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Decoding Ripple

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Market Update: As of this writing, bitcoin is up to almost $10,800 with ETH at $962. Great news. What we saw this week was slow, consistent gains. It looks like most coins are gaining 3-10% daily, with not too much parabolic activity that would make me more nervous. We had a ton of tailwinds, too many to count. A White House Official said cryptocurrency regulation would not be in the immediate future, Wyoming & Colorado are trying to legislate crypto-friendly offerings/enforcements, and of course “Coinbase Merchant” was launched; which is a payment platform for businesses to begin accepting cryptocurrency payments. I couldn’t think of a better way to end the Chinese New Year.

Big players are announcing partnerships, and of course, Ripple leads the pack. A coin is only as good as their buyers, so I want to make sure that all of my readers know who those buyers could potentially be, and what they can buy. I want provide a background on Ripple & their 3 Products (Xrapid, Xcurrent, Xvia). Ripple is one of my largest holdings, so full disclosure here.

Ripple’s Market

Ripple’s products are all designed to work with businesses on sending and receiving payments instantly and securely. Their main competitor is the incumbent, the SWIFT system.

SWIFT facilitates money wire transfers, with many checks and balances along the way. Overall, it takes about 3-5 days to clear a transaction with the SWIFT system. That means if you want to send money from USA to Germany, you can either wait a long time or you can pay a high fee to get it there quicker (via Remittance company like Western Union). During your wait time, there is also security risk. Just recently, we saw hackers take SWIFT via a Russian Bank for $6M. When you don’t encrypt your transfers & information, there is always a possibility that someone is smart enough to hack in.

The SWIFT system, regardless of Ripple’s success, will phase out of existence. Their way of transferring money in the 21st century is outdated, and people should expect more out of their financial institutions than their money going through the equivalent of snail mail to get to it’s recipient.

Blockchain is a simple solution for payment processing, which is why you are getting so many people trying to enter the space altogether. There are trillions of dollars being moved back and forth each year around the world, and there are certain niches that will require different blockchain characteristics to serve them. One of them is banks & remittance companies. They need Anti-Money Laundering/Know Your Customer procedures built in, just like the SWIFT system. Ripple (and Lumens!) designed their chains/coins specifically for this purpose.

XCurrent

The product I hate to love. This is Ripple’s solution for bank cross-border transactions. Their system not only uses blockchain, but also validates the parties in the transaction and the transaction itself BEFORE it even takes place, so there is no wait time in between.

One bank wants to send money to another bank, with a “correspondent bank” (wire facilitator) in the middle. There is a message sent from the sending bank that will outline their intended transaction. Ripple will decode the message, and put it into ledger format for all 3 banks to read, compliance screen, and validate instantly (Inter-ledger Protocol). Sender, receiver, account information, and transaction details are all used to determine the fee that each bank will tack on for their services to determine total cost to sender for approval.

The next step is cryptographic hold of funds. This puts a hold on the transaction at all 3 banks, so that they can generate a cryptographic signature that will serve as evidence that funds are available and have been pledged for dispensing. In other words, the banks send each other “I’m ready” signals. Once all parties have provided their cryptographic signatures, Ripple automatically releases the transaction, which is sent and settled within seconds.

Communication and uniformity are the solutions that Ripple brings with this system. No longer should banks have inboxes and outboxes. Blockchain ledgers automatically validate participants in the transaction, and the blockchain itself can serve as the highway to transfer the funds instantly. Overall, this is expected to yield a 30% decrease in transaction costs for customers, while also providing instant settlement. No brainer.

Raiden, why do you love to hate it? This is the main side chain product culprit. You don’t need to use XRP in these scenarios, and banks aren’t. Sure, there is some trial periods, but I haven’t heard a major bank using XCurrent with XRP. This is when I wish I was a shareholder, not a coin holder. The best we can hope for is that XRP will become a base currency for banks once society has warmed up to the thought of virtual shells that encapsulate and mimic the value of fiat currency. Until then, I am not happy when I hear the word XCurrent.

XRapid

Our future hero. This is XCurrent, but with XRP being added in. Cross-Border/Currency payments are completely inefficient. In order for me to send dollars and someone to receive Rupees, Currency (USD) must be sent to a correspondent bank, and exchanged in a “Nostro-Account”, which serves as a liquidity pool of the foreign currency (INR). Then it has to be sent to the receiving bank in the foreign currency, going through the wire system. Long, expensive, and complicated. It is so troublesome, that most banks and remittance companies need to set minimums on transactions because it is so economically inefficient for smaller users.

Nostro-Accounts, what Ripple CEO Brad Garlinghouse calls “Dormant Cash” are just pools of sitting money that have to remain there in order to convert all of these cross-currency transaction requests. XRP can serve as the unified currency for all banks to transact with, and exchange into their intended currency. Ripple takes a multi-step/multi-party process, and eliminates almost of all it.

The U.S. dollar can eventually take the form of XRP, be sent anywhere in the world, and XRP will then take form of the intended foreign currency, and settle itself within the intended bank account. As coin holders, this is what everyone should be dreaming of prior to the Beta version launch in the Spring of 2018.

During my research, Ripple’s 2016 White Paper was the only source I could find to properly explain this system, and even my explanation may be lacking. This system is expected to free up massive amounts of Emerging Market liquidity through the lessening use of the “nostro-account” system, while also cutting transaction costs by up to 60%. I am trying to get my hands on more XRapid material, but this is very very new. I am going to keep you all posted on developments, as I have set up an RSS feed to give me anything related to XRapid as it comes out in the future.

Xvia

This system for is a platform for point of sale payments. There is not one piece of information on XVia. It is actually kind of scary how little information is available on any of these products. Here is my most educated guess based on the limited information. This is Ripple’s version of Coinbase Merchant. It is software that can be imbedded in E-Commerce sites that people can use XRP to pay for goods and services. Based on the level of information, XVia is not going to be used in the near future. If it is, then their customers must have more information on it than the public does.

Conclusion

This research was tougher than I expected. Ripple has provided good information on XCurrent, but the others are severely lacking. There also isn’t much interest in the Youtube community, with rocket ship memes being more important than content. As a coin investor, I am disappointed. Their main product right now is private labeling chains, which does not benefit coin holders. I want more information on XRapid and Xvia. You can go look at my Lumens article. There is enough information from Jed, IBM, and followers to fill a textbook. If Ripple wants to have products listed on their site, there better be some information for me to look at. We may not be owners, but we are investors. I think it’s time for them to start treating us that way.

 

None of what I am saying is an offering to buy or sell coins. Full disclosure, this author owns XRP. You certainly wouldn’t think it based on this article! I wish you the best of luck on the exchange. Please do follow me @raijincrypto on Twitter. I try to send out thoughts throughout the week.

 

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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Are Crypto News Sites Allowing Freedom Of Thought?

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As the interest in cryptocurrencies has exploded during the past couple years, crypto news sites have been on the rise.  These sites are quickly becoming an invaluable resource for traders who enjoy learning about new crypto projects and trade ideas.  The content distributed through these platforms is typically created by a combination of full-time staff and guest contributors/bloggers.  Many of these writers also have a lot of experience in crypto trading so the articles are extremely beneficial for readers.

One thing that readers should always keep in mind is that the content from these sites normally represents the independent thoughts of the writer.  This is important because writers/traders aren’t infallible.  They can make mistakes like all of us.  So, the best approach for readers is to try to attain a diversity of thought.  A diversity of thought means to gather as much information as possible, from a wide selection of sources.  This is absolutely necessary before reaching a conclusion on a certain topic.

But what happens when a website prevents writers from writing about specific topics?  A colleague of mine recently tried publishing an article at Coinnounce.  The writer wanted to publish an article about the buying opportunity that the Bitcoin crash was affording investors.  Normally an article is rejected for legitimate reasons such as poor grammar, plagiarism, or promotional work.  Unfortunately, Coinnounce cited that the website was bearish on Bitcoin and that they wouldn’t be publishing bullish articles.  Even more troubling is that when Bitcoin rebounded in price, Coinnounce reached out to my colleague and told him they would now be willing to publish the bullish article.

When I found out about the rejection and the reason given, I decided to browse the Coinnounce website (which I had never heard of) to find out what kinds of articles were being published.  And sure enough, the articles were nearly all bearish in some fashion.  The problem with this approach is that nobody knows where Bitcoin is going.  It’s 100% speculation.  What actually matters is the logic presented in the article that helps back up a prediction.  So, while Coinnounce is free to run its business as it sees fit, the website (or the articles published) should have a disclaimer that the information presented represents the thoughts of the website’s owners/editors.  Otherwise, readers may not have a clear understanding of what is being presented.

The point of this article is not to call out Coinnounce.  Rather, the point is to make sure readers are aware that some sites may have different motivations than others.  It’s important to read from a variety of sources to get as much information as possible.  This is true not just for cryptocurrency markets, but for everything in life.  I’m proud to write for Hacked which runs an open and honest platform.  The articles written do represent the thoughts and feelings of the writers.  So, while the editors may not always come to the same conclusions that the articles do, they will never suppress freedom of thought.

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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Op-Ed

The Underlying Assets are Getting Squeezed

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An interesting phenomenon has emerged in the last 3 or 4 months. It appears as if many of the core underlying investment assets of the economy are getting steadily killed in the markets. This is observable in FANG stocks (Facebook, Amazon, Netflix, and Google) as well as commodities like crude oil and iron ore.

Additionally, Bitcoin has continued to get hammered during this absolute beat down on the economy. Many pundits have come out and talked about how this is the “end of Bitcoin” or how this is Bitcoin finally finding its true value, but something far more important is at work here.

Deleveraging During the Credit Squeeze

For anyone who hasn’t been reading the news over the last several months, the actions of the Fed (and other central banks) have been under considerable analysis. The previous decade has seen some of the easiest money in the history of our economy. Easy money refers to the cost of borrowing. The lower the cost (interest rate), the easier the money is considered to be.

So as we start to see the credit markets change in a way that makes it a lot harder to borrow money, a credit crunch begins. This is when there is a shortage of credit (lending) and borrowers are forced to pay back parts of their loans, or at least not take out any new ones. And as a direct result, they can’t afford to maintain certain investment positions.

Their inability to maintain these positions means they need to sell off their holdings in the same way a short squeeze causes short sellers to need to buy back the security they were shorting. A credit crunch closes a lot of positions.

The economy-wide effect this is having is both predictable and scary, because we don’t know how far all these underlying assets are going to fall before they stabilize. In the mean time, there will be drastic political effects as a result. The policies of central banks have come under scrutiny in recent months thanks to comments by President Trump, and now that a tighter monetary policy is being put into play, we are going to see much lower dollar liquidity in the future.

Zooming in on Bitcoin

So with all of these assets “puking on themselves”, or deleveraging, we are seeing some interesting dynamics unfold. In Bitcoin, capitulation is occurring on both sides of the asset, which is exactly what is necessary to reverse this trend in the future.

You can see traders instinctively realize that the “dead cat bounce” that normally occurs as shorts get squeezed out in the $4k range is much more muted now. This is because many of the shorts have already closed their position. Longs are doing the same as they bought in at what they thought was the bottom, even as recent times have proven them to be mistaken.

This is going to work out as a good thing for Bitcoin in the long-term, as it could be the end of the massive downmarket it has experienced all year and a new time to shine. At the very least, it could create a good “bottom” for opportunistic buyers to hop in and average their costs down a bit.

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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Altcoins

60 Minutes Showcases Potential of DNA and Genetic Genealogy; Opportunity for Crypto Investors

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DNA Storage

Throughout the years, 60 Minutes has been responsible for reporting on some of the biggest stories in the world.  Many of the most memorable episodes have involved world leader interviews, stories on endangered animals, profiles of famous celebrities, and occasionally, segments on promising developments in business and science.  A week ago, 60 Minutes had a very interesting report on how the authorities used Genetic genealogy to solve the case of the Golden State Killer, and how the authorities plan to keep using this new field to solve more cold cases in the future.

On April 25, 2018, authorities in Sacramento announced that they had solved the notorious case of the Golden State Killer.  Authorities were able to use a promising new technique called Genetic genealogy to help identify 72-year-old former police officer, Joseph DeAngelo, as the suspected killer.

Genetic Genealogy

Genetic genealogy is a mixture of high-tech DNA analysis, high speed computer technology, and family genealogy.  The end goal is to determine the level and type of genetic relationship between individuals.

In the case of the Golden State Killer, DNA came into play because the killer had committed at least 12 murders, 50 rapes, and many home burglaries.  Investigators were able to obtain DNA from the killer at one of the reported crime scenes.  After many years of frustrating dead ends, a cold case investigator submitted the obtained DNA sample to GEDmatch.  GEDmatch is the largest public genealogy database in the world.  After uploading the sample, authorities were able to generate a handful of leads which eventually led to the front doors of Joseph DeAngelo.

In addition to the Golden State Killer case, authorities have used Genetic genealogy to make arrests in at least 11 other cold cases.  While the science appears to be sound, there is a legal question that has yet to be answered.  There is no doubt that attorneys for the accused will raise the question of privacy and whether using databases, thought to be private, should be legal.

Opportunity for Crypto Investors

While I’ve invested in equities and crypto for many years with varying degrees of success, I’ve never had the opportunity to invest at the beginning of a new frontier.  Fortunately, the opportunity has come.  Encrypgen (DNA) is a genomic blockchain network that provides customers and partners with best-in-class, next generation, blockchain security for protecting, sharing and re-marketing genomic data.  This creates a fair marketplace for a person’s DNA that can be stored private and sold (if a person wishes to do that).

Over the past few months, Encrypgen has been gaining attention in the mainstream media because of their revolutionary technology as well as the fact that their closest competition is still years away.

In August, Encrypgen released a beta version of its Gene-Chain.  The Gene-Chain allows consumers to upload their genetic profile and for researchers to purchase that genetic data.  Within the next 2 weeks, the company plans to release the full version of the Gene-Chain which will officially make them a new pioneer in the field of genomic blockchain security.

With the DNA token hovering at approximately 5 cents, the time is running out to accumulate at bargain basement prices.  I fully expect the token to achieve utility in the next several months which will cause a rocket-like explosion in the token price.  There is no looking back now, only forward, and I love what I see.

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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