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geokills
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Re: Cryptocurrency Big Dogs: Bitcoin (BTC), Ethereum (ETH) and Tezos (XTZ) [Re: sh4d0ws] 1
#26307500 - 11/08/19 02:50 PM (4 years, 2 months ago) |
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That's awesome about optional zk-snarks on Tezos! The project sure appears to be forward thinking, and that's exactly what you need to be in such a young industry. I have been wondering how anti-money laundering & know-your-client regulations can mesh with this new paradigm of finance. I've noted a couple of stories surrounding these concerns on the wire this past week:
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geokills
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Re: Cryptocurrency Big Dogs: Bitcoin (BTC), Ethereum (ETH) and Tezos (XTZ) [Re: Gypsy Boy]
#26397217 - 12/23/19 11:09 AM (4 years, 1 month ago) |
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My only issue with the Ledger Nano S is the limited application storage. Because I have consolidated most of my holdings, it's not a big deal to me these days, but I recall during the frenzied days of late 2017 being frustrated that I couldn't get more than 3 or 4 apps to idle on the Nano S before running out of space. Technically, you can delete an app and reinstall it later and it will feature the same private key, so you can use the Nano S for accessing more assets than the applications it will hold at any given time, but it's not very user friendly to have to install/uninstall/reinstall if you are managing more coins than the S can fit applications for.
Firmware updates on the Nano S are fairly painless, I've had mine for years and the new Ledger Live software that pairs with the device is decent, even if it isn't perfect. It's small size, simplicity and security is why I use it. I wouldn't be opposed to using the Nano X just because it has bluetooth. If I ever do get one, I'll likely use the same recovery phrase that my Nano S uses, so that I can store the Nano S as an easily accessible backup.
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geokills
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Re: Cryptocurrency Big Dogs: Bitcoin (BTC), Ethereum (ETH) and Tezos (XTZ) [Re: BotanyChild] 1
#26452609 - 01/25/20 09:09 PM (4 years, 3 days ago) |
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Quote:
BotanyChild said: Do any of you guys/gals regularly buy or sell tangible goods/services on the clear net using crypto? Just curious...
About a quarter of the Shroomery's advertising partners pay us via crypto. And we are grateful for it! After the run around the banks gave us with our credit card processing over the past few years, I know crypto has the potential to be a great equalizer.
My sister just spent several weeks in Zimbabwe offering counselling services and helping setup a rural school for extremely poor underserved children. Kinda rollin' off topic but did you know a teacher out there is willing to work on $50/month!? Stark reminder of how such a small amount of money to me can make such a huge difference to people elsewhere, and the excesses to which our nation and its people have become so accustomed to... but I digress. Anyway, I wanted to avoid Western Union transfer fees in my support, and inquired with my sister's host family about sending bitcoin. Unfortunately, because not so many people use it, they would have to convert it into a local or locally accepted fiat currency to be practical, and the banks are unreasonably strict about allowing that conversion. Such a shame, as this is exactly the type of scenario where crypto can be a huge help with its almost zero cost transfer of value and lack of scruitany from corrupt institutions. Good to see the people of Venezuela and Argentina signing on.
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geokills
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Re: Cryptocurrency Big Dogs: Bitcoin (BTC), Ethereum (ETH) and Tezos (XTZ) [Re: sh4d0ws]
#26460537 - 01/30/20 04:16 PM (3 years, 11 months ago) |
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Quote:
sh4d0ws said:
Quote:
geokills said:
Quote:
BotanyChild said: Do any of you guys/gals regularly buy or sell tangible goods/services on the clear net using crypto? Just curious...
About a quarter of the Shroomery's advertising partners pay us via crypto. And we are grateful for it! After the run around the banks gave us with our credit card processing over the past few years, I know crypto has the potential to be a great equalizer.
But I still can't use my crypto to buy a supporter account.
I think.
One day, maybe? 
We were getting close to trying to reopen our store as a crypto only store after years of struggling with our merchant processor banks, but it would ultimately block so many potential supporters/customers that when we found a platform that could support us with credit card payments, we kind of abandoned the crypto integration. It's just not seamless for the platform we are using, which otherwise is really slick and streamlines our entire store operation in a way we've never really been able to do before. It would be awesome if they could integrate crypto payments, but for now it's not likely on the immediate horizon.
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geokills
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Re: Cryptocurrency Big Dogs: Bitcoin (BTC), Ethereum (ETH) and Tezos (XTZ) [Re: deadwk] 3
#26467029 - 02/03/20 03:40 PM (3 years, 11 months ago) |
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Quote:
deadwk said:
@geokills: what shop platform is being used? I think shopify has a crypto payment extension that could be used. There's also a couple of different provides that let you integrate with them.
Hey thanks for the friendly nudge and spot on knowledge deadwk. Our store is now accepting crypto through Coinbase Commerce.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: Grimsweeper] 1
#26477285 - 02/09/20 05:14 PM (3 years, 11 months ago) |
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sh4d0ws is offering sage advice. It doesn't matter if you're trading with $100 or $100,000, it's very difficult to come out ahead if you are rapidly moving in and out of trades on the regular. With steadfast discipline to risk management, trading around your core positions can help increase your total reward. However, the amount of discipline required and the general increase in stress and time spent to actively trade, just won't work for most people.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: LogicaL Chaos] 1
#26481191 - 02/11/20 10:52 PM (3 years, 11 months ago) |
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I would temper your buying enthusiasm here, I'm actually getting ready to unload a tranche as the the euphoria approaches a fever pitch. The market has been very hot, and all markets ebb and flow. If you have no exposure to an asset that you want to own; Fine, buy a small increment of what you would like to own. But save the bulk of your powder for when it's actually a deal... when people are depressed, when you don't feel like buying. At least that's my take on crypto. I can't say I hold quite the same philosophy on stocks (although I most definitely advocate for buying and selling incrementally - i.e. trading around a core position), however the value approach is what works for crypto, in my experience.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: ManianFH] 1
#26481610 - 02/12/20 08:57 AM (3 years, 11 months ago) |
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Quote:
sh4d0ws said: Do you think the block reward halving is going to affect anything in the coming months, or not until later, after it's passed (going by previous ones?)
Not sure what to think part of me thinks it might go on another parabolic run after halving 20 1
Anything can happen, although it would seem to me (in theory) that the price response to halvings will become less impactful, the more of the halvings we get through. Going from a block reward of 50 to 25 BTC, that's a pretty big adjustment for miners to manage. But as the total rewards get smaller, supply isn't changed so dramatically, so it follows that price may not be as affected either. Of course, with everyone and their mother talking about it, there can be a significant psychological effect, although I suspect that is one of the factors leading the present day rally, and that it may end up being "priced in" by the time the event actually occurs.
Quote:
mick said: So Ive been holding all my coins on paper or cold wallet. Now I am wondering is it wiser to keep these on a trusted exchange such as CB to earn staking? I feel like I am missing out on returns by just holding these forever while others are essentially earning a dividend.
You should definitely be making use of staking rewards wherever reasonably possible, otherwise your position is being diluted due to asset supply inflation. With an asset such as Tezos, you don't need to park it on an exchange, you only need to delegate your stash to a baker who will then share the bulk of the reward with you. I've done this with the tezzies I hold on my Nano S, and am getting paid out on the regular, while keeping my stash off exchange. Check out https://www.mytezosbaker.com for a list of bakers you may delegate to.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: sh4d0ws] 2
#26482043 - 02/12/20 01:59 PM (3 years, 11 months ago) |
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Quote:
sh4d0ws said: you can always verify your baker is being legitimate and honest and giving you the correct rewards you deserve by checking your tz or KT address on Baking Bad
Cool resource! My baker currently skims 7% of the reward, although they offer a 6% rate if you mention that you have a better offer elsewhere.
On Tezos price action, I am moving 20% of my XTZ onto exchange now, with price bouncing around between $3.30 - $3.60. Intending to put up a ladder of sell orders between $3.45 and $4.00 to lock in some of this move. For some very basic "back of the cocktail napkin" kind of calculations, let's take a look at the Top 10 crypto assets by their market capitalization.
- 1. Bitcoin $188,430,276,986
- 2. Ethereum $29,233,998,895
- 3. XRP $13,128,848,143
- 4. BCH $8,709,278,301
- 5. BSV $6,713,808,707
- 6. Litecoin $5,233,884,983
- 7. EOS $5,142,170,803
- 8. Tether $4,643,725,847
- 9. Binance Coin $4,009,207,484
- 10. Tezos $2,305,416,043
As much as I'd like to believe that Tezos could some day overtake Ethereum on the leaderboard, that's a wildly optimistic expectation given the deep developer network and early mover advantages that Ethereum enjoys. While hypothesizing based upon the above numbers is not a particularly rigorous exercise, it seems reasonable to me that Tezos could be valued similarly to EOS given its present stage of functional development and, although less than EOS's coffers, a nevertheless significant amount of financial resources that its foundation can use to engage and further encourage the development of its ecosystem.
At parity with EOS's current market capitalization, that would theoretically provide for another ~120% gain from the current price of $3.32, making for a target price of ~$7 per tezzie. Because such a move would likely occur concurrent with a rising tide that would lift most crypto assets, parity with EOS would likely occur at an even higher price. Thus, in my most optimistic short term scenario, I would expect XTZ to find "fair value" somewhere between $7-$9. That being said, the trading volume on XTZ is remarkably low, only 7% the amount of volume compared to EOS. Because of this low trading activity, one can expect the nominal price to be more volatile than other assets in the Top 10 list. Indeed, this is likely a major contributing factor for why XTZ has rallied so quickly compared to all other assets this year, and portends that the road ahead will in all odds be very bumpy with some gut wrenching swings in both directions. Hence why I am trying to take a tranche off of the table today.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: eLeSDenes] 1
#26482057 - 02/12/20 02:09 PM (3 years, 11 months ago) |
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Quote:
eLeSDenes said: Can someone tell me how to get most out of staking? Is there a threshold to get rewards? Do you just hodl and get the monthly rewards? What is the return? Sorry to many questions 
Generally speaking, you just want to find a baker that will offer the lowest fee for their service and then delegate a KT1 contract to that baker. I have been using Tezos Tacos at a 7% fee and they have been paying out reliably. Note that once you choose a baker and execute your delegation to them, there will be 4-5 week delay before you begin receiving rewards. So long as the coins lay idle in your delegation contract and your baker is reliable, you will receive the prevailing reward rate of 5-6% annually. Keep in mind that this isn't necessarily "free money", because everyone who is part of the ecosystem will qualify for it, however it is something that you want to do to prevent value loss through this inflationary mechanism.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: sh4d0ws] 1
#26486240 - 02/14/20 10:24 PM (3 years, 11 months ago) |
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Quote:
sh4d0ws said: I don't have much confidence in ripple.
I've never been a fan, although I did trade it pretty well during its initial hype cycle. Maybe it works out long term, but in the interim it seems likely that the continuous supply that the organization doles out on the regular to raise funds for itself (and the incredible amount that they have left yet to sell), is why XRP has been underperforming. It's also already richly valued, so yeah, definitely not a crypto I get lathered up about.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: eLeSDenes] 1
#26486715 - 02/15/20 08:54 AM (3 years, 11 months ago) |
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Of course, BTC has long remained the dominant crypto asset and it's tide will push or pull the entire sector. I believe one of the key reasons this occurs is because several altcoins do not have tradable fiat currency pairs, but rather trade strictly against BTC. This is beginning to change somewhat, but generally speaking, the BTC:alt trading pairs tend to be the most liquid for altcoin assets. This interrelationship inherently correlates altcoins to BTC's price, when reviewed in terms of your local fiat currency.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: ManianFH] 1
#26489887 - 02/17/20 12:09 PM (3 years, 11 months ago) |
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Quote:
mick said: i just sold all my XTZ. I figure its best to get out while im ahead and just chill for a sec. It could continue to rise and maybe I miss out, but at least still made a profit. If for some reason the market dips significantly ill consider buying back in.
participating in that ICO made up for all of my crypto losses, and there have been quite a few over the years. Looking back in the posts, it was Geo who brought the ICO to my attention. Thank you Geo for making me aware of them in 2017. Being selfless with the knowledge you share on here, you do more than you know 
Congratulations on another excellent trade mick! I generally don't advocate selling (or buying) an entire position all at once, but there's nothing wrong with booking your profits and clearing your head space so you can keep an eye out for a new opportunity.
Thanks also for the kind words, I'm happy to share my thoughts, although I am not sure that I would consider them selfless. In truth, I share because it is practice for my own clarity of thought, and helps hold myself accountable. I surely am no soothsayer. Despite Tezos doing very well for me (and Bitcoin/Ethereum originally), my more recent participation in the Hedera Hashgraph and PolySwarm ICO's resulted in an abysmal loss of capital.
PolySwarm is a super cool product, and maybe it will ultimately work out, however it arrived a bit before its time and right as the market flushed out (in other words I'm down nearly 90% on that one). Although I have incurred 60% losses on Hashgraph, they have some interesting and attentive governance, and have floated a plan to make ICO investors whole, over time, by offering an amended SAFT that delays distribution while in turn compensating investors with surplus tokens from their treasury, over time and in accordance with the velocity of network adoption and use. Of course, if the network fails to see adoption, it won't really matter, but it is nice to see that they are trying. Their team is fortunately well funded and dedicated, regularly hosting events and news releases, and as recently as last week, Google joined their governance council. For anyone looking to allocate capital on a speculative asset that has been flying under the radar and barely coming out of its ICO hangover, I would suggest Hedera Hashgraph's HBARs as a viable option.
Best of luck to everyone out there.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: sh4d0ws] 3
#26490194 - 02/17/20 02:51 PM (3 years, 11 months ago) |
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The "public" ICO was open to accredited investors and had two primary offerings:
- Series 3A at a purchase price of $0.12 per token with a 8 month restricted period
- Series 3B at a purchase price of $0.096 per token with a 4 year restricted period
I went for Series 3B, which entails four equal distributions over a four year period from network launch. Thus, I have received 25% of my original allocation to date. At the prevailing rate of $0.053/HBAR, I am presently down 45%. The asset had a nice rip higher during the latest bull cycle and Google news. Since I already have a commitment, I won't be buying above $0.04 and would ideally target $0.03 to add to my stake. If we head back down to $0.02, I will be buying in some size.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: ManianFH]
#26492078 - 02/18/20 04:48 PM (3 years, 11 months ago) |
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At the risk of looking like I'm totally drinking the koolaid, this interview with ShapeShift's Erik Voorhees, a crypto pioneer, is fairly uplifting to those of us who enjoy the general tenets of the space:
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: Gypsy Boy] 2
#26494131 - 02/19/20 09:41 PM (3 years, 11 months ago) |
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Nothing goes up in a straight line. $10,000-$11,000 BTC is a pretty major point of control that was carved out through 2019 after BTC fell back from last year's highs at $14,000. You don't typically just blast through price areas that have seen a lot of trading volume in recent memory. In a healthy market, you at least pause and trade sideways for sometime, more typically the first attempt is rejected and falls back to a lower, shorter-term support level before consolidating and making another attempt at breaking through. This can go on for a while.
While crypto is known for moving very quickly, as it matures it should begin trading more conventionally. Because retail order books are still fairly thin and there is a lot of algorithmic trading going on, a broken support or resistance level can lead to rather violent short-term follow through. While I wouldn't like to see it, BTC could easily test $9,000 and have no technical chart problems with its current uptrend, so long as it made it higher than $9,500 on its subsequent bounce.
Tezos is shockingly strong in the face of this, which is encouraging for upside continuation. The relatively thin volume on Tezos is working in its favor, as it doesn't take a whole lot of buying pressure to push the price higher quickly. If its trading volumes were more in line with the majority of the Top10 cryptos, I would expect it to have a very difficult time passing $4 in the near term; However given the thin volume, it could very well blow through that level and take a run to $5 by the end of the month. Note: I am not expecting that and do not advocate buying at this level unless you are a very experienced day trader well versed in risk management. The chart is technically stretched and due to trade sideways or pull back, and while it doesn't show any weakness right now, when it does rear its head, it will likely happen faster than you'll be able to send to an exchange. If you are managing a trading position in XTZ, keep a stop below the daily low, currently $3.50.
In other news, I would really like an opportunity to accumulate some Chainlink (LINK). The not one but two hacks on bZx, a prominent decentralized-finance (DeFi) protocol, that occurred between Valentine's Day and President's Day, occurred in large part due to the reliance of DeFi contracts on single point oracles (an oracle is a provider of real world data). This indicates that oracle protocols like Chainlink that aggregate data from multiple sources, and thus cannot be as easily manipulated, will almost certainly have to be implemented across the entire DeFi sector. This is something I figured would happen a long time ago, back when I was involved with ZAP, but ZAP's administration fell behind whereas Chainlink seems to have their house in order. I only wish I hadn't lost sight of the thesis until now. That trade has already been well on the move, with Chainlink performing similarly to Tezos, as two of the best performers so far this year. On weakness, I would look to be buying LINK, preferably on a test of $3.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: TonyMushrana] 2
#26522975 - 03/07/20 10:06 PM (3 years, 10 months ago) |
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Mick's recommendation is a good one. If you don't want to overthink it and loathe micromanaging, BTC all the way. For a more diversified but still fairly simple portfolio, I would suggest 40% BTC, 40% ETH and 20% XTZ. If you want a more aggressively diversified portfolio, I'd suggest allocating a minority stake to LINK and HBAR as well.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: geokills] 1
#26531876 - 03/12/20 10:37 PM (3 years, 10 months ago) |
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$4-$5K BTC, $100 ETH, $1.10 XTZ... these are levels that should be bought.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: Grimsweeper] 1
#26539586 - 03/16/20 10:17 PM (3 years, 10 months ago) |
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All markets are under immense pressure from various cross currents, not the least of which involve the massive leverage that has been ingrained into the system. Volatility will eventually normalize, but there's no telling when that's going to happen. I think anyone who is underexposed to crypto can buy here. I've wired fiat into my crypto brokerage to add to my positions, but I am not quick to pull the trigger since we have been, more or less, trading sideways over the past several days. I either need to see another big washout down, or a constructive breakout before I am buying. For now, I have low ball bids on ETH and XTZ for a washout. If that doesn't happen and we start to rebuild higher, that's ok, I'll buy higher once that becomes apparent. But right here, we're kind of in no man's land. It's OK to sit on your hands.
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geokills
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Re: Cryptocurrency: A Discussion on Bitcoin, Ethereum and Related Projects [Re: geokills] 2
#26591266 - 04/10/20 02:50 PM (3 years, 9 months ago) |
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Just thought I'd put this here...
Quote:
Choose your Fiction Source: Arthur Hayes on the BitMEX blog 9 Apr 2020
Shazaam! You snap your fingers and COVID has disappeared, you can exit lockdown and continue on with your life. How do you feel? Are you as optimistic as you were in January? Do you trust your government to put your health and safety first? Do you trust your government to tell you the truth in a timely manner, or will it juke the stats when it suits them? Do you trust the media to speak truth to power? Will you wash your hands once an hour furiously, or blithely touch your eyes, nose, and mouth with zero fucks given?
If, once we’re out of this, you can honestly say that everything has gone back to how it was in early January of this year, then happy days. It may well be that we are in for a V-shaped economic recovery. But if, as I believe, your world view has fundamentally changed, the fictions that underpinned your life have shifted dramatically. As we consider the most important price, the price of money and its nature, predicting the collective fiction we believe in becomes of utmost importance.
Money, true money, which is divorced from industrial utility, is nothing more than a fiction which allows us to exchange labour and capital efficiently so that real goods and services can be produced. Without this fiction … the conveniences of modern society would cease to exist. There are three prevalent monetary fictions whose interrelationships post-COVID will completely change.
Government Fiat, aka The USD = Fiction + Violence
We know the USD has value because contracts and taxes owed will be collected at the barrel of a gun if necessary. The dollar derives value from a strong belief the United States can raise taxes to pay back its debts.
Gold = Fiction + Physical Scarcity
Gold has no widespread industrial use case. It is just shiny, physically scarce, malleable, and has captivated human attention for millennia. Therefore it has value.
Bitcoin = Fiction + Cryptographic Scarcity
Bitcoin has value because a piece of open source code is collectively run by many guarantees that only 21 million units will ever exist. Therefore it has value.
After the senseless destruction of human lives in WWII, the victors sat down in Bretton Woods and created the modern financial system underpinned by the USD. We still are under the yoke of the USD today.
The USD used to be worth its weight in gold, $35/oz to be exact until 1971. Tricky Dick wanted to fight a war while giving out goodies at home. “Free Shit, Vote for Me!” That’s the best way to win any election. However, he couldn’t stomach a run on the nation’s gold so he severed the relationship. Since then, the value of USD has depended entirely on trust.
Fast forward to January 2020. The US has the most liquid financial market and is completely open to all capital. All major commodities and trade is priced in dollars. Therefore if you are a country or company doing international business you must have access to those dollars.
That’s great for everyone when the beat is going strong. The Federal Reserve has a global obligation to keep dollars in good, cheap supply. That is why they have FX swap lines with the major central banks. The world is short on the dollar and only demure academic-looking Federal Reserve governors can provide them.
Countries and companies can easily earn dollars by selling knick knacks to rich Americans. 70% of American GDP is driven by consumption. It makes the world go round. Hundreds of millions of peasants have been lifted out of abject poverty so that they can produce cheap iPhones, AirJordans, or F150s, all so the parent “American” company can enjoy record profit margins.
Europeans are not far behind in their consumption. Europe and America combined represents the global demand for goods. Absent them, who the fuck is going to buy this dog shit at insane markups?
Deng Xiaoping on his Southern Tour unleashed the Chinese upon the world after a hundred year hiatus. They began powering the luxury goods, travel, and education sectors after gaining serious wealth from the offshoring of manufacturing from West to East.
Sorry for waxing philosophical, I’m no modern day Thoreau and I certainly don’t live on a pond. Keeping it simple: China sells shit in dollars that Americans and Europeans buy.
Uh oh, COVID… China shut down production to fight the virus, meaning no dollar income. Then Americans and Europeans caught it and shut down their economies, meaning no more demand.
Once China “opened” again for business and started making stuff, there were no orders from the West as they were all watching PornHub at home and ordering GrubHub. If they aren’t vegging-out, they’re worried about when their next paycheck will arrive to pay for fuck-off expensive medical care. The moral of this sorry tale is that China ain’t earning dollars.
And they are not alone. No major manufacturing or services hub is earning any dollars. But they need them to pay for raw commodities and to pay back their dollar liabilities. It would be all gravy if their central bank could print dollars, but Mon Dieu! They cannot lah.
A mini EM currency meltdown occurred at the tail end of March. The Fed’s response was to offer swap lines to additional central banks, but not China. That has eased the pressure a bit. But take a look at the CDX EM HY CDS spread. It looks like a West Hollywood blowout hairdo.
The conventional wisdom is that the Fed can print money until the dollar gets cheap enough. But US banks tend to hoard USD and refuse to lend. There are a variety of regulatory reasons why they cannot, and why take the risk during a global depression. Better to be safe and make sure your balance sheet is rock solid.
Simple simple. The Fed can print as much USD as it likes, but the companies and countries that need it the most will not get it. The most important one is China. China’s currency is not convertible and in the eyes of Western Europe and America, it was responsible for this virus. Whether that is true or not is not the point. Do you think for a second any US politician would stand up and ask the Fed to print money so the Chinese economy can survive the COVID pandemic?
The virus supposedly originated in a Wuhan live animal market. The West believes Beijing downplayed or lied about its severity. Then, all of a sudden, it shut the country because it was a serious problem. Too bad a few million infected Chinese travelled the world and started the party. Truth is not the point here; the narrative rules all. This is an election year, and China bashing is in full swing. Cue The Seinfield Soup Nazi, “No dollars for you”.
The USD is STRONK and will destroy the global economy.
The only country which can credibly enact the appropriate amount of fiscal stimulus to weather the storm is the US. No other country has the option to depreciate their currency to the degree necessary to generate economic activity at a level which honours the credit in the system and promises to their plebes. Remember that all raw commodities are priced in dollars, if you print too much money to monetise your government debt, your currency craters and inflation runs rampant. At that point, the Jacobins enter the street and you better not be munching on a cake.
That summarises how I see events playing out over the next decade. I have no idea on timing, but the strong USD will break the back of the global economy and force a reset. The question is what the new system will look like.
Gaze into my portfolio to see my soul: Long USDCNH 2y 8.00 calls Long USDKRW 1y 1600 calls Long CDX EM CDSI Sprd (I don’t have this on yet, but I’m waiting for my levels on the rebound in markets)
Central banks will devalue against a hard digital asset. What that digital asset is, I have no clue. But, it may include a linkage to bitcoin.
The USD fiction is over. It’s time for a new mental crutch.
Do you believe in Physical or Cryptographic scarcity?
After a societal fetish for all things fiat, the pendulum will swing wildly towards what is hard and scarce. Traditionally investors expect a weak gold or bitcoin price when the dollar is strong.
But dollars cannot be had, and trust in government Frankenstein currencies will evaporate. Gold is the historical best choice. It also is widely owned by central banks. The best way to rebase a currency is an extremely high gold price. This happened during the 1970’s oil crisis, and the Fed raised interest rates to a level where it became silly to own gold when you could earn 20% investing in US Government debt.
This time around, the Fed cannot raise rates. That would destroy the finances of the USG who must hand goodies to all. Remember this is now QE 4 Da People / QE 4eva. The US electorate will not tolerate another exclusive financial services bailout. They will get paid to sit at home, watch NetFlix, aka the Tiger King, and refrain from using their assault rifles to initiate a modern day Whiskey Rebellion.
Therefore, there is not an alternative asset which entices people away from gold as the legacy of Bretton Woods system breaks down. The stock market of the Land of the Free will become a political tool. The US Treasury, powered by the Fed, will buy all government and corporate debt. They will buy equities. They will buy consumer loans. You would think that stocks are the place to be if the government is buying the Index. But let’s remember the Nikkei in 1989. The BOJ now owns upwards of 30% of the Japanese equity market, and the Nikkei is still 50% below its ATH. And I’m only speaking in nominal terms. Try deflating that by the BOJ balance sheet … REKT.
The once mighty US stock market will be a corral of zombie big corporates who had the connections to suck from the teat of the US tax payer. That wouldn’t be so bad if inflation can be kept at bay. However, as the world recovers we have an infinite amount of fiat currency chasing a finite supply of real goods. SMEs represent 60 – 80% of most countries’ economies. These companies, due to their small size and limited connections, pay a high price for credit if it can be obtained. Even with all the well meaning government SME lending programs, a large portion of SMEs will no longer be in existence by the time they can actually access the funds. Complex systems do not recover in a linear fashion.
Therefore, an infinite amount of pledged fiscal and monetary assistance will chase non-existent supply. That leads to inflation. Global stock markets will also become political tools, not efficient allocators of capital. The wrong signals will be sent, the wrong goods will be produced. Can the hipsters handle a $40 smashed avo toast?
The best inflation hedge of human civilisation to date, gold, will be repriced higher. It’s the only thing you can own if you believe in Fiction + Physical scarcity. How high can it go? Take the ratio of the total amount of credit to base money. That multiplier serves as guidance to a possible future for gold.
Another possible outcome is the creation of a digital financial non-USD dominated system.
If they dare to come out in the open field and defend the [dollar] standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a [dollar] standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of [the USD].
Satoshi Nakamoto’s Democratic Convention Speech 2020
Will a cabal of central banks rebase their currency using a digital hard crypto? Maybe. Could there be a basket of digital fiat currencies where the central banks hold a sufficient amount of gold? Maybe.
All I know is the setup for bitcoin, the hardest form of digital money, could not be better. All manners of trust have evaporated. In order to solve for demand and supply destruction, governments will embark on the greatest fiscal stimulus binge the world has ever seen. It will not be paid for by tax receipts, it can’t be because 30% of the population is out of a job, it will be paid for by the printing press. The kicker is that, in order to hand money directly to the people, governments will have to digitise their currencies. That will educate the populace on digital money. Once they understand fiat digital money, they will seek out the hard version to avert the ravages of inflation. If you believed that Libra could educate the masses on the joys of digital currencies, just imagine when everyone on Basic spends their food stamps via a mobile app.
Remember, the supply of goods will be insufficient because of the SME destruction during the global shutdown. Inflation in what you need, deflation in what you want. Digital finance meets wealth preservation equals Bitcoin. ‘Nuff said.
That was a lot of words to get to that conclusion. Now let’s trade it.
Correlation One
In a global margin call, the market will find leverage and punish it.
In a global margin call, all liquid assets will be sold to finance holdings of illiquid ones.
In a global margin call, correlation = 1.
We are in the midst of a global margin call on all risky assets. The reason why every asset class gets the stick is that weak hands used leverage to juice their short volatility strategies.
The BitMEX open interest halved. Leveraged traders got carried out. Platforms who lent dollars to miners against bitcoin (errbody needs dollars), force sold as the market puked.
Leverage was punished, just like in every other asset class. However on a relative basis, Bitcoin in Q1 still outperformed the S&P 500. Its correlation with SPX reached a local high.
Leverage was extinguished on the downside. The BitMEX XBTUSD swap open interest is rebuilding slowly and, as traders get their sea legs and inflation expectations adjust, the search for inflation hedges will begin in earnest.
This is Act One of a global rebalancing. Every pocket of pricing distortion brought about by leverage will be exploited. Buy the dip at your peril.
Bitcoin will be owned unlevered. Could the price retest $3,000? Absolutely. As the SPX rolls over and tests 2,000 expect all asset classes to puke again. As violent as the Q1 collapse in asset values was, we have almost 100 years of imbalances to unwind the ancien régime. My end of 2020 price target remains $20,000.
Everyone knows the shift is upon us, that is why central bankers and politicians will throw all of their tools at this problem. And I will reiterate, that is inflationary because more fiat money will chase a flat to declining supply of real goods and labour. There are only two things to own during the transition to whatever the new system is, and that is gold and bitcoin.
If you think I’m full of shit, or a stark-raving Cassandra, remember what you believed in pre and post-COVID. Can your mental model revert back to January 2020? I will take my inflation adjusted pocket rockets (gold and bitcoin), and call your Bretton Woods seven two off suit. All in, mother fuckers.
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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