Tag Archives: trading

A Personal Rant on Trading Bitcoin

Posted by mysticstache on

I would say the summary of my trading practices thus far can be summed up into, “I’m an idiot.”

It’s up. it’s down. Oh, my gosh I could have made $10k. Oh, no I’ve lost $300. Ack! What does everyone else think?… Just an average day in a Cryptocurrency trader’s life. But not for the above average trader’s life. Much of the same advice you’d get from a financial planner is applies to Bitcoin and other currencies.

Research the Company

Who are the developers of the Currency you’re thinking about buying? Who are their investors? Have they successfully launched a currency before? Have previous projects they worked on failed in a spectacular fashion?

There are a lot of motivations for attempting to create a new Altcoin. Notoriety, solving social or economic problems, or greed are some of the most popular themes of Cryptocurrency. Following the successes or failures of a development team will guide you in figuring out what motivates them. Don’t get stuck into thinking greed is bad motive. Several self-interested projects made a lot of money for the development team and early investors who knew when to sell.

Research the Product

The development teams are going to market their Cryptocurrency to garner investment interest, adoption, and higher trading prices. That makes it easy to find information like what problems are they trying to solve or new Blockchain technology are they trying to introduce? Are they trying to bring a solution to Apple products or Mobile devices where others aren’t?

Invest for the Long Term

If you’re full time job is staring at charts and day trading, you can still do that with cryptocurrencies. You just need to adjust to the increased volatility. By Volatility I mean 40% up or down in a day… 30 minutes even. But if your trading on the intraday bumps you might find a higher portion of your profits going to fees and splits. So, I say invest for the long term. If I had followed the advice in these sections, I’d have a lot more disposable income.

Personal Stories

I met a guy while working at Dell that told me a story of the $300,000 240 MB Hard drive he bought. Yes, MB. Well he cashed in some of his employee purchase plan stock for a new hard drive when the stock wasn’t worth all that much. At the time of telling me the story the Hard Drive was worthless and the amount of stock he sold for it was worth $300,000. Oh, how we laughed. And now I’ll relate for you the story of the guy who bought a pizza with Bitcoin when it was worth pennies and now that Bitcoin would be worth Millions. You’d think I’d learn from others, but I too have purchased a $700 tablet for $4,000 worth of Bitcoin at today’s prices.

But I think more disappointing are opportunities I missed due to fear.

Stratis is an Altcoin someone pointed out to me in December of 2016. The price was under $0.05. I thought well let’s wait and see what happens. The interesting thing about Stratis is the development team’s partnership with Microsoft and building their platform on the .NET framework. This means that the products a developer would write to interact with their Blockchain technology can run natively on Windows Operating Systems without a lot of additional translation code or “wrapper” code. The price went up to something over $0.07 and I said, “Ok I’ll buy some.” And invested $300. I woke up one morning a few weeks later and the price is over $0.30, and has been hovering between $0.40 and $0.50 the last two weeks. The currency had a lot of earmarks of something I thought was a good investment, and I kick myself for not putting in $1500 or more at the $0.07 price.

DASH, which was launched as Dark Coin, I used to mine. The name Dark Coin certainly sounded cool to the kids and it was marketed as the first truly anonymous currency because the network had the function called mixing where your bitcoin cold be split up and mixed with fractions from other Dark Coin on the network without additional entries in the blockchain thus removing the traceability of the transactions. When fintech investing in Blockchain technologies started becoming serious business they grew up and changed the name to DASH. I had mined 8 DARK when I had a hard drive failure and said well I won’t both with that currency any more. At that time, Dash was only worth around $1.00, so I was out maybe $10. At the same time Stratis had its big jump DASH goes to $100 and has stated above $50. Now why didn’t I keep mining when the difficulty was low and amass a vast fortune? I was able to restore my Dark Wallet from a backup and retrieve my 8+ DASH, but I could have had 100 over the course of that year.

Check out the stellar raise of PIVX. I looked at it when it was less than $0.03. It’s trading at $1.38 today… $1,500.00 would be worth over $100,000, and it happened extremely fast.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

 

 

​Surprise! Bitcoin is not the only Cryptocurrency.

Posted by mysticstache on

Surprise! Bitcoin is not the only Cryptocurrency available, and that’s a good thing.

Within two years of users joining the Bitcoin network and mining coins with their CPUs competing currencies appeared developed by other teams by augmenting the open source code provided by the Bitcoin developers. Namecoin was the first and used the same protocol, SHA-256. In fact the two networks are so closely related that miners can submit the same work for both currencies. Litecoin came next and introduced the Scypt protocol.

Since then the number of Altcoins has grown to over 700, and there are over 10 different protocols. Several Cryptocurrencies never gained any popularity and because users did not maintain nodes, mining, or trade these currencies their projects have been abandoned.

Bitcoin can be thought of as the base currency. That same sort of role the US dollar plays now as an internationally accepted currency that many other currencies are traded against. Bitcoin was first, most widely accepted and most widely traded. But there are some inherent issues with Bitcoins design. In “The Bitcoin Network and You” I mentioned how the size of the Blockchain is over 110 GB. This is limits the type of hardware one can maintain a Node on. Not everyone agrees with the number of Bitcoins that will be mined before finding blocks will cease to generate a reward, some argue for less and others think it should be unlimited. These arguments usually playout in the creation of a new Altcoin.

The concept and implementation of a “Blockchain” itself has a lot of applications beyond making coins. Within each transaction is the ability to create messages. Some developers have taken this to the complex level of creating contracts, like Ethereum. Contracts between two addresses are forever part of the Blockchain once verified by enough nodes. In my work, I’ve considered Blockchain technology the logical choice for IoT applications. The distributed network allows for sensor recordings and commands to become part of the system without relying on a central server to manage the communications. That way allowing for remote devices that only need to communicate with 3 or for devices near by and not have full internet access. As long at the remote devices eventually daisy chain to all other node on the network, some other server can explore the Blockchain for the various messages to facilitate reporting and management.

The Altcoin phenomenon has motivated the team of developers of Bitcoin to consider making various improvements to the Bitcoin network to address some of the issues. These proposed changes involve a large amount of discussion and campaigning and ironically usually fail to be implemented. Bitcoin was designed without a central controlling authority. Changes to the Blockchain or the network are approved or denied by miner votes. Conflicting proposals and the option to not change are voted on by placing a vote message in the work submitted by the miners. When a clear majority opt for a decision, that change will become part of the code that makes up the currency and its network. Implementation of new code in the Network is called a Fork, and all nodes need to implement the new visions of the Node code in order or operate on the Forked code (continue to mine and trade).

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

The Bitcoin Network and You

Posted by mysticstache on

I have mentioned a few times previously the term “Network” while writing about Cryptocurrencies. All Cryptocurrencies require some sort of communication between many different participants/users/ the official term is “Nodes”, which process and verify transactions. The health of a Cryptocurrency depends on there being many Nodes connected Globally. Having more Nodes increases the the speed at which a transaction is accepted, and decreases the likelihood of bad transactions propagating either through an error or malicious act.

Participating in the Network

Participating in the network is easy! Just setup a Wallet. If you go with a local wallet they come with the Node software, leave it up and running on your computer with access to the internet! The Node clients let you create multiple Wallets. So you can have a Wallet for send/receive to a dedicated Exchange, or one Wallet for collecting your Mining rewards.

Simple,well sort of, in the case for Bitcoin specifically, because of the age and popular adoption, the size of the Blockchain is over 110 GB. The standard Bitcoin wallet needs a copy the Blockchain so you need to have enough hard disk space to handle that and future growth. Each Cryptocurrency has a unique network and therefore Wallet client software. There are several created for Bitcoin and Ethereum, for other currencies links to their Wallet software will be found on their webpages. It’s time for a little explanation of the Blockchain.

The Blockchain is a detailed ledger book of every transaction that’s happened on the network. So every movement (Mining reward, trade, etc.) of every fraction of a Cryptocurrency from one address to another is recorded on the Blockchain. A Wallet appears as an address, and so the balance of a wallet is the total of all transactions of sent or received fractions of Cryptocurrency. A wallet’s balance CANNOT be negative. When Cryptocurrency is sent from one address to another through the wallet software, the wallet adds that transaction to the chain. Network Nodes verify the transaction by hashing it. It usually takes one Block (for Bitcoin 10 minutes) for the transaction be be accepted by the network and the transaction to show in the recipient’s Wallet. The balance will show as unconfirmed until a certain number (for Bitcoin 6 is recommended) have hashed and verified the transaction. The number of verifications is configurable. Some institutions or Wallets require more than others.

To hash a transaction means to encrypt or de-crypt (do some complicated math on) the transaction using a network password and the wallet’s password. These two passwords usually called “keys” ensure that the transaction is valid for the network and the came from the address specified in the transaction. Wallet’s have a unique password assigned to their network addresses to sign transaction in the network.

There is lots of great advice on backing up your wallets and creating cold backups etc. The Wallet itself is an encrypted file on your hard drive (in the case of a local desktop Wallet). This file is not large and can be zipped up and saved to your favorite backup location. If your computer dies, you can install the wallet software to new hardware and copy over the old Wallet file. The Wallet client will rebuild your balance by scanning the entire 110 GB Blockchain for transactions to and from your Wallet address.

Quick admin note, my blog will continue to discuss Cryptocurrencies in a general sense and pointing out what items are specific to Bitcoin vs. an Altocoin. But for the sake of the search engines I must litter my articles with “Bitcoin” more.

Up next Altcoins.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

Acquiring Cryptocurrencies

Posted by mysticstache on

Cryptocurrencies like Bitcoin, well almost exclusively Bitcoin, have been getting some play time in the popular media. Hopefully you understand what they’re talking about, if not check back to my earlier post “A Change in Direction”. Now you might be asking yourself, “How do I get some?”

Mining

Mining Cryptocurrencies is essentially using electricity to generate Cryptocurrency. Not all Cryptocurrencies can be mined. For those that can, the process involves looking for a new block in the currency’s blockchain. The miner who finds the block is rewarded with some units of the currency.

The process of looking for a block involves math, complicated and difficult math. The sort of math that would take you or me 30-45 minutes to do by hand with a calculator. Additionally, the more miners doing the same math for a currency increases the “Difficulty” of the math. New or less popular currencies are easier to mine until they become more popular. The more miners or powerful mining hardware working away at the currency, the more the completion rate of the calculation must be slowed down to keep the reward rate stable. The “Difficulty” of the calculations is proportional to the “Hash Rate” of the currency’s network and must adjust to speed up or slow down the reward frequency.

A later post will look at mining in more detail, but I will briefly touch on hardware concepts. Mining can be done on a computer’s CPUs, though the video card(s’) GPU(s), or with application-specific integrated circuit (ASIC) hardware.

Staking

Staking also involves electricity, but does not require math. With staking, one is rewarded for operating a node in the Network and holding on some units of the currency. The more currency held in the wallet the more often the wallet receives a deposit from the currency’s network. When I say, staking requires electricity, remember that Cryptocurrencies are digital, requiring computing hardware, which requires electricity. When the computer (desktop, tablet, laptop, ARM device, phone) is not running and connected to the network, Staking does not occur. Staking currencies to not require miners to generate more currency.

The acts of maintaining a node and holding a balance of currency results is two things. First, having more nodes in the Network increases the speed of transaction verification and keeps the network well distributed and healthy. Holding back portions of the currency from trading increases the rarity of the currency and helps support higher trading prices through the laws of supply and demand.

Master Nodes

Master Nodes are very like Staking, but there some major differences. The amount or frequency of reward does not change with the amount of currency in the wallet of the node. Master nodes take a portion of the coins mined. Networks require a certain balance of the currency to qualify as a master node.

If you want to increase your reward with Staking, buy and hold more currency in your staking wallet. If you want to increase your reward with Master Nodes, create a new master node and buy the minimum amount of currency required to run the master node.

 

Exchanges

You’ve heard of New York Stock Exchange (NYSE), right? There are several others around the world where people trade fiat currencies for pieces of a company. You may not have heard of FOREX exchanges. These market places are where people come to trade currencies.

Conceivably, you could trade or exchange some US Dollars (USD) for Great British Pounds (GBP) one morning at the Exchange rate of 1.60 USD for 1 GBP. Later that day the rate has changes and you can change your 1 GBP back to 1.80 USD. So over the course of the day you’ve made 20 cents just moving your balances from one currency to another.

The same concept is available in Cryptocurrencies. You can move your balances between Bitcoin and Altcoins, Bitcoin and fiat, fiat and Altcoins…. Altcoins and Altcoins.

Upcoming posts will break out some topics introduced in this blog and cover other concepts in detail.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

A Change In Direction

Posted by mysticstache on

There are a lot of great and exciting things happening in the world of Microsoft. I am nearly overwhelmed with the evolution of Data Science technologies, my specialty. And yet I’ve not found an opportunity within my current career to dive in and work on solving interesting problems utilizing these new technologies. Instead I find myself becoming more passionate about the developments in Cryptocurrencies.

There is a lot of introductory information available on this topic. I will include some links at the end for further reading. But to summarize and explain it in my characteristic easy straightforward manner: A Cryptocurrency is a digital asset. That is: A Cryptocurrency is something of value that exists as 1s and 0s. Simple, right? Let’s try an analogy, most of you have played some kind of mobile or PC game that involved earning money or points that can be traded in for improvements to your ability to play. In a lot of cases there are means to spend USD, GBP, or Euros to purchase in game Cryptocurrencies. From here on out I will refer to USD, GBP, Euros, other government managed currencies as fiat.

These concepts are directly transferable to Cryptocurrencies like Bitcoin, LiteCoin, Dash, Ethereum, Stratis, ZCash, so many more. They exist within digital systems (computers). They can be traded between fiat currencies. They are not carried around as physical paper or metal. In most cases, they can be acquired through a repetitive process.

Enough about game money, let’s focus on Cryptocurrencies that actually have some financial ramifications. Bitcoin was the first. The brain child of a mysterious personality,  Satoshi Nakamoto, took form first as a white paper (technical article). A short time later the concepts in the article were built as software and the first chuck of Bitcoin was created, some of it going to early supporters of the project.

Since that time several imitators have been created. Currently, any Cryptocurrency that is not Bitcoin is called an Altcoin (Alternative Coin). Nearly all of them have some value people are willing to trade fiat to acquire, anywhere from fractions of $0.01 to Bitcoin itself which is hovering over $1100 at the time of writing this blog. The reasons for development of these other coins vary as much as their value. In some cases, there are central challenges with the Bitcoin infrastructure they claim to solve. In other cases, the Altcoin is trying to stabilize the fiat trade value by limiting the supply. And there are those currencies created specifically for the creators to gin up hype, trade a lot of the initial supply for fiat, and then disappear.

Upcoming posts will break out some topics introduced in this blog and cover other concepts in detail.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/