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Discussion in 'Business, Investing & Finance' started by BMF, Jan 16, 2021.
BTC is down today, under $47k. I just added $500.
I think it will trend down to the 39-42k range. Will see big support there. That being said I am a strict DCAer and try to avoid looking at price action.
Can you further explain this to me - i.e, why is Cardano safer than Blockfi? I opened the blockfi account w/ $5000, I've added a little as I'm buying actual BTC through the account (so I hold about $1900+ on BTC and $4100+ in GUSD - and the GUSD is earning 8.6%). What do see as the risks here? Thanks!
Yes of course. Cardano is a unique Blockchain. It is built on the concept of "proof of stake", rather than "proof of work" which is what older generation crypto is built on like Bitcoin and Ethereum. Proof of work coins are "mined" using advanced systems to solve complex equations. Cardano does not get mined. Instead Cardano is minted by verifying transactions through decentralized staked pools of Cardano coins. When you "stake" cardano, you can have your coins inside your own hardware wallet, and just "delegate" them to a staking pool. You will pay a fee of 2-3% of the staking rewards (not of your actual principal). For example if you are staking 100 cardano ada, then you will get roughly 4-6 ada every year. The pool will charge 2-3% of the 4-6 Ada you got (roughly 0.09 ada). While you are staking your coins, they are always inside your own wallet. No one controls your coins except you. It's like having cash in your house instead of the bank, but earning interest. You are your own bank. Blockfi is a centralized company. They offer to "hold" your coins, and in return pay you an interest, just like traditional banks. The downside to this is that you do not control your coin. What that means is that if Blockfi gets hack, or if it collapses for some unforseen financial calamity, they don't really owe you anything. It is not an FDIC insured bank. There is no way to lose staked Cardano Ada unless the entire block chain gets wiped out, which is impossible bar a massive world wide disaster. That being said, of course you would have to hold Cardano Ada specifically. Alt coins can lose or gain value exponentially. ADA lost nearly 90% of its value in 2018, although it was extremely overvalued back then, and I think it is undervalued today. I started buying it when it was about $0.31. Now it is trading for about $1.2. I think it has a lot more room to grow, but all alt coins are risky assets (in relation to bitcoin). By the way there are other blockchains you can stake with, like Polkadot. But they have other rules and limitations.
So what's in it for cardano? What is the risk in "staking" my coins? I assume they are paying interest to me because they are somehow earning more from the coins held in my own wallet, but how?
What they earn is encouraging decentralization. There are fees that the network charges from every pool. Each pool is charged 340 ada each epoch, and that is spread among the thousands of stakers, so it is negligible. Remember these come out of your rewards, not your principal. Ultimately, the more people stake their coins, the more staking pools, the more decentralized the Cardano network is, which makes the network more secure and more capable. Its basically an incentive structure to secure the network.
I wish I could say that I understood all of that. I'll need to do some independent research to understand it.
Yes it definitely can get complicated. Regardless of the speculative price action, this tech will definitely play a major role in the progress of the world financial system. Whether crypto currency becomes mainstream, or the blockchain tech gets implemented by central banks, it is far more efficient than anything the current banking system can handle, and for a fraction of the cost. Just remember, it does not matter if you stake ada and earn 5-6% a year, if the price of ada crashes by 90%, which happened before. So definitely don't go into this with a "savings account" mindset.
A year ago Cardano ADA was around 2.5c per coin. Today it is around $1.17, with a hockey-stick rise since the first of the year. I'll wait for the correction, and use the time to learn more about how their staking works. Thanks for bringing this one to the forefront.
Yes it has risen massively, but for very good reason. It currently is likely the biggest threat to Ethereum's market cap. They just launched their Smart contracts era, and I suspect it will overall grow significantly. I would not count on a massive correction that would bring it anywhere near prior levels anytime soon, but of course can't discount it. I just buy slowly into it, stake and DCA only money I set aside for very high risk investments, because it is one of my 3-4 very long term "bet" holds for me (thinking 5-10 years +).
so does diversifying across multiple cryptocurrencies make sense? Are there "classes" of coins that would get grouped together as being too similar to be considered diversified? What differences might one seek in a "diversified" crypto portfolio, in your opinion?
Yes there is a good reason to diversify inside a crypto portfolio, because some of them are "less risky" than others. "Less risky" though is still far riskier than any index fund and most traditional stocks. Bitcoin is viewed as the market leader, where it goes, most other things follow. But obviously with a 1 trillion dollar market cap, it will move much slower. I don't necessarily look at current price action, because I am not a trader. I evaluate it just like evaluating a company as a long term investor. Look at the project, the people behind it, the goals they are planning to achieve and their track record. Bitcoin will forever remain my main hold. Don't fall for the trap of how "expensive" is their coin. The price of a coin is meaningless without taking into consideration circulating supply and market cap. Most of the crypto currency analysis on youtube is garbage, but there are very few that are really good and grounded. One of them is Benjamin Cowen. He is a nuclear physicist who uses logarithmic equations to make sense of the market. But he is the first to warn you that past performance does not guarantee future return. He has a nice video about diversification in Crypto. Bitcoin just does one thing and it does it well. Ethereum has Decentralized financial applications (trustless banking system where you can get loans or give loans) built on top. For example, research this project called AAVE. There are decentralized exchanges like Uniswap. ADA is planning to disrupt that market with a much better and cheaper approach. There are some that are related to NFTs. Again as always, if you are wanting the 10-100x upside, then you need to accept the 80-90% downside. I would consider my crypto porfolio to be rather small at this point, although I started with a 5% allocation of my overall investment porfolio (others in real estate and traditional stocks) it has quickly grown to about 11-12%. The market is very heated still right now and I am only buying small amounts into long term holds that I am willing to keep holding even if they drop 80-90% tomorrow. I just had to start building a position because you can never know how far a coin will go before it corrects, and when it does how far it will drop. This is a video talking about current market risk:
I have 3% of 1 Bitcoin, 1 whole ETH and 1 whole LTC. I’m going to DCA my way up to 1 whole BTC. After that who knows. I have 259 XRP that I bought before the whole SEC snafu, will just let that ride as it’s only ~$120 I do this not having a fuchsing clue what I’m doing
Thanks this helps tremendously. I have a lot of studying to do!
Not accounting for the LTC and XRP (since it such a small amount and I don't plan on adding to those positions), I am currently 55% ETH and 45% BTC. That makes me a little higher on the expected return (110%) but also higher on the volatility (75%). Of course it could all go to zero tomorrow. I will say thank you for leading me to his content. Numbers don't usually lie.
In February, consumers lost another 1.8% YoY in purchasing power... let that sink in.
I am at 85% BTC, 7% Ethereum and 7% ADA, and currently looking to slowly build my position in ADA.I tend to be conservative in my investment choices, because I lean towards preservation rather than returns. I like his content a lot because he is grounded. That being said, and he acknowledges this, past performance does not guarantee future returns. His charts are best used to know when to buy (accumulation phase) more so than when to sell. No one knows where this ship is going to land or crash. Even though I now own a substantial amount of crypto in my portfolio... (it has ballooned to nearly 18% even though I invested 5% at the beginning) I am looking forward to the next "accumulation" phase / bear market, and fully expect a 50% crash or more to declare the end of this bull market. My timeline is at least 10 years +.
Do you subscribe to his crypto verse content or do you just watch his YouTube videos? Would be nice to get more timely analytics, but the cost for membership is high for me. I would love to know when BTCs market cap risk is high versus when it’s low (a good sign to buy).
I actually just did just to check it out, but if you just keep up with his youtube channel you will definitely know when we hit an "accumulation" phase, usually right after a 50% crash and mainstream media writing an obituary for crypto again.
Great, I would like to reward his work with a paid subscription, but I'm not putting enough into crypto to justify it
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