Bitcoin

Too much of a gamble if you can't afford to lose the money. 

I like to invest in individual stocks in the US markets for a bit of fun and properly invest in large equity funds spread across different world markets. If/when markets dip, buy more units. Invest/build up £50k and within 3 years you'll have a new 552 for free. Within, not in.

Advice? Choose a market i.e. Asia excl Japan, research and compare fund options and choose one that always out-performs the others. 

Yeah I am trying to make heads and tails out of this cryptocurrency situation. I think there are over 900 of them at present, and I am sure most of them will utterly fail, but as the financial markets continue on their Central Bank fueled Bataan Death March I am sure some of them will flourish and stick.

Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Adam you have to be very careful keeping a spread portfolio.  It has to be spread wide enough, because, in close proximity, the hippogriffs will eat the unicorns (but they then feel guilty about it, which is why they're calls gilt hippogriffs). 

Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Good for you. 

I've earned the right to be as smug as I want. I spent my career in finance and made three predictions:

1.Amazon

2. Gold

3. Bitcoin

Im not surprised people mock Bitcoin as I had the very same reaction in 2001 when I predicted Amazon would eventually become the world's most valuable company.

Anyhoo... You be you and I'll be me.

Ke

Kevin Richardson posted:
Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Good for you. 

I've earned the right to be as smug as I want. I spent my career in finance and made three predictions:

1.Amazon

2. Gold

3. Bitcoin

Im not surprised people mock Bitcoin as I had the very same reaction in 2001 when I predicted Amazon would eventually become the world's most valuable company.

Anyhoo... You be you and I'll be me.

A lot of people very rightly predicted the remarkable rise in value of the South Sea Company.

Huge posted:

Ke

Kevin Richardson posted:
Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Good for you. 

I've earned the right to be as smug as I want. I spent my career in finance and made three predictions:

1.Amazon

2. Gold

3. Bitcoin

Im not surprised people mock Bitcoin as I had the very same reaction in 2001 when I predicted Amazon would eventually become the world's most valuable company.

Anyhoo... You be you and I'll be me.

A lot of people very rightly predicted the remarkable rise in value of the South Sea Company.

Don't worry... most older people are clueless as to the economic reality of Bitcoin\crypto currency. I'm pushing 50 but have always been a futurist. The massive transfer of wealth from holders of gold, silver, bonds, and large-cap equities to Bitcoin\crypto may take 20-50 years but it will happen regardless of how boomers, Gen X, and Gen Y feel. Is it a straight line up? No. Will it crash again? Probably. Is it a risky investment given a 10-20 year horizon? No. Could I be wrong? Yes. Nothing is 100%. [Bitcoin is only 99.9% likely to go to $30,000 in five years.]

Just so open to fraud, fear of fraud and lack of substance which, together with its stupendously high daily volatility, means the world at large won't accept any CC until it has some kind of even theoretical backing by 'real world' reserves.

The fact that 99% of Bitcoin owners could switch allegiance to a brand new, more shiny CC tomorrow doesn't help endear it either.

Belief is everything, whether it's Gold, Dollars or Bitcoin. Tulip bulbs, Parmalat or CDOs. Right now we're in the phase where some, like the OP, are benefitting from the belief. The moment that belief becomes unfounded, after some of the masses have bought in, it is likely to collapse I suspect.

It could be quite likely that investors at some point wonder 'what was I thinking...' and the belief stops spreading very swiftly.

Kevin Richardson postedon't worry... most older people are clueless as to the economic reality of Bitcoin\crypto currency. I'm pushing 50 but have always been a futurist. 

Young man, I'm even clueless about how 'ordinary' money is an economic reality.

At least, in this, I share my ignorance with the Wall Street Masters of the Universe.

JamieWednesday posted:

Just so open to fraud, fear of fraud and lack of substance which, together with its stupendously high daily volatility, means the world at large won't accept any CC until it has some kind of even theoretical backing by 'real world' reserves.

The fact that 99% of Bitcoin owners could switch allegiance to a brand new, more shiny CC tomorrow doesn't help endear it either.

Belief is everything, whether it's Gold, Dollars or Bitcoin. Tulip bulbs, Parmalat or CDOs. Right now we're in the phase where some, like the OP, are benefitting from the belief. The moment that belief becomes unfounded, after some of the masses have bought in, it is likely to collapse I suspect.

It could be quite likely that investors at some point wonder 'what was I thinking...' and the belief stops spreading very swiftly.

"Real world reserves"... A common misconception regarding Bitcoin is that it is not "backed by anything".  This is absolutely not true. Bitcoin is backed by the mathematics performed by the world's largest super computer network. This network continues to grow in hash power as the value of the Bitcoin increases. Millions of $/day is spent securing the integrity of the Blockchain. If you own a BTC, this network makes it economically impossible for anybody to change ownership without your consent. The cost to "undo" a previous transaction doubles every 10 minutes. To change a transaction from yesterday requires resources beyond even that of the US government.

Trust and faith in mathematics vs central banks is what will continue to propel Bitcoin to the level of a world Reserve Currency. The volatility will decrease over time as the existing BTC become more evenly distributed among the population. Since 2012, I've told everybody in my life to just buy 1 BTC as the downside risk has been very little. AFAIK nobody has followed my advice. Right now 1 BTC = $4,300 and I'd still recommend everybody buy 1 if they can just hold it for several years without "freaking out" over a possible 50% retraction.

Beyond BTC, some other crypto coins are going to form the basis for Internet 4.0. Platform coins like NEO, Ethereum, and Stratis will become the new "distributed computing networks" for "Smart Contracts" which will likely disrupt existing business models in finance, banking, identity management, gambling, and many more.

Bitcoin is difficult to understand but if you spend time learning how it works, you will understand WHY it works. Also, you will eventually understand that its value will continue to grow vs USD.

I suppose I should stop trying to sell the idea. I've experienced nothing but ridicule over the years. Eventually everybody will know a "Bitcoin Millionaire" and that will be enough for typical people to understand it is "real".

Hard to keep up with Bitcoin news, which now appears to have split in two: Bitcoin and Bitcoin Cash. But there have been some interesting articles in the WSJ over the last few weeks. Brett Arends called Bitcoin garbage with no real world use outside of online gambling, trafficking in illegal goods and services, and money laundering.  Josh Brown bought some Bitcoin, but admitted it was mostly based on FOMO (fear of missing out).

I can see pluses and minuses. On the one hand, when I think about the advancements in mobile payments and e-commerce over the last decade, and if I read about the potential of block chain technology, then it’s seems silly to just write Bitcoin and other crypto currencies off as a fad. But the volatility, the potential for fraud (e.g., for relatively immature exchanges to be hacked and money stolen), means there are still serious warning signs.

I know that my US dollars have not been redeemable for gold since 1933, and silver since 1968. I know they are only backed by this nebulous promise of "full faith and credit" by the US government. But at least I can still exchange them for goods and services worldwide. Will Bitcoin reach this level of ubiquity some day? Maybe. Will it become the world's next reserve currency? We'll see.

Personally, I have not reached the FOMO stage, and I am definitely more risk adverse than Kevin. Still, I appreciate him sharing his informed opinions, and I wish him all the best with his investments!

Kevin Richardson posted:

"Real world reserves"... A common misconception regarding Bitcoin is that it is not "backed by anything".  This is absolutely not true. Bitcoin is backed by the mathematics performed by the world's largest super computer network. This network continues to grow in hash power as the value of the Bitcoin increases. Millions of $/day is spent securing the integrity of the Blockchain. If you own a BTC, this network makes it economically impossible for anybody to change ownership without your consent. The cost to "undo" a previous transaction doubles every 10 minutes. To change a transaction from yesterday requires resources beyond even that of the US government.

I hear you - I really do.

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Kevin Richardson posted:

Is it a straight line up? No. Will it crash again? Probably. Is it a risky investment given a 10-20 year horizon? No. Could I be wrong? Yes. Nothing is 100%. [Bitcoin is only 99.9% likely to go to $30,000 in five years.]

Is asking a question that you then answer a valid rhetorical device? Sometimes.

Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167. Please continue to tell me I'm wrong . (Disclaimer: I've been buying Bitcoin since it was 60$)

You won't be right or wrong, you'll be lucky or unlucky. During the night, bitcoin went down 15% within a 6 hour period. There's a chance it could double overnight or crash to zero. Not an investment I'd be interested in. You can't know what the bitcoin value is going to do, no matter how long you've been in finance. Amazon, gold, Google, Apple...... not exactly difficult was it? Sunday paper reading.

99.9%? With statements like that, I'd worry if I were you. Trade the bitcoin with excess money, don't invest your life savings.

Kevin Richardson posted:
Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Good for you. 

I've earned the right to be as smug as I want.

Me too. I'm a Yorkshireman............... 

Kevin Richardson posted:
Adam Meredith posted:
Kevin Richardson posted:

Ok.... When I posted this BTC was $3,209 and now at $4,167.

I plunged majorly into unicorn futures - before they became fashionable.

My broker tells me we now have a consolidated spread portfolio which leverages market trends to give an over-base-rate return of 720%.

Should I so wish (and why would I?) this can easily be reverse capitalised through a gradual move to tranches of gryphons and gilt hippogriffs. 

I'm feeling pretty smug (I think).

Good for you. 

I've earned the right to be as smug as I want. I spent my career in finance and made three predictions:

I was going to make a smart alec (American orange orientated) comment about that, but I won't as
1 you don't deserve that comparison
2 it would get me banned!

If you want another area in which to invest, the next technical era is going to be the era of ceramics.

We've had eras of Stone, Bronze, Iron, Steel, Aluminium, Plastics, Electronics, Computers, and these are now common place.  Now we're seeing composites gaining traction (pun intended), and the most remarkable of these are ceramics.


Early ceramic developments include...

Surface control (non-stick surfaces, self lubricating bearings, hardened surfaces)
Lightness & hardness (low wear bearings, ceramic knives)
Lightness and rigidity (Aloxite structural components)
Toughness (toughened cermets)
Strength (hotelware, boron fibre)


Still to come, but getting close...

Combinations of these (and novel) properties
Ceramic semiconductors (this has already started with amorphous silicon photovoltaic cells)
Medium temperature capable ceramic superconductors (currently yttrium barium copper oxide (YBCO) and a few others are getting close)
Ceramic optical devices (such as opto-electronic switches)


So, it's not that difficult!

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.

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.)

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