Cryptoassets: Season 3: Episode 7 – The Birth of Altcoins

Guys! It’s been a long time since doing one of these, and it’s probably because I fell a bit out of the system.  However, I’m back and I’m giving you some information in terms of the other altcoins.  Lots of this information I came across was both interesting and head-scratching.

Within a couple of years of launching, it had become clear that bitcoin was the first fully decentralized cryptocurrency to gain significant adoption, but there were some aspects with which people were not fully satisfied.  For example, bitcoin’s 10-minute block time mean that, depending on when a consumer hit send, it could take up to ten minutes, sometimes more, for the transaction to be appended to Bitcoin’s blockchain.

The delays happened because of the merchant and consumers.  However, it got better as time progressed.

Bitcoin’s first darling…Namecoin

This was the first of its kind.  However, it was more about utilizing blockchain than being a cryptocurrency. There’s really nothing else to say about this coin.

Litecoin

Litecoin was released in 2011 and still remains the one that retains its significant value to this day.  It was developed by Charlie Lee, a graduate from MIT out there in Boston, Mass, who was a software engineer at Google.

He launched it in 2011 of October and was an immediate hit because it was much faster than blockchain’s transaction times.

Ripple

This was created in 2004.  I had no idea that Crypto was created that far back, but Ryan Fugger, a web developer in Canada, worked on this project before Satoshi and Bitcoin.  Ripple also didn’t have miners, but instead had its own algorithm that relied on subnetworkers.  Let’s just say these algorithms were part of a larger decentralized network.  That’s all.

Dogecoin

It’s arrival was in 2013, and being that it was just a joke, Jackson Palmer bought the domain named dogecoin.com and then he got the attention of a lot of people.   After it’s launch, it’s network grew to 70 million in only seven weeks.  Shortly after, it dipped below 20 million.

Dash

Dash, and it’s developer, Evan Duffield, got off to a rocky start.  The coins went on a significant surplus and the reliability had become bleak because the developer not focusing 100% of his attention on dash.

Zcash

Zcash was another cryptocurrency that had a lot of promise.  It reached $1k per coin rather quickly.  At one point, the value peaked at 1 zcash for 3,299 bitcoin, or 2$ million dollars at the time.  You can only imagine what WOULD’VE happened.

After the hysteria, Zcash calmed down and traded between a cool $40-50 bucks per share.

By the end of 2016, the price of bitcoin had reached a level just below $1,000 USD, and there were over 800 cryptoassets in a market that totaled over $17 billion.  At the time, the top assets in order of network value were: Bitcoin, Ethereum, Ripple, Litecoin, Monero, Ethereum, Classic, and Dash

The innovative investor may note from the list that Ethereum follows Bitcoin.

Podcast

Cryptoassets: Season 3: Episode 6 – Digicash & The Miracle of Bitcoin

Why Crypto

Sometimes the word crypto makes people shudder, perhaps because they associate it with illicit activity, but that’s a mental bias that is important to overcome.  Crypto is simply a tip of the hat and a shortening of the key technology underlying these systems: cryptography.  As discussed, it’s the science of securely transmitting data so that only intended recipients can make use of it.  Cryptography is used to ensure that cryptoassets are transferred to the intended recipients securely.  Given our digital world and the increasing prevalence of hacks, the secure transmission of resources is paramount, and cryptoassets have such security in spades.

As I’ve said before, there are lots of things that need to happen before crypto, in general, goes to the next level.  Hackers are going to have to be neutralized at some point in order for this to really work.

The Story of David Chaum

Does anyone remember DigiCash’s ecash? Well, basically in the mid-90’s, David Chaum founded a digital payment system called Digicash.  He was a technical genius, but lacked all other skills in terms of personal development (thus why I tell everyone that they better start learning ASAP). Bill Gates, who I’m not particularly fond of, came to him with a 100 million dollar offer — he turned it down.  Netscape also wanted to know about it, but they didn’t like Chaum’s attitude at all.  In 1996, Visa wanted to invest $40 million into the company but Chaum wanted 75 million.

This was the fall of Digicash and they went bankrupt in 1998.  If not, ecash would have been integrated into all browsers and we wouldn’t have to make online payments with credit cards.

Amazing what happens when greed, selfishness, and a rotten personality (and romanticism over an idea) can do to your business and potentiality.

The Miracle of Bitcoin

So, the miracle of bitcoin is remarkable.  We know that.  We know that we can’t see it, touch it, or smell it, which is interesting because I’m still trying to figure out how miners actually work (and will in the later chapters). Paper currency has its value because it’s literally agreed upon.  Every member in society has agreed that this sheet of paper means money.  That’s why it’s famous.

When bitcoin launched, however, it had zero value.  The supporters valued bitcoin, though, and then it became big.

What does this mean? The power of it all lies in the hands of the people, and I truly think it’s unbelievably remarkable!

Podcast

Cryptoassets: Season 3: Episode 5 – The Taxonomy of Cryptoassets

As I was saying in the last blog, bitcoin had a hell of a spike in November of 2013, capturing the attention of the People’s Bank of China, which then slapped restrictions on bitcoin’s use. Shortly after, FBI captured the creator of the Silk Road, Ross Ulbricht,  and then the collapse of the biggest exchange happened.

Bitcoin’s price declined over the next two years; meanwhile, developers were building different gadgets to atop it.  When this happened, developers didn’t really want bitcoin; and instead, they would much rather want to use blockchain. Of course blockchain was underlying Bitcoin, and then there was the explosion in the blockchain technology space, catapulting other coins into the sphere.

The Taxonomy of Cryptoassets

As of March 2017, there were over 800 cryptoassets with a fascinating family tree, accruing to a total network value of over $24 billion.  At the time, bitcoin was the largest and most widely transacted of these assets by a wide margin, with a network value of $17 billion, accounting for nearly 70 percent of the total network value.  The next largest cryptoasset by network value was Ethereum’s ether at over 4 billion. – Author

You can see how fast crypto moves.  Potential investment opportunities are identified quickly by investors when they look into the digital siblings….and that’s why it’s time to dive into specifics.

Cryptocurrencies, commodities, and tokens

Cryptassets are either cryptocommodities or cryptotokens, which are finished digital goods and services.  Lots of this can become confusing, so my goal is to explain in simple English and how it relates to you.

If we look at money, which is in your wallet or bank, it’s made on paper that has no value; however, it has the illusion of value. If we look at what commodities are, they’re essentially oil, wheat, copper, steel — those are common commodities.

Digital commodities, on the other hand, are compute power, storage capacity, and network bandwidth.

These digital commodities, when provisioned via the blockchain network, become just as important and turn into cryptocommodities.

Cryptokens are in the beginning stage of it all.  Because they require currency and commodities, it will take longer to gain traction.

This is essentially what these are, and in the next podcast, I will be talking about the cryptocurrencies today.

Listen to “Cryptoassets: Season 3: Episode 5 – The Taxonomy of Cryptoassets” on Spreaker.

 

 

Cryptoassets: Season 3 – Episode 4 – Scammers on Apple’s App Store & The Beginning of bitcoin

Scammers: Apple’s App Store Compromised

So, it’s been probably a week + since I’ve done a podcast, but I’ve been monitoring a lot of news and it’s getting a little crazy in the crypto world.

Almost every week passes by and there are scams everywhere, which is why I’m telling people to hold back until regulations and other things are implemented to protect people who are actually investing.  For example, the Appstore (of course — on Apple), has a lot of fake apps that phish for users to scam them.  Face value it has a nice photo and great reviews, but again, all the reviews are fake and that’s why aesthetics always trump those who don’t know what they’re doing.

Because I love going over Bitcoin and everything about blockchain technology, I’m not encouraging anyone (who’s a beginner) to dive in a world that they could possibly be taken advance of.  It’s in the beginning stage, and there have been a number of victims who fall to “live” hackings by hackers around the world.  This is probably the biggest downside of bitcoin, because at anytime, virtual coins are unprotected and can be stolen.

Cryptography

Let’s just put it this way.  Every time we type in a password, pay with a credit card, or use WhatsApp, we are enjoying the benefits of cryptography.  This is implemented in the real world right now, but not in the crypto world, which is why so many people end up being scammed.

The other topics that are mentioned get into the technicalities of cryptography, which isn’t useful for “us” kind of people. It goes over blockchain, how it works and other variations of the system. So, time to get into the early years of Bitcoin.

Bitcoin’s Early Years

So, in the dawn of 2011, a software application was released that would make Bitcoin famous; but it was also the time that Bitcoin developed its dark reputation.

Silkroad

People would go so far to say it’s only a place to buy drugs, but this developed the dark/deep web even more.  Bitcoin was used as the main currency on the dark market, and it wasn’t only drugs, it was child slavery, all types of ammunition, hitmen.  You name it.  This is how it began.

This lead to the resurgence and life of bitcoin.  It drove bitcoin from a $10 price to a $30 price in just a week.  Two months later, it went from $30 – $230 in a month span.  There was a bailout of Cyprus that was associated with losses that citizens took on their bank account balances as the core driving point of why it spiked so high in a small amount of time.

While the spring of 2013 was notable, it was a preview of bitcoin’s grand opening to global attention.  This came six months later, in November of 2013, when increased demand for bitcoin in China along with interest from the U.S. Senate on the innovation led to a stratospheric ascent through $1,000 that grabbed international headlines.

Podcast

 

Cryptoassets: Season 3 – Episode 3 – The Birth of Bitcoin

Financial markets, as said in my last post, took the heaviest losses in United States History.  However, somewhere in the world was this many Satoshi formalizing what’s going to take the world by storm.

A day after publishing that white paper, Satoshi sent an email called “The Cryptography Mailing List”.

He later wrote: “you will not find a solution to political problems in cryptography….but we can win a major battle in the arms race and gain a new territory of freedom for several years.  Governments are good at cutting off heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.” – Satoshi

On the 9th of November in 2008, Bitcoin project was registered on SourceForge.net. Wall Street continued crumbling, Satoshi laid-low, and then nine days after that, the first ever transaction using bitcoin took place.

Fact: A dollar investment in Bitcoin in 2008 would’ve been worth around 1 million dollars at the end of 2017.

What I find so unbelievably fascinating about all of this is while the US government was injecting trillions into the system to fight off the significant deaths and greed of wall street, Bitcoin’s birth cost NOTHING.

Since Satoshi disappeared, Bitcoin has unleashed a tidal wave of disruption and rethinking of global financial and technological systems.  Countless derivations of Bitcoin have been created — systems such as Ethereum, Litecoin, Monero, and Zcash — all of which rely on blockchain technology, Satoshi’s gift to the world.  At the same time, many financial and technological incumbents have moved to embrace the technology, creating confusing around all the innovation unfolding and what is most relevant to the innovative investor.  – Author

And now it’s time to talk about the lower case b and upper case B.

  • Bitcoin equals software.
  • bitcoin equals currency.

The author of this book emphasized that to truly understand Bitcoin, one has to move beyond the thinking that the media has pressed upon their consciousness in terms of being a currency/software for criminals.

If we look at history, the majority of wars were funded by “physical” currency, so if Bitcoin/bitcoin is bad because it’s used on illegal markets, we should possibly do away with ALL CURRENCY.

Over 100 media articles have jumped the opportunity to declare bitcoin dead, and each time they have been proven wrong.

To jump just a little off topic, remember those tools on wallstreet before the great crisis of 2008 saying that “Tesla is a cold stock!”  Yeah, proven wrong.  Bitcoin allows transactions to be settled in an hour as opposed to a couple of days.

Let me give you another example.  Transferwise, which was launched maybe in the last couple of years, has overtaken Paypal.  Honestly, I should be able to transfer money from my KTB account to my friend’s B of A account in America in an hour.  However, those middlemen, who Gary Vee has talked about for so long, always gets a piece of the pie. Bitcoin and blockchain will take all of that away, and this is why so many services are terrified and shaking in their boots because it could mean the end of them.

Bitcoin has something arguably more impressive than uber, Airbnb, and LendingClub to be a multibillion-dollar companies in their own realms.  Bitcoin let’s anyone be their own bank. – Chris Burniske

Listen to “Cryptoassets: Season 3 – Episode 3 – The Birth of Bitcoin” on Spreaker.

Cryptoassets: Season 3 – Episode 2 – Satoshi Nakamoto & 2008 Financial Crisis

Welcome back to another Crypto blog and I first want to talk about this financial crisis on a scale you’ve never heard.  The amount of collapses that happened through banks and private companies in 2008 is UNHEARD of.

Let’s kick this off with Satoshi, Satoshi Nakamoto.  No on ein the world knows who he is.  He/they have remained anonymous…and still to this day, no one knows anything.  Apparently he’s living in Japan, there are stories of him being an Australian chap — which was later debunked — and the mystery goes on.

Why do I mention such a man? Well he’s the one that published a paper that founded Bitcoin and the basis of blockchain technology.  He’s the one that has showcased an array of different topics including cryptography, computer science, economics and others.  Nonetheless, he was completely away of Wall Street (a company that hasn’t been audited in 60 years)’s growing instability and was putting the final touches on the concept of Bitcoin.  In August of 2008, bitcoin.org, the home website for information on Bitcoin, was registered.

On Halloween day of 2008, Satoshi then released the Bitcoin white paper, which served as the genesis for every single blockchain implementation.

“We have proposed a system for electronic transactions without relying on trust.” – Satoshi

Notable 2008 Debacles

Bear Stearns got slammed by the house market’s downward-spiral, ultimately getting bought out for $2 a share by JP Morgan, just 1% of the value from a year before. 

Much of the crisis was born on the irresponsibility lending, known as subprime loans. 

Historically, when a bank issued a loan, the bank was on the hook for ensuring that the borrower repaid the funds.  However, in the case of many subprime loans, one these loans issued to borrowers, they were packaged, or securitized into complex CMO’s (collateralized mortgage obligations).

So basically this risk was passed on like a hot potato through the financial markets.  People didn’t know about the instability of CMO’s, but let’s just say they were outdated financial architecture.  What happened in 2008 was global investors, too, being involved with these garbage CMO’s.

Toxic assets plagued Fuld and other groups, significant losses occurred in the billions, and then CEO’s of the biggest investment banking groups had meetings at the Federal Reserve on what to do with the Lehman Brothers, a company that has been long standing for 164 years at the time.  Well, if Lehman filed for bankruptcy, financial firms that did business with Lehman would also lose billions, triggers financial armageddon.  And so it happened, Merrill Lynch was bought by Bank of America and Lehman filed for Chapter 11.

To sum this up, it got ugly real quick on wall street with global investors getting thrown into pure pandemonium.

However, The Birth of Bitcoin happened.

Listen to “Cryptoassets: Season 3 – Episode 2 – Satoshi Nakamoto & 2008” on Spreaker.

 

 

Season 3: Episode 1 – Cryptoassets – Intro Part II

Just like most people thought the plane, cars, and everything that was technologically advanced (at the time) would fail — they were wrong.  The same was with the author of this book.  He was convinced that Bitcoin would fail when it debut almost a decade ago.

Somewhere on the internet is him railing against Bitcoin and it becoming the “next big thing” because he was a skeptical trader.

Boy, was he wrong!

“Since those unenlightened days, I’ve come to realize that bitcoin — and the blockchain beneath it — is a technological advancement that has the potential to revolutionize financial services the same way email did to the post office.

If we look at an even more micro scale, everything is being replaced.  Toys R’ Us collapsed after selling everything to Amazon.  Blockbuster and other stores in respective countries had thrown in the towel to Netflix (which was another very skeptical app when it first launched).  Don’t you just seeing the changes?

The beauty of this book is that it it’s going to take you and I on a journey from the beginning of bitcoin’s perception in the ashes of the Great Financial Crisis (2008) to its role as a diversifier in a traditional investment portfolio.

Valuing cryptoassets is done unlike traditional investments; they typically do not have revenue or cash flows and thus present a conundrum for those evaluating their merits. One of the most fascinating outcomes of the blockchain revolution is how cryptoassets are disrupting the disruptors.

Never before have we seen any technology that’s as disruptive as blockchain and bitcoin.  Early in the year, Gates and Buffet took to the stand and berated how terrible Bitcoin was.  His argument was “if you buy a stake in real estate, a home, etc…that’s hard.  It’s real. You can touch it.  Bitcoin you can’t touch.”

When the author first started working in Wall Street, the Internet was something on a computer at the end of the trading desk.  Amazon, eBay, and Google did not exist — but within five years, these companies had changed the world.

He also went on to say that you would never see a once-in-a-generation type of investment opportunity like the internet, but then came blockchain, which will soon be one of the most important innovations in the history of finance.

It is changing the way we transact, distribute capital, and organize our companies.  If you’re like me and missed investing in the Internet, take advance of this, which is the biggest investment since the internet.

Introduction

Books, TV shows, and movies have been making futuristic predictions for decades, many of which were originally considered absurd.  Star Trek featured several that proved to be not so outlandish: the indispensable handheld communicators have become today’s smartphones, the personal access display device is now our tablet, and a universal translator exists, of which there are several apps to choose. In three short decades between now and the twenty-first century, million of ordinary, psychologically normal people will face an abrupt collision with the future.” – Author of the book.

I’ll leave you with that for this weekend, just so you have the opportunity to leave your mouth watering for more.

Podcast

Season 3: New Book Series! Cryptoassets!

It’s been an absolute long time coming!  I was thinking about it while walking up and down the aisles of the bookstore at the shopping plaza where I work.  I asked people and my content writer some questions about what book should I dissect next.  Over the past few years, I’ve gone over a lot of things in terms of personal development: Lewis Howes, Dale Carnegie, Lisa nichols, Stephen Covey….you name it.  However, Tim Ferriss, which has had a lot of plays on my podcast, and Tony Robbins, which has also had a fair amount of plays, are the only books I’ve gone over in terms of money and time-management.

So, I think it’s time.  Yes, for those returning, I was dissecting the Tony Robbins: Unshakeable book for some time, but I do believe that the historical investing will become obsolete.  When the markets crash within a three year period, the American public will have had enough with how corrupted the system is.  I think now that we can control our own assets, and with the emerging blockchain, it’s time!

Testimonials

Newcomers often try to wiggle their way into the world of accepted financial tools.  Most fail miserably.  But cryptocurrency and its accompanying blockchain technology have made their mark and will likely have an ongoing impact on how we all do business.  Burniske and Tatar (authors of this book) have written an increidble comprehensive book that explains what you need to know about this new asset class. – Douglas Goldstein

Cyptoassets provides a one-stop shop for learning about this new asset class.  You’ll learn about their colorful histories, how to apply fundamental valuation techniques, and practical tips to navigate the at-times turbulent markets. – Matthew Goetz

This book is a must-read for an financial advisor who wants to stay on top of the shifting asset and technological landscape.  Advisors would be wise to familiarize themselves with cryptoassets before their innovative clients approach them for an intelligent cryptoasset discussion! – Fred Pye

Chapters

  • Bitcoin and the Financial Crisis of 2008
  • The Basics of Bitcoin and Blockchain Technology
  • “Blockchain, Not Bitcoin?”
  • The Taxonomy of Cryptoassets
  • Cryptocommodities and Cryptotokens
  • The Importance of Portfolio Management & Alternative Assets
  • The Most Compelling Alternative Asset of the 21st Century
  • Defining Cryptoassets as a New Asset Class
  • The Evolution of Cryptoasset Market Behavior
  • The Speculation of Crowds and “This Time Is Different” Thinking
  • “It’s just a Ponzi Scheme, Isn’t It?”
  • Fundamental Analysis and Valuation Framework for Cryptoassets
  • Operating Health of Cryptoasset Networks & Technical Analysis
  • Investing Directly in Cryptoassets: Mining, Exchanging & Wallets
  • “Where’s the Bitcoin ETF?”
  • The Wild World of ICOs
  • Preparing Current Portfolios for Blockchain Disruption
  • The Future of Investing Is Here!

With so much information out there with people talking about Crypto from online blogs, this is really going to be the best breakdown because I got the book of the ages on my hand.  Stay tuned for the introduction Friday!

Podcast