Ant Colonies Retain Memories That Outlast the Lifespans of Individuals - <AUTHOR> https://www.smithsonianmag.com/science-nature/ant-colonies-retain-memories-outlast-lifespans-individuals-180971022/ <comment><USER2> These algorithms are similar to the ones I developed for the computer strategy for the Empire game. They worked, but I was unable to get them good enough to reliably defeat a human player.

The first strategy I tried was simply randomness. It was pretty ineffective. A rule based one was also ineffective, as it tended to get itself into a box. But I found that adding a dose of randomness to the rule based strategy worked well.

Most computer strategies of the day cheated, or altered the rules to give an advantage to the AI. Empire didn't. I did have thoughts about creating an interface so people could provide their own AIs and then the various AIs could battle it out.

classicempire.com

There's been a lot of research on the Life game. But I bet Empire would be a much better research platform - the rules are simple, but the game play can get pretty complex. I had a lot of fun developing AI algorithms for it. I wish the ant algorithms were known at the time, I bet they'd help!

(One of the reasons the simple rules worked so well was the pieces had a hammer-paper-scissors relationship to each other.)

<comment><USER3> Hey Walter, did Sid Meier ever consult you while developing the Civilization series? I recognized a lot of similarities between Civ and Classic Empire when I went back and played the older games in the series.

<comment><USER2> No, he never acknowledged Empire.

<comment><USER4> Do you mean he never acknowledged Empire as an inspiration? This article mentions him admitting that: [https://arstechnica.com/gaming/2017/03/sid- meier-tells-civil...](https://arstechnica.com/gaming/2017/03/sid-meier-tells- civilizations-origin-story-cites-childrens-history-books/)

Additionally, I'm like 75% sure I remember him mentioning Empire at a GDC talk.

<comment><USER2> I didn't know he had. Thanks for the link.

</comment></comment></comment></comment></comment><comment><USER5> I just traversed the ant part of Wikipedia, and this is what I found.

> Queen ants have one of the longest life-spans of any known insect – up to 30 > years.

> The fertile eggs become female worker ants and unfertilized eggs develop as > males; if the fertilized eggs and pupae are well-nurtured, they potentially > become queens.

> males are "quickly converted to sexual missiles."

> the queens often try to escape the males, allowing only the fastest and the > fittest males to mate. Mating takes place during flight.

> One queen usually mates with several males. The sperm is stored in a special > organ, known as a spermatheca, in the queen's abdomen, and lasts throughout > her lifetime. This can be as long as 20 years, during which time the sperm > can be used to fertilize tens of millions of eggs.

> The males have evolved for the single purpose of inseminating the queen.[3] > During "the quick and violent mating," the male literally explodes his > internal genitalia into the genital chamber of the queen and quickly dies.

And, moving on to army ants.

> A nest is constructed out of the living ant workers' own bodies to protect > the queen and larvae, and is later deconstructed as the ants move on.

> As many as 150,000 to 700,000 worker bodies cover and protect the queen, > linking legs and bodies in a mass that measures a meter across.

> In the morning, the bivouac dissolves into raiding columns that form a fan- > shaped front. These raiding columns can travel up to 20 metres per hour with > lead workers laying a chemical trail for other workers to follow. Smaller > workers lead the column, while larger, formidable soldiers protect the > flanks.

> When the queens emerge, the workers in the colony will form two 'systems' or > arms in opposite directions. These queens that are hatched will move down > either the arms and only two queens will succeed, one for each branch. The > remaining new queens will be left in the middle and are abandoned to die.

> The whole colony of army ants can consume up to 500,000 prey animals each > day, so can have a significant influence on the population, diversity, and > behavior of their prey. [...] About five species hunt in higher trees, where > they can attack birds and their eggs, although they focus on hunting other > social insects along with their eggs and larvae.

<comment><USER6> >> The fertile eggs become female worker ants and unfertilized eggs develop as males

One interesting consequence of this is that _male ants have no fathers_. All of their genetic code is inherited from their mother, and there is no variation in what they pass on. This lack of variation in what fathers pass on means that two ant sisters share 75% of their chromosomes instead of the 50% you see in most other animals, which some researchers believe is the underlying cause for the high level of cooperation in ant species (eusociality).

More reading: [https://en.wikipedia.org/wiki/Haplodiploidy](https://en.wikipedia.org/wiki/Haplodiploidy)

<comment><USER7> You can also, if you're in a certain quirky intellectual mood, think of an ant colony as a _single organism_ , since all the ants in it have 75% identical DNA.

Its body just happens to be physically disjoint.

<comment><USER8> And if you're in that quirky intellectual mood, could you also think of all of humanity as being a single organism, since we all share about 99.9% of our DNA? Certainly a thought I find hard to shake observing cities from the window of an airplane..

<comment><USER9> I'm not someone who studies this stuff, but I'd wager that the 99.9% thing isn't quite the same context as the 75% thing, and two ants in the same colony are more similar than two humans.

Not to detract from your comment about all humans being one organism and whatnot (hell, maybe ants and our bodies operate on a different level of consciousness that as specialized intellectual creatures we typically override woooah mann). I mostly just wanted to fish for more info on this 75% thing from someone who studies DNA and can confirm my hunch - and maybe has more info on correlation between DNA similarity and cooperative behavior.

<comment><USER10>
      > I'm not someone who studies this stuff, but I'd wager that the 99.9% thing isn't quite the same context as the 75% thing,
      > and two ants in the same colony are more similar than two humans.

Exactly. There are several very distinct contexts for discussing percentages of genetic similarity, and although it's usually clear from context which one people are talking about, making it explicit would prevent nonsensical conflicts like this 99.9% vs 75% one.

<comment><USER11> Its not 99.9% vs 75%

It is more like 75% closer to 100% than 99.9%

<comment><USER10> That's exactly my point. They represent totally different things.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER12> This is a lovely article, and I feel there's a lifetime of lessons to be learned from any colony behaviour. I've recently submitted a thesis on a swarm intelligence algorithm which exhibits some of these qualities, and the parallels between the two was a core component of the contribution.

This effect, where something is globally stable, even though all the individuals that make it happen are unstable is sometimes described as "a forest whose contours remain the same, as the trees all change".

Consider this algorithm for an ant colony foraging for a good source of food (this behaviour has also been observed in ants searching for a new nest site):

      for each ant in the swarm
        if the ant is unhappy
          run to a random ant
          if the random ant is happy
            follow it to its location
          if the random ant is unhappy
            select a location at random
        if the ant is happy
          the ant continues to search its current location

       for each ant in the swarm
         the ant searches a tiny of its location, at random
         if the ant finds food
            the ant becomes happy
          if the ant doesn't find food
            the ant becomes unhappy

If you run this algorithm you will find a "clusters" of ants form, which is a number of ants who share the same foraging location. Importantly, and this is mathematically proven, the largest cluster will form in the location with the best probability for finding food. This algorithm works even when the locations change over time and, as in the article, even when the ants which found the location are replaced with ants who have simply followed other ants to get there.

The aspect which captured my attention is that there are tiny changes to individual lines of the algorithm which implement diverse behaviours such as hill climbing, optimise for exploitation or exploration, and global optimisation.

The algorithm is called Stochastic Diffusion Search and I'm in the process of polishing a Python library which implements it and its many variants for a Show HN :) The repo is here [https://github.com/AndrewOwenMartin/sds](https://github.com/AndrewOwenMartin/sds) some info and an explanatory animation here [http://www.aomartin.co.uk/sds- animation/](http://www.aomartin.co.uk/sds-animation/) and an beta version is already on PyPi here [https://pypi.org/project/sds/](https://pypi.org/project/sds/).

Contact me (email address on my profile) if you're interested in using this algorithm or contributing to the library, it needs snappy C implementations, and a better explanatory animation!

<comment><USER13> Could you model this as a cellular automaton? Kind of reminds me of that. Sounds cool.

<comment><USER12> Each ant, or "agent", just needs to store its "activity" (whether its happy or unhappy) and its "hypothesis" (its current location). You don't even need to store the hypothesis of inactive agents, so it's pretty minimal as it is, it's not clear how you would make it a cellular automaton.

I have some ideas, but what did you have in mind?

<comment><USER13> Take a look at this visualization [https://www.youtube.com/watch?v=VsHc91IhzdI](https://www.youtube.com/watch?v=VsHc91IhzdI)

There's a repo in the description. Might not be specifically relevant to your project though

</comment></comment></comment></comment><comment><USER14> This is an example of an "extended phenotype" as written about in [https://en.wikipedia.org/wiki/The_Extended_Phenotype](https://en.wikipedia.org/wiki/The_Extended_Phenotype) by Richard Dawkins (invented the word meme).

Great concept, although harder to grasp than The Selfish Gene.

It is a bit like treating the ants as stateless functions, and storing the state in the world?

</comment><comment><USER15> I mean, I feel like the wording "retain memories" might imply a greater degree of consciousness/agency than what was actually observed. The "memory" appears to be some completely tangible phenomenon, as per their comparison of trees "retaining memory" in the form of a tree growing bark around where a branch broke off. "Ants use the rate at which they meet and smell other ants, or the chemicals deposited by other ants, to decide what to do next." , etc. That said, it's still pretty interesting, and I think we can make some comparisons about how humans share knowledge/experience and what kind of tangible markers we use as cues for our own behaviour.

<comment><USER16> In certain traffic conditions, bottlenecks can persist for hours without any apparent cause (i.e., there is no crash or stopped car blocking the road). Even though the cars entering and exiting the region are changing all the time, the bottleneck persists. You could say that traffic has "memory". Ant colonies can exhibit "memory" in a similar way.

<comment><USER17> The traffic example would work better if the bottlenecks persisted even after an extended period when all cars were removed from the highway.

<comment><USER16> The "memory" of the ant colony doesn't persist when all ants are removed, either. You can't have memory without having _some_ substrate.

</comment></comment></comment></comment><comment><USER18> >> Apr 23, 2014 - Almost 25 years since the Iron Curtain came down, deer roaming the Czech-German border still balk at crossing areas where electric fences one lay

[https://www.dailymail.co.uk/news/article-2611585/Deer-not- cr...](https://www.dailymail.co.uk/news/article-2611585/Deer-not-cross-old- iron-curtain-boundary-areas-electric-fences-lay-25-years-regime-fell.html)

I also remember a story from the US. A high-security prison was removed, its razor wire fences torn down. Years later, GPS data showed an outline of the prison. The deer were still afraid of a fence that they had never themselves seen.

</comment><comment><USER19> An interesting definition of 'memory' (and 'history') includes the 'physical record' that we can decipher.

Anthropologists study 'memories' left behind by ancient cultures that created artifacts. And the Earth keeps 'memories' of extinct animals in fossils ... and of geological events in rocks and landforms. DNA and epigenetics keep a 'memory' of lessons learned. Darwin 'remembered' evolution by the study of species.

There's a valuable lesson to be learned here ... what record will 'digitization' leave behind?

</comment><comment><USER20> Carpenter ants built a nest in my apple tv, it took me 3 days to clear them out. I hope they don't remember it.

</comment><comment><USER21> Fascinating. First thing that comes to mind is Family Systems theory of psychology. The idea is the family unit itself is treated as an entity that is sick, rather than any single "identified patient." I like it because it provides a useful model for understanding transmission of observable patterns like child abuse or other behavioral problems across generations. If ants can do it for certain types of behavior, it certainly seems plausible that "human colonies" aka "families" can as well.

</comment><comment><USER22> The book A Deepness in the Sky ([https://www.amazon.com/Deepness-Sky-Zones- Thought/dp/0812536...](https://www.amazon.com/Deepness-Sky-Zones- Thought/dp/0812536355)) goes really deep (no pun intended) on this idea! I highly recommend it as some really solid sci-fi. It was full of big new ideas I had never conceived of before and often found myself sitting down just to think.

<comment><USER23> Likewise Children of Time ([https://www.amazon.com/Children-Time-Adrian- Tchaikovsky/dp/1...](https://www.amazon.com/Children-Time-Adrian- Tchaikovsky/dp/1447273303/ref=sr_1_1?s=books&ie=UTF8&qid=1544657316&sr=1-1&keywords=children+of+time)), another piece of solid sci-fi that explores some ideas about the development of "intelligence".

</comment></comment><comment><USER24> CRAB: It's too bad, Achilles, that you weren't here last week, when Dr. Anteater and Aunt Hillary were my house guests. I should have thought of having you over then.

ACHILLES: Is Aunt Hillary your aunt, Mr. Crab?

CRAB: Oh, no, she's not really anybody's aunt.

ANTEATER: But the poor dear insists that everybody should call her that, even strangers. It's just one of her many endearing quirks.

CRAB: Yes, Aunt Hillary is quite eccentric, but such a merry old soul. It's a shame I didn't have you over to meet her last week.

ANTEATER: She's certainly one of the best-educated ant colonies I have ever had the good fortune to know. The two of us have spent many a long evening in conversation on the widest range of topics.

ACHILLES: I thought anteaters were devourers of ants, not patrons of ant- intellectualism!

ANTEATER: Well, of course the two are not mutually inconsistent. I am on the best of terms with ant colonies. It's just ants that I eat, not colonies-and that is good for both parties: me, and the colony.

\- Douglas Hofstatder, "Godel, Escher and Bach"

</comment><comment><USER25> Doesn't almost every community of living creatures retain memories that outlast the lifespans of individuals?

</comment><comment><USER26> Nice article. It's fascinating how the experiences of individuals can shape the behaviour of the colony in future. (I am interested in studying this in future.) I think the ants as simple input and output devices i.e. provide stimulus, get some results. But, the interaction of ants provides the output to the complex situations.

When one observes the colony while doing any colony related function, one can see how each individual is assigned with specific function e.g. foraging, nursing etc. And suppose if you remove these ants, there will be a new set of individuals doing that function. Somewhat similar to the neurons of brain. (One has to compare the extent of similarities.)

PS: I used to do research with ants. My master's thesis was on colony cohesion. What are the factors important for the cohesion? I have looked at few aspects (physical) of this.

</comment><comment><USER27> Is it surprising? We do the same and call this culture. A set of behaviour rules that we inherit from previous generations, don't really need to understand but can still use it to increase our survival and which slowly adapts to big time environment changes.

</comment><comment><USER28> This reminds me of the parable of the 5 monkeys: [http://wiki.c2.com/?TheFiveMonkeys](http://wiki.c2.com/?TheFiveMonkeys)

</comment><comment><USER29> This isnt very surprising me considering we humans--and probably most other living species--are pretty good at this. Memory seems to be an emergent property of a network.

</comment><comment><USER30> Reminds me of this:

[https://skeptics.stackexchange.com/questions/6828/was-the- ex...](https://skeptics.stackexchange.com/questions/6828/was-the-experiment- with-five-monkeys-a-ladder-a-banana-and-a-water-spray-condu)

</comment><comment><USER31> I've heard the concept of a "hive mind" before but this is extraordinary.

</comment><comment><USER32> So basically it's a massively legged delay line memory

</comment><comment><USER33> ants have culture, ants have memes.

</comment><comment><USER34> culture</comment>


When Does Your Intelligence Peak? - <AUTHOR> https://www.scientificamerican.com/article/when-does-your-intelligence-peak1/ <comment><USER2> Right before you stop learning?</comment>


New Zealand just took care of a $3.6M mouse infestation - <AUTHOR> https://www.popsci.com/new-zealand-mice-eradication-million <comment><USER2> That's great to hear! Gough Island is 3x larger and has a similar rodent problem. [1] A mission like this is planned for 2019 and will cost £7.6m. The organization in charge is accepting donations. [2] Eradicating mice could prevent the death of over 600,000 seabird chicks per year.

[1] [https://www.rspb.org.uk/our- work/conservation/projects/gough...](https://www.rspb.org.uk/our- work/conservation/projects/gough-island-restoration-programme/)

[2] [https://www.rspb.org.uk/join-and- donate/donate/appeals/gough...](https://www.rspb.org.uk/join-and- donate/donate/appeals/gough-island-appeal/make-a-donation/)</comment>


Coz: Causal Profiling - <AUTHOR> https://github.com/plasma-umass/coz <comment><USER2> Thanks for posting. We have a technical report describing how Coz works in detail. The current implementation profiles Linux x86-64 binaries.

 _Causal Profiling: Finding Optimizations that Count_

([https://web.cs.umass.edu/publication/docs/2014/UM- CS-2014-01...](https://web.cs.umass.edu/publication/docs/2014/UM- CS-2014-018.pdf))

While traditional profilers reveal where a program spends its time, they do not indicate where developers should spend their time. This paper introduces causal profiling, a novel profiling approach that not only indicates exactly where programmers should focus their optimization efforts, but also quantifies their potential impact. Causal profiling works by performing a series of performance experiments at runtime. These experiments quantify the impact of any potential optimization via virtual speedups, which emulate the effect of real speedups by slowing down concurrently-executing tasks. Causal profiling further departs from traditional profilers by identifying optimization opportunities that increase throughput or reduce latency. We present COZ, a prototype causal profiler, and empirically demonstrate its efficiency and effectiveness at guiding optimization efforts.

<comment><USER3> Out of curiosity, where did you get the idea for the virtual speedups? The "causal" notion here is fairly unusual to see in systems literature.

<comment><USER2> It's not that unusual these days. Jason Flinn (Michigan) has published quite a few papers that root out causality in various settings. The use of causality via happens-before relationships has been part of distributed and concurrent systems since Lamport's classic paper on time. In any event, virtual speedups were Charlie Curtsinger's idea, so you'd have to ask him :).</comment></comment></comment>


A Slack community for mobile developers - <AUTHOR> http://mobilepolitans.com

<comment><USER2> <\-- Trying to reverse engineer this little signup page? Why not join grandcentrix and help us building awesome mobile products! -->

I LOL'ed

<comment><AUTHOR> If at least one person laughed, it was worth the effort! We are at [https://twitter.com/grandcentrix](https://twitter.com/grandcentrix)</comment></comment>


Doom mod uses neural network image upscaling to improve on a classic - <AUTHOR> https://www.pcgamer.com/this-doom-mod-uses-neural-network-image-upscaling-to-improve-on-a-classic/ <comment><AUTHOR> Submitter here, PC Gamer article is good, but here's a direct link for those who want direct info from the author / have DOOM handy: [https://www.doomworld.com/forum/topic/99021-v-0-95-doom- neur...](https://www.doomworld.com/forum/topic/99021-v-0-95-doom-neural- upscale-2x/)</comment>


Pose Detection in Twilio Video with Tensorflow.js - <AUTHOR> https://www.twilio.com/blog/pose-detection-video-tensorflow-js <comment><USER2> TensorFlow.js is a pretty nifty piece of software and it's underutilized. If the model parameters can be stored in IndexedDB then users could train TensorFlow.js based site augmentation to suit their own needs.

For example, what if HN had a TensorFlow.js model for ranking new submissions based on the user's preferences? This model could be trained like a spam filter and would eventually learn the types of articles that someone likes to see but they would be in charge of the model's evolution and so would be empowered to use it however they saw fit. Maybe I don't care about politics then my model parameters would eventually converge on downgrading all political posts and the more technical submissions would rise to the top based on how I upvoted new and front page submissions.

There is a lot of interaction data sites are just leaving on the table that could be used to enhance user experience. There is only so much processing that can happen centrally so offloading some of the computation to user devices with these models I think makes a lot of sense. Centralized ranking is fine but it only shows the average opinion of the group (by construction, because it is averaging all inputs from all users).

One can imagine a staggered and federated system of ranking that expands from the users preferences all the way up to all members of the forum. If I trust certain users then I might want to use their model parameters to inform my own ranking decisions. And if they were willing to share their parameters then I could view the site with their model or make an ensemble and weight inputs however I saw fit.

Twitter blocklists are a very poor form of such a system in that they're static, centralized, and not controlled by the users. A personal version I think could be built that deferred Tweet ranking decisions up to the user and the ensemble of models they'd chosen to trust.</comment>


Coinbase Index Fund - <AUTHOR> https://blog.coinbase.com/announcing-coinbase-index-fund-3925fbf548db <comment><USER2> I have attempted to duplicate this index fund manually by purchasing the top 25 cryptocurrencies (market-cap weighted) over the past year or so. I'll say that it was hardly worth the enormous work involved, and these index funds cannot come soon enough to non-accredited investors. In some cases it's not possible to do perfectly alone: NEO has a minimum unit of 1 coin, and so if you wanted it to not be overweighted, you'd need to have a total portfolio that is an integer multiple of $6700 right now.

However, I would not buy this fund from Coinbase since they are not a neutral player, and the market is not regulated yet. There are still great advantages in owning coins yourself - I expect that, as an average investor, I will certainly be prone to manipulation in some way. Alas, the greatest gains are probably long-since gone. No risk, no reward.

<comment><USER3> I had the same problems with re-balancing my own portfolio and ended up creating a trading bot that automatically diversifies my investment portfolio across the top 20 coins by market cap (10% capped). It is heavily inspired by the crypto20 whitepaper.

For anyone that is interested, you can find the project here: www.hodlbot.io

I'm about 1-2 weeks from the MVP launch. Only the top 20 coins by market cap fund will be available at the start. In the future users will be able to create their own custom weightings.

The bot requires users to have a Binance account and uses their API key (trade only, no withdrawal access), to execute monthly rebalances. Users will always own their own coins.

At this point, I haven't run into any huge issues with min trading amounts given a reasonable initial investment amount (~0.5 ETH). For example, the NEO example you mentioned.... the min trading amount on Binnace is actually 0.01 NEO (~$1.1 USD).

I'll be making the project open source in the future and sharing with you all!

<comment><USER4> This is a really clever idea, but as someone who's trying to stay as legal as I can with reporting my crypto transactions for taxes, this sounds like it could potentially be a nightmare to report (or possibly to pay taxes on), especially with the recent GOP addition to the tax reform law that made every cryptocurrency transaction, even a trade from currency to currency, a taxable event.

I really wish I could just freely use this as a tool for investment, but the laws seem pretty draconian right now, and not reflective of the open and experimental nature of this space.

Once you get this up and going, consider some reporting tools to help keep track of the transactions, so people can use it for both personal and legal purposes.

<comment><USER5> I've found that IRS requirement is really difficult to comply with. Does anyone have any tips for tracking trades?

<comment><USER6> Trading is taxed just like capital gains, and mining as income. For small investments with few trades, it's straightforward and you can likely use a free service. Beyond a certain threshold (like 200 trades), it's probably worth using something like [https://bitcoin.tax/](https://bitcoin.tax/) or [https://cointracking.info/](https://cointracking.info/) which will create your forms for you after you import (and painstakingly correct) trades, at a rather steep price ($120/mo) though cointracking has a lifetime buy for $380...

<comment><USER7> Is mining income taxed before conversion to USD? What price would you be expected to use?

</comment></comment></comment></comment></comment></comment><comment><USER8> For anyone wondering why this is better than just buying the coins yourself, here are some reasons:

1\. Non-technical investors don't know which coins to buy. There are some genuinely good coins, and lots of scams, and they look pretty much identical to the untrained eye.

2\. Non-technical investors don't know how to store coins safely. Words like "cold wallet" and "Trezor" don't mean anything to them. Even if they wanted to learn, it's hard to separate useful information apart from scams. There was a guy a while ago who bought a hardware wallet on ebay and lost all his coins. Even smart people sometimes do dumb things, and in this case it could cost them everything.

3\. Investment firms with more than 1 person involved have additional challenges. Who gets the coinbase login? Who gets access to the safe deposit box where the private keys are held? If only one partner has access, he might steal the coins and say "we got hacked" and no one can prove otherwise. Or he might get hit by a bus, and then no one else can get the coins out. If multiple partners have access, one of them might screw the others and steal the money and there's no way to know who did it. Crypto nerds will say "use multi-sig wallets," but that's way too complicated for most people. Screw-ups when creating a multi-sig wallet could render your coins unspendable.

4\. If you make a crypto portfolio (as opposed to just holding bitcoin), you'll trigger a capital gains event each time you rebalance. Many people don't seem to realize that crypto-to-crypto trades are still taxable, but it's true. If you want to rebalance more than once per year, it becomes short-term capital gains and your tax rate goes way up.

<comment><USER9> Disagree with all 4 of these:

1) They are publishing which coins are held by the index, so the choice of coins is being given away for free, not just to investors.

2) Coinbase's main product is a SaaS account that lets you buy the same coins without knowing how to manage a wallet - so you can implement the index and skip the management fee using an account with them.

3) Controlling administrative access to an account with a fund has the same challenges as controlling administrative access to a coinbase account.

4) Funds have to pass through taxable events to customer (other than some structures which must pay the tax themselves) -- the taxation doesn't disappear because it's wrapped by another entity. Plus, the prospectus shows that the Coinbase fund will only need to rebalance once a year when it recalculates available supply on Jan 1.

There's really no excuse for the high fees on this fund. It's 100 times easier to manage than a typical stock index ETF, which must manage many more names plus dividends, splits, etc. And it charges 20x the fees.

<comment><USER10> > 4) Funds have to pass through taxable events to customer (other than some > structures which must pay the tax themselves) -- the taxation doesn't > disappear because it's wrapped by another entity. Plus, the prospectus shows > that the Coinbase fund will only need to rebalance once a year when it > recalculates available supply on Jan 1.

Doesn't that depend on the structure? Mutual Funds pass taxable events but I don't believe Index Funds/ETFs do, since there is an incorporated entity that you own shares in that is making the trades and paying the taxes.

<comment><USER11> Also, mutual funds can be forced to take fewer taxable distributions since they can use cash inflows to handle things they'd otherwise need to take a distribution for.

</comment></comment></comment></comment><comment><USER12> "Available to US accredited investors."

It seems a little ironic that any Joe Blow with a credit card can buy cryptocurrency, at presumably higher risk since he's managing the assets himself, but he can't invest in this fund.

<comment><USER13> This whole regulation is unneeded. You can bring your money to a casino and put it all on zero. Or buy a thousand lottery tickets. But investing in risky businesses needs to be walled off to the wealthy.

What we really need is the real consequences for fraud / false financial claims.

<comment><USER14> At the casino your risks are known, and well-defined. In blackjack with basic strategy your expected value is, what, 49%? Craps, it's similar. Just look it up. Nobody at the table playing, or even running the show, can manipulate the outcome except by changing the parameters of the game as posted in the (I assume) regulated odds boards.

Investing in an unregulated market is absolutely nothing like that. Your outcome is undefined, but you're subject to front-running, tape painting, wash trading, fake news stories and tens of other well-known scams.

The regulations aren't to stop the poor from making money. If it were a sure- fire way to make money, everyone would just do it all the time. It's the Trumpian "trade wars are easy to win" argument. If it's easy, everyone would win, so nobody would win, end of story. It's to limit people to what they can afford to lose (or at least try). And it's done in the social good also, as people who become insolvent then utilize the social safety net to get back on their feet.

Yes, we need the real consequences, and what you're describing is literally regulation.

<comment><USER15> But don't they, even in Blackjack, use multiple card decks to kill the odds calculation unless you're Rain Man?

Sorry, but if cryptocurrency is prone to manipulation and fraud (it is), casinos are tens times worse because not only do they do that, as the House must win as a business strategy, but they appeal to people who have addiction issues.

I'm not against casinos but to defend them against cryptocurrency trading and suggest average Joe is better off playing Roulette is in my opinion a misplaced attempt at morality.

<comment><USER16> That's to make it difficult for a player to calculate the odds of a _particular hand_. The odds of the overall game are still pre-defined and regulated.

Casinos can't/won't promise that you'll make money by playing their games. Securities are generally purchased with the expectation that you'll make money, and are marketed up to the allowable line of suggesting they are good ways to make money.

Allowing people to play a game where the odds are openly against them, vs. buying a security where they're being told the odds favor them but it may be otherwise, are very different propositions when you're asking if they're "fraud".

<comment><USER15> _That 's to make it difficult for a player to calculate the odds of a particular hand. The odds of the overall game are still pre-defined and regulated._

My Average Joe brain is too small to calculate probability when there are a bunch of hands involved, much less one. It is, however, large enough to place bets on which cryptocoins might be more useful than others, based on a lot of data and current event news that I have access to.

 _Casinos can 't/won't promise that you'll make money by playing their games. Securities are generally purchased with the expectation that you'll make money, and are marketed up to the allowable line of suggesting they are good ways to make money._

I don't recall Coinbase or any exchange promising anything. And trading is just that - trading. There are waves of ups and downs of supply and demand, of various volumes of buys and sells that lead to intraday, intraweek swings in which you can attempt to play your 'hand'. Even if you don't believe in the underlying security, you can attempt to ride those waves using technology provided to you by GDAX or Bittrex or whatever - the entire order book is laid out for you to learn and think about, and speculate on. That's easier to parse than odds for .. a blackjack hand? Even a roulette wheel probability play requires some basic training in probability.

The Casino ALWAYS wins, in aggregate.

 _Allowing people to play a game where the odds are openly against them, vs. buying a security where they 're being told the odds favor them but it may be otherwise, are very different propositions when you're asking if they're "fraud"_

Okay, fine, so then regulate the 'telling' part and not the 'playing' part. I don't recall being told that the odds favor me. I was presented with an interface that let me purchase these coins. There were no words telling me what to do or not to do. The only people telling people what to do are peers and various Internet news sources that no one is obliged to follow.

<comment><USER16> Consider the contrast between the two things you just said:

* "place bets on which cryptocoins might be more useful than other" * "The Casino ALWAYS wins, in aggregate."

In the former, you expect you have some better than even odds of winning money -- otherwise you wouldn't be doing it. In the latter you clearly understand that the odds are against you. See how different those are?

We can argue about the ability to day-trade the cryptocurrency market, but it's hard to argue that the odds there are more clearly defined than in a casino. The _reason_ there's a moving market is because we don't all agree on those odds.

> Okay, fine, so then regulate the 'telling' part and not the 'playing' part

They _do_ regulate the telling part, quite tightly. But it's extremely difficult to control what people may tell each other outside the bounds of an issuance document. E.g. the SEC can't control what folks in r/bitcoin might be out there telling people as reasons to buy this Index fund.

<comment><USER15> _Consider the contrast between the two things you just said: "place bets on which cryptocoins might be more useful than other" "The Casino ALWAYS wins, in aggregate."

In the former, you expect you have some better than even odds of winning money -- otherwise you wouldn't be doing it. In the latter you clearly understand that the odds are against you. See how different those are?

We can argue about the ability to day-trade the cryptocurrency market, but it's hard to argue that the odds there are more clearly defined than in a casino. The reason there's a moving market is because we don't all agree on those odds._

Hold on a second. I never argued that the odds are more clearly defined. How in the world can you calculate political odds, legal odds, and other odds? Can you calculate odds on a commodities trade like oil? What happens if a war breaks out between Iran and Israel? If a new technology takes hold? All of these things are another way in which odds can't be calculated as cleanly as, say, a Blackjack hand.

That many in the HN crowd consistently compare stocks and now cryptocurrency to casinos, and pad their argumentation that casinos are the same or better with an underlayment of probability calculation -- that shows the inherent mathematical bias of folks in tech. For how can one ascribe odds to purely human factors? Here's a probability prediction: chances of this comment being voted down > 50%.

<comment><USER16> You specifically said "That's easier to parse than odds for .. a blackjack hand?" Presumably what one is parsing when making a speculative trade is the odds of a positive outcome.

(You don't need to parse a blackjack hand, btw. The odds are pre-calculated and easy to look up[0]. But I was talking about the overall odds of playing, anyway, which is usually about a 0.5% house advantage per hand.)

Note: I'm not arguing that casino odds are better or worse than the odds of a crypto trade. Just that they're better defined, which you seem to agree with me on.

[0] [http://www.blackjackage.com/odds- hand.php](http://www.blackjackage.com/odds-hand.php)

<comment><USER15> Right - it seems we agree on that and probably when I wrote:

 _Even if you don 't believe in the underlying security, you can attempt to ride those waves using technology provided to you by GDAX or Bittrex or whatever - the entire order book is laid out for you to learn and think about, and speculate on. That's easier to parse than odds for .. a blackjack hand? Even a roulette wheel probability play requires some basic training in probability._

You read that as, the odds are easier to parse for crypto. That's not what I was saying, even if I worded it poorly such that it could be taken like that. It's just not an apples to apples comparison, since with a card game you can construct a mathematical model of probability around it. You can't do that so easily with many other types of speculation and investment (let's suspend argument about THAT distinction for a moment).

But my point all along is that _it doesn 't matter_; investments can be assessed non-mathematically by following non-mathematical sources of data and making predictions. History, politics, law change and it's extremely difficult to ascribe statistics to every possible outcome, at least for almost everyone. Otherwise, there would be no market at all for the vast majority of 'investments' / 'speculations'. Only mathematicians could be involved. Now, there are people that make a living out of creating statistical models around stock movements, but that doesn't mean that every other person alive who doesn't and still pursues purchases of stocks is doing so with more risk than throwing all their chips on Black 26. And it is the same with cryptocurrency.

To circle back to the original point, yes, I feel it's rather hypocritical that casino games are open for business for the little guy, but when the little guy uses a web app with a UI with order book details to try to play the cryptocurrency market, a tool of the type really mainly known primarily on stock trading floors until recently, suddenly the little guy needs the law to step out in front to protect him from himself.

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER17> Seems dishonest to not use a linear scale on this graph: [https://am.coinbase.com/index](https://am.coinbase.com/index)

Also, the minimum investment and management fee found here don't look too appealing:

Minimum Investment: $10,000

2% annual management fee

[https://am.coinbase.com/#invest](https://am.coinbase.com/#invest)

<comment><USER18> why is it dishonest to not use a linear scale? When you're investing, you're generally looking for relative-yield-over-timescale, which is appropriately charted as logarithmic.

<comment><USER19> Using a linear scale implies that the growth rate is independent of scale.

Using a log scale implies that the growth rate is dependent on scale.

Depending on your opinion of the market, choose whichever you wish

<comment><USER18> In the modern era of central bank capitalism, the dominant purpose of investment is to fight inflation, which is an annualized quantity, so using a linear scale is nonsensical for the most common practical purposes.

</comment></comment></comment></comment><comment><USER20> Kudos to Coinbase for launching this but a 2% fee and the fact that Coinbase is far from being trustworthy in my book I am going to wait for when/if a company like Vanguard starts such a fund.

<comment><USER21> Yeah, at 2% this is more akin to a mutual fund.

<comment><USER22> Forget mutual funds. That's closer to a hedge fund.

</comment></comment></comment><comment><USER23> That chart is log-scale. The index fell by more than half between December and February, but you wouldn't know it by glancing at the chart.

<comment><USER24> Good eye, that is sketchy. The entire industry seems to be floating on FOMO right now though, so it definitely serves that purpose.

<comment><USER25> It should be labeled or otherwise shown, but I think that semi-log is the most appropriate choice of scale for long-term price change graphs like this. I can buy linear-linear for intraday charts, but anything long-term should be log- linear IMO.

</comment></comment></comment><comment><USER26> This is a great move by Coinbase to make "owning more crypto" easier for the average (accredited) investor. But 4 coins != the market.

Like others, we've tried to maintain our own index of top cryptocurrencies, and experienced all the same repetitive issues of calculating asset shares, etc.

So we created a tool to help ourselves, and hopefully others: [https://thecoindexer.com](https://thecoindexer.com). It takes an input portfolio (on CoinFYI or others) and periodically calculates and emails the optimal* rebalancing trades to match a target index. Current indexes are based off CoinMarketCap's top 5, 10 and 25 assets.

We've still got a lot of kinks to work out, but feedback/suggestions are welcome.

*optimal = fewest # of trades on preferred exchanges

<comment><USER27> How about buying into top 10 coins from CoinGecko [https://www.coingecko.com/en](https://www.coingecko.com/en) weighted by multiple metrics and they got [https://www.coingecko.com/en/crypto_index/crix](https://www.coingecko.com/en/crypto_index/crix)

</comment></comment><comment><USER28> I'd avoid this. Coinbase knows the time and price of potential crypto entrants, and this fact can be manipulated to make the fund the bag-holder for shitcoin pump-and-dumps.

Like, a fundamental thing about market-cap weighted index funds is that they buy a fixed percentage of a security in the index, regardless of price. If the fund has 1/100k of the market cap of all the coins listed on Coinbase, you can buy 1/100k of any coin and offload it at whatever price you can manipulate it to at the date it enters the index.

<comment><USER29> That seems unlikely given GDAX has publicly released it's criteria for listing new assets.

[https://www.google.com/url?sa=t&source=web&rct=j&url=https:/...](https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.gdax.com/static/digital- asset- framework-2017-11.pdf&ved=2ahUKEwi89vuD-9jZAhUj6YMKHUYiDOIQFjAAegQIBRAB&usg=AOvVaw2rgeXVkdN62gvvzv3y81gH)

</comment></comment><comment><USER30> Reading the weighting section of the index fund ( [https://am.coinbase.com/documents/cbi- methodology.pdf](https://am.coinbase.com/documents/cbi-methodology.pdf) \-- linked in a few sibling comments too) the following statement, while standard language and approach, makes me wonder in this case:

"The market capitalization of each constituent asset is calculated as the price of the asset multiplied by the supply of the asset."

There are always some small mistakes in the supply of the asset. Bitcoin however has a considerable amount of lost coins. This has been discussed a lot and there are a couple of studies out there (here is a quick link via fortune (placeholder till I find the original study): [http://fortune.com/2017/11/25/lost- bitcoins/](http://fortune.com/2017/11/25/lost-bitcoins/)).

They seem to ignore this fact in their calculations (they follow a fixed supply approach it appears. Does anyone with experience in investing have any opinion? Shouldn't indexes at least attempt adjustment?

Note paragraph 2.10 mentions that no supply adjustment ever is going to be made. I think this considerably inflates the nominal value of the fund (for the eyes of the world). Thoughts?

<comment><USER31> There is a concept in index weighting called float-adjusted where you remove shares that have not been issued.

that isnt really the same as what you are talking about, but it is a similar concept. The real problem would be finding out how many bitcoin exist or have been lost. I dont think there is any way to do that at this time.

</comment></comment><comment><USER32> Kind of sad when a major player likes Coinbase invites the pure speculators in. Yes I know that 99% of people were just speculating before but at least they had the possibility of transferring their crypto assets off the exchange and using them for something. Now it's just some magic number you can root for. It's no more interesting or decentralized than any other financial instrument.

When you think about it, crypto currencies may have been too successful. The market got so big that it has to start looking like every other financial product instead of something different with a chance to shake up finance.

<comment><USER33> Part of the problem is that if you buy a coffee with cryptocurrency, the IRS wants you to pay capital gains on that transaction. Personally I've avoided actually using crypto because I don't want the hassle.

Germany recently passed a law that excludes small crypto transactions from tax reporting. The U.S. already has this for foreign currencies.

</comment></comment><comment><USER34> This is a terrible deal. A 2% annual fee is a hedge-fund-esque fee. For 2% I'd expect an actively managed fund that gets in on ICO presales, carefully vets teams/technologies behind new coins and gets in early, has a strategy for hedging risk, etc. etc.

Instead you get a passively managed fund with FOUR assets that are all tightly correlated with each other (they all crash at the same time), that is only rebalanced once a year, and offers no tax benefits. Tax loss harvesting, for example, is not possible - there are only 4 assets to choose from!

You could replicate this yourself in a few minutes, and you wouldn't need a script.

<comment><USER35> Just to elaborate:

On a yearly basis the only two coins among the top coins that correlate less with the coins listed in the index are Ripple and Stellar.

Source:

[http://cryptoport.net/blog/diversification-i.html](http://cryptoport.net/blog/diversification-i.html) (my blog, just scroll down to the correlation matrices)

EDIT: "don't correlate closely" -> "correlate less"

<comment><USER34> They are still very correlated with the other top crypto coins. In the most recent crash Stellar and Ripple plunged just the same.

<comment><USER35> Fixed it, thanks.

</comment></comment></comment></comment><comment><USER36> Interesting. The fund creates another potential source of revenue for them and at the same time, the more people that invest in it, the higher it's likely to go.

Why would anyone choose to invest in a fund that is basically the same as investing in the 4 currencies they currently support directly (without fees or limitations on trading)?

<comment><USER37> Automatic and cheap balancing.

Its a great business for coinbase: if it had plenty of investors, then they have a very definite measure on what to ask coin makers before putting their coin on their exchange.

Figure they can ask 10% of the outstanding tokens in exchange for the legitimacy that will pump the coin sky high.

<comment><USER38> > _Automatic and cheap balancing_

For someone unknown definition of "balancing." (Rebalancing and re-weighting or re-constituting are different things.)

<comment><USER39> It's only "unknown" if you refuse to read.

[https://am.coinbase.com/documents/cbi- methodology.pdf](https://am.coinbase.com/documents/cbi-methodology.pdf)

Edit: sorry, this came across more aggressive than I meant for it to be!

<comment><USER38> Pardon me, the construction is as transparent as something like this can be, i.e. generally, whatever their committee feels like. My qualm is with the word "balancing" which implies diversification as this term is used within portfolio theory. You can't balance a book of correlated assets. (You can _track_ them, which this index tries to do.)

<comment><USER40> Rebalancing is the correct term of art here. The index reweights, the fund rebalances its holdings in order to track the new reweighted index. Source: traded a lot of index funds.

Also, based on the blog post, the fund (or the index managers, who are the same people here) would say they are rebalancing in your sense of the word too. They are adding diversification compared to a portfolio that just holds, say, bitcoin. Sure, it's not as diverse as one that also holds stocks and bonds and real estate, but nobody's perfect.

</comment></comment></comment></comment></comment></comment><comment><USER41> If anyone's interested in a similar concept, Iconomi does a number of managed funds. I don't believe any are actual indexes (BLX comes closest with market cap weighted - [https://www.iconomi.net/dashboard/#/daa/BLX](https://www.iconomi.net/dashboard/#/daa/BLX)) but they do cover a number of different crypto spaces.

Also Crypto20 does an index of the top 20:

[https://crypto20.com/en/](https://crypto20.com/en/)

<comment><USER42> Yes, much more interesting than the Coinbase 4-coin-index, for me at least.

I have a small amount in one of their DAAs, and as a customer, I really enjoy the transparency in their communication. They do regular Reddit AMA's ([https://www.reddit.com/r/ICONOMI/](https://www.reddit.com/r/ICONOMI/)), financial reports on Medium ([https://medium.com/iconominet](https://medium.com/iconominet)), and simply make me feel like there are real and motivated humans behind. Quite rare in crypto.

</comment></comment><comment><USER43> Couldn't anyone just copy the composition of this fund and buy the same cryptos themselves without paying management fees or being locked in to Coinbase?

<comment><USER44> The transaction costs would probably add up to more than 2% depending on how accurately you wanted to track the index, plus it sounds like a bunch of work.

(Edit: I'm not saying it's actually worth 2%, which seems excessive)

<comment><USER38> The index they track reabalances annually [1].

[1] [https://am.coinbase.com/documents/cbi- methodology.pdf](https://am.coinbase.com/documents/cbi-methodology.pdf) _6.10_

<comment><USER9> And, since those rebalances reflect only relative changes in supply, the turnover should be a small fraction of AUM.

</comment></comment></comment></comment><comment><USER45> From [https://am.coinbase.com/](https://am.coinbase.com/):

>* Coinbase Index Fund will invest in assets in proportion to their relative market capitalizations and rebalance annually on January 1st. This strategy will track Coinbase Index (Fixed Supply) - a modified version of Coinbase Index which is adjusted to remove the effect of supply increases, so that it can be tracked by investors. For more information, see Section 6 of the Methodology and Construction.

So if you invest in this, you're basically making a bet that 'the flippening' will not occur because you would lose bigly relative to the market if bitcoin tanked since they don't rebalance for a year (which is forever in crypto).

</comment><comment><USER46> "Index fund" has a meaning if the economy itself the fund is built on top of is stable.

For example, stock market index fund makes sense because stocks are built on top of capitalism, which has proven to work for a long time. Nobody would buy a index fund from a communist country, because time has proven communism is not profitable.

I think people are missing the point if they're investing in crypto index funds, because the whole point of cryptocurrencies right now is that the economy it's built on is extremely unpredictable. The whole point of "index fund" is to minimize risk, but they're not exactly minimizing risk since the whole industry could just go to zero if something radical happens (for example BTC crashes), while not really getting a good deal in terms of upsides which you can get by actively trading.

For most people who lack knowledge I think a better strategy is to invest in aggressive crypto hedge funds which are springing up like crazy nowadays--that is, if you value the potential gains more than potential loss.

And for the rest of those who are risk-averse, I would just keep it in the bank if I were them.

Risk-averse people investing in cryptocurrency is like going to las vegas and thinking they'll make tons of money.

<comment><USER47> >>For example, stock market index fund makes sense because stocks are built on top of capitalism, which has proven to work for a long time. Nobody would buy a index fund from a communist country, because time has proven communism is not profitable.

That is not what index funds are for, or aren't for, at all.

Parts of bond index funds I own are invested in "communist" countries and I'm glad to have the diversification.

<comment><USER46> There is no communist country in the world right now...

<comment><USER48> Was there ever? The Warsaw Pact countries had "communist" parties, but the country itself was usually called "socialist", and the propaganda tended to refer to "building socialism", as if they hadn't even finished socialism yet, let alone communism. So "communism" seemed to be a sort of nirvana that people were supposed to eternally strive towards rather than something that they could claim with a straight face they already had.

Anyway, China is ruled by a "communist" party, and I guess they have as much right as anyone else to decide what they mean by "communist", or whatever the corresponding expression in Chinese is.

Of course the lack of consensus about what "communism" means is as nothing compared with the confusion about what "capitalism" means. We can't just follow Marx because Marx was writing about a world (19th-century England) that no longer exists.

<comment><USER46> As we agree, there has never been a pure communist country. When I mention communist country, I'm talking about this hypothetical communist country. If such an economy did successfully exist, the concept of "money" will be very different in their world.

I used this as an analogy to explain how the concept of cryptocurrency is very different from the gold standard or fiat based money we've been accustomed to.

A lot of people think of cryptocurrency as just another speculative investment asset like stocks, but that's the stupidest thing anyone can do, because unlike stock market which exists on top of capitalist economy, backed by government's legal system, cryptocurrency is a whole new world.

In fact, the whole point of cryptocurrency is that it's "trustless"\--if you lose your money to a scammer, no government will help you, it's your fault for being an idiot.

Cryptocurrency and stocks look the same to most people because all they see is a way to get richer, but most of them don't realize they're jumping onto a completely different economy.

This is why I think index funds are meaningless. Index funds in traditional economy can never go to zero because governments will bail them out. Cryptocurrencies in my opinion have a good chance of going to zero (and this is coming from a cryptocurrency believer). And when it does go to zero, there is no government to bail anyone out, and coinbase won't help you either, they'll just move on.

</comment></comment></comment></comment></comment><comment><USER10> Great to see innovation in the crypto-index space, but as others point out 2% is way overpriced for some administrative efficiencies and a once a year rebalancing. This is a very 'classic' approach to the diversification problem, but as an alternative financial system we should see crypto-focused solutions that move past this.

I'm working with a group of folks on a version of this that re-balances in real-time on GDAX with immediate withdrawls, no pass-thru tax burden, and low monthly fees. If anyone is interested in participating or learning more reach out to me via email to philip at postral dot com.

</comment><comment><USER49> Dang, I was looking everywhere for something like this just a couple months ago! I ended up digging through the GDAX API docs, writing a node script, and scheduling it [0], but I'd rather not be in the business of script maintenance.

The fees and accredited investor requirement will keep me with what I've got, though :/

[0]:[https://www.chrisjeakle.com/projects/#gdax- automation](https://www.chrisjeakle.com/projects/#gdax-automation)

<comment><USER50> Oh man, I do not envy your tax situation...

<comment><USER49> It's been shockingly easy, actually! I do relatively few orders (2 per month) and can get a record of my filled orders [0] on the day I know my buys will occur.

I plug those automated buys into a spreadsheet where I maintain a record of my orders. That spreadsheet does a FIFO capital gains calculation, and I'm good to go.

I must admit, I haven't sold yet, so I may just be niave about how 2018 taxes will go!

[0]: [https://www.gdax.com/orders/fills/BTC- USD](https://www.gdax.com/orders/fills/BTC-USD)

</comment></comment></comment><comment><USER51> There is a person who bought 800$ worth of cryptocurrency via 66 coins [1].

On Day 40 the total value is 388.58$.

1: [https://66shitcoins.com](https://66shitcoins.com)

<comment> m-i-l Also [https://buyandhold100crypto.com/](https://buyandhold100crypto.com/) .

</comment></comment><comment><USER52> From their Twitter Account. I wonder what kind of "broader digital assets" they are talking about here? Tokens? ERC721?

"We're working on launching more funds which cover a broader range of digital assets. Stay tuned."[0]

[0] - [https://twitter.com/coinbase/status/971156625951145985](https://twitter.com/coinbase/status/971156625951145985)

</comment><comment><USER53> 2% fee is pretty high for an index fund.

<comment><USER54> Yeah, there's no way that what they're doing is worth 2% here.

</comment></comment><comment><USER55> Wow, that doesn't seem wise (at the first glance). These market caps are really easy to manipulate, especially when you only have to do it annually and the exact time is specified. Huuge shorts. Bonus points for doing something like BCH before that to force your coin onto Coinbase (because otherwise people are gonna complain Coinbase is stealing their coins from the forked chain).

</comment><comment><USER56> As a few others here seem to have hinted at. Although this seems to be not only an interesting idea and also a natural space for Coinbase it appears to be limited in a number of different ways. Has anyone had any other experience with other crypto style index funds such as Crypto20? If so any thoughts, advice or recommendations would be most welcome.

</comment><comment><USER57> Coinbase also confirmed on CNBC that their transaction volumes are lower compared to the peak in Dec/Jan - matches up well with lower transaction volumes in Bitcoin and Ethereum (despite transaction costs going down), fewer new wallets created daily, and fewer searches (Google Trends).

</comment><comment><USER58> Warning: you may want to read up on all the major problems Coinbase have had & are having with locking people's funds up and going unresponsive before giving them actual money.

Frustrating that they're still launching new products instead of fixing what's broken.

</comment><comment><USER59> From this post :

      Coinbase Index is a measure of the financial
      performance of all assets listed on GDAX,
      weighted by their market capitalization.

Methodology : [https://am.coinbase.com/documents/cbi- methodology.pdf](https://am.coinbase.com/documents/cbi-methodology.pdf)

      The index level for CBI is calculated by dividing
      the sum of the current USD market capitalizations
      of all constituent assets by the Divisor

I don't see how anything is weighted, it's just the sum of capitalizations expressed in USD divided by a weird divisor they control to keep the index smooth

<comment><USER60> That's automatically weighted by their market capitalization. Capitalization in USD = price (USD/coin) * capitalization in coins

</comment></comment><comment><USER61> I work at Bitwise Investments (venture backed by Avichal Garg - a YC partner), and some people know us as "the first cryptocurrency index". We think Coinbase releasing an index is great for the space - diversification is super important for a crypto portfolio and it is good to see other people working on the problem. We offer a different basket (Coinbase only offers the coins available on Coinbase), have different business model incentives, and different focuses.

If investing in a diversifed portfolio seems intriguing to you, and Coinbase's offering doesn't fit your needs, you should check us out: bitwiseinvestments.com

Also, we're hiring!

</comment><comment><USER62> This just strikes me as really shady - not because I have any reason to believe that you're not going to get what they're selling you, but that a lot of non-experts in financial products are familiar with the idea of an index fund as a (relatively) safe and responsible long-term investment, when this is clearly neither of those things.

Coinbase even describe this as an investment in their description.

This has more in common with buying a bunch of lottery tickets in a syndicate for a draw that might not even happen. I wish we'd be more responsible than to call buying cryptocurrency investing. We know what it is. It is not _this_.

</comment><comment><USER63> If cryptocurrencies are the currencies of the future and they're not just an investment product for people who want to get rich on hype, prove it to me very simply; spend your cryptocurrency.

Really, it's that simple; use all of them to buy something disposable, or even invest them if you want, but if you can't bear the thought of being separated from them for something else then I just don't see how their deflationary model is offset by their ease of transaction. They're supposed to be the medium of exchange between valuable goods and services, they're not supposed to be the valuable good itself.

<comment><USER10> You are right to be suspicious, but there are a wide variety of cryptocurrencies, some of which are designed to be a medium of exchange between valuable goods and services and some of which are designed for very different purposes. Not all are deflationary. Some are supposed to be the valuable good itself (as a proxy for some physical asset).

</comment></comment><comment><USER64> Reminder people. Crypto exchange tokens held tokens means counterparty risk.

You don't hold the crypto. They owe you it and they may not pay out due to court orders, bankruptcy, hackings, they think you are laundering money, a terrorist etc.

</comment><comment><USER65> When Coinbase adds a new coin, will they buy the coins for the fund before or after the announcement? If before, then this fund would actually be useful as a way to front run the market. But I'm guessing it would be after.

</comment><comment><USER19> The potential for this fund to motivation market manipulation is large: Given that the fund rebalances annually, all market manipulators need to do is 'paint the close' on the year, Coinbase is dictated by their terms to go in and buy up a bunch of the coins rebalance on that 'market cap' that had their close painted, and then the painted coins are dumped.

I.e. eating up ask liquidity close to year end forces Coinbase to buy up that removed liquidity at a premium.

</comment><comment><USER66> This looks pretty similar to Crypto20, [https://crypto20.com/en/](https://crypto20.com/en/). However, Crypto20 is explicit about your token giving you proxy ownership of the underlying assets. I am not an expert so i'm not sure if it's a scam or not, but so far it seems reasonable. Much less stressful than maintaining one's own portfolio, too.

</comment><comment><USER52> There are many people ("traditional" hedge fund managers) outside of the crypto world that want "exposure" without having to figure out which ones to pick.

This seems like a perfect product for them.

But from what I understand.. If $100 in invested into the index fund, $67 of bitcoin is bought, $27 of Ethereum, $7 of Bitcoin Cash, and $4 of Litecoin.

Bitcoin - 62% Ethereum - 27% Bitcoin Cash - 7% Litecoin - 4%

Doesn't that make it so that the market favors incumbents?

<comment><USER9> Yes, by design! The most traditional way of deciding index weights is by market capitalization: if the world has thus far allocated more to Bitcoin than Ethereum, the index will too. Besides concurring with past "wisdom", this method minimizes management overhead. If Ethereum doubles in price tomorrow, so that by market capitalization it should have similar weight to Bitcoin, the index will already be "in position" because the value of it's eth holdings will have doubled alongside.

<comment><USER67> I hadn't considered this, why do you ever need to rebalance then?

<comment><USER9> Price is one of two inputs driving market capitalization - the other being available supply. Since many cryptocurrencies continuously issue new supply, relative supply can change over time. The Coinbase Index rebalances once a year to track this change.

The other cause of rebalance will be if they add members to the index, which would also upset all the ratios.

</comment></comment></comment></comment><comment><USER68> Most cryptocurrencies (especially the few that Coinbase trades) are still so pegged to the Bitcoin price that it's hard to see any value in this, especially considering the management fee.

Click between any of the currency graphs on their main page - they all move together, just with different base values.

</comment><comment><USER69> The entire point of cryptocurrency is to control it yourself, by owning the private keys. Instead of investing in ethereum with coinbase, why not invest in a centralized smart contract platform (much easier and even safer as long as you trust the person who runs it)?

</comment><comment><USER70> How does this compare to Bitwise?

<comment><USER71> Bitwise has better diversification across top 10 currencies based on market cap. Coinbase has lower entry point of $10k minimum v/s $25k minimum required by Bitwise.

</comment></comment><comment><USER72> Anyone reading this, please spend at least a few minutes considering an alternative investment approach: In my opinion, most HN readers are technical enough that if they read up on the top 10 coins they would find that quite a few of those coins have extremely unconvincing future prospects- I won't name names, but several of the top 10 coins are (in my estimation) based on EXTREMELY UNCONVINCING ideas.

Before jumping on an index fund, a person on HN should at least consider the possibility that they may be better off doing some homework and reading up on the top 10 coins and then only investing in those that have a convincing technological basis- Index funds are not always a sensible strategy for markets that are as new as the cryptocurrency market, since proper price discovery in asset markets is a slow process that requires time.

</comment><comment><USER73> This design will allow Coinbase for adding some tokens they like and profit immensely from large retail base of investors investing passively in anything that Coinbase will list - becoming de-facto token curation network

</comment><comment><USER74> Repeat after me:

        A good currency is a bad investment

<comment><USER75> but what about a basket of four bad currencies?

<comment><USER76> AAA rating!

</comment></comment></comment><comment><USER77> cue the "return to normal" ?

[https://www.forbes.com/sites/jessecolombo/2013/12/19/bitcoin...](https://www.forbes.com/sites/jessecolombo/2013/12/19/bitcoin- may-be-following-this-classic-bubble-stages-chart/#4849024736b8)

</comment><comment><USER78> One would think that once there's a stable crypto ETF it'll be included in Vanguard funds and the like.

</comment><comment><USER79> What will happen to the underlying assets, and therefore the value, of this fund if Coinbase gets hacked?

</comment><comment><USER80> Since nobody has posted it yet, the composition is:

* Bitcoin 62%

* Ethereum 27%

* Bitcoin Cash 7%

* Litecoin 4%

So don't expect any of the more obscure cryptocurrencies.

<comment><USER81> \+ Because they aren't listed on Coinbase yet, that is obviously subject to change as time goes on

</comment></comment><comment><USER82> I am mystified as to why coinbase is not performing float or liquidity adjustments.

</comment><comment><USER83> Alternatively there is BITTWENTY (BTWNTY) which is a more diversified index.

</comment><comment><USER84> By having an index fund, are they saying crypto investing is safe now?

</comment><comment><USER85> Are index funds the new subprime mortgage packages?

<comment><USER86> Absolutely not. Cryptocurrency may be.

<comment><USER85> so how is the index fund not a looming disaster?

</comment></comment></comment><comment><USER87> it's not particularly diversified, it's basically just 70% btc/bch and 30% eth

</comment><comment><USER88> Currency isn't an investment.

</comment><comment><USER89> Accredited investors only. Sigh.

</comment><comment><USER90> I don't see the value here. I can simply buy it on Gdax weighted by market capitalization and save the 2% annual management fees.

<comment><USER91> You're not their target customer.

</comment></comment><comment><USER92> Does anyone really think this is a good idea when the crypto market is obviously being heavily manipulated? Specifically by Tether but by others as well.

The behavior during the last crash showed obvious pumping and fake buy walls, and was only halted when Tether started printing EURT en masse.

The whole thing is insane.

</comment><comment><USER93> the fact that this is the top post really seems to hammer home the fact that hacker news is often actually get rich quick news

</comment><comment><USER94> I wish that I could choose my own percentage weighting (rather than a market cap based weight) and have it rebalance to whatever that is. Seems like a good service for users who couldn't write it themselves.

</comment><comment><USER95> Mix it up with Vanguard and I ll move all my funds from Betterment to Coinbase.

<comment><USER37> What do you mean mix it up with vanguard?

<comment><USER96> 0.15% fee would make it sound more like Vanguard.</comment></comment></comment>


Nexus: An Operating System for Trustworthy Computing - <AUTHOR> http://www.cs.cornell.edu/People/egs/nexus/index.php

<comment><USER2> I prefer Richard Stallman's term: Treacherous Computing.

These academics, like many others, have sold their souls. Books on "trusted computing", "remote attestation", and similar freedom-destroying garbage have become disconcertingly plentiful at my university library.

We must fight it to the last bullet. Because once we lose the general-purpose computer, we aren't _ever_ getting it back:

 _"The "you don't own your computer" paradigm is not merely wrong. It is violently, disastrously wrong, and the consequences of this error are likely to be felt for generations to come, unless steps are taken to prevent it."_

Ethics for Programmers: Primum non Nocere (<http://glyf.livejournal.com/46589.html>)

 _"Who should your computer take its orders from? Most people think their computers should obey them, not obey someone else. With a plan they call "trusted computing", large media corporations (including the movie companies and record companies), together with computer companies such as Microsoft and Intel, are planning to make your computer obey them instead of you."_

Can You Trust Your Computer? (<http://www.gnu.org/philosophy/can-you- trust.html>)

Buy, maintain, and cherish true general-purpose computers, my friends, for I fear that within a decade, they will be contraband items.

<comment><USER3> Yeah, why is anybody posting about this garbage on HackerNews?

There are no startup opportunities for "trustworthy" computing, because there simply aren't any customers for "you do it the way we tell you, or else" products.

<comment><AUTHOR> HN is for hackers, not just entrepreneurs. As a hacker, my interest in the technical aspects of this project slightly outweighs my disdain for its evil nature.

<comment><USER4> Explain again how this is evil? If you can protect a computer from a virus, you can protect it from a DVD ripper.

<comment><USER2> > If you can protect a computer from a virus, you can protect it from a DVD > ripper.

The antivirus vendors, champions of "Enumerating Badness", (<http://tinyurl.com/8a2uk>) would like us to think so.

Yet it is pure nonsense. It is much the same as saying that if a house is safe against burglars, it must also be "safe" against the owner engaging in officially forbidden sex acts in the master bedroom.

<comment><USER4> Marcus Ranum also believes that closing holes in Linux is "enumerating badness", and counts as one of the "dumbest ideas in security".

Since you didn't make an argument that refered to any technical detail of the antivirus/antimalware problem on general purpose operating systems, I'm content simply to point out that your sources are both comical and non authoritative. Also: let me strongly encourage you to run your views on computer security past Ranum, and report back his response. Warn me first so I can get a get a cold glass of milk to blast out my nose when you do.

<comment><USER2> I have never heard of Ranum before. He was simply the top Google hit for the well-known phrase "enumerated badness." For all I know, he might also be, say, a Creationist. This is immaterial.

Please make an actual argument, as opposed to trumpeting my supposed ignorance of everything in general terms.

Does your front door lock work by checking a video feed against a database of known burglar mug shots and clicking shut in the event of a match, or by _staying locked_ sans a key?

Security through enumerated badness (as opposed to actual robustness, as in the above example) is Bad. The phrase has a meaning. If you believe that it means something other than what I believe it to mean, please say so.

So far, all of your arguments have been thinly veiled appeals to authority. Please take a moment to think of one which is not. I would like to believe that you have genuine thoughts, and would like to hear them.

<comment><AUTHOR> I don't think tptacek is defending the AV industry; I suspect he's advocating systems that are either inherently virus-resistant or use whitelisting, which is pretty much the opposite of what we usually call "antivirus".

If we ever want to escape from the current computer security morass, we're probably going to need something _like_ trusted computing, if not necessarily exactly what TCG is proposing.

<comment><USER2> > If we ever want to escape from the current computer security morass, we're > probably going to need something like trusted computing

Limiting malware to an officially approved subset is a curious definition of "escape." And any program which causes my computer to deliberately act against my orders is malware, whether it was created by a script kiddie or a multi- billion-dollar media cartel.

<comment><USER4> Nobody here disagrees with that. What's funny is that it's the current situation that allows companies like Sony to do that to your computer.

<comment><USER2> Let's posit that Sony (or another company) is in the consortium holding the TPM root key. They will then be able to install a truly undetectable and unremovable you-name-it.

You are quite correct in implying that a TPM would prevent a repetition of the Sony scandal. It would do this simply by preventing discovery.

Of course, it is also possible that Sony in particular would not be given access to the magic key. They may have to pay a steep tribute to, say, Microsoft, to slip the payload through.

Whether _currently sold_ TPM chipsets are capable of such feats is immaterial. The camel's nose is in the tent.

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER4> For the past couple years, Intel has had a different but related approach: they use a combination of a coprocessor (with its own OS and memory aperture) and hardware virtualization to run a TCB alongside Windows, from which you can run antivirus and attestation code.

</comment><comment><USER5> Nexus overload. I thought its the new mobile platform. and now its the new OS.

I thought chrome was just a browser and then now chrome is also a OS.

d'oh.</comment>