I think it’s time to move into crypto

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bitcoininthevp
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Wed Feb 24, 2021 10:46 am

dualstow wrote:
Wed Feb 24, 2021 8:23 am
Ethereum, well ether, is one that I am curious about. Kind of a next generation after bitcoin? I’m still reading up on the subject.
Do you have any opinion on it?
I would highly recommend reading "An (Institutional) Investor’s Take on Cryptoassets" to understand my and many other "bitcoin maximalists" (bitcoin only/mostly folks) perspective.

https://s3.eu-west-2.amazonaws.com/john ... ets+v6.pdf

TLDR: bitcoin is money, altcoins are chuck e cheese tokens
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Re: I think it’s time to move into crypto

Post by dualstow » Wed Feb 24, 2021 11:27 am

Thanks!
😂 @ Chuck E Cheese. Just when I had convinced myself that you were European.
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whatchamacallit
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Re: I think it’s time to move into crypto

Post by whatchamacallit » Wed Feb 24, 2021 2:54 pm

bitcoininthevp wrote:
Wed Feb 24, 2021 6:22 am
whatchamacallit wrote:
Tue Feb 23, 2021 7:34 pm
Quick search on btc is not bitcoin went to a new coin:

"Bitcoin sv"

It is a fork of a fork of bitcoin.

It is much cheaper below $200 still. Might be worth a gamble.
Apply your normal thinking to other assets to the crypto space.

Gold is expensive, but this sand.... Might be worth a gamble.

Apple is expensive, but this penny stock... Might be worth a gamble.
There is the other side that you probably can't see now since you probably have at least several BTC.

Most people will feel like they missed out on HODLing a whole BTC and that has a psychological effect that deters from participating.

If people start seeing another coin that seems to have potential and they can afford a whole coin it will be more attractive.

I think I will look into the next trend and start telling people "BTC is not bitcoin".
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Re: I think it’s time to move into crypto

Post by doodle » Wed Feb 24, 2021 5:13 pm

dualstow wrote:
Wed Feb 24, 2021 9:52 am
Yep, the energy comes up often and it is massive. i mentioned in the lengthy Giveaway thread that a friend wanted to go in on mining and I just didn’t want to deal with the utility bill.
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
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Mark Leavy
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Re: I think it’s time to move into crypto

Post by Mark Leavy » Wed Feb 24, 2021 10:01 pm

doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
I'm sorry. I'm a pedant. This sort of stuff horrifies me. "begging the question" is a bad translation of "assuming the conclusion" NOT "suggesting the question".

Carry on.
Mark
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Re: I think it’s time to move into crypto

Post by doodle » Wed Feb 24, 2021 11:10 pm

Mark Leavy wrote:
Wed Feb 24, 2021 10:01 pm
doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
I'm sorry. I'm a pedant. This sort of stuff horrifies me. "begging the question" is a bad translation of "assuming the conclusion" NOT "suggesting the question".

Carry on.
Mark
https://www.merriam-webster.com/words- ... question
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Re: I think it’s time to move into crypto

Post by Vil » Thu Feb 25, 2021 12:35 am

doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
It's already hardly profitable.
Here, people are making some gains combining the BTC price increase with electricity thefts. Do not know how widely spread in US the electricity theft is, though here the increase of BTC price leads to increase in the news like 'yet another miner was caught today stealing electricity in the neighbourhood of ... '. Free lunch is yet to be invented.
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Re: I think it’s time to move into crypto

Post by doodle » Thu Feb 25, 2021 7:49 am

Vil wrote:
Thu Feb 25, 2021 12:35 am
doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
It's already hardly profitable.
Here, people are making some gains combining the BTC price increase with electricity thefts. Do not know how widely spread in US the electricity theft is, though here the increase of BTC price leads to increase in the news like 'yet another miner was caught today stealing electricity in the neighbourhood of ... '. Free lunch is yet to be invented.
So if bitcoins price is cut in half due to some market shakeout.. and with the continued halving events the amount of Bitcoin rewarded for work continues to decrease what happens if a large number of miners call it quits? Does the everything grind to a standstill? Will transactions take days to process?
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Re: I think it’s time to move into crypto

Post by Vil » Thu Feb 25, 2021 8:29 am

doodle wrote:
Thu Feb 25, 2021 7:49 am
Vil wrote:
Thu Feb 25, 2021 12:35 am
doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
It's already hardly profitable.
Here, people are making some gains combining the BTC price increase with electricity thefts. Do not know how widely spread in US the electricity theft is, though here the increase of BTC price leads to increase in the news like 'yet another miner was caught today stealing electricity in the neighbourhood of ... '. Free lunch is yet to be invented.
So if bitcoins price is cut in half due to some market shakeout.. and with the continued halving events the amount of Bitcoin rewarded for work continues to decrease what happens if a large number of miners call it quits? Does the everything grind to a standstill? Will transactions take days to process?
No idea. Can't recall where I read it, but Nvidia announced some changes in their product range and specs e.g. cutting some of the performance if regular GCs are used for mining. So, do not know whether that will change also the product pricing model miners rely on. Too many unknowns for my taste.
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Re: I think it’s time to move into crypto

Post by Kbg » Thu Feb 25, 2021 9:06 am

No comment on the goodness or badness of the statement, but I did think it interesting Yellen called out bitcoin as specifically being bad for the environment last week/earlier this week.

"“I don’t think that bitcoin … is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference. “To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 10:19 am

whatchamacallit wrote:
Wed Feb 24, 2021 2:54 pm
There is the other side that you probably can't see now since you probably have at least several BTC.

Most people will feel like they missed out on HODLing a whole BTC and that has a psychological effect that deters from participating.

If people start seeing another coin that seems to have potential and they can afford a whole coin it will be more attractive.

I think I will look into the next trend and start telling people "BTC is not bitcoin".
Totally. This is "unit bias" and its too bad for the humans that dont buy one of the most potentially lucrative investments ever simply due to a psychology quirk.

Even worse if they buy some cheaper coin due to unit bias. Then they go from missing out on gains to likely taking loses.

Look at the list of top 10 "market cap" coins from 2013,2014,2015. Most are gone.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 10:23 am

doodle wrote:
Wed Feb 24, 2021 5:13 pm
dualstow wrote:
Wed Feb 24, 2021 9:52 am
Yep, the energy comes up often and it is massive. i mentioned in the lengthy Giveaway thread that a friend wanted to go in on mining and I just didn’t want to deal with the utility bill.
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
Apply this question to any business. The answer is the business of minting bitcoins via burning electricity using hardware (mining) is a losing business proposition when the costs of the business (mining hardware, electricity, etc) cost more than you can sell the bitcoin (product) for, for a sustained period of time.

Ill assuming your next question is: then who is mining bitcoin if it becomes unprofitable??

The same answer for any other industry. The least profitable miners will go out of business, and the more profitable miners will stay in business.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 10:27 am

Vil wrote:
Thu Feb 25, 2021 12:35 am
doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
It's already hardly profitable.
Here, people are making some gains combining the BTC price increase with electricity thefts. Do not know how widely spread in US the electricity theft is, though here the increase of BTC price leads to increase in the news like 'yet another miner was caught today stealing electricity in the neighbourhood of ... '. Free lunch is yet to be invented.
A few wrong statements here.

Actually bitcoin is largely profitable right now due to the large increase in bitcoins price (revenue to existing miners) vs a complete lack of mining equipment/shortages (lack of competition/capacity).

Stealing electricity was more common in the 2011-ish era of bitcoin. That is when you could set a laptop up one night and have 50 BTC in the morning. These days, youd need specialized machines and a large amount of power (hint: not an outlet in the wall) to mine a non ~0 amount of bitcoin. There are some stories of smaller countries with miners setting up shop and using the governments free energy program to mine, but they are smaller operations and dont last long. So to note that very tiny minority here is a bit misleading.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 10:28 am

Vil wrote:
Thu Feb 25, 2021 8:29 am
No idea. Can't recall where I read it, but Nvidia announced some changes in their product range and specs e.g. cutting some of the performance if regular GCs are used for mining. So, do not know whether that will change also the product pricing model miners rely on. Too many unknowns for my taste.
No bitcoin miners are using general purpose computing or video cards for mining. That is for some altcoin mining.
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Re: I think it’s time to move into crypto

Post by doodle » Thu Feb 25, 2021 10:29 am

bitcoininthevp wrote:
Thu Feb 25, 2021 10:27 am
Vil wrote:
Thu Feb 25, 2021 12:35 am
doodle wrote:
Wed Feb 24, 2021 5:13 pm
That begs the question...at what price does mining bitcoin become a losing proposition? What happens if miners can't turn a profit?
It's already hardly profitable.
Here, people are making some gains combining the BTC price increase with electricity thefts. Do not know how widely spread in US the electricity theft is, though here the increase of BTC price leads to increase in the news like 'yet another miner was caught today stealing electricity in the neighbourhood of ... '. Free lunch is yet to be invented.
A few wrong statements here.

Actually bitcoin is largely profitable right now due to the large increase in bitcoins price (revenue to existing miners) vs a complete lack of mining equipment/shortages (lack of competition/capacity).

Stealing electricity was more common in the 2011-ish era of bitcoin. That is when you could set a laptop up one night and have 50 BTC in the morning. These days, youd need specialized machines and a large amount of power (hint: not an outlet in the wall) to mine a non ~0 amount of bitcoin. There are some stories of smaller countries with miners setting up shop and using the governments free energy program to mine, but they are smaller operations and dont last long. So to note that very tiny minority here is a bit misleading.
But isn't it the miners that basically process the transactions? So if they can't mine profitably then how do transactions get processed?
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 10:32 am

doodle wrote:
Thu Feb 25, 2021 7:49 am
So if bitcoins price is cut in half due to some market shakeout.. and with the continued halving events the amount of Bitcoin rewarded for work continues to decrease what happens if a large number of miners call it quits? Does the everything grind to a standstill? Will transactions take days to process?
You were working ahead, I see.

If miners, for whatever reason, shut down and stop contributing their energy burning (hash power) to the bitcoin network, the threshold for how much energy needs to be burned goes down. It is a self correcting mechanism in the code. This adjustment happens every couple weeks.

This mechanism is also the reason that only so many bitcoins are "created" every so often.
https://en.bitcoin.it/wiki/Controlled_supply
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Re: I think it’s time to move into crypto

Post by dualstow » Thu Feb 25, 2021 11:21 am

bitcoininthevp wrote:
Thu Feb 25, 2021 10:32 am
You were working ahead, I see.

If miners, for whatever reason, shut down and stop contributing their energy burning (hash power) to the bitcoin network, the threshold for how much energy needs to be burned goes down. It is a self correcting mechanism in the code. This adjustment happens every couple weeks.

This mechanism is also the reason that only so many bitcoins are "created" every so often.
https://en.bitcoin.it/wiki/Controlled_supply
That's a very informative page.

I know this is a very pie in the sky thought, but that would be neat if there could be some distributed computing going on. In the early 00's, you could participate in SETI's project to search photographs of the stars, and it would happen when your computer was otherwise idle and ready to go to a screensaver.

If we could just take the hardware we have at home and the measly power outlets, and contribute to some computer somewhere with a virtual machine in return for a fractional coin in the future- never mind. Pie in the sky.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Feb 25, 2021 4:45 pm

dualstow wrote:
Thu Feb 25, 2021 11:21 am
I know this is a very pie in the sky thought, but that would be neat if there could be some distributed computing going on. In the early 00's, you could participate in SETI's project to search photographs of the stars, and it would happen when your computer was otherwise idle and ready to go to a screensaver.

If we could just take the hardware we have at home and the measly power outlets, and contribute to some computer somewhere with a virtual machine in return for a fractional coin in the future- never mind. Pie in the sky.
So in some sense it’s pie in the sky some sense its not.

On one hand its exactly what bitcoin mining is.

But on the other hand while you can still run it on your laptop but you wouldn't make much and would probably overheat it and not make much money.
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Re: I think it’s time to move into crypto

Post by dualstow » Thu Feb 25, 2021 4:51 pm

But would it help finish the project? I want all the bitcoins to be mined. O0 (Yes there is a 'd' at the end).
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Feb 25, 2021 10:16 pm

I've been hedging my gold allocation according to the previous cycle peak market cap ratio of bitcoin versus that of gold. That part replaces gold permanently. I've also been running somewhat of a VP which I call a crypto PP.

It involves 25% smart contract platforms cap weighted (ETH, DOT, ADA, and ATOM), 25% bitcoin, 25% defi (using synthetix sDEFI + a basket of smaller cap defi projects that I don't rebalance), and 25% yield farmed stablecoin (USDC).

I'm rebalancing 35/15 just like the PP.

The case for bitcoin is pretty simple. There is a rapidly growing international blockchain industry and 60% of the capital in this industry is stored in BTC. BTC is used as an interoperable collateral asset that you can use to borrow money in decentralized finance which is the main use case that will attract capital to the blockchain industry.

I have physical metal, I cannot use my physical gold as collateral in legacy finance and that is a real pain when trying to leverage a minimal volatility/best risk adjusted return portfolio to meet the returns needed using optimum leverage. In that sense bitcoin is superior to gold as a collateral reserve asset for regular investors.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Fri Feb 26, 2021 9:40 am

I thought this was a nice twitter thread on "Bitcoin as super-collateral":
https://threadreaderapp.com/thread/1225 ... 22305.html

vincent_c, have you read 'An (Institutional) Investor’s Take on Cryptoassets'?

How do you see value accruing to smart contract platforms in the long term? In my chuck e cheese analogy, people only need chuck e cheese tokens for a brief period of time while at chuck e cheese, then immediate convert back into real money. I see the same thing for these smart contract chains.

If I need to do something in ETH, Ill use my money (BTC) to quickly/instantly pay some ETH fees and keep the rest of my wealth in BTC, the "money" chain.

Now dont get me wrong, that doesn’t mean alts cant, in the short/medium term, have massive returns. I just dont really see why Id hold non-best money (BTC) tokens for any period of time. And that means while there is non zero demand for alt tokens, it doesn’t really command a big value for those tokens.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Fri Feb 26, 2021 9:42 am

dualstow wrote:
Thu Feb 25, 2021 4:51 pm
But would it help finish the project? I want all the bitcoins to be mined. O0 (Yes there is a 'd' at the end).
No matter how many miners join or leave the bitcoin network, the number and schedule of new bitcoin being released will be the same.

That is the elegance, dare I say beauty, of Bitcoin's self correcting difficulty adjustment.
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Re: I think it’s time to move into crypto

Post by vincent_c » Fri Feb 26, 2021 10:13 am

yes I have read it

Let's say you were to buy a company.

It would be worth the net assets + an intangible amount that represents the premium a company.

Ethereum has no assets so the value is purely intangible and I don't think it should be valued on a discounted cash flow basis.

So you see my approach is not to assume that Ethereum will win out (I'm hedging accordingly) but you will see that Cardano and Polkadot themselves hedge by not aiming to be an Eth killer but rather to work with it if possible. They have a problem with attracting capital and as much as Ethereum doesn't work for the little guy, it works just fine if you're investing in large amounts and liquidity speaks for itself.

The smaller chains will start attracting capital from the small investors over time, but Ethereum is also moving to ETH 2.0.

Anyway, let's assume ETH wins.

ETH is money on the ETH platform.
BTC is gold on the ETH platform.
DEFI are businesses on the ETH platform.

You also currently have BETH which actually serves as a bond-like investment on Ethereum.

So that's how I built my crypto PP.
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Re: I think it’s time to move into crypto

Post by vincent_c » Fri Feb 26, 2021 10:20 am

The analogy is the same as why would anyone hold USD if they can just hold gold. Convert some gold into USD to pay someone and keep the rest in gold. When it comes to uncorrelated investments (in ETH terms) then it improves risk adjusted returns.

Anyway the crypto PP is an experiment and I treat it as if I'm running a separate PP in a separate currency.

If I could, I would run an SDR weighted PP but I use the US PP as a proxy for it.
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Re: I think it’s time to move into crypto

Post by vincent_c » Fri Feb 26, 2021 10:27 am

Just also as a matter of background.

I got into crypto in 2016.

I was working with a partner pair trading NEO/GAS. It started one night when I turned $100 into $1000 and stayed up all night. Realizing that here we finally had a currency pair that fundamentally was tied together so that it should always revert to the mean if you can make the relationship stationary.

We designed an algo that ran the trade very successfully through the 2017 cycle until it was no longer scalable and liquidity wasn't there anymore. Unfortunately, stayed in the trade too long and at the time there was a real risk that BTC would go to zero. I don't believe that tail risk exists anymore.

In the end I decided that if BTC would be irrelevant following the end of a cycle in terms of market cap then I don't need to hedge my gold allocation. But after we went past the 18k mark and knowing that BTC typically doesn't fall below previous cycle high, the BTC market cap is high enough that it can no longer be ignored. But you also have to factor in what the real store of value market cap is and separate that out from speculation.
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