As Kingstepper observed, cryptocurrencies are backed. They are backed by the real world energy that went into generating them according to their algorithm. This is actually far more backing than most nation state currencies (they mostly have no backing at all) have since the removal of precious metal standards.Originally Posted by TimeThoughts
As for "no asset", how do you mean? There is no asset backing Pounds Sterling. Currency such as Pounds Sterling or Bitcoin can nevertheless be treated as an asset.
What do you mean by "no profit/loss"?
All currency valuation worldwide (including all types of currency) is about "voluntary or speculative uptake". All currencies are only worth what people choose to agree that they are.
I don't think anyone should be taking financial advice on an Internet forum.
And let's be clear buying crypto currencies is speculation.
But ur main concern is that 'advice' (opinion) is being dispensed by someone that writes some words short hand on an Internet forum?
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Last edited by Ribena36; 30th May 2017 at 16:19.
Well, eventual natural market value[1] and success or failure are two different things.
If Bitcoin is not superseded by other currencies then its eventual natural market value will naturally and necessarily be very, very high indeed (when measured in other currencies). It will have to be since there is a limit to the number of Bitcoins that can ever be made. This means that if Bitcoin is successful (in that it survives in the longer term) then, as an economic necessity, each Bitcoin will be worth vast sums by today's standards: I said hundreds of thousands of pounds but it could easily be millions.
As I say, however, eventual market value is a separate question to whether or not it actually does succeed by surviving.
Footnote:-
1: I invented the term 'eventual natural market value' as shorthand to save more verbosity. What I meant in brief is the point in time when the vast majority of possible new Bitcoins have been mined and when all of miners' income comes from transaction validation. At that stage the growth in value of Bitcoins should theoretically stabilise and we should know what the ongoing market value will be. It will also be a point at which should discover whether continual growth in supply forever is really necessary (or not) for a particular currency to retain its value and psychological usefulness in the longer term. Remember that Bitcoin does not offer continual growth in supply forever unlike, say, US Dollars or Pounds Sterling.
I am considering the choice of those who use Bitcoin as an investment tool. You could invest in shares or gold for example.
Investing in Bitcoin (or one of the other 700 cryptocurrencies in circulation) relies on their takeup and continued use should you seek ROI.
I see major risk there of a dotcom type bubble.
Come on, if you're going to nit-pick then at least get it right! I think in this instance you surely meant 'you're', rather than 'your' in your effort to correct grammar/spelling. But hey, we all make mistakes :)
When you look at the effect the Chinese market had on the BTC price then it would not be unreasonable to suggest that this will impact the price of ETH hugely, in a positive way.
Historically, the BTC price has leapfrogged when new exchanges, in otherwise unserved markets, come online- Korea, China, Japan etc Equally when regulation in a particular market is softened to allow BTC trading.
I would say that you're absolutely correct. There is a huge chance of a bubble. But the guys buying see it having a very bright future.
I hold a small amount of BTC and a fair amount of ETH. The price rise of ETH has all the characteristics of a bubble. But I believe in its long term success and therefore will not sell all of it. I will prob take some profit in meantime though
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Fully agree sir. The recent price rise in ETH has coincided with Korean exchanges allowing trading. Fingers crossed the Chinese come good!
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Last edited by Ribena36; 30th May 2017 at 17:26.
To an extent I agree. We are in the midst of an alt-coin rush, but to call it a bubble may be a little hasty. There will certainly be winners, alt-coins that succeed, and there will be losers, those that fall by the wayside. What I have hoped to impart in my posts (and in the many PM's replied to) is that the smart investor/speculator will look beyond the immeidate 'value' or market capitalisation (eg current uptake/popularity) of an alt-coin, and try to identify if there is any additional value that could support and add value in the long term. By this I mean, are there third party uses for the public/private blockchain of a particular alt-coin, for example. Does the alt-coin offer something to users that others coins don't, speed of transaction, additional layers of security etc etc. These are the factors (IMHO) that will underpin the longevity and value of a particular alt-coin.
Personally, I'm done with banks, gold etc. I move around Europe frequently and have seen my money devalued by changes in interest rates, exchange rates, insane transfer fees etc and I'm fed-up with it. Banking scandals (LIBOR, HSBC money laundering proceeds of Mexican drug cartels etc) suggest to me that bankers have scant regard for the average Joe and their hard earned cash. I see alt-coins as a game changer in this regard. Banking charges and transfer fees dont exist. Transfer of funds is instant and, for the main part, fairly anonymous. The same certainly can't be said for banks.
The cat is well and truly out of the bag, and watching banks and the like, scurry about trying to get a piece of the action, or cry to governments for harsh regulation just makes me smile and reaffirms my position.
What use is money in the bank? it barely earns you tuppence ha'penny in interest and just funds the morally corrupt interests of the banks holding your deposit. They win, you don't. Why not put your money into something that you can enjoy and that will appreciate, like watches, art, antiques, jewellery...or alt-coins. When you need cash, divest one of those assets, or trade them.
If I ever get to the point where I have made enough posts to be able to post on Sales Corner, ALL of my watches will be sold for Bitcoin or Etherium.
No fiat currency thank-you, its too expensive and, IMHO, morally corrupt.
FFS, it's Ethereum!
;)
For what it's worth, I don't see Bitcoin as an investment tool, strictly speaking. Just like gold or other currencies, buying Bitcoin and hoping for inflation in its value measured in other currencies is speculation, not investment. This is on the semantic basis that "investment" vehicles such as shares or property produce an income (in addition to increase or decrease in capital market value) whereas items that only have capital growth or loss (like Bitcoin, gold, or other currency dealing) are "speculation".
Referring to Bitcoin specifically, there's no chance of a "bubble". As I noted, Bitcoin is way, way undervalued compared to its natural market value. I don't say this for purely subjective reasons; it is for technical reasons within a psychological framework.
Bitcoin (or any other new currency) may well fail such that no one wants it, and thus it would become valueless, but I'd say that even if this occurred it would not represent a bubble (where something is valued above its true value).
The dotcom bubble occurred because businesses were valued above what they could reasonably earn and were reasonably worth. Bitcoin, on the other hand, is still vastly undervalued compared to its natural eventual market value (if successful).
Possible or even actual failure, in and of itself, does not represent or indicate the existence of a bubble.
All of the above may seem like semantic quibbling but I think it is very important to understand that, even though Bitcoin or other cryptocurrencies could perfectly well fail in the marketplace, the term "bubble" is not applicable (at least not in the specific case of Bitcoin). Bitcoin is certainly not over-valued as it presently stands, which it would have to be to constitute a "bubble".
Last edited by markrlondon; 30th May 2017 at 18:24.
Well said to all of that. In particular I applaud you for looking at the underlying fundamentals of what should make a long term successful cryptocurrency.
This is a good post and I have learned a great deal. One thing sits in my head and frustrates me greatly though.
Isn't it such a pity that the computational power used in solving the hashing algorithm is wasted ? As I said in one of my earlier posts, the bitcoin miners are just burning up electricity whilst they run mindless algorithms.
It would have been great if that computing power could have been employed in a constructive manner like protein folding, Rosetta@home or even SETI@home. Terrible waste really.
I run a couple of numerical programs from this list, some good causes...
https://boinc.berkeley.edu/projects.php
As Kingstepper pointed out when Bitcoin was discussed on here before, it should have reduced their heating costs. ;-)
Well, one might take the view that mining Bitcoin was constructive. It's added to the world's money supply. That extra money can buy more CPUs to do other constructive jobs.
One might, but being a cynic, I suspect it will be used for the same.
When you look long into an abyss, the abyss looks long into you.........
Ah, But are they mindless algorithms, and is the electricity wasted?
You could argue that this is the fundamental starting place of the value ascribed to a Bitcoin, the minimum cost below which it should never fall. Some on this thread have argued that there is nothing underpinning the value of a Bitcoin, and it has already been said that the cost of increased computing power and electricity should be considered as such. It is the application of a resource to a specific end, not a waste per se. And who is to say that once mined, and resources being expended, that that the value if that coin isn’t put to good use, a donation to charity etc.
If we look at these machines within a domestic context, then yes, one could conceive of it being a huge waste of resources. By extension, that outlook could be applied to many instances, time and time over. For example, the diesel used to power heavy mining equipment burns fossil fuel resources, heavily pollutes the atmosphere and scars the environment, all to pull a small piece of yellow metal out of the ground. Surely better to redirect that fuel resource into the tank of an ambulance, or a fire engine etc.
That said, the total global consumption of electricity deployed in Bitcoin mining is truly staggering. It is predicted that in the next three years Bitcoin mining (globally) will consume as much electricity as Denmark.
Checked your link and will donate downtime on one of my machines to DENIS@home :)
From my reading, the specialised mining boxes for Bitcoin are very dumb machines, in that, they are specially made for the Bitcoin compute algorithm (ASIC - Application Specific Integrated Circuit).
Which is even worse as we now have computing assets that are difficult to repurpose churning out numbers (an imaginary asset) at a huge energy cost.
All feels terribly wasteful to me.
Viable alternatives to 'Proof of Work' may well exist with 'Proof of Stake' seemingly being the most actively pursued.
Very interesting, thanks for the link.
A big problem with Proof of Stake is it pretty well guarantees the rich get richer.
Plenty of POS coins out there, some doing OK but they seem in the minority.
This has been a really interesting thread with some great insights and input.
Its also something I've been thinking about for a while. So in summary, if you're dealing in GBP and living in the UK, what are the options for buying Bitcoin and how do the wallets work? I'm thinking of doing something like buying on a regular basis (small £ amounts) - bit like an ISA - so a platform that is good for that would be good to know about.
Is it straightforward to buy only % of single BTC? As in, you have £100 as opposed to whatever the price is for a whole BTC?
Thanks
Edit - just re-read earlier posts and am looking at Coinable as someone asked a very similar question earlier.
Last edited by bambam; 31st May 2017 at 10:40. Reason: Not reading things through!
Yes you can buy fractions of a Bitcoin - it is divisible to eight decimal places - actually strictly it is the other way round, the "unit" is 100 millionth of a Bitcoin (called a "satoshi") and 100 million of them make a "Bitcoin".
The very easiest way to buy in the U.K. is probably www.bittylicious.com - all you need is a wallet, which will allow you to create a Bitcoin address and a U.K. bank account.
Thanks. Tried creating an account with Coinbase and can't upload my ID - you have to do it via your mobile and get a constant 'Not delivered' message. The app has pretty poor reviews too as that seems like another method to upload id. Anyone else had these issues??
Might just try the link you suggested instead.
I've never used Coinbase, so don't know I am afraid.
Do you have an iPhone? Breadwallet - available in the app store - is a superb mobile wallet.
I tried Coinbase way back when and had similar issues.
I keep saying it, and I'm in no way affiliated, but in all my experience, Kraken was the quickest to get verified and their customer support were great. If i recall, i was up and running on Kraken in well under 24hours- from new account to funds transferred and available to spend. That said, I was transferring funds from a Euro account. GBP need to be sent to their bank in japan by wire transfer which takes circa 24 hours. Another example of getting screwed over by banks.
- - - Updated - - -
Indeed, the same applies to most, if not all, alt-coins. Percentages of a coin can be bought depending on the level you are prepared to invest.
Had you the inclination (or foresight) to invest GBP 1000 in either Ethereum or Bitcoin on the date of the last post on this thread, today your GBP 1,000.00 would be worth, either:
Ethereum GBP 1,647.05
Bitcoin GBP 1,238.28
Result!
I put a few grand in last week.
Decent result upto now but looks like they are going backwards a little at the moment.
Indeed, they went a bit silly over the weekend so I think we are seeing the market correct itself.
Keep your nerve and hold.
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I'm still waiting for my kraken account to be verified so I can buy more
I'm still skeptical about long term but I have read more extensively and I'm going to throw a few hundred in to keep myself keen. The Kraken account is still awaiting verification. 6 days now ?
I'm still sick that the power is all wasted on mindless computation. I wish those Megawatts (worldwide) were doing something useful and not just churning out heat and carbon, its a crime really.
Tier 2 verification is about 2 weeks for me now, I did buy a couple of bitcoin a few years back which at the time was quite a hassle I'm hoping kraken makes that easier hence holding on, I can see them rising and rising as it becomes more popular, I think I paid about £500 for 2 coins which at the time seemed a bit high but I'm happy I did now. Reading round litecoin may also be one to watch with some accreditation expected in august, sorry I can't give more info than that but I'll only get muddled trying to explain because I read so much stuff it's merged into one. I treat it as a punt tbh
I finally got all the verification done with Coinbase last week and put a couple of hundred £ in - via debit card and also via SEPA transfer - just to try it out initially and make sure the money got transferred ok etc.
Had to use the app for the verification side, but it all worked in the end.
SEPA transfer was quite simple and showed in the wallet the next day.
Will probably buy a little more over time.
But agree, its a bit of a punt at this stage (for me).
Last few days has been interesting and clearly many have sold at the perceived 'top' yesterday resulting in many cashing in causing a fall back which I think will be temporary.
Hewjardon - Leon has been a great source of knowledge and I thank him for that he knows his subject.
I am holding firm with ETH as I think it's BTC version 2 or at least VHS.
Who knows what the future truly holds but clearly having some diversification into "crypto" makes sense given it could end up the way we transact in the future for many activities.
The debate I am having is do I just stick with what I've put in already and happy to take a calculated punt with or go all in ...... ? Not a decision anyone else can make and vey much feel like Chris Tarrant is staring at me with ... duh duh duh duh dudle a duh in my ears.
Surprised Kraken is taking so long. It took me little more than 24hrs for multi stage verification. I guess this is testament to the volume of new sign ups.
Thanks for the kind words TKH, and I know how you are feeling. I'm all in. IMHO if you are going to do it for longterm benefits, then choose the right coin/s and just buy them. You may buy at the 'top' and see an immediate loss, or the opposite could be true. Either way, your focus should be on the long term gain, which will soon supercede and pass any immediate ups and downs.
My head is seriously being turned by Ethereum and I think I am going to increase my long term holding,Oving BTC anvil to ETH. I still think it has some way to go and will be at €500 in a matter of weeks.
Where will it stop? There are signs that gains could increase much further, I still don't think we have seen any significant Chinese impact on the ETH market, which I think we will do soon, now they have native exchanges authorised to trade ETH.
Interesting comments last week by the head of the Peoples Bank of China, almost suggesting that investing in crypto currency was a smarter move than investing in shares. That's the kind of comment that will push prices higher and quicker than we have seen since in the last 12+ months.
I remain firmly of the belief that BTC will remain the Blue Chip of crypto. But we will see.
Aeon, GNT and (possibly) XDR are still at good prices and are my tip for a promising few weeks.
According to kraken website, Tier 1-3 verification is currently taking 2-4 weeks.
Coinbase is much quicker.
Your insight and knowledge on this is brilliant and really appreciated. I too am debating how far to go. I think my approach may be to buy at regular intervals and take the timing out of the equation, very much like an ISA approach. Balanced between BTC and ETH. Any thoughts on that model?
Sensible approach, and pretty much how I did it. The only point to note is that you will ('should') of course see diminishing margins as you buy in at higher prices eg your first batch of coins will/should show greater profits than the preceding investments. Whilst this type of emotion should not be a factor when investing, I guarantee that it will cause harmless gnashing of teeth and wishing that you had more funds to invest earlier when those margins were greater. But again, taking emotion and sentiment out of investing, and sticking to sensible guns, is the only real way forward. Remember to note what price you buy in at so you can keep an accurate record of your total commitment, and respective returns.
How would I split? Right now, given that ETH is showing no sign of cooling, I would go top-heavy on ETH for short-mid term gains and then make a balancing transfer of ETH into BTC when you feel the price is right. If you go down this path, start to familiarise yourself with the BTC/ETH charts, showing their value as against each other, and try to avoid making fiat comparisons eg ETH/GBP, then BTC/GBP.
IMHO Euro and GBP are not stable enough at present and also aren't really relevant when you moving from one crypto to another.
Whatever you do, only put in what you can afford to lose. Whilst we are seeing wild growth in the market generally, it will drop and/or plateau at some point. Always make sure you have some fiat somewhere; cars don't run on BTC and I've yet to meet a landlord happy to take the rent on crypto!
Best of luck, and thanks again for the kind words.
Fantastic insight this thread - was researching ETH over the last few days for part of another project relating to ICOs. Seems I may be diving into the world on crypto investing....
Thanks and good points. Have started keeping a record already. Quick follow-up question - trying to decide if its 'better' to buy using a debit card or loading up the EUR Wallet via SEPA transfer. The debit card appeals as you can buy when you like but the fees are quite high - e.g. £250 would mean a £9.98 fee (or something very close to that). The EUR wallet is useful but you have to pay the SEPA fees and the EUR conversion and the fees when purchasing, plus your unused cash just sits there. Any thoughts from people on this?
Cheers
Indeed - it has prompted me to set up a Coinbase account and I have a Kraken one pending.
When you look long into an abyss, the abyss looks long into you.........
Think I'm going to set up a Coin base for GBP transactions (seems by far the best one) and a Kraken one for Euro. I see little point diverging from the tips Hewjardon sets out. Top heavy on ETH and some in BTC. I do believe the underlying tech behind ETH is much more interesting/relevant for the blockchain, thus seems to have more mileage.
Interested to know what you consider top heavy in ETH? A 60/40 split? 70/30? Just curious how top heavy people are thinking.
Probably around 70/30. I think XBT is nice for the stability. Even at €2.5k. Should have sorted my act out and got on the bandwagon a few months back, but hey ho. I do not think the main currencies will drop much as it gets more widely circulated/used.
I've sold most of my ETH. My investment is so big now that I guess I bottled it!
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Nothing wrong with that! If you're in early then nothing wrong with taking your profits and realising them.
Coinbase all up and running - threw £100 in it today (ETH) to make sure the process works as it should.
When you look long into an abyss, the abyss looks long into you.........
Great stuff Chris - I have to wait till I am in the UK to set up my coinbase account as my UK sim is there. Luckily though a mate is wanting to sell his XBT position which nicely lines up with what I want to invest so that is an easy transaction.
He thinks I am mad only 'jumping' on the XBT bandwagon now (he got in a few years back and has made a nice amount), but I did stress to him thinking strategically, it's still very much worth buying now given the underlying technology and where it is heading. Guess he wants to cash in some wins!
I'm sure you are aware of this, but if you are doing a private sale you only need a wallet, no need for a trading account. Just forward your 'receiving' wallet address to your friend and he can send you the BTC direct, you can manage payment between yourseleves: BT, paypal, 'old' money (cash)
Yep we are aware, but good to have the info in the thread for other!
I do want to buy some ETH too snd prefer doing so from my UK account than my Euro one. Need to do some sums with the plummeting pound to see whats best value.
I was also doing some research on that Ledger Nano hardware wallet - seems an excellent solution to secure offline. Thanks for that information!
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