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    Cryptocurrency Daily General Discussion - March 26, 2018

    March 26, 2018

    Cryptocurrency Daily General Discussion - March 26, 2018

    Daily General Discussion - March 26, 2018

    Posted: 25 Mar 2018 11:15 PM PDT

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    submitted by /u/AutoModerator
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    The good thing about diversifying is that instead of having one coin falling 5% you have 5 falling 5%

    Posted: 25 Mar 2018 10:52 AM PDT

    Silicon Valley's new season includes a Coinbase logo in their intro

    Posted: 26 Mar 2018 01:31 AM PDT

    Request Network partners with PwC France

    Posted: 26 Mar 2018 03:48 AM PDT

    Bithumb + Korea Pay’s Service bringing on board 200 franchise and 8,000 retail locations to accept all of Bithumb’s crypto listings as payment.

    Posted: 26 Mar 2018 01:32 AM PDT

    Governments are gettin bully!

    Posted: 26 Mar 2018 12:00 AM PDT

    Thomas Lee Presents The Economics of Cryptocurrencies - why Wallstreet is coming - we are just at the beginning of something very large

    Posted: 25 Mar 2018 08:10 PM PDT

    Amazing larger picture presentation by Thomas Lee, Wall Street strategist (JP Morgan) with over 25 years of experience in equity research, and has been top ranked by Institutional Investor every year since 1998.

     

    This is a must 20 minute watch if you want to understand how large Crypto will become. https://youtu.be/GGberGnxiJk

    submitted by /u/Dorian7
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    KuCoin To Streamline Trading Pairs

    Posted: 25 Mar 2018 10:49 PM PDT

    Will Bitcoin Cash fade into obscurity now that Bitcoin is improving so rapidly?

    Posted: 26 Mar 2018 12:08 AM PDT

    Complete list of ICO ranking spreadsheets.

    Posted: 25 Mar 2018 09:16 PM PDT

    Goldman Is Setting Up a Cryptocurrency Trading Desk by the end of June, if not earlier

    Posted: 25 Mar 2018 08:52 PM PDT

    This Week in Crypto: Cryptocurrency Headlines for the Week of March 25, 2018

    Posted: 25 Mar 2018 09:18 AM PDT

    Diversification in Cryptocurrencies is only effective with holdings of more than 4-5 (max 20-30) coins, with a weighted Correlation Coefficient of -1

    Posted: 25 Mar 2018 05:27 PM PDT

    For quite a while now the mantra in the crypto community has been to "make sure you diversify". Ultimately there is some element of truth to this, but in practice I see a lot of people implementing this as a rule of thumb rather than as a function of modern portfolio theory. Which is the whole reason why so many people unwittingly suggest diversification in the first place.

    There is absolutely no point in diversifying, unless there are strong fundamental themes driving your decisions to diversify (which I wouldn't recommend on it's own, due to degree of subjectivity of opinion) and/OR you're using the following steps based on modern portfolio theory:

    Step 1.0

    Identify the coins that you're interested in and define their correlation coefficients:

    The premise behind this is that the closer you get to -1 in c/coefficient the larger the degree of variance in market behaviour between the cryptos in question. Where, for example, participants aren't just buying or selling as a function of Bitcoin price.

    The following website is really good for identifying negatively correlating crytpo's: https://www.sifrdata.com/cryptocurrency-correlation-matrix/

    Step 1.1

    Devise a model of weighting (e.g. Crpto A = 50% of portfolio; crypto B = 50% of portfolio). There is no right or wrong way to distribute your portfolio but I personally do it based on my fundamental convictions (i.e. Nano = 40% of portfolio; ETH = 50%; XMR = 10% etc). The theory suggests that 2-3 won't really bring about much reduction in risk, but the closer you head towards a portfolio with 20-30 different cryptos, the greater the degree of reduction in risk. I also revise this decision after Step 4.1

    Step 2.

    Identify historical returns of the coins that you're interested in for period x: (this could be weeks, months, years it really just depends on your needs as an investor/trader. although the greater the time the greater the uncertainty).

    Step 3.

    Figuring out the average return for the chosen period:

    (x+y+z)/3 = return = (10%+(-10%)+20%)/3 = 3% for e.g. monthly periods, over a 3 month timeframe.

    Step 4.0

    Risk in terms of standard deviation:

    you can identify what the risk is by figuring out the square root of the sum of periodic returns (-) minus the return of the average weighted return ( ^ ) to the power of 2 ( / ) divided by the number of periods. Just wiki standard deviation formulas to get the proper notation.

    Alternatively, this short video is pretty useful https://www.coursera.org/learn/portfolio-selection-risk-management/lecture/yQp1s/diversification-a-graphical-illustration-with-two-assets

    Step 4.1

    get the risk in terms of variance: which is risk in terms of standard deviation ( ^ ) to the power of 2.

    note: after this step it is worth re-thinking the weighting of your portfolio allocation, to narrow down the best possibilities. I would consider weighting my portfolio allocation based on the risk in terms of variance, but at the end of the day figuring out the best portfolio weighting is really just trial and error.

    Step 5.

    Figure out the portfolio return using the weighted average of individual returns: R = (size of portfolio share % for crypto A) x (weighted average return for crypto A) + (size of portfolio share % for crypto B) x (return for crypto B).

    Step 6.

    Identify the sum of the weighted average risk in portfolio A multiplied by the correlation coefficient:

    risk = (portfolio share of crypto A) ^ 2 * (risk in crypto A) ^ 2 + (portfolio share of crypto B) ^ 2 * (risk in crypto B) ^ 2 + (2 * correlation coefficient * portfolio share of crypto A % * portfolio share of crypto B % * risk in crypto A * risk in crypto B).

    Remember risk = standard deviation, and the closer your correlation coefficient is to -1 the better chances you'll have of diversifying your portfolio. Hence, a significant reduction in risk.

    Conclusion

    If you follow these steps it will give you way greater edge over the average crypto investor, because it will allow you to identify the ideal amount of risk, as well as risk reduction, for the maximum amount of return, the Efficient Frontier of portfolio management.

    ie. portfolio A-B (sharing 50:50) gives returns of 9%, but a risk of 7%; while portfolio D-E (sharing 20:80) gives returns of 8% but only a risk of 3%. From a rational investing POV it is far more sensible to go with portfolio D-E because you're getting slightly less returns in exchange for a significant reduction in risk.

    The best way to calculate risk and return as a function of the correlation coefficient is to use Excel. this is because you can model and replicate the calculation using 100s of different portfolio structures and narrow down the ideal composition for diversification.

    I'm currently in the process of programming a website/app with this model embedded for cryptocurrencies but if you search hard enough on google I'm sure you'll find someone who has uploaded their own excel templates, that you can use.

    I just think we need more education like this in the crypto community, because at the moment it's just one giant shit show of weekly "don't kill yourself" threads, and a week later "buckle up, we're going to the moon". Surely education will lead to better market decisions and hence greater market stability in the long run.

    Edit: Copping a lot of flack in here for sharing a theory/model that has been tested and verified over hundreds of years worth of data. If you guys go and test this model for the crash/dip period for crypto currencies, I guarantee you will discover that portfolios (comprised of more than 5, and maximum of 30 cryptos) with correlation coefficients as close to -1 as possible, suffered, on average, the least amount of losses for this period.

    If you're investing money in cryptos that you'd prefer to keep rather than lose then definitely use this model.

    submitted by /u/Hotsiam
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    Crypto at a crossroads. Total freedom or total control

    Posted: 25 Mar 2018 03:39 AM PDT

    After beginning to file my crypto taxes I realized a couple things. Blockchain technology if it were not to remain anonymous will be the de facto tool to literally watch and record every step any person makes. Every transaction whether its money, text, video, you changing the color of your lightbulb (IOT chain) the RFID Chips in your coke bottle (VEN) will be watched and recorded. Literally everything around you will be on the ledger.

    For example in a near possible future where anonymity does not exist in a blockchain then people will not be able to get away with anything. And failing to comply with the authority will stop you from being able to access certain things Because everything will be connected. You now see blockchains for almost every industry and or service.

    Say Rick doesn't pay his taxes or says something anti establishment on the internet. These actions will forever be on the blockchain. It will be undeniable that the person didn't commit these actions because identities will be given via rfid chips like Walton or though companies like TKY. Then the consequences of these actions will lead into other aspects of life because everything will be interconnected On the blockchain. Certain services will be prohibited to you because you don't qualify.

    Right now China and other nations are developing a system that rates you based on your social actions. Straight black mirror. You say something bad about the president or jay walk then you get docked points and forfeit certain privileges or worse.

    Blockchain has the potential to bring a whole new system of control never before seen if crypto loses its core value.

    We as community in general are blinded by profits and naive to the fact that the old guard will simply step aside. Instead they will do what they do best. Infiltrate, coercion ,control. Purposefully crash the old system. Controlled chaos. Implement a new system "by the people for the people."

    DESTROY FROM WITHIN - the inner front strategy "A war can only really be fought against a enemy who shows himself. By infiltrating your opponents ranks, working from within to bring them down, you give them nothing to see or react against- the ultimate advantage. From within you also learn their weaknesses and open up possibilities of sowing internal dissension. So hide your hostile intentions. To take something you want you do not fight those who have it, but rather join them- then slowly make it your own or wait for the moment to stage a coup d etat. No structure can stand for long when it rots from within."

    We are in a war for freedom.

    This might sound tin foil but if you look at the big picture this is possible. We are at crossroads.

    Edit: for people wondering why blockchain would or should replace centralized methods already in place from government perspective. My theory:

    Governments want to track every transaction. The reason for this is for your security. (Terrorists, illegal drug transactions, let's not forget taxes). Cash is not completely traceable. This is why Leaders of China have mentioned cash will eventually be all digital.

    Immutable ledger makes every transaction set in stone.

    Since it is on a ledger it is traceable.

    World accessible blockchain equals = world currency, world government, centralized control.

    Most importantly they have the people's backing because crypto is anti establishment. Make people think they are winning the war but behind the scenes they are contributing to their demise.

    But this future is not confirmed... yet.

    submitted by /u/cryptothrice
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    Australian Tax Law and Crypto

    Posted: 25 Mar 2018 04:40 PM PDT

    Crypto and Tax Australia - Date: 26 March 2018

    I was sent this by the tax office:

    We have just updated our website and cemented our position on cryptocurrencies. For more information see <https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Au stralia---specifically-bitcoin/> Tax treatment of cryptocurrencies or go to ato.gov.au and search for QC 42159.

    Capital Gains Tax

    When does it apply?

    Currently individual Cryptocurrencies are a Capital Gains Tax (CGT) Asset..

    When you sell or otherwise dispose of an asset it's called a capital gains tax (CGT) event. This is the point at which you make a capital gain or loss.

    Therefore, a CGT event applies each time crypto currencies are traded (sold or converted) - whether they are traded for another currency or cashed out. - regardless if there is no exchange of funds (AUD$).

    For every capital gains tax (CGT) event that happens to your assets during the year, you need to work out your capital gain or loss.

    If you have both capital gains and capital losses, you also have to work out your net capital gain or net capital loss for the year.

    When working out your capital gains or losses, include the transaction conversion in Australian dollars at the time of trading on your spreadsheet.

    How do you record Capital gains or losses to your Income tax return?

    At the end of the financial year your capital gains can be reduced by the capital losses. This is then added to your income. Capital Gains and or losses are recorded in your income tax return, under the Capital Gains section.

    Capital gains discount

    Capital gain can be reduced by 50% for individuals if held for 12 months or more.

    For information see <https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-g ain-or-loss/Working-out-your-capital-gain/> Capital gains tax or go to ato.gov.au and search for QC 22147

    ————————————————————

    What I have learnt about ATO laws and crypto in Australia in my own words:

    Ok- so I have now had about 2 hours discussion with the Tax Office and want to outline what I have learnt - for good and bad. If you want to be legal this is what you have to do. I submitted these points to a tax office rep. who verified they are correct as at 26th March 2018.

    1. Every single sale is a taxable event- that means coin to coin and coin to AUD - every single one! That is a shock to most of us - but unfortunately true.

    2. Every time you make a gain you have to record it and it is a taxable event. EG- you buy ETH with AUD- then buy NEO - if this took 1 hr and in that time ETH went up by $10 before u bought the NEO you just made $10 taxable dollars on the ETH as u buy the NEO!

    3. The tax office does not concern itself with what we call "profit," that our folio app may show, it is concerned with net gain or losses on individual transactions.

    4. So EVERY transaction (buy and sell) has to be logged with the corresponding AUD value so gains and losses can be determined.

    5. Blockfolio app is perfectly set up for tracking all of this - If you diligently add each transaction accurately, it will log the info you need in AUD. You can look at a purchase price for a coin in AUD - the sell value in AUD and determine gain or loss on each sale- and log it.

    6. I am also using a second ledger in an excel doc. as another record in case the app dies for whatever reason. I will transfer the details from blockfolio into this file on each transaction.

    7. The tracking headers for the excel doc would be something like:

    Coin

    Date

    Amount

    AUD buy

    AUD Sell

    Profit or loss:

    1. If you sell a coin at a loss- it comes off your taxable total at end June 30- as do all your fees and other expenses- eg's a Ledger, PC, ISP fees, backup HDD, etc (some may have to be depreciated over a few years).

    2. Some good news is that if you sell an alt coin into BTC or ETH at a profit (attracting CGT) and then into AUD, (it will be approx. the same value if done quickly), the change into AUD is also potentially taxable but there will usually be next to no change in value- if done quickly. You can thus cash out and not have to use something like USD Tether and rebuy whenever you like. The CGT will have applied to the gain as you exited crypto into AUD via ETH or BTC.

    3. Turning crypto into AUD is not the crux of what attracts CGT- it is every single coin or cash exchange that results in a gain or loss.

    4. Coins you bought at any given time do not attract CGT as they appreciate- only when you sell them. So if you made 500% gains in your portfolio no CGT is attracted until you sell for another coin or AUD.

    5. CGT gains are added to your personal income- so most will be in higher tax brackets.

    6. There is no $10,000 "get out of CGT" clause that applies to crypto.

    7. If you have a partner in life, and purchase crypto currency with joint funds, you have to share the CGT across both of your tax returns. It can be a nominated percentage for this Join Tenant arrangement, but you must be consistent. The percentage you choose at your first return (EG 60/40%) has to be maintained for the entire time you are into crypto.

    8. The tax office has developed and is improving on a tool to help you work out your CGT obligations- it isn't mandatory you use it and should be able to be found on the ATO website.

    9. Coins bought and held for 12 months attract the benefit of a 50% discount in CGT. This applies to specific coins and not "your crypto in general" It does not mean you can buy and sell crypto all year and then turn it into AUD after a year and pay tax on your profit that you cash out.

    ————————

    This process is complex for crypto investors- especially if you are an active day or swing trader- To be compliant with Australian Tax law this is how to do it. Essentially, it is fair as losses and costs are deducted from profit. This process gets hard for crypto traders to bear when we may have bought at one price, made gains then our portfolio drops. In practice, you could be liable for more gains that have attracted CGT than "profit" you show in your portfolio when there is a crash. It's hard to take but it's the way the Aust. Govt. is approaching crypto and all investing actually. At this stage, the ATO is treating crypto like all other investments and some of the differences may, in my opinion, not be fully appreciated by law makers and potentially may change in the future. I expect this would be a slow process.

    ———————

    I realise ppl may say "Well, the tax office doesn't know what I'm up to and I will just declare any taxable gain when I cash out." That is your prerogative- I'm just passing on what the legal approach to this is FYI. Do with this info what you may- I hope it is helpful in some way.

    submitted by /u/dmarthick
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    France’s Finance Minister Plans ICO Regulations in Bid to Attract Crypto Startups

    Posted: 26 Mar 2018 04:12 AM PDT

    China Has The Most Blockchain Patent Applications Intenationally in 2017

    Posted: 25 Mar 2018 08:12 PM PDT

    Reddit removes the option of using Bitcoin to pay for Reddit Gold

    Posted: 25 Mar 2018 11:15 AM PDT

    Litecoin Core release: Transaction Fees drop to 0.1lites (0.0001LTC) per kB. With most transactions being 300 bytes, you are looking at fess of 0.003USD or one third $cent

    Posted: 25 Mar 2018 11:17 PM PDT

    Germany University wants to build the first industrial use case over IOTA tangle

    Posted: 25 Mar 2018 07:05 AM PDT

    Tennessee passes a new bill recognizing making blockchain transactions and smart contracts legal

    Posted: 25 Mar 2018 11:38 AM PDT

    I wrote a basic review of OMG. Hope you like it.

    Posted: 25 Mar 2018 11:05 PM PDT

    Malta Wants to Become The Blockchain Island, With World’s Largest Cryptocurrency Exchange

    Posted: 25 Mar 2018 09:34 AM PDT

    Verge (XVG) cultists banned me for nothing.

    Posted: 25 Mar 2018 06:23 AM PDT

    Hello,

    I'm a small hodler, during a small time period I used to buy XVG with my crypto dust. But stopped buying after the first Q&A was released when I understood that Verge was actually very unprofessional and amateur.

    Yesterday I was banned from /r/vergecurrency just for not agreeing with this "75M crowd funding" which proves my first thoughts about Verge.

    This 75M crowd funding from Verge is just ridiculous, they are asking money from the people who invested in first place, shouldn't they be working on gaining new private investors and building new partnerships so they could finance themselves? Instead of asking the holders who have stick with them from the beginning?

    Not only the project and team are extremely unprofessional and clueless but the community is salty AF and one of the most childish I've found in the crypto sphere, they are cultists, they follow the XVG to zero without questioning nothing.

    I got banned for commenting while I was asking for a pre-contract so everyone could at least have guarantees that the partnership they are talking about was real.

    I'm fully dumping XVG hard on Monday.

    Cheers,

    submitted by /u/ubernakamoto
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    German University Wants To Explore IOTA For Real Industrial Application

    Posted: 26 Mar 2018 04:05 AM PDT

    Achain officially opens an office in Silicon Valley and are currently hiring.

    Posted: 25 Mar 2018 10:13 PM PDT
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