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Why You Must Buy The Brand Names

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No matter if you are a developer with deep knowledge of technology or a prospective first time investor, your choices are pretty mind-boggling. This year started with 1384 cryptocurrencies. More are coming every week.

Literally billions are being made but how to choose the right one. If it means spending you life buried in complex technical blogs trying to understand both the obtuse technical language and then the writers jargon, you may decide to bail.

Putting Perspective on The Technology

There are loads of folks who understand the different technology between bitcoin and Litecoin or between Ethereum and Cardano. My perspective comes from analyzing dozens of businesses over more than four decades and cryptocurrencies is one of the most promising yet.

Simple Solution

Here is a solution that will help you cut through the complexity. Buy the best brand name. Classic investment risk management dictates a completely different strategy. Every certified investment advisor will recommend risk diversification and clearly cryptocurrencies are about as risky as you can find.

However, after digging through all 1384 cryptocurrencies, you will be fully diversified by owning just two brands. The couple that we are talking about is bitcoin and Ethereum.

There are other choices in the top ten like Ripple, bitcoin Cash, Cardano and Litecoin. Each brand is worth researching but none offer all the combined benefits of bitcoin and the Ethereum Network.

ICOs Don’t Need To Be Confusing: Look To Ethereum

 In the past year some huge returns have been chalked up by initial coin offerings. Here we are talking about companies seeing their value go from fractions of a penny to dollar multiples in no time. The challenge is how to choose the right one.

Consider what you are dealing with. Initial coin offerings allow companies that are at pre-venture capital stage to get started. So the risks here are higher than investing in a blind pool venture capital fund.

The accepted formula by VCs is to aim for a success rate of 2%-5%. This means that 95% of the companies that are much further developed than most ICOs will fail. With your chances of finding the dream ICO generously placed at 1%-2%, why bother.

In 2017 more than 1,000 ICOs raised about $4 billion. According to ICO Watch List, 78.7% of those used the Ethereum platform. So if you want to play the ICO game, why not simply own the gas the powers the network: Ether.

 The Ethereum Brand: Think Microsoft Corp

In a recent CNBC interview Ethereum co founder Steven Nerayoff made the comparison of Ethereum with the early stages of Microsoft Windows. Along with Bill Gates, Microsoft is one the world’s most ubiquitous brands. Side note: Microsoft didn’t reach Ethereum’s present value until after ten years of Windows.

Nerayoff cites billions of dollars being poured into as many as ten times the number of projects in 2018 over the previous year. From his vantage point these projects include a wide breadth of industries starting from financial tech, oil & gas, gaming, travel/resorts, government and various creative areas.

According to Jeremy Millar, cofounder of the Enterprise Ethereum Alliance (EEA), CEOs across the world are clamoring for blockchain technology. Millar believes most CEOs require a heavy dose of education about the new technology and that means there will be a natural demand for the largest supplier with the biggest brand- Ethereum.

A key to Ethereum’s brand leadership started last February when the EEA to connect Fortune 500 companies with Ethereum experts. Now with almost a year under their belt membership has grown to over 300. This is brand leadership in the most important market for Ethereum. Nobody else is close.

The Bitcoin Brand

Think of bitcoin as a brand like MasterCard, Visa, American Express or even Crest toothpaste. Each of these names enjoys instant consumer recognition thanks to million invested in advertising, marketing and image development. Bitcoin is unique in the sense that not a single bitcoin has been spent to advertise its usefulness.

One source claims there are well over 10,000 merchants that accept payment in bitcoin. Headliners include Microsoft Corp, Subway, Whole Foods, Intuit, Expedia, Bloomberg, Dish Network and Overstocked.

Ask First Data, Fiserv or any other payments processing company and they will attest to the difficulties of changing client habits in accepting payments. Any newbie attempting to enter the payments business will have to answer the dual questions: what makes you better, faster and cheaper then bitcoin and do you have greater consumer acceptance? Right now, bitcoin has a lead of at least two year and they aren’t sitting still.

The Bitcoin Moat Is Being Built

 Bitcoin is the king of digital currencies but the king is not perfect. There are those shortcomings like volatility and slow speed.

The start of a bitcoin futures market began on December 18. The CME and CBOE are giving everyone the ability to hedge. The prospect of reduced price volatility will attract additional mainstream retailers.

No more than a few days after futures trading began on the CME, one of the largest luxury used car dealers in Japan announced the acceptance of bitcoin. Since then the giant investment bank Goldman Sachs has created a research team and issued a glowing report on the cryptocurrency outlook. The tipping point for bitcoin has taken place.

The bitcoin moat is being built even wider by Bitcoin Lightning Network, which was released this week both increasing speed and resulting in dramatically lower fees.

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 97 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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2 Comments

2 Comments

  1. douglash

    January 13, 2018 at 11:13 am

    Wow, are we paying to subscribe to Hacked to get the advice, “Just buy ETH and BTC for full diversification”?

    A more sophisticated approach to diversification would be to think about various token functions as ‘sectors’ and buy 2-4 high class offerings within each sector. Example:

    Store of Value coins: Bitcoin, Diamond
    Convenient Transaction coins: Dash, Litecoin, Bitcoin Cash
    Smart Contract coins: Ethereum, NEO, QTUM, Cardano, EOS, Lisk, Ethereum Classic
    Business-friendly coins: Ripple, Bancor, Neblio, Modum
    Functionality coins: Raiden Network, BlockCat,VeChain, Walton Coin, Quantstamp
    Exchange coins: KuCoin Shares, Binance Coin, COSS, Spectre, Kyber Network
    Blockchain for the Masses coins: Everex, UTRUST, NEM, Stellar, Omise Go
    IOT coins: IOTA, IOT Chain, Golem, SPARK
    Privacy coins: ZCash, ZCoin, ZClassic, Monero, Pivx, Zen Cash
    Masternode coins: Dash, Pivx, Diamond, Crown
    Change the World coins: SALT, Substratum, Civic, ARNA
    AI coins: Deep Brain Chain, Neurotoken, Red Pulse

    I could call out a few more sectors, but you get the point. There are key differences in utility of these blockchain ecosystems. Targeting high quality coins within each sector is a far better approach, to me, than just loading up on ETH and BTC. It’s a lot of coins, but the great thing about being diversified is that you really don’t need to trade often. Every day you’re having a good day in some sector.

  2. douglash

    January 13, 2018 at 11:15 am

    *sorry, Golem and SPARK were supposed to be under AI coins.

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Overstock.com Shares Spike 17% After Chinese Private Equity Firm Pledges $270 Million for tZERO

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Shares of Overstock.com (OSTK) surged in after-hour trading Thursday after a major Chinese equity firm agreed to invest in tZERO, the blockchain subsidiary vying to reshape the investment world through a SEC-regulated alternative trading system (ATS).

GSR Capital to Invest Heavily in tZERO

CNBC confirmed on Thursday that Hong Kong-based GSR Capital will invest up to $270 million in tZero. The investment is based on a valuation of $1.5 billion, giving GSR an 18% stake in the new blockchain startup. GSR will also buy $30 million worth of tZERO security tokens.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi in a statement, as quoted by CNBC. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

The announcement came less than six weeks after GSR Capital signed a letter of intent with Overstock to purchase $160 million worth of security tokens.

Launched in December, tZERO’s initial coin offering (ICO) has raised $134 million to finance its ATS infrastructure, which will provide a regulated venue for securities trading. The company plans to build similar systems around the world.

Despite a highly successful crowdraise, documents submitted to the SEC earlier this year revealed a target of $250 million. Independent valuations had placed tZERO’s ICO anywhere between $200 million and $500 million.

Overstock.com Spikes

Overstock.com’s share price was up by as much as 21% after-hours. It would eventually settle at $45.40 for a gain of 17.6%.

As the following chart illustrates, the OSTK price rose 4.5% in regular trading on Thursday to settle at $38.60.

Despite the gain, OSTK has been a dismal performer this year. Share prices are down 40% year-to-date, vastly under-performing the Nasdaq Composite Index, which has returned more than 14%.  What’s more, the stock is trading at less than half of its 52-week high.

Overstock’s share price has been rocked by disappointing quarterly results and the cancellation of a proposed public stock offering. Last March, the company offered four million shares of common stocks before abruptly cancelling those plans. Noursalehi said the decision to pull the offering was due to “market volatility and price.” To be sure, OSTK had declined 20% following the initial announcement to issue common stock.

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 551 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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A Closer Look at Boerse Stuttgart’s New Cryptocurrency Platform

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The Boerse Stuttgart group has is expanding upon past product launches to create a complete holistic ecosystem for digital assets, including cryptocurrencies. This comes on the heel of them launching the “Bison” app, which allowed users to trade cryptocurrencies with zero fees, similar in functionality to that offered by Robinhood.

The difference between Bison and Robinhood, however, is that the Boerse Stuttgart group is the second largest derivatives exchange in Germany. Another unique feature of the Bison app was its “crypto radar” feature.

This functions as a social media tool that aggregates more than 250k tweets and analyzes them to determine the “mood” of cryptocurrency investors.

Having an existing (and profitable) large financial firm expanding their brand to cryptocurrencies in any capacity reflects a market that is increasingly accepting the reality of institutional capital flowing into crypto markets.

The new ecosystem is composed of three distinct pillars. Bison represents the first of these pillars. The second is a branded platform for initial coin offerings to sell tokens. The third is a safe custody solution for digital assets.

This ecosystem, in turn, falls within Boerse Stuttgart’s so called “digitization” strategy and should serve as a bellwether of changes to come in financial markets. After all, as an established market player, Boerse Stuttgart Group has extensive knowledge in the fields of technology, regulation, and trading models respectively.

According to their own CEO Alexander Höptner, “On this basis, we can offer central services along the value chain for digital assets, all under one roof. Investors and market participants know that Boerse Stuttgart Group stands for quality, transparency, and reliability. As a Germany-based provider, we want to transpose this standard into the digital world. We will help to promote acceptance of digital assets.”

The key to their ambitions focuses on solving two major problems. The first is that KYC procedures tend to be overly complex for average investors, as well as time-consuming. The Boerse Stuttgart group’s own KYC solution allows traders to pass KYC and start trading within minutes, as opposed to more typical solutions that take a few days.

The second issue they are tackling the liquidity and accessibility of ICO tokens post-sale. They solve this by allowing tokens launched through their platform to be traded within their broader ecosystem using Bison.

According again to the CEO, “At the trading venue tokens issued via our ICO platform can be traded on the secondary market. This is an important success factor for ICOs. At the same time, we are responding to demand from both retail and institutional investors for a regulated and reliable environment for trading with cryptocurrencies. Furthermore, established cryptocurrencies like Bitcoin or Ethereum will also be traded.”

This approach will likely serve to establish the Boerse Stuttgart group a prime recipient of crypto-intrigued institutional capital. After all, the early bird gets the worm. A key component of this future success also rests on how well they partner with authorities.

This exact point was also emphasized recently by the CEO, who said, “In designing the strategic projects we closely cooperate with all competent boards and committees, and especially with the supervisory authorities.”

While it remains to be seen whether retail investors make use of this ecosystem, it seems reasonable to assume that larger investors will flock to a simple crypto-specific ecosystem backed by an old guard stalwart of finance.

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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MasterCard Could Be Your Best Friend

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Since just after the financial crisis, I have been searching for a way to beat MasterCard and Visa at their own game. These two brands dominate the business of processing debit and credit card transactions.  I have always considered this duopoly as the enemy of mankind, but could turn out to be a hasty judgement.

MasterCard and Visa don’t actually process transactions as much as they offer an electronic network and charge fees for the use of their name.  They collect about 0.11% per card swipe which ain’t much until you consider they are running more than 150,000 transactions per minute through their network.  Pretty nice business to be in. All together, the two will generate about $30 billion this year.

The problem with both of these guys is that it is impossible to get around them.  If you buy something anywhere in the world with a debit or credit card, it is almost guaranteed to run on either the Visa or MasterCard network.  In which case, in addition to the 0.11% taken out for the network, the store that accepts your purchase pays anywhere from 3% to often as much as 5% in total for processing fees.  And if you travel abroad and charge something, well forget about it. Everywhere along the network are intermediaries taking their nick of your wallet.

When foreign currency transaction fees are taken into account, that is where more intermediaries are included.  That is where the costs add much higher and that is often where the consumer is hurt most.

Fighting Back

The whole idea behind blockchain technology is to make transactions of all types fast with little or no dependency on intermediaries.  All this makes MasterCard and Visa the enemy of cryptocurrency developers. But neither of these brands are sitting still applying for patents on blockchain based payments methods.

The natural reaction is to sell to sell your crypto and find some easier way to earn a decent return.  We disagree: we think there is crypto to be made from MasterCards strategy. Here is why you should be encouraged.

ome time back, MasterCard applied for a patent on blockchain technology that created a link between crypto and fiat currencies. MasterCard is not alone, as there are any number of crypto projects with the same idea.  Recently we looked at TenX and there are others.

Using TenX for comparison, MasterCard’s recently awarded patent offers to convert crypto to fiat using the existing MasterCard network.  TenX and many others plan either create their own high speed mainnet or use the Ethereum platform.

In head to head competition, this gives MasterCard a sizable advantage since MC is pretty much accepted by merchants everywhere.  As much as I hate the duopoly represented my MC and Visa, right now they could turn out to be the best thing to happen for one simple reason.  They will unquestionable accelerate mass acceptance of crypto.

Their existing network and transaction speed, immediately solves the lingering Bitcoin/Ethereum issue of scalability.  In addition as observers have pointed out, both MC and Visa have had systems in place to identify fraudulent transactions.

Having said all of this, is MasterCard going to kill all other crypto payment wanabys like TenX and others? Before concluding the answer is yes, consider this.  In their recently released quarterly review to shareholders, MasterCard reported net income of $2.33 billion on revenue of $5.24 billion. That is a whopping profit margin of 44.5%!  This towers over extraordinarily profitable companies like Apple at 20.3% or the average US corporation at less than 10%.

When MasterCard’s blockchain system goes into use, it will plump up those already MC margins. So, as a crypto investor, you have to ask yourself, do you actually think that MC will pass on those savings or wallow in the cost savings?  The answer is pretty obvious.

MasterCard Could Be The Best News

Crypto naysayers are the first to deny that Bitcoin and others are a legitimate medium of exchange.  This is based largely on the limited number of mainstream merchants that are in the crypto loop. MasterCard could help take crypto mainstream and that would be a good thing for major names like Bitcoin, Bitcoin Cash and Ether.  And with the payments processing business dealing in over $50 trillion in transactions annually, there will be room for startups offering high speed scalability at lower cost. It will not happen this year but it will happen.

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 97 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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