Edmond Chan

Cryptocurrencies

Why am I buying Monero (XMR)?

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I first heard about Monero whilst sitting on the toilet reading Bloomberg News on my phone.

This must have been towards the end of 2016.

I can’t find the exact article but here’s two similar ones:

Bitcoin Isn’t Anonymous Enough – True confidentiality is crucial to the success of digital cash

MONERO, THE DRUG DEALER’S CRYPTOCURRENCY OF CHOICE, IS ON FIRE

What I read at the time was similar. The message I heard loud and clear was that there was a Bitcoin alternative that was getting adopted.

People were actually using it.

Now these people could well have been drug dealers, but who cares.

I’ll repeat…people were using it.

Now remember my previous post on what I look for in when buying cryptocurrencies and let’s see what of my criteria applies to Monero as at August 2017.

Reasons you might buy Monero as a crypto investment

Evidence of current adoption

Yes. We saw from the articles earlier that there was adoption by drug dealers and probably other criminals. So it has a use.

It’s also around the 9th position in the market cap tables. See coinmarketcap.com:

buy monero

So it’s being bought. That’s USD 2 billion worth of Monero.

Some serious upside potential

Well this is a lot less than it was a couple of weeks ago. Then it was around USD 45.

However, after 21st August 2017, it started to shoot to USD 80, then to USD 130.

But….I still think there’s a lot of upside potential here. Why couldn’t this get to USD 1,000, or to USD 5,000, or more?

The movement from USD 45 to USD 130 suggests that new money is coming into Monero.

The speed of that movement is highly encouraging too.

This movement was attributed to just the rumour of being listed on a South Korean exchange.

Imagine what might happen if it actually gets listed, then if it gets listed on another exchange?

Or it becomes widely adopted and as easily buyable as Litecoin, ETH or BTC?

Signs that the underlying tech and idea is respected

The idea is a digital currency that is truly anonymous. Bitcoin transactions (size and value) are public and and that is an issue for those that want anonymity.

Monero is accepted to be able to grant that extra level of anonymity.

That is its main USP.

Finite supply of coins

Yes there will be: https://monero.stackexchange.com/questions/9/how-many-monero-will-be-mined-in-total

Open source and immutable code

https://github.com/monero-project/monero

I can’t find anything online that says that it’s not open-source. That gives me confidence to say that it is open-source.

What do you think of Monero? Are you buying?

What do I look for in buying cryptocurrencies?

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The universe of investable cryptocurrencies is large. As at this date, on Coinmarketcap.com, there are nearly 1,000 to choose from. You could buy and hold all of them but this would be impractical and scattergun.

Most of these you would think will fail. By failure, I mean they will not be around in 5 years or longer. You might make some money in the short term but equally you might lose.

This kind of scattergun approach is a bit like VC fund strategy. You might bet on 10 startups and 9 fail but one returns 20x.

This isn’t my strategy with cryptocurrencies.

Instead, I want to pick the most promising. I want to protect the downside as much as possible. A lot of people I know would probably laugh at me for saying this. After all, even investing in Bitcoin, the biggest crypto in the room, isn’t really protecting the downside in the strictest sense of that in investment-speak.

Protecting the downside in traditional stock investment might be getting in at a discount to what you believe is current value.

Protecting the downside in property investment might be investing in good locations and waiting until a bear market to enter.

Protecting the downside in cryptocurrencies is different.

You could invest 100% of your money allocated to crypto in the market leader Bitcoin and you still might lose all your money.

However, this is certainly protecting your downside more than just putting all your money into a new ICO (Initial Coin Offering)

Protecting your downside by investing in crypto market leaders will mean that you give up the chance to fully maximise your  upside potential. After all, if you get in on an ICO at pennies, then you’ve got in at the beginning. However. the chances of the ICO’d coin even being around in 5 years is minimal. Protect the downside instead with the following criteria and you give yourself a chance of not just making money, but also reducing your chances losing it too.

This is still such a early market. Just because you see Bitcoin at USD 4,000 doesn’t mean that you’ve missed the boat.

Here’s what I’m looking for in buying cryptocurrencies:

Signs that there could solid future mass adoption

Adoption is crucial in this game. If it doesn’t get adopted, then there’s no demand. If there’s no demand, then there’s no upward price movement.

Signs that there’s potential future mass adoption are:

Evidence of current adoption

The biggest indicator of current adoption is its position in the current market cap tables.

The bigger the market cap, the bigger the price of the coin vs the amount of coins in circulation.

The bigger the price, the greater the demand vs supply.

The greater the demand, the greater the current adoption.

The greater the adoption, the greater esteem it is held by people.

So check out coinmarketcap.com and look at the biggest market caps.

Market cap = current price X number of coins in issue.

eg. Bitcoin market cap as at 28 August 2017 =  USD 4,606.35 X 16,531,512 BTC = USD 76,149,930,301

Some serious upside potential

Monero at USD 40 has some serious upside potential. I think it still has serious upside potential even at USD 130. However, it clearly has less upside potential in the second scenario.

What about the upside potential of those new ICOs? Well they’ve got potentially massive upside potential but they’ve also got a massive chance of being worthless in a year or two.

I believe that Bitcoin could be at USD 50,000 in a few years. That’s still serious upside potential from where it is now at USD 4,600.

Signs that the underlying tech and idea is respected

Look at Ethereum on Google and you’ll quickly see that people think this is game-changing.

Look at Bitcoin and it’s been scrutinised for years and there’ve been no major problems with it (except for those concerned with privacy and anonymity)

Finite supply of coins

You want something with some scarcity built in. Value is based on scarcity.

Talent like Lionel Messi is scarce, therefore he is valuable.

Gold is scarce and in limited supply, therefore it’s valuable.

If Bitcoin will only ever have 21 million coins mined, then it is finite and scarce.

If it becomes adopted, it will only ever rise in value.

Open source and immutable code

The whole philosophical basis for cryptocurrency and blockchain is to decentralise things, whether that be money or other information.

The coin you’re looking at investing should be open-source and fully decentralised.

It should also be immutable, meaning that it can’t be changed.

A quick bit of research should reveal this.

Mutability and closed source will be well-known bones of contention in the relevant crypto community.

What do you look for when investing in cryptocurrencies? Let me know in the comments below!

Problems with my Ethereum (ETH) node wallet and next steps

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I bought some Ethereum (ETH) about 2 weeks ago from Bittylicious. It wasn’t a lot (0.5 ETH) because I’m trying to keep the losses down in case I send it to the wrong place. I also want to dollar cost average my overall entry into my buy and hold Ethereum position.

I had 0.5 ETH in my Ethereum node wallet. This was the official wallet from the Ethereum site. It runs as a node on your machine and has to download and then sync with the entire Ethereum blockchain before you can see incoming transactions.

And that’s the problem.

The blockchain is too big to download at normal internet speeds.

I’ve been running this for hours and days.

There’s 160,000 plus blocks (which get added to all the time, and maybe faster than you can keep up with), and sometimes, that’s being downloaded to your machine at a block per second.

That’s insane.

There’s tales on the internet where people have reported that their ETH has vanished into the ether, because they can’t see incoming transactions.

So I can see 0.5 ETH in my wallet from before but I can’t see the 0.5 ETH that I just bought.

This is the worst wallet I could have picked from a user friendliness point of view.

Imagine running a wallet that can’t catchup with the blockchain, and so you can’t actually see all your coins. Nightmare.

Luckily, it isn’t huge amounts of cash. Yet.

0.5 ETH is about GBP 126 as at today’s price for ETH. So it doesn’t hurt too much now. At the moment, it’s a slightly painful lesson and I’m glad that I didn’t buy 5 ETH and send it all to this address/wallet.

The main lesson for everyone just starting out like me is to buy very small amounts first, and get used to (1) buying and sending to your wallet and (2) opening your wallet regularly and use it to send coins from. The second point makes sure that your wallet is truly usable.

Worst case scenario (besides losing your coins to theft) is that ETH or whatever coin you bought, rises over the medium to long term to serious multiples of your entry price, and you can’t access them because your wallet won’t let you.

Next Steps

  • I’m going to continue running my node to see if I can catchup to get my 0.5 ETH, that has been sent to my address, but that my address/wallet/node hasn’t synced up to yet.
  • Next, I’m going to see if I can manage to follow this advice from these two Github threads where other people have had the same problems with their ETH node wallets.
  • I’ve just bought and received a Trezor hardware wallet. My first one. I will unbox, install and write up the experience.
  • I will then transfer whatever ETH I have from my node wallet to this Trezor wallet.
  • I will also then look at using a range of wallets like Ledger Nano S (a hardware wallet) and other software wallets.

Let me know in the comments if you’ve had any problems with the Ethereum node wallet and if so, which wallet you recommend!

How I finally bought my first MONERO cryptocurrency (complete beginner’s guide)

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Argh. Today (22nd August 2017) I was looking at buying Monero again (remember it was on my watchlist of cryptocurrencies to buy) and I couldn’t believe it.

Suddenly, Monero was trading at USD 75, when it had been bouncing around USD 45 for months. (see chart below from Coindesk):

how to buy monero
ARGH! This is what FOMO feels like.

I looked up the news for Monero and apparently it jumped on rumours of being listed on a South Korean exchange:

https://www.coindesk.com/monero-price-hits-record-high-near-100-on-new-exchange-listing/

This would bring extra accessibility to buying Monero so would have spurred demand for punters wanting to get some of the price rise once it did get listed on that exchange. If it gets on that exchange, it will pop. (If it doesn’t, then it might well go down due to not being listed)

Getting a Monero Wallet to receive and store Monero

I looked at Moneroeric and this article on how to use the official GUI wallet from monero.how. I then downloaded the GUI but couldn’t get it to open on my computer.

So the alternative wallet is My Monero, which is a web-based browser wallet. This is only recommended for small amounts of Monero and not for big amounts. I wanted something quick and easy to set up NOW.

I then went onto My Monero and created an account, which was really easy.

how to buy monero

Buying Monero

There are two main ways of buying Monero that Monero Eric recommends in his excellent article on buying Monero.

First, you could go onto an exchange like Poloniex and use either fiat currency like USD or EUR and then use these to buy Monero (XMR).

Second, you could use a cryptocurrency swapping site like Changelly or Shapeshift.

I went for the second option because I wouldn’t need to sign up for a laborious ID verification process, like I would have to do with an exchange like Poloniex or Kraken.

So I went to Changelly (not Shapeshift) and opened an account.

Why Changelly? I just got a better feel off Changelly vs Shapeshift. I liked the look of the site more and I think it gives a slightly better exchange rate than Shapeshift. I haven’t done extensive comparisons (for a later post).

I went to change a test amount of BTC to XMR and went through the steps on Changelly:

I entered my My Monero address and payment ID.

Then I went to my BTC Electrum wallet to send BTC to Changelly BUT………

I couldn’t get my wallet to send BTC. ARGH. In a similar way to my Ethereum wallet, the wallet needed to sync before it could do anything.

It wouldn’t sync. To be fair, my internet connection at home is not the strongest, so I’ll try again tomorrow.

OKAY so let’s try this again.

So following the exact same steps as above:

SUCCESS! On 24th August 2017, I finally bought some Monero.

It’s really not an easy process. Wallets in cryptocurrency world take a long time to sync with the Blockchain.

Even sending Bitcoin from my Electrum wallet took a while for the transaction to be verified by the Blockchain.

Then it finally got to Changelly…..

how to buy monero

Then it confirmed the transaction had happened on Changelly, but now I had to wait for my Monero to appear in my My Monero wallet.

Instead of instantly appearing in the wallet, it stayed at a zero balance because it was still catching up with the Blockchain:

how to buy monero

So here we wait.

UPDATE: This morning (25th August 2017), despite the wallet still being 46 blocks behind in syncing with the Blockchain, my Monero (XMR) has arrived in my wallet. Woohoo!

In the next posts, I’ll give my assessment of the Monero buying process and of the various elements of the trade.

Why is Bitcoin trending now?

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Following on from the last post, we’re looking at questions that my friends have asked? Last time we looked at ‘What is Bitcoin?’

Today, we look at ‘Why is Bitcoin trending now?’

The main reason that Bitcoin is trending now is because it’s making the news.

It’s making the news because it’s smashing through historic highs from deep lows.

Most people knew Bitcoin as a ‘digital currency’, but maybe thought it was a fad or a scam, or something to use to buy drugs on the Silk Road.

They may have known that it was pretty cheap a few years ago.

Those same people now know Bitcoin as going through USD 3,000, then USD 4,000.

Now people see that tech giants like Bill Gates and Jack Dorsey talking about how the Blockchain is here to stay and talking up Bitcoin.

This new phase of acceptance and then adoption is driving the price multiples of what it has been.

People now see Bitcoin millionaires. Those early adopters that bought in at USD 30 are now rich (on paper) and people want in on that.

If you bought £1,000 worth of Bitcoin at £30, you would have 33.3 Bitcoins, which at £3,000 per Bitcoin, would be £100,000. A huge return.

So it’s trending because of natural greed and from looking at charts like this:

Who doesn’t want to see charts like that?

And when people hear that some are predicting that Bitcoin could go to USD 500,000 per Bitcoin, understandably, people don’t want to miss out. Greed and FOMO are driving interest and that drives the price up and that then drives more greed and more FOMO.

People are now thinking that maybe Bitcoin has a future. That it could be the dominant cryptocurrency and that it could one day be as accepted as the mighty dollar.

So in a nutshell, it’s trending because it’s new and exciting, it’s been rocketing up in price, it’s being talked up by big, well-respected figures and it’s potentially being viewed as a truly viable currency (crypto or not).

Any questions, let me know in the comments below!