The frozen money of cryptocoin dust

I have taken profits on my ethereum from back in August and went one level deeper, a dream within a dream. Coinbase is considered the "safe" exchange in the US. They have state of the art security (nothing is guaranteed), cold storage, and clean interface. They only offer trades in 4 cryptocoins, so if you want to get in on what are termed "altcoins", or alternative crypto projects, you have to find another exchange.

A little research led me to Binance. After creating an account, I found the ETH address of the online wallet there and was able to do a direct transfer of ETH from my coinbase wallet. The ETH network was a little clogged and my first direct transfer through the blockchain took 3 hours. During that time, my money was in limbo, it didn't exist in either place. Since then, transfers have only taken a couple of minutes. That's a pretty big time gap. With a wallet full of ETH, I was able to do quick and low cost cryptocurrency swaps on binance. I got in and out of a few coins reaping small profits and eventually some small losses, too.

What I didn't expect was for fractions of crypto to be left behind when I sold it. Most of the currencies and tokens use ledgers that go to 6 digits, ten millionths of a unit. For example, in one of my wallets, I sold as much as I could to convert back to ETH and ended up with 0.00670500 ICX. Most blockchains require a transaction fee so I didn't have enough ICX to convert back to ETH or anything else. It was left over coin dust. I have about 8 wallets with dust that are just sitting there. The only way they would ever be unfrozen is if the coin rose enough in price to allow a conversion. It just a funny side effect of the trading platforms and 6-digit precision.

The Blockchain delivers

Well, that escalated quickly. When I wrote my first post about blockchain, the price of bitcoin was $4,549. Now, less than 4 months later, it is $18,600. A nice 400%+ return. Bitcoin futures (disconnected from the underlying) are now trading on two US exchanges. I hear about cryptocurrencies every day on Bloomberg. Marketwatch.com added a "crypto" column to their tickers. I am still not convinced that bitcoin is "the" long term solution, but it has had an amazing run. I don't think most people even understand the implications of the hard forks this year.

Since August, I have dabbled in several cryptocurrencies and made huge percentage gains (with small dollar amounts). It's easy to feel smart when everything is going up. It feels a lot like the Napster days before the lawsuits. It could certainly all crash as fast as Napster, too. However, blockchain, or a successor technology like the Iota Tangle (which I don't think will work as designed), will survive and get applied to hundreds of finance problems to reduce costs and speed services. I am wasting some time researching all the development projects going on and enjoying the fresh takes on the technology.

Meanwhile, the S&P has made more records than any other year in history. Real estate is booming. It's seems hard to lose money on anything right now. I wonder how long that will last.

Blockchain Believer

Bitcoin was born in 2008. I watched it with mild fascination when it was an infant and remember the milestone of being able to buy pizza with bitcoin. But I was never persuaded that bitcoin was more than a curiosity. I had seen early attempts at digital currency come and go as far back as the early 1990s. Maybe it gained some traction because it was born out of the ashes of the 2008 mortgage fraud crisis, aka the Great Recession. It has survived many scandals, online exchange thefts, a dirty reputation as a currency for criminals, and a recent hard fork (with another one probably coming up at the end of the year). It also gave birth to a thousand copy cats, some with new and improved features.

This was the first year that my curiosity and the skyrocketing price nudged me into really researching it. I am still not persuaded that bitcoin itself will be more than a launchpad, but do believe that one of the technologies used in bitcoin, the blockchain, is destined for greatness. The way the distributed ledger works and the problems that were solved and proven over many years is genius. How it eventually evolves is hard to predict, but I am believer in blockchain technology and the promise of distributed trustworthy applications in the future.

Here is a great short intro video on bitcoin technology:


And here is a longer more technical intro from the same author:


Disclosure: I have a small wager on ethereum and own some ether coins.

Cullen Roche's Biggest Myths in Investing

Cullen Roche is currently my favorite financial blogger for many reasons not worth elaborating. He published a list of investing myths that really covers a wide swath of the investing world and I thought worth repeating. Grab a cup of coffee and see if you agree. Good Stuff!

Biggest Myths in Investing

She sells shares by the Sears store

According to Reuters, Sears warns of 'going concern' doubts. If you hold Sears shares, that isn't reassuring. It smacks of Chapter 7, turn out the lights and go home.

The warning comes less than six weeks after the company announced what it called the "next phase of its strategic transformation," in which it hoped this year to reduce costs by $1 billion and cut its debt and pension obligations by at least $1.5 billion.

Oh, my. Sears (SHLD) was down 12.3% today and another 3% after hours.

Calculated Risk Comment Site Nuked

During and after the Great Recession, I used to hang out quite a bit on the CalculatedRisk Blog site. The comment section was a separate web site filled with an eclectic, but generally bright mix of people from all walks of life. Each had a different view of the elephant that is our financial system. Over the years, I drifted away, but would still occasionally read the blog posts.

On January 25, the comment site administrator posted that the comment site was shutting down indefinitely.

The last time I visited the comments, some of the old regulars were still there, but there were also some active trolls, doing what the Internet does -- turning everything into Boaty McBoatface. A long time ago, it was useful resource, but it had become a toilet and finally got flushed. Good call, Bill.