Bitcoins/Litecoins/Virtual Currencies

wormie said:

Its also possible that crypto currencies will be a store of value during a crash. Decent chance they actually gain a lot of value during crashes.

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depends what you mean by a 'crash'. If the dollar gets devalued heavily, then sure, it would raise in 'value' when exchanged into USD, but it wouldn't matter. It'd still be worth the same, proportionately, to other cryptos.
If it's like a stock market crash, and people are losing tons of money, they may sell their cryptos off to get liquid funds, which would drop the value.

Long term, the idea is that cryptos, in some form, replace traditional finance and currency. Rather then creating debt to create more money, slowly devaluing your dollar (inflation) there is a set amount of money that gets split up. So, imagine if you said 'the dollar is a good store of value during a stock market crash'. They are too closely linked, and so will cryptos eventually.

Now, I guarantee that bitcoin will NOT be the 'currency' that replaces the dollar. It's too volatile, not enough coins exist, etc.. all kinds of issues that other cryptos have improved upon. There will be a mass drop of btc, specifically, at some point. When some other coin has a combination of a good name, social awareness, acceptance and functionality to be the superior coin. Imo, of the current ones, that's most likely Ethereum. It has other factors contributing to its value other then 'cause people want it' that may give it the stability it needs long term.
Short term? Btc will still be the king, and I wouldn't be surprised to see it hit 100k+. But, in 3 years? 5 years? Unless someone improves upon Ethereum itself, Eth will have the highest market capitalization.

Enzee said:

Now, I guarantee that bitcoin will NOT be the 'currency' that replaces the dollar. It's too volatile, not enough coins exist, etc.. all kinds of issues that other cryptos have improved upon. There will be a mass drop of btc, specifically, at some point. When some other coin has a combination of a good name, social awareness, acceptance and functionality to be the superior coin. Imo, of the current ones, that's most likely Ethereum. It has other factors contributing to its value other then 'cause people want it' that may give it the stability it needs long term.
Short term? Btc will still be the king, and I wouldn't be surprised to see it hit 100k+. But, in 3 years? 5 years? Unless someone improves upon Ethereum itself, Eth will have the highest market capitalization.

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These are bad reasons.

Volatility is a symptom of price discovery, which is what bitcoin is going through now. The market cap of a currency must be large enough to support the people using it to transact. Since supply is effectively fixed, as more people join the network to use the currency its price will increase. You will not see price stability until its user base stops growing ---> however, if it's price continues to increase it will attract more and more people looking to use it as an investment vehicle. Can you see the feedback loop this creates to bring everyone into the network?

Number of coins is arbitrary. So long as you can infinitely divide the currency it doesn't matter if there are 21B, 21M, or 21K "coins". While there is currently a theoretical limit of subdivision - we're not even close to using it and my understanding is that it can be extended indefinitely making this a non-issue.

You're underestimating first mover advantage and other network effects. The best in theory product often ends up in the garbage bin of history. I own Ethereum and want to see it do well, but as a currency it has no real advantages over bitcoin. It has applications that extend into areas beyond use as money.

General Antony said:

These are bad reasons.

Volatility is a symptom of price discovery, which is what bitcoin is going through now. The market cap of a currency must be large enough to support the people using it to transact. Since supply is effectively fixed, as more people join the network to use the currency its price will increase. You will not see price stability until its user base stops growing ---> however, if it's price continues to increase it will attract more and more people looking to use it as an investment vehicle. Can you see the feedback loop this creates to bring everyone into the network?

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Yes, which is why it has gone from 1k to 18k in less then a year. But, the same is true of the reverse. If enough of the 'big guys' sell, it causes a chain reaction that would drive the price down more. Because there's only 20 million coins, the price fluctuates more when compared to dollars, which creates a bigger image that it's failing. I was surprised to find out Ripple actually has a ton of capital invested in it, but because it's split among 100 billion coins, each individual coin is still only worth about 30 cents (last I looked). If someone buys a billion dollars worth of ripple, it doesn't move the individual price as much as it would of bitcoin. I believe that's what they want, though, as they want it to be a more stable coin to act as an intermediary between other coins and for financial transactions.

If someone buys a billion dollars worth of bitcoin, that moves the individual coin price by a much larger amount. That creates a bigger impression on the average holder that it's going up significantly.

So, while you and I might understand that things SHOULD be looked at on a percentage basis.. i.e. ripple going from 33 cents to 1 dollars is the same as bitcoin going from 5k to 15k. It has less of an impact on the average person. Seeing those big numbers of 5,000 and 15,000 versus pennies creates a more emotional impact. Something dropping 'two THOUSAND!!' versus 'dropped 3 cents' sounds worse.

Alternatively, if the guy who invented it, who supposedly has about a million coins himself, ever decided to unload them all at once. Selling it all at once would cause a mass panic that the creator has lost faith in it. While it's highly unlikely, it's still possible. It's very similar to stock in that regard. It's only worth what everyone agrees it's worth. That's not necessarily a bad thing, but it means it's more susceptible to the whims of the largest investors. Should the biggest ones decide it's not worth holding anymore, they can have a big impact on the price.

As for eth, the applications of that mean there could be too many companies/apps dependent on it for it to ever fail. Even if the biggest holders dump their eth, the companies using Ethereum will take that opportunity to buy all of it up to save on operating costs. There's more of a fail safe in place, imo.

General Antony said:

These are bad reasons.

Volatility is a symptom of price discovery, which is what bitcoin is going through now. The market cap of a currency must be large enough to support the people using it to transact. Since supply is effectively fixed, as more people join the network to use the currency its price will increase. You will not see price stability until its user base stops growing ---> however, if it's price continues to increase it will attract more and more people looking to use it as an investment vehicle. Can you see the feedback loop this creates to bring everyone into the network?

Number of coins is arbitrary. So long as you can infinitely divide the currency it doesn't matter if there are 21B, 21M, or 21K "coins". While there is currently a theoretical limit of subdivision - we're not even close to using it and my understanding is that it can be extended indefinitely making this a non-issue.

You're underestimating first mover advantage and other network effects. The best in theory product often ends up in the garbage bin of history. I own Ethereum and want to see it do well, but as a currency it has no real advantages over bitcoin. It has applications that extend into areas beyond use as money.

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Ether, like most alt coins, and Bitcoin are two different animals. Ethers has with it additional functionality with smart contracts. The idea that you can encode how and when and with whom transactions take place in the transaction itself is a new feature and I don't think we've began to understand the implications that come along with it. That said, this extra functionality comes with extra risk (DAO attack is a textbook example) and will be a deterrent compared to the stability that the less complex Bitcoin blockchain offers. The biggest benefit Bitcoin has now, and it is a huge one, is market cap. It does not function as a currency, but could easily be a serviceable store of value. The items I think Bitcoin has to solve to hang around are the obvious block size / scalability issue and encrypting account data. Monero is already addressing the latter by encrypting the ledger, but I see no reason bitcoin cannot evolve to protect this in a similar fashion. Scalability also will be a solvable problem, just a matter of time and consensus (the bigger the issue gets, the more pressure to reach this consensus). Hardware / business miners bother me a bit here as you can get too much mining muscle in just a few places and potentially influence decisions.

Government intervention, while technically not possible, will also stifle growth in blockchain tech and could abort it outright. It'll be interesting to see how each coin navigates through these challenges as you can bet each government will have their say on what is and is not allowed. What I mean by "technically not possible" is yes, you can still create an account and the likelihood that the government could regulate that effectively is slim and none (since it is decentralized). However, they can force it to the shadows and keep it from becoming mainstream and you can bet that will affect its survival. Even if you have your private key memorized but get caught up astray from the government, while they can't hack / control your account they would certainly be in a position to persuade you to help yourself. The hard part is knowing how each country will react and what solutions the community provides without compromising one of the core aspects of the tech (decentralized store of assets). There is already legislation in the US to make it criminal to have hidden stores of value in these. I feel the intent here is more about money laundering and organized crime, but it is the government so who knows where the power grab stops. Exchanges (banks) could be the answer to still have accounts, but also some transparency as to where the funding is sourced.

It's all interesting to me to see how it plays out. Not just from the money making perspective, but also just observing how people's (the market) emotion seem to be playing really heavy into it all and there's so much hype about the tech in general.

Edit...also, regarding the dollar never being replaced by Bitcoin. What makes any currency immune to change? Historical global reserve over time. I see no reason a digital currency could not be the next?

gshurik said:

What wallets do you all use?

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Electrum for BTC and Exodus for the alts it can store. (but is also fine for BTC)

For XMR and Sia I use their particular GUI clients/wallets.

I'm still not convinced that Ethereum isn't a big scam. It's been around 3 years now and the only application I see it used for is a kitty cat trading game, and the network can't even handle it. People think some of these blockchains are legitimate because Microsoft or whatever shows interest. Microsoft can't find their ass with both hands anymore and the only reason MS is still relevant is because of their monopolies, which are becoming less of monopolies every day.

The only real use for a p2p blockchain is to decentralize trust; otherwise it's just an extremely inefficient database. Why do you need to decentralize trust for anything other than money? You don't need to do it for package delivery or property ownership.

Ok, so ethereum has plans to make this extremely inefficient database slightly more efficient with proof of stake and compartmentalizing the ledger. Those are tough nuts to crack and they may never make it practical without compromising security significantly. It still wouldn't make Ether's network better than a centralized database for virtually all use cases.

Another extremely serious issue with ETH is security. How many times have people lost millions of dollars from a hack/contract design error? I've lost count. I write code myself, and while I'm far from an expert, I understand the difficulty in it. Writing code that is fail proof is virtually impossible after a certain size. How can you trust your smart contracts to not contain errors? you can't unless they are very small and very tested. One of the criticisms of ETH's language is that it wasn't designed to really prevent these kinds of contract errors. Bitcoin's security comes from its simplicity.

The kitty game is silly, but it shows the basics of what you can do. i.e. authenticate rarity of a digital good.

Imagine we ever make headway into a virtual reality/neuromancer cyberspace type of situation, that kind of technology is going to be very valuable. When digital assets can be proven to be 'one of a kind' without any copies existing, they start to inherit value just like any luxury good or collectible item. If you kept that data on a trusted 3rd party database, it's vulnerable to hacks or copying, and then it's in the ether (no pun intended).

A decentralized network that proves legitimacy, and rarity, of a digital file of some kind, is valuable. By it's nature, you can't hack that without controlling the majority of the network. It just hasn't been implemented well yet, for sure.

Springbok said:

Thoughts on Litecoin?

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Lightning networks could kill Litecoin's only use case. However lightning is still a ways off, so for the time being Litecoin has a use. The current rise is entirely from speculation mania; you can't pay many merchants with it yet so there isn't much transaction growth. Even with unfull blocks I was still paying half a dollar in fees.

That said, I do hold some. (probably not for long, but trading is getting much harder with the insane levels of KYC)

a_skeleton_02 said:

Want to start mining litecoin I can have three machines set up. Not really looking to make money I just kind of want to tinker with it.

Anyone have experience with 24/7 mining? I know i'm going to get raped on Electricity.

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Mining with what?

Antonopoulos' videos are required viewing for anybody in this space: https://www.youtube.com/channel/UCJWCJCWOxBYSi5DhCieLOLQ

His Mastering Bitcoin book is more for technical people. The Internet of Money book is more for the average person.

So I put 10% of my IRA into GBTC a few days ago at $1700. I thought I had the stomach to let it ride and see where it took me but I just don't. Never been the type to invest in individual stocks or assets, just can't bring myself to do it. Cashed it out this morning for ~25% profit so pretty good for 4 days of growth. I'm staying the fuck away from BTC from now on though. Cannot handle the volatility.

Khane said:

So I put 10% of my IRA into GBTC a few days ago at $1700. I thought I had the stomach to let it ride and see where it took me but I just don't. Never been the type to invest in individual stocks or assets, just can't bring myself to do it. Cashed it out this morning for ~25% profit so pretty good for 4 days of growth. I'm staying the fuck away from BTC from now on though. Cannot handle the volatility.

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My crypto portfolio is in the six digits. The hour to hour swings are massive, you learn to love it.