Crypto Currencies Will Eat the World
In 2011, Legendary Silicon Valley VC, Marc Andreesen famously wrote an article entitled “why software is eating the world”, discussing the meteoric rise of companies like Twitter and Facebook.
Decentralized platforms pioneered by Bitcoin will do the same. They already are. The rise of cryptos has been even more impressive.
Bitcoin, Litecoin, Dash allow us to do without fiat.
Smart contracts allow programmers and code to replace lawyers and laws.
ICOs allow investors to do without brokers, regulations, and heck, even without stock markets.
DAOs (decentralized autonomous organizations) allow rigorous, leaderless cooperation.
Crypto currencies are giving us censor proof message boards and social networks, markets, governance, content delivery. One category of crypto currencies is trying to replace AdSense. Another is trying to replace Google search.
I can imagine my son regarding today’s tech titans — Google, Facebook, Amazon — in very much the same way that I regard Kodak and IBM. Yesterday’s companies.
On the whole, this is a good think. We are brining down gate keepers and bureaucrats, and starving parasites and rent seekers.
All my acquaintances consider me an expert, but I feel like an newbie. This emerging industry is very deep, very complex, and very active. There’s so much to still learn.
The emerging industry includes niches for hyping new investments, and I’ve found a handful of good resources among the deluge of poor ones.
Crypto Gurus are by far the best. Check out their quick overview of the top 50 crypto currencies from December.
Their youtube channel is solid — technical, skeptical and level headed.
I also like David Hay’s youtube channel. Here he seems to second my doubts about Verge which I described in newsletter #7.
And, I like the Box Mining youtube channel. He produces a lot of content always summarizing important news and development.
On Twitter, I like Charlie Lee of LiteCoin, the Merkle, @themerklenews, and representatives of all the projects that interest me, including Charles Hoskinson of Cardano, @IOHK_Charles.
There are groups on Slack, Telegram, and Reddit which track specific projects too.
Lastly, I like the Youtube channel In it for the money, though he does a little too much hype for my taste. Here he seems to offer pretty simple and reasonable guidelines for evaluating crypto currencies. And I watch DataDash, though he does a lot of technical analysis which to me seems like pseudo science.
There was a crash this week. It definitely precipitated by the website coinmarketcap.com (CMC), but probably had two other contributing factors.
CMC is the go to site for what seems like millions of people who research cryptos. They list about 1400 coins and their prices. CMC averages prices using a wide variety of crypto exchanges. Early in the week they removed Korean exchanges from their averages because Korean exchanges have abnormally high prices (because of Korean currency controls, I assume). They did this suddenly and without any warning, and so their visitors suddenly saw all the charts go red, triggering a mini panic.
The other factor also has to do with Korea. There were rumors of Korea’s finance minister preparing to shut down exchanges. But as seems to often be the case, this turned out to be a gross exaggeration. There was just a little talk about compliance.
Lastly, this was probably a cool down from the recent bull run.
Ethereum Scaling Issues
I’ll reiterate the issue I raised in newsletter #6. Ethereum was the first smart contract platform that allowed people to issue “tokens” on top of it. There are more competitors than I can keep track of:
Neo (China’s Ethereum).
Eos – Emphasis on scaling and ease of use. Arguably the best scaling solution, since Cardano isn’t live yet.
Waves – a cool project that emphasizes usability. Their wallets also include all the functionality of decentralized exchanges for Waves tokens. So if you install the Waves wallet, you can automatically invest in Waves projects.
Qtum – seems to be focused on business.
Nuls – a new entrant which claims to be an enterprise solution.
and of course, Cardano, which I’ve very bullish on as explained in the previous newsletter.
Anyway, Ethereum has a huge first mover advantage, but there are thousands of project which will come online in the coming months. They’re either going to solve their scaling issues and do great, or it’ll be a slow motion train wreck. Vitalik recently also announced subsidies of between US$50,000 and US$1 million to solve scalability issues.
Yes, they are being worked on. There are many proposals and supporting projects. Ethereum’s co-founder Charles Hoskinson is skeptical, which is why he’s now building Cardano.
In newsletter #6 I wrote that I’d be looking for token system to start working in 2018. I was wrong to write that. They’re already working.
Investment Coins – This is an enormous no-brainer use of smart contracts. Dividends. I want to look more closely at each of these and see exactly what is guaranteed by the smart contract and what requires the trust and good will of the people involved.
TAAS (token as a service) – a Ukrainian project built on Ethereum which invests in digital currencies and pays dividends to everyone who holds TAAS coins.
MELON – a Swiss project built on Ethereum which presumes to be a white-label platform for creating digital investment funds.
Black Moon Crypto – Same thing. A white label platform for creating investment funds.
KuCoin Shares – The crypto currency exchange KuCoin shares its profit with everyone who holds KuCoin Shares. (If you want to join KuCoin, you can support this newsletter by doing so through this link.)
Bitconnect – Investment and lending. Extremely high valuation.
Scrinium – A platform currency running its ICO. People who trade with algorithm bots can post their bots and rent them for other people to use. The system will track performance and rate algorithms. These ambitious plans are just steps to the larger goal of training artificial intelligence to do its own trading.
Content Coins – These focus on removing middlemen, and giving content creators access to their fans without middlemen. In the case of books and music, there’s also a key system that allows users to unlock content they pay for (using tokens).
Tron, which fizzled this week after breaking into the top ten, is trying to be an alternative to the World Wide Web. It’s an extremely ambitious (and extremely hyped) project.
Vetz want distribute music and after a $4M ICO, purchased some content from a range of popular artists, such as Kanye West, Drake, Jay-Z, Dr. Dre, and John Legend.
Opus also aspires to do music distribution.
Viberate is focused on artist collaboration.
ArtByte is a tip system for visual artists.
Publica want to store and publish books, freeing self-publishing authors from Amazon.
Authorship seems to have similar ambitions.
Lunyr seems like a blockchain based wikipedia.
Spank Coin is in the porn industry.
Prediction Markets –
Augur – the leader
Infra Structure Coins – This is a broad category. It includes Ethereum and all of its competitors. I wanted to name it as a category because to me it seem like a good way to invest in the space without having to worry about niche value propositions.
The following four project either help different crypto currencies connect with each other, or they help smart contracts connect with the outside world, for example, getting the gold price from a reliable API, or the weather.
– Icon (ICX)
– Ark Coin
Quant Stamp – the only project I currently know of which audits the code in smart contracts.
Enigma – an MIT based project which allows data to be stored on a blockchain anonymously and encrypted.
Aragon – helps you build a system for voting and decentralized governance.
District0x – a community builder that uses Aragon and Ethereum. It’s communities consist of users, message boards, and a market place. So, it is Reddit plus Ebay. Amazingly, it’s already functioning. There are crypto-related jobs boards in District0x.
Monetha – this is more of a payment system, but their central feature is a trust system. Their marketing is about as polished as I can tolerate.
Clams – a lower profile Monetha. They’re targeting development geeks while Monetha is aspiring to global trade.
Supply Chain Management – These ambitious projects propose using the blockchain’s immutability to add guarantees to the supply chain, including food safety. For example, sensor reading of cooling containers could record readings directly into a blockchain.
VeChain – huge rise in the past month.
Walton – new arrival. Huge rise in past few days.
Ship Chain – In ICO now. No idea if it’s realistic.
Replace the Web – If you think Tron’s meteoric rise was justified, then it’s peers, Substratum and Maid Safe, and probably be under valued. I’m skeptical that Tron had too much marketing and not enough focus.
Tron – content delivery network. Based in China.
Substratum – every computer becomes a host to build a censor proof alternative to the web.
Maid Safe – another decentralized content system.
Share your Computer – These projects add your computer’s disk space or processing power to the sharing economy.
Golem & Sonm – Sell your computer power.
Storj, Sia Coin, FileCoin – Sell your computer’s storage space (or buy some to replace Google Drive, Drop Box)
Oyster Pearls – Instead of selling advertising on your website, force your visitors to do a little math on their computers. You’ll get paid for it.
Decentralized Exchanges – Many people have predicted that in 2018 governments will come for their pound of flesh. While I discourage tax evasion (avoidance – no problem), I think we can reliably predict that people will seek alternatives. Decentralized Exchanges are already here and already working, they just suffer from low volume and bad user experience.
Omisego – seems to have the best user experience.
Cobinhood – no transaction fees
Komodo – uses atomic swaps
Waves – a smart contract platform with a built-in decentralized exchanges for Waves Tokens.
Binance Coin – issues by one of the giant centralized exchanges. Currently it can be used for discounts of existing services. They say that it’ll power a yet-to-be-released decentralized exchange.
Advertising coins – These threaten to kill 90% of Google’s income by removing the middlemen from digital advertising.
Qchain (UC Irvine PHDs. Strong team. In development.)
AdShares (small Polish team)
AdBank (ico now)
AdEx (Russian project, I’m skeptical of their reach, but they may be first to market.)
Yankee Go Home
It’s heart breaking. Because of our IRS and securities laws, most ICOs reject Americans.
Space Socialism! An ICO to send North Korea to the stars!