Cryptocurrency and Blockchain
Sunday, May 12, 2019
For those millennials and tech enthusiasts, investors, and just people interested in money and finance I hope you’ve been following the news. This weekend some digital currencies have jumped nearly a thousand dollars in the last two days. This is quite incredible as it shows that the digital currencies, virtual currencies or electronic property / assets (and any other name you call them) still are in the forefront of people’s minds.
This large price push and public awareness all really started when the first digital currency on the Blockchain became recognized as legal currency in a very forward thinking country of Japan around April of 2017. They knew that most people and millennials carry around their phone on their person, even more so than a wallet or purse and also conduct their whole life and business on that one device. In the future or even today small handheld devices will have as much and even more computing power than electronics we had decades ago. You can imagine that people have dreamed of devices that could do everything or were more application specific like Pokédexes from Pokémon. Even episodes of fantasy like Batman Beyond where people carry around and operate “credits” have long been in the back of people’s minds as to what the future of money would be like. And it came down to the fact that future money has to be fast, and quick and easily usable by anyone around the world. To be sure the oldest and largest cryptocurrencies came about before 2009 just after the first financial crisis but it didn’t start to get mainstream recognition until the last two years when the price jumped so significantly.
There have been many iterations of money and record-keeping from seashells to “quipus” also known as “talking knots” in which strings had knots tied in them in mainly South American countries to keep track of value. People have used things such as gold, silver, cigarettes and ramen to have a system of exchange and a medium for store of value. A few early precursors of money came from things like Beenz, e-gold which mostly came about in the 1990’s and has been been referenced in other media such as e-coin on TV shows such as Mr. Robot.
Right now there are way over a hundred cryptocurrencies out there including Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, EOS, Stellar, Cardano, TRON, Monero, Dash, and IOTA, NEO, Zcash and Dogecoin just to name a few. More and more keep coming out and it gets rather confusing what is what and how each are beneficial to the ecosystem.
There are many sites out there that already do a great job summarizing this ongoing development but we will try to summarize a few things. Lately the price points have been going parabolic or getting close to it again with price jumps from the upper 3 thousand dollar price points for a single Bitcoin for example and has increased already to nearly 7 thousand this weekend.
The advantages of most of these electronic stores of currency are that they represent money and:
1) don’t have to be carried around in a physical wallet and you can spend and receive money to exact change without having to carry loose bills and coins.
2) you don’t have to wait very long for your transaction to clear as most payment systems such as PayPal and credit cards take a few days to clear and settle
3) large amounts can be moved with very little to almost no fees
4) it requires no dependence on a third party to control and handle the transactions
5) the transactions can be as public or anonymous as people want it to be in a sense because transactions are put on a public ledger which is partly obscured to partly protect identity but can still show other data for analytic purposes to improve services. This is basically what the blockchain is, a ledger that is immutable and can’t easily be altered to show transactions in a set order and able to be traced back to some extent.
Of course there are disadvantages as well including:
1) that it’s still in its infancy and is new technology with disagreements on how best to implement
2) putting things on a peer to peer blockchain also requires a lot of computing power and storage in some cases and sometimes can be slow to confirm some transactions still if a network is congested
3) is prone to hacking
4) doesn’t have much in the way of protection of income if you aren’t careful there are “no takebacksies” meaning once you submit a transaction you have no real way to initiate a chargeback or dispute if there’s a problem. (although this can also be an advantage in some cases I’m sure)
5) the currency is subject to market fluctuations and not fully accepted everywhere yet and it’s not currently easy to convert between paper currencies or other types into digital currency and back and forth. Thus if you want to get into digital currency and convert back to fiat as they call it, you might have a bit of difficulty in some cases. There are steps currently to make it easier with ATM’s coming out, more vendors like Overstock and places like NewEgg and sellers of gold are accepting these currencies. There are exchanges and stock based companies coming in to fill the gaps in need so this is quickly changing for easy of use to the consumer.
Many people are getting into the mix with social media companies getting into the fray as well as banks wanting to start their own coin. In fact there was also a time where companies were raising venture capital with what were initial coin offerings or ICO’s but certain countries had difficulty at the time between 2017 and 2018 as the parabolic price curves skyrocketed from 3000 all the way to 7000, past 8000 and 9000 to 10,000 and eventually up to 17,000 and in the 20,000 range. Many people compared this to a bubble and tulips because of not understanding the excitement and hype about the technology yet. It was and still in its infancy as again, there is still difficulty getting into the system.
A period of ad bans happened to try to control the spread of information and it was a war of people trying to pump price and also dump and drop the price. Basically a battle between bulls and bears and the people looking to see a bright optimistic long period versus pessimistic short period.
Millennials that are constantly on the phone and their devices and practically live, breath and consume online content just want easy of use, mass consumption of content, and live and get the best of their life without the difficulty that their parents had. They are smarter in terms of not being so naive to the brand of politics and fear instilled from the past from prior generations and superstitions. However there is still a vast fight as people will do anything to resist change by implementing controlling doctrines and philosophies. People are trying to maintain status quo with current currency standards while new options will always face resistance. It’s sort of like when people first came out with cars people were worried about why it was needed and costs and accidents. And there’s an episode of The Today’s Show where Katie Couric and Bryant Gumbel were wondering why people needed the Internet and email. And fast forward from 1995 to today and the Internet is pervasive everywhere and in most of our lives as well as conducting business via email. Most businesses would be seen archaic if their business cards didn’t have a website with hours of operation or have a customer contact to reach them online.
Here is the reason why these virtual currencies will be the next thing.
1) It allows people to transact 24/7 with no third party intermediary. That means where you used to have to wait till Monday to get your paychecks for payments to clear, there’s virtually only a less than half hour wait to get payments sent.
2) Because of this if you are flipping coins to take advantage of price fluctuations, also know as arbitrage and a use case similar to forex trading then this is also 24/7 trading.
3) You can keep your transactions relatively private although IP addresses and other electronic data can still be collected, you could literally pay your friend very simply and not have to worry about political issues. For example Customer A wants to buy or pay for services by Company XYZ but has to got through Payment-Processor MNO. And this Payment Processor doesn’t like the type of goods Company XYZ is doing and so might deny the transaction from going through. Now Customer A could just pay Company XYZ directly. How is this different from cash? Well let’s say Customer A wanted to give Company XYZ a ten dollar bill to pay for a Wizards and Witches game. They could probably do that with cash. But using a credit card by Payment-Processor MNO might not go through if let’s say they thing Wizards and Witches games are evil and a waste of time. So they refuse to help your transaction go through. And so you can’t buy your game. And so that’s why it’s nice to know you can have a relatively private transaction so only you and your friend know you like Wizards and Witches as an example.
4) The who system is built on redundancy and multiple copy failsafes. So that means that the system is built on a peer-to-peer sharing network much like the initial music and file sharing systems that were built ten years ago. If one person decides to disconnect from the network, the fact that you have so much in your account is still saved on the system. So if Brian has a copy and John, Sarah, Mary, Henry and Henrietta all have copies and Mary decides she doesn’t want to use a smart phone any more but get a flip phone then the other people still have copies of the payments that have processed and can tell when payments were made and to whom so it keeps track of who paid what. It’s basically a huge accounting system.
The 24/7 transactions is probably the coolest thing about this system and the fact that you don’t need to rely on anyone else to process the payments, just the software, access to the net and multiple network servers. So unless someone decides to take down the server affecting everyone else, the system has to stay up to continue to process all payments.
So what is also exciting in the last few days is that:
1) April 2017 the first cryptocurrency was legalized in Japan
2) It went all the way up to 20,000 between November and December
3) New coins, “futures” and ETF and exchanges were brought in to try to make money off this money system including ICO’s and advertisements meaning more business
4) Meetup groups, excitement, TV references like the Big Bang Theory had an episode of it, it started being talked about on the news and media and radio on NPR, and ending up on CNBC as an index,
5) People were stirred up and brought to a frenzy and Twitter or CryptoTwitter was alive with buzz
6) Then the price plummeted and price dropped all the way to about 3k over 15 months
7) People that were writing books, taking out mortgages to invest, scammers, and pump and dumpers got wiped out but learned from this experience, and a lot of people learned that a digital revolution had been happening all this time despite all the political talking and trade daily noise and back and forth
8) People had a chance to accumulate and have a foray into business with this “easy money” while it lasted
9) The people that have been studying it are poised to continue to take advantage of the market still as some countries continue to regulate, others will step in and fill in the gaps to engage in e-commerce where others refuse to have monetary dealings.
The fact is, as many point out on YouTube, Twitter and social media, if you are not awake. If you’ve been asleep for the last 10 years worried about your daily mundane lives and riding a bus back in forth to work or just sitting in front of the TV watching mindless sitcoms or even driveling non-essential video entertainment on the net, you may have totally overlooked this entire digital revolution and likely will miss it again. People took to YouTube to promote their ideas and make it seem like they were financial experts, people were getting subscribers and there was a whole business world and payment system. You could basically get paid in the entire ecosystem with digital currency and survey.
Remember the commercials in the 90’s where people were touting being daytrading as the new thing and celebrities were doing it? Or the commercial were you could work from home without wearing clothes?
This is basically a new iteration of it, only it’s blending real world money and a potential new purely digital world.
In order to capitalize on this new world people will see that there are free “token” and coin giveaways (with a big warning to those newbies that in most cases these are scams as well with a few being legitimate with click- throughs and likes), subscribe to social media feeds and take advantage of the fact that electronic messages are now being disseminated in encrypted fashion and people have access to more information, copies, and templates faster than ever. There are bounties, and referral links just like the early days of the internet. But the real thing is that actually involves real money, real profits and people that are veteran traders who are truly more excited than ever to see a new “dot com” era that they haven’t seen in a long time.
Who would have thought in nearly 20 years we would have another dot-com-esque bubble and that’s what has made the last two years quite exciting. With the stock markets at an all time high and the currencies on the cusp of either a breakout higher or even a slant lower depending on the fates and the free market, it is truly an exciting time.
Don’t be caught unaware. The next few years has some big names like Charlie Lee, Tim Draper, McAfee, Novgratz, Roger Ver, and other “influencers” that are affecting the market and though in the “CryptoTwitterverse”. There are also other people in the Twitter universe that if you look around and follow them enough you will be sure to gain insight into how everything works. And it is not just males getting into this. There are also ladies who are just as interested in this and making money by promoting merchandise, books, and informational feedback for others.
One thing to note is that there are some basic things about blockchain and cryptocurrency. You can find a lot of great information on the web if you just search.
1) There are a lot of coins that probably do something you want to do.
2) These are “smart coins” or tokens that allow conditions to happen or execute in order for someone to be paid. These are “smart contracts” built into certain coins built off a coin called Ethereum. There are newer versions based on an ERC-20 standard.
3) DYOR mean “Do your own research” as a lot of people in the Twitter-verse will help you but you need to do a bit of research to find some information sometimes.
4) It is not all money but also fun and games. Some of the people nicknamed the first coins “magic Internet money” with a “wizard mascot” to show it was for fun.
5) The first blocks of coin transactions ever done were called the genesis blocks.
6) Before the price took off there was someone who spent 10,000 bitcoins on a pizza and that would now be one of the most expensive pizza purchases at the current price it is at now.
7) To HODL means to hold your assets and not sell. To BTD or BTFD means to buy the dip or buy the flipping dip (slightly cleaned up so as not to offend). To STR or sell the rip means to sell when the price is high. So buy low and sell high like in stocks.
8) Consider storing your data and private information offline in paper wallets or cold storage. Make sure you look into this.
9) Consider using 2FA or two factor authentication for your devices.
10) Don’t ever give anyone your private keys or private information. There are a lot of hacks and malware out there.
11) Miner virusware will try to take over browsers, apps and phones and install something to mine certain profitable currency which only serves to make your phone hot or your PC resources getting hogged. So be careful of those. Nowadays you need a special device like an ASIC or application specific integrated circuit to “mine” cryptocurrencies as you would try to “mine” gold. Some video cards can still be used.
12) There are cloud services that will do mining for you but may or may not be profitable at all.
13) Be careful. If it’s too good to be true it’s likely a scam because if you’re giving out information or money to someone there’s no guarantee someone is going to render you a service or the product will be around. A scam going around is people offering to give you a bigger amount of coins in exchange for a smaller amount from you.
14) There are opportunities always everywhere. You have to look. And there are people of all ages, races, and cultures interested in it. Many months ago we had a chance to check out a meetup conference and was pleasantly surprised to see, men and women, old and young from ages 16 all the way to 60’s and so interested in this new technology.
15) If someone is overly enthusiastic or pessimistic take things with a grain of salt. They may be invested in it in some way and trying to pump or dump prices or have a conflict of interest.
16) Some specialized devices like Ledger Nanos and Trezors are cold storage devices that allow you to store your cryptocurrency separately from the internet so someone can’t hack the device. Consider getting one.
17) Major exchanges have been hacked including Mt. Gox and in the last few months Binance had a hack but had a SAFU fund to ensure no funds were actually harmed because they had this worse case scenario fund for a scenario just like that. So don’t store a lot of money on exchanges on only enough to trade if you decide you want to do it.
18) Some people advocate taking small investments like Mark Cuban just enough that’s reasonable as it is very volatile and prone to losing money, but no risk means no chance for a huge reward. Essentially it’s a bit of a gamble.
19) You will have seed phrases and private keys that only you need to know. Never ever give either to anyone or else you basically will lose all your money. Seed phrases allow you to recover your wallet in the case the program gets corrupted or the app gets an update and messes up or you lose your phone and need to restore it to a different device. This is so so so important that you need to make sure you have it where you can recover your wallet if you ever need to. Don’t just give away your money because a lot of these coins have returned triple digit or more return on investments and more than any other asset in the last few years. People have even lost hard drives with these electronic assets and lost out on huge sums of money. Don’t be like them.
20) Hackers may want to steal your files by locking them in exchange for these currencies. It’s so important to have a contingency and backup. In many cybersecurity meetings and business meetings they said the number one thing that you can do to keep your operations running smoothly is to keep a back up so you can quickly restore and recover files. A lot of storage is now super reliable and a USB flash drive or external hard drive is very cheap in terms of storage per cost per unit. It’s an investment of your time and life so take the effort to back up your files. You will thank yourself later and be less prone to pull your hair out later.
21) Find other people who have an interest in these technologies like yourself and you will go far. People are starting companies and groups based on these technologies. Remember GoDaddy and Lycos and a lot of the startups like Pets.com and all those companies? There are so many companies and domains that have gone defunct or out of business that weren’t archived or put in The Way Back Machine Internet archives and are gone, but the ones that survived like Amazon and Google and many other companies were pioneers and are the ones setting the rules now. Yahoo was another pioneer back in the day and still around. There were even money making seminars that you would see fliers in the mail and go listen to a 2 hour seminar and get a free lunch or CD I remember and they you would pay some crazy fee like $997 or so for a chance to learn how to do the things they taught. Well those are likely to be scams too in a way because you have free information on the net and need to DYOR, surround yourself with down to earth people and learn. That’s what Steve Jobs did in finding Steve Wozniak and they built and tinkered till they got something they were passionate about and others were interested in. You’re gonna find some amazing opportunities to learn in this space.
22) It’s not all about money, not all about business. No matter what it’s also about finding a good life and using that money to create a good life. There was an article about Danielle Steele in Glamour about how she wrote 179 books but wished she “had a little more fun”. She’s a hard worker for sure and thinks many millennials think they are too soft and are in a ‘I deserve it’ mentality and don’t do the hard work necessary sometimes. Our recommendation? Strike a balance. It’s true that we are living in one of the greatest tech and financial revolutions of all times but that doesn’t change the fact that people are still people. Love is still love, and people get old. And people need to eat, spend time with family and deserve respect. Find time to not neglect your family, your health and common sense. Never let your head get too big with money whether you get a lot of it or lose a lot of it. Time is irreplaceable. Money comes and goes. What good is all the world’s money if you can’t be happy or with someone who loves you? Ask Bezos. Ask Buffet. Ask Gates. There’s a lesson for us all. The price and currency may rise and fall like the tide at see, but never get so lost by the current that you miss your way back home to truly what’s important.
Peace, love, success, health, security and prosperity to you.
These opinions are our own and we do not advocate for or against any particular positions in the market other than plain old common sense. As always, do your own research as any investments are subject to both market fluctuations that may include gains, as well as, losses.