Pros and cons of crypto

Pro: crazy, wild profits to be made.

Con: crazy, wild losses to be made.

Pros: I'm getting a green Lambo

Cons: I'm not really getting a green Lambo, am I?

This is something that I have developed a passing interest in of late, primarily as a result of all the chatter about the huge rise in the values of crypto currency, with bitcoin being the main one mentioned.

I’ll admit I know little about Blockchain and crypto currencies, and could care less at the moment. I am interested in the speculation that’s going on and some of the background to it all.

I am aware that there is a bit of a clamp down on some exchanges and trading activities in South Korea and China. This sort of attention is something that I believe will cause a lot of volatility in the future. I’m aware Winkelvoss twins and others have been punting an ETF structure that invests in these currencies.

I have read a number of threads on the topic here and elsewhere, and one of the things that strikes me as a cause for concern is the entirely speculative nature of the pricing and value of these instruments.

I’ve seen posts such as “I believe it will go up to 24k in six months” with little evidence to back this up. Being entirely honest, and I realise this may rankle some of those who have invested both financially and emotionally in cryptos, but this has been compared (rightfully based on what I know about it) of the whole beanie baby craze on the nineties.

I do think there is money to made trading cryptos, sell the highs and buy the lows etc, but you could just as easily lose your shirt doing that as anything else.

What I don’t get is what intrinsic value these coins have - what, other than selling it to someone else, an I use if for?.
There are also a multitude of these coins and anyone who understands the tech can potentially launch a new coin.

I understand the blockchain technology is likely to be expanded further in the future and we are likely to see that become a lot more mainstream. I don’t believe these coins or tokens have any use or intrinsic value realistically.
Right now, it’s all speculative and supply and demand, but there is nothing other than the will of someone to pay at a certain price for all of these coins to fall to zero overnight.

Overall the pros are:
Something you can have a bit of a punt on and maybe end up owning a lambo from. A bit of craic maybe.
Interesting technology
Could be used as a means of exchange (if the wild swings in price were to cease)

Cons:
No intrinsic value
Difficulties in extracting your crypto into cold hard cash
Taxable considerations
Speculative mania at present.
Hugely volatile in price
Very few merchants using it as means of payment.

That’s kinda where I’m at on this. I’m not having a dig at those that believe, I do think that the technology behind all this is quite fascinating and even the mania that’s going with the whole crypto currency thing is quite remarkable. It does bring to mind the various speculative bubbles that have happened in the past and given these tokens, to my knowledge, don’t actually do anything, I have to be sceptical as to their long term viability or value.

Blackjack wrote: »

This is something that I have developed a passing interest in of late, primarily as a result of all the chatter about the huge rise in the values of crypto currency, with bitcoin being the main one mentioned.

I’ll admit I know little about Blockchain and crypto currencies, and could care less at the moment. I am interested in the speculation that’s going on and some of the background to it all.

I am aware that there is a bit of a clamp down on some exchanges and trading activities in South Korea and China. This sort of attention is something that I believe will cause a lot of volatility in the future. I’m aware Winkelvoss twins and others have been punting an ETF structure that invests in these currencies.

I have read a number of threads on the topic here and elsewhere, and one of the things that strikes me as a cause for concern is the entirely speculative nature of the pricing and value of these instruments.

I’ve seen posts such as “I believe it will go up to 24k in six months” with little evidence to back this up. Being entirely honest, and I realise this may rankle some of those who have invested both financially and emotionally in cryptos, but this has been compared (rightfully based on what I know about it) of the whole beanie baby craze on the nineties.

I do think there is money to made trading cryptos, sell the highs and buy the lows etc, but you could just as easily lose your shirt doing that as anything else.

What I don’t get is what intrinsic value these coins have - what, other than selling it to someone else, an I use if for?.
There are also a multitude of these coins and anyone who understands the tech can potentially launch a new coin.

I understand the blockchain technology is likely to be expanded further in the future and we are likely to see that become a lot more mainstream. I don’t believe these coins or tokens have any use or intrinsic value realistically.
Right now, it’s all speculative and supply and demand, but there is nothing other than the will of someone to pay at a certain price for all of these coins to fall to zero overnight.

Overall the pros are:
Something you can have a bit of a punt on and maybe end up owning a lambo from. A bit of craic maybe.
Interesting technology
Could be used as a means of exchange (if the wild swings in price were to cease)

Cons:
No intrinsic value
Difficulties in extracting your crypto into cold hard cash
Taxable considerations
Speculative mania at present.
Hugely volatile in price
Very few merchants using it as means of payment.

That’s kinda where I’m at on this. I’m not having a dig at those that believe, I do think that the technology behind all this is quite fascinating and even the mania that’s going with the whole crypto currency thing is quite remarkable. It does bring to mind the various speculative bubbles that have happened in the past and given these tokens, to my knowledge, don’t actually do anything, I have to be sceptical as to their long term viability or value.

Some form of crypto will rise to the top and be used widely in banking etc however it very likely does not exist yet.
Im prepared to take a small gamble myself and see what happens. There is money to be made and lost ..... timing is everything but id be of the opinion that its along way from a crypto being widely adopted.

asteroids over berlin wrote: »

I don't understand/comprehend many of your (and many other peoples) points, more so, how you get to them.
All these coins are ongoing projects - the value is investing in this project of choice as you believe in it. One day many of the projects will materialise into healthy businesses/corporations, many will fail. With that, your investment will grow/fall. This is the beginning. 2018/2019 will be huge for some of these projects int erms of the beginning of adoption, arguably it is starting to happen now for some of them. It's up to YOU to decide on which project to invest in. Your shiny smart phone was once a project, your TV, car, shoes etc etc. Give it time, research and invest in good projects. The only other option is to not research and take a punt aka gamble - this may or may not pay off

In essence, i see only upsides to crypto BAR AN ARCHAIC TAXATION SYSTEM.

Are any of these coins representative of a share value in the company or the technology?. My understanding is that they are not, blockchain as a technology is entirely separate from any coin that may be issued using the technology.
So if the companies behind the coins at some point make it big, what is the coin they issued going to be worth?. My understand is that they are more like trinkets issued, once the coin miner or issuer has issued them and sold them on, they have no further recourse to anyone that holds them after that.

Blackjack wrote: »

Are any of these coins representative of a share value in the company or the technology?. My understanding is that they are not, blockchain as a technology is entirely separate from any coin that may be issued using the technology.
So if the companies behind the coins at some point make it big, what is the coin they issued going to be worth?. My understand is that they are more like trinkets issued, once the coin miner or issuer has issued them and sold them on, they have no further recourse to anyone that holds them after that.

Some coins share dividends from fees, most are trying to sidestep the SEC so essentially you have a magic bean that is necessary in order to use the platform. If the platform gets widely used there's a need for liquidity yet all or most of the tokens are held by people who want to profit so they won't be selling low - the price works it's way up if the utility of the coin or token with regard to the business' platform is deemed a necessity by the prospective buyer.

It's simple supply and demand & yes people who buy the top in order to speculate on a further rise get burned if they sell lower than their buy-in, but it's possibly the easiest form of crowdfunding and ongoing price-discovery that's yet been established.

Nay-sayers don't seem to understand supply-demand dynamics where the token's value is inherently linked to the platform's perceived value.
Granted it's massively speculative right now, but so was buying Amazon shares two years ago, or FB shares before they started posting profits. People were guffawing at people buying shares in a company that doesn't have any profits to share - more fool them.
If you don't believe a project's token will retain or grow in value due to adoption and you've researched the project properly, don't buy it.

sameoldname wrote: »

So as someone who has no need to purchase drugs online, launder money, evade taxes or wants to invest in them... what benefits do cryptocurrencies offer me?

Say for example they reach widespread adoption and as part of that they have the same protections and restrictions that regular currencies have. What are the advantages over cash and current electronic transfer methods?

Various based on the token,currency,asset you are talking about.. but a very real problem is paying for cars (or other large $$ things) where neither party trusts one another and/or there is a requirement for realtime payment and/or across borders or currencies.

The bank network, despite knowing this problem for 50years, completely and utterly sucks at this problem.

Bank Drafts- not accepted across many borders, can be faked, banks cannot guarantee their legitimacy, even the issuing bank (and arent free).
Cheques - even worse than drafts and even more expensive to operate (for banks and business).
Huge wads of cash - attracts tons of other risks (crime, loss, natural disaster) as well as difficult to source over say 10k.
Bank Transfers - ok speed though far from realtime within the SEPA network. Cross borders to the UK not fast. Sometimes gets held up for various reasons. And attract random fees (currency, cross border)


Even with something as technologically "old" as Bitcoin (vs say Raiblocks which blow it out of the water for this purpose) I can fly to the UK (or Australia), inspect a car, make an offer, send payment and drive away in minutes.

You can scale this problem and solution up and down to various other things than high value items, but this real world, totally normal problem epitomises where right now (and for years) digital currencies excel.

Wouldnt it be nice for instance for Adverts to implement Raiblocks as the payment solution, the buyer would indicate all is good with purchase (either pre or post collection of goods), instant, FREE payment to the seller and funds are known good (unlike say PayPal which is large Credit based and can be reversed and quite expensive)?

PS: My examples are currency and payments based but bear in mind this industry offers a lot more outside this core finance staples.

sameoldname wrote: »

So as someone who has no need to purchase drugs online, launder money, evade taxes or wants to invest in them... what benefits do cryptocurrencies offer me?

Say for example they reach widespread adoption and as part of that they have the same protections and restrictions that regular currencies have. What are the advantages over cash and current electronic transfer methods?

Matt explained it well but you need to read up on the difference between blockchain and bitcoin it'll give you a better understanding of where all this is going and its uses.
If you want to invest in Blockchain it's companies like IBM you should be looking at. If you want to invest in cryptos that's very speculative with no real catalyst only the price keeps rising because the price keeps rising. Blockchain doesn't need bitcoin but bitcoin needs blockchain.

asteroids over berlin wrote: »

I don't understand/comprehend many of your (and many other peoples) points, more so, how you get to them.
All these coins are ongoing projects - the value is investing in this project of choice as you believe in it. One day many of the projects will materialise into healthy businesses/corporations, many will fail. With that, your investment will grow/fall. This is the beginning. 2018/2019 will be huge for some of these projects int erms of the beginning of adoption, arguably it is starting to happen now for some of them. It's up to YOU to decide on which project to invest in. Your shiny smart phone was once a project, your TV, car, shoes etc etc. Give it time, research and invest in good projects. The only other option is to not research and take a punt aka gamble - this may or may not pay off

ye, what this lad said.

Invest in something doing something useful, like using ethereum smart contracts to trace food for example among other things. There is multiple ways this technology can be used aside from buying things, it's not a currency, it's an idea that will be mainstream eventually. (Think OS, wallet combined etc).

These clowns comparing it to the dot com bubble back in 2000 haven't a clue, only big investors got burned there and the programmers working for stock. This is 100X bigger than that bubble.

And maybe it is a bubble, I reckon it's only getting started though. :pac:

grindle wrote: »

Some coins share dividends from fees, most are trying to sidestep the SEC so essentially you have a magic bean that is necessary in order to use the platform. If the platform gets widely used there's a need for liquidity yet all or most of the tokens are held by people who want to profit so they won't be selling low - the price works it's way up if the utility of the coin or token with regard to the business' platform is deemed a necessity by the prospective buyer.

It's simple supply and demand & yes people who buy the top in order to speculate on a further rise get burned if they sell lower than their buy-in, but it's possibly the easiest form of crowdfunding and ongoing price-discovery that's yet been established.

Nay-sayers don't seem to understand supply-demand dynamics where the token's value is inherently linked to the platform's perceived value.
Granted it's massively speculative right now, but so was buying Amazon shares two years ago, or FB shares before they started posting profits. People were guffawing at people buying shares in a company that doesn't have any profits to share - more fool them.
If you don't believe a project's token will retain or grow in value due to adoption and you've researched the project properly, don't buy it.

What are the best sources of information as to the attributes of the various coins e.g is there any site that details an equivalent P/E ratio to the coins that pay dividends or that details, perhaps briefly, how each one works?.

As regards people guffawing at those that invested in Amazon or Facebook, I’m not sure I heard anyone guffawing, but I wasn’t listening out for that either.

Blackjack wrote: »

What are the best sources of information as to the attributes of the various coins e.g is there any site that details an equivalent P/E ratio to the coins that pay dividends or that details, perhaps briefly, how each one works?

No site that goes into detail that well, reading specific whitepapers is the main way to find out how a team hopes the token economics work out. As I've said, most want to sidestep the SEC's regulatory oversight (which applies where dividends are concerned) so most are dependant on adoption and/or a combination of market-baiting mechanisms.

Something like Rialto's XRL token is using their ICO funds as liquidity for an arbitrage hedge fund - they take snapshots of the token holders at certain times and 100% of the excess above the fund's starting value gets distributed to token holders - their own method of profit-taking for themselves is enticing large investors to use them as a hedge for the market as a whole, so that profit will be private, plus if they get to a large enough level the entire market will benefit from having markets evened out - market making is standard between exchanges of any kind but apparently some don't know that arbitrage is common and they mistake it for a pyramid scheme despite it fulfilling none of the requirements of a pyramid scheme.
Very good chance XRL won't be able to become a dominator in the scene as wall street funds have entered the market aiming to do much the same thing minus the user rewards and with funds of $500m+

One fantastic example of supply->demand economics in a coin is Binance's BNB coin.
If you use their exchange (which you probably should as it's easily the best exchange right now), you pay half the trading fees if you buy their coin and pay your fees with it - this causes a steady stream of market buys, more buy pressure than sell pressure.
For community votes to get new coins on Binance you have to spend BNB. Steady stream of market buys.
The only coin you'll be able to clean your crypto-crumbs (tiny bits left behind from trades) up with is BNB. Steady stream of market buys.
BNB used in all of these instances is burned quarterly reducing supply of BNB in a market where demand is high which drives price up.

Blackjack wrote: »

As regards people guffawing at those that invested in Amazon or Facebook, I’m not sure I heard anyone guffawing, but I wasn’t listening out for that either.

Oh yeah, TechCrunch (which was as bullish as you'd get in the speculative Silicon Valley market) back in the day was a wall of articles wondering when the bubbles would burst as Amazon was running at a loss consistently and FB hadn't worked it's tendrils into every facet of our lives yet, they took a long time figuring out how to monetise. There was just an assuredness from whomever was buying while they were losing money that these would be the businesses to break through.
I remember seeing FB's valuation thinking people had lost their senses and I'm bullish on tech. Made no sense to me that the place where you post your scrapbook & diary entries would become so valuable.

Cons:
Technical "analysis"
"Partnerships"
"Roadmaps"
John McAfee