May 23 2017

Bitcoin Millions

Bitcoin, and the world of cryptocurrency, is filled with predictions that will cause the whipsaw effect: “You Said WHAT???” And, with the #Consensus17 hashtag trending as the largest industry event enters day two, the whipsaw effect might be turned up to 11.

Probably the most outlandish prediction to date comes from this Quartz article, which talks about what Wences Casares had to say at a private dinner event – one of the dozens taking place at Consensus – just last night.

Long story short, Casares suggests taking 1% of your net worth and parking it in Bitcoin, then ignoring it for several years, up to a decade.

Casares pretty much says that he’s either betting on complete failure of the Bitcoin ecosystem – odds he puts at “20%” – or a runaway success that makes each Bitcoin worth…well…here’s his quote:

If it fails, it will be worthless,” he says. “If it succeeds, in five to seven years it [one bitcoin] will be worth more than a million dollars.” He puts the chances of success at greater than 50%.

Orders of Magnitude

On the one hand, that’s a darn outlandish prediction.

But, on the other hand…

A couple months ago, Bitcoin was trading at around $1,000 per coin. Today, it’s in the $2,200 range, more than doubling in a month. And due for a pullback, right?

Contrast this with the growth of Ripple’s XRP token, which has gone from a half a penny to 30-plus cents each so far this year, and Bitcoin looks like a laggard. But talk about the network value (or market capitalization) of Bitcoin, which is right now at just $37 billion, and compare BTC to…what, the market cap of Facebook? That would mean an order of magnitude growth for Bitcoin – and then some – to get to Facebook’s market cap of $400-plus billion.

Once you start making comparisons and looking at the growth of the network, the potential is certainly there.

Of course, we could also see Bitcoin fall flat on its face, take the altcoins with it, and we’re talking about a whole host of ones and zeros that are worth rather close to zero.

About that 1%

So if Mr Cesares says to invest 1% of your net worth, and we take an average figure of…$100,000 (I’m ballparking – yours could be much higher, but think about the average American and this seems like about an average figure), then we’re looking at your investing in 1/2 of a Bitcoin, roughly.

Might take more than $1,000,000 per Bitcoin for the average American to be a millionaire here.

Did we tell you there would be hyperbole at Consensus? We did.

May 22 2017

Signal to Noise Ratio: Be on the Lookout

It was a busy weekend for cryptocurrency. And, with Consensus – the largest event in the Bitcoin, blockchain, and cryptocurrency industry – getting started this week, you might be in for a crazy ride of hype, more hype, and even more, uh, hype.

Today, we’re going to talk about the “signal to noise ratio” – expected to be heavily weighted this week in the direction of NOISE – as well as what to potentially look for coming out of the event.

Weekend Headline #1: BTC and ETH

First, Bitcoin and Ethereum jumped over psychological hurdles ($2000 for BTC, $120 for ETH), then pole vaulted over the same hurdles, with prices for each reaching all-time highs that might have seemed folly just a couple of weeks earlier.

In fact, we looked at our own screenshot from April 26, where we saw that Ethereum was in the 50s and we thought…WHAT?

This is not unexpected, however: for every case out there that “Bitcoin is overvalued” or “Ether is just a me, too technology,” there seem to be dozens of stratospheric projections – some based on math! – that both coins are only scratching the surface.

Weekend Headline #2 – Altcoin Roulette

Meanwhile, the “Altcoins” – those non-BTC coins that are highly volatile – were also doing some rather odd things in the markets. Take two of the more interesting cases from one of our hypothetical portfolios: Digibyte and Dogecoin.

Here’s a screenshot from our “Hedge Portfolio,” with the three-week growth of those two coins highlighted.

Anyone else think this all looks eerily like the late 90s? Instead of a high-flying Internet stock tip, it’s a high-flying cryptocurrency bet that could go from, in the case of Digibyte, $1,000 to $15,304.77?

The flipside of the late-90s argument is the “how are these used in the wild?” argument. Digibyte went “Segwit” before the other mainstream coins. Doge is called by some “the world’s tip jar.” With real use cases and actual nine-digit market caps for both coins, it’s not that you’re betting on cocktail-napkin business plans.

Signal to Noise

We’ve talked for the past several weeks about things like “fundamentals,” and business plans, and use cases, and white papers. And, the fact that we spent so many years in financial services and fintech marketing and communications means, frankly, that we can see through a lot of the BS that accompanies any launch.

This week, as the industry gathers in NYC for Consensus, we invite you to be on the lookout for BS. For hype. For marketing double-speak – which, it should be no surprise, exists in the blockchain and crypto universe, too.

Honestly, and this is not trading advice and you should of course seek your own counsel, fundamentals are what attracted us to investments such as Bitcoin, Ethereum, Digibyte, and Dogecoin in the first place. Sure, each has its fanboys and fangirls on the various chat boards, but the reality here is that each has the fundamental potential to make serious noise in this emerging industry.

We invite you to do the same: watch for the “check out this COIN, bro!” posts vs. the announcements of actual news from the businesses. See what looks like an engaged, active community online vs. a coin with lots of questions but very few answers.

And as always, stay grounded. Do your research. Don’t dive in with more than you can handle.

Have a Great Week!

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May 19 2017

Bitcoin $2000, Ethereum $120

Quick post here, because most pundits will, IMHO, “Bury the Lead.”

(If you’re not familiar with that concept – “burying the lead” involves talking about everything but the biggest news first. Sorta like…”Hey, how ya doin? Did you hear that it’s supposed to rain today? Yeah, it’s been kinda cold, too. My dog is tired. The kids are okay. By the way, I won the lottery last night and now have a million dollars! Talk to you later.”)

And all the pundits will say “OMG, Bitcoin got up to $2000!” Which is great. A worthy accomplishment.

But, IMHO, the worthier accomplishment – and the “LEAD” in this story, is this: Ethereum is up to $120.

Ethereum All-Time High: Biggest News of the Week

Why?

Support over $100/coin. This is rather big, since ETH went over that figure overnight, stayed over that figure this morning and into the afternoon, and now leads Poloniex in volume (on the BTC-pairs portion of the exchange; screenshot above).
Ethereum is the business story – maybe moreso than Ripple. Yes, the XRP love was shown this week, and a pullback into the 17000-Satoshi range wasn’t unexpected. But where the action is going to be is not necessarily in payment processing and transactions between banks (which, don’t get me wrong, is vitally important), but in using Ethereum’s “smart contracts” to underpin just about every sort of insurance, banking, legal, and other kind of contract in the world.
That was a bold statement – and it’s one we talked about a little here. The ETH coin underneath the Ethereum technology has the potential to be more earth-shattering than Bitcoin itself, and more earth-shattering than Ripple’s XRP for sure.

And an ETH Investment YTD…

Here’s this afternoon’s BRED Portfolio chart. Sure, it’s no XRP, but your ETH investment would be would be A-OK.

OMG.

Happy trading!

BTW, if you haven’t gotten started with Bitcoin, Ethereum, or Litecoin yet, use this AFFILIATE link to check out Coinbase. You’ll get a $10 bonus (well, $10 worth of BTC) with your $100 purchase of any of the three coins. And we’ll get a $10 bonus for referring you.

May 17 2017

The Ripple Effect

OMG, Ripple! OMG, XRP!

Ripple, the company, and XRP, the coin, are both on a serious tear. How serious? Let’s give you a few points about this, ahem, Ripple Effect. (I’m here all week.)

1. It’s made us question various portfolios.

Yeah, yeah, we talk about the #BRED Portfolio quite a bit here. In fact, we were gonna write about this very subject on Sunday morning, before we got sidetracked. Here’s the Excel chart we were going to share.

And here’s that same chart, but updated with today’s numbers (pulled around 8 p.m. CDT, May 17, from Poloniex, USDT trades).

$10,000 in our basket of Bitcoin, Ripple (XRP), Ethereum, and Dash would yield more than $206,323.19 today. IN FACT, a $2,500 investment in RIPPLE on January 1 would be worth $154,270.04 today.

How much portfolio weighting and shifting should one do after an exercise such as this? Remember, we entered this HYPOTHETICAL portfolio on January 1 with four coins that were each equally weighted.

So we did the math: re-weighting the portfolio on April 1 would have given you 115,000+ coins/tokens of XRP. That, using the above math – VOLATILITY, BABY; the numbers keep shifting as we type – would give you more than $46,000. In XRP alone. (Whole portfolio? Went from $10K to $57,000.)

2. It’s made us wonder…why it’s so special?

I had to – literally – “STOP THE PRESSES” when I saw this article from Logan Kugler on the Huffington Post website. It’s awesome; there’s no sense in my trying to explain what he explains so well. Here’s a link:

Ripple and XRP Are More Stable Than You Think.

To wit: they’re going to take out SWIFT. Next year? No. Ten years from now? Maybe.

AND the article does a great job of walking us through the differences between Ripple (company) and XRP (the coin).

3. It’s made us look for…the next Ripple.

The thought of having any asset that goes from half a cent to 40 cents makes any trader drool.

We had been working on a post we were calling “The Next XRP?” and then we had to stop writing the post because, well, the next XRP is actually XRP.

That’s not a fair answer to the question, though. Is there another company with technology like Ripple AND a coin like XRP? We don’t think so. (Re-read Logan’s article for the down low.)

However, is there another coin that could go from less than a penny to 40 cents, or beyond? Sure. (Don’t worry, we’re working on that blog post.)

For now, y’all…sit back, relax, and enjoy the Ripple (effect).

May 16 2017

Calm Down, Everyone…

Are we in a Bull Market for cryptocurrencies? Is your latest “Pick of the Day” going to the MOON? Are you witnessing a pump-and-dump?

Is Ripple really going to be bigger than Bitcoin in the next month?

Will Bitcoin go to $5,000 a piece?

Calm Down, Everyone…

Really, while some of the froth in the market might be scary, there are a few questions you should ask yourself before entering into any investment or asset class; this is what you should do if you’re buying stocks, bonds, mutual funds, pork bellies, platinum futures or, yes, Bitcoin, altcoins, or any crypto-asset.

1. Is this fundamentally a good pick?

Let’s talk about Ripple – XRP is the ticker, and the token/asset/coin attached to the technology. While it appears that 389 gazillion XRP are in existence, you can get off the company’s back for a half-second. It’s not THAT many – 38.3 billion to be exact – AND the company announced today that they are escrowing 55 billion tokens.

So the froth around XRP – which is now #2 in the rankings, ahead of ETH and still well behind BTC – probably comes from the fact that the technology behind the token is actually being used, and that Ripple is actually taking on SWIFT. And, it appears, in some cases, winning.

Fundamentally: XRP is more than likely a long-term player, and its technology will likely make a whole host of behind-the-scenes bank transactions easier. Thus, it’s a good call.

But you should be asking yourself if there’s something to it that you can grasp, a concept that makes sense, and the people and technology that gives it a chance of being successful.

2. Will this be around in a few years?

I remember, back when electric cars were becoming a thing – but hadn’t yet become a thing in the US – and there was a company called “Think” that was bringing Finnish (?) automotive technology to the US.

It was a great concept, and it was poorly executed, and there wasn’t a vision behind it, and it fizzled.

Contrast that to Elon Musk and Tesla. Who cares that Elon himself didn’t invent electricity; you wouldn’t know it if you saw one of his press conferences. The guy can sell air conditioning to the proverbial Eskimo – he’s probably already contracted with Eskimos everywhere to put solar panels on igloos.

Why do I bring that up? Ages ago, for another site I have worked on, I made what I thought was a bold prediction: Tesla is the Next Apple. I doubted my own prediction last year, but now I’m starting to look like maybe I was on to something.

The Tesla vision is pretty simple: electricity, coming off your roof, coursing through your home’s veins, powering your auto.

Contrast that with…well, pick a coin, any coin. Ethereum: Smart Contracts, powering a whole host of transactions in a wide variety of industries, in as transparent a fashion as possible. I’ll take that.

3. Can I afford this? And…Can I afford this going to zero?

That’s right, another part of the sniff test: what if your investment hits rock bottom.

You should get professional advice, your should do your own research, and you should talk to a whole bunch of different folks about any investment. But, especially with a really REALLY emerging and crazy space like cryptocurrencies, you should “bet with your head, not over it.”

It’s possible you could end up a “bag holder” – someone who buys in at the top, then watches the asset drop like cray-cray, then finds themselves with 100,000 tokens that are worth .00000001 each. (In crypto parlance, that would be “1 Satoshi.” At today’s prices, $1.78, give or take.)

Happy Trading. Now…Everybody Calm Down.