Crypto mania !

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YRT70
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Re: Crypto mania !

Post by YRT70 »

watchnerd wrote: Thu May 13, 2021 4:37 am
Prahasaurus wrote: Thu May 13, 2021 4:33 am So you are not a passive investor. Fine, I don't recommend passive investing in crypto. But probably doesn't make sense to claim you buy at market weight, and hence don't need to actually do a bit of research of how you tilt.
So is your critique that passive investing doesn't work in the crypto space because it's too immature?
I realise you didn't ask me but this is something I've been thinking for a while when I saw you mention 'market cap weight' investing in cryptos. I think MCW investing works well in efficient markets, but I don't think the crypto market is anywhere near efficient yet. For example: many people who invest in Bitcoin have no idea of the capabilities of Ethereum and the differences with BTC. Personally I own a lot more ETH than BTC (total crypto is less than 1% of my portfolio, this is just for fun for me).
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Re: Crypto mania !

Post by Prahasaurus »

watchnerd wrote: Thu May 13, 2021 4:37 am
Prahasaurus wrote: Thu May 13, 2021 4:33 am So you are not a passive investor. Fine, I don't recommend passive investing in crypto. But probably doesn't make sense to claim you buy at market weight, and hence don't need to actually do a bit of research of how you tilt.
So is your critique that passive investing doesn't work in the crypto space because it's too immature?

Or that my passive index isn't good enough because I can't buy all the assets unless I get multiple accounts at multiple exchanges?
My critique is you are clearly not a passive investor. So when I say it helps to understand the protocols in which you have sunk a lot of money, and you reply no need, since you are just a passive investor, well.... Does not compute.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

YRT70 wrote: Thu May 13, 2021 5:24 am I realise you didn't ask me but this is something I've been thinking for a while when I saw you mention 'market cap weight' investing in cryptos. I think MCW investing works well in efficient markets, but I don't think the crypto market is anywhere near efficient yet. For example: many people who invest in Bitcoin have no idea of the capabilities of Ethereum and the differences with BTC. Personally I own a lot more ETH than BTC (total crypto is less than 1% of my portfolio, this is just for fun for me).
I'm choosing to hold crypto at market weight with global stocks and global bonds.

I don't feel I can philosophically combine this with an activist approach to the crypto sector.

If the two biggest players, ETH and BTC, have >50% of the market cap (which they do, at present), I'm not clear why MCW won't work reasonably well.

As far as I can tell, anecdotally, the macro movements of the two big dogs drive most of the behavior of the smaller cryptos, anyway.

In the end, it's a bit academic, as at market weight it's 2% of my risk portfolio, and dominated by ETH and BTC so heavily that the difference in the long tail of alt coins is a rounding error.
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Re: Crypto mania !

Post by Prahasaurus »

YRT70 wrote: Thu May 13, 2021 5:24 am
watchnerd wrote: Thu May 13, 2021 4:37 am
Prahasaurus wrote: Thu May 13, 2021 4:33 am So you are not a passive investor. Fine, I don't recommend passive investing in crypto. But probably doesn't make sense to claim you buy at market weight, and hence don't need to actually do a bit of research of how you tilt.
So is your critique that passive investing doesn't work in the crypto space because it's too immature?
I realise you didn't ask me but this is something I've been thinking for a while when I saw you mention 'market cap weight' investing in cryptos. I think MCW investing works well in efficient markets, but I don't think the crypto market is anywhere near efficient yet. For example: many people who invest in Bitcoin have no idea of the capabilities of Ethereum and the differences with BTC. Personally I own a lot more ETH than BTC (total crypto is less than 1% of my portfolio, this is just for fun for me).
This is exactly correct. There are many other reasons why it makes little sense. But primarily because crypto markets are so terribly inefficient. But the good news is that brings opportunities, too.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Thu May 13, 2021 5:39 am
My critique is you are clearly not a passive investor. So when I say it helps to understand the protocols in which you have sunk a lot of money, and you reply no need, since you are just a passive investor, well.... Does not compute.
Explain to me what isn't passive about buying by market cap?

It's certainly not activist.

Now if your critique is the index is not a Total Crypto Market index, I'd agree.

But that doesn't mean I'm making active decisions.

If the Total Crypto Market was available at Coinbase, I'd buy it.
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Thu May 13, 2021 5:42 am
This is exactly correct. There are many other reasons why it makes little sense. But primarily because crypto markets are so terribly inefficient. But the good news is that brings opportunities, too.

Bogleheads is a site for passive investing.

And you're saying the crypto markets are inefficient.

And therefore unsuitable for passive investing.

So why would a believer in passive investing choose to invest in crypto at all if its so horribly inefficient?
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Re: Crypto mania !

Post by Prahasaurus »

watchnerd wrote: Thu May 13, 2021 5:45 am
Prahasaurus wrote: Thu May 13, 2021 5:42 am
This is exactly correct. There are many other reasons why it makes little sense. But primarily because crypto markets are so terribly inefficient. But the good news is that brings opportunities, too.

Bogleheads is a site for passive investing.

And you're saying the crypto markets are inefficient.

And therefore unsuitable for passive investing.

So why would a believer in passive investing choose to invest in crypto at all if its so horribly inefficient?
Because I don't believe in passive investing when markets are inefficient.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Thu May 13, 2021 6:37 am
Because I don't believe in passive investing when markets are inefficient.
And so if someone doesn't want to be an active investor, they should just stay out of crypto?

That sounds like what you're saying.
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banook
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Re: Crypto mania !

Post by banook »

One thing I have realized that would be useful data for an exchange to have are an “automatic rebalance” option/series of functions. The tolerance for rebalancing may need to be quite different - rebalance every 10% swing that lasts more than...?

watchnerd, what are your thoughts after this most recent flash crash? I don’t plan on rebalancing for the near future and have been through flash crashes before. Lots of maintenance... I think HODL by analogy is the “passivity” of crypto.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

banook wrote: Thu May 13, 2021 7:31 am watchnerd, what are your thoughts after this most recent flash crash? I don’t plan on rebalancing for the near future and have been through flash crashes before. Lots of maintenance... I think HODL by analogy is the “passivity” of crypto.
I shouldn't need to rebalance within my crypto allocation itself.

If you're asking about crypto vs stocks/bonds, I'm going to do that quarterly. The payroll contributions to stocks/bonds means there is more new money going into those and I need catch up the crypto contributions quarterly.
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SuperSaver
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Re: Crypto mania !

Post by SuperSaver »

Internet Computer (ICP) debuts this week. Promising to be next great thing, but with real tangible benefits over ETH.

Reached $35 Billion in Market Cap in 24 hours.

Is this going to be the natural progression in the future? Is this dumb money throwing against the wall? How to tell the winners from the losers for those who want to be "early adopters"?
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

SuperSaver wrote: Thu May 13, 2021 8:14 am Internet Computer (ICP) debuts this week. Promising to be next great thing, but with real tangible benefits over ETH.

Reached $35 Billion in Market Cap in 24 hours.

Is this going to be the natural progression in the future? Is this dumb money throwing against the wall? How to tell the winners from the losers for those who want to be "early adopters"?
The only thing you can do is follow community forums/ chats wtv. dedicated to said crypto project, before show-time. Some projects that take themselves more seriously will supply actual documentation about the design.

Otherwise, if you invest at the very onset then you are indeed throwing %#!% at walls and seeing what sticks.
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Re: Crypto mania !

Post by Prahasaurus »

watchnerd wrote: Thu May 13, 2021 6:39 am
Prahasaurus wrote: Thu May 13, 2021 6:37 am
Because I don't believe in passive investing when markets are inefficient.
And so if someone doesn't want to be an active investor, they should just stay out of crypto?

That sounds like what you're saying.
What? You are free to do whatever you want. How do you make the leap to assuming I want people who disagree with me to stay away from crypto investing? :oops:
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

Prahasaurus wrote: Thu May 13, 2021 3:15 am
OohLaLa wrote: Thu May 13, 2021 2:21 amEven if someone has never used Amazon, if you would give them the explanation and details on the improvements, they could grasp the added value of it. This would have been true even if you had told them about the current state of Amazon (what they were working on), years ago. "I will be able to order a TV, Garfield books and a 12-pack of Doritos, while sitting in my soiled boxers and get it all delivered for free within a couple days? Where do I sign up!?"
You can earn 8-10% on your dollar deposits at Aave, an Ethereum application, today. Aave is a decentralized application that cuts out the middle man, connects borrowers to lenders, and ensures users capture the vast majority of profits, unlike traditional banks. Rates are set by the algorithm based on supply and demand, and are variable. Loans are over-collateralized, and available instantly.
[...]
To use Aave, you only need an internet connection, crypto assets to deposit (ideally stablecoins like USDC or DAI, but Aave supports many other crypto assets, as well), and a small amount of gas (ETH) for transactions (moving assets in and out of the protocol). You do not need to apply to join Aave, there is no KYC, nobody to ask permission when you move money in and out, you have complete freedom to manage your money as you choose. In a world where yields on dollar deposits are minimal at best, Aave is a unique and refreshing alternative.

As an aside, while there is no need to own the AAVE token to interact with the Aave protocol (just like you don't need AMZN stock to shop at Amazon.com), Aave has the potential to replace traditional banks, and I believe will prove an incredibly popular alternative for many. Aave's market cap is currently less than 4% of Wells Fargo, even though Aave's growth and addressable market are considerably higher.
You've explained Aave well throughout the different threads. Even though there are still some questioning the advantages of it, most people here seem to understand what it's used for.

Aave fits right into "investment and retail banking", though. Just like Binance, Coinbase, Uniswap, Crypto.com, Ripple etc. The question surrounding different applications still stands. People want to see more realistic ideas and plans involving other domains, too, if crypto is to be world-changing.

From an investment PoV, I don't care if crypto remains all about financial transactions. It will stay a niche and that's ok. From a non-investment PoV, I would love to see other uses. Imagine if the Internet remained just a network for exchanging scientific documents. It would have been leveraged in a great way, but wouldn't have been the world-changing technology that it is now.
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Re: Crypto mania !

Post by ohboy! »

watchnerd wrote: Thu May 13, 2021 12:25 am
ohboy! wrote: Thu May 13, 2021 12:16 am Like some of us have been saying, Ethereum is a totally different world. One that if Bogleheads experienced firsthand they would understand the difference.
What does "experience it first hand" mean in this context?

If you just hold BTC and ETH on an exchange, they're both just numbers bopping around like stocks.

You'll notice some differences between them in terms of which tokens you can directly convert to without converting to fiat first, sure.

But what else are they going to notice if just holding a portfolio?
Im not saying buy on coinbase and hold. Im saying use a wallet and a dapp.
flyfishers83
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Re: Crypto mania !

Post by flyfishers83 »

In looking at charts over the last 24 hours, how is it possible that so many coins move in what looks like coordinated fashion. Looking at charts on Coindesk, so many coins have bounces that appear to happen at the same time. It just doesn't seem possible that they should all move the same, at the same time.
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Re: Crypto mania !

Post by Prahasaurus »

OohLaLa wrote: Thu May 13, 2021 9:21 am
Prahasaurus wrote: Thu May 13, 2021 3:15 am
OohLaLa wrote: Thu May 13, 2021 2:21 amEven if someone has never used Amazon, if you would give them the explanation and details on the improvements, they could grasp the added value of it. This would have been true even if you had told them about the current state of Amazon (what they were working on), years ago. "I will be able to order a TV, Garfield books and a 12-pack of Doritos, while sitting in my soiled boxers and get it all delivered for free within a couple days? Where do I sign up!?"
You can earn 8-10% on your dollar deposits at Aave, an Ethereum application, today. Aave is a decentralized application that cuts out the middle man, connects borrowers to lenders, and ensures users capture the vast majority of profits, unlike traditional banks. Rates are set by the algorithm based on supply and demand, and are variable. Loans are over-collateralized, and available instantly.
[...]
To use Aave, you only need an internet connection, crypto assets to deposit (ideally stablecoins like USDC or DAI, but Aave supports many other crypto assets, as well), and a small amount of gas (ETH) for transactions (moving assets in and out of the protocol). You do not need to apply to join Aave, there is no KYC, nobody to ask permission when you move money in and out, you have complete freedom to manage your money as you choose. In a world where yields on dollar deposits are minimal at best, Aave is a unique and refreshing alternative.

As an aside, while there is no need to own the AAVE token to interact with the Aave protocol (just like you don't need AMZN stock to shop at Amazon.com), Aave has the potential to replace traditional banks, and I believe will prove an incredibly popular alternative for many. Aave's market cap is currently less than 4% of Wells Fargo, even though Aave's growth and addressable market are considerably higher.
You've explained Aave well throughout the different threads. Even though there are still some questioning the advantages of it, most people here seem to understand what it's used for.

Aave fits right into "investment and retail banking", though. Just like Binance, Coinbase, Uniswap, Crypto.com, Ripple etc. The question surrounding different applications still stands. People want to see more realistic ideas and plans involving other domains, too, if crypto is to be world-changing.

From an investment PoV, I don't care if crypto remains all about financial transactions. It will stay a niche and that's ok. From a non-investment PoV, I would love to see other uses. Imagine if the Internet remained just a network for exchanging scientific documents. It would have been leveraged in a great way, but wouldn't have been the world-changing technology that it is now.
You are calling the total disruption of global banking a “niche”? :oops:

Just a reminder that AAVE is live on mainnet Ethereum for just over 1 year. Also, “Ripple” lol.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Thu May 13, 2021 9:15 am
watchnerd wrote: Thu May 13, 2021 6:39 am
Prahasaurus wrote: Thu May 13, 2021 6:37 am
Because I don't believe in passive investing when markets are inefficient.
And so if someone doesn't want to be an active investor, they should just stay out of crypto?

That sounds like what you're saying.
What? You are free to do whatever you want. How do you make the leap to assuming I want people who disagree with me to stay away from crypto investing? :oops:
Oh, then passive investing is just fine?

Then people don't need to actually be technically familiar with crypto to invest in it.

So all these questions asking people if they've used MetaMask, if they've gotten hands on with Aave, etc, seem unnecessary.
Last edited by watchnerd on Thu May 13, 2021 9:42 am, edited 1 time in total.
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zzzquil
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Re: Crypto mania !

Post by zzzquil »

If one is interested in learning how about everything what are some resources/forums that may not be super one sided? To be honest I've really enjoyed the back and forth here as people are intelligent and avoid ad hominem attacks.
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Re: Crypto mania !

Post by watchnerd »

ohboy! wrote: Thu May 13, 2021 9:27 am Im not saying buy on coinbase and hold. Im saying use a wallet and a dapp.
Why do investors need to have this experience?

Canada has crypto ETFs where people don't have to do any of that.

They don't even need a Coinbase account.
Last edited by watchnerd on Thu May 13, 2021 9:55 am, edited 1 time in total.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

flyfishers83 wrote: Thu May 13, 2021 9:30 am In looking at charts over the last 24 hours, how is it possible that so many coins move in what looks like coordinated fashion. Looking at charts on Coindesk, so many coins have bounces that appear to happen at the same time. It just doesn't seem possible that they should all move the same, at the same time.
Are they more coordinated than stocks on down days in the stock market?

To me, that's indicative of them being an asset class.

Of course, it could also be nefarious.

But at $2T market cap, I'm betting on asset class.
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YRT70
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Re: Crypto mania !

Post by YRT70 »

I had a friend chatting about Yearn Finance (YFI) today. Anyone familiar with it? Opinions?

https://academy.binance.com/en/articles ... inance-yfi
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OohLaLa
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Re: Crypto mania !

Post by OohLaLa »

Prahasaurus wrote: Thu May 13, 2021 9:34 am
OohLaLa wrote: Thu May 13, 2021 9:21 am You've explained Aave well throughout the different threads. Even though there are still some questioning the advantages of it, most people here seem to understand what it's used for.

Aave fits right into "investment and retail banking", though. Just like Binance, Coinbase, Uniswap, Crypto.com, Ripple etc. The question surrounding different applications still stands. People want to see more realistic ideas and plans involving other domains, too, if crypto is to be world-changing.

From an investment PoV, I don't care if crypto remains all about financial transactions. It will stay a niche and that's ok. From a non-investment PoV, I would love to see other uses. Imagine if the Internet remained just a network for exchanging scientific documents. It would have been leveraged in a great way, but wouldn't have been the world-changing technology that it is now.
You are calling the total disruption of global banking a “niche”? :oops:

Just a reminder that AAVE is live on mainnet Ethereum for just over 1 year. Also, “Ripple” lol.
I love how you're fixating on the minutiae instead of the actual topic. Are you ok with the use of "specialization" instead of "niche", then?

I know that a lot of crypto-based services are recent. I actually wrote a whole post recently about how people have too-high expectations for the technology itself and I compared it to the the long development of the Internet.

Yes, "Ripple". Not sure what is so funny about it, as they are all about finance. They are an example of the cryptosphere's current fixation on finance. In fact, it would just be easier, at this point, to list any coin or token projects that have non-financial applications in mind. I imagine the list would be short.

In the end, we still don't have any other applications for the near-future (within the next decade). I guess we'll have to wait and see, for pioneers to come forth. Good to at least have that confirmed.
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Re: Crypto mania !

Post by hilink73 »

OohLaLa wrote: Thu May 13, 2021 9:21 am
Prahasaurus wrote: Thu May 13, 2021 3:15 am
OohLaLa wrote: Thu May 13, 2021 2:21 amEven if someone has never used Amazon, if you would give them the explanation and details on the improvements, they could grasp the added value of it. This would have been true even if you had told them about the current state of Amazon (what they were working on), years ago. "I will be able to order a TV, Garfield books and a 12-pack of Doritos, while sitting in my soiled boxers and get it all delivered for free within a couple days? Where do I sign up!?"
You can earn 8-10% on your dollar deposits at Aave, an Ethereum application, today. Aave is a decentralized application that cuts out the middle man, connects borrowers to lenders, and ensures users capture the vast majority of profits, unlike traditional banks. Rates are set by the algorithm based on supply and demand, and are variable. Loans are over-collateralized, and available instantly.
[...]
To use Aave, you only need an internet connection, crypto assets to deposit (ideally stablecoins like USDC or DAI, but Aave supports many other crypto assets, as well), and a small amount of gas (ETH) for transactions (moving assets in and out of the protocol). You do not need to apply to join Aave, there is no KYC, nobody to ask permission when you move money in and out, you have complete freedom to manage your money as you choose. In a world where yields on dollar deposits are minimal at best, Aave is a unique and refreshing alternative.

As an aside, while there is no need to own the AAVE token to interact with the Aave protocol (just like you don't need AMZN stock to shop at Amazon.com), Aave has the potential to replace traditional banks, and I believe will prove an incredibly popular alternative for many. Aave's market cap is currently less than 4% of Wells Fargo, even though Aave's growth and addressable market are considerably higher.
You've explained Aave well throughout the different threads. Even though there are still some questioning the advantages of it, most people here seem to understand what it's used for.

Aave fits right into "investment and retail banking", though. Just like Binance, Coinbase, Uniswap, Crypto.com, Ripple etc. The question surrounding different applications still stands. People want to see more realistic ideas and plans involving other domains, too, if crypto is to be world-changing.

From an investment PoV, I don't care if crypto remains all about financial transactions. It will stay a niche and that's ok. From a non-investment PoV, I would love to see other uses. Imagine if the Internet remained just a network for exchanging scientific documents. It would have been leveraged in a great way, but wouldn't have been the world-changing technology that it is now.
Not saying that (especially) Ethereum won't change a thing. (I'm in it as well, although I do not "use" it, but only speculate in it (since 2017).

There's still a lot of hype around blockchain. And it's the same hype we had in 2017. That's it.
For the end user, nothing has changed. I don't need it for any of my financial transactions, only if I need to speculate in other coins.

Also NFT (with crypto kitties as one of the earlier projects): the "master pieces" are not stored on the blockchain itself, but links to offline ressources. So, if these ressources go bust, your NFT "master piece" is gone.
Still no reason why I cannot participate in this madness on the winner side. Speculate ("invest") in the tools, not the commodity ("art") itself (I guess).


I'm working at a (top 10) bank in Switzerland and blockchain is the last thing we are worried about right now.
Current stats for "problems" crypto wants to solve:
Transaction fees (bank to bank): mostly zero.
Regular transaction speed (bank to bank): mostly intraday (in Switzerland), intraday in Europe (if you're lucky, otherwise maybe 1-3 days).
There's also a micropayment app in Switzerland (including instant P2P) linked to your bank account and/or a creditcard. Very easy.
Mortgage (10 years fixed): around 1%
Unsecured loan: around 5.9%

Finally, just pointing to http://doyouneedablockchain.com/ which is based on a research paper from 2017 (!).
So, I'm still excited what changes blockchain technology will actually bring, but at the moment, it's just a crypto circle jerk.
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HomerJ
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Re: Crypto mania !

Post by HomerJ »

Prahasaurus wrote: Thu May 13, 2021 3:15 am
OohLaLa wrote: Thu May 13, 2021 2:21 amEven if someone has never used Amazon, if you would give them the explanation and details on the improvements, they could grasp the added value of it. This would have been true even if you had told them about the current state of Amazon (what they were working on), years ago. "I will be able to order a TV, Garfield books and a 12-pack of Doritos, while sitting in my soiled boxers and get it all delivered for free within a couple days? Where do I sign up!?"
You can earn 8-10% on your dollar deposits at Aave, an Ethereum application, today. Aave is a decentralized application that cuts out the middle man, connects borrowers to lenders, and ensures users capture the vast majority of profits, unlike traditional banks. Rates are set by the algorithm based on supply and demand, and are variable. Loans are over-collateralized, and available instantly.

While Aave is not FDIC insured, it has been in operation for over 1 year with zero downtime and zero loss of funds through software bugs or hacks. There is currently over 18 billion dollars within the Aave protocol, and that sum is growing exponentially, proof of wider market acceptance.

To use Aave, you only need an internet connection, crypto assets to deposit (ideally stablecoins like USDC or DAI, but Aave supports many other crypto assets, as well), and a small amount of gas (ETH) for transactions (moving assets in and out of the protocol). You do not need to apply to join Aave, there is no KYC, nobody to ask permission when you move money in and out, you have complete freedom to manage your money as you choose. In a world where yields on dollar deposits are minimal at best, Aave is a unique and refreshing alternative.

As an aside, while there is no need to own the AAVE token to interact with the Aave protocol (just like you don't need AMZN stock to shop at Amazon.com), Aave has the potential to replace traditional banks, and I believe will prove an incredibly popular alternative for many. Aave's market cap is currently less than 4% of Wells Fargo, even though Aave's growth and addressable market are considerably higher.
AAVE should be compared to junk bonds, not FDIC insured banks. You can make outsize interest, but only because there is a risk of losing principal.

A run on crypto will cause mass liquidations of the loans, which will force selling of the collateral, which will cause the price to crash even faster. AAVE specifically says in the fine print that the lenders can lose money. AAVE will not lose money. If they cannot liquidate the collateral fast enough, they will take the money from the lenders accounts.

Since AAVE only loans to people who put down 1.25x - 2.5x the amount they want to borrow, it's not surprising they are only 4% the size of Wells Fargo who makes loans to human beings who actually need loans.

The market for people who want to give a bank $500,000 in collateral to buy a $350,000 house and pay 13% interest for that loan is a market of zero human beings.

AAVE may be something in the future. It cannot be compared to banks today.
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Re: Crypto mania !

Post by Prahasaurus »

watchnerd wrote: Thu May 13, 2021 9:40 am
Prahasaurus wrote: Thu May 13, 2021 9:15 am
watchnerd wrote: Thu May 13, 2021 6:39 am
Prahasaurus wrote: Thu May 13, 2021 6:37 am
Because I don't believe in passive investing when markets are inefficient.
And so if someone doesn't want to be an active investor, they should just stay out of crypto?

That sounds like what you're saying.
What? You are free to do whatever you want. How do you make the leap to assuming I want people who disagree with me to stay away from crypto investing? :oops:
Oh, then passive investing is just fine?

Then people don't need to actually be technically familiar with crypto to invest in it.

So all these questions asking people if they've used MetaMask, if they've gotten hands on with Aave, etc, seem unnecessary.
Not sure what we're even talking about anymore, to be honest. I think I'm being clear, but you keep jumping to conclusions and asking me to clarify things I never even said...

I said that passive investing is just not that effective in crypto, since the crypto market is very inefficient. I did not say you shouldn't invest in crypto if they want to invest passively. "Not effective" does not mean "forbidden"...

I said it makes sense to actually study and learn about the protocols in which you invest within crypto, it will make you a better investor. You seemed to take issue with that completely common sense statement, as well. It does matter if you can actually use Metamask, because you will understand better Ethereum and Ethereum applications. But again, if your strategy is to not bother, whatever, I have no desire to debate it.

I said you don't seem to be passive in the sense you have actively selected projects in which to invest. Unless by "passive" you mean not really researching projects in which you invest? Of the top 20 tokens (minus stables), you seem to hold only a handful, and you don't rebalance. If this isn't tilting, I'm not sure what is.... But again, if you believe you are being a "passive" crypto investor with you strategy, ok, I'm not going to argue the point. You can obviously do whatever you want (just adding that to make sure you don't again accuse me of trying to keep you from investing however you like).

I'm kinda amazed I've posted about 5 times on these topics, which seem to be total common sense. But whatever, I'm moving on and I will not be responding to any more questions on these topics.
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Re: Crypto mania !

Post by Nathan Drake »

decapod10 wrote: Thu May 13, 2021 2:15 am
Nathan Drake wrote: Thu May 13, 2021 1:28 am 99.99999999999% of people buying Eth (or whatever) aren’t using it got anything other than to hopefully dump it off at a higher price to some poor old sucker

The fact that you need a PhD in Crypto and DeFi to understand its brilliance makes me less likely to believe it actually has real utility as an investment vehicle
Unlike stocks, where people buy hoping to sell to other people for a lower price :wink:
Stocks generate earnings and have models of valuation to base your investment thesis on

They also produce products people use. Hardly anyone buying these coins is doing so for the perceived benefits of the technology
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Re: Crypto mania !

Post by runninginvestor »

hilink73 wrote: Thu May 13, 2021 10:16 am
Not saying that (especially) Ethereum won't change a thing. (I'm in it as well, although I do not "use" it, but only speculate in it (since 2017).

There's still a lot of hype around blockchain. And it's the same hype we had in 2017. That's it.
For the end user, nothing has changed. I don't need it for any of my financial transactions, only if I need to speculate in other coins.

Also NFT (with crypto kitties as one of the earlier projects): the "master pieces" are not stored on the blockchain itself, but links to offline ressources. So, if these ressources go bust, your NFT "master piece" is gone.
Still no reason why I cannot participate in this madness on the winner side. Speculate ("invest") in the tools, not the commodity ("art") itself (I guess).


I'm working at a (top 10) bank in Switzerland and blockchain is the last thing we are worried about right now.
Current stats for "problems" crypto wants to solve:
Transaction fees (bank to bank): mostly zero.
Regular transaction speed (bank to bank): mostly intraday (in Switzerland), intraday in Europe (if you're lucky, otherwise maybe 1-3 days).
There's also a micropayment app in Switzerland (including instant P2P) linked to your bank account and/or a creditcard. Very easy.
Mortgage (10 years fixed): around 1%
Unsecured loan: around 5.9%

Finally, just pointing to http://doyouneedablockchain.com/ which is based on a research paper from 2017 (!).
So, I'm still excited what changes blockchain technology will actually bring, but at the moment, it's just a crypto circle jerk.
I'll admit, NFTs for a lot of things are probably a bubble. But I do see a potential strong case for the smart contracts for artists. There will be some growing pains, as with any industry or new technology, but I can see artists - and I've spoken to a couple (n of 3 so negligent sample size ;) ) - who are interested in leveraging it to be financially rewarded not just in the initial sale, but subsequent sales. Since most artists that sell original art pieces only make money on the original sale, the art may trade many times before it finds the right person that's willing to pay a lot for it. I think it can be beneficial for this use case.
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Re: Crypto mania !

Post by Prahasaurus »

HomerJ wrote: Thu May 13, 2021 10:19 am AAVE may be something in the future. It cannot be compared to banks today.
Yeah, that's kinda the point, isn't it? That's why it's so exciting you can still buy AAVE's governance token for under 600 USD today, with all that massive potential.

Just like when I told you 5 months ago that UNI at under 4 USD was insane, based on the volume of business they do and cash they generate compared to similar institutions in traditional finance (e.g. Coinbase). But now at 40 USD UNI is still interesting, just not quite as interesting as before...
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Re: Crypto mania !

Post by HomerJ »

Prahasaurus wrote: Thu May 13, 2021 10:31 am
HomerJ wrote: Thu May 13, 2021 10:19 am AAVE may be something in the future. It cannot be compared to banks today.
Yeah, that's kinda the point, isn't it? That's why it's so exciting you can still buy AAVE's governance token for under 600 USD today, with all that massive potential.
There may be no massive potential. The niche loans that they are making now cannot grow much farther.

If they move into commercial loans, they will have to evaluate credit risk, evaluate properties, have a collections arm to recover physical collateral like houses and cars, and they will be competing with standard banks, so they will have make loans at 2%.

They will no longer be paying you 10% interest on the money you give them if they do achieve their "massive potential". Instead they'll probably be paying you near the same as banks today.

But I bet they keep their policy where they can take money from YOUR account to make up for the delinquent loans they make to other people. So maybe they won't need a collections department after all.

Because, you know, decentralized! No regulations is the best.

Or maybe it will work out. Right now, I don't see an easy move into normal loan space that they will need to grow. But I could be wrong.
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Thu May 13, 2021 10:25 am
I said you don't seem to be passive in the sense you have actively selected projects in which to invest. Unless by "passive" you mean not really researching projects in which you invest? Of the top 20 tokens (minus stables), you seem to hold only a handful, and you don't rebalance. If this isn't tilting, I'm not sure what is....
1. That's correct. I lightly researched a few of the things out of intellectual curiosity, but it has no bearing on my selection. Other than obvious things like excluding stablecoins.

2. Who said I don't rebalance? I've said multiple times I'll do that quarterly.

3. I already explained to you why I don't own all of the Top 20 tokens -- because I can't get them all in one exchange. If I could, I would.

4. I hold 16 coins / tokens. That's more than a 'handful' of the Top 20.


So where is the tilt?

Unless your point is that it's not Total Crypto Market, which I already said.

The S&P500 isn't the total stock market, either.
Last edited by watchnerd on Thu May 13, 2021 10:55 am, edited 2 times in total.
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Re: Crypto mania !

Post by decapod10 »

Nathan Drake wrote: Thu May 13, 2021 10:26 am
decapod10 wrote: Thu May 13, 2021 2:15 am
Nathan Drake wrote: Thu May 13, 2021 1:28 am 99.99999999999% of people buying Eth (or whatever) aren’t using it got anything other than to hopefully dump it off at a higher price to some poor old sucker

The fact that you need a PhD in Crypto and DeFi to understand its brilliance makes me less likely to believe it actually has real utility as an investment vehicle
Unlike stocks, where people buy hoping to sell to other people for a lower price :wink:
Stocks generate earnings and have models of valuation to base your investment thesis on

They also produce products people use. Hardly anyone buying these coins is doing so for the perceived benefits of the technology
I'm not really that pro-crytpto as an investment honestly, but I just find it funny it's "we don't know nothin" in every other Bogleheads thread. No one cares about valuation metrics anywhere else except suddenly in crypto threads "what about the valuation metrics?".

And I would guess 99.9% of the people who own Tesla stock are not buying TSLA because they are driving Teslas. a lot of people own TSLA who don't think they are good cars. They buy TSLA because they want to profit on it. So TSLA is a scam? And if yes, because TSLA is a scam we can now generalize the one scam stock to say all stocks are scams? I can't buy Apple because GME is a scam?

As I mentioned somewhere else, there are a lot of good reasons to be bearish on crypto. I don't really think it's a good investment for most people. But I feel like pushing back at these superficial arguments sometimes because it clogs up the threads for more meaningful discussion.

Slowmovinginvestor, for example, is not particularly bullish on public crypto either, but at least the arguments come from a place of understanding what crypto is and how it works.

Believe me, I want to hear negative arguments against crypto. But "People only buy crypto because they want to make money" is not an argument I find particularly convincing.
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Re: Crypto mania !

Post by Nathan Drake »

decapod10 wrote: Thu May 13, 2021 10:50 am
Nathan Drake wrote: Thu May 13, 2021 10:26 am
decapod10 wrote: Thu May 13, 2021 2:15 am
Nathan Drake wrote: Thu May 13, 2021 1:28 am 99.99999999999% of people buying Eth (or whatever) aren’t using it got anything other than to hopefully dump it off at a higher price to some poor old sucker

The fact that you need a PhD in Crypto and DeFi to understand its brilliance makes me less likely to believe it actually has real utility as an investment vehicle
Unlike stocks, where people buy hoping to sell to other people for a lower price :wink:
Stocks generate earnings and have models of valuation to base your investment thesis on

They also produce products people use. Hardly anyone buying these coins is doing so for the perceived benefits of the technology
I'm not really that pro-crytpto as an investment honestly, but I just find it funny it's "we don't know nothin" in every other Bogleheads thread. No one cares about valuation metrics anywhere else except suddenly in crypto threads "what about the valuation metrics?".

And I would guess 99.9% of the people who own Tesla stock are not buying TSLA because they are driving Teslas. a lot of people own TSLA who don't think they are good cars. They buy TSLA because they want to profit on it. So TSLA is a scam? And if yes, because TSLA is a scam we can now generalize the one scam stock to say all stocks are scams? I can't buy Apple because GME is a scam?

As I mentioned somewhere else, there are a lot of good reasons to be bearish on crypto. I don't really think it's a good investment for most people. But I feel like pushing back at these superficial arguments sometimes because it clogs up the threads for more meaningful discussion.

Slowmovinginvestor, for example, is not particularly bullish on public crypto either, but at least the arguments come from a place of understanding what crypto is and how it works.

Believe me, I want to hear negative arguments against crypto. But "People only buy crypto because they want to make money" is not an argument I find particularly convincing.
Investing is never a perfect science. But at least there’s some rationale for expecting a certain dispersion of returns (whether that be 2-7% real annualized). “Nobody knows nothing” exactly, but historically living off 3-4% has turned out fine.

With Crypto you have no idea how to value it because it doesn’t generate earnings or have projected earnings growth. It’s 100% speculation in a legalized pyramid scheme.

If people aren’t buying Crypto mostly because it goes up in price, what are they buying it for?

And by the way, there’s nothing wrong with buying something and expecting it to go up in price (like stocks), the problem is when there’s clearly no expectation that it SHOULd go up in price and is based almost entirely on hope of ever increasing demand and slowing supply.
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Re: Crypto mania !

Post by watchnerd »

Nathan Drake wrote: Thu May 13, 2021 11:21 am

With Crypto you have no idea how to value it because it doesn’t generate earnings or have projected earnings growth. It’s 100% speculation in a legalized pyramid scheme.
This isn't correct for all crypto assets.

You can earn APR for staking certain crypto assets.

I used to think that, too, due to the dominance of Bitcoin in the media.

But it's not broadly true of the whole space, especially the DeFi sub segment.

NFT bonds will also pay interest, or royalties if it's a creative work.

The Kings of Leon's new album will be sold as NFT, allowing the band to recoup royalties directly to them from the owners of the copies.
Last edited by watchnerd on Thu May 13, 2021 11:34 am, edited 1 time in total.
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Re: Crypto mania !

Post by Nathan Drake »

watchnerd wrote: Thu May 13, 2021 11:29 am
Nathan Drake wrote: Thu May 13, 2021 11:21 am

With Crypto you have no idea how to value it because it doesn’t generate earnings or have projected earnings growth. It’s 100% speculation in a legalized pyramid scheme.
This isn't correct for all crypto assets.

You can earn APR for staking certain crypto assets.

I used to think that, too, due to the dominance of Bitcoin in the media.

But it's not broadly true of the whole space, especially the DeFi sub segment.
You are not earning an actual yield in USD or any other real currency
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Re: Crypto mania !

Post by watchnerd »

Nathan Drake wrote: Thu May 13, 2021 11:33 am
You are not earning an actual yield in USD or any other real currency
It's spot convertible to USD instantaneously.

Is it as safe as FDIC CD? Heck no.

Does it earn "real world" money? Yes.
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Re: Crypto mania !

Post by Nathan Drake »

watchnerd wrote: Thu May 13, 2021 11:35 am
Nathan Drake wrote: Thu May 13, 2021 11:33 am
You are not earning an actual yield in USD or any other real currency
It's spot convertible to USD instantaneously.

Is it as safe as FDIC CD? Heck no.

Does it earn "real world" money? Yes.
Not if the underlying “asset” crashes

It’s a fictitious yield where you’re still beholden to the underlying object you are “investing” in
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Re: Crypto mania !

Post by langlands »

Nathan Drake wrote: Thu May 13, 2021 11:44 am
watchnerd wrote: Thu May 13, 2021 11:35 am
Nathan Drake wrote: Thu May 13, 2021 11:33 am
You are not earning an actual yield in USD or any other real currency
It's spot convertible to USD instantaneously.

Is it as safe as FDIC CD? Heck no.

Does it earn "real world" money? Yes.
Not if the underlying “asset” crashes

It’s a fictitious yield where you’re still beholden to the underlying object you are “investing” in
Are dividends fake too? Since you're paid in the "underlying object you are investing in."
Last edited by langlands on Thu May 13, 2021 11:55 am, edited 1 time in total.
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Re: Crypto mania !

Post by watchnerd »

Nathan Drake wrote: Thu May 13, 2021 11:44 am

Not if the underlying “asset” crashes

It’s a fictitious yield where you’re still beholden to the underlying object you are “investing” in
It's like a really really risky local currency emerging market bond.

If I buy a bond paying great APR in Vietnamese dong or Argentinian pesos, I have:

1. Currency conversion risk

2. Default risk

Those apply here, as well.

The other factor that adds a risk premium is:

3. Loss of property -- hacking theft, lost your keys

All of these are risks that need to be compensated in the yield.

But to say that coins don't have earning isn't actually correct across the whole category.
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Re: Crypto mania !

Post by Nathan Drake »

watchnerd wrote: Thu May 13, 2021 11:55 am
Nathan Drake wrote: Thu May 13, 2021 11:44 am

Not if the underlying “asset” crashes

It’s a fictitious yield where you’re still beholden to the underlying object you are “investing” in
It's like a really really risky local currency emerging market bond.

If I buy a bond paying great APR in Vietnamese dong or Argentinian pesos, I have:

1. Currency conversion risk

2. Default risk

Those apply here, as well.

The other factor that adds a risk premium is:

3. Loss of property -- hacking theft, lost your keys

All of these are risks that need to be compensated in the yield.

But to say that coins don't have earning isn't actually correct.
They have a crypto yield that is convertible, but with such extreme volatility it’s next to meaningless from any sort of valuation model

That was my main point
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Re: Crypto mania !

Post by watchnerd »

Nathan Drake wrote: Thu May 13, 2021 11:58 am They have a crypto yield that is convertible, but with such extreme volatility it’s next to meaningless from any sort of valuation model

That was my main point
It's certainly challenging.

Maybe one could create some kind of range of conversion dispersions in an attempt to create some probabilistic SWAG at it, but the confidence level would be low.
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Re: Crypto mania !

Post by decapod10 »

watchnerd wrote: Thu May 13, 2021 11:35 am
Nathan Drake wrote: Thu May 13, 2021 11:33 am
You are not earning an actual yield in USD or any other real currency
It's spot convertible to USD instantaneously.

Is it as safe as FDIC CD? Heck no.

Does it earn "real world" money? Yes.
Nathan Drake wrote: Thu May 13, 2021 11:33 am
watchnerd wrote: Thu May 13, 2021 11:29 am
Nathan Drake wrote: Thu May 13, 2021 11:21 am

With Crypto you have no idea how to value it because it doesn’t generate earnings or have projected earnings growth. It’s 100% speculation in a legalized pyramid scheme.
This isn't correct for all crypto assets.

You can earn APR for staking certain crypto assets.

I used to think that, too, due to the dominance of Bitcoin in the media.

But it's not broadly true of the whole space, especially the DeFi sub segment.
You are not earning an actual yield in USD or any other real currency
I do think that one of the weaknesses of the DeFi is that the link to the "real world" is somewhat tenuous. At some point, it will need a stronger bridge from crypto to traditional finance to make even Bogleheads care. I think it will get close, but I suspect whether or not it will actually make it is one of the biggest questions.

I think the pie in the sky outcome would be to have some way to hard asset ownership legally issued on blockchain. Stocks, bonds, car deed, house deeds, etc. If that were to happen, now you are buying and selling stocks on DEX, you are putting up your house as collateral for that AAVE loan, DeFi "becomes real" at that point.

If that doesn't happen, there are other ways I could see uptake in DeFi, but that would probably be the gold standard.

It's also possible there will be some development in DeFi that we have not yet foreseen.
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Re: Crypto mania !

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Prahasaurus wrote: Thu May 13, 2021 12:49 am It just seems strange to me people would purchase ETH and yet not really be interested in experiencing first hand - the good, the bad, the ugly - what is happening on the Ethereum network! It's this experience that convinced me to purchase Uniswap, Synthetix, and Aave, for example. And to understand how hard it will be for other chains (so called "Eth killers") to displace Ethereum. Because, unlike Bitcoin, Ethereum has tremendous utility, which I have seen and experienced myself, first hand.
There is nothing strange about pump and dump scams. People see the hustle and want quick profit like you.
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Re: Crypto mania !

Post by YRT70 »

Forester wrote: Thu May 13, 2021 3:24 am What is Bitcoin "the future of" if a character like Elon Musk can cause a 10% value crash with a single tweet.
He tweeted last year that Tesla’s stock was “too high,” sending shares down more than 10% immediately.
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Re: Crypto mania !

Post by Cycle »

I'm not sure what Cardano is, but I own it and it is doing well today, while everything else is going red
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Re: Crypto mania !

Post by Top99% »

ballons wrote: Thu May 13, 2021 12:45 pm
Prahasaurus wrote: Thu May 13, 2021 12:49 am It just seems strange to me people would purchase ETH and yet not really be interested in experiencing first hand - the good, the bad, the ugly - what is happening on the Ethereum network! It's this experience that convinced me to purchase Uniswap, Synthetix, and Aave, for example. And to understand how hard it will be for other chains (so called "Eth killers") to displace Ethereum. Because, unlike Bitcoin, Ethereum has tremendous utility, which I have seen and experienced myself, first hand.
There is nothing strange about pump and dump scams. People see the hustle and want quick profit like you.
Those of us who were of investing age during the 1999-2000 Tech Bubble have seen this movie before. In the early days of the bubble investors with an appreciation for technology understood companies like Cisco and Amazon would be big winners and bid up the prices accordingly. Later investors noticed the performance, started chasing it and drove up shares of these companies and anything else remotely connected to the Internet to silly levels. The positive feed back cycle continued until something abruptly stopped it. I think the Wile E Coyote looking down after running off the cliff (https://www.youtube.com/watch?v=_d8ROhH3_vs) moment will come soon enough. Speaking of the Tech Bubble Cisco was indeed a big winner but there market CAP is still below where it was in 1999 even though sales and profits are 4x higher. Amazon obviously was too but one had to stick with it for a long time to do well.
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Re: Crypto mania !

Post by decapod10 »

Cycle wrote: Thu May 13, 2021 1:22 pm I'm not sure what Cardano is, but I own it and it is doing well today, while everything else is going red
Cardano is more energy efficient than BTC due to its Proof of Stake system, it's a bet that Elon will accept it for Tesla basically. The only other crypto in the green in the Top 25 coins is Polkadot (DOT), which unsurprisingly is the other cryptocurrency in the top 25 that uses Proof of Stake.
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Re: Crypto mania !

Post by Cycle »

decapod10 wrote: Thu May 13, 2021 1:27 pm
Cycle wrote: Thu May 13, 2021 1:22 pm I'm not sure what Cardano is, but I own it and it is doing well today, while everything else is going red
Cardano is more energy efficient than BTC due to its Proof of Stake system, it's a bet that Elon will accept it for Tesla basically. The only other crypto in the green in the Top 25 coins is Polkadot (DOT), which unsurprisingly is the other cryptocurrency in the top 25 that uses Proof of Stake.
Thanks for the education on ada

I also own dot, bought it two days ago. Had to open a kraken pro account just to get it (use coinbase pro mainly). I also don't know what dot is though I'm happy to have a winner.

So 2 of my 10 holdings are in the green.
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Re: Crypto mania !

Post by HomerJ »

Cycle wrote: Thu May 13, 2021 1:38 pm
decapod10 wrote: Thu May 13, 2021 1:27 pm
Cycle wrote: Thu May 13, 2021 1:22 pm I'm not sure what Cardano is, but I own it and it is doing well today, while everything else is going red
Cardano is more energy efficient than BTC due to its Proof of Stake system, it's a bet that Elon will accept it for Tesla basically. The only other crypto in the green in the Top 25 coins is Polkadot (DOT), which unsurprisingly is the other cryptocurrency in the top 25 that uses Proof of Stake.
Thanks for the education on ada

I also own dot, bought it two days ago. Had to open a kraken pro account just to get it (use coinbase pro mainly). I also don't know what dot is though I'm happy to have a winner.

So 2 of my 10 holdings are in the green.
Are these posts "tongue-in-cheek"? Hard to tell when reading.

Can you imagine how silly someone would sound if they posted "So I just started buying random stock ticket symbols that I saw on a website. I have no idea what any of them actually are. But, hey 2 of 10 are green, so that's good, right?"

Cycle, you're a pretty smart cookie...

Are these posts jokes? I mean, I can believe you're actually buying these for fun, but your posts about them are really weird.
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Re: Crypto mania !

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I removed an off-topic post. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

...At all times we must conduct ourselves in a respectful manner to other posters.
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