Archives for August 2017

Aug 07 2017

Crypto Hedge Fund Update

One note before we dive in: we’ve actually made one minor tweak to the “Hedge Fund,” which you’ll see below. We’ll also explain why, but suffice it to say that this is a space that’s always shifting, and we thought this shift was important.

Hi! How was your weekend in Cryptoland? Oh, you didn’t visit?

Wait, you don’t know how to find Cryptoland? You must be new here.

Anyway, sit back and relax. Let’s take you on a little journey to the small corner of Cryptoland we call the DIY Hedge Fund.

***DISCLOSURE: As always, do your own research. This is not investment advice or financial advice. We aren’t responsible for gains or losses. Don’t invest more than you can afford to lose.***

Why We Invested In What We Invested In

The main reason behind the hedge fund was…well, to act as a hedge against other things happening in the world economy. As we mentioned back when we launched this fund, this was (1) hypothetical and (2) based on an assumption that someone has net investment funds of $100,000. That’s how we arrived at the $10,000 figure – 10% of the overall funds.

We gave it variety – didn’t want it all in Bitcoin, and we needed to have a couple emerging coins, too.

Plus, we wanted at least one recent ICO, leading us to WeTrust – which we’re actually getting out of in this hypothetical fund.

So we’ll have to change that fun graphic. But that’s not as important as telling you about the results…

First, where we started

Here’s how the initial investment, made on May 1, broke down.

Simple enough, right? 30% in BTC, and the rest split between those categories – “Established,” “Growth,” and “Emerging”) we talked about above.

(You could argue whether Litecoin should move into the second category of “Established” altcoins – it’s not a Growth coin anymore, and it’s one of the Crytpo Unicorns now, with greater than $2B in market cap – but let’s keep these categories as is for now.)

Now that we see where we started, let’s see what it looks like today, August 7, with the prices from this morning (as close to midnight as we could find, GMT, pulled from CoinMarketCap.com).

Not too shabby, right?

Actually, if you could get those sorts of returns from any asset, you should probably take them; any time you take $10,000 and turn it into nearly $40,000 inside of three months, it’s nothing short of staggering.

But We Had to Make a Tweak

That’s right, we ditched WeTrust, since we didn’t like the fact that it was our only negative return. We replaced it with Tierion, which is an ICO that – full disclosure – Dave personally invested in.

We simply swapped the dollar value of the WeTrust coin for an equal amount of Tierion, which was priced at $0.071 by the coin’s management team.

And we are now off to the races…again.

We’ll keep tracking this fund – as we do our BRED Portfolio – and we’ll let you know what happens as we continue our journey through Cryptoland.

BTW…

We’ve also been telling you about Bitconnect – the lending platform backed by the Bitconnect coin. Click on the banner ad below to get started; it’s our affiliate link but, if you join and get others on board, you can share in referral fees, too.

Aug 04 2017

Bitconnect – How Are We Doing?

We’ve been trying an experiment here at Metacoin HQ: can we use a small amount of capital on the Bitconnect platform and see the kind of results that make it a worthwhile investment? This post will contain our BITCONNECT REFERRAL LINK quite a few times – so you can read on and decide for yourself if you think it’s legit. We’re not here to sell you on the platform – you can make that decision on your own; if you do decide to join, use the link above and warm our hearts appropriately.

To that end, here’s a disclaimer before we dig in: Do your own research. With anything in this rapidly changing and evolving crypto space, past performance may not be indicative of future results. Your experience may vary. Also, be sure to talk to your own legal advisors and accountants and tax people. We’re not responsible for any successes or failures of yours: your investments are entirely your own responsibility.

OKAY, y’all…let’s find out what’s really going on with Bitconnect.

First up, the difference…

…Between the Bitconnect coin and the Bitconnect “Volatility Software.” We think it’s really important to understand where one stops and the other begins. (BTW, what follows is a banner ad that we found; it works like an affiliate link.)

The Bitconnect Coin is ranked 15th by market cap, according to Coinmarketcap.com. Here’s a screenshot of some of the statistics:

Upshot for those who don’t want to study the details – in case you don’t want to, say, examine the blockchain behind it – is that it’s sizable enough to not go anywhere. Legitimacy is key, because you’re buying the coin first – that’s a must – in order to have access to the volatility software. Were this a coin with a low market cap, you might ask a few hundred more questions.

The flipside here, though, is the “Mt. Gox” element of ANYTHING IN THIS SPACE. There could be a hack, or an inside job of some sort could cause large chunks of the coin to disappear; the Bitconnect coin could plummet in value, leading to a “run on the bank.” Or the founders and large “whales” with lots of BCC could dump the coin, which could have the same effect.

So that’s the risk with any of these coins – the risk, in our view, may well be exacerbated by the fact that there’s that volatility software element. It’s the man behind the curtain: we don’t know how he (or she) operates, and his run of magic may come to an end.

Now, Let’s Invest – or Lend – or…

When we first “went there” a few weeks ago, we said the same thing we’re saying now: it’s an experiment.

It’s a simple process: take your Bitcoin – you of course need to get some first, which you can do with Coinbase by using that affiliate link over there- and convert it to Bitconnect. Using their platform is the easiest way (though you could use one of the exchanges on which BCC trades, too) to convert the coins.

Once you have the coins in hand, you need to “lend” them. And, our best guess here is that you ARE technically lending your coins – but you’re lending them to the Bitconnect folks, who then take their volatility software and work their magic.

For us, this process was a little bit of a pain. We decided to bite the bullet and actually get into the mix on a day when prices were plummeting on all of the exchanges. And we moved coins back and forth and money around just enough to get $110 – $10 more than the minimum – into the system.

Our journey was now underway.

How it Works, Part 1

Once you have invested in the platform, you will need to keep a couple things in mind. One is that you are now saying goodbye to your money for as long as 299 days. See this chart:

That’s right: my first investment was on July 10, 2017. I will not see my capital return until May 5, 2018. If you remember those “substantial penalty for early withdrawal” notices you used to hear about bank CDs, well, this takes it to a new level. Your funds are locked up and you will not see them.

However, you will see the interest, and that interest is something you can withdraw at any time.

The Interest

Here’s what that interest has looked like for the past five days.

Interest is tabulated daily, but it is tacked onto the original investment amount only.

The beauty of compound interest has been talked about over and over, so we won’t give you all the Einstein platitudes about it. We will tell you that you will have to do the actual compounding. That’s right, playas, you need to reinvest on your own in order to compound.

This is a rather important fact – and one that we actually missed for a few days while we were focused on other things. Yes, we’ll be more diligent next time.

The Actual Results So Far

Some notes about the above:

Though the minimum buy-in is $100, the minimum amount to reinvest is only $10.
This reinvestment must be done in multiples of $10 – so we could technically have reinvested after eight days.
They take what’s left over and call it “leftover” and put it back into your account.
When you reinvest any amount, it is locked up for 299 days (unless you are reinvesting an amount that’s greater than $1010, which cuts your “lockup” time by 60 days).

The Referral Program

This is where it gets…well, interesting. There’s an element of this that is old school affiliate marketing – “hey, here’s our Referral Link” is something you’ll see all over the place, and it’s why this is the third time we’re mentioning our own link in this blog post.

But where it’s even more intriguing is that there’s also an element that is similar to multi-level marketing. That’s right, by nature of my signing up, I’m now in someone’s downline. He gets commission when I invest or re-invest, and I get commission when someone I refer invests or re-invests.

This all has me wondering whether or not this is a sustainable business model: at some point, we’ll all run out of people to invite to this system, and the value of Bitcoin might drop, or the entire crypto universe could render itself obsolete.

Another Note of Caution

Sustainability is a really big buzzword: more than just “is this environmentally sound?,” sustainability can and should include questions such as “will this business be able to continue?” More endemic to this discussion – is Bitconnect here to stay?

I don’t honestly know. That’s why I gave you several up front caveats.

Now, in theory, with a total number of coins in circulation that’s right around 1/4 of the total coins to be created, Bitconnect may very well have the inflation thing down. And, since they advise you to “pay no attention to the man behind the curtain,” what we don’t know about the system may be an okay thing. High-frequency trading can certainly throw off percentage gains here and there that eventually add up, and perhaps this system does that in such a way that it can be sustained as long as Bitcoin remains somewhat volatile.

But it could also come crashing down. My 299 days could balloon to infinity if the money all of a sudden isn’t there.

These are risks throughout cryptocurrency, and this is why you are advised anywhere and everywhere in this space to only invest that which you can afford to lose.

Projections Are Also Dangerous…

I mean, really…do we think that 30% returns are sustainable on an annual basis? 30% a month is…well…nuts.

My math tells me that the original principal of $110 would, if it continues and I continue to compound, turn into $2500 in one year.

Once you see a projection like that, you start to think: “well, what if I invested $1100? OR $11,000!!!”

Here’s what I’m going to commit to doing: I will keep an eye on this coin, this project, and this system, and I’ll keep you up to date on what I learn. Warts and all.

Color me still intrigued, a little skeptical, but willing to ride this out and see what happens.

And here’s that link again, in case you want to join us.

Aug 03 2017

The BRED Portfolio Update: Still Doing Okay

Since April, we’ve told you quite a few times about the BRED Portfolio: our own specially selected basket of currencies. Artisan, GMO-free, and tasty! Actually, no…just four of the cryptocurrencies that you would have done well with, had you invested $2,500 in each of them and left the basket alone.

Whether or not they’re the coins for hipsters or they’re the tokens of the future is beside the point: the idea here was to create an index of sorts. This basket was selected for its simple diversity:

B – Bitcoin. The crypto that started crypto.
R – Ripple. Their XRP token is taking on SWIFT, the international banking and money transfer protocol. (This is the closest thing to investing in a Silicon Valley startup you’ll find in cryptocurrency, as it’s an actual Silicon Valley startup.)
E – Ethereum. The smart contract underpins so many of the ICOs that have burst onto the scene.
D – Dash. Dare I say it still has the best community, and it is still the closest thing to a consumer-friendly cryptocurrency being used in the wild.

Before we share the updated results, a word on the fork.

Ah, the fork. The spinoff. The creation of Bitcoin Cash, which came “out of nowhere” this week and became the third-largest cryptocurrency on the planet. By market cap, at least – though, due to the nature of the beast and the system, price was all over the map and volatility was everywhere and some people have yet to find their coins.

For the purposes of this portfolio, we are going to assume that we held all the keys for all of the coins. Thus, any sort of fork would have given us the same number of BCH coins as the number of BTC that we started with.

Other than that move, nothing was done to the portfolio. Nothing pulled out, nothing added in.

So, How Are We Doing?

Yes, had you invested $10,000 in these four cryptocurrencies at the beginning of the year, you would have turned that basket into a rather large basket, growing it to 17 times its original size.

But, as you can see from that chart over there, we’re actually below the highs for the portfolio, and below even the June 1 levels.

What gives?

The combo of Ripple and Ethereum are both down from where they were, with each having hit all-time highs earlier this summer.

But we’re still way above the starting point – both Ripple and Ethereum took their original stakes and multiplied them 20-plus times.

The Question: Is Buy-and-Hold the Way to Go?

Only you can answer that question, and we encourage you to do your own research. And seek legal and financial advice from professionals, too.

We’re just here to share ideas and let you do what you want with them.

And one thing we did hear loud and clear this week was that different strategies to manage through “the fork” could all possibly work. Some traders we follow buckled down and held their Bitcoin and didn’t do much with it, other than wait for their Bitcoin Cash tokens to manifest themselves. Others dumped their Bitcoin and doubled down on altcoins – those cryptocurrencies that are lower on the totem pole and, in some cases, highly speculative investments.

The BRED Portfolio is likely somewhere in between – you’re holding your BTC, but you’re also holding some other coins and tokens that aren’t necessarily altcoins.

So this is one way to potentially manage through the Bitcoin and crypto universe – with a semi-diverse basket of four coins that have done pretty well this year.

Aug 01 2017

Here Come the Altcoins

In the Bitcoin universe, it seems most everyone has August 1 circled, starred, underlined, and highlighted on the calendar. Today’s the day of the “Hard Fork,” or the “Soft Fork,” or the end of life as we know it, or the beginning of the Bitcoin bull run.

Strategies for investors have been all over the map: sell all altcoins – those other cryptocurrencies, ranging in size from billions in market cap (Ethereum, Ripple) all the way down to that one “crap coin” that might go 10x or 100x (or 1000x) – or buy this altcoin or that altcoin and hold on for dear life. And then there’s BCH – Bitcoin Cash – aiming to become that fork (hard or soft, we’re not sure) that sets the world on fire. Or gets sold en masse once we figure out who is holding what.

Carp Coins — We don’t use the word “crap” round here, preferring “carp.”

A quick screenshot from this morning, though – 8:15 or so Central Time in the US, well into first day of the new era in other parts of the world – tells us that maybe the “hold the carp coins” strategery might make a little sense.

Nice little run, right? Everything is green – positive growth for the most-recent 24-hour period.

Were it that simple, though, practically everyone would have chosen altcoins as their post-fork, August 1 and beyond strategy.

Making sense of the nonsense

I’ve witnessed a whole bunch of craziness during the past few days. To wit:

The creation of BCH – which was originally making the rounds as BCC, but BCC is the ticker for Bitconnect (where you can lend out your Bitcoin, sorta). (Use that affiliate link if you want to explore it, it’s an interesting site and the interest possibilities are rather crazy.)
The lending madness on Poloniex, where people have loaned out Bitcoin at rates of 3 to 4 percent per day, on average, as others borrow the Bitcoin for their margin accounts and plan on, I don’t know, conquering the world.
The resilience of Bitcoin itself – which, let’s face it, looks like a pretty stable investment right now, having really only oscillated between $2400 and $2900 USD during the past seven days.

Does this mean the Alts are back?

Maybe possibly.

We personally moved in and out of a couple during the past week – in fact, one of our favorites, Siacoin, dropped into the 250-260 range and we dumped it – with plans of maybe returning soon.

Bargains appeared to be everywhere: Ripple’s XRP token was in the 5000s, Library Credits opened its private beta to the public and still stuck around below 20,000 Sats.

Tea leaves are tough to read, but the diversified strategy might actually be the way to go here. Right?

One last word…

It’s August 1, and, honestly, your guess may be as good as mine or anyone else’s. Rapid growth of all altcoins? BTC’s re-resurgence, testing $3000? Flight into coins like ETH and LTC and XRP as large-cap alternatives? All of the above?

As always, do your own research. Seek out professional advice for things like taxes and legal ramifications of your moves.

But one bet: the whole space – all of crypto – will benefit from the attention. So sitting on the sidelines might mean missing out on an asset class that could get larger and larger from here.