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Putting $400M of Bitcoin on your company balance sheet
Also posted on my blog as usual. Read it there if you can, there are footnotes and inlined plots. A couple of months ago, MicroStrategy (MSTR) had a spare $400M of cash which it decided to shift to Bitcoin (BTC). Today we'll discuss in excrutiating detail why this is not a good idea. When a company has a pile of spare money it doesn't know what to do with, it'll normally do buybacks or start paying dividends. That gives the money back to the shareholders, and from an economic perspective the money can get better invested in other more promising companies. If you have a huge pile of of cash, you probably should be doing other things than leave it in a bank account to gather dust. However, this statement from MicroStrategy CEO Michael Saylor exists to make it clear he's buying into BTC for all the wrong reasons:
“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”
Let's unpack it and jump into the economics Bitcoin:
Is Bitcoin money?
No. Or rather BTC doesn't act as money and there's no serious future path for BTC to become a form of money. Let's go back to basics. There are 3 main economic problems money solves: 1. Medium of Exchange. Before money we had to barter, which led to the double coincidence of wants problem. When everyone accepts the same money you can buy something from someone even if they don't like the stuff you own. As a medium of exchange, BTC is not good. There are significant transaction fees and transaction waiting times built-in to BTC and these worsen the more popular BTC get. You can test BTC's usefulness as a medium of exchange for yourself right now: try to order a pizza or to buy a random item with BTC. How many additional hurdles do you have to go through? How many fewer options do you have than if you used a regular currency? How much overhead (time, fees) is there? 2. Unit of Account. A unit of account is what you compare the value of objects against. We denominate BTC in terms of how many USD they're worth, so BTC is a unit of account presently. We can say it's because of lack of adoption, but really it's also because the market value of BTC is so volatile. If I buy a $1000 table today or in 2017, it's roughly a $1000 table. We can't say that a 0.4BTC table was a 0.4BTC table in 2017. We'll expand on this in the next point: 3. Store of Value. When you create economic value, you don't want to be forced to use up the value you created right away. For instance, if I fix your washing machine and you pay me in avocados, I'd be annoyed. I'd have to consume my payment before it becomes brown, squishy and disgusting. Avocado fruit is not good money because avocadoes loses value very fast. On the other hand, well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate. Let's look at the chart of the USD against BTC While the dollar loses value at a predictible rate, BTC is all over the place, which is bad. One important use money is to write loan contracts. Loans are great. They let people spend now against their future potential earnings, so they can buy houses or start businesses without first saving up for a decade. Loans are good for the economy. If you want to sign something that says "I owe you this much for that much time" then you need to be able to roughly predict the value of the debt in at the point in time where it's due. Otherwise you'll have a hard time pricing the risk of the loan effectively. This means that you need to charge higher interests. The risk of making a loan in BTC needs to be priced into the interest of a BTC-denominated loan, which means much higher interest rates. High interests on loans are bad, because buying houses and starting businesses are good things.
BTC has a fixed supply, so these problems are built in
Some people think that going back to a standard where our money was denominated by a stock of gold (the Gold Standard) would solve economic problems. This is nonsense. Having control over supply of your currency is a good thing, as long as it's well run. See here Remember that what is desirable is low variance in the value, not the value itself. When there are wild fluctuations in value, it's hard for money to do its job well. Since the 1970s, the USD has been a fiat money with no intrinsic value. This means we control the supply of money. Let's look at a classic poorly drawn econ101 graph The market price for USD is where supply meets demand. The problem with a currency based on an item whose supply is fixed is that the price will necessarily fluctuate in response to changes in demand. Imagine, if you will, that a pandemic strikes and that the demand for currency takes a sharp drop. The US imports less, people don't buy anything anymore, etc. If you can't print money, you get deflation, which is worsens everything. On the other hand, if you can make the money printers go brrrr you can stabilize the price Having your currency be based on a fixed supply isn't just bad because in/deflation is hard to control. It's also a national security risk... The story of the guy who crashed gold prices in North Africa In the 1200s, Mansa Munsa, the emperor of the Mali, was rich and a devout Muslim and wanted everyone to know it. So he embarked on a pilgrimage to make it rain all the way to Mecca. He in fact made it rain so hard he increased the overall supply of gold and unintentionally crashed gold prices in Cairo by 20%, wreaking an economic havoc in North Africa that lasted a decade. This story is fun, the larger point that having your inflation be at the mercy of foreign nations is an undesirable attribute in any currency. The US likes to call some countries currency manipulators, but this problem would be serious under a gold standard.
Currencies are based on trust
Since the USD is based on nothing except the US government's word, how can we trust USD not to be mismanaged? The answer is that you can probably trust the fed until political stooges get put in place. Currently, the US's central bank managing the USD, the Federal Reserve (the Fed for friends & family), has administrative authority. The fed can say "no" to dumb requests from the president. People who have no idea what the fed does like to chant "audit the fed", but the fed is already one of the best audited US federal entities. The transcripts of all their meetings are out in the open. As is their balance sheet, what they plan to do and why. If the US should audit anything it's the Department of Defense which operates without any accounting at all. It's easy to see when a central bank will go rogue: it's when political yes-men are elected to the board. For example, before printing themselves into hyperinflation, the Venezuelan president appointed a sociologist who publicly stated “Inflation does not exist in real life” and instead is a made up capitalist lie. Note what happened mere months after his gaining control over the Venezuelan currency This is a key policy. One paper I really like, Sargent (1984) "The end of 4 big inflations" states:
The essential measures that ended hyperinflation in each of Germany,Austria, Hungary, and Poland were, first, the creation of an independentcentral bank that was legally committed to refuse the government'sdemand or additional unsecured credit and, second, a simultaneousalteration in the fiscal policy regime.
In english: *hyperinflation stops when the central bank can say "no" to the government." The US Fed, like other well good central banks, is run by a bunch of nerds. When it prints money, even as aggressively as it has it does so for good reasons. You can see why they started printing on March 15th as the COVID lockdowns started:
The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.
In english: We're going to keep printing and lowering rates until jobs are back and inflation is under control. If we print until the sun is blotted out, we'll print in the shade.
BTC is not gold
Gold is a good asset for doomsday-preppers. If society crashes, gold will still have value. How do we know that? Gold has held value throughout multiple historic catastrophes over thousands of years. It had value before and after the Bronze Age Collapse, the Fall of the Western Roman Empire and Gengis Khan being Gengis Khan. Even if you erased humanity and started over, the new humans would still find gold to be economically valuable. When Europeans d̶i̶s̶c̶o̶v̶e̶r̶e̶d̶ c̶o̶n̶q̶u̶e̶r̶e̶d̶ g̶e̶n̶o̶c̶i̶d̶e̶d̶ went to America, they found gold to be an important item over there too. This is about equivalent to finding humans on Alpha-Centauri and learning that they think gold is a good store of value as well. Some people are puzzled at this: we don't even use gold for much! But it has great properties: First, gold is hard to fake and impossible to manufacture. This makes it good to ascertain payment. Second, gold doesnt react to oxygen, so it doesn't rust or tarnish. So it keeps value over time unlike most other materials. Last, gold is pretty. This might sound frivolous, and you may not like it, but jewelry has actual value to humans. It's no coincidence if you look at a list of the wealthiest families, a large number of them trade in luxury goods. To paraphrase Veblen humans have a profound desire to signal social status, for the same reason peacocks have unwieldy tails. Gold is a great way to achieve that. On the other hand, BTC lacks all these attributes. Its value is largely based on common perception of value. There are a few fundamental drivers of demand:
Means of Exchange: if people seriously start using BTC to buy pizzas, then this creates a real demand for the currency to accomplish the short-term exchanges. As we saw previously, I'm not personally sold on this one and it's currently a negligible fraction of overall demand.
Criminal uses: Probably the largest inbuilt advantage of BTC is that it's anonymous, and so a great way to launder money. Hacker gangs use BTC to demand ransom on cryptolocker type attacks because it's a shared way for an honest company to pay and for the criminals to receive money without going to jail.
Apart from these, it's hard to argue that BTC will retain value throughout some sort of economic catastrophe.
BTC is really risky
One last statement from Michael Saylor I take offense to is this:
“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold,” MicroStrategy CEO said in an interview
"BTC is less risky than holding cash or gold long term" is nonsense. We saw before that BTC is more volatile on face value, and that as long as the Fed isn't run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds. But on top of this, BTC has Abrupt downside risks that normal currencies don't. Let's imagine a few:
A critical software vulnerability is found in the BTC codebase, leading to a possible exploitation.
Xi Jinping decides he's had enough of rich people in China hiding their assets from him and bans BTC.
Some form of bank run takes hold for whatever reason. Because BTC wallets are uninsured, unlike regular banks, this compounds into a Black Tuesday style crash.
Blockchain solutions are fundamentally inefficient
Blockchain was a genius idea. I still marvel at the initial white paper which is a great mix of economics and computer science. That said, blockchain solutions make large tradeoffs in design because they assume almost no trust between parties. This leads to intentionally wasteful designs on a massive scale. The main problem is that all transactions have to be validated by expensive computational operations and double checked by multiple parties. This means waste:
BTC was estimated to use as much electricity as Belgium in 2019. It's hard to trace where the BTC mining comes from, but we can assume it has a huge carbon footprint.
A single transactions is necessarily expensive. A single transaction takes as much electricity as 800,000 VISA transactions, or watching 50,000 hours of youtube videos.
There is a large necessary tax on the transaction, since those checking the transaction extract a few BTC from it to be incentivized to do the work of checking it.
Many design problems can be mitigated by various improvements over BTC, but it remains that a simple database always works better than a blockchain if you can trust the parties to the transaction.
Stablecoin charts don’t add up in comparison to Euros
As most of you know by now, the US Dollar has been tanking pretty hard since late May. The value was hovering around 0.90€ (avg) for a good part of the year. It’s currently at 0.84€ - looking at the Euro to USD data, the charts make complete sense. However, if you go to CDC App and look at any USD stablecoin chart, they make it seem like it has always been this low. Go 6 months back, and you will only see the price range go from 0.83xxx to 0.84xxx. This was brought to my attention because I have tether locked up in Earn. I broke even a long time ago and was actually enjoying the great returns. But since the dollar tanked so hard I’m actually in the negative again (including all the 10% Earn interest). I’m not too phased by this, it’s actually a good opportunity to make some sure profit. But I was just so confused for a while, asking myself why did I buy Tether at 0.92€, even though the charts say it never was more expensive than 0.84€. It’s also wrong on CMC (which I assume is where they get their data from) Can we get an accurate chart?
Jesus H. Christ, I nearly fell hook, line and sinker for what appears to be an innocuous triangle on the surface but is actually a lording pyramid in truth. On Monday my friend who happens to be a semi-pro sportsman with his eyes on the financial freedom dream you see in YouTube ads rocks up to my house. He's parked outside and reckons to me, "dude, are you keen to go to a board game thing where you learn how to manage your finances?" I'm usually against financial preaching and stuff because it usually sounds hokey and bullshit, but against my better judgement I cave in and we go. The whole ride there he's telling me about this amazing mentor that's going to make me learn about making money without any effort, a dude I'm going to call James. Now James is a charming, well-off guy with a family. He doesn't quite have the YouTube millionaire lifestyle that you usually expect in this sort of 'profession' but I'd happily trade places with him if the opportunity presented itself. Anyhow, from moment one, James and my friend are mouthing off incessantly about how much money they're making on Freebay. Mind you, I'm oblivious to what the fuck is going on because I don't understand what's cracking - but literally the whole time there's graphs on a screen, and they're talking about these magical AI bots that guarantee returns on investment. Now this is South Africa, and these blokes are talking about making something like 10 000 USD in a month!? Do you know that 10 000 USD in South Africa is like enough to pay for an entire undergraduate degree at the best university in the country, and these geezers are making this shit in a month? Fucking hell. Anyhow, we digress from the discussion about Bitcoin and that to get to the meat and potatoes of the meet-up, which was to play that Cashflow game that that bloke who wrote Rich Dad Poor Dad formulated. Before we got to playing the game we had this zoom webinar with fellow victims... I mean participants, and they're all monotonously droning on with a despondent stare the same principles from this book that's supposed to be the Bible to financial freedom. There's a charismatic bloke leading the charge and the whole thing feels eerily reminiscent to a cult, in retrospect. You see, in the moment I'm eating all of this shit up about how wealth is a mindset and what not, and when I consider the conversation that was had around me just before the webinar - I saw two positive blokes trusting in this 'company' or whatever and seeing clear cut returns. Maybe they're right, maybe they're onto something. We play this game and that's all I'm thinking about: passive income, wealth, financial freedom - FREEBAY. After the game, I'm sat talking to this James bloke, his missus and my mate. They're apparently all on this Freebay tip making stacks of foreign cash that doesn't get taxed by the government, and now they're sizing me up. I tell them I'm a small-time writer in uni studying to become a teacher. They tell me that I can exponentially increase my earning potential by watching the link to video that my friend had sent to me during the webinar, and then by opting into a 190 EUR package... the same things I running through my mind: passive income, wealth, financial freedom - FREE FUCKING BAY. And then I go home, ruminate over the whole thing and begin my research. The whole thing? A facade. Apparently, this Freebay shit was being run under the name of some other pyramid/ponzi-esque cryptocurrency racket called Karatbay and people got fucking conned out of hundreds of thousands of dollars. Suddenly, I realise from the website that they posture themselves as 'affiliate marketers' or whatever in an attempt to hide in plain sight. What's worse is that when I play the sequence of events back in my mind from the beginning when my friend randomly rocked up to my house, the whole thing felt like an entire fucking rat trap and I nearly fell for it too. What blows is that my buddy is balls deep in the pyramid and he's blinded by the illusion that he'll find wealth with these people. He's on the prowl for every friend, family member and acquaintance he can get his hands on and it sucks to see him acting this way. I just thought I'd share my story. Always be on the lookout guys, these motherfuckers are everywhere - try and save your buddies from this shite. Also, I just thought it'd be wise to mention the name FreeBay in any anti-MLM rhetoric you spew, because these people are predatory as hell.
It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
The pandemic period played into the hands of the entire team and we managed to build beauty in our services. In anticipation of the exchange, the team tidied up the sites and services and connected new tools. First of all, we paid attention to the preparation of all services for a foreign audience, taking into account its mentality. New sections, localizations, nice things, and much more to ensure the most efficient use of the TKEY resource. In addition to the new tabs, the services that we will talk about in this material, there is a special page for representatives of the exchange with the necessary documentation for listing — https://tkeycoin.com/en/documentation/. https://preview.redd.it/63a1cmdwve151.png?width=700&format=png&auto=webp&s=0a064bff4acd1c1e3171f2c72ff79533b87aa3e1
Buying cryptocurrency for pound, dollars, euros, and other currencies
At the end of February, we told you that we are working on building a payment service that will include the provision of services: buy cryptocurrencies, sell a cryptocurrency, withdraw cryptocurrency to Bank cards, etc. This day has come, now you can buy Bitcoin (BTC), Ethereum (ETH), Tether USDT, Basic Attention Token (BAT), Algorand (ALGO), Tron (TRX), OKB (Token Okex.com). https://preview.redd.it/1pm2cnv8we151.png?width=700&format=png&auto=webp&s=69473d2e5ed1b8dc75189362b46906752be29895 The purchase is available in any currency: Russian ruble, US Dollar, Euro, British pound, Ukrainian hryvnia, Indonesian rupiah, South Korean won, Japanese yen, Turkish Lira, Argentine peso. As you can see, the currency corridors are quite extensive, which allows you to make exchanges fast and at a favorable rate. Just choose the right pair to exchange or buy, available fiat currencies: RUB, USD, EUR, GBP, UAH, IDR, KRW, JPY, TRY, ARS, available cryptocurrencies: BTC, ETH, BAT, USDT, ALGO, TRX, OKB. Even if this wide list does not include the currency you want to buy, such as Bitcoin or USDT, it’s okay — the service will automatically convert your currency into the payment currency and the Bank will make the exchange. Exchanges take place within 1–3 minutes, it is enough to pass quick verification once, which allows you to work with a volume of > 15,000 euros per month. https://preview.redd.it/0ln5uttawe151.png?width=700&format=png&auto=webp&s=35de9e413db35bb53f39332aa4197cd54a3e211c
Exchange of cryptocurrencies for pound, dollars, euros, and withdrawal of Bankcard
In addition to the fact that you can now easily buy a cryptocurrency for fiat currencies, pound, dollars or any other, during this week we will finish work on the withdrawal to a Bank card and you can easily withdraw your profit to the card, the most important thing is that this is a completely legal method, and all operations pass through banks and jurisdictions where work with digital assets is legalized.
This means that when you buy or make a withdrawal to the card, you get legal funds that are credited to you by the Bank or payment system.
If you are used to working with effective tools that work in a new way, or rather correctly and legally, then this service is for you. Fast crediting, easy exchange, a large selection of currency pairs, that’s what the company is betting on. We work with the most reliable third-party partners to make your cryptocurrency process easy and convenient, and most importantly safe for You. The service supports plastic and virtual Bank cards VISA, MasterCard, MIR, and other payment systems for fast payment processing. https://preview.redd.it/x1jnm1ccwe151.png?width=700&format=png&auto=webp&s=f86fc353ad5f207db8d233821204b521ba0b3d0e On the exchange page, you can choose any currency pair to exchange in the opposite direction, for example, GBP to BTC or USD to BTC. Choose a suitable pair for exchange, available fiat currencies: RUB, USD, EUR, GBP, UAH, IDR, KRW, JPY, TRY, ARS, available cryptocurrencies for exchange: BTC, ETH, BAT, USDT, ALGO, TRX, OKB. How it works When buying cryptocurrency for the first time, your Bank reserves (holds) the requested amount, then this amount is transferred to the authorization waiting state. As soon as the Bank freezes the fiat funds, the service fixes the exchange rate at the time of creating the application, reserves the cryptocurrency, and provides you with 30–40 minutes to complete verification. After successful verification, the service charges cryptocurrency to the wallet.
Support for other currencies, including TKEY, will be added gradually and highlighted through service updates. As for the TKEY exchange, it will become available in exchange services after listing on the exchange. Listing on an exchange allows you to automate the exchange process, link the necessary services, and most importantly, the exchange provides liquidity, which is key when we talk about exchanging for a particular currency. We will tell you more about the operation of the service and its advantages, chips, in a separate material dedicated to the withdrawal and purchase of cryptocurrencies for fiat currencies, as well as touch on various banking issues and tell you how you can combine the SWAP service for more efficient exchange and withdrawal to the card.
By making an exchange or purchase of cryptocurrency, you help children and people who need our help. We deduct 0.1% of the profit from each transaction to charity funds. This is the fastest and most comfortable way of charity, which allows you to bring together people who are not indifferent to other people’s problems. TKEY enables people to do good deeds, and the resulting turnover profit of 0.1% is sent to charity funds every month. Together with You, we create new opportunities for people in need who need help — “Big things have small beginnings”. How does it work? You have made an exchange or purchase operation, the company has accumulated the volume of these operations for a month->the company has chosen a charity Fund->sent funds to the charity Fund’s account. Priority charity funds are children’s aid funds. You can always suggest a candidate for a particular Fund by sending a message to [[email protected]](mailto:[email protected]). Why do we write Funds and not a Fund? This is the first launch of the service, so depending on the monthly volume, we will focus on distributing funds to one charity or several. For example, if we have accumulated $ 10,000, we can distribute $ 5,000 to 2 funds. if we have accumulated $ 100, it is logical that we will only send this amount to 1 Fund. With the development of the service, we will be able to focus on several funds, which we will actively help due to the received volume.
New blocks were added, the entire page was fully localized and is available in Chinese, Korean, English and Russian, and QR codes were added for easy navigation for the Asian audience.
Documentation for the exchange
We have already mentioned that there is a section for exchanges with the necessary documentation for listing, now it is available in English. In the next updates, it will be translated into Russian, Chinese (Traditional and Simplified), and Korean.
Added answers to frequently asked questions in various sections of the site, You can find the information directly on the section page, for example, TKEY-QT, SWAP or Core. Right on the page there is a FAQ section, in which we disclose answers to questions, for example: How are You going to solve the scalability problem, or why did you choose Phoenix as the logo and symbol of the project, or how do you exchange cryptocurrency for pound or dollars? As you can see, you can get answers to different questions, depending on the topic of the site section. https://preview.redd.it/8utkvv6iwe151.png?width=700&format=png&auto=webp&s=d493ec784d74c5982486e36fe3b4bcbcb6d57335
In addition to various improvements, connecting services, our team has been working every day on other main areas of the Tkeycoin project, which are already being prepared for the next release and we will tell you what updates, what plans, events, and what else will be interesting this year.
Online conference with management
An online conference in question-answer format will be organized. The main task of the conference, in addition to questions and answers, is to discuss plans, talk about new directions, touch on issues of legislation, and analyze current issues of users. The online meeting format will allow you to get feedback and discuss a large number of issues in a short time. Questions related to technical support and other questions that can be answered through the administration will not be discussed. The meeting involves the development, constructive, and suggestions from users for further development of the Tkeycoin project. If you are interested in participating in the conference, you can also make business proposals during it, please use the time to your advantage. We work for you.
New content: reports, new categories, useful information
Based on user feedback, we introduce new categories to our content plan: Reports This section will be accompanied by information about the work done by the team for the month, the format of submission — abstracts, highlights. This format will help establish feedback between users and developers. Question-answer In addition to the content that we produce ourselves, users have questions that arise during the process of working with the project’s services, as well as during interaction with the project itself. To avoid making guesses and making up stories, we have introduced the question-answer category. Users ask questions in comments, and the company prepares answers based on the questions and they are published in the post. Depending on the number of questions, the post generates all the answers, or the post is divided into parts if the number of questions for the past period was the largest. In addition to asking questions, you can make suggestions to the project, for example, about new features or directions. This format also builds feedback and helps to improve all services. the most important thing is that it can not only help us but also you, as the offer and questions will help you focus on the tasks that the end-user wants to see.
TKEY-POOL (Tkeycoin pool)
We are completing the work and debugging of the official pool for Tkeycoin, this is a completely new approach for mining Tkeycoin. The pool will feature higher performance and stable architecture, a light interface, and objective commissions. A pool is a highly loaded system that works 24/7/365, it turns out that such a product hides a sufficient number of lines of code and, most importantly, is built on a reliable architecture that can withstand +50000–100000 miners, not to mention the number of connected devices for this number of miners. A cryptocurrency pool is a combination of the hardware power of many miners at once to increase the probability of finding a block. The reward for a block obtained by the pool is distributed among all participants. The TKEY pool is developed taking into account the features of the Tkeycoin blockchain, including multi-blockchain, transaction model, hashing, blocks, and other nuances that are an upgrade of the blockchain among others. Together with the pool, the TKEY network is being tested: high loads, attacks, and other tests that show positive results, proving that the TKEY blockchain can work under any loads and is protected from attacks. Our task was to: 1. Stable system for handling high loads; 2. Adaptation pool for any software; 3. Connecting any hardware for mining cryptocurrency Tkeycoin; 4. Fair remuneration calculation; 5. Security. The main goal is for any user, regardless of the software and hardware used, to be able to connect to Tkeycoin mining via a pool. The first releases will be accompanied by a simple user-friendly interface, easy connection, instructions for various mining programs that can be connected. In future releases, we will optimize the operation of the pool, add new features, as well as tracking functions and other nice things. any suggestions from miners and the community are interesting to us and will be implemented, so do not hesitate to send your suggestions after the launch.
https://preview.redd.it/fjy2dkanwe151.png?width=700&format=png&auto=webp&s=99dedd6aa59ae7eb4d585d2ef1ddae4cc6dd50f9 Work on the TkeySpace mobile app is also not standing still. We will soon release updates for TkeySpace on Android and iOS. This release is a complete transition to the most stable version of the mobile wallet. This means that after the update, even with the largest changes, the user will not need to completely reinstall or restore to use the new features, as before, just update the app via the AppStore or GooglePlay. Between the previous update has been a sufficient amount of time, on average, updates are released once a month. This update will be one of the major ones. We are finishing work on the code to prepare the app for the new features that will be available this year. Besides, we are improving the app’s logic, data processing speed, optimizing the code, restoring order, and preparing for the global market.
Exchange, purchase of cryptocurrency and withdrawal to the Debit/Credit Card
The development team is finishing work on optimizing the SWAP service. Regardless of updates, it is available in working mode 24/7/365. The team is working on improving the operation, optimizing the page, changing the interfaces, improving navigation, and speeding up query processing. This update is also among the upcoming ones, along with the pool, mobile wallets, and other news that will excite.
In the network statistics section, there are several sections that will be fixed — this is the hash rate of the network and the volume of Tkeycoin. Now the volume of Tkeycoin is displayed by mTKEY, and the graph itself indicates M TKEY, the user may incorrectly understand the volume of transactions in the network, so, given the current volume, it is advisable to switch the display to TKEY, and in the future switch to mTKEY for large volumes.
This issue has become the cause of mass discussions, disputes, investigations, the subject of memes, kitchen, and online conversations, that just did not happen, that TKEY is not taken anywhere, someone made guesses that we are waiting for everyone to run away, or TKEY is a world conspiracy and around some actors, you can write a book or shoot a great series, not worse than Breaking Bad. Jokes, jokes, but the question is serious. Since the 4th quarter of last year, the company has been actively working on the issue of listing, prepared the necessary platform for this, held several meetings, negotiations, released the necessary products, figured out various transfers of funds to the blockchain, worked out many small things, many major issues that were behind the scenes. Everything is ready, and it’s time to start soon. This will be a surprise, believe it or not, and we will meet you on the stock exchanges :)
What other plans does the company have?
Enabling payment at retail outlets
After entering the exchange, we will actively engage in connecting payments to implement them and link them to TKEY. The plan, strategy, and legal component are ready.
This implies the development of payments and services that will expand the use of digital currencies in the commercial sphere. Application on the territory of Russia will depend on the Federal law on the CFA, in any case, we plan to analyze the law, after its release, to find a legal way to implement payments based on blockchain and digital assets. Therefore, until the law is released, we are keeping this initiative in the future, and we will work on other jurisdictions that will support it. We left some plans behind the scenes, because they will make the greatest impact on the market and the value of our asset, and this — likes silence.
What useful materials will be released soon?
How to effectively use the SWAP service together with the exchange and purchase of cryptocurrency from a Bank card?
We will tell you in detail how to use these 2 services, how to save on payments and purchases, how to exchange tokens that are very difficult to exchange, how to quickly get money for them to the card, and much more.
The law CFA
Our opinion about the law of cryptocurrencies in Russia, what to pay attention to, what to prepare for, how to act if there is a complete ban. Let’s talk about legal nuances and banking practices.
In this material, we will talk about the blockchain, analyze the issues of the system, expand the questions on attacks, payment processing, and touch on the system of multiple chains. The article suggests your suggestions, perhaps someone will have ideas that we will implement in the chain. At the end, Don’t forget to ask questions in the comments or send suggestions to [[email protected]](mailto:[email protected]) we will be happy to respond and consider your requests for any of our services. Collaboration, feedback, help us make the whole platform better. Thank you for being with us! Until new meetings, stay tuned for news, updates, because the most unexpected news comes spontaneously.
setup an account on coinbase.com, buy your coins, walk away until next year or later, fees are ~1.5% which is $1.5 USD for a $100 USD of coin
note coinbase does have an option to buy via credit card instead of a bank account, fees are ~4% when you do that, your credit card company may charge more if it considers it a cash transfer
Guide for Not Noobs
-setup an account on coinbase.com, move dollars into your account, setup an account on gdax.com (same company, same login), move your cash from coinbase to gdax, buy your coins on GDAX at Market, fees are cheaper 0.25% versus 1.5% -consider buying alternative coins supported by coinbase
-all of the above but use GDAX's Limit/Buy, zero fees, but you have to wait for the market to dip below your buy price
More Money Available
-setup several Limit/Buy orders at different price points to capture dips when you are away
More Control but More Complex
-it's possible coinbase could go out of business, move some or most of your coins to a personal hardware wallet like a Trezor or Ledger Nano S, made in Czech Republic and France respectively -consider using other exchanges with different fees and coin support -consider buying other alternative coins supported by other exchanges
You Are Very Responsible
-create a paper wallet, put it in a safe, be warned it's like a visual bearer instrument, if you lose it or someone takes a picture of it...it's gone, but you have complete control over your money/asset
DO NOT EVER
-buy more than you can lose, it's early wild west days, the market could easily come crashing down -panic sell, the market fluctuates regularly by 20%, thus far it has ALWAYS recovered, people that try to sell during a fall/dip and buy at the bottom usually miss time it and lose -store your keys on your computer or phone unless its small amount, these are the two most vulnerable routes to hacking and simple hardware failure resulting in loss -attempt to daytrade and time the best prices unless your real life job is day trading -get addicted to watching the market, pay attention watch for dips, but don't let it crowd out your work or free time -keep a LOT of cash or coin in an exchange, it is very easy to mistype and buy or sell far more than you meant to, exchanges can disappear with your coins -buy a hardware wallet from anyone other than the company who makes it, i.e. do not buy one on Amazon, it is possible some third person hacked it and could steal your coin
-limit sells until the far future when market volatility is down, flash crashes have happened and recovered, if you had all your coin in limit sells it would be gone -margin trade unless your real life job is day trading -stop buys or stop sells unless your real life job is day trading
-hold your coins, your coin may be worth x10 or more in value in the future, e.g. if bitcoin replaced gold, bitcoin would be worth ~x70 the current value -buy small amounts over time DCA, this might not seem intuitive but it spreads your risk out, reduces risk of buying at all time highs (ATH) and more likely to catch lows (dips), a fluctuation of $100 in price is small if the eventual value is worth x10 or more in the future -keep a small amount of cash on an exchange always, when there is a lot of traffic/trading which happens during dips, you are much more likely to be able to make trades on an exchange rather than with your own wallet
-if you don't have your coin in your own wallet, it's not your coin. this is not a problem until you have a lot of value and you want to keep it safe from a bankruptcy, unscrupulous people/exchanges, or unforeseen acts. if it's a small amount compared to your income it's an acceptable risk, if not then move it to a wallet -in the days of fake news not everything you read is true, in fact there are armies of people shilling for 'pick a random coin'; some are malicious, some uninformed, and some willfully uninformed -if your value starts to become large, dig deep into how your asset/currencies work just like you would for any other purchase, understanding how it works helps you understand if it will be a success, e.g. understand the difference between PoW vs PoS or what a hard fork is -some coins especially newer ones are scams, a good indication of if it is not a scam is how long the coin has been around -most bitcoin hard forks so far have not been successful with some exceptions -btc is the accepted short-name for bitcoin on most (but not all) exchanges, xbt is also common in EUR-land
-holding your own coin requires personal responsibility, it is easy to lose and not be able to recover it if you are not careful -again, do not buy more coin than you can lose -transaction speeds which are slow are a serious problem in bitcoin scaling -there is less innovation and more argument going on in bitcoin than some other coins, bitcoin is large enough that consensus is difficult, future change is less likely than with some other coins, there are other side solutions to bitcoins problems that may not require bitcoin to change much -bitcoin.org IS the generally accepted bitcoin website, NOT bitcoin.com -important other risks compiled by themetalfriend -coinbase has insurance up to $250k USD for you USD Wallet which DOES NOT cover your bitcoins or other crypto currencies, they claim to have separate insurance for your crypto currency but it is unclear how much
there are a lot of memes -hodl, GameKyuubi mistyped hold and it spread -to the moon, where everyone hopes the price will go -coin on a rollercoaster, it is highly volitile market you will see this during fluctuations -this is gentlemen, via Liquid_child , here -lambo/roadster, a car people want to buy when they get rich -the cost of pizza, early days someone bought a pizza for 10,000btc which is worth over ~80million USD today -tesla/vehicle with a bitcoin chart, cytranic posted a picture that spread -intersting guide by stos313 , here. I do not agree with everything but it has a lot of useful information.
Edit: Adding in user comments. Edit: Crosslinking to a more Beginner Version. Edit: Note in an earlier edit of this guide I said. note that most of the development on bitcoin is by employees of one company, it is open source but their priorities may not align with the community This is not true. Blockstream appears to have a high representation but not an overwhelming amount. You can compare blockstream's employee page and bitcoin's commits in the last year. Thank you to lclc_ , trilli0nn , and Holographiks for pointing this out. See this for a detailed break down. Edit: Clarification that FDIC insurance does NOT cover crypto currency/assets. Edit: Clarity on who owns bitcoin.org
Good Luck and Hodl.
Please comment if your experience is different. Or call out things I missed.
Exchanges The best way to support XRP is to buy/sell XRP directly with your local currency, not with USDT, ETH, LTC, or BTC. Available XRP pairs - AUD, BRL, CAD, CNY, EUR, GBP, IDR, INR, JPY, KRW, MXN, PHP, RUB, THB, TRY, UAH, USD, ZAR. You can find the complete list of XRP exchanges and supported XRP/fiat pairs Here.
Elaborating on Datadash's 50k BTC Prediction: Why We Endorse the Call
As originally published via CoinLive I am the Co-Founder at CoinLive. Prior to founding Coinlive.io, my area of expertise was inter-market analysis. I came across Datadash 50k BTC prediction this week, and I must take my hats off to what I believe is an excellent interpretation of the inter-connectivity of various markets. At your own convenience, you can find a sample of Intermarket analysis I've written in the past before immersing myself into cryptos full-time. Gold inter-market: 'Out of sync' with VIX, takes lead from USD/JPY USD/JPY inter-market: Watch divergence US-Japan yield spread EUUSD intermarket: US yields collapse amid supply environment Inter-market analysis: Risk back in vogue, but for how long? USD/JPY intermarket: Bulls need higher adj in 10-y US-JP spread The purpose of this article is to dive deeper into the factors Datadash presents in his video and how they can help us draw certain conclusions about the potential flows of capital into crypto markets and the need that will exist for a BTC ETF. Before I do so, as a brief explainer, let's touch on what exactly Intermarket analysis refers to: Intermarket analysis is the global interconnectivity between equities, bonds, currencies, commodities, and any other asset class; Global markets are an ever-evolving discounting and constant valuation mechanism and by studying their interconnectivity, we are much better positioned to explain and elaborate on why certain moves occur, future directions and gain insights on potential misalignments that the market may not have picked up on yet or might be ignoring/manipulating. While such interconnectivity has proven to be quite limiting when it comes to the value one can extract from analyzing traditional financial assets and the crypto market, Datadash has eloquently been able to build a hypothesis, which as an Intermarket analyst, I consider very valid, and that matches up my own views. Nicolas Merten constructs a scenario which leads him to believe that a Bitcoin ETF is coming. Let's explore this hypothesis. I will attempt to summarize and provide further clarity on why the current events in traditional asset classes, as described by Datadash, will inevitably result in a Bitcoin ETF. Make no mistake, Datadash's call for Bitcoin at 50k by the end of 2018 will be well justified once a BTC ETF is approved. While the timing is the most challenging part t get right, the end result won't vary. If one wishes to learn more about my personal views on why a BTC ETF is such a big deal, I encourage you to read my article from late March this year. Don't Be Misled by Low Liquidity/Volume - Fundamentals Never Stronger The first point Nicholas Merten makes is that despite depressed volume levels, the fundamentals are very sound. That, I must say, is a point I couldn't agree more. In fact, I recently wrote an article titled TheParadox: Bitcoin Keeps Selling as Intrinsic Value Set to Explode where I state "the latest developments in Bitcoin's technology makes it paradoxically an ever increasingly interesting investment proposition the cheaper it gets." However, no article better defines where we stand in terms of fundamentals than the one I wrote back on May 15th titled Find Out Why Institutions Will Flood the Bitcoin Market, where I look at the ever-growing list of evidence that shows why a new type of investors, the institutional ones, looks set to enter the market in mass. Nicholas believes that based on the supply of Bitcoin, the market capitalization can reach about $800b. He makes a case that with the fundamentals in bitcoin much stronger, it wouldn't be that hard to envision the market cap more than double from its most recent all-time high of more than $300b. Interest Rates Set to Rise Further First of all, one of the most immediate implications of higher rates is the increased difficulty to bear the costs by borrowers, which leads Nicholas to believe that banks the likes of Deutsche Bank will face a tough environment going forward. The CEO of the giant German lender has actually warned that second-quarter results would reflect a “revenue environment [that] remains challenging." Nicholas refers to the historical chart of Eurodollar LIBOR rates as illustrated below to strengthen the case that interest rates are set to follow an upward trajectory in the years to come as Central Banks continue to normalize monetary policies after a decade since the global financial crisis. I'd say, that is a correct assumption, although one must take into account the Italian crisis to be aware that a delay in higher European rates is a real possibility now. !(https://coinlive.io/ckeditor_assets/pictures/947/content_2018-05-30_1100.png) Let's look at the following combinations: Fed Fund Rate Contract (green), German 2-year bond yields (black) and Italy's 10-year bond yield (blue) to help us clarify what's the outlook for interest rates both in Europe and the United States in the foreseeable future. The chart suggests that while the Federal Reserve remains on track to keep increasing interest rates at a gradual pace, there has been a sudden change in the outlook for European rates in the short-end of the curve. While the European Central Bank is no longer endorsing proactive policies as part of its long-standing QE narrative, President Mario Draghi is still not ready to communicate an exit strategy to its unconventional stimulus program due to protectionism threats in the euro-area, with Italy the latest nightmare episode. Until such major step is taken in the form of a formal QE conclusion, interest rates in the European Union will remain depressed; the latest drastic spike in Italy's benchmark bond yield to default levels is pre-emptive of lower rates for longer, an environment that on one hand may benefit the likes of Deutsche Bank on lower borrowing costs, but on the other hand, sets in motion a bigger headache as risk aversion is set to dominate financial markets, which leads to worse financial consequences such as loss of confidence and hence in equity valuations. !(https://coinlive.io/ckeditor_assets/pictures/948/content_2018-05-30_1113.png) Deutsche Bank - End of the Road? Nicholas argues that as part of the re-restructuring process in Deutsche Bank, they will be facing a much more challenging environment as lending becomes more difficult on higher interest rates. At CoinLive, we still believe this to be a logical scenario to expect, even if a delay happens as the ECB tries to deal with the Italian political crisis which once again raises the question of whether or not Italy should be part of the EU. Reference to an article by Zerohedge is given, where it states: "One day after the WSJ reported that the biggest German bank is set to "decimate" its workforce, firing 10,000 workers or one in ten, this morning Deutsche Bank confirmed plans to cut thousands of jobs as part of new CEO Christian Sewing's restructuring and cost-cutting effort. The German bank said its headcount would fall “well below” 90,000, from just over 97,000. But the biggest gut punch to employee morale is that the bank would reduce headcount in its equities sales and trading business by about 25%." There is an undeniably ongoing phenomenon of a migration in job positions from traditional financial markets into blockchain, which as we have reported in the past, it appears to be a logical and rational step to be taken, especially in light of the new revenue streams the blockchain sector has to offer. Proof of that is the fact that Binance, a crypto exchange with around 200 employees and less than 1 year of operations has overcome Deutsche Bank, in total profits. What this communicates is that the opportunities to grow an institution’s revenue stream are formidable once they decide to integrate cryptocurrencies into their business models. One can find an illustration of Deutsche Bank's free-fall in prices below: !(https://coinlive.io/ckeditor_assets/pictures/946/content_2018-05-30_1052.png) Nicholas takes notes of a chart in which one can clearly notice a worrying trend for Italian debt. "Just about every other major investor type has become a net seller (to the ECB) or a non-buyer of BTPs over the last couple of years. Said differently, for well over a year, the only marginal buyer of Italian bonds has been the ECB!", the team of Economists at Citi explained. One can find the article via ZeroHedge here. !(https://coinlive.io/ckeditor_assets/pictures/953/content_2018-05-30_1451.png) Equities & Housing to Suffer the Consequences Nicholas notes that trillions of dollars need to exit these artificially-inflated equity markets. He even mentions a legendary investor such as George Soros, who has recently warned that the world could be on the brink of another devastating financial crisis, on lingering debt concerns in Europe and a strengthening US dollar, as a destabilizing factor for both the US's emerging- and developed-market rivals. Ray Dalio, another legend in the investing world and Founder of Bridgewater Associates, the world’s largest hedge fund, "has ramped up its short positions in European equities in recent weeks, bringing their total value to an estimated $22 billion", MarketWatch reports. Nicholas extracts a chart by John Del Vecchio at lmtr.com where it illustrates the ratio between stocks and commodities at the lowest in over 50 years. As the author states: "I like to look for extremes in the markets. Extremes often pinpoint areas where returns can be higher and risk lower than in other time periods. Take the relationship between commodities and stocks. The chart below shows that commoditieshavennot been cheaper than stocks in a generation. We often hear this time it is different” to justify what’s going on in the world. But, one thing that never changes is human nature. People push markets to extremes. Then they revert. " !(https://coinlive.io/ckeditor_assets/pictures/954/content_2018-05-30_1459.png) Bitcoin ETF the Holy Grail for a Cyclical Multi-Year Bull Run It is precisely from this last chart above that leads Nicholas to believe we are on the verge of a resurgence in commodity prices. Not only that but amid the need of all this capital to exit stocks and to a certain extent risky bonds (Italian), a new commodity-based digital currency ETF based on Bitcoin will emerge in 2018. The author of Datadash highlights the consideration to launching a Bitcoin ETF by the SEC. At CoinLive, our reporting of the subject can be found below: "Back in April, it was reported that the US Securities and Exchange Commission (SEC) has put back on the table two Bitcoin ETF proposals, according to public documents. The agency is under formal proceedings to approve a rule change that would allow NYSE Arca to list two exchange-traded funds (ETFs) proposed by fund provider ProShares. The introduction of an ETF would make Bitcoin available to a much wider share of market participants, with the ability to directly buy the asset at the click of a button, essentially simplifying the current complexity that involves having to deal with all the cumbersome steps currently in place." Nicholas refers to the support the Bitcoin ETF has been receiving by the Cboe president Chris Concannon, which is a major positive development. CoinLive reported on the story back in late March, noting that "a Bitcoin ETF will without a doubt open the floodgates to an enormous tsunami of fresh capital entering the space, which based on the latest hints by Concannon, the willingness to keep pushing for it remains unabated as the evolution of digital assets keeps its course." It has been for quite some time CoinLive's conviction, now supported by no other than Nicholas Merten from Datadash, that over the next 6 months, markets will start factoring in the event of the year, that is, the approval of a Bitcoin ETF that will serve as a alternative vehicle to accommodate the massive flows of capital leaving some of the traditional asset classes. As Nicholas suggests, the SEC will have little choice but to provide alternative investments. Bitcoin as a Hedge to Lower Portfolios' Volatility Last but not least, crypto assets such as Bitcoin and the likes have an almost non-existent correlation to other traditional assets such as stocks, bonds, and commodities, which makes for a very attractive and broadly-applicable diversification strategy for the professional money as it reduces one’s portfolio volatility. The moment a Bitcoin ETF is confirmed, expect the non-correlation element of Bitcoin as a major driving force to attract further capital. Anyone Can BeWrongDatadash, But You Won't be Wrong Alone Having analyzed the hypothesis by Nicholas Merten, at CoinLive we believe that the conclusion reached, that is, the creation of a Bitcoin ETF that will provide shelter to a tsunami of capital motivated by the diversification and store of value appeal of Bitcoin, is the next logical step. As per the timing of it, we also anticipate, as Nicholas notes, that it will most likely be subject to the price action in traditional assets. Should equities and credit markets hold steady, it may result in a potential delay, whereas disruption in the capital market may see the need for a BTC ETF accelerate. Either scenario, we will conclude with a quote we wrote back in March. "It appears as though an ETF on Bitcoin is moving from a state of "If" to "When." Datadash is certainly not alone on his 50k call. BitMEX CEO Arthur Hayes appears to think along the same line. On behalf of the CoinLive Team, we want to thank Nicholas Merten at Datadash for such enlightening insights.
https://preview.redd.it/hixbz9f3lxm31.jpg?width=1200&format=pjpg&auto=webp&s=43896de84a3693d840c84057c0314af71718f0a3 What is Zcoin? Zcoin, also referred to as XZC or Zerocoin, is an open source decentralized cryptocurrency that provides privacy and anonymity for its users when making transactions. To achieve its privacy and anonymity, Zcoin uses zero-knowledge proofs via the Zerocoin protocol, which is at this moment in time one of the most cited cryptography papers. According to Wikipedia, in cryptography, a zero-knowledge proof or zero-knowledge protocol is a method in which one party proves to another party (the verifier) that a given statement is actually true. In other words, in a transaction with Bitcoin or Ethereum or something similar, your transaction history is always linked to your coins by default, leaving you vulnerable. All it takes is one link to your personal information or IP to find out the origin of the coins. However, when you trade with Zcoin’s Zercoin feature, your transaction history is not linked to the actual coins. Only the receiver and sender know that the funds have actually been exchanged.
How Does Zcoin Work?
Zcoin works on the Zerocoin protocol by enforcing Zero-knowledge proofs. Here are the components of Zcoin to explain how it works. Mint: When sending a private transaction with Zcoin, all you need to do is select the number of coins you want to mint. Post that your normal Zcoin balance would reduce automatically and you will be credited with new coins and no transaction history. In essence, your old coins are burned cryptographically, which prevents anyone else from using them again and being directed to your transaction history. You get credited with new coins with no history, while the total supply is maintained. For now, you can only mint in denominations of 1, 10, 25, 50 and 100. If you choose ‘100’ coins to be minted, for instance, you will instantly be credited with 100 new Zcoins with no history attached to them.
Spend: When you want to make a private transaction, you will be required to use these ‘100’ newly minted coins. From this pool of funds, you can now send any amount in any denomination to anyone anonymously because no history is attached to it.
Repeat: You can ‘mint’ and ‘send’ Zcoins any number of times at anytime with your privacy intact.
Zcoin seeks to improve things that Bitcoin hasn’t been able to so far, some of which include fungibility, privacy and miner’s centralization. Users of Zcoin can enjoy full fungibility and privacy along with demolishing miner’s centralization by implementing a better proof of work algorithm called MTP. Total Zcoin supply Only 21 million units of Zcoin will ever be produced. Currently, there are about 3.4 million units in circulation, with the rest yet to be mined. But the total supply has increased by 388450 XZC units after a Zcoin code bug, which the team refused to roll back due to economic reasons, which is why the total supply stands at approximately 21.4 million. Every 10 minutes, a Zcoin block is mined and 50 coins are generated, making 72,000 Zcoins per day. Market cap of Zcoin According to CoinMarketCap, the total circulating supply of Zcoin is 5,757,841 XZC and the current unit price is $9.6. That makes the market cap approximately $55 million*.* https://preview.redd.it/qw2igvupoxm31.png?width=1080&format=png&auto=webp&s=cfaa195d5d75ba8f20e5894d0351b2eabf76825a
How To Buy Zcoin Cryptocurrency
If you are looking to get some Zcoin, here is a list of resources where it can be bought from.
Atomars – Supported pairs are XZC/BTC, XZC/ETH, XZC/USDT
Binance - Supported pairs are XZC/BTC, XZC/ETH, XZC/BNB
Note: At the moment, buying XZC in fiat currencies such as USD, EUR, or GBP is quite difficult. https://preview.redd.it/rrwao97woxm31.png?width=1460&format=png&auto=webp&s=442bf152f86a63300c5c4a029bb07369a69e6f70 Zcash: Zcash is a decentralized and open-source peer-to-peer cryptocurrency that provides strong privacy protections. It was created as a fork of Bitcoin and, like bitcoin, it also has a hard limit of 21 million coins. Unlike bitcoin, however, Zcash offers total privacy for its users maintaining the absolute anonymity behind each transaction along with the parties and the amounts involved in it. PIVX: PIVX, which stands for Private Instant Verified Transaction, is an open-source, decentralized form of digital online money that uses blockchain technology. This makes it easy to transfer all around the world in an instant with low transaction fees with market leading security & privacy. PIVX focuses on privacy, security, anonymity, and instant transactions. Monero: Monero is a fast, private, secure and untraceable digital currency system that uses a special kind of cryptography to keep all its transactions 100% unlinkable and untraceable. With Monero, you are your own bank. You can spend safely, knowing that others cannot see your balances or track your activity. Some Zcoin misconceptions There are some misconceptions regarding Zcoin:
Some believe that, since Zcoin has a trusted setup that allows indefinite minting of coins, it is not safe. This is untrue. Of course, to start with they had to use a trusted setup because they have an auditable total coin supply that prevents any form of cheating. This downside however, is being taken care of by removing this trusted setup in the near future and when that happens, Zcoin will be one of the serious coins to count on for privacy.
Zcoin has been considered as Zcash’s fork but that is also not true because Zcash is based on the Zerocash protocol whereas Zcoin was started from scratch by applying Zerocoin tech.
Now that some of the Zcoin’s misconceptions have been cleared, here’s a look into its future.
Zcoin’s Future & Roadmap
Zcoin’s future is quite promising and worth watching based on these interesting milestones on their roadmap:
Zcoin is the first coin to implement MTP proof of work, which makes it possible for general masses to mine Zcoin with GPUs and CPUs. MTP doesn’t allow costly ASIC-like miners to mine XZC coins.
Zcoin is also implementing Znodes to make their cryptocurrency more decentralized and anonymous. These Znodes will be like masternodes and facilitate anonymous transactions as making an anonymous transaction single-handedly is quite computational.
Znodes will be incentivized by reducing some portion of the founder’s reward. Also, the surplus funds that get generated from the founder’s reward reduction would be used for hiring new developers and increased marketing efforts.
Another agenda on their roadmap is to bring inbuilt Tor or some IP obfuscation mechanism that will make it completely anonymous.
Apart from these, some innovative and exciting things like sigma protocol, decentralized anonymous voting and Zcoin Labs are on their roadmap, making this project worth checking out.
Last but not least, its recent price is a good indicator of its healthy market sentiment and shows that there are people who understand this project’s worth. Just to put things into perspective – a unit of Zcoin was priced $2 in March 2017 and now it is $37*.*
Zcoin Team & Progress
Zerocoin is a cryptocurrency proposed by professor Matthew D. Green, a professor of Johns Hopkins University, and graduate students Ian Miers and Christina Garman. It was proposed as an extension to the Bitcoin protocol that would add true cryptographic anonymity to Bitcoin transactions. Zerocoin was first implemented into a fully functional cryptocurrency and released to the public by Poramin Insom, the lead developer, as Zcoin in September 2016. Some of the notable dev members of the team are listed below. Poramin Insom Founder and Core Developer Poramin Insom created what was the world's 4th most valuable cryptocurrency in February 2014. He is also the world's first person to implement stealth addresses in QT-Wallets, improving cryptocurrency anonymity. He earned a master’s degree in Information Security from Johns Hopkins University, where he wrote a paper on a proposed practical implementation of the Zerocoin protocol. Alexander N. Developer Alexander N. aka Aizensou is a full-stack developer who has experience in many programming languages (C++, C#, Python, Perl, Java etc.) and has been involved in the cryptocurrency space since 2013. He has a broad development portfolio from low level APIs in Python and C++ to Android native applications in Java. In addition to his involvement in cryptocurrencies, Alexander was doing his P.h.D. in machine learning at a German university from 2012 to 2016. Saran Siriphantnon Developer Saran Siriphantnon is the CTO of Satang.co/Satoshift, a fintech company focusing on creating an open financial system for Southeast Asia. He served as President of the Computer System Administrator Group at King Mongkut's Institute of Technology Ladkrabang. Tadhg Riordan Solidity Developer Tadhg Riordan is a 24 year old Software Developer from Wexford, Ireland. He recently completed his MSc from Trinity College Dublin, where he worked with Blockchain privacy mechanisms, focusing particularly on Zero-Knowledge Proofs and the Ethereum platform. He is a strong advocate for the adoption of cryptocurrency and for complete financial privacy. Apart from these, their team comprises of other developers, community managers, support personnel and advisors who maintain the required balance.
Aram Jivanyan (Cryptography Advisor): Co-Founder at Skycryptor & KMSchai Torphop Korgtadam (It Security Consultant): Senior Vice President, Head Of Internal Audit Strategy, Innovation and Decision Science at United Overseas Bank Limited Alexander N. aka Aizensou (Advisor)
Unique/Key Features Against Its Competitors:
Anonymous transactions. The project establishes a notably higher level of anonymity and seeks to bypass current analysis techniques which governments use to reveal the identity of users.
Not subject to transaction graph analysis. Zcoin has an anonymity set that encompasses all minted coins in a particular RSA accumulator that can scale to many thousands.
Innovative process. Tokens are burned cryptographically and replaced with new coins without a transaction history. This actively prevents anyone else from using the tokens again and stops the public from being directed to a user's transaction history.
Transparency focused. Zcoin's main advantage is its auditable money supply.
If you are holding a shovel, that doesn't necessarily mean you are digging gold ;)
Ok, you may still call it "mining" but technically it's only hashing (mind the name: NiceHash). (and it may or may not be used to mine Cryptos, but in the end, it's not you who decides).
What the hell am I doing then?!?
You offer your hashing power; e.g. your GPU(s) and/or CPU(s) computing power - you are a Seller
NiceHash is a marketplace where others buy access to your hashing power - these are Buyers
Others aka Buyers are then mining Cryptocurrencies to their wallets, by using your hashing power
Deals are sold and therefore paid in BTC - from the Buyers pockets directly to your pocket
Prices are solely set by best bids from the Buyers - neither you nor NiceHash can directly affect them.
Who makes Profit, and how?
NiceHash collects fees from buyers and sellers to pay their costs and make their income.
Buyers mine Coins... on other pools to hodl (hoping for future profits), solo to win the “block lottery”, to capitalize short-term rate changes, or by applying other, more complex strategies. tl;dr: Buyers spend their BTC on NiceHash to make a profit for themselves.
Sellers (you) earn these BTC, and after covering your costs - investments in hardware, electricity, maintenance (i.e. your precious time to keep rigs running) - you hopefully made some profit also.
How is it possible everyone is making a profit?
The Cryptocurrency ecosystem attracts people; even the average Joe these days; There is lots of hype, and also lots of belief - more or less reasonable - that Cryptos are the Next Big Thing. So they put their so-called Fiat money (USD/EU…) into buying Coins and thus generate new value within them.
As long public interest rises, thus enough fresh (Fiat) money is floating in - to at least cover more than all the running costs are (hardware, electricity, wages, etc.; usually still to be paid in Fiat) - everyone within this ecosystem can make some profit over time.
Why do profits skyrocket, and will it last (and will this happen again)?
When even Fox News tells people to have some Bitcoin, because everyone can double his money within a few months only, a heavy influx of fresh (Fiat) money begins, and shortly after everyone gets completely crazy, the pie that feeds us grows - to the moon, at least ;)
But nothing is going to last forever (or even for long), nor does this; a minor nucular incident with NK, news from China about potentially disruptive regulation, less trust in the future of Crypto investments because of whatever good or bad reasons, or people just need their Fiat money back for medical bills… you name it.
The good news: If you still believe in Cryptos and hodl you can probably make more out of your past earnings - and what you earn today is going to be a past earning anytime soon ;)
The bad news: Yes, the current raw numbers (for payments per work unit) are decreasing and will continue to decrease, unfortunately; unless there is a new hype. But in the long term that is the only trend you will ever see - so better make up your numbers and act wisely.
The bottom line: Even when your profit steadily declines, it's still a profit (given you have done the math right). And there is not much you - or any other individual - can do about that anyway.
But why?!? I’m supposed to make lotsa money out of this!!!
Since Fox News told everyone about Bitcoins, there were many people having the obvious idea to make big money by mining Cryptos; at first this seems to work since it makes more slices, but from a bigger pie also, but as soon the hype train stutters, the pie stops growing or even starts to shrink again - and so do the slices for everyone who still keeps mining:
Interest hype -> Influx of Fiat money -> Coins quotes skyrocket -> Influx of miners -> Difficulty skyrockets -> Most of the price uptrend is choked within weeks, since it’s now harder to mine new blocks.
Interest hype drains out -> Fiat money influx declines -> Coins quotes halt or even fall -> Miners still hold on to their dream -> Difficulty stays up high, even rises -> Earnings decrease, maybe even sharply, as it's still harder to mine new blocks, that may be even paid less.
Earnings are hit by... a) Planned difficulty increases (like for Ethereum) b) Difficulty increase because of an ever-growing number of miners c) Lower prices of Bitcoin (the NiceHash market trade currency in which you are paid) d) Lower prices of Alt Coins (what buyers are acquiring while using your hashing power) e) And last but not least, when using NiceHash, a possibly declining number of Buyers of hashing power
Also NiceHash earnings/trends are additionally complicated by the fact, that these mechanisms affect tons of Alt Coins, in slightly different ways, and since Buyers "trade" Bitcoins against Alt Coins by using your hashing power, it may, at times, look like someone is cheating; but usually it's just convoluted market mechanics - and the plain truth that you only feel cheated on if you lose, but never when you win ;)
Be warned that this process(es) may happen slowly over several months, in just a couple of weeks, and sometimes within a few days only, and ups & downs of 10,20,30 percent (and more) are nothing unusual!
So, how to judge what’s going on with my profits?
Check the crypto economy - and don’t forget (I might now repeat myself): NiceHash is just a marketplace which runs on BTC; read below how this basically works out.
Check the mid/long term hashrate on NiceHash for your favorite algo(s) - the higher it gets, the smaller is the slice of the (payout) pie you will be able to acquire with the same equipment!
Check the news! Cryptocurrencies are a hot topic nowadays, and many people act on what is in the news; and whatever is going on will probably affect prices in either way and thus your profit.
Simple breakdown of the relationship of BTC payouts by NiceHash, BTC/ALT Coins rates, and Fiat value:
BTC quote | ALTs quotes | BTC payout | Fiat value ----------------------------------------------------- UP | UP | stable*) | UP stable | UP | UP | UP UP | stable | DOWN | stable*) stable | stable | stable | stable DOWN | stable | UP | stable*) stable | DOWN | DOWN | DOWN DOWN | DOWN | stable*) | DOWN
*) If the BTC payouts or Fiat values are really going to stay the same in these cases, or drop, or even rise, of course, depends on the exact delta of the changes between BTC and ALT.
Note: Since BTC is by far the leading Cryptocurrency, you will most probably watch ALTs drop when BTC drops quite often, but not necessarily see ALTs rise as soon BTC rises; all the Fiat (money) value they all together represent simply needs to come from somewhere, and it’s much more likely that new investments aka “fresh money” is pulled into BTC first, and trickles down to ALTs.
Some rather obvious remarks:
Many points are intentionally oversimplified - as otherwise this post would need to be at least ten times as long; the best you can do to stay ahead of the pack is to do your own research and learn about what you are doing here - ideally before doing it!
Even if NiceHash is often jokingly (more or less) called NoobHash, because it's that easy to start with, staying a Noob will pull you back, rather sooner than later, in an ultra-fast paced economy like this.
Don’t expect strangers here or elsewhere to hold your hand all the time, no matter how helpful some people still are. In the end, we all (also) compete against each other ;)
Keep yourself well informed to avoid nasty surprises!
Disclaimer: I'm a user - Seller like you - not in any way associated with NiceHash; this is my personal view & conclusion about some more or less obvious basics in Crypto mining and particularly using NiceHash. Comments & critics welcome...
Crypto Wallet Offers the Purchase Bitcoin and Ether for USD or EUR
https://preview.redd.it/hrlgnd9fm3i31.png?width=450&format=png&auto=webp&s=8c7da6198e6e5e568624702aa8321e318d18f79a News by Cointelegraph: Viktoria Moore A crypto wallet has enhanced its functionality, enabling users to buy cryptocurrency with a credit card using dollars or euros. Lumi Wallet, which comes in the form of iOS and Android apps as well as a web wallet, says its motivation is to provide its users worldwide with safe and convenient tools for purchasing cryptocurrency. The company says it gives its clients the opportunity to buy Bitcoin (BTC) and Ether (ETH) in a fast, simple and secure way. The safety of fiat-to-crypto transactions is ensured by Simplex — technology that allows the processing online payments with “complete fraud protection and chargeback coverage.” By expanding multicurrency features, Lumi seeks to become more appealing to consumers not only in the United States but also internationally. The team says this increases mass adoption and the promotion of cryptocurrencies. Lumi adds that it also gradually localizes all its products in order to make the wallet accessible for users no matter where they live and no matter which language they speak.
Users’ data protection
Lumi boasts its adoption of Simplex, which prevents users’ credit card data from fraud via a Know Your Customer protocol and sends all the money back if something abnormal is suspected. Being considered the new crypto industry standard, Simplex processes billions in dollars and Bitcoin every year, and it collaborates with the largest crypto platforms, as Lumi reports. The team emphasizes that fiat-to-crypto exchange will take place directly in the wallet by means of a built-in browser so that users don’t have to leave the wallet in order to carry out a transaction. The company says that its ambition was not only to make the purchase of cryptocurrency convenient for its clients but also to provide a sufficiently high level of user security. From its inception, the client-side Lumi Wallet has placed an emphasis on the protection of privacy. This has been done by ensuring the anonymity of transactions and providing users with complete control over their private keys, which are saved exclusively on their own devices.
Easier than ever
According to Lumi, buying cryptocurrency today is no harder than shopping online. This attracts both newcomers who have never bought it before as well as crypto enthusiasts. What’s more, Lumi strives to create a pleasant user experience by providing an “intuitive interface and smooth design in its applications.” As for other features of Lumi Wallet, it allows clients to organize their digital asset portfolio as they wish by exposing, hiding and shifting token wallets. In addition, both the mobile app and the web version of Lumi are equipped with crypto price graphs and the entire histories of users’ transactions.
The company is looking forward to move to an open-source model this year. According to its founders, it will be a major step in Lumi’s development. The team hopes that this milestone will help to attract more loyal followers and supporters, as well as put more trust in Lumi Wallet. Lumi notes that its intention is to make not only the original wallet open source, but also the web wallet and Lumi Collect. The latter is an Ethereum wallet for ERC-721 tokens such as Blockchain Cuties, Cryptokitties, CryptantCrabs and more. Through Lumi Collect, a user can store and manage all of the crypto collectibles and in-game assets in one place. For some games, it is also possible to perform in-game actions (like gifting, selling or breeding) without leaving the app. In the future, the company is planning to expand its functionality by offering more convenient tools, such as physical and virtual credit cards that will allow for hassle-free purchases of Bitcoin and thereby stimulate mass crypto adoption.
3 Don’ts in Cryptocurrency Trading: Sharing the Experience of ROKKEX
On the way to becoming an excellent cryptocurrency trader, ROKKEX posts educational articles that will guide crypto newbies in the world of altcoins, volatility, and market caps. I know how you feel. We all got through this path from “WTF is cryptocurrency” to “How to Trade Bitcoin.” I know what it’s like when you bought altcoins for $1 and then sold them for $0.01 😩. Source: https://steemit.com/bitcoin/@kristo/cryptocurrency-meme-3 True, cryptocurrency market is harsh and bearish. You never know what the best cryptocurrency exchange is, which one is faking its volume, targeted by black hat hackers, or planning an exit scam. Nevertheless, we gathered universal crypto trading tips and talked to ROKKEX colleagues about their first experience with BTC and other cryptocurrencies. Let’s see what we got! Share your tips below in the comments ⬇️. 3 Don’ts in Crypto Trading 1. Don’t Haste Sometimes, it seems to me that the best marketers are gathered in the cryptocurrency market. It’s insane that random ICO projects got millions during their token sale promising to resolve the issues that we never had. No product, no team disclosure, no technical background, and then boom — $660 million from around 32,000 people, looking at you, Modern Tech. When you’re a newbie in cryptocurrency, don’t rush to buy “promising” altcoins and new coins, especially on ICO. ICO and IEO don’t give you any legal protection, and it’s so painful to lose even $100. ROKKEX advice: pay attention to some old and well-known coins, ideally BTC or ETH and HODL them. No matter what is going on in the cryptocurrency market, either it’s falling or rising, define the term don’t touch the coins until the deadline. Vaidas, ROKKEX Graphic Designer I first heard about cryptocurrency from my friends who had already invested in crypto mining rigs. Time went by, at the end of 2017 BTC price was sooo skyrocketing (~$19.000), that I decided to dive into the cryptocurrency market. Watched crypto-related videos on YouTube, found some crypto websites and asked my friends which crypto exchanges they used. I chose an Austrian cryptocurrency exchange as it was somewhat user-friendly, secure, and based nearby. So I signed up, went through all KYC with live agent video call, and send some funds there. First, I bought crypto (BTC) for a small amount of money (at the time bitcoin price was ~$10k), and when I understood that everything was easy, I went for more. I signed up to a larger exchange, and started manipulations! I bought some coins and sold the other. Later, I found out that I lost funds and decided just to HODL. Until now I’m HODL’ing my funds and just waiting for BTC to resurface again :) My advice: you need to be careful with those long addresses. Actually, you can check first and last 3 characters of the address (when you’re copying it).
Don’t Use P2P Services
When buying cryptocurrency from third parties and on P2P platforms, you can be tricked and hugely overpay. On average, the commission for the deal fluctuates between 10–30%. Thus, buying and selling cryptocurrency through P2P services will incur fairly high losses. ROKKEX advice: spend more time and puzzle out how you load money on a cryptocurrency exchange. Soon we’ll show you how to trade cryptocurrency and provide the explanations with all the screenshots. Stay tuned! Evaldas, ROKKEX CISO When I was buying crypto for the first time, I used a P2P platform. No KYC, no hustle, just needed to connect with the seller via Facebook Messenger and pay him directly via PayPal. Good old days. :) I sent money straight to exchange, so no wallet setup was needed. The biggest issue for me at that time was the lack of exchanges supporting FIAT. I didn’t want to use USDT and searched for the ones which support EUR deposits. An American cryptocurrency exchange was my weapon of choice. Later other big exchanges started to accept EUR. My only advice would be: get the hardware wallet and stay secure!
Don’t Be Too Confident in Margin Trading
Margin trading is one of the most profitable but at the same time, risky strategies. It lies in the fact that a trader borrows capital at a relatively high percentage to increase their leverage. For instance, if your leverage is 1:5 and the daily volatility of a cryptocurrency is 20%, so the risk to lose everything is 1:100! In this situation, you’re doomed to game away all your money. ROKKEX advice: don’t go into margin trading until you figure out how the cryptocurrency market works and you’re pretty confident in your actions. Modestas, ROKKEX COO I started crypto trading because my friends said I should try it out. I was hyped and saw the cryptocurrency pumping, so I decided to jump into it. I bought my first cryptocurrency on a P2P platform. Just later, I started reading more about the industry and deepened my knowledge considerably. Oh, I’ve got plenty to tell young cryptocurrency traders: Do in-depth research about an exchange you’re about to use; Trust the news with care. Articles on non-reputable sources can and are bought. Influencers can be paid to hype a new project. Looking into the actual project behind the ICO. Don’t go WHEN MOON I WILL BE RICH way; Don’t sell in panic (and don’t buy when hyped); Don’t be too confident with margin trading, as the risk grows significantly; But the best advice I can give is to learn to trade not with trial and error, but reading some theory about it! Try watching the graphs without buying crypto, see if you understand the market movement and analyze what you would have done and how the market actually moved. “Nothing is absolute, everything is relative” (the internet is confused about the source, either Statham, Frida Kalo, or Helvétius), and we cannot describe the current cryptocurrency market better. There is no best cryptocurrency exchange, and there is no univocal advice about what cryptocurrency to invest in to become rich. Listen to the peers, stay calm, think twice, and don’t get upset if you fail! ROKKEX cryptocurrency exchange is live now and we’re working hard to deliver a secure and user-friendly product. With all our passion and talent, we want to introduce the cryptocurrency industry to as many people as possible and lay a safety net for your first trading attempts. Cryptocurrency is the future, and you should know about it! read more https://medium.com/@rokkex/3-donts-in-cryptocurrency-trading-sharing-the-experience-of-rokkex-dbbc5ac87cc9
This post covers what happened in Decred last month. Let's get down to business and have About section at the end.
Wallet and node software version 1.2.0 has been released. Decrediton wallet highlights: improved startup experience, redesigned overview page, added basic graphs to visualize statistics and an export to CSV (helpful for tax reporting). dcrd node software highlights: significantly faster startup and compact filters to support light clients. See full release notes and downloads here, for Decrediton use 1.2.1 bugfix release. The release process has been improved. Instead of announcing a release date and trying to meet it, a Release Candidate 1 (RC1) will now be posted. After it has been tested an bugfixed with the help of the community, a second candidate (RC2) will be released. This is repeated until an RC version with no apparent bugs becomes the final release. The new process removes a ton of pressure from developers and users and gives more time for testing. As our primary consumer-facing product, Decrediton, is growing in features and complexity, more testing will be required for new releases. Politeia is "Getting close to a public beta of voting" (slack). Decred plugin merged, paywall and voting are in the testing stage. Ticket voting works on testnet via CLI. Trezor support got closer as Decred patch was merged. Please note this is only firmware support, to be usable it also needs wallet integration. WooCommerce Decred plugin alpha version is ready for testing. Decred.org received a new sleek exchanges page. The contributors page has been updated to add 10 new faces. Some of them are new to the project but others have been contributing for a while. Dev activity stats for April: 152 active PRs, 125 commits, 21,656 added and 10,288 deleted lines spread across 7 repositories done by 2-7 developers per repository. (chart)
Hashrate: April started at 2.0-2.7 PH/s range and seen a general increase with some big fluctuations between lows at 2.2 and new all time high above 5.2 PH/s. Nodes: there are 200 public listening and 500 normal nodes per dcred.eu as of May 1. 169 nodes already upgraded to version 1.2.0. Some 30 nodes were observed to be testing Release Candidate versions before the final release. Ticket price 30-day average has seen a steady rise to 87.5 DCR. Stake participation is solid 46.1% with 3.53 million DCR as of May 1.
Updates from Obelisk's Taek:
We got results back. They are more or less on line with the simulations I didn't realize this, but we don't get the real chips back for 3 more weeks. The ones we've been testing are hacked together into a DIP package (they are BGA chips) that really screws up the results There's a decent chance that the full bga chips perform better For the time being though, we're pretty much on track for the hashrates estimated on the website (slack, Apr 12)
And regarding the June delivery date:
We're still on track for batch 1. We've ordered most of the parts we'll need, including the chips. We've got working chips, we've got test boards, test units, test everything. We've signed manufacturers to produce everything. Obelisk is going strong. (reddit, Apr 23)
We are thankful for his updates in our #pow-mining channel and hope other ASIC manufacturers will also join. Fellow Sia miners are discussing the design of Obelisk SC1 case. Halong: B29 units are shipping. The amount of units in first batch was estimated 450-600 by our community member. Review of DragonMint B29 published, people are discussing shipping and running the miners. By surprise, Innosilicon announced the sale of D9 DecredMaster ASIC miner with specs identical to Halong B29 while being much cheaper ($6800 Inno vs $10499 Halong). Expected shipping date of the first batch is April 28-30. The company is active on their bitcointalk thread, also see our reddit. Just 9 days later Innosilicon announced second batch with delivery on May 7-11 and same price of $6800. (reddit)
Decred's Brazilian community made good progress with integrations this month.
emiliomann: On April 2nd @Rhama will launch the first BR exchange of altcoins with fiat market and totally within the laws of the Brazilian government. Decred will have the two markets DCBTC and DCBRL. It’s very difficult to fulfill all the legal requirements and get authorization to work with FIAT here.
The exchange turned out to be Profitfy. Profity is innovating by using dcrtime for their blockchain ID login via Original My. Great to see this deeper engagement with the tools that Decred provides, and not a surprise that it comes from @Rhama, who has been a community member since day one. This seems to have spurred another exchange, Braziliex, to bring forward their launch of DCBRL and DCBTC pairs, coming just 2 hours after Profitfy launched. Not stopping there,
viniciusfrias: We're excited to announce PagueCripto.com, a Brazilian crypto-to-fiat payment gateway which accepts Decred among other cryptocurrencies for Brazilians to pay daily bills, such as credit cards, energy, rent, etc, and also to make local bank transfers. Our service is both a web platform and an Android app, and as our community is relevant in Brazil, we are offering a discount coupon (50%) in service fees using DCR until May 14, 2018. Check it out at paguecripto.com and in Google Play Store. (slack)
Moving to other countries, good news from Canada:
michae2xl: Decred is now available on @ezBtcCanada, an exchange with DCCAD trading pair. From Toronto – ezbtc.ca
Eventually we hope to offer the pair in GBP and YEN as well
changenow.io, a non-custodian exchange for fast conversions, added DCR. You can see all exchanges known to support Decred in a spreadsheet maintained by snr01. Many of them are missing from coinmarketcap.
RAurelius: I think that a law firm accepting Decred is a worthy distinction from other previously publicized companies that accept Decred for typical consumer products. Legal services are severely lacking in the Crypto-sphere, so the publicity is good for everyone in this arena.
Great to see business owners reaching us directly in chat. VotoLegal is migrating from Ethereum to Decred blockchain:
emiliomann: VotoLegal, a Brazilian project that uses blockchain technology to allow election campaign funding to be transparent and that all transactions conducted are tracked and made available to the citizens, now uses dcrtime and Decred blockchain. https://twitter.com/decred_bstatus/986610826051276800 (slack)
YBF Ventures and Decred announced partnership in building a blockchain-focused development and business hub in Australia.
With the YBF Ventures partnership, Decred hopes to grow their Australian contractor network and scale their operations throughout the Asia-Pacific region. (btcmanager.com) We specifically chose Decred for a more robust corporate partnership, and it is the first time that a decentralised autonomous organisation is partnering with a ‘traditional’ organisation in such a capacity. (ybfventures.com)
Dustorf joined on the marketing front and is conducting a brand discovery analysis:
Decred is soliciting the input of our user community. In order to better understand you, what you think of Decred, and where you would like it to focus its efforts, we've come up with a short (4 minute) survey. Your input of all varieties is most appreciated https://www.surveymonkey.com/2LHK3FV
April targeted advertising report released (previous March report here). Reach @timhebel for full version. The iconic "Not Overly Scammy" t-shirt by cryptograffiti is available for purchase. For those wondering, the meme originates from @fluffypony. Some hilarious promos by @jackliv3r: onetwothree.
Community event at YBF Ventures in Australia. Meetup in Wroclaw, Poland. BBQ with @scalarcapital team in Austin, USA. Blockchain Expo in London, UK. Decred was well represented at this large-scale industry event. Project Lead Jake took part in several interview and the Decred stand manned by community members was flooded with inquisitive visitors. (video, photo 123) First Decred meetup in Hangzhou, China. (slack) Business of Blockchain at MIT Media Lab in Cambridge, USA. Presentation: Blockchain Sovereignty and Blockchain Integration for Businesses by Jake Yocom-Piatt. (event, reddit, photo 123) Cambridge Blockchain Meetup in Cambridge, USA. Talk: Cutting the Head off the Snake by Jake Yocom-Piatt. (event, photo 123) Upcoming events:
Madison Blockchain Meetup in Madison, USA on May 21
Second episode of Lightning Network educational series is out, exploring topics such as payment channels, onion routing, centralization risk, and challenges that still lie ahead. (youtube) A user’s perspective and introduction to blockchain governance (Richard Red) The Importance of Governance: Analyzing the Aftermath of the Monero Hard Fork by Noah Pierau (btcmanager.com) The Crypto Show w/ Marco from Decred (youtube) Interview with Jake at @Blockchain_Expo by Crypto Coin Growth (youtube) Interview with Jake at @Blockchain_Expo by Cryptocurrency Academy (youtube) Alternative Blockchain Governance Systems With Jake & Kyle From Decred at @Blockchain_Expo by Crypto Disrupt (youtube) Decred Looks Ahead: An Interview with Project Lead Jake Yocom-Piatt (Exclusive) (sludgefeed.com) How Complex Bitcoin Politics Led to the Creation of Decred (btcmanager.com) Interview with Decred’s Project Lead Jake Yocom-Piatt on Crypto Ad Bans and Market Volatility (cryptoslate.com) Decred’s Jonathan Zeppettini: The Industry Is Going To Be Displacing Wall Street (blocktribune.com) On Chain VS. Off Chain Governance: The Ins And Outs (coinjournal.net) Decred: On true decentralisation, Bitcoin communities, and avoiding the ICO route [Video] (blockchaintechnology-news.com) Marco in shitcoin talk episode 54 (youtube)
Reddit highlights: A debate on Decred protocol security and attack cost, a comparison of expected and actual block production times, a write-up on distribution of powers and how Monero could benefit from a PoS governance layer, twoother threads on ASIC resistance, and one discussing different types of decentralization. Very thoughtful discussion on whether it is appropriate to use half naked photos in marketing, followed by meta-discussion how to handle very polarizing issues and unwanted contributions to the marketing efforts of a decentralized project. (slack, continued) A new #governance channel was created to discuss governance in Decred and other projects. politeia subreddit was recovered for Decred community. Thanks to Tivra for filing the request. Politeia can bring a lot of value outside Decred so it well deserves its own sub. A new Slack invite page has been setup and onboarded 40 people in 48 hours. Decred StackExchange site proposal was closed due to inactivity in a 7 day period, according to Area 51 rules.
In April Decred showed a confident recovery after previous months. DCUSD moved from below $40 to nearly $90 and the more liquid DCBTC from 0.0058 to 0.0093. OOOBTC showed unexpectedly huge DCR trading volume of $19 m on April 10 (reddit), it went back to normal 2 weeks later. On April 25 a wild rush took the price from 0.00777 to 0.0177 BTC in under 30 minutes on Poloniex, setting a new USD all time high of ~$165 ($141 world average). Prices on other exchanges followed to a lesser degree. Possible causes were discussed on reddit. Talking about all time highs, an indicator tracking difference between ATH and current price shows Decred is competitive at retaining USD value.
Bittrex finally opened registrations again. ASIC debates are raging after Bitmain stealth-launched ASICs for Sia, Monero and Ethereum. Most opinions reflect on whether and how to resist ASICs, but some are recognizing the Decred way, like this excellent piece. The importance of governance is gaining recognition as well. One notable example is Mike Hearn's AMA where it was a hot topic.
About This Issue
This project was motivated by the desire to expose just how much is happening in Decred and save the time for people unable to actively follow our channels. It aims to cover all relevant developments with a short description and links to read further. It shows the depth of the project and the involvement of the community. We also plan to launch a newsletter and consider a shorter version if there is such a demand. This is the first issue and feedback is welcome to discover what is best for our readers. Please join our Slack and write us on #writers_room or comment directly on GitHub. Any help is welcome too. Credits (Slack names, alphabetical order): bee, jazzah, Richard-Red, snr01 and vj.
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