A Primer in Ethereum (Ethereum 101)

Ethereum is the clearest when it comes to why it goes up in price. So in case you aren’t aware Ethereum allows you to create tokens/smart contract on its Blockchain.

So many companies have been creating business that make use of tokens in their product and then pre-selling these tokens to raise money calling them ICO’s (initial coin offering). When you buy these tokens it costs Ethereum to create them and it costs Ethereum to send them to others (so the greater the demand for these ICOs the greater the demand for Ethereum)

What we know as Ethereum (ETH) is actually a fork of the original Ethereum Classic (ETC). (There was a large scam ICO on the original Blockchain, a fork was created to reverse the scam and get people back their money) Tokens that are created on the newer Ethereum Blockchain are called ERC20 tokens which is most ICOs (BAT, Augur Rep, Civic, etc.)

There are many other token platforms that exist and many in the works. All it takes is a few successful coin issuances to drive demand for the platforms currency. Examples of these are NXT, Waves, ARDR, NEO, Bitshares, and many more.

Waves/NXT/ARDR – They have built in exchanges in their Blockchain

Bitshares – Allows you to create collaterlized assets that track the value of real things, one BYS asset is called a HERO which tracks the value of a 1913 dollar

NEO – has a second currency called GAS that is a reward for owning NEO, so it essentially pays you a dividend for owning it.

The more you know…

4 Types of Cryptos

I generally put all cryptos/blockchains into 4 categories.

1. Bitcoin Alternatives: these are pure currencies, their goal is to solve bitcoins scalability and environmental challenges before the bitcoin community does. The benefit is they can try out new hashing algorithms, encryption types, block sizes etc. without having to have the entire bitcoin community take the risk with bitcoin proper. These to me are risky as an investment because successful alternatives will likely have their features adopted into bitcoin or in a bitcoin fork so there’s an incentive to just hoard bitcoin till a fork with all the best features airdrops you your winnings.

2: Sidechain Platforms: basically these are blockchains of blockchains like Ethereum, NXT, Waves, ARDR, Bitshares etc. that are trying to create the best platform for creating, distributing and trading custom token assets for capital raising, in-game currencies, gift cards, smart contracts, etc. I think these are my favorite investments because the success of tokens made on these platforms create demand for the platform and the platforms internal currency (Ethereum/Waves) and a few successful tokens can create a home for the platform for time to come. RSK and Omni are platforms built on top of existing blockchains

3. Privacy Coins: These are coins who are mainly trying to figure the best method of privacy while at the same time be convienient and scalable. There is a demand specifically for anonymity in the black market and from privacy hawks that I put these in whole separate category because I expect the dominant currency coins will be lot less private than these particular consumers will want.

4. ICOS/Token Products: Non-currency tokens meant to act as symbol of an investment or for redemption for a particular good or service. These are the riskiest as they are built for niche applications and lot of them are scams.

Generally if I can’t fit a token into one of these categories I don’t think twice about it.

Is bitcoin just about anonymity?

100% disagree that anonymity is bitcoins only utility. (Or that it is even a utility these days, it’s a public ledger so it’s not very anonymous)

Blockchains biggest value is trust (the distributed ledger), governance (requires mass consensus to successfully alter) and portability (Hard for Venezuelan authorities to find that crypto you are hiding).

Granted, these are not killer uses for a developed nation, but for underdeveloped nations where trust or availability of financial institutions are lacking or the local currency lacks value crypto offers a spectacular way to keep commerce developing globally.

Venezuela is a prime example, Cyprus was another example.

Yes some people use bitcoin to be off the grid but most of those people have moved to Monero/Aeon/Dash at the point.

This is like mobile banking, it is huge in Africa because it was a huge step up from what existed before but still hasn’t taken in the same way in America cause the additional value wasn’t enough to foster mass adoption.

If we look at crypto in the American context we are very much missing the big picture.

Enterprise vs Governments vs Charity

One of the benefits of a business as a way of helping people vs a charity or government is the following. (Don’t get me wrong I’m glad charities exist)

Charities separate the provision of a good/service from the funding. Since this is the case, to get funds they have to build relationships and cater to patrons with galas and other events. The result is overtime they spend more time in securing funding that providing the charitable food or service. (Political organizations are a perfect example)

Government doesn’t have to spend time getting funding because they can just take it, but the result is complacency in the providing of a good or service. The result is typically plagued with corruption since it’s someone else’s money and they can always just take more.

In a business the funding and provision are the same, the more you provide the good or service the more funding you receive. In this case you focus your time on those who need your good or service cause they are the funders and only Fund you if you offer more than the next provider instead of spending endless time snoozing rich people to fund the occasional helping of others or taking other people’s money by force and wasting most of it on at best disorganized and often corrupt government aid programs.

Bottom line, entrepreneurship is philanthropy, Profit is Generosity.

Cryptocurrency and Governments

Many have predicted anticipated governments developing their own currency blockchains. Venezuela seems to be the first jumping into this game.

My prediction is eventually the BIS will create a form of Ethereum/NXT/BITSHARES and allow all countries to create their domestic currency as an asset on that Blockchain (kinda like ICO tokens on Ethereum).

Having them all on one Blockchain offers several benefits I doubt governments will ignore.

– Easier to track payments for AML purposes with one shared Blockchain.

– Each central bank can act as a masternode for processing each other’s transactions

– Easier for tax collection

– having the BIS be the center would make it easier for international payments.

Is this a good thing? Not really, but it’s the likely outcome of government application of the tech.

Fortunately they would have no choice but to compete with existing private blockchains as they are now since they are decentralized and near impossible to eradicate unilaterally so people can diversify their monetary mediums which will still put pressure on governments to be more accountable.

Also BIS having visibility of international transactions may make it harder for governments to start wars with each other on some level.

Although I can think of several nations who would opt out of such a regime although the benefits to international trade and their economies may force them to be more transparent and join in.

An interesting thought.

Bitcoin Thoughts

Bitcoin Thoughts

– I think the price will trade within a range for a time being since it has had a little bit of a correction from hitting 19k

– I don’t think there’s a bubble because too many people are saying “bubble” usually bubbles require an overwhelming mania… I did think the price movement last week was a bit irrational especially on Friday but it seem to have corrected

– Bitcoin futures will allow better price discovery and market stability so I expect the volatility to dampen a little bit as the futures market to develop

This is a good thing because of the value stabilizes then bitcoin can go back developing itself as a medium of exchange beyond exchanging for other cryptos (which people totally underestimate the value of that one function alone)

– This means volatility of altcoin will probably increase as people chase large trades, a lot of people will be providing a lot of liquidity to a lot of useless cryptos (although many will be buying large amount of BTC and ETH so they can trade these altcoins on exchanges that alone will provide substantial liquidity to BTC/ETHat current levels)

– I still think the Best long term plays are diversifying among privacy coins (Monero, Aeon, Dash, Zcash) and Ethereum alternatives (NEO, WAVES, Bitshares, etc.) as I can see the value in at least one player in each category finding real demand and application.

– I’m staying out of ICOs until I see a final product of an existing one that shows the value of the ICO model. (I guess Steemit and Lbry do that, but I’m more interest in seeing if something like Civic or BAT create their product which would be killer)

The WAVES Blockchain is Cool

The more I learn about the WAVES Blockchain the more bullish I become. Was learning today about how Master Nodes work and how they allow for transaction fees to be paid in custom assets and seeing how some startups are making use of this.

Cool stuff. I find it fascinating how a good Blockchain business model is essentially this:

Find a solution you want to crowdsource (data entry, content curation, providing unused hardrive space), create a token that rewards people for providing it, create a use for the token that would lead to its demand (paying for data entry/content curation/cloud storage). If this is successful the token develops an exchange value that rewards the creators on their holdings in the token.

(The model above can be used on all blockchains that support asset creation such as WAVES, Ethereum, NXT, NEO, etc.)

*subscribe to my podcast, “The Bitcoin, Blockchain, Crypto Podcast”

Al Franken, Roy Moore and the Injustice of Politics

When it comes to the controversy with Al Franken and Roy Moore the egg is on the face on politics itself. Their slow response to both men show how their desire to maintain power trumps any desire for justice and how unaccountable public officials can be.

When the controversy broke out with Weinstein, Spacey, Laurer and more the fall from grace and consequence was almost immediate, swift and painful. Why? Because someone can cancel their Netflix subscription, avoid movies and watch a different morning show at any moment. A shareholder concerned about the future of the company can sell their shares at the drop of hat. These mechanisms make private entities accountable and responsive in real time.

On the other hand an elected politician faces no consequences till their next election which can be so far off that peoples’ outrage will have died down and be replaced with the cheering on of “their team”. Politics is slow to respond and resilient to withstanding bad press on unethical and disgusting behavior long as it’s far enough from the next election.

So why as a Libertarian do I prefer more and more things be handled outside of politics and government? Accountability is a pretty damn good reason.

Ideology and Charity

Sometimes I see people say they won’t donate to a charity or support a worthwhile cause because of some ideological foul of some sort. (either by people associated with the cause or the actions of the cause itself)

As a libertarian I want us to voluntarily create the solutions to societies greatest challenges. Sometimes that means creating an alternatives to inefficient non-voluntary based schemes, other times that means embracing and supporting existing channels so voluntary support is enough because even if we don’t agree perfectly with the people who run that outlet they may have the skills and expertise to solve that problem. (Ideology alone doesn’t make one suited or not suited to solve problems)

If we think a cause is worthwhile we should deeply act and work to make things happen in a voluntary manner not as a judgement but as demonstration of what is possible when you believe in individual liberty and taking personal responsibility of the world around you instead of hoping for the opposite.

Privilege, Social Conflict, and Innovation

Privilege is just having some sort of benefit that others may not. If I wear a suit jacket I may have the privilege of eating at certain restaurants that I may not if I didn’t, if I have a certain skill sets I may have the privilege of having certain employment opportunities that others may not. Most people don’t begrudge others for the privileges they have but aspire to garner those privileges. The privileges we may not have serve as a utility in giving us something to aspire too, a vision of what we can be if we figure out how, a source of motivation and drive to do great things.

On the other hand all social divisions come from privilege as well. Every great social conflict comes from groups of like people feeling some other group of like people have privilege at their expense. (The feeling you can’t aspire too but are burdened by the privileges of another)

Workers feel Entrepreneurs/Capital Owners get rich and powerful on their work.

Taxpayers feel those who receive tax funded welfare do so at their expense.

Natives feel immigrants coming to seek new opportunities do so at the expense of those opportunities for themselves

Factory workers feel that cheap foreign labor benefits at their expense

essentially all of these conflicts and more follow two molds…

Traditionally less powerful groups feel the powerful earned their power at the expense of less powerful groups

The powerful groups feel that less powerful groups attain more power at their expense

Point is every political/social conflict can be summed as one group feeling another is attaining privileges at their expense.

This reality is not bad or good, it’s just a reality of how society works. Conflicts arise and from those conflicts arise new ideas, ways of cooperating, etc. Government should not play a role in these conflicts as it prevents the tension that spurs social innovation (these innovations will reduce the tension till the next one boils). People look to government to a be a force for reducing and resolving social and economic conflicts, the reality is by doing so you slow down social and economic innovation. Learning how to be better as a society is a good, but doing so sometimes isn’t pretty so people turn to governments to hide the ugly at the expense of generations to come.

Older posts