KIN - TRON of the West header image

KIN - TRON of the West?

More Users Than All Ethereum DApps Combined

On August 20, 2018 SludgeFeed published an article stating that “Kin (KIN)...has recently surpassed the daily active users of all the decentralized applications (DApps) on the Ethereum (ETH) blockchain.”

Huh? First, what is KIN? Second, how the f*&k did they pull that off?

Let’s head over to their website and take a look under the hood of this supposed goliath. If you go to https://kinecosystem.org/ you’ll see the timeline states that “Kik announces cryptocurrency as a first step to launching a decentralized ecosystem of digital services”. Ok - so they’re affiliated with Kik.

What is Kik? According to the website it’s a chat app created in 2009 so that you can chat with anyone - no matter the device you’re using. For those of you old enough to remember the Blackberry, back then you couldn’t chat with someone if they weren’t on the same platform as you.

They have focused on the teen age group and have raised over $120m from various investors including Union Square Ventures and Tencent (maker of WeChat). It’s important to note that WeChat is one of the world’s largest standalone mobile apps by month active users, and apparently a potential competitor to Visa, MasterCard, and American Express in the eyes of Charlie Munger.

What is Kin?

Kin is a solution to Kik’s mission of keeping user information private, and avoiding the use of display advertising. Kin is the currency that will foster a healthy user-first economy where Kik can be a market participant rather than a landlord.

Kik is known for their custom bots - in fact, they have over 187,000 bots created by third-party developers. To put that in perspective, Facebook Messenger has approximately 300,000 bots on it’s platform.

Why are bots important? What’s the significance?

The writing is on the wall. Society is moving towards a mobile first engagement platform like Facebook Messenger, Kik, WeChat, etc. Within these platforms we are seeing ecosystems created to facilitate transactions like monetary payments, purchasing of digital goods, themes/skins for customization, and a ton more. Bots are a popular use case and simply a metric for my broader argument here.

App Showcase October 2

The Kin EcoSystem Foundation has selected 40 projects from a total pool of 200 applications to showcase apps they have built for Kin. Provided with a SDK, these projects have been building their apps since for the past few months in anticipation of their virtual showcase on October 2, 2018.

Those that are able to successfully build their demo and present it that day will receive a combination of 50m KIN and $15,000. This first payout represents the beginning of a 6 month incentive program where teams can win up to 400m KIN and $60,000.

The apps submitted include everything from Social, Gaming, and Fitness to VPNs, Education, and Travel. One project that stuck out was WiCrypt. Here is the description provided by Kin’s blog post:

“WiCrypt is a new peer-to-peer internet sharing app that enables users to get rewarded for sharing their mobile data. Users will use Kin to purchase a connection to a WiCrypt hotspot. Hosts will earn Kin for providing others with an internet connection, and can receive bonuses for high ratings from those who have used their internet connection.”

For those that live in a city, a steady wi-fi connection may not be problematic but there are many who either live in rural areas or have only one service provider. As more and more of our daily lives integrates with internet based activities, the ability to hold a steady data stream is crucial. WiCrypt aims to solve this problem using Kin as it’s payment method.

TRON of the West

I know what you’re thinking - nobody knows who KIN is - the max coin supply is 10 TRILLION and TRON has way more visibility. These are all valid points but let’s take a look at TRON, then recap what we’ve learned about KIN - I think you’ll see the parallels.

Much like how KIN used the existing Kik platform with millions of existing users to launch their token, TRON partnered with PEIWO (founded by TRON’s Founder & CEO, Justin Sun) to jumpstart theirs. PEIWO is a teen & young adult entertainment platform with approximately 10 million users where you can use TRX (TRON’s token) to purchase digital goods.

TRON is funded by some heavy-hitters including Jihan Wu - the CEO of Bitmain and advised by Jack Ma - the founder of Alibaba.

When we look at the DApps available, they aren’t quite as robust as KIN, but they include categories such as Freelancers, Radio, and Kitties.

In conclusion, we have two decentralized ecosystems targeting the teen & young adult age group, funding from highly respected VC’s and market movers, and leveraging non-crypto platforms to onboard millions of users.

While TRON seems to be focusing on a more decentralized web in general, it is not crazy to see the similarities between the two. Right now KIN is priced at 1 satoshi. That is not a typo - KIN is literally 1 satoshi right now! The risk reward here is comical. Talk about buying at the bottom.

What do you think? Is KIN TRON of the West?


Stocks vs Cryptocurrency header image

Stocks vs Masternodes - Which Investment is Better?

We recently asked you to comment on how stocks and cryptocurrencies are different and/or similar. What follows below is a compilation of research based on your answers. There is a lot to cover - we recommend grabbing your favorite beverage, finding a comfortable space, and scrolling at your leisure. Cheers!

Recurring Income

Stocks: 3/5
Masternodes: 5/5

Stocks

Benjamin Graham, the father of value investing, once wrote “The real money in investing will have to be made - as most of it has been in the past - not out of buying and selling, but out of owning and holding securities, receiving interest and dividends, and benefiting from their long-term increase in value.” There are many ways to receive interest and dividends in the stock market. For a thorough explanation, check out this resource from Investopedia.

Masternodes

In the past year or so we have seen the masternode niche explode and for good reason. Much like rewards paid to miners, those that are willing to hold masternodes are rewarded as well, on a structured and predictable basis. It is worth noting that these rewards tend to decrease in value due to more investors buying masternodes. The rate of decrease/increase varies depending on the price of the token and the amount of masternodes on the network.

Income from Value Growth

Stocks: 2/5
Masternodes: 5/5

Stocks

When considering dividend or “income” stocks, one important factor to consider is by and large these stocks do not increase in value. Put another way, since the company is taking much of their profit and offering dividends, they are not reinvesting it into the company to expand. Ultimately you’re investing in a stable recurring income stream.

Masternodes

Masternodes are a great way to earn recurring income. If we swapped out a few words in the quote above it would sound like we were describing a masternode. While a dividend stock tends to grow at a slow rate, a masternode on the other hand can grow rapidly. If you do your due diligence, you can find a high-quality masternode that allows you to increase the value of your collateral while also providing a recurring income stream.

Sweat Equity

Stocks: 1/5
Masternodes: 2/5

Stocks

Sweat equity is often heard in conversations describing ones contribution in a startup, or an improvement on their real estate property. Essentially you put in the work now for free or below market rates hoping that it will pay off in the form of a buyout or a purchase later. This is common in small businesses where funding is low and they compensate labor with stock.

Masternodes

Investments are often seen as passive but don’t be fooled, you can do your part to help grow the project. When it comes to masternodes, you can supplement your typical Discord chats with creating a marketing campaign, or writing an article on your blog. You have the power to turn your passion for your investment into a vehicle that increases its value.

Accessibility / Availability

Stocks: 2/5
Masternodes: 2/5

Stocks

For many, investing in the stock market is a daunting task. What do I buy? Where do I buy it? Is it safe? These are common questions that deter most would-be investors. If you have been exposed to the market, many of these may seem elementary but the newcomer is absolutely turned off by the experience.

Masternodes

Like stocks, navigating the masternode space can be nebulous. For some of us it comes naturally because we have financial backgrounds or we’ve been here for more than a year, but think about those that have yet to enter the market. The same would-be investors in the stock market not only have to locate where to buy a masternode, they have to first understand that we’re redefining what it means to exchange value.

Security

Stocks: 4/5
Masternodes: 4/5

Stocks

While the United States is currently experiencing its longest Bull Market in history, many are preparing for the coming Bear Market. No one knows when the market will change sentiment but it’s prudent to start planning. Since the stock market is mature and tested, protecting your investment has nothing to do with the security of the funds themselves. The protection comes in the form of hedging your bets against a loss in value of the various investments you have made. Things like Put Options, Bonds, and Real Assets are a few. Diversification here is paramount to stable investment performance long term.

Masternodes

Masternodes differ in a few different ways in this regard. Since the cryptocurrency market is still new, investors have to worry about scammers AND loss in value of their investments constantly. Masternodes are also highly complex to setup and maintain if you’re unfamiliar with Linux, a VPS, and/or command line prompts. If you’re looking up what Linux is right now, you’ll want to check out this article on how to protect your VPS aka masternode investment. Services like GINcoin can help take care of all these worries in a few simple steps.

Flexibility

Stocks: 3/5
Masternodes: 2/5

Stocks

Over the past 20 years or so, globalization has reduced the ability to diversify investments and mitigate risk. While this correlation is becoming tighter and tighter, investment opportunities outside of your home country are abundant. Instead of investing in a broad index fund based on foreign equities, think about honing in on individual companies in the region.

Masternodes

The masternode niche has grown tremendously in the past year. With this growth comes both opportunity and challenges for the novice investor. Before GIN and other 1-Click Masternode Setup services were created, the majority of masternodes were held by those familiar with Linux, servers, VPS’s, etc. Now the barrier to entry is much smaller. Combine that lower barrier to entry with the Cold Staking option offered by projects such as Callisto and what you get is an opportunity to add flexibility to your recurring income stream in the crypto market.

Privacy

Stocks: 2/5
Masternodes: 3/5

Stocks

Data breaches have become what seems to be a very common occurrence these days. Whether it’s a telecom company, a credit rating service, or even a grocery store, these breaches expose customer’s personal information in ways that are irreversible. Many people have had their identities stolen because of the lack of best practices in data protection. One company has said after a breach that the information was not encrypted because there was no legal requirement to do so. It should be no surprise that when this sort of thing happens, the value of a share in that company drops quite a bit and they lose customers.

Masternodes

The use of the blockchain creates an interesting dynamic when we think about the security of our information. On the one hand the use of advanced cryptography and decentralization being used helps safeguard against hacks, but on the other hand information stored on the blockchain is there forever. It will be interesting to see how the blockchain space deals with regulations such as GDPR.

Interest Rates

Stocks: 3/5
Masternodes: 0/5

Stocks

Interest rates do not have a direct correlation to stocks, but there is a ripple effect. When interest rates are increased, it becomes more expensive to borrow money as a business, and as a consumer. If a company is unable to borrow money cheaply they will most likely not continue expansion of their company thereby slowing the share price growth. As a consumer, if credit is more expensive it will be less likely that big purchases will be made and overall growth of consumer demand will slow across the board.

Masternodes

Fortunately the crypto market does not have to deal with interest rates as it is completely independent from the traditional marketplace.

Scalable Growth

Stocks: 3/5
Masternodes: 4/5

Stocks

The goal for all investors is to grow our portfolios. But what happens when we grow our portfolio so big that it’s hard to buy/sell our favorite small cap stocks? Or what if we typically allocate 10% of our portfolio for each stock but now that our portfolio has grown 10x? Are we willing to allocate that same 10% for each stock? This is what it means when we think about scalability.

Masternodes

How do you scale a masternode? You can use the rewards from your first masternode to pay for the next one once you have saved up enough collateral or you can use your rewards to buy shares in a masternode. It turns out the use of compounding interest can grow your masternode pretty quickly. Check out this example here.

Diversification

Stocks: 2/5
Masternodes: 3/5

Stocks

While many of us have heard we should diversify our portfolio, how many actually do? And are we doing it properly? Ideally a diversified portfolio is one that has as many uncorrelated assets as possible. It should have a mixture of sectors, market cap sizes, and asset types. This mixture will also depend on your level of risk.

Masternodes

Diversification in the masternode space is similar to the stock market. You can still choose a variety of sectors (privacy, gambling, protocol, etc), market cap, and ROI. It would be wise not to pick all of the top ROI masternodes out there - chances are high that the ROI will decrease quickly in the short term as ROI chasers move from one masternode to the other. Due diligence here is really important.

Turnaround Time

Stocks: 2/5
Masternodes: 4/5

Stocks

The time it takes a company to change course and improve its failing operation. One of the larger and more recent examples is General Motors. A former giant in the auto industry found itself in bankruptcy in 2009. After a government bailout and reorganization, the company found itself back on top a few years later. Turnarounds can vary from a few months to a few years depending on the size of the company and the severity of the problem.

Masternodes

The duration between initial investment and profitability is typically much shorter for masternodes. Since masternodes offer rewards in predictable periods of time, we’re able to realize profitability (if it’s a good project) quicker than a traditional investment in the stock market. On the other hand, a bad investment in a masternode could turn out to be a much longer turnaround time as you may have to wait for the next bull market.

ROI

Stocks: 2/5
Masternodes: 4/5

Stocks

Return on Investment. The reason every investor is an investor. What can we expect to earn by putting money into the stock market? The average annual return in the S&P 500 is approximately 10%. Some years the returns are higher, some years they’re much lower. Holding long term can calm these ripples, while timing the market will sink your returns.

Masternodes

The beauty of masternodes is the average ROI and the passive income stream.Unlike the stock market, a 10% return is very much on the low end. If we look at the top 10 masternodes by market cap on masternodes.online, the average return is approximately 160%. Where else can you find an “average” return of 160%?

Concentration of Assets

Stocks: 2/5
Masternodes: 2/5

Stocks

We’ve all heard the saying: “don’t put all your eggs in one basket”. If you haven’t, now you have! Essentially we’re talking about the need to diversify. Putting most of your portfolio in the same sector, asset class, or market segment is not a wise move, even in something hot like crypto.

Masternodes

Much like the stock market, investing your entire portfolio or capital in the same project is very risky. Even if the masternode seems solid, if the worst case scenario happens, you have nothing. Instead of picking one project and going all in, try spreading it out across market caps and sectors.

Taxes, Fees, Insurance

Stocks: 1/5
Masternodes: 1/5

Stocks

Depending on how long you hold your shares and your tax bracket (based on income level), you will be taxed accordingly. Fees also vary from platform to platform. If you use a broker your fees will be higher than someone that uses a software like Wealthfront. Regarding insurance, you can’t buy a policy per se, but what you can do is utilize options, diversified assets, etc.

Masternodes

Taxes on your masternode investment will vary depending on the laws in your country, locality, tax bracket, etc. Just know that it will be wise to allocate some of your gains for the purpose of paying the tax man. Fees are applicable here too. There are fees when you buy the masternode’s token on an exchange, their are service charges for hosting your masternode on a platform, or perhaps the monthly fee for your VPS. Fortunately, these fees aren’t hidden. They’re available in plain sight.

Active Involvement

Stocks: 2/5
Masternodes: 2/5

Stocks

Active Involvement sounds like the proper way to outperform the market. But studies show that the majority of actively managed funds underperform typical market indexes like the S&P 500. However, if you’re investing in a particular sector, it may be wise to seek active involvement from an expert in that sector. Remember that investing in a particular sector can be very risky if not part of a broader portfolio.

Masternodes

Masternodes can be a very hands-off operation if you use a masternode setup service. In these scenarios you simply provide enough of the cryptocurrency to pay for their setup fee, hold your collateral in your wallet, and collect your rewards.

Liquidity

Stocks: 2/5
Masternodes: 3/5

Stocks

The stock market tends to be liquid given its maturity. Liquidity is simply the ability to buy/sell at the price you specify with relative ease. Now, not all stocks are liquid - some of them are very thinly traded and become very risky when you don’t have conviction in a long term hold.

Masternodes

The liquidity of the crypto space, including those in the masternode space specifically can be liquid, while some can be very illiquid. On larger exchanges you’ll typically find more opportunities with higher volume. Decentralized exchanges, while more secure than the more popular centralized exchanges, offers less liquidity at the moment due to technology challenges and less usage by most crypto investors.If you’re looking for less risk and ease of buying/selling, choose high-quality projects with high volume.

Scammers

Stocks: 1/5
Masternodes: 4/5

Stocks

From pump & dumps to prophetic gurus, the stock market has it all. While not as rampant as the crypto market, you’ll find all the usual scam tactics. The best defense against these sort of scammers is due diligence and common sense. If they tell you they have a secret formula for always profiting or they offer an exclusive group where you all get in early and then exit before the dump, GET OUT. In fact, don’t even start. You’ll be better off for it.

Masternodes

As luck would have it the masternode space and crypto space at large has all of the same problems as the stock market. I guess the apple doesn’t fall far from the tree? Like the stock market, you’ll find pump & dumps, overpriced trading courses, and exclusive trade groups. The best offense here is a good defense. Before signing up for a too good to be true group, or a polished trading course, make sure to research and ask around.

Liability

Stocks: 2/5
Masternodes: 3/5

Stocks

When you invest in a stock, your only concern is the amount of capital you have invested. You are not liable for anything the company is involved with from a debt standpoint. However, if you are investing using margin or leverage, then you may be put in a situation where you could lose more than you invested. In simple terms, if you invest $10 in Company X, your responsibility is the performance of Company X in relation to your investment. The company is responsible for their own operations.

Masternodes

Again, when you invest in a masternode your liability is only your investment. An investment in the project does not create a scenario where you need to concern yourself with the debt, milestones, and day to day operations of the token. With regard to a masternode specifically, you will want to keep an eye on any wallet updates, VPS uptime/downtime, ensuring you have proper funding for your VPS, and a wallet backup from time to time.

Required Capital

Stocks: 3/5
Masternodes: 2/5

Stocks

The term Required Capital is normally associated with federal requirements for lending institutions and entities like banks. In our scenario required capital is the minimum amount needed to complete your investment in the stock. Think of this as the share price. If Company X is on the stock market at $10, you will need at least $10 to purchase that share.

Masternodes

Similarly, the required capital for a masternode is the minimum amount required to purchase the masternode. This may be as little as a couple dollars for a new project or as expensive as $250,000 for something more established. The bottom line here is that risk and required capital tend to be correlated. The more a masternode costs, the more stable and proven it is. Keep in mind there are always exceptions but by and large this is the case.

Transaction Times

Stocks: 2/5
Masternodes: 1/5

Stocks

The act of buying a stock happens instantly, but the hours of operation are much more limited than a cryptocurrency (masternode) market. In a traditional stock market environment, you can trade a specific time frame. For the U.S., you can trade as early as 4am and as late as 8pm. When it comes to transferring fiat between accounts, that can and usually does take a matter of days. In this digital age that’s insane, right?

Masternodes

Masternodes in contrast tend to have much faster transaction times. Due to the Instant Send feature of masternodes, you can receive payment within a minute of it being sent. Not all cryptocurrencies in general have this quick of a payment channel, but that’s the beauty of masternodes!  

Transaction Limits

Stocks: 2/5
Masternodes: 1/5

Stocks

Even though the stock market has been around for quite some time now, there are still limitations placed on how much you may transact in a given day. For example, there are limitations in place that protect the investor from losing too much when trading options like calls and puts. There are also types of orders you can place as an investor that specifies a price that you’re willing to buy or sell the stock.

Masternodes

Masternodes however are a bit different. Any limitations on transactions come by way of technology limitations and/or third party limitations via an exchange. You may come to find that the particular token you’re trading can only handle 10 transactions per second and so you’re ability to send someone a few tokens may take 30 mins to 2 hours to complete. Regarding exchanges, the amount you’re willing to deposit or withdraw depends on the exchange’s jurisdiction (country of residence). Some require KYC and some don’t. In the future we’ll probably see more KYC requirements.

Value Fluctuation

Stocks: 3/5
Masternodes: 5/5

Stocks

Volatility is not something we typically associate with the traditional stock market. Anyone who has spent time trading in any market knows that there is always volatility to be found - although it may not be as prevalent as the crypto markets. If you’re looking for volatility, you can find it in the small cap stocks like bio-pharma or cannabis for example.

Masternodes

Masternodes and the crypto space at large is notorious for volatility. It’s the poster child for volatility! As the market matures and investors with deeper pockets invest in this market, the volatility will subside and we’ll see much calmer waters. In the meantime, learn to remain patient and wise in your investment choices. Not everyone can swim in the chop.

Complexity

Stocks: 3/5
Masternodes: 5/5

Stocks

To many, even today, the stock market is confusing. Most investors rely on someone else to handle their investments, or at the very least help them through the process. It seems the market is constructed in such a way that it deters non-professionals from entering.

Masternodes

If the traditional stock market is daunting, imagine how the masternode space must feel!

Not only are we entering an atmosphere that is highly technical and risky, we’re attempting to redefine what money is and what value transfer looks like. This is a treacherous space indeed for the uninitiated. Remember to always do your due diligence. You will always have your own best interests at heart.


Plan Your Investments header image

How to Plan Your Investments Like a Crypto Millionaire

Intro

What should I invest in? Is now the right time to jump in? I see these questions asked inside Facebook trading groups, Discord channels, and crypto subreddits all day, everyday.

The answers I see most are based on the potential ROI (Return on Investment) or some grandiose vision painted by the token’s website. Investing in something with a high ROI or a project that sounds like a literal moonshot isn’t inherently wrong. The problem is that most people don’t use any other piece of information.

In my experience, the more data points you can obtain on a prospective investment, the better the outcome will be. The following will expand on this thesis and help you frame your decision in a much more structured way.

What Are Your Goals?

This question seems simple, right? The goal is to make a lot of money trading crypto! While this is true, it’s not clear enough to help steer your decision making moving forward.

I want to begin my explanation by looking at this from a non-crypto perspective. Let’s pretend your goal is to eat dinner. How many data points do you use when deciding on dinner? What time will you eat? Are you going to cook or are you going to have it delivered? Are there any dietary restrictions? How much will it cost? What type of cuisine? How many people are eating?

As you can see, the questions pile up quickly and this is just one meal! Are you asking this many questions when investing your hard-earned money? If you’re chasing ROI, that’s one data point. In the example above choosing one data point looks like this:

What time will you eat? Let’s say 7pm. Now what? That answer represents about 10% of what you need to know. By asking better questions, you can get better answers.

Asking better questions can be challenging at first but over time you will become better at it, much like anything else in life. Regarding investments, my first question is always “what is the goal?” or put another way, “is this something long term or short term”?

How does one decide what their goal is? Well, that’s not for me to decide - each person has their own goals, dreams, hopes, and ambitions. What I can offer is a very effective way to outline what your goal is and the exact amounts you need to realize them.

Check out this article from Tim Ferriss. By actually sitting down and visualizing what you want, you’re that much closer to realizing that vision. Unfortunately, this practice is very rare - especially among young investors.

Robert Herjavec from Shark Tank says it best:

“A goal without a timeline is just a dream”.

Short Term

A short term goal can mean something different to everyone. For our purposes let’s call short term less than one year. The majority of those in the crypto market fall into this category and will want to either day trade or swing trade.

Very few have the patience to hodl something more than a few days, but in my experience having that patience is the key and an advantage against the rest of the market participants. We’ll discuss advantages later in this article.

Day Trading

For those of you that have a high risk tolerance, enjoy getting rekt, and want a quick flip, this is for you. I personally started trading traditional securities (stock market) in this way. Some days I did well, but most days I lost. I’m not here to deter you from following this path, but I want to make sure you understand how risky it is if you don’t know what you’re doing.

Still interested? Here are a few resources to get you started:

Swing Trading

This is my personal favorite. It gives me the ability to buy something one day and then sell it a few days, weeks, or months later. Unlike Day Trading, Swing Trading helps bypass much of the daily volatility. It is sort of a “set it and forget it” method.

Essentially we’re talking about making 100% profit per month (Swing Trading in a bull market) compared to a stressful 30% profit per month (Day Trading in a bull market). I realize it’s foolish to give blanket statements like this but I do it to illustrate a point.

If you want to make one trade per week for a 20% gain you can choose Swing Trading. If you would rather make one or more trades per day for 1-5% you can choose Day Trading. Keep in mind, approximately 90% of Day Traders lose money.

We wrote about a Swing Trading technique based on catalysts titled The Two Week Portfolio - How to Invest Like a Crypto Millionaire. Since we have that article already written, I won’t repeat the details of the process here but I will list some helpful resources to get you started below:

Long Term

While rare in crypto outside of hedge funds, this is for those that are patient, focused on market caps, and macro trends.

There are many different ways to decide on what to invest in long term. Namely, you could invest in all the projects that are related to privacy coins (Monero, Verge, etc), you could invest in the top 10 by market cap, or you could invest in the top coin by market cap in each sector.

It goes without saying that you’ll need a plan or goal to decide on what to invest in, just like the other strategies we’ve outlined. See a pattern? If you want to invest in the crypto space for broad exposure, you would invest in the top project by market cap for each sector or maybe even a couple in each sector. Or, if you’re looking for a long term but high growth portfolio, you could take a stab at hand picking various projects throughout the crypto space or you could pick one sector like privacy coins.

Below are a few resources to help you get started:

Do the Market Conditions Match Your Goal?

There is a saying that I picked up back in my penny stock day trading life and it sums up what this section is all about: “the trend is your friend”. All the planning and preparation in the world means NOTHING if the market isn’t being friendly.

Think about this: you wake up and check coinmarketcap.com to see how everything looks. As you scroll down the page you notice that everything is red, EVERYTHING.

Now, unless you’re investing long term (about a year or longer), do you think day trading is going to be effective? Even if it’s for 1%, chances are you’ll lose that day.

Swing Trading is a bit different here because it is more than a one day hold. But, if the market has been red for multiple weeks back to back, it would be wise to look at the charts and decide whether or not the trend is bullish or bearish.

So, what do you do when the market is red for an extended period of time? You could hodl long term, you could learn a new skill, build a company, research investments that will be good trades once the market is bullish again, and/or get yourself a passive income machine like a masternode.

What is Your Advantage?

The market is competitive - this isn’t a surprise. Do you have an advantage? What gives you the edge over the competition? There are a few advantages a trader can have and some of them are knowledge, speed, and/or patience.

Knowledge

We have access to much of the same information, but not everyone uses it, nor do they know where to look for it. Even if you have the right information and no one else does, do you know how to use it?

The market may be bullish, and you have goals in place, but do you have the right knowledge to take advantage of the conditions? What I mean by knowledge is do you know where to put your money, when to buy, and when to sell?

Speed

This advantage relates to day traders specifically. Since day traders rely on quick moves (how fast they can pull the trigger), the speed of your internet connection actually matters. Do you have lightning fast internet? If not, it would be wise to avoid buying and selling minute by minute. Rather, use more of the 24hr period to your advantage and time the move as best as possible.

Patience

The majority of those in the market are not patient. They want to moon today! When lambo? Since this is a reality, anyone that has patience can deploy this as a huge advantage. The use of patience is very effective when we consider the swing trading strategy.

Many traders try to jump into a coin that’s mooning, riding the wave to the top. The problem with that strategy is it could plummet at any moment. There is very little support when something spikes 50% within a few hours. Alternatively, imagine you know about that coin before everyone else and you jump in a week or two before the event. You ride the “slow” wave up until the day of the event and get out before it spikes. Sounds boring, right? It’s not quite as adrenaline pumping as the day trade but it does typically provide bigger returns than the spike. Seriously.

Summary

We have covered a lot of material here on goals, strategies, and advantages. And there is a lot more that could be said for each of them beyond what’s written above. The focus of this piece is not to provide every answer and give you an exact playbook. There is no way I could help everyone from this content alone because everyone has their own unique goals and circumstances.

What I do want to accomplish with this article is helping those that may not be familiar with investing or those that want an alternative perspective on investing as it relates to crypto. I have been investing in one form or another for over 10 years and have made a ton of mistakes because I didn’t have a proper education on how to do it.

Hopefully this brief framework can help you gain a more focused approach. As you consider these various strategies, think about what your goals are and how these strategies may help you achieve them. As always thank you for your reading and I appreciate any comments/suggestions you may have.


War Field header image

War Field (GLDR) - A First Person Shooter That Pays to Play

Good news for the online gaming community! For the first time ever, gamers can make real money just for playing a video game — real cryptocurrency, that is, with the GOLDER (GLDR) token. With War Field, the stakes are real and so are the rewards.

WHAT IS WAR FIELD?

WAR FIELD is the first online multiplayer, first-person shooter video games you play to win real cryptocurrency (GLDR). “First-person shooter” means that you see everything from a first-person view as though you are the character who is playing in the gaming experience. Powered by the Ethereum blockchain, WAR FIELD enables players to win actual cryptocurrency in a zero-sum, winner takes all dynamic. They need to have the skill to outperform other gamers actively playing against them online.

Having something real to win or lose raises the stakes, the intensity, and the adrenaline. This can make gaming even more addictive than it already is, but it also turns this time-consuming and often costly hobby into a potentially productive pastime since winners can earn additional income.

It is possible that the WAR FIELD team will expand to other genres of the gaming industry. For now, however, Founder and CEO of WAR FIELD Andrius Mironovskis says that they are beginning with a shooter “because these games command the largest market share in the industry.” This seems to have been a smart move given that WAR FIELD’s global video-gaming market cap already surpassed $116 billion in 2017, seeing annual growth of 10-12 percent.

The game’s ALPHA version is available right now. During the trial period, every new player can try WAR FIELD for free.

HOW IT WORKS

WAR FIELD gives people the chance to win GLDR, an ERC20 tradable cryptocurrency. To get started, players must get GLDR, which is easy to do at the beginning, especially right now during the Token Sale Event (TSE), with significant discounts being offered up to 60%. As the sale progresses, the discount rate will decrease. The goal is to make 100 GOLDER worth no less than $1 by the end of the sale. After the TSE, GLDR will be available for trading on cryptocurrency exchanges.

Every new player automatically gets 100 free GLDR to get them started during the trial period, and there are many other ways to get free GLDR — outlined on WAR FIELD’s FAQ page. Once players have their GLDR tokens, they must then stake a part of their tokens on their character’s “life.” If they lose, the player who “kills” or “injures” them will receive the player’s tokens.

All new players begin WAR FIELD with a knife and a pistol; they have the option to purchase more equipment on their own. Every game is played on Battlegrounds (an in-game space within which WAR FIELD combat takes place). There is only one battleground map available–a bulk carrier–for the time being. The first WAR FIELD Battleground is the Freighter MS Vanguard. Additional battlegrounds will be added as the TSE progresses, including an Amusement Park, Area 51, Pleasure Island, and others – each a unique environment with its unique challenges.

WAR FIELD is a browser gaming experience and has its own platform. This means that the game can be played on the most recent version of a Google Chrome or Firefox browser. WAR FIELD is currently in alpha and is fully functional, offering all its features to its players. It is already available on PCs and Macs, and it’s planned to be made available on the Xbox, PlayStation, and on mobile at some point in 2019.

According to WAR FIELD’s website, no installation is necessary for the online version for desktop PCs (available June 21). The minimum requirements are:

  • Intel i3 or higher processor running at least 2.3 GHz
  • 4GB of RAM
  • 100 MB of free disk space
  • At least Intel(R) HD Graphics 530 video card
  • Chrome or Firefox (runs slightly faster) browser updated to the newest version

To become multi-platform, WAR FIELD makes use of the Unity game engine. Versions for mobile devices and gaming consoles are coming soon.

GOLDER (GLDR): THE DETAILS 

GOLDER (GLDR) is the cryptocurrency of WAR FIELD. It is an Ethereum-based ERC20 utility token that is also an in-game digital currency. This means it can be used to stake and purchase digital goods for use within the game. GLDR is available for purchase on WARFIELD.com at hugely discounted rates during the WAR FIELD TSE, which began on June 28th and is expected to run until November 15th of this year. During the time of this TSE, GLDR are available on WARFIELD.com only. The WAR FIELD team warn not to accept any offers from any other sources until the TSE has ended. After the TSE, GLDR become fully tradable and can be bought, sold, and transferred because it is also an ERC20 cryptographic token. You can buy GLDR for BTC, LTC, ETH, or fiat.

The WAR FIELD team expects that GLDR will have a market value exceeding the prices for which it is being offered during the TSE. The quantity of GLDR will be limited and fixed forever at the end of the TSE. As the WAR FIELD website explains, the GLDR token’s scarcity and utility should ensure an increase in its value — along with the growing popularity of WAR FIELD and other games that use GLDR. The team hopes that 100 GLDR will be worth the value of at least one US dollar by the end of the TSE and that its value will continue to grow thereafter.

HOW WAR FIELD USES BLOCKCHAIN TECHNOLOGY 

The main concept of WAR FIELD is to leverage the blockchain to drive the in-game economy using their GOLDER(GLDR) tokens that are based on the Ethereum blockchain.

The WAR FIELD economy is based in the GLDR token, which is powered by the Ethereum blockchain. As the utility token of the platform, it can be used for purchases useful items in the game, including weapons, medical kits, apparel, armor, and so on, from the WAR FIELD Marketplace. Tokens can also be used to purchase entry for in-game events such as tournaments. Tokens can be exchanged with other token holders as long as they own an ERC20-compliant wallet.

All the players begin with a set amount of GLDR tokens and can win more based on their performance. For example, if they kill or injure opponents they gain tokens; if they get hit, then they lose tokens, which are transferred to the player who injured them.

All of the in-game transactions are recorded in the game’s internal gaming community blockchain, which does not require mining and makes transactions cost almost zero. Because every game is recorded and monitored, cheating will not be tolerated. Any player who attempts to cheat will lose their GLDR and be banned.

IMPLICATIONS FOR BLOCKCHAIN

One of the most significant benefits of blockchain is its potential to return control and ownership to people. Mironovskis sees this same opportunity for members of the massive gamer community:

“Our goal is no less than to create a global blockchain-driven gaming economy that lets video gamers fully monetize their skills,” he stated.

Incorporating cryptocurrency into massively popular industries and businesses such as video games is another step toward mass adoption of cryptocurrencies in the global marketplace. The WAR FIELD team expect their shooting game to help shape the economy of a blockchain-driven industry.

 

This article originally appeared on mintdice.com


Ross Ulbricht Cover Image

Who is Ross Ulbricht? | A Journey into the Dark Net and Cryptocurrency

Ross Ulbricht is a former dark net operator who is currently in prison for life after creating and administering the Silk Roadan online marketplace where over a billion dollars worth of illegal goods/services were exchanged. 

Transactions on Silk Road were completed using Bitcoin for the sake of anonymity. For that reason, Ulbricht is credited with developing one of the first and largest platforms that used cryptocurrency as a medium of exchange. The Silk Road was a pioneering project that took advantage of the fundamental decentralized properties of Bitcoin. 

Silk Road Marketplace

Ulbricht’s Motivation to Create Silk Road

The Silk Road was a product of Ulbricht’s desire to make a successful startup coupled with his libertarian political views. Ross wanted to build a truly free market that was outside the reach of government entities. On his LinkedIn profile, Ulbricht wrote “I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force,” claiming this description to be for an online multiplayer role-playing game.

Prior to the Silk Road scandal, Ulbricht had no history of criminal activity. He was a college graduate with a Bachelor’s degree in Physics from UT and a Master’s in Materials Science/Engineering from Penn State. 

A couple of years after graduating, Ulbricht found himself uninspired with traditional employment and wanted to become an entrepreneur. It’s worth noting that Ross also had a growing interest in libertarian economic theories during those years as well. After limited business success from his existing ventures, Ross began working on his online superstore in 2010 as a side project.

By 2011 the Silk Road was a fully functional platform where users could buy/sell goods and services both legal and illegal, but mostly illegal. A user entering the Silk Road site could expect to immediately see listings for illegals such as drugs or counterfeit money.

Silk Road Products

Ross was even accused of later hiring a hitman from the site to eliminate a threat posed to the platform’s anonymity. Although this allegation was never part of Ulbricht’s full indictment, the transcript between Dread Pirates and the contracted killer can be a pretty convincing piece of evidence.

The Silk Road did, in fact, have some rules. The site would not allow for the exchange of anything that had the purpose of “harming or defrauding.” This meant that criminal activity like child pornography or the use of stolen credit cards was prohibited. Hiring a hitman, if it did occur, must have been an administrative privilege. 

How Did Silk Road Operate?

The Silk Road ran for 4 years and hosted the exchange of over $1.2billion worth of illegal goods/services before getting shut down in 2015. Ulbricht ran the site from San Francisco, California under the pseudonym“Dread Pirate Roberts”. 

The Dread Pirate was able to keep himself and the site’s users disguised by running the site on Tor browser; an underground virtual network. Tor Browser keeps IP addresses anonymous by bouncing internet traffic among many web servers around the world, making it very difficult to pinpoint any one source. 

Tor Browser anonymous

Furthermore, transactions on Silk Road were kept anonymous with Bitcoin. Hashing algorithms and the lack of a central entity allowed for transactions to be anonymous and virtually untraceable. 

The Empire Falls

Ulbricht had a concrete understanding of the tools needed to host a completely anonymous marketplace. The slip-up that led to his imprisonment, however, was rather anticlimactic. Ulbricht posted about his need for an IT professional on a web forum using his real email address.

Ross Ulbricht email Silk Road Scandal

The FBI arrested Ulbricht in October of 2013. On May 29, 2015 Ulbricht was sentenced to life in prison without parole after being convicted of drug trafficking, computer hacking, and money laundering in 2014. 

Silk Road Trial Ulbricht

Ross attempted to appeal in May of 2017 but the court upheld their original verdict. 

Silk Road Scandal Implications on cryptocurrency

Ross Ulbricht created one of the earliest and largest platforms that used cryptocurrency as its medium of exchange. The Silk Road is often regarded as a defining event in cryptocurrency history for being an early implementation of the politics embedded in crypto. 

The Silk Road Scandal has had both positive and negative effects on cryptocurrency adoption. On the plus side, the Silk Road showcased the security and high-availability of the Bitcoin network. Transactions taking place on the site were being processed anonymously 24/7 for 4 years until the site shut down. Negatively, however, the platform cast a shadow on cryptocurrency by exploiting the potential criminal aspects of Bitcoin’s anonymity. Paying for illegal items was carried out very effectively with Bitcoin. 

A less talked-about impact was Silk Road loading up the site’s users with Bitcoins during a time when cryptocurrency was barely on the radar. Bitcoin’s price fluctuated from $100 – $600 during most of the time that the site was active. Just a couple years later, though, the price 30x’ed. Some likely wrongdoers may have cashed out handsomely.

Ulbricht Today

Today Ross is in a high-security federal prison for male inmates in Colorado: USP Florence High

His indictment, though, has been somewhat controversial. Some believe that Ulbricht’s punishment was excessive for the crimes that he was actually charged with, all of which were non-violent. Unbendingly, Judge Katherine Forrest said she would give Ross “the severest sentence possible,” restrained by law from issuing the death penalty.

Ross Ulbricht Prison

The argument of a harsh sentencing was brought up during Ross’s several appeals, but none have had any success. Some people also just sympathized with Ross for the determined and non-violent character he was known to have. Hundreds of letters were submitted to the court on his behalf in an attempt to convince the judge to lessen Ross’s punishment, but the verdict was still double life without parole + 40 years.

His family has been keeping a webpage to garner support for Ross’s case by asking the community to sign a petition in support of his appeal process. 

 

This article was originally published on coincentral.com


LUX Coin logo

What is LUX Coin?

Overview

According to the LUXCORE Whitepaper, “LUXCORE’s open-source blockchain includes the groundbreaking,energy-efficient, ASIC resistant algorithm PHI1612; the tradeable commodity, Lux Coin; Masternodes that act as a network security and rewarding system; Smart Contracts; and SegWit for improved transaction size and malleability".

Unlike many other blockchain solutions, LUXCORE is aiming to help Governments, Big Business, and anyone else incorporate various levels of features and security into their IT stack. Many blockchain solutions take an US vs them approach but LUXCORE wants to foster a more collaborative environment.

Unique Features

PHI1612
LUX Coin is the first coin to introduce the PHI1612 Hybrid algorithm. The blockchain resource Coin Guides states that the algorithm “is a hybrid Proof-of-Work and Proof-of-Stake algorithm build using a combination of 6 different crypto hashing algorithms. The algorithms that make up PHI1612 are: Skein, JH, Cubehash, Fungue, Gost and Echo”.

Parallel Masternodes
Based on i2pd Technology and SAM Protocol, parallel masternodes are available only to verified and vetted business and government institutions. As the whitepaper states, “Any function, wallet, or transaction on the Parallel Masternode will be encrypted with the ip addresses auto-changed. These wallets and transactions are invisible to prying eyes to meet institutional security prerequisites”.

A New CEO

Announced today, John McAfee has accepted the role of CEO. In April of 2018 McAfee joined the LUX coin project as an advisor. Now that the latest version (Mercury v5.2.1) has been released, the focus is now on the business side of things. McAfee brings business expertise and a large cult-like following to any project he touches.

The price spiked briefly for a 20-30% gain and has held a 10% gain since then. The current bear market has almost certainly put a cap on what would have been a 50-100% gain on the news.

Summary

The LUXCORE blockchain is a highly ambitious project with many firsts in the blockchain space. McAfee believes that the first truly decentralized exchange will come from this project. Whether or not you’re a fan of the man, I think we can all agree that we need more privacy, and more decentralization. Time will tell if they can pull it off but I for one will be cheering them on.


Particl (PART) - A Surprise Announcement Tomorrow

Event: “first-time-in-crypto” feature

Date: August 7, 2018

Source: https://twitter.com/ParticlProject/status/1026132129430884353

Details
Since this is a surprise, all we have is speculation and rumor to go on. Their Discord server offered a few guesses including “printing out particl wallets with balances”, “multi-wallet support”, and a possible partnership with SpaceX for a trip to Mars.

About Particl
According to their website:Particl is an open-source and decentralized privacy platform built on the blockchain specifically designed to work with any cryptocurrency. It allows decentralized applications (Dapps) of all sorts to be built within a secure, highly-scalable environment and be integrated directly into Particl’s flagship wallet: Particl Desktop.”

Exchanges (Top 3 in 24hr Volume)
Bittrex (US Friendly)
Upbit
LiteBit.eu

Market Sentiment
The community is large, active, and engaged. In the past 24 hours, the price is up about 5% and I expect it to rise much more than that as we approach tomorrow’s announcement. This will most likely be a “buy the rumor, sell the news” situation so if you’re looking at this for a short-term flip, set your sell orders because unless this is an actual partnership with SpaceX, we’ll see the price come back down after the announcement.

Social
Twitter
Reddit
Github
BitcoinTalk
YouTube
Slack
Riot
Telegram
Discord

Wallets
Particl offers a variety of wallets including Desktop, Core QT, cli, and Copay available here.

Summary
While this is a short term snapshot of Particl, the project itself looks strong long term. DPRating, which is the “Moody’s” of the digital currency sector, recently ranked them above Ethereum for their Github activity in June. For those of you interested in privacy coins and a decentralized marketplace, check this project out.

As always, this is just my opinion. Please do your own research. I am not a financial advisor.


FAWS - More Than a Cryptocurrency News Aggregator

A quick Google search of “Cryptocurrency News Aggregator” returns more than a few results. Like cryptocurrencies, news aggregators are popping up every day. So how should you decide which one to use? I took a look at the top 10 results from the Google search and found that faws.com was my favorite. Read below to see why.

News

As a “news aggregator” website, it is absolutely imperative that you get the “news” page right. What I mean is the core product needs to be stellar. The news sources need to be diverse and the layout needs to be easy to read.

What I really like about the FAWS approach is the option to use either the light or dark mode, the ability to customize which specific news sources to use in the feed, AND the ability to switch between Compact, Magazine, and Article layouts. For a UI critic like myself, this sold me.

Coins

As you can see in the screenshot above, you’re given all the usual metrics: Ticker, Name, Price, % Change, Market Cap, and Volume. The price is based on an average of the values from CoinMarketCap, Bitstamp, Gemini, Bittrex, Bitfinex, Poloniex, and Cryptopia.

While the default view is List All, you can organize coins based on your favorites, watchlist, and/or portfolio(s). For those of you that enjoy ticker streams, you will be happy to know that there’s one of those too located at the bottom of the window.

Portfolios

Other than my current position in DBC, the portfolio features here are much like others out there. It offers P/L (Profit/Loss) in %, USD, and BTC.

When comparing this particular screen to others out there, I noticed a big difference in the way the UI was designed. FAWS has taken a much more elegant and stepped approach to adding a new coin to your portfolio. It walks you through each step in a guided way vs a generic form that pops up. I personally find this easier on the eyes and easier to fill out.

Alerts

Whether you’re a day trader, or someone that can’t stop watching the charts, this will come in handy. First, you choose your coin, then you decide the parameters based on $, %, or BTC value.

Once you pick your desired alerts, you can change your alert preferences. For example, you can receive web notifications, a sound, and/or a text message. If you’re really crazy you can check all three! I don’t recommend that unless you want a heart attack.

Sources

As you can see from the screenshot there are a lot of options here. Keep in mind this is about half of them since the image is cropped. How does one choose where they get their news? Well that’s up to you! I would recommend at least 5 sources to keep things balanced.

It also depends on what news you want to receive. If you’re interested in macro events like how Bitcoin is being accepted in the broader global market, I would choose something like Business Insider + CoinDesk + Forbes + Zacks. There are a ton of ways to mix & match here but the important thing is that you understand each news source will have a bias and content type.

Summary

At the end of the day, the news aggregator you pick will depend on what features you need/want beyond just news. Many of them have a lot of the same features and news sources, so you’ll need to decide what else you want that the others don’t have.

Some of the various extras include widgets, comparison tools, predictions, and price converters to name a few. Much like the decisions you’ll need to make when choosing your news sources, the extras that are important to you depend on where you fit in the crypto market.

For any questions or comments leave them below or give us a shout in discord!


DeepBrain Chain graphic

DeepBrain Chain - What to Watch

Event: Launch of AI Training Net for DeepBrain Chain
Date: August 8, 2018
Source: https://twitter.com/masi2521/status/1017484908795695104

Importance
The release of the training net is one of the biggest milestones for DeepBrain Chain thus far and will signify whether there is a real world demand for the DeepBrain Chain platform.

Exchanges (Top 3 in 24hr Volume)
Huobi
Gate.io
Kucoin (US Friendly)

About DBC
DeepBrain Chain is the world’s first AI computing platform driven by blockchain. It uses blockchain technology to help AI companies save up to 70% of computing costs while protecting data privacy in AI training. Its vision is to build a ‘’Decentralized AI Cloud Computing Platform’’ and become ‘’The AWS in AI’’.

Market Sentiment
The community is large and optimistic. DBC’s willingness to listen to community feedback has been noted by many. There is a true belief that the price will recover to the ATH, and DBC will be a big player in the AI space.

Social
Twitter
Reddit
Telegram
Medium

Wallets
Desktop
Mobile
Web

Summary
As far as the blockchain community is concerned, there are two competitors in the AI sector: Golem and DeepBrain Chain. Golem is built on the Ethereum blockchain with a first mover advantage, while DBC is built on the NEO blockchain and will soon be going live.

The next week or so will be very interesting to watch. If you have any questions or comments, leave them below or say hello in our discord!


Bitcoin header graphic

What is Bitcoin: Part 2

The following is Part 2 of a collaboration with GINcoin. To read Part I, click here.

Introduction

When you hear the word Bitcoin, chances are you have one of two thoughts: “it’s a bubble” or “when moon?”. There is no doubt that Bitcoin and the broader cryptocurrency market has seen both sides play out. There are many that have become millionaires and even billionaires from investing early, and there are those that won’t touch it, even with someone else’s money!

In Part 1 of “What is Bitcoin” we examined what money is, where it came from, and how we ended up at Bitcoin. Now it’s time to play Devil’s Advocate and look at the current challenges facing a blockchain-based currency.

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Price Volatility

Everyone knows Bitcoin is volatile, and if you don’t, you’ve never heard of Bitcoin. But why is it so volatile? The answer to that depends on your perspective.

The Bubble is Bursting

Most traditional investment guys will first and foremost label crypto (especially Bitcoin) as a bubble. Whether or not this is true depends on the author’s definition or intent of that label. The word “bubble” typically gets associated with Tulip Mania or the Dot Com era where prices rose to astronomical heights, then came crashing down. If you look at the Bitcoin chart for the past year, it indeed looks like the standard “bubble” chart.

Before you assume the critics are right, scale out a bit beyond the one year chart and you’ll notice that the HUGE bubble of 2013-2014 is barely noticeable compared to the run-up of the past year. This is noteworthy because volatility is relative. If you’re investing in a speculative and premature market, it’s important to balance your expectations. Short term investment in almost ANYTHING is going to be volatile.

Fundamentals

A common argument is that Bitcoin and any other cryptocurrency doesn’t have a fundamental basis for its price - it’s pure speculation. This isn’t totally wrong, and much of the market is uneducated retail investors hoping their cash advance is going to moon overnight. However, let’s not forget that the hashrate/hashpower of the Bitcoin blockchain has increased exponentially, even in this current bear market. What does this mean? More people are using their processing power to mine Bitcoin. Real work is being done on the blockchain, and when more work is being done, the perceived value of that blockchain increases. Unlike fiat currency, the creation of Bitcoin requires thousands of dollars of real work (processing power). While it’s not totally inaccurate to say that cryptocurrencies are based on speculation, it is only a half-truth.

Manipulation

Next on our list is market manipulation. Yes, there is market manipulation! ANY market can be manipulated. You may have heard the term “whale” before in various Telegram channels or Reddit threads. These market movers are present in both traditional and crypto-based markets. Simply put, those with more money and market knowledge can fool those in a low volume environment using a relatively large buy order to suggest there is more demand than there is. These spikes are often referred to as “pump & dumps”. One would be wise to think twice before investing hard earned money into a low volume token simply based on hope that it will spike.

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Institutional Investment

In the past 9 or so years that the cryptocurrency market has existed, one investor type has been missing: the institutional investor. For those unfamiliar with the term, an institutional investor is “someone” with very deep pockets. Investment banks like Goldman Sachs would be an example of an institutional investor. A common characteristic of institutional investment is a long term hold. In contrast, the retail investor (you and I) is typically a short-term investor. We want to jump in and out, time the market, etc. These are habits the institutional investor doesn’t have. They are willing to hold for YEARS. Why? Because they’re smart! They know that it is very difficult to time the market and the key to growing your investment is patience.

Many institutional investors are sitting on the sidelines until further regulation is put into place. You may have noticed more and more exchanges are asking for AML/KYC information (Anti Money Laundering/Know Your Customer). These are the stepping stones that will forge a trusted path for a much larger pool of investors. While many early adopters of crypto are cringing at the thought of further regulation, this is a necessary step if Bitcoin and other blockchain-based services are to flourish.

Store of Value

We learned in Part 1 that money should be a storage of value. If we were to own $1 today, we would expect it to have the same purchasing power in 10 years. Bitcoin is often called Gold 2.0, as many believe that Bitcoin will be a store of value much like gold is today. Unfortunately Bitcoin in its present state is very volatile and doesn’t exactly fit the definition of a store of value when the price can fluctuate 10% in a single day.

However, if you’re living in Venezuela where inflation has climbed over 40,000% this year you may be okay with the 10% daily price fluctuation of Bitcoin. On a much more conservative note, the U.S. Dollar has lost much of its buying power in the past 100 years. For example, $1 in 1918 has the same buying power as $16.66 today - while it’s not 40,000%, it’s an issue that is growing by the day.


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Inability to Lend

As the market matures, we are seeing more familiar services typically associated with traditional monies. One such service is lending - the ability to get a loan from a bank and then pay it back with interest in a predefined period of time.

Although these services do exist using the blockchain, they require AML/KYC information. What is still lacking is the ability to enforce the terms of a loan using a service that is anonymous, as many early adopters would like to remain private. At the moment it is very difficult to create a lending platform where the user can remain anonymous while also complying with the lender’s requirements. How comfortable would you feel lending money to someone you have never met, and you have no way of identifying them?

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Hard Caps Make Inflation Impossible

One of the most intriguing features of cryptocurrencies is the hard cap on total supply. This is a totally new concept when we think of money. Most of us are used to things like inflation, interest rates, and printing more money. But what happens when these elements are replaced by a limited supply?

First, let’s make sure we understand the importance of inflation in our current modern marketplace. Simply put, inflation is the rising cost of goods and services. An apple may cost $1 today, but in a few years, it will probably cost $1.50. This increase in cost is seen as good as long as it doesn’t happen too quickly because it incentivizes spending. If we know that these items are going to become more expensive, we will want to purchase them sooner than later - otherwise, we would wait around for a better price. If we wait around for a better price, demand for goods and services will drop. And if demand for goods and services drop, companies lose revenue, employees lose jobs, etc.

So is cryptocurrency a bad thing since it has a hard cap (fixed supply)? If we look at that question from the surface it certainly seems to be the case. But let’s jump into the Magic School Bus and travel to a place where global and national economies are architected around the use of cryptocurrencies.

Enter James Zdralek - part psychologist, part accountant, part industrial designer, and part innovator at SAP.

James imagines a scenario where central banks use a cryptocurrency that is actually tied to the output of a nation. A scenario where a currency could increase in value over time. But how would this actually work? Much like how the US Dollar used to be tied to gold, this system would rely on assets on the blockchain. There are three asset types that would need to be embedded into smart contracts:

Ownership of the factory
Inventory of a company
Prepaid Forward Contract

The Prepaid Forward Contract is the defining element of this setup because it acts as a mutual fund, aggregating all other futures-backed cryptocurrencies. In Jame’s words, “instead of value being degraded by an inflation rate imposed by the central bank, citizens who hold the currency might actually receive a return on its value – or at least would not lose it.”

Many central banks are beginning to look at cryptocurrencies as a way to combat fraud and the cost associated with minting a fiat currency. Venezuela has already created their own cryptocurrency called the “Petro” to combat corruption and have pegged it to the forward value of their oil reserves. Critics, including Washington D.C., claim the cryptocurrency will be worthless once President Maduro steps down from office. Additionally, many in the global community view this new cryptocurrency as a way to avoid sanctions imposed by the U.S.

Time will tell if James’ vision becomes more than a utopian dream, but in the meantime
scaffolding is being put in place, one country at a time.

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Not Truly Decentralised

The promise of Bitcoin and other cryptocurrencies is that they enable a trustless network because of the blockchain. But what happens when one person or small group has most of the nodes? This is a problem that has not been solved, and is currently under-the-microscope with the launch of EOS.

Each cryptocurrency is experimenting with their own protocol, and eventually one of them will find the best solution. It is still very early in the development of blockchain protocols and governance frameworks. Projects like EOS may very well find their footing and update their protocol to resolve what appears to be a very centralized community. In the meantime, do your own research and take caution when investing in an untested solution.

Not Truly Trust-less

You’ve heard it before, the future of the internet is going to be decentralized and trustless - no more middlemen to trust with our precious information. The only problem with this assertion is that we are actually switching from trusting a middleman to trusting a developer or team of developers. How trustless is the network if the entire protocol is written by a couple people?

Unless you are an expert programmer and have the ability to inspect the code for yourself, you’re trusting that someone else has done that for you, or that the creator(s) of the protocol are good people. The reality here is that this current challenge is like the others we’ve discussed. Over time these new unknowns will be battle-tested and not given a second thought.

Not Foolproof

You’re about to send your favorite cryptocurrency to someone else to complete a transaction, they have sent you their address, you have pasted it into the address field, and now you’re ready to send. *Click* You’re all set, right? Technically yes, you have sent the funds to that address but now you’re having second thoughts. You didn’t double check the address and that wasn’t a small sum of money.

Sound familiar? Anyone that has sent funds to someone else knows this feeling. But why so nervous? Because crypto isn’t highly regulated and matured, safety nets like insured funds (FDIC), chargebacks, etc aren’t possible. Once you send that transaction, the recipient has to create a new transaction to send back funds and no one can force them to do so. This immutability is what makes the blockchain so secure, but naturally there are these drawbacks to consider.

Wallet Fragility

From time to time you have to update your wallet or maybe download the wallet to a new computer. You go to import the saved .dat file and you get an error message. Instantly you start panicking. You have never Googled for help so fast in your life! This is a common occurrence for many projects and usually it gets resolved by restarting the wallet, or re-importing the .dat file. But what if that doesn’t work?

There are many folks out there that have lost a ton of money from a bug in a wallet’s code or they misplaced their private key altogether. Crypto is such a new and exciting space that we forget we’re very much in control of our funds. Every heard the phrase “measure twice, cut once”? Nowhere else does this save your sanity than in crypto. Sometimes the situation is totally out of your control! The project was maybe a bit sketchy, the developers not as responsible as they should be and now you have a corrupted wallet and you’ve suddenly lost $5k. Not a good day.

Conclusion

The release of Satoshi’s white paper has changed many lives over the past nine years. From early adopters getting rich, to unfortunate exchange hacks resulting in the loss of retirement savings, the cryptocurrency space has seen it all. While we have seen much development progress through it all, there is no doubt that we will see more pitfalls in the future. We are all here for various reasons but we are all responsible for our own investments. In a land of decentralization and a trustless society, doing your own research is paramount. As we close out this very long document, I’ll leave you with a quote.

As crypto Jay-Z would say, “I got 99 problems, but a glitch ain’t one!”