BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

[fluidistic]

Investors across most asset classes believe that the gravy train has pulled out of the station, and since the belief that crypto was disconnnected from the traditional economy has evaporated, it is no surprise the market has lost its mojo. But that's across the board, so trying to untangle exactly what's driving one asset compared to another in the same class can get complicated.

In the case ethereum vs bitcoin, it's not that hard. People could lock their eth since already a few years, with a reward falling down to about 4 percent apy, on major exchanges. However they couldn't withdraw it before the merge, which was risky in that if the merge never happened, they would lose their funds. Nevertheless, a big percentage of all ETH was locked.

When the merge finally occured, people could suddenly get what they had invested (plus the rewards). It's obvious that some part of it was sold right away.

Edit: apparently I,was wrong, people still have to wait 6 months to 1 year on binance, to reteieve their ETH. However, if you look the total value of ETH locked, you can see a drop when the merge occured: https://defillama.com/chain/Ethereum?currency=ETH so those would could retrieve it, could sell part of it.

 

[Melbourne Guy]

Edit: apparently I,was wrong, people still have to wait 6 months to 1 year on binance, to reteieve their ETH.

Not everyone staked their ETH, of course, @fluidistic, but I thought withdraws of staked ETH will be possible after the Shanghai upgrade early next year, rather than after a set amount of time has passed?

 

[fluidistic]

Not everyone staked their ETH, of course, @fluidistic, but I thought withdraws of staked ETH will be possible after the Shanghai upgrade early next year, rather than after a set amount of time has passed?

Right, at least those who staked on binance. Note that ''early next year'' isn't a certainty, as far as I know.

Edit: after a little redearxh, nothing is sure yet. We don't know yet whether the devs will allow withdrawals from the contract at the shangai upgrade. And we also don't know the exact date of that upgrade.

 

[Melbourne Guy]

Note that ''early next year'' isn't a certainty, as far as I know.

True, and the merge took forever, so who knows, but the GitHub is active and as far as I can tell, Shanghai is less difficult than the merge, so fingers crossed their "few months" holds.

Right, at least those who staked on binance.

That's interesting, I'd seen that Binance Ethereum has resumed deposits and withdrawals for ETH and ERC-20 tokens on the Proof-of-Stake (PoS) chain. I know that there is an ETH post-merge withdrawal limit, so maybe that is a limit rather than Binance itself?

 

[kyphysics]

Feels like bitcoin is in a holding pattern. Between $18,000 and $22,000.

Hasn't changed much "recently."

 

[BWV]

Feels like bitcoin is in a holding pattern. Between $18,000 and $22,000.

Hasn't changed much "recently."

average annual vol of bitcoin has been ~80% or about 4% / day, so a 10% range over a shorter time period is not unusual, however the same stats would give a price range one year out of somewhere between $6K and $65K if it just trades like normal.

If something catastrophic happens, like miners shutting down, a majority attack and / or collapse of tether then all bets are off

 

[kyphysics]

average annual vol of bitcoin has been ~80% or about 4% / day, so a 10% range over a shorter time period is not unusual, however the same stats would give a price range one year out of somewhere between $6K and $65K if it just trades like normal.

If something catastrophic happens, like miners shutting down, a majority attack and / or collapse of tether then all bets are off

What's a majority attack?

Yeah, that range of 18-22k range is not unusual for a stock, so for the even more volatile BTC, it's no big deal.

I'd love to see it crash, so maybe there's an evil side of me that is finding this boring. It was fun watching it crash from $60K to $17K. ..now it's in a holding pattern w/o much "action." I don't own any, so it's all fun and games for me.

I just enjoy watching it crash.

 

[BWV]

a majority attack is when over half the computing power on a blockchain colludes to cheat the other participants

https://www.investopedia.com/terms/1/51-attack.asp

 

[Melbourne Guy]

Feels like bitcoin is in a holding pattern. Between $18,000 and $22,000.

We used to caution the money market traders that there is no pattern, back when I worked in forex at a bank.

But the fervour for crypto is certainly irrational, and market knowledge seems no hedge against that.

CEO and co-founder of One River Asset Management, Eric Peters, offers interesting viewpoints in this interview, which was flagged as him suggesting a BTC value of $500K, though my take on his comment is he's relating BTC to gold on a scarcity basis and waving his hands to arrive at a 'price'. I'd say that the comparison is questionable, and note that his company has $B worth of BTC, but it's an opinion at least!

https://news.bitcoin.com/asset-mana...ore-than-gold-massive-institutional-interest/

 

[kyphysics]

CEO and co-founder of One River Asset Management, Eric Peters, offers interesting viewpoints in this interview, which was flagged as him suggesting a BTC value of $500K, though my take on his comment is he's relating BTC to gold on a scarcity basis and waving his hands to arrive at a 'price'. I'd say that the comparison is questionable

Nah. It's possible it hits $500K, but I highly, highly doubt it.

At that price, it's market cap would be ~$25T, which is more than 2021 U.S. GDP (which was ~$23T). Does anyone really think a digital coin, whose value is at least significantly based on what OTHER people are willing to pay for it (as it has no profits and cash flows to speak of like a real business) and that's only been around a little over a decade is somehow worth more than the entire U.S. economy?

Possible the mania gets that crazy, but it starts to sound more and more ridiculous!

Also, I don't entirely buy the scarcity point. I commented in the Random Thoughts thread that I could sell my pubic hairs to a lab/manufacturing plant that shreds it into nano particles/slices and distributes them to people for widespread adoption as a currency.

My pubic hairs are scarce. I'm the only one with unique DNA for it and it only grows so much at a time. No one can replicate them, except for me. . . .You start to see my point? Scarcity in the sense of not getting debased by government money printing is one thing...but you can argue LOTS of things on this Earth are scarce too. . .why not prop up those as the next bubble asset?

Anyone want to buy my pubic hairs for $20K a nano slice?

 

[Drakkith]

Also, I don't entirely buy the scarcity point. I commented in the Random Thoughts thread that I could sell my pubic hairs to a lab/manufacturing plant that shreds it into nano particles/slices and distributes them to people for widespread adoption as a currency.

Indeed. Scarcity is only one part of why BTC has value. Though if we substitute grossness for value, you're starting to hit it big with your idea.

 

[kyphysics]

Indeed. Scarcity is only one part of why BTC has value. Though if we substitute grossness for value, you're starting to hit it big with your idea.

...What other virtues/values does BTC have?

I know it's supposedly:
It's decentralized?
It's "democraticized" so anyone can buy it?

Why can't other cryptos do the same?
And, can we take those same properties that make it valuable and just find another item that does the same?

Is BTC truly so unique and valuable that it's worth $20K...$60K...$500K a coin? Why can't it just be worth $0 just as easily?

 

[fluidistic]

...What other virtues/values does BTC have?

I know it's supposedly:
It's decentralized?
It's "democraticized" so anyone can buy it?

Why can't other cryptos do the same?
And, can we take those same properties that make it valuable and just find another item that does the same?

Is BTC truly so unique and valuable that it's worth $20K...$60K...$500K a coin? Why can't it just be worth $0 just as easily?

At this point I would say bitcoin has value because people value the fact that it was the 1st cryptocurrency that ''worked''. If its value falls to zero it means someone cracked it and exploited it so that there's double spending, or an unlimited amount of coins instead of the currently falling amount.

There will always be at least one rich people who would pay a high price to get his hands on all bitcoins if he could afford it. He could then prove to the world he is the owner of all bitcoins, and he could transfer all his btc between 2 wallets over and over and place a camera on his computer screen for the world to see.

The utility of bitcoin isn't so groundbreaking unfortunately, it is too slow for most purchases, and too expensive to buy a bread with. But we already have better than bitcoin for those purposes.

But, for internet purchases (say on Amazon and the like), and to buy a car and a house, bitcoin would already work.

 

[Drakkith]

...What other virtues/values does BTC have?

I know it's supposedly:
It's decentralized?
It's "democraticized" so anyone can buy it?

Yes, plus it is a secure, robust, and reliable system that is nearly immune to things like hacking or data loss. Every block contains the information needed to build the entire blockchain up to that point, so the entire internet could go down and one guy with a printout of the last block could rebuild the entire blockchain.

Why can't other cryptos do the same?

Many can and do.

And, can we take those same properties that make it valuable and just find another item that does the same?

You can, but that doesn't make it valuable. Value requires agreement between many parties, and BTC is more valuable than other cryptocurrencies mostly because of 'inertia'. That is, it was the first one people started using and so it has remained the top mostly because switching to a new currency would require change.

Is BTC truly so unique and valuable that it's worth $20K...$60K...$500K a coin? Why can't it just be worth $0 just as easily?

Because the people buying it are willing to pay that much. Same reason anything sells for any price. People are buying BTC mostly because they think other people will buy it for a higher price later on. Again, just like many other things. Stocks don't skyrocket in price because people actually care about the company and their dividends, they go up because most people expect to be able to sell their stock at a higher price later on.

 

[Melbourne Guy]

But, for internet purchases (say on Amazon and the like), and to buy a car and a house, bitcoin would already work.

Are you suggesting BTC for these high value purchases because BTC has a high coin value? Because using it as currency has serious downsides. Price fluctuation is an issue, its transaction rate is very low and does not scale, and the cost per transaction is higher than other processing options, so why would anyone prefer it? Plus...energy use! Proof of work chains are increasingly likely to be regulated out of general use, even if consumers don't self-regulate them out of general use.

 

[fluidistic]

Are you suggesting BTC for these high value purchases because BTC has a high coin value? Because using it as currency has serious downsides. Price fluctuation is an issue, its transaction rate is very low and does not scale, and the cost per transaction is higher than other processing options, so why would anyone prefer it? Plus...energy use! Proof of work chains are increasingly likely to be regulated out of general use, even if consumers don't self-regulate them out of general use.

Not really. My point is that it is very slow for in-shops payments (el Salvador isn't using bitcoin as what is reported by most media that don't dig deep enough). For any payment where a few minutes of waiting isn't an issue, bitcoin would already work. I mentioned Amazon, a car, and a house as examples with this in mind, not because of a high price purchase.

I know PoW sucks for the environment, and I'm glad better solutions already exist. I have little doubt Nakamoto would be in favor of bitcoin going PoS or something similar, but not bitcoin maximalists. In the long run, I think this may drive people away from bitcoin and.its price may slowly vanish over the years.

I also agree that value swings are not appealing to use it as a currency. I had read that with a massive everyday use, these swings would be attenuated. I have yet to see this happening, but I do not see why this wouldn't hold either. And here I'm not focussing on bitcoin in particular, bjt on any cryptocurrency (other than stablecoins).

 

[kyphysics]

Many can and do.

That's interesting then. Why do people seem to prefer BTC, then, over those other ones if they have the same properties that make it valuable?

 

[kyphysics]

Because the people buying it are willing to pay that much. Same reason anything sells for any price. People are buying BTC mostly because they think other people will buy it for a higher price later on. Again, just like many other things. Stocks don't skyrocket in price because people actually care about the company and their dividends, they go up because most people expect to be able to sell their stock at a higher price later on.

I partially agree and disagree re: stocks.

They do have a rough fundamental value that you can calculate based on things like discounted cash flows, PE and PEG ratios, P/S, P/B, etc. That entirely quantitative approach, of course, lacks the qualitative side that is important too that completes one's analysis.

Speculation, emotions, short-term thinking, momentum trading/chasing, etc. can make prices for a stock deviate from its fundamentals. But, it usually reverts back to it at some point.

With BTC, I don't understand what its fundamental value is based on, b/c it has no cash flows or balance sheet to speak of like a "real business." Its feels like mostly speculation, no?

Even art has a coterie of industry people (art historians, museum curators, insurers, etc.) who appraise it within a decent agreed upon range of value. Most people agree there really is something "special" about the Mona Lisa that makes it worth a lot/desirable/aesthetically pleasing/masterful/etc. vs. a two-year old's home doodles with crayons.

 

[Drakkith]

With BTC, I don't understand that its fundamental value is based on, b/c it has no cash flows or balance sheet to speak of like a "real business." Its feels like mostly speculation, no?

Perhaps BTC is more comparable to something like gold or silver? All three have a finite supply, are 'mined', have several qualities that people like about them, and have a changing price associated with them.

 

[Melbourne Guy]

With BTC, I don't understand that its fundamental value is based on, b/c it has no cash flows or balance sheet to speak of like a "real business." Its feels like mostly speculation, no?

It was originally pitched not just as a currency, but as the currency, the one that would usher in the libertarian dream of decentralised, unregulated, entirely private transactions. It's not done that, but along the way, it caught the zeitgeist, and has become entirely speculative. And I feel that the price swings reflect the tension of your observation that it has no intrinsic value against the suspicion that there might be something in it, so it's best to hold some BTC...just in case!

 

[russ_watters]

...have several qualities that people like about them...

That's under-selling gold a bit, isn't it?

 

[kyphysics]

It was originally pitched not just as a currency, but as the currency, the one that would usher in the libertarian dream of decentralised, unregulated, entirely private transactions. It's not done that, but along the way, it caught the zeitgeist, and has become entirely speculative. And I feel that the price swings reflect the tension of your observation that it has no intrinsic value against the suspicion that there might be something in it, so it's best to hold some BTC...just in case!

But, how can a currency be so volatile?

Suppose I have $1M worth of BTC. I want to buy my dream house worth $500K. It's September 25th 10 AM and I offer to buy and turn in my coin literally that afternoon (by 12 PM).

Well, it just happens to be a 10% BTC drop day in the markets. Too bad. Now, I cannot buy my dream home and I get scooped by another buy with cash. That's an extreme example, but given how crazy it trades, it's not such a great "currency."

For those wanting to own, say, 1/2 a % of bitcoin in their asset mix, what is a way to buy it without holding it directly (where it can be hacked and stolen). Microstrategy almost got margin called (or did they actually get one?), so that's out of the running for me.

 

[collinsmark]

For those wanting to own, say, 1/2 a % of bitcoin in their asset mix, what is a way to buy it without holding it directly (where it can be hacked and stolen).

There's stocks such as Grayscale Bitcoin Investment Trust (BTC) (GBTC) that is traded as a stock. It's stock price is not directly tied to bitcoin, but it is indirectly. The idea is that GBTC is a trust who's assets are just a bunch of Bitcoin. You can buy and sell shares of the trust on the regular stock market.

 

[Drakkith]

But, how can a currency be so volatile?

Currency can fluctuate wildly in short spans of time. Just ask all those countries where hyperinflation has taken hold.

For those wanting to own, say, 1/2 a % of bitcoin in their asset mix, what is a way to buy it without holding it directly (where it can be hacked and stolen).

'Directly' holding BTC would involve a digital wallet on a physical device that is in your possession, such as a program on your home desktop or something like the Ledger Nano. It's a bit like having cash in your wallet in that there are associated risks with keeping it yourself vs a bank or other 3rd party. It's certainly more secure, as you guarantee that no one can steal your money from the blockchain or hack your device as long as they don't have access to your digital wallet. But then you run the risk of losing it or having it damaged.

 

[russ_watters]

Currency can fluctuate wildly in short spans of time. Just ask all those countries where hyperinflation has taken hold.

But that's a bug, not a feature.

 

[russ_watters]

There's stocks such as Grayscale Bitcoin Investment Trust (BTC) (GBTC) that is traded as a stock.

Are they known to be secure/trustworthy?

 

[russ_watters]

For those wanting to own, say, 1/2 a % of bitcoin in their asset mix, what is a way to buy it without holding it directly (where it can be hacked and stolen). Microstrategy almost got margin called (or did they actually get one?), so that's out of the running for me.

You mean 1/2 of a % of a bitcoin? For what goal, with what risk tolerance? If I understand your scenario, that's about $100. I have a lot of trouble avoiding being glib about this...

 

[kyphysics]

You mean 1/2 of a % of a bitcoin? For what goal, with what risk tolerance? If I understand your scenario, that's about $100. I have a lot of trouble avoiding being glib about this...

1/2 of a 1% of one's portfolio.

People always say to invest 1% of your assets into BTC. If it turns out to be awesome, you'll have a piece of the action, but if it goes to $0 or sucks, then you'll have lost at most 1%.

I guess I didn't even like the idea of 1%. That's why I asked about 1/2 a percent.

 

[kyphysics]

There's stocks such as Grayscale Bitcoin Investment Trust (BTC) (GBTC) that is traded as a stock. It's stock price is not directly tied to bitcoin, but it is indirectly. The idea is that GBTC is a trust who's assets are just a bunch of Bitcoin. You can buy and sell shares of the trust on the regular stock market.

I read about them a little bit, but wonder why they are trading at a 35% discount to NAV?
Is there something wrong with this company (that maybe insiders or top analysts would know and the avg. person doesn't)?

Is that at all suspicious?

 

[kyphysics]

'Directly' holding BTC would involve a digital wallet on a physical device that is in your possession, such as a program on your home desktop or something like the Ledger Nano. It's a bit like having cash in your wallet in that there are associated risks with keeping it yourself vs a bank or other 3rd party. It's certainly more secure, as you guarantee that no one can steal your money from the blockchain or hack your device as long as they don't have access to your digital wallet. But then you run the risk of losing it or having it damaged.

Thanks for that.

What if your computer has malware, though. And let's say you keep your BTC in a digital wallet (I'm guessing this is an app of some sort) on your desktop computer. And let's say the malware has some tracking of everything you type and that info. is retrieved by a hacker. With your digital wallet screen name/password (I'm assuming that's how it works), they proceed to log into your account.

AT THAT POINT, is there a way for them to steal your stuff?

I know we talked about this conceptually vs. a brokerage account for stocks. Even if someone had access to your brokerage account details, they'd still have to get the money out somehow. They'd either have to wire the money into their own bank account or cut a physical check to themselves.

Both all those leave an official paper/digital trail. At worst, someone does this and succeeds. But, if you can prove it, the major brokerages (Vanguard/Fidelity) will reimburse you your losses. BTC doesn't seem to have this 'insurance," nor the investigative bodies interested enough in BTC theft to look into it, right?

That's be my one fear.

On a related note, do you have any thoughts on a possible central bank digital currency (CBDC as they're called)? These would obviously be safe, as they're linked to literally a government's central bank. But, of course, they'd not be decentralized and thus not really compete with BTC directly. But, if CBDCs sort of democratize banking, then would that take away some of the appeal of cryptos? I know a lot of low-income folks, who cannot afford traditional banking accounts (min. balances and/or monthly service charges), often flock to online payment apps and alt currencies.

 

[Melbourne Guy]

But, how can a currency be so volatile?

If you're intending your invention to be the global currency, you're not considering that it's going to be converted to fiat currency (or anything else for that matter), so volatility isn't an issue.

 

[Melbourne Guy]

People always say to invest 1% of your assets into BTC. If it turns out to be awesome, you'll have a piece of the action, but if it goes to $0 or sucks, then you'll have lost at most 1%.

We're waaaay off topic, but I worked for a successful businessman and he always told me that a speculative investment needed to cause you pain if it failed for it to be beneficial if it succeeded. Given he's the guy driving the hypercar between his multiple expensive houses, there might be something in it

 

[russ_watters]

1/2 of a 1% of one's portfolio.

People always say to invest 1% of your assets into BTC. If it turns out to be awesome, you'll have a piece of the action, but if it goes to $0 or sucks, then you'll have lost at most 1%.

I guess I didn't even like the idea of 1%. That's why I asked about 1/2 a percent.

Of what portfolio? Your total net worth? All investments? Non retirement investments? Play money investments? People can't have been saying this for long, because crypto hasn't been around long.

Regardless, if we're talking about a tiny amount of money such that the risk of the asset itself doesn't matter, then where you keep it doesn't matter either, does it? Or even, if it goes to zero, that's probably going to be part of the reason anyway.

But what if I said one shouldn't store money in a bank/investment company that is less than 20 years old?

 

[russ_watters]

If you're intending your invention to be the global currency, you're not considering that it's going to be converted to fiat currency (or anything else for that matter), so volatility isn't an issue.

Are you talking about exchange rates? That's not what stability/volatility means, it's just a proxy. Bitcoin is volatile not because of the exchange rate but rather because last year you could buy 2 cars with one bitcoin and today you can only buy 2/3 of a car.

 

[BWV]

Bitcoin is not volatile, its price denominated in bitcoin has been exceedingly stable:

BTC cultists actually are spouting this a cope as all the other maxi arguments have collapsed -
new, more efficient currency - No
Inflation hedge - No
Environmental disaster - Yes

Oh well then at least 1BTC = 1BTC
https://finance.yahoo.com/news/one-bitcoin-equals-one-bitcoin-140000086.html