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Op-Ed

EOS: The Tomorrow Blockchain

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Bitcoin is making a comeback – $11,400 is a good number. However, altcoins are not feeling the rally whatsoever. That being said, I am confident that a strong BTC adds extra positivity to the overall crypto market. When we saw BTC rally in December, we saw the flood into the alts as well, so new investors could take advantage of the next coin. Because of how rapidly this has all evolved, there will be far more access to trading than there was in last year. Key phrase is will be. There is wide scale crack down on ICOs and exchanges, and it just looks like there is a lot of short term buying controlling the market. That is not stuff I want to trade into.

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If I had new money to invest, I would wait until Ethereum is above $1,000. Confidence in Ethereum through price is confidence in DAPPs and smart contracts, and that is all I believe in. I don’t want to decipher technology differences between currencies. I want to see actual commerce taking place on the respective networks. Ethereum’s commerce community led me to one of it’s children, EOS. This is a special, special project. It has a $9 figure partnership with Galaxy Capital, run by Former Equity Hedge Fund Manager Mike Novogratz. Their ERC-20 ICO record of over $1 billion is mind-boggling. There clearly is something more robust about EOS than existing currencies.

Background

EOS is the project of a blockchain advocacy company called Block.one, which is headed by CTO Dan Larimer, who worked on projects such a Bitshares and Steem. The purpose of EOS coin was to crowd fund EOS.io, which is a software toolkit that regular people can use to make DAPPs and smart contracts in an easily consumable web-based format. Because blockchain is still very new, EOS’ software would be able to “functionize” blockchain like Windows did with the computer. It provides an interface and a simple way to take advantage of the technology.

I hate to mention Crypto Kitties, but Ethereum has crashed due to upticks in volume on their DAPPs. EOS.io can support large amounts of data transfer through parallel chaining, and is designed to look like a website interface. With many coins, society is going to have to move forward before their adoption. XRP is an excellent case. We see XCurrent (no XRP use) gaining traction, but XRapid (XRP use) is still lagging. It will take time to move the largest institutions in the world toward cryptocurrency solutions. This software application already has a very strong GitHub and development community, and that is their target market; not centuries-old institutions.

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Team/Following

Dan Larimer-:The crypto community really likes this guy. Dan is the CTO of Block.one; he has expertise across many different blockchain projects, with all of them promoting decentralization. Steem, for example, is a content creation site that is stored on computers around the world through blockchain, rather than in a single server. His belief is that the decentralized nature of blockchain does not give power or wealth to any single party, as humanity has been vulnerable to fraud, greed,  and bias if power is given to individuals. Steem will never have an issue with censorship of authors, or a parent company wanting to take a share of their success on the network. The EOS.IO project made that structure into a pre-packed software product.

Notable Technology

The blockchain they are developing is not going to be related to their token on Ethereum. Dan Larimer himself said he will have nothing to do with Ethereum after June, when the software system is completed.

Mechanism Freeze 

This is a direct solution to the DAO issue with Ethereum. This allows the community to “freeze”, and fix issues, without disrupting any of the other running applications. There will no longer be a need for forking, which disrupts the entire community, as you saw with Ethereum/Ethereum Classic. This is important to me after all the drama we are saw with ZCL, and the impending Monero fork. Society won’t accept the answer of “Oh, we need to hard fork.” when they adopt blockchain. They will see the red on the screen, and sell. Freezing is a good and palatable solution to both developers and users.

Parrallel Chains

Running different chains in parallel, EOS’ beta is currently supporting 10,000-100,000 transactions per second, with 1 million in sight as more parallel chains are run. In other words, this can support large commercial smart contracts and decentralized applications. These applications can be web-based in manner, and there are no transactional fees. This allows developers to work within EOS without having to pay to contribute (Ethereum’s GAS is an example of payment for contribution). Incentives would be far higher on EOS than Ethereum – once the software launches, of course.

Interface

The application allows developers to create an environment exactly like a website, so that users will not even know they are using EOS.io blockchain software. The reason I think this is different than Ethereum is because of the software package. Just like Windows Office, the toolkit was designed for mass adoption and customization. That’s a better offering than Ethereum, which is offering a shaky transactional infrastructure and making you pay for GAS to run your business. Hell, there are two VCs below who will pay you to open up on EOS!

Partnerships

Galaxy Digital

This is a firm for cryptocurrencies. One of the most notable investments came recently, with Novogratz investing $325 million into a partnership with Block.one to provide a pool of funds to entice developers to create projects on EOS.io. This is an uncommon investment, as this fund will act as a perpetual incubator for new businesses on EOS exclusively.

Novogratz has a created his way to not miss any of the new developments within blockchain, and partner with a software he is confident in. That is a ton of money to sink into one non-proven project. He has clearly seen the value of it’s scalable and user-friendly applications, and is making his bet on the future. Note: He didn’t make this investment with Ethereum.

Tomorrow Blockchain 

This was the first VC to set up the structure with EOS to exclusively invest in projects developed off of EOS.io. This was a $50 million investment into the network, yet again, with no proven working product. By the looks of these two partnerships, there are some big players getting ready for large inflows of capital into EOS’ network.

Ecosystem

This is still a new project, with beta versions being launched before the full fledged release in June. The communities on Github and Telegram are some of the largest in cryptocurrency. The optimism is rooted in how the coin works. You control as much of the network operational bandwidth as proportional share of EOS tokens you have. This is enough of incentive for me as a coin holder. As the need for development power on EOS grows, the value of the coin will go up. There are buyers and sellers in this ecosystem.

Conclusion

I like it EOS, a lot. I didn’t expect to like it as much as I did, but this makes sense to me. EOS made sure that the token had value, as your voting and development power on the network is decided by how much you own. You don’t have to spend anything to be part of the community and contribute. There are also large investment companies that have staked their reputations on the strength of this company’s software offering to developers.

The biggest takeaway is that this coin is a developer’s coin. It wants to siphon the development power away from other networks through their offering. Not making developers pay to run their applications is a gigantic upper hand. I don’t develop, but I wouldn’t be interested in working on something that is making me pay tolls. This industry is so new that developer communities can shift toward what will reward them the most for their work. I would say that this offering is extremely competitive. The software is scaleable, no transaction fees, and no payment for working on it. I am looking forward to June.

 

This is not a recommendation to buy or sell cryptocurrencies. EOS does not have a working product, therefore this investment is impossible to quantify in terms of risk. Do your own research.

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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4.4 stars on average, based on 27 rated postsMythological God of Lightning. Cryptocurrency/Blockchain writer, evangelist, and friend. May the odds be ever in our favor.




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Market Overview

Comparing Nasdaq and Bitcoin: What Lessons Can We Learn?

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Bubbles

Over the past few months, lots of people have talked about the similarities between the .com bubble in the early 2000s and the bitcoin market today. It seems that the further down the bitcoin market goes; the more people are using this analogue to help them stay in the game for the long-run.

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One of the influential people in the crypto space who often refers to this comparison is Teeka Tiwari at Palm Beach Research Group. While he usually compares the Nasdaq during the late 1990s with the total cryptocurrency market cap, we are here going to compare the Nasdaq during that same period with the market for bitcoin specifically.

Nasdaq vs Bitcoin

In the image above, the top chart is a weekly chart of bitcoin, while the bottom chart is a monthly chart of the Nasdaq 100 Index from 1989 to 2004.

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As we all know, the crypto market tends to behave like the stock market on steroids. Moves are larger, and trends change faster in crypto compared to in stocks. It therefore makes more sense to compare these two charts using different timeframes, which is why I have chosen the monthly chart for Nasdaq while bitcoin is represented with a weekly chart.

There are a few interesting things to take note of regarding this comparison:

The Nasdaq found support following the crash in 2000 and 2001, and has later gained more than 600%. The Nasdaq has, in other words, returned more than three times as much for investors than the broader S&P500 index has done.

One explanation for why all financial bubbles have so much in common is that the one thing that causes them – human fear and greed – never changes.

What was different during the dot-com bubble back in the early 2000s was that communication was slow and ineffective compared to the high-speed Internet connections we have today on our phones and laptops. This is one of the reasons why it took the Nasdaq a few years to rise 1,700%, while bitcoin managed to achieve the same return in just a few months.

Similarly, it took the Nasdaq 30 months to fall 78%, while bitcoin lost 70% in just one and a half month.

Another thing both markets have had in common is that when they were down 70% from the top, many people completely lost faith in the future of these markets.

It has been pointed out by observers that even the arguments these people used against investing in the said markets were largely the same: No underlying value, too much volatility, too much regulations/lack of regulations/bad regulations, lack of social responsibility from the market actors, etc.

In hindsight, it has become clear that only the investors who had the mental clarity to ignore all this noise during the early 2000s were able to catch the 600% move that followed in the Nasdaq.

Diversification saved investors

When we are talking about ignoring noise and riding out the storm, let’s not forget that many of the companies that made up the Nasdaq in the early 2000s did eventually go out of business. Betting everything on a single company, in many cases, ended up being a catastrophe for the investor, despite the fact that the sector as a whole did incredibly well. This really made the benefit of diversification clear to everyone.

We can assume that the same is true for the cryptocurrencies of today. Some will emerge and become hugely successful, while others will slowly but steadily decrease in value and become irrelevant. Which ones they are is extremely difficult to tell at this early stage, but the lesson to be learned is clear: Diversification may be the only free lunch we will ever get in the world.

Featured image from Pixabay.

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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4.3 stars on average, based on 33 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Op-Ed

Is Manipulation Behind Bitcoin Cash’s Absurd Rally?

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Although you wouldn’t know it by today’s prices, bitcoin cash (BCH) has topped the crypto market leader board this month. The digital currency more than doubled over the span of 18 days, and in doing so far outpaced the broader market. But a closer examination of the value drivers suggest manipulation could be partly responsible for the rally.

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As a reminder, the author has no vested interest in smearing BCH as I believe it to be one of the more advantageous coins on the market today. That said, the circumstances surrounding the most recent rally are peculiar to say the least.

What’s Up with Bitcoin.com?

A Hacked user informed me earlier this week that Bitcoin.com has been using the “BCH” ticker next to the word “bitcoin”. Normally, the ticker “BTC” is reserved for bitcoin, which is the original blockchain we all know about. Instead, the website quotes “BTC” next to the term “bitcoin core”.

In other words, BCH is quoted next to bitcoin and BTC is referred to as bitcoin core. See here for yourself:

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For most readers of Hacked, the distinction is easily discernible, but for new traders the difference isn’t easily gauged.

The first question I have is, how many people bought bitcoin (BCH) thinking they were receiving actual bitcoin (BTC)?

Bitcoin.com describes itself as the “premier source for everything bitcoin.” Although the website doesn’t appear to offer a full-fledged trading platform, users can purchase bitcoin and bitcoin cash using the following link.

It is unclear how long the website has been referring to BCH as bitcoin. For those of us who’ve been following the market for some time, the way BTC and BCH are quoted is certainly strange.

Antpool

A large cryptocurrency mining group by the name of Antpool has also been accused of pumping BCH in recent weeks. The pool announced about six days ago that it is responsible for confirming more than 8% of all bitcoin cash transactions. In addition to confirming those, Antpool is also said to be burning BCH on a daily basis in order to reduce supply and boost prices.

Of course, crypto pumps do not require such elaborate setups to achieve their goals. Pump-and-dumps can be orchestrated rather easily through a chat group on social media. But Antpool does have a large and privileged position in the BCH ecosystem, which has raised suspicion over its recent actions.

Bitcoin Cash is Overbought, According to Tom Lee

Fundstrat’s Tom Lee recently weighed in on the bitcoin cash phenomenon, concluding that the cryptocurrency was overbought. In his view, investors should stick with bitcoin if they had a choice between Core and Cash.

In a segment on CNBC’s Fast Money, Lee said:

“I prefer not to pick winners and losers when we’re looking at cryptocurrencies like bitcoin/bitcoin Cash… Both have merits but if I was putting new money to work today… I would be a lot more interested in buying a lagger that could attract inflows rather than something that’s potentially overbought.”

Bitcoin cash added around $1,000 to its value between Apr. 6 and 23, with prices peaking near $1,600. The cryptocurrency corrected sharply lower on Wednesday and was still declining as of Thursday’s early-morning session. At the time of writing, BCH/USD was down 4.6% at $1,268.

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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4.5 stars on average, based on 453 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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Decentralization

JP Morgan’s Surprise Cryptocurrency Fees are a Reminder of Why Decentralization Is Sorely Needed

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JP Morgan Chase & Co has been hit with a class-action lawsuit by cryptocurrency traders over allegations of unannounced fees and higher interest rates on purchases of digital currencies. Though the allegations have not been proven, extra fees are a tactic routinely employed by traditional banking institutions. In the case of JP Morgan, this has karma written all over it given the way its chief executive has ridiculed digital assets by associating them with fraud.

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Class Action Lawsuit

Traders from across the United States are seeking statutory damages of $1 million for unannounced interest charges and fees on cryptocurrency transactions between January and February of this year. The named plaintiff in the lawsuit is Brady Tucker, an Idaho resident who paid a total of $163.91 in fees and surprise interest charges over a six-day stretch.

According to information obtained by Reuters, the lawsuit accuses the bank of violating the U.S. Truth in Lending Act, a piece of legislation that requires credit card issuers to inform customers in writing of any notable change in fees.

The lawsuit asserts that Tucker tried to resolve the dispute by calling Chase’s customer support service directly. His request was turned down, prompting him to seek legal help. According to Bloomberg, the case in question is Tucker v. Chase Bank USA NA, 18-cv-3155, U.S. District Court, Southern District of New York (Manhattan).

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The Growing Case for Decentralization

Depending on who you ask, the allegations against JP Morgan are akin to cryptocurrency fraud not unlike the kind Jamie Dimon talked about while ridiculing bitcoin. But the irony in Dimon’s comments extend far beyond Chase’s latest dealings.

As the actions of Chase bank and other financial institutions have clearly demonstrated over the years, those who control the size and growth rate of fiat money cannot be trusted to do the right thing. As Nassim Taleb argues in The Black Swan, banks have a tendency of losing as much money as they make in the long run due to shady business practices and high-risk ventures. Decisions like these are easy when you are Too Big to Fail.

Decentralization, like the kind advocated by blockchain startups and cryptocurrencies, allows users to trade directly with each other without having to go through a (predatory) middleman. Decentralized systems not only help participants avoid unnecessary fees, red tape and other forms of unwanted intervention, they are virtually impossible to shut down. In this vein, decentralized currencies give people a fighting chance in their battle against never-ending inflation. As we’ve argued before, this is not only a prudent fight, but a noble one as well.

Cryptocurrencies that rely on decentralization offer society a unique value proposition unlike anything we’ve seen in recent history. What’s more, their adoption is not contingent upon us leaving the realm of traditional finance – at least, not yet. That’s because cryptocurrency started off as an obscure and esoteric asset class but has since become a value store for investors. Tomorrow, it will become a viable medium of exchange accepted worldwide.

That said, we are still in the very early days of the crypto revolution and it may be a while still before we can conclusively prove people like Dimon wrong. But crypto backers and investors should take comfort in knowing that big banks rarely lead in disruption these days. They have the resources to play catch-up, which they are clearly doing with blockchain.

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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4.5 stars on average, based on 453 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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