Spreading the word on crypto

April 1, 2021April 5, 2021 | roger nunn

Yesterday I made a short presentation to family members to explain what crypto is all about.

I have been interested in bitcoin since around 2015 and spent many hours reading and watching videos before starting to trade it myself.

I went through the 2017 boom and the drop that followed, all the while learning about it and watching new developments.

Now I am even more convinced as to its long term viability, especially as I believe that the decentralised consensus is an excellent way of linking the power of spending to real democracy.

However, finding a way to present this view of the future without appearing to be a fanatic proved to be very difficult.

I ended up by talking about the reason for bitcoin’s development and the benefits it can bring wherever value needs to be maintained or transferred.

I am working on totally non technical presentation that gives a newcomer an idea of What and Why, followed by How.

Looking to the future

March 23, 2021 | roger nunn

For about a week I have been trading futures, based on the rise and fall of bitcoin relative to the US $.

I have been using very small amounts of money with only 10 X leverage. This is because leveraging multiplies losses as well as gains. I put in stop-losses that sell your holdings automatically if the price starts to drop.

It sounds as though it should be a winner and seems to be for the professional traders.

I found that for the amount I was willing to risk, the fluctuations minute by minute were enough to very quickly move the price to my stop-loss level. This easily limited my losses and I managed to make a few gains. However I had to pay fees for every trade and I found that I was losing overall.

This last week saw an end or at least a break in the bull run so I couldn’t rely on a steadily increasing bitcoin to ensure profitable trades.

So I lost a bit but now I feel that I understand what it means to short or long a future contract so I consider the loss to be acceptable.

In the end futures trading can only be a form of gambling, we can’t know what will happen in the future.

It is exciting when you make a gain.

What are Bitcoin futures?

March 15, 2021 | roger nunn

As part of my ongoing attempts to understand the world of crypto I have been researching the idea of futures. As far as I know, it is impossible to predict what is going to happen in the future. However, I have been following a number of youtubers who consistently make profit on trading in futures.

So how can it be? Surely buying and selling in the future is either guesswork or just gambling, neither of which seems to me to be a good long term strategy.

This only scratches the surface so don’t be surprised if I miss out important parts of the action.

I have found out that I can use “leverage” to allow me to make or lose multiples of the money that I put into a cryptocurrency. A base idea is that I have to deposit enough money to cover any possible losses and then I can buy a contract that takes the change in the value (in US$) of the currency and multiplies it by the leverage factor. This allows me to make very big gains compared to the actual change in the value of the underlying asset.

I don’t like the idea that the reverse is also true as my losses are also multiplied.

The way the you make money is by allowing the multiplier to act when the price goes up and by selling quickly if the price drops. Luckily the mechanics of it is taken care of by the software on the trading site. This is called a long contract, with the reverse action being called shorting.

I have been testing out the action and so far have not managed break even. This is because there are always charges to be met, so you have to make big gains to cover the costs as well as the loss making trades.

I have to say that it feels like gambling to me, and is very time-consuming.

Crypto 24/7, isn’t it great?

February 22, 2021 | roger nunn

When I started buying and selling Bitcoin I was happy to find that the trading can be done at any time, that the markets never sleep. This was good because it is so different to the stock markets, which are only open 5 days a week, as well as being closed on national holidays.

However, there is a downside. Me, not being a machine needs to eat, sleep, have fun and socialise with other people. While I am not in front of the computer I cannot monitor my potential gains/losses from crypto trading.

I have decided that trading has to take second place to normal living and so deliberately leave my computer alone, obviously have first checked that I wont lose badly in the event of a big drop in the market. In fact, this is the case even when I am sitting in front of my computer as I cannot effectively monitor all the different parts of the crypto market and its multitude of coins, tokens and derivatives. I haven’t even got my head around the future direction of DEFI, and its constant evolution.

Therefore I have a plan of switching on and trying to follow the general direction of the market before formulating any buy/sell plans for the day.

I have to say that I really don’t see any way that a human can get a good feel on all the parts of the market simultaneously. This observation is borne out by listening to many different online trading YouTubers, who seem to be able to make money by using different tactics in different markets.

So I like using trading bots to act for me, but so far they seem to be limited to trading crypto pairs chosen by me. I am looking forward to the development of Machine Learning based decision models that decide what to buy and sell in real time. It will be less exciting but a good way to create a passive income without doing anything.

What to do with the money

February 20, 2021 | roger nunn

At the moment we are in a Bull market for crypto. It actually just means the that prices (in Fiat currencies like the US $) are generally rising. Bitcoin’s market cap (value of the number of coins times the current price) is more than 50% of the entire crypto market and so the market generally follows its lead.

There are fortunes to be made by trading within crypto, getting into coins just before they pump. Obviously choosing a coin is an inexact science, but it is exciting when you catch the wave.

The Bull market will eventually end and there are numerous people explaining what they think will be the timing, as you can expect huge reductions in value, especially with low cap alt coins. So the widely acknowledged strategy is to sell some of the coins as they go up “locking in” profits. This works well enough and you can then re-invest the profits in the next potentially good high flyer.

My problem is the same, however much profit I make. Assuming that there will be a Bear market sometime this year, I need to know how to keep my profits safe.

Keeping you money safe is the same problem whether or not you are a crypto enthusiast. The explosion in supply of fiat is very likely to result in inflation in the long run, so getting out of crypto is like getting out of the flying pan into the fire.

So it looks in the end that hodling in crypto (some at least) is going to be a long term strategy. I’m waiting for more people to accept bitcoin for big purchases, like houses or cars.

Exciting financial changes are here but not everyone realises it yet.

Bitcoin is going through the roof

February 9, 2021 | roger nunn

Bitcoin is currently worth around $46,000 each. As usual, most of the altcoins follow suit with some dropping in value and some making spectacular gains, far higher than Bitcoin itself.

It is a rising market, where it starts to feel as though the sky is the limit. I prefer the expression of going through the roof as it indicates a barrier and brings the expectation that there will be a drop afterwards.

As far as making money is concerned, sitting and hodling in a rising market is just asset appreciation. It looks like a good money maker but it’s only real when you sell the bitcoin and realise the profit. It’s a good feeling when the market is rising and you can see yourself getting richer.

However, being a trader is something else. It means studying the different coins, buying low and then selling as they rise to take the profit. It is less exciting because you can always imagine how much more you could have made if you had waited a bit longer.

The harder thing is how to make money on a falling market, something that happens often. It means building a buy and sell strategy that makes use of the relative difference in value between various coins, buying and selling to take advantage of price changes.

How to do it? This is the trail that many of us are hoping to follow. It’s not easy.

What is an altcoin?

February 3, 2021 | roger nunn

History shapes language. First there was Bitcoin (there had been previous attempts at electronic money but no real success). Just ask most people about cryptocurrency and you will get comments on Bitcoin being a criminal’s money. Most people are not even aware that there are other forms of crypto.

The development of Bitcoin spawned a lot of interest in developing alternatives, supposedly able to address its short-comings. Disagreements in the mining communities resulted in copies (hard forks) of existing coins and developments of new ones. Extra ideas, such as programmable inputs were also brought in.

Now there is Bitcoin, Etherium and lots of alt-coins. Lots and lots, measured in thousands of new coins and tokens. I have separated Eth from the altcoins because of its huge market capital and because it is used a base for the creation of many other forms of crypto.

Bitcoin has increased hugely in value over the past 10 years (large fluctuations make it more exciting), so it is now considered a store of value, rather than a currency. However, its increases are dwarfed by some of the increases (and price drops) in many of the altcoins.

The problem is knowing how to choose an altcoin to buy and then when to sell it. Even when you find one that is increasing quickly, it is exciting enough that your inclination is to go on riding it up to the top. Where is the top? Nobody knows?

So what to do? Build and apply a strategy (logic not emotion) systematically. Usually this means researching a coin, buying it and then selling when it reaches a pre-determined price. Not very exciting, but it can be profitable.

Apparently it is now an alt season. Try to figure out what that means.

What is a crypto wallet

January 21, 2021 | roger nunn

Understanding a crypto wallet necessitates getting your head around the way that crypto works.

When I started looking at Bitcoin I learned that getting access to the coins is done through simply knowing the right unique string of numbers. This the only way to access your Bitcoin and is what gives rise to the expression “Not Your Keys, Not Your Coins”.

A wallet is software that stores the numbers for you and provides an interface for transferring (or trading) your coins. The software is password protected. When it is installed, it creates a set of recovery words that can be used to re-create the numbers in the event of forgetting or losing the password.

The recovery words can be used by anyone to use the coins so they are usually written down and hidden away safely.

In writing this I realise that although I use software wallets to keep and transfer coins I don’t have a clear enough picture of how they work. I will read more about it.

As software wallets are susceptible to being hacked or being emptied through information collected through a phishing attack there are also hardware wallets.

Hardware wallets are used to store the crypto numbers and accessed through software. This means that the coins are protected through both the software and needing physical access to the wallet. This extra level of security brings an extra level of complication, as with most things on the internet.