Sunday, June 18, 2017

June 2017 Weekend Ramblings

There's been a lot on my mind lately.

It is no help that the cryptocurrency world is moving so fast! ICOs are popping up left and right, but the good news is that I'm rapidly learning, so I am able to get a feel of how good or bad an ICO is going to be. I think this is particularly useful if bullets are limited and accuracy becomes more important.

One of the problems that I am having is finding a good way to convert SGD into cryptocurrencies.

In my latest post here on the quick and easy (not best and cheap) way to convert SGD into cryptos, I ranted how Coinhako is charging 8% over spot. That means that if I had USD on another exchange, I could probably execute trades 7.5% cheaper than Coinhako. 8% spread is freaking enormous. As you can tell, I am highly displeased.

I am currently thinking that the most sane method of getting in now involves changing SGD into USD, following by wire transferring that money onto a foreign exchange, and then buying cryptocurrencies off the exchange in USD.

Still, my options are not plentiful. Citibank needs $10k USD. DBS is $3k SGD, but it's waived until 29. UOB is $1k USD. SCB is $2k. CIMB is $1k USD.

I guess I've no choice but to go with DBS. It seems like it should be pretty easy to fund it in SGD, convert to USD and send it to where I need it to go. Looks like conversion fee would only be less than 1% if my math isn't too bad (instead of the ridiculous 7% by Coinhako).

Actually, I also realized that instead of creating a USD account specifically to send money to an exchange, I can use the modern fintech solutions to do cheap FX transfers. I need to find out if the exchange I am thinking of using will accept transfers from companies like Transferwise. HMMM. I think this is actually the best and cheapest solution.

Alternatively, I could use this Transferwise (or any other 3rd party payment solution) to fund Uphold...

Ah, I definitely need to research a lot more options. 8% is definitely NOT a long term solution. I hope to find a better long term solutions to change SGD into cryptos. I'll definitely share my findings.

Option 1: Fund an exchange account with 3rd party payment processor
+ no need to open multi currency account
+ no need to pay bank cable fees
+ ~0.5% funding fee
- more counterparty risk
- 3PPPs and exchanges might not be able to accept this arrangement

Option 2: Fund an exchange account with multi currency account
+ more control
+ less counterparty risk
- more fees (~0.8% conversion fee + $25-35 SGD + $10 USD... so on a $10,000 SGD transfer, it would be ~1.3% total fees)
- extra micro management

However, from my quick look around, most 3rd party payment processors do not transact to exchanges. And most exchanges do not accept transfers from 3rd party payment processors as well, since they are not able to match the inward transaction to the account's name.

It is most likely that I am going to open an eMCA account with DBS, manually convert to USD and transfer to the exchange in USD, followed by making whatever trades and then sending back cryptos off the exchange to myself.

It sound's like a damn leychey roundabout way, but I would be looking at savings of about 6.5%. If it was a $10,000 that I'd be transacting, that's a good $650.

I'm actually currently thinking of starting a full cryptoportfolio. I'm considering something along the lines of $5,000 or $10,000 initial starting money, followed by maybe $300-500 every month.

This sounds like a lot to some people, especially for something which seems like a "fad" or even just outright stupid, but every logical fiber in my body is screaming at me to go even BIGGER. I'm trying very hard to control myself and not let myself throw in the kitchen sink into cryptos. Blockchain technology is revolutionary. I am certain that in the future, many mainstream applications would be using blockchains without users even know. It's like how users of the internet have no clue about internet protocols, DNS, servers etc. While very interesting to know, it is not necessary knowledge. I believe that blockchain will end up being like that as well.

For what it's worth, I still believe that most traditional asset classes are ridiculously overvalued. Since my first priority is getting my own place, I still need to make sure that I am heading towards my downpayment goal. I can't forget my focus and jump into cryptos and get my money locked up in there while the good bargains and deals that I have been so so so patiently waiting for finally appear.

Since I started playing a bit in cryptos since the start of June, my returns has been mindblowing. However, I am not fooled. This move looks extremely bubbly and the way that you can tell is that pretty much anything that isn't nailed onto the ground has risen up in value tremendously. At these price points, not many cryptos are that attractive.


Anyway, to summarize:
All exchanges in Singapore sucks. Looks like I need to bring my business elsewhere.
Cryptos are in a bubble. You can tell because some stupid coins still have a sizable market cap. People aren't buying based on anything other than hype and technicals. Fundamentalists will have an edge here by staying clear of the crap coins.
I might start a cryptoportfolio soon. Maybe I'll update it monthly, like how I'm supposed to do it with my SGX portfolio (but I haven't been, haha)

7 comments:

  1. The problem is whether cryptos will end up being the Pets.com, GeoCities.com, TheGlobe.com of yesteryear. Even many of the essential pioneers that provided the critical foundations struggled e.g. Sun Microsystems (inventor of Java), Cisco (whose stock price plunged 86% and still haven't recovered its peak).

    Blockchain tech & its many untapped applications will survive & thrive in the future. But majority of its uses and applications currently today will simply die off.

    Of course, can always hope it'll be an Amazon stock. But even that required balls harder than Chobham armour wrapped in depleted uranium as the price dropped from $107 to $7, and spent many years in the wilderness before reaching $980 today.

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    1. Hi Anon,

      Yes, I think that is a very valid risk to consider - if the CURRENT blockchains will be able to last and be the FUTURE blockchains.

      There is no doubt that in the future blockchain technology will used widespread. I think that most people will not even know that they are interacting with blockchains once the technology becomes more mature and widespread!

      Probably 80% of the stuff out right now there are nonsense. Too many people are entering into cryptos and flooding all the prices, raising up prices of worthless coins. Price discovery is going to be a bitch, and I'm gonna make it mine hahaha.

      Delete
  2. Hi GMGH, I am a bit confused.. I understand the part on opening eMCA account and convert sgd to usd but how about the part on exchange? Which exchange are u talking about? Can you do a more deliberate write up on how to purchase cryto currency?

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    Replies
    1. Hi Cheryl,

      Sorry for being confusing. My ramblings are a bit unstructured.

      In this case, I am referring to exchanges where you would be able to convert fiat (USD) into cryptos (and vice versa, though that is not as important).

      I have found Kraken to be a big exchange with lots of pairs and decent volume. Another reader recommended Gemini and it looks very clear cut and simple, but with only BTC and ETH.

      However, I have still yet to trade on both of these exchanges, so I can't do a write up about them. I think it will take a while for my accounts to be verified.

      The best I've got so far is my previous post on Coinhako, but as you know, they have bad spreads, allegedly lower trader limits for new customers (I have the old limits) and it really depends how quickly they can process your application.

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    2. Thanks, so it would be:
      1. open a eMCA dbs account and open a coinhako account
      2. open a wallet account too? E.g. Exodus / Jaxx / coinomi for safety reasons?

      either a. transfer SGD from bank account to coinhako, buy cc, and transfer to a wallet? or
      b. convert sgd to usd on the eMCA account, and then convert usd into cc on kraken? then transfer the cc into a wallet? confused...

      is coinhako the same as kraken i.e. both are exchanges or is it coinhako is a platform while kraken is a exchange?

      omg im such a noob.. i need cc101 course..

      also, i know you said you were participating in ICO in june, was it Bancor? so i presume Bancor is considered a cc? but on reading further it is not a cc?

      I went to this website https://coinmarketcap.com/currencies/views/all/ are these all cc? or only some?

      Cheryl

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    3. Hi Cheryl,

      You are spot on.

      Route 1: deposit SGD into Coinhako, buy CC and transfer to wallet
      Route 2: convert SGD to USD with eMCA, remit to US exchange, buy CC and transfer to wallet

      Both are exchanges in that their main function is changing between fiat and CCs. However, Kraken is definitely more advanced with a lot more CCs available. Coinhako is rather simple, but I quite like their very simple and basic style.

      It's okay Cheryl, you seem to be catching on quite well.

      I was initially interested in Bancor, but the last minute change to their ICO terms and the crazy amount of money collected scared me away. I am participating in FundYourselfNow, but only as part of their bounty program as of now. Their ICO period is still open for a long while, so if they manage to make big leaps, I would consider it, but for now it seems a bit lackluster.

      While I use the general term "CC" to encompass all of them, strictly speaking cryptos are further divided into cryptocurrencies and crypto-assets. The distinction is a bit fuzzy, but that's how they seem to do it.

      GMGH

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    4. Thank you GMGH for clarifying!
      So I also need to create a wallet account too right. Is it better to put all CCs in one wallet or spread across several wallets?
      How to transfer the CC from Coinhako account/Kraken to wallet?

      Delete

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