Author Topic: The Cryptocurrencies Thread  (Read 22383 times)

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Offline XJDenton

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Re: The Cryptocurrencies Thread
« Reply #175 on: May 27, 2021, 06:23:34 AM »
I reckon it will survive in some capacity, but I don't see there being a paypal or amazon of crypto. I think Vinyl is a more apt comparison.
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Offline ErHaO

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Re: The Cryptocurrencies Thread
« Reply #176 on: June 04, 2021, 03:15:43 AM »
Saw another headline about Musk trolling crypto. So are some of these billionaires just creating dips and surges? Obviously Musk knows what kind of influence his tweets have. At this point it really seems like this to me: tweet something bad about crypto>causes dip>announce that you believe in it and buy>causes surge>sell>repeat in a couple of months/weeks (or wait for a dip for another reason>buy and announce faith>sell). At this point in time there is little use for crypto as an actual currency (outside of shady of the grid stuff), thus it's value seems so incredibly dependant on internet discourse.

Granted, I have not been following it closely at all, but I just saw yet another "Musk announced friendship with Bitcoin is over" type of headline.

Offline MinistroRaven

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Re: The Cryptocurrencies Thread
« Reply #177 on: June 04, 2021, 05:31:45 AM »
I hate Musk.
I got blocked on Twitter for a reply to his stupid tweet. Sincerely, I don’t understand how what he does is not considered market manipulation, the SEC should be all over that jerk.

Offline ReaperKK

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Re: The Cryptocurrencies Thread
« Reply #178 on: June 04, 2021, 07:11:28 AM »
Once Musk got a slap on the wrist for his "might take tesla private @420 a share" a few years back he probably realized he can say whatever the fuck he wants and the SEC won't do a thing about it.

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Re: The Cryptocurrencies Thread
« Reply #179 on: June 04, 2021, 08:00:42 AM »
Does crypto fall under the jurisdiction of the SEC?

Offline cramx3

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Re: The Cryptocurrencies Thread
« Reply #180 on: June 04, 2021, 08:17:18 AM »
I hate Musk.
I got blocked on Twitter for a reply to his stupid tweet. Sincerely, I don’t understand how what he does is not considered market manipulation, the SEC should be all over that jerk.

While I do agree with this take on Musk.  I'm really being soured by him myself.  I told my friend this just yesterday that I'm not sure what he does on reddit with stocks like AMC to be much different. All this stuff going on seems to be market manipulation to me.  Makes me want to just stay out of it and continue to dump money into some ETFs that are consistent performers and not play along with crypto and whatever wallstreetbets wants to play with.

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Re: The Cryptocurrencies Thread
« Reply #181 on: June 05, 2021, 09:14:19 AM »
Does crypto fall under the jurisdiction of the SEC?

I don't think so, but in due time it will.

Offline ReaperKK

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Re: The Cryptocurrencies Thread
« Reply #182 on: June 05, 2021, 11:35:44 PM »
I hate Musk.
I got blocked on Twitter for a reply to his stupid tweet. Sincerely, I don’t understand how what he does is not considered market manipulation, the SEC should be all over that jerk.

While I do agree with this take on Musk.  I'm really being soured by him myself.  I told my friend this just yesterday that I'm not sure what he does on reddit with stocks like AMC to be much different. All this stuff going on seems to be market manipulation to me.  Makes me want to just stay out of it and continue to dump money into some ETFs that are consistent performers and not play along with crypto and whatever wallstreetbets wants to play with.

IMO wallstreetbets are bets, and just that. Yes there is some fantastic DD there but with the size of the community it's largely a gamble. I'm with you in the sense of putting my money into ETF's, WSB is simply a gamble for me with fun money.

Offline ReaperKK

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Re: The Cryptocurrencies Thread
« Reply #183 on: June 06, 2021, 08:58:37 PM »
This is hilarious. I found this coin a little while back and it was worth nothing and now look at the price:

https://www.coinbase.com/price/cumrocket-crypto

I have to remind myself, the stupider it sounds the more likely i'll make money lmao.

Offline Cool Chris

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Re: The Cryptocurrencies Thread
« Reply #184 on: June 06, 2021, 09:12:07 PM »
Circulating supply:
1.4B CUMMIES
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Offline ReaperKK

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Re: The Cryptocurrencies Thread
« Reply #185 on: June 06, 2021, 09:35:39 PM »
Oh looks like Elon tweeted about it, most likely the reasoning behind the surge.

Offline cramx3

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Re: The Cryptocurrencies Thread
« Reply #186 on: June 07, 2021, 08:10:09 AM »
Well, this is interesting.... Anonymous going after Elon

https://www.youtube.com/watch?v=UG07x3aN3b0

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Re: The Cryptocurrencies Thread
« Reply #187 on: June 07, 2021, 08:40:27 AM »

Offline ReaPsTA

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Re: The Cryptocurrencies Thread
« Reply #188 on: June 07, 2021, 06:16:02 PM »
For a small-cap coin that isn't just a meme, give RUNE a look.

https://erikvoorhees.medium.com/an-introduction-to-thorchain-for-bitcoiners-3f621bf0028e < Long article explaining why RUNE actually has value. It's a liquidity-enabling token for the THORChain, a method of swapping coins such as Ethereum/Bitcoin over different blockchains rather than using wrapped/synthetic tokens.
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Offline ReaPsTA

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Re: The Cryptocurrencies Thread
« Reply #189 on: June 07, 2021, 06:20:57 PM »
Saw another headline about Musk trolling crypto. So are some of these billionaires just creating dips and surges? Obviously Musk knows what kind of influence his tweets have. At this point it really seems like this to me: tweet something bad about crypto>causes dip>announce that you believe in it and buy>causes surge>sell>repeat in a couple of months/weeks (or wait for a dip for another reason>buy and announce faith>sell).

Indeed. Big money wants to move into crypto so they're signal-boosting bad news to create temporary dips for them to buy. You notice how BTC never seems to go under 30k or ETH under 2k? Would cause genuine panic. Support somehow magically comes in at those marks.

Quote
At this point in time there is little use for crypto as an actual currency (outside of shady of the grid stuff), thus it's value seems so incredibly dependant on internet discourse.

Granted, I have not been following it closely at all, but I just saw yet another "Musk announced friendship with Bitcoin is over" type of headline.

As adoption increases there will be more money in the market and it will be harder to do these things. Agreed though that it sucks short term.
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Online lonestar

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Re: The Cryptocurrencies Thread
« Reply #190 on: June 09, 2021, 02:35:04 PM »
El Salvador to be the first country to accept bitcoin as legal tender.

Offline reneranucci

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Re: The Cryptocurrencies Thread
« Reply #191 on: June 09, 2021, 08:06:46 PM »
El Salvador to be the first country to accept bitcoin as legal tender.
Don't get me started (I'm a citizen from El Salvador). The decision was made based on a capricious desire from our childish President who also controls the absolute majority in Congress. If you believe in BTC, that's fine, reap the benefits privately. But don't commit a whole country to an experiment. The worst part of the stupid, rushed, nonsensical law is that it mandates all economic agents to accept payments in BTC. There's a reason why even the most sophisticated companies in the world won't accept payments in BTC, but hey, let's make your 3-person paper distribution company invest in BTC infrastructure to receive payments in a currency that nobody uses as a method of payment but as a speculative investment. For a country that ranks in the lowest quartile of business competitiveness, we should be looking to reduce costs of doing business. But hey, our leader now has laser eyes on his Tweeter profile and he's being filled with "El Salvador is finally free" and "BTC is prosperity for El Salvador" quotes from crypto-cult lunatics, so I guess everything is fine.

By the way, they should have read the disclaimer available on Bitcoin.org: "Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. During these growing pains you might encounter increased fees, slower confirmations, or even more severe issues. Be prepared for problems and consult a technical expert before making any major investments, but keep in mind that nobody can predict Bitcoin's future."

Online lonestar

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Re: The Cryptocurrencies Thread
« Reply #192 on: June 09, 2021, 08:28:27 PM »
Wow, thanks for the perspective. So if bitcoin crashes, so goes the Salvadoran economy. Fucking frightening.

Offline reneranucci

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Re: The Cryptocurrencies Thread
« Reply #193 on: June 09, 2021, 08:42:57 PM »
Wow, thanks for the perspective. So if bitcoin crashes, so goes the Salvadoran economy. Fucking frightening.
Not so much. The US Dollar is our legal tender and the financial system including the Central Bank are dollarized (yes, from the perspective of the crypto cult we're slaves :)) Unless the government is stupid enough to convert our international reserves (composed by the cash reserve that banks have to maintain to guarantee deposits) into BTC, a Bitcoin crash won't affect anybody who doesn't hold the currency. The problems of the law are others:
- Mandates all economic agents to accept payments in BTC. I don't need to spell out how stupid this is, hopefully companies won't give a shit and just won't complain with the law. Plus, nobody uses crypto for payments, unless you're buying a Tesla with Bitcoin (Also known as the Twitter orgasm)
- The majority of companies have liabilities in dollars (for example, with international suppliers). If they're not bullish in BTC, they'll try to get rid of the shitcoin as soon as possible to avoid the volatility. Bitcoin becomes HotPotatoCoin. The law establishes a Government Trust Fund to guarantee the "immediate convertibility" from BTC to USD, but doesn't say how the government will finance it (by the way, we're running record-high deficits and debt is close to 100% of GDP, but hey, priorities). This overly complicated mechanism signals that Bitcoin adoption is a solution in search of a problem.
- Of course our politicians have promised that Bitcoin will attract investments, and even guaranteed low-cost renewable energy to miners. We have one of the highest energy costs in the world, 30% of households don't have access to electricity, and importing equipment for mining is extremely expensive, so this is just shit coming from the mouth of the President. Nobobdy will mine in the country. Plus, mining does not multiplicate benefits to the country as a whole, only individuals reap the benefits, those with enough cash to buy the equipment.

To me, is a law with imaginary benefits and very real costs.

Offline kirksnosehair

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Re: The Cryptocurrencies Thread
« Reply #194 on: June 10, 2021, 01:50:15 PM »
Fascinating

Offline cramx3

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Re: The Cryptocurrencies Thread
« Reply #195 on: June 10, 2021, 05:15:52 PM »
- Mandates all economic agents to accept payments in BTC. I don't need to spell out how stupid this is, hopefully companies won't give a shit and just won't complain with the law. Plus, nobody uses crypto for payments, unless you're buying a Tesla with Bitcoin (Also known as the Twitter orgasm)

I've said here before that spending your BTC on product makes little sense to me.  There's a finite amount of BTC. 

Offline Cool Chris

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Re: The Cryptocurrencies Thread
« Reply #196 on: June 10, 2021, 06:27:43 PM »
Fascinating

I read "fascinating" in Spock's voice, while looking at Kirk shouting "Khan!" My mind cannot process what just happened.
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Re: The Cryptocurrencies Thread
« Reply #197 on: June 11, 2021, 06:38:53 AM »
I now hold 1,544,034,953 in PAWGcoin  :lol :lol I finally set up a legit wallet too instead of just going with whatever I can get on Robinhood or Voyager.

Offline kirksnosehair

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Re: The Cryptocurrencies Thread
« Reply #198 on: June 11, 2021, 01:10:57 PM »
Does crypto fall under the jurisdiction of the SEC?


I'm pretty sure crypto is 100% unregulated in the USA

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Re: The Cryptocurrencies Thread
« Reply #199 on: June 11, 2021, 01:11:38 PM »
Fascinating

I read "fascinating" in Spock's voice, while looking at Kirk shouting "Khan!" My mind cannot process what just happened.


 :rollin

Offline ReaPsTA

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Re: The Cryptocurrencies Thread
« Reply #200 on: June 11, 2021, 11:57:02 PM »
Don't get me started (I'm a citizen from El Salvador). The decision was made based on a capricious desire from our childish President who also controls the absolute majority in Congress. If you believe in BTC, that's fine, reap the benefits privately. But don't commit a whole country to an experiment. The worst part of the stupid, rushed, nonsensical law is that it mandates all economic agents to accept payments in BTC. There's a reason why even the most sophisticated companies in the world won't accept payments in BTC, but hey, let's make your 3-person paper distribution company invest in BTC infrastructure to receive payments in a currency that nobody uses as a method of payment but as a speculative investment. For a country that ranks in the lowest quartile of business competitiveness, we should be looking to reduce costs of doing business. But hey, our leader now has laser eyes on his Tweeter profile and he's being filled with "El Salvador is finally free" and "BTC is prosperity for El Salvador" quotes from crypto-cult lunatics, so I guess everything is fine.

By the way, they should have read the disclaimer available on Bitcoin.org: "Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. During these growing pains you might encounter increased fees, slower confirmations, or even more severe issues. Be prepared for problems and consult a technical expert before making any major investments, but keep in mind that nobody can predict Bitcoin's future."

Not so much. The US Dollar is our legal tender and the financial system including the Central Bank are dollarized (yes, from the perspective of the crypto cult we're slaves :)) Unless the government is stupid enough to convert our international reserves (composed by the cash reserve that banks have to maintain to guarantee deposits) into BTC, a Bitcoin crash won't affect anybody who doesn't hold the currency. The problems of the law are others:
- Mandates all economic agents to accept payments in BTC. I don't need to spell out how stupid this is, hopefully companies won't give a shit and just won't complain with the law. Plus, nobody uses crypto for payments, unless you're buying a Tesla with Bitcoin (Also known as the Twitter orgasm)
- The majority of companies have liabilities in dollars (for example, with international suppliers). If they're not bullish in BTC, they'll try to get rid of the shitcoin as soon as possible to avoid the volatility. Bitcoin becomes HotPotatoCoin. The law establishes a Government Trust Fund to guarantee the "immediate convertibility" from BTC to USD, but doesn't say how the government will finance it (by the way, we're running record-high deficits and debt is close to 100% of GDP, but hey, priorities). This overly complicated mechanism signals that Bitcoin adoption is a solution in search of a problem.
- Of course our politicians have promised that Bitcoin will attract investments, and even guaranteed low-cost renewable energy to miners. We have one of the highest energy costs in the world, 30% of households don't have access to electricity, and importing equipment for mining is extremely expensive, so this is just shit coming from the mouth of the President. Nobobdy will mine in the country. Plus, mining does not multiplicate benefits to the country as a whole, only individuals reap the benefits, those with enough cash to buy the equipment.
 one
To me, is a law with imaginary benefits and very real costs.

These posts were interesting to read. I'm only learning now about El Salvadorian politics because they're adopting crypto, so it's worthwhile to read something written by someone who actually lives there and isn't just hyping the move on Crypto Twitter. I found it odd that your president started parroting their exact talking points, and your posts validate that feeling. Hopefully it's because he genuinely thinks he can get investors/companies/miners to invest in the country and not because he has a scheme in place to personally profit while gambling with his country's future.

That said....... And I know I'm incredibly biased....... but......

Even if the solution is only half-thought out, it is addressing a real problem. The US Dollar is in danger of being the next Bolivar.

Prices around the world are rising due to supply chain issues. However, prices in America are also rising because of how many US dollars we are printing. I think something like 20% of all US dollars ever printed were made in the last year. We have no incentive to stop doing this either. Many "too big to fail" companies in the US are burdened by debt they cannot feasibly repay, yet they borrow money to buy back shares to increase their stock prices. To help keep major stock prices afloat, our central bank prints money to then buy those stocks. In some meeting last month, the Federal Reserve said they were considering pulling back on how much help they were injecting into the stock market, and it experienced a mini-crash.

While El Salvador's move is the most flamboyant, the rest of the world is also looking to move on from using the USD as its reserve currency. The US's share of the overall global economy is decreasing, and the rest of the major world powers are working on trade arrangements that don't require our money (obscenely long article on Petrodollar collapse: https://www.lynalden.com/fraying-petrodollar-system/)

It's easy for me as a relatively well off American to talk about the importance of crypto currency in an abstract sense. But on a human level, the US is already a very hard country to be poor in relative to Canada or Western Europe, and we're only making that worse with how we're debasing our currency. A 15 dollar minimum wage is meaningless if the price of a bag of rice doubles. Food prices have already gone up about 20% over the past few months.

BitCoin might have flaws. But the real shitcoin is the USD.
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Offline reneranucci

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Re: The Cryptocurrencies Thread
« Reply #201 on: June 12, 2021, 09:13:50 PM »
Thank you for taking the time to learn about the experiment in El Salvador and for sharing your thoughts. I enjoyed reading your post and I don't have any major rebuttals. Actually, I'm not against Bitcoin per se, just 100% against making it MANDATORY for all businesses to accept the currency. I think most of the benefits of Bitcoin (hedge against inflation, potential for transactions, etc.) could have been reaped privately by piloting its use in the country and investing government resources to push for education and penetration of the technology, while avoiding most of the social costs and risks of making it a legal tender and forcing 'all economic agents' to understand the technology, invest in a wallet, figure out how to keep count of bitcoins received, setting up a trust with public funds to guarantee convertibility, etc. I've worked in the economic analysis of regulations and the basic tenet is that regulation is the last option to be considered b/c it's usually the most costly and irreversible. Governments should only regulate after they've justified that all other actions do not accomplish the desired goals, and the regulation is the only way to achieve them. So my concern is why rushing it to a law, when there are so many other options.

Regarding your comments about the dollar, it's a very complex situation:
1. El Salvador had its own currency up to 2001, when the economy was dollarized, a policy imposed by the president who controlled the congress. The decision was announced 1 month before its implementation, the law rushed through the approval process, and people left to their own devices to adjust to the rapid change. I kid you not, the law was approved after a congressman shot a police office while drunk, and his party offered to support dollarization in exchange of the majority party not withdrawing immunity from the congressman. There was also some blatant lying in the process: the law said that both the national currency and the dollar would remain in circulation, while in reality all banks were forced to substract the local money from the economy until only dollars remained in circulation. So we have some strong deja vu's going on. And now we're a country with 3 legal tenders.
2. The dollar was considered as a bedrock for stability but it has become an experimental currency itself, considering that Quantitative Easing initiated by the Fed is one of the largest monetary policy experiments in history. It actually provides some explanation about why the increased money supply has not lead to inflation (up until very recently).
3. I don't see Bitcoin becoming a real alternative to the dollar until its volatility decreases and isn't so sensitive to Elon Musk's trolling. The main benefit of Bitcoin  or other cryptos as a hedge against US$ inflation comes from a country's (or private citizens/companys) ability to create reserves in crypto, and belief that its limited supply will serve as a long-term reserve of value against the dollar's inflationary policies. This strategy is becoming more popular among governments and banks. There's no easy mechanism, however, to do that in El Salvador. With a dollarized economy, our only reserves are the liquidity reserves constituted by a fraction of the deposits in the banking system (around 30% of all deposits). These can't be converted to Bitcoin b/c of its price volatility, and b/c this reserve is the cornerstone that shores up our whole financial system. Plus, our international lenders would never give us any money if we would do something as crazy as that. So the government can't really use it to escape the dollar, unless many things happen before and some serious macroeconomic engineering is put into place.

Again, I'm not against the currency, only against the law. And I'm only scratching the surface here, the law is so short and superficial that economists, bankers, investment funds, business owners and regular citizens have millions of questions that our childish President won't care to answer, because it requires more ability than tweeting memes and appearing cool in front of the crypto community.

Offline ReaPsTA

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Re: The Cryptocurrencies Thread
« Reply #202 on: June 12, 2021, 10:17:19 PM »
Thank you for taking the time to learn about the experiment in El Salvador and for sharing your thoughts.

I'm invested in crypto for a lot of reasons so it's good to learn!

Quote
Actually, I'm not against Bitcoin per se, just 100% against making it MANDATORY for all businesses to accept the currency. I think most of the benefits of Bitcoin (hedge against inflation, potential for transactions, etc.) could have been reaped privately by piloting its use in the country and investing government resources to push for education and penetration of the technology, while avoiding most of the social costs and risks of making it a legal tender and forcing 'all economic agents' to understand the technology, invest in a wallet, figure out how to keep count of bitcoins received, setting up a trust with public funds to guarantee convertibility, etc.

There's also the technical hurdle of how to make Bitcoin actually function as a day-to-day payment system. The core network is slow and expensive to use. At this precise moment the transaction fee is about four USD which relative to normal network fees is actually pretty good. But to make payments for day-to-day purchases? Unacceptable. I know there are various proposals for layer 2 solutions to work on top of it, with Lightning being the most popular, but none of them have really gained traction even after years of working on them.

The crypto community is very excited about having El Salvador as a use case to test ideas and provide some real world urgency for them to be whipped into usable shape. But it feels a bit flippant relative to the real human costs that might be incurred along the way.

Quote
I've worked in the economic analysis of regulations and the basic tenet is that regulation is the last option to be considered b/c it's usually the most costly and irreversible. Governments should only regulate after they've justified that all other actions do not accomplish the desired goals, and the regulation is the only way to achieve them. So my concern is why rushing it to a law, when there are so many other options.

Agreed..... and why indeed......

Quote
Regarding your comments about the dollar, it's a very complex situation:
1. El Salvador had its own currency up to 2001, when the economy was dollarized, a policy imposed by the president who controlled the congress. The decision was announced 1 month before its implementation, the law rushed through the approval process, and people left to their own devices to adjust to the rapid change. I kid you not, the law was approved after a congressman shot a police office while drunk, and his party offered to support dollarization in exchange of the majority party not withdrawing immunity from the congressman. There was also some blatant lying in the process: the law said that both the national currency and the dollar would remain in circulation, while in reality all banks were forced to substract the local money from the economy until only dollars remained in circulation. So we have some strong deja vu's going on. And now we're a country with 3 legal tenders.

The more things change the more things stay the same!

Quote
2. The dollar was considered as a bedrock for stability but it has become an experimental currency itself, considering that Quantitative Easing initiated by the Fed is one of the largest monetary policy experiments in history. It actually provides some explanation about why the increased money supply has not lead to inflation (up until very recently).

So when it comes to how the US dollar is doomed, you are already far more initiated than I!

Quote
3. I don't see Bitcoin becoming a real alternative to the dollar until its volatility decreases and isn't so sensitive to Elon Musk's trolling.

Agreed. And, as noted above, it's not ready yet on a technical level.

Quote
The main benefit of Bitcoin  or other cryptos as a hedge against US$ inflation comes from a country's (or private citizens/companys) ability to create reserves in crypto, and belief that its limited supply will serve as a long-term reserve of value against the dollar's inflationary policies. This strategy is becoming more popular among governments and banks. There's no easy mechanism, however, to do that in El Salvador. With a dollarized economy, our only reserves are the liquidity reserves constituted by a fraction of the deposits in the banking system (around 30% of all deposits).

Seems like you're talking about fractional reserve banking?

Quote
These can't be converted to Bitcoin b/c of its price volatility, and b/c this reserve is the cornerstone that shores up our whole financial system. Plus, our international lenders would never give us any money if we would do something as crazy as that. So the government can't really use it to escape the dollar, unless many things happen before and some serious macroeconomic engineering is put into place.

I also think that the various powerful world governments/monetary organizations feel threatened by crypto and will try to undermine the success of this initiative. In that sense, I feel like diving so boldly into adopting BTC might be brave. But maybe a lot of rich people invested in crypto already told Bukele they will invest and give him protection. Or maybe he just doesn't know what's coming.

Quote
Again, I'm not against the currency, only against the law. And I'm only scratching the surface here, the law is so short and superficial that economists, bankers, investment funds, business owners and regular citizens have millions of questions that our childish President won't care to answer, because it requires more ability than tweeting memes and appearing cool in front of the crypto community.

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Offline kirksnosehair

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Re: The Cryptocurrencies Thread
« Reply #203 on: June 13, 2021, 05:49:27 AM »
A friend of mine who is a financial analyst with Fidelity told me crypto-currencies are going to "change the world as we know it" in the same way the Internet did.  We had a long talk about it.  Probably 1/2 of what he said hit the wall about 20 feet above my head, but some of it made a lot of sense to me.  The comparison to the Internet is striking.  The internet is an unregulated communications platform that sort of democratized information.  Crypto is an unregulated and untaxed currency that is tied to no specific government or paper currency.  Crypto is in its dial-up phase of development.  He said he believes there will probably end up being several viable crypto currencies to choose from when it all shakes out, but there won't be anywhere near the number of global currencies that currently exist.  There will be a long period of very volatile "uptake" as more and more countries look at possibly adopting crypto as a national currency.  He said if the US ever does that it will reach "critical mass" and not long after that (by "not long" he meant in less than 50 years) traditional currency will begin to fade away. 


I'm not sure what to think but listening to him talk about this it seemed like he knew what he was talking about.  He's made some money trading in Bitcoin.  Paid off his mortgage and student debt with the profits he's taken from it.  That's over $500k according to him, and I have no reason to believe he was talking out of his ass.

Offline Cool Chris

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Re: The Cryptocurrencies Thread
« Reply #204 on: June 13, 2021, 06:08:07 PM »
Well this discussion certainly got serious... but I appreciate the insight from those who understand this more than I do.
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Offline reneranucci

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Re: The Cryptocurrencies Thread
« Reply #205 on: June 14, 2021, 08:17:40 AM »
A friend of mine who is a financial analyst with Fidelity told me crypto-currencies are going to "change the world as we know it" in the same way the Internet did.  We had a long talk about it.  Probably 1/2 of what he said hit the wall about 20 feet above my head, but some of it made a lot of sense to me.  The comparison to the Internet is striking.  The internet is an unregulated communications platform that sort of democratized information.  Crypto is an unregulated and untaxed currency that is tied to no specific government or paper currency.  Crypto is in its dial-up phase of development.  He said he believes there will probably end up being several viable crypto currencies to choose from when it all shakes out, but there won't be anywhere near the number of global currencies that currently exist.  There will be a long period of very volatile "uptake" as more and more countries look at possibly adopting crypto as a national currency.  He said if the US ever does that it will reach "critical mass" and not long after that (by "not long" he meant in less than 50 years) traditional currency will begin to fade away. 


I'm not sure what to think but listening to him talk about this it seemed like he knew what he was talking about.  He's made some money trading in Bitcoin.  Paid off his mortgage and student debt with the profits he's taken from it.  That's over $500k according to him, and I have no reason to believe he was talking out of his ass.
Did he mention the words "freedom", "tyranny of the dollar", "HODL" or "lambo"? In that case, I would dismiss his opinion completely (just kidding :))

More seriously though, his opinion is probably well-informed. A couple of comments about what he said:
1. I see a more likely future where countries adopt some sort of cryptocurrency of their own making as legal tender, rather than any crypto "out there". Countries should be reluctant to ever give up one of the most important policy instruments they have, i.e. monetary policy. Even when that has happened (European Union, de-facto or de-jure dollarization in Ecuador, Panama and El Salvador), that control wasn't given to some decentralized community. If it wasn't already dollarized, El Salvador's move to crypto would be even more disastrous. Of course, this would offset the largest advantage of crypto, being completely independent from any centralized decision making.
2. Bitcoin has made a lot of people very wealthy but I'd expect a professional financial advisor to nuance his story about big returns with a statement of how much risk he took. Returns should always be compared to risk taken (measured by volatility), and the real measure of an efficient portfolio is the return per unit of risk taken. Even if he made a lot of money, he can't recommend Bitcoin as an investment strategy without talking about how risky it is or how it compares to other portfolios, at least for the short term. Bitcoin has outclassed any other asset in returns, but also in volatility.   
« Last Edit: June 14, 2021, 08:45:25 AM by reneranucci »

Offline reneranucci

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Re: The Cryptocurrencies Thread
« Reply #206 on: June 14, 2021, 08:21:16 AM »
As an aside, I'm looking to invest a small amount in crypto  :lol I have $6,500 which is my "gambling" money invested in a portfolio of 10 stocks, picked more or less randomly, in which I have high hopes for the future. I have a long-term strategy so I shouldn't be looking at my portfolio until 5-10 years from now (of course, I check daily). I'd like to invest $1,000 in crypto but I haven't been able to convince my wife yet. I have an investment of $1,000 in Coinbase stock so at least I have some exposure to crypto markets in case it takes off in the long term.

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Re: The Cryptocurrencies Thread
« Reply #207 on: June 14, 2021, 02:16:46 PM »
Does crypto fall under the jurisdiction of the SEC?


I'm pretty sure crypto is 100% unregulated in the USA
There's some sparse regulation going on, AFAIK:
- Most serious crypto exchange platforms will require their users to provide a photo ID before opening an account, and I think this is due to regulatory requirements.
- Crypto currencies are taxable assets considered as property by the IRS. When doing my tax return this year, the first question that popped up on the H&R Block platform was "Did you own any crypto currencies in 2020?"

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Re: The Cryptocurrencies Thread
« Reply #208 on: June 14, 2021, 02:35:38 PM »
(I am not a financial advisor and none of this is financial advice. This is all my opinion)

In terms of what to actually invest in, I think ETH is actually the most interesting long term. The value of Ethereum isn't just the currency but what can be done with the platform. Decentralized finance, contracts, and so on. I think Binance's chain has more volume, but ETH has more institutional interest. While I like CZ, the Ethereum devs seem to be a bit more innovative and have a better eye on where the future of crypto is going. If you look at the de-centralized exchanges like Uniswap and Sushiswap, they both run on the Ethereum platform. So if you own Ethereum you reap the rewards of both of their successes.

I can't imagine Bitcoin will ever go away but I can't imagine where it's going either. There are developers trying to build projects on top of it (Lightning and STX) and they might succeed. But is that as good a bet as ETH? I don't think so. A crypto portfolio without BTC is probably a huge mistake, but I don't think it can be your only coin and I don't think its future success is guaranteed. IMO it becomes the new gold. You want it to hold value, but you don't transact with it.

It's a bit of an alt coin but I think $LINK should also be part of a basic crypto portfolio. Chainlink is the most popular solution to the problem of, how do you get data from outside of a blockchain onto that blockchain. And there's no serious competition.

Did he mention the words "freedom", "tyranny of the dollar", "HODL" or "lambo"? In that case, I would dismiss his opinion completely (just kidding :))

lol

Quote
More seriously though, his opinion is probably well-informed.

I agree

Quote
1. I see a more likely future where countries adopt some sort of cryptocurrency of their own making as legal tender, rather than any crypto "out there". Countries should be reluctant to ever give up one of the most important policy instruments they have, i.e. monetary policy. Even when that has happened (European Union, de-facto or de-jure dollarization in Ecuador, Panama and El Salvador), that control wasn't given to some decentralized community. If it wasn't already dollarized, El Salvador's move to crypto would be even more disastrous. Of course, this would offset the largest advantage of crypto, being completely independent from any centralized decision making.

You can see this already with Miami creating its own city token.

I think though that government/bank issued coins are going to co-exist with crypto. Every attempt to ban crypto has only resulted in it being more widely used, and the manipulation of fiat money is actually entering popular consciousness. Soon everyone will be that guy on Youtube on 2003 who talked about how the fed was a scam and you should buy gold, except it will be crypto.

Quote
2. Bitcoin has made a lot of people very wealthy but I'd expect a professional financial advisor to nuance his story about big returns with a statement of how much risk he took. Returns should always be compared to risk taken (measured by volatility), and the real measure of an efficient portfolio is the return per unit of risk taken. Even if he made a lot of money, he can't recommend Bitcoin as an investment strategy without talking about how risky it is or how it compares to other portfolios, at least for the short term. Bitcoin has outclassed any other asset in returns, but also in volatility.

It's hard to say. It's easy to look at what Crypto is now and say "oh of course it was inevitable." You can rightfully point out though that, for all its problems, the concept itself was never invalidated. When Mt. Gox (big exchange in the early-mid 10's) went under and its reserves were stolen, the lesson was that you need to make sure you own your own crypto, which reinforces the central conceit of decentralized currency.

One thing I definitely think is, short-term volatility to me isn't really a downside in investing. If you trade, volatility is how you make your money. If you're in it for the long term, then short-term swings shouldn't bother you. (seriously though I am not a financial advisor and if you need to withdraw your investments during hard times and you're in a down swing that's a bad time. And I own some index funds so it's not like I think stable investments don't matter)

I think the best way to look at it retrospectively is - Any big evolution or revolution is a risk. The Internet was clearly the future in the late 90's, but a lot of people got wiped by the dot com bubble. They picked the wrong companies, and it sucks. Where I think the mainstream committed a sinful error was looking at crypto as not even a legitimate investment vehicle because it was fake internet money, instead of even trying to understand the possibilities. Yes you still treat it as high risk (especially small cap coins), but there are legitimate returns to be had.

Does crypto fall under the jurisdiction of the SEC?


I'm pretty sure crypto is 100% unregulated in the USA
There's some sparse regulation going on, AFAIK:
- Most serious crypto exchange platforms will require their users to provide a photo ID before opening an account, and I think this is due to regulatory requirements.
- Crypto currencies are taxable assets considered as property by the IRS. When doing my tax return this year, the first question that popped up on the H&R Block platform was "Did you own any crypto currencies in 2020?"

Correct. The SEC also looks at tokens it judges as "securites". The Ripple and LBRY lawsuits are the most infamous. But, to give the SEC credit, they clamped down on ICO scams. I didn't follow crypto during this period, but my understanding is a lot of people got rugged by them.
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Offline cramx3

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Re: The Cryptocurrencies Thread
« Reply #209 on: June 14, 2021, 02:42:11 PM »
After saying I was going to buy and hold BTC, I sold it all off when it was around 40K today.  I'll buy back in when it drops to 30k next week  :lol I'm just tired of seeing it go between 30 and 40 each week.  Sell high, buy back low.  I guess I really need to "play the game" and not just be on the sidelines expecting it to rise which I very much expected and kind of still do expect.  I'm just not sure that it's going to go up in the near future.  It seems to have found it's sweet spot for now.

This also allowed me to consolidate my BTC between off coinbase and I'll buy back in on robinhood to avoid the fees.