Bitcoin on the rise

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halfmoon
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Re: Bitcoin on the rise

Post by halfmoon »

BlueNote, you have my utmost sympathy. I prepare my family's tax returns; it's frustrating. It does, however, give me notice (though not advance) of any ill-judged moves on their part. I live in dread of discovering that any of them have "invested" in bitcoin. These relatives are all older than I and lacking spare play money for this sort of gambling.

I like your greater fool/greatest fool point. A lot.

bryan
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Re: Bitcoin on the rise

Post by bryan »

2017 will probably be my most complex tax year (and planning for 2018) yet. Uncle Sam will be quite happy. Ideally everything in BTC remains calm next year and I can stay in the 0% LTCG bracket..

Being in the Bitcoin space for years, it's really interesting seeing the fundamental stuff being built up and around and under Bitcoin. It mostly seems like porting or re-discovering stuff from finance/markets/etc history. Cool to see how the plumbing works. Weird to see how our current day's psychology, in regards to those domains, may have evolved from scratch.

The current run up in price is following the start of futures trading at CBOE. I find it kind of funny (the BTC +20% 24hrs, atm), because the initial trading was likely only a few very well-off Bitcoin people pumping the futures and lo-and-behold the spot prices immediately follow.. Currently the CBOE volume is 2425 BTC (the initial jump was just from a few BTC..), which has caused much more volume than that in the real markets*.. kind of pitiful** considering most people in the real markets probably have no idea how the CBOE BTC price is calculated: the daily auction at Gemini (historically, very low volume compared to other exchanges).

[*] unless there is some other reason for volume.. maybe Asia just really felt like buying BTC Monday morning?
edit: [**] then again the futures are at $18.8k now and no one on the exchanges actually wants to touch that sell wall at $17k... maybe it is futures market buyers putting up the sell wall hoping that the newspapers on Monday morning report "BTC stable at $19k!" and then everyone who downloaded Coinbase will check and see $17k and buy? Or maybe pull their sell orders? Who knows.

I expressed worry earlier about CME futures. I still have that worry (especially after seeing how this pump is working well). However, yesterday I was looking more into CBOE (since I had completely forgotten about it..). My conclusion last night was that CBOE would actually have a positive effect on the BTC price leading into the CME launch, due to most people (that want to "short") probably waiting for CME whereas people that are "long" Bitcoin (especially the Winklevoss who run Gemini which is used for CBOE..) have more to gain by pumping the price in the small volume Gemini auction and letting the rest of the liquid market fall in line. Anyone that really needs to hedge against bitcoin prices doesn't mind another week for CME to open for more liquidity and they certainly don't mind another week of price bumps. Any really bad news for Bitcoin (mainly thinking of all the Tether stuff.. but also any exchange news in general) is being saved until sizable futures can be traded.

I plan on moving some coins to Gemini, if they finish verifying me, to take advantage of what I think will be market manipulation (up). Basically I think Gemini spot price (or rather the final daily auction price) will end up being the highest BTC price in the US (previously GDAX thanks to Coinbase). I may sell more BTC than I want to, in the hope of a crash after CME to buy at a higher cost basis.. not sure on that yet.

Funny thing in response to BTC going up thanks to futures trading: https://www.youtube.com/watch?v=2LTkeBqiRJQ

It's also been interesting to see how restrictive the banking industry is these last few years. I'm starting to come around to the opinion that even though Bitcoin has really fallen short from being a digital cash, it has so far proven to be a powerful money (network/system). I'm starting to come around to the idea that Big Banking may not mind Bitcoin that much, now that it doesn't really work well for consumers.

> Turns out they made a bunch of little trades here and there trading one crypto currency for another which creates a headache for me trying to figure out how the Canadian tax authorities would interpret those transactions.

If they avoided dollars, it's debatable whether or not it is a taxable event. Basically, how would you treat that Craigslist guy that turned a paper clip into a house? Though, that's not even a good analogy since it's more like how do you treat swapping physical bearer stock? Or maybe it is a US forex trader who never touches USD? Not sure.
Last edited by bryan on Mon Dec 11, 2017 6:41 pm, edited 1 time in total.

halfmoon
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Re: Bitcoin on the rise

Post by halfmoon »

Regarding taxability of cryptocurrency trades: the IRS (don't know about Canada) is pretty definite that anything realizing a gain is taxable. The only real question is whether it's a capital gain or ordinary income. I anticipate a lot of extra business for tax preparers over this. ;)

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

distracted_at_work
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Re: Bitcoin on the rise

Post by distracted_at_work »

A couple links I found helpful when researching cryptocurrency in Canada:
https://www.canada.ca/en/financial-cons ... rency.html
https://www.canada.ca/en/revenue-agency ... rency.html

I applied to a Canadian exchange 7 days ago and have yet to be approved to fund my account. People continue to rush into it. Haven't decided if I will add a position or "spend" my bitcoin money on new mountain gear yet haha.

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fiby41
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Re: Bitcoin on the rise

Post by fiby41 »

I rank this article next to gandk's podcast for a reasonable take
Is It A Bubble? Is It An Asset?

jacob
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Re: Bitcoin on the rise

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ThisDinosaur
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Re: Bitcoin on the rise

Post by ThisDinosaur »

Anybody shorting this yet? What would be your criteria to do so?

Also, how do you think a mass exit from bitcoin would affect other asset class prices?

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Seppia
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Re: Bitcoin on the rise

Post by Seppia »

No, I would personally not own bitcoin (I don't), but I'd never short it either.
This thing went up 20x in a year, it could go to zero in a month or triple for all we know.

bryan
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Re: Bitcoin on the rise

Post by bryan »

I love reading a lot of these hot takes and articles (so many are so off-base..). I'm not a huge fan of Bitcoin this last year for various reasons (i.e. it is riskier than ever; 2013+ was a clear BUY where if someone disagrees I just respond "ha, yeah don't if you don't want to.." (multiple friends have now expressed that they wish I had tried to convince them harder..)), so I am always looking for news for why I shouldn't keep at least some Bitcoin et al as part of my portfolio. Very surprised that there are no new arguments to be read..

Let me re-iterate.. I don't really know if it will go up or down from here. I've had all the same concerns since 2015 (some have not come to pass yet while some have played out in exactly the bad way).. yet the price has risen. A lot of people had the same concerns and decided to exit Bitcoin after failing to address said issues. Too smart for their own sake?

Maybe this run-up is just the built up energy from behind the scenes in wall street being released? Are big BTC investors exiting their positions as we speak? Is this the BTC IPO (I would have said that would be an ETF...)? Main reason I've held onto a chunck of BTC even after doubting it the past two years or so is because it still looks like a great hedge against economic/financial/capital crises like 2008 or civil wars. We haven't really seen that tested yet, other than Cyprus.

I do think Bitcoin as-it-is-today will not be the dominant one in five, ten years. Short term, there are only a few alternatives, but I expect some superior choices to arise, eventually. I just hope they have the same sort of emphasis on decentralization, censor resistance as Bitcoin did.

> I plan on moving some coins to Gemini ... to take advantage of what I think will be market manipulation (up). Basically I think Gemini spot price (or rather the final daily auction price) will end up being the highest BTC price in the US (previously GDAX thanks to Coinbase).

Welp, first day was a fail as my (out of the money, as it were) auction order did not get matched.

> "We've seen mortgages being taken out to buy bitcoin"

I remember the guy on reddit that bet it all on BTC (a year or two ago?). He was terminally ill and a BTC fan and had the appetite for the risk. Anyone doing that today is taking an even larger risk, imo. Though I suppose it's safer than taking a mortgage to _short_ Bitcoin :lol:

> Anybody shorting this yet? What would be your criteria to do so?

Still can't really go short on it unless you are directly tied into CBOE, I think. I would short it if I had some information that others did not (e.g. such and such exchange stopped processing BTC withdrawal and I got early news that the CEO took the billions of BTC worth and ran.. or I found early news of a signature signed by Satoshi (the implication being a shit ton of supply just came back from the dead)). One nice thing about futures vs BTC is the speed at which you can enter/exit. If your BTC is not on an exchange, you can't sell it. It takes >1 hour to transfer to an exchange.

> Also, how do you think a mass exit from bitcoin would affect other asset class prices?

Related to above, the big money would get theirs and the little players would be looking at a 90% loss. Probably would do absolutely nothing to other asset prices; BTC is far too small for that (well, I suppose it would be interesting to see if people go into BTC alternatives..).

Solvent
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Re: Bitcoin on the rise

Post by Solvent »

Heh, I'm feeling smart right now... I saw the price rising fast at around 8,000 and felt damn near 100% sure that once it hit 10,000, the subsequent media storm would cause the price to punch hard through that benchmark. It's nice to be right. I already took out an amount equal to 25% of my initial stake, wondering when I should pull the rest... It was only a three-figure amount, we're not talking sheep stations here. For those of you with substantial sums floating around in bitcoin-space, I really don't know how you deal with the volatility. It doesn't suit my temperament. I wouldn't be able to put the price fluctuations out of my mind.

I've been following bitcoin news only a little bit since around 2012, but never actually bought any until just recently. I remember telling my more risk-happy friends to be very cautious in this space, but hey, I guess a few of them made reasonable money over the past five years, while I just went into equities. I think the concept is fascinating, but that's not to say I think the current value is justified. I'm certainly hoping I can pick an appropriate time to sell to a greater fool, but we'll see.

I 'diversified' (whatever that term is worth in this space) across a few coins and on a whim put more into Litecoin than Bitcoin. Lucky me, that actually tripled compared to BTC's roughly 60% rise.

Not claiming to be an expert in any way on this subject, but I do know more about it than my colleagues and find myself trying to explain it to them. From what I read about transaction times and fees, I think Bitcoin is starting to look like a bit of a MySpace - it's a massive groundbreaking thing, but it will be supplanted at some point.

frihet
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Re: Bitcoin on the rise

Post by frihet »

http://investorfieldguide.com/hashpower/

Excellent documentary in three parts. A good introduction to the space hosted by the podcast Invest Like The Best

Find it fascinating that someone as well read and versed in investments as Patrick O’Shaughnessy haven't really understood it until know. This space is really the revenge of the nerds where they where the ones to get in first and capitalize.

"Hash Power is meant to be an introduction, but really, it is an invitation to explore this emerging world on your own. In the coming weeks, we will cover the technology, the power of decentralization, Bitcoin, Ethereum, ICOs, cryptography, and hashing. We will spend time with the leading active hedge fund managers in the field, and with outside investors who are both optimistic and skeptical. Episode one covers the big picture, and answers the question: what is blockchain and why might it significantly affect our world?"

NPV
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Re: Bitcoin on the rise

Post by NPV »

Solvent wrote:
Thu Dec 14, 2017 7:02 am
From what I read about transaction times and fees, I think Bitcoin is starting to look like a bit of a MySpace - it's a massive groundbreaking thing, but it will be supplanted at some point.
Seems like choosing specific coins to invest in basically comes down to three questions:
1. Will something replace BTC for the "money" use case?

My anecdotal feel from buying both BTC and LTC was similar to Solvent's above - LTC transaction posts almost instantly and costs peanuts while bitcoin took days (I guess this is bottlenecked by the exchange though rather than the protocol) and cost something comparable to a bank wire. Hence trying to imagine crypto being used as a medium of exchange, current version of LTC seems more suitable than current version of BTC. The important question which perhaps someone understanding the technical side better can answer: is this something that BTC will solve with a fork or two (LTC advantage gone) or is this something where BTC will be lagging behind compared to new and faster blockchains (e.g., LTC, Waves)?

Perspective of money use cases is another interesting one, and I agree XMR seems to be perhaps the most proven use case right now. Seems like one key niche where crypto really has an edge over fiat (anonymous online decentralized payments with no KYC/paperwork constraints) is the one where XMR now really has an edge over other cryptos.

Without massive technical changes (i.e. for higher speed and faster transactions) the use case for BTC remains "just" to be the digital gold - but will belief in its value be sustained once it is clear some alt coins are clearly superior for practical purposes?

2. Will something replace ETH for the "platform" use case?

CryptoKitties has been a really interesting example showing that consumer applications can actually be built on ETH platform (I don't think any other "platform" - Lisk / NEO / Waves etc. - can boast of the same?). It has also raised questions on scaling with kitties clogging the network.

Hence the sub-questions here are:
  • Similarly to BTC vs. LTC above, will ETH be able to change enough to enable 1000s times more transaction capacity than now? Does anyone have enough technical understanding to opine on the matter?
    Do any of the other platforms have something that will tip the scale in their favor? They boast technical advantages - e.g., C support on Lisk or simpler and faster Waves blockchain - but is there a critical mass of developers who are actually building products on them?
3. What are other credible use cases and are there robust blockchains for them already?
File transfer (e.g. Filecoin) and P2P cloud computational capacity (e.g. Golem) seemed not too far fetched - do you think the use cases and their current implementations have legs?
What else?

Or, focusing on the underlying question - what are some coins which you think have 100x+ upside potential to put some play money in (obviously notwithstanding the likely downside scenario of losing it all)?

Fish
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Re: Bitcoin on the rise

Post by Fish »

NPV wrote:
Mon Dec 18, 2017 10:45 pm
1. Will something replace BTC for the "money" use case?
Noob question, but exactly what value does BTC or crypto offer for the "money" use case? In the present, I can store my money in a bank account and it is readily convertible to physical currency on demand. I can perform transactions using cash, credit card, Paypal, or wire transfer. Are cryptocurrencies an attempt to circumvent the downsides to fiat currency (including inflation and exchange-rate manipulation)? Maybe when times are good, it doesn't matter which you hold, but BTC will shine in times of crisis?

Hankaroundtheworld
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Re: Bitcoin on the rise

Post by Hankaroundtheworld »

@Fish Although difficult, but you need to try to expand on the concept of Money. We have been growing up that fiat-currency is the only "trusted" system of exchange of value. Trust means that we have a Central Bank (although privately owned) that can control the total supply and we have a Government that controls the spending and controls the trust somehow (with a lot of military power if needed). This will not go away anytime soon, but there are risks as you know, mainly because of the need to create more Debt to fuel Economical Growth, and there is also a lot of untrust what is happening behind the curtains (fraud, illegal funding of war activities, etc...). At the same time, with Blockchain and the growth of the Digital Economy, there are now more "trusted" networks that can support exchange of value. These trusted networks co-exist next to the Fiat networks (basically fiat money might also get implemented on a Blockchain / several countries are working on this), and it will get all integrated. There are several systems in the making to make it easy to connect all these trusted networks, and allow easy conversion between all the currencies. In 2018 you will see the 1st versions of these systems come alive, and it will become easy to hop into several Crypto-currencies, in and out of Fiat. It is too soon to predict that Fiat networks will get replaced by Crypto-currencies networks, for now it will co-exist and all these networks will have their own use-case, some of them will fail, others will prosper. So, for the coming years, you will see an Evolution unfold which networks will become strong. What does it mean for us?
(1) More freedom to choose. Depending on your beliefs, work or passion, you might participate in several of these trusted networks. For instance, if you have a strong local or regional economy, there might be a regional Trusted network with its own Currency (Coin) to support that process, etc.. There might be global networks to support global activities, etc...
(2) More transparency. Depending on how you trust the current Fiat networks, you might find other Trusted networks that are more Transparent (meaning: less fraud, less war funding, more protection of value, etc...). In a way, I think, the Crypto networks force governments and Banks to transform their business, and become more honest, transparent & efficient.
(3) Invest in this future. If you believe in this future of multiple trusted networks, you can ride this wave and invest in the components of this new infrastructure.

Solvent
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Re: Bitcoin on the rise

Post by Solvent »

I think I can be perhaps more succinct for Fish.
Yes, one of the theoretical use cases of BTC is protecting against hyperinflation, money printing (supply is effectively fixed) exchange rate manipulation etc. Theoretically, it can also be transferred without incurring substantial fees from trusted, centralised payments providers. Particularly for people in countries without highly developed payments infrastructure and with governments prone to appropriating wealth, the potential here for lower cost cross-border transactions is huge.

I think most of us can agree that BTC is not living up to these theoretical promises though (congested network, volatility, fees going through the roof, etc.).

That's not to say that other newer cryptocurrencies won't live up to these theoretical benefits more fully. Or even, I suppose, changes to BTC itself could allow it, but I don't know enough about the tech to say for sure.

bryan
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Re: Bitcoin on the rise

Post by bryan »

@fish, Bitcoin is the world's first programmable/digital money that doesn't have a fatal flaw (well... that's what we thought a few years ago.. some now think there are flaws e.g. fees or throughput) which means it can be universally used. We've wanted programmable money since computers were invented and especially since the internet came online. Impossible (unless some huge counter-party like EU/IMF/USA/APPL created such a thing). You can use BTC in your computer programs, to a much greater extent than solutions like banking APIs or Stripe/Paypal. You can also think of Bitcoin as a bearer instrument in that whoever has/knows the private key for a BTC can spend the BTC (or a few other things..).

Could ransomware be such a successful thing without the invention of Bitcoin? Online drugs? Barely scratching the surface of possibilities. Prediction markets are the holy grail in my mind.

https://www.youtube.com/watch?v=mD4L7xDNCmA for some nice use cases, also look up some Andreas Antonopoulos talks.

Kriegsspiel
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Re: Bitcoin on the rise

Post by Kriegsspiel »

Solvent wrote:
Wed Dec 20, 2017 6:11 am
I think I can be perhaps more succinct for Fish.
Yes, one of the theoretical use cases of BTC is protecting against hyperinflation, money printing (supply is effectively fixed) exchange rate manipulation etc. Theoretically, it can also be transferred without incurring substantial fees from trusted, centralised payments providers. Particularly for people in countries without highly developed payments infrastructure and with governments prone to appropriating wealth, the potential here for lower cost cross-border transactions is huge.

I think most of us can agree that BTC is not living up to these theoretical promises though (congested network, volatility, fees going through the roof, etc.).

That's not to say that other newer cryptocurrencies won't live up to these theoretical benefits more fully. Or even, I suppose, changes to BTC itself could allow it, but I don't know enough about the tech to say for sure.
I still don't see how BTC, or any other cryptocurrency, is an effective protection against money printing/a good store of value. I get that the supply of BTC is limited to 21 million, but it seems the blockchain concept is infinitely (as long as electricity is cheap) reproducible. A proliferation of different cryptocurrencies that dilutes the value of each seems inevitable.

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fiby41
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Re: Bitcoin on the rise

Post by fiby41 »

New Age Technology, Old Fashioned Fraud

All the sobering counter-arguments one could think of.

Fish
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Re: Bitcoin on the rise

Post by Fish »

From what has been presented thus far I don't see a compelling use case for myself personally. I can see the appeal for cross-border remittances (thanks @Solvent), but that's a limited use case . I remember the mid to late-1990s internet and how trust was such a pain in those days. People were reluctant to give out CC numbers for fear of fraud, checks had to be held a week to clear payment, eBay sellers insisted on "verified" Paypal accounts, foreign transactions were near-impossible, etc. So maybe if that is my reference frame, then @bryan's argument of "digital money that works" seems very appealing. But in the last 20 years we've figured out how to live on the internet using the old systems, and it's kind of clunky but it gets the job done. The fiat and credit networks have adapted and the 20th century solution is stable.

Then I see @hank's vision and I would agree that it could work (i.e. the 21st century solution is also stable), but what I don't see is a transition plan for getting from point A to point B. As an end user, I'm just going to adopt the payment system used by the majority. I think a lot of humans are also in my same situation and it's a matter of getting them to flip. It's not going to happen in the present where the primary use cases are limited to speculation, illegal activities and cryptokitties.

I think commerce (both internet and physical) is the more likely driver. It depends if and when sellers start accepting, then demanding crypto as a preferred form of payment due to lower processing fees and protection from chargebacks. When I can save 1-2% on a large purchase then I will bite the bullet and finally buy my first digital coins. But until then, I think the status quo is simply too stable and crypto adoption will be slow. BTC and cryptocurrencies arrived 2 decades too late from that perspective (think of how quickly it would have been adopted had it been available 20 years ago when e-commerce was in a nascent stage!). I'm reminded of this:

1. First they ignore you.
2. Then they laugh at you.
3. They they fight you.
4. Then you win.

It seems we're currently at the "laughing" stage. At a rational level, I understand that a transformation is under way and that the rewards for being an early adopter can be immense. But I'm not a participant in this. At the same time, I know that given my attitude about technology adoption (I'm a laggard) it's dangerous to speculate, so I won't. This has helped me remain calm during the huge run-up in BTC, i.e. I'm not kicking myself for not getting in sooner and agonizing over "what if" scenarios with respect to FI/RE.

BRUTE
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Re: Bitcoin on the rise

Post by BRUTE »

no, bitcoin has entered the beginnings of the fighting stage about a year ago. humans don't laugh any more, they ban and yell "Monopoly money!" and write serious articles about how it's a bad idea.

when bitcoin works well (which it currently doesn't), transactions are incredibly convenient - in brute's opinion, more so than credit cards, and certainly better at everything than wires. vs. credit cards, a nice fact is that bitcoin doesn't require giving anyone the credit card number, so there is much less of a trust problem. it can also be much cheaper than wire transfer fees, and easily crosses international borders.

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