When would you buy cryptocurrency?

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watchnerd
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Re: When would you buy cryptocurrency?

Post by watchnerd »

Gadget wrote: Fri May 14, 2021 8:43 pm Are there ways around all this? Some, but there are probably also ways to circumvent them. I won't get into those. But the IRS has already contracted with companies like Palantir to catch crypto tax cheats for the IRS. For all we know, they can actively trace all crypto assets from terrorist groups across the globe. After all, the blockchain data is 100% transparent and open. It's gotta be easier than tracking foreign currency in banks from 3rd world countries.
I've wondered if Monero is as stealthy as the proponents think it is.

I've also thought, if I was the FBI/NSA/DEA, I would create Monero as a honey pot.
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Re: When would you buy cryptocurrency?

Post by Wellfleet »

I never understand these scenarios where the local fiat currency becomes worthless and crypto saves the day. We have plenty of failed states right now and if they are using crypto in North Korea, Syria and Iraq, maybe it is a good idea to get some.
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Re: When would you buy cryptocurrency?

Post by Gadget »

watchnerd wrote: Fri May 14, 2021 8:49 pm
Gadget wrote: Fri May 14, 2021 8:43 pm Are there ways around all this? Some, but there are probably also ways to circumvent them. I won't get into those. But the IRS has already contracted with companies like Palantir to catch crypto tax cheats for the IRS. For all we know, they can actively trace all crypto assets from terrorist groups across the globe. After all, the blockchain data is 100% transparent and open. It's gotta be easier than tracking foreign currency in banks from 3rd world countries.
I've wondered if Monero is as stealthy as the proponents think it is.

I've also thought, if I was the FBI/NSA/DEA, I would create Monero as a honey pot.
Lol, I've actually thought this too. The greatest con the NSA could pull is creating Monero themselves, where only they have the decoder key. I mean, it's what I would have done if I were the NSA. Maybe that's why it isn't banned by the government.

I would also keep spreading media stories about how all criminals transact in Bitcoin. People obviously seem to believe them, likely making stupid criminals transact in bitcoin and get caught. The Darkside hackers on the pipeline sure got caught quickly...
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Re: When would you buy cryptocurrency?

Post by watchnerd »

Gadget wrote: Fri May 14, 2021 9:03 pm I would also keep spreading media stories about how all criminals transact in Bitcoin. People obviously seem to believe them, likely making stupid criminals transact in bitcoin and get caught. The Darkside hackers on the pipeline sure got caught quickly...
Superhero series "The Falcon and the Winter Soldier" showed Bitcoin being used as currency in the pirate state of Madripoor. ;)
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Re: When would you buy cryptocurrency?

Post by SlowMovingInvestor »

Gadget wrote: Fri May 14, 2021 8:43 pm But the IRS has already contracted with companies like Palantir to catch crypto tax cheats for the IRS.
When did they contract with Palantir specifically for crypto ? I don't remember reading that. Honestly, my impression is that Palantir is overhyped.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Gadget wrote: Fri May 14, 2021 8:43 pm
typical.investor wrote: Thu May 13, 2021 7:53 am I will buy cryptos when there is a system in place to more effectively prevent them from being used in cyber/ransomeware attacks such as the one that shut off fuel out East. Call it socially responsible investing. If tracking payment were so easy, cryptos wouldn’t be the desired payment method.

I was so close to dropping $100 k in Ethereum but on second review ...
Bitcoin and ETH are not anonymous to a government that can get a warrant from an ISP or exchange with KYC. So while their transactions can't be stopped, they can be tracked. Just not by the average Joe. But if you have one crypto wallet with its identity tagged, it can be traced to every wallet it makes a transaction with across the blockchain. Nobody is mining or staking crypto effectively with free McDonalds wifi, so I'm pretty sure it can all be tracked with the right resources.
Reports are conflicting on whether the Colonial Pipeline ransom was paid in untraceable cryptocurrency or Bitcoin.

And then if paid in something like Zcash or monero payment would no doubt transferred to Bitcoin or ETH and then (when desired) either spent of to a stable coin and then to real cash to be spent. Or are you arguing that from a technical point of view, that flows into Bitcoin and ETH from other cryptos designed to be untraceable will suddenly make the whole process transparent? I don't believe that is a supportable view.

Some are saying analysis of the wallet used points to the previous millions received being transferred to the darknet where it could be moved to gift vouchers, prepaid debit cards or cash. Interestingly, the Colonial Pipeline ransom was only $5M. In about three months before that, the wallet saw inflows of $17.5M. So even if it were paid in traceable bitcoin, it would seem that a lot was coming in before someone finally made the effort to track it down.

I'd argue that the crypto ecosystem as a whole is enabling illegal transactions and encouraging extortion attempt via an easier method to obtain payment (compared to cash). And thus I, an an investor considering whether to invest in the space, should consider that there may be a necessity to regulate exchanges which might impact the value of cryptos. From a cost per transaction perspective, crypto seems expensive. The value of it seems only to be that it is payment beyond current legal systems.

Ransomeware payments since 2019 are up what 400%? I don't see the trend as sustainable.
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Re: When would you buy cryptocurrency?

Post by Beensabu »

TheLaughingCow wrote: Wed May 12, 2021 2:55 am For those who own no crypto. Under what conditions would you consider exchanging some USD for crypto?
When they do it for me automatically or start paying me in crypto. I'm not doing that of my own volition.
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Re: When would you buy cryptocurrency?

Post by BogleMelon »

Every Boglehead owns a Total Stock Fund. Total Stock Fund owns Tesla. Tesla Owns Bitcoins. Every Boglehead own Bitcoins :D
Seriously though, if crypto becomes the future, companies would own them in big amounts and be a big part of their financial statements. Those companies will make their way (if not there already) to the index funds.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

Mel Lindauer wrote: Fri May 14, 2021 2:55 pm Since you didn't want to hear "never" as a response, I'll simply say that I'll consider crypto when it's confirmed that the proverbial cow actually jumped over the moon and there are multiple reliable independent videos showing that it really happened. 'til then, I'll pass and hope none of my friends or relatives get caught up in the mania and end up getting burned when they turn out to be left holding an empty bag.
I had assumed the moderation here was heavily biased against crypto. Thanks for the confirmation!

Unfortunately (actually fortunately), you won't be given the choice on whatever you will buy crypto, at least indirectly, if you live long enough. Bonds and stocks will eventually be tokenized, likely issued on Ethereum. Those boring old index funds will be chock full of crypto, but not as you envision.

Even the term "crypto" will evolve, similar to those "internet companies" we heard so much about a generation ago (as opposed to "brick and mortar" companies, remember that?). All companies now are "internet companies," and the same will happen with crypto. The protocols will be integrated in such a way you won't even realize your cash deposits at Vanguard or Wells Fargo (if they are still in business) are actually earning interest on Aave or Compound. You won't really know and likely won't care.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Prahasaurus wrote: Fri May 14, 2021 11:40 pm
Mel Lindauer wrote: Fri May 14, 2021 2:55 pm Since you didn't want to hear "never" as a response, I'll simply say that I'll consider crypto when it's confirmed that the proverbial cow actually jumped over the moon and there are multiple reliable independent videos showing that it really happened. 'til then, I'll pass and hope none of my friends or relatives get caught up in the mania and end up getting burned when they turn out to be left holding an empty bag.
I had assumed the moderation here was heavily biased against crypto. Thanks for the confirmation!

Unfortunately (actually fortunately), you won't be given the choice on whatever you will buy crypto, at least indirectly, if you live long enough. Bonds and stocks will eventually be tokenized, likely issued on Ethereum. Those boring old index funds will be chock full of crypto, but not as you envision.

Even the term "crypto" will evolve, similar to those "internet companies" we heard so much about a generation ago (as opposed to "brick and mortar" companies, remember that?). All companies now are "internet companies," and the same will happen with crypto. The protocols will be integrated in such a way you won't even realize your cash deposits at Vanguard or Wells Fargo (if they are still in business) are actually earning interest on Aave or Compound. You won't really know and likely won't care.
Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
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Re: When would you buy cryptocurrency?

Post by watchnerd »

typical.investor wrote: Fri May 14, 2021 11:55 pm

Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
I hold both Ethereum and Cardano.

If the gas prices don't come down enough, Ethereum will stall.
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Re: When would you buy cryptocurrency?

Post by decapod10 »

watchnerd wrote: Fri May 14, 2021 11:58 pm
typical.investor wrote: Fri May 14, 2021 11:55 pm

Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
I hold both Ethereum and Cardano.

If the gas prices don't come down enough, Ethereum will stall.
layer 2 solutions will most likely be needed to control gas prices. Ethereum gas prices are mainly dependent on demand, and there is a lot of demand on the network and it keeps getting higher. MATIC is rocketing up the charts for that reason, transaction fees are very low on Polygon/MATIC but it still uses Ethereum as the settlement layer . It's up 50% today, Pretty soon you're going to have to put it in your index fund, lol.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

typical.investor wrote: Fri May 14, 2021 11:55 pm
Prahasaurus wrote: Fri May 14, 2021 11:40 pm
Mel Lindauer wrote: Fri May 14, 2021 2:55 pm Since you didn't want to hear "never" as a response, I'll simply say that I'll consider crypto when it's confirmed that the proverbial cow actually jumped over the moon and there are multiple reliable independent videos showing that it really happened. 'til then, I'll pass and hope none of my friends or relatives get caught up in the mania and end up getting burned when they turn out to be left holding an empty bag.
I had assumed the moderation here was heavily biased against crypto. Thanks for the confirmation!

Unfortunately (actually fortunately), you won't be given the choice on whatever you will buy crypto, at least indirectly, if you live long enough. Bonds and stocks will eventually be tokenized, likely issued on Ethereum. Those boring old index funds will be chock full of crypto, but not as you envision.

Even the term "crypto" will evolve, similar to those "internet companies" we heard so much about a generation ago (as opposed to "brick and mortar" companies, remember that?). All companies now are "internet companies," and the same will happen with crypto. The protocols will be integrated in such a way you won't even realize your cash deposits at Vanguard or Wells Fargo (if they are still in business) are actually earning interest on Aave or Compound. You won't really know and likely won't care.
Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
Now show me bandwidth rates from dial up connections, and tell me how we'll never watch high def videos on-line. Ok ...
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

decapod10 wrote: Sat May 15, 2021 12:06 am
watchnerd wrote: Fri May 14, 2021 11:58 pm
typical.investor wrote: Fri May 14, 2021 11:55 pm

Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
I hold both Ethereum and Cardano.

If the gas prices don't come down enough, Ethereum will stall.
layer 2 solutions will most likely be needed to control gas prices. Ethereum gas prices are mainly dependent on demand, and there is a lot of demand on the network and it keeps getting higher. MATIC is rocketing up the charts for that reason, transaction fees are very low on Polygon/MATIC but it still uses Ethereum as the settlement layer . It's up 50% today, Pretty soon you're going to have to put it in your index fund, lol.
Matic (Polygon) is one way Ethereum will address its scalability issues, there will be many others. You can't stop won't stop innovation. Aave went live on Matic just over a month ago. It now has 4 billion USD locked in its protocol there.

Think of our solar system, with Ethereum as the sun, and lots of Ethereum L2s like Matic, plus other L1s with integration to Ethereum (Bitcoin, Cosmos, Polkadot, etc.) evolving around Ethereum. Maybe Cardano, if they ever actually ship something (I'm skeptical). Ethereum's mainnet will be used primarily for final settlement, most of the action will happen on the periphery.

The average user will not interact with Ethereum, but with other applications or companies that leverage this decentralized infrastructure. Your bond fund will still exist, the fees you pay will include ETH transactional costs, you won't really know or care, provided fees are lower than you have today. Vanguard will continue to provide your primary interface to your stock and bond portfolio, but their role will change (more about custody, regulatory compliance, customer experience).

Your bank, on the other hand... Let's just say, good luck to Wells Fargo, they will need it.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

decapod10 wrote: Sat May 15, 2021 12:06 am It's up 50% today, Pretty soon you're going to have to put it in your index fund, lol.
Yeah, I saw.

Bigger market cap than Aave now.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Prahasaurus wrote: Sat May 15, 2021 12:08 am
typical.investor wrote: Fri May 14, 2021 11:55 pm
Prahasaurus wrote: Fri May 14, 2021 11:40 pm
Mel Lindauer wrote: Fri May 14, 2021 2:55 pm Since you didn't want to hear "never" as a response, I'll simply say that I'll consider crypto when it's confirmed that the proverbial cow actually jumped over the moon and there are multiple reliable independent videos showing that it really happened. 'til then, I'll pass and hope none of my friends or relatives get caught up in the mania and end up getting burned when they turn out to be left holding an empty bag.
I had assumed the moderation here was heavily biased against crypto. Thanks for the confirmation!

Unfortunately (actually fortunately), you won't be given the choice on whatever you will buy crypto, at least indirectly, if you live long enough. Bonds and stocks will eventually be tokenized, likely issued on Ethereum. Those boring old index funds will be chock full of crypto, but not as you envision.

Even the term "crypto" will evolve, similar to those "internet companies" we heard so much about a generation ago (as opposed to "brick and mortar" companies, remember that?). All companies now are "internet companies," and the same will happen with crypto. The protocols will be integrated in such a way you won't even realize your cash deposits at Vanguard or Wells Fargo (if they are still in business) are actually earning interest on Aave or Compound. You won't really know and likely won't care.
Ethereum Average Transaction Fees show an average growth rate of 2.51K%.

If Visa transaction costs were increasing 2,510% per year, would we be viewing it as the future?

I suspect that bogleheads will continue to hold their stocks and bonds in the least expensive manner. In the end, I am not convinced that the Ethereum network is it.

$64 per transaction currently. Ok ...
Now show me bandwidth rates from dial up connections, and tell me how we'll never watch high def videos on-line. Ok ...
Your argument that "because there has been technological progress in particular areas in the past" means that "Ethereum's system will succeed" is less than persuasive to me.

I don't really dial up as being significant anymore. So yeah, in terms of progress perhaps we can expect the Ethereum network to be replaced by something else. That's about the only conclusion I can draw from the certainty of progress.

Eth2.0 might work but ...

Because of the size of Ethereum and the inherent complexity of blockchain technology, sharding Ethereum will be anything but simple. …by sharding the nodes into smaller subsets, these subsets need to be able to process specific sets of transactions while simultaneously updating the state of the network, all while ensuring it is valid. This means that for a sharded Ethereum to function as the current network does, a complex system must be developed to determine the distribution of responsibilities between the beacon chain and the shards and to establish how the shards will communicate with each other and with the beacon chain. The system must also include a mechanism to make sure that all the network data and transactions remain valid and available to achieve finality. Ethereum researchers and developers have wrestled with several ideas about what sort of system could best achieve all of these functions.

None of the proposed systems for sharding are actually in production and that some argue that communication between shards in this environment may pose an even greater challenge to network scalability than a transaction bottleneck.

Time will tell but AOL had a run too ... anyway transaction costs are an issue that needs to be solved and it stems from the basic premise of every transaction recorded everywhere. Didn't work. Now the idea is to break things into 64 (or whatever the latest proposal is) parts and let them only do part ... but still they need to agree.

Proclamations of problem solved are premature. And then there is the issue of who controls coin issuance. Sure, move the decision from central banks (by replacing FIAT with crypto) which in many cases are ultimately influenced by a democratic process to what ... a small group of self interested developers.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

Chainlink founder, echoing my sentiments exactly:

https://chainlinktoday.com/how-banks-an ... -for-defi/
“There is a skepticism about blockchains, DeFi and cryptocurrencies that’s born out of a fundamental misunderstanding of how attractive this is to users.” He pointed to banks and fintechs scrambling to get custody of cryptocurrency now after dismissing it just a few years ago. His advice to those similarly discrediting DeFi is extremely straightforward:

“If the same guy who told you you’re never going to need custody of Bitcoins is advising you on the upcoming demand for DeFi, fire his ***. He doesn’t know how it works. He was wrong once, he’s going to be wrong again and you’re going to be behind in the future, just like you are now.”

One reason Nazarov believes people will demand DeFi is its superior yield. “A bank can give them 1%; on Aave they can get 8%. The only reason they’re not on Aave is they don’t know how to get on Aave. If you get them on Aave, that’s it.”
I didn't start to invest in AAVE until I started to use the Aave protocol. At that point, it was crystal clear where this is all going. The same feeling I had when I started to surf the internet a generation ago. Sure, it was difficult, slow, frustrating at times. But it was so obvious it was going to eventually improve and totally disrupt industry. I just underestimated its impact then, and I think I'm still underestimating how fundamentally crypto will change our lives now. Going to be fascinating to watch!
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

typical.investor wrote: Sat May 15, 2021 12:35 am Your argument that "because there has been technological progress in particular areas in the past" means that "Ethereum's system will succeed" is less than persuasive to me.

I don't really dial up as being significant anymore. So yeah, in terms of progress perhaps we can expect the Ethereum network to be replaced by something else. That's about the only conclusion I can draw from the certainty of progress.

Eth2.0 might work but ...
If your argument is that crypto has an incredibly bright future, but we just don't yet know if Ethereum will be at its core, ok. I disagree, but I suppose it could be some other technology. We'll see.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Prahasaurus wrote: Sat May 15, 2021 12:35 am One reason Nazarov believes people will demand DeFi is its superior yield. “A bank can give them 1%; on Aave they can get 8%. The only reason they’re not on Aave is they don’t know how to get on Aave. If you get them on Aave, that’s it.”
Again, Ethereum Average Transaction Fees show an average growth rate of 2,510%. This is where the 8% comes from. It comes from the fee to use Ethereum. Even if ETH2.0 can lower transaction costs, there will always be the cost of the network. The processing and storage costs of every transaction recorded everywhere would seem expensive to me, and we see this in transactions fees.

I really wanted to stake ETH, saw the growing disk requirements and learned that the sharding solution really wasn't worked out yet. So it really induced doubts.

Economically, I would expect people to choose the lowest cost way to perform a transaction. Is crypto really it?

But I am a Boglehead and believe fundamentally that cost matters.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

typical.investor wrote: Sat May 15, 2021 12:41 am
Prahasaurus wrote: Sat May 15, 2021 12:35 am One reason Nazarov believes people will demand DeFi is its superior yield. “A bank can give them 1%; on Aave they can get 8%. The only reason they’re not on Aave is they don’t know how to get on Aave. If you get them on Aave, that’s it.”
Again, Ethereum Average Transaction Fees show an average growth rate of 2,510%. This is where the 8% comes from. It comes from the fee to use Ethereum. Even if ETH2.0 can lower transaction costs, there will always be the cost of the network. The processing and storage costs of every transaction recorded everywhere would seem expensive to me, and we see this in transactions fees.

I really wanted to stake ETH, saw the growing disk requirements and learned that the sharding solution really wasn't worked out yet. So it really induced doubts.

Economically, I would expect people to choose the lowest cost way to perform a transaction. Is crypto really it?

But I am a Boglehead and believe fundamentally that cost matters.
What are transactional costs on Matic?

Ethereum fees are high because of demand. It's like saying a popular restaurant will fail because it's expensive and always packed.... :oops:

Ethereum has issues. They are being resolved. Ethereum mainnet will not be used for the vast majority of transactions in the future.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Prahasaurus wrote: Sat May 15, 2021 12:51 am
Ethereum fees are high because of demand. It's like saying a popular restaurant will fail because it's expensive and always packed.... :oops:
And yet Visa processes far more transactions at a far lower cost, and costs don't rise that much in response to higher demand.

No, Ethereum fees are high because the network is inefficient by design.

Yes, a more efficient design is in the conceptual stage.

As for your restaurant analogy, try this ... a popular restaurant goes nationally to find that each time they open a new branch, costs everywhere go up. And you argue that we are all going to be eating there and only there. Well, if there is a cheaper alternative for the same food, I don't agree with your prediction.

Until the relationship between demand and increasing cost is resolved, I don't see the economics working out.

That's a cutesy green slap to the forehead by the way. I wonder if you convinced anyone by using it. The ability of people to actually analyze something seems so low these days that it may have in fact been persuasive. Sad but true.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

typical.investor wrote: Sat May 15, 2021 1:33 am
Prahasaurus wrote: Sat May 15, 2021 12:51 am
Ethereum fees are high because of demand. It's like saying a popular restaurant will fail because it's expensive and always packed.... :oops:
And yet Visa processes far more transactions at a far lower cost, and costs don't rise that much in response to higher demand.

No, Ethereum fees are high because the network is inefficient by design.

Yes, a more efficient design is in the conceptual stage.

As for your restaurant analogy, try this ... a popular restaurant goes nationally to find that each time they open a new branch, costs everywhere go up. And you argue that we are all going to be eating there and only there. Well, if there is a cheaper alternative for the same food, I don't agree with your prediction.

Until the relationship between demand and increasing cost is resolved, I don't see the economics working out.

That's a cutesy green slap to the forehead by the way. I wonder if you convinced anyone by using it. The ability of people to actually analyze something seems so low these days that it may have in fact been persuasive. Sad but true.
You can't compare a centralized system like Visa with a decentralized blockchain. Of course Visa can be more efficient. But at the cost of centralization! At the cost of total dependence on Visa, the corporation, it's board, its policies, its monopolistic position within our financial system that allows it to extract ridiculous rents from users, etc., etc. Decentralization is the fundamental concept - the revolutionary concept, with all its implications, including technical limitations and challenges - that few technical people grasp. Which is why Ethereum v Visa is just the wrong comparison. But yes, Visa will adopt, or be replaced, by this technology, definitely.

This is also why I say to begin to grasp the real benefits of Ethereum, you need to use applications running on Ethereum. And also have a bit of imagination. Because we are still so early.
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Re: When would you buy cryptocurrency?

Post by typical.investor »

Prahasaurus wrote: Sat May 15, 2021 1:49 am
typical.investor wrote: Sat May 15, 2021 1:33 am
Prahasaurus wrote: Sat May 15, 2021 12:51 am
Ethereum fees are high because of demand. It's like saying a popular restaurant will fail because it's expensive and always packed.... :oops:
And yet Visa processes far more transactions at a far lower cost, and costs don't rise that much in response to higher demand.

No, Ethereum fees are high because the network is inefficient by design.

Yes, a more efficient design is in the conceptual stage.

As for your restaurant analogy, try this ... a popular restaurant goes nationally to find that each time they open a new branch, costs everywhere go up. And you argue that we are all going to be eating there and only there. Well, if there is a cheaper alternative for the same food, I don't agree with your prediction.

Until the relationship between demand and increasing cost is resolved, I don't see the economics working out.

That's a cutesy green slap to the forehead by the way. I wonder if you convinced anyone by using it. The ability of people to actually analyze something seems so low these days that it may have in fact been persuasive. Sad but true.
You can't compare a centralized system like Visa with a decentralized blockchain. Of course Visa can be more efficient.
Yes, you can and yes you should. Decentralization has cost and it doesn't follow that the additional costs are necessarily worth the expense.
Prahasaurus wrote: Sat May 15, 2021 1:49 am But at the cost of centralization! At the cost of total dependence on Visa, the corporation, it's board, its policies, its monopolistic position within our financial system that allows it to extract ridiculous rents from users, etc., etc.
And yet the cost of those rents is far, far lower that the cost per transaction for cryptos.
Prahasaurus wrote: Sat May 15, 2021 1:49 am Decentralization is the fundamental concept - the revolutionary concept, with all its implications, including technical limitations and challenges - that few technical people grasp.
I see. So if we use our imagination we will see its true value.
Prahasaurus wrote: Sat May 15, 2021 1:49 am This is also why I say to begin to grasp the real benefits of Ethereum, you need to use applications running on Ethereum. And also have a bit of imagination. Because we are still so early.
Still, the question of transactional cost of smart contracts running on a decentralized system remains.

In a way, I think ETH2.0 is the right solution. Break it into smaller components to boost transaction ability, and require those validating transactions to have stake in the process. But why do I need everyone in Africa and New Zealand to record the transaction of me buying a house. And do I want the Chinese government to have access to my history and political contributions. Free Tibet! No, I think rather an exchange for real estate that every State, County and City validates and perhaps a separate exchange for political contributions would do better.
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Re: When would you buy cryptocurrency?

Post by Prahasaurus »

typical.investor wrote: Sat May 15, 2021 2:03 am In a way, I think ETH2.0 is the right solution. Break it into smaller components to boost transaction ability, and require those validating transactions to have stake in the process. But why do I need everyone in Africa and New Zealand to record the transaction of me buying a house. And do I want the Chinese government to have access to my history and political contributions. Free Tibet! No, I think rather an exchange for real estate that every State, County and City validates and perhaps a separate exchange for political contributions would do better.
This is exactly what I believe will happen, smaller Ethereum L2s that feed a subset of info into Ethereum mainnet, or smaller L1s that are able to capture a niche, but still require some integration to Ethereum. Which is why all the "Eth killers" are quick to announce their bridge to Ethereum. Cardano can't even manage smart contracts, but they already integrate to Ethereum. :D

We'll see how it all plays out.
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Re: When would you buy cryptocurrency?

Post by RobLyons »

I follow Boglehead strategy for 99.5% of my investments and use some side money as I would have in the past for a fun night at the casino.

So a couple years ago I made a good profit on XRP from $0.49 to $1.55 and Bitcoin in the $17k range. I did not listen to coworkers hype about other crypto like ethereum in the $300 range.
Last night I was ready to buy into Cardano at $1.95 and now it's at $2.19 so I'm in finally, totally speculative, with about a 0.5% slice of my portfolio.

Looking back I could've been much wealthier buying more crypto but vision is always 20:20.
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Re: When would you buy cryptocurrency?

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TheLaughingCow wrote: Wed May 12, 2021 2:55 am For those who own no crypto. Under what conditions would you consider exchanging some USD for crypto?

Edit: This is a thought experiment. The point is to challenge Bogleheads' existing beliefs. At one point bonds were considered a safe investment and common stocks were regarded as excessively risky. Yet today the family who held stocks for the last 100 years is substantially richer than the family which held bonds. I do not want to be so attached to dogma that I miss fundamental shifts in the way the world works.

There is a point at which everyone would hold crypto, Boglehead or not. For example if your salary were paid in crypto, and the dollar was worthless, you would have no choice. I am asking, at what point would you decide there is some merit to holding some crypto "just in case" it really is the next big thing?

If you're going to answer "never", please just don't respond. This post is for people who don't own crypto, who can genuinely imagine a situation where they might need to get some. Saying you would rather starve to death than swap to a new economic system and use crypto is disingenuous and goes against the spirit of the question.
We do not own any crypto, but I do listen to younger colleagues in the break room every day talk about it (and they have been talking at a level of excitement for the past 3 years on a daily basis) to recognize that it reminds me a lot of similar behavior I personally experienced and witnessed in the 1995-2001 time frame.

I have posted about this on BH before, but my choice over the past 4-5 years has been to learn from history of prior rushes, and invest in the companies that sell the "picks, shovels, overalls, food, shelter, energy, and services" to the miners (to borrow an analogy). I began reading about the companies in 2015 and have been fascinated at how many have already come and gone within the space as the larger leaders have emerged and are well known. I grew up in an area of the US that historically was a very large part of the Gold Rush (area was mined for 126 years), so have spent a lot of time over the past decades studying the boom bust cycle that was created.

For now, we remain focused with a portion of our portfolio invested in the companies that provide the equipment and infrastructure rather than the actual cryptocurrencies. For the typical BH, these are all in the Total Stock Market Index Funds - so Bogleheads are already invested in the space regarding "picks, shovels, overalls, food, shelter, energy, and services". For most, that is probably plenty. We just have been tilting a small percentage in that direction via holding individual company shares of some of the more important infrastructure providers. I am also cognizant that the demand for the gear/services could fizzle out due to more supply than demand, so do consider the risk reward level scenario to keep the percentage invested in the space at a smaller, reasonable level.

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Re: When would you buy cryptocurrency?

Post by nisiprius »

BogleMelon wrote: Fri May 14, 2021 10:08 pm Every Boglehead owns a Total Stock Fund. Total Stock Fund owns Tesla. Tesla Owns Bitcoins. Every Boglehead own Bitcoins :D
It's a decent "gotcha" but it's a logical non sequitur. When I own Tesla, I own a claim on the earnings of a corporation that is in the Consumer Discretionary sector. Tesla holds a certain amount of bitcoin for purposes I don't fully understand. But I can't show up with a Tesla stock certificate at Tesla headquarters and exchange it for "the bitcoin I own" any more than I can show up at ExxonMobil headquarters with a stock certificate and exchange it for a barrel of light sweet crude.

It's evidence that bitcoin is being used to a small extent in "mainstream" businesses. But it doesn't mean Bogleheads who own VTSAX "own bitcoins."

I assume that Coinbase Global stock, COIN, will soon be a holding in Vanguard Total Stock if it isn't already. But that, too, will mean only that I have beneficial ownership of a corporation in the Financials sector, Financial Services industry, which provides cryptocurrency-related services. Not that "I "own bitcoins."
Last edited by nisiprius on Sat May 15, 2021 10:41 am, edited 1 time in total.
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Re: When would you buy cryptocurrency?

Post by Ramjet »

Probably Paypal
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Re: When would you buy cryptocurrency?

Post by BogleMelon »

nisiprius wrote: Sat May 15, 2021 9:34 am
BogleMelon wrote: Fri May 14, 2021 10:08 pm Every Boglehead owns a Total Stock Fund. Total Stock Fund owns Tesla. Tesla Owns Bitcoins. Every Boglehead own Bitcoins :D
It's a decent "gotcha" but it's a logical non sequitur. When I own Tesla, I own a claim on the earnings of a corporation that is in the Consumer Discretionary sector. Tesla holds a certain amount of bitcoin for purposes I don't fully understand. But I can't show up with a Tesla stock certificate at Tesla headquarters and exchange it for "the bitcoin I own" any more than I can show up at ExxonMobil headquarters with a stock certificate and exchange it for a barrel of light sweet crude.

It's evidence that bitcoin is being used to a small extent in "mainstream" businesses. But it doesn't mean Bogleheads who own VTSAX "own bitcoins."

I assume that Coinbase Global stock, COIN, will soon be a holding in Vanguard Total Stock if it isn't already. But that, too, will mean only that I have beneficial ownership of a corporation in the Financials sector, Financial Services industry, which provides cryptocurrency-related services. Not that "I "own bitcoins."
While you can't claim your Bitcoins from Tesla, on the other hand if Bitcoin price become 1 million per coin, that should (at least theoretically) icrease the value of Tesla stocks and positively affect your portfolio
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Re: When would you buy cryptocurrency?

Post by ruralavalon »

JoeRetire wrote: Fri May 14, 2021 3:22 pm
ApeAttack wrote: Fri May 14, 2021 11:36 am
JoeRetire wrote: Wed May 12, 2021 5:08 am
TheLaughingCow wrote: Wed May 12, 2021 2:55 am For those who own no crypto. Under what conditions would you consider exchanging some USD for crypto?
Right after I cash in a winning lottery ticket.

(hint: I don't buy lottery tickets)
Under what condition would you buy lottery tickets? :dollar
When Megabucks first came out in 1982, I bought a single lottery ticket.
I didn't win.
I have never purchased another.

I view it as a tax on the mathematically challenged.
State lotteries are a tax on people who didn't learn arithmetic in grade school.

Cryptocurrencies are what?
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Re: When would you buy cryptocurrency?

Post by JoeRetire »

ruralavalon wrote: Sat May 15, 2021 11:02 am
JoeRetire wrote: Fri May 14, 2021 3:22 pm
ApeAttack wrote: Fri May 14, 2021 11:36 am
JoeRetire wrote: Wed May 12, 2021 5:08 am
TheLaughingCow wrote: Wed May 12, 2021 2:55 am For those who own no crypto. Under what conditions would you consider exchanging some USD for crypto?
Right after I cash in a winning lottery ticket.

(hint: I don't buy lottery tickets)
Under what condition would you buy lottery tickets? :dollar
When Megabucks first came out in 1982, I bought a single lottery ticket.
I didn't win.
I have never purchased another.

I view it as a tax on the mathematically challenged.
State lotteries are a tax on people who didn't learn arithmetic in grade school.

Cryptocurrencies are what?
Lottery tickets.
Just remember: it's not a lie if you believe it.
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Re: When would you buy cryptocurrency?

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This thread is now in the Investing - Theory, News & General forum (general discussion).
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Re: When would you buy cryptocurrency?

Post by ballons »

Wellfleet wrote: Fri May 14, 2021 8:58 pm I never understand these scenarios where the local fiat currency becomes worthless and crypto saves the day. We have plenty of failed states right now and if they are using crypto in North Korea, Syria and Iraq, maybe it is a good idea to get some.
Crypto can't even be used to buy pizza anymore but now it can be used for everyone's daily transactions?

Under your logic, gold should have saved every single failed state in the past.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

JoeRetire wrote: Sat May 15, 2021 1:54 pm
Lottery tickets.
Do you think they follow similar mathematical models?
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Re: When would you buy cryptocurrency?

Post by ballons »

Prahasaurus wrote: Sat May 15, 2021 12:35 am Chainlink founder, echoing my sentiments exactly:

https://chainlinktoday.com/how-banks-an ... -for-defi/

...
https://chainlinklabs.com/careers?utm_s ... gn=careers

Look at all these worthless crypto middleman getting hired.
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Re: When would you buy cryptocurrency?

Post by JoeRetire »

watchnerd wrote: Sat May 15, 2021 2:41 pm
JoeRetire wrote: Sat May 15, 2021 1:54 pm
Lottery tickets.
Do you think they follow similar mathematical models?
No. Do you?
Just remember: it's not a lie if you believe it.
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Re: When would you buy cryptocurrency?

Post by ballons »

watchnerd wrote: Sat May 15, 2021 2:41 pm
JoeRetire wrote: Sat May 15, 2021 1:54 pm
Lottery tickets.
Do you think they follow similar mathematical models?
Do think those buying whatever is listed on coinbase lottobase to create their lotto index care about mathematical models?
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Re: When would you buy cryptocurrency?

Post by watchnerd »

JoeRetire wrote: Sat May 15, 2021 2:43 pm
No. Do you?
No, not at all.

They're both quite risky, but the distribution of returns and odds are dissimilar.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

ballons wrote: Sat May 15, 2021 2:44 pm

Do think those buying whatever is listed on coinbase lottobase to create their lotto index care about mathematical models?

The comment was..

"I view it as a tax on the mathematically challenged"

...but if we don't think they follow similar math models, it raises another question.

What is the proper mathematical model for crypto?

That's a much harder question.

I don't think anyone has a good very good mathematical model for the crypto space. Even the "stock to flow" analysis has a holes.
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Re: When would you buy cryptocurrency?

Post by ballons »

watchnerd wrote: Sat May 15, 2021 2:54 pm
ballons wrote: Sat May 15, 2021 2:44 pm

Do think those buying whatever is listed on coinbase lottobase to create their lotto index care about mathematical models?

The comment was..

"I view it as a tax on the mathematically challenged"

...but if we don't think they follow similar math models, it raises another question.

What is the proper mathematical model for crypto?

That's a much harder question.

I don't think anyone has a good very good mathematical model for the crypto space. Even the "stock to flow" analysis has a holes.
And my question still stands: Do you think those buying whatever is listed on coinbase lottobase to create their lotto index care about mathematical models? I don't think they are at all.
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Re: When would you buy cryptocurrency?

Post by JoeRetire »

watchnerd wrote: Sat May 15, 2021 2:51 pm
JoeRetire wrote: Sat May 15, 2021 2:43 pm
No. Do you?
No, not at all.

They're both quite risky, but the distribution of returns and odds are dissimilar.
Probably.

I know how to compute the expected returns for lottery tickets. The expected returns for speculative "investments" like cryptocurrency - how lucky do you feel? Perhaps they are not similar to your favorite lottery, perhaps they are.
Just remember: it's not a lie if you believe it.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

ballons wrote: Sat May 15, 2021 3:04 pm And my question still stands: Do you think those buying whatever is listed on coinbase lottobase to create their lotto index care about mathematical models? I don't think they are at all.
The overwhelming majority of retail investors, no.

Quants working for the hedge funds getting into the space? Probably yes.
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Re: When would you buy cryptocurrency?

Post by Ocean77 »

This whole thing is just incredible. If you sent a check to Bernie Madoff, at least you genuinely expected your money would be invested in a productive asset and not be used to pay off previous investors who wanted to cash out. But with crypto, this scheme is all plainly open. Anybody putting in their dollars knows full well that 100% of them go into the pocket of an earlier investor who wants to cash out.

And still, people are tempted, because they see others getting rich from this scheme. And it could keep going on for a long time. Even I have to admit I did open an account with coinbase and considered putting in a tiny amount of money.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

Ocean77 wrote: Sat May 15, 2021 3:20 pm. Anybody putting in their dollars knows full well that 100% of them go into the pocket of an earlier investor who wants to cash out.
For stakable crypto assets, cashing out actually isn't necessary to earn a return.
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Re: When would you buy cryptocurrency?

Post by ballons »

typical.investor wrote: Sat May 15, 2021 12:35 am I don't really dial up as being significant anymore. So yeah, in terms of progress perhaps we can expect the Ethereum network to be replaced by something else. That's about the only conclusion I can draw from the certainty of progress.

Eth2.0 might work but ...
...
Proclamations of problem solved are premature. And then there is the issue of who controls coin issuance. Sure, move the decision from central banks (by replacing FIAT with crypto) which in many cases are ultimately influenced by a democratic process to what ... a small group of self interested developers.
If people actually believed in decentralized finance, then the notion of any kind of "winner" represents the antithesis of their belief.

Eventually some random person who doesn't care about money will create truly decentralized finance. The crypto fanatics will hate it because they can't speculate with it and the crypto middleman will hate it because it exposes themselves to be just another worthless middleman. These two groups will spread as much FUD as possible to stop people from using it.
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Re: When would you buy cryptocurrency?

Post by alluringreality »

Ocean77 wrote: Sat May 15, 2021 3:20 pm Anybody putting in their dollars knows full well that 100% of them go into the pocket of an earlier investor who wants to cash out.
If you really want to, you could lend your money to crypto speculators. Just convert your money to stablecoins and then lend it. Most likely it will be used to bet on the price of crypto going up or down. If the system doesn't collapse, it's possible you could get a return. If the value of cryptocurrency tanks beyond the expectations built into the model, it is possible a lender could lose all their assets. Some crypto supporters downplay the risks of this arrangement by comparing the lending rate with bank rates, but anyone taking this on should be aware that the higher rate comes with risks. Clearly the US government is willing to insure bank deposits, but they don't insure lending money to gamblers.
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Re: When would you buy cryptocurrency?

Post by HanSolo »

watchnerd wrote: Sat May 15, 2021 3:26 pm
Ocean77 wrote: Sat May 15, 2021 3:20 pm. Anybody putting in their dollars knows full well that 100% of them go into the pocket of an earlier investor who wants to cash out.
For stakable crypto assets, cashing out actually isn't necessary to earn a return.
I'm noticing there's no contradiction between the above two assertions.

Process check: Is this the thread where Bogleheads who don't own crypto share what might make them buy?

Or is this some other topic now?

I gave my take on the original question in another thread:
HanSolo wrote: I think I'll sit out crypto until everyone is getting their own personal cryptocurrency. Why would I eat someone else's dog food?
For now, crypto is like aluminum siding to me. If I don't need it, I don't buy it. I'm not seeing a problem in that.

Perhaps there's some overlap between my position and the following quote (below). At some point, the casino aspect and the financial services aspect may get bifurcated (although that may be like separating the bait from the hook!). And that's where things get interesting. But even then, if I already have whatever financial services I need, I still might not be in the market for any new ones.
ballons wrote: Sat May 15, 2021 4:01 pm Eventually some random person who doesn't care about money will create truly decentralized finance. The crypto fanatics will hate it because they can't speculate with it and the crypto middleman will hate it because it exposes themselves to be just another worthless middleman. These two groups will spread as much FUD as possible to stop people from using it.
Has the original question been fully addressed?
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Re: When would you buy cryptocurrency?

Post by watchnerd »

HanSolo wrote: Sat May 15, 2021 4:09 pm
watchnerd wrote: Sat May 15, 2021 3:26 pm
Ocean77 wrote: Sat May 15, 2021 3:20 pm. Anybody putting in their dollars knows full well that 100% of them go into the pocket of an earlier investor who wants to cash out.
For stakable crypto assets, cashing out actually isn't necessary to earn a return.
I'm noticing there's no contradiction between the above two assertions.
It is not contradictory, correct.

They are complementary.
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Re: When would you buy cryptocurrency?

Post by watchnerd »

ballons wrote: Sat May 15, 2021 4:01 pm
If people actually believed in decentralized finance, then the notion of any kind of "winner" represents the antithesis of their belief.

Eventually some random person who doesn't care about money will create truly decentralized finance. The crypto fanatics will hate it because they can't speculate with it and the crypto middleman will hate it because it exposes themselves to be just another worthless middleman. These two groups will spread as much FUD as possible to stop people from using it.
None of the current crypto DeFi advocates want a non-monetizable new DeFi system.

Despite the virtue signaling, it's not really about democratizing finance.

It's about capturing a slice of the current financial services market and getting rich off it.

Reducing inequality and systemic barriers is a good marketing pitch, but people are in it for the money.

Greed is good, right? ;)
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Re: When would you buy cryptocurrency?

Post by nisiprius »

HanSolo wrote: Sat May 15, 2021 4:09 pm...Process check: Is this the thread where Bogleheads who don't own crypto share what might make them buy?...
I did my level best to give an honest answer here.
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