Cryptocurrencies - bitcoins, ether and the rest; let's ripple out...

[Auntpodder]

Further to the AIBU discussion on other people's finances, is there mileage on a discussion about the different cryptocurrencies? I've dabbled a bit and find them fascinating even though I'm very much a novice and pretty innumerate. I bought a fraction of a bitcoin a couple of years ago which has done well, thought about ether earlier this year but only got round to it recently and there was lots of talk about ripple so bought a few last weekend.

I know that (rightly) no financial advisor would ever suggest investing in them, but as a bit of fun, I'm finding them just that - but would like to hear other people's experiences.

Of course I have an understanding of finance and markets.

Bitcoin became popular and gained value because it was used in criminal transactions. It has a limited investment use. If you believe your randomly invested into currency will suddenly gain value you are wrong. It would either need to be recognised as a currency by a state, so that it could be more widely used in transactions, or picked up and used by less savoury sources whose transactions would be high value enough to pull up the value.

Simply mining the coins between yourselves to get more doesn't make it more valuable, it just makes some figures on a screen go higher and your pockets get lighter.

FFS, how many individuals are mining bitcoins these days? It's been years since you could sit in front of your PC and happily mine away. Japan just recognised Bitcoin as legal tender, one of the big factors in the recent skyrocketing of the price. You need to follow the global trends of who is using it and why they are using it. It's a massive gamble and of course it could all pop overnight and vanish into cyberspace, but for those of us who like high risk it's an awful lot of fun.

Anyway, I bought a bunch quite a few years ago back when it was "the dark side" of Bitcoin and they were only starting to get a bit of broader appeal (thank God I didn't use Mount Gox, though!). I paid £10 per coin and have held onto them ever since. DH was horrified when I told him and has been trying to get me to sell them ever since they hit about £400- the first time they hit £400. I then had to live through a whole lot of "I told you so" after they peaked and then crashed to about £140ish.

They were just a bit of fun when I bought them though I did think they had possible big potential. I now want to buy Ethereum, but want to use coinbase and they are currently having problems with EU credit cards so am possibly going to look at other exchanges.

My Bitcoins are a small part of my overall assets. If my exchange gets raided or I lose my key or they crash into nothingness or whatever, I'm only out what I originally put in and (as I said on the other thread), I can live with that.

And as a last note just now, before I completely spam the thread. The price can widely fluctuate by the minute- e.g. by £200 or more per minute. If watching that would make you panic, and possibly seeing your holdings down 30odd% or more overnight, bitcoins are not for you.

Do people think that Bitcoin will ever be a currency or just a commodity, a bit like gold?

When I bought my fraction, I put some of it on a Bread wallet app on my phone because there was talk that people would start doing things like buy coffee with Bitcoin. I look at the amount in the Bread wallet and I could buy a lot of coffees with it at the moment.

However, there still don't seem to be many outlets and also, given the rise in Bitcoin's value, it doesn't make much sense to do so. So, is Bitcoin's future as more of a commodity?

I think they'll end up as a weird mix of both. Right now we have Japan recognising it as a legal tender which will be followed by Australia in July and Russia in 2018- I'm guessing on the back of this, more and more countries will follow. However, given the overall upward price movement, I think it'll be difficult to get people to actually spend it- most people will want to hold onto it. I read an article last week about Fidelity (US) where they said employees can use Bitcoin to pay for food/drink in the staff canteen but barely anyone was doing so! To be honest, I wouldn't either.

I think some cryptocurrencies will become currency more in the background - e.g. look at the amount of support and interest Ethereum is getting from financial institutions in the US. They are looking at how they could use it, and I could see it becoming a replacement for back office money transfers etc.

Caveat to keep Claudia et all happy. Of course, this is pure speculation on my part and it could al vanish into cyberspace tomorrow.

Interesting. Yes, I can't see myself delving into my Bread wallet for a cup of coffee any time soon. Quite high up on my list of Things I Like About Bitcoin is how it could make transferring money to the developing world (by, say, family members) so much cheaper than organisations like Western Union. Bank back office money transfers are due an overhaul, aren't they - the systems they currently use date from the 1970s and there's quite a lot of duct tape-style fixes in place?

What is kracken? Where do you find the values of the crypto currencies? Don't suppose you can put them in any sort of ISA can you? Just venturing back after the dot com crash...

Kraken is one of the main Bitcoin (and some other crypto currencies) exchange. You can get the current price of Bitcoin by looking on any exchange- I use local bitcoins (not technically an exchange, more a marketplace).

Unfortunately you can't put them in an ISA! When you sell, any profits are subject to CGT (above your CGT allowance, obviously).

I hadn't come across local bitcoins before but learned about it today in this New York Times article. www.nytimes.com/2017/05/15/business/all-about-bitcoin-the-mysterious-digital-currency.html?_r=0

I have previously toyed with getting some from a Bitcoin ATM. If you google them are there various ones around the country - mostly in London, and in the Shoreditch/Old Street area, but they may offer a poorer rate of exchange.

Very interesting article. Thank you for posting it. I didn't realise that Coinbase was an American company. If you find a UK company, I wonder if they are regulated by the FSA? Anyone planning to invest!

I'd doubt they'd be regulated as crypto currencies really aren't regulated at all yet in the UK, but I could be wrong.

Hargreaves Lansdown announced access to a Bitcoin ETN today which can be held in your SIPP. I'm not interested in buying and holding any additional bitcoins now, but the ETN looks interesting and I may switch some of my SIPP over (currently held in a Neil Woodford fund and ticking along nicely if a bit uninspiringly). I do still want to buy some Ethereum if coinbase would hurry up and sort out their EU credit card problems!

Oops, forgot the caveat. I am in absolutely no way shape or form trying to convince anyone to buy into this ETN or, indeed, any ETN. ETNs are mindbogglingly risky instruments and you could lose every single penny you put into one.

I enjoyed investing in a n investment trust (far east excluding japan) some years ago. That wasn't as volatile as crypto currencies but it did return a nice nest egg for my sons' 18ths. I am setting up on Coinbase but disappointed they don't deal with ripple. Do you think that will change?

I don't have anything in the Far East, but do have some money in Jupiter's India fund. I tend to stick with UK investments as that's enough for me to keep track of! If you manage to register a credit/debit card with Coinbase let me know because it's still not working for me (system status says it's still having degraded performance).

I'm registered for their newsletter updates and they say they are opening a new UK base and trying to grow over here. There wasn't any mention of expanding their range of crypto currencies but it was a bit all, watch us expand over the next 12 months.

I did transfer a bit of my SIPP into the ETN and then remembered that I haven't named DH as the beneficiary yet. Need to sort that this weekend in case I'm knocked down by a bus!

That's very noble of you, given DH's scepticism.

Which do people think are the best wallets? I have an Armoury Bitcoin one, but would like to put some of the BTC that is on my Bread wallet in a place that feels a bit more secure. And possibly see if I can round up my Bitcoin fraction into a whole one. Whole numbers being pleasing to me.

I lost track of this thread. I finally got into coinbase's app after weeks of waiting, right in time for last weekend's crash. I've been buying Ethereum and litecoin, much to DH's horror as the price kept dropping. I failed to convince him that the price drop is a good thing. He sees falling market and panics. I see falling market and think, "buy". We'll see in 9 years and 3 months (planned DH retirement date) who was right.

Lonely thread. I was very happy to watch Bitcoin glide through the fork without problems. DH is finally starting to take my love of cryptocurrencies seriously but I'm still not allowed to give him daily price updates.

Bumping this to see if anyone is still around. The prices have been going crazy this weekend - am waiting for the next correction but wondering how high it’ll go before it happens.

I'm still around. Yes, the graphs are fascinating. My bitcoin friend (IRL) is a Bitcoin Cash fan, so I did buy a v small amount of it on top of my Bitcoin fraction but do feel very ignorant - especially regarding the forks. As far as I can tell, you don't get the same amount of Bitcoin Cash or Gold (or whatever it's named) when there's a fork, it's more that you can - if you liquidate - choose which type of bitcoin you can cash in? Noofly would you agree? And what does your DH feel about cryptocurrency at the moment?

apologies Noofly I've had a name change since starting the thread.

I don’t know much about the forks. As far as I’m aware, it depends on who is setting up the new currency and what they decide to do as well as where you hold your Bitcoins. Bitcoin Cash decided to give an equivalent number of Bitcoin Cash as your Bitcoin holding if you owned your private key. I have my Bitcoin with localbitcoins and they initially weren’t recognising Cash and we weren’t going to get our Cash. They then decided to give us compensation in Bitcoins so my account was credited with X number of Bitcoins which corresponded with the value of my Bitcoin Cash on that date.

I’ve just ordered a Nano Ledger S to get my Bitcoins off the exchange as I’m increasingly getting worried about a raid on my cryptos. Hopefully it’ll be straightforward to set up!

DH seems a bit bemused by the whole thing and I think he’s waiting for to all crash. He has said that he really thinks I ought to sell my Bitcoin Cash compensation now because it’s effectively free money and by doing so I’m in the same place I was when I first bought Bitcoin. I’m going to hang on a bit longer, but probably will within the next 6 months or so.

That makes sense over the BCH fork, thank you. Mine are in lots of different accounts and I need to rationalise them at some point (and extract the BCH element from some of them (Armoury and Bread, particularly) but I start reading the threads about it and it's in v technical language. My IRL Bitcoin friend argues that there will be a 'flippening' because Satoshi Nakamoto (whoever he/she is) says that the longest chain will eventually win the Bitcoin race and that's BCH. My Ripple are stewing away on an exchange doing nothing, but I now have roughly the same amount of BCT, BCH (if/when I can access the damn things) and Ether. I spend much too much time checking the price but I do consider it 'lost' money. I'm certainly not counting it as future income (if Claudia is still around).