What is the perfect hedge for our bitcoins?

[forevernoob]

"Investing into crypto to avoid inflation"
*Buys Bitcoin* *Does not realize it has over 8% inflation a year and there's still 6-7 million coins coming out*   

Bitcoin has more inflation than currencies in developed first world countries.


https://www.cryptocoinsnews.com/bitcoin-price-90-users-want-higher/
90% of Bitcoiners want the price to be higher.  A good example of Stockholm Syndrome is where these same 90% of users will continue to support inflationary PoW.  Yet it is this inflationary PoW which creates a downward pressure on Bitcoin's price!  The user base does not know about alternative mechanisms.

 

The only non-inflationary crypto that was in the top 10 was NXT.  "Why didn't NXT go to the moon, then?".  Just because you don't have inflation doesn't not mean you can ignore the network effect.

Yes but the inflation drops after a while. And with bitcoin we know exactly when it decreases and stops completely. So it's not like FIAT which can be printed whenever they decide to.
With that said I believe USD is winning the currency war so it might be a good investment but I don't see how it's better than Gold and Silver?

[1714302403]

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[TPTB_need_war]

also, the Poelstra PoS criticism is deranged

Vitalik Buterin provided a strong counter argument. But regardless of whether PoS has more gameable entropy or not, for sure PoW can distribute new coins (and redistribute existing wealth...a necessary requirement of all money since dawn of mankind) and PoS can not.

Why necessary to redistribute money (at slow rates of debasement)? Because otherwise the macroeconomic incentives to invest with risk to produce more instead of save in deflation are not balanced.

[Undermood]

I think the perfect hedge is to diversify your investment to avoid the potential risk. I would recommend to split your investment to btc / whatever coins you like, dollar, gold/silver.

[habraken]

also, the Poelstra PoS criticism is deranged

Vitalik Buterin provided a strong counter argument. But regardless of whether PoS has more gameable entropy or not, for sure PoW can distribute new coins (and redistribute existing wealth...a necessary requirement of all money since dawn of mankind) and PoS can not.

Why necessary to redistribute money (at slow rates of debasement)? Because otherwise the macroeconomic incentives to invest with risk to produce more instead of save in deflation are not balanced.

In NXT the 'forging' (mining PoS) where you receive the transaction fees in a block, is just for helping secure the network, not as a source of new wealth. The low value of the coins (tokens) you receive is hardly enough to pay for electricity (yes, even when it runs on a Raspberry Pi)

If NXT whales really want to actively increase their wealth, they'd do better to invest in projects (=risk), buy and trade NXT assets (=risk). Just leaving their NXT in the account forging doesn't do much for them. So PoS isn't relevant for wealth imo when it's like this.

[JBC]

also, the Poelstra PoS criticism is deranged

Vitalik Buterin provided a strong counter argument. But regardless of whether PoS has more gameable entropy or not, for sure PoW can distribute new coins (and redistribute existing wealth...a necessary requirement of all money since dawn of mankind) and PoS can not.

Why necessary to redistribute money (at slow rates of debasement)? Because otherwise the macroeconomic incentives to invest with risk to produce more instead of save in deflation are not balanced.

In NXT the 'forging' (mining PoS) where you receive the transaction fees in a block, is just for helping secure the network, not as a source of new wealth. The low value of the coins (tokens) you receive is hardly enough to pay for electricity (yes, even when it runs on a Raspberry Pi)

If NXT whales really want to actively increase their wealth, they'd do better to invest in projects (=risk), buy and trade NXT assets (=risk). Just leaving their NXT in the account forging doesn't do much for them. So PoS isn't relevant for wealth imo when it's like this.

If stimulus spending is guaranteed to boost NXT then why don't Bitcoin whales like Roger Ver give away their millions or fund huge advertising events?   "$10,000 Bitcoin here we come!".  Instead the Bitcoin millionaires can't even be bothered to spend $79.99 on a decent HD webcam.. 

[BitcoinNational]

"Namecoin: This is based on the bitcoin codebase, but why do I include it in the "shortlist"? Well, I don't think a new decentralized naming system is fair, because that would render all registered domains on namecoin useless and invalid. However, I don't think it's a good hedge, because it's really a niche currency and has the same codebase as BTC."

then UNO meets your qualifications
like Name it is merge mined on the bitcoin network
and in case of bitcoin market crash causes high difficulty high mining cost (feed back loop)
Name and Uno might just drive the bitcoin network in such an event

The kicker over Name coin is that UNO only inflates the money base at 7 coins per day ... name coin is just on it's first half, no?

This means UNO favors investors over miners, super low inflation.
Where bitcoin is designed to be a currency (inflation needed) - UNO was designed to be a store of value and functions like a POS model but no staking required and secured by bitcoin network hash power.

Also, as far as I know, NMC still can not be redeemed for a domain name?  So the business model seems to have been gunked up by mis-management.

[shanem]

There is no hedge for bitcoins unless you are storing your money outside cryptocurrency.
When bitcoin drops, all other altcoins will follow suit.

[masterOfDisaster]

Bitshares has pegged fiat currencies, even has gold, silver and nasdaq composite indices:

http://www.bitsharesblocks.com/assets/market

nuBits is also pegged to USD.

Well, that's true. We will see (hopefully not) how these coins are doing during a bitcoin collapse . But I guess a general distrust towards cryptoes will have some effect even on the most stable coins. Actually I'm really curious.

Neither bitUSD nor NuBits (NBT) rely on Bitcoin to keep the peg. The collateral is in both ways the issuing company in one way or the other.
Both provide a peg to the USD and in difference to e.g. Tether there's no single point that can be attacked (like collateral held in USD). I'm too lazy to look up how coinoUSD works

Fiat is a good hedge, but can't easily be withdrawn from exchanges. Would you want to leave money at exchanges for longer than necessary after all these exchange hacks and defaults?
Use bitUSD or NBT instead and withdraw them to your wallet!

Speaking of bitUSD and NuBits - both are products of decentralized corporations. It's something different from a "coin" you buy today hoping you can sell it for more money in the future.
The corporations will earn their owners money if they run well and generate revenue. The owners of these corporations are able to have a say.
At Bitshares delegates are elected, at Nubits people continuously vote with their shares (or register feeds if they don't want to follow development closely).

If it wasn't too late to buy shares, I'd recommend "Blocks & Chains Exchange" as well - another decentralized corporation that has recently completed funding. A kind of high risk venture capital operation (at the moment). But as the funding is over you need to try to buy shares at exchanges (e.g. here: https://www.ccedk.com/nbt-bks but there's not much of a market. Almost nobody wants to sell )

Peercoin is another lottery ticket like Bitcoin, but in a way more sustainable way. It has a hybrid process and PoS secures the blockchain; this consumes so little energy it doesn't play a role. You can run it on a RaspberryPi1!
Once the Bitcoin price plummets, the security risk for Bitcoin gets bigger and bigger. The rationale for that is here: https://www.reddit.com/r/Bitcoin/comments/2s8qge/its_happening/cnndc36
This risk doesn't exist for the Peercoin network. If anything is close to "digital gold" it's Peercoin: hard to mine it (via PoW), easy to secure it (via PoS).

Why not Slimcoin (the inventor of Proof-of-Stake to secure a blockchain) or Emercoin (similar to Namecoin, but based on PoS instead of PoW)?

There's so much more that is long in the wild than just Ethereum which yet has to prove that it can do what it was designed for...

There is no hedge for bitcoins unless you are storing your money outside cryptocurrency.
When bitcoin drops, all other altcoins will follow suit.

Not true for the coins pegged to USD (bitUSD, coinoUSD, NuBits, TetherUSD)

[...]
Where bitcoin is designed to be a currency (inflation needed) - UNO was designed to be a store of value and functions like a POS model but no staking required and secured by bitcoin network hash power.
[...]

A currency with no way to inflate AND deflate supply has a bad design. It might work as a means to transfer value, but never as currency - unless you don't care for fluctuations by two digit percentages on bad days
And as store of value Bitcoin is too expensive (thanks to the PoW arms race) and unfortunately UNO depends on Bitcoin due to merged mining.
Thanks, but no thanks.
If you look for a store of value, try the PoS pioneer Peercoin which can be sustained by RaspberryPis

[Sentinelrv]

Peercoin: this is a good hedge against a flaw in PoW because it also has PoS combined with PoW. Seems a more secure solution AND it has the first mover advantage in the PoS space. But it doesn't offer anything else. And theoretically PoS could be implemented in BTC if needed (although unlikely).

It seems many people believe Peercoin is simply a PoS clone of Bitcoin, but they couldn't be more wrong. Sunny King designed Peercoin with a different purpose or role than Bitcoin. I'd like to talk about this aspect of Peercoin's philosophy that I think many Bitcoiners don't realize, but first I'm going to post some quotes from a couple days ago about the block size debate, one of them from Bitcoin Core Developer Gregory Maxwell...

Do we want it to handle all world daily transactions,
or do we want protection from current monetary systems and government involvement?

If we achieve the second, we can have both.  But if we only achieve the first, we likely cannot have the second (and wouldn't find it to be a substantial improvement over the fiat systems we have now, even if).

The reason for this is that if Bitcoin is secure and trustworthy, trustless decenteralized micropayment facilities can be built on top of it and extend Bitcoin's transaction security with arbritary speed or scale.  But if the system is fragle and underminable by attackers (government or otherwise) then it won't be robust enough to underpin these things.

(and things like micropayment channels were't my invention, they were recommended by the system's creator-- thats part of why Bitcoin has smart contracts to begin with.)

whats interesting is Peercoin Achieves the second, now by design.

It heads of the whole Block size issue by going for the backbone, which is now becoming the problem for BTC as it tries to be 1 and 2, without being 2 first.

It seems that something like peercoin will take the lions share of large value transactions and BTC is falling into the middle of not being doge Ie doge can handle a high TPS at sacrifice of security [but who cares when your buying an ice cream and dont get hit up huge credit card fees], and not being good as a backbone.

Dont get me wrong I am a hardened BTC supporter, its just the boundary conditions do not support backbone currecy as well as Peercoin and so a debated like this rages.

I have being saying this for some time now, and it has come to fruition.

Just in case anyone is not clear on what Jubalix is saying here, Sunny King coined the term "backbone currency" in an interview on October 24th, 2013 where he laid out his vision for Peercoin and explained why he designed it the way he did. In his quote, Gregory Maxwell is describing Bitcoin as a backbone currency when Sunny King designed Peercoin to fulfill this exact role. Here is Sunny's main quote on this topic...

https://www.peercointalk.org/index.php?topic=2218.0

"Both PPC and XPM are designed to last. PPC is designed with energy efficiency, XPM is designed with energy multiuse. Bitcoin has a long term uncertainty as to whether transaction fees can sustain good enough level of security. Before that the main concern is how to balance transaction volume and transaction fee levels. Currently I get the feeling that bitcoin developers favor very low transaction fees and very high transaction volume, to be competitive against centralized systems (paypal, visa, mastercard etc) in terms of transaction volume, to the point of sacrificing decentralization. This also brings major uncertainties to bitcoin's future.

From my point of view, I think the cryptocurrency movement needs at least one 'backbone' currency, or more, that maintains high degree of decentralization, maintains high level of security, but not necessarily providing high volume of transactions. Thinking of savings accounts and gold coins, you don't transact them at high velocity but they form the backbone of the monetary systems.

Pure proof-of-work systems such as bitcoin is not 100% suitable for this task. This is because transaction fee is not a reliable incentive to sustain network security. If the mining generation amount is kept constant (there have been several such attempts in altcoins) it would work better security-wise but then it would also significantly weaken the scarcity property of the currency. XPM's inflation model is designed in such a way that it could serve as backbone currency better than bitcoin if needed, because it could maintain high security reliably for longer, with reasonably good scarcity property as well. Of course that's only from architect's point of view, whether or not it would be chosen by the market is a whole different matter.

PPC is designed to serve even better as a backbone currency. The proof-of-stake technology in PPC is not only energy efficient; it also maintains high level of security without relying on transaction fee. Thus PPC could be safely designed with strong scarcity property yet serving well as backbone currency. Both PPC and XPM use protocol enforced transaction fees, which reflects my preference that high transaction volume is discouraged in favor of serving as backbone currencies.

Right now if we are talking about micropayments in the US$1 range, both PPC and XPM still handle them with much lower overhead than credit card network. In the long term micropayments should be provided by centralized providers, or a less decentralized network optimized for high capacity transaction processing.

On the other hand there is no promise that minimum transaction fee wouldn't be adjusted. If processing capacity of personal computers continues to advance at the current pace, both max block size and minimum transaction fee could very well be adjusted at some point. However I do take a very cautious approach to adjusting transaction fees, as opposed to bitcoin devs. The impact to the fitness of the currency as a backbone currency is of great concerns to me."

Therefore, Peercoin is designed first and foremost as a secure store of value which prioritizes decentralization over speed and transaction volume. This is the definition of a backbone currency. Further, Sunny said in the quote that large volume and high-speed microtransactions can be achieved by using off-chain networks, which could range anywhere from centralized solutions to semi-decentralized to trustless. This allows Peercoin to remain a highly decentralized network and store of value while the majority of transactions take place off-chain.

Peercoin just turned 3 years old and its blockchain is only around 400 MB. This is a result of Sunny King's very specific design. The Peercoin community has been promoting these ideas for a long time now. It seems that certain people are only now starting to realize the importance of them.

[Sentinelrv]

Also for those who discount Peercoin because of centralized checkpoints, they won't be part of the protocol forever. As many Peercoiners know, checkpoints are similar to training wheels. They are an added protection when the network is young. Once minting participation increases and the network strengthens, centralized checkpoints will be removed by Sunny King and Peercoin will be able to exist without them.

The Nu Network, which is one of our Peercoin forks has already removed centralized checkpoints due to its higher participation of minting by shareholders. The participation is higher because of the requirement of shareholders to place votes when minting, which are needed in order to successfully run the network and change the supply of NuBits. Nu has run without checkpointing for almost a year now with no problems and Peercoin will eventually reach this state. It's just a matter of time.

[K210]

Peercoin has my vote, Sunny King designed peercoin to be a backbone currency. It's only know that many people are starting to catch onto Sunny King's concept that went into peercoin.

[lovely89]

It's almost like peercoin was developed today to solve the exact problem bitcoin has, except it was done innovatively 3 years ago!

I also like nxt. Ethereum looks like something to continue watching but way over priced. eMunie is making strides. NEM could be big and there are a few smaller ones I'm invested in.

[Leinaded]

What are your thoughts?

If I've understood your question well you ask for stability, reliability and a good investment long term?

As cryptocoins are based in code in my opinion they won't be a safe investment long-term, 20-40 years for something like a retirement fund. All things related with computers and programming are highly mutable and fluid. Just look how has changed the pc world in this last decade. As new hardware appears new revolutions can change it all, old things that seemed reliable could become obsolete in a couple of years but same as the are risks there are many great opportunities.

So if you want to buy something and forget about it for the next 40 years I don't recommend cryptos. But if you're willing to keep an eye to your investment, search for opportunities and take risks cryptos are a great place to look. If you want safety and a bit of profitability long-term look for gold when it goes back to 400$-500$/oz. or invest in diamonds, something tangible. And always diversify your investment.

[penek]

Why you forgot about Novacoin?

[masterOfDisaster]

It's almost like peercoin was developed today to solve the exact problem bitcoin has, except it was done innovatively 3 years ago!
[...]

The problem Bitcoin has? No, the real problems will begin when mining data centres start to attack the network to perform double spending attacks.
Sounds crazy?
For convenience here's not only the link, but the content as well for the rationale:

In difference to recent significant price drops in Bitcoin's history the situation might be more complicated now. 
It mght be more complicated, because Bitcoin mining is no longer something that single enthusiasts do on their GPU rigs, FPGAs or Avalons. 
Bitcoin mining has been converted to a business. A business that needs to generate revenue. That revenue is generated by mining and an appropriate combination of selling the Bitcoins to cover costs (purchase, operating, etc.) and keeping the Bitcoins for speculating purposes. 
With plummeting prices there's a point at which the mined Bitcoins don't even cover the cost of operating the mining devices. 
Somewhere close to that point the mining devices need to be shut off. 

The thing is: the block chain is secured by the PoW mining. The difficulty drops as a result of turned off miners. 
But the mining hardware is still there, available, with who-knows how many PH/s (in case of a Bitcoin mining data centre that was shut down). 
That is not only a threat for other coins that have a SHA256 PoW, it poses a thread to Bitcoin itself. 

This threat is based on the scenario in which a mining facility operator might be desperate by having invested hundreds of thousands of USD, maybe even millions and not knowing how to cover the costs. 
It would be good for that operator to at least cover the costs of building that facility. 
Assuming that the mining would have been done by selling a part of the Bitcoins and keeping some for speculation that could be achieved by selling those kept Bitcoins. 
That might be an explanation for this downward spiral we see at Bitcoin's price for some time now. 
Dropping prices cause more Bitcoins to be sold until there are no left in the pockets of that operator. 
Now begins the real threat - not for the operator and not in terms of selling pressure at the markets. 
That operator now has an incentive to use the hardware for attacking the network trying to cover his loss. 
If it's just a small mining data centre with only a few PH/s, that wlll hardly be successful. 
If it's a big one it will be dangerous. 
This is the ugly face of the combination of centralization and the need for expensive specialized mining hardware. The little guy can't do anything to leverage the effects of big mining data centres going wild. 
Under normal circumstances big players have no incentive to go wild. Instead they have an incentive do to the best to protect their investment. 
Under extraordinary cirumstances it might be different.

That's sad but true. 

You can downvote me to hell now. 
You can do so, because you hate what I say. 
You can do it because I made you afraid. 
But you can hardly do it, because all of it is nonsense and lacks comprehension.

Why you forgot about Novacoin?

Because of the shady start of Novacoin?
Because it's a Peercoin clone that doesn't offer anything special except for a PoW process (to distribute new coins) that uses Scrypt instead of SHA256?
...dunno what else

[EvilDave]

There is no hedge for bitcoins unless you are storing your money outside cryptocurrency.
When bitcoin drops, all other altcoins will follow suit.

Yep, sad but true:



However, if you take a look at the top 15 currencies on CMC over the last week, you can see that several are gaining against BTC, even if only in small amounts.
Based on this, Ethereum, Maidsafe, Ripple, NXT and Doge are the only possible hedge options at this moment........but: as Ethereum is still a baby and Ripple isn't a crypto, looks like NXT, Maidsafe and Doge are the best options.

Edit: Heres my investment tip:
Suzuki Katana GSX1100M

[penek]

Why you forgot about Novacoin?

Because of the shady start of Novacoin?
Because it's a Peercoin clone that doesn't offer anything special except for a PoW process (to distribute new coins) that uses Scrypt instead of SHA256?
...dunno what else

Novacoin is clone of Peercoin? I don't think so... https://wiki.novaco.in/en/FAQ

[Balthazar]

Because of the shady start of Novacoin?

http://www.thefreedictionary.com/imagination

[masterOfDisaster]

Because of the shady start of Novacoin?

http://www.thefreedictionary.com/imagination

Imagination?
-> https://bitcointalk.org/index.php?topic=144158.0 !

Regarding hedging - $100,000 daily volume, almost 0 fluctuation:


edit: hmmm imgur links don't work here? try this: http://imgur.com/Y8GIs1Y

More details here: http://coinmarketcap.com/currencies/nubits/

[Balthazar]

Imagination?
-> https://bitcointalk.org/index.php?topic=144158.0 !

I wonder to know what are you trying to say by publishing this link. Of course there were some coins generated right after public start of block chain and I personally destroyed these outputs. I guess it would be correct to say that you haven't seen anyone, who did the same thing. Is this a shadowy start or what?

https://bitcointalk.org/index.php?topic=143221.msg3730462#msg3730462
https://bitcointalk.org/index.php?topic=217110.msg2298533#msg2298533

I would say that forum trolling can be a good approach for developing the ability to gather information and form an independent opinion. It's much better than idea to follow some statements religiously and, even more, to keep the will for pushing the same agenda over and over, like some other people are doing. But honestly, I just don't care, because there are some other interesting issues to be dealt with.

Sincerely, your Alex.