If you ask me, Monero is a very good altcoin to hedge a bit. Why you may ask?There is also a fungibility issue: because transactions are public, all sorts of regulation can be applied to them by centralized wallet services, payment processors and exchanges. Bitcoin isn't censorship resistant.
If you want fungibility, you need to mix your coins by default. You'll get default privacy as a bonus. In other words, a privacy oriented solution should be mandatory at the protocol level to achieve perfect fungibility.
Having met or read about a few people in the bitcoin community, I have come to think it's a very relevant question and you can better weight their opinions having an idea of how many Bitcoins they hold (or do not hold.)"Never ask anyone for their opinion [...] Just ask them what they have -or don't have- in their portfolio"
Hey Scott, I'm glad you liked the report!Hey Tuur,
Very impressive report! I know you recommend a buy and hold strategy, but still, how do you see the price of bitcoin fairing over the next twelve months?
Did you research how the sidechains will be secured?I expect that in the next 12 months new sidechain protocols will illustrate that Bitcoin is the shaping up to become the ground zero for the internet of property.
Hi dEBRUYNE,Hi Tuur!
I want to ask you something regarding your recent tweet on sidechains and privacy -> https://twitter.com/TuurDemeester/statu ... 0463382528
In that tweet, you state that you expect "blockstream's Liquid sidechain to prove that Bitcoin is a privacy friendly ecosystem".
I tend to think that BTC as a default transparent ledger will not be able to provide absolute privacy. It's possible to obfuscate your identity a little bit, but when you spend your coins again, your privacy is lowered because the receiving end knows you and thus can know details about your balance.
There is also a fungibility issue: because transactions are public, all sorts of regulation can be applied to them by centralized wallet services, payment processors and exchanges. Bitcoin isn't censorship resistant.
If you want fungibility, you need to mix your coins by default. You'll get default privacy as a bonus. In other words, a privacy oriented solution should be mandatory at the protocol level to achieve perfect fungibility. Can you elaborate on your views on the privacy issues with BTC and on the economic importance of fungibility?
Hi BitcoinXio,Hi Tuur,
Thanks for doing this AMA!
Can you tell me in your opinion what you feel is the biggest challenge that Bitcoin faces right now toward gaining more user adoption?
Hi, first of all, thanks for elaborting and writing such an extensive comment!Hi dEBRUYNE,Hi Tuur!
I want to ask you something regarding your recent tweet on sidechains and privacy -> https://twitter.com/TuurDemeester/statu ... 0463382528
In that tweet, you state that you expect "blockstream's Liquid sidechain to prove that Bitcoin is a privacy friendly ecosystem".
I tend to think that BTC as a default transparent ledger will not be able to provide absolute privacy. It's possible to obfuscate your identity a little bit, but when you spend your coins again, your privacy is lowered because the receiving end knows you and thus can know details about your balance.
There is also a fungibility issue: because transactions are public, all sorts of regulation can be applied to them by centralized wallet services, payment processors and exchanges. Bitcoin isn't censorship resistant.
If you want fungibility, you need to mix your coins by default. You'll get default privacy as a bonus. In other words, a privacy oriented solution should be mandatory at the protocol level to achieve perfect fungibility. Can you elaborate on your views on the privacy issues with BTC and on the economic importance of fungibility?
My tweet definitely lacked nuance, thanks for giving me the chance to elaborate!
Coin mixing on the Bitcoin blockchain for privacy reasons ('coinjoin'), as I understand it, is not easy to execute well, it takes quite a bit of time, requires trust in third parties, and may in the future become increasingly expensive. That, however, does not mean that bitcoins cannot be stored, sent, and received in a privacy friendly manner.
In my view, Bitcoin is the basic layer of a protocol stack that will turn into the "internet of property". The Bitcoin blockchain has very limited functionality, mainly focused on security, and privacy protection is not part of that. Privacy for Bitcoin is a function that will be provided by additional protocol layers, such as sidechains. For some ideas about that, see for example this introductory article about confidential transactions.
Fungibility is important in the world of money, but in my opinion does not require perfection. A tainted silver coin may be worth a little less than a mint one, but it doesn't do significant harm to physical silver as a safe haven asset. Similarly, a set of bitcoins that are blacklisted, for example by a government entity, will not significantly damage Bitcoin as a safe haven asset. The 'tainted' bitcoins will simply trade at a discount, or will move to be used in an area in the world where people care less about this particular blacklist.
- -
I've added some more thoughts about the Liquid sidechain here below.
Core dev & Blockstream team member Pieter Wuille sent me an email about my tweet, in which he made the points that:
- Liquid is not Bitcoin, but rather a separate, private blockchain.
- Liquid is by design much more centralized than Bitcoin. No miners, instead an exclusive federation of private participants. (this centralization is no problem, because the only money handled in Liquid is that of the participants themselves)
- Because of this design, Liquid supports higher transaction speeds.
- Liquid transactions can be verfied by the public at large.
- Liquid does not directly influences the privacy or scalability of Bitcoin.
My response to Pieter (translated from Dutch):
In my understanding, Liquid is a "private clearing house" for Bitcoin. Somewhat like the London Bullion Market (LBMA), a clearing house for physical gold to which only an exclusive club of participants have access. An important difference seems to be that the public at large can verify whether Liquid tokens are actually fully covered by the previously agreed upon underlying bitcoins (not the case with the LBMA, which only has internal audits).
With that analogy in mind, it indeed appears to me that Liquid does not represent a direct scalability incrase, in the sense that this sidechain does not allow the public at large to participate, and therefore it is not possible to move huge amounts of transactions to Liquid.
However I do see an impact on Bitcoin scalability in the general sense of the word:
- By facilitating bitcoin-backed remittance and IOU transactions, the platform and utility of Bitcoin is expanded.
- By launching a successful sidechain, the road cleared for investments in new sidechains, and thereby for a further expansion of the sidechain-on-bitcoin ecosystem.
Hi crypto_investor!Hey Tuur!
I entered bitcoin at the end of 2012 and been following your talks and writings. I very much enjoy the Austrian Economics you bring to your reasoning on BTC. You are also an investment adviser, so let me ask some questions on that topic
See page 15 and 16 of our free report about that: "How to position for the next rally in Bitcoin"What do you consider to be a good % of exposure one should have towards BTC in their portfolio?
I know this is probably dependent on the personal situation of the investor, but maybe you can give general advice.
I have liked Litecoin since I first learned about it, because it offers similar utility as the Bitcoin network, and therefore can be seen as a 'backup network' for Bitcoin. A 'silver' for Bitcoin's 'gold', as is often said.Personally I have a big % of my net worth in BTC, but that is due to the exponential growth of the BTC value
I always steered clear of altcoins. I never really saw the innovation. I did had a small speculative position in LTC. Sold a lot during the LTC bubble (most of them > 0.04 BTC). I sold the remaining part of my stash once the rumors on the scrypt ASIC started to surface. Reason: LTC's USP was a more decentralized mining algorithm. Everybody with a GPU could mine, so that created a community. But since the scrypt ASICs, there is fundemantally no difference between BTC and LTC in my opinion.
What is your opinion on investing in LTC? Are there any altcoins you are following?
I think that privacy friendly sidechains will go a long way to solve fungibility issues in Bitcoin.Personally, I think that this quote is very relevant on the topic:There is also a fungibility issue: because transactions are public, all sorts of regulation can be applied to them by centralized wallet services, payment processors and exchanges. Bitcoin isn't censorship resistant.
If you want fungibility, you need to mix your coins by default. You'll get default privacy as a bonus. In other words, a privacy oriented solution should be mandatory at the protocol level to achieve perfect fungibility.
Yes I have certainly heard about Monero, it's one of the altcoins I am researching for our newsletter. Roeland Creve has been generous in providing me with info about it.If you ask me, Monero is a very good altcoin to hedge a bit. Why you may ask?
*Monero solves the fungibility issue. This coin has stealth addresses (hides the receiving address, balances are unlinkable), ring signatures (hides the history of the coins making them untraceable) and will likely implement Confidential Transactions (hides transaction amounts, money flows become completely opaque) as well while preserving a transparent emission (unlike zerocash).
*Monero also has a dynamical block size limit, making it a good hedge in case this becomes a real problem in BTC.
*And last but not least, it has a completely different codebase than BTC (unlike DASH for example) making it a good hedge in case some problem with the BTC code would arise (Monero uses for example a completely different elleptic curve than BTC)
So my final question is simple:
have you heard about Monero and do you think it's a good hedge for BTC? What percentage would you advice to hold?
Personally I diversified 10% of my BTC in XMR because I feel that this could become a complementary coin to BTC.
Hi crypto_investor!Hey Tuur!
I entered bitcoin at the end of 2012 and been following your talks and writings. I very much enjoy the Austrian Economics you bring to your reasoning on BTC. You are also an investment adviser, so let me ask some questions on that topic
Glad to hear you've been enjoying my presentations & writings
See page 15 and 16 of our free report about that: "How to position for the next rally in Bitcoin"What do you consider to be a good % of exposure one should have towards BTC in their portfolio?
I know this is probably dependent on the personal situation of the investor, but maybe you can give general advice.
In summary, my thoughts:
- Bitcoin as an insurance: 1-2% of financial assets
- Bitcoin in a speculative portfolio: 2-5% allocation
- Bitcoin as a bet on early retirement: 5-10% of financial assets
(about the latter, be sure to read all the caveats in the report)
I have liked Litecoin since I first learned about it, because it offers similar utility as the Bitcoin network, and therefore can be seen as a 'backup network' for Bitcoin. A 'silver' for Bitcoin's 'gold', as is often said.Personally I have a big % of my net worth in BTC, but that is due to the exponential growth of the BTC value
I always steered clear of altcoins. I never really saw the innovation. I did had a small speculative position in LTC. Sold a lot during the LTC bubble (most of them > 0.04 BTC). I sold the remaining part of my stash once the rumors on the scrypt ASIC started to surface. Reason: LTC's USP was a more decentralized mining algorithm. Everybody with a GPU could mine, so that created a community. But since the scrypt ASICs, there is fundemantally no difference between BTC and LTC in my opinion.
What is your opinion on investing in LTC? Are there any altcoins you are following?
Other arguments for having at least a little LTC exposure, in my mind:
- it's the number 2 in market cap: $150 million as of today
- the most liquid altcoin (highest volumes on exchanges)
- has a unique price relationship to Bitcoin, making it an interesting currency for trading
Below is a reflection of my personal Litecoin-Bitcoin trades of the last two years. It's based on my trading history on several exchanges.
Note that my actual profit may be a bit lower due to some unaccounted trading fees. Piecing everything together was pretty grueling, if anyone has tools to make this easier I want to hear about them!
I think that privacy friendly sidechains will go a long way to solve fungibility issues in Bitcoin.Personally, I think that this quote is very relevant on the topic:
Yes I have certainly heard about Monero, it's one of the altcoins I am researching for our newsletter. Roeland Creve has been generous in providing me with info about it.If you ask me, Monero is a very good altcoin to hedge a bit. Why you may ask?
*Monero solves the fungibility issue. This coin has stealth addresses (hides the receiving address, balances are unlinkable), ring signatures (hides the history of the coins making them untraceable) and will likely implement Confidential Transactions (hides transaction amounts, money flows become completely opaque) as well while preserving a transparent emission (unlike zerocash).
*Monero also has a dynamical block size limit, making it a good hedge in case this becomes a real problem in BTC.
*And last but not least, it has a completely different codebase than BTC (unlike DASH for example) making it a good hedge in case some problem with the BTC code would arise (Monero uses for example a completely different elleptic curve than BTC)
So my final question is simple:
have you heard about Monero and do you think it's a good hedge for BTC? What percentage would you advice to hold?
Personally I diversified 10% of my BTC in XMR because I feel that this could become a complementary coin to BTC.
I am very excited about the different technological innovations we've seen in the altcoin space, and I work to keep track of them. One of the questions I keep asking myself is which ones will be incorporated in sidechains, and which ones will function best in standalone alt-blockchains.
Hi nyeko_12,Hi Tuur!
What is your opinion regarding LN-network,BIP 100 (increasing the blocksize first to 2mb -> 4mb --> 8 mb--> 32mb) & 101?
Do you think this block-size issue can be resolved by December (thinking of Combining the LN-network with BIP 100)?
What do you think of bitcoin future?
Hi Chris,Hi Tuur,
Full disclosure, this question is a shameless plug:
Have you (or are you) considering submitting any of your research to our new peer-reviewed journal Ledger? Also, it would be great to hear your thoughts on the role that academics can play in the evolution of Bitcoin/cryptocurrencies.
Hi Hazir,hello Tuur! greetings.
1)i'm working on building for the first time my investment portfolio, i have a 2.5% of my capital in bitcoins, and am planing to rising it to about 6%, what i'm wondering is this - if i get lucky and bitcoin rises many-fold as hoped, it will become a bigger and bigger percent of my investment , what are you thoughts on taking out profits and scaling out in this gradual scenario? what percent of profit taking would you consider wise at what point? (i will not take this as individual investment advice! just curious to hear your personal thoughts )
i guess that if i'm betting on a high profit in case of mainstream bitcoin adoption, i should cash out profits in according to the stage in adoption ,right?
The block halving is yet to come (cutting the supply of new BTC in half from 3600 BTC / day to 1800 BTC / day, and I think prices will likely rise in anticipation of that event.2)what are your thoughts on the current price of a bitcoin (320$~), do you tend to think it's a symptom of the block halving?
Long term: undervalued stock markets (hard to find, but there are a few left in the world), Bitcoin, gold mining shares, tech stocks (after a serious correction), ...3)what areas of short and long term investment do you find interesting currently?
It's hard to say because there are so many fruitful approaches to investing.4)what reading material and advice would you point a new investor to? i'm at the stage of trying to absorb as much information as possible and would be grateful for your input!
Hey Tuur,
I guess you will be more happy than others with the the question since you are first an investor.
I was re-reading Antifragile by iconoclast thinker Nassim Taleb recently. He writesHaving met or read about a few people in the bitcoin community, I have come to think it's a very relevant question and you can better weight their opinions having an idea of how many Bitcoins they hold (or do not hold.)"Never ask anyone for their opinion [...] Just ask them what they have -or don't have- in their portfolio"
In 2014, the world gold production was 2,860 metric tonnes. In troy ounces, and multiplied by the gold price: 9.1951e+7 * 1,072 = $ 98,571,472,000 worth of gold, or $98 billion.Since you are kwown to be sceptic about the current monetary policy in most of the world:
- What do you think of gold in an environment where Bicoin would be rising ? At what point (market cap) Bitcoin starts to seriously compete with gold and grabs some of its marketshare as a store of value / hedge against monetary risk ? (I think now it works more as an investment with a high risk/reward profile akin to an option).
I think it's an opportunity for the new regime (if it actually gets elected) to push through reforms a la Thatcher, with privatisations, lower government spending, and a stabilization of the currency. I think Argentina could become a better place to live and work (although that won't change overnight), and very investable, somewhere in the next 5 years.What do you think of the result of the presidential election in Argentinia ?
Thanks for having me! It's been fun and interesting so farHi Tuur,
Thanks for joining bitcoin.com. The links are great too. I will have to read alot today
I don't disclose how I store my bitcoins personally, but in our report we recommend Xapo and Bitcoin Trezor. I hear the Open Bitcoin Privacy Project is soon coming out with new ratings of bitcoin storage solutions, so you may want to keep an eye out for that.1) How do you store your coins? Can you give new members some tips on that?
Many things!2) What are you working on at the moment?
Yeah, I'll be presenting at the Latin American Bitcoin Conference next week. I'm taking it a bit slow with presentations lately because of all the preparations for the newsletter.3) You did alot talks about BTC in the past all over the world. Are you planing to attend on BTC conferences again and give some talks?
Sidechains.4) What is the most exiting thing that is happening right now in the bitcoin sphere?
Hi Jordan,Hi Tuur, I've been following you on Twitter for quite sometime and really enjoy reading your thoughts. I just read your report and already sent the link to some family members.
I'm getting into economics. So far I've read Economics in One Lesson, and What Has Government Done to Our Money. What other books do you recommend for learning the basics of Austrian economics?
What are your current thoughts on the bitcoin price and what do think will happen in the next ~12 months?
Hi edugarbizu,Hey Tuur,
could you tell us more about Adamant Research?
- What is the business model?
- How it profits?
- What´s your role on it?
- Future plans?
Thanks
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