Sunday, November 19, 2017

19 Nov 2017 Crypto Thoughts

Just gonna plop out some mental crap that has been clogging up my brain's mempool for a while. Hope anyone picking my thoughts can pick up something interesting.

Bitcoin is a trustless, uncenorable way to transfer payment information and balances.
Ethereum is a trustless, uncenorable way to transfer all types of information, INCLUDING payment information and balances.

Monero is what normal people think Bitcoin is.
Monero is what shady people that use Bitcoin need to actually use instead.

Banning cryptocurrencies because it can be used for money laundering is like banning the internet because terrorists can send each other emails.

People used horses for thousands of years, until the car.
People used paper money for hundreds of years, until cryptocurrency.

Tokens that are securities are one of the easiest and best use cases of blockchain.
Securities (shares, bonds, etc) WILL be tokenized and will be legal.

Token holders may NOT have any legal recourse NOW, but that WILL change with the tokenization and securitization of everything.

Classifying all different types of tokens as the same thing is like classifying all modes of transport as the same thing. Cars and donkeys are different, much like many types of tokens are different from each other.

Once there are clear legal frameworks for tokenized securities, the majority of tokens will be clear-cut, straight-up crypto versions of shares trading on stock markets now. (profit sharing + voting)

Project Ubin mentioned blockchaining bonds and settling payments - clear and straight forward use case.

95% of all crypto will end up being *close to* worthless. Blockchains don't die easily, but their value and usage do.

Market cap is a very very fragile metric. Give me a few thousand dollars and I can move the market cap of some coins by several million dollars.

People betting on alts hoping for it to become the "next Ethereum" are smoking some crazy shit.
Same as the people betting on alts hoping for it to become the "next Bitcoin".
Bitcoin and Ethereum already exists, why do you need the "next" one?
(For clarification, I am referring to overall development and community, not price speculation. There is obviously more profit percentage-wise to be made gambling on small alts.)

Many traders are looking only at upsides and ignore the downsides.

Many traders have never even used or sent crypto on its blockchain - they have only traded it on centralized exchanges

Many traders are going to end up holding extremely heavy bags of quickly becoming worthless alts, using Noble logic - "it has dropped so low, it can't possibly get any lower, can it?".

Many utility-only tokens will end up being worthless.

Many of those projects MUST screw over their token investors and choose to accept ETH as payment in order to survive.

Or else they must partner up with someone that can offer services along the likes of Kyber to instantly accept ETH from users and get it converted to their utility tokens to be used natively. Either way, the value of those utility tokens will be very much muted due to there being no intrinsic value of holding the tokens, since it would be preferable to just purchase the required tokens on the spot, as per demand and usage dictates.

Proof of Stake will likely be the new "proof" model of the future.

That said, Proof of Work will not die easily.

It makes much more sense in 95% of scenarios to just buy the coin instead of mining the coin.

Ethereum's success will be determined by how it reacts to new and objectively more technologically advanced blockchains, and retain and incentivize developer talents, and general adoption of its blockchain (both public and private).

If Ethereum can manage to fend of newer blockchains until sharding goes live successfully, they would have won the decentralized application race for the foreseeable short term future.

Proof of Stake + Sharding will create MASSIVE global FOMO of "investing" in crypto-currencies and could be one of the things that fuels real, mainstream adoption and gets widespread usage.

Cryptocurrencies will spark a "renaissance", where the new generation questions the need, trust, reliability of all 3rd party institutions and roles in both commerce and society. Corruption will be highly scrutinized.

Adoption of crypto will also spark the general public demanding that central banks and government run monetary policy better as parallels with unlimited fiat money vs deflationary cryptos are drawn and understood.

Mass adoption is still extremely far away.
Most people have only heard of Bitcoin. Almost none can name more than 3 other cryptos.
Of those that own cryptos, many are only lightly invested, "testing" out the market.
Of those that own and trade cryptos, many don't even know what their crypto is used for, other than speculation on price.
Institutional money has almost no legitimate way to get exposure into this new "asset class".
General public understanding of crypto is close to zero.
General public WANTING to understand crypto is even closer to zero.

We are STILL in the early adoption phase.
Prices WILL flop around like a fish on land.
People who are now owning the 5% of crypto that survives the next several years of culling, will be the new class of wealthy.

These are just my views on cryptos at this point of time. Lots of things can change on a dime, and I am learning new things every single day.

Crypto life, best life.

9 comments:

  1. FYI - I saw your previous post : Norton is flagging your blog as a web attack (JSCoinminer 6) and after repeated access to here the auto-block on the PC will kick in for 30-minutes haha.

    I enjoy your blog posts on crypto. I'm primarily an index investor, but that doesn't mean I should stop learning about new things.

    ReplyDelete
    Replies
    1. Thanks for the comment Kevin. I decided to remove the miner, my own security was flagging it like crazy as well.

      Glad you like it Kevin. I hope I can share more of what I learnt to other people, especially on more interesting and actionable things. Crypto projects are gearing up in 2018, so I think I'll have some interesting things to share!

      Delete
  2. Replies
    1. Naw. Supply controlled crypto. I have no desire to ever own it.

      Delete
  3. Wow this is one of the most informative blogs I've come across and it reinforces my belief in the blockchain and crypto. I am learning everyday as well.

    Also I was wondering if you could do a blog post on https://digix.global/ that you've highly recommended as a stable crypto in your next post.

    Cheers,
    Keith

    ReplyDelete
  4. Do you think that there is still a case to buy into Bitcoins / Eth at the current pricing level?

    ReplyDelete
  5. A great piece that sheds much needed light on some of the great theoretical/ideological debates in the contemporary crypto space. At CleanApp Foundation, we appreciate the emphasis on pragmatism, and emphasis on Blockchain/DTL/Crypto projects that offer real social utility. Looking forward to engaging more with your crew!

    ReplyDelete
  6. A great piece that sheds much needed light on some of the great theoretical/ideological debates in the contemporary crypto space. At CleanApp Foundation, we appreciate the emphasis on pragmatism, and emphasis on Blockchain/DTL/Crypto projects that offer real social utility. Looking forward to engaging more with your crew!

    ReplyDelete
  7. A great piece that sheds much needed light on some of the great theoretical/ideological debates in the contemporary crypto space. At CleanApp Foundation, we appreciate the emphasis on pragmatism, and emphasis on Blockchain/DTL/Crypto projects that offer real social utility. Looking forward to engaging more with your crew!

    ReplyDelete

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