Blockchain technology is continuously being compared to internet-technology. Facebook, a company with about 2.3 billion users launches its own blockchain-based currency called Libra. This is a fairly bold move and a lot of thoughts come to mind. When the internet was launched to the public in the 1990s no single company had this many clients or users. In fact, in the history of humanity nobody, not even the largest countries, had this many users for a new currency. This is a unique move in the history of humanity.
Decentralized applications (Dapps) have taken off. Dappradar.com, the trusted authority on all things Dapps, has over 1800 listed dapps. And the activity is not restricted to the developer side; users and transactions are also steadily growing. Another player, State of Dapps reports the following:
ETH, EOS, and TRON are the major platforms for dapps, which now include apps for gaming, gambling, exchanges, and more. If we analyze the top 50 dapps, three are on ETH and the rest are on EOS and TRON.
Blockchain is now mainstream, but there are multiple niches that are growing and finding traction in the real world on a standalone basis. Decentralized Applications (DApps) have existed since the advent of P2P networks, but have only gained popularity with blockchain technology.
So, what are these decentralized apps, and why are they important?
Tezos brings multiple technical innovations: On-chain Protocol Governance, Liquid Proof of Stake, and their own smart contract language called Michelson. As the Tezos network has now been live for a few months and in order to understand the potential of the network we interviewed Samuel Harrison from Tezos Commons Foundation.
As Samuel explains, it is best to think of Tezos Commons as one “marketing” arm, among others, of the Tezos ecosystem. And, in particular, Tezos Commons is the arm that is based in Silicon Valley.
We are, of course, interested in understanding Tezos. Especially it comparison to Ethereum, EOS, Cardano and other smart contract blockchain platforms.
The purpose of this analysis is to execute an objective and quantitative evaluation of the Ethereum network. Why? Ethereum’s token ETH price has been in a spectacular free fall for the past few months. From a high of over $1400 in January 2018 to the May push to almost $800, ETH has now reached lows around $240. This surprising price movement made me want to reconsider my thoughts on Ethereum again from scratch and without emotions.
In addition groups are targeting the Ethereum network with a negative campaign using the same strategy they used against IOTA in the past as you can read here. Therefore I would like to make my own opinion.
Today, in the US, crypto coins are seen as property by the IRS. Therefore, according to policy, if you want today to pay for your coffee with 0.00075 Bitcoins worth about $5 dollars, you also must pay tax on these 0.00075 Bitcoin you just spent.
What tax? Here is a rough way on what this tax is. You have to calculate at what USD/BTC price you purchased these 0.00075 Bitcoins, lets say $250 per Bitcoin. You have to look at what USD price you sold these bitcoins, lets say today at $6600. Then you have to look up your tax rate, lets say 30%. Therefore in addition of paying for your coffee with 0.000075 BTC you also have to write a check to the IRS for 0.00075*(6600–250)*0.30=$1.42
What would you rather buy: tokens in a $25mil ICO or a liquid token with a $5mil market cap?
The ICO still must prove itself. The liquid token is already trading on multiple exchanges. The liquid token’s team already hit a few milestones and either has a working ecosystem or is just months from releasing it.
Junk bond market
Around the mid-1980s the junk bond market appeared by leveraging that humans tend to be overly pessimistic. For example, certain bonds that pay 20% interest may have a lower probability of default then the interest would make you think. By picking those bonds certain hedge funds have made very impressive returns in the past.
Software writing is slowly moving from human-written to computer generated using large amounts of data. Blockchain allows for crowdsourcing of cheap and diverse high quality data which wasn’t possible before.
The “IF” “THEN” approach
The Von Neuman computer model I used in all the computer we are familiar with from Desktop to Laptops via Smartphones and Tablets. To make the computer do what we want the typical computer programmer will, elegantly and through more advanced rules, basically write a list of “if” “then” conditions where all possible cases will hopefully be covered. For example: if you type W, move the character up. If you type S, move it down. If there is a wall in the direction of movement stop. And so on. The results are the computers we are familiar with today who use keyboards, mice, and in general digital inputs that are 0s or 1s and very clear. This also includes capacity sensing on smartphones which are “is the finger here or not”.
However, as seen in self-driving cars, recent advances in computer science are opening the door to computers using other inputs like “what they see”.
It is just the beginning of the coin offering market. In this article we, Block X Bank, an investment bank focused on blockchain, will be exploring using the best data available the past, present and future of the Initial Coin Offering (ICO) market.
Total potential market size
Private Equity Assets under management are valued in total to about $2.5 trillion USD. A Private Equity investor is typically locked in for 7 to 10 years. In general, the investment is difficult to value during that time. And the investor receives back their payment at the time that is solely at the discretion of the fund manager.
Imagine a world where most crypto-coins are regulated securities trading on regulated securities exchanges. And shares in companies, cash flows, dividends, interests, notes, and other existing proven financial products back these coins.
In my eyes volatility is what is preventing crypto currencies from being more used for payments in online commerce.
I believe that crypto currencies are much better adapted than credit cards for online payments (faster, cheaper, non-reversible, simpler, etc). And yet crypto currencies are hardly used at all:
BTC is 300x more volatile than EUR
I strongly believe that lack of adoption is due to the crypto’s volatility. Merchants have costs in fiat currency (USD for example). Having a BTC price for their product that changes by 30% a week is not manageable and provides poor customer experience. Imagine if you wanted to buy a car and the price was today 10 BTC and tomorrow 13 BTC and day after 7 BTC while the normal consumers haggles over $200 for the price of the a $40,000 car and needs hours/days to make the payment. This is not manageable.