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S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

reuters.com

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Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#181

Post by Imnimo »

anythingdude321 wrote: post #167
Imnimo wrote: post #149

Earlier quoted context omitted.

The supply of capital-B Bitcoin is 21M, but at any time, anyone can create Bitcoin2, which is an exact clone of Bitcoin but with a fresh chain. Any Bitcoin2 token has exactly the same utility as a Bitcoin token in principle - the only difference is that, for now at least, lots of people are mining Bitcoin and no one is mining Bitcoin2. If there comes a day when a lot of people think there should be 42M bitcoins, inst…

yes but the beauty is that, due to the lack of a central authority, the game theory of the situation virtually ensures that no one would ever do that — that is, take bitcoin2 seriously

I don't know if I agree with that. Like take the example of a country whose currency collapses due to government mismanagement and its people decide that they would be better off with a cryptocurrency. I'm not sure how realistic this is, but it's at least a scenario that I see proposed from time to time. Those citizens face a trade-off when deciding between Bitcoin and Bitcoin2. Bitcoin has a lot of active miners, which is valuable, as it means their future transactions will be more secure. But Bitcoin is also very expensive, and difficult to acquire. Joining the bitcoin economy is entering into a game where other players (bitcoin early adopters) have a huge head start, and these newcomers have nothing. If they instead start a new chain, they will need to bring their own compute power, but will have an opportunity to have a meaningful share of the tokens, and therefore some amount of influence on steering the currency.

It's probably unlikely that an enfranchised bitcoin user would be incentivized to jump to a newborn chain, but I don't think it's the case that a new user is always incentivized to adopt the existing chain. As the price of bitcoin increases, and the remaining coins to be issued decreases, a new chain becomes more attractive for new users.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#182

Post by tcoff91 »

joosters wrote: post #156
asdffdsa wrote: post #118

Earlier quoted context omitted.

Are you disagreeing with the fundamental economics argument of supply and demand? More demand assuming a constant (forecasted) supply means the price will be higher.

There's no constant supply of cryptocurrency, there are new types of coins created every day.

Different cryptocurrencies are not fungible. New altcoins don't increase the supply of Bitcoin. It's not like they siphon much demand from Bitcoin either. Someone discovering a huge new source of Platinum doesn't fundamentally effect supply/demand of gold.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#184

Post by acituan »

fractionalhare wrote: post #92
cortesoft wrote: post #65

Earlier quoted context omitted.

That is what risk is.... not knowing. If you want high reward from an investment, you need to take high risks, which means you will invest without knowing something. Now, some risks are smarter than others...

That's not necessarily a good idea. You don't need to take on higher risk for a higher return. It's usually better to leverage risk-adjusted returns rather than chase high total returns with commensurate risk. You can take on more risk that if you have the appetite, but if that's the case you could also just use levered beta (e.g. 3x levered S&P 500). This would significantly improve your portfolio while still being…

> You don't need to take on higher risk for a higher return

The lower the risk of an instrument, the more it will be saturated with investors, the more thinly per-investor share of profit will be spread. Therefore there is no such thing as "low risk, high returns", unless it is a scam. There is no unexploited profit opportunity that is risk free, if one thinks they have found one, they must have just missed accounting for the hidden risks.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#185

Post by shuntress »

raziel2701 wrote: post #127
zapdrive wrote: post #34

Earlier quoted context omitted.

A cryptocurrency cannot be put into any traditional bracket of commodity, currency, stock etc. It's a new breed in itself. It has features of a currency, a commodity, a stock and much more.

So is it a jack of all trades and master of none sort of thing? I still see it as a speculation tool and it's grabbing a lot of momentum. But I don't see what's so fundamentally useful about the technology unless you're interested in laundering money and/or buying illegal stuff.

Bitcoin is a currency.

The fundamentally useful thing about Bitcoin is it's proof-of-work shared ledger that allows transactions to be conducted and verified between individuals (through the shared network) independent of any third party or broker.

It is the electronic equivalent of handing someone a physical coin.

It is genuinely pretty neat.

Any actual meaningful application of this use has yet to be realized.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#186

Post by miguelmota »

puranjay wrote: post #150

I've been dabbling in crypto since the lockdown (all red, but I've had fun) and this space is like the wild west early days of the internet, with even more scammers. We're past the heady ICO days but now, all the scams have moved to Uniswap. And I might be guilty of being elitist, but I rarely, if ever, see founders with A+ tier credentials (Ivy league education, FAANG/Investment banking/Mckinsey et al) starting cryp…

What exactly are you seeing on Uniswap that’s a scam?

Why do you think people need credentials to create a startup if they have a good idea?

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#187

Post by spurgu »

Imnimo wrote: post #149
nostrademons wrote: post #67

Earlier quoted context omitted.

It's analogous to investing money in USD or GBP before those countries were given a license to print as many USD and GBP as they wanted. Before then (1931 for the pound and 1933 for the dollar, though they maintained de-facto parity with gold until 1971), dollars and pounds were considered good investments. That's why we had bank runs: people thought their money would be safer under their mattress, and preferred to o…

The supply of capital-B Bitcoin is 21M, but at any time, anyone can create Bitcoin2, which is an exact clone of Bitcoin but with a fresh chain. Any Bitcoin2 token has exactly the same utility as a Bitcoin token in principle - the only difference is that, for now at least, lots of people are mining Bitcoin and no one is mining Bitcoin2. If there comes a day when a lot of people think there should be 42M bitcoins, inst…

Similar things have already happened (Bitcoin Cash, Bitcoin Gold). The original is still standing tall. But if you think you can convince someone your Bitcoin is better, feel free to do a fork!

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#188

Post by cryptica »

iamspoilt wrote: post #30

Someone please explain this to me: How is any cryptocurrency even considered an investment vehicle? I would classify myself as Boglehead and I believe in the fundamentals of investing in stocks because in all it's technicality (and given the buy-and-hold strategy), you are investing in a business by owning a part of it which naturally means that you will and do get the returns on it, both in terms of profits (dividen…

It's not about ROI anymore. It's mostly about which asset can capture most of the newly printed fiat money now and in the future.

New fiat currency is constantly being created and all assets are competing for the biggest possible chunk of that new money.

The reason why crypto is doing well comes down to a contrast between monetary abundance and scarcity. Some people in this world have access to an essentially infinite supply of fiat currency at 0 risk... So fiat currency is not worth anything to these people; so if these people start buying some scarce resource, they will quickly realize that it will drive up the price of that resource ad infinitum. The only other variable is how hard people HODL the asset.

If enough of these people buy up the same scarce resource, the growth of that scarce resource will outpace that of all other scarce resources.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#189

Post by eruleman »

jonahss wrote: post #110
vocatus_gate wrote: post #33

Earlier quoted context omitted.

I'll try to use my elevator pitch: With cryptocurrency, you're right they're not an "investment" in the traditional sense. Right now more of a long-term gamble. In my opinion the value is in the network and the ability to move money instantly (or at very least faster than traditional methods), securely, to anywhere in the world for a fraction of a cent. That ability alone is valuable and hasn't existed until now. The…

The "anywhere in the world" part is really huge. As of now, most cryptocurrencies aren't run by nation states, unlike traditional currencies. Cryptocurrencies have to potential to become a global currency that's fair to all. I actually think that the nation states really missed out when they didn't mint their own cryptocurrency that has the same value as their physical money. If they controlled a currency completely,…

Central Bank Digital Currencies (CBDCs) are incoming — 2020s will be the fight of MMT vs BTC as Balaji says.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#190

Post by elevenoh »

raziel2701 wrote: post #162
elevenoh wrote: post #77

Earlier quoted context omitted.

Could you elaborate? We're definitely in an accelerated-transition period w/ an uptick in inequality, if that's what you mean.

Covid hits, Fed and US govt. unleash trillions of dollars of easy money for corporations and the stock market bubbles up to record all time highs in record time. This is unprecedented. The largest transfer of wealth program continues on and we continue to have a 9/11 worth of deaths at an alarmingly increasing frequency. Unemployment is high, food lines are staggeringly long, small businesses are cracking, and we don…

Humans are less & less required for the unfolding, highly leveraged, highly automated, highly unequal economy.

Don't see any way for avoiding this.

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