Research Perspectives and Challenges for Bitcoin and
Research Perspectives and Challenges for Bitcoin and
Bitcoin’s “halvening” won’t boost its price | FT Alphaville
What Are the Main Drivers of the Bitcoin Price? Evidence
Price manipulation in the Bitcoin ecosystem - ScienceDirect
Close to 14,000 Google Scholar Articles Mentioned Bitcoin
A concentrated campaign of price manipulation may have accounted for at least half of the increase in the price of Bitcoin and other big cryptocurrencies last year, according to a paper released on Wednesday by an academic with a history of spotting fraud in financial markets.
A concentrated campaign of price manipulation may have accounted for at least half of the increase in the price of Bitcoin and other big cryptocurrencies last year, according to a paper released on Wednesday by an academic with a history of spotting fraud in financial markets.
06-12 20:24 - 'Am I the Only One Concerned about Bitcoin’s Relationship with Tether?' (self.Bitcoin) by /u/Rusty_Shacklefurd69 removed from /r/Bitcoin within 27-37min
''' From a macro perspective, I am bullish on the long term acceptance and growth of bitcoin as a “digital gold”, a store of value, a means of speculation, and maybe even one day a better medium of exchange. I purchase btc regularly with conviction for these reasons. But, from time to time the HODL gets slow and I “stress test” my conviction- I ask myself “What’re the long term bearish cases against Bitcoin?” “What could go wrong?” And lately, my biggest, most significant bearish fear about Bitcoin is Tether. I realize there are other bearish cases that can be argued for Bitcoin, but I want to focus on Tether right now because it I think it is the most significant and under-reported. What if Tether is really (for lack of better wording) a scam? What if each USDT isn’t backed by $1? What is the creators of Tether are creating unbacked USDT and using it to buy and even manipulate the price of Bitcoin? I’m sure most of us have seen the articles about Tether being unable to supply concrete evidence of a reputable audit. Tether has less than desirable business linkings to shady exchanges. The company that created Tether is incorporated somewhere in the Caribbean where there’s less financial oversight. They are engaged in a legal conflict through the state of New York (can’t remember the exact suit and I don’t know the right legal jargon but they are being investigated for shady dealings basically, just google it). And even more there’s been published academic papers arguing the 2017 Super Bull Run to 20k was partially fueled by massive Tether creation and false volume on Bitcoin exchanges (I think Bloomberg has a couple articles about this). So I ask you fellow Hodlers and brave BTC Bulls, with all the FUD out there against Tether, are you worried about Tether ultimately creating downside for Bitcoin? Do you think if it came out that Tether was fraudulent and insolvent and being used to manipulate Bitcoin, that Bitcoin’s price and reputation would be significantly hurt? Do you think Bitcoin’s ties to past shady organizations (and if you think back, there really has been a lot of fraudulent exchanges and scams in Bitcoin’s adolescence) such as Tether are in part holding it back from greater adoption (see SEC ETF approval, your coworkers or family who call it a scam, etc)? Really would like some genuine opinions. Please keep the topic to Tether. CHEERS! ''' Am I the Only One Concerned about Bitcoin’s Relationship with Tether? Go1dfish undelete link unreddit undelete link Author: Rusty_Shacklefurd69
Upon the Fortune of this Present Year | Monthly FIRE Portfolio Update - November 2019
My ventures are not in one bottom trusted, Nor to one place; nor is my whole estate Upon the fortune of this present year Therefore my merchandise makes me not sad Shakespeare, The Merchant of Venice (1596) This is my thirty-sixth portfolio update. I complete this update monthly to check my progress against my goals. Portfolio goals My objectives are to reach a portfolio of:
$1 598 000 by 31 December 2020. This should produce a passive income of about $67 000 (Objective #1) - Achieved
$1 980 000 by 31 July 2023, to produce a passive income equivalent to $83 000 (Objective #2)
Both of these are based on an expected average real return of 4.19 per cent, or a nominal return of 7.19 per cent, and are expressed in 2018 dollars. Portfolio summary Vanguard Lifestrategy High Growth Fund – $797 618 Vanguard Lifestrategy Growth Fund – $45 218 Vanguard Lifestrategy Balanced Fund – $81 294 Vanguard Diversified Bonds Fund – $109 367 Vanguard Australian Shares ETF (VAS) – $158 769 Vanguard International Shares ETF (VGS) – $28 471 Betashares Australia 200 ETF (A200) – $268 114 Telstra shares (TLS) – $2 057 Insurance Australia Group shares (IAG) – $9 996 NIB Holdings shares (NHF) – $8 100 Gold ETF (GOLD.ASX) – $98 376 Secured physical gold – $15 868 Ratesetter (P2P lending) – $16 915 Bitcoin – $128 630 Raiz app (Aggressive portfolio) – $17 535 Spaceship Voyager app (Index portfolio) – $2 377 BrickX (P2P rental real estate) – $4 418 Total portfolio value: $1 793 753 (+$33 713) Asset allocation Australian shares – 43.2% (1.8% under) Global shares – 22.9% Emerging markets shares – 2.4% International small companies – 3.2% Total international shares – 28.4% (1.6% under) Total shares – 71.6% (3.4% under) Total property securities – 0.2% (0.2% over) Australian bonds – 4.8% International bonds – 9.8% Total bonds – 14.6% (0.4% under) Gold – 6.4% Bitcoin – 7.2% Gold and alternatives – 13.5% (3.5% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments This month the value of the portfolio increased again by around $33 000 in total, building on the previous two months of growth. [Chart] The equity part of the portfolio has grown by around $50 000 to now reach over $1.25 million for the first time. This increase includes new contributions and the last part of the previous June distributions being 'averaged into' equity markets. The equity component of the portfolio has increased by around 40 per cent this calendar year. The only other major movement in the monthly value of the portfolio has been a sharp downward movement in the price of Bitcoin, and a small increase in the value of bond holdings. [Chart] The contributions this month went entirely into the Vanguard Australian shares ETF (VAS.ASX), to reduce the gap to both the overall target equity allocation, and to achieve the target split between Australian and global shares. From this month onwards I expect more regular variations in whether new contributions go to either Australian or global shares, based on keeping this target allocation constant. Charting errors and wrong bearings - the nature of long-term returns Over the last month, as the end destination starts to appear a little clearer in the distance, the issue of the nature of long-term returns has been front of mind. There is a strong literature and body of academic work around long-term equity return expectations. Much of this has informed my thinking, and has over time found its way into the corners of financial independence movement through the avenues of the so-called Trinity and Bengen '4 per cent' studies (pdf), and a range of calculators that use historical data to help guide investors expectations around feasible future returns. Yet, as I have noted before, future states of the world are not drawn from the same distribution as the past - or as the British writer G K Chesterton evocatively put it - 'wildness lies in wait'. Most often this issue is glided over neatly (including by myself) with assured sounding phrases such as 'based on history'. The works of Nassim Taleb, most particularly Fooled by Randomness, and The Black Swan, provide a fuller perspective on these issues. Recently though, reading a 2017 paper Stock Market Charts You Never Saw provided a unique and arresting view of their application to long-term return projections. The paper is long and detailed, but makes some fundamental points for consideration. It provides a challenging perspective on investment returns that falls almost completely out of mainstream discussions of the topic in the financial independence arena. To summarise, the paper highlights that:
Long-term average equity returns are just mean averages - While they have a stable property over the long-term, this is an inherent statistical property of these values being long-term averages of diverse sets of returns. They are not a reliable forward-looking promise of likely returns. In the words of the paper: 'history documents, but does not constrain'.
Time (in the market) does not always heal all wounds - Investors who spend their dividends and avoid market timing - in other words an average FI investor - can reasonably expect to encounter 30 year periods of low real returns, with US investors facing three such periods in the twentieth century alone.
Typical charts of long-term equity returns can be misleading - Through behavioural finance findings it is clear that presented with a chart showing a seemingly inevitable rising line of equity returns over a long-time frame, an impression of safety and inevitability can be created. The paper highlights a range of ways in which standard charts on equity returns can obscure important facets of investors actual experiences.
No investor actually experiences the longest set of historical returns - While it is comforting to know that equity returns have averaged (for example) six per cent over a century, or two, this information is not as relevant for an investor who is more likely to be invested in a discrete 30-50 year period in which deviations from historical averages can be significant.
One-off events should not be dismissed - While the temptation is continuously present to believe that events like the Great Depression could never happen again, careful review of equity returns yields some distinctly similar periods of sustained low or negative real returns.
Comparisons of bond and equity returns are often oversimplified - It is not an immutable truth that equities outperform bonds, at least when the US historical record is considered. Rather, a more complicated picture emerges of returns over long periods. Sometimes, equities have outperformed bonds, but at other times, bonds have out-performed equites.
As the paper notes: "When investment advisors counsel that stocks are the best bet for a long investment horizon, they should append the acknowledgement: “if my market timing is good.” When advisors argue for stocks over bonds, they should append the caveat “as long as you are not French, or Italian, or Japanese, or Swiss, and provided that the 20th century is a better guide to the future than the 19th century.” For real investors with their limited time horizons, who may reside anywhere in the world, there have been times when both stock recommendations were bad." The issue of the primacy of total returns, compared to income returns is also bracingly challenged with reference to the drawdown phase: Once portfolio accumulation ceases with retirement, portfolio income must be spent to live. Under those circumstances real price return, over short periods lasting two or three decades, becomes an important metric. By that measure, an investment in stocks has been dicey indeed. Usefully, the paper sets out (at the end) both conventional charts, and alternative representations of the same returns data, aimed at illustrating the hidden biases and properties of standard charts of market returns. In short, the paper poses challenges to many conventional investment tenets assumed to be true and widely repeated within financial independence discussions. Often these tenets are promoted with the sound and well-meaning goal of reducing new or existing investors caution or level of worry around possible falls in equity markets. The question this work implicitly poses is, in the process, are distorted expectations unintentionally being promoted? Drawing out the lessons - understanding and responding to risks What are the practical implications of this? The most obvious is to look closely at how data is presented and to think carefully about how the assumptions implicit in that presentation line up against ones own situation. Some other implications include:
Projections based on earning stable and uniform returns should be undertaken with caution - Multi-decade periods of low returns can happen, and mathematical models of compounding smooth returns don't capture their impacts.
By taking an equity position an investor is simply undertaking a probabilistic bet, with no guarantees - That is, equity investment over the long-term usually pays offs, but some risk is inescapable.
Diversification across markets and time represents a workable response to risk - Investing regularly and across geographic markets can help current investors capture some of the positive 'survivorship' bias that was denied to individual investors in many countries across the twentieth century.
In other words - to paraphrase Shakespeare's Antonio - not trusting ones ventures to one ship, place, or a fortune upon the present year. Progress Progress against the objectives, and the additional measures I have reached is set out below. Measure Portfolio All Assets Objective #1 – $1 598 000 (or $67 000 pa) 112.2% 153.0% Objective #2 – $1 980 000 (or $83 000 pa) 90.6% 123.5% Credit card purchases - $73 000 pa 103.0% 140.4% Total expenses - $89 000 pa 84.5% 115.1% Summary As the year begins to draw to a close, a restlessness to see its final outcomes, in dividends and portfolio growth presses itself forward. It is in fact a small echo of one of the strong temptations of the middle of the FI journey - a desire to wish away time itself. Some potential upcoming changes and uncertainties in work situation have added force to this temptation, forcing some thoughts about different potential balances between work and other elements of daily life could be. By distance, the intended journey is around ninety per cent over. At times this introduces both an elegiac quality to, and a premature desire to mark, possible 'lasts' along the journey. Yet the extraordinary current state of financial markets gives pause. Policy makers and advisors casually discuss negative rates and their implications, even as Australian and US equity markets hit new highs. In a sense, it feels a more psychologically testing time to be closer to my higher target allocation for equities than any time before. The diversification in the portfolio can be thought of as a series of small hedges against different potential futures playing out. By far, the largest probability (or potential future) at 75 per cent, is that the historical dominance of equity as a generator of real returns continues to function. The remainder of the portfolio can be seen in some ways as a offsetting hedge against large equity market falls, or some other disturbance in financial markets with negative implications for equity. At base, however, I remain comfortable with the 'balance of probabilities' implied in the target asset allocation. This month saw a new (v)blogger Mx Lauren join the Australian FI scene, as well as the suggestion by Money Magazine of a new 'simplified' retirement rule of thumb to consider. A further piece of fascinating reading was this piece by Ben Carlson in Fortune Magazine, explaining the key role of earnings growth in recent US market return. It posits that the recent strong performance of US equities is attributable to fundamental earnings growth, rather than simply an unjustified expansion in the price investors are willing to pay for that growth. This - in addition to Shakespeare's pre-modern enjoinment to diversify - is potentially another reason to not confine considerations to one market, and one place, as December distributions slowly drift into sight. The post, links and full charts can be seen here.
3rd Global Cryptoasset Benchmarking Study – CCAF, University of Cambridge
Hi BitcoinMining! We are the cryptocurrency research team from the Cambridge Centre for Alternative Finance (CCAF), an academic research centre at the University of Cambridge. We publish freely available research reports on the cryptocurrency industry. In 2020 Bitcoin’s issuance per block will drop for the third time since its launch. When the number of blocks hit 630,000 the Bitcoin network will experience another “halving”, where the block reward will drop from 12.5 BTC to 6.25 BTC. As the Bitcoin halving is rapidly approaching, we would like to highlight a few interesting observations and ask some open questions that we have encountered during our research. 1) What will the impact of the 2020 Bitcoin halving be for miners, and in particular smaller ones? In a recent paper entitled “Bitcoin’s Production Cost”, Charles Edwards from Capriole Investments pointed out that (i) Historically, the electrical cost to produce a Bitcoin has represented a price floor in the Bitcoin market price (ii) Based on CCAF’s electrical consumption data, from “The Cambridge Bitcoin Electricity Consumption Index (CBECI)”, 2019 was the least profitable year for Bitcoin Mining in the last 5 years. (iii) Given that the Bitcoin Production Cost will double in the next Bitcoin halving, and that the daily cost of Bitcoin Production therefore will be spread across half as many Bitcoins, a number of questions arise: · What will be the impact on the smaller miners' businesses? · What are the core risks small miners face? · How can smaller miners mitigate this risk? 2) Will we see a greater concentration of mining in the hands of a few? If so, what will the implications be? Back in 2018, when we released the 2nd edition of the Global Cryptoasset Benchmarking Study, “Centralisation of hashpower in the hands of a few” was the greatest concern for small miners. It would be interesting to gauge what the sentiment is in 2020. · Is the concentration of mining power still the greatest concern for small miners? · Will this situation worsen after the halving? · What scenario could mitigate these issues of mining concentration? 3) How will miners deal with concentration risks? In the 2nd edition of the Global Cryptoasset Benchmarking Study, we identified three categories of concentration risk in the mining industry: (i) Hardware manufacturing concentration, (ii) Hashing facility concentration and (iii) Pool concentration. Miners will have to mitigate and deal with concentration risk on all three levels. · What strategies will small miners likely use to mitigate these risks? These are some of the questions we hope to answer in the 3rd edition of the Global Cryptoasset Benchmarking Study. In order to gather accurate, relevant and useful benchmarking data, we need your help. As a company active in the mining industry, perhaps you would take a few moments to answer our Cryptoasset Mining Survey? The mining survey can be accessed here: https://jbs.eu.qualtrics.com/jfe/form/SV_bEMklTo335cP0Wh The survey is available in English, Español, Português, 中文, 日本, русский, and 한국어. Thank you in advance!
Keeping a Reckoning | Monthly FIRE Portfolio Update – September 2019
We may by care and skill be able to trim our ship, to steer our course, or to keep our reckoning; but we cannot control the winds, or subdue deceitful currents, or prevent disasters. The Sailors’ Prayer Book: A Manual of Devotion for Sailors at Sea (1852)
This is my thirty-fourth portfolio update. I complete this update monthly to check my progress against my goals.
My objectives are to reach a portfolio of:
$1 598 000 by 31 December 2020. This should produce a passive income of about $67 000 (Objective #1) - Achieved
$1 980 000 by 31 July 2023, to produce a passive income equivalent to $83 000 (Objective #2)
Both of these are based on an expected average real return of 4.19 per cent, or a nominal return of 7.19 per cent, and are expressed in 2018 dollars.
Vanguard Lifestrategy High Growth Fund – $767 282
Vanguard Lifestrategy Growth Fund – $43 936
Vanguard Lifestrategy Balanced Fund – $80 318
Vanguard Diversified Bonds Fund – $109 802
Vanguard Australian Shares ETF (VAS) – $124 643
Vanguard International Shares ETF (VGS) – $24 276
Betashares Australia 200 ETF (A200) – $263 829
Telstra shares (TLS) – $1 870
Insurance Australia Group shares (IAG) – $13 777
NIB Holdings shares (NHF) – $8 760
Gold ETF (GOLD.ASX) – $101 214
Secured physical gold – $16 292
Ratesetter* (P2P lending) – $19 140
Bitcoin – $131 280
Raiz* app (Aggressive portfolio) – $16 657
Spaceship Voyager* app (Index portfolio) – $2 184
BrickX (P2P rental real estate) – $4 402
Total value: $1 729 662 (+$17 325)
Australian shares – 42.0% (3.0% under)
Global shares – 22.6%
Emerging markets shares – 2.5%
International small companies – 3.2%
Total international shares – 28.3% (1.7% under)
Total shares – 70.3% (4.7% under)
Total property securities – 0.3% (0.3% over)
Australian bonds – 5.0%
International bonds – 10.1%
Total bonds – 15.0%
Gold – 6.8%
Bitcoin – 7.6%
Gold and alternatives – 14.4% (4.4% over)
Presented visually, below is a high-level view of the current asset allocation of the portfolio.[Chart]
This month the portfolio grew by just over $17 000 in total, following two consecutive months of small declines.[Chart] The total equity component of the portfolio has grown, including through new contributions and another part of the June distributions being 'averaged into' equity markets. The only major reductions in the portfolio has been the result of a sharp downward movement in the price of Bitcoin. [Chart] Lower credit card expenditure and the gradual increase of the trailing three year average of distributions paid has helped sustain a sense of momentum this month. Together they have continued to narrow the gap between distributions paid and credit card spending to less than $500 per month. [Chart] The complete closure of the remaining gap is within sight. Assuming no sustained reversals in the absolute level of distributions through time, this could happen in the next 12 months. Some added progress towards this goal should come from pending quarterly distributions from the Betashares A200 ETF and Vanguard's Australian shares ETF (VAS). These are currently being finalised. The draft distributions guidance indicates that for A200 and VAS these quarterly distribution should total around $4 700, approximately double the absolute level of the same quarterly distributions a year ago. New investments this month have been higher than normal due to a work bonus and the staggered reinvestment of June distributions. They have been directed predominantly to Vanguard's Australian Shares ETF (VAS), with a small recent allocation to Vanguard's international shares ETF (VGS). Following the recent fee reduction in VAS, I have directed Australian purchases through to this ETF, preferring the (slightly) wider exposure it delivers through following the ASX300, compared to the Betashares A200's slightly narrower holdings. The end of 'the big rebalance' into Australian equities The reason for the split between Australian and international equity purchases is that this month has seen the effective end of 'the big rebalance' - that is, the gradual movement to a 60/40 split between Australian and international shares. This was first targeted in my January 2019 review of portfolio targets and allocations. Previously my Australian and international equity allocation was largely just an unconscious and purely mechanical outcome of the splits in various Vanguard retail funds, and a number of smaller side Australian shareholdings. The last nine months - by contrast - has seen a concentrated direction of new funds and distributions into Australian shares to achieve the targeted balance. The shift has been significant, with the value of Australian shares only overtaking international holdings in the second half of 2018. International shares have fallen from more than a third of total portfolio assets at this start of this record to closer to a quarter. [Chart] At the same time Australian equities now make up 42 per cent of total portfolio, and have just reached 60 per cent of the equity portfolio. All this has occurred as the total equity portfolio has grown from $630 000 at the start of this journey, to over $1.2 million this month. [Chart] The main vehicles for this expansion over the past two years has been Betashares A200 and Vanguard's VAS ETFs. More recently, as mentioned, I have added Vanguard's global share ETF (VGS) to allow an avenue to keep within the targeted split with future contributions. Measuring investment income from tax returns This month also saw completion of my tax return, including explaining my tax position to a brand new tax agent. The tax assessment from this past financial year provides an additional data point about the taxable investment income being generated by the portfolio. The graph set out below updates the series published last year on taxable investment income. It is taken from the return items for partnerships and trusts, foreign source income and franking credits (i.e. items 13, 20 and 24 on the return, and not including capital gains) over the past nine years. [Chart] This shows that taxable investment income has risen only around five per cent over the past financial year. This likely reflects the decline in higher interest payments from a slow rebalance away from Ratesetter towards equities. Taxable investment income is still well short of both the original objective, and even further short of Objective #2. [Chart] As previously outlined, there are a range of factors that likely account for the mismatch between tax return income and received distributions. These could include timing differences, capital gains realisations, and potentially even small errors in how I have added in individual return items in past years. I have also continued to seek to avoid double counting and so understatement is also a possibility, given the formats and labelling of tax returns are not always particularly clear.
Progress against the objectives, and the additional measures I have reached is set out below. MeasurePortfolio All Assets Objective #1 – $1 598 000 (or $67 000 pa) 108.2% 147.5% Objective #2 – $1 980 000 (or $83 000 pa) 87.4% 119.1% Credit card purchases - $73 000 pa 99.3% 135.4%T otal expenses - $89 000 pa 81.5% 111.1%
Forward progress has resumed, with the growing warmth and life of spring. The last few months has been a continual reminder that the fickle direction of market winds may play a greater role than sheer saving and investing efforts at this point in the journey. Focusing on the process, rather than the short-term outcome is therefore almost forced upon one - which perhaps is no bad thing after all. Indeed, increasingly I have wondered whether these now ingrained habits and processes will themselves be difficult to break out of, even as I definitively pass some FI benchmarks in future months and years. The varying winds will also increasingly dictate where additional contributions are to be made. This is the automatic result of targeting an asset allocation with new contributions rather than active rebalancing through selling existing holdings. In fact, it probably constitutes one of the more difficult tests for a chosen risk allocation, as it will tend to result in buying unspectacular portfolio 'laggards', rather than assets that have recently moved up, without the consolation of taking these new funds from locked in profits elsewhere in the portfolio. This can lead to signals that are easier to follow in theory than in practice. As an example, currently Australian government bond yields are close to historical lows, and potentially heading lower. This is highly relevant to FI planning, as there is some academic evidence that the 'four percent rule' has a higher failure rate in low bond rate environments. There is also a strong possibility that bonds are close to the end of a forty year decline in yield - and have nowhere to go. The increasing spread of negative yielding government and corporate bonds around the world, however, also holds out equally plausible but very different possibilities, at least in the short term. This is more than a hypothetical issue and uncertainty. Through the next 12 months it is possible that my target asset allocation will start signalling a need to buy bonds. This would involve a need to find the right investment vehicle to access this asset at least cost. On the same topic, this month saw an excellent explainer piece from Aussie HiFIRE on bonds, and also a good discussion from Kurt at Pearler on how to put the modern portfolio theory to practical work in FI portfolio design. Youtube content on FI and portfolio issues seems to be improving all the time as well, including this short video on thinking about the role and value of dividends.All such guidance represents a way of keeping a reckoning on the unfolding horizon, its dangers and subtle deceits .The post and full charts can be seen here.
A Grey Dawn Breaking? | Monthly Portfolio Update - June 2019
I must go down to the seas again, to the lonely sea and the sky, And all I ask is a tall ship and a star to steer her by; And the wheel’s kick and the wind’s song and the white sail’s shaking, And a grey mist on the sea’s face, and a grey dawn breaking. – John Masefield, Sea Fever This is my thirty-first portfolio update. I complete this update monthly to check my progress against my goals. Portfolio goals My objectives are to reach a portfolio of:
$1 598 000 by 31 December 2020. This should produce a real income of about $67 000 (Objective #1) - Achieved
$1 980 000 by 31 July 2023, to produce a passive income equivalent to $83 000 (Objective #2)
Both of these are based on an expected average real return of 4.19%, or a nominal return of 7.19%, and are expressed in 2018 dollars. Portfolio summary Vanguard Lifestrategy High Growth Fund – $772 490 Vanguard Lifestrategy Growth Fund – $44 487 Vanguard Lifestrategy Balanced Fund – $80 006 Vanguard Diversified Bonds Fund – $107 352 Vanguard Australian Shares ETF (VAS) – $88 322 Betashares Australia 200 ETF (A200) – $260 499 Telstra shares (TLS) – $2 052 Insurance Australia Group shares (IAG) – $14 405 NIB Holdings shares (NHF) – $9 204 Gold ETF (GOLD.ASX) – $92 340 Secured physical gold – $14 807 Ratesetter* (P2P lending) – $22 011 Bitcoin – $186 350 Raiz* app (Aggressive portfolio) – $15 744 Spaceship Voyager* app (Index portfolio) – $1 991 BrickX (P2P rental real estate) – $4 643 Total value: $1 716 703 (+$118 079) Asset allocation Australian shares – 40.2% (4.8% under) Global shares – 21.5% Emerging markets shares – 2.5% International small companies – 3.2% Total international shares – 27.2% (2.8% under) Total shares – 67.4% (7.6% under) Total property securities – 0.3% (0.3% over) Australian bonds – 5.2% International bonds – 10.0% Total bonds – 15.2% (0.2% over) Gold – 6.2% Bitcoin – 10.9% Gold and alternatives – 17.1% (7.1% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments The portfolio has experienced the strongest growth on record through this month, with a total increase of $118 000. This pushes the portfolio well beyond Objective #1 to over $1.7 million. [Chart] This has followed a period of unprecedented growth in the absolute value of the portfolio, with an increase of almost $400 000 since January. A remarkable consequence of this is that over 20 per cent of the entire value of the portfolio has come into existence in this short six month period. [Chart] This unbroken record instinctively invites expectations of a sharp - and possibly a quite sustained - reversal. I am determined, however, to act in accordance with my asset allocation decisions, not on the basis of overconfidence in my own capacity to predict or time markets. The key contributors to growth this month have been continued appreciation in the price of Bitcoin, and even more significantly, increases in the value of Australian equities and gold. Lower official cash rates have strongly supported equity value growth, and a sharp increase in the price of gold has occurred. Combined, the gains in equities and gold accounted for over half of the total monthly increase. New investments this month were focused on Australian equities. Following the lowering of the management fee of the Vanguard ETF VAS - tracking the ASX300 index - to 0.10 per cent from 1 July, I also made my first new investment in VAS for eighteen months. This lowering leads to the VAS ETF becoming significantly more competitive in fees with the Betashares A200 (which charges 0.07 per cent). It also offers some (small) additional diversification benefit through tracking an additional 100 smaller listed companies. Accounting for volatility and Bitcoin in asset allocation The sharp increase Bitcoin's value over the past month has brought the combination of alternatives (gold and Bitcoin) to just over 17 per cent of my portfolio, higher than sought. Bitcoin continues to serve a role providing portfolio diversification, but its recent increase has actually correlated with a rise in Australian equities. Recent price volatility leaves me conscious that the market value of these holdings could quite easily slip down to $50 000, its position a few short months ago. If there is a star to steer by in such times, it is provided by the target asset allocation. Tracking back towards that in a time of intense volatility is the task at hand. To ensure Bitcoin volatility is not unduly driving asset allocation decisions, however, I have started to test any new investment action I am considering taking on a 'with' and 'without' basis. This involves notionally backing Bitcoin completely out of the portfolio (or, more realistically, adopting a trailing average value) and assessing whether or not the asset allocation 'signal' for the direction of future investments changes. The reason for doing this is to check that I am not undertaking hard to undo portfolio actions monthly merely as a response to Bitcoin's unique price variations. At one extreme if I remove Bitcoin from allocation considerations (e.g. assume it has no value), I have actually already achieved my target equity allocation of 75 per cent. Taking a less extreme approach, however, of attributing just a lower trailing average value results in a continued signal to make new equity investments. Waiting for the next set of distributions This period prior to July distributions being finalised and paid always has a quality of uncertainty and contingency about it. Distributions have been quite volatile over time, principally due to different distribution levels from Vanguard retail funds. In turn, these are likely due to maintaining asset allocations, and irregular distributions of underlying capital gains. My current July distribution estimates are for around $2600 from the Betashares A200 ETF, $800 from Vanguard's VAS ETF, and around $16 000 to $23 000 from the Vanguard retail funds. These are based on median and average past distributions over the past 10 years for the funds and the already announced distributions in the case of the ETFs. This could to mean that in early July I may have around $20 000 of newly available capital to re-invest in the market, however, these estimates are just that. In the past, distributions have at times been both dramatically less and more than anticipated. For example, the Vanguard High Growth fund has twice recently produced July distributions at levels above $30 000. Following distributions being paid I will be looking to re-invest the capital in accordance with my target allocation. Two factors will likely drive these decisions. First, as discussed above the portfolio remains under its assigned equity allocation. Second, after a year of almost exclusive contributions to Australian equities, the target for that component is almost reached. This means that a proportion of future contributions will be directed to international equities, to target the 60/40 per cent split I have set based on academic research on the historical record of the optimum balance of reducing volatility while maximising risk adjusted returns. History of Australian equities research This month the Reserve Bank of Australia issued a new research paper (pdf) on the history of Australian equities. This draws on newly collected and analysed historical data on the past century of Australian share market returns, improving on previous incomplete or simplified data sets. Some of the key findings of this report have potential implications for my future portfolio planning. For example, the paper finds:
Dividend yields since the 1980s have averaged around 4.0 per cent, and prior to that have been 200 basis points lower than previously estimated
The historical geometrics and arithmetic average equity risk premium (the equity return in excess of the 10 year bond rate) is between 4.0 and 5.2 per cent, lower than previous estimates Australian and US equity returns are historically very similar
The overall composition of the Australian share market by sector is remarkably similar to a century ago
For several years leading up to 2018, the Australian equity market has tracked its historical valuation measures quite closely, with lower than historically average volatility
One implication of this is that in future investment policy reviews, I may need to lower my current estimate of long term real equity returns (currently 5.65 per cent). Progress Progress against the objectives, and the additional measures I have reached is set out below. Measure Portfolio All Assets Objective #1 – $1 598 000 (or $67 000 pa) 107.4% 144.5% Objective #2 – $1 980 000 (or $83 000 pa) 86.7% 116.7% Credit card purchases - $73 000 pa 98.6% 132.6% Total expenses - $96 000pa 75.0% 100.9% Summary The rapid growth in the portfolio has been somewhat disorientating. On an 'All Assets' basis, this has meant that all current expenses could theoretically be met from the portfolio and superannuation assets. Nonetheless, while this is pleasing, my focus remains on reaching my financial independence goals using just the portfolio assets. The higher markets reach, the more interested I become in learning what I can from other periods of volatility. This has led to absorbing the book Wealth, War and Wisdom, a fascinating study of financial markets and returns through the convulsions of the twentieth century's world wars and Cold War tensions. It examines the challenge of the protection of real wealth in extreme conditions, finding that a diversified portfolio of real and paper assets, including a large weighting to equities, generally performed well. The Australian FIRE community has also been sinking its teeth into launches of the 'Playing with FIRE' documentary. For those not able to make one of the premieres, AussieFireBug's most recent podcast provides a really enjoyable post-viewing conversation reflecting on its strengths and weaknesses. Also this month Big ERN has published an interesting guest post on safe withdrawal rates over 60 year periods. It makes the point that the 'rule' of 4 per cent can be risky and misleading over long time scales, with withdrawal rates of 3.5 per cent significantly decreasing the failure risk. The passing of the winter solstice a week ago brings with it the promise of longer and lighter days ahead. The distributions to come also evoke a sense of a possible grey dawn breaking. In just a few days, the mists should lift and navigation of the portfolio towards my financial independence goals should be significantly clearer. The post and full charts can be viewed here.
Setting of the Sails - Role of Gold and Bitcoin in the FIRE Portfolio
One ship drives east and another drives west With the self-same winds that blow. ‘Tis the set of the sails And not the gales Which tells us the way to go.
Ella Wheeler Wilcox, The Winds of Fate
Future returns are unknowable with any degree of precision. A portfolio must contend with all that future market prices and developments put before it, whilst seeking to earn the best possible return for the level of risk assumed. This uncertainty is a core issue for portfolio design. Part of my approach to building my FIRE portfolio has been to target a small allocation to alternatives such as gold and Bitcoin to deliver reduced portfolio volatility, and improved returns. My current target allocation set earlier this year is 7.5 per cent gold and 2.5 per cent Bitcoin. This post explores the reasons for, and basis of, this approach. Portfolio design - one wind, different directions In designing the FIRE portfolio, the key guiding principle has been maximising the overall risk-adjusted return, whilst minimising unnecessary volatility. The important implication of this is that it is not the performance of the individual portfolio parts that I am trying to maximise. Rather, it is the performance of all of the component parts as they interact that is of prime concern. The objective is for the mix of all of these different holdings to play their part together to enhance portfolio returns or reduce volatility. Decisions on asset allocation - or the mix of assets held - has been repeatedly been shown in academic studies to explain around 90 per cent of the volatility of portfolio returns. This approach is consistent with the simple guidance to diversify. Underlying it, however, are some observations of modern portfolio theory and the Capital Asset Pricing Model, that can be summarised in the following insights:
the investor should seek to mix assets with non-correlated returns (i.e. returns that move in different directions) to achieve an optimum balance of likely returns and portfolio volatility
not all extra risk taken by an investor is automatically compensated by higher returns
the investor should consider each additional investment security or asset from the perspective of how it will contribute to overall portfolio risk and return
At any given time this can mean that one 'wind' will send the individual portfolio components in different directions. In short, the approach is not one that will deliver a portfolio without any losses or low returns in the set of assets held at any given time. Asset correlation - assessing the crosswinds The critical ingredients for the approach to be effective are assets that do not move together - that is, uncorrelated assets. A traditional example used in portfolio design are equities and bonds, which have over time often tended to move in opposite directions (e.g. be inversely correlated) in many markets. This is the basis for traditional investment guidance to include greater bond holdings to dampen the volatility of equities. Gold has tended to have a low correlation to other asset classes. An example of the effects of this on equity portfolios is described in this research paper (pdf) - from the World Gold Council - which found that adding gold holdings to an all equity portfolio both lowered the volatility of returns and increased total returns over the 1968-1996 period (see p.47 and Figure 4.6). The academic evidence for the low correlation of gold to equity returns is, in fact, strong over multiple periods. Moreover, this diversification benefit appears when most needed. As this recent paper in the International Review of Financial Analysis notes: …we think that a review of the results from earlier papers on this issue, coupled with our findings, points to the fact that gold is always a hedge or, at worst, always an excellent diversifier of portfolio risk. Gold’s usefulness in managing risk does not disappear in a crisis when the prices of the vast majority of assets tend to be perfectly correlated. (He, 2018) That is, gold seems to generally hold up as providing non-correlated returns, even when extreme market conditions prevail. Globally, central banks - including Australia's Reserve Bank - also seem to recognise this characteristic. It is in part why central banks collectively own around 17 per cent of gold currently above ground. Setting the level of gold exposure - competing evidence There is considerable discussion and debate on the right level of gold holdings to maximise the diversification benefit, and few definitive answers. The optimum level will vary under most estimation approaches, which inevitably are based on models that build on historical observed relationships and correlations. These correlations themselves vary over time and between markets and countries. An original study by Jaffe for institutional portfolio managers recommended a 10 per cent allocation against a basket of international equities. Additional studies (pdf) by other authors have recommended 9.5 per cent, and between 0.1 per cent to 12 per cent depending on which country the investor is in. As an example, the country-specific weights typically fell within 3 to 8 per cent for developed countries. More complex methods than classical mean variance analysis, which take into account the positive skew of gold returns, produce different results again. A 2006 study which examined 1988-2003 data recommended a holding of 4-6 per cent under classical portfolio optimisation approaches, but a lower figure of 2-4 per cent taking return 'skewness' into account. Diversification and Bitcoin - looking at the record My purchase of Bitcoin began as an exploration of a new financial technology driven by curiosity. The present question is, however, does it deliver any additional diversification benefits beyond gold holdings? Conceptually, Bitcoin can be said to share some characteristics with gold that might be expected to reduce any diversification benefit. They both represent highly liquid assets that when held personally are no other parties liability. They are not issued by central banks or other monetary authorities, and they can be transferred. So is there a case for holding just one or the other? The tentative answer is that despite some conceptual similarities, they do appear to behave differently. So far, in the decade between July 2009 and February 2019, Bitcoin has shown a low positive correlation to gold (see In Gold We Trust (pdf), p.245). This is consistent with my own observations in my portfolio in the last three and a half year period, with a low correlation of 0.1 over the entire period in the chart below. [Chart] On its face it appears Bitcoin may well be a useful complementary alternative holding, offering diversification benefits distinct from other combinations of holdings. Unlike gold, there is not a clear empirical or academic basis for setting a 'right' level of exposure to Bitcoin. The recent In Gold We Trust report (pdf) discusses and analyses one possible approach - a 70/30 split between gold and Bitcoin, indicating that this delivered similar maximum drawdowns to a gold only portfolio, but with higher returns. Yet this finding is only a function of the extraordinary positive returns from Bitcoin to date, and may not be repeated. Trade-offs, risks and limits of exposure to alternatives There are acknowledged trade-offs and risks to investing in alternatives such as gold and Bitcoin. First, they produce no income or cashflow. Their return is based entirely on capital gains. This is often cited as a definitive proof that they do not represent part of any proper investment portfolio. Yet, as a part of a portfolio, alternatives can reduce the absolute volatility of the capital value of the portfolio, and - historically in the case of gold, can also increase overall returns. Given final capital value and returns over time are critical inputs into FI, these characteristics are relevant and worth considering. A potentially stronger objection is that while alternatives may have been useful in the past, they cannot be guaranteed to be so in the future. That is, the correlations and diversification benefit that has been observed, may disappear. This is entirely possible, and ultimately unknowable. The diversification benefits of gold have a far longer history. Its roles in industry, manufacturing and jewellery would seem likely to continue to guarantee that at any given time there will be some minimum demand for gold, and a relationship between its price and other asset prices that is not perfectly correlated. For Bitcoin, the same cannot be said. There are many plausible scenarios in which Bitcoin's value declines, it falls in usage, and becomes the equivalent of niche digital collectible with little residual value. The disappearance or long-term reversal of 'known truths' in finance is not impossible. There are significant periods in capital markets in which bonds outperformed equities, negative yielding debt has moved from something previously unobserved, to a commonplace across many world bond markets. By some measures, global interest rates are at 5 000 year lows. Few developments should be dismissed as inconceivable looking forward. This suggests that any analysis based on historical trends should be relied on with modest expectations around its accuracy. Yet importantly, this applies not just to speculation around the role and benefits of alternatives. It also applies to traditional investment classes, such as equities or bonds. For example, the continuation of a positive equity premium for Australia, or any other nation, is not foreordained. Australia's comparatively high equity returns are in fact an anomaly looking across developed countries (see Table 2 and 3, here (pdf)). There are no particularly strong reasons to suggest this will necessarily continue. Set of the sails - applying the evidence to a FIRE portfolio The role of gold and Bitcoin are primarily as non-correlated financial instruments for diversification, and as an insurance against extreme capital market events. No actual positive return is assumed for either asset. The evidence discussed above leads me to the following conclusions, for my personal circumstances and risk tolerance.
Reliance on equities as the engine for portfolio growth. Long term equities continue to have a strong record of providing higher total returns, earning their place as the centrepiece of the portfolio.
Reliance on history of performance of gold to reduce volatility. Some exposure to gold appears to reduce volatility and potentially enhance returns historically, making it a potentially beneficial addition to my FIRE portfolio.
A small role for gold based on tested academic evidence. Past evidence suggests a gold allocation of between 5 to 10 per cent is sufficient to capture diversification benefits, without compromising long-term portfolio returns
With Bitcoin potentially adding further diversification. Bitcoin appears to be non-correlated to equities, bonds, and gold, meaning it potentially is a useful further additional source of diversification benefit.
But with modesty about what the future holds. Aside from Bitcoin being volatile, there is an inadequate history to know how it will perform compared to other assets through a full cycle, or whether it has a long-term future.
Recognising the limits of knowledge and history. Asset performance, diversification benefits, volatility and returns which are historically based can and do reverse at times, meaning the 'best' portfolio will only ever be known in retrospect.
The alternatives target allocation set earlier this year is 7.5 per cent gold and 2.5 per cent Bitcoin. As of July 2019, a strict reading of these targets suggests I need to moderately lift my exposure to gold, and sell approximately 75 per cent of my Bitcoin holding. I currently plan to do neither of these things. This is because:
The volatility of Bitcoin is such that 'chasing' a target allocation by buying and selling is likely to incur high transaction costs (including realising capital gain tax).
A plausible scenario is the apparent over-allocation to Bitcoin resolving itself through substantial price declines as previously experienced (at its previous low, the allocation was close to the 2.5 per cent target).
Similarly in the case of gold, both price volatility and the goal of minimising transaction costs suggest it is better to seek to adjust holdings only when they fall well outside the target allocation for a sustained period.
The overall size of the entire alternatives allocation (a 10 per cent target) is more significant than the individual sub-targets. Before making new investments to pursue my portfolio allocation I perform a 'with and without' test, notionally removing the Bitcoin holdings for a moment from the portfolio, to identify if recent fluctuations in the value of Bitcoin are driving a perverse allocation choice which would be entirely different were it not for Bitcoin. While not theoretically 'pure', this is a pragmatic adaptive approach that recognises the lack of clear history and knowledge about the portfolio behaviour and characteristics of Bitcoin.
So the sails are set, and the wind will come. These settings allow me to feel that whatever direction they happen to blow, there is the best chance possible based on evidence that they will help in the journey that remains. The post, source citations and full charts can be viewed here. Disclaimer: This article does not provide advice and is not a recommendations to invest in either gold, Bitcoin or any alternative assets. It's sole purpose is to provide an explanation of why - in my personal circumstances - I have chosen this exposure.
Which are your Top 5 favourite coins out of the Top 100? An analysis.
I am putting together my investment portfolio for 2018 and made a complete summary of the current Top 100. Interestingly, I noticed that all coins can be categorized into 12 markets. Which markets do you think will play the biggest role in the coming year? Here is a complete overview of all coins in an excel sheet including name, market, TPS, risk profile, time since launch (negative numbers mean that they are launching that many months in the future) and market cap. You can also sort by all of these fields of course. Coins written in bold are the strongest contenders within their market either due to having the best technology or having a small market cap and still excellent technology and potential. https://docs.google.com/spreadsheets/d/1s8PHcNvvjuy848q18py_CGcu8elRGQAUIf86EYh4QZo/edit#gid=0 The 12 markets are
Currency 13 coins
Platform 25 coins
Ecosystem 9 coins
Privacy 10 coins
Currency Exchange Tool 8 coins
Gaming & Gambling 5 coins
Misc 15 coins
Social Network 4 coins
Fee Token 3 coins
Decentralized Data Storage 4 coins
Cloud Computing 3 coins
Stable Coin 2 coins
Before we look at the individual markets, we need to take a look of the overall market and its biggest issue scalability first: Cryptocurrencies aim to be a decentralized currency that can be used worldwide. Its goal is to replace dollar, Euro, Yen, all FIAT currencies worldwide. The coin that will achieve that will be worth several trillion dollars. Bitcoin can only process 7 transactions per second (TPS). In order to replace all FIAT, it would need to perform at at least VISA levels, which usually processes around 3,000 TPS, up to 25,000 TPS during peak times and a maximum of 64,000 TPS. That means that this cryptocurrency would need to be able to perform at least several thousand TPS. However, a ground breaking technology should not look at current technology to set a goal for its use, i.e. estimating the number of emails sent in 1990 based on the number of faxes sent wasn’t a good estimate. For that reason, 10,000 TPS is the absolute baseline for a cryptocurrency that wants to replace FIAT. This brings me to IOTA, which wants to connect all 80 billion IoT devices that are expected to exist by 2025, which constantly communicate with each other, creating 80 billion or more transactions per second. This is the benchmark that cryptocurrencies should be aiming for. Currently, 8 billion devices are connected to the Internet. With its Lightning network recently launched, Bitcoin is realistically looking at 50,000 possible soon. Other notable cryptocurrencies besides IOTA and Bitcoin are Nano with 7,000 TPS already tested, Dash with several billion TPS possible with Masternodes, Neo, LISK and RHOC with 100,000 TPS by 2020, Ripple with 50,000 TPS, Ethereum with 10,000 with Sharding. However, it needs to be said that scalability usually goes at the cost of decentralization and security. So, it needs to be seen, which of these technologies can prove itself resilient and performant. Without further ado, here are the coins of the first market
Market 1 - Currency:
Bitcoin: 1st generation blockchain with currently bad scalability currently, though the implementation of the Lightning Network looks promising and could alleviate most scalability concerns, scalability and high energy use.
Ripple: Centralized currency that might become very successful due to tight involvement with banks and cross-border payments for financial institutions; banks and companies like Western Union and Moneygram (who they are currently working with) as customers customers. However, it seems they are aiming for more decentralization now.https://ripple.com/dev-blog/decentralization-strategy-update/. Has high TPS due to Proof of Correctness algorithm.
Bitcoin Cash: Bitcoin fork with the difference of having an 8 times bigger block size, making it 8 times more scalable than Bitcoin currently. Further block size increases are planned. Only significant difference is bigger block size while big blocks lead to further problems that don't seem to do well beyond a few thousand TPS. Opponents to a block size argue that increasing the block size limit is unimaginative, offers only temporary relief, and damages decentralization by increasing costs of participation. In order to preserve decentralization, system requirements to participate should be kept low. To understand this, consider an extreme example: very big blocks (1GB+) would require data center level resources to validate the blockchain. This would preclude all but the wealthiest individuals from participating.Community seems more open than Bitcoin's though.
Litecoin : Little brother of Bitcoin. Bitcoin fork with different mining algorithm but not much else.Copies everything that Bitcoin does pretty much. Lack of real innovation.
Dash: Dash (Digital Cash) is a fork of Bitcoin and focuses on user ease. It has very fast transactions within seconds, low fees and uses Proof of Service from Masternodes for consensus. They are currently building a system called Evolution which will allow users to send money using usernames and merchants will find it easy to integrate Dash using the API. You could say Dash is trying to be a PayPal of cryptocurrencies. Currently, cryptocurrencies must choose between decentralization, speed, scalability and can pick only 2. With Masternodes, Dash picked speed and scalability at some cost of decentralization, since with Masternodes the voting power is shifted towards Masternodes, which are run by Dash users who own the most Dash.
IOTA: 3rd generation blockchain called Tangle, which has a high scalability, no fees and instant transactions. IOTA aims to be the connective layer between all 80 billion IOT devices that are expected to be connected to the Internet in 2025, possibly creating 80 billion transactions per second or 800 billion TPS, who knows. However, it needs to be seen if the Tangle can keep up with this scalability and iron out its security issues that have not yet been completely resolved.
Nano: 3rd generation blockchain called Block Lattice with high scalability, no fees and instant transactions. Unlike IOTA, Nano only wants to be a payment processor and nothing else, for now at least. With Nano, every user has their own blockchain and has to perform a small amount of computing for each transaction, which makes Nano perform at 300 TPS with no problems and 7,000 TPS have also been tested successfully. Very promising 3rd gen technology and strong focus on only being the fastest currency without trying to be everything.
Decred: As mining operations have grown, Bitcoin’s decision-making process has become more centralized, with the largest mining companies holding large amounts of power over the Bitcoin improvement process. Decred focuses heavily on decentralization with their PoW Pos hybrid governance system to become what Bitcoin was set out to be. They will soon implement the Lightning Network to scale up. While there do not seem to be more differences to Bitcoin besides the novel hybrid consensus algorithm, which Ethereum, Aeternity and Bitcoin Atom are also implementing, the welcoming and positive Decred community and professoinal team add another level of potential to the coin.
Aeternity: We’ve seen recently, that it’s difficult to scale the execution of smart contracts on the blockchain. Crypto Kitties is a great example. Something as simple as creating and trading unique assets on Ethereum bogged the network down when transaction volume soared. Ethereum and Zilliqa address this problem with Sharding. Aeternity focuses on increasing the scalability of smart contracts and dapps by moving smart contracts off-chain. Instead of running on the blockchain, smart contracts on Aeternity run in private state channels between the parties involved in the contracts. State channels are lines of communication between parties in a smart contract. They don’t touch the blockchain unless they need to for adjudication or transfer of value. Because they’re off-chain, state channel contracts can operate much more efficiently. They don’t need to pay the network for every time they compute and can also operate with greater privacy. An important aspect of smart contract and dapp development is access to outside data sources. This could mean checking the weather in London, score of a football game, or price of gold. Oracles provide access to data hosted outside the blockchain. In many blockchain projects, oracles represent a security risk and potential point of failure, since they tend to be singular, centralized data streams. Aeternity proposes decentralizing oracles with their oracle machine. Doing so would make outside data immutable and unchangeable once it reaches Aeternity’s blockchain. Of course, the data source could still be hacked, so Aeternity implements a prediction market where users can bet on the accuracy and honesty of incoming data from various oracles.It also uses prediction markets for various voting and verification purposes within the platform. Aeternity’s network runs on on a hybrid of proof of work and proof of stake. Founded by a long-time crypto-enthusiast and early colleague of Vitalik Buterin, Yanislav Malahov. Promising concept though not product yet
Bitcoin Atom: Atomic Swaps and hybrid consenus. This looks like the only Bitcoin clone that actually is looking to innovate next to Bitcoin Cash.
Dogecoin: Litecoin fork, fantastic community, though lagging behind a bit in technology.
Bitcoin Gold: A bit better security than bitcoin through ASIC resistant algorithm, but that's it. Not that interesting.
Digibyte: Digibyte's PoS blockchain is spread over a 100,000+ servers, phones, computers, and nodes across the globe, aiming for the ultimate level of decentralization. DigiByte rebalances the load between the five mining algorithms by adjusting the difficulty of each so one algorithm doesn’t become dominant. The algorithm's asymmetric difficulty has gained notoriety and been deployed in many other blockchains.DigiByte’s adoption over the past four years has been slow. It’s still a relatively obscure currency compared its competitors. The DigiByte website offers a lot of great marketing copy and buzzwords. However, there’s not much technical information about what they have planned for the future. You could say Digibyte is like Bitcoin, but with shorter blocktimes and a multi-algorithm. However, that's not really a difference big enough to truly set themselves apart from Bitcoin, since these technologies could be implemented by any blockchain without much difficulty. Their decentralization is probably their strongest asset, however, this also change quickly if the currency takes off and big miners decide to go into Digibyte.
Bitcoin Diamond Asic resistant Bitcoin and Copycat
Market 2 - Platform
Most of the cryptos here have smart contracts and allow dapps (Decentralized apps) to be build on their platform and to use their token as an exchange of value between dapp services.
Ethereum: 2nd generation blockchain that allows the use of smart contracts. Bad scalability currently, though this concern could be alleviated by the soon to be implemented Lightning Network aka Plasma and its Sharding concept.
EOS: Promising technology that wants to be able do everything, from smart contracts like Ethereum, scalability similar to Nano with 1000 tx/second + near instant transactions and zero fees, to also wanting to be a platform for dapps. However, EOS doesn't have a product yet and everything is just promises still. Highly overvalued right now. However, there are lots of red flags, have dumped $500 million Ether over the last 2 months and possibly bought back EOS to increase the size of their ICO, which has been going on for over a year and has raised several billion dollars. All in all, their market cap is way too high for that and not even having a product.
Cardano: Similar to Ethereum/EOS, however, only promises made with no delivery yet, highly overrated right now. Interesting concept though. Market cap way too high for not even having a product. Somewhat promising technology.
VeChain: Singapore-based project that’s building a business enterprise platform and inventory tracking system. Examples are verifying genuine luxury goods and food supply chains. Has one of the strongest communities in the crypto world. Most hyped token of all, with merit though.
Neo: Neo is a platform, similar to Eth, but more extensive, allowing dapps and smart contracts, but with a different smart contract gas system, consensus mechanism (PoS vs. dBfT), governance model, fixed vs unfixed supply, expensive contracts vs nearly free contracts, different ideologies for real world adoption. There are currently only 9 nodes, each of which are being run by a company/entity hand selected by the NEO council (most of which are located in china) and are under contract. This means that although the locations of the nodes may differ, ultimately the neo council can bring them down due to their legal contracts. In fact this has been done in the past when the neo council was moving 50 million neo that had been locked up. Also dbft (or neo's implmentation of it) has failed underload causing network outages during major icos. The first step in decentralization is that the NEO Counsel will select trusted nodes (Universities, business partners, etc.) and slowly become less centralized that way. The final step in decentralization will be allowing NEO holders to vote for new nodes, similar to a DPoS system (ARK/EOS/LISK). NEO has a regulation/government friendly ideology. Finally they are trying to work undewith the Chinese government in regards to regulations. If for some reason they wanted it shut down, they could just shut it down.
Stellar: PoS system, similar goals as Ripple, but more of a platform than only a currency. 80% of Stellar are owned by Stellar.org still, making the currency centralized.
Ethereum classic: Original Ethereum that decided not to fork after a hack. The Ethereum that we know is its fork. Uninteresing, because it has a lot of less resources than Ethereum now and a lot less community support.
Ziliqa: Zilliqa is building a new way of sharding. 2400 tpx already tested, 10,000 tps soon possible by being linearly scalable with the number of nodes. That means, the more nodes, the faster the network gets. They are looking at implementing privacy as well.
QTUM: Enables Smart contracts on the Bitcoin blockchain. Useful.
Icon: Korean ethereum. Decentralized application platform that's building communities in partnership with banks, insurance providers, hospitals, and universities. Focused on ID verification and payments. No big differentiators to the other 20 Ethereums, except that is has a product. That is a plus. Maybe cheap alternative to Ethereum.
LISK: Lisk's difference to other BaaS is that side chains are independent to the main chain and have to have their own nodes. Similar to neo whole allows dapps to deploy their blockchain to. However, Lisk is currently somewhat centralized with a small group of members owning more than 50% of the delegated positions. Lisk plans to change the consensus algorithm for that reason in the near future.
Rchain: Similar to Ethereum with smart contract, though much more scalable at an expected 40,000 TPS and possible 100,000 TPS. Not launched yet. No product launched yet, though promising technology. Not overvalued, probably at the right price right now.
ARDR: Similar to Lisk. Ardor is a public blockchain platform that will allow people to utilize the blockchain technology of Nxt through the use of child chains. A child chain, which is a ‘light’ blockchain that can be customized to a certain extent, is designed to allow easy self-deploy for your own blockchain. Nxt claims that users will "not need to worry" about security, as that part is now handled by the main chain (Ardor). This is the chief innovation of Ardor. Ardor was evolved from NXT by the same company. NEM started as a NXT clone.
Ontology: Similar to Neo. Interesting coin
Bytom: Bytom is an interactive protocol of multiple byte assets. Heterogeneous byte-assets (indigenous digital currency, digital assets) that operate in different forms on the Bytom Blockchain and atomic assets (warrants, securities, dividends, bonds, intelligence information, forecasting information and other information that exist in the physical world) can be registered, exchanged, gambled and engaged in other more complicated and contract-based interoperations via Bytom.
Nxt: Similar to Lisk
Stratis: Different to LISK, Stratis will allow businesses and organizations to create their own blockchain according to their own needs, but secured on the parent Stratis chain. Stratis’s simple interface will allow organizations to quickly and easily deploy and/or test blockchain functionality of the Ethereum, BitShares, BitCoin, Lisk and Stratis environements.
Status: Status provides access to all of Ethereum’s decentralized applications (dapps) through an app on your smartphone. It opens the door to mass adoption of Ethereum dapps by targeting the fastest growing computer segment in the world – smartphone users.16. Ark: Fork of Lisk that focuses on a smaller feature set. Ark wallets can only vote for one delegate at a time which forces delegates to compete against each other and makes cartel formations incredibly hard, if not impossible.
Neblio: Similar to Neo, but 30x smaller market cap.
NEM: Is similar to Neo No marketing team, very high market cap for little clarilty what they do.
Bancor: Bancor is a Decentralized Liquidity Network that allows you to hold any Ethereum token and convert it to any other token in the network, with no counter party, at an automatically calculated price, using a simple web wallet.
Dragonchain: The Purpose of DragonChain is to help companies quickly and easily incorporate blockchain into their business applications. Many companies might be interested in making this transition because of the benefits associated with serving clients over a blockchain – increased efficiency and security for transactions, a reduction of costs from eliminating potential fraud and scams, etc.
Skycoin: Transactions with zero fees that take apparently two seconds, unlimited transaction rate, no need for miners and block rewards, low power usage, all of the usual cryptocurrency technical vulnerabilities fixed, a consensus mechanism superior to anything that exists, resistant to all conceivable threats (government censorship, community infighting, cybenucleaconventional warfare, etc). Skycoin has their own consensus algorithm known as Obelisk written and published academically by an early developer of Ethereum. Obelisk is a non-energy intensive consensus algorithm based on a concept called ‘web of trust dynamics’ which is completely different to PoW, PoS, and their derivatives. Skywire, the flagship application of Skycoin, has the ambitious goal of decentralizing the internet at the hardware level and is about to begin the testnet in April. However, this is just one of the many facets of the Skycoin ecosystem. Skywire will not only provide decentralized bandwidth but also storage and computation, completing the holy trinity of commodities essential for the new internet. Skycion a smear campaign launched against it, though they seem legit and reliable. Thus, they are probably undervalued.
Market 3 - Ecosystem
The 3rd market with 11 coins is comprised of ecosystem coins, which aim to strengthen the ease of use within the crypto space through decentralized exchanges, open standards for apps and more
Nebulas: Similar to how Google indexes webpages Nebulas will index blockchain projects, smart contracts & data using the Nebulas rank algorithm that sifts & sorts the data. Developers rewarded NAS to develop & deploy on NAS chain. Nebulas calls this developer incentive protocol – basically rewards are issued based on how often dapp/contract etc. is used, the more the better the rewards and Proof of devotion. Works like DPoS except the best, most economically incentivised developers (Bookkeeppers) get the forging spots. Ensuring brains stay with the project (Cross between PoI & PoS). 2,400 TPS+, DAG used to solve the inter-transaction dependencies in the PEE (Parallel Execution Environment) feature, first crypto Wallet that supports the Lightening Network.
Waves: Decentralized exchange and crowdfunding platform. Let’s companies and projects to issue and manage their own digital coin tokens to raise money.
Salt: Leveraging blockchain assets to secure cash loands. Plans to offer cash loans in traditional currencies, backed by your cryptocurrency assets. Allows lenders worldwide to skip credit checks for easier access to affordable loans.
CHAINLINK: ChainLink is a decentralized oracle service, the first of its kind. Oracles are defined as an ‘agent’ that finds and verifies real-world occurrences and submits this information to a blockchain to be used in smart contracts.With ChainLink, smart contract users can use the network’s oracles to retrieve data from off-chain application program interfaces (APIs), data pools, and other resources and integrate them into the blockchain and smart contracts. Basically, ChainLink takes information that is external to blockchain applications and puts it on-chain. The difference to Aeternity is that Chainlink deploys the smart contracts on the Ethereum blockchain while Aeternity has its own chain.
WTC: Combines blockchain with IoT to create a management system for supply chains Interesting
Ethos unifyies all cryptos. Ethos is building a multi-cryptocurrency phone wallet. The team is also building an investment diversification tool and a social network
Aion: Aion is the token that pays for services on the Aeternity platform.
USDT: is no cryptocurrency really, but a replacement for dollar for trading After months of asking for proof of dollar backing, still no response from Tether.
Market 4 - Privacy
The 4th market are privacy coins. As you might know, Bitcoin is not anonymous. If the IRS or any other party asks an exchange who is the identity behind a specific Bitcoin address, they know who you are and can track back almost all of the Bitcoin transactions you have ever made and all your account balances. Privacy coins aim to prevent exactly that through address fungability, which changes addresses constantly, IP obfuscation and more. There are 2 types of privacy coins, one with completely privacy and one with optional privacy. Optional Privacy coins like Dash and Nav have the advantage of more user friendliness over completely privacy coins such as Monero and Enigma.
Monero: Currently most popular privacy coin, though with a very high market cap. Since their privacy is all on chain, all prior transactions would be deanonymized if their protocol is ever cracked. This requires a quantum computing attack though. PIVX is better in that regard.
Zcash: A decentralized and open-source cryptocurrency that hide the sender, recipient, and value of transactions. Offers users the option to make transactions public later for auditing. Decent privacy coin, though no default privacy
Verge: Calls itself privacy coin without providing private transactions, multiple problems over the last weeks has a toxic community, and way too much hype for what they have.
Bytecoin: First privacy-focused cryptocurrency with anonymous transactions. Bytecoin’s code was later adapted to create Monero, the more well-known anonymous cryptocurrency. Has several scam accusations, 80% pre-mine, bad devs, bad tech
Bitcoin Private: A merge fork of Bitcoin and Zclassic with Zclassic being a fork of Zcash with the difference of a lack of a founders fee required to mine a valid block. This promotes a fair distribution, preventing centralized coin ownership and control. Bitcoin private offers the optional ability to keep the sender, receiver, and amount private in a given transaction. However, this is already offered by several good privacy coins (Monero, PIVX) and Bitcoin private doesn't offer much more beyond this.
Komodo: The Komodo blockchain platform uses Komodo’s open-source cryptocurrency for doing transparent, anonymous, private, and fungible transactions. They are then made ultra-secure using Bitcoin’s blockchain via a Delayed Proof of Work (dPoW) protocol and decentralized crowdfunding (ICO) platform to remove middlemen from project funding. Offers services for startups to create and manage their own Blockchains.
PIVX: As a fork of Dash, PIVX uses an advanced implementation of the Zerocoin protocol to provide it’s privacy. This is a form of zeroknowledge proofs, which allow users to spend ‘Zerocoins’ that have no link back to them. Unlike Zcash u have denominations in PIVX, so they can’t track users by their payment amount being equal to the amount of ‘minted’ coins, because everyone uses the same denominations. PIVX is also implementing Bulletproofs, just like Monero, and this will take care of arguably the biggest weakness of zeroknowledge protocols: the trusted setup.
Zcoin: PoW cryptocurrency. Private financial transactions, enabled by the Zerocoin Protocol. Zcoin is the first full implementation of the Zerocoin Protocol, which allows users to have complete privacy via Zero-Knowledge cryptographic proofs.
Enigma: Monero is to Bitcoin what enigma is to Ethereum. Enigma is for making the data used in smart contracts private. More of a platform for dapps than a currency like Monero. Very promising.
Navcoin: Like bitcoin but with added privacy and pos and 1,170 tps, but only because of very short 30 second block times. Though, privacy is optional, but aims to be more user friendly than Monero. However, doesn't really decide if it wants to be a privacy coin or not. Same as Zcash.Strong technology, non-shady team.
Tenx: Raised 80 million, offers cryptocurrency-linked credit cards that let you spend virtual money in real life. Developing a series of payment platforms to make spending cryptocurrency easier. However, the question is if full privacy coins will be hindered in growth through government regulations and optional privacy coins will become more successful through ease of use and no regulatory hindrance.
Market 5 - Currency Exchange Tool
Due to the sheer number of different cryptocurrencies, exchanging one currency for the other it still cumbersome. Further, merchants don’t want to deal with overcluttered options of accepting cryptocurrencies. This is where exchange tool like Req come in, which allow easy and simple exchange of currencies.
Cryptonex: Fiat and currency exchange between various blockchain services, similar to REQ.
QASH: Qash is used to fuel its liquid platform which will be an exchange that will distribute their liquidity pool. Its product, the Worldbook is a multi-exchange order book that matches crypto to crypto, and crypto to fiat and the reverse across all currencies. E.g., someone is selling Bitcoin is USD on exchange1 not owned by Quoine and someone is buying Bitcoin in EURO on exchange 2 not owned by Quoine. If the forex conversions and crypto conversions match then the trade will go through and the Worldbook will match it, it'll make the sale and the purchase on either exchange and each user will get what they wanted, which means exchanges with lower liquidity if they join the Worldbook will be able to fill orders and take trade fees they otherwise would miss out on.They turned it on to test it a few months ago for an hour or so and their exchange was the top exchange in the world by 4x volume for the day because all Worldbook trades ran through it. Binance wants BNB to be used on their one exchange. Qash wants their QASH token embedded in all of their partners. More info here https://www.reddit.com/CryptoCurrency/comments/8a8lnwhich_are_your_top_5_favourite_coins_out_of_the/dwyjcbb/?context=3
Kyber: network Exchange between cryptocurrencies, similar to REQ. Features automatic coin conversions for payments. Also offers payment tools for developers and a cryptocurrency wallet.
Achain: Building a boundless blockchain world like Req .
Req: Exchange between cryptocurrencies.
Bitshares: Exchange between cryptocurrencies. Noteworthy are the 1.5 second average block times and throughput potential of 100,000 transactions per second with currently 2,400 TPS having been proven. However, bitshares had several Scam accusations in the past.
Loopring: A protocol that will enable higher liquidity between exchanges and personal wallets.
ZRX: Open standard for dapps. Open, permissionless protocol allowing for ERC20 tokens to be traded on the Ethereum blockchain. In 0x protocol, orders are transported off-chain, massively reducing gas costs and eliminating blockchain bloat. Relayers help broadcast orders and collect a fee each time they facilitate a trade. Anyone can build a relayer.
Market 6 - Gaming
With an industry size of $108B worldwide, Gaming is one of the largest markets in the world. For sure, cryptocurrencies will want to have a share of that pie.
Storm: Mobile game currency on a platform with 9 million players.
Fun: A platform for casino operators to host trustless, provably-fair gambling through the use of smart contracts, as well as creating their own implementation of state channels for scalability.
Electroneum: Mobile game currency They have lots of technical problems, such as several 51% attacks
Wax: Marketplace to trade in-game items
Market 7 - Misc
There are various markets being tapped right now. They are all summed up under misc.
OMG: Omise is designed to enable financial services for people without bank accounts. It works worldwide and with both traditional money and cryptocurrencies.
Power ledger: Australian blockchain-based cryptocurrency and energy trading platform that allows for decentralized selling and buying of renewable energy. Unique market and rather untapped market in the crypto space.
Populous: A platform that connects business owners and invoice buyers without middlemen. Invoice sellers get cash flow to fund their business and invoice buyers earn interest. Similar to OMG, small market.
Monacoin: The first Japanese cryptocurrency. Focused on micro-transactions and based on a popular internet meme of a type-written cat. This makes it similar to Dogecoin. Very niche, tiny market.
Revain: Legitimizing reviews via the blockchain. Interesting concept, though market not as big.
Augur: Platform to forecast and make wagers on the outcome of real-world events (AKA decentralized predictions). Uses predictions for a “wisdom of the crowd” search engine. Not launched yet.
Substratum: Revolutionzing hosting industry via per request billing as a decentralized internet hosting system. Uses a global network of private computers to create the free and open internet of the future. Participants earn cryptocurrency. Interesting concept.
Veritaseum: Is supposed to be a peer to peer gateway, though it looks like very much like a scam.
TRON: Tronix is looking to capitalize on ownership of internet data to content creators. However, they plagiarized their white paper, which is a no go. They apologized, so it needs to be seen how they will conduct themselves in the future. Extremely high market cap for not having a product, nor proof of concept.
Syscoin: A cryptocurrency with a decentralized marketplace that lets people buy and sell products directly without third parties. Trying to remove middlemen like eBay and Amazon.
Hshare: Most likely scam because of no code changes, most likely pump and dump scheme, dead community.
BAT: An Ethereum-based token that can be exchanged between content creators, users, and advertisers. Decentralized ad-network that pays based on engagement and attention.
Dent: Decentralizeed exchange of mobile data, enabling mobile data to be marketed, purchased or distributed, so that users can quickly buy or sell data from any user to another one.
Ncash: End to end encrypted Identification system for retailers to better serve their customers .
Factom Secure record-keeping system that allows companies to store their data directly on the Blockchain. The goal is to make records more transparent and trustworthy .
Market 8 - Social network
Web 2.0 is still going strong and Web 3.0 is not going to ignore it. There are several gaming tokens already out there and a few with decent traction already, such as Steem, which is Reddit with voting through money is a very interesting one.
Mithril: As users create content via social media, they will be rewarded for their contribution, the better the contribution, the more they will earn
Steem: Like Reddit, but voting with money. Already launched product and Alexa rank 1,000 Thumbs up.
Rdd: Reddcoin makes the process of sending and receiving money fun and rewarding for everyone. Reddcoin is dedicated to one thing – tipping on social networks as a way to bring cryptocurrency awareness and experience to the general public.
Kin: Token for the platform Kik. Kik has a massive user base of 400 million people. Replacing paying with FIAT with paying with KIN might get this token to mass adoption very quickly.
Market 9 - Fee token
Popular exchanges realized that they can make a few billion dollars more by launching their own token. Owning these tokens gives you a reduction of trading fees. Very handy and BNB (Binance Coin) has been one of the most resilient tokens, which have withstood most market drops over the last weeks and was among the very few coins that could show growth.
BNB: Fee token for Binance
Gas: Not a Fee token for an exchange, but it is a dividend paid out on Neo and a currency that can be used to purchase services for dapps.
Kucoin: Fee token for Kucoin
Market 10 - Decentralized Data Storage
Currently, data storage happens with large companies or data centers that are prone to failure or losing data. Decentralized data storage makes loss of data almost impossible by distributing your files to numerous clients that hold tiny pieces of your data. Remember Torrents? Torrents use a peer-to-peer network. It is similar to that. Many users maintain copies of the same file, when someone wants a copy of that file, they send a request to the peer-to-peer network., users who have the file, known as seeds, send fragments of the file to the requester., he requester receives many fragments from many different seeds, and the torrent software recompiles these fragments to form the original file.
Gbyte: Byteball data is stored and ordered using directed acyclic graph (DAG) rather than blockchain. This allows all users to secure each other's data by referencing earlier data units created by other users, and also removes scalability limits common for blockchains, such as blocksize issue.
Siacoin: Siacoin is decentralized storage platform. Distributes encrypted files to thousands of private users who get paid for renting out their disk space. Anybody with siacoins can rent storage from hosts on Sia. This is accomplish via "smart" storage contracts stored on the Sia blockchain. The smart contract provides a payment to the host only after the host has kept the file for a given amount of time. If the host loses the file, the host does not get paid.
Maidsafecoin: MaidSafe stands for Massive Array of Internet Disks, Secure Access for Everyone.Instead of working with data centers and servers that are common today and are vulnerable to data theft and monitoring, SAFE’s network uses advanced P2P technology to bring together the spare computing capacity of all SAFE users and create a global network. You can think of SAFE as a crowd-sourced internet. All data and applications reside in this network. It’s an autonomous network that automatically sets prices and distributes data and rents out hard drive disk space with a Blockchain-based storage solutions.When you upload a file to the network, such as a photo, it will be broken into pieces, hashed, and encrypted. The data is then randomly distributed across the network. Redundant copies of the data are created as well so that if someone storing your file turns off their computer, you will still have access to your data. And don’t worry, even with pieces of your data on other people’s computers, they won’t be able to read them. You can earn MadeSafeCoins by participating in storing data pieces from the network on your computer and thus earning a Proof of Resource.
Storj: Storj aims to become a cloud storage platform that can’t be censored or monitored, or have downtime. Your files are encrypted, shredded into little pieces called 'shards', and stored in a decentralized network of computers around the globe. No one but you has a complete copy of your file, not even in an encrypted form.
Market 11 - Cloud computing
Obviously, renting computing power, one of the biggest emerging markets as of recent years, e.g. AWS and Digital Ocean, is also a service, which can be bought and managed via the blockchain.
Golem: Allows easy use of Supercomputer in exchange for tokens. People worldwide can rent out their computers to the network and get paid for that service with Golem tokens.
Elf: Allows easy use of Cloud computing in exchange for tokens.
Market 12 - Stablecoin
Last but not least, there are 2 stablecoins that have established themselves within the market. A stable coin is a coin that wants to be independent of the volatility of the crypto markets. This has worked out pretty well for Maker and DGD, accomplished through a carefully diversified currency fund and backing each token by 1g or real gold respectively. DO NOT CONFUSE DGD AND MAKER with their STABLE COINS DGX and DAI. DGD and MAKER are volatile, because they are the companies of DGX and DAI. DGX and DAI are the stable coins.
DGD: Platform of the Stablecoin DGX. Every DGX coin is backed by 1g of gold and make use proof of asset consensus.
Maker: Platform of the Stablecoin DAI that doesn't vary much in price through widespread and smart diversification of assets.
EDIT: Added a risk factor from 0 to 10. The baseline is 2 for any crypto. Significant scandals, mishaps, shady practices, questionable technology, increase the risk factor. Not having a product yet automatically means a risk factor of 6. Strong adoption and thus strong scrutiny or positive community lower the risk factor. EDIT2: Added a subjective potential factor from 0 to 10, where its overall potential and a small or big market cap is factored in. Bitcoin with lots of potential only gets a 9, because of its massive market cap, because if Bitcoin goes 10x, smaller coins go 100x, PIVX gets a 10 for being as good as Monero while carrying a 10x smaller market cap, which would make PIVX go 100x if Monero goes 10x.
Hello again. It's been a while. People have been emailing me about once a week or so for the last year to ask if I'm coming back to Bitcoin now that Bitcoin Cash exists. And a couple of weeks ago I was summoned on a thread called "Ask Mike Hearn Anything", but that was nothing to do with me and I was on holiday in Japan at the time. So I figured I should just answer all the different questions and answers in one place rather than keep doing it individually over email. Firstly, thanks for the kind words on this sub. I don't take part anymore but I still visit occasionally to see what people are talking about, and the people posting nice messages is a pleasant change from three years ago. Secondly, who am I? Some new Bitcoiners might not know. I am Satoshi. Just kidding. I'm not Satoshi. I was a Bitcoin developer for about five years, from 2010-2015. I was also one of the first Bitcoin users, sending my first coins in April 2009 (to SN), about 4 months after the genesis block. I worked on various things:
My main effort was an implementation of a Java library called bitcoinj. This was the engine used in the first p2p mobile wallet ("Bitcoin Wallet for Android"), and the first p2p desktop wallet that was faster to run than Bitcoin [Core] itself (MultiBit). These together were responsible for around 2.5 million user installs at a time when downloading the full block chain was becoming too slow for normal users to tolerate and the only alternative was a "bitbank" or cloud-hosted wallet. It was used in the first trustless gambling site (SatoshiDice), over 100 products and projects, and many academic research papers.
With Gavin Andresen and others I designed some upgrades to the Bitcoin protocol like Bloom filtering and BIP70.
With Matt Corrallo I implemented and demonstrated the first version of (micro)payment channels. I put together a demo of a file server that charged micropayments using a GUI called Payfile (mentioned in New Scientist here). I used to have a video of this but unfortunately it no longer seems to be on YouTube. Payment channels went on to be used in the design of the Lightning Network.
You can see a trend here - I was always interested in developing peer to peer decentralised applications that used Bitcoin. But what I'm best known for is my role in the block size debate/civil war, documented by Nathaniel Popper in the New York Times. I spent most of 2015 writing extensively about why various proposals from the small-block/Blockstream faction weren't going to work (e.g. on replace by fee, lightning network, what would occur if no hard fork happened, soft forks, scaling conferences etc). After Blockstream successfully took over Bitcoin Core and expelled anyone who opposed them, Gavin and I forked Bitcoin Core to create Bitcoin XT, the first alternative node implementation to gain any serious usage. The creation of XT led to the imposition of censorship across all Bitcoin discussion forums and news outlets, resulted in the creation of this sub, and Core supporters paid a botnet operator to force XT nodes offline with DDoS attacks. They also convinced the miners and wider community to do nothing for years, resulting in the eventual overload of the main network. I left the project at the start of 2016, documenting my reasons and what I expected to happen in my final essay on Bitcoin in which I said I considered it a failed experiment. Along with the article in the New York Times this pierced the censorship, made the wider world aware of what was going on, and thus my last gift to the community was a 20% drop in price (it soon recovered).
The last two years
Left Bitcoin ... but not decentralisation. After all that went down I started a new project called Corda. You can think of Corda as Bitcoin++, but modified for industrial use cases where a decentralised p2p database is more immediately useful than a new coin. Corda incorporates many ideas I had back when I was working on Bitcoin but couldn't implement due to lack of time, resources, because of ideological wars or because they were too technically radical for the community. So even though it's doesn't provide a new cryptocurrency out of the box, it might be interesting for the Bitcoin Cash community to study anyway. By resigning myself to Bitcoin's fate and joining R3 I could go back to the drawing board and design with a lot more freedom, creating something inspired by Bitcoin's protocol but incorporating all the experience we gained writing Bitcoin apps over the years. The most common question I'm asked is whether I'd come back and work on Bitcoin again. The obvious followup question is - come back and work on what? If you want to see some of the ideas I'd have been exploring if things had worked out differently, go read the Corda tech white paper. Here's a few of the things it might be worth asking about:
Corda's data model is a UTXO ledger, like Bitcoin. Outputs in Corda (called "states") can be arbitrary data structures instead of just coin amounts, so you don't need hacks like coloured coins anymore. You can track arbitrary fungible assets, but you can also model things like the state of a loan, deal, purchase order, crate of cargo etc.
Transactions are structured as Merkle trees.
Corda has a compound key format that can represent more flexible conditions than CHECKMULTISIG can.
Smart contracts are stateless predicates like in Bitcoin, but you can loop like in Ethereum. Unlike Bitcoin and Ethereum we do not invent our own VM or languages.
Transactions can have files attached to them. Smart contracts in Corda are stored in attachments and referenced by hash, so large programs aren't duplicated inside every transaction.
The P2P network is encrypted.
Back in 2014 I wrote that Bitcoin needed a store and forward network, to make app dev easier, and to improve privacy. Corda doesn't have a store and forward network - Corda is a store and forward network.
It has a "flow framework" that makes structured back-and-forth conversations very easy to program. This makes protocols like payment channelss a lot quicker and easier to implement, and would have made Lighthouse much more straightforward. A big part of my goal with Corda was to simplify the act of building complicated decentralised applications, based on those Bitcoin experiences. Lighthouse took about 8 months of full time work to build, but it's pretty spartan anyway. That's because Bitcoin offers almost nothing to developers who want to build P2P apps that go beyond simple payments. Corda does.
The flow framework lets you do hard things quickly. For example, we took part in a competition called Project Ubin, the goal of which was to develop something vaguely analogous in complexity to the Lightning Network or original Ripple (decentralised net-out of debts). But we had about six weeks and one developer. We successfully did that in the time allowed. Compare that to dev time for the Lightning Network.
Corda scales a lot better than Bitcoin, even though Bitcoin could have scaled to the levels needed for large payment networks with enough work and time. It has something similar to what Ethereum calls "sharding". This is possible partly because Corda doesn't use proof of work.
It has a mechanism for signalling the equivalent of hard forks.
It provides much better privacy. Whilst it supports techniques like address randomisation, it also doesn't use global broadcast and we are working on encrypting the entire ledger using Intel SGX, such that no human has access to the raw unencrypted data and such that it's transparent to application developers (i.e. no need to design custom zero knowledge proofs)
Your Guide to Monero, and Why It Has Great Potential
/////Your Guide to Monero, and Why It Has Great Potential/////
Marketing. It's a dirty word for most members of the Monero community. It is also one of the most divisive words in the Monero community. Yet, the lack of marketing is one of the most frustrating things for many newcomers. This is what makes this an unusual post from a member of the Monero community. This post is an unabashed and unsolicited analyzation of why I believe Monero to have great potential. Below I have attempted to outline different reasons why Monero has great potential, beginning with upcoming developments and use cases, to broader economic motives, speculation, and key issues for it to overcome. I encourage you to discuss and criticise my musings, commenting below if you feel necessary to do so.
Bulletproofs - A Reduction in Transaction Sizes and Fees Since the introduction of Ring Confidential Transactions (Ring CT), transaction amounts have been hidden in Monero, albeit at the cost of increased transaction fees and sizes. In order to mitigate this issue, Bulletproofs will soon be added to reduce both fees and transaction size by 80% to 90%. This is great news for those transacting smaller USD amounts as people commonly complained Monero's fees were too high! Not any longer though! More information can be found here. Bulletproofs are already working on the Monero testnet, and developers were aiming to introduce them in March 2018, however it could be delayed in order to ensure everything is tried and tested. Multisig Multisig has recently been merged! Mulitsig, also called multisignature, is the requirement for a transaction to have two or more signatures before it can be executed. Multisig transactions and addresses are indistinguishable from normal transactions and addresses in Monero, and provide more security than single-signature transactions. It is believed this will lead to additional marketplaces and exchanges to supporting Monero. Kovri Kovri is an implementation of the Invisible Internet Project (I2P) network. Kovri uses both garlic encryption and garlic routing to create a private, protected overlay-network across the internet. This overlay-network provides users with the ability to effectively hide their geographical location and internet IP address. The good news is Kovri is under heavy development and will be available soon. Unlike other coins' false privacy claims, Kovri is a game changer as it will further elevate Monero as the king of privacy. Mobile Wallets There is already a working Android Wallet called Monerujo available in the Google Play Store. X Wallet is an IOS mobile wallet. One of the X Wallet developers recently announced they are very, very close to being listed in the Apple App Store, however are having some issues with getting it approved. The official Monero IOS and Android wallets, along with the MyMonero IOS and Android wallets, are also almost ready to be released, and can be expected very soon. Hardware Wallets Hardware wallets are currently being developed and nearing completion. Because Monero is based on the CryptoNote protocol, it means it requires unique development in order to allow hardware wallet integration. The Ledger Nano S will be adding Monero support by the end of Q1 2018. There is a recent update here too. Even better, for the first time ever in cryptocurrency history, the Monero community banded together to fund the development of an exclusive Monero Hardware Wallet, and will be available in Q2 2018, costing only about $20! In addition, the CEO of Trezor has offered a 10BTC bounty to whoever can provide the software to allow Monero integration. Someone can be seen to already be working on that here. TAILS Operating System Integration Monero is in the progress of being packaged in order for it to be integrated into TAILS and ready to use upon install. TAILS is the operating system popularised by Edward Snowden and is commonly used by those requiring privacy such as journalists wanting to protect themselves and sources, human-right defenders organizing in repressive contexts, citizens facing national emergencies, domestic violence survivors escaping from their abusers, and consequently, darknet market users. In the meantime, for those users who wish to use TAILS with Monero, u/Electric_sheep01 has provided Sheep's Noob guide to Monero GUI in Tails 3.2, which is a step-by-step guide with screenshots explaining how to setup Monero in TAILS, and is very easy to follow. Mandatory Hardforks Unlike other coins, Monero receives a protocol upgrade every 6 months in March and September. Think of it as a Consensus Protocol Update. Monero's hard forks ensure quality development takes place, while preventing political or ideological issues from hindering progress. When a hardfork occurs, you simply download and use the new daemon version, and your existing wallet files and copy of the blockchain remain compatible. This reddit post provides more information. Dynamic fees Many cryptocurrencies have an arbitrary block size limit. Although Monero has a limit, it is adaptive based on the past 100 blocks. Similarly, fees change based on transaction volume. As more transactions are processed on the Monero network, the block size limit slowly increases and the fees slowly decrease. The opposite effect also holds true. This means that the more transactions that take place, the cheaper the fees! Tail Emission and Inflation There will be around 18.4 million Monero mined at the end of May 2022. However, tail emission will kick in after that which is 0.6 XMR, so it has no fixed limit. Gundamlancer explains that Monero's "main emission curve will issue about 18.4 million coins to be mined in approximately 8 years. (more precisely 18.132 Million coins by ca. end of May 2022) After that, a constant "tail emission" of 0.6 XMR per 2-minutes block (modified from initially equivalent 0.3 XMR per 1-minute block) will create a sub-1% perpetual inflatio starting with 0.87% yearly inflation around May 2022) to prevent the lack of incentives for miners once a currency is not mineable anymore. Monero Research Lab Monero has a group of anonymous/pseudo-anonymous university academics actively researching, developing, and publishing academic papers in order to improve Monero. See here and here. The Monero Research Lab are acquainted with other members of cryptocurrency academic community to ensure when new research or technology is uncovered, it can be reviewed and decided upon whether it would be beneficial to Monero. This ensures Monero will always remain a leading cryptocurrency. A recent end of 2017 update from a MRL researcher can be found here.
///Monero's Technology - Rising Above The Rest///
Monero Has Already Proven Itself To Be Private, Secure, Untraceable, and Trustless Monero is the only private, untraceable, trustless, secure and fungible cryptocurrency. Bitcoin and other cryptocurrencies are TRACEABLE through the use of blockchain analytics, and has lead to the prosecution of numerous individuals, such as the alleged Alphabay administrator Alexandre Cazes. In the Forfeiture Complaint which detailed the asset seizure of Alexandre Cazes, the anonymity capabilities of Monero were self-demonstrated by the following statement of the officials after the AlphaBay shutdown: "In total, from CAZES' wallets and computer agents took control of approximately $8,800,000 in Bitcoin, Ethereum, Monero and Zcash, broken down as follows: 1,605.0503851 Bitcoin, 8,309.271639 Ethereum, 3,691.98 Zcash, and an unknown amount of Monero". Privacy CANNOT BE OPTIONAL and must be at a PROTOCOL LEVEL. With Monero, privacy is mandatory, so that everyone gets the benefits of privacy without any transactions standing out as suspicious. This is the reason Darknet Market places are moving to Monero, and will never use Verge, Zcash, Dash, Pivx, Sumo, Spectre, Hush or any other coins that lack good privacy. Peter Todd (who was involved in the Zcash trusted setup ceremony) recently reiterated his concerns of optional privacy after Jeffrey Quesnelle published his recent paper stating 31.5% of Zcash transactions may be traceable, and that only ~1% of the transactions are pure privacy transactions (i.e., z -> z transactions). When the attempted private transactions stand out like a sore thumb there is no privacy, hence why privacy cannot be optional. In addition, in order for a cryptocurrency to truly be private, it must not be controlled by a centralised body, such as a company or organisation, because it opens it up to government control and restrictions. This is no joke, but Zcash is supported by DARPA and the Israeli government!. Monero provides a stark contrast compared to other supposed privacy coins, in that Monero does not have a rich list! With all other coins, you can view wallet balances on the blockexplorers. You can view Monero's non-existent rich list here to see for yourself. I will reiterate here that Monero is TRUSTLESS. You don't need to rely on anyone else to protect your privacy, or worry about others colluding to learn more about you. No one can censor your transaction or decide to intervene. Monero is immutable, unlike Zcash, in which the lead developer Zooko publicly tweeted the possibility of providing a backdoor for authorities to trace transactions. To Zcash's demise, Zooko famously tweeted:
" And by the way, I think we can successfully make Zcash too traceable for criminals like WannaCry, but still completely private & fungible. …"
Ethereum's track record of immutability is also poor. Ethereum was supposed to be an immutable blockchain ledger, however after the DAO hack this proved to not be the case. A 2016 article on Saintly Law summarised the problematic nature of Ethereum's leadership and blockchain intervention:
" Many ethereum and blockchain advocates believe that the intervention was the wrong move to make in this situation. Smart contracts are meant to be self-executing, immutable and free from disturbance by organisations and intermediaries. Yet the building block of all smart contracts, the code, is inherently imperfect. This means that the technology is vulnerable to the same malicious hackers that are targeting businesses and governments. It is also clear that the large scale intervention after the DAO hack could not and would not likely be taken in smaller transactions, as they greatly undermine the viability of the cryptocurrency and the technology."
Monero provides Fungibility and Privacy in a Cashless World As outlined on GetMonero.org, fungibility is the property of a currency whereby two units can be substituted in place of one another. Fungibility means that two units of a currency can be mutually substituted and the substituted currency is equal to another unit of the same size. For example, two $10 bills can be exchanged and they are functionally identical to any other $10 bill in circulation (although $10 bills have unique ID numbers and are therefore not completely fungible). Gold is probably a closer example of true fungibility, where any 1 oz. of gold of the same grade is worth the same as another 1 oz. of gold. Monero is fungible due to the nature of the currency which provides no way to link transactions together nor trace the history of any particular XMR. 1 XMR is functionally identical to any other 1 XMR. Fungibility is an advantage Monero has over Bitcoin and almost every other cryptocurrency, due to the privacy inherent in the Monero blockchain and the permanently traceable nature of the Bitcoin blockchain. With Bitcoin, any BTC can be tracked by anyone back to its creation coinbase transaction. Therefore, if a coin has been used for an illegal purpose in the past, this history will be contained in the blockchain in perpetuity. A great example of Bitcoin's lack of fungibility was reposted by u/ViolentlyPeaceful:
"Imagine you sell cupcakes and receive Bitcoin as payment. It turns out that someone who owned that Bitcoin before you was involved in criminal activity. Now you are worried that you have become a suspect in a criminal case, because the movement of funds to you is a matter of public record. You are also worried that certain Bitcoins that you thought you owned will be considered ‘tainted’ and that others will refuse to accept them as payment."
This lack of fungibility means that certain businesses will be obligated to avoid accepting BTC that have been previously used for purposes which are illegal, or simply run afoul of their Terms of Service. Currently some large Bitcoin companies are blocking, suspending, or closing accounts that have received Bitcoin used in online gambling or other purposes deemed unsavory by said companies. Monero has been built specifically to address the problem of traceability and non-fungibility inherent in other cryptocurrencies. By having completely private transactions Monero is truly fungible and there can be no blacklisting of certain XMR, while at the same time providing all the benefits of a secure, decentralized, permanent blockchain. The world is moving cashless. Fact. The ramifications of this are enormous as we move into a cashless world in which transactions will be tracked and there is a potential for data to be used by third parties for adverse purposes. While most new cryptocurrency investors speculate upon vaporware ICO tokens in the hope of generating wealth, Monero provides salvation for those in which financial privacy is paramount. Too often people equate Monero's features with criminal endeavors. Privacy is not a crime, and is necessary for good money. Transparency in Monero is possible OFF-CHAIN, which offers greater transparency and flexibility. For example, a Monero user may share their Private View Key with their accountant for tax purposes. Monero aims to be adopted by more than just those with nefarious use cases. For example, if you lived in an oppressive religious regime and wanted to buy a certain item, using Monero would allow you to exchange value privately and across borders if needed. Another example is that if everybody can see how much cryptocurrency you have in your wallet, then a certain service might decide to charge you more, and bad actors could even use knowledge of your wallet balance to target you for extortion purposes. For example, a Russian cryptocurrency blogger was recently beaten and robbed of $425k. This is why FUNGIBILITY IS ESSENTIAL. To summarise this in a nutshell:
"A lack of fungibility means that when sending or receiving funds, if the other person personally knows you during a transaction, or can get any sort of information on you, or if you provide a residential address for shipping etc. – you could quite potentially have them use this against you for personal gain"
Major Investors And Crypto Figureheads Are Interested Ari Paul is the co-founder and CIO of BlockTower Capital. He was previously a portfolio manager for the University of Chicago's $8 billion endowment, and a derivatives market maker and proprietary trader for Susquehanna International Group. Paul was interviewed on CNBC on the 26th of December and when asked what was his favourite coin was, he stated "One that has real fundamental value besides from Bitcoin is Monero" and said it has "very strong engineering". In addition, when he was asked if that was the one used by criminals, he replied "Everything is used by criminals including the US dollar and the Euro". Paul later supported these claims on Twitter, recommending only Bitcoin and Monero as long-term investments. There are reports that "Roger Ver, earlier known as 'Bitcoin Jesus' for his evangelical support of the Bitcoin during its early years, said his investment in Monero is 'substantial' and his biggest in any virtual currency since Bitcoin. Charlie Lee, the creator of Litecoin, has publicly stated his appreciation of Monero. In a September 2017 tweet directed to Edward Snowden explaining why Monero is superior to Zcash, Charlie Lee tweeted:
All private transactions, More tested privacy tech, No tax on miners to pay investors, No high inflation... better investment.
John McAfee, arguably cryptocurrency's most controversial character at the moment, has publicly supported Monero numerous times over the last twelve months(before he started shilling ICOs), and has even claimed it will overtake Bitcoin. Playboy instagram celebrity Dan Bilzerian is a Monero investor, with 15% of his portfolio made up of Monero. Finally, while he may not be considered a major investor or figurehead, Erik Finman, a young early Bitcoin investor and multimillionaire, recently appeared in a CNBC Crypto video interview, explaining why he isn't entirely sold on Bitcoin anymore, and expresses his interest in Monero, stating:
"Monero is a really good one. Monero is an incredible currency, it's completely private."
There is a common belief that most of the money in cryptocurrency is still chasing the quick pump and dumps, however as the market matures, more money will flow into legitimate projects such as Monero. Monero's organic growth in price is evidence smart money is aware of Monero and gradually filtering in. The Bitcoin Flaw A relatively unknown blogger named CryptoIzzy posted three poignant pieces regarding Monero and its place in the world. The Bitcoin Flaw: Monero Rising provides an intellectual comparison of Monero to other cryptocurrencies, and Valuing Cryptocurrencies: An Approach outlines methods of valuing different coins. CryptoIzzy's most recent blog published only yesterday titled Monero Valuation - Update and Refocus is a highly recommended read. It touches on why Monero is much more than just a coin for the Darknet Markets, and provides a calculated future price of Monero. CryptoIzzy also published The Power of Money: A Case for Bitcoin, which is an exploration of our monetary system, and the impact decentralised cryptocurrencies such as Bitcoin and Monero will have on the world. In the epilogue the author also provides a positive and detailed future valuation based on empirical evidence. CryptoIzzy predicts Monero to easily progress well into the four figure range. Monero Has a Relatively Small Marketcap Recently we have witnessed many newcomers to cryptocurrency neglecting to take into account coins' marketcap and circulating supply, blindly throwing money at coins under $5 with inflated marketcaps and large circulating supplies, and then believing it's possible for them to reach $100 because someone posted about it on Facebook or Reddit. Compared to other cryptocurrencies, Monero still has a low marketcap, which means there is great potential for the price to multiply. At the time of writing, according to CoinMarketCap, Monero's marketcap is only a little over $5 billion, with a circulating supply of 15.6 million Monero, at a price of $322 per coin. For this reason, I would argue that this is evidence Monero is grossly undervalued. Just a few billion dollars of new money invested in Monero can cause significant price increases. Monero's marketcap only needs to increase to ~$16 billion and the price will triple to over $1000. If Monero's marketcap simply reached ~$35 billion (just over half of Ripple's $55 billion marketcap), Monero's price will increase 600% to over $2000 per coin. Another way of looking at this is Monero's marketcap only requires ~$30 billion of new investor money to see the price per Monero reach $2000, while for Ethereum to reach $2000, Ethereum's marketcap requires a whopping ~$100 billion of new investor money. Technical Analysis There are numerous Monero technical analysts, however none more eerily on point than the crowd-pleasing Ero23. Ero23's charts and analysis can be found on Trading View. Ero23 gained notoriety for his long-term Bitcoin bull chart published in February, which is still in play today. Head over to his Trading View page to see his chart: Monero's dwindling supply. $10k in 2019 scenario, in which Ero23 predicts Monero to reach $10,000 in 2019. There is also this chart which appears to be freakishly accurate and is tracking along perfectly today. Coinbase Rumours Over the past 12 months there have been ongoing rumours that Monero will be one of the next cryptocurrencies to be added to Coinbase. In January 2017, Monero Core team member Riccardo 'Fluffypony' Spagni presented a talk at Coinbase HQ. In addition, in November 2017 GDAX announced the GDAX Digit Asset Framework outlining specific parameters cryptocurrencies must meet in order to be added to the exchange. There is speculation that when Monero has numerous mobile and hardware wallets available, and multisig is working, then it will be added. This would enable public accessibility to Monero to increase dramatically as Coinbase had in excess of 13 million users as of December, and is only going to grow as demand for cryptocurrencies increases. Many users argue that due to KYC/AML regulations, Coinbase will never be able to add Monero, however the Kraken exchange already operates in the US and has XMfiat pairs, so this is unlikely to be the reason Coinbase is yet to implement XMfiat trading. Monero Is Not an ICO Scam It is likely most of the ICOs which newcomers invest in, hoping to get rich quick, won't even be in the Top 100 cryptocurrencies next year. A large portion are most likely to be pumps and dumps, and we have already seen numerous instances of ICO exit scams. Once an ICO raises millions of dollars, the developers or CEO of the company have little incentive to bother rolling out their product or service when they can just cash out and leave. The majority of people who create a company to provide a service or product, do so in order to generate wealth. Unless these developers and CEOs are committed and believed in their product or service, it's likely that the funds raised during the ICO will far exceed any revenue generated from real world use cases. Monero is a Working Currency, Today Monero is a working currency, here today. The majority of so called cryptocurrencies that exist today are not true currencies, and do not aim to be. They are a token of exchange. They are like a share in a start-up company hoping to use blockchain technology to succeed in business. A crypto-assest is a more accurate name for coins such as Ethereum, Neo, Cardano, Vechain, etc. Monero isn't just a vaporware ICO token that promises to provide a blockchain service in the future. It is not a platform for apps. It is not a pump and dump coin. Monero is the only coin with all the necessary properties to be called true money. Monero is private internet money. Some even describe Monero as an online Swiss Bank Account or Bitcoin 2.0, and it is here to continue on from Bitcoin's legacy. Monero is alleviating the public from the grips of banks, and protests the monetary system forced upon us. Monero only achieved this because it is the heart and soul, and blood, sweat, and tears of the contributors to this project. Monero supporters are passionate, and Monero has gotten to where it is today thanks to its contributors and users.
///Key Issues for Monero to Overcome///
Scalability While Bulletproofs are soon to be implemented in order to improve Monero's transaction sizes and fees, scalability is an issue for Monero that is continuously being assessed by Monero's researchers and developers to find the most appropriate solution. Ricardo 'Fluffypony' Spagni recently appeared on CNBC's Crypto Trader, and when asked whether Monero is scalable as it stands today, Spagni stated that presently, Monero's on-chain scaling is horrible and transactions are larger than Bitcoin's (because of Monero's privacy features), so side-chain scaling may be more efficient. Spagni elaborated that the Monero team is, and will always be, looking for solutions to an array of different on-chain and off-chain scaling options, such as developing a Mimblewimble side-chain, exploring the possibility of Lightning Network so atomic swaps can be performed, and Tumblebit. In a post on the Monero subreddit from roughly a month ago, monero moderator u/dEBRUYNE_1 supports Spagni's statements. dEBRUYNE_1 clarifies the issue of scalability:
"In Bitcoin, the main chain is constrained and fees are ludicrous. This results in users being pushed to second layer stuff (e.g. sidechains, lightning network). Users do not have optionality in Bitcoin. In Monero, the goal is to make the main-chain accessible to everyone by keeping fees reasonable. We want users to have optionality, i.e., let them choose whether they'd like to use the main chain or second layer stuff. We don't want to take that optionality away from them."
"Monero has all the mechanisms it needs to find the balance between transaction load, and offsetting the costs of miner infrastructure/profits, while making sure the network is useful for users. But like the interviewer said, the question is directed at "right now", and Fluffys right to a certain extent, Monero's transactions are huge, and compromises in blockchain security will help facilitate less burdensome transactional activity in the future. But to compare Monero to Bitcoin's transaction sizes is somewhat silly as Bitcoin is nowhere near as useful as monero, and utility will facilitate infrastructure building that may eventually utterly dwarf Bitcoin. And to equate scaling based on a node being run on a desktop being the only option for what classifies as "scalable" is also an incredibly narrow interpretation of the network being able to scale, or not. Given the extremely narrow definition of scaling people love to (incorrectly) use, I consider that a pretty crap question to put to Fluffy in the first place, but... ¯_(ツ)_/¯"
u/xmrusher also contributed to the discussion, comparing Bitcoin to Monero using this analogous description:
"While John is much heavier than Henry, he's still able to run faster, because, unlike Henry, he didn't chop off his own legs just so the local wheelchair manufacturer can make money. While Morono has much larger transactions then Bitcoin, it still scales better, because, unlike Bitcoin, it hasn't limited itself to a cripplingly tiny blocksize just to allow Blockstream to make money."
Setting up a wallet can still be time consuming It's time consuming and can be somewhat difficult for new cryptocurrency users to set up their own wallet using the GUI wallet or the Command Line Wallet. In order to strengthen and further decentralize the Monero network, users are encouraged to run a full node for their wallet, however this can be an issue because it can take up to 24-48 hours for some users depending on their hard-drive and internet speeds. To mitigate this issue, users can run a remote node, meaning they can remotely connect their wallet to another node in order to perform transactions, and in the meantime continue to sync the daemon so in the future they can then use their own node. For users that do run into wallet setup issues, or any other problems for that matter, there is an extremely helpful troubleshooting thread on the Monero subreddit which can be found here. And not only that, unlike some other cryptocurrency subreddits, if you ask a question, there is always a friendly community member who will happily assist you. Monero.how is a fantastic resource too! Despite still being difficult to use, the user-base and price may increase dramatically once it is easier to use. In addition, others believe that when hardware wallets are available more users will shift to Monero.
I actually still feel a little shameful for promoting Monero here, but feel a sense of duty to do so. Monero is transitioning into an unstoppable altruistic beast. This year offers the implementation of many great developments, accompanied by the likelihood of a dramatic increase in price. I request you discuss this post, point out any errors I have made, or any information I may have neglected to include. Also, if you believe in the Monero project, I encourage you to join your local Facebook or Reddit cryptocurrency group and spread the word of Monero. You could even link this post there to bring awareness to new cryptocurrency users and investors. I will leave you with an old on-going joke within the Monero community - Don't buy Monero - unless you have a use case for it of course :-) Just think to yourself though - Do I have a use case for Monero in our unpredictable Huxleyan society? Hint: The answer is ? Edit: Added in the Tail Emission section, and noted Dan Bilzerian as a Monero investor. Also added information regarding the XMR.TO payment service. Added info about hardfork
A reminder of who Craig Wright is and the benefits to BCH now he has gone.
This needs to be repeated every so often on this subreddit so new people can understand the history of the fork of BCH into BCH and BSV From Jonald Fyookball's article https://medium.com/@jonaldfyookball/bitcoin-cash-is-finally-free-of-faketoshi-great-days-lie-ahead-bb0c833e4c5d Craig S. Wright (CSW) leaving the Bitcoin Cash community is a wonderful thing. This self-described “tyrant” has been expunged, and now we can get back to our mission of bringing peer-to-peer electronic cash to the world. The markets will rebound when they see the chaos is over, but regardless of the price, we will keep building. Nothing will stop the sound money movement. Calling Out Bad Behavior As Rick Falkvinge recently explained, there is a difference between small-minded gossiping about personalities and legitimately calling out bad behavior. CSW’s bad behavior must be called out, because he has done tremendous damage to Bitcoin Cash (and possibly even the entire cryptocurrency sector). The brief history is that he gained his reputation by claiming to be Bitcoin’s creator (Satoshi Nakamoto). He said he would provide “extraordinary proof” but he has never done so. Supposedly, he did some “private signings” to a few people, and this allowed him to gain influence in the BCH community. The destruction he has been causing was not widely recognized until after a huge mess had been made. Thanks to u/Contrarian__ for the following compliation of CSW’s misgivings: Some background on Craig’s claim of being Satoshi, for the uninitiated:
He faked blog posts He faked PGP keys He faked contracts and emails He faked threats He faked a public key signing He has a well-documented history of fabricating things bitcoin and non-bitcoin related He faked a bitcoin trust to get free money from the Australian government but was caught and fined over a million dollars.
And specifically concerning his claim to be Satoshi:
He has provided no independently verifiable evidence He is not technically competent in the subject matter His writing style is nothing like Satoshi’s He called bitcoin “Bit Coin” in 2011 when Satoshi never used a space He actively bought and traded coins from Mt. Gox in 2013 and 2014 He was paid millions for ‘coming out’ as Satoshi as part of the deal to sell his patents to nTrust — for those who claim he was ‘outed’ or had no motive
Caught Red Handed Plagiarizing No respectable academic, scientist, or professional needs to stoop so low as to steal and take credit for the work of others — least of all Satoshi. Yet, CSW has already been caught at least 3 times plagiarizing.
His paper on selfish mining has full sections copied almost verbatim from a paper written by Liu & Wang. His “Beyond Godel” paper which purports to claim that Bitcoin script is turing complete, is heavily plagiarized. A paper on block propagation was blatantly and intentionally plagiarized.
Can’t Even Steal Code Correctly CSW was also caught attempting to plagiarize a “hello world” program (the simplest of all computer programs). He apparently does not understand base58 or how Bitcoin address checksums work (both of these are common knowledge to experienced Bitcoiners), and has made other embarrasing errors. So How Did Such an Obvious Fraud Gain So Much Power and Influence? There are no easy answers here. It seems that as humans, we are very susceptible to manipulation and misinformation. The greatest weapon against sinister forces is a well-educated populace. This is something that can only improve over the long run. The “Satoshi factor” is a powerful one and appeals to the glamorization of a mythical figure. Even people such as myself, who are technically astute, gave CSW all benefit of the doubt until the evidence staring us in the face could no longer be denied. The seduction of the BCH community was also facilitated by CSW becoming a strong advocate for the on-chain/big-block scaling movement at a time when the community was dying to hear it. This message, delivered with a brazen, in-your-face style, was a sharp contrast to anything seen before. In addition, CSW was able to find obscure topics (“2pda”), network topology, etc, that seemed to establish him as an expert with esoteric knowledge above and beyond anyone else. Basically, he was using technobabble, but it wasn’t immediately obvious except to very technical people… who were then attacked and discredited. Eventually, as more and more of the community began to realize his technical claims were bogus, CSW banned those people from his twitter feed and slack channel, leaving only a group of untechnical “believers”, which the larger BCH community referred to as “the church” AKA the Cult-of-Craig. Finally, if some believed that CSW possesed Satoshis’s stash of 1M BTC, then they may have been gnawing to get a piece of it. But it may turn out that these are the coins that never were. Broken Promises If this article so far seems like an “attack piece” on CSW, remember it is important to get all the facts out in the open. We’ll get to the silver lining and bright future in a moment… but let’s continue here to “get it all out”. One of the biggest ways that CSW has damaged the community is to make an endless series of broken promises. This caused others to wait, to waste time on his unproven ideas and solutions, and to postpone or drop their own ideas and initiatives.
He said he was building a mining pool to “stop SegWit” He said he was bringing big companies to use the BCH chain He said that he was providing a fungibility solution based on blind threshold signatures He said he was providing novel technology based on oblivious transfers He said he was providing a method where people could do atomic swaps without using timelocks He said he was going to show everyone how we can do bilinear pairings using secp256k1 He said he was going to release source code for nakasendo He said he was releasing some information that would “kill the lightning network” He said he was going to show everyone how the selfish mining theory is wrong He said he was going to show everyone how we can tokenize everything in the universe squared He said a few times “big things are coming in 2 months”
How CSW Has Damaged the BCH Community In addition to the broken promises, the BCH community was wounded due to:
The division of the community (with classic divide and conquer tactics) Loss of focus. Huge amounts of drama and distraction from building and adoption Investor confidence has been shaken due to uncertainty and chaos. BCH is a laughing stock to outsiders due to CSW’s antics Gemini deployment of BCH and other rollouts paused Loss of developer talent due to toxic and abrasive personality Various patent and legal threats
The Hash War Event and Split into BitcoinSV Every 6 months, BCH has a scheduled network upgrade. This is technically a “hard fork” but a non-contentious fork does not result in a split of the chain — it is simply new network rules being activated. Bitcoin Cash has multiple independent developer groups including Bitcoin ABC, Bitcoin Unlimited, Bitcoin XT, Bitprim, BCHD, bcash, parity, Flowee, and others. The nChain group, led by CSW, introduced an alternate set of changes a week before the agreed cut-off date, intentionally causing a huge controversey. These changes were incompatible with the changes being discussed between the other groups. nChain objected to the changes being proposed (cannonical transaction ordering) despite specifically agreeing to it almost a year earlier. The last minute objections were in my opinion, an attempt at sabotage. An emergency meeting was held in Bangkok to attempt to resolve the differences between the nChain group and the rest of the community. Not only did CSW refuse to listen to the other presentations, he walked out of the meeting after his own speech had been given. The other nChain people refused to discuss the technical issues. After this, nChain built their own software (“BitcoinSV”) to attempt to compete for the Bitcoin Cash network. But rather than split off to follow their own set of rules, they threatened to attack Bitcoin Cash. Their attitude was “you follow our rules or we burn it all down”. The CSW sycophants adopted a strange interpretation of the Bitcoin whitepaper and proselytized the idea that if nChain could “out hash” everyone else, the market should be obliged to follow them. This faulty thinking was eloquently debunked by u/CatatonicAdenosine. As it turns out, nChain was unable in any case to win at their own game. But Here’s the Obviously Good News… CSW is gone. It’s over. He can do whatever he wants on the BitcoinSV chain. He will never be allowed to influence Bitcoin Cash again. And all the negative things and negative people that were a consequence of his involvement in Bitcoin Cash are gone with him. As a community, we will redouble our efforts and get back to our mission of peer-to-peer electronic cash. We will learn to work together better than ever, and we will learn to detect and punish bad behavior sooner. The attempted attacks with hashpower also sparked innovation and a focus on the problem of how to stop such attacks in the future. This is only making Bitcoin Cash (BCH) and the entire class of Proof-of-Work coins stronger. Nothing will stop us. The reason why millions of dollars were spent to attack and also to defend Bitcoin Cash is because it’s something truly worth fighting over. It’s sound money. It’s permissionless. It’s what Satoshi Nakamoto wrote about in 2008. It’s Bitcoin, a Peer-to-Peer Electronic Cash System.
Go to the profile of Jonald Fyookball Jonald Fyookball More from Jonald Fyookball Jimmy Song Tries to Claim Bitcoin Cash is “Fiat Money”… Seriously? Go to the profile of Jonald Fyookball Jonald Fyookball Related reads 600 Microseconds Go to the profile of Awemany Awemany Related reads The scams in Crypto Go to the profile of Craig Wright (Bitcoin SV is the original Bitcoin.) Craig Wright (Bitcoin SV is the original Bitcoin.) Responses
Since blockchain’s inception, scholars and economists have rigorously studied and written thousands of academic papers covering the subject. In 2019, there were more than 13,700 academic papers and Google Scholar articles published that mention the Bitcoin protocol. Also Read: Someone Redeemed a 100 BTC Casascius Bar Worth Over $700K A Texas academic created a stir last year by alleging that Bitcoin’s astronomical surge in 2017 was probably triggered by manipulation. He’s now doubling down with a striking new claim: a The Bitcoin has emerged as a fascinating phenomenon in the Financial markets. Without any central authority issuing the currency, the Bitcoin has been associated with controversy ever since its popularity, accompanied by increased public interest, reached high levels. Here, we contribute to the discussion by examining the potential drivers of Bitcoin prices, ranging from fundamental sources to The academic literature on price manipulations of stocks includes Aggarwal and Wu (2006); they examined U.S. Securities and Exchange Commission litigation against market manipulators in OTC markets. They find small, illiquid stocks are subject to manipulation and that stock prices, volume, and volatility increase during the alleged manipulation Susan Athey Ivo Parashkevov Vishnu Sarukkai Jing Xia August, 2016 Working Paper No. 17-033 Bitcoin Pricing, Adoption, and Usage: Theory and Evidence
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