Bitcoin/Cryptocurrencies – Digital Gold or Tulip Bulb?


(Alok Bhola) #23

JPMorgan’s Dimon says bitcoin ‘is a fraud’ and will blow up

Speaking at a bank investor conference in New York, Dimon said, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.”

Dimon said that if any JPMorgan traders were trading the crypto-currency, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

“It is worse than tulips bulbs,” Dimon said, referring to a famous market bubble from the 1600s.

Dimon predicted big losses for bitcoin buyers. “Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up.” he said.

“Honestly, I am just shocked that anyone can’t see it for what it is.”


(Alok Bhola) #24

The Bitcoin: Asset, Currency, Commodity Or Collectible?

Price vs Value:

Not everything can be valued, but almost everything can be priced.

Cash generating assets can be both valued and priced, commodities can be priced much more easily than valued, and currencies and collectibles can only be priced.

Investing vs Trading:

To invest in something, you need to assess its value, compare to the price, and then act on that comparison, buying if the price is less than value and selling if it is greater.

Trading is a much simpler exercise, where you price something, make a judgment on whether that price will go up or down in the next time period and then make a pricing bet. While you can be successful at either, the skill sets and tool kits that you use are different for investing and trading, and what makes for a good investor is different from the ingredients needed for good trading.

Most Delusional Player: A trader who thinks he is trading based on value.

What is Bitcoin?

Bitcoin is not an asset, since it does not generate cash flows. It is not a commodity, because it is not raw material that can be used in the production of something useful. The choice then becomes whether it is a currency or a collectible, with its supporters tilting towards the former and its detractors the latter.

You cannot value Bitcoin, you can only price it. You don’t invest in Bitcoin, you trade it.


(Alok Bhola) #25

RBI doesn’t have information on illegal trading, dealing in virtual currencies, reveals RTI reply

While maintaining that it has not issued any licence or authorisation to any company to trade in virtual currencies like Bitcoin, the RBI has no information about entities dealing in illegal trading, investing and exchange of virtual currencies.

RBI said, “As such, any user, holder, investor or trader dealing with virtual currencies will be doing so at their own risk”.

Earlier in February, the central bank had issued an advisory warning people about not dealing in virtual currencies.


(SkyWalker) #26

In a price versus value debate, what we know is a price of bitcoin. How do we value it, that is a question?


(Sachin) #27

New York University professor of corporate finance and valuation Aswath Damodaran: “bitcoin is not an asset, but a currency, and as such, you cannot value it or invest in it. You can only price it and trade it.”


(Vasu) #28

Bitcoin is a store of value and it is competing with Gold against Fiat money . As long as govts across world continue to print meaningless money and manipulate their currencies , Bitcoin will shoot up. In the past Gold used to take that place ,however Gold cannot be easily exchanged and stored(carrying costs) which is mitigated by Bitcoin. However Bitcoin is yet to be evolved and it will truly reach its value when the network congestion issue gets resolved


(Alok Bhola) #29

Bitcoin dips a toe into the mainstream

The status of bitcoin as a legitimate financial asset may be rising even faster than its price.

On Tuesday, the CME Group announced that it plans to list bitcoin futures contracts by the end of the year.

Bitcoin exchanges have been plagued by hacks. CME’s bitcoin contract will trade and settle, somewhat ironically, in dollars. The virtue of that is traders can bet on the price of bitcoin without the fear of the bitcoins in their accounts being hacked.

If bullish bitcoin investors flood into the CME’s new contracts and push their price up, that could further inflate the value of actual bitcoins. Derivatives have been known to add air to bubbles.


(SkyWalker) #30

(SkyWalker) #31

It looks like, governments, if they can’t regulate it, they will ban it.

What people in China, Vietnam are supposed to do with their bitcoins, if respective governments start tracking trades and punish traders?

It looks very risky to trade in crypto currencies at this stage. Biggest worry is, what happens, when something goes wrong? With traditional currencies, we can rely on governments, what to do if something goes wrong with Cryoto Currencies?


(Alok Bhola) #32

Mining One Bitcoin Now Uses as Much Energy as Your House in a Week

Bitcoin’s incredible price run to break over $7,000 this year has sent its overall electricity consumption soaring, as people worldwide bring more energy-hungry computers online to mine the digital currency.

It would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to “mine” more Bitcoins. That’s about as much as Nigeria, a country of 186 million people, uses in a year.


(Alok Bhola) #33

This is how you can protect your cryptocurrencies from hackers

Coinbase, one of the largest cryptocurrency exchanges, added about 1.9 million new users in the last two months. In the same period, Blockchain.com, the leading digital wallet to store cryptocurrencies, saw its users grow just slightly less than that.

Many are newcomers, unaware of the risks and security holes in the complicated yet lucrative world of cryptocurrency, making them easy prey for hackers and cyberthiefs.

One common crime that’s carried out on cryptocurrency investors is the phone-porting attack. Hackers snoop around social media, looking for cryptocurrency conversations in which investors post their phone and email for easy contact. Then, posing as the victim, they call up the phone provider in an attempt to fool the customer service representative into transferring the phone number to a device they control.

Once the hackers take over the phone number, they can go into the victim’s cryptocurrency exchange account by resetting the password, ultimately stealing cryptocurrencies from the account. Cody Brown, a virtual reality developer, blogged about how he lost around $8,000 worth of cryptocurrencies on Coinbase in 15 minutes, triggered by a phone porting attack on his phone account.

A few suggestions to minimize loss from hacking:

Don’t keep all your cryptocurrency investments in one place. Diversify among exchanges.

Keep your cryptocurrency off the internet, in a “cold wallet.” “Cold wallet” is a concept of storing bitcoins offline (not connected to internet) so that it reduces the opportunities for hackers to steal via online techniques.

Store your tokens on a hardware wallet, which is a hardware device.


(Vivek) #34

Offline wallet’s are now available in amazon india too and easier than before to buy.ledger nano s. Is one such wallet
Its costlier than buying from outside India by 1500-2000rs but you will get the wallet easier from Amazon


(Alok Bhola) #35

It’s better to buy Ledger Nano S from their authorized reseller in India such as Ninjadodo.

Current price at ninjadodo.com is Rs 8500 vs Rs 9800 at amazon.in.


(Alok Bhola) #36

$300m Ether accidentally lost forever due to bug

The lost money was kept in digital multi-signature wallets built by a developer called Parity.

On Tuesday Parity revealed that, while fixing a bug that let hackers steal $32m out of few multi-signature wallets, it had inadvertently left a second flaw in its systems that allowed one user to become the sole owner of every single multi-signature wallet.

The user, “devops199”, triggered the flaw apparently by accident. When they realised what they had done, they attempted to undo the damage by deleting the code which had transferred ownership of the funds. Rather than returning the money, however, that simply locked all the funds in those multisignature wallets permanently, with no way to access them.

Effectively, a user accidentally stole hundreds of wallets simultaneously, and then set them on fire in a panic while trying to give them back.


(Alok Bhola) #37

What is forking and how does it impact cryptocurrencies such as bitcoin

So far in bitcoin, two major forks have taken place, which have led to the birth of two cryptocurrencies—bitcoin cash and bitcoin gold.

Forking happens because a set of miners, who create bitcoin, believe that there are more efficient options than the existing bitcoin. Forking implies a splitting of the chain on which bitcoin runs; making it go in a different direction—with different rules than the existing blockchain as the two would now have different visions of bitcoin. “For example, bitcoin cash changed the block size, which means that blocks can be greater than 8 MB while bitcoin continues with 1 MB blocks. When the miners disagree with the existing rules of bitcoin, the blockchain forks or splits into two different blockchains which have different rules,”


(SkyWalker) #38

https://m.economictimes.com/markets/stocks/news/bitcoin-slides-by-over-1000-in-less-than-48-hours/articleshow/61596454.cms

Few people can manipulate price of bitcoin and others have no control over it, that’s a big risk. You can’t vote them out. In case two or more groups differ in opinion, they will fork the chain, now that’s very unpredictable.


(Alok Bhola) #39

100 cryptocurrencies described in four words or less

Name Sym. Description
Bitcoin BTC Digital gold
Ethereum ETH Programmable contracts and money
Bitcoin Cash BCH Bitcoin clone
Ripple XRP Enterprise payment settlement network
Litecoin LTC Faster Bitcoin
Dash DASH Privacy-focused Bitcoin clone
NEO NEO Chinese-market Ethereum
NEM XEM Batteries-included digital assets
Monero XMR Private digital cash
Ethereum Classic ETC Ethereum clone
IOTA MIOTA Internet-of-things payments

(timedimpulse) #40

That’s an interesting description and quite accurate.

Bitcoin is Gold as a store of value
Litecoin is Silver (faster for now due to segwit but BTC will catch up)
Ethereum is Oil for the global computer
Monero is what Bitcoin used to be - same use cases in the deep web - only more solid encryption


(Alok Bhola) #41

Cryptocurrencies: blockchain of fools

One of the few men to get out in time before the Wall Street crash of 1929 did so – legend has it – because he was offered a stock tip by the boy who shined his shoes.

The corresponding moment for the cryptocurrency bubble will only be discernible in retrospect, but we have some pretty strong candidates already. The endorsement of one project by the reality TV star Paris Hilton has already happened. Posters have appeared on the London underground urging people to gamble in bitcoin futures on the margin. The production – or “mining” – of bitcoins now uses more electricity than Ireland or Nigeria.

The blockchain technology underlying the various cryptocurrencies is meant to make human decisions redundant and to replace faith in governments with indisputable rationality. The delusion that this might be possible has produced one of the most astonishing outbursts of irrational exuberance in financial history.


(Alok Bhola) #42

Which cartoon characters are the major cryptocurrencies?

Ethereum and bitcoin are Tom and Jerry. Tom is always chasing after Jerry, sometimes getting very close, but never actually catching him. This has been the trend between these two cryptocurrencies, where Ethereum has been chasing bitcoin but it has never caught up.

Litecoin as Johnny Bravo. The cartoon character was always full of confidence as he approached girls, but his overconfidence became his downfall. I can’t recall any event he actually got a girl.

Bitcoin cash as Scooby Doo. Scooby Doo was the adorable yet always scared sidekick to a team of crime solvers. Nevertheless, just as Scooby Doo somehow manages to survive and thrive, bitcoin cash has done so too.

Dash as SpongeBob. It’s perhaps the most successful cryptocurrency to date given it’s just been in existence for 3 years. The SpongeBob SquarePants cartoon character is also new, but it is already beating most of the other characters in viewership.

Ripple as Dexter. Dexter was always down in his laboratory cooking up schemes and inventing stuff. The character feels a lot like Ripple, which is very successful but does not receive as much attention as Ethereum and bitcoin.