Iran Enters The Cryptocurrency Race

This is huge news following the successful pre-sale of Petro Coin (Venezuela’s 733M USD private sale!).  I suspect a lot of those funds came from other states including Iran itself, China, Russia and other allies.

https://www.cnbc.com/2018/02/22/iran-becomes-latest-rogue-state-to-develop-its-own-cryptocurrency.html

I believe it is no coincidence that it comes just on the heals of Petro Coin’s success.

I am very excited at these prospects even moreso than the Petro Coin.  Iran has huge oil reserves and in generally is quite wealthy despite sanctions that it has faced.

When countries move positively to adopt cryptocurrency they really open a floodgate of potential trade and commerce.  This could especially be the case with Iran who has a robust and developed country and economy.

With this announcement and the successful launch of Iran’s coin I believe it could be the next Singapore of the Middle East.

We’ll have to wait and see how this plays out but I wonder if there will be strong co-operation in this development with Venezuela?  Could it be that both countries are vying to be the crypto-kings of their region?  It very well could happen if supporting policies and development are put into place.

From an investment standpoint I believe most would agree this presents an amazing opportunity that we may never see again.

Ripple’s First Central Bank Contract with Saudi Arabia!

This is huge news for Ripple but apparently at the time of writing Ripple has tumbled more than 5% to .957 USD (under a dollar now).  To be honest I do hold Ripple but I believe my analysis to be unbiased.

The news is huge that Ripple will help Saudi Arabia settle foreign currency transactions and shows Ripple has proven itself in the large scale banking and even central banking industry.  It looks like other gulf countries including the UAE (United Arab Emirates) are going to be involved as well which could be really huge for Ripple.  One thing that many have said though is that none of these banking organizations involved are really interested in XRP.  They are using Ripple’s network but these transactions are not being funded or traded in XRP itself.

Some industry analysts have speculated that Ripple’s relationship with big banks is so strong that it may have strong incentive in the future to literally kill/dissolve XRP.

Despite this my outlook on Ripple is strong with the reservations about it mainly being a tool for large banks.  Don’t get me wrong, the technology works well for transactions in terms of being low-fee, fast not having to sync the blockchain, very secure (aside from no first party wallets….) but can we trust this company to protect our interests and those of its large banking clients?

I think this is why Ripple has been volatile itself, from an investment standpoint it sounds great but also bad because Ripple is kind of a crypto-rebel by essentially being the tool that cryptocurrency was meant to fight or free us from (the tool of big banks and now Saudi Arabia’s central bank.).

To look at it from the other perspective though this could mean a huge rise for Ripple in valuation but it could also mean the opposite.  Ripple has carved out an incredible niche but at the same time risks alienating its main users and investors.  The question is what will Ripple as a private and centralized blockchain do?

I do agree the author of the quoted article above could very well have it right for the end game.   It’s a shame because Ripple solves a number of key issues while also introducing security and trust issues at the same time.  Ripple works well but will it literally sell us users and investors out to central banks in the future?

I’ve attempted to play the lotto and will seek Ripple’s comment on these concerns but regardless of assurances only time will tell where things head.

How Governments Should Handle Crypto and ICOs

First of all after seeing so much confusion, panic and misinformation in the news, it is about time each country made a dedicated website for cryptocurrency.  The winners will be the countries who clearly communicate their policy, laws and intentions on handling cryptocurrencies.

Now in all fairness things are moving so fast, governments have genuine reason to fear cryptocurrency (aside from illegitimate reasons…) with most ICOs being absolute scams.  The real reason is of course is that governments can no longer vote or control who can fund themselves, the internet and public will judge.  However, there are still good reasons to have regulation or at least accountability so ICO fraudsters cannot hide overseas and disappear with the coins they collect.  This is my position where I feel the majority of token ICOs have no intention of completing their projects.

Getting back to what government should do, it’s not only ICOs but also the laws surrounding the purchase, use and trade around cryptocurrency.

The first country(s) to make fair, easy and favorable laws surrounding ICOs and cryptocurrency may find itself literally walking into digital gold and could be the next Hong Kong or Singapore of the crypto-finance world.  It’s up for grabs until countries clarify and cement their policies with crypto.

The first step if I were a regulator would be to hold public consultation and establish a staterun/government website domain to encourage discussion.  I also imagine it will be a hard case for government going after their citizens or businesses because they could simply leave the country with their crypto.  I think this is one element that business and government doesn’t like, that they can no longer control what people do with their money.  Typically governments and banks work hand in hand to achieve specific goals but with cryptocurrency, much like the world-wide web (initially) they are trying to find a balance and also ways to reign in control.

This time is very different, there is a lot at stake for governments, banks, people and business.  If a government moves too aggressively against the crypto world it could find itself sidelined and in financial ruin while their citizens and businesses will flock to countries that treat them better.

One of the first known examples of staterun conspiracy to harm cryptocurrency is Poland’s recent Youtube campaign: https://cryptoslate.com/polish-central-bank-caught-funding-anti-cryptocurrency-youtube-campaign/. They can’t be the only one and we know because of the well-timed press-conferences from various countries that threaten to ban ICOs or the currency outright.  On that note, as an investor this gives me more confidence than ever.  If crypto isn’t a big thing, then governments wouldn’t be talking about it.  The fact they warn so much about crypto suggests that governments and banks are well aware it is here to stay.

It could be that some governments are just playing games and waiting to see how things play out.  Perhaps internally if they see their attacks on crypto don’t kill it then they’ve already accepted that they will stop the fight against crypto.  Personally I think they are well aware that they cannot stop it and are maybe buying time so they can launch their own like Japan, Russia and China have announced.

I don’t think there’s a direct comparison but this standoff reminds me of the anti-piracy fight.  It used to be a fringe and underground element, but with crackdowns it actually has become more prevalent and easy for people to engage in piracy. Don’t get me wrong, crypto is not at all illegal or wrong (as compared to piracy) but the governments are essentially treating the crypto world the same way.  Much like the rule of investment after your strategy fails, trying again “won’t be different this time” I believe.

What do you think, how can governments handle crypto better and how would you react to bans and other aggressive action against crypto and related businesses?

The Future Of Blockchain Currencies like Bitcoin, Ethereum and Litecoin belong to governments, banks and large corporate players.

One aspect of cryptocurrencies that some users aren’t aware of is that decentralized blockchain based currencies are in their own ways their own worst enemy.  The blockchain is the problem, as currencies like Bitcoin and Ethereum keep getting slower due to their limited transactions per second, and the blockchain gets large this has started the end game.   The end game is clearly spelled out in Ethereum’s current white paper and it’s that essentially the blockchain will get so large no small players (individuals) will be able to participate.   This is because all transactions are stored in the blockchain ledger, and the more transactions the larger it gets.  Eventually the blockchains will grow to several terabytes and require more memory.  This will mean that only big corporate, government and banking players will have the resources to control these so-called decentralized currencies.  It is really inevitable unless a mechanism is adopted for off-loading this storage to trusted third parties.

I may not be a huge Microsoft fan but I think Ankur Patel has stated what many in the cryptocurrency already understand to be correct.

Patel said that blockchains that increase network capacity through on-chain scaling, which involves raising the blocksize, will eventually experience degraded centralization and will not be able to function on a “world-scale.”

https://www.ccn.com/public-blockchain-chain-scaling-degrades-decentralization-microsoft-researcher/

This is something that Stellar Lumens and Ripple essentially do.  They are a centralized blockchain that are generally faster than the competitors but are centralized and literally supported by big corporate players and banks.  These have pros and cons.  As an investment they are an excellent hedge against threatened regulations that people fear for the decentralized currencies and they also provide real value and work very well.

Is this all bad?  It’s hard to say because public blockchains can be attacked literally with DDOS/SPAM/bad blocks and this has happened with all the major currencies.  On top of that you are still giving up trust to unknown people and the value and stability of these currencies are at risk for other reasons such as hardfork cash grabs like Bitcoin Cash and the Bitcoin Gold Group.

The future is bright for crypto but these uncertainties need to be accounted for and sorted out.  It may be that the future is going to involve a combination of foundations and semi-decentralized currencies.

Neo, the Ethereum Competitor from China. How does it stack up?

Some friends have asked me for my thoughts, I admit I haven’t paid much attention to Neo myself but I am happier with this project, the team, architecture, planning and thought that has gone into it.

First of all, Neo, in my opinion has the technical superiority and is the better and faster coin to use everyday.  It has similar features such as the digital asset/smart contract option and API.   Neo is based on C# basically the fastest and most efficient programming language.  Ethereum is based on my arch nemesis, Java which I’ve always found to be efficient, slow, buggy and riddled with security issues (which is one thing that makes me very nervous about major bugs or hacks impacting the Ethereum network and blockchain in the future).

My belief is that because Neo is seen as Chinese based that it has scared away investors and this is the only reason why we see Ethereum as #2 or #3 in terms of market cap.  Neo is not far behind and if more attention and awareness shifts towards it I believe it’s only a matter of time before it overtakes Ethereum.

I’ve also seen much more evidence that the Neo team cares about the community by actively participating in discussions.  By comparison I can see endless complaints about issues that the ETH community has on their own forums with seemingly no response from the team.  Another factor is that the NEO team seems to be a professional and experienced team.  The ETH founder is only 18-years old and originally from Russia (nothing against Russia I am long there and we have many wonderful clients from there and around the world!).  I am highlighting that both teams are overseas but the fact that Neo is entirely Chinese and based inside China is probably the stumbling block for its growth.

What is wrong with Neo?

One big issue that I believe will be a huge problem is the fact that Neo is not divisible.  You cannot buy a fraction of a Neo.  This will be a huge problem even at it’s current value of $108 USD.  What if you want to buy a bag of chips or a USB stick?  It completely fails as a currency even though it’s otherwise superior to Ethereum.  How about if you want to invest in an ICO and you want to send .5 Neo?  No, not going to happen so Neo has set itself on the path to self-destruction in my opinion.  I’m very disappointed as otherwise it has done everything much better than Ethereum but shoots itself in the foot over the inability to ever be a real currency or used in daily transactions and this will only worse as the value increases.   This in itself almost makes the currency fail and is major stumbling block.  I also take issue with Neo’s GAS which will become another huge issue just like Ethereum, it is confusing and annoying.  See my blog post about how a $5 transaction in ETH cost me over $105 in gas fees!

Don’t get me wrong on this issue, I am long China, but with all the news coming out of China I believe it scares people away from this currency.  This aspects actually draws me towards it, in China there is such high regulation that the kind of scams I see many other developers pull is much harder to do even compared to Japan.

I would be all over Neo if the coin was divisible.

Would I invest in Neo?

Not at these levels, but I also won’t buy more Ethereum for similar reasons.  I do think Neo is a much better implementation of the Ethereum concept minus one huge issue with the currency division not being possible.

The hype on this digital asset/smart contract sounds great but in practice I am strongly against directly mixing currency and other assets in the same technology especially after Ethereum’s parity issue (we’ve seen nothing yet and I believe most of these smart assets will experience huge issues in the future).

Neo could still very well be an Ethereum killer but suffers from GAS and non-divisible currency.