Bitcoin

Simon-in-Suffolk posted:

Kevin, what method to you use as securing your bitcoin wallet with that sort of money.. I assume you use a disconnected (off line) hardware wallet in a safe or similar, or do you use a third party?

S

I have a hardware wallet but I have offline cold storage that makes it ~ impossible for me to access the bulk of my bitcoin. I figured (correctly) I'd be tempted by the lure of material possessions and I am holding them for my descendants.

If you are interested I'd recommend Trezor hardware wallet. Very easy to use and it has open source software which makes its internal operations "transparent" (If you can read code)

As far as I can figure, BITCOIN is not so much as investment as it is a hedge.  A hedge against QE, debt defaults, bank defaults, asset seizures, bank account freezes, etc. etc. 

The more Greeces and Eurozone calamities or US/North Korea stand-offs we have, the higher Bitcoin is destined to go. 

A few Bitcoins bought today has the potential to offset some major traditional currency losses in the future if push ever really comes to shove.  

Blackmorec posted:

As far as I can figure, BITCOIN is not so much as investment as it is a hedge.  A hedge against QE, debt defaults, bank defaults, asset seizures, bank account freezes, etc. etc. 

The more Greeces and Eurozone calamities or US/North Korea stand-offs we have, the higher Bitcoin is destined to go. 

A few Bitcoins bought today has the potential to offset some major traditional currency losses in the future if push ever really comes to shove.  

Bitcoin has replaced gold for me. I was a hardcore gold bug starting in 2001-2 but I've lost all interest in PM's outside of a small "sentimental" position. 

Bitcoin is a hedge vs central bank manipulated currency. I also believe it is an investment given the massive influx of capital into companies/products leveraging Bitcoin Blockchain. These new ventures will create increased demand for bitcoins by building 100's or 1,000's of new use cases for the coin. [Recently a Bitcoin company Blockstream has setup a network of satellites aimed at extending the reach of Bitcoin beyond the Internet across the globe.]

Bitcoin is also an investment simply because it is expected to go up in value vs every government controlled currency. My guess is < 1% of the population currently owns any Bitcoin yet it has been the best performing asset class over the past two years. This combined with increased media coverage, ability to include in IRAs, the regulatory approval of an options market, an existing "ETF like" investment vehicle that tracks price of Bitcoin recently trading at 2x the value of the underlying asset, low interest rate environment with the inevitable demise of the 40 year bond market bull run leaving investors  sitting on cash/short-term bond funds ......

"Brett Arends called Bitcoin garbage with no real world use outside of online gambling, trafficking in illegal goods and services, and money laundering. "

Well yes, that is what Central Bank Useful Idiots would say. They're saying the same things about cash too...just to begin priming the pump of public stupidity, er, I mean opinion. (See Rogoff, Summers, etc.)

Simple fact is they hate anything that might break their grip on total control of everything, because if you control the money supply, you are 100% in charge. This hatred encompasses cryptos, PMs, and cash. Of course, the simple fact that the US dollar has lost 97% of its purchasing power since the Federal Reserve was formed should give no one pause for thought...after all, they are the experts.

That is why that silly/stupid woman running the Fed can make a statement as she did last month that we are highly unlikely to see another financial crisis in our lifetimes - oh really Janet? I give it 2, maybe 3 years at most. An awful lot of this bogus credit loaned at faux interest rate levels that prompted this "recovery" is NEVER getting paid back. And once the dominoes start to fall, watch out below - 2008 will look like a walk in the park, because the setup is exactly the same, only this time the numbers are way larger.

The reality is that when we deposit money in a bank, it is literally no longer our money...all we have become is an unsecured creditor to the bank. And almost all western nations have passed "bail-in" laws in the past 5 or so years. Cyprus was just a Beta-test.

I am not in cryptos, but looking to get some exposure - definitely NOT something for the rent money. Interested in Ethereum, Factom, maybe Monero, and there is an ICO of Ahoolee upcoming - but the whole exchange/wallet thing is difficult for me to wrap my head around.

Cryptos, PMs (including shares of quality miners and royalty companies), some physical cash, and shorts (including long-dated puts) on highly indebted companies with lousy balance sheets. Then after the crash, go shopping for the stocks of quality businesses that will be on sale at massive discounts.

It'll be interesting to see what happens when someone designs a successful virus targeting cryptos.

Actually I heard 2 large accounts on Coinbase (IIRC) were hacked - and it was simply a case of "too bad, it sucks to be you"  - another reason to tread lightly. And you are correct Huge, you know there are people working on just what you have mentioned.

Which is why if you use cryptocurrencies you need to be aware conceptually how they works and unless you have trivial amounts of money keep an independent hardware wallet that you control, not hosted by some third party which can then become an obvious target . This way the world can hack to their hearts content, your computer can be compromised and your money is still safe - which of course is the ultimate attraction of crypto currency compared to regular money - you kind of treat it like gold - but clearly if you vault is raided you have no gold.... but it holds its value independent of standard currencies, and with crypto currencies you can give give yourself protections that you cant have with gold.....

The current big issue with Bitcoin in 2017 is increasing transaction settlement time - and it is increasing in a way  which may ultimately point to a limitation of its architecture. Other cryptocurrencies such as Ethereum and Zcash are gaining ground and growing more quickly and have apparently advantages over Bitcoin - though I am no expert at all.

While the independent 'Hardware Wallet' is offline, that's true, but when it becomes connected to perform a transaction, it only has to be connected to a compromised system and the potential for cryptotheft is as present as the cryptocurrency!

I don't think so - only when the cryptocurrency has been converted to traditional cash, like any cash,  can it be realised through hacking. And if you you are concerned you would be physically held to ransom for your passwords then you can have multiple keys - and distributed funds - so  one physical compromise through blackmail or personal threat would not be able to be used to access some  funds or all funds - depending on how you set up. But clearly keeping your private keys with a third party no matter how much you trust them I suggest is not a great idea.......

What I like about crypto currencies is that much of the thinking behind them is the same (in my opinion) that is used in the mind set of crypto and cyber engineers that develop and exploit vulnerabilities/viruses in predominant computer architectures... its a validated cryptographic mesh of safety in numbers...

Kevin Richardson posted:

 I was a hardcore gold bug starting in 2001-2 but I've lost all interest in PM's outside of a small "sentimental" position. 

 

While I don't speculate on intrinsically worthless things like PMs or Bitcoin, I applaud your decision to get out of this space. Holding gold has been (and will continue to be) a terrible, terrible strategy over any reasonable time period.

Simon, I agree that there's no point in trying to exploit vulnerabilities in the maths of the current generation of asymmetric entropic encryption schemes, but that's not where you target the attack - you look for vulnerabilities in the supporting structures.  Previously In my design role I was frequently having to remind people of this.

Huge posted:

Simon, I agree that there's no point in trying to exploit vulnerabilities in the maths of the current generation of asymmetric entropic encryption schemes, but that's not where you target the attack - you look for vulnerabilities in the supporting structures.  Previously In my design role I was frequently having to remind people of this.

Yes, don't try to make gold from lead, but simply steal it instead.

winkyincanada posted:

Kevin Richardson posted:

 I was a hardcore gold bug starting in 2001-2 but I've lost all interest in PM's outside of a small "sentimental" position. 

 

While I don't speculate on intrinsically worthless things like PMs or Bitcoin, I applaud your decision to get out of this space. Holding gold has been (and will continue to be) a terrible, terrible strategy over any reasonable time period.

And fiat currencies are not "intrinsically worthless" things? Gold has a 5,000 year record of value. Name one fiat currency in the history of world finance that has been successful for more than 300 years. The USD will eventually find its intrinsic value. Ditto the Euro, and all the others. Then the SDRs will show up, and the banks will take care of themselves. They always do.

$305 an ounce ca. 2002, and just shy of $1,300 today. That's a double every 3 years on average...so I fail to see how that "has been a terrible strategy" - and no, I didn't own any gold in that time period, so I was not in that game. Had you sold out anywhere near the $1,600 - $1,800 top a few years back, it would have returned ~650% in about 10 years.

But it really is not an investment, nor should it be treated as such. It is crisis and reset insurance, nothing more. Being a "gold bug" is a pointless endeavor. Use miners and royalty companies as speculative vehicles because they tend to front-run and increase more than the value of the PMs - mining itself is a TERRIBLE business.

As Alan Greenspan recently said in a recent interview, after saying generally negative things about gold...he was asked "Do you own any gold?" His response: "Of course...I'm not stupid."

Central banks are loading up on gold these days, despite nay-saying it consistently. And the only reason the price is where it is, is because the paper gold market (i.e., funds like GLD) allow it to be one of the most manipulated markets around. If people with the contracts ever demand their physical product, there is nowhere near enough to sate those requests.

And cryptos may (or may not) end up being alternatives to PMs and fiat currencies - only time will tell.

DrMark posted:

winkyincanada posted:

Kevin Richardson posted:

 I was a hardcore gold bug starting in 2001-2 but I've lost all interest in PM's outside of a small "sentimental" position. 

 

While I don't speculate on intrinsically worthless things like PMs or Bitcoin, I applaud your decision to get out of this space. Holding gold has been (and will continue to be) a terrible, terrible strategy over any reasonable time period.

And fiat currencies are not "intrinsically worthless" things? Gold has a 5,000 year record of value. Name one fiat currency in the history of world finance that has been successful for more than 300 years. The USD will eventually find its intrinsic value. Ditto the Euro, and all the others. Then the SDRs will show up, and the banks will take care of themselves. They always do.

$305 an ounce ca. 2002, and just shy of $1,300 today. That's a double every 3 years on average...so I fail to see how that "has been a terrible strategy" - and no, I didn't own any gold in that time period, so I was not in that game. Had you sold out anywhere near the $1,600 - $1,800 top a few years back, it would have returned ~650% in about 10 years.

But it really is not an investment, nor should it be treated as such. It is crisis and reset insurance, nothing more. Being a "gold bug" is a pointless endeavor. Use miners and royalty companies as speculative vehicles because they tend to front-run and increase more than the value of the PMs - mining itself is a TERRIBLE business.

As Alan Greenspan recently said in a recent interview, after saying generally negative things about gold...he was asked "Do you own any gold?" His response: "Of course...I'm not stupid."

Central banks are loading up on gold these days, despite nay-saying it consistently. And the only reason the price is where it is, is because the paper gold market (i.e., funds like GLD) allow it to be one of the most manipulated markets around. If people with the contracts ever demand their physical product, there is nowhere near enough to sate those requests.

And cryptos may (or may not) end up being alternatives to PMs and fiat currencies - only time will tell.

You're cherry-picking your timeline.

From 2013 to the present day gold, in inflation-adjusted terms has provided a CAGR of just 0.87% per year. If inflation is added the CAGR is just 4%. It's been a much worse investment the US bonds. If the returns are considered in the light of the volatility, then they are really dismal. All the risk and no reward. Of course, some gold bugs argue that the gold price is negatively correlated to their other investments and therefore should be a part of a risk managed portfolio as a hedge against bad things happening. Their is some evidence to support this notion, I'll admit. 

We're not disagreeing in general. Currencies are simply promises made by one party to another to provide something of tangible value in the future. They're all risky to a greater or lesser extent in that regard, and I don't speculate on their movement in price. My investments are in tangible things such as companies and real-estate, (albeit all priced by way of regular currencies). I count gold primarily as a currency as the stored amount of gold vastly exceeds it's usage for real applications (plating audio connectors for example). It's price is largely reflection the market's view of its future price, and is essentially disconnected from the cost of production via mining/processing/smelting/refining process by the vast buffer of stockpiled gold. (The notion that the amount gold named in derivatives vastly exceeds the stored amount is true, but disingenuous. In the case of the derivatives there are always counter-parties and it all just nets off or defaults to zero. Adds to volatility but not to long-term price growth.)

Actually Winky - we do agree much more than it seemed at first glance - I wasn't so much trying to cherry pick a time line - I just felt like 15 years was a decent "recent" time line, and where we do disagree is that I think PMs will go much higher from here...priced in fiat currency terms. That is the interesting thing about gold - throughout history it is a "currency" (or as some say, "real money") that has maintained pretty steady and stable buying power for thousands of years, with fluctuations of course.

People who think gold will make them rich are kidding themselves (the gold bugs) because the "value" is priced in terms of the government fiat currencies. As I said, I view it literally as n insurance policy, because in the event of currency collapse I feel reasonably certain gold will still have a place at the table in the new fiat. (Not guaranteed, but 5,000 years of history speaks to that being the case more likely than not.) It might provide some seed funds to start life over.

I agree that productive businesses, real estate, and farmland (which is part of both of those categories) are good (even the best) investment classes. Because they are things that are useful and will always be in demand. The only advantage gold might be considered having over those is its relative portability...but then, I don't see it as an investment or speculation, just an insurance policy.

Cryptos? Who knows, but to me it is a highly speculative thing regardless. I'd like some exposure, but only in a very small way since I don't really "get it"...very much like gambling in my mind.

Huge posted:

Simon, I agree that there's no point in trying to exploit vulnerabilities in the maths of the current generation of asymmetric entropic encryption schemes, but that's not where you target the attack - you look for vulnerabilities in the supporting structures.  Previously In my design role I was frequently having to remind people of this.

Indeed as in anything - but that is a constant as it were and nothing to do with Crypto currencies per se. I find it fascinating that a small JSON file containing my private key and few other crypto pieces so as to  access  my money which I can keep locked away - and even that is protected by a secret private  key that I only know unless I want to share with multiple keys- but the 'money' itself  is distributed across the planet in the validated global block chains - I love the technology and mathematics of it all - and it is so easy to have multiple accounts such as pay in or mining accounts that can then feed weekly into your master off line or cold account.... one thing for sure it  is quite volatile at the moment with the price ticking up and down a few percentage points each day - I guess you need to look into the trend to work out the 'interest' which probably has been unsustainably high over the last 6 months at about 700% [with Ethereum] - and hindsight is a wonderful thing . The other concept I like with Ethereum is the 'gas' or transaction charge - and the quicker you need the transaction validated and confirmed the more global computing resources are uses so the higher the cot. I leave mine at the default responsiveness of about 15 pence per transaction.

And I think Mark has it - treat it speculatively - use it to pay for some items - kind of novelty style - but for the most part use it to save small amounts gambling the interest. Its almost as fun as going to the races - but somewhat more fruitful currently... 

DrMark posted:

Actually Winky - we do agree much more than it seemed at first glance - I wasn't so much trying to cherry pick a time line - I just felt like 15 years was a decent "recent" time line, and where we do disagree is that I think PMs will go much higher from here...priced in fiat currency terms. That is the interesting thing about gold - throughout history it is a "currency" (or as some say, "real money") that has maintained pretty steady and stable buying power for thousands of years, with fluctuations of course.

People who think gold will make them rich are kidding themselves (the gold bugs) because the "value" is priced in terms of the government fiat currencies. As I said, I view it literally as n insurance policy, because in the event of currency collapse I feel reasonably certain gold will still have a place at the table in the new fiat. (Not guaranteed, but 5,000 years of history speaks to that being the case more likely than not.) It might provide some seed funds to start life over.

I agree that productive businesses, real estate, and farmland (which is part of both of those categories) are good (even the best) investment classes. Because they are things that are useful and will always be in demand. The only advantage gold might be considered having over those is its relative portability...but then, I don't see it as an investment or speculation, just an insurance policy.

Cryptos? Who knows, but to me it is a highly speculative thing regardless. I'd like some exposure, but only in a very small way since I don't really "get it"...very much like gambling in my mind.

I think we do agree. My point was really that gold as an "investment" is pretty hopeless on average. It's better than putting cash in your mattress, for sure, but not even as good as "risk free" bonds. And certainly nowhere near as good any other mainstream investment category in the long-term.

I'd suggest that it is (ultimately) a mistake to invest in things you don't understand - especially things which have no intrinsic value.

On my other hand - you can make money buying any old shit as it rises and getting the hell out before the bubble bursts. I just don't find that a very attractive way of making money.

As Richard Feynman didn't say about Bitcoin (applies to money to be frank) "If you think you understand (quantum mechanics) Bitcoin, you don't understand (quantum mechanics) Bitcoin."

Additionally - Richard Feynman, the late Nobel Laureate in physics, was once asked by a Caltech faculty member to explain why spin one-half particles obey Fermi Dirac statistics. Rising to the challenge, he said, "I'll prepare a freshman lecture on it."

But a few days later he told the faculty member, "You know, I couldn't do it. I couldn't reduce it to the freshman level. That means we really don't understand it."

Frank

winkyincanada posted:

DrMark posted:

winkyincanada posted:

Kevin Richardson posted:

 I was a hardcore gold bug starting in 2001-2 but I've lost all interest in PM's outside of a small "sentimental" position. 

 

While I don't speculate on intrinsically worthless things like PMs or Bitcoin, I applaud your decision to get out of this space. Holding gold has been (and will continue to be) a terrible, terrible strategy over any reasonable time period.

And fiat currencies are not "intrinsically worthless" things? Gold has a 5,000 year record of value. Name one fiat currency in the history of world finance that has been successful for more than 300 years. The USD will eventually find its intrinsic value. Ditto the Euro, and all the others. Then the SDRs will show up, and the banks will take care of themselves. They always do.

$305 an ounce ca. 2002, and just shy of $1,300 today. That's a double every 3 years on average...so I fail to see how that "has been a terrible strategy" - and no, I didn't own any gold in that time period, so I was not in that game. Had you sold out anywhere near the $1,600 - $1,800 top a few years back, it would have returned ~650% in about 10 years.

But it really is not an investment, nor should it be treated as such. It is crisis and reset insurance, nothing more. Being a "gold bug" is a pointless endeavor. Use miners and royalty companies as speculative vehicles because they tend to front-run and increase more than the value of the PMs - mining itself is a TERRIBLE business.

As Alan Greenspan recently said in a recent interview, after saying generally negative things about gold...he was asked "Do you own any gold?" His response: "Of course...I'm not stupid."

Central banks are loading up on gold these days, despite nay-saying it consistently. And the only reason the price is where it is, is because the paper gold market (i.e., funds like GLD) allow it to be one of the most manipulated markets around. If people with the contracts ever demand their physical product, there is nowhere near enough to sate those requests.

And cryptos may (or may not) end up being alternatives to PMs and fiat currencies - only time will tell.

You're cherry-picking your timeline.

From 1913 to the present day gold, in inflation-adjusted terms has provided a CAGR of just 0.87% per year. If inflation is added the CAGR is just 4%. It's been a much worse investment the US bonds. If the returns are considered in the light of the volatility, then they are really dismal. All the risk and no reward. Of course, some gold bugs argue that the gold price is negatively correlated to their other investments and therefore should be a part of a risk managed portfolio as a hedge against bad things happening. Their is some evidence to support this notion, I'll admit. 

We're not disagreeing in general. Currencies are simply promises made by one party to another to provide something of tangible value in the future. They're all risky to a greater or lesser extent in that regard, and I don't speculate on their movement in price. My investments are in tangible things such as companies and real-estate, (albeit all priced by way of regular currencies). I count gold primarily as a currency as the stored amount of gold vastly exceeds it's usage for real applications (plating audio connectors for example). It's price is largely reflection the market's view of its future price, and is essentially disconnected from the cost of production via mining/processing/smelting/refining process by the vast buffer of stockpiled gold. (The notion that the amount gold named in derivatives vastly exceeds the stored amount is true, but disingenuous. In the case of the derivatives there are always counter-parties and it all just nets off or defaults to zero. Adds to volatility but not to long-term price growth.)

Correction to my timeline. I meant to write 1913!

Pre August 1,2017 Bitcoin passed $5,000 USD today.

Apparently it produces a massive amount of CO2 gases to mine Bitcoins.

Those poor countries that are exploited for those precious minerals they add to make it more shinier.

its atrocious.

TOBYJUG posted:

Apparently it produces a massive amount of CO2 gases to mine Bitcoins.

Those poor countries that are exploited for those precious minerals they add to make it more shinier.

its atrocious.

It is the world's most powerful single purpose super computer.

Kevin Richardson posted:

TOBYJUG posted:

Apparently it produces a massive amount of CO2 gases to mine Bitcoins.

Those poor countries that are exploited for those precious minerals they add to make it more shinier.

its atrocious.

It is the world's most powerful single purpose super computer.

Shouldn't it get a proper job?

Kevin Richardson posted:

Pre August 1,2017 Bitcoin passed $5,000 USD today.

How come you didn't post here on Tuesday when you lost $600,000? 

count.d posted:

Kevin Richardson posted:

Pre August 1,2017 Bitcoin passed $5,000 USD today.

How come you didn't post here on Tuesday when you lost $600,000? 

Not sure I follow that comment, Bitcoin as at 10.40 BST is worth £162.44 per Bitcoin more than it was precisely this time a week ago.

If you invest in crypto currencies unless you want to play with trading algorithms you really need to do for the longer term and diversify the currencies in my opinion... and even most trading algorithms seem to only really yieldresults over a longer term.. say several weeks and months. Thanks to the cue from Kevin I now again have a modest investment in cryptos and so far so good....