Crypto mania !

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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sureshoe
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Re: Crypto mania !

Post by sureshoe »

Valuethinker wrote: Mon May 10, 2021 9:53 am
JohnDindex wrote: Sat May 08, 2021 1:49 pm I happen to have 3 friends who are financial advisors. All 3 of them have told me a similar story in the last 30 days. They have existing clients and new prospects that are crypto millionaires. Too much to write but crazy stories, people in their 30’s worth 4-6 million dollars. The advisors are obviously pushing them to sell enough and invest normally but it’s just insane. Some of them are wanting to double down, pull money from traditional investments, and even use leverage.

One of them said to me: “ I think when this thing pops, it might trigger a collapse in markets etc”

I own no crypto and I have no desire.

What do the bogleheads think? Could a crypto bubble burst cause a financial panic ?
It is leverage that causes the meltdown. Borrowing more money to invest more, with the collateral of what you already have.

Which then, when the value of the collateral falls, leads to margin calls & forced liquidations. Which leads to lower prices, more margin calls, more forced liquidations.

Even in the Tech Media Telecoms aka "dot com" bubble, although the dot coms were primarily equity financed, the Media & Telecoms stocks had borrowed hundreds of billions of dollars, to dig holes in the ground and fill them with fibre optics that were often never lit. And companies had signed leases for huge amounts of office space that they then defaulted on, another form of leverage.

So, if people have found a way to leverage their crypto investments, there could be broader systemic effects of a bubble collapse.

If not, it's like your average mining bubble when it blows, only the investors who don't get out ahead of the pack get hurt. The last investors, usually the woman on the street, the little guy or gal, get hosed. The smart money is off on the next new new thing.
I might have made a bad decision. You can spend your whole life looking in the rear view mirror. I did that a little when Covid struck thinking "omg, I should have dumped some". But, I kept doing the same old boring stuff.

We'll see. I kick it around, but I often find it's the wrong reason to invest. The idea of "everyone has doubled" since January is interesting, but the market is also up 12-13%, so I started glancing at what is the overall beta of crypto. When Covid hit, bitcoin took about a 60% didn't it, while the broader market took 30%. So we haven't really seen what a downswing does to crypto at this point. Does 15% pullback give a 40% hit?

I dunno. It's interesting. I can't help but think "I should toss a few $k that way." But again, there are lots of people doing that.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

HomerJ wrote: Mon May 10, 2021 11:36 am
nisiprius wrote: Mon May 10, 2021 11:19 amApparently people with the right temperament and willingness to take risk can temporarily make "huge profits," but the exact same qualities that lead to huge profits make it likely that they will experience huge losses. Someone who has multiplied their money by ten a few times is not going to suddenly stop and miss out on the opportunity to multiply it by ten again. The mentality is "Stocks only go up. Only losers take profits."
Good point.

Most of us here, even if we did invest in something that went up 1000x, would never get those profits, because we would have cashed out (at least some, and maybe all) at 3x, 10x, 20x, 50x, etc.
Or, if following a market weight approach, rebalancing keeps chiseling down your allocation because your 'fund' has 'tracking error' relative to the 'market cap index'.

I expect that to happen in my case, given that my DIY 'index' only represents about $1.7T / 68% of the crypto market cap, so I expect the long tail of money losing projects to cause the market cap to grow less than my 'fund'.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
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starboi
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Re: Crypto mania !

Post by starboi »

NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
decapod10
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Re: Crypto mania !

Post by decapod10 »

starboi wrote: Mon May 10, 2021 12:21 pm NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
Tom Brady is starting an NFT company, so it would be surprising if he is not already invested in the crypto space to some degree
banook
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Re: Crypto mania !

Post by banook »

decapod10 wrote: Mon May 10, 2021 12:23 pm
starboi wrote: Mon May 10, 2021 12:21 pm NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
Tom Brady is starting an NFT company, so it would be surprising if he is not already invested in the crypto space to some degree
Well California Pension system beat him to it - been in BTC since 2017... upped position in 2020. Warning sign or sign of the times?
decapod10
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Re: Crypto mania !

Post by decapod10 »

banook wrote: Mon May 10, 2021 12:28 pm
decapod10 wrote: Mon May 10, 2021 12:23 pm
starboi wrote: Mon May 10, 2021 12:21 pm NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
Tom Brady is starting an NFT company, so it would be surprising if he is not already invested in the crypto space to some degree
Well California Pension system beat him to it - been in BTC since 2017... upped position in 2020. Warning sign or sign of the times?
Who knows, I like crypto and all, but I wouldn't want to bet my pension on it, lol
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starboi
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Re: Crypto mania !

Post by starboi »

Shiba Inu Adds $11B To Ethereum Founder Vitalik Buterin's Net Worth

https://www.benzinga.com/markets/crypto ... -net-worth
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

starboi wrote: Mon May 10, 2021 1:16 pm Shiba Inu Adds $11B To Ethereum Founder Vitalik Buterin's Net Worth

https://www.benzinga.com/markets/crypto ... -net-worth
Hilarious.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
csmath
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Re: Crypto mania !

Post by csmath »

I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
txhill
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Re: Crypto mania !

Post by txhill »

csmath wrote: Mon May 10, 2021 1:21 pm I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
Cardano is the 6th largest cryptocurrency by market cap, but:

1. Cardano has essentially no applications. I don't think there are any?
2. Cardano has essentially no developers (or low development activity relative to other chains): https://medium.com/electric-capital/ele ... 17165c6444 (look at slides 64+ to see what blockchains are attracting talent)
3. Cardano is trying to compete with Ethereum, which has a bazillion developers and basically all of the major applications. https://dappradar.com/rankings/category/defi (sort by balance to see where the money is, and just scroll down to see how ETH is dominating)

I'm not tech savvy enough to know whether Cardano is technologically superior to Ethereum. But Cardano is currently priced as if it were a major competitor, but it has no development and no existing use cases. It's a risky bet that somehow ADA is going to attract users really soon, but I don't yet see that happening yet.
csmath
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Re: Crypto mania !

Post by csmath »

txhill wrote: Mon May 10, 2021 1:39 pm
csmath wrote: Mon May 10, 2021 1:21 pm I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
Cardano is the 6th largest cryptocurrency by market cap, but:

1. Cardano has essentially no applications. I don't think there are any?
2. Cardano has essentially no developers (or low development activity relative to other chains): https://medium.com/electric-capital/ele ... 17165c6444 (look at slides 64+ to see what blockchains are attracting talent)
3. Cardano is trying to compete with Ethereum, which has a bazillion developers and basically all of the major applications. https://dappradar.com/rankings/category/defi (sort by balance to see where the money is, and just scroll down to see how ETH is dominating)

I'm not tech savvy enough to know whether Cardano is technologically superior to Ethereum. But Cardano is currently priced as if it were a major competitor, but it has no development and no existing use cases. It's a risky bet that somehow ADA is going to attract users really soon, but I don't yet see that happening yet.
Thanks for the reply. I'll take a look at the link. BTW, the person is about 30 and quitting their job to "take a few years off and figure out what is next because they've had some investments really pay off recently". I replied, "Well obviously you're talking about crypto", which got the conversation going.
Freefun
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Re: Crypto mania !

Post by Freefun »

Cardano was designed after Eth and to improve on Eth weaknesses... as such it's less expensive to operate but improvements for Eth are coming. The application investment landscape is currently much larger for Eth.

Hard to know what will succeed long term and a case could be made that many will coexist.
Remember when you wanted what you currently have?
YRT70
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Re: Crypto mania !

Post by YRT70 »

watchnerd wrote: Mon May 10, 2021 7:18 am
Wannaretireearly wrote: Mon May 10, 2021 7:12 am
I'm curious, roughly what is 2% of your risk portfolio? Is this around $20k of pure play money just to get your feet wet?
Also, how is your EM strategy going ;) - still part of your portfolio?
Overall, i admire how you've setup your portfolio. I def need to understand your fixed income strategy better using TIPS etc.

:sharebeer
Thanks.

The crypto allocation is a low six figure amount.
And it's 2% of your portfolio? Or am I confused now, I think I am.
txhill
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Re: Crypto mania !

Post by txhill »

csmath wrote: Mon May 10, 2021 1:43 pm
txhill wrote: Mon May 10, 2021 1:39 pm
csmath wrote: Mon May 10, 2021 1:21 pm I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
Cardano is the 6th largest cryptocurrency by market cap, but:

1. Cardano has essentially no applications. I don't think there are any?
2. Cardano has essentially no developers (or low development activity relative to other chains): https://medium.com/electric-capital/ele ... 17165c6444 (look at slides 64+ to see what blockchains are attracting talent)
3. Cardano is trying to compete with Ethereum, which has a bazillion developers and basically all of the major applications. https://dappradar.com/rankings/category/defi (sort by balance to see where the money is, and just scroll down to see how ETH is dominating)

I'm not tech savvy enough to know whether Cardano is technologically superior to Ethereum. But Cardano is currently priced as if it were a major competitor, but it has no development and no existing use cases. It's a risky bet that somehow ADA is going to attract users really soon, but I don't yet see that happening yet.
Thanks for the reply. I'll take a look at the link. BTW, the person is about 30 and quitting their job to "take a few years off and figure out what is next because they've had some investments really pay off recently". I replied, "Well obviously you're talking about crypto", which got the conversation going.
I'll add this: probably best not to write off anything entirely--Cardano or any other crypto token. I used to scoff at crypto generally but it's now apparent that crypto has real use cases and is here to stay. We don't know who will win the space entirely, so it's reasonable to hedge a bit--maybe he's right that Cardano has the better tech, people will recognize it, and it will pick up steam. After all, Ethereum didn't have many proven uses until a few years ago either. And you never want to be in a position where you're eating your own words later :)

My view on Cardano is just that I'd expect it to have shown some progress toward smart contracts before it reached its current valuation, but that doesn't mean it is never going to start developing and growing.

Another thing is that there is going to be a lot of new crypto money and they won't have gone through the steady process of getting just 7% per year for 30 years. Very annoying and frustrating, but they're coming nonetheless.
decapod10
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Re: Crypto mania !

Post by decapod10 »

csmath wrote: Mon May 10, 2021 1:21 pm I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
Cardano has a lot of the things that Ethereum is trying to implement, such as Proof of Stake (which helps reduce energy costs and transaction fees). Ethereum is trying to move to POS on ETH 2.0, however this has not happened yet and there is always some risk of problems when doing a transition like that. Cardano proponents also believe there are other improvements under the hood that give it advantages over Ethereum. Being a newer chain, I would imagine this is probably true. There are some differences in the way they are governed as well that people might prefer Cardano over Ethereum. Some people feel that Ethereum is too dependent on Vitalik for example.

The one major, major downside to Cardano as of today is that it does not actually support smart contracts. I heard they were going to be implemented in April, but sounds like it has been bumped to August. So the major barriers it will have is to implement smart contracts and make sure that it is implemented in a secure fashion. And because there are no smart contracts, all the technical advantages of Cardano are currently hypothetical, since it hasn't really been used in a large scale like Ethereum has.

If Ethereum 2.0 just completely fails, then Cardano could easily take over. If Ethereum does not fail, then I think Cardano overtaking Ethereum depends on a few things:
1) Can Cardano implement Smart Contracts effectively/securely?
2) Do the theoretical technical advantages of Cardano hold up in practice when smart contracts do go live and as traffic gets higher?
3) Is that advantage over Ethereum enough to make users/developers want to move over to Cardano?

It's difficult to say honestly. I'm betting on Ethereum right now, but Cardano is certainly among the possible "ETH killers" along with Binance Smart Chain, Solana, Polkadot (though Polkadot officially isn't positioning itself as a direct competitor to ETH), etc.
Marseille07
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Re: Crypto mania !

Post by Marseille07 »

YRT70 wrote: Mon May 10, 2021 1:48 pm
watchnerd wrote: Mon May 10, 2021 7:18 am
Wannaretireearly wrote: Mon May 10, 2021 7:12 am
I'm curious, roughly what is 2% of your risk portfolio? Is this around $20k of pure play money just to get your feet wet?
Also, how is your EM strategy going ;) - still part of your portfolio?
Overall, i admire how you've setup your portfolio. I def need to understand your fixed income strategy better using TIPS etc.

:sharebeer
Thanks.

The crypto allocation is a low six figure amount.
And it's 2% of your portfolio? Or am I confused now, I think I am.
Why? That poster previously said they're already 40x. I wouldn't be surprised if their AA is 5M+.
YRT70
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Re: Crypto mania !

Post by YRT70 »

Marseille07 wrote: Mon May 10, 2021 1:54 pm
YRT70 wrote: Mon May 10, 2021 1:48 pm
watchnerd wrote: Mon May 10, 2021 7:18 am
Wannaretireearly wrote: Mon May 10, 2021 7:12 am
I'm curious, roughly what is 2% of your risk portfolio? Is this around $20k of pure play money just to get your feet wet?
Also, how is your EM strategy going ;) - still part of your portfolio?
Overall, i admire how you've setup your portfolio. I def need to understand your fixed income strategy better using TIPS etc.

:sharebeer
Thanks.

The crypto allocation is a low six figure amount.
And it's 2% of your portfolio? Or am I confused now, I think I am.
Why? That poster previously said they're already 40x. I wouldn't be surprised if their AA is 5M+.
Just making sure I understood him correctly.
claypigeon
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Re: Crypto mania !

Post by claypigeon »

csmath wrote: Mon May 10, 2021 1:21 pm I REALLY don't want to start another thread for this... so asking here. Why would a fairly intelligent person that I know be so convinced that Cardano is the real future of crypto? They were extremely confident, stating, "I can tell you everything about it and have studied it in detail, it isn't like the other ones (crypto)". I won't get into details but when I asked about the risk of the government banning it they cited Africa and that Cardano can't be stopped by governments. I mentioned a few other companies in the past that failed after being pioneers and dominant in a field and they seemed to get agitated and responded with a similar response I often see here, that I "don't understand it and that they could educate me about it if I wanted to talk about it".

I tend to believe they like the academics behind the development but that they are ignorant about the history of markets and that being first or more "sound" at its core doesn't mean success in the long run in terms of market valuation. I'm curious what some of you that consider yourselves "crypto educated" think about Cardano and why it would be so special? I'm just not seeing it.
I have to disclose cardano is the one crypto I hold so look out for any bias but I believe this is the future of cryptocurrency and blockchain.

Technologically cardano uses proof of stake model so you don’t get the energy consumption issues inherent in a proof of work model. This is about a million times more energy efficient than Bitcoin so they say. It’s open source, completely decentralized. has many well funded academics behind it, is led by a founder of ethereum, on the major crypto exchanges, and the blockchain has some really cool applications. Currently they’re getting all 5 million students in Ethiopia and will be in charge of their student ID, tracking academic records, etc. This is likely part of their larger plan to appeal towards the bankless first. Transactions fees are fixed and minuscule (0.17 ADA, or 29 cents as we speak), transfer are instantaneous, and the price of fees can be voted to go down. And unlike with a POW model there isn’t a huge incentive to keep fees high. You also get paid to “stake” your coins with a decent 5-6% per year which helps the network verify transactions and doesn’t lock up your coins unlike ethereum 2.0. Also unlike ethereum 2.0, there is a tiny minimum amount needed to stake (2 ADA? Or about $3.50). They also plan to support and I think recently released coding so coins can talk to each other and inter operate.

For caveats though they do not yet have smart contracts. NFTs are up with kind of a workaround. Smart contracts should come out later this month with public testing and I believe full capabilities in August. As such developers can choose a high fee model like ethereum now or wait for a low fee model like cardano later. Of note, cardano also depends on a different programming language which is great for banking applications but not as well known (Haskell) and very different from object oriented or other more typical languages. Think logic based rather than object based. Finally, since this is open source, there’s always the risk someone copy pasted the blockchain or otherwise subtly tweaks it, makes their own coin, and Cardano’s IP is gone. The CEO is very smart but is philosophically against getting a patent for Cardano.

I think it comes down to when, if ever, ethereum moves to ethereum 2.0, a proof of stake model, and so the fees can come down. As someone who recently sold out of $5 of Bitcoin gifted awhile ago by a conspiracy theoy friend that I forgot about and raised to some decent spending money, I’d not want to pay a $20 fee and want to wait 2 hours for a transaction selling it (though had to) and ether runs into those same issues. I would pay 29 cents for an instantaneous transaction happily. I don’t foresee ethereum fixing it problems until 2022/2023 and feel the market is so early, developers will move to cardano.

Similar to Nintendo when PlayStation came on the market. Nobody would say NES. SNES, or N64 were bad tech or bad sellers but ultimately Nintendo’s technology drove developers away despite world wide recognition and first mover status. I’ll play Mario and Zelda all day long but when I want the latest capcom, Ubisoft, or BioWare game, I can’t rely on developers to develop around Nintendos technology limitations. That said, these can coexist and I generally buy a PlayStation or Xbox early in a generation and a nintendo system late in a generation to get the best games of that generation

There are other third generation coins out there. I like algorand as well. But if I had to pick one coin to dominate the future it’s ADA / cardano
Last edited by claypigeon on Mon May 10, 2021 2:29 pm, edited 1 time in total.
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telemark
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Re: Crypto mania !

Post by telemark »

HanSolo wrote: Mon May 10, 2021 1:53 am For now, some of us (quite possibly a silent majority) just sit on low-cost index funds and enjoy watching the circus go by.

Much index. So cheaper. Very chill.
For true. It continues to puzzle me that people come to Bogleheads, the one forum least likely to be interested in getting in on the next new thing or even guessing what the NNT is going to be, and then are surprised and sometimes annoyed to find that there is little interest in speculating on new things. Do they even look at the wiki? Is this the kind of due diligence they do on their investments?

Not to mention the endless threads on how Bogleheads would invest if only they were... somehow not Bogleheads.
decapod10
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Re: Crypto mania !

Post by decapod10 »

telemark wrote: Mon May 10, 2021 2:20 pm
HanSolo wrote: Mon May 10, 2021 1:53 am For now, some of us (quite possibly a silent majority) just sit on low-cost index funds and enjoy watching the circus go by.

Much index. So cheaper. Very chill.
For true. It continues to puzzle me that people come to Bogleheads, the one forum least likely to be interested in getting in on the next new thing or even guessing what the NNT is going to be, and then are surprised and sometimes annoyed to find that there is little interest in speculating on new things. Do they even look at the wiki? Is this the kind of due diligence they do on their investments?

Not to mention the endless threads on how Bogleheads would invest if only they were... somehow not Bogleheads.
I suspect the amount of chatter about crypto is much higher than the number of Bogleheads actually investing in crypto. Because crypto is new and can be very technical, there is a lot more to learn/discuss about crypto than index funds. So a few people discussing crypto will generate a lot more discussion than 100 people discussing traditional BH investing. Even the question "What is the difference between Bitcoin and Ethereum?" can take a lot of discussion to adequately answer.
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starboi
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Re: Crypto mania !

Post by starboi »

If you don't like crypto, why read and comment on a crypto thread?
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

YRT70 wrote: Mon May 10, 2021 1:48 pm
watchnerd wrote: Mon May 10, 2021 7:18 am
Wannaretireearly wrote: Mon May 10, 2021 7:12 am
I'm curious, roughly what is 2% of your risk portfolio? Is this around $20k of pure play money just to get your feet wet?
Also, how is your EM strategy going ;) - still part of your portfolio?
Overall, i admire how you've setup your portfolio. I def need to understand your fixed income strategy better using TIPS etc.

:sharebeer
Thanks.

The crypto allocation is a low six figure amount.
And it's 2% of your portfolio? Or am I confused now, I think I am.
It's 2% of our risk portfolio.

That doesn't include the LMP portfolio, which consists of a non-rolling bond ladder of TIPS and STRIPS to the year 2037.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

starboi wrote: Mon May 10, 2021 2:33 pm If you don't like crypto, why read and comment on a crypto thread?
To argue about something you have no knowledge of. Reading a basic intro about said topic is entirely optional. 8-)
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HomerJ
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Re: Crypto mania !

Post by HomerJ »

telemark wrote: Mon May 10, 2021 2:20 pmthen are surprised and sometimes annoyed to find that there is little interest in speculating on new things. Do they even look at the wiki? Is this the kind of due diligence they do on their investments?
Heh. Very salient point.

Seriously.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

starboi wrote: Mon May 10, 2021 2:33 pm If you don't like crypto, why read and comment on a crypto thread?
I assume to discourage the average investor from engaging in speculation that has a decent chance of blowing up in their face and creating all sorts of behavioral errors when it comes to investing.

It's a similar caution to that expressed towards the use of leverage.

And, TBH, I think it's reasonable caution -- from what I can tell, a good chunk of Bogleheads don't even really understand how bonds work very well. They're probably not great candidates for crypto.

On the flip side, I've been surprised that some pro-crypto folks seem to struggle with basic business model and return on investment questions about the crypto space.

Boglehead methodology is to err on the side of approaches that the average lay person can use without really having to learn about 'advanced' methods and still get reasonable results by following some pretty simple rules.

I think it's completely reasonable, and a good sanity check even to those who are pro-crypto.

Echo chambers can lead to reinforcing cognitive bias, which is dangerous in investing.

Group-think is stupidity reinforcing.

I think it's mentally healthy to have anti-crypto people on pro-crypto threads.
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txhill
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Re: Crypto mania !

Post by txhill »

starboi wrote: Mon May 10, 2021 12:21 pm NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
I guess Tom Brady doesn't have Elon Musk's market influence cachet.
txhill
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Re: Crypto mania !

Post by txhill »

watchnerd wrote: Mon May 10, 2021 2:57 pm
starboi wrote: Mon May 10, 2021 2:33 pm If you don't like crypto, why read and comment on a crypto thread?
I assume to discourage the average investor from engaging in speculation that has a decent chance of blowing up in their face and creating all sorts of behavioral errors when it comes to investing.

It's a similar caution to that expressed towards the use of leverage.

And, TBH, I think it's reasonable caution -- from what I can tell, a good chunk of Bogleheads don't even really understand how bonds work very well. They're probably not great candidates for crypto.

On the flip side, I've been surprised that some pro-crypto folks seem to struggle with basic business model and return on investment questions about the crypto space.

Boglehead methodology is to err on the side of approaches that the average lay person can use without really having to learn about 'advanced' methods and still get reasonable results by following some pretty simple rules.

I think it's completely reasonable, and a good sanity check even to those who are pro-crypto.

Echo chambers can lead to reinforcing cognitive bias, which is dangerous in investing.

Group-think is stupidity reinforcing.

I think it's mentally healthy to have anti-crypto people on pro-crypto threads.
I agree it's good to have other views here. It's a little silly to see the same generalized criticisms made repeatedly when there isn't really much substance to them ("no IRR!" "not a currency!") but it also forces people on both sides to re-test their views. I'm obviously no finance professional (even if I've somehow crushed Warren Buffett's performance for a decade, but then again who hasn't) so I get schooled here a decent bit, but I also take some pride in helping convince at least a few folks to see things from another point of view too :)
langlands
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Re: Crypto mania !

Post by langlands »

Prahasaurus wrote: Mon May 10, 2021 3:03 am
langlands wrote: Mon May 10, 2021 2:15 am I don't understand why "Litecoin is silver to Bitcoin's gold" is idiotic. Even BCH doesn't look like it's going to die. There are some quasi-philosophical issues in crypto regarding how thinly value can be spread between various cryptos and it's no longer clear to me that BTC/ETH maximalism is necessarily the only equilibrium. To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Ok, I'll edit as follows: I believe Litecoin being positioned as silver to Bitcoin's gold is idiotic. And I think BCH will eventually die, yes. I think Bitcoin should remain as a storage of wealth, but I don't see the need for 20 variants of Bitcoin (Litecoin, Ethereum Classic, Dogecoin, whatever). Of course, I could be completely wrong!

As to this:
To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Can you elaborate? I'm not sure I follow. Thanks!
My first impression of NFT's was that the whole thing was doomed to fail because there was the illusion of scarcity when in fact there was none at all. Digital content is too easy and costless to produce relative to physical objects, which will inevitably result in NFT's flooding the market, making the whole space worthless.

I still think this to some extent, but I think it is possible for a power law type structure to emerge in the space, where people can come to an agreement of what is valuable and what is not, so that the 1000'th NFT of a random gif meme will not sell for the same amount as Nyan Cat. Because again, if it did, people could just flood the market with infinite memes.

Cryptocurrencies as a space suffers a problem similar to NFT's, which you are pointing out in your post. We don't need 20 variants of Bitcoin. But how does Bitcoin protect its value if at any point, a Bitcoin clone can be started (e.g. Dogecoin) that eats into its market value? If any random clone can have value, then none of them can have value. That's one of the main arguments crypto-opponents have been using since the beginning, which is that bitcoin scarcity is an illusion since it's all software, and software is the opposite of scarce.

So what's the solution to this "abundance of scarcity" problem? I think "maximalism" is too fragile a solution, since that means that if Bitcoin's market share dips past some tipping point, it will rapidly plummet to zero. Rather, the digital store of value "market" will allow some flexibility in how thinly it will allow itself to spread. If too many Bitcoin clones start popping up, I suspect a rapid consolidation into Bitcoin will commence to "protect" the space (Bitcoin dominance will rise). Similarly, if too many NFT's start popping up, consolidation into the highest consensus and valuable NFT's will follow. But when times are good and the honey is flowing, the "alts" will be allowed to have their day in the sun. I don't think they will die.
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Re: Crypto mania !

Post by ballons »

txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm
txhill wrote: Sun May 09, 2021 9:23 pm
ballons wrote: Sun May 09, 2021 9:21 pm Anyone or anything that takes their cut between two parties. This claim seems demonstrably false. You could say a potential reduction in the middleman's cut; however, I would argue that isn't a benefit due to the unknown reduction that may not even materialize.
Ok if you say so.
You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
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Re: Crypto mania !

Post by txhill »

ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm
txhill wrote: Sun May 09, 2021 9:23 pm
ballons wrote: Sun May 09, 2021 9:21 pm Anyone or anything that takes their cut between two parties. This claim seems demonstrably false. You could say a potential reduction in the middleman's cut; however, I would argue that isn't a benefit due to the unknown reduction that may not even materialize.
Ok if you say so.
You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
Here's another question to help point out the absurdity of your form-over-substance argument: If there were 100 middlemen before (representing everyone who worked at the banks and assessed risks and matched lenders to borrowers, the lawyers who drew up the contracts, the lawyers who litigate if there's any disagreement on terms, the courts that decide who wins, etc.) and it's now down to 1 middleman (the smart contract programmer, who doesn't even control the smart contract after it's deployed), is saying "we've cut out the middleman" a falsehood? Because that's what smart contracts do.

Sometimes it helps to take a step back and see the big picture.
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Re: Crypto mania !

Post by hilink73 »

ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm
txhill wrote: Sun May 09, 2021 9:23 pm
ballons wrote: Sun May 09, 2021 9:21 pm Anyone or anything that takes their cut between two parties. This claim seems demonstrably false. You could say a potential reduction in the middleman's cut; however, I would argue that isn't a benefit due to the unknown reduction that may not even materialize.
Ok if you say so.
You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
What are you trying to accomplish?

It does indeed sound ridiculous, when you want to declare a trading infrastructure to be a middleman.

When you drive to your business counterpart by car to meet in person (to cut out the bank as midddleman), do you count the car you're driving in as middleman, too? Or the road you're driving on?
ballons
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Re: Crypto mania !

Post by ballons »

txhill wrote: Mon May 10, 2021 3:33 pm
ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm
txhill wrote: Sun May 09, 2021 9:23 pm
Ok if you say so.
You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
...If there were 100 middlemen before...and it's now down to 1 middleman...
Like I said.
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

txhill wrote: Mon May 10, 2021 3:33 pm
ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm
txhill wrote: Sun May 09, 2021 9:23 pm
Ok if you say so.
You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
Here's another question to help point out the absurdity of your form-over-substance argument: If there were 100 middlemen before (representing everyone who worked at the banks and assessed risks and matched lenders to borrowers, the lawyers who drew up the contracts, the lawyers who litigate if there's any disagreement on terms, the courts that decide who wins, etc.) and it's now down to 1 middleman (the smart contract programmer, who doesn't even control the smart contract after it's deployed), is saying "we've cut out the middleman" a falsehood? Because that's what smart contracts do.

Sometimes it helps to take a step back and see the big picture.
I get the feeling you guys are talking about two different things... efficiency of the actors versus pure existence of said actors.

From what I've read so, most projects employ a service cost for you to transact on the network of your choice. Using the service is not free, and if you wish get your transaction fulfilled, you need to pay a "middleman" a transaction fee. I hope none of this comes as a surprise to anyone on this forum... you pay direct, or hidden, costs for any other service (ex: package delivery, wire transfers etc.), why should it be different here (distributed costs of hardware, software, energy, incentive)?

Certain projects have significant costs right now (BTC, ETH) for any small transaction. There are lesser-known projects that seem to have smaller fees and have been suggested for smaller transactions, or for newcomers to test the waters.

No matter whether it is a sleazy banker :wink:, or a benevolent geek with a crypto node :wink:, they act as a "middleman". Due to its decentralized nature, the middleman is not known ahead of time (like in the case of a particular bank you deal with) but he or she still exists. You are not paying a faceless protocol/ hivemind.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

txhill wrote: Mon May 10, 2021 3:28 pm It's a little silly to see the same generalized criticisms made repeatedly when there isn't really much substance to them ("no IRR!" "not a currency!") but it also forces people on both sides to re-test their views.
Those are perfectly substantive, especially when it comes to crypto projects that are purporting to be a currency and / or don't have staking and / or a revenue stream.

I think it's fair to ask for every crypto coin / token someone might consider buying.

Like how does Shiba Inu score on these questions?
Last edited by watchnerd on Mon May 10, 2021 3:53 pm, edited 2 times in total.
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

hilink73 wrote: Mon May 10, 2021 3:41 pm It does indeed sound ridiculous, when you want to declare a trading infrastructure to be a middleman.

When you drive to your business counterpart by car to meet in person (to cut out the bank as midddleman), do you count the car you're driving in as middleman, too? Or the road you're driving on?
At least for the projects I've read about, this is an incorrect analogy. You are not paying the node, much like you do not pay the car for the transport. You pay the node owner that service your transaction, much like you pay Shell for your premium petrol to go into your brand new Lambo (bought with crypto gains, of course!)

ETH goes as far as using the "gas" moniker.
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Re: Crypto mania !

Post by claypigeon »

OohLaLa wrote: Mon May 10, 2021 3:49 pm
txhill wrote: Mon May 10, 2021 3:33 pm
ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm

You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
Here's another question to help point out the absurdity of your form-over-substance argument: If there were 100 middlemen before (representing everyone who worked at the banks and assessed risks and matched lenders to borrowers, the lawyers who drew up the contracts, the lawyers who litigate if there's any disagreement on terms, the courts that decide who wins, etc.) and it's now down to 1 middleman (the smart contract programmer, who doesn't even control the smart contract after it's deployed), is saying "we've cut out the middleman" a falsehood? Because that's what smart contracts do.

Sometimes it helps to take a step back and see the big picture.
I get the feeling you guys are talking about two different things... efficiency of the actors versus pure existence of said actors.

From what I've read so, most projects employ a service cost for you to transact on the network of your choice. Using the service is not free, and if you wish get your transaction fulfilled, you need to pay a "middleman" a transaction fee. I hope none of this comes as a surprise to anyone on this forum... you pay direct, or hidden, costs for any other service (ex: package delivery, wire transfers etc.), why should it be different here (distributed costs of hardware, software, energy, incentive)?

Certain projects have significant costs right now (BTC, ETH) for any small transaction. There are lesser-known projects that seem to have smaller fees and have been suggested for smaller transactions, or for newcomers to test the waters.

No matter whether it is a sleazy banker :wink:, or a benevolent geek with a crypto node :wink:, they act as a "middleman". Due to its decentralized nature, the middleman is not known ahead of time (like in the case of a particular bank you deal with) but he or she still exists. You are not paying a faceless protocol/ hivemind.
Ah but due to decentralization and the market itself, transaction costs continue to approach the actual physical costs to conduct a transaction. Even if we could simply wish things into existence, the one calorie in brain power needed to do wish is still a transaction cost. There can never not be a transaction cost IMO but 29 cents to transfer a billion dollars in assets across borders seems reasonable.
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Re: Crypto mania !

Post by Jags4186 »

decapod10 wrote: Mon May 10, 2021 12:23 pm
starboi wrote: Mon May 10, 2021 12:21 pm NFL QB Tom Brady appears to have invested in Bitcoin:

https://twitter.com/TomBrady/status/1391553067498287106
Tom Brady is starting an NFT company, so it would be surprising if he is not already invested in the crypto space to some degree
Also, when you have career earnings of $300mm+, likely similar income in endorsements and other ventures, and have a spouse who makes more than you do, you probably can afford to put many millions into dozens and dozens of speculative investments at infancy and if just one blows up, you’ve made a fortune, and if you lose $50mm along the way you wouldn’t even miss it. It wouldn’t surprise me if Brady has held Bitcoin for years.
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Re: Crypto mania !

Post by txhill »

watchnerd wrote: Mon May 10, 2021 3:52 pm
txhill wrote: Mon May 10, 2021 3:28 pm It's a little silly to see the same generalized criticisms made repeatedly when there isn't really much substance to them ("no IRR!" "not a currency!") but it also forces people on both sides to re-test their views.
Those are perfectly substantive, especially when it comes to crypto projects that are purporting to be a currency and / or don't have staking and / or a revenue stream.

I think it's fair to ask for every crypto coin / token someone might consider buying.

Like how does Shiba Inu score on these questions?
Well yes they are substantive criticisms for certain cryptos like bitcoin and dogecoin (and presumably Shiba Inu although I have spent literally zero time looking at that one so I don't know), but literally every time I have seen that criticism it is because it's leveled by someone who does not even know that some cryptos are fundamentally different types of investments. It's like being told "Why are you investing in stocks, they don't pay dividends!" simply because some stocks don't pay dividends.

Essentially I like seeing real criticism of cryptos but it also helps when the person criticizing them has actually bothered to do a modicum of homework first.
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Re: Crypto mania !

Post by Prahasaurus »

langlands wrote: Mon May 10, 2021 3:28 pm
Prahasaurus wrote: Mon May 10, 2021 3:03 am
langlands wrote: Mon May 10, 2021 2:15 am I don't understand why "Litecoin is silver to Bitcoin's gold" is idiotic. Even BCH doesn't look like it's going to die. There are some quasi-philosophical issues in crypto regarding how thinly value can be spread between various cryptos and it's no longer clear to me that BTC/ETH maximalism is necessarily the only equilibrium. To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Ok, I'll edit as follows: I believe Litecoin being positioned as silver to Bitcoin's gold is idiotic. And I think BCH will eventually die, yes. I think Bitcoin should remain as a storage of wealth, but I don't see the need for 20 variants of Bitcoin (Litecoin, Ethereum Classic, Dogecoin, whatever). Of course, I could be completely wrong!

As to this:
To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Can you elaborate? I'm not sure I follow. Thanks!
My first impression of NFT's was that the whole thing was doomed to fail because there was the illusion of scarcity when in fact there was none at all. Digital content is too easy and costless to produce relative to physical objects, which will inevitably result in NFT's flooding the market, making the whole space worthless.

I still think this to some extent, but I think it is possible for a power law type structure to emerge in the space, where people can come to an agreement of what is valuable and what is not, so that the 1000'th NFT of a random gif meme will not sell for the same amount as Nyan Cat. Because again, if it did, people could just flood the market with infinite memes.

Cryptocurrencies as a space suffers a problem similar to NFT's, which you are pointing out in your post. We don't need 20 variants of Bitcoin. But how does Bitcoin protect its value if at any point, a Bitcoin clone can be started (e.g. Dogecoin) that eats into its market value? If any random clone can have value, then none of them can have value. That's one of the main arguments crypto-opponents have been using since the beginning, which is that bitcoin scarcity is an illusion since it's all software, and software is the opposite of scarce.

So what's the solution to this "abundance of scarcity" problem? I think "maximalism" is too fragile a solution, since that means that if Bitcoin's market share dips past some tipping point, it will rapidly plummet to zero. Rather, the digital store of value "market" will allow some flexibility in how thinly it will allow itself to spread. If too many Bitcoin clones start popping up, I suspect a rapid consolidation into Bitcoin will commence to "protect" the space (Bitcoin dominance will rise). Similarly, if too many NFT's start popping up, consolidation into the highest consensus and valuable NFT's will follow. But when times are good and the honey is flowing, the "alts" will be allowed to have their day in the sun. I don't think they will die.
I don't really agree with much of this (although granted I don't really understand most of what you are saying, especially with NFTs). Yes, we don't need 20 Bitcoin like projects. Litecoin, Ethereum Classic, etc., seem silly to me. But that's because they are more or less trying to be Bitcoin, just a slightly different version to retain some tenuous level of differentiation, e.g. "Litecoin is silver to Bitcoin's gold!" So silly.

Doge is different. It began as a joke, and was insistent on never taking itself seriously. It never tried to woo IBM consultants or revolutionize finance. It was just a digital currency with a nice dog.

The idea that you can just start a project and replace Bitcoin is quite silly. Yes, the argument is used a lot ("Anyone can start their own crypto currency!"), but it's still a ridiculous argument. Just like anyone can start their own e-commerce site quite easily, but I don't think Amazon is worried.
If any random clone can have value, then none of them can have value.
That really doesn't make much sense, does it? I can fork Bitcoin, call it BogleheadCoin, get 10 people to bid on it so its value is some minuscule amount (but not zero), have I now demonstrated that Bitcoin has no value?
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txhill
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Re: Crypto mania !

Post by txhill »

OohLaLa wrote: Mon May 10, 2021 3:49 pm
txhill wrote: Mon May 10, 2021 3:33 pm
ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm

You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
Here's another question to help point out the absurdity of your form-over-substance argument: If there were 100 middlemen before (representing everyone who worked at the banks and assessed risks and matched lenders to borrowers, the lawyers who drew up the contracts, the lawyers who litigate if there's any disagreement on terms, the courts that decide who wins, etc.) and it's now down to 1 middleman (the smart contract programmer, who doesn't even control the smart contract after it's deployed), is saying "we've cut out the middleman" a falsehood? Because that's what smart contracts do.

Sometimes it helps to take a step back and see the big picture.
I get the feeling you guys are talking about two different things... efficiency of the actors versus pure existence of said actors.

From what I've read so, most projects employ a service cost for you to transact on the network of your choice. Using the service is not free, and if you wish get your transaction fulfilled, you need to pay a "middleman" a transaction fee. I hope none of this comes as a surprise to anyone on this forum... you pay direct, or hidden, costs for any other service (ex: package delivery, wire transfers etc.), why should it be different here (distributed costs of hardware, software, energy, incentive)?

Certain projects have significant costs right now (BTC, ETH) for any small transaction. There are lesser-known projects that seem to have smaller fees and have been suggested for smaller transactions, or for newcomers to test the waters.

No matter whether it is a sleazy banker :wink:, or a benevolent geek with a crypto node :wink:, they act as a "middleman". Due to its decentralized nature, the middleman is not known ahead of time (like in the case of a particular bank you deal with) but he or she still exists. You are not paying a faceless protocol/ hivemind.
Ok, fair, but this is starting to get into the territory of: you breathe oxygen while conducting a transaction, therefore the plants that produce oxygen are middlemen too. At some level, on some scale, it becomes an absurdity, because pretty much by definition under the laws of entropy EVERY transaction involves some sort of transaction cost. That's like, physics.
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Re: Crypto mania !

Post by OohLaLa »

claypigeon wrote: Mon May 10, 2021 3:55 pm Ah but due to decentralization and the market itself, transaction costs continue to approach the actual physical costs to conduct a transaction. Even if we could simply wish things into existence, the one calorie in brain power needed to do wish is still a transaction cost. There can never not be a transaction cost IMO but 29 cents to transfer a billion dollars in assets across borders seems reasonable.
I don't recall anybody saying 29 cents to transfer a billion dollars is a huge cost. I also do not recall anybody wanting things to magically come into existence.

The point of discussion is simple: is there a middleman or not? Yes, there is.

The cost of the service provided by this middleman varies depending on the project and apparently even on the stage of the project (ex: BTC costs varying through time, due to demand). It's not 29 cents across the board. In fact, it's a significant problem for different projects, as the costs are too high for day-to-day transactions (versus the fringe example of a billion dollar transfer). Paying 25 bucks to transfer a 1000 bucks to my sister is something that exists today, on certain networks. I can do that for free through a super quick bank transfer (and it's nothing unusual in these parts). This means there is a lot of room for improvement, and it's being worked on. Just got to give it some time.
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Re: Crypto mania !

Post by OohLaLa »

txhill wrote: Mon May 10, 2021 4:05 pm Ok, fair, but this is starting to get into the territory of: you breathe oxygen while conducting a transaction, therefore the plants that produce oxygen are middlemen too. At some level, on some scale, it becomes an absurdity, because pretty much by definition under the laws of entropy EVERY transaction involves some sort of transaction cost. That's like, physics.
I would say it's absurd to compare the energy cost of breathing with a transaction in which someone provides a service for a fee/ profit.

The only case where the comparison might hold is if the node owner processing your request is only paid to cover his costs, not a penny more. I have a hard time believing everybody is in this as a charity case, repulsed at the idea of making a profit on fees.

Again, I don't see any issue with this setup. It's actually nothing new in its basest sense.
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Re: Crypto mania !

Post by Caleb4387 »

Random Musings wrote: Sun May 09, 2021 8:14 pm The mania will continue until the leverage trend reverses course. Then, I expect trouble with crypto's.

RM
Then they'll drop to higher lows than before and in a couple years soar again.
langlands
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Re: Crypto mania !

Post by langlands »

Prahasaurus wrote: Mon May 10, 2021 4:04 pm
langlands wrote: Mon May 10, 2021 3:28 pm
Prahasaurus wrote: Mon May 10, 2021 3:03 am
langlands wrote: Mon May 10, 2021 2:15 am I don't understand why "Litecoin is silver to Bitcoin's gold" is idiotic. Even BCH doesn't look like it's going to die. There are some quasi-philosophical issues in crypto regarding how thinly value can be spread between various cryptos and it's no longer clear to me that BTC/ETH maximalism is necessarily the only equilibrium. To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Ok, I'll edit as follows: I believe Litecoin being positioned as silver to Bitcoin's gold is idiotic. And I think BCH will eventually die, yes. I think Bitcoin should remain as a storage of wealth, but I don't see the need for 20 variants of Bitcoin (Litecoin, Ethereum Classic, Dogecoin, whatever). Of course, I could be completely wrong!

As to this:
To me, what's currently playing out with NFT's is playing out at a meta-level with cryptos.
Can you elaborate? I'm not sure I follow. Thanks!
My first impression of NFT's was that the whole thing was doomed to fail because there was the illusion of scarcity when in fact there was none at all. Digital content is too easy and costless to produce relative to physical objects, which will inevitably result in NFT's flooding the market, making the whole space worthless.

I still think this to some extent, but I think it is possible for a power law type structure to emerge in the space, where people can come to an agreement of what is valuable and what is not, so that the 1000'th NFT of a random gif meme will not sell for the same amount as Nyan Cat. Because again, if it did, people could just flood the market with infinite memes.

Cryptocurrencies as a space suffers a problem similar to NFT's, which you are pointing out in your post. We don't need 20 variants of Bitcoin. But how does Bitcoin protect its value if at any point, a Bitcoin clone can be started (e.g. Dogecoin) that eats into its market value? If any random clone can have value, then none of them can have value. That's one of the main arguments crypto-opponents have been using since the beginning, which is that bitcoin scarcity is an illusion since it's all software, and software is the opposite of scarce.

So what's the solution to this "abundance of scarcity" problem? I think "maximalism" is too fragile a solution, since that means that if Bitcoin's market share dips past some tipping point, it will rapidly plummet to zero. Rather, the digital store of value "market" will allow some flexibility in how thinly it will allow itself to spread. If too many Bitcoin clones start popping up, I suspect a rapid consolidation into Bitcoin will commence to "protect" the space (Bitcoin dominance will rise). Similarly, if too many NFT's start popping up, consolidation into the highest consensus and valuable NFT's will follow. But when times are good and the honey is flowing, the "alts" will be allowed to have their day in the sun. I don't think they will die.
I don't really agree with much of this (although granted I don't really understand most of what you are saying, especially with NFTs). Yes, we don't need 20 Bitcoin like projects. Litecoin, Ethereum Classic, etc., seem silly to me. But that's because they are more or less trying to be Bitcoin, just a slightly different version to retain some tenuous level of differentiation, e.g. "Litecoin is silver to Bitcoin's gold!" So silly.

Doge is different. It began as a joke, and was insistent on never taking itself seriously. It never tried to woo IBM consultants or revolutionize finance. It was just a digital currency with a nice dog.

The idea that you can just start a project and replace Bitcoin is quite silly. Yes, the argument is used a lot ("Anyone can start their own crypto currency!"), but it's still a ridiculous argument. Just like anyone can start their own e-commerce site quite easily, but I don't think Amazon is worried.
If any random clone can have value, then none of them can have value.
That really doesn't make much sense, does it? I can fork Bitcoin, call it BogleheadCoin, get 10 people to bid on it so its value is some minuscule amount (but not zero), have I now demonstrated that Bitcoin has no value?
I'm simply applying the law of supply and demand. If you can fork Bitcoin into BogleheadCoin, and it's immediately worth $1 million with no effort, then tomorrow someone will create a billion forks BogleheadCoin1, BogleheadCoin2,..., BogleheadCoin10^9 which must all have the same $1 million market cap (because they're all fungible). So you've created $1 trillion market cap out of thin air.

I think we pretty much agree, but you seem to be arguing backwards, by saying that the Bitcoin alikes (Litecoin etc.) must have no value because they're basically like Bitcoin. But what market mechanism will enforce that? The danger is that the market fails to view Bitcoin as capable of differentiation from its clones and the whole narrative falls apart. That's the epistemological worry. I don't think just repeating the mantra "Bitcoin is THE store of value" will work. And in my view, it's not necessary as there is an equilibrium that allows for a spectrum of coins.

There are a number of podcasts that discuss these sorts of game-theoretic questions. The term "Schelling point" seems to come up a lot.
Last edited by langlands on Mon May 10, 2021 5:05 pm, edited 2 times in total.
Prahasaurus
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Re: Crypto mania !

Post by Prahasaurus »

OohLaLa wrote: Mon May 10, 2021 3:49 pm
txhill wrote: Mon May 10, 2021 3:33 pm
ballons wrote: Mon May 10, 2021 3:29 pm
txhill wrote: Sun May 09, 2021 9:44 pm
ballons wrote: Sun May 09, 2021 9:41 pm

You're free to expound on how a cheaper middleman is not a middleman.
I don't even know what you're arguing. You're saying that a liquidity protocol that is deployed to a network--and after it is deployed is not subject to alteration by people and is not dependent on people's input--is a middleman. I don't know what to say to that. When you do a math problem for homework, is the piece of paper you wrote on now a middleman between you and the teacher? I just don't think we can have an intelligent conversation about this, so maybe let's just agree to disagree.
I asked you to prove your claim that you can "cut out the middleman." You failed to do that. The best you could say that there might be a cheaper middleman.
Here's another question to help point out the absurdity of your form-over-substance argument: If there were 100 middlemen before (representing everyone who worked at the banks and assessed risks and matched lenders to borrowers, the lawyers who drew up the contracts, the lawyers who litigate if there's any disagreement on terms, the courts that decide who wins, etc.) and it's now down to 1 middleman (the smart contract programmer, who doesn't even control the smart contract after it's deployed), is saying "we've cut out the middleman" a falsehood? Because that's what smart contracts do.

Sometimes it helps to take a step back and see the big picture.
I get the feeling you guys are talking about two different things... efficiency of the actors versus pure existence of said actors.

From what I've read so, most projects employ a service cost for you to transact on the network of your choice. Using the service is not free, and if you wish get your transaction fulfilled, you need to pay a "middleman" a transaction fee. I hope none of this comes as a surprise to anyone on this forum... you pay direct, or hidden, costs for any other service (ex: package delivery, wire transfers etc.), why should it be different here (distributed costs of hardware, software, energy, incentive)?

Certain projects have significant costs right now (BTC, ETH) for any small transaction. There are lesser-known projects that seem to have smaller fees and have been suggested for smaller transactions, or for newcomers to test the waters.

No matter whether it is a sleazy banker :wink:, or a benevolent geek with a crypto node :wink:, they act as a "middleman". Due to its decentralized nature, the middleman is not known ahead of time (like in the case of a particular bank you deal with) but he or she still exists. You are not paying a faceless protocol/ hivemind.
Yes, you are paying a protocol. You are not paying that "benevolent geek with a crypto node." It's true the geek does get paid, but not by you. He is paid by the protocol (the code). Maybe it's a subtle distinction, but it's critically important to understanding how decentralized systems work.

That geek has no idea who you are or what you are doing. He is typically deploying software developed by developers for that protocol. He is typically providing his own hardware on which his node operates, or is using 3rd party hardware under his control (e.g. AWS). He has typically invested his own capital into this node, his "stake" that is at risk and will be "slashed" if his node does not behave properly. But he is simply a cog in this greater decentralized machine. He is one of hundreds or thousands of node operators, each acting independently, but working together within the protocol, tied together through the code. The benevolent geek has no idea that you are making a transaction, "he" is not the middle man in any real sense. And if his node went off line, the network would reroute as necessary. If the protocol was dependent on this benevolent geek, then it wouldn't be decentralized.

Our benevolent geek cannot change the code (if he tried his stake would be slashed), he cannot act independently in any way. The code may change, but that is under the control of the DAO, the larger community. Not any one participant within the network. His role would simply be to load the new code onto this node.

You can't really compare the "sleazy banker" with the geek.
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Caleb4387
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Re: Crypto mania !

Post by Caleb4387 »

Orangutan wrote: Mon May 10, 2021 11:17 am
nisiprius wrote: Mon May 10, 2021 7:32 am Image

The loss of about $38 billion in Dogecoin's "market cap" due to a punchline delivered by Elon Musk on SNL shows the fragility of the crypto ecosystem. I don't think you can just call this "volatility." This is certifiable mania.

Note that press reports are inaccurate! Reuters says Dogecoin tumbles after Elon Musk calls it a 'hustle' on 'SNL' show. But that's not so!

The sketch, Weekend Update: Financial Expert Lloyd Ostertag on Cryptocurrency, is pretty funny, well worth two minutes of time. As you can tell just from the title, it isn't really "Elon Musk" who said it.
  • It's in a comedy sketch on a comedy show.
  • It is said by a fictional character named Lloyd Ostertag who is being played by Elon Musk--thinly disguised by wearing glasses.
  • Ostertag: "It's a cryptocurrency you can trade for actual money."
    Host: "So it's a hustle?"
    Ostertag: "Yeah, it's a hustle."
    Did you get that? He "supports" his statement that it's a hustle by giving a reason for thinking it isn't!
  • It is the punch line to a two-minute sketch and thus the actual words and tone are guided as much by a writer's instincts for "a funny thing to say," as by Musk's real opinion, whatever it may be.
It is as if JetBlue's stock had fallen -40% because of something Gordon Gekko said in the movie "Wall Street."

This is certifiable mania.

Sure, it is happening in Dogecoin and not the more respectable BTC or ETH. But it shows that mania on a large scale is happening within the cryptocurrency space. People are putting real, valuable fiat dollars into something that is 100.000% pure speculation. I have yet to hear claims that people are buying things at Nordstrom's with Dogecoin, or that Dogecoin is digital copper, or that anyone has registered a Dogecoin ETF with the SEC.

Note that $30 billion move in Dogecoin represents about 1.9% of the total claimed "market cap" for all cryptocurrency. In contrast, at its peak Gamestop had a market cap of about $25 billion in a global market cap of almost $100 trillion, or 0.025% of the global market cap for all stocks. As a percentage of its own global market, the Dogecoin move was roughly a thousand times as big.

So it would be a false equivalence to observe that there is mania in the stock market, too. Sure there is, but a loss of 1.9% of the total value of the global total of all cryptocurrency...
...due to a dive in the value of a joke currency...
...as the result of a punch line to a joke on a comedy show...
is no joke.
So when does the party stop? It very much feels like peak hysteria right now. And what does the post-crash landscape look like?
Looks like buying cheap for a couple years then soaring again to even higher highs.
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

Prahasaurus wrote: Mon May 10, 2021 4:39 pm Yes, you are paying a protocol. You are not paying that "benevolent geek with a crypto node." It's true the geek does get paid, but not by you. He is paid by the protocol (the code). Maybe it's a subtle distinction, but it's critically important to understanding how decentralized systems work.
[...]
You went into detail about the particularities of a decentralized system, none of which changes the fundamental economic reality of a person providing a service for a profit. The owner-operator gets paid in both cases. With respect to that basic principle, it doesn't matter if you see them, if they know what you are doing, if you hand them your dollar bill or if the Borg does it etc.

I really don't know why this basic question is so contentious.

One thing that I like about the "middlemen" in DeFi, in concept, is that they represent a sort of cooperative model of ownership. They share a common set of rules and shared returns. The model is open to participation by a wider population. In the concept of ownership, there is a definite difference.

The cynical side of me sees how it's playing out in reality so far, though. The barrier to entry is becoming more and more costly, with costs like 100k to stake ETH (and getting worse), and is closing the door to more and more people, instead of "democratizing" finance like doe-eyed proponents claim loudly. Sure it's decentralized, but it gets more and more concentrated... and to whom? The richest.

I would be really happy to see some cryptocurrency rise up to the challenge and make it more feasible and truly democratic, but I am not getting my hopes up. :(

You can't really compare the "sleazy banker" with the geek.
Yes, I can; they both have horrible fashion sense. So do I, while we're at it. :mrgreen:
ballons
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Re: Crypto mania !

Post by ballons »

watchnerd wrote: Mon May 10, 2021 1:19 pm
starboi wrote: Mon May 10, 2021 1:16 pm Shiba Inu Adds $11B To Ethereum Founder Vitalik Buterin's Net Worth

https://www.benzinga.com/markets/crypto ... -net-worth
Hilarious.
Hilarious will be you adding more dog coins to your market weight crypto strategy in a month.
Gadget
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Re: Crypto mania !

Post by Gadget »

claypigeon wrote: Mon May 10, 2021 2:17 pm There are other third generation coins out there. I like algorand as well. But if I had to pick one coin to dominate the future it’s ADA / cardano
Your technical analysis of ADA is spot on. I'll play devil's advocate though.

I don't really see any convincing reasons for DeFi, Dapps, and NFTs to move from ETH to ADA unless the ethereum 2.0 merge fails. If that happens, I do think Cardano could be the next best option. But it seems like a big if.

Charles Hoskinson, the leader of Cardano, is also kind of a polarizing figure. I'm not a huge fan of him, but I could see how some could be. But I feel like he is one Youtube video away from causing a mass exodus from his platform just based on his political like rants.

Currently, the programming language for Cardano is terrible. Even if they implement smart contracts, I wouldn't want to have to develop on some weird language no one uses.

Part of the reason Cardano is able to have such cheap transaction costs is because no one is using the network. ETH would be pennies per transaction too if it had the usage Cardano did.

Projects like Matic are more of a threat to Cardano to me. Because Matic allows anyone to utilize and transact on the main ethereum network for pennies. If that is the case and Matic side chain support via Uniswap and other DeFi projects gains usage, what does Cardano have to offer?

If we're going purely off technicals, look at Harmony One. They have smart contracts, DeFi exchanges (ViperSwap), and they have one of the best implementations of sharding. Their transaction times are lightning quick. But no one uses ONE, so how inflated are their technicals? Would it have scaling issues if it became the giant that is Ethereum?

In my opinion, ADA is best suited as a downside hedge to a large bet on ETH. Like maybe if you had a bunch of ETH validators, you'd want some ADA before the ETH 2.0 merge just in case it fails.

To be fair, I used to have some ADA. I sold it all after reporting bugs that you can't use ADA on any of the main wallets with a hardware wallet and passphrase enabled. That seems like a capital offense on usability. It's been months, and they still haven't bothered to fix that bug, even though they said on reddit they are aware. I also got turned off on Hoskinsons rants.
mikejuss
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Re: Crypto mania !

Post by mikejuss »

What is the forum's consensus on the safest way to buy cryptocurrency? Coinbase, Gemini, Robinhood?
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