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Increasing the risk/reward in my crypto portfolio whilst trying to protect the downside

chanman · Jan 6, 2018 · Leave a Comment

In my last post, I detailed my crypto portfolio as at 31 December 2017.

I think it’s pretty solid and it’s made some good gains, and I think it’s set up for some good gains in 2018. But I’m not sure it’s going to 10x in 2018.

Let’s take a look at my portfolio again:

I still want to Protect The Downside

One of Warren Buffett’s maxims is Don’t Lose Money. He says to ‘protect the downside’. This is because losing money makes it mathematically harder to make your money back.

If the value of your portfolio goes down by 50%, to get back to where it was, it needs to increase by 100%.

That’s why not losing money is Buffett’s starting principle.

(Now he might laugh about the idea of protecting your downside within cryptocurrencies but that’s another question!)

I think that my portfolio above is pretty good at protecting the downside. I see steady gains for all the coins above with the exception of Verge. Verge is a highly speculative play for me. (See how and why I bought Verge here)

But I want to increase my risk and therefore my chance of reward

It’s so easy to get caught up in the frenzy that we’ve seen in late 2017 and even in the last two weeks. Three friends have suddenly started buying cryptocurrencies, using Coinbase and Binance to buy Ripple etc.

Some coins are seeing 200% to 1,000% rises.

That makes me question my asset allocation.

Is my split too conservative by crypto standards? Am I missing out on potentially life-changing amounts of gains by playing it too safe?

The portfolio above is solid and if you bought the same split today, I would think that you wouldn’t lose money in 2018 and you might make 10x. But are there more gains out there? Am I being too greedy? Are we definitely in bubble territory now? (A classic oft-quoted example of bubble territory is when your taxi driver asks you for stock tips. Translate that to crypto and the equivalent is when The Sun tabloid starts giving in-depth guides to cryptos like Verge (XVG) and Stellar (XLM))

I want to add some risk to my portfolio but not so much that I fail to protect the downside

What’s the spice and how much to allocate to it

I’m going to add 15% – 20% of my portfolio into riskier coins which have the chance to at least 10x from here and that could actually return even more.

On 3rd Jan 2018, I deposited some Bitcoin onto Binance and bought a nibble of Cardano (ADA), Ripple (XRP) and some Stellar Lumens (XLM).

Yes there was certainly some FOMO in those buys but the amounts I’ve put in aren’t big enough to risk my downside. Their prices have dropped off a bit since the 3rd and I might buy a bit more of each to dollar cost average my entry price and I’ll write up how and why I bought these in subsequent posts.

Coins that are on my imminent watchlist

  • Binance (BNB)
  • Dragonchain (DRGN)
  • Kucoin (KCS)

What’s on your watchlist for 2018? Let me know in the comments below!

Holdings as at 31 December 2017

chanman · Dec 31, 2017 · Leave a Comment

31-Dec-17
Prices from Coingecko in GBP
Units Total units held Total price paid for units incl sales Avg net cost per unit incl. sales (GBP) Current price (GBP) Current value of holding (GBP) Profit/Loss (GBP)
Bitcoin BTC 0.567 £1,158.93 £2,043.97 £9,828.72 £5,572.88 £4,413.95
Litecoin LTC 6.197 £328.89 £53.07 £158.05 £979.45 £650.56
Dash DASH 1.000 £244.00 £244.00 £759.39 £759.39 £515.39
Monero XMR 5.521 £488.39 £88.45 £251.55 £1,388.92 £900.54
Verge XVG 4921.074 £554.61 £0.11 £0.15 £723.89 £169.28
Augur REP 10.792 £152.28 £14.11 £47.87 £516.59 £364.31
OmiseGo OMG 19.449 £145.90 £7.50 £11.94 £232.22 £86.32
Decred DCR 5.537 £377.76 £68.23 £67.88 £375.83 -£1.93
£3,450.75 £10,549.19 £7,098.43

 

Date of first purchase Overall return
Bitcoin 15/05/2017 381%
Litecoin 04/09/2017 198%
Dash 24/10/2017 211%
Monero 24/08/2017 184%
Verge 26/12/2017 31%
Augur 19/09/2017 239%
OmiseGo 25/09/2017 59%
Decred 26/12/2017 -1%

 

Percentage of total crypto portfolio
Bitcoin 53%
Litecoin 9%
Dash 7%
Monero 13%
Verge 7%
Augur 5%
OmiseGo 2%
Decred 4%

Is Decred a good project and should you buy Decred DCR?

chanman · Dec 30, 2017 · Leave a Comment

buy decred

I first heard about Decred from Boxmining’s awesome YouTube channel and I started watching the price when it was around USD 35 around September 2017. Since then, I’ve been looking to buy Decred.

I had also seen it as an option in my Exodus wallet and it would be easy to ShapeShift some Bitcoin into Decred.

It’s been on my watchlist for a few months now and I like it as a coin as opposed to an ICO token. It’s a coin like Bitcoin, Dash, Litcoin, Monero, Zcash.

However, what really pushed me over the edge and got me buying Decred in the past week or so was watching a recent great series of 6 short videos between Tai Zen and Decred Jesus, where they discuss what Decred is and whether this is a good investment. I’m going to show these videos in full below:






What I like about Decred

It looks to solve Bitcoin’s governance problem

One of the major problems that Bitcoin has is who decides on significant questions. Questions such as ‘Should Segwit be incorporated into Bitcoin?’ The power in who decides this question lies with the Bitcoin miners. Miners perform an essential function in Bitcoin and crypto in general by verifying and validating tranactions before they get added to the blockchain.

What’s wrong with miners having this power?

If miners don’t want this change such as Segwit, then the only way for this to happen is for a hard fork to happen. This is where developers split the code and change elements of it to something else. This has happened with Bitcoin Cash (BCH).

Decred is known as a ‘Goverance Coin’, as solving this problem is a major feature of the project. It does this through a mix of Proof of Work (POW) and Proof of Stake (POS) model.

This means that people that own Decred will get a say in major questions as to Decred’s future direction.

In a nutshell, those that own Decred will be eligible for a ‘ticket’ in a random lottery and those ticket-holders get a chance to vote on these issues.

There is a fantastic current example of this happening right now, where Tai Zen (from the above videos) has submitted a marketing proposal to the Decred community asking for Decred (USD 245,000 worth) to execute the proposal. (This money would come from the Decred war chest that Decred Jesus referred to the in the videos above)

This was posted on the Decred reddit here and this reddit refers to the Politeia on Decred’s site, where Tai Zen submitted his proposal for the Decred community to discuss and debate. Holders of Decred (POS) will have the right to vote and decide on this.

Isn’t this a very civilised and democratic way of doing things? It is also closer to the dream of cryptocurrency enthusiasts in that decision making power isn’t as centralised as it is in some other currencies/projects. For example, in Ethereum, Vitalik has a huge influence on what happens to the project.

It’s a true coin as opposed to an ICO token

I wrote about why this important to me here.

It looks to have a great team and a great community behind it

Here are the developers behind Decred: https://www.decred.org/contributors/

The advisors are first rate too: Charlie Lee from Litecoin and Jimmy Song from Bitcoin.

For a sense of the community, check out the Decred subreddit. and the Decred YouTube channel.

Where could it get to in price?

It has a limited supply just like Bitcoin, with a maximum supply of 21 million DCR. Check out the screenshot from coinmarketcap.com below:

buy Decred

I love a limited supply because that encourages an upward price move when demand starts to increase.

I can see it getting to USD 500 in 2018 and USD 1,000 in 2019, and USD 5,000 in 2020.

Should you buy Decred?

I’m gutted to miss out on buying Decred at USD 35, when I first started looking at it. The main reason I didn’t get in was because I had cash flow issues in the past few months.

Reasons I would recommend that you buy Decred are:

  • Great development team, advisers and highly engaged community. This gives me confidence that constant improvements and new features will be released in the short, medium and long-term.
  • Because of the limited supply and the organic growth of the project, I can’t see too much on the downside with regards to price.
  • The infrastructure is there is support further adoption of the currency i.e. there is a wallet like Exodus that supports storing it
  • I see solid (if not spectacular) returns in Decred. I see this as a solid addition to your crypto portfolio.

How big should your investment in Decred be?

My holding of Decred is currently 3% of my portfolio (holdings report to follow in an imminent blog post). I plan to increase this to 10% in the next month. I think this is an investment comparable to Monero, Litecoin and Dash.

How can you buy Decred and how can you store it?

I bought it using ShapeShift within my Exodus wallet. I used my tiny piece of remaining Ethereum to buy Decred on 26th December 2017 (£54.44 worth).

AND my wife very kindly gave me 1 Decred (DCR) as my Christmas present, so I took the opportunity to buy more Decred. I bought some Bitcoin on Bittylicious (my preferred way of buying BTC from GBP) and swapped this for Decred using ShapeShift within my Exodus wallet on 28 December 2017 (£323.32 worth).

Further resources on Decred

Official Decred website

Official documentation subdomain on Decred

Linda Xie’s Beginners Guide to Decred

How can we improve mental health?

chanman · Dec 27, 2017 · 1 Comment

I go through low periods. For those who know me, this might sound surprising. I’m normally bouncing off the walls with positivity. And this is true for the most part. There are times however where I make myself positive, because I want to and I know that to some extent, you can control your mental state.

Mental health is one of those things that we don’t really discuss. Which is strange given how much time we devote to physical health. We sign up to gym memberships, we go running, we watch what we eat and look for the latest superfoods. Instagram is full of accounts dedicated to inspiring us to exercise better and eat better.

But what about mental health? Shouldn’t we also work on that? How do we improve mental health?

It’s becoming better known that the biggest killer of men under 45 in the UK is suicide. This is a shocking fact. According to this article in the Independent, of the 6,000 suicides in the UK per year, 75% of those are male. That is a shocking fact.

improve mental health

What can we draw from this fact?

Firstly, men are more likely to kill themselves than women. Why?

Secondly, what about the number of men who are near-suicidal but don’t actually go on to kill themselves? I’m going to speculate that this figure is bigger than the 4,500 that commit suicide. For the sake of this post, let’s say that figure is 25,000. That’s 25,000 near-suicidal men in the UK every year.

Thirdly, what about the number of men that aren’t near-suicidal, but instead are severely depressed? I’m going to speculate that this figure is 100,000.

Fourthly, what about the number of men that aren’t severely depressed, but instead aren’t as happy and flourishing as they might be? I’m going to speculate that this figure is in the millions. And that’s just in the UK.

Now for the benefit of those reading this that know me, I want to emphasise that I’m not suicidal. But in my life, I have had the thought about throwing myself off my balcony, imagining what that would be like. Or throwing myself in front of an oncoming train.

However, whilst I’ve never been suicidal, I have been low in my life. It doesn’t happen that often, maybe once or twice a year. This past week, I’ve had some low moments.

For me, this feels like when everything’s getting on top of me. Things that I would normally take in my stride, are suddenly obstacles. Obstacles stacked on top of more obstacles. I get frustrated much faster. My OCD goes into overdrive. I have trouble sleeping. My patience is thinner. I want to just lie in bed under the duvet for hours. I’ll stop writing and I’ll stop reading. I’ll eat more junk food. I won’t want to exercise. I won’t want to socialise.  I wonder if I’ll ever get out of this funk. I wonder if I’ll ever get back to my normal highs.

So what can we do to get out of our lows, our ruts, our funks?

My wife and my sister had some good advice last week when I was feeling low.

They identified that I’d been out a lot in the past month. Three or four serious booze ups and regular drinking during the week. My sleeping was patchy. This probably led to the knock-on effects of the above symptoms.

It was time to get back to basics. I’m a big believer that the body and the mind are way more connected than we think. Things that are going on in the body can have a profound impact on the mind. We’ve seen in previous articles how hormones such as testosterone and cortisol impact mental states. There’s likely to be chemical imbalances in the brain when we’re feeling down.

I’m focused now on reducing my levels of angst and anxiety. To that end, I’m:

Reducing caffeine intake

I drink a lot of coffee. People watch me make instant coffee and always say that it looks like tar. I drink less than I have done in previous years. These days, I don’t drink any coffee after 12pm otherwise it affects my sleep. At the very least, caffeine raises your heart rate and makes your mind race. I’m hoping that reducing my intake by half will reduce my anxiety and help me sleep better.

Reducing alcohol

I don’t know what it is, but alcohol affects me much more than it did when I was younger. I get hangovers after 4 pints the night before. I’m sluggish in the morning. My brain is foggier than it should be. I feel more tired. I’m hoping that reducing my intake will leave me with a clearer head and feeling clearer and more energised.

Eating as well as I can

Dieting is a bad idea when you’re feeling low. Restricting calories or carbohydrates is not going to encourage feel-good hormones in your body. You’re going to feel tired and cranky. When you’re hungry, you’re more likely to feel frustrated more easily.

I also try to eat more nutritious food. So out goes the junk food for a bit. In come the soups, steaks, and loads of vegetables. I try to remember to drink lots of water and stay hydrated.

Exercise

When I’m feeling low, the last thing I want to do is get down the gym. But that’s exactly what you need to do. Lift heavy and go at least twice a week. Allow your body to recover and eat plenty in your days of rest.

Talk to someone about this

It’s sound cliched but a problem shared is a problem halved. Often, the anxiety and angst that you’re feeling isn’t anything near as bad as you think it is. The person you confide in will probably think that it’s not that bad and this will make you feel better. They will also support you at this tie when you need the support the most.

improve mental health

Eventually…after a few weeks….

You’ll start to feel better. You’ll be back to your normal levels of positivity (which are different for everyone). You’ll be ready to try some of these ways to increase your positivity levels.

Let me know in the comment below if you ever feel low and or if any of the above has affected you. What do you do to help yourself out of your ruts?

How I bought my first Verge XVG using Binance exchange

chanman · Dec 27, 2017 · 2 Comments

verge xvg buy verge

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.

verge xvg

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?

  1. It’s a coin and not an ICO token. It’s a coin like Bitcoin, Monero, Dash etc.
  2. 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.
  3. The recent price surge and the backing of a major figure in the crypto world, John McAfee (above)
  4. 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!

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