🤷 Opinions Cyril Gilson

CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You

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How much psychology is involved in the crypto industry? Do ICOs have a future? What’s the next thing?
CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You

CryptoKitties’ co-founder Benny Giang philosophizes on the kitty’s latest adventures, Vitalik Buterin, cats and wallets, cryptopsychology and incentivizing Blockchain adoption, and revolutionizing ICOs.

Cryptophychology

Cyril Gilson: How much psychology is involved in the crypto industry? I think there is a lot of talk about finance, trading, these kind of things but people underestimate the role of psychology.

Benny Giang: Well really what got me into it was, when I first started to dive deep into Blockchain, it wasn’t necessarily the technical aspects that drew me in, what drew me in was the philosophical approach on why does this matter, why does this technology matter. Then the psychology of it, the whole game theory, incentivizing behavior and trying to solve the classic problems in computer science that have been so difficult to solve, like the Byzantine Fault Tolerance or the general problems.

These things in combination are so interesting to see. I would encourage to listen to a couple of Vitalik’s talks. Vitalik along with a couple other people are really really smart. He is super deep into economics and he is also deep in philosophy and then he talks about the technical aspects.

One of the things I encourage for new people who have no clue what crypto is, is for you to spend the first or second week to try to understand why it matters to you. Why do you care about it? With anything you do in life if you don’t understand why you care about it, then why are you doing it? Besides money. Why is this technology going to change everything?

That took me about two weeks to really just keep asking myself that question and reading more until I found that answer and I was like okay this is the reason why!  

I encourage you to read Naval Ravikant, the founder of Angellist, he has a lot of tweet storms about crypto. Andreas Antonopoulos, he is amazing. He did a talk, and the whole talk wasn’t about Bitcoin it was about why does this matter. It’s about decision making, collective decision making, where a corporation is a group of people making decisions, or back when kings and monarchies when one or two people or family.

Understanding why is so important and then you can dive in the technical aspect. Then you could go to these conferences and network with people. If you don’t then you are coming in for the wrong reasons I think.

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Kitty goes to the market

Cyril Gilson: How are things going with CryptoKitties lately?

Benny Giang: Well we recently just raised 12.6 mln venture funding. We had investors from Silicon Valley and Union Square from New York City. Chris and Fred have been super helpful in really guiding us, we have a bunch of angels as well.

Right now we are focused a lot on growing CryptoKitties to new markets. We are going to be launching the Android version very soon in China. We have been exploring Japan and Korea. We have been talking to lawyers and figuring out the crypto and the gaming laws that exist in those two areas.

But really for CryptoKitties we want to expand this concept of KittyVerse. KittyVerse is third party developers who are building on top of CryptoKitties. So imagine that you buy a CryptoKitty from CryptoKitties ICO, right from the marketplace, and then you can use the same kitty you bought to raise it. You can play a racing game, you can play a battling game, you can put a hat on your cat. And so these experiences are built by third party developers who are part of our community.  We call this the KittyVerse because they play the game as well, they are incentivized to create content and experiences for the kitties. So that’s Kittyverse!

At the core of CryptoKitties is making it easy for people to come in and buy a kitty. Right now if you come into the marketplace there is over 750,000 kitties, so it’s a little bit difficult for you to select the kitty you want or you don’t know which kitty you want to buy.

Imagine Amazon where instead of curating things they suggest you to buy, they had millions of items just displayed in a list and they are like ‘hey go buy it.’ That’s gonna be a huge problem! We are actively solving it on the CryptoKitties side.

On the other side we formed a team to really look at the full UX experience. So that includes everything up until you are interested in CryptoKitties and then you need to buy crypto, you need to buy Ether, and then you need to download metamask to play the game, and then you go to the marketplace. So the team is looking at every single step and seeing what can we do to make it better, make it smoother. What kind of tools can we create to bridge this gap, so the its seamless?

The ideal experience is you have a credit card and you can buy a kitty. But right now you capped your card and you need to buy crypto, then you need to buy a cat. The US is a huge unwrap for us, and we are working on both of these things.

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Not a joke

CG: I was just thinking that you might consider some other project besides CryptoKitties? Because for many people it’s still a joke, for some at least.

BG: Well the funny thing is that CryptoKitties has always been an experiment. We are part of a larger parent company called Axiom Zen based in Vancouver, Canada. Axiom Zen is a five year old company, venture studio, it’s a startup that builds startups. So previous to CryptoKitties, we were building B2B Saas companies. We worked with fortune 500 companies to build ventures and products together, then we took the revenue from these fortune 500 partnerships and then we built our own startups. We spun out two startup companies, and they are both profitable.

Around last summer we started poking around: let’s explore Blockchain, let’s explore what we can do with smart contracts. So we built CryptoKitties and we decided we are not going to do an ICO, because everything last year was the price of Bitcoin, ICOs and the hacks and scams that were happening. That’s really here in Coindesk and Cointelegraph. We were like it just can’t be like this forever, there needs to be more real products that are building their shipping code and building real products. So we didn’t do an ICO, we launched a product, a Blockchain game.

For us it’s always been about education and mainstream adoption. If we can get your mom and dad to think about and get excited about Blockchain and crypto means our mission has gone right. Frankly a lot of people have struggled to explain Bitcoin, Ether, especially smart contracts to your mom and dad or whoever, they just don’t understand or are uninterested.

We had so many emails sent to us like the boyfriend is in crypto, my girlfriend never understands what I do, I tell her about Bitcoin, but she doesn’t care. Then we get an email like I told her about CryptoKitties and she is all like I wanna buy one, and she went through the floor of buying a kitty, and she was like wow now I own this kitty, and she got interested!

For us that’s perfect, that’s what we want. We want a billion people, a billion consumers to be on the Blockchain. We are not targeting a few 100 people who would download a crypto wallet app or a 1,000 people who want to use a fintech investment app. Not everybody in the world are investors, there are more gamers than investors out here.

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Beyond ICOs

CG: Last year was a year of hype but now comes some sobriety, ICOs are becoming more like VC investing, those people from VC are getting more like ICOs in a way. So do ICOs have a future?

BG:So ICOs to be clear are an amazing funding mechanism that allowed people from areas in the world that don’t have access to VC funding to get to raise money to build their own businesses. I have heard many stories of people in Singapore, Indonesia or some place in China, they are just not in Silicon Valley where they could walk to the office of a VC firm and ask for money.  So ICOs are a revolutionizing funding for business and companies.

That being said there were so little parameters around ICOs that there were a few bad players that took advantage of ICOs and just ran away and took the money and bought expensive cars. It’s the mentality that kind of was set by some of the early crypto people, where they spent a lot of their money on Lamborghinis. There was at New York Blockchain week, Consensus 2018, they had a boat party and the Aston Martin Giveaway. We look at it as a team and we are like sure those things are really cool but for us if you think that perspective ‘I want to be at a boat party, I want to win a Lambo’ it’s just really toxic kind of behavior.

CG: It doesn’t help with adoption...

BG: Exactly it doesn’t help with adoption. Then you ask yourself a great funding ICO mechanism to help business around the world to acquire capital, to build business, now people are just taking the money and running. We see people facing the consequences, like those guys in Miami who ran away with $12 mln and then the FCC came after them and now they are in jail. Those are some examples of like you taking advantage of many many many people who invested in your project and ran away with it. You certainly can’t get away with it.

So from my opinion regulation is good for ICOs. There needs to be more proactive regulation that allow for ICOs to happen, but happen in a way where it’s more safe for the normal person who wants to buy into an ICO.

The second thing is, Vitalik Buterin had this concept of a decentralized autonomous ICO, where the community that bought the tokens of your ICO, that they get to control the percentage that is basically given to the team. They are like this month we wanna give five percent of this money to the field of development and the community controls it. Now that’s just one example of kind of taking the ICOs and raising money but then having responsibility in place where people can’t run just run away very easily.

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The next thing

CG: The next thing is another way of tokenization...what do you think?

BG: There are people still building protocols who want to raise money. There are people who are building dapps on protocols who want to have tokens. For us it’s the CryptoKitties they are non-fungible tokens, they are ERC7-21. People are thinking CryptoKitties is a digital asset, it’s a gaming item, but its a digital asset so a lot of people are exploring this space.

Now there is also this hybrid. I have seen these people basically using a hybrid approach of I have a Van Gogh painting and I want to tokenize it, so then multiple people can buy parts of the Van Gogh like a token, and then we lock up the Van Gogh somewhere where nobody or one person or multiple people have access. This kind of hybrid approach of a physical item being tokenized is something that is challenging. You can say the same for real estate or registering your land.

These are physical things that have existing systems in place that people now want to tokenize, but it’s going to take some time to do that. We picked a digital world where you can create a digital item and then you can tokenize it. Everything is digital because in the future there is going to be a combination of physical and digital, as the Internet and the Blockchain get bigger, they allow for digital assets to exist.

Soon enough it will be like Ready Player One or West World where people can live in two worlds and own things in two worlds. It can be just as real as the physical world.

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Kitty and the wallet

CG: So you are interested in arts?

BG: Right now we are focused in three areas. It’s the crypto area, the gaming area and the arts area. We are going to be in an art exhibit in Germany, I forgot the city, it’s a very big exhibit for contemporary art. In September we will be back in Berlin at the Schlinker Pavilion, and we will be doing an exhibit with a very famous contemporary artist. That is to say that this is not only a crypto project, it’s a gaming project and its an art project. That is just building the dialog just think of this as a digital asset, it’s not just one thing.

CG: Is the coming arts project going to be digital art as well?

BG: It’s still early to tell, I think it will be a combination of physical and hardware. Two weeks ago we were in NY and we had an art auction for the Ethereal Summit. We had a Christie’s auctioneer there and we sold a kitty for $140,000. That all went to charity to help artists to fund art projects. It’s not the first time we had Kitties raise lots of money to help charities.

In the beginning, Nick Johnson from the Ethereum Foundation sold one of his Buck hats for $90,000 and he bought a bunch of cows for farms in Africa. A 10-year old girl Bella raised $15,000 and gave it all to Seattle Children’s Hospital in the US. So people are using these Kitties to really solve big problems and help other people and teach other people. It’s more than just the image, it has something deeper to that.

For us the whole art angle, digital asset is very interesting and you can have a hardware wallet. Right now you think of the hardware wallet it looks like a usb stick, now they work but they don’t look that cool. But imagine a Tamagochi, which is a hardware wallet, and you can put your kitty in it. Imagine all the people playing our game, but the normal consumers- maybe your children, will want to carry it around. Its my kitty I own it and it’s in a Tamagochi device. They would want to carry the ledger around then right?

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User experience

CG: How secure is it?

BG: We haven’t built it yet. It’s just an idea. If someone robs you they steal it. If someone robs your ledger they also steal it too, right? When you bring it to the physical world whether its a software or a hardware wallet you always run that risk. Losing your phone, you lose everything right? People have lost millions of dollars.

That actually brings us to the point that user experience for a crypto is really difficult as I mentioned. This one area specifically about decentralized wallets and key management, people can’t even remember their own passwords. People use the same password all the time, so if you tell someone you shouldn’t use the same password, you shake your head ‘yeah that’s true’ but then you still use the same password. Then you go tell a normal person, hey remember your safeword and your private key, and make sure you don’t forget it or you lose all your money. That’s just too much to ask from a normal person.

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EOS vs. Ethereum: The Bitter Rivalry Re-Examined

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EOS and Ethereum are continuously at loggerheads: here we attempt to deduce why
EOS vs. Ethereum: The Bitter Rivalry Re-Examined

Ethereum and EOS just don’t seem to be on the same page and agree on most things crypto, apart from unanimously declaring that the Blockchain itself is our virtual future. Of late, there have been scandals and accusations, but where is this all coming from? Is there more that meets the eye? Turns out yes, there is.

A Bit of History

Ethereum was established in 2015 by the Russian-Canadian programmer Vitalik Buterin. The company very quickly ended up among the market leaders, becoming the second most valuable currency by market cap with around 22 billion USD. EOS got officially launched much more recently, only this year, but the company is already the fifth in the world by market cap with around 5 billion USD.

Importantly, one of EOS’s founders, Daniel Larimer (the other being Brendan Blumer of Block.one), already possessed a substantial amount of crypto experience as he had previously founded both the Steem Blockchain, along with its native coin of the same name, and Steemit, the corresponding social networking platform, back in 2016.

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ERC-20 Tokens

What some may not remember is that EOS actually started out as an Ethereum Blockchain-based ERC-20 token company. Similarly to how, say, Electrify.Asia are conducting their business at present, EOS used Ethereum—having gathered around one billion USD from token sales—to gain the necessary momentum before they launched their very own EOS Blockchain.

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This means two things. One is that Ethereum was used as a crypto springboard of a sort whose services were let go of when they became redundant. And two, Larimer and Blumer were savvy or even devious enough to use not the Steem Blockchain, ready at hand, but the more powerful one by Ethereum, though it belonged to a different camp. Today, EOS has both its own Blockchain platform / EOS altcoin and its own working EOSIO token with a similar purpose to ERC-20. So yes, it is possible that Ethereum views EOS as a younger neighbor from across the street who has now suddenly started playing on the same team with the big kids… and winning, too.

The Punches Being Thrown

While both networks are solid, both have their drawbacks of course. The EOS team has been fairly vocal in pointing out or at least hinting at Ethereum’s technological problems and problems-to-be. For instance, traffic congestion for Ethereum is not that unusual with some reports of longer confirmation times having been publicly voiced already. Another one of Ethereum’s problems, which is, in fact, the cause of the first one, is scalability: because of how the platform is modelled, expanding it is bound to create all sorts of jams and delays, and, crucially, not let the network grow properly beyond a certain point. This dilemma is said to be noticeably less pronounced on the EOS Blockchain because of how the latter one is built.

Also, unlike Ethereum that charges its participants fees in the form of “gas”, EOS charges its users nothing whatever. Instead, the network asks for some power and bandwidth in exchange, which are proportional to the resources required to undertake that particular action on the platform. This was also publicly noted by those who side with EOS.

It didn’t take much time for the Ethereum team to return the favor which culminated in a serious accusation this past summer from Ethereum’s DApp developers, among them Justo. Conveniently enough, this accusation also single-handedly explained why Ethereum’s network was getting congested and gas prices were jumping up and down:

“Myself, and many other high profile Ethereum application developers made a prediction that EOS would, in all likelihood, attempt to attack the Ethereum network gas prices to validate the launch of their platform.”

And further, after it had allegedly happened, in response to how one can be sure it was indeed EOS:

“EOS has been attacking the network on and off every time something they do doesn’t run properly… It started one month running up to the mainnet release. It was predictable and very clearly orchestrated… Follow the wallets. If you don’t think EOS is doing it, then who has 2 million dollars a day to attack Ethereum, and also owns EOS tokens?”

Daniel Larimer’s cold and succinct response can be seen below:

Larimer Message

The Most Recent Scandal

Earlier this week, Ethereum went a step further and plainly accused EOS of not being a Blockchain company altogether, a claim of immodest proportions. A research study conducted by the Ethereum-funded company ConsenSys and its partner Whiteblock concluded that EOS had been built using a model which is profoundly different from the universal standards of today’s Blockchain technology. Whiteblock’s CTO (Chief Technology Officer), Zak Cole, who is also one of the published report’s authors, proclaimed:

“EOS token and RAM market is essentially a cloud service where the network provides promises for computational resources in a black box for users to access via credits. There is no mechanism for accountability due to the lack of transparency on what block producers are able to create in terms of computational power.”

This has resulted in a heated discussion on Reddit with many users taking a stand in support of either of the two companies.

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Epilogue

The rivalry now seems like the result of bad blood right from the very beginning. Predicting what is going to happen next is difficult, but most likely things are only going to get more wound up. The market is ultra competitive and billions of dollars are up for grabs. On the plus side, perhaps a by-product of this rather nasty exchange will bring the users better and cheaper technology; after all, as the late Henry Ford once said, “competition is the keen cutting edge of business, always shaving away at costs”.

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Reddit Can Predict Crypto Prices: Research

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Another reliable crypto predictor in sight
Reddit Can Predict Crypto Prices: Research

In a recent scientific paper published by PLOS One, Dr. Denise Gorse and her colleagues from UCL’s Financial Computing and Analytics Group, revealed research findings that looked at how cryptocurrency rates and social media could be connected. Previous scientific research indicated that certain time intervals existed during which cryptocurrency rates and online social media factors appeared to be directly related; however, it was unclear why this correlation only appeared under some but not all market conditions.

Having examined the 2010-2017 aggregated data from all major cryptocurrencies, the researchers have concluded that the correlation does indeed exist but, crucially, it depends largely on market regime. Using wavelet coherence analysis together with a Supremum Augmented Dickey-Fuller test (SADF), Gorse and colleagues were able to determine that a positive correlation between cryptocurrency prices and online activity appears to exist during bubble-like growth periods in the medium-term (8 to 32 days). In other words, when the market is rapidly escalating, online activity can give cryptocurrency a boost in periods ranging from approximately a week to a month.

image

In the more erratic short-term (2 to 8 days), there appears to be a negative correlation between online activity and cryptocurrency rates, which is linked to specific market events, such as security breaches and Blockchain bugs. In other words, when red flags go up due to potential safety violations, the crypto prices can plummet in the first week. Generally speaking, however, outside the extremities of these sudden factors, correlation between crypto rates and social media in the short-term seems to be weak and should not be used as a reliable predictor, claim the researchers.

In the long term (32 to 512 days), evidence points to a strong positive correlation between activity on social media, namely Reddit, and cryptocurrency prices, even when bubble-like growth is not necessarily present. The authors stipulate that this was a somewhat expected result: naturally, cryptocurrency tends to strengthen as its community grows wider due to more exposure on social networks. What is intriguing though is that Reddit with its three main metrics (posts per day, subscriber growth, and new authors) is capable of predicting cryptocurrency rates on its own and may, in fact, hold more promise in this regard than the already verified predictor, Twitter.

To find out more, stay tuned for UToday’s upcoming interview with this study’s authors from University College London.

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The Human Soul of Technologically Advanced Web 3.0

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Blockchain brings back transparency and collaboration of real human interaction
The Human Soul of Technologically Advanced Web 3.0

Long before the world wide web connected cat video enthusiasts everywhere into a global community, social psychologists used a theory of knowledge called social constructionism to talk about the emergence of communities that could not be fully explained by cultural, social, demographic or geographic categorizations.

To put it very simply, any group of people who identify themselves as belonging to that group through the sharing of some common interest can be defined as a community. Or in other words, a community is a group of people who are, unlike Groucho Marx, happy to become part of a club simply by virtue of being viewed as a member by other, older members of that club.

The immediacy and anonymity of online communities have taken this concept much further, such that physical appearance, distance or command of a particular language do not pose barriers to interaction with any group. All you have to do is show up and contribute, in good faith.

Recently though, the "good faith" part is becoming a bit of a problem online. The Internet was originally created as a small network of trusted participants with scientific goals– in fact, there was a phone book with everyone's names, phones and addresses–  so questions of security and identity were not an immediate concern. Now, more than half of the world's population has Internet access, and not all of them log on with the goal of sharing their latest knitting project photos.

Who are U?

The Blockchain community

Online communities need a new mass paradigm, and it has been dawning on developers, entrepreneurs and investors that Blockchain could be the technology to provide this paradigm. The space is very new, with most participants still figuring out their place in it. On one hand, the openness is what makes it such a great opportunity for anyone who wants to make a contribution. On the other, the confusing landscape can be intimidating for beginners. It might seem that Blockchain is all developers and investors, but that is emphatically untrue.

The Blockchain community could perhaps be described as a loosely formed constellation of more tightly knit sub-groups. There are developers and scientists, of course– experts on the inner workings of Blockchain, quietly building the infrastructure for all the use cases that are being proposed by... Entrepreneurs–  startup founders who are increasingly not just Stanford-grad white boys anymore. The more far-flung possibilities of the way Blockchain can quite literally change the world are prophesied by Evangelists– eloquent and vocal enthusiasts who get big Investors excited, thereby helping Entrepreneurs make their case. Some of the Investors are also taking long-term stakes in cryptocurrencies, where a swarm of Traders are playing the highly volatile crypto market for daily gains.

Some cross-sections of the groups are emerging, such as the growing Women in Blockchain movement, and the conference circuit in general. The Twitter expert-verse is populated by representatives of various Blockchain groups, offering sometimes useful, sometimes biased commentary on current crypto events. Of course, there is much more to the Blockchain community– no description could be exhaustive, with such a dynamic and fast-growing network. But where does this community interact? And how do small investors and everyday users, the real drivers of new tech adoption, fit in?

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Walk-ins welcome

The goals of Blockchain network scaling can't be achieved without widespread adoption, which in turn can't be achieved without simple products with intuitive interfaces fulfilling universal needs.

The existing Blockchain community must put the average beginner user first.

A single ecosystem where participants can communicate, execute financial transactions and smart contracts, store and transfer funds, create and consume content, build custom decentralized applications, form and join organizations, and monetize any of their activities with fairness and respect toward other members of the network– that is something a platform like U°Community can provide. With friendly support and a negligibly low technical barrier to entry, the global Blockchain community can find a forum where everyone has a productive role.

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Transparent reputations into real capital

With changing algorithms and monetization, likes on social networks have long ceased to have any real meaning. But what if they could? What if likes could have the social weight of a Forbes 100 CEO recommendation and the financial power of a direct-to-deposit donation? What if you could build a reputation that would give your opinions high value, and be rewarded for the value you create for others? What if all participants were incentivized to represent themselves truthfully and build reputations by consistently acting in good faith?

We have become used to our online activities being monetized by companies that provide the scaffolding for these transactions, without compensating the actual creators and owners of the content. Only in a decentralized network can social capital– the sum product of active community participation– be converted into real capital for the users. At the moment, the dream of self-realization in the global community is literally sold to internet users– in exchange for their content and connections.

But self-realization can, and must, be accompanied by compensation for added value.

A decentralized network isn't just a more authentic reflection of real life– it's a projection of what real life interactions could be, and should be. Perhaps the Blockchain model of collaboration could eventually spill over into the way humans address each other in person, on the individual, organizational and governmental levels.

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Framework for real human connection

Wherever new technology is involved, it's worth keeping in mind that all progress should serve real, existing human needs as opposed to creating artificial needs for the purposes of corporate profit. The human need for community and support is one of the most basic requirements for a healthy society. New types of online communities can harness Blockchain technology to bring the transparency and collaboration of real human interaction back to the Internet with decentralized networks.

Unlike Facebook and other centralized social networks, new platforms like U°Community offer not just the ability to reach and transact with other participants, but the confidence of knowing who is behind every profile and the understanding that, by becoming part of the network, everyone subscribes to the same values. This could be an environment where truly anyone can contribute a verse, as experts collaborate with newbies on developing a vibrant ecosystem. A decentralized global U°Community could become the human soul of the highly technologically advanced Web 3.0.

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The Top Crypto Dozen by Year of Formation

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If you ever wondered whether being the first meant staying ahead of rivals, this crypto list should offer some insight
The Top Crypto Dozen by Year of Formation

We have previously brought you a fair bit of statistics, from popularity trends to age categories of Bitcoin owners. But now, why not take a step back and look at the bigger picture, as it were. ICOs come and go, prices drop and skyrocket, but who is actually leading the market? Or, more interestingly, how long have they been doing so?

Below is our latest list that offers a brief crypto history from the start of the Blockchain movement up until now:

The Top Crypto Dozen

2008: The actual, seemingly invisible starting point, the global financial crisis. Huge banking corporations, among them Lehman Brothers and Goldman Sachs, go bankrupt. To many, this is the glaring signal that the centralized system is failing.

2009: The crypto pioneer Bitcoin gets launched by the mystery man Satoshi Nakamoto and later adopted as the currency of choice by the infamous Silk Road. Today, with the market cap of around 111.7 billion US dollars, it is the current leader, as well as the most valued altcoin on the market (around 6 500 USD a pop).

2011: Litecoin gets launched by Charlie Lee, a former Google employee. Though the second to be featured on our list (and of very similar fintech specifications to Bitcoin), it is, actually, currently occupying the seventh position by market cap with around 3.2 billion USD.

2012: Ripple, or XRP as it is known to many, gets launched. Despite the low price of around 50 US cents per coin, Ripple is both the third one to be mentioned in our list and concurrently the third one by market cap with roughly 21 billion USD. Note that XRP cannot be mined.

2014: Dash (first called XCoin, then Darkcoin, finally getting its present name in 2015), Monero, Stellar, and Tether get launched, who are currently occupying positions twelve with 1.4 billion USD, nine with 1.85 billion USD, six with 4.8 billion USD, and ten with 1.8 billion USD respectively. The fact that four of the leading companies appear in the aftermath of the 2013 Bitcoin bubble (that continued well into 2014) is surely no coincidence.

2015: Ethereum gets launched by the Russian-Canadian programmer Vitalik Buterin. In spite of formally entering the market comparatively late in the game, six years after Bitcoin, the Ethereum platform with its native coin, Ether, is in second place by market cap today with around 22 billion USD, slightly ahead of Ripple (with just around 800 million USD in excess). Ethereum futures are said to be on the way shortly.

2017: Bitcoin Cash (through the hard fork split with Bitcoin), Cardano, and TRON get launched, who are presently occupying positions four with over 10 billion USD, eight with roughly 2 billion USD, and eleven with 1.6 billion USD respectively. Once again, the fact that we have yet another three major players that emerged out of yet another crypto bubble (with Bitcoin’s price approaching 20 000 USD in December) does not look like a coincidence either.

2018: EOS gets launched. Being the latest newcomer, it is already at the very respectable number five by market cap with just over 5 billion USD. However, very recently, EOS got accused by the Ethereum-funded research companies, ConsenSys and Whiteblock, of not being a Blockchain company and instead being a cloud-like service. This could potentially affect EOS’s global standing, but the full outcome of this scandal still remains to be seen.  

We hope you found our list helpful. Stay tuned for more.

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Why ICOs Are Uglier, Worse Stock Market: Opinion

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Here, on Blockchain territory, we are thought to be making a revolution. Horseshit. In fact, what we are doing here, is uglier, worse stock market.
Why ICOs Are Uglier, Worse Stock Market: Opinion

 

Here, on Blockchain territory, we are thought to be making a revolution. Horseshit. In fact, what we are doing here, is uglier, worse stock market. The thing is, many businesses (along their private investors) that opted for ICO, literally put their balls into the crocodile jaws of the speculators or have no intention to come up with a product whatsoever.

Most of the recent crashes have a simple explanation: trading in money is more profitable than any meaningful job or enterprise. It didn’t matter if someone’s profitable, employs people, has a product, only stock quotes matter. The totally Nietzschean situation of a clown replacing a priest as a central figure.

Bad enough, but… Amazon has lost 95 percent of its stock price in 2000 dotcom crash, and look at it now. The company continued running, its stock recovered eventually and Jeff Bezos is one of the richest persons in the world today.

What if Amazon’s everyday operations depended on its stock quote? Like, any stuff you buy on Amazon, is valued not in dollars, but in fractions of their stock? “What’s this dishwasher price? - 10 mAMZN.” Funny? But it is the case of many ICOs, who think to have escaped the SEC supervision by claiming their tokens are utility, not an investment instrument.

Now, remember George Soros attacking the pound sterling? If a national currency of a first world country can be brought to its knees by a bet (trading is essentially betting), how about a small-time coin used to pay for a certain service? One can imagine a small-time, by Wall Street standards, trader playing George Soros with crypto assets under certain conditions. It is imminent that futures and short trading on major crypto assets are to become available. Brokerages already allow borrowing BTC for short trading. It is risky, given its volatility, but with a little help from an AI, why not? Tokens will be probably available to borrow, too.

How you could kill Filecoin

Let’s look at Filecoin ICO, the biggest, the savviest and one of the greediest ICOs of 2017.

Raised hell lot of money in 2017. At the start, there’d be maximum 280 mln tokens on the market (80 mln pre-sell +  200 mln ICO), and another 280 mln FIL held by Protocol Labs and Filecoin Foundation. Advisors and other pre-sale participants have bought their FIL at max price $0.75, and the general public was paying up to $5. There are already enough skeptic commentaries on Filecoin model both financial and business model (1, 2) but let’s assume that the product is live, have actual users, and is listed on exchanges.

It is self-evident that bullish speculation may kill Filecoin’s business. If there’s steep growth of FIL valuation, there will be less incentive to spend FILs, and also, the price of storage may increase beyond what users are willing to pay.

Miners would rush to offer more storage, but fewer people actually spend FILs to pay for it, so organic demands diminishes. The reliability of the storage service suffers, and the word gets out, sending a negative signal to non-user (investor) FIL holders.

By this moment, a savvy operator has already sold their bought FILs, fixed profits from the inflated price, borrowed it from the brokerage, preparing for the plunge. Then borrowed tokens are sold below market value. If the splash is big enough, a panic ensues.

Filecoin Foundation will then start buying FILs back in order to protect their business. If FILs drop, there’d be less incentive for the nodes to provide storage, so the underlying product becomes unreliable even more.

Giving up and gutting it

So Filecoin foundation may end up in the position of Bank of England in 1992 - buying pound sterling until it gives up. The token price plunges and the initial operator buys it on the exchange, returning it to the brokerage.

Essentially, the same people who brought the prosperity to Filecoin will gut it, if there’s an opportunity.

Anyone with sufficient access to media and enough money can play the same game with anything, including the very Ethereum or Bitcoin. There is no law on the crypto arena, so no holds are barred (including insider trading) - since everybody keeps pretending tokens aren’t securities.

Back in 2000, I was a faithful reader of fuckedcompany.com, a fresh corporate recruit in a cheap suit, half-world away from the Valley. It was somehow gratifying to see them suckers suffer. It seems that this long forgotten pleasure is bound to return.

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