Monday, December 25, 2017

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.

Tuesday, December 19, 2017

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. 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.