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Can Stellar Become the Next Major ICO Platform?

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If you’ve been paying attention to ICOs, you’ve probably noticed a consistent trend: the vast majority of token raises are built on Ethereum. The protocol has quickly emerged as one of the blockchain community’s undisputed leaders. And just like that, of cryptocurrencies were born.

Although there’s little evidence to suggest that startups are thinking about abandoning the ether platform, a new kid on the block is proving just as worthy of consideration.

Stellar Payment Network

Stellar actually isn’t all that new. It was founded in 2014 as an open platform for developing financial products. Though largely flying under the radar amid the latest crypto boom, Stellar has earned a market cap of nearly $3 billion. That’s enough for 11th spot on the CoinMarketCap chart of leading cryptocurrencies.

Stellar made headlines last month after Smartlands became the first company to launch a token on the payment platform. Smartlands, which markets itself as the platform for agriculture, touted Stellar’s superior transaction protocol and massive reach. Proceeds from the ICO will fund the development of the company’s Asset Based Tokens, which are offered on the Smartlands platform.

With Smartlands latching on to Stellar, market participants are curious to see whether more ICOs will follow suite. As it turns out, Stellar has a number of unique advantages that could make it the ideal platform for future token raises.

Stellar for ICOs: The Rationale

ICOs have raised $3.5 billion and counting this year. Although most token raises continue to be delivered through Ethereum, there is a strong case to be made for Stellar.

1. Cheaper and faster

One of Stellar’s most defining attributes is its ability to avoid the gas problem facing Ethereum and other cryptocurrencies. As ether prices march toward $500, transactions are becoming more expensive. Stellar does not need gas to execute programs and has a miniscule transaction fee (i.e., fraction of a penny). The Stellar network is also able to process 1,000 transactions per second, making it ideal for token raises with a strong transaction component.

2. Customizable

As we’ve mentioned before, there’s no shortage of industries represented in the ICO market. Projects are diverse in scale and nature, making customization an essential feature of the underlying infrastructure. Stellar allows token issuers to customize their accounts, payments, tokens and special offers.

3. Decentralized Exchange

As the number of cryptocurrencies continues to rise, a platform that enables efficient trading will be viewed more favorably by the investing public. As Lindsay Lin describes on the Stellar blog, any token created on the platform can be bought and sold via Stellar’s decentralized exchange. Companies that launch their ICOs on the Stellar network do not need a third-party cryptocurrency exchange to make their token available. This is an extremely attractive value proposition at a time when crypto-market liquidity is going through the roof.

4. Security Features

The Stellar system doesn’t offer the same breadth of features as Ethereum. This was done on purpose to limit risk and keep the bad actors from exploiting the program. As an added layer of security, token issuers can choose which nodes are allowed to validate their transactions. Security often comes at a cost, but Stellar has taken a reasonable approach to protecting its infrastructure.

5. The Team

Stellar is backed by one of the strongest teams in the industry, with co-founder Jed McCaleb already building two cryptocurrency companies. For those who are unfamiliar with McCaleb, he created Mt Gox, the now defunct exchange that at one point handled nearly three-quarters of global bitcoin transactions. After the Mt Gox debacle, he went on to found what would eventually become Ripple. The Stellar team currently consists of 12 employees, four board members and eight advisers. It’s advisory group is, shall we say, stellar. It includes the founders of Y Combinator, AngelList, WordPress and Apache Software. The chief scientist of White Ops is also involved in the project.

Of course, none of these attributes diminishes Ethereum’s capabilities as a superior programming platform. Its smart contract applications continue to be a major draw for prospective token raises. As the ICO Ratings page clearly shows, Ethereum remains very much in the driver’s seat.

That being said, keep your eye on the Stellar network. We wouldn’t be surprised if more ICOs are launched on this platform in 2018.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 552 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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2 Comments

2 Comments

  1. Steppa75

    December 7, 2017 at 9:31 am

    Yes certainly one I’ve been looking at closely, I thing even the recent big gains could be just the start. Maybe a good long term buy, even at current prices.

  2. JL1671

    December 9, 2017 at 12:15 pm

    You might also want to remark, that Ripple XRP offers the same thing on their ledger – with a far better team, and actively pursuing compliance with authorities. Alhough it must be said: yes, Ripple does not concentrate on it (yet). But imagine they would, being the trustworthy partner (contrary to shady McCaleb) towards our real-life regulators that enforce compliance upon us. ICO ban? “Comply through a trustworthy partner, and you’re ok after all” ? Who knows…

    In any case – whatever a future outcome on this might be, the Ripple protocol allows for just the same as well.

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Ethereum

Progress Scaling Ethereum

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In the blockchain technology world, scaling debates are pretty much the centre of everything. It is one thing to create a solution that works on a micro-level, but no one knows how things will look once it is expanded to the global level.

Many people spend time talking about the scaling of Bitcoin, but the efforts to scale Ethereum have been far more interesting. Between sharding and the switch to proof-of-stake, there have been countless solutions provided, and Vitalik Buterin seems to think his hard work is about to pay off.

Ethereum’s End Goal

Everyone knows this, but it is important to restate it: Ethereum wants to become a world computer of sorts. The end goal is to build a giant, decentralized network of computers that are both able to record transactions (using blockchain technology) and produce smart contracts (using artificial intelligence technology).

The combination of these features allows for the development of decentralized applications (DApps), which piggyback off the underlying technology and create a market for Ethereum’s token, Ether.

ERC-20 Standard

Tokens classified as ERC-20 are designed and used on the Ethereum platform, and follow a list of standards that allow for a simpler method of sharing, exchanging, and transferring tokens between users.

DApps use the ERC-20 token standard to represent shares in companies, proof of ownership, or coins of a currency. These tokens have essentially become the building block of any DApps that developers seek to develop on Ethereum. It is important not to confuse ERC-20 tokens with Ether, as Ether is what is used to compensate a user for their computing power, whereas the ERC-20 tokens are endemic to the actual DApps.

This high level of simplicity comes with a cost though. Some vulnerabilities have been found that allow attackers to gain access to a large quantity of tokens. Additionally, tokens may be destroyed by accident with the use of some smart contracts. A new standard, ERC-223, is now being developed to solve this problem.

The Best Alternative

Companies like Golem, which saw the release of its token delayed 3 years, are finding there to be some difficulties integrating with Ethereum. Most of these issues stem from current scaling problems, as was evidenced when Cryptokitties (a popular game building on top of Ethereum) created massive congestion within the system.

The technological barriers become more important once you process the fact you are dealing with other people’s money. There can be no room for error, and this is where much of the delays came from. For example, the verification of basic cryptocurrency transactions is fairly simple, but once you are verifying the results of a smart contract, the system begins to fail.

That being said, Golem’s CEO, Julian Zawistowski, still believes that Ethereum is “by far the most promising blockchain platform”. There aren’t many competitors in the space, and it seems like all the current problems will be solved, or on their way to being solved, soon.

Why Scaling Matters

The critical difference between Ethereum and Bitcoin is the fact that Ethereum acts like a company, whereas Bitcoin is a scarce commodity that is generally unmanaged and has no new offerings. As a result, this puts pressure on the Ethereum foundation to continually improve the capabilities of their platform so it is able to handle the required amount of transactions and tokens.

Not every company wants to build a whole new framework for the operation of their own protocol. The same way that WordPress has made it unnecessary for every company to learn how to code their own website on a deep level, Ethereum hopes to do this for all blockchain companies. Its ability to enable the development of DApps makes it a unique player in the space, and the fact that scaling issues are beginning to be solved (as is evidenced by ERC-20 problems being solved and projects like Golem finally being released) is a great sign for its future.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Why Investors Should Pay Attention to Golem

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Did you know most of us only use a fraction of our computers’ capacity? Thinking about it, you wouldn’t expect most of the tasks we do on a daily basis to take up much computing power. So what do you think happens to the rest of your capacity?

It sits idle, and nothing is done with it. Your computer is still on and consuming electricity and this power goes to waste. Based on this exact “problem” Golem has come up with a solution that ends up being a lot like AirBnb for your computer.

Golem has created a peer-to-peer system for sharing computing power across the network. The result is a flexible, scalable solution that aggregates idle resources and democratizes the payout to the millions of people on the network.

Golem’s Long Road to an ICO

It took 3 years, but Golem finally completed the sale of their GNT token in early April 2018. The platform is built on ETH and utilizes smart contracts to drastically bring down the cost of distributed computing. The sale was completed in under 20 minutes and raised 820,000 ETH ($340 million).

How it works is that suppliers have extra computing power and are willing to be paid GNT in exchange for their computers performing tasks for requesters.

The app is 100% secure and operates in the background, and you can also choose what fraction of your computing power to use, so there’s no worry about getting slowed down by its operation. Ideally, the only time you would notice it is when you earn some ETH for performing tasks for other users.

Golem’s Economics

The mechanics of the market are pretty simple. There is demand (requesters) and supply (providers). The supply is essential, because there are no central servers that are able to perform computations. Providers will come to the network with the goal of earning a few dollars a month in ETH, at virtually no cost to themselves.

On the demand side, you have users who buy GNT tokens in order to pay for providers to perform tasks for them. Requesters generally join the network because of its lower cost. They are able to set the maximum they will pay (their bid) and Golem distributes the tasks appropriately.

A final party to consider are the software developers who enjoy access to a distribution channel that helps them depoy and monetize new software. Golem has a store that enables this function and adds much more value to the network.

The obvious competitors to Golem are big cloud services like Amazon Web Services and Microsoft Azure. The fact is that these services are grossly overpriced because the companies have developed an oligopoly that allows them to collect high margins. This is crazy because computing power is not actually a scarce resource and this is the market inefficiency Golem aims to fix.

Golem’s Long Game

Golem is currently trading at a fraction of a dollar ($0.145) and is down from a high above $1.00. The same downturn has affected many companies in the blockchain space, and Golem has received extra flak for taking so long to release their product. At the same time, another way to look at this is as a major buying opportunity.

Most of this has to do not with ineptitude, but a complex framework (Ethereum) that isn’t perfectly designed for integration yet. However, in the long-run Golem still has huge potential. As more features are released (Clay Golem is next) and they scale to be able to help data centres, there is no limit to how far they can go. The size of the market has been proven by Amazon and Microsoft, and now it is up to Golem to see if they can get a piece of the pie.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Bitcoin

Dan Morehead Weighs In on Bitcoin’s Seventh Bear Market

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Bear markets are nothing new for bitcoin, with the latest devaluation marking the seventh such occurrence since 2009. According to Pantera Capital’s Dan Morehead, now is the ideal time to increase your position. He also had a few choice words for the traditional banking industry.

Bitcoin: Time To Buy

In a recent interview, Morehead described blockchain investments as the most “asymmetric risk-reward trade” he has ever seen. In other words, if you invest in blockchain, there’s no way you can lose everything. What’s more, many of the funds currently invested in bitcoin can increase their value 25 times.

With bitcoin hovering around $6,300, now is “actually a good time to increase your position,” Morehead said, as quoted by CCN.

“It’s highly likely to be the low point for the industry,” he said, reminding investors that the bitcoin price has been steadily increasing since 2009. “My normal view is that it’s going to return to its trend.”

Since inception, bitcoin has had only one down year (2015). In all other years, the cryptocurrency has returned at least 145%.

Morehead also responded to Warren Buffett’s claim that bitcoin is “rat poison squared.”

“It is rat poison; it’s just the banks and credit card companies are the rats.”

As Hacked recently reported, Pantera Capital has engineered returns of more than 10,000% since its inception.

Institutional Money

Despite the recent downturn, 2018 is shaping up to be the year of the crypto hedge fund. A total of 96 cryptocurrency funds have come into existence this year, according to Crypto Fund Research. This figure is expected to reach 165 in 2018 compared with 156 all of last year.

There are now 466 cryptocurrency funds around the world, with more than half coming into existence since the start of 2017. Crypto hedge funds account for more than half of the total.

The crypto market is expected to receive a huge boost from institutional capital once regulators change existing rules allowing for bitcoin exchange-traded funds (ETFs) to be listed. The launch of Bakkt – a startup company backed by Intercontinental Exchange, Microsoft and Starbucks – is also expected to streamline mainstream adoption of cryptocurrency both at the investor and consumer levels.

Leading digital currency exchanges such as Coinbase are expanding custody services to appeal to Wall Street. Crypto custody is one of the biggest developments currently underway in the industry.

However, institutional involvement in crypto may be a double-edged sword. Multiple researchers, including the San Francisco Federal Reserve, believe institutional meddling is responsible for the 2018 bear market. They cite the launch of bitcoin futures in December as the main catalyst for the selloff.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 552 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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