Saturday, July 28, 2018

A Traditionalist Approach to Bitcoin

Here's Bill Miller's take on Bitcoin.

It's a very good take.

Paraphrasing:

- uncorrelated asset
- put 1% into it
- anyone can afford to lose 1% of their portfolio
- it's a positive expected return lottery ticket



I am so balls deep into crypto now that I feel like an expert on money and incentives.

Funny thing is, most people, even investors, have shit knowledge on money itself.

Making money? Easy.
Spending money? Easier.
Saving money? Great.
Investing money? Not too shabby.

Defining money? Wait u say mot m8?

Most people can't go any deeper than "because my government gives it value and backs it up".

Okay.

If that's good enough for you, then great.

The next crypto bull run is going to be madness. Mass media all have an ear out and someone covering crypto. Crypto is near the tipping point of being treated as a niche investment at traditional institutes. At this point, nearly everyone in the world knows about Bitcoin.

Everyone knows that Bitcoin was $0.01, then $1, then $10, then $100, then $1000.

Next thing you know, we're at $10,000 and everyone is kicking themselves for missing YET ANOTHER opportunity to buy it.

The Lindy effect is already taking root and I think we will see even more mania in the next bull run.

As of now, except for the die-hard crypto community (which is tiny), people either have tiny exposure to crypto, or not at all.

Some people will say Bitcoin is not income producing. They are right, it is not.

Some people will say Bitcoin is not an asset. They have been wrong since 2009.

Some people will tell you not to invest and gamble into strange ponzi tulip schemes.
Of course you should not.
Also, Bitcoin is not a strange ponzi tulip scheme.

At the end of the day, the problem with forming an investment thesis on Bitcoin and other cryptocurrencies is that most people are just not willing to go deep enough back to the basics and strengthen their foundational knowledge on money itself.

Sunday, July 22, 2018

The Govt should NOT bail out Hyflux

I read this post by Blade Knight from Dividend Passive Income talking about the Hyflux shitshow.

As many know, I rarely go out of my way to call out really trashy investments, because let's face it, a lot of investors are irrational and will gladly and happily buy up stupid shit. Just because something is terrible fundamentally, does not mean that it cannot be a good investment. Plenty of examples in crypto of pure dogshit going to the moon and making early investors 10-100x their investments.

But Hyflux and Noble are my muse. I go the whole nine yards just to shit on them.

I've been talking shit about Hyflux since forever, nicely summarized in this post, where I am *completely shocked* about what happened to them. Not.

The Government should NOT bail out Hyflux.

Replace Hyflux perpetual bonds / preference shares / stocks with ANY other investment, and you can see how ridiculous this notion is of thinking that the government has a role to play.

There was no misrepresentation.

I wrote about how terrible it looks BEFORE the offer closed. Don't say that G is not a bro and didn't warn you. GMGH got your back.

Risks were clearly highlighted in the Product Highlights Sheet. Even way more detail on pg 9-10.


It was a shitty investment into a shitty company.

Plain and simple. Clear as day.


Investors got greedy.

Investors get rekt.

Investors SHOULD get rekt.

The government should NOT be bailing out aggressive risk-seeking investors.

Investors need to wisen up the fact that every INVESTMENT has RISKS.

It is up to the individual investors to discern if those RISKS are compensated with enough RETURNS.

If no bond could ever go belly up, then I guess everyone involved in the bond market is mega retarded for not buying the highest yielding shit bonds in the market, right?

Saturday, July 21, 2018

Co-ops before Co-ops were Cool

With the recent 2 co-op articles pumped out by Dollars & Sense (one of the few financial blogs that I hold in high regards) and by SG Budget Babe (fellow crypto warrior), I thought it's time that I dug out my old posts on co-ops.

About 2 and a half years ago, I blogged about a mysterious financial product that as it turns out, is actually savings and share subscription at one of the co-ops.

Based on the last financial report, annual dividend is at 3% and there is a 30% buffer, making it a rather "safe" investment vehicle in my opinion.

As mentioned a long time ago, I am treating it as a cross between a last line of defense emergency cash, flexible rolling fixed-deposit and a retirement product that has emergency features to either:
(1) borrow from myself with a small interest cost or
(2) drain and withdraw entirely if need be.

I must say, I am particularly happy to have stumbled upon and open this co-op savings account.

If I continue at it, maxing my contributions every month, at the end of the day I'm going to have a very flexible, low-risk cash generating machine.

Recently, I have done a lot of re-arranging of my bank accounts and financial products:

- SGX stocks
- SSBs
- CIMB StarSaver account
- P2P loan capital and interest
- precious metals trading position
+ crypto
+ crypto
+ CRYPTO
+ CRYPTO

But amidst all that change, the few things that I have been doing is trying to:

  • keep my Citibank Maxigain account untouched
  • diligently contribute to my co-op savings
  • pay my insurance premiums

I guess soon it'll be time for me to do my financial spring cleaning and move around money from accounts, consolidate and close accounts and review my financial situation again.

Anyway, I was drifting off-topic for a bit.

Co-ops are great. You should check to see if you are eligible to join any. Even if you aren't, perhaps now is a good time to take stock of your finances now that we are past the 1st half of the year.

It's only when we know where we are, that we can properly map the path to our goal.

Don't get too caught up in the now and make (or don't make!) decisions that end up to be very costly for your future.

As much as I yolo into crypto, I do have the necessary fallback plans if it all goes to shit and I won't be ruining my life - it will merely be a set-back if my calculated risky adventure fails.

Wednesday, July 18, 2018

Crypto Securities coming faster than you think

Note: I drafted this post on 7 June 2018, not sure why I didn't post it.

-------------------------------------------

Remember my post just a while ago talking about crypto securities?

The wheels are in motion by both Coinbase and Nexo.

So institutional custody solutions are coming, and now crypto securities are up next.

(As a side note, I want to reaffirm my stance - AGAIN - that people who classify crypto securities as a "negative" might be missing some brain cells. There have been several notable cases of projects stripping and removing every ounce of valuable feature from their tokens, making them PURE UTILITY tokens. Needless to say, they end up as worthless trash that nobody wants to own. **COUGH BEE TOKEN COUGH**)

And if you listened to the podcast with the Bitmex CEO, you'd know that in his opinion, the vast majority of money in the crypto space belongs to retail.

Institutional custody solutions and SEC regulated crypto securities pave the way for institutional money to find their way into the space long only. Repos can get hedge funds in by allowing short strategies. That should be coming soon too.

I still believe that a lot the big money in the crypto space now are just limited to very forward thinking private funds and family offices. Of course, we all know about the tech VCs that have shifted focus from other buzzwords to come into the blockchain space, and there have been a recent uptick of blockchain specific VCs in the last 2 years, but that seems to be about it.

I've seen a "fund manager" boast that he has almost $1M AUM.

Please, I know a regular guy who alone has more crypto assets than that. But I digress. The point isn't that I know some whales here and there, but it's that the amount of professionally managed money in the space is extremely low.

And to be completely honest, I think some of these fund manager have no fricking clue what they invested in. You don't need to look very far for VCs that have spectacularly flush their reputation down the drain.

R.I.P. Trakinvest and Verime institutional investors. May the feeling of rekt be just a distant memory.

When the proper, actual, smart, managed money comes into the space, it's gonna be crazy.

Not only because crypto is gonna pump with all the money flowing in, but because it's gonna be asymmetrical where only some stuff gets pumped while a lot of stuff go zero.

Not everyone here today is going to make it across the finish line, that's what I'm saying.

Choose your allegiance wisely. When war breaks out, you don't want to be on the losing side.

-------------------------------------------

I believe that securities, along with decentralized money and stablecoins are the 3 more interesting things about crypto now, and it is where I spend most of my time in the crypto space. ICOs, consumer-grade dapps and infrastructure and extremely uninteresting for me.

Tuesday, July 17, 2018

17 Jul 2018 Update

Crypto markets suddenly turned bullish on a dime.

Coinbase greenlighted for securities.
Blackrock rumours.
Billionaire Steven Cohen gettting into crypto.
CIA positive?
South Africa's financial firms adding crypto
India to regulate instead of ban crypto
Eve Bloomberg is bullish


To be honest, I'm meh about it.

I've mentally hardwired as a contrarian psychopath, so I don't really care.

To be honest, slightly bummed out that it didn't hit levels for me to raid my warchest (that I've been topping up slowly) and to add another leveraged long position, but oh well. The gain in my portfolio is nice, can't complain.

Anyway, I've been slowly building up and adding to my toolkit of generally market neutral strategies (strategies where I make money, regardless of market movement up or down).

As of now, I have:

$2300 hedged profits
$1500 unhedged profits in instrument A
$2900 unhedged profits in instrument B
and another ~$1300 profits in instrument C coming in at the end of August.

My $50,000 goal by the end of the year looks not too bad, since I could close and hedge all my positions and lock in a $6700 today and expect that other $1300 coming in next month.

Honestly, not too bad. I'm at ~16% of my goal, give or take a bit because of the unhedged positions.

In my previous update, I had secured 2% of my goal and I was expecting to end August at 10%.

Now that I'm already sitting at 16%, I'll try to eek out profits to hit 20% or hopefully 25% by the end of August. That would translate to $10-12k profits in SGD.

Technically, since I'm going for market neutral, I ought to be keeping my positions hedged, but I like the boost that I am getting from speculating that we can spike. I'd convert my profits slowly on spikes. It's all 100% pure profits anyway, so it's just a matter of how much money I profit/loss by speculating on the market movements. I suppose it's another form of trading, though its calculated risk instead of pure arbitrage. 

Since the market is in quiet mode, I'm glad I've honed a bit of my skills for making money instead of just being an idle holder. So much dead capital in this space, squatting on junk. Pfft.

I'll be adding node running to my skillset soon. The prospect of a sharding validator in a few years time and also running a LN hub quite appeal to the "passive income" side of me. Of course, the knowledge of these things are not simply acquired overnight. I'll be tinkering around with hardware, Linux and probably VPS as well. The knowledge of all of this is also a bit synergistic so the skill of running trade bots, which is also another more advanced skill that I'd like to learn in the future.

So I'm improving, upgrading, evolving.

By the time everyone else finally capitulates into crypto, I'd have ascended already. Simple Red Queen theory.

See you on the frontlines lads, and make sure you're not on the other side of my iron sights.

Monday, July 16, 2018

Crypto "Passive Income" - Staking, Masternodes, Dividends

"Passive income", "income investing", "yield investing" are the fashionable investing trend buzzwords of our time.

If you thought that only traditional investors can be blinded by yield and end up completely overlooking fundamentals and only focusing on the yield number, you would be wrong. This sort of irrational thinking exists and runs rampant in the crypto space as well.

The easiest example to give is the notion of Staking and Masternodes (MNs). What the similarities and differences? They are actually extremely similar. In both cases, you "lock up" your crypto and in return you get back a return. It's like a rolling fixed deposit. The difference is that for Masternodes there is usually a substantial minimum amount required, and also hardware and node requirements.

Just why are Masternodes so appealing? Just check out the yield. For the top 10 largest cryptos with masternodes, the annual yield ranges from.... 7% to a mindblowing 1407%.

Of course, if you use your brain for a moment, you realize that who cares if the yield is 1% or 9999% if its all in worthless masternode shitcoins?

And in almost all of the cases, that is exactly what it is. You get a billion % return, but your return are in coins that are rapidly losing their value faster than you can sell them off.

But you know what is funny?

Everyone knows that you CAN run masternodes with 5000% annual ROI, but yet no one does this. Why?

Pretty much everyone who is in crypto have already formed a rational argument against running shitcoin masternodes because of the worthlessness of them, yet strangely a lot of them cannot see that some of the crypto that they own is essentially the same thing.

Which ones, dare I name them?

Sure. NEO and ONT.

They pay out "dividends" in GAS and ONG.

WOW, FREE MONEY!


Herpy herpy derpy derp derp.

If you're smart enough to see why 98% of masternode coins are scams, but you don't see how NEO/GAS or ONT/ONG is essentially a rehashed version of the same thing, your logic might not be working properly.

I don't want to shit on NEO too much, because a lot of fanbois own NEO and they are fanatical af, but the hypocrisy for me is painfully laughable when I see NEO/ONT supporters criticize shit masternoders or stakers. To be fair, NEO and ONT *could* be very successful in the future, and that would lead to their crypto becoming valuable, but I wouldn't bet on it. Like, I literally wouldn't bet on it. I own neither.

Honestly, there is nothing wrong with:
- Staking crypto (ARK, QTUM, DCR, etc)
- Masternode crypto (DASH, PIVX, XZC, BLOCK, etc)
- "Dividend" crypto (NEO, ONT, crypto securities, etc)

The key thing though, is that it isn't how much ROI% they payout. It's a question of whether the crypto that they pay out is valuable and useful. Is it digitally scarce and useful that other people would be willing to pay for it? How do they get the crypto to pay the returns? Who actually "pays" the return to the stakers / masternodes / crypto "asset" holders? *gasp* Don't tell me that they are just minting new coins out of thin air to pay these returns!

So, while I myself also like to relish the sick fantasy of being a fatcat rent-seeking passive income asset hoarder, I restrain myself from suffering from YIELD BLINDNESS - a strange disease that blinds yield seekers to the fundamental risks of the crypto that they are blindly chasing.

Of course I am biased and I will now reference my own "yield producing" crypto so that I can illustrate the difference between my genius-insanity and just regular pleb-insanity.

DGD - pays out voters in DGX, which has tangible value, since it is backed and redeemable to gold. The payout is from the fee pool for governing the DAO, which are taxed to general DGX users.

HAV - pays out stabalizers in nUSD, which is collateral backed and redeemable. The payout is from the fee pool for maintaining price stability, which are taxed to general nUSD users.

REP - pays out reporters in ETH. The payout is from the fees for accurate reporting, which are paid by Augur market users.

And some security tokens treat token holders as shareholders and pay them ETH as part of their contract of profit sharing.

Now, the argument that delusional people will bring up is, "Hey, I can sell my GAS for BTC/ETH and then sell it to USD too". And the counter argument to that is...... a secret. Because I've already given enough hints, and that's all I'm going to give. If you can't already see the difference between your regular staking / MN / dividend shitcoin and the ones that I have carefully selected to mention, then you'll never be convinced and think I just have a weak argument.

Honestly, I realized that I can't be bothered trying to teach or explain to people about certain beliefs that are seared onto their hearts. What do I get if I convince them to exit? Do they give me any money from what they would have saved? Naw, I only get blamed and "See look it went up, you're wrong" whenever it goes up.

At the end of the day, the only thing that talks is money. Lots of these "income" coins have serious hype and fanatical supporters. But let's see if owning more and more of coins that no one cares about is going to be valuable, or not. Let's revisit this in a few years time. I'll still be around and in crypto then. What about you?

My final hint is, if you can't explain WHY the ROI of a certain crypto is a certain value, WHERE it comes from and WHO pays for it, then you might be in a serious pickle.

For the "income" crypto that I proudly own and support, I can happily say that if the platform isn't used, I get diddly shit and my investment goes to near zero. But on the flipside, if I am right and it is something that gets adopted and widely used, the payout is gonna be sick.

If your crypto pays you out for no reason, there is a problem.

Saturday, July 14, 2018

Crypto-incrementalism vs Crypto-anarchy

What is crypto-incrementalism and crypto-anarchy? This article is a fantastic read on that.

I would like to clarify that I realize that I quite identify myself following crypto-anarchy, and that quite affects the way that I think, the topics that I write and how I approach them. I actually think that a lot of people would be quite pleased and agreeable to crypto-incrementalism, especially the "we like blockchain, but not Bitcoin" crowd. Heh.

When I first learnt about crypto back in 2013, it was almost exclusively about crypto-anarchy - decentralized, uncensorable crypto that cannot comply to authoritarian requests. Bitcoin.

As much as I was intrigued by crypto then, it looked like a dead end to me. Little did I know that the protocol evolves and upgrades and changes along with its community, developers and users. Just a while later, Ethereum would be "born".

In mid 2017, I was allured back into crypto, NOT by the improvements made to the Bitcoin protocol, but instead by the world of opportunity and use cases that I was imagining Ethereum could be solving. I did not see Ethereum as a means to liberate monetary policy from governments, but instead I saw it as very cutting edge technology that has the potential to disrupt, improve and cannibalize on existing industries and business models. I didn't know it then, but Ethereum made me a crypto-incrementalist.

I started branching out into lots of altcoins (shitcoins) during the crypto bull market. I invested in some really long-shot ideas because everything was seemingly rainbows and unicorns back then - even terrible ideas made money.

However, it wasn't long before I realized that there are A LOT of shitcoins. Like. A lot. A lotttt. A shit ton of them.

It has been quite a mental journey for me, but I've pretty much greatly narrowed my wide field of vision to zoom in only a handful (I can literally count them with my hands) of projects that I not only think would be good investments, but is furthering a mission that I can get behind. That's my take on tokens, over here.

So, while I was introduced to CA, what drew me in is actually CI, but now I find myself learning more towards the CA side of things.

My anarchist way of thinking on some projects are almost caveman-like, at times.

NEO? Centralized Chinese shitcoin with 7 nodes.
EOS? Centralized Western shitcoin with 21 nodes.
BCH? Centralized Chinese BTC clone shitcoin
IOTA? Centralized IoT shitcoin with 1 coordinator
ADA? 100 nodes? Centralized shitcoin.
LTC? 250 nodes? Shitcoin tier number of nodes.
95% of ETH tokens? Centralized shit tokens that serve no function, other than friction as payment.

Coincidentally (or maybe not), one of things that I observe that has me leaning towards anarchist blockchains is that they will thrive if they are able to exploit something that an authoritarian entity would like to oppose.

BTC - exploits money transferring laws
ETH - exploits fundraising and security issuing laws

Unless you can do something illegal with it, imo, you're almost always better with a centralized structure. Cheaper and faster.

I use this an extreme thought experiment: If someone develops a completely private and trustless way to store, transfer and sell data / information, it would be one of the most safe and private way to store private or corporate private information and access it anywhere in the world without anyone knowing who is accessing and what data they are retrieving. But the flip side here is that it would also unlock a way for illegal pornography or pirated content to be stored and distributed without people being able to stop it.

And that is what scares a lot of people. I actually know of people who are in crypto, but want the best of both worlds. Hunny, you need to make a trade-off, ain't nothing is perfect. We want great money, but we don't want terrorists to use it. We want great encryption, but we don't want criminals to have the same access. We want a pseudo-anonymous, 24/7, low-friction value transfer network, but we don't want money laundering happening on it. We want a world computer that can be programmed to do pretty much anything, but we don't want some people to be able to do somethings. Do you see the problem here? Where do you draw the line, and who draws the line? THE GOVERNMENT? LOL. And that's why I find myself in the anarchist camp over and over again. Ain't nothing wrong with being an incrementalist, but I suppose it's the difference in trade-off selection that divides the two.

So, while I do understand that blockchain is definitely a great data structure, it is tough in most situations to justify having a PUBLIC blockchain that issues CRYPTOCURRENCY to incentivize the correct behaviour of participants.

And that personal belief has lead to me to be biased against that projects that are not crypto-anarchistic. I think they will either fail as an investment, or fail to survive as a public blockchain because of lack of proper incentives.

Perhaps my stance might swing around again in the future, but I find myself identifying quite well with being a crypto-anarchist.

If anarchy isn't what we are here for, then what is it? Reduce fraud and errors so that bankers make more money, so that governments have more control and surveillance? I see so many people walking around with so many contradictions in the things that they hold onto.

Anyway, if that's the future we are heading towards, then that's not something that I would like to bankroll and invest with my own money to expedite progress in.

I'll just be in my lonely corner holding all my anarchist crypto. On the bright side - you'll never be able to seize them from me, no matter how worthless they become. Heh.

Wednesday, July 11, 2018

Inconvenient Insurance Pills to Swallow

1) No one in Singapore needs whole life insurance


2) Most insurance agents will immediately pitch you a whole-life insurance or an ILP (which you should not take). You should not continue dealing with them.

3) Most agents have extremely poor knowledge in financial planning and investing. Some don't even know the inflation rate and gives you bullshit numbers.

4) If you are lazy to settle your own insurance, you will pay an arm and leg for an agent to recommend an expensive product for you. Nothing wrong with that, if you're lazy.

5) If you are lazy to settle your own investments, you will pay an arm and leg for an agent to funnel it through an ILP to get subpar returns for you. Nothing wrong with that, if you're lazy.

6) Don't buy endowment plans.

7) BUYING. INSURANCE. IS. NOT. INVESTING.

8) If you need to buy insurance from anyone, DO NOT ASK YOUR INSURANCE AGENT "FRIENDS". Ask a non-commissioned agent for advice or better yet, a friend who is an insurance actuary.

9) You MUST have a shield plan (H&S)

10) Get term life insurance

11) If you need more term life coverage later on, layer it up

12) If you have a family history of critical illness, add CI coverage in

13) If you have a terrible family history of critical illness, get early CI coverage and go for regular screenings

14) If you have a blue collar job, get personal accident insurance and consider unemployment insurance

15) If you don't know anything, fricking google it.



--------------------------------

I recently had a debate with a friend about the insurance industry in Singapore, and that got me to make this post.

I really hate the insurance industry in Singapore. It's predatory *because of the screwed up incentive structure of products and agent commissions* and most consumers end up getting screwed.

Don't get screwed.

If you're an agent, try not to screw people, unless you really don't like them.

That is all. Dismissed.

Thursday, July 5, 2018

COE drop like grapes


ST wrote an article with some reasons.

Fact is, a few years ago when COE was at $92,000, there was a clear "bubble" in car prices.

In fact, I dare to say that prices have come down that it can almost be considered economically viable for some people to consider upgrading their transportation method.

Some time ago, I wrote about the transportation situation in Singapore. I think that with more MRT stations popping up, along with so many transportation alternatives, so many last-mile solutions, people are realizing that the NEED for a car, is actually a very, very, expensive WANT.

It's okay to WANT to have a car. You just need to realize that you just have to pay more. There's nothing wrong with that. However, if you are struggling financially, it's probably better not to get a car.

Honestly, I get why a car is great. But a lot of people who aren't car owners also don't get why it can suck too. Driving yourself, renewing season parking, pumping petrol, topping up cash card, regular maintenance, renewing insurance, paying for road tax, washing the car..... please, as much as its great to have (expensive) convenience on demand, people also need to acknowledge that there are a lot of un-fun responsibilities that comes with owning a car.

If you want the car, you got to do all that shit that comes along with it.

Personally, I rather call a Grab, play with my phone, take a nap, watch videos, catch up with news and not worry about driving and navigating through jams and traffic and later parking. Commuting in the morning is tough when you just woke up. Commuting after work is tougher when you had a long day and you're sleepy.

Anyway, that's was a short rant from me why buying a car shouldn't be purely a financial decision.

Back to transportation in SG.

I hope self-driving taxis can faster launch.
I hope there is limited and better 24/7 or late night public transportation services.
I hope that PMD can get their own segregated lanes.

There are wayyyyyyyyyyyyyyyyyyyyyyyy too many bicyclists these days.

Everything is a trade off I suppose.

Pick your poison.

BEST Article on Stablecoins so far

This article is really, really good.

It's no secret, I am a big fan of stablecoins. I was really heavy into DGD, but I took disgusting profits from it's rise later on. Enough profits that my remaining position is free and I pocketed profits just from what I sold.

I have used Maker to leverage, it was a terrible experience.

Since then I've become rather bullish on a particular stablecoin project, which is Havven.

I'm still a fan of DGD for its goal, though as an investment, it's thesis is getting weaker and it is struggling to gain traction and adoption.

The article is an excellent read and I'm rather happy that the author concludes rather similar things that I have earlier myself independently come to conclude.

In short notes, my interpretation of some of his key points:

- Centralized stablecoins are easy, but stupid and goes against the decentralization movement.

- DGX is the best model to have off-chain assets and corresponding blockchain-based tokens.

- Most people think stablecoins cannot be invested in, since its price is stable. This is true.

- However, in dual-token stablecoin systems, the NON stablecoin can be invested into.

- Dai will never scale to meet demand in the high hundreds of millions, let alone billions.

- Havven's eventual problem is decentralizing its oracles, which no one has done successfully yet.

- Basis is greedy af and they don't need a shareholder token

- Carbon is great, but built on Hashgraph

- Fragments is great, but they've still a long way to go

- Reserve seems like a complicated mash up of the best things of earlier existing projects. Looks interesting.


My personal prediction is that the non-Tether stablecoin market will surpass $1b within 2 years. And if the projects with investible dual tokens succeed, their owners are about to become insanely rich.

Tuesday, July 3, 2018

GMGH take on Utility Tokens

Here is the reference article, please read it.

Here is the main classification table, I will reference it.



Store of Value
Only a HANDFUL will exist. Scarcity (stock to flow), decentralization and willingness of other people to accept them as stores of value are key factors to determine success. Upside potential is high, but can you figure out which crypto fall into this category?

Stablecoins
Has no upside, with 100% downside risk. Not for investment purposes, but excellent as a medium of commercial transfer and short term wealth transfer.

Payment Tokens
Shit.

Governance Tokens
Shit, unless you get paid (DGD)

Discount Tokens
Shit, unless people actually want to buy the tokens and use it for the discount themselves (BNB)

Work Tokens
This is my preferred classification. I believe that REP, HAV and actually even DGD falls into this category. The whole article above talks about why they are unique and special.

Burn & Mint Tokens
I have no opinion on them because I am not familiar with any good models of this.

Security Tokens
Pretty much the same as investing into any normal security, except you have global 24/7 trading, but the downside risks of the underlying asset itself does not change.


Conclusion

I only hold SoV crypto, Work Tokens.
I use discount tokens.
I am betting on the USAGE of stablecoins (NOT it's value appreciation, since there is none)

You most likely hold Payment Crypto / Tokens, which... surprise, surprise, nobody is actually accepting as payment.

I urge you to re-evaluate the kind of crypto that you hold and to think if they even have any value. Can I use the token? Can anyone else use the token? Who would buy the token from me and for what reason?

The failing of most crypto investors is being unable to realize that the success of the company and its products may, and usually, have NO correlation or impact to its token.

All the best.

Monday, July 2, 2018

$20,000 Crypto "Passive Income"

Right now, price of ETH is $450 USD.
After Casper + Sharding, 32 ETH is required to be a validator. (this link is a great read, btw)
USDSGD rate is about 1.36.

Do the math and you get $19,584, which will be enough to get the crypto capital required to run a validator.

Buy a NUC for about $400-500 and you've got yourself enough hardware to host the node.

(examples of NUCs: eg1, eg2, eg3)

So there you go, for about $20,000 SGD, you'll have the essentials to run an ETH validator once Casper and Sharding is out.

All of this is crypto nerd speak, but basically it's going to be a "passive income instrument".

ROI is fuzzy. Some people think 5%, but I'd imagine that the real life returns are 3%, or maybe even lower.

ROI is also in ETH, which is volatile against USD. I guess you can just assume it's 1 ETH a year.

So now you have an interesting curious case of having crypto capital paying out crypto returns.

Personally, I believe that ETH marketcap will be larger than BTC. That means at current prices, with BTC staying constant, ETH would be $1079 USD.

Capital gain of the 32 ETH in the node: $27,370 or 140% unrealized capital gains
New annual expected "income" from the node: $1460, or 7.4% pa

Now, if BTC goes back to $20,000 and ETH matches its market cap? Just a simple 3x to all those numbers above.

Capital gain would be close to $80,000 and annual ROI would be over 20%.

And this is if the value of cryptocurrencies just stagnate at those levels, which I personally doubt.

Anyway, these are all hypothetical numbers that I'm throwing out into the air.

Question: GMGH, how many ETH validators do you plan to run?
Answer: As many as I can.

Looking back at this post 2-4 years down the future when Casper and sharding is live and well, it might be crazy to think about how cheap it was to acquire these digital assets and how crazily disgusting the current returns are, such that someone with just a handful of nodes can retire and live a very comfortable life.

I'm not going to come out and explicitly tell you that you should get 32 ETH. Your money, your life.
But that's what I'm doing for myself and for people who have entrusted me to manage their crypto portfolios.

Sunday, July 1, 2018

Crypto Case Study: Bamboo (Acorns, for Crypto)

If we want to talk about the crypto version of Acorns, we first need to know, what is Acorns?


That's Acorns. It's a very, very, very interesting way and tool to help people save small amounts of money without thinking about it, and also a way to invest recurring and even lump sum amounts.

The premise of Acorns is that brain-dead easy. I've talked about Acorns wayyyyyyyy back on my blog in 2014, so I'm actually a very big fan of this model. I think it's a really good and painless way to help people save and invest.

So, the reason why I talked about Acorns first is that there is actually going to be a crypto version of it, and it's called Bamboo.

Same concept - round up small purchases and help auto-invest into a basket of cryptocurrencies.



Acorns was founded in 2012, raised $100m and now is worth about $1.28b.

Bamboo is looking to raise $20m with a valuation of $40m. However, it is important to note that TOKENS ARE NOT EQUITY.

This is where I am kind of meh about the idea of Bamboo.

- Crypto markets are way smaller than traditional markets
- Token is not equity
- Token only has value if (big if) Bamboo takes off and generates so much fees that users want to offset them with Bamboo tokens.
- Barriers to entry is not high (Acorns can offer crypto when crypto ETFs finally come out)

To be very frank, there actually isn't a good reason for Bamboo to issue tokens at all. If they just raised traditional equity VC money and pushed out their product and services and charge fees in cryptocurrency or fiat, it'd be a mighty fine business model already.

This is not me recommending to invest into Bamboo tokens. I'm skeptical on the return to be had as an investor. However, would I use this as a user if this was available in Singapore? Yes, I would.

Anyway, just wanted to share about a rather interesting crypto project to show just how fast this space is developing and trying to catch up with traditional fintech companies.

You can be excited about a company and its products and services, but that does not mean that you have to invest in it.

That is something a lot of new investors fail to realize.