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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 06/15/2019 :  7:09 PM Follow poster on Twitter  Join poster on Facebook as Friend  
Hmmmm. I can't figure out why members here would send me an e-mail instead of posting to the thread so that others can benefit. In any event, I just got an e-mail that said that the writer doubted anybody would pay me 1% A DAY for USD (365% APR).

Believe it! When someone borrows fiat (USD) on an exchange it can ONLY be used to buy a cryptocurrency - in other words, use somebody else's money along with their own to margin buy more than they can using only their own money.

Suppose that you believe that BTC will go up in price by 5% in a day, then the 1% they pay in interest is a GREAT DEAL for them - if they're right. Many, many times, BTC will move at least 5% in one day - but remember, that goes both ways (up and down).

Anyway, traders can do margin trades on virtually any cryptocurrency, which means they sometimes borrow BTC, for example, instead of fiat (USD). They would do that if they thought that the BTC would go down instead of up. In other words, they borrow 'expensive' BTC so that they can sell it, then, after it has gone down, buy the 'cheaper' BTC to liquidate their loan.

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Vlad
Male Administrator
18 Posts


Rijeka, PG
Croatia

Honda

CBX 500XA

Posted - 06/26/2019 :  5:22 PM

James thank you for sharing your views and thoughts, always a good read.

To me it looks that Bitcoin will again reach it's high price levels so I'll put few hundreds more in it, which is what I can afford to lose in some part if things go south.

If any of you guys who are US residents wish to take part in those loans James mentioned I as non US resident could take a loan from you.... and put it to work




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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 06/26/2019 :  6:12 PM Follow poster on Twitter  Join poster on Facebook as Friend  
Ha! Picking on US citizens, are you?

Just because you are earning about 20% APR on YOUR money now, that can always drop to 2% in a matter of days - but not likely.

Anyway, I mentioned that bitcoin has often risen (or fallen) by 5% in a day, today was a spectacular example of that. It rose more than 11% today from $12,500 to $13,900, then within a period of just 15 minutes it fell by $2,000 from $13,900 to $11,500, then rose back up to $13,300.

But the interest rate paid for USD stayed nearly constant at 21%.

What a day!!
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Vlad
Male Administrator
18 Posts


Rijeka, PG
Croatia

Honda

CBX 500XA

Posted - 06/26/2019 :  6:37 PM
Not sure what connotations picking has :)
Not promising anything as you know or even asking.

Just offering gateway

Think I read somewhere that Bitcoin will be (or is) banned in India and that made India citizens even more curios on subject...though something like BTC can hardly be made unavailable to people if they really want. But those KYC regulations will make things complicated for buyers as they will have to resort to less reputable exchange (I assume)

Who knows, though I expect some "fear of missing out" will drive price up a bit more.

After 40% gain in 7 days, todays drop is not so unexpected.
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 06/26/2019 :  7:40 PM Follow poster on Twitter  Join poster on Facebook as Friend  
This thread has just gotten very interesting!

I'd like to explain a few things to our readers based on what you just said.

As to that remarkable bitcoin (BTC) price gain. Eleven days ago I mentioned that it had risen to $9,000. Right now the price is $13,200. That's astounding growth. And though there was a terrific fall back this morning, the price is more than $1,000 higher right now than it was the same time yesterday.

Why is that? My opinion is that this uptrend is primarily the result of Facebook's announcement of its intention to create a new 'cryptocurrency' called the Libra next year. (The Libra is NOT a cryptocurrency. It would NOT be decentralized from a control point of view. It would NOT be market priced.) It is an attempt to CONTROL financial transaction all over the world! There are about 6 TRILLION dollars worth of transactions around the world every day. Facebook, along with about 100 deep pocket investors (at $10,000,000 each) want to replace fiat currency transactions with their Libra and in the process become the LARGEST MONEY TRANSFER 'company' in the world (and MOST INFLUENTIAL COMPANY AS A RESULT).

Can they do it? It's possible, but UNLIKELY, in my opinion. Why? Because, unlike bitcoin, for example, their plan depends on user TRUST. (Bitcoin transactions are trustless - their are NO MIDDLE-MEN making huge profits and delaying those transactions.) Furthermore, there is an almost certain regulatory hurdle that they will be unable to ignore - the Travel Path requirement that insists that exchanges (money transfer agents) must know BOTH who sends money to them as well as who sends money from them at the same time. Libra is expected to be used largely by people who cannot even get a bank account - thus, they will be 'unknown'.

Anyway, by making their announcement, Facebook has suddenly made a huge part of the world aware of cryptocurrencies like bitcoin. And made arguments that suddenly make the world aware that cryptocurrencies are not JUST a way to gamble. The result, bitcoin prices have risen spectacularly of late.

If interested, I'll explain how Facebook and their 100 deep pocket investors will make a killing with this plan. (Hint: it's called INTEREST.)
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 06/26/2019 :  8:01 PM Follow poster on Twitter  Join poster on Facebook as Friend  
Back to bitcoins ...

I've recently heard otherwise very bright financial people characterize bitcoins in a most inappropriate way; they are calling bitcoins DIGITAL GOLD.

WRONG!!!

For a couple of years I found myself buying 1 ounce gold ingots as a 'retirement investment' - you know, SAFE.

I was paying a little over $1,200 per ounce when I started. After two years they were worth about $1,200 per ounce. Only because inflation was so low did I figure I hadn't lost money doing this. But what really opened my eyes was when I realized that you almost cannot spend gold anywhere, and you certainly cannot easily transfer it to someone else (safely), if at all. I sold all of that gold.

Bitcoins can be spent (not in many places, but can be exchanged easily), can be transferred safely instantly anywhere in the world, can be converted to fiat currency (USD, EUR, etc.) just as easily, and so on.

Bitcoins are NOT digital gold.
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Vlad
Male Administrator
18 Posts


Rijeka, PG
Croatia

Honda

CBX 500XA

Posted - 06/27/2019 :  2:15 AM
Please do elaborate on Libra.

Sure it is far from gold, gold is exactly what you wrote;
But is Bitcoin store of value ? To volatile for that

- will its price stabilise (and do we even want that)
- will its price go "forever up" as it has limited supply
- will it go into obscurity and become worthless

No crystal ball to look into, though I think it will long term be worth more and more, but my belief is not so strong that I'll go in it with more than 10-20% of what I have of "free money".

Now it is an high risk volatile investment.

Just my thoughts/views

Vlad
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Peer Review: 1

Posted - 06/27/2019 :  7:21 AM Follow poster on Twitter  Join poster on Facebook as Friend  
About Libra ...

First, let's talk about Facebook and its group of 100 (potentially) deep pocket investors in this plan. These investors (typically corporations such as VISA and PayPal) must put up $10,000,000 each in order to buy a different 'coin' (absolutely NOT Libra). They can trade these 'coins' any way they wish. What these coin holders are buying is the interest the fiat currency they invested in the coins earn as deposits in banks as well as the right to manage the Libra program.

So, for example, banks are paying about 0.2% for deposited money of this size. Therefor, buying $10,000,000 worth of these coins will earn about $20,000 per year in interest. Not a big deal at all. So why bother?

That's where the Libra comes in. Each Libra is a 'stable-coin' which means it is backed up by fiat currency. For example, one Libra is worth $1.00. That means the market does not determine its value - governments do. The 'common man' can buy/sell/trade Libra anyway they wish. They could, for example, store $10.00 worth of Libra on their cellphones and use the cellphone to buy lunch or transfer Libra to others and those Libra will be worth $10.00 at the time.

The Libra they buy (with fiat currency, typically) are fungible - meaning they are all the same; your Libra are EXACTLY the same as my Libra. (Sound like fiat currency to you?)

Where does the fiat currency you used to buy Libra go? Why into a bank, of course. The MUST, because that is what backs up the Libra.

Facebook is looking to create ONE TRILLION DOLLARS worth of Libra, or more. That, because there are about SIX TRILLION DOLLARS worth of transactions A DAY in the world and Facebook wants to 'control' a significant portion of ALL transactions in the world.

And just like those investor funds, the expectation is that this one trillion dollars of bank deposits will earn about 0.2% interest. BUT THAT INTEREST IS NOT PAID TO LIBRA OWNERS. It is paid to the holders of those investor coins. That's right, once a full trillion of Libra are sold, EACH $10,000,000 investor coin will earn $20,000,000 PER YEAR - doubling their worth annually!!! Of course it won't start out that big. Estimates are that the investors will 'only' earn about 30% per year. Not bad, is it?

Don't you wish you could reliably double your worth each year? All you need is $10,000,000 to start with.

Oh, and let's not forget that Facebook makes a ton of money by selling information about its users. Imagine what they can learn about you if they know how much money you spend and on what. And, finally, Facebook is also well known for CENSORSHIP. Could it be that if you are a gun owner, you will find it difficult to buy guns - or cars, or homes, or your kids' tuition - using Libra?
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 06/27/2019 :  8:10 PM Follow poster on Twitter  Join poster on Facebook as Friend  
You might think that the Libra idea is actually pretty good. Think, however, VERY BIG.

If the Libra is created and is successful, then Facebook and those 'insider investors' would become the most powerful financial 'people' in the world - MUCH MORE POWERFUL than most governments!

Consider, for example, that Venezuela decides to buy (thus, creates) a few billion dollars worth of Libra and then makes it LEGAL TENDER there. Instead of fighting a million percent rate of inflation, their populous would do whatever they could to get some Libra and suddenly they will become immune from inflation. Or what if Iran buys a trillion dollars worth of Libra and does the same thing. No more worries about financial sanctions!

Oh, and Facebook and their investors make $50 or $60 million per year of interest on their $10 million investment.

Do you think governments and their banking systems will not put up a fight? The prospect of a healthy Libra is scary as hell.
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Vlad
Male Administrator
18 Posts


Rijeka, PG
Croatia

Honda

CBX 500XA

Posted - 06/29/2019 :  8:54 AM
Thanks, a lot of information to consider when thinking about future
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 07/07/2020 :  9:45 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Well, the Bitcoin halving has occurred and the anticipated substantial rise in price as a result was only modest.

The price today is about $9,300 and very slowly rising.

The most interesting news that I'm aware of is that PayPal is preparing to allow Bitcoin as a currency they support. That would enable over 350 million people to have instant access to bitcoin and would be, by far, the most important reason for substantial price gains thereafter.

What is curious to me is why PayPal would do this as there is every reason to think that by adding Bitcoin, they essentially destroy their bread and butter business.

Anybody want to suggest their reasoning?
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 08/02/2020 :  9:16 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Yesterday the bitcoin market was amazing to watch.

The price for 1 bitcoin reached $12,000 after a steady growth for about a month from just over $10,000. Then, at about midnight, the price fell $1,000 in just over ten minutes and reached $11,040 with about $50,000,000 of transactions.

Of course there was a lot of profit taking to account for that drop. But a huge number of margin traders didn't believe it. So they scrambled to buy more and more of it as it fell in price.

How do I know that? Well, the current interest rate being paid to borrow USD to buy bitcoin has been slightly more than 0.06% per day, until the price for bitcoin fell. For a period of almost half an hour the DAILY borrowing interest rate rose to 7%. That's 7% PER DAY, not APR. 7% per day is over 2,550% APR!!!!

Today the price of bitcoins is $11,100 and the daily borrowing interest rate is back to 0.06%.

Amazing swings to watch.
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JanK
Male Junior Member
89 Posts


Ljubljana, Ljubljana
Slovenia

BMW

R1200R

Posted - 08/03/2020 :  2:46 AM
Will you be staking on the ETH 2.0 net? I'm considering giving it a try.
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James R. Davis
Male Administrator
17361 Posts
[Mentor]


Houston, TX
USA

Honda

GoldWing 1500

Posted - 08/03/2020 :  6:31 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Very interesting question.

For those of you who wonder what that's all about ...

Since cryptocurrencies have been around the way those coins have been created is through mining where computers around the world run very challenging algorithms in an attempt to solve a problem which when solved rewards the solving system with some number of the newly minted coins. Miners also provided the necessary infrastructure that managed their blockchains.

So much computer power has been devoted to mining that the electricity used by those computers has become a meaningful percentage of all electricity generated -- and, of course, it is expensive. Over time the algorithms have gotten so difficult to solve (by design), and cutbacks in the number of coins awarded, that for many (most) people it is no longer profitable to mine unless you are a large corporation that manufactures cryptomining equipment and have made special deals with electricity providers. That results in concentrating ownership and the ability to 'control' (via voting) the future of those currencies.

The solution is to get away from mining (called proof of work) and replacing it with proof of Stake (ownership).

Anyway, proof of stake generates new coins by awarding a certain percentage (essentially interest) to those owners who hold (and do not trade) their coins.

The second generation of Ethereum (ETH) creates new coins via proof of stake (staking) instead of proof of work (mining).

ETH is easily the second most viable crypto currencies after bitcoins. Huge market, very strong trading and investment community, excellent price growth history, and its blockchain has proven to be very secure. Of the hundreds of different cryptocurrencies, MANY of them are actually subsets (well, exist as creations under ETH using its blockchain).

If Bitcoin (BTC) provided a staking option, I would certainly consider using it as I'm more of an investor than a trader. But I'm conflicted as to wanting to stake ETH. That, largely because when I earn interest on cryptocoins it is because margin traders have borrowed those coins to sell them only to buy them back at hoped for lower prices. In other words, cryptointerest 'feels like' (to me) a very weak hedge against prices going down where very savvy traders are betting against me. (I think interest is a viable hedge only with stable assets. What good is earning, say, 6% PER YEAR when an asset can lose 5% PER DAY in value?)

Additionally, when I trade I expect to earn (or lose) more than interest rates by doing so.

So, long answer, I know, but I will 'stand by' and 'watch' the staking effort with ETH rather than commit at this time. I like ETH as both an investment and trading vehicle. For the time being I'd like to continue buying/selling based on market risks rather than tie up funds with staking, but that could change. I mean, if the interest rate (staking payoff) is large enough, I could be persuaded. And, I earned money mining when it was profitable. Staking MAY be another way.
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