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If You Don't Own Any Bitcoin, Read This

This week it hit $19,000. What's next?
Friday, December 8, 2017, 7:50 PM

Wow. Just....wow.

Bitcoin's price has gone 'beyond exponential' this week. Just yesterday, as I started working on this article, it shot up 22% -- from $14,000 to $17,000 (hitting an intraday high of over $19,000).

And that's after a mind-blowing upwards rocket ride over the past several months. 

I think it's safe to say that the vicious melt-up in price over such a short timeframe has surpassed the expectations of even the starriest-eyed Bitcoin fanboys.

The whole world, especially the 99.99% of us that own zero cryptocurrency, is asking: What happens next? And, What should I do?

Is this insane trajectory going to continue for a lot longer? Do I need to get in now to avoid missing this once-in-lifetime fortune-making opportunity?

Or is this a classic bubble blow-off top? Is this the deadliest time to enter, right before the price implodes?

An Expert's Take

I had the chance to ask these questions Wednesday to a long-time veteran in the digital currency space. We met at a gathering of online media 'mavens'; this guy has published news and analysis on cryptocurrencies since 2011, for both investors and developers. He knows the space exceedingly well.

Unsurprisingly, he holds a lot of Bitcoin. I didn't ask directly how much; but knowing that he was covering the space back when Bitcoin traded in the single-dollars range, my conservative mental math quickly concluded he's probably worth more than most people I've met in my life.

So here what I learned during my chat with him:

  • He thinks the current price action is "nuts": To his veteran eye, the current frenzy is a speculative mania and will end in a massive sell-off, resulting in huge losses for those buying in at these prices. He's watched Bitcoin long enough to have seen it experience several 70%+ corrections. In his mind, this will simply be the latest one. And there will be more in the future, he predicts.
  • But he's not worried in the long run: Like many longtime crypto investors, he sees a much higher price potential for Bitcoin. But to reach that level and sustain it will take years. The currency will need to be much more widely held among the general populace and used in a material percentage of transactions (i.e., not just being held by speculative investors). Until then, he expects lots of volatility (both up and down) of the sort we're seeing now.
  • He admits that Bitcoin could lose out to a superior successor: When asked if the capital currently flowing into Bitcoin could flee for a better crypto 'mousetrap' in the future, he says "sure". Which is why he has diversified holdings across a number of cryptocurrencies and watches new entrants into the the space closely. But one advantage Bitcoin increasingly has over the rest of the crypto field is scale. He gave a highly-technical argument for how the blockchain actually has limited value without a platform to offer it sufficiently critical scale. "Does Bitcoin offer that critical scale yet?" I asked. "Probably not yet" he answered, "But it's much closer to it than any other competitor at this time. And it's growing faster than the rest." Translation: Bitcoin is the odds-on winner at this point.
  • He expects the world's central banks to criminalize the cryptocurrencies: We talked about the central banking cartel's longstanding monopoly of the money supply and its historic ruthlessness for squashing all competition. He agreed that the central banks would like nothing more than to replace the current cryptos as well as all paper fiat currencies with digital sovereign versions. And he predicts they will likely try to do exactly this. How successful will they be? Uncertain. He can certainly foresee a time when they ban ownership of Bitcoin and its brethren, criminalize transacting with them, and shut down the exchanges. Though while the cartel may be able to seriously curtail Bitcoin et al, he doesn't see it succeeding in driving them to extinction for several reasons. One he offered that I hadn't heard before (but have since verified) is that private investors have put a network of satellites up in space dedicated to making it possible to transact in Bitcoin anywhere on Earth even if the terrestrial networks are taken down by the authorities or natural disaster.

His overall takeaway? Don't buy at today's prices; wait for a correction (it could be a really big one). But once it happens, buy in and hold, as he sees the price going much, much higher over the next decade.

By the way, I'd share this guy's name with you but he asked me not to. Given how stratospheric Bitcoin has risen over the past year, he says his biggest priority right now is to fly under the radar and have as few people as possible be aware of his crypto holdings. Apparently this has recently become a real concern for Bitcoin investors who have suddenly become overnight multi-millionaires (Or hundred-millionaires. Or in the case of the Winklevoss twins, even billionaires). A vast windfall like this makes you an alluring target to criminals.

Just one more unexpected consequence of this crypto mania we're watching play out in real time.

The Peak Prosperity View

The above expert's views match well with those of our team's outlook here at PeakProsperity.com.

Charles Hugh Smith, who has been writing about Bitcoin for us since it traded below $600 has long had a price target of $17,000 -- which seemed unattainably high even just one short week ago. That underscores how insane the price moves of the past few days have been.

With the $17,000 milestone hit so quickly, does he think a large correction could ensue? Very possibly. (I should make clear though, he remains quite bullish about Bitcoin's long-term future potential).

Davefairtex, our resident charting expert, notes that his model now shows Bitcoin's level of overvaluation at "nosebleed" levels with a daily RSI of over 98 and the forecaster clearly predicting a reversal:

And reader mrees999, our community's most-respected educator on the cryptocurrency space -- and one of the biggest advocates earlier in the year for buying Bitcoin -- offered the following words of caution yesterday:

I probably wouldn't get in now. It's gotten irrational with FOMO. I'm selling into this rally and waiting for a massive correction once the bit shorts come in with the futures trading about to begin.

(Again, I should point out that mrees999 remains robustly optimistic about Bitcoin's longer-term future price potential.)

To the above, I'll simply add two additional pieces of data to show how quickly Bitcoin has outstripped any sort of rational justification for its recent price explosion.

The first is this chart below, which shows how Bitcoin's price has blown above the maximum Fibonacci extension between its previous swing low and yesterday's swing high (note: this chart was created before the price continued higher to $19,000):

(Source)

And lastly, here's a table showing the accelerating compression of time it has been taking for Bitcoin to hit each new $1,000 price milestone:

(Source)

That right there, folks, is the madness of crowds. It's a FOMO-driven mania to make the South Sea Bubble blush.

Advice For Those Who Missed The Rocket Ride

So, if you've been feeling like the loser who missed the Bitcoin party bus, you've likely done yourself a favor by not buying in over the past few weeks. It is highly, highly likely for the reasons mentioned above that a painful downwards price correction is imminent. One that will end in tears for all the recent FOMO-driven panic buyers.

To that point: as I'm finishing up this article, Bitcoin has retraced back to $15,100. That's a 21% loss in less than 24 hours for those who bought at yesterday's $19,000 high. If yesterday indeed proves to have been the blow-off top, that loss could get a lot uglier quickly.

But even if it doesn't, what can those of us who don't currently hold any cryptocurrency do as we wait for the dust to settle here?

Here's our current guidance:

  • Open an account with a crypto exchange: While we maintain Bitcoin and many other cryptocurrencies are in a bubble right now, we reiterate our position that they are worth having exposure to in your portfolio -- albeit not at today's prices. So, while waiting for (possibly much) lower prices after the inevitable blow-off top, you should open an account with a leading crypto exchange (like Coinbase, Kraken, Bitfinex or Bitstamp), so that you'll be positioned to buy when the insanity is over. These exchanges require a fair amount of personal information that they use in account verification, and some of them take a surprising amount of time and effort to set up before your account is approved and/or funded to transact. So get all of that out of the way now, while your waiting on the sidelines.
  • Build cash: We've been beating this drum for a while because it's not just Bitcoin that's in a bubble. As laid out in previous reports, nearly all financial assets are dangerously over-valued in today's financial markets. Keep building your cash reserves as "dry powder" to deploy when the next big market correction hits. Chances are likely that at some point in the next 0-2 years, you'll have the opportunity to buy cryptos, stocks, bonds and real estate at generous fractions of the prices seen today.
  • Hold on to your precious metals: Holders of gold and silver have watched Bitcoin's moon-shot with a lot of understandable envy. This is the kind of massive re-pricing boom they expected the precious metals to experience as world fiat currencies inflate away their purchasing power. Were PM investors wrong? Did they pick the wrong horse in this race? Should they have piled into the cryptocurrencies instead? While it has been a painful five years, we expect precious metals holders will be rewarded in the end. Separate from the current emotion-driven FOMO blitzkreig, the reasons informed investors are buying Bitcoin have heavy overlap with the rationale for owning gold and silver. Capital will return to the PM market as soon as the current nested set of financial bubbles begins bursting. And if you think the jump in Bitcoin has been tremendous as a money tsunami has flooded into this small market, remember that Bitcoin's market capitalization is now substantially larger than that for all the world's above-ground silver. How high could we see silver go when that metal become en vogue again?
  • Practice emotional resilience: Hey, Bitcoin could still rally higher from here -- much higher. It's still a small market with a lot of hot money fighting to enter it. How long the mania will last is unknowable -- we could be seeing the end of it right here (Bitcoin's price dropped below $15,000 as I wrote the last paragraph), or it could still go on for a lot longer than we can imagine. If it does, don't let the twin devils of fear and greed compel you to be one of the "last fools" to jump in before a correction takes hold (remember: that's how Isaac Newton lost his fortune in the South Sea bubble). And don't beat yourself up for not being one of the very few people to make millions from this craze. It's like being jealous of lottery winners. Instead, focus on the real wealth in your life (hint: it's much more than the money in your bank account), take time to appreciate what you have, and plan on sustainable ways -- instead of speculative ones -- to increase it. Those looking for some guidance on how to best do this can find our thoughts here.

Don't Ignore The Revolution

While we've made the case that Bitcoin's current run-up has been "too far, too fast" and a painful correction is highly likely, the new cryptocurrency era is a bona fide revolution. The underlying technology of the blockchain will transform industry and commerce on a similar scale as the Internet has.

While we urge prudence and caution regarding the conditions under which you invest in the cryptos, we don't recommend you ignore their significance.

Charles Hugh Smith has written several reports for us designed to demystify the digital currency space and help you understand the future value that the blockchain promises to unlock for society.

If you feel you don't yet have a good grasp on all this, make his report Understanding The Cryptocurrency Boom your mandatory reading over the next few days.

Written just a few short months ago, when Bitcoin was a mere $2,600(!), this publication and its excellent companion report, The Value Drivers Of Cryptocurrency, explain in layman's terms the real utility value of digital currencies and why a long-term view can justify prices that may ultimately be much higher than where they are today.

Don't let ignorance or a sour-grapes frustration from missing out on the first big run make you blind to the revolution underway. Whether you participate in it or not, and at what price, is up to you. Just make sure your decisions are well-informed ones.

Click here to read Understanding The Cryptocurrency Boom (free to all readers).

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98 Comments

suziegruber's picture
suziegruber
Status: Silver Member (Offline)
Joined: Dec 3 2008
Posts: 195
Bitcoin Has A "Whale" Problem

Adam,
Thanks for a great article.  I just came across an interesting article on Zero Hedge related to this:

According to Bloomberg, about 1,000 so-called “whales” control 40% of the bitcoin in circulation, giving them unrivaled leverage over the broader market. And because there are no laws explicitly banning collusion in digital currency markets, only the most blatant pump-and-dump operations risk being prosecuted as fraud.

Thoughts?

--Suzie

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4942
the bitcoin innovation

Suzie-

It occurs to me that in addition to chatting with each other and organizing trading strategies, some whales might also run around the internet telling everyone about how cool crypto currencies are - most are surely true believers (why else would they own so much?), but at the same time they also are extremely motivated to move prices higher.

I bet some are gifted communicators, while others employ the time-tested strategy of dumping on anyone who says anything negative about their favorite coin.  For some, personal attacks and other obnoxious behavior are fully justifiable, since they have tens of millions of dollars at risk.

The existence of such a motivated grass roots sales force/influencer group is another reason why "the brand" has value.

This is yet another reason why the true innovation here isn't actually the blockchain - it's the funding mechanism for the system itself.  It generates an instant sales force of people who are highly motivated to see the system succeed.

Generally speaking, a thing doesn't usually sell itself.

New_Life's picture
New_Life
Status: Silver Member (Online)
Joined: Apr 18 2011
Posts: 143
Typo...

Good article, minor typo??? (Out by a Factor of 10)

"The first is this chart below, which shows how Bitcoin's price has blown above the maximum Fibonacci extension between its previous swing low and yesterday's swing high (note: this chart was created before the price continued higher to $1,900):"

paulanders's picture
paulanders
Status: Member (Offline)
Joined: Feb 6 2013
Posts: 6
Bitcoin

While I do believe Bitcoin (and the rest of them for that matter) has become frothy, people are not looking at the whole picture. We Americans seem to think the world is all about "US".  Every country is in the same boat as we are and when they fall like dominos one by one, where do you think these people are going to go? Metals? You have to wait for them, and that's if the exchange can even deliver them. I own gold and silver also but when it's SHTF time, it's not only easy to buy cryptos, but you can buy them in any denominations, and it's instant.

I too think they will one day fall out favor one day but for now, there are plenty of dominos yet to fall...

Jeffleonard90@gmail.com's picture
Status: Bronze Member (Offline)
Joined: Aug 17 2012
Posts: 31
Thanks

Thank you for the article, still trying to wrap my head around this. The mining is somewhat of a mystery to me, along with the shadow figure(s) that started bitcoin.  

Loved the article

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 731
thank you Adam

Your article is good consolation. I wonder how the big winners in this will evolve, they are grass roots but are now elite. I hope they maintain their standards as some do but being worth 8 to 9 figures can really change your perspective on things (a change in perspective I wouldn't mind experiencing LOL).  I am happy for the people here who did well, though a natural jealousy is unavoidable out of a remorse for following this for years and staying on the sidelines.  

Congratulations to those who did well (some of whom I know had like no real money before this) it is a nice rags to riches event for some very good people who understand the message of this site. I hope they will focus their newly found power in ways that make sense.

charleshughsmith's picture
charleshughsmith
Status: Platinum Member (Offline)
Joined: Aug 15 2010
Posts: 676
solving problems

I want to stress that beneath all the speculative frenzy, what will retain value and remain scarce and in demand is anything that solves problems.

Cryptocurrencies have the potential to solve two problems:

1. reducing the cost and friction of financial intermediaries

2. holding its value as the $250 trillion in phantom wealth created in the past 8 years vanishes

Uncletommy's picture
Uncletommy
Status: Gold Member (Offline)
Joined: May 3 2014
Posts: 455
Feel archaic? Just ask you're grandkids.

Yesterday my grandson asked me what a bitcoin is. He's 6 years old!

Image result for bitcoin cartoons

PaulJam's picture
PaulJam
Status: Bronze Member (Online)
Joined: Dec 4 2016
Posts: 61
Fascinating: Bulgaria gov't has over 3 billion in siezed bitcoin

http://www.zerohedge.com/news/2017-12-08/bulgaria-government-shocked-dis...

alanrgreenland's picture
alanrgreenland
Status: Member (Offline)
Joined: Nov 7 2010
Posts: 1
But is Bitcoin SUSTAINABLE??

I admit to being a skeptic about bitcoin, and I don't know the details of the "mining" operations.  But I have seen articles suggesting that it uses TONS of electricity (apparently to run complex algorithms for hours on servers).  One headline said that bitcoin uses more energy than Ireland!  Given that, is it even close to sustainable? 

I often wonder whether even the internet will survive more than another decade or two, because I think it's likely that electricity (supplied by the grid) will become unreliable.  So the last thing I'd want, at that point, would be for some portion of my wealth to be tied up in something that doesn't exist except on my computer, and requires some unknown number of servers out there to be connected and operating in order for me to conduct a transaction.  This sounds like the opposite of simple, sustainable technology (which, I think, is all that's likely to survive into the next century).

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4942
bitcoin wallet hack

A long while ago, I was having an argument with someone here about how bitcoin was unhackable.  I explained that if I were going to hack bitcoin, I wouldn't go through the front door, but instead I'd attack the wallet code.  My proposed hack was inspired by the NSA, which seldom did brute force attacks on crypto algorithms.  Instead, they focused on key generation.  They would look to see how the key was generated, and see if they could duplicate that process.  Or, they'd sneak in and change the key generation code so that the mechanism was easily reproducible - such as, using the current time as the "seed" for the key generation, thus constructing a "predictable key".

Then I was told, "but for bitcoin, that's impossible!  The code is reviewed!"  Top men, I was told, were on the problem.

Well, apparently, someone has done exactly this.  They've somehow infected the "wallet generation" mechanism somewhere, and then wrote a bot that loots the contents of these "predictable wallets" as soon as they appear in the blockchain - as soon as someone uses them in a transaction.

https://pastebin.com/jCDFcESz

The article is long and technical, but the executive summary is this:

Someone apparently hacked the wallet generation code "somewhere" so that the "seed" for the wallet used bits and pieces of the blockchain historical record - transaction IDs, other people's public addresses, etc.  Then they wrote a bot that would scan the blockchain looking for anyone using on of these "predictable wallets."  When it saw one of them in use, the bot would immediately loot the contents of that "predictable wallet."

The author, looking for "treasure in the blockchain", discovered this on his own.  "Hey, that wallet ID was constructed using someone else's wallet ID (or one of the old blockchain transaction IDs) as a seed.  Why would someone do this?"

Pretty much, it was about theft.  Again, this approach doesn't attack bitcoin's cryptography directly.  Instead, it attacks via key generation.

True story?  Its easy to verify.  All you have to do is check all addresses ever used, and see if any of them were derivatives of blockchain transaction IDs or other people's wallet IDs.

Moral of the story: while we all know that you must guard your private key, its also the case that you are forced to trust the mechanism by which your private key was generated.  And you can't tell, simply by inspection, that your private key isn't one of these "predictable" ones.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 364
Important Leeson to be learned

Don't trust hot wallets from any exchange or hosted wallet service.  Do your own research.

 

Blockchain.info has had a terrible record for years. It has been hacked and wallet compromised several times. Clear back to 2014. A quick Google search will bring up dozens of accounts.  Hopefully a person smart as yourselves will at least do a google search to verify the trustworthiness of any company before they store money with them and validate their reputation. We get bad actors in all fields including casinos, banking, wall street, high speed trading bots etc.  So it shouldn't be a surprise to see one wallet service with a bad reputation gets hacked or suffers from bad coding but it is exposed and available for anybody who spends 15 seconds with Google to learn to avoid.  

 

https://www.coindesk.com/good-samaritan-blockchain-hacker-returned-255-b...

This might be a case of confirmation bias for somebody with an agenda?

Or, the strawman logical fallacy.   You can decide.

 

 

 

mrees999's picture
mrees999
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Joined: Aug 16 2013
Posts: 364
Misleading headline

Most mining comes from China. They overbuild to keep the economy afloat during the last banking crisis. They built entire citifies that are still unused today. They build several dams to power these still empty cities.  So now they have all this wasted electricity coming from clean energy and would like some productive use so the attach the bitcoin miners to capture the wasted efforts.  The mining is a layer of protection doing the complex algorithms that root the network to the physics of thermodynamics. 

 

The other major server farms come from Iceland and other northern areas that have natural volcanic heating vents that create electricity - clean and sustainable and utilize the naturally cool climate for cooling. They do this for economic reasons - but still not unhealthy for the earth, The cost of this per transaction is expensive and hardly justifies the cost as it combines to create the most robust computer system by orders magnitude. But it could be coded in a way to include everybody in the world without any additional energy requirements. It's just sitting there waiting for the population to arrive and utilize it. 

Is the growth sustainable?  Not forever. It will find equilibrium as all things rooted in nature.

 

jtwalsh's picture
jtwalsh
Status: Gold Member (Offline)
Joined: Oct 1 2008
Posts: 263
Open Mind

Adam, Charleshughsmith and Davidfairtex:

Thanks for making a very obscure topic much more understandable.  One of my issues with Bitcoin has been my own inability to understand what it is and how it works.

At its essence Bitcoin and the other crypto currencies seem to me to be another form of fiat currency.  They are valuable only because we ascribe value to them.  The most intriguing thing about them is that they exist without the backing of any government and seem to operate outside the present banking oligarchy.  Both attributes are very appealing to someone with a libertarian bent.

My concerns, which may flow from my profound ignorance are: First, Bitcoin and the rest exist only in cyberspace.  For someone who lived most of their life before the internet and who has been prepping for a decade for the possible collapse of the electric and communications grids it seems possible that this wealth could become as inaccessible as buried treasure on a remote island was two centuries ago. Second:  While the block chain seems to be secure, there are reports of people losing the key code to their electronic wallet which makes their wealth inaccessible, or of hackers that can break or duplicate pass codes. To me this seems that there is a risk of loss or fraud, just as there is in the currencies of the present banking system.

I look forward to future reports on this topic so I can reach an even better understanding of the subject.

Thanks again..

JT

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1725
Automatic Earth Blog on a real role for cryptos

(Sorry about the formatting.  I cant get rid of bold and underlining.)

Crypto-Cornucopia Part 4 -- Without It, You're Talking Mad Max

He reviews the ways that deliberately inaccurate record keeping is used to defraud others.  (This was quite an eye-opener to me.)

On the geneal problem of inaccurate (fraudulent) record keeping in stock transactions:

Without records of transfer, how do you know you own it? Morgan transferred a stock to Schwab but forgot to clear it. Doesn’t that mean it’s listed in both Morgan and Schwab? In fact, didn’t you just double-count and double-value that share? Suppose you fail to clear just a few each day. Before long, compounding the double ownership leads to pension funds owning 2% fake shares, then 5%, then 10%, until stock market and the national value itself becomes unreal.

Inaccurate record keeping on stock prices.

But it doesn’t stop there. You don’t only buy stocks, you sell them. And you can sell them by borrowing them from a shareholder. But what if there’s no record of delivery? You can short or sell a stock without owning any... You could literally own nothing, borrow nothing, post nothing, and with no more than insider access to an exchange, drive a company out of business. That’s how crucial recording is.

What happened to Overstock.com

And while for appearance’s sake, they only attack and destroy small plausibly weak stocks, Overstock.com with a $1.45B market cap fought these naked short sellers for years. Publicly, openly, vocally, with the SEC. Besides eroding their capital, besides their legal fees, besides that e.g. Amazon could pay to have their competition run out of business with fraudulent shorting.

An honest stock market blockchain

However, what if you created an honest stock market Blockchain that actually had the stock certificates and actually transferred them, cheaply and reliably without false duplication? This is what is happening in the Jamaican Stock Market. A new company can choose to list on the stock Blockchain and avoid the old system.

Blockchains can also do Smart Contracts.  What is that?

Suppose you make a bet: IF the Packers beat the Lions on November 12, 2017, THEN I will pay you $50. You set up the contract, and the bot itself can look for the headlines and transfer the money when the conditions are met.

The value of a smart contract.

...[H]ow about this: You run a jewelry business on Etsy and need to buy $500 in beads from Hong Kong. Normally, you would need to pay an importer, a currency exchange, bank account, wire transfer, escrow account, and a lawyer, or their proxies within the system, plus two weeks’ clearing time. That’s a lot of overhead for a small transaction. In contrast, a smart contract such as Ethereum could post the value of the coin (escrow), and when Long Beach or FedEx confirms delivery, releases the Ethereum, a coin of value, to the seller in Hong Kong. Instantly. Why? The existing financial system is charging too much and doing too little. That’s a huge incentive to get around their slow, overpriced monopoly.

Once you cut the costs, have a more direct method, and reduce the time to minutes, not weeks, the choice is obvious, which may explain why Microsoft, Intel, and others are deep in ETH development.

What about the end of the electrical grid?

Another objection is that cryptos depend on electricity and an expensive, functioning Internet. True. But while I’m no fan of technology, which is full of problems, so does everything else. Without electricity, the western world would stop, with no water, no heat, and no light.

Without Internet, our just-in-time inventory halts, food and parts stop moving, banking and commerce fail. You’re talking Mad Max. TEOTWAWKI. That’s a grave problem, but not unique to Bitcoin.

robie robinson's picture
robie robinson
Status: Diamond Member (Online)
Joined: Aug 25 2009
Posts: 1144
SP, right on

I can’t solve the next generation’s problems. We’ll be lucky to survive our own. But I can warn you that even now this generation will never accept a digital mark without which you cannot buy or sell, not voluntarily and not by force. It’s too far to reach and social trust is too compromised. But could they get us halfway there and just make it official later, when everything’s fixed again? I think absolutely.

Once that’s in, you can finish all the plans written in the bank and government white papers: perfect, inescapable taxation. Perfect, indelible records of everyone you talked to, everything you said, everything you bought, everywhere you were, everyone you know. Not today, but in the future. And that is the purgatory or paradise they seek today. The price of Liberty is eternal vigilance. The system we have wasn’t always bad: a small cadre of bad men worked tirelessly while complacent citizens shirked their duty. So when we move to a new system softly, without real purge, real morality, real reform, what makes you think the same thing won’t happen to your new system? Only far, far more dangerous. But I can’t prevent that. Think, and plan accordingly. 

The last two paragraphs from the Automaticearth essay,,,say it for us here at Bluestemfarms. Kelsey has settled again, all are hayed, now to get snow bound trees off the fences,,,firewood.

Mark_BC's picture
Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 417
The same thing would have

The same thing would have happened to gold a long time ago if the CB's didn't have digital naked futures to manage it. They will do the same to Bitcoin, they don't like competitors.

For bubbles to go to such astronomical levels there has to be a bunch of extra money sitting around which peopele throw at them, and we all know where that money comes from.

All these new billionaires from Bitcoin, they aren't billionaires unless they sell it and buy something real with it. In this era of grossly over-inflated financial assets in relation to the amount of real world wealth out there, I see a musical chair situation arising.

Will cryptos maintain their value after the currency crash? I doubt it, people will be clamoring for real things and cryptos are about as imaginary as you can get, next to Federal Reserve notes which at least have some degree of backing by the US government and the 300 million slaves it represents. Sure it takes energy to mine Bitcoins but why would anyone want to spend (waste) money to make some digital bit when things fall apart, when they could just buy PM's once they are set free?

As with everything else that has skyrocketed in the financial bubble over the last years, I am just disappointed that I missed out and am labouring down here in my 8 to 5 to make ends meet. I still believe I will win out in the end but the question is whether I'll still be alive by then to witness it.

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 424
RR & SP

“And that is the purgatory or paradise they seek today.”

Love that sentence!  Perhaps it could also be “Purgatory of Paradise”. They are both so, so appropriate!

I would be depressed or demoralized if I didn’t believe in “the serendipity of unintended consequences” and the power of grace, and good.  

So glad you all post, thank you.

AKGrannyWGrit

davefairtex's picture
davefairtex
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Joined: Sep 3 2008
Posts: 4942
you are the bank

So the good news is, bitcoin lets you be your own bank.

Unfortunately, that's also the bad news.

When asked why he robbed banks, Willie Sutton famously answered, "because that's where the money is."

And now, with bitcoin, you are the bank!

And bank robbers are now electronic, not physical.

And general purpose computing machines, the mechanism through which we get to play banker, are notoriously easy to hack.

So you get to learn about being the paranoid security team at the bank.  All of us get to learn this.  Because we're all the bank now.  And there are armies of electronic Willie Suttons out there who are looking to rob us, because "that's where the money is."

And unlike with credit cards, once the money is gone - it's just gone.

So google before you do anything.  If you miss something, well you were pretty stupid, weren't you?  After all, it is your responsibility to be the paranoid security team.   And never, ever, click on anything.  Remember, you're the freaking bank!

I have to say, I'm having a great deal of fun.  But it is also absurdly easy to move money around.  I like being the bank.  I'm also a bit paranoid about security.  How about you?

Just one perspective.  :)

Afridev's picture
Afridev
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Posts: 119
Cryptos in a currency crash

Would in a currency crash the cryptos not be one of the little alternatives to 'get out' that still present themselves? At this moment it seems that even if they are 'imaginary', cryptos do provide certain 'services' (I think proven - and in addition possibly will open up significant new ones in the future - unproven) and align to principles that other resources do not necessarily offer. So I believe that at this moment there is real value in cryptos, possibly not justifying their current value though, I don't know...

If some trust in cryptos can be maintained in case of a currency crash, even if only a very limited amount of resources would flow into the cryptos, they would still be exploding. But unless they can then be used for direct interactions that bypass the traditional paper stuff (i.e. crypto-to-crypto or crypto-to-real stuff), you'd still be stuck in the computer or with paper... In the end the key is what real stuff you can get for it... I suppose it all depends on what scenario(s) you think are most plausible on what decisions to take now.

Cornelius999's picture
Cornelius999
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Posts: 367
Jim Rickards says somewhere

Jim Rickards says somewhere that btc and eth ect. will be superseded by a deeper underlying system that the likes of IBM are developing.

 
KugsCheese's picture
KugsCheese
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Posts: 1423
Bitcoin Options?

Anyone know when Bitcoin Options start trading on retail brokerages like Ameritrade/Sccottrade?

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stevejermy
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Posts: 46
Hyperinflation Harbringer?

Exceptionally interesting articles, which I need to read again fully to understand.

Although the South Seas & Tulip nature of the Bitcoin ascent is fascinating, two interesting and interrelated questions to me, which would be interesting to explore further, are:

  • first, to what extent is the parabolic ascent of Bitcoin and its volatility consequent on the G7/G20 central banks'  inability to control it through market intervention;
  • second, to what extent is Bitcoin's ascent actually the start of hyperinflation of the West's currencies, as the wall of QE monies now finding another monetary class into which to descend?

My guess is that the ascent could be a combination of Tulip and early inflation. Perhaps a good time to add to PMs, if so.

 

newsbuoy's picture
newsbuoy
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Posts: 228
Chino-Ruskie Blubber Processing

Indeed the Chinese and Russian (and other) whalers are diving deep and looking for old captain Ahab. Possibly the only reason we risk blood and treasure is to protect the Petro Dollar. That is, the value of energy expressed in U.S. Federal Reserve Notes. Do a googlearch and you will now see stories about how blockchain/bitcoin will be used to buy/sell oil. Genie is out of the bag. The Petro Dollar is finito! So whether I have bitcoin cryptographs printed on a piece of 8 1/2 x 11 safely tucked away in ... hey, hey, hey ... or not. It will be what lies beneath most if not all transactions the way the U.S. Federal Reserve Note does today. Will this happen before events unfolding in our atmosphere make it mute is a different question. Speculate if you have the gambling disease but lets hope that somehow this tech can disintermediation the FM'res. Look'n at you Jamie.

No, this is not Max Kieser.

mrees999's picture
mrees999
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Posts: 364
There is balance in the force - the resistance lives

Some speak as if there is one side. Happy smiling faces everywhere. Where there is no conflict or disagreement and with any decent - they are left out of the system.  The technology was BORN out of disregard for the status quo. IT WAS FREEDOM FIGHTERS  escaping the exact kinds of scenarios where governments and those in authority try to impose their will. Jim Rickers is an idiot trying to sell books when he espouses this garbage. He preys on your fears because he expects none of us have done our homework.

Study of a moment the source of this technology. The freedom fighters that were HAL FINNY who was a cryptographic activist.  His self-declared duty was to protect people like you from the exact nightmare scenario you blame on crypto. Some insult him and his achievements he did for us because they are uneducated and refused to actually learn there are two sides with many sharing the same concerns but actually doing something about it rather than just complaining and imagining without making an effort to even understand.

He was one of the people behind bitcoin creating it for people like you and me. He fought the big brother state. ADAM BACK who was threatened with imprisonment for trying to export code that would get past the right of the people to keep their transmissions secret from "the powers that be" - as he PRINTED the SECRET CODE DECRYPTION KEY ON HIS SHIRT - he refused to remove as he crossed national lines. He went to court and won the issue as a right to wear the number as a right to free speech. His actions were was an act of defiance for the right you enjoy every time you pull up a web browser that the US Military wouldn't allow to be encrypted past 52 bits (Easily broken these days and a source of national security hacking). These things still happen today with Senator McCain trying to reign in our rights to privacy.

 

Without their fighting for your rights, there would be no commerce on the internet. There would be no internet in tyrant states with dictatorships. It is the reason we have HTTPS in your browser to scramble your messages that have any hope of not being eavesdropped at the first hop past your house. To this day, the military outlaws a NUMBER. They consider knowing or possessing A NUMBER to be munitions. 

Take five minutes to understand the background of David Chaum,  Another digital freedom fighter for the internet and your rights to privacy. Without his services, your life right now might be unrecognizable.

Privacy tokens like Monero that will be resistance to authority that keeps the common person at equal distance with the right to bare digital arms for protection. There are tokens to make switching from any of thousands into any other of thousands completely autonomously and in computer code. These things happen without money exchangers on the ground, and without borders. No apologies, no permission.  Centralized currency is already obsolete. Fiat Currency is on its last stand. 

Some keep pretending it isn't happening. Every day is confirmation bias. They wast their time glorifying any bad news about crypto - because it makes them feel better - trying to ignore the truth. The world around them is changing and crypto is the method that is stealing the thunder from what they've waited and invested for.  The role of PM was stolen from them. It sucks I know. Will you continue to ignore the truth? Time's wasting. Did bitcoin just go up another thousand overnight? I've got some silver to sell you.

 

 

 

 

 

mrees999's picture
mrees999
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Posts: 364
Answers for JT

Mistaken for fiat is one of the first mistakes people make in gaining an understanding. Here's what I wrote about that:

https://medium.com/@mreespublic/why-bitcoin-is-not-fiat-currency-c3d1996...

Cryptocurrencies like powerledger are changing everything - including the electrical grid. See microgrids now made possible because of crypto: https://web.powerledger.io/

To keep crypto safe from hackers, and lost passwords - there is a tool for that: https://www.ledgerwallet.com/

People can still trick and con you so it is still important to be educated. But these links will help you on your path to understanding.

 

 

 

mrees999's picture
mrees999
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Posts: 364
You are probably not ready to be a bank

Let's face it. Crypto currencies are a hard topic to grasp. It is largely uncharted territory. There are land minds next to gold minds. We are in the wild wild west. I don't think anybody would argue those points. I would not trust my 92 year old father with a digital hard wallet. There are many ways you can make a mistake by not using a copy\paste function correct for example. There are fake websites - snake oil salesman, and a host of ways people will try to trick you out of it.

If you leave it with banks and exchanges, I don't suspect we'll have much better success trusting them with this form of money that we've had with any other form we've used for 5,000 years. It might not become mainstream for a decade. By them in might be waterdowned, and made as easy as sending an email on your iphone today. But - by then all the big money smart people will have made their fortunes.

 

You'll get paved roads, instead of wagon wheel roads.  You'll get fancy smartphones when the pioneers in the field had to make due with walky-talky.  You'll have airconditioning while those that explored the uncharted territory and took the pains of learning through blood sweat, tears, pain, loss, errors, to actually find the treasures to be found.

Adventuring isn't for everybody. Some want to be pampered and just be wealthy without needing to earn it themselves. Others want to be responsible for taking the hard road and earning the rewards for being first. It can be bloody and bruising going to the school of hard knocks. But if it were easy - everybody would be doing it. What kind of person do you identify with? Perhaps your hands are too soft, or your neck and backache. Maybe you've given up?  Maybe you already think you know everything you need to know. At some point, all the new technology just doesn't matter anymore. Right?

I would say for the vast majority of people - just wait.  Wait until it's handed to you gently. For your own good, by people that have earned the right to portion it out to you as they see fit. There are those that do and those that do not. For every go get-em - "die with your boots on" type of guy, there are a hundred that want to die peacefully in their bed without the need of a story to tell their children about the fight they made to get to the top. Those stories are for other people.

Perhaps you're too old.

Or too distracted

Or too dumb

or too tired

or too discouraged, resentful, suspicious, doubtful, untrustful. We can think of a thousand reasons not to do something.

But.

We are fortunate to be alive during the great wealth transfer of the millinia. I tiny smiggen of life sliced in a way that we are allowed perhaps a decade or two in all of world history to be in the right place at the right time, with the right tools and the right education and being fortunate to have health and education and an open mind to actually make a life-change with a life-changing amount of wealth for not just ourselves, but for generations of our family that follow. 

What will you do with that fortunate opportunity?

Ah shucks, it might be scary to be your own bank. Go watch history being made rather than taking part. It's dangerous. There's a rocking chair waiting somewhere for you right now.

Which one are you?

 

 

 

 

 

davefairtex's picture
davefairtex
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Joined: Sep 3 2008
Posts: 4942
do molecules still matter?

That's my question.

Bitcoin is a claim on real wealth.  A bitcoin is a claim on the operating bitcoin infrastructure, which itself is a claim on the properly functioning internet, your connectivity to it, and the functioning power grid.  While the bitcoins themselves will survive any sort of internet outage (on the disk drives of all the servers), their utility is questionable if the outage persists.  If your transaction can't be verified, or if the worldwide internet ends up being fragmented for some reason, double-spending problems appear.  Blah blah blah.  Bottom line is, if you don't have connectivity, you can't execute transactions, and so your personal "realtime" utility from your bitcoins is zero.

A US dollar is a claim on the functioning US economy, the strength of the US military, as well as the open-ness of the US capital account.  Of course, when the government (or the Fed) prints up more claims, that's dilution for existing holders of claims.  Bitcoin doesn't have this problem.  When it comes to discipline of new claims production, bitcoin can't be beat.

However, both USD and bitcoin are still both just claims.  They should not be mistaken for underlying real wealth.  In bitcoin's case, the "underlying real wealth" are the functioning servers, clients, and the fully-connected Internet.  (We can debate if "the Internet" represents real wealth; I think it does, but it too is a derivative/depends on reliable power generation.)

But maybe that doesn't matter.  Maybe claims are all we need.

Ultimately that leads me back to my question: do molecules still matter?  Houses, food, farms?  And the portable molecules: gold? Or are digital claims the ultimate in what we should focus on?

See the log chart below of the gold/bitcoin ratio.  Once again, its a LOG chart.  A regular chart simply looks ridiculous, with the ratio being a flat line right at the bottom - looking exactly like the EKG of some patient that has died.

So right now, molecules just don't matter.  As in - they really, really don't matter.  Monthly RSI: 14, weekly RSI 19, daily RSI 21.  That's capitulation territory for molecules.

Me, I love tech.  Its what I do.  Bitcoin is tons of fun.  I'm learning more and more about the details as time passes.  I've worked in the networking field since the dawn of time.  I have to constantly adapt.  I'll be writing python (or its successor language) from my rocking chair, quite possibly until I keel over dead.  Why?  Because for me, its just that much fun.  It always has been, ever since I was a kid.

So, my question again: do molecules just not matter anymore?  Should you sell your silver at $15.90, and buy bitcoin at $16,230?

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 364
Silver Molecules VS Electrons

Silver and bitcoin - that's a fun one to compare. I own both. I have owned silver many years before bitcoin was a thing. 

I bought silver under $10 in the 2000s. Bitcoin was technically born in 2009, but had no price until mid-way through 2010 when it was used to buy a pizza. No fiat or declaration. Doing the math for 10,000 bitcoin to buy $40 worth of pizza put the price at about one-quarter of a penny. It went several thousands of percent in the first bull run of its life lifting the value to 8 cents in weeks. As a full bitcoin is just another name for 100 million satoshis (units of value 8 decimals in) we could measure those 8 cents needing many leading zeros.

But we are looking at silver in its relation in US dollar terms. What can we trade them for as a currency. The can both act as unit of account and store of value. So we need something in relation we can buy with both so we can triangulate meaning.

Let's use the standard median house price for the years both had established value. As they both have fluctuating prices throughout each year, I'll look at December 31 of each year. The price of housing comes from the St Louis Fed  https://fred.stlouisfed.org/series/MSPNHSUS

We will measure each in quantity of units required to purchase the house for each year - silver measured in troy ounces. Bitcoin measured in a full bitcoin. We can separate a troy oz into 33 grams, and bitcoin into 100 million sub units called 'satoshi's as we can buy these in their equivalent portions but let's stick to the full until as commonly know for ease.

           
Year Median US house price  SLV  Price   BTC Price  SLV Needed BTC needed
2010  $        241,000.00 30.63  $      0.08            7,868.10  3,012,500.00
2011  $        218,600.00 28.18  $        4.25            7,757.27 51,435.29
2012  $        258,000.00 29.95  $          13.51            8,614.36 19,096.97
2013  $        275,500.00 19.5  $        757.00          14,128.21                363.94
2014  $        301,000.00 15.97  $        319.00          18,847.84                943.57
2015  $        297,000.00 13.82  $        430.00          21,490.59                690.70
2016  $        327,000.00 15.99  $        968.00          20,450.28                337.81
2017  $        312,800.00 15.95  $  16,940.00 19,611.29                   18.47

The silver I purchased I own and poses. It's now dustier and fighting mildew. It's dark, and nobody seems to want to talk about it or show any interest at all except my old Uncle Rocky. Even the shiny pieces straight from the US MINT for less than half of what I paid for them on Ebay. Yep, the molecules are still there- I counted the silver and it llooksto weigh the same if anybody cared to check.

 

The bitcoin I own is invisible. It exists everywhere and nowhere at once. and EVERYBODY wants to talk about it. I find people all over willing to sell their homes and cars for bitcoin.  Bankers have wwhiteboardsand swat teams put together trying to figure out how they can cool it down. Central bankers are scratching their heads. Government officials are creating teams trying to harness its technology to make government more efficient. Speculators are having a hey-day.  Millionaires from all walks of life are have become millionaires.  

Now that mutual funds, retirement funds all a wall of money can just now begin to invest in it - many predictions from reputable predictors in the space call bitcoin at $40,000 each next year. That would put the estimated house at about 8.5 bitcoin - or near 20,000 ounces of silver. 

So speaking of networking - one is electronic and fancy computer systems, and one is social. Social networks bring consensus. Human-relatable and agreeable networks of friends and family. Those over 70 might have a sense of nostalgia from when they were young and silver was an actual thing they could use to buy a bag of penny candy or shop the five and dime stores.

Most can't get their kids interested in it because they can't relate. Sure, it has industrial uses - but so does copper and zinc and that makes them about as excited - which is to say they aren't interested. As I grow older and wiser it becomes easier to spot the patterns of life. One is up and coming with hopes and dreams, grown and excitement with a world of possibilities. One is a relic. I struggle to stay interested as I go visit the old boxes less frequently. My magnifying glass and books with holes ready to be filled with coins yet unfound. 

I walk past the old coin store occasionally and see an older gentleman or couple in the quiet store from time to time. Only very rarely do I see a young person enter the forgotten store with the elderly owner. I guess it's a sign of the times. They are moving on. The social networks of silver (and gold) are growing older and weaker each year. A lot of those social networks are getting shorted out as people fade away leaving only memories behind- for a while at least. Their loved ones will soon follow but the silver molecules will remain, dark, damp, and unappreciated. It claims the past.

Bitcoin is just a cryptocurrency. Who knows if it will live a long life. But it is made of energy which refuses to lie at rest. Its decedents are claiming the future.

I expect in my lifetime that a child will find it unbelievable that it once took more than one whole bitcoin to purchase a house. She might also find it equally unbelievable that people once were expected to use those old silver-colored round discs to actually pay for something.  

Today an ounce of silver will claim 259,625 Satoshis flying around as measured electrons in a worldwide accounting book. How long before the silver is a claim on only 1,000 as the bitcoin price continues to soar? More importantly - will anybody still care?

Afridev's picture
Afridev
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 119
Very good question...

The moment molecules don't matter anymore we're done for. Last I checked my kids were still built up of molecules, as was the food we grow and eat, the water we drink, the air we breathe, and the heat we need to survive has its source in molecules. I work with resilience, and one of the things that are often overlooked in that domain are the chains of dependency. As Dave indicates above, even cryptos ultimately depend on molecules (as unfashionable as they may have become).

I like certain aspects of what cryptos can do, part of their message, and a potential level of freedom they possibly can give (though I haven't even scratched the surface to really understand the potentials cryptos have - or the threats they could bring). Based on discussions on PP I put some fiat into cryptos beginning of the year - the equivalent of an old bashed-up clunker - which now would be a more recent clunker with a funky stereo. So I'm pretty happy; it'll never be 'big' what I'll get out, but that's OK, I feel (sideways) part of the movement. Cryptos (for me) will always be a mean that leads to 'molecular' ends. I'm uncomfortable with the seemingly in-baked tendency of society to always push further toward abstract 'things' while losing the bigger picture. This is part of what got us into this mess in the first place. I think a solid grounding in 'molecules' is key to our survival and well-being. Our vegetable garden will always be worth more to me then cryptos.

I understand that cryptos are potential game-changers, but let's not separate this development from the 'real world'...

davefairtex's picture
davefairtex
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Posts: 4942
molecules are for grandpa

I confess, while my code is grunging through the blockchain in the background, I'm doing everything I can to prod Mark into sending me that skeleton again.  If bitcoin breaks out above 16,700 (bitstamp price) maybe he'll finally give in and send it one more time.  I want my skeleton, and I won't stop provoking him until I get it!  :)

If I'm really pushy, maybe he'll even post a picture of a dusty, moldy box of silver coins.  [Mark: you just know you want to!]

You read his article.  Doesn't it feel right to you?  I mean - I feel like that grandfather with dusty old gold and silver, an old has-been, behind the times.

We should all sell our dusty, moldy, reeking-of-decay gold and silver and swap them for shiny new invisible bitcoin, nowhere, yet everywhere, a handful of bits in a ledger residing in a collection of servers on the Internet.

Seriously.  I feel the pull to do this.  Bitcoin is exciting.  Everyone is talking about it!  His argument resonates on an emotional level.  It is persuasive.  [Most likely, something similar has been said on websites around the world by a collection of bitcoin whales.]  Given how emotion tends to drive the herd, what does that say about where we are in this particular cycle?

So forget buy-low-sell-high.  That's grandpa's mind-set, sitting in his rocking chair, thinking about "business cycles" and other ancient belief systems that no longer apply to the modern age.  You don't want to be a fossil!  You want to be young, dynamic, a kid again, willing to jump into bitcoin at $16,500 because its sure to go to $40,000 due to a wall of money about to hit it from pension funds who are eager to cash in on bitcoin's rise.

Your takeaway today: molecules are for Grandpa!

As a trader, you need to interpret your emotions properly rather than being led by them.

I can just feel the low coming.  Can't you?  But first, we need as many goldbugs as possible to capitulate.   They need to bail out here at the ratio-lows.  They need to give up on gold, swap it for bitcoin, here at $1250/$16,500.  They need to swap 13 ounces of gold for one bitcoin.

You do feel like capitulating, right?  I sure hope so.  That's what lows feel like.  The more of us that feel like that poor, deluded, ancient, behind-the-times grandpa, the happier I become.  Once the goldbugs sell, that will mark the low.

Armstrong calls that "the slingshot move."

Afridev's picture
Afridev
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 119
Grandpa's are great!

They have the wisdom to know where to fish, where to find mushrooms, and when to say 'drop it, it's not important'. Would have wanted to have had more time with my grandfathers, so much more to learn... I hope with time to grow into a grandpa myself to whom (grand)children will turn for some wise words or mental support, work in progress wink. Besides molecules and bits, there are other things that give depth to life, wisdom, meaningful connection...

I like Taleb's view (from 'Antifragile'): 'For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable, every additional day may imply a longer life expectancy', i.e. if it has weathered and survived serious stuff being thrown at it, it probably is pretty resilient (though Taleb doesn't seem to like the term). The 'molecular' world has proven itself to be quite 'antifragile'. The jury is still out on cryptos...

Afridev's picture
Afridev
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Posts: 119
Yeeeeh, I got promoted from a

Yeeeeh, I got promoted from a (digital) bronze to a (digital) silver member devil

DennisC's picture
DennisC
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Joined: Mar 19 2011
Posts: 264
No Money, No Problem, No Credit, No Problem

Remember that advertisement?  I've been thinking along the same line with regards to the wall of pension money hitting the shore.  Why not use (more) taxpayer money?  It would require (perhaps) some additional tweaks to either version of the Pension Rehabilitation Trust Fund bill (H.R.4444 or S.2147), in my opinion, to make it happen; specifically, this section (in H.R.4444):

(3) USE OF LOAN FUNDS.—

(A) IN GENERAL.—The loan received under subsection (a) shall be used to purchase annuity contracts which meet the requirements of subparagraph (B) or to implement a portfolio described in subparagraph (C) (or a combination of the two) to provide the benefits described in paragraph (1).

(B) ANNUITY CONTRACT REQUIREMENTS.—The annuity contracts purchased under subparagraph (A) shall be issued by an insurance company which is licensed to do business under the laws of any State and which is rated A or better by a nationally recognized statistical rating organization, and the purchase of such contracts shall meet all applicable fiduciary standards under the Employee Retirement Income Security Act of 1974.

(C) PORTFOLIO.—

(i) IN GENERAL.—A portfolio described in this subparagraph is—

(I) a cash matching portfolio or duration matching portfolio consisting of investment grade (as rated by a nationally recognized statistical rating organization) fixed income investments, including United States dollar-denominated public or private debt obligations issued or guaranteed by the United States or a foreign issuer, which are tradeable in United States currency and are issued at fixed or zero coupon rates; or

(II) any other portfolio prescribed by the Secretary of the Treasury in regulations which has a similar risk profile to the portfolios described in subclause (I) and is equally protective of the interests of participants and beneficiaries.

The beauty is that all the hands that fondle the fund stream get their vig.  What's not to like? If things don't work out too well, there is always the "forgiveness" part [section (e) Loan Default].

(refer to https://www.congress.gov/bill/115th-congress/house-bill/4444/)

sand_puppy's picture
sand_puppy
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Joined: Apr 13 2011
Posts: 1725
Sitting this one out

I have ridden that rocketship of "exponential price increase euphoria" before and been crushed.

So I won't be participating in this one.  Goes High or low.  Doesn't matter.  I'm sitting this one out.

However, after some semblance of stability returns, I will follow CHS, DaveF, The Saker, Raul Meijer's general suggestion that cryptos can be useful in commerce and keep a crypto account open for transactions.  Won't store much money there, though.

And I feel comfortable sitting on the sidelines and missing out should it go much higher.

mrees999's picture
mrees999
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Posts: 364
What I would Tell Grandpad about his retirement account

Dennis is using an old logical fallacy of setting up a straw man defense. He must be new to these parts because I get quite an enjoyment of calling these out and making one feel a bit silly for trying these dumb tactics.  The basics of straw man.

 

From Wikipedia: straw man is a common form of argument and is an informal fallacy based on giving the impression of refuting an opponent's argument, while refuting an argument that was not presented by that opponent.[1] One who engages in this fallacy is said to be "attacking a straw man".

He presents these laws and formal declarations not based on anything I said or suggested. It's often used by unintelligent people trying to confuse the facts and build a case for no argument based on completely unrelated topics. But our audience is much smarter than that. So I supposed he has more success trying tactics like this on Hip Hop Forums.  Go get giggy with it.

My grandpa was an excellent man with a lot of good idea and a heart of gold. He was full of sage advice. He often said "By the Great Horn Spoon!" when I would tell him some new thing I had discovered as a child. Nobody else I knew used that expression. I loved him for it. It was "our thing'. I could count on it all through my teenage years.

One bit of advice he told me in all seriousness while taking my hand he would look me in the eyes and remind me that it wasn't the things he did that he regretted. It was the things he didn't do. Because he was scared, or it was new, and he wasn't confident. He just didn't want to make a mistake. In the process, he led a very conservative and unremarkable life. There's nothing wrong with that. This could describe - by far, most people in life.  But with regret. What could have been. We can all look back and find moments of decision - where making a different choice would have likely lead to amazing adventures, or opportunity for wealth. But we were risk adverse.

As many of you know, I teach community classes on this technology. I haven't made a dime doing it. In my class, I volunteered on Saturday I met a great older gentleman of 70 years old. He was still bustling even helping me carry my equipment to my car. He told me that he decided to take law classes at the age of 51. By 54 he had spent the happiest three years of his life not being the same realtor that he had spent his life. But he found out the hard way that there weren't any job openings for a 54-year-old lawyer with no experience that would pay near enough to sustain his lifestyle. 

But here he was - front row learning about the world of blockchains. Soaking in every world but obviously confused at times and I took the time to repeat sections until the light bulb went off. I told him that it's a rinse and repeat kind of thing. But this was one I admired. Living life on his terms - continuing to progress and not missing new opportunities. In our conversations after class, he realized I'm a never-ending student of life as well. The things I learned from him.... exciting times are ahead.

So what would I tell my grandpa about spending his retirement account on crypto?  The same thing I told my 92 year old father.  Use the money you wouldn't lose sleep over - and are comfortable loosing if it just doesn't work out. Then, let somebody experience and trusted help you.

 

 

 

 

 

 

 

DennisC's picture
DennisC
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 264
Okey Dokey

You got me there, as in confused.  Not quite sure where I was referring to grandpa and bitcoin but thanks for your response.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4942
straw men

Mark, I'm really not sure who you were responding to.  Dennis said nothing about Grandpa.  Or bitcoin.

Hint: you were probably responding to me.  I'm Dave, not Dennis.  And you were the one that started talking about rocking chairs.  I just took what you said, owned it, and moved it a bit further down the road.

If there was an explicit response to something I said in all that text you wrote in your latest response (absent your using the wrong name), I'm missing it completely.

Simple question.

Would you tell Grandpa to buy bitcoin here, now, at $16,500?

Or would you tell him to wait for a better entry point?

I want my skeleton!  Now!!

Mark_BC's picture
Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 417
Regarding waiting for a

Regarding waiting for a pullback for an entry point, just a question. They said that about gold 5 years ago and it dropped and languished at $1200 since then due to naked shorting. Since the banks will have the same shorting mechanism in place for bitcoin, is it possible that bitcoin will never go back up because they can provide an infinite amount of naked futures?

thc0655's picture
thc0655
Status: Diamond Member (Online)
Joined: Apr 27 2010
Posts: 1503
Bubble or no bubble?

Smart money or dumb money?

https://www.cnbc.com/2017/12/11/people-are-taking-out-mortgages-to-buy-bitcoin-says-joseph-borg.html

Bitcoin is in the "mania" phase, with some people even borrowing money to get in on the action, securities regulator Joseph Borg told CNBC on Monday.

"We've seen mortgages being taken out to buy bitcoin. … People do credit cards, equity lines," said Borg, president of the North American Securities Administrators Association, a voluntary organization devoted to investor protection. Borg is also director of the Alabama Securities Commission.

I do have to confess that I've told my wife on multiple occasions that we will one day regret not selling our house, buying and living in an RV, and using the rest of the proceeds to buy gold and silver.

mrees999's picture
mrees999
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Joined: Aug 16 2013
Posts: 364
Skeleton man

In all honesty, I wouldn't recommend to anybody getting into the market now. Just like the class I taught Saturday. Unless you've been in the market a long time and have a lot of financial cushion and have plenty of patience to learn - take time to learn the technology.

 

I advised (actually provided) them hard wallet we gave them $15 worth of Ether and taught them how to move it around between accounts. We even showed them how to exchange some of it using shapeshift and right back to the safety of their wallets. We advised them to stay out of the markets but to learn to watch them and learn from them. I don't just leave it at that with just enough information to be dangerous. I then have them follow me and my newsletter from Facebook "Watchmywallets" so they get some experienced guidance. And then I teach patience. 

I actually never advise them to get in the market at any point as I'm not a financial advisor. I just point out interesting changes I see coming and new technologies over the horizon I find interesting that they can watch for themselves. The new internet will be built on the technology of blockchains, so I point at the technologies and the people and teams that are competing to build and connect their visions. 

We are likely going to be heading soon into the trough of disillusionment soon. That will give us three to five years to take a breather and watch the real productive work begin. There in the dot-com years were when the pets.com went away- but the Amazons and Ebays and Netflicks grew from whacky ideas into fruitful ( world largest) companies using the new paradigm. Those that were paying attention and not looking at the paradigm we just left - did very well. Stay alert.

Don't take advice from strangers.

Sorry about the mixed up message - I actually was talking to Dennis, but the thread had been about Gradpas so it appeared he shifted gears without a clutch. But - it was nice to talk about my grandpa and pass the message anyhow. :-)

 

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2232
thoughts on litecoin?

mrees999 (and others), I'd be interested in your thoughts on litecoin, which went up over 40% today (at $227 as of this post).  Like many others, I've avoided getting into the crypto-currencies because they aren't a real store of wealth, and seemed too risky to me.  But I am now considering a small purchase (not more than I could stomach losing) for diversification purposes and -to be honest- to take a shot at riding a bubble up for a change. 

Andrewbradnan's picture
Andrewbradnan
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Joined: Oct 31 2012
Posts: 4
Bitcoin

There's about 330 oz of gold for each bitcoin.  No one trades in gold and the price is suppressed.  So par is $400,000.  Bubble is what 1-2 million?  Granted this napkin computation is for the whole market of cryptos.  It could go really high in any case.  Governments could lose power (God I hope).

Andrewbradnan's picture
Andrewbradnan
Status: Member (Offline)
Joined: Oct 31 2012
Posts: 4
Bitcoin

There's about 330 oz of gold for each bitcoin.  No one trades in gold and the price is suppressed.  So par is $400,000.  Bubble is what 1-2 million, maybe way over that?  Granted this napkin computation is for the whole market of cryptos.  Bitcoin could go really high in any case.  Governments could lose power (God I hope).

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 364
litecoin

I think litecoin is ok. I mined it years ago when it was under $2 and got a few a day. It would be fun to still have those today.  It's a good honest technology. It was created very early by a well known programmer from Google. People make way too much out of the secret identity of the original coder of bitcoin -but the code has been copied and forked thousands of times so it doesn't matter in the slightest as everybody just uses the principals - the stick figure' he used that just combined two decades of work from others before him. Charlie was one of the first to give the code a face and name as it is almost exactly bitcoin but on a faster timescale. It has evolved quicker since then.

It is kind of an experimental chain. They try new ideas on litecoin before the try it on bitcoin to make sure it works well. They've got a top-notch team with Charlie Lee at the helm. He used to work atop Coinbase and likely convinced them to start doing business with Litecoin as an option. Because it is an option on the world's easiest exchange, it is very easy to buy with dollars. People see it is perceived to be inexpensive and want the thrill of the thought that it might reach Bitcoin price levels.  They can buy a WHOLE COIN. Which probably what attracted you to it.

So I'm ok with it. It doesn't light my imagination on fire like Ethereum. It has surprised me the legs it has had over the last few weeks. And people piling into cryptos is all it takes for mass phycology to make a self-fulling prophecy. With expectations from those that are finally convinced, there is something to this whole crazy idea. If you think about it - religions have been based on far less that can last centuries.

Nobody I know is planning on building the next internet on it - but it's training wheels. for the newbies. And that's something.

 

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2232
Thanks mrees999

Thanks mrees999; I appreciate your insights on litecoin, and crypto-currencies in general.

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2232
Thanks mrees999

Thanks mrees999; I appreciate your insights on litecoin, and crypto-currencies in general.

Mohammed Mast's picture
Mohammed Mast
Status: Bronze Member (Offline)
Joined: May 17 2017
Posts: 84
Nice try

nice try Dave but the discussion was not about wallets . It was about the blockchain. 

The blockchain has never I repeat never been hacked. Wallets? yes Exchanges ? yes The blockchain never. Is it possible ? Not until quantum computers come along. By then i will be on my island sipping cool drinks with umbrellas in them.

S o Dave I am sure that your charts have made you oodles in the last year. Was it Bitcoin? Ethereum? Litecoin perhaps? Which is your favorite?

https://theoutline.com/post/1618/how-hackable-is-bitcoin

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 364
This one says it all. HAHAHA Sustainable just the latest...

There you go Alan Greenland. Your arguments in a nutshell.

 

 

You have 16 group think likes - if that's your thing to be proud of.  But what's really going to get your panties in a wad is this......

 

By the year 2020....

The bitcoin network....

will use the same amount of electricity.....

 

 

as

 

 

the

 

 

 

entire

 

 

USA!!!!!!!!!!

 

:-)

 

Now, where do I find chicken little?

 

 

David Allan's picture
David Allan
Status: Bronze Member (Offline)
Joined: Nov 15 2009
Posts: 95
Its all a matter of focus and balance

I think alanrgreenland (comment 10) is dead right about the big picture but what about the short term? Where should we put our effort and attention?

To me its a matter of balance and focus.

In terms of focus, some years ago I asked myself some tough questions. I know others here have done the same. Where do I set my intention? Where should I invest time, energy and money. My own personal decision was to focus on transition, homestead, orchard, gardens and new skills.

In terms of balance it seem sensible to have one foot anchored in the present and the other firmly planted to be supportive in an uncertain future. This is based on a fundamental martial arts principle - if you get caught out with all your weight on the wrong foot you're gone. So in my case the 'leading foot' part of life is involved with growing food and building soil and managing animals and saving seeds. The 'trailing foot' still needs to deal with the realities of present day living - making some money off-property and paying the bills. Investigating opportunities like bitcoin are no longer on the radar screen

BTW another part of balance in the peak everything world is to enjoy the incredible abundance that is available. In our case this includes dark chocolate, good cheese, red wines from around the world, and the occasional trip away. Enjoy it while you can.

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