Category Archives: finance

Ripple (XRP) Coin Review


Image Caption: Before reading this review, please read our disclaimer at the bottom of the article or here. Also, we wrote a 5 minute summary on Ripple you can find here.

The Payment Network Token

Ripple just became the second largest Cryptocurrency by market cap at an astonishing $122 Billion dollars. aking Ripple’s co-founder, Chris Larsen, the 8th wealthiest man on earth as he holds the equivalent of about $55B USD (as of January 4th, 2018 at 16:00 hrs EST).

How did this happen? Why now? What’s Ripple? This article will answer those questions, and shed some light on both the positive, and negative aspects of the cryptocurrency, as well as the historical reasons that made this token jump from the 9th to the 2nd most valuable cryptocurrencies in a couple of hours. Even though this looks like an overnight success, this is a story 14 years in the making.

Note: The price of this currency increased by 10 times during the hours writing and editing this article. Woah. If you want to read our shorter, 5 minute summary of Ripple, click here.

Introduction

Ripple as a token has been in circulation since 2012. During this time ICOs were essentially non-existent so this will be the first time we do a review on a company that didn’t have an ICO, but a strategy that involved multiple partnerships, clients, and movement of tokens.

Ripple is trying to revolutionize payment systems through its platform. They described the current banking system as “slow, limited in transparency and expensive”. And therefore claim that it is also inadequate as a Global Payment System. Their idea is to reduce these barriers of entry to enable global payment to become a truly worldwide activity. And so RippleNet was born.

Talk is cheap, but Ripple has been able to deliver on their promises by partnering with some of the most successful investors in silicon valley, as well as multiple international banking institutions, regulators, and leaders in technology, such as Google and MIT.

RippleNet

RippleNet is the name given to the Global Payment System of Ripple. It creates a global network of banks in which people can send and receive payments through Ripple technology. They claim the system to have real-time messaging, clearing, and “gross settlement certainty” of transactions.

Gross Settlements is the name given to the transfer of funds or securities between two banks. Gross refers specifically to the ability to enable those transactions to happen one-by-one instead of sending them as a bulk, for example if banks sent all their transactions of one day at the end of each day.

The way it works is by forming partnerships between banks to have access to the RippleNet network. Once a participating bank is part of the network, users around the world can interact with that bank through their own local RippleNet-enabled Bank. Users refers to corporations, individuals, and other organizations looking to participate in banking activities.

The advisory team alone for RippleNet includes members of 6 different banks (and counting).


Image under caption: RippleNet Banking advisory members, from Page 14 of RippleNet Brochure (PDF)

Furthermore RippleNet has a series of products:

  1. xCurrent: Payment Processing
  2. xRapid: Source of liquidity
  3. xVia: Payment origination

xCurrent

Enables payment processing between banks. Their RippleNet paper describes it as:

“A standardized technology enabling the ability to message and settle transactions between banks with increased speed, transparency and efficiency.” — RippleNet Brochure, Page 9

xRapid

Banks need to hold foreign currencies in order to enable fast transactions (without constantly having to pair up transactions), otherwise known as “nostro accounts”. xRapid is a pool of funds that banks can have access to in order to transfer funds easily.

“Access to an on-demand liquidity pool of digital assets that eliminates the need to hold nostro accounts in destination currencies.” — RippleNet Brochure, Page 11

xVia

Finally, xVia is a global payment transaction system

“A web services layer providing corporates with the ability to securely originate real-time payments with rich data attachments.” — RippleNet Brochure, Page 13

Banking Clients

This is one of Ripple’s strongest value propositions. Anyone can come up with an idea, but execution is the real difficulty. As a two-sided market business, Ripple requires both Supply (Banks) and Demand (Users, Businesses). In order to succeed they need to get the Supply side first, and that’s exactly what they’ve done.

The list of banks that Ripple has as customers continues to grow, the current list is quite impressive, and it is one of the main reasons that the price of Ripple has been shooting as high as it is.


Image Caption: Ripple Customer Sample from Page 15 of RippleNet Brochure

History


Price of Ripple from January 2014 to January 4th, 2018. Price from CoinMarketCap.com found here.

Ripplepay

14 years ago, in 2004, before bitcoin was created, Ripplepay was a service created by Ryan Fugger to allow swapping of credit between trusting participants. Essentially if someone owed you $10, they could create an IOU worth $10 and if someone else trusted that person, you could then use that as IOU as $10 with that third party. This is also the way current banks operate and is one of the building blocks of the current financial system. This is a relatively simple concept and even cash notes are essentially IOUs just all issued by the same entity, i.e a bank/govt.

This is very different from bitcoin, which is a trustless cash system, where you don’t require trust between two transacting parties, but you do require some form of verification that the asset being traded (in this case bitcoin) cannot be double-spent. If you could double-spend the same bitcoin, it is essentially like counterfeiting banknotes and obviously that is a problem.

However, in the above a payment system described by ripple, you do need trust. If I owe Bob money, a third party, Alice does not need to trust Bob to believe that my debt is valid, she only needs to trust me. You can’t issue debt to someone who does not trust you. So, you need to set a trust line, or a credit limit, that defines to what extent you trust which participant. Trust lines can “ripple” through a network, allowing trading of IOUs with participants you may not know, but with whom you share trusted intermediaries. If Bob and Alice both trust me, Bob could pay Alice with an IOU that I issued to Bob.

Ripple on the Blockchain

After the introduction of bitcoin to the world, Ripple began development of a blockchain based payment network similar to their existing product, however instead of bitcoin’s proof-of-work ripple used something called global consensus to verify trust, which they explain in the whitepaper leads to faster transaction times and lesser transaction fees.

This implementation of global consensus was new, even though the problem it was solving is well established in computer science literature. The validation of trust through consensus is a problem known as the “Byzantium general problem” and there are a few protocols which generated a solution for the problem, one of which was ripple’s new global consensus protocol. Another company, Stellar implemented a very similar protocol and came under heat for it in 2014 when a serious bug resulted in transactions being unconfirmed forever, however Ripple vehemently denied that their protocol was the one to blame and that it was an incorrect implementation. However leading cryptologists currently do not agree on whether the protocol is sound or not.

The Idea

As explained in the history section Ripple started out as Ripplepay, a simple debt exchange platform which did not involve any counterparty risks however it required trust between the participants on the network. Thus if Bob trusted Alice and Alice trusted Charlie, the line of trust between Bob and Alice could “ripple” through to Charlie and thus allowed Bob’s debt/credit be passed on to Charlie and vice versa.

While there was no issue of double-spending with debt (the same person could issue the same debts to two different people and they would just owe two different people money.) However once Ripple started working on a blockchain based verification network. Now a simple problem of having a payment network without any counter-party risk now became a problem of having a system that does not only require trust amongst the network, but also a way to ensure that double spending does not happen (i.e XRP cannot be counterfeited). However how these two pieces fit together is quite complicated so we shall break it down into the following separate sections.

The Token

Ripple purports these settlement issues are caused by manual settlement done in order to translate one bank’s ledger system’s transactions into another bank’s ledger system. Ripple however introduces something called the interledger protocol which uses a new cryptocurrency (ripple [ XRP]) to settle accounts across two banks differing ledgers, allowing for much faster settlement times.

Ripple’s White Paper

Ripple submitted multiple documents and white papers. Some focused on the business development side, such as Ripple Solutions Guide (PDF), and the RippleNet Brochure (PDF). But the company also submitted technical white papers that go very deep into their technology, Consensus algorithm (PDF) , and the Interledger Protocol (PDF).

Consensus Algorithm

Ripple does not use bitcoin’s proof-of-work rather it uses a consensus protocol to validate transactions, this new consensus protocol is states in Ripple’s whitepaper for their consensus algorithm. The consensus algorithm was new and unproven when it was initially presented but since then Ripple has carried out several validations for the transactions. This together with the fact that they have partnered with many banks has shown that the consensus algorithm works well for validations of transactions. These validations ensure that there are no double-spends of XRP, however why this needs to be the currency is the real question.

Interledger Protocol

The interledger protocol is specified in Ripple’s whitepaper and is basically the way the ripple network allows for cross-currency remittances. In order to understand the interledger protocol, we need to explain how banks currently issue international remittances. They use different databases as ledgers to make sure that credit and debt assets are tallied in the local native currency. What Ripple does is it settles transactions across multiple ledgers by settling each separate ledger by using XRP as an intermediary currency.

Validators

In order to distribute the amount of control that the Ripple corporation exerts over the network, and more importantly, to enable the network to operate, even if Ripple fails as a company, a series of validators have been put in place.

Validators (Unique Node Lists) are organizations and/or individuals that can verify a transaction on the Ripple network, so they act as a semi centralized agency. Validators also make sure transactions are not “double spent” by agreeing in the order of transactions.

Amongst the current validators of the Ripple protocol there are:

  • MIT (Massachusetts Institute of Technology)
  • Microsoft
  • CGI (Canadian Global Information)
  • And many more

Unfortunately this list is not extensive, and there is a series of nodes and addresses that are not public. So there could be a risk of decentralization, due to the fact that we don’t know if Ripple investors, employees, or the board of directors is part of this elite validators.

Token Distribution

This is one of the most criticized aspects of the Ripple protocol. Ripple controls over 50% currently, and once all the XRP have been released into circulation, the ripple company will own exactly 50%.

Blockchain Test

The Blockchain test refers to the question of whether or not a company requires the use of the Blockchain in order to be successful. This test was a result of a lot of companies abusing the ICO hype in order to just add the word “Token” after their name. “The Token for X” model.

In principle Ripple needs the Blockchain as an improvement on current banking financial standards. The question is whether or not it was necessary for ripple to create their own cryptocurrency, and whether or not it was a good idea for them to do so in a semi-centralized way with obscure validators. Undoubtedly they could have used bitcoin or any other already pre-existing cryptocurrency to fulfill this role and the introduction of a native currency like XRP leads to a lot of questions as to why the extra currency is necessary.

Furthermore, hyperledger which is an open source protocol very similar to the interledger protocol provided by Ripple existed prior, so why Ripple chose not adopt that is a reasonable question. Ripple claims that it is hard to do the kinds of international remittances that it does through the hyperledger protocol due to lack of atomic book transactions, however hyperledger is currently working on exactly that problem, and thus it is an important point to note.

Ripple has also created solutions in order to easily transfer their token for others. In 2013 OpenCoin created the “Bitcoin Bridge”, which essentially allows users to transfer funds in any currency to a Bitcoin address. Essentially enabling anyone in the world to purchase items in exchange of Bitcoin, without having to own Bitcoin in the first place.

The Bridge is one of the most interesting aspects of the Blockchain test for Ripple. It shows a great use of the technology, and also something that almost only Ripple would be able to do, since their global partnerships with banks allow them to provide the multi-currency liquidity and network to provide those services.

Traction — Performance

Besides all the activities, products, partnerships, investors, and clients that Ripple has, it is also important to discuss how the token has been performing over the last years in order to demonstrate traction and the validity that people have given the token since its inception.

2013–2016

During this period of time, one of the main engines moving cryptocurrencies forward was the rise and rise of Bitcoin. In the period of August 2013 until December, Bitcoin increased in price from around $80 USD to over $1,000 USD. by March of 2014 the bubble burst, and the price of Bitcoin continued to decline until it reached less than $200 at the beginning of 2015.

For many, Ripple was “The Next Bitcoin” and while Bitcoin was at an all time high people saw the potential for Ripple to become the next best option. As Bitcoin prices crashed, people also lost hope on Ripple, so you can see a very similar price pattern for Ripple during the period of 2013–2015. However, during the all-time low of Bitcoin in 2015, many thought Ripple would replace Bitcoin to become the preferred worldwide cryptocurrency, so the price increased inversely to that of Bitcoin.


Ripple Price Graph from Coin Market’s Ripple found here.

Bitcoin Price Graph from Coin Market’s Bitcoin during the same period found here.

2017

This was by far the best year for the Cryptocurrency, and probably the reason you are reading the article now. 2017 became the most important year for investment in cryptocurrencies, so people started looking at the largest and most important ones in the market.


Graph from Coin Market’s Ripple found here.

For many Ripple was going to become the defacto banking cryptocurrency so a sort of self-fulfilling prophecy occurred. In the span of 12 months, the price off Ripple went from $0.006 USD (or about 0.6 cents) to over $3 for every token. This is an increase of about 50,000%. Of course, as the price kept increasing, people kept saying that the price would continue to do so, so more people invested in the currency, and the cycle continued.

Part of the reason the token has become so popular recently is social media. As ICOs are becoming more popular and people are investing more, the price of cheap altcoins is attracting a lot of people to invest in it.

One of the reasons that Ripple seems to be such a “cheap” token, is due to the massive volume of Ripple tokens that exists in production. Price is relative, and does not take into consideration a tokens total token volume. There are 100 billion tokens, so the price fluctuates much less than if there were 1 million tokens, in comparison there are 16 million Bitcoins, out of the total possible maximum of 21 million.

Lately, criticisms have stopped the price from continuing to rise, these criticisms include the centralized nature of the network, the amount of tokens that the team gave to themselves and partners, and technical decisions that put in question the need for Ripple in the first place.

Team

Team History

5 years before Satoshi Nakamoto’s famous original Bitcoin paper “Bitcoin: A Peer-to-Peer Electronic Cash System” there was Ripplepay (2004). The project was originally created by Ryan Fugge, a software developer from Vancouver.

The idea came from working at a stock trading exchange and development began 2004. A year later, Fugge had a working product that enabled consumers to be able to secure transactions over the internet, just 5 years after the internet boom.

6 years later, software developers Jed McCaleb, Arthur Britto, and David Schwartz development began to build their own digital currency system through a consensus algorithm. The following in year, in 2012, the new system was incorporated into the new company OpenCoin Inc. Fugge transitioned into helping with the creation of the credit network section of Ripple.

As OpenCoin continued to grow and develop Ripple, the team continued to acquire veterans from the finance, software, and venture capital markets. The team now is heavily stacked and connected to both cryptocurrencies and Fintech, which is one of the reasons that has justified their valuation and quick rise so far. Ripple was co-founded by Angel Investor Chris Larsen, and Software Programmer Jed McCaleb. Fugge left his role as a developer at Ripple, and is currently working ICO advisor. His websites mentions he doesn’t have intentions to take new projects related to health conditions (We won’t link his website, as we are sure he currently appreciates privacy).

On September of 2013 OpenCoin Inc. changed its name to Ripple Labs Inc. Which is currently the name for the company and main holder of Ripple, and with Chris Larsen as a CEO.

The Team

There are an estimated 2,000 billionaires in the world. Ripple as a company has created at least 3. We find that this is an important point to mention, since our criticism section talks about the distribution of the cryptocurrency amongst its founders, which could potentially created complicated incentives within the company.

Ripple’s CEO is Brad Garlinghouse, he’s worked at executive levels at AOL, Yahoo, SBC, and act as CEO of Hightail, and Dalpad Communications. Brad currently owns 6.3% of Ripple, making his net worth a considerable $9.5 billion dollars.

Chris Larsen is a Silicon Valley venture capitalist, he helped co-found Ripple, as well as multiple FinTech related companies such as E-Loan, OpenCoin, and Prosper Marketplace.

Jed McCaleb, is well known for creating largest Bitcoin exchange ever by volume of BTC, the now defunct Mt Gox (hacked after McCaleb sold the company to Mark Karpeles). Jed is now worth $20B from his Ripple’s token and is on the top 40 richest people on the world.

The Investors

Ripple has a series of renowned technical investors in silicon valley and worldwide, including

  • Google Ventures
  • Andreessen Horowitz
  • CME Ventures
  • Accenture
  • Santander

Needless to say the Board of Directors is equally as impressive, and extremely well connected in the financial and banking sectors.

How to Buy

As one of the largest tokens, Ripple is readily available in a multitude of exchanges. From their website, the exchanges that trade Ripple are:

Note: different exchanges have different authorization stages, so in some it may become much more difficult to obtain Ripple or other currencies to ultimately obtain Ripple.

Criticisms

Business Decision Criticisms

The amount of Ripple tokens that the cofounders have decided to reward themselves with has been heavily obfuscated by the company. Two of the founders are now billionaires, and one is the 10th wealthiest man in the world now. That money does not come from sales, but instead from the expectation that people have in how the cryptocurrency will behave.

In order to mitigate this situation, the founders decided to escrow a large portion of their funds. This way the money will be frozen until certain events trigger the smart contracts to pay the founders. Even with this, hacking incentives to unlock these smart contracts could create incredible greedy situations. Just think about this, what would you do if you knew you are technically the 8th wealthiest people on earth, how far would you go to protect that investment?

In May of 2015, the United States’ Financial Crimes Enforcement Network fined Ripple $700,000.

“Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers. XRP II later assumed Ripple Labs’ functions of selling virtual currency and acting as an MSB; however, like its parent company, XRP II willfully violated the BSA by failing to implement an effective AML program, and by failing to report suspicious activity related to several financial transactions.” — FinCEN fines Ripple, through an immediate release found here.

Technical Criticisms

As mentioned in the above explanation of how Ripple works, XRP merely acts as the intermediary currency between cross-border ledgers to settle assets for the various banks. Initially this started off as a very centralized version of their consensus protocol with only Ripple as a validator and every transaction was verified by them. However in an effort to decentralize the trust-validation of the currency, they have started to slowly add other validators to the network and begun to dismantle the validators that they control. However this does not mean that the control over the currency is decentralized! Since Ripple (the company) controls the majority of the XRP supply, the power of usage with the currency is very centralized in the company and they control the pricing by controlling the demand/supply market.

Conclusion

No matter what happens, Ripple will have a formidable story. It will either become one of the largest financial assets in the next decade, or it will have an incredible implosion and hundreds of millions of dollars will be lost to competitors, corruption, unsolved technological challenges, unused technologies, or a combination of all of these.

We are not sure what the future will be, but we will definitely be watching with excitement what happens in this space. We hope this review gives you enough information to start doing your own research in the token, and your own decisions.

Certainly one of the most interesting stories, and an incredible series of partners, clients, and team members.

For our previous ICO White Paper Review check:

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Ripple (XRP) Coin Review


Image Caption: Before reading this review, please read our disclaimer at the bottom of the article or here. Also, we wrote a 5 minute summary on Ripple you can find here.

The Payment Network Token

Ripple just became the second largest Cryptocurrency by market cap at an astonishing $122 Billion dollars. aking Ripple’s co-founder, Chris Larsen, the 8th wealthiest man on earth as he holds the equivalent of about $55B USD (as of January 4th, 2018 at 16:00 hrs EST).

How did this happen? Why now? What’s Ripple? This article will answer those questions, and shed some light on both the positive, and negative aspects of the cryptocurrency, as well as the historical reasons that made this token jump from the 9th to the 2nd most valuable cryptocurrencies in a couple of hours. Even though this looks like an overnight success, this is a story 14 years in the making.

Note: The price of this currency increased by 10 times during the hours writing and editing this article. Woah. If you want to read our shorter, 5 minute summary of Ripple, click here.

Introduction

Ripple as a token has been in circulation since 2012. During this time ICOs were essentially non-existent so this will be the first time we do a review on a company that didn’t have an ICO, but a strategy that involved multiple partnerships, clients, and movement of tokens.

Ripple is trying to revolutionize payment systems through its platform. They described the current banking system as “slow, limited in transparency and expensive”. And therefore claim that it is also inadequate as a Global Payment System. Their idea is to reduce these barriers of entry to enable global payment to become a truly worldwide activity. And so RippleNet was born.

Talk is cheap, but Ripple has been able to deliver on their promises by partnering with some of the most successful investors in silicon valley, as well as multiple international banking institutions, regulators, and leaders in technology, such as Google and MIT.

RippleNet

RippleNet is the name given to the Global Payment System of Ripple. It creates a global network of banks in which people can send and receive payments through Ripple technology. They claim the system to have real-time messaging, clearing, and “gross settlement certainty” of transactions.

Gross Settlements is the name given to the transfer of funds or securities between two banks. Gross refers specifically to the ability to enable those transactions to happen one-by-one instead of sending them as a bulk, for example if banks sent all their transactions of one day at the end of each day.

The way it works is by forming partnerships between banks to have access to the RippleNet network. Once a participating bank is part of the network, users around the world can interact with that bank through their own local RippleNet-enabled Bank. Users refers to corporations, individuals, and other organizations looking to participate in banking activities.

The advisory team alone for RippleNet includes members of 6 different banks (and counting).


Image under caption: RippleNet Banking advisory members, from Page 14 of RippleNet Brochure (PDF)

Furthermore RippleNet has a series of products:

  1. xCurrent: Payment Processing
  2. xRapid: Source of liquidity
  3. xVia: Payment origination

xCurrent

Enables payment processing between banks. Their RippleNet paper describes it as:

“A standardized technology enabling the ability to message and settle transactions between banks with increased speed, transparency and efficiency.” — RippleNet Brochure, Page 9

xRapid

Banks need to hold foreign currencies in order to enable fast transactions (without constantly having to pair up transactions), otherwise known as “nostro accounts”. xRapid is a pool of funds that banks can have access to in order to transfer funds easily.

“Access to an on-demand liquidity pool of digital assets that eliminates the need to hold nostro accounts in destination currencies.” — RippleNet Brochure, Page 11

xVia

Finally, xVia is a global payment transaction system

“A web services layer providing corporates with the ability to securely originate real-time payments with rich data attachments.” — RippleNet Brochure, Page 13

Banking Clients

This is one of Ripple’s strongest value propositions. Anyone can come up with an idea, but execution is the real difficulty. As a two-sided market business, Ripple requires both Supply (Banks) and Demand (Users, Businesses). In order to succeed they need to get the Supply side first, and that’s exactly what they’ve done.

The list of banks that Ripple has as customers continues to grow, the current list is quite impressive, and it is one of the main reasons that the price of Ripple has been shooting as high as it is.


Image Caption: Ripple Customer Sample from Page 15 of RippleNet Brochure

History


Price of Ripple from January 2014 to January 4th, 2018. Price from CoinMarketCap.com found here.

Ripplepay

14 years ago, in 2004, before bitcoin was created, Ripplepay was a service created by Ryan Fugger to allow swapping of credit between trusting participants. Essentially if someone owed you $10, they could create an IOU worth $10 and if someone else trusted that person, you could then use that as IOU as $10 with that third party. This is also the way current banks operate and is one of the building blocks of the current financial system. This is a relatively simple concept and even cash notes are essentially IOUs just all issued by the same entity, i.e a bank/govt.

This is very different from bitcoin, which is a trustless cash system, where you don’t require trust between two transacting parties, but you do require some form of verification that the asset being traded (in this case bitcoin) cannot be double-spent. If you could double-spend the same bitcoin, it is essentially like counterfeiting banknotes and obviously that is a problem.

However, in the above a payment system described by ripple, you do need trust. If I owe Bob money, a third party, Alice does not need to trust Bob to believe that my debt is valid, she only needs to trust me. You can’t issue debt to someone who does not trust you. So, you need to set a trust line, or a credit limit, that defines to what extent you trust which participant. Trust lines can “ripple” through a network, allowing trading of IOUs with participants you may not know, but with whom you share trusted intermediaries. If Bob and Alice both trust me, Bob could pay Alice with an IOU that I issued to Bob.

Ripple on the Blockchain

After the introduction of bitcoin to the world, Ripple began development of a blockchain based payment network similar to their existing product, however instead of bitcoin’s proof-of-work ripple used something called global consensus to verify trust, which they explain in the whitepaper leads to faster transaction times and lesser transaction fees.

This implementation of global consensus was new, even though the problem it was solving is well established in computer science literature. The validation of trust through consensus is a problem known as the “Byzantium general problem” and there are a few protocols which generated a solution for the problem, one of which was ripple’s new global consensus protocol. Another company, Stellar implemented a very similar protocol and came under heat for it in 2014 when a serious bug resulted in transactions being unconfirmed forever, however Ripple vehemently denied that their protocol was the one to blame and that it was an incorrect implementation. However leading cryptologists currently do not agree on whether the protocol is sound or not.

The Idea

As explained in the history section Ripple started out as Ripplepay, a simple debt exchange platform which did not involve any counterparty risks however it required trust between the participants on the network. Thus if Bob trusted Alice and Alice trusted Charlie, the line of trust between Bob and Alice could “ripple” through to Charlie and thus allowed Bob’s debt/credit be passed on to Charlie and vice versa.

While there was no issue of double-spending with debt (the same person could issue the same debts to two different people and they would just owe two different people money.) However once Ripple started working on a blockchain based verification network. Now a simple problem of having a payment network without any counter-party risk now became a problem of having a system that does not only require trust amongst the network, but also a way to ensure that double spending does not happen (i.e XRP cannot be counterfeited). However how these two pieces fit together is quite complicated so we shall break it down into the following separate sections.

The Token

Ripple purports these settlement issues are caused by manual settlement done in order to translate one bank’s ledger system’s transactions into another bank’s ledger system. Ripple however introduces something called the interledger protocol which uses a new cryptocurrency (ripple [ XRP]) to settle accounts across two banks differing ledgers, allowing for much faster settlement times.

Ripple’s White Paper

Ripple submitted multiple documents and white papers. Some focused on the business development side, such as Ripple Solutions Guide (PDF), and the RippleNet Brochure (PDF). But the company also submitted technical white papers that go very deep into their technology, Consensus algorithm (PDF) , and the Interledger Protocol (PDF).

Consensus Algorithm

Ripple does not use bitcoin’s proof-of-work rather it uses a consensus protocol to validate transactions, this new consensus protocol is states in Ripple’s whitepaper for their consensus algorithm. The consensus algorithm was new and unproven when it was initially presented but since then Ripple has carried out several validations for the transactions. This together with the fact that they have partnered with many banks has shown that the consensus algorithm works well for validations of transactions. These validations ensure that there are no double-spends of XRP, however why this needs to be the currency is the real question.

Interledger Protocol

The interledger protocol is specified in Ripple’s whitepaper and is basically the way the ripple network allows for cross-currency remittances. In order to understand the interledger protocol, we need to explain how banks currently issue international remittances. They use different databases as ledgers to make sure that credit and debt assets are tallied in the local native currency. What Ripple does is it settles transactions across multiple ledgers by settling each separate ledger by using XRP as an intermediary currency.

Validators

In order to distribute the amount of control that the Ripple corporation exerts over the network, and more importantly, to enable the network to operate, even if Ripple fails as a company, a series of validators have been put in place.

Validators (Unique Node Lists) are organizations and/or individuals that can verify a transaction on the Ripple network, so they act as a semi centralized agency. Validators also make sure transactions are not “double spent” by agreeing in the order of transactions.

Amongst the current validators of the Ripple protocol there are:

  • MIT (Massachusetts Institute of Technology)
  • Microsoft
  • CGI (Canadian Global Information)
  • And many more

Unfortunately this list is not extensive, and there is a series of nodes and addresses that are not public. So there could be a risk of decentralization, due to the fact that we don’t know if Ripple investors, employees, or the board of directors is part of this elite validators.

Token Distribution

This is one of the most criticized aspects of the Ripple protocol. Ripple controls over 50% currently, and once all the XRP have been released into circulation, the ripple company will own exactly 50%.

Blockchain Test

The Blockchain test refers to the question of whether or not a company requires the use of the Blockchain in order to be successful. This test was a result of a lot of companies abusing the ICO hype in order to just add the word “Token” after their name. “The Token for X” model.

In principle Ripple needs the Blockchain as an improvement on current banking financial standards. The question is whether or not it was necessary for ripple to create their own cryptocurrency, and whether or not it was a good idea for them to do so in a semi-centralized way with obscure validators. Undoubtedly they could have used bitcoin or any other already pre-existing cryptocurrency to fulfill this role and the introduction of a native currency like XRP leads to a lot of questions as to why the extra currency is necessary.

Furthermore, hyperledger which is an open source protocol very similar to the interledger protocol provided by Ripple existed prior, so why Ripple chose not adopt that is a reasonable question. Ripple claims that it is hard to do the kinds of international remittances that it does through the hyperledger protocol due to lack of atomic book transactions, however hyperledger is currently working on exactly that problem, and thus it is an important point to note.

Ripple has also created solutions in order to easily transfer their token for others. In 2013 OpenCoin created the “Bitcoin Bridge”, which essentially allows users to transfer funds in any currency to a Bitcoin address. Essentially enabling anyone in the world to purchase items in exchange of Bitcoin, without having to own Bitcoin in the first place.

The Bridge is one of the most interesting aspects of the Blockchain test for Ripple. It shows a great use of the technology, and also something that almost only Ripple would be able to do, since their global partnerships with banks allow them to provide the multi-currency liquidity and network to provide those services.

Traction — Performance

Besides all the activities, products, partnerships, investors, and clients that Ripple has, it is also important to discuss how the token has been performing over the last years in order to demonstrate traction and the validity that people have given the token since its inception.

2013–2016

During this period of time, one of the main engines moving cryptocurrencies forward was the rise and rise of Bitcoin. In the period of August 2013 until December, Bitcoin increased in price from around $80 USD to over $1,000 USD. by March of 2014 the bubble burst, and the price of Bitcoin continued to decline until it reached less than $200 at the beginning of 2015.

For many, Ripple was “The Next Bitcoin” and while Bitcoin was at an all time high people saw the potential for Ripple to become the next best option. As Bitcoin prices crashed, people also lost hope on Ripple, so you can see a very similar price pattern for Ripple during the period of 2013–2015. However, during the all-time low of Bitcoin in 2015, many thought Ripple would replace Bitcoin to become the preferred worldwide cryptocurrency, so the price increased inversely to that of Bitcoin.


Ripple Price Graph from Coin Market’s Ripple found here.

Bitcoin Price Graph from Coin Market’s Bitcoin during the same period found here.

2017

This was by far the best year for the Cryptocurrency, and probably the reason you are reading the article now. 2017 became the most important year for investment in cryptocurrencies, so people started looking at the largest and most important ones in the market.


Graph from Coin Market’s Ripple found here.

For many Ripple was going to become the defacto banking cryptocurrency so a sort of self-fulfilling prophecy occurred. In the span of 12 months, the price off Ripple went from $0.006 USD (or about 0.6 cents) to over $3 for every token. This is an increase of about 50,000%. Of course, as the price kept increasing, people kept saying that the price would continue to do so, so more people invested in the currency, and the cycle continued.

Part of the reason the token has become so popular recently is social media. As ICOs are becoming more popular and people are investing more, the price of cheap altcoins is attracting a lot of people to invest in it.

One of the reasons that Ripple seems to be such a “cheap” token, is due to the massive volume of Ripple tokens that exists in production. Price is relative, and does not take into consideration a tokens total token volume. There are 100 billion tokens, so the price fluctuates much less than if there were 1 million tokens, in comparison there are 16 million Bitcoins, out of the total possible maximum of 21 million.

Lately, criticisms have stopped the price from continuing to rise, these criticisms include the centralized nature of the network, the amount of tokens that the team gave to themselves and partners, and technical decisions that put in question the need for Ripple in the first place.

Team

Team History

5 years before Satoshi Nakamoto’s famous original Bitcoin paper “Bitcoin: A Peer-to-Peer Electronic Cash System” there was Ripplepay (2004). The project was originally created by Ryan Fugge, a software developer from Vancouver.

The idea came from working at a stock trading exchange and development began 2004. A year later, Fugge had a working product that enabled consumers to be able to secure transactions over the internet, just 5 years after the internet boom.

6 years later, software developers Jed McCaleb, Arthur Britto, and David Schwartz development began to build their own digital currency system through a consensus algorithm. The following in year, in 2012, the new system was incorporated into the new company OpenCoin Inc. Fugge transitioned into helping with the creation of the credit network section of Ripple.

As OpenCoin continued to grow and develop Ripple, the team continued to acquire veterans from the finance, software, and venture capital markets. The team now is heavily stacked and connected to both cryptocurrencies and Fintech, which is one of the reasons that has justified their valuation and quick rise so far. Ripple was co-founded by Angel Investor Chris Larsen, and Software Programmer Jed McCaleb. Fugge left his role as a developer at Ripple, and is currently working ICO advisor. His websites mentions he doesn’t have intentions to take new projects related to health conditions (We won’t link his website, as we are sure he currently appreciates privacy).

On September of 2013 OpenCoin Inc. changed its name to Ripple Labs Inc. Which is currently the name for the company and main holder of Ripple, and with Chris Larsen as a CEO.

The Team

There are an estimated 2,000 billionaires in the world. Ripple as a company has created at least 3. We find that this is an important point to mention, since our criticism section talks about the distribution of the cryptocurrency amongst its founders, which could potentially created complicated incentives within the company.

Ripple’s CEO is Brad Garlinghouse, he’s worked at executive levels at AOL, Yahoo, SBC, and act as CEO of Hightail, and Dalpad Communications. Brad currently owns 6.3% of Ripple, making his net worth a considerable $9.5 billion dollars.

Chris Larsen is a Silicon Valley venture capitalist, he helped co-found Ripple, as well as multiple FinTech related companies such as E-Loan, OpenCoin, and Prosper Marketplace.

Jed McCaleb, is well known for creating largest Bitcoin exchange ever by volume of BTC, the now defunct Mt Gox (hacked after McCaleb sold the company to Mark Karpeles). Jed is now worth $20B from his Ripple’s token and is on the top 40 richest people on the world.

The Investors

Ripple has a series of renowned technical investors in silicon valley and worldwide, including

  • Google Ventures
  • Andreessen Horowitz
  • CME Ventures
  • Accenture
  • Santander

Needless to say the Board of Directors is equally as impressive, and extremely well connected in the financial and banking sectors.

How to Buy

As one of the largest tokens, Ripple is readily available in a multitude of exchanges. From their website, the exchanges that trade Ripple are:

Note: different exchanges have different authorization stages, so in some it may become much more difficult to obtain Ripple or other currencies to ultimately obtain Ripple.

Criticisms

Business Decision Criticisms

The amount of Ripple tokens that the cofounders have decided to reward themselves with has been heavily obfuscated by the company. Two of the founders are now billionaires, and one is the 10th wealthiest man in the world now. That money does not come from sales, but instead from the expectation that people have in how the cryptocurrency will behave.

In order to mitigate this situation, the founders decided to escrow a large portion of their funds. This way the money will be frozen until certain events trigger the smart contracts to pay the founders. Even with this, hacking incentives to unlock these smart contracts could create incredible greedy situations. Just think about this, what would you do if you knew you are technically the 8th wealthiest people on earth, how far would you go to protect that investment?

In May of 2015, the United States’ Financial Crimes Enforcement Network fined Ripple $700,000.

“Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers. XRP II later assumed Ripple Labs’ functions of selling virtual currency and acting as an MSB; however, like its parent company, XRP II willfully violated the BSA by failing to implement an effective AML program, and by failing to report suspicious activity related to several financial transactions.” — FinCEN fines Ripple, through an immediate release found here.

Technical Criticisms

As mentioned in the above explanation of how Ripple works, XRP merely acts as the intermediary currency between cross-border ledgers to settle assets for the various banks. Initially this started off as a very centralized version of their consensus protocol with only Ripple as a validator and every transaction was verified by them. However in an effort to decentralize the trust-validation of the currency, they have started to slowly add other validators to the network and begun to dismantle the validators that they control. However this does not mean that the control over the currency is decentralized! Since Ripple (the company) controls the majority of the XRP supply, the power of usage with the currency is very centralized in the company and they control the pricing by controlling the demand/supply market.

Conclusion

No matter what happens, Ripple will have a formidable story. It will either become one of the largest financial assets in the next decade, or it will have an incredible implosion and hundreds of millions of dollars will be lost to competitors, corruption, unsolved technological challenges, unused technologies, or a combination of all of these.

We are not sure what the future will be, but we will definitely be watching with excitement what happens in this space. We hope this review gives you enough information to start doing your own research in the token, and your own decisions.

Certainly one of the most interesting stories, and an incredible series of partners, clients, and team members.

For our previous ICO White Paper Review check:

IOTA Coin Review

Want to stay up to date in ICOs?

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Decrypto

you hunting currency, well here it is
trust makes the world go round
trust makes the world go round
not metal bullion gleaming yellow
not even the US dollar, no

and certainly not bitcoin

I get it
you excited
you holler like a trumpet
heart poundin’, evangelizin’
hey mate you ain’t too late, there’s more to go
can’t you feel the ripple of crypto?
the crescendo of ICOs?

I get it
you want in on what might be salvific
change the world whole, the status quo
sorta like that man crucified and humble

or maybe, maybe you’re merely wanting to make a quick buck
i could use a new ford truck so let me try my luck
maybe it’s you fearin’
the masses sittin’ on a hundredfold gain
the train, it’s leavin’ it’s leavin’

that’s it — I’m playin’

but those who have ears let him hear
when this bubble pops
the mania stops
hey is that a fidget spinner? cool —

we just might have to eat off the dollar menu

Upcoin — Better exchange market for Crypto Currencies

New exchange market arriving — Upcoin.

Why i should recommend you to register right now?:
– 500$ bonuses for fees
– all types of orders (market, limit, trailing)
– ability to deposit/withdraw money in USD
– user friendly interface like on WhalesClub
– people that i know and who really knows what to do

Bonus program limited so take hurry: Register on Upcoin

Upcoin — Better exchange market for Crypto Currencies

New exchange market arriving — Upcoin.

Why i should recommend you to register right now?:
– 500$ bonuses for fees
– all types of orders (market, limit, trailing)
– ability to deposit/withdraw money in USD
– user friendly interface like on WhalesClub
– people that i know and who really knows what to do

Bonus program limited so take hurry: Register on Upcoin

Beware of Bubbles

What is a bubble?

In the context of capital markets, a “bubble” is a phenomenon in which the prices of an asset or asset class are bid up to levels far beyond their historical baseline, and far beyond what any rational valuation of future prospects would warrant.

Put simply, bubbles typically arise when some legit factor causes there to be excess demand for an asset, thus forcing the price of the asset to rise. This rise in price attracts speculators looking to turn a quick profit, which in turn drives the price up further. If speculators drive its price up enough, it gets the attention of the large financial institutions. Those who are bullish on the asset or are confident that they can make a quick buck out of it begin to drive its price up at an exponential rate. A fear of missing out kicks in and fund managers buy in simply because they see other managers doing the same. At this point, fortunes have already been made by those who bought in at the beginning. Stories of these overnight millionaires flood the news, suddenly everyone with a few bucks to scrape together is considering joining the fold.

This is where the calls of a market bubble start to appear. Sophisticated investors familiar with past market bubbles start to cry out that there is no away these price increases can continue. However, prices keep going up. There are still enough unsophisticated investors drawn in by the tales of the overnight millionaires, hoping it is not too late. Typically there are even large price corrections, but the asset quickly returns to reaching new highs. Eventually, the voices warning against a market bubble begin to get drowned out by the crowd.

Buyers begin to think that there is no limit to how high the price can go. To quote Alan Greenspan (though he was not the first person to use the expression), “Irrational Exuberance” begins to set in. Unfortunately, it is at this point, when the least sophisticated investors have just managed to scrape some money together to get in on the action, that there is no one left who is looking to buy in. At this point, supply starts to outpace demand, and prices begin to fall.

As soon as the this happens, all the speculators begin to panic and sell out immediately, since their decision to buy had no relation to the underlying fundamentals of the asset. No one is left waiting on the outside too buy in on the next price correction, so prices continue to decline. This leads to an incredible reduction in prices, leaving the common investors, those last to enter the fray and last to find out that the party is over, with empty retirement accounts and a wealth of newfound knowledge.

Past Bubbles

Perhaps the most notorious bubble occurred for tulips in 17th-century Holland, and has since been coined “tulip mania”. Tulips were brought from Turkey into Holland in the late 16th century, and the novelty of this new flower made it very sought after, driving up the price. This attracted more buyers, raising the price again and again until inevitably the priced collapsed. The price fell from around $60 to ten cents, and overnight the savings of thousands of people were completely wiped out.

While the idea that tulips could be purchased for investment purposes at any price is particularly absurd, in truth, no asset is a good investment at any price. The most recent bubbles have occurred in industries which truly had a phenomenal potential for growth, yet even so, this potential for growth was still only finite. The valuations placed on the companies in these industries were priced as if they were guaranteed to grow hundreds of times over in the immediate future. Inevitably reality would sink in, and even if a given company was still poised to increase its earnings 10x over the next few years, it would see its stock price crumble.

The best example of this is the intertnet bubble, the Nasdaq declined by 75% from 2000–2002. Speculation that internet the would fundamentally change the way the world operated caused buyers to believe that no price was too high to pay for interenet stocks. Companies who added “tech” or “internet” to their name saw their share price increase astronomically within a matter of days. IPO’s for new tech companies were a near-daily occurrence, and investors would throw their money at these companies with little to no due diligence. While investors were right about the fact that the internet would change the world and dominate the lives of millions of people, many of these companies didn’t make last more than a handful of years, and it took 20 years for the Nasdaq stock index to surpass its 2000 peak.

This is where the true danger lies, not in industries with have little prospect for legitimate growth, but in industries with awesome potential.

Today’s Bubbles

CryptoCurrencies

Cryptocurrencies have the potential to completely revolutionize the global financial system. They have the potential to circumvent central banks, allow for the expedient transfer of money across borders, and potenitally lower fees, among a barrage of other potential uses. The blockchain technology that enables them to function has revolutionary potential in its own right. While some may doubt the validity of cryptocurrencies, there are very few in the know who scoff at the potential of blockchain technology.

All of this potential for growth has caused the price of the most predominate cryptocurrency, bitcoin, to increase fifteen-fold over the course of 2017. Other cryptocurrencies have experienced a similar rise. Reminiscent of the tech bubble in the early 2000’s, companies have seen their share prices increase several times over simply because they added some variant of blockchain or cryptocurrency to their name. New coins are being launched, known as an initial coin offering (ICO), and the prices of such coins often skyrocket upon their launch due to massive amounts of promotion only to crash back down shortly thereafter.

One problem with cryptocurrencies is that there is no standard method for valuing them. They produce no earings and they give holders claim to no assets. Any intrinsic value for cryptocurrencies stems from the natural demand for them in order to complete transactions.

Alas, the increase in price over 2017 has not come as a result of an increased likelihood that Bitcoin will be used for transactions across the world, i.e due to a growing acceptance as a store of value and medium of exchange. Instead, it is the of a result of a speculative bubble. As with previous market bubbles, this situation is unlikely to end well, and it will be those who can afford to lose the least who will suffer the most.

Marijuana?

The underground market for marijuana in North America is likely in the billions. With Canada expected to legalize the substance sometime in July 2018, and many States having already gone ahead with legalization, cannabis stock have risen through the roof. Companies with negative earnings are being given billion dollar plus valuations based primarily on speculation.

While some companies are sure to dominate this industry and warrant their sky high valuations, just as a few select internet stocks did in the past, the vast majority of them will likely fall short. Even those which are ultimatley successul will take a long time to realize the level of earnings which justifies their current valuation and may well become more affordable before that time arrives.

Unlike cryptocurrencies such as Bitcoin, there is less reason to believe that marijuana stocks are in bubble territory. In fact, whether they will ever get to that level is also uncertain, but it is a fair statement to say that the majority of these companies should be classified as highly speculative given their current valuations.

Countdown Till Launch

Dear WCX Community,

WCX recently crossed 1.3 million sign-ups. That’s more sign-ups than most exchanges active today.

Every month, WCX is visited by more than 2 million people, almost half of whom are from non-English speaking countries — which speaks to the global nature of the project.

When WCX was announced just a few months ago, our vision was to create a global digital currency exchange that is secure, reliable, low-cost, and easy-to-use. Today, that vision is almost a reality.

As we look forward to the launch, we wanted to take a moment to express how grateful we are to our contributors, subscribers, and every member of our community. From everyone at WCX, thank you!

Public Launch

The product is feature-complete. Our team is performing integration and load testing, as well as hardening and vulnerability testing, to make sure the exchange is safe, secure, and ready to handle millions of transactions. We’re planning to launch WCX to everyone on Saturday, February 10.

As we mentioned in our previous blog post, we’d initially planned to serve around 30,000 traders with the systems we had built. As of today, the number of people who have signed up for WCX is more than forty times that.

To ensure a secure, low-cost, and reliable experience for all users, we redesigned our systems and rebuilt our team from the ground up to meet this newfound demand.

This new effort pushed back the initially planned launch date. You can take a peek at our new backend systems in our API Reference.

From the very beginning, we’ve been focused on bringing our community the best and most secure product, even if that meant delaying the public launch. We’d rather launch a great product late than a mediocre one before it’s ready.

ICO Planning

The WCX tokens offered in our presale program (limited quantity) have been selling out on a daily basis. As promised, we’ll be holding a broader token sale to sell the remaining tokens about four weeks after the exchange launches to the public.

Leading up to the token sale, we’ll be offering detailed insights into our company roadmap and future plans concerning product and marketing direction.

WCXT & USDP

As a reminder, WCXT tokens will begin trading on WCX approximately two weeks after the end of the token sale described above. WCXT will be issued as ERC20 tokens on the Ethereum blockchain. The trading pairs available will be WCXT/BTC, WCXT/ETH, and WCXT/USDP.

Introducing USDP
USDP is a new currency that is pegged to the value of the US Dollar. It allows you to convert out of crypto and hold funds without being affected by volatility and without needing to convert to fiat.

It’s available initially only to WCX users. More details will be posted at launch.

New Benefits
New benefits have been announced recently for WCXT holders:

  • WCX will use up to 20% of the exchange’s profits to buy back WCXT at market price every quarter, until 50% of all WCXT sold are bought back by WCX. The WCXT bought through this buyback program will be destroyed, hence reducing the available supply of WCXT.
  • You’ll be able to use WCXT to recoup rebates on fees and get discounts on future products such as margin trading.
  • You’ll be able to use WCXT as a base token for the decentralized exchange planned to launch at a future date.

We appreciate your patience as we work to launch the exchange in a safe, secure, and scalable manner. We are proud to have every one of you as a member of our community!

– The WCX Team

ICO Alert Report: SwissBorg

ICO Alert does not endorse or recommend participating in any initial coin offerings. ICO Alert receives a promotional fee for the production of this ICO Alert Report. Please click here for additional important information.

ICO Alert Quick Facts

  • Switzerland based wealth management service
  • 0.10 Swiss Franc = 1 CHSB token
  • December 7, 2017-January 10, 2018
  • 625,000,000 total available / 1,000,000,000 total supply
  • $11,000,000 currently raised; team comprised of 90+ years of investment experience

What is SwissBorg?

In a nutshell, SwissBorg is an investment platform for the crypto generation built by investment professionals. Our investment team is combining its 90+ years of experience from top investment firms with smart contracts technology to build the new future of investing.

While cryptocurrencies are a brand new and rapidly growing asset class, investment strategies used in traditional asset classes can be applied to successfully manage portfolios of cryptocurrencies.

— Anthony Lesoismier, CSO


Q&A with Anthony Lesoismier CSO | Jeremy Baumann Head of Discretionary

ICO Alert: How does the SwissBorg token (CHSB) function within the platform and why is it needed?

SwissBorg: A core feature of the CHSB Token is giving holders the ability to choose the direction in which the network will be developed. The CHSB token is used to generate a referendum token, called the “RSB token.” For each decision, the RSB token is used by the holders to make decisions on the referendum proposals. The voting power will be weighted based on the amount of CHSB tokens users hold at the time of the referendum announcement and it will not cost any CHSB tokens to vote.

The type reward will depend on the type of referendum. ETH, CHSB, or ERC-20 Tokens can be offered during referendums. Inspired by the open protocol philosophy, SwissBorg is leveraging on a new type of open protocol utility: “proof of meritocracy” to revolutionize the wealth management industry.

ICO Alert: In your whitepaper you discuss the possibility of cryptocurrencies evolving into a new asset class. Can you discuss this claim further and describe how SwissBorg will benefit from this progression occurring?

SwissBorg: As shown on the graph above, for the cryptocurrencies space to scale to the size of the dotcom bubble, widespread adoption will be needed.

It is still difficult for both retail investors and institutional investors to get access to the cryptocurrencies market as they simply don’t understand what a wallet actually is; yet there is an ever growing demand of crypto asset investment solutions.

2017 allowed cryptocurrencies to be recognized as a new active class of asset. Nevertheless, due to the technical obstacles related to the purchase of cryptocurrencies, very few people hold crypto money.

There is no less than the demand for this new active class is in constant growth. In positioning itself as a pioneer in the field, SwissBorg counts on capitalizing on the gap between the strong demand for investment products in cryptocurrencies and the very few solutions available currently.

ICO Alert: What are the problems currently facing the wealth management industry? How will SwissBorg and blockchain implmentation solve these issues?

SwissBorg: Most of the time, wealth management is reserved for an elite clientele because of the relatively high cost of operations. In using smart contract technology, SwissBorg is able to offer a large number of wealth management services.

Wealth management experts use relatively unsophisticated products with very little customization for individual clients. There again, smart contract technology allows SwissBorg to create tailored investment products that are personalized and accessible to every client.

ICO Alert: Describe the “Proof of Meritocracy” model you have based the governance of the SwissBorg platform on. What keeps certain individuals or groups from manipulating/monopolizing the voting system?

SwissBorg: We believe, in the principle of “self-governance,” and if we cannot prevent such a phenomena, in the same way as any open protocol, we are sure that the unevenness cannot last forever.

It is in the interest of blockchain, to reach a natural balance and system to the central controlling organization exposing the inefficiency of the system that tries to regulate too much.

ICO Alert: Holders of the CHSB token will have exclusive access to additional products, services, and bonuses within the SwissBorg ecosystem. Can you detail some of these products or services?

SwissBorg: As the platform develops, the spectrum of products and exclusive offers becomes bigger and bigger. For example, new index tokens will be regularly created according to demand & our assessment. CHSB holders will have a privileged access and advantageous pricing for subscribing to these products. Another example could be in payment solutions. A CHSB holder could hold a card with fewer fees or with more offered services.

ICO Alert: Potential regulation seems to be on the horizon for the entire cryptocurrency industry. You have a stated goal of being regulated in multiple countries, can you tell us which locations you are specifically targeting? Why is this an important step for the viability of your platform?

SwissBorg: The legal development is one of the most important aspects of 2018. We aim to become 100% regulated in Switzerland, of course, but also in Europe. These two arenas are our priority.

In order to achieve this, we have been making progress and are already in discussions with qualified authorities in Switzerland.

For the EU, we are currently in the process of studying the different possibilities for achieving regulation in the Union. We will inform the community as soon as we have completed our discussions.

ICO Alert: The Ethereum network has occasionally suffered from slow transaction times. Is there any concern that this may affect the SwissBorg platform?

SwissBorg: The Ethereum network is far from perfect, but we should not forget that we are in the very beginnings of this technology. We continue to have confidence in the future development of this blockchain, both in terms of innovation and in terms of better growth and security in the future. In connection with SwissBorg, we must realize that it was not the network itself that was paralyzed, but that it was hit with high density traffic. To avoid being blocked, it is enough to pay a little more “gas” (commissions), and its impact could be zero. Nonetheless, we are evolving in an as of yet imperfect system and are aware of its limitations.

ICO Alert: As a non-SwissBorg question, we like to ask for unique predictions for the ICO and cryptocurrency space in the future. Where do you see both in the next 3–5 years?

SwissBorg: We believe that the ICO space will evolve to a more regulated place as well as the entire crypto space.

We believe that better structured, more professional ICOs will take place. We will see the emergence of new standards brought by regulators and investors.

For the cryptocurrency space, the same dynamics will apply as more regulation will mitigate the space. We see this as being positive as it will open the access to retail investors and allow cryptos to become an entirely separate asset class.

Therefore, we see the space maturing in a more professional, stable, and sustainable way which can only benefit everyone.

As a pioneer in this new decentralized financial reality, we are confident that in 3–5 years from now, SwissBorg would be counted as part of the world leaders in the wealth management industry.

ICO Information
The main ICO began on December 7, 2017 and will end on January 10, 2018. There are a total of 625,000,000 Swissborg tokens (CHSB) available during the main ICO, representing 62.50% of the total CHSB supply. A hard cap of 625,000,000 CHSB is set for this period.

0.10 Swiss Franc = 1 CHSB token
10% Token Bonus for remainder of ICO

Current accepted currencies for Swissborg include ETH, BTC, XRP, BCH, LTC and fiat.

Swissborg is an ERC-20 token, so it’s important that contributors use ERC-20 compatible wallets to send funds to the ICO smart contract and to receive the Swissborg tokens.

All CHSB token holders will have the opportunity to participate in the development of the SwissBorg network through the concept of “Proof of Meritocracy.” The community will be rewarded by voting on the most promising projects of SwissBorg’s platform.

Token Distribution Information
There are a total 1,000,000,000 CHSB tokens being created, with 625,000,000 available during main ICO.

Contributors will have their tokens distributed on January 31, 2017. Visit the SwissBorg website for more information and the contribution address.

Allocation

Use of Crowsale Proceeds

Roadmap

Team

Social Media
Facebook
Medium
Twitter
Telegram
Github
BitcoinTalk [ANN]

View the Swissborg website here.

View the only comprehensive list of active and upcoming Initial Coin Offerings (ICOs) here.

References
(1) Swissborg Website, Swissborg (2017)
https://swissborg.com/en/index.html

(2) Swissborg Whitepaper, Swissborg (2017)
https://swissborg.com/en/index.html



ICO Alert Report: SwissBorg was originally published in ICO Alert Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Binance Exchange: Fueling a Hot New Era of Token-based Exchanges Models?

Igniting a Wildfire of Innovative Exchange Features For Traders


Binance Website

If you have been a crypto-trader for anything longer than a few months, you have probably also experienced a lot of negative news from exchanges in the space. Perhaps the most critical exchange matter in recent years was the issue with Mt. Gox who, in 2011, announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time [Source 1, 2]. 850,000 BTC today…$16,150,000,000 at $19,000 each.


Source: CoinTelegraph, Mt. Gox CEO Passes Victim of Mt. Gox Happening

I don’t know about you, but that’s an issue I would rather not experience first-hand.


CoinTelegraph: Suddenly, Bitcoin Exchange Poloniex Changes Terms of Use, Triggers Alarm

Then you have the Poloniex ‘user agreement’ issue that occurred earlier this year in which the popular exchange abruptly changed their terms of use which did not go unnoticed by the protectors of the crypto community. Below is an excerpt from CoinTelegraph on the issue:

“While Poloniex did not highlight the changes that were made, Reddit user NLNico parsed the document and composed a long list. There are some surprising changes, including bizarre items such as a claim to own anything that a user writes about the exchange on its social media accounts.”

This change ultimately included their users waive the right to participate in a class action lawsuit against the exchange — see where this is going?

Last example I’ll bring into the mix is that of Bitfinex Exchange; an exchange that has most recently taken scrutiny from the community because of their potentially shady dealings with USD Tether, a token that is said to be backed by USD at a 1:1 ration. However, Medium user Bitfinex’ed makes quite the case that both


Bitfinex’ed on Medium

Bitfinex and USD Tether are run by the same, elusive CEO who has yet to display a public audit of the USD Tether bank accounts — 1:1 USD:USDT ratio. This quickly becomes an issue because of a November 2017 USD Tether ‘hack’ which resulted in $30 million of USD Tether lost. Bitfinex’ed really does have some good info on this Bitfinex exchange we are talking about.

The point I’m trying to make here is that exchanges have not acted in the best interest of the stakeholders involved in their operations. Instead, exchanges seem to think they can just ‘pick off’ the Bitcoin that rightfully belongs to the traders on their platforms by claiming a ‘hack’ has occurred. Kind of funny blockchain technology seeks to solve this problem directly — exterminating bad actor intermediaries from the planet.

While Bitfinex is one of the busiest exchanges in the cryptoverse — a new breed of token-based exchanges are popping up to enhance the trading experience, giving traders more attractive options to the regular Bittrex, Poloniex, Bitfinex-type exchanges traders were pigeon-holed into using.

Early Attempts At The Token-based Exchange

Some of the earlier attempts at putting a token at the center of the exchange model are Cryptopia and their DotCoin; NovaExchange and their NovaCoin; and POSWallet’s PoSWCoin. Today, I don’t hear about Cryptopia’s DotCoin or POSWallet’s PoSWCoin and NovaExchange is closing their exchange in Q1 of 2018. These were clearly all innovators that were just a bit too early to the party.

Today, we can see a revival of the token-based cryptocurrency exchange business model being led by Binance and Kucoin Exchange as they forge the path forward to a new era of trader-friendly exchanges. The projects following the path of Binance and Kucoin’s are Exmo and HitBTC as they are both integrating tokens into their pre-existing exchange model, currently undergoing their own Initial Coin Offering (ICO) in order to initiate their token integration.

Binance The Behemoth: Killer of Bittrex?


Binance Website

Binance Exchange launched their ICO in early July (2017) and has experienced exponential growth ever since, nailing down the token-based exchange model better than any before.

For a quick look into the Binance Exchange platform, below is what I believe is an explainer-video submitted by Hypercube Studios to a video competition put on by the exchange — VERY well done, concisely explaining the platform:



Binance Website

The large infographic above is a bit hard to read so I’m going to break-down each section in strips to make it easier to read. Notice how these are the updates for their 5-months of operating as an exchange — Nov. 15th-Dec. 14th.

Binance has reached Top 3 in this short time period, but I want to highlight that the exchange may have at one point been the #1 exchange in terms of 24h volume. As I was tracking Binance’s 24h volume a couple weeks ago, the highest I saw while refreshing their CoinMarketCap page was $4.5 billion and they are casually trading at $2,470,175,294 24h volume as we speak. So the $2.1b figure in the infographic has been more than doubled.

According to CoinMarketCap, Binance’s BNB token was trading at $3.00 as of Dec. 14th, 2017. Today, as I type this article, Binance’s BNB has a price of $6.95 — this means BNB’s market capitalization has more than doubled again since just 11-days ago, now sitting at $687,878,972.


Binance Website

Continuing with the infographic narrative, we can see that Binance has quite a diverse user-base with users coming from all over the world with a majority coming from the United States.

I really do feel that it is necessary to point out that Binance reached 1.5 million users within just 5-months. Similar to the previous highlights, Binance has already exceeded 2 million users in the 11–days since this infographic update. I say this because I’m now seeing exchanges like Exmo and CEX talking about their ‘1-million users reached’ after Binance has already been talking about their user-base statistics — those other exchanges have been around for years and Exmo is currently running their own ICO to integrate a token into their business model, effectively following behind Binance.

On top of all of this, they have also upgraded the desktop client to use the Binance Exchange through — not all exchanges have a desktop client for download.


Binance Website

What’s more, the ‘Binance Launchpad’ feature has been added, allowing Initial Coin Offerings (ICOs) to go straight to market — this can be most closely compared to the way an Initial Public Offering (IPO) works in the world of traditional finance. Seeing this feature installed further reinforces the fact that Binance is already an institutional-standard cryptocurrency exchange platform to trade cryptocurrency on.

I mean, everything went completely fine with the Gifto Official ICO — so well that it sold out in 2-minutes. This is also key because over 235 ICO’s were launched in 2017, raising over $3.7 billion in aggregate to date.

I don’t know what time period the 22 new coins/tokens were listed in, but they bring Binance’s total trading pair offering to 194. This is an important metric to look at because not all exchanges have an expansive offering — specially exchanges that have gotten up and operational, while growing this quickly.


Binance Website

Quite possibly one of the most exciting actions Binance has taken on its way to becoming the top cryptocurrency exchange was their various trader competitions! They gave away multiple cars including a brand-new Mercedes Benz c180L and Jaguar XF. Those are just past competitions — Binance is currently running trading competitions that will give away:

  • Time New Bank (TNB) tokens — 1st place = Porsche Panamera. 2nd place = Mercedez-Benz Smart Fortwo.
  • Monaco Card (MCO) — 1st place = Lamborghini Huracan RWD Coupe.

The two mentioned are live and the Tron trading competition just ended in which Binance gave away a 2018 Maserati 3.0T Levante Classic and Mercedes-Benz Smart Fortwo.

Oh, we can’t forget Binance’s competitive referral program! As of the Dec. 14th infographic, the top referrer had earned roughly $333,000. As of December 25th, 2017, the top Binance referrers have earned approximately:

  • 63.69082344 BTC = $891,671
  • 30.66260902 BTC = $429,276
  • 28.548836 BTC = $399,683

Not only is Binance bringing a new, higher level of standards to the way exchanges treat traders, but they are quite literally bringing prosperity to the entire community by constructing this synergy-wrapped business model.

Token Burning: Things Are Heating Up


Binance Website

Binance’s business model includes a buy-back and burn feature to increase the scarcity of BNB in existence. On their ultimate journey to becoming a decentralized exchange, Binance offers traders a fee-discount for using the BNB to pay exchange fees with. Binance will repurchase 50% of the total supply of BNB in existence to burn and will do so with 20% of quarterly profits. Per this update, Binance’s first quarterly token burn resulted in 986,000 BNB tokens burned.

Keep in mind, Binance had not even hit $1 billion in 24h volume as of their 1st token burn. The BNB was much cheaper during their last burn, I think under $2, so while we may not see as high a number, it’s safe to say the team has built an extremely powerful scarcity/demand mechanism for the BNB.

This leadership team gives us so many reasons to support this project and I believe their ultimate goal of becoming a decentralized exchange speaks volumes about the innovation this project brings to the blockchain community. I am nothing short of excited to see what the next announcement is from the Binance leadership team!

Happy Holidays to You and Yours From CrowdConscious

Merry Christmas and happy holidays to you all. I do this because I truly believe in blockchain technology. That it is ushering in a new era of positive change that is already helping people across the globe. If it weren’t for Binance, new projects might not have this greater level of liquidity critical in picking up traction in any early project — Binance provides them with the platform and over 2-million pairs of eyes. ICO 2.0.

The best way you could help contribute to my success is by sharing this and/or signing-up for an account on Binance. I’m on a journey to make a living off of crypto so that I can continue covering innovative projects full-time! Thank you and stay tuned for your next bit of crypto — next article will include a feature of Kucoin Exchange!

Below are some resources for beginning cryptocurrency enthusiasts or others interested in something new:

  • Cryptoversity by Chris Coney — The Online School That Pays You To Learn About Bitcoin, Crypto-currencies and Blockchains
  • HitBTC Exchange— major exchange, access ICOs and multi-currencies.
  • CoinTracking — Your personal Profit / Loss Portfolio Monitor and Tax Tracker for all Digital Coins
  • Changelly — as easy as purchasing cryptocurrency gets — watch the exchange rate.
  • CoinMate.io — Bitcoin arbitrage made easy.
  • CEX.io— Buy Bitcoin w/ credit card, ACH bank transfer, SEPA transfer, cash, or AstroPay. Credit purchases are instant.
  • CoinPayments — Receive payment via 70+ different cryptocurrencies — the crypto-PayPal.
  • CoinMama — purchase Bitcoin and Ethereum w/ credit/debit cards & using cash through WesternUnion on their platform. Best for Euro purchases.
  • Ledger Nano S — multi-cryptocurrency cold hardware wallet supporting Bitcoin forks. Keep your coins safe and offline. Cold storage.
  • Kucoin — new exchange with its own token used to split exchange fees with holders, daily. Only exchange with NEO trading pairs too.
  • Binance — 150+ cryptocurrencies with its own token used to pay exchange fees on the platform and give perks to traders on their platform.

Binance Exchange: Fueling a Hot New Era of Token-based Exchanges Models?

Igniting a Wildfire of Innovative Exchange Features For Traders


Binance Website

If you have been a crypto-trader for anything longer than a few months, you have probably also experienced a lot of negative news from exchanges in the space. Perhaps the most critical exchange matter in recent years was the issue with Mt. Gox who, in 2011, announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time [Source 1, 2]. 850,000 BTC today…$16,150,000,000 at $19,000 each.


Source: CoinTelegraph, Mt. Gox CEO Passes Victim of Mt. Gox Happening

I don’t know about you, but that’s an issue I would rather not experience first-hand.


CoinTelegraph: Suddenly, Bitcoin Exchange Poloniex Changes Terms of Use, Triggers Alarm

Then you have the Poloniex ‘user agreement’ issue that occurred earlier this year in which the popular exchange abruptly changed their terms of use which did not go unnoticed by the protectors of the crypto community. Below is an excerpt from CoinTelegraph on the issue:

“While Poloniex did not highlight the changes that were made, Reddit user NLNico parsed the document and composed a long list. There are some surprising changes, including bizarre items such as a claim to own anything that a user writes about the exchange on its social media accounts.”

This change ultimately included their users waive the right to participate in a class action lawsuit against the exchange — see where this is going?

Last example I’ll bring into the mix is that of Bitfinex Exchange; an exchange that has most recently taken scrutiny from the community because of their potentially shady dealings with USD Tether, a token that is said to be backed by USD at a 1:1 ration. However, Medium user Bitfinex’ed makes quite the case that both


Bitfinex’ed on Medium

Bitfinex and USD Tether are run by the same, elusive CEO who has yet to display a public audit of the USD Tether bank accounts — 1:1 USD:USDT ratio. This quickly becomes an issue because of a November 2017 USD Tether ‘hack’ which resulted in $30 million of USD Tether lost. Bitfinex’ed really does have some good info on this Bitfinex exchange we are talking about.

The point I’m trying to make here is that exchanges have not acted in the best interest of the stakeholders involved in their operations. Instead, exchanges seem to think they can just ‘pick off’ the Bitcoin that rightfully belongs to the traders on their platforms by claiming a ‘hack’ has occurred. Kind of funny blockchain technology seeks to solve this problem directly — exterminating bad actor intermediaries from the planet.

While Bitfinex is one of the busiest exchanges in the cryptoverse — a new breed of token-based exchanges are popping up to enhance the trading experience, giving traders more attractive options to the regular Bittrex, Poloniex, Bitfinex-type exchanges traders were pigeon-holed into using.

Early Attempts At The Token-based Exchange

Some of the earlier attempts at putting a token at the center of the exchange model are Cryptopia and their DotCoin; NovaExchange and their NovaCoin; and POSWallet’s PoSWCoin. Today, I don’t hear about Cryptopia’s DotCoin or POSWallet’s PoSWCoin and NovaExchange is closing their exchange in Q1 of 2018. These were clearly all innovators that were just a bit too early to the party.

Today, we can see a revival of the token-based cryptocurrency exchange business model being led by Binance and Kucoin Exchange as they forge the path forward to a new era of trader-friendly exchanges. The projects following the path of Binance and Kucoin’s are Exmo and HitBTC as they are both integrating tokens into their pre-existing exchange model, currently undergoing their own Initial Coin Offering (ICO) in order to initiate their token integration.

Binance The Behemoth: Killer of Bittrex?


Binance Website

Binance Exchange launched their ICO in early July (2017) and has experienced exponential growth ever since, nailing down the token-based exchange model better than any before.

For a quick look into the Binance Exchange platform, below is what I believe is an explainer-video submitted by Hypercube Studios to a video competition put on by the exchange — VERY well done, concisely explaining the platform:



Binance Website

The large infographic above is a bit hard to read so I’m going to break-down each section in strips to make it easier to read. Notice how these are the updates for their 5-months of operating as an exchange — Nov. 15th-Dec. 14th.

Binance has reached Top 3 in this short time period, but I want to highlight that the exchange may have at one point been the #1 exchange in terms of 24h volume. As I was tracking Binance’s 24h volume a couple weeks ago, the highest I saw while refreshing their CoinMarketCap page was $4.5 billion and they are casually trading at $2,470,175,294 24h volume as we speak. So the $2.1b figure in the infographic has been more than doubled.

According to CoinMarketCap, Binance’s BNB token was trading at $3.00 as of Dec. 14th, 2017. Today, as I type this article, Binance’s BNB has a price of $6.95 — this means BNB’s market capitalization has more than doubled again since just 11-days ago, now sitting at $687,878,972.


Binance Website

Continuing with the infographic narrative, we can see that Binance has quite a diverse user-base with users coming from all over the world with a majority coming from the United States.

I really do feel that it is necessary to point out that Binance reached 1.5 million users within just 5-months. Similar to the previous highlights, Binance has already exceeded 2 million users in the 11–days since this infographic update. I say this because I’m now seeing exchanges like Exmo and CEX talking about their ‘1-million users reached’ after Binance has already been talking about their user-base statistics — those other exchanges have been around for years and Exmo is currently running their own ICO to integrate a token into their business model, effectively following behind Binance.

On top of all of this, they have also upgraded the desktop client to use the Binance Exchange through — not all exchanges have a desktop client for download.


Binance Website

What’s more, the ‘Binance Launchpad’ feature has been added, allowing Initial Coin Offerings (ICOs) to go straight to market — this can be most closely compared to the way an Initial Public Offering (IPO) works in the world of traditional finance. Seeing this feature installed further reinforces the fact that Binance is already an institutional-standard cryptocurrency exchange platform to trade cryptocurrency on.

I mean, everything went completely fine with the Gifto Official ICO — so well that it sold out in 2-minutes. This is also key because over 235 ICO’s were launched in 2017, raising over $3.7 billion in aggregate to date.

I don’t know what time period the 22 new coins/tokens were listed in, but they bring Binance’s total trading pair offering to 194. This is an important metric to look at because not all exchanges have an expansive offering — specially exchanges that have gotten up and operational, while growing this quickly.


Binance Website

Quite possibly one of the most exciting actions Binance has taken on its way to becoming the top cryptocurrency exchange was their various trader competitions! They gave away multiple cars including a brand-new Mercedes Benz c180L and Jaguar XF. Those are just past competitions — Binance is currently running trading competitions that will give away:

  • Time New Bank (TNB) tokens — 1st place = Porsche Panamera. 2nd place = Mercedez-Benz Smart Fortwo.
  • Monaco Card (MCO) — 1st place = Lamborghini Huracan RWD Coupe.

The two mentioned are live and the Tron trading competition just ended in which Binance gave away a 2018 Maserati 3.0T Levante Classic and Mercedes-Benz Smart Fortwo.

Oh, we can’t forget Binance’s competitive referral program! As of the Dec. 14th infographic, the top referrer had earned roughly $333,000. As of December 25th, 2017, the top Binance referrers have earned approximately:

  • 63.69082344 BTC = $891,671
  • 30.66260902 BTC = $429,276
  • 28.548836 BTC = $399,683

Not only is Binance bringing a new, higher level of standards to the way exchanges treat traders, but they are quite literally bringing prosperity to the entire community by constructing this synergy-wrapped business model.

Token Burning: Things Are Heating Up


Binance Website

Binance’s business model includes a buy-back and burn feature to increase the scarcity of BNB in existence. On their ultimate journey to becoming a decentralized exchange, Binance offers traders a fee-discount for using the BNB to pay exchange fees with. Binance will repurchase 50% of the total supply of BNB in existence to burn and will do so with 20% of quarterly profits. Per this update, Binance’s first quarterly token burn resulted in 986,000 BNB tokens burned.

Keep in mind, Binance had not even hit $1 billion in 24h volume as of their 1st token burn. The BNB was much cheaper during their last burn, I think under $2, so while we may not see as high a number, it’s safe to say the team has built an extremely powerful scarcity/demand mechanism for the BNB.

This leadership team gives us so many reasons to support this project and I believe their ultimate goal of becoming a decentralized exchange speaks volumes about the innovation this project brings to the blockchain community. I am nothing short of excited to see what the next announcement is from the Binance leadership team!

Happy Holidays to You and Yours From CrowdConscious

Merry Christmas and happy holidays to you all. I do this because I truly believe in blockchain technology. That it is ushering in a new era of positive change that is already helping people across the globe. If it weren’t for Binance, new projects might not have this greater level of liquidity critical in picking up traction in any early project — Binance provides them with the platform and over 2-million pairs of eyes. ICO 2.0.

The best way you could help contribute to my success is by sharing this and/or signing-up for an account on Binance. I’m on a journey to make a living off of crypto so that I can continue covering innovative projects full-time! Thank you and stay tuned for your next bit of crypto — next article will include a feature of Kucoin Exchange!

Below are some resources for beginning cryptocurrency enthusiasts or others interested in something new:

  • Cryptoversity by Chris Coney — The Online School That Pays You To Learn About Bitcoin, Crypto-currencies and Blockchains
  • HitBTC Exchange— major exchange, access ICOs and multi-currencies.
  • CoinTracking — Your personal Profit / Loss Portfolio Monitor and Tax Tracker for all Digital Coins
  • Changelly — as easy as purchasing cryptocurrency gets — watch the exchange rate.
  • CoinMate.io — Bitcoin arbitrage made easy.
  • CEX.io— Buy Bitcoin w/ credit card, ACH bank transfer, SEPA transfer, cash, or AstroPay. Credit purchases are instant.
  • CoinPayments — Receive payment via 70+ different cryptocurrencies — the crypto-PayPal.
  • CoinMama — purchase Bitcoin and Ethereum w/ credit/debit cards & using cash through WesternUnion on their platform. Best for Euro purchases.
  • Ledger Nano S — multi-cryptocurrency cold hardware wallet supporting Bitcoin forks. Keep your coins safe and offline. Cold storage.
  • Kucoin — new exchange with its own token used to split exchange fees with holders, daily. Only exchange with NEO trading pairs too.
  • Binance — 150+ cryptocurrencies with its own token used to pay exchange fees on the platform and give perks to traders on their platform.

X8C — A LEAP FORWARD IN THE QUEST OF THE STABLE TOKEN

A recent article by Anatoly Knyazev goes straight to the heart of the matter for the X8 project. We could hardly have produced a better historical introduction to the X8currency. The author points out that the famous Austrian liberal economist Friedrich von Hayek opined that the biggest headwind a currency might face is volatility. Of course no holder sees the appreciation of his altcoins as a problem, but what goes up can always go down. The perennial threat and reality of inflation is another problem addressed by X8currency. To efficiently hedge against inflation capital must be continuously reallocated. The X8 project is not about value gains (and consequently value losses), as this field already provides a host of speculative instruments. X8currency tackles the problem of value preservation and has no intention to appeal to speculators and token dumpers. It will appeal to the risk-averse and everyone who dislikes inflation. And we believe there are a great many of them.

MANY ATTEMPTS AT SOLVING ONE PROBLEM

We have already written a comparison of X8C with some other tokens and also with arguably still the most popular token crypto traders resort to in downswings — the USDT. Von Hayek envisioned many different “private currencies” pegged to different commodities competing for the consumer’s wallet. Since stability is a universally recognized problem in the crypto world many projects have emerged recently under the banner of ensuring stability. Different solutions have been proposed but we can say with confidence that our particular niche is not getting crowded. In fact we stand in it alone for the reasons stated below.

VON HAYEK AND X8C

To quote from the article: “The egg of Columbus, in my opinion, is to connect a coin to a fund that holds a range of basic assets like national currencies and other commodities.” The author goes on to claim that the pegging mechanism has to be revolutionized. The reserves backing the token must be audited by an independent agent. Here X8C gets a big check. The holdings will be audited and monitored by JP Fund SA which will also transfer all data on the blockchain. Additionally, a special audit will be performed on request for a fee. Another issue the author mentions is legislative support. Here again X8C gets a check. The X8 team has been working hard to make the whole enterprise FINMA (Swiss regulatory authority) compliant.

CONCLUSION

Unlike any other token X8C is backed by an active basket. ARM (Automatic Reserve Management) AI allocates its holdings continuously amongst 8 currencies (USD, GBP, EUR, JPY, AUD, CAD, CHF, NZD) and gold. There is no human factor involved. No central planning and no room for any arbitrary manoeuvres. No board of directors and no group of fund managers will ever need to sit together and fix the ratio of the currencies in the basket. This is why only those currencies that are 100% convertible into each other have been accepted into this basket. The system responds to any kind of market movements and volatility boosts its ability to fight inflation. That is the gist of having a system — no situation should blindside you. Every contingency is covered. ARM AI is brought down only when the grid comes down altogether, with every other electrical device. A descriptive ARM AI whitepaper is available on our site.



X8C — A LEAP FORWARD IN THE QUEST OF THE STABLE TOKEN was originally published in X8currency on Medium, where people are continuing the conversation by highlighting and responding to this story.

Centra ICO, Promoted by Mayweather, is Sued as Investors Request Refunds

With the proliferation of bitcoin and cryptocurrencies into the world economy, an uncountable number of startups have taken advantage of the unregulated nature of the ICO ecosystem, and now ICOs, not IPOs are the new ways to raise capital for startups.

In recent times, there have been quite many ICO projects that have gone under with millions of investors’ funds without giving back a dime to its participants. Plexcoin, REcoin, DRC and possibly Centra are some examples of ICO projects that turned out to be nothing but well-advertised scam schemes.

Centra is a multi-blockchain cryptocurrency wallet linked with a debit card that allows its holders spend their bitcoin and altcoin from all over the world. Centra raised approximately $30 million during its Pre-sale and Crowdsale organized in July and September.

The Centra ICO project was promoted by quite a number of celebrities including boxing superstar; Floyd Mayweather. Back in July, the Centra ICO looked like a project meant for the skies, but it appears it got its wings broken somewhere along the line and now, investors have dragged Centra to the court.

Centra Goes To Court

As reported by Fortune, Centra has been dragged to court by some investors who took part in its ICO. Although Mayweather is not mentioned in the suit dated December 13, the founders of  Centra Tech, Incorporated have been charged with allegations of making deceptive statements and selling unregistered securities. The lawsuit, which was filed in U.S district court in Florida, seeks a total refund of primary plaintiff Jacob Zowie Thomas Rensel and all other investors in the Centra ICO.

It is pertinent to note that in October, the New York Times reported that Centra’s claims of having established partnerships with Visa and Mastercard were nothing but lies. It was also claimed that the founders of the Centra Project were neither cryptocurrency or Blockchain technology experts nor credit card gurus and some have previously been accused of corrupt and fraudulent practices, financial negligence and drunk driving.

It also appears that Centra’s claim of Mayweather’s endorsement as being part of an ongoing business is false as the superstar boxer’s spokesman has since refuted the claim saying that Mayweather’s endorsement of Centra was just a one-off deal and that the fighter got paid in cash for it.

Celebrities like Mayweather and rapper DJ Khaled were only able to sponsor the Centra ICO project because the United States Securities and Exchange Commission (SEC) had not established its cyber crime department at that time. Mayweather also put his name to the Stoxx ICO during August 2017.

However, since the SEC’s cybercrime arm got into full action, wielding its strong hammer on fake ICO’s like Plexcoin, its operations have sounded a note of warning to entrepreneurs planning to organize fraudulent crowdfunding schemes. In November, the regulator also warned about celebrity endorsements for ICOs, stating endorsement by artists, musicians, actors or athletes, does not ensure the credibility of a purchase.

The post Centra ICO, Promoted by Mayweather, is Sued as Investors Request Refunds appeared first on BTCMANAGER.

Shhh…Don’t Tell My Kids They are Getting Bitcoin for Christmas

I live with three women, which makes Christmas gift buying about as easy, and mystifying, as unclogging a toilet.

My wife’s apparel sizes seem to alter daily, which is why every item of clothing I’ve ever wrapped and placed under the tree contains a gift receipt prominently displayed on the blouse, the jeans; even the scarf, although her neck measurements seem to have remained steady over the years. Her stocking usually includes a gift card from our local gas station so she can fill her tank, compliments of her loving husband, when she begins returning all my purchases.

As for my daughters, our tastes in music, movies and any form of entertainment differ wildly so purchasing CDs and DVDs is pointless. And does anyone under 25 even utilize those two items anymore?

This year, however, I believe I have found the perfect gift for all three. It’s expensive, mysterious, riotously popular and, here’s the best part, doesn’t have to be wrapped. I just need to come up with $18,000, no $18,492, excuse me, $19,734. Would somebody please hold the price steady long enough for me to make a purchase?

Of bitcoin.

Like 99.9 percent of the human race, I have absolutely no idea what bitcoin is; I only know that everybody is talking about it, as if speaking of bitcoin is the prerequisite to getting rich off bitcoin. Like AOL and Qualcomm stock 20 years ago, and house flipping in the years leading up to the real estate crash, bitcoin has achieved bandwagon “make boatloads of money now” status, at least verbally and through online queries. I recently typed “what is the current value of” into my Google search engine and the auto fill feature enthusiastically completed the inquiry with “bitcoin.” Less popular choices were “copper,” “my house,” “a forever stamp” and, sadly, “love.”

In my health club locker room, where middle-aged men loudly reveal their financial worth in various states of nakedness, bitcoin is on everyone’s minds. I listen while trying to avert my eyes, yet still can’t make sense of this strange currency; even when it’s being discussed by financial pros, who seem equally clueless.

“So, Charlie, where’s bitcoin at today?”

“It’s up 35 percent in the last 20 seconds.”

“Incredible. How high do you think it’s gonna go?”

“Nobody knows for sure.”

“How do I get some?”

“Couldn’t tell you. There’s a finite number of bitcoin.”

“Who decides to make more?”

“No idea.”

“Who owns the bitcoin company?”

“It’s not a company. But some Japanese guy owns most of it. Can’t recall his name.”

Again, this was an actual conversation between NAKED, SEASONED FINANCIAL PROFESSIONALS. The Japanese guy, incidentally, is Satoshi Nakamoto, a California man credited with inventing the currency, which somehow makes him a gajillionaire. But there seems to be no proof whether that is his real name or whether he actually created bitcoin, which many believe is being looked at lovingly by drug dealers since transactions can be made without notifying those pesky banks.

Still want to invest?

My research into this cryptocurrency, as bitcoin is known, has yielded two very positive pieces of information pertaining to my girls:

1. I can purchase a fraction of a bitcoin, keeping the price in the $50 to $100 grab bag gift range.

2. Subway accepts bitcoin.

Regarding number two, I have yet to see anyone at Subway whipping out a bitcoin to purchase their meatball marinara and don’t want to be in line behind the person who does. But it’s comforting to know my wife and daughters can buy lunch without carrying cash or even credit cards.

Now, as the shopping days until Christmas tick down, I find myself reading a tutorial explaining the app Coinbase, which allows you to buy bitcoin on your smart phone. I also have read numerous articles detailing hacker breaches that have ensnared novice bitcoin buyers such as myself. I am concerned, but the massive Target hack of 2013 hasn’t stopped me from purchasing items on that retail giant’s website. I’m ready to buy bitcoin, but I still have one pressing question that somebody, perhaps the naked guys in the locker room, must answer:

Does a bitcoin purchase come with a gift receipt?

Greg Schwem is a business humorist, motivational corporate comedian, corporate emcee, nationally syndicated humor columnist for Tribune Content Agency and creator of the web series, “A Comedian Crashes Your Pad.”

Who cares about bitcoin?


https://www.shutterstock.com

The always-entertaining Jamie Dimon, CEO of JP Morgan, made news earlier this summer by criticizing Bitcoin and the hype surrounding the crpyto-currency market as a whole.


https://twitter.com/joelight/status/918899226771427328

While Dimon’s words were harsh and probably a little exaggerated he made a valid point: “Who cares about bitcoin?” In our first presentation for Wolverine Crypto Trading this semester my co-presenter, Briana, and I stressed the same point. Aside from the speculation frenzy, if bitcoin were to go away, the world wouldn’t change for most of us. As compared to our existing payment system in developed countries, bitcoin is slower, more expensive, less scalable, and not very well understood. In reality, cryptocurrencies only have had a tangible impact on those who can’t rely on existing financial institutions. So who are these people?

In reality, cryptocurrencies only have had a tangible impact on those who can’t rely on existing financial institutions.

Bitcoin’s Actual Benefactors

1.Illegal Actors

Let’s start with Jamie’s answer (and the first thought in many of your minds): criminals. It’s true — the notorious Silk Road network (the largest online marketplace for illicit material) was powered entirely by bitcoin. For many years criminals thought they were invincible with crypto-currencies. Then, in 2013, Silk Road was shut down. In the years that followed law enforcement agencies nabbed many crypto-criminals. The world realized that “the paradox of cryptocurrency is that its associated data create a forensic trail that can suddenly make your entire financial history public information.” Since then the fraction of estimated illegal transactions has dropped.

After 2013, the Dimons of the world speculated that bitcoin was useless. “After all, bitcoin was for criminals, the narrative went, and now that the greatest criminal use for bitcoins was gone, what was bitcoin good for?” While there are probably still criminals who use the currency, it’s suffice to say that the value can’t just be propped up by them.

2. The Unbanked

The second category of folks are those who don’t have access to financial institutions. “The Age of Crypto Currency” — a deep dive into cryptocurrency by two WSJ journalists Paul Vigna and Michael J. Casey— has a chapter called the “Unbanked.” Vigna and Casey give a plethora of examples for these people, which I break down into two categories: a) underserved markets and b) discriminated minorities.

a) Underserved markets: The book cites the fact that 2.5 billion adults across the world don’t have access to a bank. Banks don’t operate in their communities because of a combination of three factors: i) a lack of infrastructure and security in some remote regions, ii) lack of legal and government institutions supporting banks and/or iii) a lack of a monetary incentive for serving poor customers. So if you live in these “unbankable” regions, there is no convenient mechanism transferring or storing money. The authors use the example of Mali. Many foreign workers who need to send remittances home to Mali must use a wildly unreliable network of human carriers to transfer money across the continent. Sounds medieval right? But this is the reality for millions of people across Africa. “Sometimes the money arrived. Sometimes it didn’t.” Those are the words of Fatima, a Malian villager who relies on her husband’s remittances to feed her family.

“Sometimes the money arrived. Sometimes it didn’t.”

However, many residents in Mali do carry cheap $5 feature phones. A startup called 37Coins took advantage of this fact to connect Malians to payments. Their service allows any one with a feature phone to send money through SMS by using the bitcoin network. This allows millions of people like Fatima to receive cash for basic needs.


https://www.coindesk.com/37coins-plans-worldwide-bitcoin-access-sms-based-wallet/

While 37Coins has shuttered since the book was written, many other startups including BigPagos, Voltabit and BitPesa have continued the same business model.

b) Discriminated minorities: In other countries where banks do operate, social norms prevent women from opening their own bank account. Vigna and Casey tell the story of Parisa Ahmadi a teen blogger in Afghanstian. Afghani women are forced to transfer their earnings to their husband’s or father’s bank accounts; essentially forfeiting control of their earnings to their male counterparts. Ahmadi got connected to a startup called BitLanders (formerly known as Film Annex). BitLanders incentivizes citizen bloggers to express their views online by paying them in, you guessed it, bitcoin! This allows Ahmadi to circumvent social challenges, and receive money directly in her own mobile wallet!

3. Imperfect financial institutions

Bitcoin was born in the aftermath of the 2008 recession, a time when the financial system collapsed. So it’s original motivation wasn’t to serve illegal actors, or even the unbanked — it was to provide an alternative for those who found their existing financial systems to be unreliable, inefficient or restrictive. While the world financial system has largely recovered, there are still millions of people who fall in this category:

a) unreliable: Existing financial systems are unreliable anytime customers don’t trust the value of their currency or can’t rely on banks to store their currency. These situations include a currency crisis , hyperinflation or bank failures. There are historic examples — Weimar Republic 1920’s and the US 1929 — but many recent ones as well — Zimbabwe 1990s, Mexico 1994, Thailand 1997, and Argentina for the past 30 years (in the words of my international finance professor — “if you want any example of bad financial policy look at Argentina”), and of course the US in 2008.


https://rarehistoricalphotos.com/hyperinflation-weimar-republic-1922/

If one day you wake up and dollar is certainly worthless or your bank tells you that can’t withdraw any money what would you do? This is when you wished you had a currency that is independent of all domestic policy and financial concerns and a bank that will never fail: enter crypto and mobile wallets.

b) inefficient: In other countries where financial systems are effective, they are very expensive, especially for cross-border payments. In the US and most of Europe we pay a nominal fee for sending money internationally. This is why Bitcoin’s fees seem high (Ripple is another coin that is better suited for this purpose). Yet in the Caribbean, foreign exchange fees are 8–9%! The book uses the anecdote of an entrepreneur in Barbados named Gabriel Abed. Mr. Abed states that most of his colleagues can’t imagine expanding their businesses abroad because the high transaction fees make their products too expensive for most consumers. So Abed created Bitt, a bitcoin exchange for merchants that allows them to convert easily between bitcoin and fiat currencies. His value proposition is simple “What if I can give you a payment option that is only 1%.” Thanks to Bitcoin, Abed and other Caribbean merchants can finally grow their businesses unfettered of any financial constraints.

The Caribbean isn’t an isolated example either. Payment transfer services like WesternUnion often charge exorbitant fees to transfer money to developing and underdeveloped countries. Bitcoin offers customers a chance to cut this expensive middleman.

c) restrictive: Finally, there are situations where financial systems are strong and effective, but they are restrictive. The prime example for this is China. In order to maintain a synthetic exchange rate, the country caps the amount that citizens can purchase in foreign currency. This is a burden to citizens who want to buy property abroad in London or send their kids to study at an American university (Go Blue!). So Chinese citizens seek a way to circumvent banks and conduct transactions of the books. Once again, bitcoin answers the call. (Technically these transactions are not legal in China, and the transactors could be considered illegal actors. However I believe there is a distinction between them and buyers on the Silk Road; what they are buying/selling is not illegal, it’s just the how that is illegal in one country).

Caveats

The goal of this article has been to reveal the various use cases of Bitcoin (and by extension other cryptocurrencies). So far, hopefully I’ve convinced you that there is an inherent utility beyond just speculation. However, I would be remiss if I didn’t talk about some of the challenges to bitcoin’s adoption:

  • Level of understanding: many in the developing world are generally hesitant to place their money in Bitcoin because most don’t understand what it is. Can you blame them — most of us can’t understand Satoshi’s paper either. To increase adoption Bitcoin-entrepreneurs will need to educate their customers.
  • Conversion to local currency / goods: Another hurdle to adoption for most customers is that in most places merchants don’t accept Bitcoin to buy and goods or services. This means that online exchanges must provide a way to i) convert to fiat currencies or ii) trade goods for bitcoin themselves. BitLanders, which I referred to earlier in the article solves this problem by allowing users to trade bitcoin for gift cards.
  • Price stability: Bitcoin has a good use case in countries with currency crises if we assume that Bitcoin itself has a stable price. Yet the past months have revealed that the price is anything but that. If customers fear a Bitcoin bubble they won’t want to invest their life savings in the currency.

coindesk.com
  • Impending government regulation: Circling back to Jamie Dimon’s comments, if the regulators decide to restrict or heavily tax bitcoin, it will remove the incentive for people to use it. In this case, all bitcoin enthusiasts can do is to cross their fingers and hope that Uncle Sam plays nice.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

Takeaway

So what’s the takeaway here? Did I just waste 8 minutes of your life by telling you about applications and then rebuffing them? Here’s my point: More people than you think (in fact a majority of the word’s population) fall in one of the 3 buckets I provided above; aka they can actually benefit from using bitcoin. However, the technology must overcome some serious hurdles for it to be practical for these people to use it.

I for one am hoping that bitcoin (or some other coin) does cross these hurdles. Mr. Dimon may not be.



Who cares about bitcoin? was originally published in Wolverine Crypto Trading on Medium, where people are continuing the conversation by highlighting and responding to this story.

Is Bitcoin A Bubble?

The current question on everyone’s mind is if Bitcoin is a bubble. YTD Bitcoin is up 2,000%+ which on any sort of investment product is an astounding return. Every day the public is bombarded by news on how so and so became an instant millionaire or even billionaire off of Bitcoin. On top of that it seems every day Bitcoin is hitting a new high. The urge to jump in with your money is at an all-time high… especially with posts like this.

With that said, Bitcoin has had some wild price swings as much as 20% drops in 90 minutes.

https://cointelegraph.com/news/20-bitcoin-price-drop-in-less-than-90-mins-just-another-day-for-bitcoin

Wild swings such as this make it hard to stomach as an investor/speculator in the digital currency. What is even more frightening is it is reported that Bitcoin has passed the Tulip Mania in 1600. Looking at the chart below the Tulip Mania lasted roughly 3 years and we are currently closing in on a 3 year run up of Bitcoin. Could the pop in this bubble be on the horizon?

http://www.zerohedge.com/news/2017-12-12/its-official-bitcoin-surpasses-tulip-mania-now-biggest-bubble-world-history

Additionally, during the Tech Bubble of the 2000’s everyone was talking about tech stocks. You would get in your taxi and the driver would be telling you about his recent investments and how much money he made. When bubbles are forming a clear indicator is when the general public and people with no information or knowledge on a topic are talking about it claiming to be a genius or expert. Just check your Facebook or Twitter feed and this evidence is clear. Every day I see countless posts from individuals with no tech, finance or investing background claiming Bitcoin is going to the moon or how great the opportunity is in crypto currencies.

While the majority of this article has had a negative view on Bitcoin, I am definitely still a longer term believer in crypto currencies and the blockchain technology behind it. Also, some credible names such as Social Capital’s founder Chamath Palihapitiya have expressed positive longer term views on Bitcoin/cryptocurrencies. Palihapitiya called for Bitcoin to go to $100,000 over the next 3–4 years and said it could reach $1 million 20 years from now. Moreover, he thinks Bitcoin has established itself as the main crypto currency and the others will be secondary currencies used. Think of Bitcoin being the US dollar and other crypto currencies being the other various currencies around the world.

https://www.cnbc.com/2017/12/12/social-capitals-palihapitiya-says-bitcoin-is-going-to-1-million-in-the-next-20-years.html

Though I am not saying I totally agree with Palihapitiya’s views and think there is likely a collapse/large correction coming to crypto currencies. I definitely see crypto currencies’ long term potential and as more retailers begin to accept them as payment we should see the adoption on a broader scale.

While I do think if you do not have any knowledge on crypto currencies you should probably not invest in them, but if you must… put a small amount that you don’t mind losing all together or that won’t bother you if it experiences volatile swings in value. Or if you can afford it go with Palihapitiya’s take that you should invest 1% of your net worth, then just let it sit for the next 20 years.

I am excited to see what will happen in the world of finance with the emergence of crypto currencies longer term. Only time will tell!

Thanks for reading!

Would love to hear your thoughts on Bitcoin and crypto currencies in general. Responses below are welcome!

The opinions discussed in this article are my own and are not investment advice.

*Picture from bitcoin.com

Is Bitcoin A Bubble?

The current question on everyone’s mind is if Bitcoin is a bubble. YTD Bitcoin is up 2,000%+ which on any sort of investment product is an astounding return. Every day the public is bombarded by news on how so and so became an instant millionaire or even billionaire off of Bitcoin. On top of that it seems every day Bitcoin is hitting a new high. The urge to jump in with your money is at an all-time high… especially with posts like this.

With that said, Bitcoin has had some wild price swings as much as 20% drops in 90 minutes.

https://cointelegraph.com/news/20-bitcoin-price-drop-in-less-than-90-mins-just-another-day-for-bitcoin

Wild swings such as this make it hard to stomach as an investor/speculator in the digital currency. What is even more frightening is it is reported that Bitcoin has passed the Tulip Mania in 1600. Looking at the chart below the Tulip Mania lasted roughly 3 years and we are currently closing in on a 3 year run up of Bitcoin. Could the pop in this bubble be on the horizon?

http://www.zerohedge.com/news/2017-12-12/its-official-bitcoin-surpasses-tulip-mania-now-biggest-bubble-world-history

Additionally, during the Tech Bubble of the 2000’s everyone was talking about tech stocks. You would get in your taxi and the driver would be telling you about his recent investments and how much money he made. When bubbles are forming a clear indicator is when the general public and people with no information or knowledge on a topic are talking about it claiming to be a genius or expert. Just check your Facebook or Twitter feed and this evidence is clear. Every day I see countless posts from individuals with no tech, finance or investing background claiming Bitcoin is going to the moon or how great the opportunity is in crypto currencies.

While the majority of this article has had a negative view on Bitcoin, I am definitely still a longer term believer in crypto currencies and the blockchain technology behind it. Also, some credible names such as Social Capital’s founder Chamath Palihapitiya have expressed positive longer term views on Bitcoin/cryptocurrencies. Palihapitiya called for Bitcoin to go to $100,000 over the next 3–4 years and said it could reach $1 million 20 years from now. Moreover, he thinks Bitcoin has established itself as the main crypto currency and the others will be secondary currencies used. Think of Bitcoin being the US dollar and other crypto currencies being the other various currencies around the world.

https://www.cnbc.com/2017/12/12/social-capitals-palihapitiya-says-bitcoin-is-going-to-1-million-in-the-next-20-years.html

Though I am not saying I totally agree with Palihapitiya’s views and think there is likely a collapse/large correction coming to crypto currencies. I definitely see crypto currencies’ long term potential and as more retailers begin to accept them as payment we should see the adoption on a broader scale.

While I do think if you do not have any knowledge on crypto currencies you should probably not invest in them, but if you must… put a small amount that you don’t mind losing all together or that won’t bother you if it experiences volatile swings in value. Or if you can afford it go with Palihapitiya’s take that you should invest 1% of your net worth, then just let it sit for the next 20 years.

I am excited to see what will happen in the world of finance with the emergence of crypto currencies longer term. Only time will tell!

Thanks for reading!

Would love to hear your thoughts on Bitcoin and crypto currencies in general. Responses below are welcome!

The opinions discussed in this article are my own and are not investment advice.

*Picture from bitcoin.com

PAYPRO a marketplace…a wallet…!!!

WHAT IS PAYPRO?

PayPro is a financial marketplace where any Decentralized Application (dApp) will be able to offer its services. Thus, dApps will be competing among them to become your supplier, not the other way around as with banks.

In order to accomplish this goal, we are building first a universal wallet that will be capable to store most popular crypto-currencies and any ERC-20 token. As soon as we have released the wallet, we will build the marketplace.
PayPro is a decentralized bank that allows new ecosystems that have benefits to be put forward on Smart Contracts.

The bottom line is, PayPro is a financial market where all dApps (decentralized Apps) can post their services on a platform. On the other hand, PayPro also creates a wallet that will be developed to store cryptocurrency and all the ERC-20 tokens. Once PayPro is set up 100%, users will be able to store ETH, BTC, GAS and other cryptocurrencies as well as users can also use the available market to be invested at the time of fundraising. In addition, all shares or shares of investment proceeds will be stored on the PayPro app, so the crypto assets will be guaranteed by the platform.

Some conditions that must be met for dApps to be included in the PayPro platform include the application must be open source, and most tokens can not be controlled by certain entities, the issued tokens must have value for the appropriate services, there are rewards programs for contributors, and most importantly the platform should based Blockhain, so it should be fully decentralized.

TOKEN SALE SUMMARY

Name PayPro Token
Symbol PYP
Pre-sale period January 8th to January 15th, 2017
Pre-sale terms Min investment of 15 ETH
Pre-sale bonus Bonus of up to 35%
Main Sale period January 15th to January 31st
Main sale terms Min investment of 0.5 ETH
Main sale bonus 1st 24 hours 20%
1st week 15%
2nd week 10%
Exchange rate 1 ETH : 500 PYP
Limits 20,000 ETH (Hard Cap) or EUR 5,000,000.00
depending on exchange rate.
Accepted currencies ETH only
Token holder benefits Decision & Economic rights.
% of Token sold 40%
Nationality Anyone except Singapore, Estonia and the
US due to legal restrictions or countries
trade sanctioned by the US.

Join ICO : http://www.payproapp.com/

PAYPRO TOKEN

PayPro Token (PYP) will be the flagship currency in our ecosystem, facilitating transactions within the marketplace. The main purpose of PYPs is that they will be used for political rights and for usage;
Political Rights

Voting on technical design: the community can propose a new technical design to modify, add or remove elements from new versions of the protocol.
Voting on monetary policy: Whereas PayPro will set the initial inflation rate, token holders will be capable of adjusting our Token inflation up or down (within a range).

In both case, the frameworks for taking decisions will be set by PayPro as main promoter and cluster for token holders.

PayPro Products
Wallet: The first stage of development after closing the Token Sale will consist of integrating Ethereal to build a Wallet. This wallet will be able to store all major crypto currency and all tokens purchased in our market.
Marketplace: Once the wallet is built, we will start working on a marketplace where decentralized financial applications will easily deliver their services to the portfolio. Users will rate and review services to create supplier ratings.

Wallet is very important to be the product of choice in completion. With PayPro’s wallet service, users will be able to store more than 100 crypto types in one wallet, including PayPro Token. PayPro Token holders will be facilitated with other crypto rewards in the easiest way. The wallet being developed, now can be downloaded in the App Store but, this new basic concept only and the new one can save. BTC. For further significant developments will be made after the ICO period is completed. That’s about Q1 in 2018.

TEAM

Contact us:

Is Bitcoin a currency? Short answer — No

Is Bitcoin a currency? Short answer — No

Its more of a financial asset.

It is unlikely that you will go more than a day without hearing about bitcoins. Ever since their value crossed $10,000, its been all over the news, prompting all sorts of debates and disagreements. Usually, people want to talk about whether it is a bubble or not. For now, we will refrain from going deeply into that. All we can say is that the behavior of bitcoin prices, especially over the last month or so, closely resembles a bubble. We want to talk about another topic associated with the cryptocurrency, specifically, whether it is a currency at all, and whether it can truly revolutionize the financial world.

Before we get started, let’s understand what a bitcoin is and how it works.

Essentially, it is a digital currency that does not rely on any central bank, regulatory body or administrator to function. The bitcoin itself is earned by a process called mining. Mining is the process used to verify bitcoin transactions. The transactions are stored in a publicly accessible ledger known as a blockchain. Verification occurs when a communicating network of miners approve a transaction, add it to their ledger, and then make this information available to the ledgers of other networks. A transaction fee is involved, but is optional.

Miners will likely choose to prioritize transactions that come with a fee. Bitcoins are registered to a private key from whence a bitcoin address is generated. The private key is very important, it’s needed to access a person’s bitcoin, and if the key is lost, it is as good as the bitcoins being lost as well. This pretty much covers what you need to know about bitcoins for the time being.

Now we can move on to the topic of currency.

There has been talk about bitcoins being the currency of the future, potentially destabilizing the established models that the world currently works on, and creating, for a lack of a better set of words, a new world order.

While this may not dominate the conversations regarding bitcoins, it does seem to be of interest to enough people, and is something that people genuinely believe to be a possibility. So let’s examine this possibility.

Basic economics will tell you that the features of a currency include a medium of exchange, i.e the ability to provide a standard value which is agreed upon, a store of value, i.e the ability to save a currency over a period of time and more or less retain that currency’s value at a later date, and a unit of account, i.e a unit of measurement such as the US dollar. This is generally the criteria a currency needs to meet in order to work. So how does bitcoin do with regard to this?

Well, if we take medium of exchange, it takes too long to use bitcoins to buy simple everyday things like groceries.

No one is buying bitcoins for that purpose, people are seeing it as a long term investment, rather than as a way to make day to day purchases.

Secondly, when we look at store of value, there is no saying how much one bitcoin would be worth in ten years. Given the debates about whether it is a bubble or not, there is too much uncertainty to rely on it as a store of value. Finally, when we look at unit of account. The problem here is that with bitcoin the value fluctuates far too frequently and over large values in a short period of time. For instance, if you wanted to buy a car for $15,000 dollars next week with one bitcoin, there is no guarantee that bitcoin would maintain this value in that period of time. It is not a reliable way to measure things.

Beyond this, the transaction fees, the fact that you need to find a way to protect your digital wallet from theft, the time it takes to process a transaction, and the sheer energy needed for the whole thing to work simply make it infeasible as a currency.

The fact that it is only valuable because it is measured in terms of dollars or euros or pounds should prove that.

What it is is a financial asset, and right now it is an asset that is performing extremely well. It is also an important step in the modernization of currency, given the digital advances that are being made everyday. It certainly seems to be pointing to the right direction, but where it will take us is a difficult question to answer.

Like what you read? Get more Wonkery here.

Interested in what we do? Check out our investment management services.



Is Bitcoin a currency? Short answer — No was originally published in Wonkery by Minance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Is Bitcoin a currency? Short answer — No

Is Bitcoin a currency? Short answer — No

Its more of a financial asset.

It is unlikely that you will go more than a day without hearing about bitcoins. Ever since their value crossed $10,000, its been all over the news, prompting all sorts of debates and disagreements. Usually, people want to talk about whether it is a bubble or not. For now, we will refrain from going deeply into that. All we can say is that the behavior of bitcoin prices, especially over the last month or so, closely resembles a bubble. We want to talk about another topic associated with the cryptocurrency, specifically, whether it is a currency at all, and whether it can truly revolutionize the financial world.

Before we get started, let’s understand what a bitcoin is and how it works.

Essentially, it is a digital currency that does not rely on any central bank, regulatory body or administrator to function. The bitcoin itself is earned by a process called mining. Mining is the process used to verify bitcoin transactions. The transactions are stored in a publicly accessible ledger known as a blockchain. Verification occurs when a communicating network of miners approve a transaction, add it to their ledger, and then make this information available to the ledgers of other networks. A transaction fee is involved, but is optional.

Miners will likely choose to prioritize transactions that come with a fee. Bitcoins are registered to a private key from whence a bitcoin address is generated. The private key is very important, it’s needed to access a person’s bitcoin, and if the key is lost, it is as good as the bitcoins being lost as well. This pretty much covers what you need to know about bitcoins for the time being.

Now we can move on to the topic of currency.

There has been talk about bitcoins being the currency of the future, potentially destabilizing the established models that the world currently works on, and creating, for a lack of a better set of words, a new world order.

While this may not dominate the conversations regarding bitcoins, it does seem to be of interest to enough people, and is something that people genuinely believe to be a possibility. So let’s examine this possibility.

Basic economics will tell you that the features of a currency include a medium of exchange, i.e the ability to provide a standard value which is agreed upon, a store of value, i.e the ability to save a currency over a period of time and more or less retain that currency’s value at a later date, and a unit of account, i.e a unit of measurement such as the US dollar. This is generally the criteria a currency needs to meet in order to work. So how does bitcoin do with regard to this?

Well, if we take medium of exchange, it takes too long to use bitcoins to buy simple everyday things like groceries.

No one is buying bitcoins for that purpose, people are seeing it as a long term investment, rather than as a way to make day to day purchases.

Secondly, when we look at store of value, there is no saying how much one bitcoin would be worth in ten years. Given the debates about whether it is a bubble or not, there is too much uncertainty to rely on it as a store of value. Finally, when we look at unit of account. The problem here is that with bitcoin the value fluctuates far too frequently and over large values in a short period of time. For instance, if you wanted to buy a car for $15,000 dollars next week with one bitcoin, there is no guarantee that bitcoin would maintain this value in that period of time. It is not a reliable way to measure things.

Beyond this, the transaction fees, the fact that you need to find a way to protect your digital wallet from theft, the time it takes to process a transaction, and the sheer energy needed for the whole thing to work simply make it infeasible as a currency.

The fact that it is only valuable because it is measured in terms of dollars or euros or pounds should prove that.

What it is is a financial asset, and right now it is an asset that is performing extremely well. It is also an important step in the modernization of currency, given the digital advances that are being made everyday. It certainly seems to be pointing to the right direction, but where it will take us is a difficult question to answer.

Like what you read? Get more Wonkery here.

Interested in what we do? Check out our investment management services.



Is Bitcoin a currency? Short answer — No was originally published in Wonkery by Minance on Medium, where people are continuing the conversation by highlighting and responding to this story.

JAPANESE GMO INTERNET GROUP TO PAY SALARIES IN BITCOIN

JAPANESE GMO INTERNET GROUP TO PAY SALARIES IN BITCOIN

GMO, the leading Japanese Internet infrastructure providing multinational, informed on Monday, 11 December, 2017, that it will start paying part of employees’ salaries in Bitcoin. This development will commence in February of 2018 and will enable GMO employees to receive their March salaries in part with the news-headlining cryptocurrency that has taken the global trading market by storm.

Based in Tokyo, the GMO Internet is a conglomerate of companies offering internet infrastructure services, as well as online advertising, internet security and mobile entertainment.

Initially, the employees of GMO will get paid in Bitcoins. However, this option will soon be applicable for workers in the entire group. At present, there are 4,710 permanent employees working for GMO.

According to the press release, GMO stated “The GMO Internet Group has decided to introduce a system that allows part of the salary payment to be received as bitcoin in order to promote ownership of our domestic employees’ virtual currency.”

The GMO Group also enumerated its 42 affiliates on its website, two of which include GMO Coins, which is GMO’s cryptocurrency faction, and GMO Click which is also one of the world’s principal Forex foundations.

According to GMO, the bitcoin payments will be within a certain range, with 10,000 Yen ($88) as the minimum payment and 100,000 Yen ($881) as the highest, keeping the exchange rate at GMO Coins in consideration. For those workers who have an account at GMO Coins Exchange, Bitcoin payments will be available on the day of the salary.

Soon after its May 2017 launch of GMO Coins, the internet giant established a blockchain development service in July. Later, it announced in September that it will delve into the mining business as well. “We believe that cryptocurrencies will develop into ‘new universal currencies’ available for use by anyone from any country or region to freely exchange ‘value,’ creating a ‘new borderless economic zone.”

In that effect, GMO has laid out a huge budget of 10 billion Yen in the coming years to set up its mining subsidiary. Additionally, GMO will also set up shop for R&D to build 7nm, 5nm, and 3.5nm mining chips, as it intends to manufacture and make available 7nm-equipped mining boards to the public, via token sales, according to a press release in October. This will be considered as a revolutionary step in the cryptocurrency mining industry.

As for when GMO will start its mining venture, the company announced on Monday that it will take place in January 2018. “The GMO Internet Group will contribute to the development of virtual currencies in the world by promoting efforts related to virtual currency throughout the group. In order to further strengthen these approaches to virtual currency, it is important for employees to actively use virtual currency first by improving [their] virtual currency literacy.”

Bitcoin Futures: Everything You Need To Know


Bitcoin futures now on offer

Bitcoin futures will begin trading for the first time ever in a few hours, at 17:00 CST on the Cboe. Like everything about Bitcoin and cryptocurrencies, this Bitcoin futures launch is fraught with controversy and heated debate.

Many cryptocurrency enthusiasts are convinced that this will mark the birth of Bitcoin as a mainstream financial product as it opens the doors for institutions and professional traders to enter the cryptocurrency markets, and make them legitimate in the eyes of the general public. On the other side of the fence are the critics, many of whom are in the traditional financial industry, who say that it is too soon to offer derivative financial products based on Bitcoin, and that the new Bitcoin futures are opening the futures markets to a huge systemic risk due to the extreme volatility of the cryptocurrency markets.

Below are things that investors need to know before Bitcoin futures launch.

Bitcoin Futures Basics

The Cboe is launching its Bitcoin futures contract with the trading symbol XBT at 17:00 CST time on Sunday December 10, 2017. Rival exchange CME is also planning on launching a Bitcoin futures contract the following week on December 18, 2017.

Futures will allow speculators to place leveraged bets on the future price of Bitcoin at a specified time, or expiration. Those who believe price will rise can go long, while those who believe price will fall can go short. With futures the long and short bets are evenly matched, meaning for every long position there is an opposite short position.

The new Bitcoin futures will be cash settled, meaning that no Bitcoins will actually change hands when the futures contract expires. In essence the winning traders will collect their profits from the losing traders. As is true for most futures contracts, traders will almost certainly close their positions and accept their losses or collect their wins, before the contract reaches its expiration.

Shorting Bitcoin

The ability to make a short bet on Bitcoin without having to borrow from a broker has strong appeal for traders. The Cboe and CME have said that by offering futures it will help stabilize prices for Bitcoin, thus taming the extreme volatility of the asset. Bitcoin bears are also quite happy to have the ability to short using futures, as they have been frustrated to this point by the difficulties that have been inherent in shorting Bitcoin.

It’s possible that in the short-term the ability to easily short Bitcoin prices will put pressure on the cash market, causing a drop in the price of Bitcoin. Longer term however, it is expected that the ability to short Bitcoin will improve true price discovery for the asset. The ability to take both the long and short side with Bitcoin will also serve to increase the interest of hedge funds in cryptocurrencies, which should broaden acceptance of the digital currencies in general.

Hedging with Bitcoin

There are expectations that the Bitcoin mining community will embrace Bitcoin futures, as it will allow them to hedge against the potential for a sharp drop in the price of Bitcoin, in effect locking in their mining prices. The miners are some of the largest players in the Bitcoin ecosystem, and could bring large amounts of capital to the futures markets

Some professional traders have also been waiting excitedly for the ability to unleash quantitative trading strategies that depend on the ability to short Bitcoin. This won’t happen overnight however, as their systems will take some time to build because of the need for price history. They will also need to wait for the ability to place block trades, which won’t become a possibility until December 17 on the Cboe contracts.

Are Bitcoin Futures Premature?

We can’t ignore the warnings of major investment banks and brokers, who have said that Bitcoin futures at this time are premature, and pose systemic risks. These concerns include those mentioned in an open letter to the CFTC in which banks and brokers claim the exchanges haven’t collected enough feedback on margin requirements.

Bitcoin futures “did not allow for proper public transparency and input.” — Futures Industry Association

Because of this most big banks, including Citigroup and JPMorgan, will not offer the Bitcoin futures to their clients. Goldman Sachs has said they will offer the Bitcoin futures contracts, but only to certain clients. For brokers, Fidelity has already said it will not offer Bitcoin futures. TD Ameritrade is planning on offering Bitcoin futures immediately after they are launched, and other large brokers, including Charles Schwab and E-Trade have declined to comment.

Addressing the Margin Concerns

Margin is the amount of money a trader needs to offer as collateral when opening a futures position. Many heavily traded futures contracts require as little as 10% of the value of the underlying contract as margin. The Cboe has said it will require 44% margin, while the CME is requiring 35% margin on Bitcoin futures.

In the case of the Cboe, this means a Bitcoin contract trading at $15,000 would require $6,600 in margin collateral, while for the CME the margin requirement on the same contract would be $4,250. There would also be requirements for additional margin if the margin account falls below a certain level.

Both the Cboe and CME feel that these large margin requirements will avoid any potential systemic risks in the event of extreme volatility in the Bitcoin cash market, such as the 40% surge high seen over two days just last week.

Price Limit Circuit Breakers

As with other futures contracts and financial markets, there will be circuit breakers put in place in the event of rapid price moves with Bitcoin. In the case of the Cboe contract, trading will be halted for 2 minutes if best bid in the contract closest to expiration moves 10% above or below the previous day’s close. If, after trade resumes, the contract moves 20% or more above or below the previous day’s settlement, trade will be halted for five minutes.

A Slow Start

Institutional investors and professional traders will likely exercise some caution and enter the Bitcoin futures market slowly, testing the waters and gathering data before fully committing themselves. This could help stabilize prices as Bitcoin futures slowly gain momentum.

One concern however is that retail investors, who don’t need to expose themselves to the risks of leveraged futures trading, will jump in the market in order to magnify there already substantial Bitcoin gains. Without fully understanding the futures market, and in a mindset of extreme euphoria, they could be putting themselves at a huge financial risk.

Originally published at coinbeginners.com on December 10, 2017.

Bitcoin Futures: Everything You Need To Know


Bitcoin futures now on offer

Bitcoin futures will begin trading for the first time ever in a few hours, at 17:00 CST on the Cboe. Like everything about Bitcoin and cryptocurrencies, this Bitcoin futures launch is fraught with controversy and heated debate.

Many cryptocurrency enthusiasts are convinced that this will mark the birth of Bitcoin as a mainstream financial product as it opens the doors for institutions and professional traders to enter the cryptocurrency markets, and make them legitimate in the eyes of the general public. On the other side of the fence are the critics, many of whom are in the traditional financial industry, who say that it is too soon to offer derivative financial products based on Bitcoin, and that the new Bitcoin futures are opening the futures markets to a huge systemic risk due to the extreme volatility of the cryptocurrency markets.

Below are things that investors need to know before Bitcoin futures launch.

Bitcoin Futures Basics

The Cboe is launching its Bitcoin futures contract with the trading symbol XBT at 17:00 CST time on Sunday December 10, 2017. Rival exchange CME is also planning on launching a Bitcoin futures contract the following week on December 18, 2017.

Futures will allow speculators to place leveraged bets on the future price of Bitcoin at a specified time, or expiration. Those who believe price will rise can go long, while those who believe price will fall can go short. With futures the long and short bets are evenly matched, meaning for every long position there is an opposite short position.

The new Bitcoin futures will be cash settled, meaning that no Bitcoins will actually change hands when the futures contract expires. In essence the winning traders will collect their profits from the losing traders. As is true for most futures contracts, traders will almost certainly close their positions and accept their losses or collect their wins, before the contract reaches its expiration.

Shorting Bitcoin

The ability to make a short bet on Bitcoin without having to borrow from a broker has strong appeal for traders. The Cboe and CME have said that by offering futures it will help stabilize prices for Bitcoin, thus taming the extreme volatility of the asset. Bitcoin bears are also quite happy to have the ability to short using futures, as they have been frustrated to this point by the difficulties that have been inherent in shorting Bitcoin.

It’s possible that in the short-term the ability to easily short Bitcoin prices will put pressure on the cash market, causing a drop in the price of Bitcoin. Longer term however, it is expected that the ability to short Bitcoin will improve true price discovery for the asset. The ability to take both the long and short side with Bitcoin will also serve to increase the interest of hedge funds in cryptocurrencies, which should broaden acceptance of the digital currencies in general.

Hedging with Bitcoin

There are expectations that the Bitcoin mining community will embrace Bitcoin futures, as it will allow them to hedge against the potential for a sharp drop in the price of Bitcoin, in effect locking in their mining prices. The miners are some of the largest players in the Bitcoin ecosystem, and could bring large amounts of capital to the futures markets

Some professional traders have also been waiting excitedly for the ability to unleash quantitative trading strategies that depend on the ability to short Bitcoin. This won’t happen overnight however, as their systems will take some time to build because of the need for price history. They will also need to wait for the ability to place block trades, which won’t become a possibility until December 17 on the Cboe contracts.

Are Bitcoin Futures Premature?

We can’t ignore the warnings of major investment banks and brokers, who have said that Bitcoin futures at this time are premature, and pose systemic risks. These concerns include those mentioned in an open letter to the CFTC in which banks and brokers claim the exchanges haven’t collected enough feedback on margin requirements.

Bitcoin futures “did not allow for proper public transparency and input.” — Futures Industry Association

Because of this most big banks, including Citigroup and JPMorgan, will not offer the Bitcoin futures to their clients. Goldman Sachs has said they will offer the Bitcoin futures contracts, but only to certain clients. For brokers, Fidelity has already said it will not offer Bitcoin futures. TD Ameritrade is planning on offering Bitcoin futures immediately after they are launched, and other large brokers, including Charles Schwab and E-Trade have declined to comment.

Addressing the Margin Concerns

Margin is the amount of money a trader needs to offer as collateral when opening a futures position. Many heavily traded futures contracts require as little as 10% of the value of the underlying contract as margin. The Cboe has said it will require 44% margin, while the CME is requiring 35% margin on Bitcoin futures.

In the case of the Cboe, this means a Bitcoin contract trading at $15,000 would require $6,600 in margin collateral, while for the CME the margin requirement on the same contract would be $4,250. There would also be requirements for additional margin if the margin account falls below a certain level.

Both the Cboe and CME feel that these large margin requirements will avoid any potential systemic risks in the event of extreme volatility in the Bitcoin cash market, such as the 40% surge high seen over two days just last week.

Price Limit Circuit Breakers

As with other futures contracts and financial markets, there will be circuit breakers put in place in the event of rapid price moves with Bitcoin. In the case of the Cboe contract, trading will be halted for 2 minutes if best bid in the contract closest to expiration moves 10% above or below the previous day’s close. If, after trade resumes, the contract moves 20% or more above or below the previous day’s settlement, trade will be halted for five minutes.

A Slow Start

Institutional investors and professional traders will likely exercise some caution and enter the Bitcoin futures market slowly, testing the waters and gathering data before fully committing themselves. This could help stabilize prices as Bitcoin futures slowly gain momentum.

One concern however is that retail investors, who don’t need to expose themselves to the risks of leveraged futures trading, will jump in the market in order to magnify there already substantial Bitcoin gains. Without fully understanding the futures market, and in a mindset of extreme euphoria, they could be putting themselves at a huge financial risk.

Originally published at coinbeginners.com on December 10, 2017.

That’s a rather gross misunderstanding of fiat money.

U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them. The main difference is that, for the moment at least, the illusion, in the case of dollars, is more widely and more fiercely believed.

That’s a rather gross misunderstanding of fiat money. And a very generous treatment of cryptocurrency.

For any national currency, be it the Euro, Dollar, Rupee, whatever…….that little piece of paper is “backed”, not by hard metal as it was in the past, but by the productive capacity of the issuing country. If the productive capacity of the issuing country is insufficient to back the amount of currency in circulation, it’s relative value falls, and the interest rate people demand to hold that country’s debt rises. If the productive capacity of the issuing country is considered sufficient, it’s relative value rises, and the interest rate people demand to hold its debt falls.

In the case of the US dollar, despite some very poor economic management and some very frightening headwinds to be dealt with in the future (entitlement funding), the productive capacity of the US remains *awesome* by international standards, and thus the relative value of the dollar is reasonably strong, and thus investors are willing to hold its debt at rates which in some cases (based on duration) actually cause them to lose money relative to inflation.

In contrast, there is no “backing” of cryptocurrencies at all, other than Keynes “animal spirits”.

Now, that doesn’t mean that cryptos are a fool’s game; but to represent it as equivalent, in any way, to a national currency; there is no productive capacity which “fixes” its value; it’s value is wholly determined by supply and demand. If it is “backed” at all (if that’s the right word), it’s backed by the desire of a small but not insignificant group of speculators who want very much to be able to transact in a currency which exists outside the money mischief of national banks.

(Unfortunately, that not insignificant group of speculators includes drug overlords, terrorist organizations, and money launderers…….but I digress.)

Don’t interpret the above as being negative on cryptocurrencies; I’m not. I’m simply critical of your characterization. Cryptos and national currencies are *not* equivalent instruments.

You don’t understand Bitcoin because you think money is fake

As Bitcoin continues its wild roller coaster ride and seems to keep climbing higher, I meet more and more people talking about investing in Bitcoin. There are advocates on both sides, some claiming that fiat currencies are dead and cryptocurrencies will replace all other forms of money, while others state that it is a speculative bubble that will pop when people realize there is no underlying value in this new fangled idea.


Bitcoin travels seamlessly through walls of binary code

In order to understand which perspective has more merit, or more concretely, to determine whether or not to invest in Bitcoin, we must understand two things. The first is how and why fiat currencies work (money backed by governments and banks), and second how Bitcoin works. We can then compare and contrast these to understand their respective merits. Excited? Me too!

A common case against Bitcoin is that it has no intrinsic value, no underlying asset of value to support it. The argument goes that because there is nothing of substance under the hood, it is doomed to fail. In response, some contend that fiat currencies are equally without substance, and rely on the same shared belief in a common fiction, referencing a truly excellent fiction in its own right, the book Sapiens.

Looking first at fiat currencies, I came across a blog post that states “A U.S. dollar is ‘backed by’ ‘the full faith and credit of the United States.’ But what exactly does this mean?” (link). It seems that people are unsure what ‘the full faith and credit’ of US government means, so let’s take a quick tour. The federal government has the power to invest in infrastructure, healthcare, retirement, military, and other services. Infrastructure projects result in very real roads, bridges, buildings, and parks, that benefit society in general. Healthcare accounts for 29% of the federal budget, and social security 24% (that’s more than half of the budget). These services save countless lives and provide for basic needs for millions of retirees. These too seem like very real capabilities to me. The military represents 15% of the budget, and its capabilities are readily apparent (link). So when we say that the U.S. dollar is backed by the full faith and credit of the United States, it means that the single most powerful entity in the world, one that in principle and practice has a real and significant impact on the world, supports the dollar. The guarantee of such an organization to make good on commitments should not be taken lightly and carries extraordinary weight.

What about Bitcoin? What is the foundation that it stands on? By design, it does not rely on any organization or power to make good on its promises, but it does have the blockchain! What is the blockchain again? Okay, grab a cup of coffee and try to stay awake for this part.

The blockchain is a list of records(!). The technology required to create this kind of record has been around years and is used to securely log into bank accounts, among other things. So what makes the blockchain so special? The idea is that no authority manages the integrity of the network. The network manages itself by crowdsourcing decisions. Wait, how does that work if nobody is in charge? Thanks for asking, let’s continue (sip coffee here).

The Bitcoin network agrees on decisions by playing a pointless guessing game that is designed to take about 10 minutes, no matter how many machines play (fun, right?). The winner of this pointless guessing game wins the right to place a new record on the chain. If the network accepts your answer, the record itself is the ‘Bitcoin’. As long as at least half of the computers on the Bitcoin network are well behaved, everyone can trust the registry. Wait what? I’m confused, go back. The ‘Bitcoin’ is a record of the answer to a pointless guessing game. Really? Yup, really. The reason it works is that while it takes billions of guesses to find the right answer, once someone has found it, it is easy for others to check the answer. When a player broadcasts the correct answer to the network, other nodes confirm it and add the record to their chain. The network agrees that the longest chain on the network is the winner, which means the first person to guess the answer will win. So you’ve won… a record on the chain… that is part of the chain… so now you’re part of the chain. Wait what were we talking about? Oh yeah, Bitcoin. So lucky you, you got yourself a Bitcoin (because you won the guessing game).

It’s worth noting that it is trivial to create one of these signed, secure, records. Computers could create billions of signed records at so fast that the network couldn’t possibly keep up. What is the value of a record so easy to generate? I dunno, go ask Nate the Great. In order to counteract the absurdity of this revelation, Bitcoin had the profound insight to agree to play the pointless guessing game (to slow things down). If we slow down how fast records can be created, then the records are now rare. Because the game says so. So it’s still a meaningless record, but you can only make one once every ten minutes. So now it’s valuable. Because it’s rare. Because of the guessing game. By the way, would you like to purchase some bubblegum? I chewed it myself, so it’s one-of-a-kind. I will even provide a certificate of authenticity signed by a private key that only I have so you can be sure that it really is the gum I chewed. Wait where were we? Oh yeah, Bitcoin.


Bitcoin will convert your brain into binary, making it easier to jack into the matrix

So, let’s zoom out for a second. One of my least favorite buzzwords in Silicon Valley is the term disruption, which is the idea that an upstart company provides a service so much better than the current solution that it takes down the multi-billion dollar incumbent that has become fat and slow. And ugly. As coined by Clayten Christensen in his 1997 book the Innovator’s Dilemma the concept is fine, but man do I hate buzzwords. Anyways, disruption. Is Bitcoin disrupting fiat currencies? Common convention within the Valley suggests that a product has to be 10 times better to qualify as a disruption. It has to be so much better, faster, and cheaper, that people will overcome their general tendency to avoid change at all costs, and adopt the new thing. After a while, the disrupting innovation will reach a tipping point where rapid adoption occurs, the new product wins, and David slays Goliath. After that David grows up into a slow, fat, multi-billion dollar incumbent whose products become ripe for disruption. So the cycle goes. What were we talking about again? That’s right, Bitcoin.

Is Bitcoin a disrupter? With regards to speed, costs, and reliability, the answer is no. Remember when we discussed that the network has to artificially slow itself down to make the pointless records rare? Well that same restriction makes actually performing transactions on the Bitcoin network very slow. So slow, in fact, that there is a lively debate going on about ‘scaling’ Bitcoin. I find this idea rather absurd, because the technology has been intentionally hamstrung in order to give itself a (sort of) plausible explanation of value. Don’t worry though, the rock star leadership team over at Bitcoin are sure to come up with a sound solution. Oh wait, who’s in charge of this thing? Oh yeah, nobody. So what if one faction thinks that the Bitcoin network operates too slowly and it should be sped up, while another faction feels like everything is fine? Oh that’s right, that has already happened. In fact, this has already happened. One faction became so convinced of their position that they cut out and made their own, similar-but-faster version of Bitcoin called Bitcoin Cash. Okay let’s make sure you got that. A group of the Bitcoin peeps decided to take their ball and go make a new playground. A faster playground with faster balls. It would be like the president printing his own bills with his head on them and telling everyone that Drumph dollars are better dollars than other dollars. And by design, nobody could stop him. And then somebody could make Hillary dollars. In fact, anyone can make infinity new kinds of dollars (these are called ICOs). So which one is better? Which one should you invest in? Which one represents a better store of value? Is one of them bad? I do not know, go ask your dad.

Some people say that Bitcoin is a commodity, others a store of value, others a chance to make mad cash $$$$. So which is it? Well it’s really quite strange, because Bitcoin is a list of records of the answer to a pointless guessing game that was invented to make the records rare, so that they wouldn’t be pointless, which makes them valuable, because they are rare, because we made them slow, because that makes them rare, because that makes them valuable… wait what were we talking about again? A store of value means a place to… well… store value. It’s like the spot in your attic you keep those first edition Star Wars Episode 1 comics that will one day be worth billions. Most people store money in the bank, because the bank offers protections to keep your money safe, with an added promise by good ol’ Uncle Sam to make good on your savings even if the bank does something stupid. Is that a store of value? As long as the full faith and credit of the US means something, which today it really, really does, then yes that qualifies as a store of value. So how about Bitcoin, does that qualify? Well, if it’s the case that society as a whole agrees that Bitcoin has value, then Bitcoin has value, and you can keep it stored. In your Bitcoin wallet. So that’s good. But what kind of guarantees are there? Can I sell my Bitcoin for parts? What if people stop believing in Bitcoin? How will it feel if that today my stored value is worth $1,000, tomorrow $2,000, and the next day $500? What if people decide they like Bitcoin Cash, and switch to the other? I do not know, go ask your mother.


Elon has more important things to worry about than Bitcoin, like how to best serve our new AI overlords

What about the black market? I heard people use Bitcoin on the black market. Sounds pretty legit. Despite being slower, less convenient, less transparent, and providing a mystifyingly circular answer to the question of what value it represents, Bitcoin does have one thing going for it. Bitcoin can be transferred anonymously. The way the cryptography works, everyone can confirm the Bitcoin record is valid, but only the owner can unlock its secrets and see what’s inside (remember there is nothing inside other than the answer to that pointless guessing game). This does provide a truly unique advantage compared to fiat currencies. This is the single strongest use case for Bitcoin and I imagine the black market might be a large market. If you’re interested, my cousin sells cocaine and is looking for a business partner. I hear the margins are excellent!

So let’s wrap this up. What is the intrinsic value of Bitcoin? To find out, collect a small bundle of sticks from a virgin apple tree and cast them into a river under the light of the new moon. Take a picture of their arrangement in the river exactly 13 seconds they cast, and send it to my aunt Margaret for interpretation (she accepts Bitcoin). Personally I’m mystified by the phenomena. It sounds about as ridiculous as if people became obsessed with investing their life savings in tulips, but of course nobody would be foolish enough to do something that crazy.

You don’t understand Bitcoin because you think money is fake

As Bitcoin continues its wild roller coaster ride and seems to keep climbing higher, I meet more and more people talking about investing in Bitcoin. There are advocates on both sides, some claiming that fiat currencies are dead and cryptocurrencies will replace all other forms of money, while others state that it is a speculative bubble that will pop when people realize there is no underlying value in this new fangled idea.


Bitcoin travels seamlessly through walls of binary code

In order to understand which perspective has more merit, or more concretely, to determine whether or not to invest in Bitcoin, we must understand two things. The first is how and why fiat currencies work (money backed by governments and banks), and second how Bitcoin works. We can then compare and contrast these to understand their respective merits. Excited? Me too!

A common case against Bitcoin is that it has no intrinsic value, no underlying asset of value to support it. The argument goes that because there is nothing of substance under the hood, it is doomed to fail. In response, some contend that fiat currencies are equally without substance, and rely on the same shared belief in a common fiction, referencing a truly excellent fiction in its own right, the book Sapiens.

Looking first at fiat currencies, I came across a blog post that states “A U.S. dollar is ‘backed by’ ‘the full faith and credit of the United States.’ But what exactly does this mean?” (link). It seems that people are unsure what ‘the full faith and credit’ of US government means, so let’s take a quick tour. The federal government has the power to invest in infrastructure, healthcare, retirement, military, and other services. Infrastructure projects result in very real roads, bridges, buildings, and parks, that benefit society in general. Healthcare accounts for 29% of the federal budget, and social security 24% (that’s more than half of the budget). These services save countless lives and provide for basic needs for millions of retirees. These too seem like very real capabilities to me. The military represents 15% of the budget, and its capabilities are readily apparent (link). So when we say that the U.S. dollar is backed by the full faith and credit of the United States, it means that the single most powerful entity in the world, one that in principle and practice has a real and significant impact on the world, supports the dollar. The guarantee of such an organization to make good on commitments should not be taken lightly and carries extraordinary weight.

What about Bitcoin? What is the foundation that it stands on? By design, it does not rely on any organization or power to make good on its promises, but it does have the blockchain! What is the blockchain again? Okay, grab a cup of coffee and try to stay awake for this part.

The blockchain is a list of records(!). The technology required to create this kind of record has been around years and is used to securely log into bank accounts, among other things. So what makes the blockchain so special? The idea is that no authority manages the integrity of the network. The network manages itself by crowdsourcing decisions. Wait, how does that work if nobody is in charge? Thanks for asking, let’s continue (sip coffee here).

The Bitcoin network agrees on decisions by playing a pointless guessing game that is designed to take about 10 minutes, no matter how many machines play (fun, right?). The winner of this pointless guessing game wins the right to place a new record on the chain. If the network accepts your answer, the record itself is the ‘Bitcoin’. As long as at least half of the computers on the Bitcoin network are well behaved, everyone can trust the registry. Wait what? I’m confused, go back. The ‘Bitcoin’ is a record of the answer to a pointless guessing game. Really? Yup, really. The reason it works is that while it takes billions of guesses to find the right answer, once someone has found it, it is easy for others to check the answer. When a player broadcasts the correct answer to the network, other nodes confirm it and add the record to their chain. The network agrees that the longest chain on the network is the winner, which means the first person to guess the answer will win. So you’ve won… a record on the chain… that is part of the chain… so now you’re part of the chain. Wait what were we talking about? Oh yeah, Bitcoin. So lucky you, you got yourself a Bitcoin (because you won the guessing game).

It’s worth noting that it is trivial to create one of these signed, secure, records. Computers could create billions of signed records at so fast that the network couldn’t possibly keep up. What is the value of a record so easy to generate? I dunno, go ask Nate the Great. In order to counteract the absurdity of this revelation, Bitcoin had the profound insight to agree to play the pointless guessing game (to slow things down). If we slow down how fast records can be created, then the records are now rare. Because the game says so. So it’s still a meaningless record, but you can only make one once every ten minutes. So now it’s valuable. Because it’s rare. Because of the guessing game. By the way, would you like to purchase some bubblegum? I chewed it myself, so it’s one-of-a-kind. I will even provide a certificate of authenticity signed by a private key that only I have so you can be sure that it really is the gum I chewed. Wait where were we? Oh yeah, Bitcoin.


Bitcoin will convert your brain into binary, making it easier to jack into the matrix

So, let’s zoom out for a second. One of my least favorite buzzwords in Silicon Valley is the term disruption, which is the idea that an upstart company provides a service so much better than the current solution that it takes down the multi-billion dollar incumbent that has become fat and slow. And ugly. As coined by Clayten Christensen in his 1997 book the Innovator’s Dilemma the concept is fine, but man do I hate buzzwords. Anyways, disruption. Is Bitcoin disrupting fiat currencies? Common convention within the Valley suggests that a product has to be 10 times better to qualify as a disruption. It has to be so much better, faster, and cheaper, that people will overcome their general tendency to avoid change at all costs, and adopt the new thing. After a while, the disrupting innovation will reach a tipping point where rapid adoption occurs, the new product wins, and David slays Goliath. After that David grows up into a slow, fat, multi-billion dollar incumbent whose products become ripe for disruption. So the cycle goes. What were we talking about again? That’s right, Bitcoin.

Is Bitcoin a disrupter? With regards to speed, costs, and reliability, the answer is no. Remember when we discussed that the network has to artificially slow itself down to make the pointless records rare? Well that same restriction makes actually performing transactions on the Bitcoin network very slow. So slow, in fact, that there is a lively debate going on about ‘scaling’ Bitcoin. I find this idea rather absurd, because the technology has been intentionally hamstrung in order to give itself a (sort of) plausible explanation of value. Don’t worry though, the rock star leadership team over at Bitcoin are sure to come up with a sound solution. Oh wait, who’s in charge of this thing? Oh yeah, nobody. So what if one faction thinks that the Bitcoin network operates too slowly and it should be sped up, while another faction feels like everything is fine? Oh that’s right, that has already happened. In fact, this has already happened. One faction became so convinced of their position that they cut out and made their own, similar-but-faster version of Bitcoin called Bitcoin Cash. Okay let’s make sure you got that. A group of the Bitcoin peeps decided to take their ball and go make a new playground. A faster playground with faster balls. It would be like the president printing his own bills with his head on them and telling everyone that Drumph dollars are better dollars than other dollars. And by design, nobody could stop him. And then somebody could make Hillary dollars. In fact, anyone can make infinity new kinds of dollars (these are called ICOs). So which one is better? Which one should you invest in? Which one represents a better store of value? Is one of them bad? I do not know, go ask your dad.

Some people say that Bitcoin is a commodity, others a store of value, others a chance to make mad cash $$$$. So which is it? Well it’s really quite strange, because Bitcoin is a list of records of the answer to a pointless guessing game that was invented to make the records rare, so that they wouldn’t be pointless, which makes them valuable, because they are rare, because we made them slow, because that makes them rare, because that makes them valuable… wait what were we talking about again? A store of value means a place to… well… store value. It’s like the spot in your attic you keep those first edition Star Wars Episode 1 comics that will one day be worth billions. Most people store money in the bank, because the bank offers protections to keep your money safe, with an added promise by good ol’ Uncle Sam to make good on your savings even if the bank does something stupid. Is that a store of value? As long as the full faith and credit of the US means something, which today it really, really does, then yes that qualifies as a store of value. So how about Bitcoin, does that qualify? Well, if it’s the case that society as a whole agrees that Bitcoin has value, then Bitcoin has value, and you can keep it stored. In your Bitcoin wallet. So that’s good. But what kind of guarantees are there? Can I sell my Bitcoin for parts? What if people stop believing in Bitcoin? How will it feel if that today my stored value is worth $1,000, tomorrow $2,000, and the next day $500? What if people decide they like Bitcoin Cash, and switch to the other? I do not know, go ask your mother.


Elon has more important things to worry about than Bitcoin, like how to best serve our new AI overlords

What about the black market? I heard people use Bitcoin on the black market. Sounds pretty legit. Despite being slower, less convenient, less transparent, and providing a mystifyingly circular answer to the question of what value it represents, Bitcoin does have one thing going for it. Bitcoin can be transferred anonymously. The way the cryptography works, everyone can confirm the Bitcoin record is valid, but only the owner can unlock its secrets and see what’s inside (remember there is nothing inside other than the answer to that pointless guessing game). This does provide a truly unique advantage compared to fiat currencies. This is the single strongest use case for Bitcoin and I imagine the black market might be a large market. If you’re interested, my cousin sells cocaine and is looking for a business partner. I hear the margins are excellent!

So let’s wrap this up. What is the intrinsic value of Bitcoin? To find out, collect a small bundle of sticks from a virgin apple tree and cast them into a river under the light of the new moon. Take a picture of their arrangement in the river exactly 13 seconds they cast, and send it to my aunt Margaret for interpretation (she accepts Bitcoin). Personally I’m mystified by the phenomena. It sounds about as ridiculous as if people became obsessed with investing their life savings in tulips, but of course nobody would be foolish enough to do something that crazy.

Nasdaq Just Announced it is about to Launch Bitcoin Futures Contracts in 2018

On November 29, Nasdaq Inc (NDAQ.O) announced it was launching a futures contract for bitcoin in 2018, opening the market to a wider audience. The emergence of futures markets should pave the way for an ETF for the cryptocurrency; in early 2017, an ETF bid by the Winklevoss twins was rejected due to concerns surrounding bitcoin exchanges and regulation.

Nasdaq has plans to launch a futures contract based in bitcoin sometime in 2018. While Nasdaq does not have a hard date set for its product, since 2015, the exchange operator company has offered an exchange-traded note based on bitcoin on its Stockholm exchange.

On November 29, the price of bitcoin just climbed to its all-time high of $11,485 (Coinbase) just a day after passing the $10,000 mark. So far, the currency has appreciated more than ten times in value in 2017. Because of this abnormal rise, a lot of concerns have been expressed, and important figures on the world of finance have accused Bitcoin of being in a bubble.

With this announcement, the company becomes the third U.S.-based exchange operator to plan derivatives contracts off of the notoriously volatile digital currency. So far, institutional investors were not getting anywhere near Bitcoin as the security risks and volatility surrounding it are too high. In any case, with the increased media attention the digital currency is receiving and the ever-increasing price surge in 2017, interest in bitcoin investments is increasing by the day.

CBOE Holdings and CME Group, the world’s largest derivatives exchange, have both came forward with their plans to launch futures products based on bitcoin as well. However, they are still pending regulatory approval. In March, the SEC denied a request for CBOE to list what would have been the first U.S. ETF built to track bitcoin.

CME stated its bitcoin futures contract would be based on the CF Bitcoin Reference Rate (BRR), a once-a-day reference rate of the U.S. dollar price of bitcoin, which currently takes prices from four bitcoin exchanges. CBOE will price its bitcoin future off the Gemini Trust, the digital currency exchange founded by brothers Cameron and Tyler Winklevoss. However, the Nasdaq futures contracts plan to use an index that taps into the prices of the cryptocurrency on more than 50 exchanges.

While the Options Clearing Corporation (OCC) clears all Nasdaq futures products, a Nasdaq source also revealed the company was teaming up with New York-based money manager VanEck to develop the futures contract, which will be cleared by the OCC. VanEck had applied to the U.S. Securities and Exchange Commission (SEC) in 2017 to launch a bitcoin-related exchange-traded fund, but withdrew the request in September after speaking with SEC staff, according to a regulatory filing. The Security Exchange Commission is now requesting VanEck to wait until the instruments in which the ETF planned to primarily invest – bitcoin futures contracts – become available for investment. Up until now, VanEck or a representative was not immediately available for comment.

This is, without any doubt, excellent news for ‘Bitcoiners’ as it will certainly help fuel the price rally that we are all watching right now. The crypto showcase is at a record-breaking high, and the Nasdaq announcement is bound to bring a lot of people into bitcoin.

The post Nasdaq Just Announced it is about to Launch Bitcoin Futures Contracts in 2018 appeared first on BTCMANAGER.

How Lendoit Protects its Lenders in Case of a Default Loan

There are many key factors that differentiate Lendoit from its competitors and makes them stand out. One of them is the fact that Lendoit is the only platform that does not require collateral from the borrower in order to get a loan. Nearly all the other lending platforms took the approach of tokens as collateral which is like lending USD by using EUR as collateral — and that can barely be called lending, it is more like hedging because it is done with the prospect of on asset performing better then the other.

The problem of loan defaults (which exists outside of Lendoit) creates a situation where lenders could lose their funds because the borrower fails to repay.

Think Different

As a matter of fact, Lendoit did not have to invent the wheel, and instead it is focused on combining successful elements from the traditional lending industry (Scoring, Verification and Collection) while using the abilities of Smart Contracts and the Blockchain Technology.

Combining 5 Different Methods to Protect Lenders

The Lendoit Platform provides an innovative solution to this problem in the following ways:

1. Scoring Providers – Every borrower is scored through a professional scoring processes by third party companies in the borrower’s country (before their loan application is published). To get the most accurate score, Lendoit will use experienced and professional score providers. Each provider will choose its method of scoring borrowers, and lenders can choose loans with scores from various providers that they trust.

2. Verification Providers – Every borrower is scored through a professional scoring/verification processes by third party companies in the borrower’s country (before their loan application is published). To prevent fraud, Lendoit will use experienced and professional verification providers. Each provider will choose how they verify borrowers, and lenders can choose loans which are verified by the providers they trust.

3. Smart Compensation Fund – The lender is protected through a Smart Compensation Fund where a percentage of every loan is stored in order to compensate for the defaulted ones. Lendoit has created the Smart Compensation Fund Contract as a transparent contract which reflects the amount of funds available in it at all times, and at no cost. Unlike with other solutions, in P2P lending, the formula to receive compensation for lost funds where a loan has been defaulted is transparent and known to everyone. It is controlled by the loan Smart Contract. In the case of a defaulted loan, the lender can benefit from the peace of mind that they will recuperate at least some of their funds.

4. Collectors’ Tender – In case of default the Lendoit Platform offers the debt to a collectors auction (default market) — the lender can sell the debt to professional collectors in each country (similar to the way it works in the traditional markets). Collectors are certified official entities in each country, mostly lawyers and financial companies. Those companies are buying debts in discounts and the money from them is sent straight to the lenders

5. Distribute Lender’s Risk – The ability to engage in syndicated loans protects the lender as well.

By combining the five Lendoit mitigates the chances that lenders are affected by the risks of lending.



How Lendoit Protects its Lenders in Case of a Default Loan was originally published in Lendoit on Medium, where people are continuing the conversation by highlighting and responding to this story.

Finance, Populism & Technology

Finance, Populism & Technology

Alcestis Cooky Oberg, a recent survivor of Hurricane Harvey wrote to USA Today that the experience renewed her faith in humanity. Weeks after the Charlottesville Riots, natural disaster tore off the façades of political difference in the Southern states, exposing to her the true, underlying goodness in all Americans.

“It didn’t matter if the people they were rescuing were African Americans, Hispanics, Caucasians, legals, illegals, Christians, Muslims, Jews, old, young, healthy, unhealthy, rich, poor, fat, thin. All that stuff was completely irrelevant. What was essential is that we had to get through this overwhelming disaster together.”

In survival scenarios, human capital becomes the most valuable resource. Your likelihood of survival directly increases with your number of alliances. Self-interest encourages us to adapt these allegiances according to circumstance. In economic speak, our utility-maximizing choice in group dynamically changes given our environmental constraints. When our basic needs are met, people organize according to their own “thrivalist” priorities. Interest groups grow more specific, more focused and more fractionalized as individual needs turn to individual wants. As groups grow more diverse, the less often individuals across groups relate to each other, the less they trust each other, and the higher the probability of conflict.

Fractionalization is natural as free societies progress and specialize, and compromise is often seen as the alternative choice to impending conflict. Compromise assumes that we inherently need each other. It shouldn’t require a hurricane to remind us of this. But consider an alternative, or additional, explanation for our aversion to compromise that doesn’t include our entrenched, insurmountable differences. What if we don’t really need to work together anymore? Financial markets are loud and clear- we don’t. The recent populist movement indicates a trend away from globalization and free markets. Global specialization is on the decline, and the reverence of national and individual self-sufficiency has resurged. Consider a transaction today where the buyer is an average investor and the seller is a financial advisor- not only are we, as the buyer, less likely to trust the financial advisor than we were ten years ago, but we do not need the financial advice in the first place. Technology has pushed the financial industry into a trend that perfectly demonstrates the macro populist sentiments caused by the loss of social trust and the increase of tools for self-sufficiency.

Distrust

Popular skepticism of Wall Street is no revolutionary notion, but recent technological and regulatory developments indicate that public distrust is here to stay, and the industry has started to accept this fact as the new norm. Ten years outside of the 2008 Financial Crisis, demand for transparency and regulation is just starting to be acknowledged through permanent legislation. MiFID II is a sweeping piece of financial policy developed by the European Commission in response to the 2008 Crisis, set to take effect in January 2018. The policy aims to make all transactions on all Euro Block exchanges visible at multiple points of the execution and settlement lifecycle and to unpack over-the-counter and proprietary financial products; it is written with the explicit intention of avoiding another mortgage-backed securities’ liquidity catastrophe. In other words, it’s a massive overhaul of the responsibilities and day to day workflow of European asset managers. Enforcement of the policy has been pushed back year after year as asset managers lobbied for more time and less regulation, promising a trickle-down effect of free financial markets. As the date crystalized and approached, firms outside of MiFID II’s jurisdiction found that investors demanded compliance regardless. Fintech providers and asset managers alike are winning business by stressing MiFID compliance and stringent regulatory adherence- this is new. Attempts by Wall Street to regain public trust through wields of soft power and the passage of time have failed. Distrust is here to stay, and Wall Street is finally reacting with a new product: transparency.

The FinTech industry is also seeing massive investments in distrust, most notably through Blockchain technology. Conceptually, Blockchain seeks to replace transactional intermediaries that provide legitimacy. Consider the purchase of a house. The buyer brings the money, and the seller brings the house. The bank provides legitimacy to the transaction- it guarantees payment, documentation, identity and legality, and consumers pay for these services through interest rates and fees. Blockchain uses a decentralized database, or a distributed ledger, to guarantee these same things without the associated cost of bank fees. There has always been a demand for legitimacy in financial transactions, though the parties always needed to trust the provider of that legitimacy (ie: the bank). That is no longer the case. According to a report by PWC in 2016, 45% of financial intermediaries reported incidents of economic crime. The massive investment in Blockchain demonstrates that legitimacy will no longer be provided by humans. Consumers trust technology more than financial professionals.

Disruption

The market share of Exchange-traded funds (or ETFs) on global exchanges has tripled in the last six years. ETFs are sold as a safe bet- they often minimize risk by inherently absorbing diversification. They do not seek to “beat the market”- they simply represent the performance of different market sectors. The proliferation of ETFs indicates one thing- the demand for unique financial strategies is on the sharp decline. Investors are looking for average, low-risk returns that do not require the help of a financial advisor. This new demand has been met with roboadvisors- tech products that provide an individual investor independence, accessibility, visibility and convenience such that they can trade autonomously. Roboadvising is the future of the financial advising, and it indicates the loss of millions of jobs. Most roboadvising relies on customizable algorithms that trade a portfolio of ETFs given an investors specified choices. As investors become more independent, money will drain from hedge funds and wealth management firms. Interfacing with financial professionals will decline, increasing the speed of distrust spurred by isolation and independence.

Populism

Social trust can be understood as transactional expectation- trust exists between parties to the extent that one believes the other will adequately complete the agreed transaction. This expectation has been the basis of all economic growth, but transactions themselves have started to be discouraged in the financial markets. Our ability to create value without the help of another person has increased, and the inherent inefficiencies of distrust in contractual obligations introduce unnecessary costs. Passive investing, algorithmic trading and highly regulated market structures indicate a rapid dissolve of social capital in the financial markets, reiterating a macro societal trend toward isolation. Without interdependence, we lose specialization and efficiency in all aspects of society. We risk the loss of creativity, genius and progress as uniqueness gives way to safety and convenience.

Get While the Getting’s Good

My Current Plan with BTC and ETH

I own BTC and ETH, but I buy at more or less random times, for more or less random reasons. It’s time for a plan. Here’s my working draft:

  1. Buy $100 of BTC each week (or maybe every other week) no matter what price it’s trading at
  2. Buy $100 ETH each week (or every other) no matter what price
  3. Instantly replenish any BTC or ETH used to buy other tokens, no matter what price either is trading at the time
  4. If either starts dropping, consider selling small increments proportional to the percentage drop, but…
  5. Always prefer holding

Why?

The reason for numbers 1, 2, and 3 is that BTC and ETH are only going up right now. There will be ups and downs in the future, but they’ll both go generally up. At some point, when everything gets just a little more mainstream, there will be a huge surge in value as everyone buys in.

I want to get as much into each currency as possible before the “mainstream spike.” (After the spike, I have no idea what will happen and need another plan, because everything will change.)

The reason for incremental investments is the uncertainty of each currency. Both are setting record highs almost daily, but who knows when the top is? By investing small increments, I can take better advantage any time the price drops. I’ll potentially miss upside that way, but ultimately, reducing some of the risk is more important to me.

Number 4 is also there to hedge a little against a price drop. If I take small amounts as the price drops, I’m keeping money I’d otherwise lose… as long as I don’t sell at the bottom. Avoiding timing the markets is an important investment principle to me, especially in crypto. That’s number 5. So instead of trying to sell a big chunk into a dip, I’ll just sit tight and wait for it to go back up. This rule is kind of a hedge against the hedge.



Get While the Getting’s Good was originally published in The Bootstrapped Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.