Crypto trading

[Roober]

If you took out a mortgage in BTC about 2 years ago for £200,000 you’d now owe about £2M.

One quick check of Defi (admittedly I haven’t researched it fully) says that it’s a P2P lending network . Not backed by collateral.

would you pay someone 10% to lend them your own money?

the converse of this must be true. If borrowers are paid 10% on their liabilities, then savers are paying 10% in negative interest.

The concept of negative interest rates aren’t sustainable without inflation. It’s a law of nature.

The entire system of asset pricing collapses with a negative risk free rate. CAPM doesn’t work, the bond market collapses. Equity markets don’t exist because the magic crypto tree can provide returns in excess of dividend streams.

what you’ve suggested doesn’t make sense. The money has to come from somewhere. If it comes from savers then surely nobody is incentivised to save at negative rates. If it’s coming from a third party or “magic money tree” if you will, that’s only possible through a central agency selling £10 notes for £9.

Me thinks a lot of this is the blind leading the blind.

You're completely misunderstanding lending.

Buy 500k in bitcoin

Borrow 200k to buy a house, loan or outright

Borrowing bitcoin will cost you about 0.3% currently (https://app.aave.com/markets)

Lending on a house is about 3%

Bitcoin grows 2x a year at minimum, let's go with a very modest 10% growth...

After 1 year, you have

550k in bitcoin
200k on real estate + asset gains

You've paid about 1k in interest on your bitcoin loan

Net = 49k

Most billionaires do this crazy stuff all the time. And it's primarily why they dont give a crap about raising taxes. They take loans out on their stocks, which does not qualify as taxable income. Their collateral appreciates faster than their loan rate.

Defi allows everyone to do it.

Crypto allows anyone to be wealthy, our current financial system makes it much more difficult.


Here's another example...

I have 25k on polygon in stablecoins which are pegged to the USD. I am currently getting about 50% APY.

 

[jaygreenb]

That’s leveraging. Nothing new, indeed.

This isn’t getting paid to have a mortgage. It’a gearing your portfolio and using crypto assets to provide growth to offset interest.

Several issues here:

- There’s an assumption that Bitcoin/crypto assets will continue to rise at an astonishing rate.

- Theres an assumption that the lending rate of Bitcoin will remain low and stable.

- I assume you’re borrowing your 500k in Bitcoin. Who is assessing your creditworthiness and how is this debt secured? What happens if you default?
What happens if Bitcoin falls in value and you make a loss?

A lot of this seems to rest on Bitcoin being a risk free perpetual growth machine.

Edit: I’ve had a little think about the realities of digital currencies appreciating ad infitium.

- A closed end asset which can’t be inflated has advantages. However, this absolutely does not mean they can’t lose some or all of their value. What drives the value is partly supply but it’s also demand. It’s dependent on adoption, not supply. It’s mostly being driven by speculation currently, and that draws in more and more speculators - asset bubble.

- Adoption brings its own problems. Let’s say it is rapidly adopted. If the asset is increasing at say, 10% a year due to demand outstripping supply, the cost of goods and services in Bitcoin terms are also increasing, which to all intents and purposes is inflation. This was one of the problems it was supposed to solve.

- Adoption is dependent on governments allowing it which I think is unlikely.

- If it isn’t adopted as a payment system it can still be a digital store of value and will become a risk off asset like gold or the yen, or dollar.

If you could explain the mechanism by which your stablecoins produce 50% a year that would be interesting.

I’m genuinely here for the exchange of ideas on this, and wiling to have any of the above challenged.

Most discussions of crypto I have had with people I know in real life tend to be people who’ve made a ton but are quite obnoxious about it when you try to discuss the mechanics of it and see it as some kind of Robin Hood thing, but I’m just genuinely sceptical of any asset which proclaims enormous returns whilst proclaiming no or limited risk. That is something I know from long experience doesn’t exist and lends me to believe it’s a speculator bubble.

thanks

I think you need to separate Bitcoin from the rest of crypto. They are completely different animals. Bitcoin is decentralized monetary energy, it's simplicity is a feature not a bug. The inability to change the rules or a single group having large influence makes it the best candidate to be a global currency of the internet. There is no central point of failure or choke points for governments to have meaningful control over it. You can't really put it in the same box as a Ethereum, ripple or other crypto. Some of those will be great too, just vastly different roles. The difference between btc and a central bank currency is the inability for a govts to erode its value or seize it. For example, if you wanted to leave your country with your wealth they can freeze a bank account, they wouldn't be able to do that with Bitcoin in self custody. If you have specific concerns, list them out and i'll address each one to the best of my abilities.

 

[Roober]

That’s leveraging. Nothing new, indeed.

This isn’t getting paid to have a mortgage. It’a gearing your portfolio and using crypto assets to provide growth to offset interest.

Several issues here:

- There’s an assumption that Bitcoin/crypto assets will continue to rise at an astonishing rate.

This is why I used a very very modest 10%. Bitcoin has been averaging (100%) 2x since 2009.

- Theres an assumption that the lending rate of Bitcoin will remain low and stable.

This is correct. However, one year of gains greater than the interest, and you can just pay it off. Defi rates are setup based on market size vs. amount borrowed. People don't generally borrow bitcoin. What you do here is deposit bitcoin, and borrow a stable coin. You're collateral will fluctuate, but your borrow amount remains the same. As long as you're not borrowing 80% of your collateral, you're in good shape.

- I assume you’re borrowing your 500k in Bitcoin. Who is assessing your creditworthiness and how is this debt secured? What happens if you default?
What happens if Bitcoin falls in value and you make a loss?

I am assuming 500k assets in this case. You could do the same for any amount. 500k portfolio in crypto is easily attainable with 1 solid year of crypto investment with an intial investment of 10k. Anyone who is not stupid rich after being in crypto for years is a moron or a degenerate gambler.... no other way around it.

A lot of this seems to rest on Bitcoin being a risk free perpetual growth machine.

Edit: I’ve had a little think about the realities of digital currencies appreciating ad infitium.

21,000,000 bitcoin is the cap. You are correct though. If everyone decides bitcoin is worth nothing, it goes to zero. Same as gold. Same as the US Petro Dollar.

- A closed end asset which can’t be inflated has advantages. However, this absolutely does not mean they can’t lose some or all of their value. What drives the value is partly supply but it’s also demand. It’s dependent on adoption, not supply. It’s mostly being driven by speculation currently, and that draws in more and more speculators - asset bubble.

Correct. That's where the speculative aspect of bitcoin comes in. If you're paying attention, adoption is growing, not shrinking. El Salvador and Brazil being the most recent examples. The US ETF looks like it will get approved on Oct. 19 of this month as well.

"What about China?" They ban bitcoin once or twice every year. . It's a running joke in crypto.

- Adoption brings its own problems. Let’s say it is rapidly adopted. If the asset is increasing at say, 10% a year due to demand outstripping supply, the cost of goods and services in Bitcoin terms are also increasing, which to all intents and purposes is inflation. This was one of the problems it was supposed to solve.

You are incorrect here. Do some real research on cryptocurrency and blockchain. Costs do not increase. There are many people in defi working on this. For example, the Solana blockchain with a locked value of... 45 billion has much lower fees than bitcoin and ethereum. Additionally, they can process 400,000 transactions per second. For reference, Visa maxes out at 1,700 transactions per second.

Bitcoin transactions are fairly reasonable, but Solana is stupid low. You can send 10 million to someone anywhere in the world for about $0.01.

- Adoption is dependent on governments allowing it which I think is unlikely.

Correct. This is the one variable that still is hanging out there. I look at the landscape though. Who outside the US wants the US to remain as the world reserve currency? Also, that doesn't mean you can't make a $hitload of money in the meantime, am I right?

- If it isn’t adopted as a payment system it can still be a digital store of value and will become a risk off asset like gold or the yen, or dollar.

This is where defi comes in. There are countless cryptocurrencies and blockchains, some scams like DOGE and ADA, while many other legitimate projects like Ethereum, Polygon, and on and on...

You're also thinking very small. Crypto can be use for EVERYTHING. NFT is beginning of authentic art and tracking. Contracts, Real estate transactions, or any other P2P transaction can be stored on the blockchain and validated wordwide.

Watch some videos on smart contracts and blockchain.

If you could explain the mechanism by which your stablecoins produce 50% a year that would be interesting.

Moved money into a Cefi (crypto.com), purchased DAI stablecoin, transferred to Defi platform, bridged to polygon network, store in yield farms on various platforms. When APY drops, I will move to another farm. 50% is low, but also low risk. Several medium risk options which can get 100% or more. Many degen options that get you 2-3% per day. Just depends on your risk tolerance.

I’m genuinely here for the exchange of ideas on this, and wiling to have any of the above challenged.

Me as well, and we have both been around SS for a while. I am always learning. I have only been in crypto since March 2021, so I have been through the last part of the boom in April, and the massive crash in May. Rookie lessons, but I am positioned to have an incredible year (e.g. I plan to quit my job and focus on building businesses with crypto earnings).

Most discussions of crypto I have had with people I know in real life tend to be people who’ve made a ton but are quite obnoxious about it when you try to discuss the mechanics of it and see it as some kind of Robin Hood thing, but I’m just genuinely sceptical of any asset which proclaims enormous returns whilst proclaiming no or limited risk. That is something I know from long experience doesn’t exist and lends me to believe it’s a speculator bubble.

Most (if not all) people know $hit about crypto. If they bring up SHIB, DOGE, ADA, or some other pile of garbage, I know they know exactly ZERO about defi, crypto, block chain or otherwise. There's two major camps in the "rich off crypto" category, people that are stupid rich because they got in early and stuck through the ride, and those who bought something like DOGE and got lucky. The second group will likely be poor again at some point.

thanks

See replies above

Do some research on youtube on smart contracts, block chain, various blockchain networks (avalanche, polygon, fantom opera, etherium, etc.), etc. There is money to be made, regardless of your entry... Just don't go full degen, and don't use leverage.

Let's also not forget that it's permissionless

And the government cannot take it away. Memorize your seed phrase and you can access your crypto anywhere you can get on the internet.

 

[bcude]

- There’s an assumption that Bitcoin/crypto assets will continue to rise at an astonishing rate.

Ding ding ding!

Most of the people in crypto haven't even experienced one real bear cycle yet and still they believe it's just going to go up forever which make them sound like single mom's promoting ponzi schemes, LOL.
The lack of correction and persistent nature of this bull market is setting up an entire generation for huge losses and cryptos are no exception.
You're welcome to quote me on that. Proceed with caution.

 

[BackInTheGame78]

That’s leveraging. Nothing new, indeed.

This isn’t getting paid to have a mortgage. It’a gearing your portfolio and using crypto assets to provide growth to offset interest.

Several issues here:

- There’s an assumption that Bitcoin/crypto assets will continue to rise at an astonishing rate.

- Theres an assumption that the lending rate of Bitcoin will remain low and stable.

- I assume you’re borrowing your 500k in Bitcoin. Who is assessing your creditworthiness and how is this debt secured? What happens if you default?
What happens if Bitcoin falls in value and you make a loss?

A lot of this seems to rest on Bitcoin being a risk free perpetual growth machine.

Edit: I’ve had a little think about the realities of digital currencies appreciating ad infitium.

- A closed end asset which can’t be inflated has advantages. However, this absolutely does not mean they can’t lose some or all of their value. What drives the value is partly supply but it’s also demand. It’s dependent on adoption, not supply. It’s mostly being driven by speculation currently, and that draws in more and more speculators - asset bubble.

- Adoption brings its own problems. Let’s say it is rapidly adopted. If the asset is increasing at say, 10% a year due to demand outstripping supply, the cost of goods and services in Bitcoin terms are also increasing, which to all intents and purposes is inflation. This was one of the problems it was supposed to solve.

- Adoption is dependent on governments allowing it which I think is unlikely.

- If it isn’t adopted as a payment system it can still be a digital store of value and will become a risk off asset like gold or the yen, or dollar.

If you could explain the mechanism by which your stablecoins produce 50% a year that would be interesting.

I’m genuinely here for the exchange of ideas on this, and wiling to have any of the above challenged.

Most discussions of crypto I have had with people I know in real life tend to be people who’ve made a ton but are quite obnoxious about it when you try to discuss the mechanics of it and see it as some kind of Robin Hood thing, but I’m just genuinely sceptical of any asset which proclaims enormous returns whilst proclaiming no or limited risk. That is something I know from long experience doesn’t exist and lends me to believe it’s a speculator bubble.

thanks

You are confusing crypto with stablecoins. The entire point of a stablecoin is that it's value remains stable.

 

[BackInTheGame78]

This is where I’m going to sound arrogant or condescending but I’ve been 20 years making money and gaining quals in investment and this really does seem to be the stand out issue. However, markets can remain irrational for incredibly long periods of time and being a person who looks at fundamentals I am always amazed at how strong sentiment is.

markets in the short term are a voting machine. In the long term they are a weighing machine. Crypto is still a voting machine

The problem is you are arguing about things you are clueless about, not making much sense then trying to turn around and say you know all this stuff.

You don't. That's the problem. This is the problem with the politicians as well..their arrogance lead them to make assumptions that are flat out wrong because they don't know WTF they are talking about when it comes to crypto.

 

[jaygreenb]

Crypto has no intrinsic value over the value we place on it. A digital token doesn’t take the value and create a product or sell it. It doesn’t use it to sit on a balance sheet as a liability which can be used as a covenant on assets in liquidation. It’s like commodities or gold. Commodities of gold can have other uses - jewellery or making steel bars etc. Crypto is closer to fiat currency in that regard.

I am just going to reference bitcoin here. The main value of bitcoin is it is the secure payment network ever created and has never been compromised. Everyone knows the rules and they can not be changed. It is the most secure, decentralized and liquid as well. We have never had an engineered monetary system where you do not have to trust the banks or politicians. Like all networks value increases as the network users increases. Ex. One person on a phone network is not valuable, each person who joins that network increases the value and utility. It has similar qualities as gold but also fixes a lot of the issues that it has with being a currency. I would argue that it is better as money than a commodity, it is pure monetary energy, no other use case that distorts the value. It is the most liquid asset on the planet that can be traded 24/7 in any currency instantly. Gold on the other hand has stored in a centralized source, usually a central bank and has large storage and transfer costs. Also when gold price rises it incentives miners to produce more which dilutes the supply. Bitcoin, no matter how high it goes, more can't be mined that the predetermined amount.

Given it’s entirely dependent on the confidence of investors and users (and lets not forget this does make it different to stock. A stock has a Mathematical discounted present value of income streams and so does a bond. Regardless of investor sentiment, those additional income streams are still there so even if a stocks or bonds spot price reduced to 0.00, you would still have the dividend/coupon cash flows) then the future rise In value of crypto assets is driven entirely by its expansion. By more and more asset pouring in to add demand.

Like all networks, value is derived from the number of participants. If you look at adoption it is very clearly following adoption rates of Metcalfes law. You can make similar arguments on any investment related to demand.

- As I’ve said in other posts there are tons of reasons why this kind of rate of appreciation in a non working asset is bad. Without blowing my own trumpet but economics/investment is my bag and I can say without question if money itself features a long run rate of appreciation of 10%+ then this would result in economic destruction essentially. It isn’t the case that bankers and big money got this before and this is now letting the little people take part.

I got my degree in economics and worked in investment management through my 20's as well. Here is a good book on why we need a deflationary currency with an environment where tech is growing exponentially, which is deflationary. The price of tomorrow by Jeff Booth. He has a lot of good interviews about it too on youtube.

- At some point, the crypto market will have to reach equilibrium. Demand will level off and it’s exchange rate to goods and services (not fiat, fiat is just one of its exchange rates) will stabilise. To get to this point it either needs to be adopted as a reserve currency, or it won’t. My fear is that as it reaches the point of equilibrium, investors will realise there is no future potential for upside, and compared to stocks, or bonds, it offers very limited potential as it’s not a real asset (real in the sense of working capital)

At some point adoption rates will slow and volatility will decrease, however due to it's properties it will always be a better savings tech than simply putting money in a central bank currency that inflates at an increasing rate. End game, is good and services are eventually priced in bitcoin. May or may not happen, but imagine that would take some time. Here is this typical evolution of money. Tech networks disrupt every industry because they are faster, cheaper and more effiecient. Now it is happening to finance. Ex. uber, netflix, amazon, apple.

https://twitter.com/i/web/status/1022169639386836992

Hopefully these are seen as sensible and prudent concerns.

Ive just finished my advanced diploma on investment management and am on the cusp of buying a course in crypto and blockchain.
as I said, I am not anti crypto, I just see holes in it from an investment/economics background.

most of what I see being described Are very similar to credit default swaps and currency swaps. This is not my specialism as I’m more of a macro guy than a technical analysis/trader. Also my entire career is based on risk mitigation rather than risk concentration, but hopefully as I learn the ropes of this emergent asset then I can interact on this thread and give perspective and we can learn from the exchange of info - the issue is presently I am ignorant of crypto so can’t comment on it with authority

Lastly can anyone recommend any decent online courses on crypto done by serious people and not guys in caps talking about getting rich? ;-)

https://learn.saylor.org/course/PRDV151 Free course

Read the bitcoin white paper and the book, the bitcoin standard

Long series of episodes but well worth the watch

 

[jaygreenb]

Ding ding ding!

Most of the people in crypto haven't even experienced one real bear cycle yet and still they believe it's just going to go up forever which make them sound like single mom's promoting ponzi schemes, LOL.
The lack of correction and persistent nature of this bull market is setting up an entire generation for huge losses and cryptos are no exception.
You're welcome to quote me on that. Proceed with caution.

There will be massive volatility and a lot of people with get washed out, anything growing at this pace has wild swings. Price is what initially draws people in but is one of the least important indicators of long term growth. Most of these cryptos will not be around in 5-10yrs. Some will be the next facebook, amazon , google etc. Choose wisely.

 

[Roober]

Ding ding ding!

Most of the people in crypto haven't even experienced one real bear cycle yet and still they believe it's just going to go up forever which make them sound like single mom's promoting ponzi schemes, LOL.
The lack of correction and persistent nature of this bull market is setting up an entire generation for huge losses and cryptos are no exception.
You're welcome to quote me on that. Proceed with caution.

Many people are new to crypto. As adoption grows, volatility decreases. Whales still have the clout to swing most cryptocurrencies wildly. However, the most reliable cryptos are still up over time, regardless of the bear markets. Since bitcoin has been around, it has doubled (or more) every year even with such bear markets.

If you are trying to trade like a degen, it's not likely to work out well. If you practicing good profit taking strategies and mitigating your losses with solid R:R, I don't see how any market in FIAT, SP500, real estate, or anything else beats it. Are those still valid investments? Ofcourse. Is crypto a better investment? I believe it is.

For the record, I only have about 20% of my net worth in crypto with the rest in real estate and 401ks.

@Fruitbat
And about your Nano Ledger, move it to a Cefi, then get a new one. I am not really familiar with it, but that seems the best approach.

NOTE: XRP also falls in the "$hit coin" category. Narrative keeps it alive.

 

[Roober]

I'm getting ready to start really researching crypto trading. So I know it's not a waste of time for me, how much would I need to invest in order to see around 80 dollars a day in profits?

It really depends on your risk tolerance..

80/day X 365 = $29,200/year

LOW to ZERO risk
Crypto.com offers 12% on USD currently with a 3 month lock.
This equates to about 250k deposit

Low Risk
Aave offers 20% on tether stablecoin
175k deposit needed

Polygon network farming offers 50% on DAI stablecoin
60k deposit needed

Moderate-High Risk
PancakeSwap offers 99% on their native token, no lock period
Put in 30k, and you will get gains from APY and token price

Buy majors and hold...
Etherium
Solana
Ren
Chainlink
CVX

Tons of other options here for farming and just buy and hold good quality tokens...

 

[BackInTheGame78]

Many people are new to crypto. As adoption grows, volatility decreases. Whales still have the clout to swing most cryptocurrencies wildly. However, the most reliable cryptos are still up over time, regardless of the bear markets. Since bitcoin has been around, it has doubled (or more) every year even with such bear markets.

If you are trying to trade like a degen, it's not likely to work out well. If you practicing good profit taking strategies and mitigating your losses with solid R:R, I don't see how any market in FIAT, SP500, real estate, or anything else beats it. Are those still valid investments? Ofcourse. Is crypto a better investment? I believe it is.

For the record, I only have about 20% of my net worth in crypto with the rest in real estate and 401ks.

@Fruitbat
And about your Nano Ledger, move it to a Cefi, then get a new one. I am not really familiar with it, but that seems the best approach.

NOTE: XRP also falls in the "$hit coin" category. Narrative keeps it alive.

I would not buy any ledger products. They have battery issues, the company knows about them but does nothing to fix it.

I bought a Nano X, brand new out of the box the battery won't charge past 6%. Their customer service is a joke, took several days to get a response...they sent me a replacement and it has the same problems...

Sent them both back for a refund and buying a Trezor.

 

[BackInTheGame78]

Feel sorry for people who were waiting for 45K entries. You only get so many chances to load up.

 

[jaygreenb]

Feel sorry for people who were waiting for 45K entries. You only get so many chances to load up.

Picking up pennies in front of a steam roller. If completely new best to just get some in then set an auto buy, that way you capture any moves down but still have some for the upside. Most don't have the experience to be able to anticipate where it's headed and the psychology of it makes it hard to buy on a massive correction.

 

[CAPSLOCK BANDIT]

Will Bit Coin at some point become unable to be mined? Why?

 

[BackInTheGame78]

Will Bit Coin at some point become unable to be mined? Why?

There will only be 21 million ever created. Why? Because that's what the code allows for.

 

[CAPSLOCK BANDIT]

There will only be 21 million ever created. Why? Because that's what the code allows for.

Whats it at now or when will that be hit

 

[BackInTheGame78]

Whats it at now or when will that be hit

A little over 18 million...
Supposed to be done in 2140.

 

[BackInTheGame78]

So then another currency could be wrote that has 1 billion mining capabilities?

I mean there are plenty of other crypto tokens that have varying numbers of coins already.

 

[wifehunter]

I mean there are plenty of other crypto tokens that have varying numbers of coins already.

Those are called 'poo coins'

 

[BackInTheGame78]

Those are called 'poo coins'

Not always. There certainly are plenty of those out there, but solid projects like SOL, DOT, LINK, LUNA, ATOM, etc are certainly not poocoins.