Crypto Dabble.

edited 13 September 2021 at 7:14PM in Savings & Investments
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  • MalthusianMalthusian Forumite
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    7-8% APY with no exposure to the underlying price of Bitcoin. 

    I am pro crypto but don't know how to achieve this, are you mixing Bitcoin with stable coins?
    The usual answers vary from "some bro in New York has a magic money making machine" to "do your own research bro" to "wibble wibble".
  • edited 29 September 2021 at 3:09PM
    darren232002darren232002 Forumite
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    edited 29 September 2021 at 3:09PM
    tebbins said:
    Please stop spreading dangerous misinformation. 
    So, the fact that there are high interest yielding products out there other than the < 1% products offered by banks and that its possible to hedge risk away is 'dangerous misinformation' on a savings and investment forum. Got it. 
    tebbins said:
    Clearly loaning your cryptocurrency to a "bank", with no FSCS guarantee is not "risk free" and incurs counterparty risk by definition. 
    Did I suggest that? I thought I explicitly stated that you can keep control of your cryptocurrency yourself. Its easier not to, and given the rest of your post you have no business accurately assessing counter party risk anyway, but it is possible to achieve whilst holding your own assets.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk, I don't see how it is possible not to. If it requires "nouse", I fail to understand how it fan be "risk-free". How is it possible to make 7-8% pa from cryptocurrenciea without having exposure to the underlying price?
    "I don't see how it is possible," "I fail to understand," "How is it possible." About sums it up.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk. 
    Really? Please, if you have no idea how something this basic can be done using financial instruments, you have no place offering advice on a savings and investments forum about 'risk free' investments, which by definition usually involve hedging if its something other than T-Bills. This goes for any commodity by the way, not just cryptocurrencies. Do you think international companies operating across multiple currencies just accept FX risk!?
    tebbins said:

    You've said "nouse" and "smart enough to figure out how to get it in the first place" - please provide sources for your claims because suggesting there is a mysterious "trick" that you won't disclose but leave for us to figure out is, frankly, suspicious.
    Seriously, if you aren't capable of googling 'contango' and knowing the kind of arbitrage opportunity I'm talking about, you have no place dabbling in it. You're not sharp enough and you'll mess it up.

    ----------

    The key thing here is just being able to monetise an idea in a strategic way. Lets imagine you think tether is a load of fake money and that its all going to come crashing down. Well, you buy USDC, a rock solid fully reserve backed stablecoin, deposit it in a defi protocol and borrow USDT against it, sell the USDT and keep the cash.* If USDT turns out to be a fake money printer, its price crashes, you can buy back what you borrowed at cents on the dollar and then claim your original USDC back, whilst also pocketing the cash you got from selling the tether originally. Congrats, you've shorted USDT and your only cost of carry is the interest on the USDT you've borrowed (circa 4% per year). Counter party risk? Well, you're using code so there is no 'bank' or evil person to run off with your money and these protocols have had billions locked in them for over a year now and haven't been hacked yet, plus worked flawlessly as BTC crashed by 60% earlier in the year. Hence why I say they are safer than an actual bank - If the FTSE crashed 60% tomorrow you've have multiple defaults and unpaid debts. That can't happen with blockchain.

    *Bonus points for using the cash to buy back USDC, deposit it in an interest bearing protocol and using the interest generated to offset your interest paid on the USDT. Also bonus points for using this strategy as insurance for one side if you were trading a pair like BTC/USDT etc.
  • darren232002darren232002 Forumite
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    Cus said:
    Do you have 90% of your net worth in mainly bitcoin to store your present value for future worth, in the same way that someone would store 90% of their current net worth in gold prior to crypto being invented?
    Yes, basically.

    The caveat to this is that Bitcoin isn't at the level, yet, where it simply maintains value even if that is the ultimate end game. People want to argue that its contradictory that an asset can be both a store of value and something that increases in value (not price) over time. Yet, they will tell you that RE is both a store of value and is expected to increase over time in the same breath. BTC has to expand to soak up the demand, and that presents an opportunity for early adopters. Look at a historical chart of gold after '33 to get an idea.
  • CusCus Forumite
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    Cus said:
    Do you have 90% of your net worth in mainly bitcoin to store your present value for future worth, in the same way that someone would store 90% of their current net worth in gold prior to crypto being invented?
    Yes, basically.

    The caveat to this is that Bitcoin isn't at the level, yet, where it simply maintains value even if that is the ultimate end game. People want to argue that its contradictory that an asset can be both a store of value and something that increases in value (not price) over time. Yet, they will tell you that RE is both a store of value and is expected to increase over time in the same breath. BTC has to expand to soak up the demand, and that presents an opportunity for early adopters. Look at a historical chart of gold after '33 to get an idea.
    Interesting. It very much depends on the drivers for this though I would guess. At present I feel that BTC is not at all like gold, in that it is not some store of present value for future worth, but a speculation/expectation that it will increase in value, and that is the current demand.  That in itself may cause a significant correction at some point, and then it may very well become like gold, which is a defensive asset.
  • vart400vart400 Forumite
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    I was thinking at the beginning of the year about opening an account with Binance after a family member said they bought some BTC from there. After doing some research I worked out that it was far too risky for me and feel the boat has already sailed. At this stage, to me it seems like a 'pump and dump' where the early adapters will cash out and leave the newcomers broke.
    When you have Max Keiser (Mr Crash JP Morgan... Buy Silver) pushing it, you know to stay away.
  • edited 30 September 2021 at 8:18AM
    HCIMbtwHCIMbtw Forumite
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    edited 30 September 2021 at 8:18AM
    tebbins said:
    Please stop spreading dangerous misinformation. 
    So, the fact that there are high interest yielding products out there other than the < 1% products offered by banks and that its possible to hedge risk away is 'dangerous misinformation' on a savings and investment forum. Got it. 
    tebbins said:
    Clearly loaning your cryptocurrency to a "bank", with no FSCS guarantee is not "risk free" and incurs counterparty risk by definition. 
    Did I suggest that? I thought I explicitly stated that you can keep control of your cryptocurrency yourself. Its easier not to, and given the rest of your post you have no business accurately assessing counter party risk anyway, but it is possible to achieve whilst holding your own assets.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk, I don't see how it is possible not to. If it requires "nouse", I fail to understand how it fan be "risk-free". How is it possible to make 7-8% pa from cryptocurrenciea without having exposure to the underlying price?
    "I don't see how it is possible," "I fail to understand," "How is it possible." About sums it up.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk. 
    Really? Please, if you have no idea how something this basic can be done using financial instruments, you have no place offering advice on a savings and investments forum about 'risk free' investments, which by definition usually involve hedging if its something other than T-Bills. This goes for any commodity by the way, not just cryptocurrencies. Do you think international companies operating across multiple currencies just accept FX risk!?
    tebbins said:

    You've said "nouse" and "smart enough to figure out how to get it in the first place" - please provide sources for your claims because suggesting there is a mysterious "trick" that you won't disclose but leave for us to figure out is, frankly, suspicious.
    Seriously, if you aren't capable of googling 'contango' and knowing the kind of arbitrage opportunity I'm talking about, you have no place dabbling in it. You're not sharp enough and you'll mess it up.

    ----------

    The key thing here is just being able to monetise an idea in a strategic way. Lets imagine you think tether is a load of fake money and that its all going to come crashing down. Well, you buy USDC, a rock solid fully reserve backed stablecoin, deposit it in a defi protocol and borrow USDT against it, sell the USDT and keep the cash.* If USDT turns out to be a fake money printer, its price crashes, you can buy back what you borrowed at cents on the dollar and then claim your original USDC back, whilst also pocketing the cash you got from selling the tether originally. Congrats, you've shorted USDT and your only cost of carry is the interest on the USDT you've borrowed (circa 4% per year). Counter party risk? Well, you're using code so there is no 'bank' or evil person to run off with your money and these protocols have had billions locked in them for over a year now and haven't been hacked yet, plus worked flawlessly as BTC crashed by 60% earlier in the year. Hence why I say they are safer than an actual bank - If the FTSE crashed 60% tomorrow you've have multiple defaults and unpaid debts. That can't happen with blockchain.

    *Bonus points for using the cash to buy back USDC, deposit it in an interest bearing protocol and using the interest generated to offset your interest paid on the USDT. Also bonus points for using this strategy as insurance for one side if you were trading a pair like BTC/USDT etc.
    I thought your post about contango was really interesting for what its worth

    Never heard the term before, but did a quick bit of reading and it makes some sense in the same way systems like matched betting do

    The barrier is you appear to know quite a lot about alt coins, and that takes a chunk of self education, platforms where you can actually trade futures for coins and buy coins.. at this stage all I am really aware of is coinbase appears to be reccomended platform for purchases.. what bitcoin is, how it works and how it was established.. and I know a little bit about ethereum

    For people like me its a bit of barrier to educate myself on and give it the time.. long term investment with S&S is intuitively seemingly much simpler.. Any particular reccomendations on how to educate myself regardind coins, contango and platforms? 

    I would be interested in playing around with them a bit as a means of diversifcation. 
  • CusCus Forumite
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    tebbins said:
    Please stop spreading dangerous misinformation. 
    So, the fact that there are high interest yielding products out there other than the < 1% products offered by banks and that its possible to hedge risk away is 'dangerous misinformation' on a savings and investment forum. Got it. 
    tebbins said:
    Clearly loaning your cryptocurrency to a "bank", with no FSCS guarantee is not "risk free" and incurs counterparty risk by definition. 
    Did I suggest that? I thought I explicitly stated that you can keep control of your cryptocurrency yourself. Its easier not to, and given the rest of your post you have no business accurately assessing counter party risk anyway, but it is possible to achieve whilst holding your own assets.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk, I don't see how it is possible not to. If it requires "nouse", I fail to understand how it fan be "risk-free". How is it possible to make 7-8% pa from cryptocurrenciea without having exposure to the underlying price?
    "I don't see how it is possible," "I fail to understand," "How is it possible." About sums it up.
    tebbins said:
    Clearly owning cryptocurrency incurs cryptocurrency volatility risk. 
    Really? Please, if you have no idea how something this basic can be done using financial instruments, you have no place offering advice on a savings and investments forum about 'risk free' investments, which by definition usually involve hedging if its something other than T-Bills. This goes for any commodity by the way, not just cryptocurrencies. Do you think international companies operating across multiple currencies just accept FX risk!?
    tebbins said:

    You've said "nouse" and "smart enough to figure out how to get it in the first place" - please provide sources for your claims because suggesting there is a mysterious "trick" that you won't disclose but leave for us to figure out is, frankly, suspicious.
    Seriously, if you aren't capable of googling 'contango' and knowing the kind of arbitrage opportunity I'm talking about, you have no place dabbling in it. You're not sharp enough and you'll mess it up.

    ----------

    The key thing here is just being able to monetise an idea in a strategic way. Lets imagine you think tether is a load of fake money and that its all going to come crashing down. Well, you buy USDC, a rock solid fully reserve backed stablecoin, deposit it in a defi protocol and borrow USDT against it, sell the USDT and keep the cash.* If USDT turns out to be a fake money printer, its price crashes, you can buy back what you borrowed at cents on the dollar and then claim your original USDC back, whilst also pocketing the cash you got from selling the tether originally. Congrats, you've shorted USDT and your only cost of carry is the interest on the USDT you've borrowed (circa 4% per year). Counter party risk? Well, you're using code so there is no 'bank' or evil person to run off with your money and these protocols have had billions locked in them for over a year now and haven't been hacked yet, plus worked flawlessly as BTC crashed by 60% earlier in the year. Hence why I say they are safer than an actual bank - If the FTSE crashed 60% tomorrow you've have multiple defaults and unpaid debts. That can't happen with blockchain.

    *Bonus points for using the cash to buy back USDC, deposit it in an interest bearing protocol and using the interest generated to offset your interest paid on the USDT. Also bonus points for using this strategy as insurance for one side if you were trading a pair like BTC/USDT etc.
    What happens if USDC has issues where they have trouble returning the actual dollars put aside against the USDC? 
  • darren232002darren232002 Forumite
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    HCIMbtw said:

    The barrier is you appear to know quite a lot about alt coins, and that takes a chunk of self education, platforms where you can actually trade futures for coins and buy coins.. at this stage all I am really aware of is coinbase appears to be reccomended platform for purchases.. what bitcoin is, how it works and how it was established.. and I know a little bit about ethereum

    For people like me its a bit of barrier to educate myself on and give it the time.. long term investment with S&S is intuitively seemingly much simpler.. Any particular reccomendations on how to educate myself regardind coins, contango and platforms? 
    Well, the bad news is that there are no shortcuts here. Information normally translates in to edge in financial markets and there is no way of getting around that. I'm lucky because a lot of my friends from my prior industry ended up in this space - they know what they are doing and we discuss it. Compared to them, I'm an idiot.

    Crypto is moving at such a pace that pretty much nobody can keep up. I'd start by getting an overview of the main general areas and the ideas behind them; Base layers (BTC), Layer 1s (ETH, etc), DEFI (Staking/Farming) plus CEXs/DEXs, and NFTs. Your starting point should always be to thoroughly understand Bitcoin and monetary history, as those ideas (decentralisation, public ledgers) underpin the whole space. Then you move out in to L1's and look at the arguments behind ETH and the other smart contract platforms. A lot of my normie friends hold Cardano, but I don't think any of my crypto friends do (or, if they do its acquired at an early price in a 'this almost certainly won't work, but I'm buying it just in case as a hedge to my ETH holdings' kinda way). Being able to form an opinion and articulate it on this sector, particularly on say Cardano, is a good starting point for entry in to the wider space I think. Put some money in to a wallet (metamask) and start actually using some of these chains (ETH might be difficult for you to use given fees, so probably start on BSC). Provide some liquidity on an exchange in a stablecoin pair and get paid for the privilege (ie. see that its not a magic money machine). Provide liquidity on an exchange in an asset pair and see/understand impermanent loss (you'll probably get rekt, so maybe just research this instead). Do some staking of assets, either via the exchange or on chain, and understand/see the benefits/drawbacks of PoS vs PoW.

    The good news is that everyone is making so much money right now that people are giving away high quality information for free on a daily basis. This will change over time. You won't find a single central source, so you will have to cast your net far and wide, find trustworthy sources that you like and build connections. However, there are multi-millionaires on twitter giving out good stuff (as well as sh*tposting and some that use their follower base as liquidity - so be careful). I listen to a lot of podcasts, there is some reasonable stuff on YouTube (although its generally lower quality and for a more basic audience), and discord/telegram groups are good for making connections with others. Beyond that, read the whitepapers of projects you are interested in and those of their competitors. If we are being really honest though, the people that make the 100x's or got a cryptopunk/pet rock for a few hundred dollars (both now worth $400k - $1M+) are the guys that are coding on ETH and got them because they thought they were cool or fun. This is to say that the best way to learn about stuff in crypto (and therefore make money) is to be part of the community as a coder/builder, or be genuinely interested in the stuff that's going on. That's not viable for everyone and I get that. There's really nothing wrong with just buying BTC (and perhaps branching out in to ETH and other SCP stuff) - that alone should majorly outperform the major stock market index's over the coming decade.

  • edited 30 September 2021 at 8:30PM
    darren232002darren232002 Forumite
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    edited 30 September 2021 at 8:30PM
    Cus said:
    What happens if USDC has issues where they have trouble returning the actual dollars put aside against the USDC? 
    Would you like to describe an event that would cause this to happen to USDC, but not other stablecoins, and assign a probability to it?
  • HCIMbtwHCIMbtw Forumite
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    HCIMbtw said:

    The barrier is you appear to know quite a lot about alt coins, and that takes a chunk of self education, platforms where you can actually trade futures for coins and buy coins.. at this stage all I am really aware of is coinbase appears to be reccomended platform for purchases.. what bitcoin is, how it works and how it was established.. and I know a little bit about ethereum

    For people like me its a bit of barrier to educate myself on and give it the time.. long term investment with S&S is intuitively seemingly much simpler.. Any particular reccomendations on how to educate myself regardind coins, contango and platforms? 
    Well, the bad news is that there are no shortcuts here. Information normally translates in to edge in financial markets and there is no way of getting around that. I'm lucky because a lot of my friends from my prior industry ended up in this space - they know what they are doing and we discuss it. Compared to them, I'm an idiot.

    Crypto is moving at such a pace that pretty much nobody can keep up. I'd start by getting an overview of the main general areas and the ideas behind them; Base layers (BTC), Layer 1s (ETH, etc), DEFI (Staking/Farming) plus CEXs/DEXs, and NFTs. Your starting point should always be to thoroughly understand Bitcoin and monetary history, as those ideas (decentralisation, public ledgers) underpin the whole space. Then you move out in to L1's and look at the arguments behind ETH and the other smart contract platforms. A lot of my normie friends hold Cardano, but I don't think any of my crypto friends do (or, if they do its acquired at an early price in a 'this almost certainly won't work, but I'm buying it just in case as a hedge to my ETH holdings' kinda way). Being able to form an opinion and articulate it on this sector, particularly on say Cardano, is a good starting point for entry in to the wider space I think. Put some money in to a wallet (metamask) and start actually using some of these chains (ETH might be difficult for you to use given fees, so probably start on BSC). Provide some liquidity on an exchange in a stablecoin pair and get paid for the privilege (ie. see that its not a magic money machine). Provide liquidity on an exchange in an asset pair and see/understand impermanent loss (you'll probably get rekt, so maybe just research this instead). Do some staking of assets, either via the exchange or on chain, and understand/see the benefits/drawbacks of PoS vs PoW.

    The good news is that everyone is making so much money right now that people are giving away high quality information for free on a daily basis. This will change over time. You won't find a single central source, so you will have to cast your net far and wide, find trustworthy sources that you like and build connections. However, there are multi-millionaires on twitter giving out good stuff (as well as sh*tposting and some that use their follower base as liquidity - so be careful). I listen to a lot of podcasts, there is some reasonable stuff on YouTube (although its generally lower quality and for a more basic audience), and discord/telegram groups are good for making connections with others. Beyond that, read the whitepapers of projects you are interested in and those of their competitors. If we are being really honest though, the people that make the 100x's or got a cryptopunk/pet rock for a few hundred dollars (both now worth $400k - $1M+) are the guys that are coding on ETH and got them because they thought they were cool or fun. This is to say that the best way to learn about stuff in crypto (and therefore make money) is to be part of the community as a coder/builder, or be genuinely interested in the stuff that's going on. That's not viable for everyone and I get that. There's really nothing wrong with just buying BTC (and perhaps branching out in to ETH and other SCP stuff) - that alone should majorly outperform the major stock market index's over the coming decade.

    Appreciate the response.. and the bit about monetary history as well, and while I am definitely no expert it is concepts like the loss of gold standard, shift into fiat currency that kinda makes me interested in the potential around some crypto

    In reality I just won't be able to give the time to setting up the accounts, researching methods or practicing half the type of trading you mentioned in the first main paragraph.. let alone hanging around discords and crypto forums to much (though I can totally appreciate this type of exchange and engagement will offer some edge). 

    Really what I am interested in is just setting up to tuck a portion away in BTC and ETH... and interested in platforms to use (reputable, best cost basis for ad hoc purchases) and strategies for timing buys...  in contrast to index funds/ETFs, which I just set up a monthly direct debit for because there is that little volatility (relative to crypto), I am thinking applying the same logic here probably isn't best and id be better off trying to time what are seemingly weekly crashes (worth noting i'm only really talking about money i'm willing to lose)... 

    If you've any reccomended youtubers or subreddits i'd be good for checking them out, don't dabble in podcasts though
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