Archives for July 2017

Jul 28 2017

One Billionaire on Bitcoin: “It’s a Pyramid Scheme”

Oh no.

It was bound to happen, the cries of “pyramid scheme” applied to Bitcoin. In this case, it’s billionaire investor Howard Marks, who, in an investor letter circulating earlier this week (and reported on by CNBC here), suggests that there’s a bubble afoot.

And this is from a guy who, according to CNBC, “is famous for his prescient investment memos, which predicted the financial crisis and the dotcom bubble implosion.”

Cue the comments about Tulip Mania!

But…But…But…

Much consternation ensued – people were peeved – over on the Bitcoin and cryptocurrency chatrooms. And rightly so: one rich billionaire dude does have the power to sway other billionaires and, in turn, cause more than just a ripple-effect.

The response from this site, though, is a heck of a lot more calm. If Mr Marks is correct, then why are hedge fund investors quietly getting involved in the space?

The Store of Value

Is it possible, though, that Mr Marks is simply misguided?

Bitcoin’s value is somewhere in the neighborhood of $46 Billion. The cryptocurrency economy – factoring Bitcoin, Ethereum, Ripple and the hundreds of other coins and tokens that make up the digital currency universe – is worth around $90 Billion. (Figures from Coinmarketcap.com.)

Gold? Estimates are that all the gold in the world would be worth somewhere in the neighborhood of $10 Trillion.

The US Debt? Twice that.

Marks is misguided, in our opinion because he doesn’t understand how the value is created and stored with Bitcoin and its ilk. Similar to gold, it has to be mined, created, manufactured. (Some ICOs are “pre-mining” their coins or tokens, and that’s a different subject.) Something exists that’s of value – but the value is stored and unlocked through lines of code and cryptographic puzzles to ensure that the code is what it says it is.

Yes, They’re Speculative, Too

Note that Marks says these are highly speculative assets – and we agree with that assessment, to a point. ICOs appear to be everywhere, and that might be part of the tulip comparison in his mind. You could, conceivably, launch a token sale today and unlock some value from the crypto economy.

Speculative investments, though, abounded after the bubbles that Marks predicted popped. Dot-com value was created after 1999; Facebook spawned a whole host of competitors (not just social media sites) after its IPO, which happened after the toxic mortgage/asset bubble popped in 2008.

What to Make of All This?

Back to those old saws:

Don’t put all your eggs in one basket
Don’t invest more than you can afford to lose
Watch the space closely
Diversify
Seek advice from a few places
Do your own research
Talk to a tax advisor, a lawyer, an accountant

Certainly, value the opinion of someone who has made billions. But seek out other opinions, too.

Maybe these Bitcoin things aren’t tulips after all?

Jul 26 2017

New Exchange Coming – It’s Called WCX – And You Can Share in the Profits

Had a “wow” moment this morning, as I learned about a new exchange that launches in October. It’s called WCX and it might just change the way cryptocurrency exchanges operate from here on out.

DISCLOSURE: Up there is a referral link, so we’ll benefit from your using it to sign up. However, there’s nothing stopping you from signing up and then using your link to invite people.

A “pro experience,” you say?

To read that, and read between the lines, you might think that they’re insinuating that other experiences are more “amateur.” And if you look online for commentary about Poloniex, for instance, you might agree.

From my perch, I do like Poloniex and haven’t had problems with it – with ANY exchange you must make sure that you’re taking the right steps with your digital currency. Don’t have too much in any one place and, if you plan on HODLing – “Holding on for Dear Life” – you are best off putting coins and tokens into some sort of cold storage.

Another affiliate link here: Trezor is the one thing we recommend for parking your coins in storage.

I also like Bittrex – US-based – and Cryptopia (that’s a referral link there, too), but can totally understand the need for an alternative.

“10x lower fees,” you say?

Okay, that’s another one that’s going to get a few people interested – though, honestly, fees in crypto appear really low already.

Quoting the site:

Tiny Fees. Some exchanges charge up to 1% in fees on every transaction. WCX is 10x cheaper and market makers are paid. That means more money stays in your pocket.

Sharing in the profits???

Read this from the site and tell me this doesn’t have tremendous potential, too…

The kicker? Social Recruitment.

I love this element – it looks like we’re in effect participating in the ICO by recruiting people. It reminds me a little of the bounty program run by our friends at Exscudo, or one of the scores of other bounty programs out there.

You’ve got to wait…a little

This has just launched – the first tweets from the team (here’s their Twitter page) are from TWO DAYS AGO. And the timeline calls for an ICO beginning September 9.

But we’ll be watching…

Here’s that link again to sign up: WCX Link.

Also, if you haven’t gotten started by buying crypto on Coinbase, what are you waiting for? That’s a link that can potentially get you a bonus with a qualifying purchase.

Jul 19 2017

Ten Days Later: How About Those Five Coins for Bargain Hunters?

Earlier in my business career, I worked for a company that was part of a paradigm shift of sorts – in the way that health care plans were delivered to corporations. Then, the “high-deductible plan” was foreign. Now, these things are everywhere.

The company I worked for was in the unique position of trying these plans out on a few of their employees, and these same employees would report back to prospective companies “warts and all” on the pluses and minuses of using these plans.

The saying at the company was pretty simple:

We eat our own dog food.

In that spirit, I’ve decided to “eat my own dog food;” or, more accurately, share an update on the “Five Coins for Bargain Hunters” that we told you about ten short days ago.

Why am I doing this?

One of the things I’ve noticed in this emerging cryptocurrency trading and investment space is that analysts, coin-pickers, token fans and others are extremely quick to tell you when they went 10x or better on a pick. But they’re awfully slow to tell you about those errors in their ways. I’d rather do this “warts and all” – you can’t take this site seriously if all we do is share our winners.

A Lot Has Happened In 10 Days

Just this afternoon, word broke of a huge theft of Ether from unsecured wallets – a potential huge blow to a coin that is serving as the backbone of so many ICOs.

And this is after price drops in what we call our BRED Portfolio.

This same portfolio, you may recall, was $224,000-plus just 18 days ago.

So…those five coins…where are they now, and would we still buy them?

And before we share this update, this disclaimer. DYOR means “Do Your Own Research.” In other words, we like our ideas, but you are at your own risk if you decided to invest in any or all of these. We are not responsible for any losses. Don’t invest more than you can afford to lose.

Library Credits – LBC

Ten days ago: accumulate at the 17-18K Satoshi range.
Today’s price: 12910 Sats.
Recommendation: Still a BUY.

This is one of those long-term plays. I don’t plan on swing trading this one, am more thinking that it has the potential to be very much like YouTube for a wide variety of content. I’m still bullish; accumulation at this price point could pay some serious dividends down the road.

Steem – STEEM

Ten days ago: accumulate up to 60K Sats.
Today’s price: 50K Sats.
Recommendation: STRONG BUY.

We give this a “STRONG BUY” in ALL CAPS because we’re in love with the platform and spend at least an hour a day there. It has engagement that’s off the charts and it reminds us – as we have said before here – of the early days of Twitter. Except you can potentially profit from it, unlike Twitter.

Give it some time, though. Some pundits are suggesting a price of $10 – which would mean growth of 8x where it is now, and would also put it into the crypto unicorn club, as its market cap is around $250m right now.

Stratis – STRAT

Ten days ago: accumulate up to 200K Sats.
Today’s price: 175K Sats.
Recommendation: STRONG BUY.

Actually, this appears to be the one coin that could benefit the most from the one-two punch of Bitcoin’s Hard Fork/Segwit uncertainty, and Ether’s afternoon follies from today.

Yesterday, it actually went above 200K, and it’s only down around 5% today. We love the project and are HODLing this coin.

Antshares – ANS

Ten days ago: accumulate at 285K Sats.
Today’s price: 260K Sats.
Recommendation: STRONG BUY.

Okay, why are three of these five coins now STRONG BUYS in ALL CAPS after ten days of tumult? Simple – these are good projects. Though I was corrected on Steemit by a friend who suggested that Antshares is actually the Chinese Ethereum and not the Chinese Bitcoin, I still stand by it. And you want some variety in your holdings – known as “hedging” – so having some exposure to Asian markets is a really good idea.

Bitshares – BTS

Ten days ago: accumulate at 8000 Sats.
Today’s price: 4700 Sats.
Recommendation: HOLD.

This is the most “meh” of our picks. I’m not going out of my way to pick more up, and I’m possibly going to become a “bagholder” here.

BUT…it could pop again – it’s below its one-month highs of 12,000 Sats. It’s just not a project I am in love with, so I’m giving it a HOLD recommendation.

Next Steps?

Well, similar to the others we talk about here, we’ll keep watching these as they emerge. There will likely be more blog posts like this one down the road.

And we’ll keep eating our own dog food.

Jul 15 2017

Get Your Crypto Bingo Card!

I mean, really…would any sort of industry be complete without a BINGO card? We’re talking about all the lingo that’s out there – and, especially for the next two weeks or so, with the Bitcoin fork/not a fork/SegWit discussion…

Anyway, feel free to download this Crypto Bingo card. And use it carefully.

Jul 13 2017

DIY: Your Bitcoin Hedge Fund

It’s time to update our Bitcoin Hedge Fund, which we told you about back in May. Before we do that, though, this reminder: we DO have a Facebook page, we ARE on Twitter, and we’ve been spending a ton of time over on Steemit. We’d love to have you join in on the conversation in any or all of the three.

And away we go…

Hedge Fund Background

First of all, the typical standard disclaimer: do your own research. We’re not responsible for gains or losses. Get legal, tax, and accounting advice. Don’t invest more than you can lose. These are volatile-as-f markets, y’all. Really volatile, especially the past several days, where there was at least a little bloodletting and panic.

Anyway, our original post said we’d park a small amount – in our hypothetical fund, we chose a guy named “Herbie” and his hedge fund (“Herbie’s Hedge Fund”) had $10,000 to invest. We chose this amount as ten percent of his investment capital. Is that a good amount? A bad amount? Too high? Too low?

Heck, that’s for you to decide. If you’re Wences Cesares, you’d put 1% of your net worth in Bitcoin and leave it there for several years. That may turn out to be good advice, or it may turn out to completely fizzle.

What We Started With

Our hedge fund had a nice mix of established coins – the BRED portfolio, of course – as well as some emerging coins and a recent ICO. Here’s what it looked like then:

If you have more than a passing understanding of the markets we’re in, you might think every one of those coins has gone up since May 1. And you’d be almost 100% right: using today’s prices, grabbed from CoinMarketCap.com, here’s what you’d have:

Some notes on what we see here:

Bitcoin: Holding Steady

Bitcoin is doing well enough, and it started as 30% of the portfolio – for reasons detailed in May, but, if it’s becoming the reserve cryptocurrency, then yeah, you want a good chunk of it.

What will be interesting, though, is where it goes in the next 20 days or so. Hard Fork, Soft Fork, stuff that even we admit we’re paying attention to but not studying THAT closely – the August 1 deadline date for Segwit-related movement on the part of the BTC-hemoth will mean movement in price not only of BTC, but perhaps of others in the BRED portfolio…and LTC, too.

Timing on LTC, DGB, XRP: Not Bad!

From the “blind squirrel” department, all three have done well. Litecoin was, indeed, a defensive play – you could argue that it belonged in our BRED portfolio – some folks have told us so – but it’s (in our eyes) a bit like Bitcoin and a bit like Dash. But it’s also seen as a Bitcoin alternative, so that’s why it’s here. And it has nearly doubled in the past five weeks.

And some of our success is a little bit of luck – we thought we could be too late to get into Ripple’s XRP token, but it turns out that quadrupled for us.

Digibyte went on a tear, then pulled back and is now back down to Earth – if Earth is an 11x growth in its price.

And, About Our Laggard

Win some, lose some. WeTrust is still a good product/coin/token/system/platform. And we’ll keep it here because we do think that it has tremendous potential.

But two things do jump out at us here at Metacoin HQ:

We picked the wrong ICO.
We are also missing out on a number of these ICOs because we’re in the USA.

A Word on ICOs

Initial Coin Offerings used to be all the rage a couple weeks ago. Then Ethereum pulled back and cries of bubble were everywhere.

THEY’RE BACK.

Tezos $XTZ pic.twitter.com/zswITrHUiY

— BambouClub (@BambouClub) July 13, 2017

That’s one we missed out on entirely because we’re in the USA and these will not let Americans get involved. You have to wait until they are traded on an exchange…

That could actually be a good thing – if an ICO is oversold, overblown, and overhyped, it will more than likely fizzle once it hits the markets, creating a buying opportunity for mere mortals, er, Americans.

But, and this is a message for Congress as they look at tax reform, and maybe, too, a message for the SEC: as long as there’s a ton of caveat emptor attached, what really *IS* the problem with these ICOs being open to American investors? How are they any different from, say, my deciding that Blue Apron is awesome and I want to bet my IRA on the Blue Apron IPO?

Food for thought.

Two More Things

One – our hedge fund actually looks a bit different today than it did on July 1.

Yeah, $7,000 down since July 1. This is why we updated the numbers on July 13 – it’s a more accurate picture of what’s happened over the past 12 days.

Two – your own hedge fund. We told you before that this is a hypothetical experiment and you can use this as a guide for creating your own. However, we like the basic principles here: some big coins, some smaller coins, maybe an ICO or post-ICO coin or token or two. The general idea, as always, with a hedge fund is that you want to hedge your bets.

Overall markets – stocks, bonds, mutual funds, precious metals, pork bellies – those could tank tomorrow, or explode tomorrow, or trudge along. If you have all of your eggs in one basket, you’re likely going to have trouble someday. And if you have all of eggs in the wrong basket, that could spell trouble, too.

Love to hear your ideas! Tell us on Twitter, or in the comments below.

Oh, if you HAVEN’T gotten some coins to get started, pop on over to Coinbase, use this Affiliate Link, and you’ll get a Bitcoin Bonus with a qualifying purchase.