OT: Ray, how's your Bitcoin investment going?

[MattTuck]

Not sure about the fork, I believe most people think that Bitcoin cash is going to whither and die, and the core bitcoin blockchain will continue...

Not really 100% sure, but that is my reading of it.

And yes, Ethereum wallets have been hacked, but not to my understanding has the underlying Ethereum platform been compromised.

The thing that Ethereum and Tezos (when it launches) have that bitcoin lacks, is the smart contract features, and with Tezos, you get built in decentralized decision making so you avoid the fork issues that bitcoin has had.

Still, bitcoin has the finite amount of bitcoins, never to grow. There is some value in that... not sure it worth 2700+ per bitcoin, but maybe.

[54ny77]

interesting article. while my small mind just can't grasp the use of (let alone investing in) an alternative currency that's not backed by a country or block of countries, it's nonetheless interesting to read about from afar.

it would be economic calamity to see the dollar or euro exhibit that kind of price volatility.

https://www.bloomberg.com/gadfly/art...spoofy-problem

"Bitcoin has hit a new record of more than $3,300. Just another day at the office for a crypto-currency that's risen 50 percent in one month, 200 percent in six months and 30,000 percent in five years."

[Bruce K]

And many people laughed at Ray and the bitcoin idea .....

If you were a smart investor and got in early and played this market wisely, even with a modest investment, you are probably feeling pretty good about now.

but like many investments, this may not be true for all.

BK

[54ny77]

As an investment, that's one thing.

But it's kind of hard to whip out $2.67 in bitcoin to buy a bottle of water from the corner market...

That's really what I'm really referring to--wide adoption, and use.

Do you put your faith in a cryptocurrency, or one issued by your country and considered the only legal tender (and all the perceived or real implications that go with it)?

Surely another version of Bitcoin-like cryptocurrency will come along and be competition.

If I were sitting in a chair in gov't, I'd consider that a destabilizing force. For example, it's tough enough policing hawalah, let alone fully understanding the impact of it on emerging market economies. That topic in & of itself is fascinating. Got introduced to it years ago by an EM guy. Very keen insight, gist of it was many countries have to be looked at as though there's two sets of books.

Add in cryptocurrency to that mix, and it becomes quite a mishmosh of stuff to navigate.

MattTuck, aren't you an econ professor? Crypocurrency as a destabilizing force would be an interesting class to take in university. Bring in some high level EM money mgrs to speak on it, as well as pros in the financial intelligence world. Boy that'd be a fun class to listen in on.

Originally Posted by Bruce K

And many people laughed at Ray and the bitcoin idea .....

If you were a smart investor and got in early and played this market wisely, even with a modest investment, you are probably feeling pretty good about now.

but like many investments, this may not be true for all.

BK

[fuzzalow]

Man. this bitcoin thread is still boppin' around.

I'm OK not messin' with things that I don't fully understand or can't fully understand because it is purposely kept opaque - 'cos I ain't quite as dumb as I seem.

All these bitcoin value numbers are meaningless unless it is possible to unwind the open positions and still have a market left afterwards. Show me the money...which is another way of saying show me the liquidity. Without the underlying support and legitimacy of conversion back to hard currency, these per bitcoin valuations are just stroking one's self in public. The trick isn't in the valuation, the trick is in closing the position.

If anyone can make hay with this stuff, then more power to them. Part of being a successful investor is knowing how to say No and got to know one's limitations. I don't mind watching this ship sail without me even if I really miss out - hey my loss but I also don't have to screw around with markets like this one. Good luck to the forum colleagues here that do.

[bobswire]

Originally Posted by fuzzalow

Man. this bitcoin thread is still boppin' around.

I'm OK not messin' with things that I don't fully understand or can't fully understand because it is purposely kept opaque - 'cos I ain't quite as dumb as I seem.

All these bitcoin value numbers are meaningless unless it is possible to unwind the open positions and still have a market left afterwards. Show me the money...which is another way of saying show me the liquidity. Without the underlying support and legitimacy of conversion back to hard currency, these per bitcoin valuations are just stroking one's self in public. The trick isn't in the valuation, the trick is in closing the position.

If anyone can make hay with this stuff, then more power to them. Part of being a successful investor is knowing how to say No and got to know one's limitations. I don't mind watching this ship sail without me even if I really miss out - hey my loss but I also don't have to screw around with markets like this one. Good luck to the forum colleagues here that do.

True that, I invested in Webvan instead of Apple (@$14 a share) with a pocket full of coin back when I thought I was keen tech wise investor with an eye towards the future. I was kinda right but took the wrong vehicle.

[MattTuck]

Originally Posted by 54ny77

As an investment, that's one thing.

But it's kind of hard to whip out $2.67 in bitcoin to buy a bottle of water from the corner market...

That's really what I'm really referring to--wide adoption, and use.

Do you put your faith in a cryptocurrency, or one issued by your country and considered the only legal tender (and all the perceived or real implications that go with it)?

Surely another version of Bitcoin-like cryptocurrency will come along and be competition.

If I were sitting in a chair in gov't, I'd consider that a destabilizing force. For example, it's tough enough policing hawalah, let alone fully understanding the impact of it on emerging market economies. That topic in & of itself is fascinating. Got introduced to it years ago by an EM guy. Very keen insight, gist of it was many countries have to be looked at as though there's two sets of books.

Add in cryptocurrency to that mix, and it becomes quite a mishmosh of stuff to navigate.

MattTuck, aren't you an econ professor? Crypocurrency as a destabilizing force would be an interesting class to take in university. Bring in some high level EM money mgrs to speak on it, as well as pros in the financial intelligence world. Boy that'd be a fun class to listen in on.

Not a prof, cuz I don't have a PhD, but work with plenty of them, and do develop courses with them.

I've been looking at bitcoin and cryptocurrencies as a potential area of research, and I do think the underlying block chain technology has some real applications.

It could be incredibly destabilizing. Specifically, the companies that make money sending money (banks, wire transfers, remittances, etc) could see their fees dry up as a result of this technology. Or, we could see them drop their prices and consumers get a better deal.

Same thing could be said for governments and central banks. Take a country like Venezuela today, I think people would rather hold bitcoin or some other asset than the worthless fiat currency they are producing. The response to this could be to try to outlaw the bitcoin. Another response would be that central banks and governments, in the face of competition, do more to create a system of money that works for its citizens. Perhaps the citizens win in the end, whether bitcoin ever becomes dominant.

All that said, the extreme volatility is bad for its use as a means of exchange.

I got interested in bitcoin in 2011, and did try to set it up on my computer, but got tangled in the technical set up, and never did get it up and running. Huge regret today, obviously. Once it got to 100, I thought it was a bubble. and again at 1,000.

I did finally buy some small fraction of a bitcoin, just to see what it was all about. It's somewhat of a hassle, but not terrible. I do think it has the potential to be worth millions of dollars per bitcoin, but that is a long shot. An equally likely outcome could be a large scale government crack down and ban on crypocurrencies -- though that seems less likely given recent moves from the SEC and CFTC.

Hard to say about the prices today. We could look back in 5 years and say that $3,000 was cheap.

And fuzz: It isn't opaque. It is complex, but all the code is open source. So, you could look at it.

[MattTuck]

Here is the original white paper if anyone is interested in reading it.

https://bitcoin.org/bitcoin.pdf

[fuzzalow]

Originally Posted by MattTuck

And fuzz: It isn't opaque. It is complex, but all the code is open source. So, you could look at it.

OK Matt, I'll simply accept what you say about it 'cos I'll not likely need to know the gritty details about bitcoin or somebody isn't paying me to know about it. Which for me means both of which are the same thing.

But from how I know things to be: In finance complex is a synonym for opacity. I know how the sausage is made. I have made the sausage.

[FlashUNC]

Best advice an accountant for the financial services biz ever told me, this being back in the heady days of 2005-2006: "None of this is a dark art. It isn't magic. If someone can't explain it easily, don't go near it."

[cat6]

Originally Posted by FlashUNC

Best advice an accountant for the financial services biz ever told me, this being back in the heady days of 2005-2006: "None of this is a dark art. It isn't magic. If someone can't explain it easily, don't go near it."

That's good advice. Just remember that something that can be easily explained and understood between two other people, and not you, doesn't make it complicated. It just means you don't understand it.

So if Bitcoin is not understood by you you're right to stay out.

Same reason my Grandmother isn't on Facebook.

[MattTuck]

Originally Posted by FlashUNC

Best advice an accountant for the financial services biz ever told me, this being back in the heady days of 2005-2006: "None of this is a dark art. It isn't magic. If someone can't explain it easily, don't go near it."

Are you saying that the hard part to explain is the underlying block chain technology or the justification for the current valuations?

If it is the first, I think you could understand it if you invested the time. From my interactions on here, I know you're no dummy. If it is the second, I can empathize (having decided many times previously that the valuations were absurd). It is something that did not exist before it was created, so there is no easy precedent for valuing it.

But, to put it in perspective, there are only 21 million bitcoins that can ever exist. If you consider that all money that exists is about 65 trillion (got from searching google), owning 1/21 millionth of all currency would give you about $3 million. But, another view is that this could trade more like a real asset (think houses), there are (just in the US) 80 million houses. So, perhaps thinking of a bitcoin in the range of a house value (similar scarcity) might make sense. Or, maybe it is viewed as a safe haven asset and behaves more like gold; are there 21 million wealthy people around the world that are willing to buy 1 btc to diversify their assets? What is their willingness to pay to hold such a thing?

It is a big unknown, but that is what makes it interesting. Don't go investing your whole net worth on it, but consider it as a transformative/disruptive technology. Blockchain has lots of potential applications. A friend of mine said the following when I mentioned I thought recent prices were a bubble. Yeah, well internet stocks were a bubble in 1999, but the internet did not go away after it popped. Lesson there is that valuations may be in a bubble, but that doesn't mean the technology isn't real.

[fuzzalow]

Originally Posted by MattTuck

But, to put it in perspective, there are only 21 million bitcoins that can ever exist.

I am admittedly speaking purely out of ignorance. But I'm gonna say it anyway....

Something intended and designed as a synthetic currency which means its purpose among many things, is that it is designed as a storer of value as well as a medium of exchange.

This synthetic currency has built into it a fixed float @ 21M units. Therefore the individual bitcoin unit value is total assets received in the form of the pool assets plus net additional incoming deposits divided by the fixed float of 21M units. There is a clear benefit from buying in early before the runup in the unit price when the total asset pool was smaller. The investors late to the game are paying the (much) higher current unit price. There is incentive to keep interest & participation zealous in order to sustain the inflow of deposits which further drives appreciation to the unit price.

Have I got the basic part of this right?

This is not crypto currency or whatever made up term to sound sexy & cool. This is a pyramid scheme.

[FlashUNC]

Originally Posted by cat6

That's good advice. Just remember that something that can be easily explained and understood between two other people, and not you, doesn't make it complicated. It just means you don't understand it.

So if Bitcoin is not understood by you you're right to stay out.

Same reason my Grandmother isn't on Facebook.

Originally Posted by MattTuck

Are you saying that the hard part to explain is the underlying block chain technology or the justification for the current valuations?

If it is the first, I think you could understand it if you invested the time. From my interactions on here, I know you're no dummy. If it is the second, I can empathize (having decided many times previously that the valuations were absurd). It is something that did not exist before it was created, so there is no easy precedent for valuing it.

But, to put it in perspective, there are only 21 million bitcoins that can ever exist. If you consider that all money that exists is about 65 trillion (got from searching google), owning 1/21 millionth of all currency would give you about $3 million. But, another view is that this could trade more like a real asset (think houses), there are (just in the US) 80 million houses. So, perhaps thinking of a bitcoin in the range of a house value (similar scarcity) might make sense. Or, maybe it is viewed as a safe haven asset and behaves more like gold; are there 21 million wealthy people around the world that are willing to buy 1 btc to diversify their assets? What is their willingness to pay to hold such a thing?

It is a big unknown, but that is what makes it interesting. Don't go investing your whole net worth on it, but consider it as a transformative/disruptive technology. Blockchain has lots of potential applications. A friend of mine said the following when I mentioned I thought recent prices were a bubble. Yeah, well internet stocks were a bubble in 1999, but the internet did not go away after it popped. Lesson there is that valuations may be in a bubble, but that doesn't mean the technology isn't real.

To be clear, I understand the underlying mechanics easy enough (and some of that technology may be worth incorporating into the global monetary system, such as it is), but when you start to ask why valuations are where they are, why the market functions as it does, and just, say, why someone thought it was a good idea to make the largest global repository of bitcoins out of a former Magic: The Gathering trading card site, well...you start to get a lot of hand-waving a lot of "because reasons" kind of explanations that don't hold much water and, to fuzz's point, start to sound very scammish rather quickly.

[54ny77]

yep. voila!

not that the wonderous machinations of gov't accounting don't give one pause, but man, at least the gubmint's got something like yellowstone as collateral!

Originally Posted by fuzzalow

I am admittedly speaking purely out of ignorance. But I'm gonna say it anyway....

Something intended and designed as a synthetic currency which means its purpose among many things, is that it is designed as a storer of value as well as a medium of exchange.

This synthetic currency has built into it a fixed float @ 21M units. Therefore the individual bitcoin unit value is total assets received in the form of the pool assets plus net additional incoming deposits divided by the fixed float of 21M units. There is a clear benefit from buying in early before the runup in the unit price when the total asset pool was smaller. The investors late to the game are paying the (much) higher current unit price. There is incentive to keep interest & participation zealous in order to sustain the inflow of deposits which further drives appreciation to the unit price.

Have I got the basic part of this right?

This is not crypto currency or whatever made up term to sound sexy & cool. This is a pyramid scheme.