Topic: Hedge against BitCoin collapse - page 2. (Read 11691 times)

There are many hedge against Bitcoin, what about property and stocks?

Seriously, why would litecoin be more vulnerable to attacks due to lack of ASIC?

You and I (and many others) are still debating selfish-mining. And I think I am winning that debate against your points over at hackingdistributed.com. So how can you make that conclusion? Did you respond to me again over there? (Don't debate selfish-mining technical points here in this thread please, off-topic)


Although I tend to agree, but it is an irrelevant point almost. That can be argued different ways. Being dominated by ASICs means Bitcoin could potentially be cartelized much more easily. And Litecoin has a considerable amount of GPU hashing rate on it, so it may not be vulnerable to any realistic attack.


Yes but it may have other vulnerabilities and they may be better or worse.

There is no weakness. The authors made a number of serious mistakes in their article. Litecoin is more vulnerable to attacks in general due to the lack of ASICs. If you want to look at a coin that doesn't share a similar set of vulnerabilities as bitcoin, look at PPC.

Newer and smaller altcoins will be more at risk of a technical vulnerability because they are less tested and probably have less resource for programming, etc..

I am not an expert on the valuations of altcoins.

Seems to me that Litecoin (LTC) is holding up its value well because it is the Bitcoin for GPUs. All those GPUs had to go mine somewhere and Litecoin is the most professional xerox of Bitcoin but so far ASICs can't mine on it.

I am not very knowledgable about the other altcoins and why people valued them. There is a lot of interest in proof-of-stake type coins such as Peercoin (PPC). I've read that one problem is the early adopters control too much in PoS. I have not analyzed that deeply.

I am biased because I want to see an altcoin with features I have been championing as important. And because I feel that a really great altcoin that was so much better than Bitcoin, would really get a lot of attention and support.

Some people have said altcoins are inherently more risky, because they are less proven, smaller market caps, and less hashrate securing their networks. Well there are counter points to those points too. But in general I would agree with the notion that altcoins are more speculative. But speculative can be a good thing too, for example that killer altcoin comes and then you ride it all the way from 1/1000 of a penny to $1 million.

I myself isn't really good at computer stuff and I find it hard to really understand. So in short, Bitcoin has a really small chances to go 0 and what about other type if coins like litecoin?

Don't get angry at me if I am wrong, but my analysis so far is there is very low near-term risk such as Bitcoin would overnight permanently lose its value due to a technical flaw. I am not commenting about the recent speculative runup in the price, of course if could correct at some point. (Americans not in a tax-deferred trading account at least have the problem that if they sell now, then they have to declare and pay capital gains taxes, so that is one motivation for finding a hedge)

So I guess I am saying the risk from technical flaw is not so great as I think you will have time to form an opinion and react. The attacks so far presented seem to be more of risks later when Bitcoin is much more valuable and a cartel is attempting a (even invisible and silent) takeover. Although I am not yet clear on whether the selfish-mining could be hidden, probably not.

Many people have put thought into finding weaknesses in Bitcoin, so my intuition+analysis is that it is less likely that a catastrophic flaw could be found that would destroy it overnight. We are more likely to see attacks found which were not considered because they are more insidious and applicable for those who have huge resources, e.g. it is claimed with a fix that Bitcoin would only be subject to attack with selfish-mining if attacker has 25+% of the total network hashrate.

On the regulatory risk, it depends how you think the government views Bitcoin. My extreme conjecture is they (NSA et al) view it as a good honeypot for tracking illegal activities on the public ledger which is for the most part not anonymous. So thus I don't expect negative regulatory action near-term. However, due to compartmentalization, perhaps not all government sectors (within the same nation even) possess the same viewpoint.

A flaw has already been argued against PoS.


 

The variant of PoW hash (e.g. Scrypt) has nothing to do with the selfish-mining attack.

Here is what I mean:

http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/#comment-1126295970

And I mean that Litecoin might be less fixable for that suggested fix, than Bitcoin is. But I am might be wrong on that conjecture.

I suppose non-experts are going to have to wait for the experts to come to a consensus. I will not conclude I am correct on all matters of the selfish-mining attack even though I consider myself to be reasonably expert on the technical side. That is what peer review is for. We must wait for the analysis and discussion amongst the experts.

You mean the selfish mining is vulnerable to all alt-coin and not only Bitcoin? Last I heard scrytp coin is safe...

I am thinking it is more difficult for the Litecoin to make the fix suggested by the research paper for the selfish-mining attack due to the shorter block time. Waiting for discussion on that over at hackingdistributed.com

I hope some rich holders are smart enough to start a new boom in LTC when the crash comes. If there would be an another quick rise in LTC, then selling BTC to LTC would be quite attractive. This way, much of the value would stay in cryptos and BTC would recover alot quicker. If people sell to fiat, then that value will walk and there will be another 6 month low period. Only another crypto-currency could cause the value to stay behind and "inside the family". The content of this bubble could be caught and reinserted, only if the game is played the right way.
LTC would be the current winner here for just because it has a decent enough start-up volume. Technical reasons will be taken into account in the future.

With great risk comes great reward.

I never know there is so much risk to Bitcoin.

I am posting here the possible risks to Bitcoin and strategies for dealing with them.

Risks:
a) A Technical flaw in either the network protocol or private key/public key algo is exposed.
Risk Mitigation: Alt Coins with significantly different POS/ Pow functions
b) New innovative AltCoin is introduced in the future. That takes away market share from BTC. While we don't have such a coin right now, there is likely be one in the future.
Risk Mitigation: Keep yourself well informed and invest small portion of funds into promising technologies.
c) Regulatory risk - This would affect all digital currencies.
Hedge: Portfolio diversification or gold/silver
d) Public panic/sell off - This will affect all AltCoins as most of them are traded for BTC.
Only alternative portfolio diversification.

If bitcoin suffered a technical failure then litecoin would most likely suffer it in an identical manner. 

Level-headed Conjecture:

USD trend (not wiggles) will likely get stronger through 2015, as capital is running from emerging markets to the reserve currency (and Euro) as the commodity bubble has peaked and China (and BRICs) is headed down due to huge imbalances. Read Martin Armstrong and Michael Pettis. India has persistent fiscal deficits and a deteriorating account balance and they are exacerbating it by launching a food subsidy program that will send their annual deficit into the high single digit percentage. (note that I am for letting 400 million suffer in malnutrition)

Gold and silver have not bottomed yet, they may bounce until next Spring, then go down for the final bottom probably under $1000 and $17. Again for same reason as the dollar strength above.

Mildly Extreme Conjecture:

After 2015, the global system will implode, then you will see gold and silver blast off.

I expect Bitcoin to have crashed from its bubble peak by then (roughly 2016 - 2020). Whether it survives or not is yet to be determined based on technical fixes to the protocol and competition.

Fact:

USD won't collapse (any time soon) because of Bitcoin due to relative size, with Bitcoin in a the $10 billion range and USD in the multiple $10s of trillions range. Bitcoin is a flea on an elephant's arse at the moment.

Fact: (unless my logic is refuted)

Disagree. I have refuted your technical arguments on selfish-mining:

https://bitcointalksearch.org/topic/m.3607191

I like this approach as exposure hedge. Re-balance your investment periodically to achieve risk exposure to bitcoin  with desired percentage level.
Good idea to also diversify your investment among different asset classes.