Anyone Into Crypto?

[Bazza06]

@bazza - some well articulated arguments here. To my mind, I try to treat it like digital gold....but us oldies have great difficulty in understanding the general concepts around it....but I do understand it from the scarcity perspective, the halving, the stock to flow models etc etc; the deFi perspective; I don't really "get" the NFT's mind you, or rather the value attributed to them..

I just can't deal with it's volatility and that's why I've been in and out a few times not having lost anything but nothing life changing either- give me a classic Porsche anyday (Is a classic Porsche a store of value??)

In some ways, crypto is no different to any currency - it's all backed by confidence...if the confidence goes, the value goes...and the powers that be will certainly try and derail crypto by whatever means

I also worry about EFT's that are now cropping up and the leverage on crypto - it makes it all the more "unpure" if that makes sense and open to manipulation

I certainly wouldn't trust britcoin, or whatever crypto any central bank decides to issue...

I'm with you on NFT's, I'm struggling to get my head around the huge cost of some cartoon image.
However, I read briefly that the music industry are exploring NFT's as a means to prevent unauthorized copying of artists material.

The SEC have so far only permitted a futures Bitcoin ETF, but this does not require the actual purchase of Bitcoin.
If a Bitcoin ETF is approved in the future, funds will have to purchase actual Bitcoin to hold.

Regarding your classic Porsche example, if it's rare then it certainly is a store of value (and great enjoyment)

[Deleted User 4325]

Give me a classic Porsche any day of the week!!

[GTB]

Give me a classic Porsche any day of the week!!

By the time some of us receive delivery of our Gen 3 GTS they will already be a "Classic" given some of the suggested wait times....................

GTB

[Miopyk]

Bazza, I really wasn't having a pop at you but to date no one I've asked has been able to answer the questions I asked you.

In short my view is that Crypto currencies could be considered an everlasting Ponzi scheme. My simplified reasoning is this:

1. I put a pound Stirling into a Crypto currency and I get 1 Crypto coin back. So £1 = CR1
2. Someone somewhere declares the value of my CR1 has increased to £1 = CR2. I tell 10 of my friends and family about my success and they all buy CR1 for £2
3. Someone somewhere declares the value of CR has decreased to £1 = CR1.50.
4. Someone somewhere takes a profit of CR.50 x 10 = £5.00
5. 10 friends and family keep quiet because its a long term investment and things will improve.
6. Someone somewhere declares the value of CR is now £1 = CR2.50. 10 friends and family tell 10 friends and family how well they are doing and they all invest £1
7. I've done very well and decide to withdraw my original investment while keeping my CR1.5 invested and singing the praises of CR which encourages another 100 people to invest £1.
8. Someone somewhere declares the value of CR has dropped to £1 = CR2
9. Someone somewhere takes a big profit
10. Repeat steps 1-9

In short a Ponzi scheme, unless someone somewhere can tell me why it isn't

[neilj007]

If you replaced your crypto coin with a gold sovereign...would the process be any different?

[Neil1911]

It's the embodiment of capitalism and maybe a perfect market. 1 unit is only worth what somebody else will pay for it. You can only buy one if another party is willing to sell one, miner or "investor". I only see a couple of reasons to own them, avoidance of scrutiny (crime), a punt on profit or a belief in the great conspiracy against freedom of the individual (but Crypto could be part of it )

Give me tulips or the LSE any day!

Neil1911 ACIB

[pmg]

If you replaced your crypto coin with a gold sovereign...would the process be any different?

Yes because the gold sovereign's value is underpinned by its meltdown value in gold

[Bazza06]

Depends who you ask. At $1T, it's the same value as silver. Total value of gold is $11T - who determines that? Global debt is $226T
If you felt inflation was running out of control, would you buy gold? If you felt that GB£ was losing value, what would you move your money into? Crypto is just another option

I read the other day, and I can't quite remember the exact wording, but take the example of the tulip mania....prices collapsed, but we still have tulips. So, is bitcoin worth $60k of $6 or $600k?

I think, like many things, the value is what someone is willing to pay for it.

[martinto8]

Whether you want to put money towards crypto is the same decision as asking yourself would you put money into that company asset.

Most retail investors (if you can even call them that) don’t know what they are buying into and subsequently lose their money. I’ve seen many buy high (the hype) and sell low when it drops because of fear, uncertainty and doubt

But it is fair to say Crypto market is definitely a minefield for losing money especially with pump and dumps and rug pulls (Cryptoeats being the last memorable one)

[martinto8]

Can someone explain how a crypto currency is able to generate a profit? What exactly is it invested in, how does it increase in value, who exactly controls them and how do hold them to account when things go wrong? I think I know the answers but would be interested to see if anyone else can tell me something I don't know.

Very simply, just like buying shares, if the value of the share/crypto increases from the price you bought at, you will see a gain in your original investment.
Equally, if the price goes down, your original investment decreases.

Profit or losses are only realized when you sell.

You buy crypto through an exchange, similar to how you would buy a share through a broker.
The most common exchange is Coinbase which is a public listed company.
Their platform is easy to use, but their fees are amongst the highest.

It's a good starting point, though.

I use Binance, but you can no longer deposit funds from most UK banks. There are ways around it, but it's not for the beginner (neither is it illegal!).

Coinbase has its own insurance in the event something goes wrong. However, I am not au fait with the extent of this. I would imagine it is protection in the event they are hacked.
Similar to if a bank experienced similar and your funds were affected.

However, as with your bank details, passwords etc. you are responsible for keeping these secure.

In terms of controls, this depends on how and where you store the crypto you buy.
Some people keep it on the exchange, which is convenient to access but less secure if the exchange was hacked.
Others use "cold storage" in the form of a secure device such as Ledger (www.ledger.com). They transfer their crypto from the exchange to the Ledger device and keep it in a secure location of their choice.

These devices have a passphrase comprising a number of words that enable you to access your crypto should you lose or damage it.
However, anyone obtaining access to the passphrase can also gain access, hence the importance of keeping it secure.

YouTube is a hive of information for understanding crypto but beware of the many "influencers" promoting the next 10X, 50X, 100X wonder coin.
Just like the many forums of individuals promoting a small cap company that's going to be the next Apple, Amazon etc. they also exist in crypto.

The best channel for informative, balanced and educated content is the Coin Bureau (https://www.youtube.com/c/CoinBureau/videos)
His introductions as to how he is not a financial advisor have become legendary.

No one should invest in crypto without understanding the risks and volatility.

Everything you've said makes sense but you've not really answered my questions, how does a crypto make a profit? What does it do to generate value? If I buy stocks or shares I'm betting on the ability of the company I've invested in making a profit by conducting its business. Can you explain what a crypto does to do the same?

This is a good read to your question: https://www.investopedia.com/tech/what- ... 1-bitcoin/