Bitcoin, Cryptocurrency and Blockchain Discussion Thread

[bkp_duke]

Just thinking out loud as I don’t follow Bitcoin am that closely. But if it goes to $500,000 per coin will there be a bunch of Bitcoin trillionaires? I am assuming that there must be people that have over 200,000 coins if they accumulated them in the early years when cheap.

In theory, yes . . . but just like with multi-billionaires and stocks . . . if they sold that much BTC it would probably cause a huge drop in the value of BTC.

And since EVERYTHING is public on the blockchain, when there are large transactions, everyone knows.

 

[MXWing]

I wonder if you can expand upon your "not ethereum" statement. Everything I've seen says that Ethereum will be the rails on which the DeFi revolution rides. If true, is there not significant upside to Ethereum?

I think Ethereum is blue chip crypto with a lot of upside room. However, I wanted to present a very simple strategy to people who were not already invested in crypo in a meaningful way. Rather than timing and researching the other crypto, just buy and hold BTC. By all means once you hit 3-5% net worth in BTC, I would recommend Ethereum as the second top holding for crypto.

Just thinking out loud as I don’t follow Bitcoin am that closely. But if it goes to $500,000 per coin will there be a bunch of Bitcoin trillionaires? I am assuming that there must be people that have over 200,000 coins if they accumulated them in the early years when cheap.

It's absolutely possible! I haven't spent much time researching big wallets (and if they are active) but I think it would be absolutely crazy to hang on to trillions worth of BTC and not be trimming the whole way up.

Far better in my opinion to be a 100 Billion BTC billionaire with 25 billion in stocks, 25 billion in gold, 25 billion in bonds, etc than have 1 Trillion in BTC and nothing else.

It's just risk management once you are past the point of maximum plaid, ludicrous wealth.

In theory, yes . . . but just like with multi-billionaires and stocks . . . if they sold that much BTC it would probably cause a huge drop in the value of BTC.

And since EVERYTHING is public on the blockchain, when there are large transactions, everyone knows.

No one is going to put a sell order for 100,000 BTC at once dude. This stuff gets trimmed over a long period of time. Easy for 1000 BTC sell walls at every 1K increment. Especially easy to sell at 4 year breakpoints, each time the block reward is halved.

 

[SN_8]

Thanks @MXWing.

I bought and unfortunately sold Bitcoin when it was in the hundreds. I saw the potential, but also saw significant risk and headwind, so I got scared and folded. At least when I start to think about what could have been I have TSLA stock to dry my tears with. In all seriousness, I'm sure that it was in part that experience with Bitcoin that gave me the willpower to hold TSLA. So there's a silver lining there.

With some of the risk inherent in BTC that I was concerned about years ago now mitigated, I may diversify back into crypto. And the information in this thread helps decide the best way to do that. In the meantime, I wait for a dip that may never come.

 

[dhanson865]

That’s a start — thanks. But you also mentioned a wiki, a faq, and a book?

Yes, I could google and maybe find them. But if you want your audience to read particular documents, it’s a good idea to link them isn’t it?

I suggest you look at post #512 that you quoted for a start since you may not know it but Amazon sells books. Check out that link above the first video.

If for some reason your browser isn't showing an amazon link on post #512 google the code 006236250X and it'll take you to amazon and the book he linked assuming your browser isn't blocking amazon links all together.

 

[Xepa777]

Thanks @MXWing.

I bought and unfortunately sold Bitcoin when it was in the hundreds. I saw the potential, but also saw significant risk and headwind, so I got scared and folded. At least when I start to think about what could have been I have TSLA stock to dry my tears with. In all seriousness, I'm sure that it was in part that experience with Bitcoin that gave me the willpower to hold TSLA. So there's a silver lining there.

With some of the risk inherent in BTC that I was concerned about years ago now mitigated, I may diversify back into crypto. And the information in this thread helps decide the best way to do that. In the meantime, I wait for a dip that may never come.

The best time to invest was back when you originally had your BTC. The second best time is now. At least a starter position. The moment people are completely out of Bitcoin they start thinking of negatives for excuses to never get back in, or hoping for bigger and bigger dips (there was literally a 25% dip in January). That's what makes buying Bitcoin so powerful with its 6% interest rate. The way I think of it, the "potential losses" are offset by the guaranteed 6% interest I'm getting.

Don't be Gary Black bro. Lol.

For the record, I bought $5k AAVE this Saturday at an ATH after going up 100,000% this past year after I last evaluated it in December but held off because I didn't have enough time to experiment with DeFi protocols. So imagine me swallowing that bitter pill LOL. I was anti-alt coin until I gained exposure to BlockFi, which led me down this DeFi path (accelerated by my disillusionment from the Gamestop saga).

 

[Xepa777]

For the record, starter DD on AAVE.

1)

2)

I knew about AAVE last year, started going into it in December, Mark Cuban saying he's in AAVE this January re-peaked my interest, and after Gamestop I seriously started to look deeper into DeFi participation. I like how in the future product roadmap they can take AAVE's DeFi ecosystem and bring it to Ethereum competitors as well. So the focus is less on the rails and more on the unique economic system of incentives/mechanisms they built.

Outside of AAVE, trying to understand the risk of yield farmers dangerously leveraging with rehypothecation. De-fi the next rehypothecation death trap. and how much of that risk exists right now in DeFi space given its explosive 2020 growth with not a large # of actual participants.

 

[phantasms]

N00b question here. What’s the best and most secure way to purchase coins and alt coins? May as well throw a few hundred at a couple.

 

[SomeJoe7777]

When you lend stablecoins, what is the risk that the other party doesn’t pay your loan back?

The coins are not really lent to a person, they're lent to the smart contract that runs on the blockchain. You can think of that as a mini-bank. In the real world, let's say a brokerage firm takes investors money, promising to pay interest, and then loans out the money to people who want to borrow it, charging them higher interest. The difference between the accrued interest from the loans and the interest the brokerage firm must pay investors is the profit for the brokerage firm. This profit also has to cover any loans that might default.

The smart contract works the same way, it's just automated. There is a risk of not being able to get your money back if too many loans default, just the same as it is in the real world.

 

[SomeJoe7777]

N00b question here. What’s the best and most secure way to purchase coins and alt coins? May as well throw a few hundred at a couple.

For US customers, the most stable and established exchange is Coinbase. You can buy all of the major cryptocurrencies there.

 

[Xepa777]

N00b question here. What’s the best and most secure way to purchase coins and alt coins? May as well throw a few hundred at a couple.

The absolute safest for crypto in general? Buy with an exchange partnered with Trezor to have it auto-delivered into your physical encrypted Trezor USB stick.

Now if you wanna maximize safe + easy, probably buy on Coinbase. Then afterwards move it to a Coinbase Wallet (that moves it to cold storage where it's harder to hack because it's taken offline). You can do both of those things from a website with a relatively easy UI.

 

[MXWing]

The best time to invest was back when you originally had your BTC. The second best time is now. At least a starter position. The moment people are completely out of Bitcoin they start thinking of negatives for excuses to never get back in, or hoping for bigger and bigger dips (there was literally a 25% dip in January). That's what makes buying Bitcoin so powerful with its 6% interest rate. The way I think of it, the "potential losses" are offset by the guaranteed 6% interest I'm getting.

Don't be Gary Black bro. Lol.

For the record, I bought $5k AAVE this Saturday at an ATH after going up 100,000% this past year after I last evaluated it in December but held off because I didn't have enough time to experiment with DeFi protocols. So imagine me swallowing that bitter pill LOL. I was anti-alt coin until I gained exposure to BlockFi, which led me down this DeFi path (accelerated by my disillusionment from the Gamestop saga).

@SN_8 - you won't be able to time the top or the bottom. Whatever you can buy right now at 1-3% net worth, just do it.

If it sinks with no change in fundamentals, buy more. If it makes you feel better you can tranche in your 1-3% position over a month. Risk of course is you end up with less coin doing it that way, but you hedged yourself against overbuying -today-.

@Xepa777 - what services are you using to get interest on your BTC? Thanks

 

[Artful Dodger]

My business partner lost a thumb drive 10 years ago with 200 BTC on it. To this day it is still missing, and he's torn his house upside down multiple times.

Lol, for $9.38M USD, he should tear the house down, and sift the remains. Unless he had a 2-yr-old when the thumb drive went missing...

BTW, does San Diego still flush it's waste directly into the Pacific?

Cheers!

 

[Artful Dodger]

it is not so trivial to just write a 10 billion dollar check and the next week have 51% of all hashing power. It takes a long time to scale up production and energy supply etc

How much "hashing power" will DoJo have?

Edit: the practical way that I see Tesla mining bitcoin is to have big western megacharger sites with adjacent solar farms which are sized for peak demand for electricity. Then, install co-located mining compute capacity to fully use that peak power, but of course throttle the mining operations to maintain energy balance at the 'island' megacharger site. Of course, megapack will help buffer the load, as will good wx prediction algorithms.

What a great future! Tesla could pay for all it's megachargers with bitcoin mining. And unlike other currency transactions, this production of value can verified / authenticated as carbon neutral (or carbon negative).

Cheers!

 

[Tiger]

Could someone explain why it would be wise to "hodl" a an instrument which is purely speculative. I would rather invest in anything that goes up (relative to all currencies simultaneously) and whenever I need a "currency" for purchasing, just use credit card or currency exchange to purhcase. I would "hodl" currency (crypto or derivative or cash or equivalent) only during a market crash as a hedge to my short positions.

 

[Matias]

The coins are not really lent to a person, they're lent to the smart contract that runs on the blockchain. You can think of that as a mini-bank. In the real world, let's say a brokerage firm takes investors money, promising to pay interest, and then loans out the money to people who want to borrow it, charging them higher interest. The difference between the accrued interest from the loans and the interest the brokerage firm must pay investors is the profit for the brokerage firm. This profit also has to cover any loans that might default.

The smart contract works the same way, it's just automated. There is a risk of not being able to get your money back if too many loans default, just the same as it is in the real world.

Ok. If I understand correctly, your counterpart is the “bank” and the risk is bank’s default?

Who is this bank? What can it do, if loaners don’t pay their loans back?

 

[SomeJoe7777]

Ok. If I understand correctly, your counterpart is the “bank” and the risk is bank’s default?

Who is this bank? What can it do, if loaners don’t pay their loans back?

While it's a good exercise to think of the smart contract as a mini-bank to understand what's going on, it's an imperfect analogy since no person or company is running this "bank". A closer analogy would be peer-to-peer lending.

I don't think the legality of a smart contract has been tested in court. Theoretically, the lender could sue the borrower for default. All of the transactions are recorded on the blockchain, so it is known what wallet borrowed the funds.

The best explanation I could find that goes over these issues is in this article:

Lending and borrowing on the blockchain — should banks be scared?

 

[bkp_duke]

Lol, for $9.38M USD, he should tear the house down, and sift the remains. Unless he had a 2-yr-old when the thumb drive went missing...

BTW, does San Diego still flush it's waste directly into the Pacific?

Cheers!

1) He's not in San Diego. Over a thousand miles north.
2) He's long since "torn the house apart". And yes, he has 4 kids, 3 dogs, and a cat. Multiple entities that could have done something with said thumb drive.

 

[bkp_duke]

How much "hashing power" will DoJo have?

Edit: the practical way that I see Tesla mining bitcoin is to have big western megacharger sites with adjacent solar farms which are sized for peak demand for electricity. Then, install co-located mining compute capacity to fully use that peak power, but of course throttle the mining operations to maintain energy balance at the 'island' megacharger site. Of course, megapack will help buffer the load, as will good wx prediction algorithms.

What a great future! Tesla could pay for all it's megachargers with bitcoin mining. And unlike other currency transactions, this production of value can verified / authenticated as carbon neutral (or carbon negative).

Cheers!

DoJo is probably worthless for Bitcoin mining.

Bitcoin mining has reached such a level of computational difficulty, that only ASICs (Application Specific Integrated Circuits) have any practical application for mining. An ASIC is a computer chip designed for an extremely limited set of computer instructions (i.e. mining code is literally configured into the circuitry for maximum efficiency). The chops are so specialized that they literally cannot be used for anything else.

For those not deep into the realm of chip design, the more specialized you get into circuit design for a single code-set, the faster you can make that code-set, but at the tradeoff of not being able to run other code for which the circuits were designed efficiently (or at all). This is why general purpose CPUs (think your desktop or laptop) can run about anything, but not necessarily fast. Your GPU, which is designed for more parallel operation, but on more limited computations, can go faster, but you cannot run your operating system on it. Then the extreme example are ASICs, which someone went to the painstaking process of designing for one set of code (i.e. cryptographic mining in the case of bitcoin). They can only do one thing, but they do it orders of magnitude faster than general purpose CPUs and even GPUs.

Chips designed for other neural nets and the like are so specialized for their purpose that they do not do well being repurposed for things like bitcoin.

So, basically, Tesla would need to design a chip for Bitcoin processing exclusively if they wanted to get into bitcoin mining. I highly doubt they are going to do that.

EDIT - primer for those that don't know what ASICs are (in the context of bitcoin mining):
What Is ASIC Mining? | CoinMarketCap

 

[Prunesquallor]

Tesla Adds Bitcoin to Its Balance Sheet

By Yassine Elmandjra | @yassineARK
Analyst

...
Microstrategy, Square, and now Tesla are showing public companies the way to add bitcoin as a legitimate alternative to cash on their balance sheets. As noted in ARK’s Big Ideas 2021, we believe bitcoin will serve as an alternative to fiat cash. As a thriving company with no prior affiliation to bitcoin, Tesla could catalyze a new wave of corporations considering the diversification of cash into bitcoin.

According to ARK’s research, if all companies in the S&P 500 were to diversify 1% of their cash balances into bitcoin, its price would double from nearly $40,000 today to almost $80,000, while a 10% allocation would add $400,000.

 

[JRP3]

Dogecoin drops after Tesla’s Musk supports holders selling ‘most of their coins’