(Kinda Serious replies only) Sooo... when do you know when your cryptocurrency is worthless?

ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
126
I don't know about you guys, but I collected a few cryptocurrencies during the early Bitcoin boom that are now basically worthless. I'd imagine that a few other people here have as well.

That said, I'm not sure if anyone ever officially developed a valuation model that says "Yep, that's now a shitcoin" by looking at some key metrics. For stocks, the point where a stock is considered to be worthless seems to be when it drops below a dollar and stays there for more than a month. At that point, the major stock exchanges tend to delist them, and they become "penny stocks" from then on.

This valuation model doesn't really work for some cryptocurrencies, though, because many of the successful ones have always been worth less than a dollar. Nobody in the crypto world would call Dogecoin worthless (for example), even though they are worth fractions of a penny each. There are people out there who have millions of them, which can be exchanged for real money. It's not how I'd invest my money, but there are probably a few Dogecoin millionaires out there. Coolcoin is also a bad example, because it can always be traded in for a t-shirt as long as I'm still around :)

So, how would you determine a cryptocurrency to be worthless? Market cap? Trading volume? Something else?

This post might be too serious for OT, the mods might want to move it. I'm not sure where, though.
 

ponyo

Lifer
Feb 14, 2002
19,687
2,794
126
If there is no active market for it, then it's worthless. As along as people are willing to buy and sell, it has value.

If the transaction cost > value of your cryptocurrency holding, then your holding is worthless. Since IRS taxes crypto now, take advantage and realize the loss and write it off on your taxes to offset some other capital gains you might have. Tomorrow is the last day to tax loss harvest for this year.
 

ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
126
These particular coins predated the IRS taxing crypto, so I'm not really worried about that (thankfully).

I'm just curious if there is a rule to follow on this. I do like the idea of the total value of the crypto holding being worth less than the transaction fees to sell it as a measure of worthlessness.
 

pete6032

Diamond Member
Dec 3, 2010
6,240
1,802
136
What coins are you talking about that you are holding?

I own a a few shitcoins I doubt will have any value a few years from now.
 

Red Squirrel

No Lifer
May 24, 2003
62,891
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twitter.com
If you can't trade it for anything then may as well just keep it. When the great reset and agenda 2030 happens, who knows what will happen and what coins will suddenly be worth something. The dollar will most likely crash or even go away. Though buying gold might be smart too.

I need to look into what is the best way to manage bitcoin/etherum offline wallets more long term, like if there's some kind of more user friendly way of doing it than having to remember all the commands, as I want to start buying more bitcoin myself. I got out of crypto because I did not want to deal with trying to figure out the tax stuff, you pretty much need a high end accountant for that. But from what I've read you don't have to pay taxes on crypto you buy, only on crypoto you sell or trade or use to buy something with. So I think I will start just buying some a bit at a time and keeping it somewhere safe. I can deal with taxes if I do need to sell, or perhaps they will simplify stuff at some point to automate the legwork more. Like it would be nice if you can just submit the wallet address to the CRA and it generates a form to give to a normal tax accountant. Hopefully at some point they do that.
 
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ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
126
What coins are you talking about that you are holding?

I own a few shitcoins I doubt will have any value a few years from now.
Once upon a time, I had some Feathercoin that I got rid of because I figured that it would never be worth anything. I think that I was right about that one.

I still have some Nimiq, which has been steadily floating at valuations below a penny each since I mined it. If you never heard of that one, you're not alone. It was supposed to be the first crypto with an easy-to-use web payment system, but tons of other cryptocurrencies have that now. I don't have a huge amount of it, but are still people in their chat rooms who are holding onto millions of these worthless coins thinking that they're going to be worth a fortune some day. I was wondering if someone could point me to a "How you can tell that your crypto is worthless" white paper that I could send them :)
 
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lxskllr

No Lifer
Nov 30, 2004
55,612
5,585
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If I had to pull a standard out of my ass, I'd say if no one's using it after five years, they never will.
 

pete6032

Diamond Member
Dec 3, 2010
6,240
1,802
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Once upon a time, I had some Feathercoin that I got rid of because I figured that it would never be worth anything. I think that I was right about that one.

I still have some Nimiq, which has been steadily floating at valuations below a penny each since I mined it. If you never heard of that one, you're not alone. It was supposed to be the first crypto with an easy-to-use web payment system, but tons of other cryptocurrencies have that now. I don't have a huge amount of it, but are still people in their chat rooms who are holding onto millions of these worthless coins thinking that they're going to be worth a fortune some day. I was wondering if someone could point me to a "How you can tell that your crypto is worthless" white paper that I could send them :)
Never heard of Feathercoin.

Just looking at the top coins by market cap on Livecoinwatch I would draw the line after about 10 coins. Everyone knows bitcoin, tether, ethereum, ripple, etc, but then you start getting to things like wrapped bitcoin and celsius network, what the heck are those? There are some outside the top 10 that have some experimental value but I doubt any of those have long term value. Seems like crypto space is good at making new coins but society still has not adopted bitcoin or other crypto as a commonly accepted payment method.
 

ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
126
Never heard of Feathercoin.

Just looking at the top coins by market cap on Livecoinwatch I would draw the line after about 10 coins. Everyone knows bitcoin, tether, ethereum, ripple, etc, but then you start getting to things like wrapped bitcoin and celsius network, what the heck are those? There are some outside the top 10 that have some experimental value but I doubt any of those have long term value. Seems like crypto space is good at making new coins but society still has not adopted bitcoin or other crypto as a commonly accepted payment method.
The funny thing is that Bitcoin totally failed at its original purpose as a fast and easy online payment system. If you want to do that now, you use something like Venmo instead. Instead, it became a tool for hiding (mostly illegal) earnings from the government.
 

pete6032

Diamond Member
Dec 3, 2010
6,240
1,802
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The funny thing is that Bitcoin totally failed at its original purpose as a fast and easy online payment system. If you want to do that now, you use something like Venmo instead. Instead, it became a tool for hiding (mostly illegal) earnings from the government.
Yes, bitcoin got a lot right but there are still some issues. As you mentioned it's neither fast nor low-cost. I think that's the biggest barrier to large scale crypto adoption. People will first want to try using crypto for small scale transactions like coffee or a bagel or some other small scale purchase, before they start buying more expensive things with it. You aren't going to get an average Joe to buy a $50 item on their first crypto transaction. The problem is, however, that average Joe only knows bitcoin, which is not good for small scale transactions so few retailers are accepting it. Joe sees he can't use bitcoin for his coffee and thus decides crypto is not for him and never uses it. Joe doesn't know about any altcoins that can be used for small scale transactions.
 

njdevilsfan87

Platinum Member
Apr 19, 2007
2,285
225
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You guys are missing a lot of the potential of crypto and blockchain in general if you're still looking to buy a cup of coffee or bagels with it.

Here's what you can do thanks to crypto right now: transfer USD to Coinbase for USDCoin, and then lend USDCoin on a DeFi network such as Compound for 8-9% interest right now. And someone in Zimbabwe could be borrowing it. If this doesn't make it clear as day to you how revolutionary crypto is... nothing will. DeFi is still experimental so there may be bugs and certain networks could have problems. But as of now it is beyond proof-of-concept: it works. Everything has been leading up to this: completely free and fully functional decentralized financial networks.

As far as Bitcoin goes, it's now just the most secure settlement layer to ever be invented by mankind. Again, coffee and bagels are not relevant right now. That will come with time, likely on some "L2 solutions" that are built on top of existing blockchains by Visa or whoever.

Finances are not the only things that can be built on top of existing networks. One example is political elections running on Ethereum - because it's open and transparent, and the most secure smart contract network. Anyone who says existing blockchains have no value are clueless about the value of the security of the existing networks. Such that anything that requires any sort of consensus of some sort from the population can be built to run on top of an existing blockchain that's already well decentralized: no cheating, no hacking, no bs.

As far as shitcoins go, I'm stuck with Peercoin myself. Maybe one day it will be worth something if it's somehow still functional just based on being a young crypto (sort of like old coins having value), but I wouldn't count on that for a very, very long time. Just having its network operate for another 30 years without dying off or hostile takeover could be a challenge.
 
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quikah

Diamond Member
Apr 7, 2003
3,684
406
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These particular coins predated the IRS taxing crypto, so I'm not really worried about that (thankfully).

I'm just curious if there is a rule to follow on this. I do like the idea of the total value of the crypto holding being worth less than the transaction fees to sell it as a measure of worthlessness.
I don't think it works like that. AFAIK all crypto is treated as property, there is no date prior to which it was not taxed. They just published a memo in 2014 basically saying, yes you should be paying tax on that. Not an accountant, best to consult a professional, etc.
 

Red Squirrel

No Lifer
May 24, 2003
62,891
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They started to charge crypto taxes here in Canada too. Problem is they don't really explain or help you much with figuring out how to even calculate it and only give you broad requirements without details, and it looks like quite the trouble to figure out. Pretty much need to hire a CPA that specializes in crypto to figure it out and by the time you pay that person and the taxes you probably lost more money than you made. Though from what I read you don't need to pay taxes when you buy it, but pretty much all other times you touch it it's a taxable event. Even just converting it to dollars is taxable, or converting it to another crypto. That's where it gets complicated as you're suppose to pay the tax in dollars based on the dollar value of the crypto at the time and you need to track all of this. It can get pretty complicated.

Given the transactions are public, they should just offer a way for you to submit your wallet address to the CRA and then it spits out a form that you can give to your tax person.
 

Torn Mind

Diamond Member
Nov 25, 2012
8,702
1,584
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When PC gamers can once again actually buy a GPU (at or below MSRP), that's when crypto is completely worthless.

(Sorry, I couldn't resist). ;)
I think that happened once already with that Bitcoin crash a few years ago..

But it seems that governments are putting into place ways to get their tax money without banning the coin, so affordable GPUs may never return, especially since the coin really shot up to the moon recently, peaking at $40,000.
 

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