Cryptocurrencies

How I bought my first Verge XVG using Binance exchange

December 27, 2017 by Edmond Chan 2 Comments

I’ve been watching Verge VXG on and off now for a few months. It’s been hovering around 80th position amongst cryptocurrencies by market capitalisation. It’s been like this ever since I’ve been looking at it……until a week or so ago when it went crazy.

It’s now around 20th position on coinmarketcap.com.

What’s the price rise of Verge XVG?

Okay, so looking at historical prices on coinmarketcap.com, on 13th Dec 2017, Verge XVG opened at 0.009203 USD (that’s just under one US cent).

On 25th Dec 2017, Verge XVG opened at 0.258386 USD (that’s about 26 cents).

So one cent to 26 cents is a price rise of about 2,500%. I’ll say that again….2,500% in about 2 weeks.

This is the reason that crypto is so exciting and why so many people are now getting involved. You’d never get this kind of move in traditional markets outside of penny stocks.

What’s made the Verge XVG price move so much?

John McAfee is a well known crypto-evangelist (he said famously in 2017 that Bitcoin would one day reach 500,000 USD). He has a large Twitter following of around 500k followers and on 13th December 2017, he tweeted this:

I am inundated by people asking me for recommendations on cryptocurrencies. If you would use your heads you would figure out that the privacy coins (anonymous transactions) will have the greatest future. Coins like Monero (XMR), Verge (XVG), or Zcash (ZEC) cannot lose.

— John McAfee (@officialmcafee) December 13, 2017

He followed this tweet up with this:

No. Not joking. I included Verge (XVG) because it is a legitimate privacy coin and it is also selling for less than three cents. If you know investing, you know that it is easier for a 3 cent coin to go to 3 dollars, than it is for a $300 dollar coin to go to $30,000 – same rise.

— John McAfee (@officialmcafee) December 14, 2017

These tweets have been credited (justifiably) with the huge rise in Verge XVG’s price rise over the last two weeks.

What’s my investment rationale for buying Verge XVG?

It’s a coin and not an ICO token. It’s a coin like Bitcoin, Monero, Dash etc.
It has a limited supply of coins. Its current circulating supply is 14,396,406,388 XVG and the total maximum supply is 16,555,000,000 XVG.
The recent price surge and the backing of a major figure in the crypto world, John McAfee (above)
The current low price. Low in terms of being sub-one USD. If it just gets to one dollar from today, that’s a 400% price rise. If it gets to 10 USD, that’s a price rise of 4,000%. Who’s to say that that’s not possible? I see it at one dollar in the next few months and then once it breaches the psychologically significant one dollar threshold, it could rise meaningfully from there.

How I bought my first Verge XVG

I was hoping to buy this from Changelly. (I’ve used Changelly to buy Monero before.) It’s also listed on the Verge website as a place to buy Verge XVG.

It’s also listed as a supported currency on the Changelly website, but when I tried to actually exchange BTC for Verge XVG, I couldn’t find it as an available option.

I also had problems with the Verge wallet. I went on the Verge website to look for wallet options. The OSX Electrum wallet wouldn’t open on my computer and I tried the alternative Verge QT but that showed as ‘Not Syncing’. This gave me pause for thought as I’d had similar problems with the Ethereum node wallet previously. The problem was where the node never caught up with the blockchain and never synced. This rendered my wallet useless. I want to make sure that I get the setup correctly with the Verge wallet(s).

So I did two things that I’ve not done before:

Firstly, I used an actual exchange.

Previously, I’ve only used Bittylicious (which is a peer to peer service) and Changelly and ShapeShift (which are instant exchange services).

I used one of the listed exchanges on the Verge site. I plumped for Binance. I have no idea why. The name called out to me. (NB: since writing this, I’ve looked up ‘Bittrex vs Binance’ and found this subreddit: Bitfinex vs Bittrex vs Binance.)

Binance was really easy to setup with. You enter an email and a password and that’s it for basic access. I then transferred some Bitcoin to it to fund my account. (The transfer took less than 30 minutes to complete.)

I then went on the XVG/BTC currency pair page to buy some Verge XVG.

It’s pretty straightforward. Look at this screenshot of Binance’s XVG/BTC screen:

Buy Verge XVG — Binance – XVG/BTC on 27th Dec 2017

Simply go to the ‘Buy XVG’ area above and enter the amount of Verge XVG you want to buy. As soon as you start entering into the ‘amount’ field, it will show you the maximum amount of XVG that you can buy, given the amount of Bitcoin (BTC) that you have funded in your Binance account.

The process of buying was easy and it took just 5 minutes to complete my order.

Secondly, I broke one of my cardinal rules of crypto speculation…

…I left my Verge XVG on the exchange. I’ve advised many times before to not leave your crypto on exchanges, as exchanges can go bust or they can get hacked. But until I can find a solid, functioning Verge wallet, I will leave my Verge XVG on the exchange.

NB: This lack of an easy to use wallet is another attractive thing about speculating right now in Verge XVG: As soon as it becomes available, greater mass adoption will follow, which can only be good for the price.

Closing thoughts on Verge XVG

I’d recommend having a little nibble on Verge XVG. Don’t put huge amounts in yet. There are more highly regarded, and better established privacy coins out there such as Monero. I can see the price moving to 5 USD or even 10 USD in 2018, but it’s not a sure thing. Worth a punt though.

Let me know your thoughts in the comments below!

Think of cryptocurrencies as a massive horse race like the Grand National

December 26, 2017 by Edmond Chan Leave a Comment

Bear with me on the metaphor…!

The Grand National is one of the most famous horse races in the world. It’s a steeplechase which is a gruelling run across often boggy ground and in which the horses have to successfully navigate and jump over the huge fences.

There are a lot of horses that fall at these fences and lots of other horses that are pulled up during the race and most don’t complete the course.

At the start, there’s 40 horses (runners) and they all have a chance (albeit different chances) of winning the 4 mile race.

Before the race, there’s a favourite. The favourite is the horse that to the market has the best chance of winning the race.

There’s also outsiders (less fancied horses) that start the race at huge odds (say 66-1 or even 150-1).

These odds will change and fluctuate during the race. So, for example, if the favourite starts at 7-1, but falls behind during the race or starts to look a bit tired, then the odds will start to drift and get longer (maybe out to 33-1 or even 50-1). This is the market’s assessment of that horse’s chances of winning the race. Equally, if the horse starts to improve, then the odds will shorten to reflect this.

So how does this relate to the world of cryptocurrencies?

So many riders/cryptocurrencies that could win

With the Grand National, it could be the favourite. Or it could be the rank outsider. You don’t know. It’s a difficult course that throws up unlikely winners.

With cryptocurrencies, we’re in the very beginnings of the race. It could be Bitcoin or it could be a cryptocurrency that isn’t even in the top 100 by market capitalisation on coinmarketcap.com. We just don’t know.

So how do you give yourself the best chance of victory?

You’ve got to diversify

The chances of you picking a winner from so many riders/cryptocurrencies is very slim. In the same way that I wouldn’t recommend putting all your money on the 25-1 shot, I wouldn’t recommend that you put all your money into ADA. It might win but it much more likely it won’t.

If you were thinking about betting £50 on the Grand National, I would recommend splitting this into 5 different bets of £10 each.

If you’re thinking of putting £10,000 into cryptocurrencies, I’d recommend splitting this up into 5 bets of £2,000 each (you could give this a different weighting).

Stay alert and watch for unconsidered riders/cryptocurrencies that are coming up strongly

In the opening stages of the Grand National, all the riders are generally still in the race. As the race progresses though, horses that you’ve never considered get into the frame for possible victory. You can still bet on these in-play. Suddenly, their odds will drop. Get on before the odds get too short.

It’s the same with cryptocurrencies. If you see that Verge (for example) is moving up the rankings day by day. Then there’s possible good news (such as rumours that it’ll be listed on a major exchange), then you might want to buy some before the price goes crazy.

Conclusion

Cryptocurrencies are like a massive, exciting horserace. Bet on them just like you’d bet on a massive, unpredictable horse race like the Grand National. Give yourself the best possible chance of victory.

Let me know what you think in the comments below.

Be careful with the amount of fees you pay when playing with cryptocurrencies. It could get painful.

December 10, 2017 by Edmond Chan Leave a Comment

I was calculating my returns in my cryptocurrency portfolio. Something wasn’t quite adding up though. I couldn’t reconcile the amount of Bitcoin that I’d bought in total with the amount of Bitcoin that I had in my three Bitcoin wallets.

I thought maybe I’d put some in another wallet that I couldn’t remember having. Uh oh.

I went through every transaction. All purchases. All transfers. All switches into other altcoins. I was still 0.05 BTC out.

Then it dawned on me. These must be the fees I’ve paid to move Bitcoin around. 0.05 BTC!!

Even 6 months ago, at those prices for a Bitcoin, it works out as a large sum of money. At USD 2,000/BTC, that 0.05 BTC is 100 USD!

At USD 15,000, that’s 700 USD! (Apologies for all the exclamation marks, but that’s a lot of money! Can you imagine how painful that would feel at USD 50,000/BTC? That would be USD 2,500! Just to move money around.)

Hmm. This needed further investigation.

So for a flavour of how much Bitcoin transaction fees are, I went into my Electrum wallet and started to look at the transaction fees I’d paid for every transaction I’d made out of the wallet.

Check out the below spreadsheet where all units are in mBTC (which are 1/1000th of a full Bitcoin):

So the actual amount I’d paid when transferring Bitcoin was nowhere near the figure that I thought it was. Stranger and stranger. Curiouser and curiouser.

Where was the remaining 0.0435 BTC?

It must be the fees paid when exchanging Bitcoin to other cryptocurrencies.

Let’s look at the Changelly and Shapeshift transactions. (I did the Shapeshift transactions through the Exodus wallet).

I’ve done three transactions through Changelly:

3 x 0.05 BTC to Monero (XMR)

And I’ve done three transactions through Shapeshift:

1 x 0.05 BTC to OmiseGo
1 x 0.05 BTC to Augur
1 x 0.05 BTC to LTC

That’s 0.3 BTC exchanged to altcoins.

Let’s look at what the missing 0.0435 BTC is as a percentage of the 0.3 BTC:

0.0435 / 0.3 = 14.5 %

That’s a huge chunk!

Let’s look at what Changelly’s fees comprise of.

From their website:

If we take the DOGE fee first. That’s 1980 DOGE / 396,000 DOGE = 0.50%. Which isn’t that big.

This means that of the 14.5% we saw we lost from the Changelly fees (above), 14% was down to the exchange rate.

Is this so different to the exchange rates we see on Poloniex (an actual exchange where you can see live buy and sell orders)?

Maybe not.

Here’s a live price (BTC to LTC) from Changelly:

and here’s a live price (BTC to LTC) from Poloniex:

(to calculate the BTC to LTC price above, divide ‘1’ by 0.00980755 to get 101.9622638.

So Changelly on this occasion, offered less Litceoin for BTC than was available on Poloniex.

Changelly offered 101.3905 LTC/BTC.

Poloniex offered 101.9622638 LTC/BTC.

That’s a fair difference. On Poloniex, you get 0.56% LTC more for your BTC, than you do for your BTC on Changelly.

Conclusions

Inconclusive. I’m still not 100% sure where my 0.0435 BTC went.

To be continued.

Can anyone help? Please let me know in the comments below!

Profile and resources on Olaf Carlson-Wee, Founder of Polychain Capital

December 2, 2017 by Edmond Chan Leave a Comment

One of the most well-known investors in the cryptocurrency space is Olaf Carlson-Wee, the founder of crypto-hedge fund Polychain Capital.

The first video I watched about him was a podcast from Y Combinator, between Aaron Harris and Olaf Carlson-Wee:

In this video (posted on 19 July 2017):

[02:25] Olaf talks about how hard it is to use traditional hedge fund strategies such as Long/Short and techniques such as margin trading when it comes to cryptocurrencies/digital assets (Olaf prefers the term ‘digital assets’ over ‘cryptocurrencies’ because he thinks that the blockchain technology has many more applications than just storing value and as currencies). Because of these difficulties, Olaf invests long-only and for the long-term. Most of his time is spent reading research papers.

[03.20] Rebalances the portfolio every 90 days. Goal is to keep positions for years.

[5.30] Olaf explains what he’s looking for when he’s reading white papers.

A novel idea, a new application. Something that’s never been tried in a crypto framework.
A fork of an existing idea is not that attractive for him.
Something written from the ground up. “Ethereum was not a fork of Bitcoin.” and eg Tezos.
Bets on people with great ideas.

[09:40] Likes Filecoin – a decentralised, distributed server architecture.

Likes ITFS (InterPlanetary File System).

[14:00] We can’t really picture what Web 3.0 (a decentralised web) will actually look like. What are the use cases for Web 3.0? What will be the components and architecture for Web 3.0?

[19:35] Thinks DAOs will be big over the next few years.

[29.40] Really goes in hard on Tezos (unfortunately, given their legal woes. Although, this might not detract from the project itself)

[40.00] really seems to be against traders and speculators, particularly when it comes to ICOs. He concedes that maybe long-term speculators are okay. 🙂

[44.50] Which protocols/projects is Olaf excited about right now?

Ox (pronounced Zero X) 0xproject.com
Maker and StableCoin makerdao.com
(Mentions Augur and OpenBazaar)

[52.11] What blogs does he recommend people read if they want to dig deeper? He thinks most people haven’t done their research. He likes the IPFS team’s blog (I couldn’t find the blog he was referencing with Jesse?) as well as CoinList, a collaboration between AngelList and IPFS.

The next resource I listened to was Forbes’ Laura Shin interviewing Olaf for her excellent podcast Unchained

(Unchained is simply excellent and I only found it after googling Olaf to find out more about him. Definitely worth a deeper dive into this podcast very soon).

To find Laura’s podcast with Olaf, scroll down this page to Episode 17 | MAR 7, 2017 | 56:08
Why The First Employee Of Coinbase Launched A Hedge Fund

[19.00] How Olaf got into working at Coinbase. He was the sole front-line customer support until 250,000 users (!). He used an automated initial reply called Roger to help cope with this volume. Then hired support teams using a tough assessment test on Bitcoin (The Bitcoin SAT). (I found this on Olaf’s original Reddit post looking for new staff. Here’s the test. I’d love to see the answers to this!)

[28.50] Becomes Head of Risk at Coinbase.

[30.00] Got deep into the Ethereum ecosystem.

[32.00] Really starts to get excited and Olaf is excited about Golem (a peer-to-peer renting processing power protocol).

[35.00] Laura asks why these projects are creating tokens and not just using Ether or Bitcoin? Olaf argues that these tokens have beneficial network effects in that they help promote the project they relate to. Almost like having shares in the project. Like being an equity owner in a private company. (My interpretation: Their value appreciation is tied to the success and growth of the project. There are also returns such as dividends from some of these tokens etc.)

[38.00] How to decide what are legitimate or good tokens?

Read white papers religiously – does it make sense?
Looks at the codebase on Github
Looks at Github ‘forks and stars’ (are other developers playing with this protocol?)
Talk to founding team

[42.00] What are the reasons that you might pass on an investment?

Where the token doesn’t make sense for the project it’s from. (Is this building network effects or is it not? If not, then it doesn’t make sense)
Where the token’s success is tied 1:1 with the success of the project

[43:40] What are the projects/tokens that he’s excited about right now?

Golem
Tezos

[47:20] There is regulatory risk facing the crypto space.

[49:00] GREAT QUESTION. How do you keep your digital assets secure? Bitcoin, Ether etc.

Industry standard cold storage. Totally new computers that don’t ever touch the internet. Sending a crypto from online to totally 100% offline storage.

[51:10] Why did a VC invest in a hedge fund? This is a unique asset class.

Bitcoin companies have raised 1.4bn in VC funding.
Ethereum-based companies have raised 300m in non-VC money.

Essential advice to my friends and family asking about Bitcoin (BTC)

November 30, 2017 by Edmond Chan Leave a Comment

I’ve had quite a few conversations about Bitcoin in the last few days with friends and family, and not surprisingly.

“Is it too late to get in?”

Absolutely not. Yes it’s around USD 10,000 right now but you would have asked the same question when BTC was at USD 5,000 or USD 7,000. In my opinion, Bitcoin’s possible price moves from here could be huge. It’s not a stretch to think that Bitcoin could get to USD 25,000 at some point next year.

“Won’t it all just crash?”

Perhaps. There’s some possible headwinds ahead. If the project lost trust (say through a huge hack like Mt. Gox in 2013), then sentiment would turn from positive to negative.

So that is a possibility. But remember, that’s just one of the possible scenarios.

A good friend of mine talks about the ‘fan of probabilities scenarios’.

What is this? Think of a huge range of possible outcomes and think of these as like a hand-held fan, where there are ‘spokes’ or ‘lines’ that emerge from the centre of the fan.

Bitcoin in the next year or so has the following ranges (non-exhaustive):

It surges to USD 100,000
It surges to USD 50,000
It surges to USD 25,000
It stays at USD 10,000
It drops to USD 5,000
It drops to USD 1,000
It goes to zero.

Each is a possibility and each has a probability.

The tough part here is to judge what the probability of each possible scenario is, and do so objectively.

So, for example, it could go to USD 100,000 but the probability of this happening is smaller that the probability of it getting to USD 50,000 and that scenario has a smaller probability than the chances of it getting to USD 25,000. And so on.

I’m NOT saying, for example, that it WILL get to USD 100,000 in 2018.

But what I AM saying is that I can’t rule it out. It is possible and given the price moves this year and the tailwinds behind Bitcoin, who’s to say that it WON’T happen? It is though definitely LESS likely than the price staying closer to where it is now.

Go in with your eyes open

Bitcoin is NOT an investment.

Bitcoin is a speculation play.

You could make a lot of money, and you could lose a lot of money.

Know this and you may restrain yourself from making some big financial mistakes.

“Maybe it’s better to be in it?”

Okay, I get FOMO. And I’m guessing if you’re asking me about Bitcoin, then you get some FOMO too! You’re looking at the huge price moves and thinking that you want some of those gains.

FOMO is an emotional response. Be aware of this and don’t be swayed by emotions such as greed and lust.

But if you do want some exposure, this leads onto the next piece of advice:

Don’t risk more than you can afford to lose

I’ll repeat: Do not risk more than you can afford to lose.

This is SO important.

Please don’t borrow to buy or trade Bitcoin.

Please don’t sell your house to buy Bitcoin.

Please don’t risk more than if you lost all of your investment, that you’d be in tears about it. It should sting enough to be meaningful enough that your gains are worth it. But not hurt so much that it destroys your life.

Educate yourself

There’s a classic line in investing/speculation: Do Your Own Research

Speak to people who know something about it. If you’re a beginner, ask me about it!

The following articles I’ve written about previously might be helpful:

This is my understanding of how Bitcoin works (simple)

What is Bitcoin? (the beginners’ guide)

It’s just as important to know the limitations and arguments against Bitcoin. I’ve written posts before about ways that Bitcoin might not reach mass adoption, and in which case, Bitcoin might not become the dominant/winning cryptocurrency:

The biggest obstacle I can see that might block mass cryptocurrency adoption

Learn about storing your Bitcoin and keeping it safe

Storing Bitcoin is an essential part of owning Bitcoin. Without a wallet, you literally can’t hold Bitcoin.

Read the following articles re Bitcoin storage:

The 3 best Bitcoin wallets for storing your bitcoin (BTC)

This Wired article shows how difficult it can be to store your Bitcoins securely

Enjoy the ride!

Don’t get too serious about this. It’s a fun ride! We live in an amazing time where technology like the blockchain and cryptocurrencies are available. Soak it up and savour the fact that we live in such fascinating times!

Any more questions, please let me know in the comments below!