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Stellar Lumens: Analysis for a HODL (or Non-HODL)

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2018 is off to a fast start for many coins, with the past couple of days being a thorn in an otherwise positive trend. Stellar Lumens was a coin that I have always been curious about. XRP was a marketing unicorn. It was perfectly palatable for the government, and it was designed to do things that were government friendly. The co-founder of XRP went on to found Stellar Lumens, a company that has a very similar system to Ripple, but a different marketing plan altogether. Let’s go into it.

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Leadership

Jed McCaleb is the brains of this company. He was also the brainchild of Mt. Gox, the exchange that was tragically hacked after his departure. If we are talking about big guys in the industry, I don’t think we are going to find many more like this guy. He’s an American success story that also builds government friendly cryptocurrencies. I am hoping this is our Rocky Balboa, because we certainly need one in 2018. I haven’t seen many people step up to the plate and talking on behalf of blockchain, so I do believe the void is certainly open for these folks to join in. Garlinghouse is already the darling of CNBC, there is room for more!

Purpose

There are three in my opinion. They are first trying to get into the micropayment space with a rapid settlement software and ledger system. They are focusing on “banking the unbanked”. The costs for using their services are low, no matter what the amount that is being transacted. Sounds like a fork in Ripple! Oh, because it is. The vision is that holding lumens could be a way for people to store their money in something that isn’t a closet anymore. There are roughly 2B “unbanked” that could be considered a target market.

Compliance-focused. These guys want the banks to be able to use them! This is the McCaleb special sauce in my opinion. He is making sure that all of his stuff is always working with the powers that be, not against them. The network is set up for banks to plug themselves in, put in a clients money, and Lumens will spit it out the other side to anyone, anywhere, in any currency. Great middleman! Ripple is the institutional version, Lumens is the use case version. I believe this is why Jed left.

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Lumens also built an excellent platform for design. If you want Raiden’s take, I think Mr. McCaleb saw that a platform is going to be a hell of a lot more important than a instrument of exchange. He has built a platform that is incredibly easy to design your own tokens on, that are so transparent that it can help you toe the line of the law. When the USA is just ramping up for their own regulations on ICOs, and you have Mr. McCaleb on the sideline with a  straight edge token maker, I think there could be some sweet music. I am not a tech person, so I will yield to others in it’s comparison to Ethereum. It has been advertised as a more advanced version of what is available. AKA, a newly paved road with custom car dealerships.

Competitors

Depends on which purpose. Personally, banking the unbanked is being worked on (and touted) by every cryptocurrency out there. They have debit cards, QR codes, CELL PHONES for it. There is a huge market for it, but the reason swaths of humanity are unbanked is because it is difficult to access basic services, including the education on cryptocurrency account set-up, payment and management. This is an “eventually” problem that will be solved. If this was the only part of this coin, I would move on. I am going to be leaving “banking the unbanked” up at the top. This doesn’t excite me. I am going to be talking about their near sighted solution cases moving forward.

The platform for creation is something I like very very much. I love when things can be worked on by entrepreneurs. When things are developed on a platform, their work is as good as being nailed into the walls of the block chain. I want to attract the most amount of smart people to use the coins I own, as their ingenuity in various forms will create a desire for the coin. Ethereum and NEO are the platforms I would say compete with Lumens right now.

Ethereum, which does have a Silicon Valley presence, has been around for quite some time, and the prospect of lightning is anyone’s guess as to effectiveness. I personally never bet against Ethereum, regardless of competitors. I just bet on all platforms.

NEO, “Chinese Ethereum,” is also an advanced platform that currently boasts the most robust way for developers to create. They have the best paint brushes at the moment, in this author’s very humble opinion. I don’t believe the NEO team is going to be focusing on the US ACO market just this moment (I could be wrong). I think NEO could very well be the advanced Chinese Lumens. No real need to deviate from that market for them…

Target Market 

This is the best target market anyone can ask for, and it is the reason I am writing about this coin. Business. High quality businesses that can transact in tokens quickly and compliantly for uses with every day transactions.

Let’s do an example: With Lumens I can have my bank send them USD, Lumens then encrypts that USD on XLM, and sends it off to the bank across the world in China. The bank gets that payment in Yuan, deposited directly to my friend. This target market is not being drooled over like it should. Decentralists will do their own thing, but for me USD is what puts gas in the tank. It will be that way. I want someone to play nice with my USD, and the keepers of my USD. Strong points to Lumens here.

Weaknesses

All friends of Raiden know I hate large supplies. This coin is designed for a specific use, and that use is certainly not being a $30,000 coin. 103B. That means it’s going to take a massive wave of adoption before we start seeing some price appreciation.

I want their vision to be a little more geared toward beating Ethereum. I think banking the unbanked will take significant amounts of time, and will require a lot of all hands on deck to get going. If we could shelf this goal for after we figure out whats going on with primary offerings in America, we may have more resources to speed up the process of such a noble goal.

Strengths

This is an American company solving an American problem. There are no hurdles to jump here! We have a gigantic market of investors/businesses that need a platform that they can begin to toy around with. If they can successfully offer tokens that will require payment in XLM, this is now a very good investment. This is the Ethereum Model, and look how well its doing from way up there.

Jed McCaleb. I think this darn guy is the one who saw the bureaucratic needle in the haystack and decided to jump in. The government friendly cryptos will always win over the anti-government cryptos. I am not going to the bonfire with those people, I want to make money this year. I have said this before. Americans want something simple, at their doorstep. This is beginning to sound like just that.

Technical Jargon 

  • Current Price 1/15/18- $.63
  • Current Supply- 17,890,569,956 XLM
  • Total Supply- 103,590,302,054 XLM
  • Market Cap- 11,447,227,515 USD
  • Market Cap Rank- 9

Partnerships

IBM. This is the big one. You may not know this, but IBM essentially controls every single corporate office in America. Their software, wiring, and hardware is what keeps most places up and running. IBM has used them for settlement, while they clear the transactions that they are doing thousands and thousands (and thousands) of. Baby steps partnership right now. However, this is already a working relationship. IBM is not a company to discount in the new wave of technology. Their technical infrastructure in American professional society is second to absolutely none. This partnership alone can tell you many things about Stellar Lumens. It is quite interesting IBM is also hiring Ethereum Developers.

Overall

I sold off some of the portions I had before the sell-off a week ago. It performed well for me, but I was going to be migrating back to my ETH. Now that I have done some real digging here, I love what this is. It is Jed McCaleb. I trust that man. I have no idea of his coding experience, or overall involvement in the nuts and bolts of any currency he has worked on behalf of. However, this man is preparing an American Noah’s Ark. This is the boat that he thinks everyone will get on, AND B2C BUSINESS OFF OF. The most important thing is the business part, hence the caps. If we are talking about a warming up ICO/ACO market in the United States, there is no better place to be apart of than a mass customization shop that can give you a filled out form to hand into the government. That hasn’t been mastered yet, even on the exchange side. I just really hope they focus on the platform first. Business comes first to set up their store fronts. People go shopping second. Lumens is a coin with customers and a lonely target market. I can’t think of that being a bad thing.

 

I am not recommending you buy XLM, or any of the currencies I have listed. You must look into each and every investment, and analyze all angles based on your savings and risk tolerance. A lot of people ask me thoughts on currencies. No currency is made for everyone. I would have to know income, savings, investment background, risk tolerance, and the list goes on. This is the reason why no one can ever recommend something to you through a long term price prediction. I want you to make money. I wish you the best of luck.


A look at the mountain range.

Disclaimer: The author holds investment positions in the cryptocurrencies discussed in this article. 

Image courtesy of Pexels and 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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The Lamen’s Story behind QTUM

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Market Update: Th crypto market cap has climbed back above $500 billion. Well done folks! I am liking the slower gains, as I think this could be new entrants. We have a ton of people way behind in cost basis on every coin, so I am just not convinced that those people sold at the bottom and then are re-entering. We waited this out, and the chatter throughout the media is getting to be too much for the later adopters to bare without getting involved. I have begun my history lesson to figure out where the true technical evolution is occurring in blockchain, and what will have the application to render an immediate investment. QTUM combines UTXO ledgers and smart contracts in one platform, and I need to understand their business reasoning behind why that is important. That starts with bitcoin.

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The Timeline in Blockchain

The beginning was bitcoin. This framework was created by the infamous Satoshi Nakamoto, who wanted to encrypt the way that money could be transacted. The transaction model he chose for his ledger based blockchain was inputs and outputs. Each bitcoin is an output from an input, and outputs are used to send money, not accounts.

UTXO “Unspent Transaction Outputs” is what your bitcoin account consists of. Don’t expect Windows 95 to be the most sophisticated! So, when someone sends you bitcoin, it goes “UTXO”. It is added up with all of the other times you received but didn’t send…and there is your bitcoin balance. Here’s where it gets tricky. Say you have UTXO balances of BTC 5, 3, 2. That means someone sent those coins to you in 3 different transactions. Now you want to send 1 BTC. UTXO will choose the most prudent one, 2 in this case, and then create an input for 2. But I wanted to only send 1! Don’t worry, there will be two outputs, 1 BTC for your recipient, and 1 BTC back to UTXO. You cannot take portion of a UTXO, it will all go into the input, and out the output.

Ethereum was the evolution. Instead of this UTXO model where there is no real single account- just lists of inputs and outputs, there was a place where people could have an account that is much similar to a bank account. You send, you receive, and everything is recorded. There is no choosing which UTXO fits which transaction, each transaction can be unique, and only the amount needed will be input. Debits and Credits, just like a bank account.

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Ethereum smart contracts are pillars of the account model. These contracts have unlimited capability to set rules (e.g., 100 voters, duration: six hours, choices: Candidate A, Candidate B, etc.), quantify inputs, determine precise results safely and securely, and dispense the ether of course! This new function in the blockchain required code of higher quality (I am not going to go GitHub level here) for the smart contract to work with, rather than a smart contract having to deal with a bunch of random UTXO’s. The account system worked for this just fine…or so we thought.

The DAO, founded by a consortium of Ethereum founders and followers, was a fund (a smart contract “account”) created in 2016 to be the first organization to promote the migration of business and commerce into the blockchain, and automate things for absolute and unbiased results. If you wanted to make a project that would benefit commerce on the blockchain, the smart contract would determine a consensus-based allotment.

Ironically, the DAO smart contract “account” was spoofed into funding a “Child DAO”, an exact replica of the DAO that convinced the smart contract to fund it multiple times over. Ethereum went from $20 to $13, as $70m was drained into the Child DAO. The Child DAO issue eventually led to an Ethereum hard fork, the result of voting to not let the attacker (who said he had legal right to his property through a lawyer) have his prize for his creation, and emptying the piggy bank to all those who lost ETH and laid claim to it.

QTUM

I want you all to know that all of that information was needed for me to explain QTUM.

This all started when I wanted to do some research for my own benefit. QTUM’s “About Us” was claiming their new benefits were that they designed a UTXO blockchain that has accounts with a smart contract account layer. So my thought was, why does QTUM want a UTXO blockchain? They believe UTXO has much more in scalability terms for business functions by having limiting information and “Proof of Consensus” model, and they wanted to build something that could act as the ether for those who were hard at work mining in the bitcoin UTXO community.

Eighty percent of all the QTUM tokens will be distributed for an array of purposes, but a major one is to bring the real world application into blockchain. Much like the older brother before it, QTUM is providing a DAO-like Account that can incentivize technical projects that can stay on their UTXO chain, but come out of the shadows to work within the community. Those who are used to coding in the Bitcoin blockchain will be happy to see that they now have Ethereum’s paint brushes in their own technical backyard. QTUM also can migrate Ethereum’s contracts into this new smart contract environment.

The platform has partnered with two companies in China (cybersecurity & media) to date, both of which are working along the lines of bringing business into the blockchain through smart contracts. China has been very cold on blockchain as of late. This may be a good project, but they are fighting against my favored incumbent NEO, and there is nothing I would say that truly separates them as unique for large migration. There will only be a handful of platforms. One for each country depending on laws/regulations. NEO is my choice.

Conclusion

I am a fan of the concept of taking a big community of people and trying to give them incentives through smart contracts to work harder for business purposes. I am not sure how big the bitcoin UTXO community is. Like you have seen, this is very deep technical information and the differences between UTXO and the Account method are murky at best for a lamen.

I have a small holding of QTUM, and it will remain small. UTXO seems like a bridge to bitcoin’s old tech that they are reviving. Ethereum already has had the first wave of business migration, and it seems that Solidity, the coding language of Ethereum smart contracts, is on every developers to-do list.

Overall, if QTUM makes a ton of money, non-coders won’t know why. It is a platform for people in the bitcoin chain to use for business purposes, but Bitcoin was made by someone who vanished and there is no one leading the initiatives within. Does bitcoin have an initiative? This may be like a Coder’s Coin. They like it for the certain coding characteristic, but overall the difference is minimal other than the chains are different. I think paradigm platform chains will exist, and the current ones are Ethereum and NEO.

A true technical smart contract artist or developer may disagree with me, but I see no extremely valuable difference between Ethereum and QTUM. QTUM certainly isn’t a coin for business people like myself. I will stick to what I know, and that is Ethereum-based platforms and compliance.

 

None of this is a recommendation to buy or sell cryptocurrencies. I own a small holding, and as mentioned, it will remain small. Best of luck to you on the exchanges. If you would like to remain updated on my thoughts, please do follow me @raijincrypto on Twitter.

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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 18 rated postsMythological God of Lightning. Cryptocurrency/Blockchain writer, evangelist, and friend. May the odds be ever in our favor.




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Crypto: Why The Best Is Ahead

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Good news has been rare these days both for investors in stocks or cryptocurrencies. Stock investors face greater uncertainty.  Stock prices have been driven by 40 years of lower interest rates.  That game is over now and inflation is on the rise. That means higher rates. That’s bad for stock prices. 

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Over time cryptocurrencies will come to be viewed as anti-inflation tools and that could turn out to be very good news for all that have endured the volatility of recent times.

No Need to Be Negative

For investors in bitcoin, Ether and other cryptocurrencies, it is easy to sit back and proclaim that the worst is behind.  After all is bitcoin going to fall another 55% or Ether by a further 33%?  It is very unlikely for this to happen.  

As painful as the last two weeks have been, let’s take a look at what was lost.  The price of bitcoin is now back to its pre-hyperbolic move that began in late November of last year, but still 7,000%+ above February 2017 levels.

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For Ethereum the picture is even better.  The price of Ether is nearly three times last November levels.  It matches the 7000%+ year over year gain of bitcoin.  Where else can you suffer such losses and still end up this well off?

Sentiment Overrules Logic

Investors are looking for logic to plan their strategies.  Technical analyst lately have been mostly gloomy but that is to be expected.  Once a down trend begins, that remains the story that nearly takes an Act of Congress to change.  The redeeming value of technical analysis is how it identifies investor sentiment.  Right now the sentiment is not going the right way.

Back in December it was the Chinese government cracking down, next South Korea stepped in and now we learn that financial regulators in Japan will be conducting inspections of certain cryptocurrency exchanges due concerns about vulnerability to cyber attacks.

Hungry deficit ridden governments everywhere are looking to collect taxes from investor winnings on cryptocurrencies, the US Internal Revenue Service benefitting from the new tax law.  Proposed regulation of cryptocurrencies seem to be in the headlines on a regular basis.

Anytime a government interferes with business investor sentiment turns negative turns negative.  Logic may dictate the moves by Asia’s three biggest countries represent efforts to improve safety and security and that will ultimately attract more investors.  However, sentiment overrules logic most of the time.

Nothing New

What is happening at the moment is no different than situations faced by just about every world changing innovation from the automobile to the Internet and beyond.  In the case of cryptocurrencies there needs to be the recognition of value beyond pure speculation. Otherwise these are nothing more than just another financial instrument with a pretty face.

We may be stating the obvious, but these days the negative sentiment is originating from various government regulators with the stated intent of shielding its citizens from “the bubble”.   Right now the world is overlooking the key benefits of currencies like bitcoin, Ripple and Litecoin: the seamless transfer of money anywhere in the world 24/7.  Once something happens to return the focus to applications of this technology, logic will be restored to the planet.  

Readers will identify our bias toward Ether and there is a reason for it.  The very nature of their open source platform offers limitless applications the average investor can taste, touch and smell.  Yes there are all those stories about failed Initial Coin Offerings that used the Ethereum platform, but that is part of the development process.

Speed And Cost Become Key

Before mainstream adoption takes place, the twin issues of speed and cost must be solved. The current lethargic processing pace of fewer than 20 transactions per second is one thing but the idea of ultra low cost is a joke.  Last year witnessed the proliferation of thousands of use cases.  It inspired investors and sent prices of cryptocurrencies to record levels.  From here getting the details of the technology up to mass market applications is what should drive prices higher.  This is a lot less sexy but adds much greater value.

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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4.3 stars on average, based on 24 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Are Most Cryptocurrencies Headed for Zero? Goldman Sachs Believes So

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Extreme volatility, high correlation and a lack of intrinsic value all spell trouble for the cryptocurrency market, according to Goldman Sachs. In a carefully worded research note on Wednesday, the Wall Street behemoth warned that most of the world’s 1,500+ cryptocurrencies were headed for zero.

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Grim Future for Most Coins

Investors should expect the vast majority of cryptocurrencies to fall to zero, with only a small handful dominating the market, Goldman analyst Steve Strongin said in a Feb. 5 report. Although Strongin didn’t speculate about a timeframe, he said massive price swings in the digital asset class are a clear sign the market is in a bubble.

“The high correlation between the different cryptocurrencies worries me,” the analyst said, according to Bloomberg. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

The cryptocurrency markets have experienced a chaotic selloff this week, with the total market cap falling some $550 billion from its peak.

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In the research note, Strongin added the following:

“Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors. At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”

Strongin’s firm has  expressed keen interest in cryptocurrencies. Goldman is expected to launch its own bitcoin trading desk as early as June, making it the first Wall Street bank to make markets in the highly controversial asset class.

Paradigm Shift

The views expressed by Goldman are in line with previous comments made by Vitalik Biturin, the founder of Ethereum. About four months ago, Buterin told a crowd at ETHWaterloo that 90% of initial coin offerings (ICOs) built on the ether protocol will fail. This paradigm, referred by Buterin as “Tokens 1.0,” could experience a cataclysmic end before the market transitions to higher quality projects. This era is referred to as “Tokens 2.0,” and could be here sooner than most realize.

Whereas Tokens 1.0 was characterized by hasty projects, bad ideas and even scams, the second generation of token sales will build off the previous era’s mistakes. Buterin said he believes this market will begin mobilizing as early as this year. That could be just in time for his new DAICO fundraising model, which combines the current ICO template with a Decentralized Autonomous Organization. DAOs rely on smart contracts to implement rules, a feature that many believe will be an integral part of future crowdraises.

Buterin’s outlook is clear: cryptocurrencies will need to evolve to remain feasible both as an investment asset and unit of transaction. It is the latter that presents the biggest challenge.

That being said, the era of Tokens 1.0 is still generating record revenues, with recent data showing $1.2 billion flowing into ICOs during the month of January.

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 165 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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