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I target about 2.5% of my portfolio to be crypto. Another 2.5% gold and silver. It's kind of amusing and baffling watching all these people speak with such cer

by vbtemp 5y ago

I target about 2.5% of my portfolio to be crypto. Another 2.5% gold and silver. It's kind of amusing and baffling watching all these people speak with such certainty and conviction. If crypto currencies collapse, meh, oh well. If they spike another order of magnitude, nice, I'll just sell to keep my allocation on target. Like you, it just seems prudent to have limited downside (ie a crypto collapse won't ruin you.. at all) but also having some exposure to big positive swings, and never basing ones hopes and dreams on it. Anyway, here's to enjoying the show. Edit: when you disclose something like this, and people get viciously defensive about it, it usually means you're on course (see comments below).

arcticbull 5y ago
There's an entire universe of things you can invest in. Picking crypto with no real thesis except one day the entire world may be transacting 7tx/sec isn't really a good one. If you allocate 1% to every longshot you will be broke. Should I allocate 1% of my portfolio to Dentacoin in case dentists on the blockchain become the future of dental work? Especially knowing that 80% of all trading volume is against Tether, which is 3% backed by money. 95% of all trading volume in the space is fictitious, according to an ETF that tried to list a few years ago.
- rawtxapp 5y ago
  Once again, lightning network is here and functional with growing adoption (1ml.com) and that's what they are using in El Salvador. LN can achieve almost instant and practically free Bitcoin payments.
  - arcticbull 5y ago
    Do they though? Because that's not really what I'm hearing. Strike is, in the US, a custodial US dollar wallet. You give them dollars and they keep them as dollars. You send them to another person in the US and they just amend their internal ledger. When you try and send them to El Salvador things go pear shaped. They: (1) Buy Bitcoin with those dollars. (2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. (3) To send those Bitcoin between their own two accounts. (4) And then buy Tether with them in El Salvador. You remember, the dollars that are actually 3% dollars. Strike is somehow the absolute worst case for the people of El Salvador. Centralized, permissioned, censorable (it's not available in Hawaii or New York) and backed by Tether. Not a coin that's likely to have the money (USDC) but Tether, who admits they don't. El Salvador by the way, is a dictatorship mandating their citizens use of Bitcoin. Where's the win exactly? [1] https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-passes-its-bitcoin-law-and-its-a-tether-scam/ https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-...
    - easymovet 5y ago
      You don’t have to use Strike, all lighting wallets are interoperable, and no need to exchange to Fiat since Bitcoin is legal tender.
      - arcticbull 5y ago
        Strike is the government sanctioned one, however, so saying options exist is a bit inconsequential. After all people on HN can barely keep abreast of why Tether is bad - I hardly expect the average Salvadoran. A government-endorsed Tether wallet is awful.
    - gruez 5y ago
      >(2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. This is a strange statement to make. It still runs on the same LN network as everyone else, it's just that they won't peer with anyone. I wouldn't exactly call that a "private LN network" in the same way I wouldn't characterize verizon as operating a "private internet" because they don't have an open peering policy. As for the bit about using tether, I wholeheartedly agree that something like USDC would be much more suited. The only explanation I can come up with is that USDC has orders of magnitude less volume than USDT. According to cryptowatch USDT has 24hr volume of 73.3B whereas USDC only has 0.60B.
      - arcticbull 5y ago
        Not sure why trading volume would matter, they can simply be an authorized participant of USDC. They after all are receiving real dollars. [edit] Complete speculation, but if I had to guess, Tether's ability to create ersatz dollars is really important to the Salvadoran scheme. After all El Salvador cannot print currency, because it's a USD economy. I know someone who's got an unlimited wildcat money printer (and the reckless abandon to use it) - his name is Paolo. If I were a criminal mastermind operating in plain sight with about $60B shortfall on my books due to counterfeiting, the best way I could think of to keep myself out of trouble would be to make a poor nation dependent on its continued existence. Literally too big to fail. Again, purely speculative. Remember, frauds have to keep getting bigger out of necessity.
  - ItsMonkk 5y ago
    This is what I am hearing from the Bitcoin crowd 1. Bitcoin mining will eventually halvening away and all security will be funded by transaction fees. 2. Most transactions will move to the Lightning Network and be practically free. As the LN will remove the need to pay fees with it combining so many transactions, the Bitcoin network will thus not be worth mining on, and will thus be able to be easily attacked. As the security of the network is diminished, it will quickly become worthless. I don't see how this works long-term.
    - rawtxapp 5y ago
      There will always be demand for on-chain transactions (for very large transfers, cold storage movements, batch opening/closing lightning channels, etc). The 1MB limit makes it highly likely that there will always be a backlog of transactions even post reward world.
      - ItsMonkk 5y ago
        Understood. So even with the Lightning Network Bitcoin will not be able to keep up with the transactions and transacting in it will be extraordinarily expensive. Currently block fees are 5% of the block reward. In 2024 when the next halvening occurs, either Bitcoin needs to double in price by then or the block fee will have to make up 45% of the gap, which is an increase in almost 10x, from $4.5/transaction to $40. If it fails to do this miners on the margin will stop mining and the security of the network will diminish.
- vbtemp 5y ago
  Anyway, as I was saying, it's amusing and baffling observing how people react with such passion and certainty.
  - arcticbull 5y ago
    Which of those facts would you like a citation for?
    - vbtemp 5y ago
      You have an axe to grind, friend, and using hyperbole and warped quotations of what I said to take it out on someone whose net worth consists of 99%+ non-bitcoin, and 98% not crypto currency overall, is the wrong target. By all means, continue grinding your axe if you really got to get it out, it's all very baffling and amusing.
      - arcticbull 5y ago
        I've no axe to grind with you or anyone else. I disagree with your bolstering the thesis that you should invest 1% or more of your portfolio in any given long-shot simply because you won't go broke if it went down. That's bad investment advice. Longshots aren't bad, but they should be backed by thesis. Certainly when there's evidence of rampant market manipulation in your target asset class. That there's plenty of evidence for. Primarily however, I'm responding to your counter that it's surprising people react with certainty. I'm saying I have evidence to back the claims I make. That's where my certainty comes from. I was offering citations.
        lowkey 5y ago
        Instead of arguing that it makes sense to invest 1% in every investment, what if the argument is that it makes sense to invest 1% in every investment that has outperformed every other investment class over the past 12 years of its existence? Historic performance isn’t the only indicator to consider but it is notable. Given that you have been wrong about it’s performance so consistently would you consider checking your assumptions?
- easymovet 5y ago
  Did you even read article or just here to troll? All of your points (except for 1 about investing in everything, which is covered in the article) are FUD that have been debunked or addressed for years. Are you even in the software space, the whole point of software is to replace the limits physical world and now its possible with money, get excited!
- dcolkitt 5y ago
  It may be possible that Tether is a house of cards, it may not. But my question is, if you’re so sure, why aren’t you actively shorting Tether? It only costs a few percent a year, and you’ll net 97% when it eventually collapses to the 3% assets that you posit.

by vbtemp 5y ago

arcticbull 5y ago

There's an entire universe of things you can invest in. Picking crypto with no real thesis except one day the entire world may be transacting 7tx/sec isn't really a good one. If you allocate 1% to every longshot you will be broke. Should I allocate 1% of my portfolio to Dentacoin in case dentists on the blockchain become the future of dental work? Especially knowing that 80% of all trading volume is against Tether, which is 3% backed by money. 95% of all trading volume in the space is fictitious, according to an ETF that tried to list a few years ago.

rawtxapp 5y ago
Once again, lightning network is here and functional with growing adoption (1ml.com) and that's what they are using in El Salvador. LN can achieve almost instant and practically free Bitcoin payments.
- arcticbull 5y ago
  Do they though? Because that's not really what I'm hearing. Strike is, in the US, a custodial US dollar wallet. You give them dollars and they keep them as dollars. You send them to another person in the US and they just amend their internal ledger. When you try and send them to El Salvador things go pear shaped. They: (1) Buy Bitcoin with those dollars. (2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. (3) To send those Bitcoin between their own two accounts. (4) And then buy Tether with them in El Salvador. You remember, the dollars that are actually 3% dollars. Strike is somehow the absolute worst case for the people of El Salvador. Centralized, permissioned, censorable (it's not available in Hawaii or New York) and backed by Tether. Not a coin that's likely to have the money (USDC) but Tether, who admits they don't. El Salvador by the way, is a dictatorship mandating their citizens use of Bitcoin. Where's the win exactly? [1] https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-passes-its-bitcoin-law-and-its-a-tether-scam/ https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-...
  - easymovet 5y ago
    You don’t have to use Strike, all lighting wallets are interoperable, and no need to exchange to Fiat since Bitcoin is legal tender.
    - arcticbull 5y ago
      Strike is the government sanctioned one, however, so saying options exist is a bit inconsequential. After all people on HN can barely keep abreast of why Tether is bad - I hardly expect the average Salvadoran. A government-endorsed Tether wallet is awful.
  - gruez 5y ago
    >(2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. This is a strange statement to make. It still runs on the same LN network as everyone else, it's just that they won't peer with anyone. I wouldn't exactly call that a "private LN network" in the same way I wouldn't characterize verizon as operating a "private internet" because they don't have an open peering policy. As for the bit about using tether, I wholeheartedly agree that something like USDC would be much more suited. The only explanation I can come up with is that USDC has orders of magnitude less volume than USDT. According to cryptowatch USDT has 24hr volume of 73.3B whereas USDC only has 0.60B.
    - arcticbull 5y ago
      Not sure why trading volume would matter, they can simply be an authorized participant of USDC. They after all are receiving real dollars. [edit] Complete speculation, but if I had to guess, Tether's ability to create ersatz dollars is really important to the Salvadoran scheme. After all El Salvador cannot print currency, because it's a USD economy. I know someone who's got an unlimited wildcat money printer (and the reckless abandon to use it) - his name is Paolo. If I were a criminal mastermind operating in plain sight with about $60B shortfall on my books due to counterfeiting, the best way I could think of to keep myself out of trouble would be to make a poor nation dependent on its continued existence. Literally too big to fail. Again, purely speculative. Remember, frauds have to keep getting bigger out of necessity.
- ItsMonkk 5y ago
  This is what I am hearing from the Bitcoin crowd 1. Bitcoin mining will eventually halvening away and all security will be funded by transaction fees. 2. Most transactions will move to the Lightning Network and be practically free. As the LN will remove the need to pay fees with it combining so many transactions, the Bitcoin network will thus not be worth mining on, and will thus be able to be easily attacked. As the security of the network is diminished, it will quickly become worthless. I don't see how this works long-term.
  - rawtxapp 5y ago
    There will always be demand for on-chain transactions (for very large transfers, cold storage movements, batch opening/closing lightning channels, etc). The 1MB limit makes it highly likely that there will always be a backlog of transactions even post reward world.
    - ItsMonkk 5y ago
      Understood. So even with the Lightning Network Bitcoin will not be able to keep up with the transactions and transacting in it will be extraordinarily expensive. Currently block fees are 5% of the block reward. In 2024 when the next halvening occurs, either Bitcoin needs to double in price by then or the block fee will have to make up 45% of the gap, which is an increase in almost 10x, from $4.5/transaction to $40. If it fails to do this miners on the margin will stop mining and the security of the network will diminish.
vbtemp 5y ago
Anyway, as I was saying, it's amusing and baffling observing how people react with such passion and certainty.
- arcticbull 5y ago
  Which of those facts would you like a citation for?
  - vbtemp 5y ago
    You have an axe to grind, friend, and using hyperbole and warped quotations of what I said to take it out on someone whose net worth consists of 99%+ non-bitcoin, and 98% not crypto currency overall, is the wrong target. By all means, continue grinding your axe if you really got to get it out, it's all very baffling and amusing.
    - arcticbull 5y ago
      I've no axe to grind with you or anyone else. I disagree with your bolstering the thesis that you should invest 1% or more of your portfolio in any given long-shot simply because you won't go broke if it went down. That's bad investment advice. Longshots aren't bad, but they should be backed by thesis. Certainly when there's evidence of rampant market manipulation in your target asset class. That there's plenty of evidence for. Primarily however, I'm responding to your counter that it's surprising people react with certainty. I'm saying I have evidence to back the claims I make. That's where my certainty comes from. I was offering citations.
      - lowkey 5y ago
        Instead of arguing that it makes sense to invest 1% in every investment, what if the argument is that it makes sense to invest 1% in every investment that has outperformed every other investment class over the past 12 years of its existence? Historic performance isn’t the only indicator to consider but it is notable. Given that you have been wrong about it’s performance so consistently would you consider checking your assumptions?
easymovet 5y ago
Did you even read article or just here to troll? All of your points (except for 1 about investing in everything, which is covered in the article) are FUD that have been debunked or addressed for years. Are you even in the software space, the whole point of software is to replace the limits physical world and now its possible with money, get excited!
dcolkitt 5y ago
It may be possible that Tether is a house of cards, it may not. But my question is, if you’re so sure, why aren’t you actively shorting Tether? It only costs a few percent a year, and you’ll net 97% when it eventually collapses to the 3% assets that you posit.