Investing

Jul 27 2020

Liquidity Machine Go BRRRRRR

If you have a hard time keeping up with the latest in crypto, fintech, or any of the other things that keep the economy moving, join the club. It seems like just yesterday we were all sharing a laugh over the Crypto Winter and lamenting how we could have gotten so many ICOs so wrong.

Then, out of nowhere, comes “DeFi.” “Decentralized Finance.” Sure, it’s Bitcoin, but it’s not, because it’s different, and decentralized, and it’s another term that you’ll pretend to understand and nod in agreement when you hear about and then move on to something else.

WELL, SOMETHING ELSE IS HERE. IT’S LIQUIDITY.

It’s Not Your Grandfather’s Liquidity

Why is Chairman Powell using what appears to be a pasta maker?

If you want to read a debrief on what is meant by these “liquidity pools” that are de rigeur now, go here: Coindesk Liquidity.

If you want *my* take on these liquidity pools, read on.

Did I Mention I’m Clueless?

I decided to jump into the pool — double entendre was intentional there — by learning what I could about a site called Yearn.Finance. $YFI is like the other liquidity pools in that meet many of these criteria:

New (with many having launched in the past few months)
Mysterious (names like “Compound” or “Ampleforth“
Volatile (see screener below)
And in Beta with warnings that “in Beta” means “could get rekt”

One month on the Great Ampleforth Coaster

How it works…in theory: you lend your coins into a pool and then those who need liquidity borrow and your pool lends your coins out at interest and you also get a share in the trading fees and it’s all dependent on algorithms and a number of variables, including whether or not there’s a need for the underlying assets and whether or not there’s a palatable interest rate and…

Liquidity in Action!

The above screenshot is, thank goodness, not the price at which I purchased YFI. I went to KuCoin to buy some and then…it failed. I tried again and…failed again. Finally there was success at something like $2000 a coin. Next:

I was the proud member of a Liquidity Pool and will now be printing money like Chairman Powell. Right?

Your Guess Is As Good As Mine

This is a serious FOMO game, as far as I can tell. Stories suggest large “whales” are making upwards of 50% a month on their deposits. Several hundred percent a year — or the equivalent — can be yours if you know what you’re doing, if your timing is right, and if the prices of these random liquidity pool tokens continue to give you the thrill ride of a lifetime.

Or not.

Once again, like everything in crypto, do your own research. You could lose everything. This isn’t investment advice.

And if anyone knows what is REALLY going on, let me know.

Final Warning:

I really fear these may be like some of the passive income “high yield” schemes we’ve seen on these pages. Which is why this small experiment is, indeed, small.

We’ll keep you posted.

Mar 11 2020

Time for Discount Bitcoin

It’s been a long, long, LONG week on the financial markets. Coronavirus fears plus an oil price drop made for a one-two punch that has left quite a few people scratching their heads. Trading was halted for a bit, and the Dow dropped 2000-plus points. That was MONDAY…

Tuesday was meh and now Wednesday brings talks of a bear market having finally arrived. You name it, it’s in the red.

Crypto people thought this could mean a flight to safety for BTC and other names in the space. Wrong. Bitcoin is really not digital gold (yet) and also doesn’t have a hundred-year track record of results.

SO…we thought we’d take a look at the year-to-date charts and try to get a handle on what the first ten weeks of the year — and what the coronavirus crisis — can tell us about what the heck is going on.

Headline 1: 11.5% Up from the Low

Okay, that’s one way of looking at it. Had you timed the market exactly right and bought at the low of $6994.28 AND held to today, you’d be up 11.5%.

The low wasn’t too far from the opening price in 2020: $7203, so an 8% gain if you bought on New Year’s Day. (Compare to a volatile stock, I guess.)

Headline 2: Had You Called the Top…

Let’s use the scenario above — you buy at the low because you are really really really smart and you “called the bottom” and “bought the dip” — to show you just how you could have done: a 48.7% gain!

Headline 3: What If You’re Bad at This?

Ah, let’s say you’re not so good at calling the market. You buy at the top and sell today because you think you’re calling a bottom.

You lose: to the tune of 33.4%.

HEADLINE 4: DON’T TIME THE MARKET

If there’s one thing that people who trade stocks for a living will tell you it’s this: “DON’T TIME THE MARKET.”

And if there’s one thing that we’ve told you here a few times, it’s this: “PLAY THE LONG GAME.”

Listen, We Don’t Have the Answers…

But — and we’re not financial advisors, do you your own research, etc., etc. — it probably makes sense right now to look at your own situation before doing anything rash like buying or selling tons of $BTC. Do you need the money for something else? What about your own long-term view? Do you feel like playing the market?

It’s a crazy world — made crazier by the fact that no one really knows what will happen to Bitcoin and crypto — so you’re best to stay grounded. Don’t watch too much news. And don’t go batty trying to time any market.

Feb 16 2020

BRED vs. Balance – Which Portfolio Wins 2020 So Far?

Well, this has been an interesting few weeks, huh?

It seems, at least to this reporter, that every time you look up someone is saying “this is the LAST TIME you’ll see Bitcoin under $10,000! BUY NOW! HODL!”

10K BTC Price Movement — Okay, that’s just one week…

Well, then…this *is* quite the development, in that the $10,000 resistance level is something that CT (“Crypto Twitter”) will tell you is really really important for short-term price spikes. So maybe there is something to be said for the fact that once BTC goes above $10,000, it holds for a little and then swings downward and then who knows what happens next?

But What Does That MEAN???

As you know, we’re less about trading crypto and more about investing in crypto. It’s about long-term projects — you can find a whole host of others who will tell you about short-term gains — and we did what we thought was a pretty decent post called Playing the Long Game a few months ago.

In the interest of talking about those long-term investments, we told you a few weeks back about the 2020 Balance Portfolio. Today, we’re curious about that portfolio, how it’s doing, and whether or not it stacks up against BRED, the stalwart we started tracking in 2017.

Let’s Go to the (Crypto) Videotape

Actually, before we do that, two things. ONE: THIS IS NOT INVESTMENT ADVICE. DYOR = DO YOUR OWN RESEARCH. We’re not responsible for your success or failure or anything in between. TWO: HERE IS A SPONSORED LINK: If you haven’t gotten yourself some crypto, we highly recommend Crypto.com. That’s our affiliate link and you can get a bonus by using it if you make a qualifying purchase.

A little foreshadowing: when we wrote the post on the Balance Portfolio a couple weeks back, we didn’t think we’d see the results that we’re seeing. We thought both would be up a little — but we didn’t think we’d see the winner that we saw.

First, the 2020 Crypto Balance Portfolio:

Two rather pleasant surprises here: ONE is that ETH has nearly doubled. (And, if you were following over the weekend, it had more than doubled before pulling back; prices were north of $280 a couple of times.) TWO is a big wow around EOS. That’s a little crazy, right?

So yeah, if you had invested $10,000 in this Balance Portfolio, you’d have nearly $15,000.

And you would have lost this little contest to the BRED Portfolio.

This one popped because of two factors: ETH (nearly doubled) and Dash (nearly tripled).

Another “Wait, WHAT?” moment was the fact that a $10,000 investment would have given you an 88 percent ROI.

Evidence It’s a Bull Market?

Not one asset in either portfolio is down Year To Date. Not one.

The worst performer of any of the assets was PAXG, which is tied to the price of gold.

What can we learn from all this? Not much, actually — it’s a Bull Market and stuff is up six weeks into the year. Some of the stuff is way up.

Might be time for the “Crypto Dartboard Portfolio:” we’re not going to tell ourselves we’re any better at this than someone randomly selecting crypto projects — but maybe there’s SOMETHING to picking a few potential winners, sticking with some old stalwarts, and hoping for a positive outcome?

As always, maybe staying interested in long-haul opportunities is really the way to go.

Jan 18 2020

A Balanced 2020 Crypto Portfolio

We struggled with this one for a little while, and you can’t really blame us: 2019 was a meh year for crypto, and our typical portfolio wouldn’t exactly be the way to go for 2020. Plus, a bunch of new entrants — both projects and categories — caught our eye last year.

Our first question: Does the BRED Portfolio makes sense anymore? Given the fact that Bitcoin had a good year and the others didn’t, does the mix of Bitcoin, Ethereum, Ripple’s XRP, and Dash still give you the kind of portfolio that will propel your crypto investments into the stratosphere?

ALSO, it may not be about the “into the stratosphere” anymore for you. And that’s okay. In any event, we have to figure out if there’s another way to do this.

First Up…How Did BRED Do?

Glad you asked: weird year for sure. Let’s look at the numbers:

2019 BRED Portfolio — Down a shade, but not insane, but…

So, in the interest of consistency, here’s what the 2020 BRED Portfolio would look like.

However, we don’t think this is the kind of portfolio to focus on for the year(s) ahead. We’ll give a couple reasons why we *think* there’s a rebalancing ahead.

Bitcoin still makes sense, but Ethereum less so.
Ripple is working on a ton of partnerships, but hasn’t grown like before.
Dash didn’t catch fire on the consumer-facing front.
Way too much else going on.

Let’s Follow the Trends and Create a New Portfolio

Without further ado, here you go: the 2020 Crypto Balance Portfolio.

So, what have we done here?

First Up, MOAR Bitcoin

If a stock went up 90% in a year, would you still want it in your portfolio? Or would you take profits?

Good question, and we address that at least a little by (a) keeping BTC in the portfolio and (b) ratcheting it up to 30% of the overall $10,000.

While I wouldn’t go so far as this commentator who thinks Bitcoin will go to $400,000 after its “halving” (when the mining rewards for Bitcoin are cut in half) in May, Bitcoin has cemented itself as the blue chip of cryptos during the past couple years.

You’ll also see that, in this Crypto Balance portfolio, we’ve ignored the forks. If there are notable forks this year, we can take those into account; but “forkening” isn’t that much of a deal the past couple years.

Ethereum, Still, Has a Role

We’ve done some writing on these pages about projects like Megacryptopolis; you can’t play with any of those NFTs, and you can’t trade any assets on OpenSea without ETH that’s in a Metamask wallet (or some other ETH wallet).

Ethereum is really a two-sided coin (ha!) — with quite a few bearish cases on the internet, and a few bullish ones, too. We think the bullish case outweighs the bearish case, though. We’re keeping it in, but dropping it down to 20%.

About the Other Five…

If our goal is a “balanced” portfolio…uh…what the heck does that mean?

In our case, we achieve some level of balance with the other 5 assets in this portfolio, each at ten percent:

XRP — The coin from Ripple still aims to underpin bank transfers, a la SWIFT. Also, if you still believe in the long-term prospects of the project, under a quarter per coin is not a bad deal at all.

MCO — We lurrve this coin. (That’s a technical term, like HODL.) Not just because you can get some for free just by jumping through a couple of hoops [DISCLOSURE ALERT: AFFILIATE LINKS IN THAT ARTICLE] but because they are doing the regulatory thing correctly. We’re American, and bank laws are pretty important to follow.

EOS — I’ll admit to still being really skeptical, but also see the benefits of owning some EOS as an anti-ETH.

VeChain (VET) — This has potential, thanks to the Toolchain, to be the standard corporate “Blockchain-as-a-Service” solution. Partnerships right and left throughout the world. Tremendously undervalued.

VET Website Screenshot — VET’s website tells you what they’re up to.

PAX Gold (PAXG) — One really clever idea is to tie the price of a coin to an ounce of gold — so it’s like Tether, but with gold behind it. Also helps the “gold bugs” get into crypto while helping the crypto bugs get into gold.

And…There You Go

Whether this will catch fire like the 2017 edition of BRED or stall like the 2018 edition of BRED or do nothing like the 2019 edition of BRED…all that remains to be seen. But the plan is that we’ll track both all year and see what happens from there.

Stay tuned. 2020 should be interesting.

Jun 24 2019

Playing the Long Game

Since *everyone* is jumping on the “IT’S A BULL MARKET” bandwagon of late, we thought we’d take a step back for a half-second.

Sure, the trappings of a bull market are there: the quick runs northward, the new entrants, the “OMG HODL” chants. And the $11,000 mark sure is nice.

SO – SHAMELESS PLUG – AND CLEARLY MARKED AFFILIATE LINK: get some crypto over at Coinbase, will ya?

But the real purpose of this here post is…playing the long game. Which means doing a couple things — beyond the HODL moments everyone will tell you about, or the “put 1% of your overall net worth into crypto” that the experts will hit you upside the head with — that might not payoff for months or even years. That’s okay. Time to play the long game with us.

**Let’s be as blatant as possible with this warning: do your own research. Your experience will vary. Not a substitute for investment advice or legal advice. You are on your own — we are just sharing information.**

Long Game Idea 1: Megacryptopolis

I shared my predictions with my buddy Von Likenstien from VRUoT. I was most curious about my timeline, as I said that Megacryptopolis (NOTE: THAT’S AN AFFILIATE LINK) was going to be huge BUT it’s going to take a year.

Did he agree? And how does Megacryptopolis compare with Decentraland — that other interesting land-grab style virtual world game that became rather large a couple years back?

“The big difference,” he told me, “is that, instead of depending on novice programmers to build the system, MCP3D is a complete, robust system. Plus, its economy is closer to that of the Sims.” Taxation is another element that is well thought out in MCP3D, according to Von.

From my perch: I am really new to the virtual world thing, and I never really played the Sims. Nor did I get on board with whatever that virtual world was several years back (must have been huge, right? I forget the name). But there’s something intuitive about the virtual world of Megacryptopolis. And the idea of millions of Chinese users having access to the game on their mobile phones this fall is extremely compelling.

Time Horizon: Probably a Year.

Long Game Idea 2: NFT Artwork and Collectibles

This idea isn’t just one site to visit, it’s an entire concept: Non-Fungible Token (NFT) Artwork and Collectibles.

This particular subject came up when Von and I were trading notes about CryptoSkulls — likely because he sent me a message and said “get on this, bro.” So I did, and ended up with my very own CryptoSkull.

When I asked Von about my CryptoSkull, here was his response:

OpenSea is where a lot of these things get traded, and the fact that it’s a non-fungible token means that it’s really tough to counterfeit.

As always, with these types of things, you’ll use a tool like Metamask and your ETH will be safe (provided you keep track of your seed phrase and guard everything rather diligently).

Beyond CryptoSkulls, there are CryptoKitties and even the pets that come as part of your Citizen packs on Megacryptopolis.

Time Horizon: Immediate (ish) to Two Years*

*the reason we said “ish” up there is that, if you want to trade these things and try to make a buck or two, you most certainly can. OpenSea is one place to do trading — but it’s sorta thinly traded right now.

Long Game Idea 3: ENS

Ethereum Name Service is more than just a new top-level domain for the web. In fact, the TLD component is coming later — a year and a half away, according to Von — because the real reason behind ENS is to allow people to send crypto (Ethereum and ERC-20 and ERC-721 tokens) to each other without having to type out a really long address.

Here’s a long address from one of my accounts:

0xD0f4c9280D87ae84c2590164FA089487615Fb1c8

And here’s an ENS “shortener” for it:

jaimedimon.eth

(Yes, I know that Jamie Dimon spells his name “Jamie,” this misspelling was done for a variety of reasons, mostly for humor.)

Some of the domains are already trading, and it’s highly possible that big banks will want their own ENS, for defensive reasons and also to get into the crypto game easily.

Time Horizon: Immediate (flipping/trading) to Two Years

Long Game Idea 4: Urbit

When Von told me about this one, he said “it might blow your mind.” Honestly, it kinda did.

The primer on the Urbit site will tell you more — and it is quite clever — but it’s likely you may not totally understand exactly what they are doing here. (I sure didn’t at first glance. Or at second glance. I’m getting there, though…)

TL;DR from the site: it’s a completely different network of computers, of the internet, of the web. It has the potential to change the world of the web as you know it.

Galaxies are the big hubs — there are a small number of them — then stars, then planets (the addresses on which you build what appears to be your own personal server and bot machine thing). (Again, I’m not a programmer — so I’m trying to translate this from technical into not-so-technical.)

(If you believe the naysayers: this whole idea has taken forever and hasn’t gone anywhere in a dozen-plus years, so why bother.)

Me? I figured (again thanks to Von) that the thing I should do is at least get one of these limited-edition planet things and see what happens. Because there won’t be a ton of them; and each one not only has its own unique name (ours is ~larwyn-tadlen) but its own SYMBOL.

One of those green things could control your toaster someday.

In any event, this one won’t take off for some time — but, in case it does, we’ve at least been part of one of the early land grabs. The network effect here might mean that we’re A FEW YEARS from these things taking hold and being used by the masses. Still, for what was an inexpensive investment for now (less than a cup of coffee), it’s possible that you could see one of those symbols on the cover of a magazine at an airport with the caption of “you could have bought this for two dollars in 2019, now it’s worth a million.” (That year could be 2049, though.)

Time Horizon: Five years, at least.

So there you have it: ideas for you to play the long game with. Some may seem out there, tougher to grasp than the “buy gold” or “have you heard about pork bellies?” ideas of yesteryear. A chance for you to start playing the long game.