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XMR, Dash – Opaque Cryptocurrencies Are the True Long Game

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The author promised some daily short picks, but you may have only a short time to pick Monero, Dash, and other privacy-centric currencies. Bytecoin is a good long-term play for big volatility, in sufficient quantities at least, depending on your risk appetite. In any case, let’s break down why these currencies have so much potential.

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  • Government regulation is coming. No one seems cognizant enough of this fact. There are tools in the Bitcoin blockchain that governments can use to trace transactions, and ultimately people will not like this. While this alone does not by itself lower the long-term valuation of Bitcoin itself, it does give rise to more room for speculation on the actual ceiling for tokens like XMR and Dash.
  • Monero has a perpetual fixed inflation rate. This means that miners will always have incentive to mine the chain.
  • Dash has found ways to modernize blockchain economics. They have what are called “Masternodes,” which play a significant role in the economy, and are rewarded for so doing. From a customer perspective, Dash is far more efficient in time and resources than Bitcoin to date, although it is built on the same codebase, whereas Monero is built on the CryptoNight algorithm and has a slightly different architecture.

We foresee governments speaking out of both sides of their mouths, but ultimately trying to take as much money from cryptocurrency holders as they can. Three agencies regulate Bitcoin and others in slightly different ways. The whole matter is intentionally confusing, so that crypto holders feel comfortable exposing themselves.

In the long run, then, currencies which foresaw the true problem of government interloping and built systems so opaque that even experienced users and hackers have great difficulty spying on users and holders, will only continue to rise in value. The valuation of Monero is no mistake. Other functional chains with higher supplies that have the same features will also see increases. That Monero is a preferred currency at dark net markets is also no mistake; they previously preferred Bitcoin. People want fungibility, and they want real, sound money. To provide these things, one cannot presume to have rights over the comings and goings of his neighbors.

Safe money will be sound money. Gold and other highly visible assets will have less utility than would say, paper or hardware wallets, in a crisis time. The long-scale value of all cryptocurrencies really lies in bad financial times, just like all real value assets. If it’s of use when nothing else is, it’s true gold. The author foresees these properties in efficient and well-developed cryptocurrencies like Monero and Dash.

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Bitcoin will have its place, as well, but we are talking about the currencies that people will use in daily lives. It seems clear that more and more Bitcoin’s role is to be the top-shelf, base currency on which all cryptocurrencies take their cues. If this destiny holds into the future, others will simply also become more and more valuable by virtue of their utility and perhaps even greater offerings of privacy.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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7 Comments

7 Comments

  1. cryptopalevu

    August 29, 2017 at 11:35 pm

    This is your best article yet. Fantastic.

  2. sickettyboy71

    August 30, 2017 at 12:21 am

    All excellent points. For anyone who wishes to go significantly (i.e., 10,000 words) deeper into the reasoning here, I suggest this excellent article by Ben Yu on the historical context of fiat currencies, gold standards, “full faith and trust”, and the emergence of cryptocurrency. Before I invested one red cent, I read this from start to finish – and it was a strong influence on what I considered to be a reasonable sum to invest, and where to invest it.

    https://medium.freecodecamp.org/cryptocurrency-101-7197684775fd

  3. bananatrue

    August 30, 2017 at 5:58 pm

    I have just a question on this: since both currencies could be actually used for non-legit purposes, could it be a problem holding them on a wallet? I know this could also be a risk with any other cryptocurrency but I’m wondering if this could cause legal troubles someway. Thanks in advance and great article

    • cryptopalevu

      August 30, 2017 at 8:01 pm

      @bananatrue.

      I don’t think so. The US Dollar and Euro are used in plenty of illicit activity. A much higher amount of ilicit activity happens in Fiat compared to Crypto.

  4. rtxt

    August 30, 2017 at 8:32 pm

    Thanks for a great article! I am wondering what your thoughts are on Zcash? Thank you.

  5. pm1gnosis

    September 2, 2017 at 6:34 am

    I have a question….after all of the 21 million bitcoin are mined, and there is no more incentive for miners anymore, how will the bitcoin transaction system work? Won’t the system just shut down at that point?

  6. Divyam Shah

    September 6, 2017 at 10:03 am

    What about verge and pivx? Even they are privacy centric right? Valuation wise, are these better?

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Fidelity Investments is Mining Cryptocurrency

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Fidelity Investments is a multi-billion dollar brokerage  that just so happens to be mining cryptocurrency. In fact, it has been at it for three years, using its own computers to harvest bitcoin and Ethereum.

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Profitable Experiment

CEO Abby Johnson recently told Fortune that its U.S.-based mining operation is “making a lot of money.” This comes despite running a relatively modest operation.

Hadley Stern, Senior VP of Fidelity Labs, described his company’s venture as an “experiment.”

The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” he said in reference to the mining process.

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The key to profitability has been the dramatic rise in cryptocurrency over the past year. Bitcoin and Ethereum are the world’s No. 1 and 2 cryptocurrencies by market capitalization, and no-one else comes close.

Well Ahead of the Pack

The fact that Fidelity has been at this for three years speaks volumes about the company. Other, much bigger players are still dipping their toes in the market, but are unsure about how to proceed. Goldman Sachs is reportedly on the fence about starting a cryptocurrency trading operation, while J.P. Morgan has already begun handling customer orders for bitcoin-based instruments.

Fidelity is doing a lot more than just mining tokens. Earlier this year, it reached an agreement with Coinbase to let customers view cryptocurrency prices alongside other assets on their Fidelity homepage.

Coinbase is the world’s most funded cryptocurrency exchange with more than 7.4 million users.

Cryptocurrency Prices

The cryptocurrency market ended the week on a firm note, with bitcoin (BTC/USD) reaching a session high of $4,425.00. At press time, the index was up 1.6% at $4,368.

Ether is also trading higher against the dollar, with the ETH/USD rallying more than 3% to $305.

Ripple (XRP) lost momentum on Friday, but still managed a weekly gain of 21%.

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Chinese Government Eyeing Fresh Bitcoin Legislation?

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The Chinese government could roll out fresh cryptocurrency regulation in the coming months permitting licensed brokers to operate, based on recent information from Xinhua.

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The state-owned news publication recently revealed that the government is mostly concerned with stamping out illegal activity involving bitcoin and other cryptos. Government authorities could be planning to regulate the market by creating a licensing program with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.

The Case for AML

The need for KYC/AML protocols has long been raised by cryptocurrency proponents, especially in reference to initial coin offerings (ICOs). In response, the blockchain community has come together to create the Simple Agreement for Future Tokens (SAFT). The SAFT is both an instrument and open-source framework for token sales that vets accredited investors.

SAFT activity is quickly gaining traction, with the likes of Gizer recently issuing a presale of its ICO through SAFTLaunch.

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SAFT was officially created by Protocol Labs in close collaboration with AngelList and Cooley.

China’s Stance Looms Large for Cryptocurrency Market

Although digital assets have recovered from the China-induced flash crash of September, favorable regulations on the mainland could mean big business for bitcoin exchanges. Prior to the ban on ICOs and bitcoin brokers, Chinese investors were responsible for a quarter of all BTC trades.

According to Xinhua, China is likely to pursue a licensing program similar to Japan, a country that recently approved 11 cryptocurrency exchanges. CnLedger, a leading source of cryptocurrency news in China, recently had this to say:

“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”

Is China’s cryptocurrency ban temporary? It certainly looks that way. Regulators must already know that the ban hasn’t stopped mainland investors from buying cryptocurrencies next door in Hong Kong or Singapore. A saner approach to an all-out blanket ban is a tighter regulatory framework that will stamp out money laundering and other underground activities.

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Analysis

Tim Draper Has Made Over $110 Million Since 2014 With his Bitcoin Investment

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Tim Draper, the billionaire technology investor and prominent venture capitalist who has invested in some of the most successful technology startups in the likes of Coinbase, Patreon, SpaceX, Tesla, Box, FourSquare, has profited over $110 million from his investment in bitcoin less than three years ago.

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In 2014, Draper participated in the auction of 144,336 bitcoins by the US government and the US Justice Department, which were seized during the investigation into Silk Road, a dark web marketplace. Draper was granted the permission to purchase a batch of 30,000 at around $600 from the US government.

Upon securing 30,000 bitcoins, Draper told Fox Business:

“[I’m] very excited about bitcoin and what it can do for the world. Bitcoin is as big a transformation to the finance and commerce industry as the internet was for information and communications. If bitcoin were here in 2008, it would be a stability source for our world economy. Everybody should go out there and buy a bitcoin. Every investor who’s a fiduciary should at least be partially involved in bitcoin because it’s a hedge against all the other currencies. There’s a whole ecosystem being built that’s going to make commerce much easier with much less friction and safer.”

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Today, Draper’s 30,000 bitcoins are worth $129.9 million. Considering that Draper had spent $19 million purchasing the batch of 30,000 bitcoins in 2014, Draper has recorded a profit of over $110 million in less than three years.

While Draper held onto his investment in bitcoin, the US Justice Department was quick all of the 144,336 bitcoins seized during the Silk Road operation. According to various sources, the US government sold the majority of its 144,336 bitcoins at a price of $336, at $48 million. If the US government had sold its bitcoins in 2017, it would have generated an additional profit of around $573 million, as 144,336 bitcoins at today’s bitcoin price of $4,330 are worth $624.9 million.

Bitcoin price was below $350 in 2014. Today, it is over $4,330.

Since 2014, in addition to purchasing tens of thousands of bitcoins, Draper has funded some of the most successful bitcoin companies in the cryptocurrency market including Coinbase and Korbit. Earlier this year, Coinbase secured a $100 million investment at a $1.6 billion valuation, while Korbit was acquired by the parent company of a $10 billion gaming company in Nexon at a $140 million valuation.

Furthermore, Draper has not sold his stake in Coinbase and earlier this year, Brian Armstrong, the CEO of Coinbase, revealed that Coinbase is still at an early stage in terms of developing and scaling. Armstrong noted that it will evolve into the safest and most trusted exchange in the global market.

“Digital currencies are having their ‘Netscape’ moment. The pace of innovation has been accelerating and we are now seeing exciting projects and companies being built on top of digital currencies. We’re beginning to transition into phase three of our secret master plan. Our goal is to be the safest, most trusted and compliant, and easiest to use. Not the first to market with new assets. Especially at scale, it takes time to ensure any new asset we add is well tested and secure,” said Armstrong.

Coinbase is also one of the two exchanges in the US market apart from Gemini that is targeting institutional and retail investors by providing sufficient liquidity. As Coinbase and its flagship cryptocurrency trading platform GDAX continue evolve, Draper will position himself at the forefront of cryptocurrency innovation and disruption.

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