One year ago yesterday, I became "involved" in the world of Cryptocurrency. I thought I should give a report.
It was something I had been reading off and on about over the previous few months. I do not have the best head financially, and certainly not for anything that sounded so complex. But then magically, I received an e-mail from Coinbase that offered me $5.00 in Bitcoin merely for setting up an account.
Free money. I will try that.
Over the intervening period, I have essentially taken short tutorials as new currencies were introduced. I have no idea how a thing actually comes to "be" a currency (it seems to be as much willing it to be so as anything else), but they again offer you free currency for watching three minutes of videos.
Again, free money. I will try that.
Unfortunately, it is a bit difficult to combine everything into a single picture the way I want, so I will start by listing the statistics:
- Starting amount: $5.06 as of 12 November 2020 at 1800.
- Additional currency "earned" through training: $72.50 (or thereabouts).
- Additional money invested: $41.00 (I put in money January through April and then stopped)
Results as of 12 November 2021 at 0615:
If you just do the simple raw numbers, that is a 90% return on my actual cash investment for a little time and just watching things happen. After I did my initial investing, it went as low as $143 to as high as $469 for no discernable reason I can understand.
The one thing I did do with the money that I actually paid in was bought crypto that actually pay interest. There are only a few of them. As of this graph, I had earned $6.77 in interest (4.91% return). That is not much, but I can almost guarantee you that is more than I earned in savings interest this year.
Crypto is funny. Take Ampleforth, a crypto for which I "earned" $3.00. The current value of my holding is $0.78.
On the other hand, take Maker, which I "earned" $6.00 and for which the current value is $33.49:
I feel like Dr. Seuss: "Why do they do this? I do not know."
Once I earn them, I typical do nothing with them (after that first cash influx early last year). I just sit an watch them increase and decrease in value for no discernable reason.
I still find the concept of a currency outside of a controlling agency very attractive. But after a year of just learning and watching, I do not think things are there yet.
I will continue to "earn" and watch of course: one fire, many irons. But I have pretty low expectations that this will do a great deal more in its current state. The system needs to move beyond high stakes risk taking to stability to be widely adapted.
Still, free money. I will always take free money.
Excellent work TB.
ReplyDeleteThe guys I listen to about such things say that TPTB simply will bot allow currencies they can’t control. I think China may have already moved against them(?) I am dubious of electronic currency that is just 1’s and 0’s in a bank computer… but that is all my savings are.
But then again, money is just paper. I dunno what a prepper should do…
Glen - You are in fact correct that China has already "moved" against cryptocurrencies. In a big way. The thought is that they will try to channel/replace it with their own E-version of the Renminbi, which not only has all the tracking elements you would anticipate from a dictatorship but also can put restrictions how soon the currency must be spent.
DeleteI 100% agree that the soft underbelly of any cryptocurrency is that governments will not tolerate anything that they cannot outright control. It is a problem that the cryptocurrency cheerleaders have not fully convinced me of yet - and even if they do not control it, they can certainly effectively tax it out of existence.
For now, it remains a very small part of my portfolio that may have a use someday - and as it costs me nothing to have at this point, a useful tool.
Blog Lone Star Parson also decided to buy? invest? early this year and is so pleased. He has given some detailed report along the way. Interesting blog. Was in finance for decades and this alludes me. Listed a few years ago when Glenn Beck had one of the inventors on to explain as he didn't understand. I think by the end of the explanation he still, anymore than I, wasn't grasping the explanation. Glad your back and what a great trip.
ReplyDeleteMargi
Margi, I sort of get it in the very, very macro sense: limited supply, easily exchangeable, cannot be inflated or faked. In terms of the actual cryptology behind it? Not a clue.
DeleteThat said, anything can be a currency if enough people are willing to treat as such. Whether it is a fad or not remains to be seen.
And thank you. It was a pretty amazing trip.
Yeah, LSP is one of the blogs that has mentioned bitcoin types.
ReplyDeleteI don't understand it and don't think I would have 30 years ago either.
LSP's main "coin" is doghi, if I spelled it right.
As I told the Parson, the only thing I remember a out finance from high school is "if you can't afford to lose it, don't invest it."
Have fun, TB!
You all be save and God bless.
Linda, I barely understand it. I think a lot of people do not, and that many people are trying to hop on the bandwagon as they see it inflating (thus, why I have invested very little cash in it).
DeleteYour financial advice, on the other hand, is very easy to understand and quite sound.
Hi TB,
ReplyDeleteI attempted to investigate crypto but to set up a wallet I needed to email an image of my driver's licence or my passport to the crypto exchange (I think it was CoinBase from memory). My instant reaction was delete delete delete - this is a scam.
There is no way I am going to email anything even slightly sensitive. I'm sure you know that email is essentially an electronic postcard - completely unencrypted and in the clear from server-to-server all the way to the recipient.
And I'm not giving ANYONE a copy of my likeness, date of birth, address and even my signature - but most especially not to a company that must be the world's largest & juiciest target for haxxors in the history of the interwebs.
I am NOT trying to do anything nefarious or avoid taxation or anything even slightly naughty. I am simply looking for another stream of passive income - and do not want to risk identity theft.
Is there a way of dabbling without providing all that identity documentation?
Can any reader point me to where I can read more about this topic?
A Grateful Reader/Student
Hi AGR/S!
DeleteI use Coinbase, but I assume that all of the exchanges are largely the same in this regard in their identity requirements. Honestly, this is essentially the same as opening a bank account or any financial account any more. And interestingly, this "take a picture of your ID" is becoming more and more widespread, as I have had to do it to register for a certification test and some other things. Sadly, this only seems to be increasing. It is a risk, to be sure - but for myself, anyway, I have some confidence (perhaps misplaced) in the fact that a company like Coinbase, who makes its living in doing online transactions, has everything to lose and nothing to gain by handling such things poorly. That said, I am not sure every company would handle things the same way.
I suspect if things continue to go the way that they are, other institutions - more traditional financial ones - will allow the purchase of cryptocurrency and so if you have an account, it may be less intrusive. That said, as more and more of those institutions are going online, you may not be able to escape the necessity of providing proof of identification by the InterWeb (and just for clarification, the information was sent directly via a one time link through the app/software, not by email - although that may not mean much).
Hope it helps and thanks for stopping by!
I'm glad to see I'm not the only one that doesn't understand it. :)
ReplyDeleteLeigh, it reminds me a lot of Tulipmania. I understand anything can be used as currency, but ultimately is has to be linked to something. Also, in the event of no power, no currency. That would seem to be a major flaw.
DeleteHaving seen Coinbase ads on my phone while playing a game, I have pondered about how easy is it to get that money in dollar currency, either mailed in check form or wired to an account? I have assumed they must have minimum amounts to keep a person invested for a long period of time or too many would simply collect the $5 and transfer it elsewhere.
ReplyDeleteIn my earlier years, something like this would have interested me but since learning of John C. Bogle, I have lost all interest in unnecessary risk. I just invest in the entire market and win all the time.
Ed, I am sure they do. You have to link to a back account as part of the set up, but I am sure there are fire doors to prevent this.
DeleteIt is mildly interesting as an experiment in a sort of new currency. I, too, invest in the whole market.