State of the cryptosphere - Jan 2019

Published: 2019-01-09


After one of the worst years in decades, 2019 is not looking too promising for the stock market. Trump's announcement that the government shutdown could go on for months threatens to further destabilize the market. However, the future could be much brighter in the crypto market. This week Bakkt raised $182.5 million, BitTorrent launches Tron-based token and despite calling 90% of crypto projects B.S, Ripple co-founder Jed McCaleb is bullish on crypto.

The week?s best performer is Ethereum, which surpassed XRP, reclaiming its position as a number one altcoin.

90% of crypto projects are B.S! Harsh words from Jed McCaleb Stellar and Ripple co-founder who was pretty scathing about most crypto projects. One project, in particular, provoked his ire: ?Things like Tron, it?s just garbage. But people dump tons of money into it, these things that just do not technically work.? The Stellar?s co-founder also thinks the majority of financial institutions won?t use Bitcoin. McCaleb, who is also the Ripple co-founder, is clearly not a believer but does have faith in blockchain, he said: ?It doesn?t need to be the Bitcoin blockchain, but if it?s not a public chain, then you?re missing the point.? McCaleb did not completely dismiss the leading crypto, rather that there isn?t a cryptocurrency that provides all the solutions: ?There are some things Bitcoin is good at, some things Ethereum is good at, and some things Stellar is good at,? ?And none of them can do all the things well. That?s just not how software works.?

Despite the fact that he was so dismissive of 90% of the market, McCaleb remained bullish about the 10% that he deems worthy; rather than calling 2018 the year of the bear he simply described it as crypto ?calming down.? His comments, of course, are to be taken with a pinch of salt. Last month Stellar partnered with crypto wallet provider to expand the circulation and uptake of Lumens with a massive $125 million airdrop. P2P file sharing platform BitTorrent launched its own native token based on the Tron protocol, the BitTorrent Token or BTT. According to the company, by exchanging the BitTorrent Token, users will be able to optimize the network speed, thus allowing faster downloads.

The BitTorrent protocol has always had a system of incentives built in. Users who upload faster are more likely to be able to download quickly. Even before the Tron acquisition, our R&D team was looking at ways to add blockchain based incentives to the protocol. Now with the addition of Tron's expertise, we can accelerate that effort. Let's talk about some of the key features of the project. The first is faster downloads. By creating a system where people can bid to accelerate downloads, you'll be able to choose to get things more quickly than you otherwise would. Which leads me to the next point: more seeds. Currently, there's no incentive for users to seed files for long periods of time.

We'll make it so that you can effectively earn for seeding. And create incentives for users not only to seed longer but to dedicate more of their bandwidth and storage overall. BitTorrent, which claims to have over 100 million users globally, was acquired by TRON for an undisclosed amount in July last year. Back then TRON?s CEO Justin Sun defined BitTorrent as ?the first decentralized Internet protocol with large-scale global application?. In August, BitTorrent announced its plans to merge its p2p network to the Tron blockchain in what is called ?Project Atlas?. The BitTorrent protocol, which pioneered peer-to-peer online file sharing, served as a major source of inspiration for the authors of the TRON whitepaper.

The launch of the BTT is considered a major step in realizing Tron?s ambitions to create a decentralized content distribution platform based on blockchain. Commenting on the launch of the new token, Justin Sun said: ?In one giant leap, we can introduce blockchain to hundreds of millions of users around the world and empower a new generation of content creators with the tools to distribute their content directly to others on the web.?

January 3 was a special day for Bitcoin. Exactly 10 years ago, the first block was created on the Bitcoin blockchain. The so-called Genesis Block contains no reference to previous blocks, it is hard-coded in the network?s software and contains all the variables from which the ensuing blockchain was generated. Three months after the release of the Bitcoin whitepaper, the block zero was mined on January 3, 2009, with a reward of 50 BTC, which today would be worth around $191,000. At the time, however, Bitcoin value was still inestimable, as Bitcoin?s very first trading price was established over a year later.

Many see the creation of Bitcoin as a response to the 2008 global financial crisis. Bitcoin was supposed to offer an alternative financial system. Commemorating the 10th anniversary of the Bitcoin blockchain, Coinbase CEO Brian Armstrong called Bitcoin ?his first love?. In a series of tweets, he pointed out that Bitcoin is ?the most popular asset on Coinbase among new customers and longtime hodlers?. He also expressed an optimistic view for the future of the first cryptocurrency. He said: ?I believe we?re still at the beginning. The white paper signaled the start of a movement and the full promise of Bitcoin is still yet to be realized.?

I think most people right now are very skeptical about crypto. And that's a good thing. It's not about the technology it's about the adoption cycle curve and there is no adoption of crypto in mainstream the number one use case is obviously trading. Right. So other than trading on it what do you do with it and the trading is very much a speculative game. We have to prove ourselves to the rest of the world that we'll be building has value and the people will use it and there'll be adoption. And if we can't do that then it by definition has no value. So how do you replace existing systems with blockchain based ones which are orders of magnitude better than what people have today. In many cases, the improvement doesn't exist. So people aren't moving towards blockchain. It's a little bit of a pipe dream right now. I do not think we've reached the bottom yet. I think there's more pain to come.

So I think we dropped below 3000 on Bitcoin and I think it works and it'll get worse before it gets better. I can be wrong but my gut feeling is that we go below 3000. I think it's another two or three or four months in that range and then if we don't get out of there then it dips and goes on forever. So this is a time to play out but I think this is too much fear pressure on the system. I don't think we can hold the current lows. I think there are there is a limited number of coins that will make every three and a half thousand coins out there. Honestly, the party looking at 100 or 200 that actually make it into real utility and that's 3 percent of the market surviving which is ok. 3 to 5 percent makes sense. I don't think we can go with a one size fits all. Bitcoin is the only coin that never survive approach. It doesn't make sense. There's just so many things Bitcoin can't do that other coins can do. And I use cases in society for those on the coins and little find markets. It's the same way the world doesn't have a one world currency right now which is kind of a good thing you know in a sense and Bitcoin is focused on being a store of value. And I think there's other know other use cases that needs to be tackled.

So typically keep your crypto investments five to 10 percent of your portfolio and you know you might you might think well that's crazy I can make so much money but you can also lose it all in. Yeah like we feel we've seen people go bankrupt literally this past year. It's a speculative investment during thesis mania. And in the long term, I'm sure it'll be fine. I'm very excited about being part of the industry. I've tried to keep crypto a very balanced part of my portfolio so I don't lose perspective because it's very easy to lose perspective and oil wealth is stuck in Bitcoin and crypto whatever and then you lose perspective on the rest of the world and how the world thinks and so I think people need to just have good common sense practical investment mindset.

If you want to gamble in a casino the returns are way better. You hit it fewer follow a strong investment portfolio that gets you to retirement. You got to be a little more conservative. You can't take these risks and be young and take an interest in you one because you have time to fix it. But as you get older you should be a lot more cautious about where you put your money and make sure that you go for returns which are hoping market-beating and great and be cognizant of what volatility can do to a portfolio because volatility kills returns. You know one day you're wealthy the next day you're not.

Bakkt is back baby! On the last day of 2018, the institutional investor-focused crypto platform announced it has completed the first round of funding of $182.5 million from 12 partners and investors including Boston Consulting Group, Galaxy Digital and Horizons Ventures - Microsoft?s venture capital arm. Bakkt is planning to introduce physically delivered Bitcoin Futures. Unlike CME and CBOE which both launched Bitcoin futures with cash settlements a year ago, Bakkt?s futures will pay out in Bitcoins.

For this company is now seeking approvals and exemptions from the Commodity Futures Trading Commission since CFTC statutes are written to account for cash, securities, and agricultural commodities, but not Bitcoin. In a separate announcement, Bakkts?s parent company ICE posted a notice that they ?expect to provide an updated launch timeline in early 2019, for the trading, clearing, and warehousing of the Bakkt Bitcoin Daily Futures Contract.? Bakkt is not the first investment in the crypto space for ICE. The exchange giant has also a stake in Coinbase. Many believe Bakkt will lead to a market rebound.

Among them Tom Lee who we spoke to last year. Bakkt is going to be I think it's going to become a very regulated and large pool of liquidity. I think it's going to attract a lot of miners to sell production into that exchange and a lot of institutions will be there and as you know if something becomes the center of liquidity that's in search of price transparency especially because you know ICE is a regulated entity. 2019 could be the year regulators ease up on crypto and Institutional investors get on board.


Filed Under: Bitcoin