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Guest jmecklenborg

Blockchains and Cryptocurriences

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Bitcoin has experienced a major resurgence in 2017 and its blockchain technology is likely to find many more applications in a few years. 

 

http://www.goldmansachs.com/our-thinking/pages/blockchain/

 

I finally got around to buying cryptocurrencies this year.  I'm using coinbase.  The one hidden fee of the service is actually with my own bank -- 5/3 has been charging me for "international" transactions when I have transferred money in and out. 

 

This past weekend Ethereum took a huge nose-dive thanks to a hoax.  Thanks to a total lack of regulation and stop losses a bunch of people lost huge money.  I read on another forum that someone lost $200,000 this past Sunday. 

 

If there is any lesson to be learned about investing today -- quit setting stops on stocks and now cryptocurrencies.  I know someone who confessed to losing $12,000 in the 2015 flash crash. 

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The only person I know who uses BitCoin is my former room mate who recently told me he uses it to pay for narcotics on the deep/dark web. He has a Virtual Private Network set up and uses BitCoin to pay for it and gets big shipments of crazy cheap Xanax, Percocet and Adderall sent to his house. A couple days later he asked me to be his room mate again because his room mate moved out.... Ha.

 

That's the sort of thing John Carroll graduates tend to go on to do with their degrees.

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^Yeah, apparently a lot of high schoolers were using bitcoin during its Silk Road heyday about five years ago and so because a lot of those people were already familiar with bitcoin they made out big in the recent bitcoing/ethereum boom.  A groomsman in a wedding I was in is up $30,000 since March. 

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Honestly though, if you think about it, crypto-currency that caters to the dark/deep web and is used for drugs, sex slavery, buying kidneys and whatnot, has to be at least a great short term investment. You profit from illegal activity without having to be held accountable for or partake in the illicit activity that takes place lol. In theory, it's a big F-U to The Fed but in practice, it's essentially a way to bypass the Patriot Act and eliminate paper-trails, yeah? I honestly don't know much about it but it seems like you should definitely try to sell it the minute that news breaks regarding even rumors of world leaders attempting to regulate the currency.

 

This is a really interesting topic. I'm curious to know more about how this stuff works.

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^The problem with the existing currencies is that anyone or anything can start their own new cryptocurrency.  So some anticipate that Ethereum will overtake Bitcoin by the end of 2017.  But something can come along and overtake that.  And so on.

 

The thing that is really crazy is that individual banks might start issuing their own currencies, tearing a page from banking from 500 years ago.  Also, I fully anticipate that tech will attempt to get a small island country to operate out of (like New Zealand) and they will do a world electronic currency that will undermine traditional government-issued currencies like the U.S. Dollar. 

 

Also, that could happen very, very fast.  Like, in a five years. 

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That's insane. I don't see Trump caring much about crypto-currency regulations; there's probably a good chance that he's a beneficiary of crypto-currency or at least a lot of his inner circle is. As a matter of fact, I wonder if those currencies have been used by powerful people or lobbyists to funnel bribery money or campaign funds. Or to give money to hackers to create facebook smear campaigns and fake news. Those currencies do allow for truly anonymous transactions, right? God knows what all it's used for. However if politicians everywhere manage to be beneficiaries of it, I don't think we could expect the FBI, CIA or even Interpol to care or do anything about it.

 

Didn't someone commit a heist recently and get away with stealing like $80M in BitCoin currency? Maybe a BitCoin competitor hired a hacker to do that to tarnish their image and expose that their currency isn't very secure. I think the level of security with the currency would be my top concern as an investor.

 

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^Yeah, I heard about that.  The hack happens at the exchange level, not with the currency itself. 

 

With all of the hubbub surrounding driverless cars and Musk's various hobbies -- all of which I remain quite skeptical of -- I do think that the cryptocurrencies could cause some totally crazy stuff to happen very quickly.  Again, I do believe that there is some threat of traditional currencies and banks being damaged.  The only thing that is slowing it down right now is the inefficiency of the exchanges and slow adoption. 

 

Bitcoin is slower to settle a transaction than is Ethereum (several hours vs. 10-15 minutes, usually).  Once the ability to throw this currency around the world several times per minute gets going the money is really going to be flying.  The exchanges keep having technical problems (erratic outtages, for example) but once this gets solved things are going to get wild. 

 

 

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Crazy -- trading of Bitcoin is going to be suspended on July 31 in anticipation of an August 1 forking of the code.  They don't want the exchanges to get overwhelmed with speculative buying and selling. 

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The people who have made really huge money in this are the ones who forgot they owned the stuff and/or forgot their exchange passwords.  Those are the only people who have experienced the meteoric rise from a nickel back in 2010 to $4,000 per coin. 

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"The main benefit of bitcoin – the only segment of society where it's used for something other than speculation – is crime," he said, noting that when cybercriminals hijack computer systems they very often demand their ransom in bitcoin."

 

Bingo. That's what I was saying. BitCoin, but also other stable (secure) and notable crypto-currencies are a solid, long term investment because the black market will always exist and it's going to exist on a grander scale as people become more aware of how to set up VPNs. It'll be more common-place just as the internet has become common-place, when before, you were considered a 'nerd' if you used the internet. Now everyone uses it. Especially since the masses have discovered how great Facebook is and how they can obtain and endless amount of porn for free on the web. This isn't rocket surgery. The PATRIOT Act eliminated any chance of anonymity in credit/debit transactions and this is the innovation you have as a result. No paper-trail! It's almost the equivalent of being a business that is "cash only" except that now, there is a fee for your anonymity.

 

You can literally buy a kidney on ice, with bitcoins from parts of the web undetectable by the government by setting up a Virtual Private Network. Unfortunately, the kidneys probably come from random people in communities no one cares about when someone randomly comes up missing. I'm not saying it's a moralistic thing to invest in but I definitely see it as a good investment if you're trying to make money.

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"The main benefit of bitcoin – the only segment of society where it's used for something other than speculation – is crime,"

 

Of course, the definition of "crime" can vary widely depending on the whims of politicians.  Consider all the things that have been illegal at one time or another, even in the US.

 

What that means is one main benefit of cryptocurrencies is a potential check on capricious or overbearing government behavior.

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If anything is capricious, it is the proliferation and wild price fluctuations of these cryptocurrencies.

 

In recent news, I capriciously purchased a single Litecoin back in May for $26.  It is now worth $66.  With no SEC or legal framework of any kind, there is widespread manipulation of these markets from around the globe.   

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If anything is capricious, it is the proliferation and wild price fluctuations of these cryptocurrencies.

 

In recent news, I capriciously purchased a single Litecoin back in May for $26.  It is now worth $66.  With no SEC or legal framework of any kind, there is widespread manipulation of these markets from around the globe.   

It's supply and demand.  As long as one understands the risks, it is what it is. 

 

It provides a check on government overcontrol of economies just like the 'net in general does on censorship of information.

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The SEC exists for innumerable very good reasons (settlement periods, records for taxation purposes, helps mitigate fraud).  Similarly, real estate property transactions are administered at the county level in the United States through a process that is very public. 

 

The main advantage of cryptocurrencies should be direct peer-to-peer exchange that eliminates the transaction fees of traditional banking methods (credit cards, etc.).  But at the individual level the current fees aren't so great that a "perfect" future would be of much advantage.  It's the big dogs who are pushing blockchain since they could potentially get away with charging the fees they do currently while dramatically lowering their costs. 

 

And be careful what you wish for.  The SEC was established and modified to respond to systemic problems exposed by each previous securities and banking crisis.  At some point there will be a call to establish a similar regulating body for cryptocurrencies.  Once A LOT of people lose A LOT of money as part of widespread fraud and/or market manipulation (instead of just the few parties losing A LOT of money as has happened to date), all the libertarian anti-government types cheering on Bitcoin, etc., will be crying Uncle. 

 

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The SEC exists for innumerable very good reasons (settlement periods, records for taxation purposes, helps mitigate fraud).  Similarly, real estate property transactions are administered at the county level in the United States through a process that is very public. 

 

The main advantage of cryptocurrencies should be direct peer-to-peer exchange that eliminates the transaction fees of traditional banking methods (credit cards, etc.).  But at the individual level the current fees aren't so great that a "perfect" future would be of much advantage.  It's the big dogs who are pushing blockchain since they could potentially get away with charging the fees they do currently while dramatically lowering their costs. 

 

And be careful what you wish for.  The SEC was established and modified to respond to systemic problems exposed by each previous securities and banking crisis.  At some point there will be a call to establish a similar regulating body for cryptocurrencies.  Once A LOT of people lose A LOT of money as part of widespread fraud and/or market manipulation (instead of just the few parties losing A LOT of money as has happened to date), all the libertarian anti-government types cheering on Bitcoin, etc., will be crying Uncle. 

 

 

I'm not wishing for anything.  I'm saying that it's a check on the regulators getting too crazy.

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https://cointelegraph.com/news/bitcoin-trading-at-85-premium-in-zimbabwe-priced-at-7200

 

This article claims that the citizens of Zimbabwe are conducting business in Bitcoin to avoid the hyperinflation of their official currency.  Sounds plausible, but at the same time there exists a gigantic hype industry behind Bitcoin and they need stories like this to illustrate that it can actually can serve a useful purpose. 

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https://cointelegraph.com/news/bitcoin-trading-at-85-premium-in-zimbabwe-priced-at-7200

 

This article claims that the citizens of Zimbabwe are conducting business in Bitcoin to avoid the hyperinflation of their official currency.  Sounds plausible, but at the same time there exists a gigantic hype industry behind Bitcoin and they need stories like this to illustrate that it can actually can serve a useful purpose. 

 

Since the beginning Bitcoin has been pushed as a way to stabilize Second- and Third-World economies and as a way to keep their citizens from being un-banked. So this will be put under the microscope for sure... all those techies that have spent their entire lives in the air conditioning have to control for all the out-of-hand stuff that goes on outside the bubble.

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https://cointelegraph.com/news/bitcoin-trading-at-85-premium-in-zimbabwe-priced-at-7200

 

This article claims that the citizens of Zimbabwe are conducting business in Bitcoin to avoid the hyperinflation of their official currency. 

 

Said hyperinflation being a result of irresponsible government actions.

 

So yes it is a potential check on such.

 

Yeah, the same sort of personalities who corrupt government currencies are the same ones who manipulate the cryptocurrency market.  There is now a vast array of junk coins and tokens coming out...just like back in the 1800s when traveling salesmen sold farmers stock certificates for railroads that would never be built. 

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Trouble in paradise:

 

https://ethereumprice.org/bitcoin-wars-cash-core-gold-2x/

 

 

Written by Nick Cannon

 

In 30 days time it is likely that there will be 4 high profile versions of Bitcoin in existence – Bitcoin Cash, Bitcoin Gold, Bitcoin 2X and Bitcoin Core. 2X and Core specifically, are so contentious that the community in which it divides will fight tooth and nail for the right to take the name “Bitcoin”. A number of highly influential individuals will refer to Core as the true Bitcoin, whilst commercial behemoths such as Coinbase and BitPay will “follow the hashrate” and choose 2X. The 2X side – who support a hard fork to increase the Bitcoin block size to 2mb from 1mb – are remaining fairly quiet, having had their code ready to deploy for a number of months. Those on the Core side – many of whom have appended “NO2X” to their Twitter handles – are ferocious in their fight to convince others that 2X should be dropped. Larger block sizes will lead to a larger blockchain, and Core supporters argue that Bitcoin cannot remain properly distributed/decentralized if the blockchain is too big for the average user to download and store.

[...]

 

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https://cointelegraph.com/news/bitcoin-trading-at-85-premium-in-zimbabwe-priced-at-7200

 

This article claims that the citizens of Zimbabwe are conducting business in Bitcoin to avoid the hyperinflation of their official currency. 

 

Said hyperinflation being a result of irresponsible government actions.

 

So yes it is a potential check on such.

 

Yeah, the same sort of personalities who corrupt government currencies are the same ones who manipulate the cryptocurrency market.  There is now a vast array of junk coins and tokens coming out...just like back in the 1800s when traveling salesmen sold farmers stock certificates for railroads that would never be built. 

 

It's a lot easier to do due diligence than it was then, though.

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Bitcoin hard fork called off but lingering code almost causes billions to be lost:

 

That's right...somebody messed up code that wasn't even used.  That mess-up could have cost many people millions of dollars -- their bitcoins either lost in space or stuck in a permanent hard fork that would never be worth as much or possibly anything. 

 

It happened early in the history of Ethereum -- that's why there is ETH (the #2 coin) and Ethereum Classic, which is #15. 

 

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There's no underlying asset.  It's like buying gold.  It's worth a lot because people value them for some reason.  But it's not like a stock.

 

I don't understand it really, but man if these last few days haven't got me hooked as well!

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So how does that work, do you have to buy individual 'coins' for $10,000 a pop, or do you buy in fractions?

 

Unbelievably small fractions.  If you buy anything through Coinbase, you get $10 worth of Bitcoin, which is a tiny fraction of a single bitcoin.  My $10 gift from May is now worth like $48.  Whoo-hoo! 

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