Bitcoin returns are very impressive

[mgray]

If you can stomach $200 plunges you can be rewarded with spectacular returns. I run the numbers here.

[Ernie Nemeth]

Intriguing.

Is there a link or advice how to get in the game?

Why $200?

[ThePythonicCow]

Posted by mgray (here)
If you can stomach $200 plunges you can be rewarded with spectacular returns. I run the numbers here.

Past performance is no guarantee of future results .

(said by someone who wishes they had put more into Bitcoin <grin>.)

[A Voice from the Mountains]

The more you invest the better, short of some unforeseen worldwide catastrophe. A complete financial collapse would also be an interesting wild card, in which gold or silver may or may not have been a better investment.


Japan just made Bitcoin legal currency. That alone will send prices through the roof.

Big money influences in finance are getting behind it too, investing millions.

[CurEus]

https://www.youtube.com/watch?v=YAk5UIJS_PU


The Dollar Vigilante has been discussing bitcoin and crypto currencies for a few years. He is "anarcho-capitalist" and libertarian. I wouldn't be surprised if he is a member here
The link is his recent talk explaining things. I believe you can join his website for $1 for a week and read all of his reports back to 2013 his you tube videos are free and worth watching

Source: https://youtube.com/watch?v=YAk5UIJS_PU

[A Voice from the Mountains]

The CoinDesk website has good news articles on Bitcoin.

If anyone is serious about investing in Bitcoin, start monitoring its price fluctuations (going up or down by hundreds of dollars a day is fairly routine), study a bit what it is and how it works, and start reading the recent news headlines about Bitcoin from a website like CoinDesk.

Investing in Bitcoin can be as easy as going to Coinbase.com and signing up, but the best way to handle your Bitcoin is to put them into cold storage on a secure computer using an encrypted wallet or something like that, but you have to know what you're doing because scams and hacking are common. I recommend using Linux.


I sunk $300 in Bitcoin just since it was $1500 and up, and already made $130 profit on the investment so far. I'm not selling anything though, because big, big moneyed interests are getting behind Bitcoin to try to co-opt it and turn it into some nightmare world digital currency that they can track. Already the "crypto" aspect of Bitcoin is essentially compromised, and even public universities are mapping out exchange networks and gathering intel from the metadata in the blockchain.

Also when quantum computing becomes more available there may be security problems, but that's months/years off still.

[mgray]

CoinDesk does have good primers on digital currencies. The $200 drop was yesterday's market moves. It was followed by a $180 rise so the volatility can be roller coaster like. But the trend for now has been up.

The why is the more interesting part. I am looking into the Chinese connection. More later on that.

[Morbid]

just an fyi. coindesk is behind driving the market. bitcointalk forum has gotten worse in rescent years but if you can filter the information it can be accurate in terms of where those invested in it stand. lots of fud & spam there so be warned.

[mgray]

The numbers in my opening post -- while just three days old -- are dated. Bitcoin is up $1,000 over the last week and I try to put some perspective on it here.

[ThePythonicCow]

Posted by mgray (here)
The numbers in my opening post -- while just three days old -- are dated. Bitcoin is up $1,000 over the last week and I try to put some perspective on it here.

I reminds me of the dot-com boom in the 1990's ... distributed computing for the masses!

This is the blockchain boom of the 2010's ... distributed money and contracts for the masses!

The distributed computing for the masses has led to the dominance of a few companies several of which didn't exist 20 years ago, such as Amazon, Google, Apple, Samsung, Intel, Cisco, Netflix, Facebook and Twitter, each of them building immense businesses on or supplying the newly formed web infrastructure, from browsers and apps to massive server data centers.

Meanwhile, the fluff of the early boom collapsed, in the Nasdaq bust of 2000.

Once again, in my estimation, game changing technology is being pumped and dumped. The pump will last longer and go higher than I dare expect (just as the dot.com boom lasted two years after I pulled out of that market, in the late 1990's.)

More importantly, the hype that this boom will empower ordinary people will instead give way to a new oligopoly of financial institutions. Current banks and other financial, trading, and contract processing businesses need not apply, unless they are prepared to reconstitute themselves from the ground up. Many current institutions in such businesses will survive the first wave or two, but will be weakened, as shopping malls and chain stores are now being weakened by Amazon.

What we think we're being sold with Bitcoin is a new financial infrastructure that puts power in the hands of the ordinary person (*). What we're actually getting is a more robust and pervasive financial, trading, contract infrastructure, dominated by a few major institutions, many of which we probably haven't heard of yet.

(*) P.S. -- Here's an excellent example, just posted yesterday on ZDNet.com, of the current hype that we're being sold: Yes, Blockchain could reverse the course of civilization and upend the world's most powerful companies.

[ThePythonicCow]

Posted by mgray (here)
The numbers in my opening post -- while just three days old -- are dated. Bitcoin is up $1,000 over the last week and I try to put some perspective on it here.

I wouldn't have expected Mike Adams, the Health Ranger, to be the one posting the following, but it seems he is. Mike's article, DO THE MATH: Here’s the rational analysis why 99% of current Bitcoin owners will never be able to sell Bitcoins for anything close to its imagined current value, does an excellent job of explaining why Bitcoins are another Tulip Mania.

In short summary - Bitcoins are like a closed-end fund (Jim Willie's analogy in his latest interview http://www.tfmetalsreport.com/podcas...e-days-jackass) ... a major problem with them being that they "collapse quickly" (Jim Willie's phrasing) in the end. Mike Adams doesn't use the comparison to a closed-end fund, but he does spell out in detail why Bitcoin will almost surely collapse quickly in the end, losing 99% of their market cap with most Bitcoin investors unable to exit. I mention Jim Willie's "closed-end fund" analogy here because (1) it makes sense to me (2) since you're a financial guy, mgray, it might make sense to you, and (3) it fits well with Mike Adam's more detailed explanation of why he expects Bitcoin to collapse quickly in the end.

In the other corner (a boxing or wrestling metaphor) we have Clif High, who today posted another clear defense of why he expects that Bitcoin and other such cryptocurrencies will make generational fortunes for those holding major investments in them: may 26 2017 wujo - cryptos no bubble, temporal markers, though Clif warns that the cryptocurrency markets will be volatile, and advises those speculating in them to subscribe to his Wealth reports.

Supporters of current cryptocurrencies say that cryptocurrencies are unlike other monetary systems, in that they are not controlled by or controllable by the elite. This idea forms a key basis for the claim that cryptocurrencies are different this time and almost certainly won't crash in the end. This claim is in my view deeply false:

• The elite continue to control (financially, legally, and if you try to run a nation without a BIS-member central bank, militarily) all major market exchanges, both between different denominations of money, and between any such form of money and any real good, service, resource, or product.
• They can lock (or as now, open) the doors between Bitcoin and Dollars (or any other such pair) on a whim.
• They can overwhelm the computational power of any independent, privately held, network of crypto currency miners or exchange operators (thus gaining the real control of any such blockchain network.)
• They can infiltrate, destroy or shutdown any major cryptocurrency exchange on a whim.

The current cryptocurrencies have way too small a global market cap, and are based on a technology that can not (contrary to Clif High's claims) and never will directly support a major portion of the world's financial transactions on a single global blockchain.

I love listening to Clif High, and can't take much of Mike Adams. But in this case, I am left wondering if Clif High is serving as a mouth piece for the elite (or perhaps he's just trying to sell his Wealth reports), and Mike Adams is the one who has nailed this. I recommend Mike's DO THE MATH: Here’s the rational analysis why 99% of current Bitcoin owners will never be able to sell Bitcoins for anything close to its imagined current value.

... none of this is to deny that "blockchain technology" won't end up serving as an important basis of financial and contract transaction database systems that are distributed across the networks and computers of large (100's or even 1000's) pools of cooperating, but not necessarily mutually trusting, corporations and governments.

... but blockchain technology is not suitable as the basis for a world-wide transaction system running on a few billion smartphones, and (unlike the lower level TCP/IP protocol) never will be.

There are a couple of cryptocurrencies that might have a future, unlike (in the view of Mike Adams, Jim Willie and myself) Bitcoin. These two are:

• Antshares, and
• Zengold

Antshares is designed to handle the efficient, secure, and distributed transfer and exchange of contracts, documents, and monetary quantities between participants in a loose collective of mutually untrusting networked server operators. I have not yet looked closely at Antshares myself, but it's on my short list to consider.

Zengold.org had their Initial Coin Offering (ICO) today, 26 May 2017 (as I write this.) I had intended to buy a few Zengold myself today, using some of the tiny fraction of one Bitcoin that I own, but I didn't set my alarm clock early enough, and by the time I checked online, the entire ICO, which had been scheduled to take two weeks, had already been 100% sold out. The design of Zengold is that it intends to be backed, at a fix rate, by vault stored gold. If I understand correctly, Zengold plans to be allow its holders to convert their cryptocurrency to that actual gold, for reasonable shipping fees.

Both Zengold and Antshares are predominantly Chinese efforts, one going after the potential for blockchain technology to serve as a trusted "distributed database" between a loose consortium of participants, and the other to serve as blockchain transferable calls on vault stored gold.

[ThePythonicCow]

Posted by mgray (here)
The numbers in my opening post -- while just three days old -- are dated. Bitcoin is up $1,000 over the last week and I try to put some perspective on it here.

Posted by Paul (here)
I love listening to Clif High, and can't take much of Mike Adams. But in this case, I am left wondering if Clif High is serving as a mouth piece for the elite (or perhaps he's just trying to sell his Wealth reports), and Mike Adams is the one who has nailed this. I recommend Mike's DO THE MATH: Here’s the rational analysis why 99% of current Bitcoin owners will never be able to sell Bitcoins for anything close to its imagined current value.

... none of this is to deny that "blockchain technology" won't end up serving as an important basis of financial and contract transaction database systems that are distributed across the networks and computers of large (100's or even 1000's) pools of cooperating, but not necessarily mutually trusting, corporations and governments.

... but blockchain technology is not suitable as the basis for a world-wide transaction system running on a few billion smartphones, and (unlike the lower level TCP/IP protocol) never will be.

Ah - after listening to another Clif High video today on cryptocurrencies (as posted here), I think I was missing a key point ... a couple of key points.

The elite bastards have no intention of running the world's finances on Bitcoin -- with every cup of Seattle Starbucks and bowl of Thai rice paid for on the particular blockchain known as Bitcoin. Of course not. That totally would not work, from a technical perspective.

Nor do they intend to have the Bitcoin market collapse and all holders of Bitcoin and other such cryptocurrencies left staring longingly at their now worthless computer bits, as if nothing ever happened.

Rather the elite bastards do intend to get us all on digital money, and the lure of these early profits in Bitcoin and other such cryptocurrencies as one of the motivators (some carrots, and some sticks) to get us there. Of course the various problems with Bitcoin in particular will be used to justify more Draconian state control, world-wide, of cryptocurrencies. These problems include fraudulent theft (e.g. Mt Gox), association with "bad" stuff such as the Silk Road, and the frequent use of Bitcoin to collect ransomware payments. These problems will have to be "balanced" with incentives, such as obscene profits.

Now I am thinking that the key to owning and trading Bitcoin will be to be "nimble", just as was the case in the Dotcom boom, when the key was getting out of the early hot stocks such as Pets.com, eToys, and Webvan, and into the long term chosen winners, such as Amazon and Google, once the chosen ones became apparent. The "chosen" ones are deeply in cahoots with the intelligence and financial powers.

Similarly the chosen ones in cryptocurrencies and other such blockchain applications will no doubt serve their real masters well.

Now this is making more sense to me in this regard -- Mike Adams is seen from this perspective as helping to create more volatility in the crypto currency market in the short term, which may well serve our Overlord's short term initiatives, and Clif High is seen as offering a reasonably intelligent perspective on how to benefit from this pump phase of cryptocurrencies, a quite volatile phase, with plenty of opportunities to make and lose small fortunes.

I continue to build up my skills with various ways to exchange cryptocurrencies with each other, and to buy and sell them for cash or goods. As with dotcom stocks in the 1990's, the way to ride out the rough waters and rapids is with a multi-hulled boat, such as a trimaran. In this case, that means never having more in any exchange or in any cryptocurrency, than you're willing to instantly kiss good-bye to. Keep adding small (whatever "small" is, for one's financial situation) amounts and stay nimble. Get some sort of idea of how big the pump phase should be, and start pulling out regular amounts, rather than still adding them, when the market seems to be reaching that size. Also, in those months where one has spectacular profits, if one's initial investments have gotten anywhere close to one's "still sleeping comfortably at night level", take some off the top.

One nice property of cryptocurrencies -- one can diversify fairly well with just a few hundred dollars capital -- unlike most assets.

Once a sizable portion of the world's people have at least made a few purchases with cryptocurrencies, then that's my idea of how bit the pump phase needs to be. Then the elite can "blow up" these early cryptocurrencies (except for the few chosen ones) and use the disaster to justify a global "Patriot Act" for cryptos. This resembles the Dotcom boom, which went bust once a sizable portion of the world had clicked on a web page or some such.

Of course, except for a few "lottery ticket winners" gross profits in the long run will be far, far, short of what one could have made with a perfect crystal ball. But one should have good odds at some quite nice profits.

(But for heavens sake, don't extrapolate the profits of a few "good" months into some anticipated income stream for decades to come and take out a massive mortgage on a palatial estate and a Rolls Royce .. until one has made one's profits and moved them to safer ground, they can be quite ephemeral.)

Meanwhile, never let the conspiracy theorist sleep at night ... the "elite" are not doing this for our good. They are doing it for their good, to give "birth" to the monetary and financial system for the next century, over which they will have world-wide control, down to the smallest detail.

[mgray]

Paul, while the elites may or may not have a devious design on the use of cryptos, we are still in the infancy. To use an American baseball analogy we are in the bottom of the 1st inning.

I do not think it is a time to be nimble, which I assume you mean to get in and out on price fluctuations. It's a buy and hold and forget about it for the time being.

I am only speaking of bitcoin here since it has the "longest" track record of all the new cryptos.

Let's just say for argument sake, if 0.0001% of the world knows of bitcoin and 0.00001% actually own a bitcoin, then upside is tremendous. With each paring of a zero after the decimal point price jumps should be expected.

I think the biggest hurdle facing bitcoin is Wall Street and London getting involved as I wrote in a column on Sunday in The New York Post on Sunday.

The SEC is again looking at an ETF linked to bitcoin, so if that goes through later this year, then we will also soon after that get a bitcoin options market and true price discovery will go the way of gold and silver.

If the ETF goes through, then I would become a seller on any pullback as the manipulation would be on.

[ThePythonicCow]

Posted by mgray (here)
I do not think it is a time to be nimble, which I assume you mean to get in and out on price fluctuations. It's a buy and hold and forget about it for the time being.

I am only speaking of bitcoin here since it has the "longest" track record of all the new cryptos.

Ah - I see that my trimaran analogy didn't work .

By nimble I didn't mean shifting quickly in and out of Bitcoin, between Bitcoin and "cash". Rather I meant having a relatively stable overall amount in several cryptocurrencies, and in several wallets and exchanges, and shifting over time between them, adding and removing which cryptos and which exchanges or wallets, hold portions of ones investment.

In other words, don't put all one's eggs in one basket, but don't spend much time trying to anticipate short term price moves either as that's usually a fool's game.

===

Our common language for cryptocurrencies seems to me to be getting all of us in a bit danger (meaning excess risk and confusion.)

Discussions of cryptocurrency often tend to confuse "Bitcoin" with "cryptocurrency", and often tend to speak of "The Blockchain", as if there was really just one blockchain (that mattered anyway.)

There are, and will continue to be, many cryptocurrencies and even more blockchains (as blockchains provide a useful "distributed database" mechanism, useful for more than just currencies.)

The business models that succeed immensely in the future, a decade or two from now, will make use of blockchains, both for currencies and other tasks. The key for their success will be that they have found and leveraged "choke points", opportunities to gain near-monopoly positions in a few essential points in the evolving infrastructure. Likely, and unfortunately, a few "Godfathers" at the top of the food chains in intelligence and financials will play key roles in picking these winners, so that they can leverage these choke points for their own nefarious (in my cynical view) ends.

===

So "nimble" didn't mean for me "rapidly moving eggs in and out of the Bitcoin nest", so much as it meant "keep several nests and several eggs, shifting between them over time". In other words, "nimble" didn't mean "day trading Bitcoin", but rather "running one's own itsy-bitsy crypto mutual funds diversified in both multiple accounts/wallets and in which cryptos one is currently holding."

[ThePythonicCow]

Posted by mgray (here)
The SEC is again looking at an ETF linked to bitcoin, so if that goes through later this year, then we will also soon after that get a bitcoin options market and true price discovery will go the way of gold and silver.

If the ETF goes through, then I would become a seller on any pullback as the manipulation would be on.

I'm more cynical .

I doubt that there was ever true price discovery in Bitcoin or other cryptocurrencies, not even back in the "beginning of time" when Satoshi Nakamoto released the bitcoin software on Sourceforge on 9 January 2009.

I figure that this is all a (semi-)controlled release of digital contract, monetary, banking, and financial market infrastructure technology, to largely surplant the institutionally controlled accounts running on "mainframes" with their payment cards, ACH and wire transfers, ATM networks, checks, cash and "stove pipe" web portals and computing. Each bank or broker I use has its own website and data processing, largely separate from the others, both at the front end, and at their back ends, with a variety of arcane interconnects between institutions.

[leavesoftrees]

One disadvantage to investing in bitcoin.. Ouch

I threw away $4.8 million in Bitcoin

Five years ago, I threw away a hard drive. An utterly generic 250GB portable hard drive, already a few years old, with a couple of dings and scratches in its shell and with the beginnings of an audible click that would have eventually killed it.

It had a data file containing 1400 Bitcoin on it. No big deal, at the time.

Today, those few kilobytes are worth more than $4 million.

http://www.theage.com.au/technology/...28-gwf4jz.html

[ThePythonicCow]

Here's another computer nerd, with more years in distributed databases and in financial software than I'll ever have, with whom I agree in someways about Bitcoin, but not in other ways.

His name is Tom Gleason, and he posted his analysis on his Gleason Report three days ago, in a report entitled An Analysis of Bitcoin’s Potential as a Digital Currency (pdf)

I whole heartedly agree with Tom Gleason that the distributed database schema update algorithm used by Bitcoin and similar cryptocurrencies is fundamentally too slow for high transaction volumes. Visa, for example, handles about 2000 transactions per second, whereas Bitcoin handles about 7 transactions per second. As Gleason says:

Bitcoin requires frequent cross-database updates (replication) to maintain data integrity of the
blockchain. Bitcoin is using the wrong database schema and I don’t see how it can work with a
high transaction volume. Updating the blockchain will always be slow because of all the
network checks it must do with every transaction.

I also agree with Gleason that if and (likely when) a Bitcoin ETF fund is opened, this will allow for greater manipulation of the $US price of Bitcoin, just as happened with the GLD fund and gold.

However I disagree with Gleason that this means that the Bitcoin price will necessarily be manipulated down.

In the year 2004, when the GLD fund was opened, gold closed at $435/oz.
In the year 2008, when GLD became publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol GLD, gold closed at $869/oz.
In the year 2012, at gold's peak, gold closed at $1664/oz.
Now, in the middle of 2017, gold is at $1273/oz.

So much for ETF manipulation of a "commodity" meaning that the commodity will go down. In the eight years following the opening of GLD, the price in $US of gold doubled, and doubled again.

Manipulation means that the manipulators get a say in the price, not just a "free and open market."

[TargeT]

Posted by Paul (here)

Bitcoin requires frequent cross-database updates (replication) to maintain data integrity of the
blockchain. Bitcoin is using the wrong database schema and I don’t see how it can work with a
high transaction volume. Updating the blockchain will always be slow because of all the
network checks it must do with every transaction.

I read:

limitation: bandwidth & computing power

And I think...

Bandwidth and computing power is about to become exponentially better (next 5-10 years? maybe FAR FAR less?)

Those seem like surmountable problems to me.

[ThePythonicCow]

Posted by TargeT (here)
Bandwidth and computing power is about to become exponentially better (next 5-10 years? maybe FAR FAR less?)

Those seem like surmountable problems to me.

We'd need two or three orders of magnitude reduction in latency to make distributed computations, such as used by Bitcoin in cross-database updates, in order to make the distributed update algorithm of Bitcoin handle Visa style transaction rates and speed. Since that's lightspeed limitation, that means we'd need communiation 100 to 1000 times the speed of light. But if we had that, we'd surely have improvements in the computational speed of an individual computer sufficient to send the current Bitcoin cryptography into the dustbin of history, along side Germany's World War II Enigma Machine.

Things get faster -- thousands of times faster in the span of my career in computing. But long haul network communication always remains thousands of times higher latency than local memory access, primarily due to the time needed to send a signal a long distance. A PDP 11/30 that I wrote a small operating system for, back in the late 1970's, cycled at about 1 MHz. The overclocked Intel Sandy Bridge that I am typing into right now, some 40 years later, cycles at about 4 GHz, 4000 times faster. That's the kind of increase we'd need in long haul data transmission latency (delays, not so much bandwidth, matter most here) to make the Bitcoin algorithm able to handle Visa transaction rates. But those kinds of increases almost certainly will NOT happen without corresponding improvements in local computing power, by which time Bitcoin in its current form will be obsolete.

(... and the tantalizing opportunity for improved secrecy in long haul network communication using quantum physics, as described in the article you linked, is still a laboratory curiosity, and so far as I can see, doesn't address the Bitcoin problem anyway.)

Computer performance increases are not magic that makes any architecture workable and competitive in short order. Rather architectures can and do fail, sometimes in a spectacular fashion, because they are fundamentally orders of magnitude slower than competitive architectures, regardless of whether you're using vacuum tubes and telegraph lines, or liquid nitrogen cooled super computers and fiber optic lines.

[Chuck]

For information only...

New currencies like Ripple, had the ability to process 1,000 transactions per second (TPS) are now at 50,000 TPS, clearly competing with the likes of VISA for efficiencies and settlements.

Rather than every computer on the network processing each transaction, the scaled blockchain figures out how many computers (nodes) are necessary to validate each transaction and divides up the work efficiently. These are done in clever ways using shards like Etherium is considering this year as a hard fork (change in direction) with Casper or something like it. This relies on a 'Proof of Stake' (PoS) protocol instead of 'Proof of Work' (PoW)... or perhaps even a blend of the two. Etherium currently processes 7-15 TPS. In the evolved state it will have capabilities of 100,000 TPS!

Clearly, banks will not survive as they currently exist. In my view, they will have to 1) evolve using blockchain technologies and 2) require regulations to protect them.