Just Keep Hodling Your Cryptocurrency Coins!

As of the time of this writing on 2018-04-15 coins have started a rally just before the weekend and they’re all up.  Could it be that there is some pumping going on from Soros, Rothschild and Rockefeller?  Or could it be an emotional reaction to their announcements that they will invest in crypto?

Coins are up between 3-16% at the time of this writing with the big news being that it looks like Bitcoin has strongly cleared the $8000 mark and is hanging there fairly well.  We are back to where we were later last year.  Could this be the next leg up of a bull run? No one can be sure since only the whales and FUD and FOMO can control the market but I’ve been hodling.

Ethereum, Ripple, Litecoin to me are key indicators of something big possibly heading our way.

 

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Hardforks Are Scams Says Charlie Lee LTC Creator

Charlie has been saying exactly what I’ve been.  Hardforks are essentially scams that devalue the original coin and cause confusion.  At the same time, I’m sure he meant well but it never helped that he announced he sold all of his LTC.  It’s akin to a CEO selling all of their stock and saying “I still believe in the company”.  Granted this happened well before this scam hardfork so the hardfork is surely what caused the latest drop.

CharlieLee-LTC-Litecoin-Founder-Says-Forks-Scam-Confusing

As we can see after Litecoin Cash, the real and original Litecoin went down in value.

Charlie also correctly warns not to give your private keys to these scammers.  Whether Bitcoin Cash, Bitcoin Gold, Litcoin Cash and the many scam coins they require you to give your private keys to their wallets (if they even create one).  The risk there is that the developers or wallet creator will steal your original coins and this has happened already with the Bitcoin Gold Scam.

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I think exchanges should outright refuse to deal with these scam coins.

The underlying issue is simply that why are hardforks possible at all?  Counterfeiting is so easy with these opensource, public and permssionless blockchains.  To me it is a complete security and privacy flaw that was well-intentioned but simply doesn’t work.

Going forward, community maintained coins that cannot be forked, that are secure, private and are real time will be the long-term ones to invest in and the long-term winners.

IRS / US Taxman Says Cryptocurrency Income IS Taxable

Like the old saying goes one thing is certain “taxes and death”.  The IRS definitely hasn’t disappointed even cryptocurrency owners by clearly stating cryptocurrency is taxable.

Hopefully the rules will be fair.  I feel it should only be taxable like any stock, so when there is a capital gain through resale.

The same rules of the IRS apply for tax evasion if you’re a US citizen and don’t report your crypto earnings.  One other interesting thing is how the IRS has got their hands on Coinbase data for some users.  This will certainly be used to go after users who’ve made profits.

We Need A Better Coin Now!

Cryptocurrency today as of the time of this writing is in a bit of a flux and identity crisis.  Part of this is due to a well directed campaign in the news via government and banking entities.  However, I will always give credit where it is due and many of the flaws that have been pointed out by these entities are completely true.  In fact, from a business, security and IT standpoint I find that most cryptocurrencies are almost impossible to use.  There are coins that individually address “some of the issues” but I have never seen a coin or team that “just seems to get it”.

Whether it’s how an ICO is run, basic functionality, security, privacy, getting out information it seems apparent to me that the vast majority of teams and coins do not sufficient combined IT and Business Knowledge to make things work.

There are just so many issues with a lot of the top coins that could kill them, let me name a few in no particular order.

Speed – 99% of cryptocurrencies are extremely slow taking minutes, hours or several days to complete a transaction!

Expensive – A lot of times you can spend a small fortune just sending a small amount of coin to someone (you could spend $100 to send $5 of coins with some Ethereum tokens for example)!

Security – Most coins are by default completely insecure.  Any coin that has a public ledger is insecure and has 0 privacy.  This allows for replay attacks and all kinds of nasty things.  It also means your activities are easily tracked and traced.  Imagine if your competitors can see exactly who is paying and who you are paying including the full amounts?  It would put your business at a huge disadvantage.  Having “public, permissionless blockchain” such as Bitcoin, Ethereum, Litecoin etc..  will mean the coins can never be secure when the whole public is involved.

Hardforks – Most coins are easily counterfeited, hard or softforked where basically anyone can copy an entire coin and just rename it and call it their own, while confusing and devaluing the original coin holders.  This should never be able to happen just for the reason of sanity, continuity and integrity.  There have already been scams like the BTG Scam and replay attacks.

PoW/Mining – It is absolutely crazy that mining still exists, as cool as it originally was, mining is now a hindrance in many ways to the cryptocurrency community.  Not only is it wasteful in terms of energy resources, it is unsustainable in both environmental, monetary and functional terms.  Returns are so slow with most major coins that it is almost not worth it unless your power is cheap or free.

To top it off why on earth should we let transactions be controlled by “miners finding the next block”.  It doesn’t secure the network anymore and that is because coins like Bitcoin were created before ASICs and assumed “no one would party would hold more than 10% hashing power”.  Of course single pools in China have way more than 10% power and so do some mining farms possibly.  This means that pools and large farms could work together to defraud people by sending false transactions and confirming it among themselves.  By the time the scam is realized the parties who initiated the scam would already have escaped with the money.

Mining also leads to centralization, the very thing that cryptocurrency was meant to avoid.  This inevitable because as difficulty increases, only large corporate or government players with deep pockets can continue.

The same applies with running full nodes, large organizations will be the one running them.

Usability – Most coins are unusable because they are slow and insecure but to make it worse there’s more.  The current coins are not easily integrated in a secure way.  You shouldn’t have to run a full Litecoin, Bitcoin or Ethereum node on a huge mega server with tons of RAM and HDD just to create receiving addresses and receive payments.  This not only inefficient, it is insecure because the same computer that generates the receiving addresses is usually the one that holds the wallet/funds.

To top it off you can send to a wrong or non-existent address and lose your money forever with virtually all currencies.  Blockchain is just a big database, couldn’t some query be done to make sure the address actually exists?!  On top of that there is no feedback, send by e-mail or notifications by e-mail you always need to keep your wallet open to notice.  It would be much easier if these different functions are kept separate.  However this is a problem too because most cryptocurrencies are admittedly not secure if you don’t sync the entire chain.  And that’s another issue, syncing is a huge issue with coins like Ethereum it is extremely slow and takes a ridiculous amount of CPU cycles.  Imagine paying someone from Craigslist in person  and one of you says “hold on mate sorry I have to wait for my wallet to sync for hours or days!”.

 

Binance Proposes a new Decentralized Exchange

Binance’s new blockchain which will be its own decentralized exchange could be just what the decentralized world needs.  I am actually not a fan of a decentralized exchange as it really means no one is responsible for your losses and in fact more scams have happened on the more famous ones like Etherdelta.  One look at most other decentralized exchanges just screams insecure and scam to me.

So this is where Binance comes in as a trusted central exchange.  Centralization is not always bad so long as the person or team behind is trustworthy and conversely as we’ve seen with Etherdelta the opposite applies.

Binance has a real shot here of being the top player in cryptoexchanges.

I’ve found Binance to be easy, safe, and honest for an exchange.  If they apply this to their new blockchain for decentralized exchange trading it could be a huge winner.

We must always remember it’s not so much about the technology but about the integrity, intention and ability of the team behind it.

I am still hesitant on decentralized exchanges because of rampant losses and scams, but if anyone can do it right I bet it will be Binance.  Time will tell but this is exciting to me.

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.

Mercatox Cryptocurrency Exchange Review

I found Mercatox because they were one of the few that had some coins I wanted to buy but have since given up out of both frustration and lack of trust.  Unfortunately in traditional form these smaller exchanges are usually broken or worse, some are often unreliable or outright scams.

The first notice I saw was a warning of “not to deposit to old BTC addresses due to security issues”.  It is good to warn your users but why couldn’t they secure their own wallet?

So why not send some ETH?  Oops it’s not working.

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Dogecoin is “Not Available”

LTC is “Under Maintenance”.

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So basically you have an exchange that isn’t working from the start and can’t accept deposits.

That’s when I clicked the “Logout” button as fast as I could, never to return to Mercatox.  I’d rather not deal with the myriad of other issues that are the symptom of problems at the front end.  This is also because in the cryptoworld 9/10 companies will never help you no matter what (eg. missing coins, deposits, withdrawals) good luck unless you sue them (if you can find them since most are anonymous without real contact information or ownership).

 

 

2018 Year of the Dogecoin Prediction as it crosses the 1 cent mark!

I’ve held Dogecoin for some time and never really considered it the “internet meme joke based currency” that some consider it and recently bought more as  I saw it approaching the 1 cent mark.  Those days are gone with a Christmas Present of Dogecoin crossing the 1 cent mark!  In fact it is been surging lately despite naysayers predicting its demise for various reasons.  One huge thing Dogecoin has always had is a loyal and large community who uses the currency.

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Now that Litecoin has hit the $300 USD territory and many other altcoins are very expensive clearly others have seen the value and potential in Dogecoin.   In fact I believe it is undervalued and in the past 7 days Doge has nearly doubled to reach the 1 cent mark and market cap of 1.2 billion!  It’s a huge milestone and for those who remember way long ago, there was a point where Doge was equivalent in value to Bitcoin!

I believe 2018 is Doge’s time to shine and it is definitely going to head into Litecoin territory (possibly the tens of dollar range in 2o18).  Essentially the Dogecoin client looks the same as Bitcoin’s and Litecoin’s.  In terms of technology though Dogecoin is more like a derivative or little cousin of Litecoin in the sense they both use Scrypt technology.

This is a good thing because I’ve never had delays or issues with sending or receiving Litecoin or Dogecoin, whereas Bitcoin can be slow and Ethereum is a nightmare to use (it is the worst wallet/client/network I have ever used and I absolutely dread Ethereum).

I think amazing things are going to go down for Dogecoin holders, likely not as big as long-time Bitcoin holders but I think in the coming years, Dogecoin users will be handsomely rewarded as the value skyrockets.

Another reason Dogecoin is rising is because of research, awareness and it is also a plain good buy compared to a lot of other much more expensive altcoins I firmly believe Dogecoin is largely undervalued.  Dogecoin is a long-time crypto whose stability has been tested and proven for years.

I’m bullish on Dogecoin so long as the developers keep working on and marketing this currency and if they cap the supply.  I don’t think it will take much for Dogecoin to see meteoric rise so long as those conditions are met.

 

 

Bitcoin, Ethereum, and Altcoin Crash – What You Need To Know

So essentially overnight Bitcoin lost 40% but at this point is still at this point at nearly $15000 and I believe will recover the $20K mark before the New Year (probably).  Some people have asked me what “FUD” is and blame it for the drop which stands for Fear, Uncertainty and Doubt.  I’m not buying that.  I also want to give a shoutout to Max Kessler who called a lot of things right about Bitcoin and predicted a sharp correction around the $20K mark but insists Bitcoin will keep running much higher.

If you look at the charts for the top 100 cryptocurrencies you will see an almost simultaneous drop in all of them.  Now if this just happened in the top 10 or a handful I would believe it is people taking profits randomly (nothing organized or not VERY large sellers).

Could Charlie Lee (creator or Litecoin/LTC) have triggered this? Yes I believe so and I don’t understand his reasoning for selling all of his position.  It’s no conflict to own your own coin and try to make it succeed.  To many acute investors they would have viewed this like a company about to bankrupt and the executives dump all of their stocks.  I certainly don’t think this was Charlie’s intention or concern at all though.

Look at the chart of the top 10 or even top 100 and they look eerily similar.  Massive selloffs with similar percentage losses of up to 30%.  The only good news or winner here is that Ripple (XRP) hardly lost anything and recovered faster than the others.

So am I worried about crypto or that there is a bubble? Yes and no, I think it has a number of years to run before the risk of a formed bubble bursting happens (and it will be massive bleeding when it does…).  But what triggered this current drop of all currencies simultaneously?

My theory is that billions of dollars of hedgefund money has come in, and in the last few weeks the currencies had significant appreciation and like some stock traders, these managers took massive profits which will look very great to the portfolio and their clients.

Now this is where it gets scary because if a small amount of people precipitated this event then it becomes easy for a small group of people to control, manipulate and play the market.

I’m not shaken from what happened, nor do I believe it was the “FUD”, I’m still long on crypto including Bitcoin but as always proceed with caution as we are heading into completely uncharted territories with massive volatility being the norm for now.  I will believe more in the FUD as Bitcoin gets higher though because those who have bought in at such high levels have a lot more to risk and worry about.

Bitcoin – I Don’t “Get It”

This may sound strange coming from a CEO who owns and uses Bitcoin and other cryptocurrency through multiple businesses that accept Bitcoin each day.   But I still really don’t understand Bitcoin on a practical level, the technical part is understandable but for how long will the current model of currencies like Bitcoin and Litecoin work?  Do not get me wrong, I am long on crypto still but what that means in the coming years and decades is probably going to be vastly different than the current model of today.

What Is A Confirmation And Why Does It Take So Long?

What I’m referring to is when you send or receive currency there are varying opinions of what it means to actually “confirm” you have it.  But even before that people who have sent and received cryptocurrency know it is actually quite slow.  It can easily take a number of minutes and even after that point it is recommended you wait for a certain amount of confirmations.

It’s quite simple, these crypto networks with multiple nodes have to talk to each other, this takes time for them to all be in sync or agreeance with the blockchain.  Once that happens you get your first confirmation, however this can be a number of minutes and still doesn’t absolutely guarantee you have the money in your wallet.

The current system is nearly impossible to use as a daily transaction/banking experience.

I’m used to using cash, debit, credit or even services like PayPal.  It is all fairly instant (although sometimes it can take several seconds for debit or credit) but once the payment is approved and the merchant is notified instantly, they knew they have their money.  Imagine waiting for even a single confirmation for cryptocurrency while in line at a supermarket?

Why does the problem exist?

It’s quite simple, ironically it’s the one huge negative side effect of distributed, decentralized cryptocurrencies.   There are other drawbacks too such as what happens to banks if they are DOS’d but this hasn’t been a huge factor so far in crypto’s history.

What other risks exist?

My biggest fear is that in the future a powerful organization or entity may eventually be able to reverse engineer or find another way to attack the blockchain and algorithm of some cryptocurrencies.  This would essentially spell disaster, chaos and the end of that currency.  It would be the equivalent of the destruction or infiltration of a fiat currency’s central banking and distribution system.

One other issue with the blockchain

Everyone knows the safest way to hold crypto is with your own wallet because exchanges are routinely hacked and coins are stolen, it is more risky to keep your coins with a third party wallet (essentially the equivalent of an online crypto bank).  The problem lays with the issue at this moment that those deposits are not insured (although I believe Coinbase and a few others may have some insurance).  This may change in the future and exchanges and currencies that are insured will definitely rise above the rest.

What is the solution?

This may draw the ire of a lot of hardcore crypto users but there has got to be some sort of central authority, body or “top-tier” network similar to root DNS servers on the internet that can serve and validate transactions on the blockchain.  There must be some sort of physical organization between the nodes on the blockchain.

Is there a current solution to this problem?

Ripple/XRP solves this problem by essentially verifying transactions instantly and keeping all the currency in essentially an online global wallet (there is no such thing as paper wallet or traditional on your computer/device wallet).  The advantage is that you don’t have to store hundreds of gigabytes of blockchain data (and growing) like Bitcoin and other currencies.  Ripple has the benefit of also being endorsed by major financial institutions which is a first for digital crypto that I’m aware of.

I haven’t done further research but currencies like XRP I believe are the future, things can be done anyway technically and Bitcoin, Litecoin and similar blockchained coins can do this if they change some of their decentralized model.  I expect there will be more infighting and similar splits as the Bitcoin Cash that emerged from the Segwit update as the industry matures and expands.

Disclaimer

I hold positions in multiple cryptocurrencies including Bitcoin and Ripple and have given my true opinion of both in this article.