Sunday, July 8, 2018

What Is EOS?

Just another crypto coin, Right?
This was what I thought when I first learned about EOS in January of this year. Now that the EOS mainchain is launched and I have been able to play around with the EOS ecosystem, what I discovered is totally mind blowing.

What is an EOS account?

When you open up your EOS wallet and look at your account, this is what you see.


The components in your account are CPU, Network and Ram! This is a computer!! Your account is describing the power and resources your computer has. The amount of CPU ( EOS staked), the amount of bandwidth or network (EOS staked) and amount of RAM available. The smallest "account computer" possible is 0.1 EOS of CPU, 0.1 EOS of Bandwidth and about 4 Kb of Ram. This represent the minimum share in the power of the main "EOS computer" run by the Block Producers. Like a computer the RAM is where all the critical data for instant access by the "EOS computer" is stored.

Think of the "EOS computer" as a computer in the cloud and all EOS accounts are just different size computers that can use the resources of this "computer in the cloud" depending on the amount of EOS staked. Sending tokens, broadcasting, buying ram, running Dapps, voting and much more.

This is very different from what we have been used to thus far. With Bitcoin when we send a transaction say sending 0.01 BTC to another account we pay a fee of hopefully 0.0001 BTC which goes to the miner and the recipient gets 0.0099 BTC. ( Ethereum works in much the same way.) In EOS if we send 0.1 EOS the recipient receives the full amount of 0.1 EOS. The transaction fee is paid by the network. For the user this is a "free" transaction. What stops the network from being spammed is that the amount of resources your " account computer" has only allows you to make a finite number of transactions within a 24 hour period after which the capacity of the "account computer" is depleted and will have to be "recharged", before it can be used again. This is an ingenious solution!

It cost a minimum of 0.2 EOS to open an account. We can see that if 1 EOS is worth say $1000 one day, it would cost $200 to open up an account! This will severely affect the number of users right? Wrong! You only need an EOS account if you want to use the EOS blockchain, hodling, holding voting and moving EOS tokens, running your Dapps. 

Remember that EOS is a computer, and as a developer of a Dapp (ono) you will need to stake a certain amount of EOS to have access to CPU, Bandwidth and Ram on the EOS computer for your users to make transactions. The more popular and successful your Dapp the more resources you will need. Your users will sign up to your Dapp and they will use the services you offer without the need to own any EOS tokens or open up an EOS account. You can even reward your users with your own native tokens (ONO). This runs separate from the EOS blockchain. If the project fails you simply sells your EOS back into the market! This is like putting up capital to start a business and if the business fails you simply resell the assets to recoup your capital. Now, this is a model for mass adoption!

Expect to see a hosts of Dapps similar to Facebook, Twitter, Telegram all running on the EOS platform. Their users can singup to use these applications and they do not need to hold any EOS tokens or have an EOS account.

To drive the point home. Remember the game of space invaders? 


You can run this program on your little Z80, Atari, Commodore or Apple computer. It uses the CPU, bandwidth and Ram resources on your little computer. Well you can run this program on your little "Eos Account" computer. All the moves will actually be recorded on the EOS blockchain in real time.

Unlike Bitcoin, transactions (moves) on the EOS blockchain are extremely fast. Send a token and by the time you refresh your page the transaction have already confirmed on the blockchain. This is so incredible that you can run Virtual Reality applications on the EOS blockchain. The mind really boggles on what this EOS computer is really capable of. Think decentralised stock exchanges, micro transactions and instant payment systems.

So what is EOS and where is EOS headed?
The inventor of EOS is Dan Larimer. Prior to EOS he has already cut his teeth on Bitshares ( a decentralised exchange ) and Steemit ( a decentralised social media platform). Steemit and Bitshares currently occupy the top two spots in number of transactions processed as tracked on Blocktivity. These two projects are running on their own blockchains. Since then, Dan Larimer has announced that he will soon release Steemit 2.0 and Bitshares 2.0 on the EOS blockchain! and on top of this he will also introduce a stable coin.

We don't know what Steemit 2.0 and Bitshares 2.0 will be like but we can be very sure that they will be huge improvements over their previous incarnations having learned from the experience. A stable coin too! like Tether? The basis of a stable coin is the asset backing ratio. Tether boast a 1:1 ratio with USD but they have difficulty proving this. BitUSD on Bitshares is said to have a 3:1 asset backing. How will this new stable coin be received?

This is what is so incredible about EOS. Everything is different and new, and yet, so far, it all works!  Even before any Dapp is launched on the platform there is already a marketplace for Ram and soon Account Names too. Only stands to reason that a market for renting EOS tokens will develop in the near future. My conclusion is that the EOS as a platform will dominate the crypto space, and EOS as a token will be worth very much more than it is now.

                                _____________________________________________

Proxy account for block producer voting - investingwad

EOS is a blockchain, a community and a society all in one. A society is only as good as the people who run the system and in EOS these are the block producers.

It is so refreshing to see that in EOS, the people we elect to rule over us actually have to be nice to us. We elect our block producers with our votes Daily. It is crucial that we counter the influence of whales who may be block producers themselves and who will vote in their own interest. 

We need to expressly know the objectives, motives and actions of these block producers.
Most users will not have the time or expertise to question, query and research these block producers and hold their feet to the fire, so to speak. They can however delegate their vote to proxies who share the same interest as them, to vote on their behalf.

I think that investingwad will vote with our interest at heart.

You can set your proxy with the Greymass wallet. Or from their Github account.

                                 _____________________________________________


A point to note.
The downside is that if EOS are lost, the resources they represents are also lost to the network and cannot be used by anybody else. In Bitcoin, when coins are lost, they have no effect on the performance of the platform. This is why EOS has a policy or proposal to "recover lost resources" after 3 years of inactivity. This is like saying that every EOS account has a temporary 3 year lease on the resources it controls and if they are never used then these resources can be reclaimed by the community. Contentious, but we can agree that these resources are precious and should not be lost to the community. There may be amendments to this policy as everything in EOS can be changed, if the community agrees by way of referendum.




Thursday, June 28, 2018

BTC Price Falling Again. Will We See The Chain Death Spiral This Time?

Another Bloodbath!


Above is the 4 hour Bitfinex candle chart. Bitcoin has just dipped below $6000 and there is good reason to expect similar drops as in the previous 3 occassions. That is $1000 USD drop. I suspect we may even see Bitcoin test levels as low as $3800.

What is important to realise is that below $5000 it is unprofitable for many commercial mining operations. I have covered this in my previous post.


Bear in mind that the mining difficulty will increase by perhaps 10% or thereabouts in the next 3 days. 10% increase in difficulty will have the same effect as a 10% drop in price. This combine effect of a huge price drop and a 10% increase in BTC mining difficulty may be the perfect storm or black swan event that set in motion the dreaded chain death spiral.

One must ask why mining difficulty have gone up so much in the last few weeks? Is it because of newer, more efficient miners being deployed? Bitmain have always endeavoured to make their miners available to the public promoting mining decentralisation. Bitfury and newer manufacturers in Korea and Japan, employing more efficient chips, have kept their technology to themselves. It is certainly not good for mining decentralisation and could very well backfire on them. The future for BTC is not bright with this 'sword of damocles' hanging over it.

Something is happening and it is still hard to imagine what the crypto landscape will look like after the dust settles. The guiding principle I suppose is to invest in the technology and not the hype, and even this is hard to do as we often can't tell what or how much is hype until reality sets in. Shucks.

If in doubt, sit on the sidelines and many ( 3 billion USD ) are certainly doing this. It would be better is crypto is based on Tether than BTC or USD. I broached on this in a previous article. Whether it will, depend on the users, and in my opinion this is much better than the whole market rising and falling with the price of BTC. At least this shift will enable each coin and project to be valued on its' own merit alone. If you have a better solution - do comment!


Saturday, June 23, 2018

A Terrifying Future For Bitcoin - Chain Death Spiral

Oh No - Not another Bitcoin obituary! We have had lots of that. But .... 

10 Years
In another 6 months Bitcoin would be 10 years old. The technology should have matured by now with mass adoption worldwide. Its' aim was to be the financial platform for every decentralised financial application. Sadly after steady increase in adoption over the early years, growth has now stalled.

Bitcoin could not scale and time has run out. Lightning cannot be a solution because it depends on users first owning some bitcoin. Preaching to the converted is not a recipe for mass adoption.

Bitcoin Cash moved in with the promise of unlimited blocksize and unlimited transactions. However since inception in August the number of transactions have not increased.


This means that Bitcoin Cash is also not able to gain users apart from the disillusioned initial converts who moved over from Bitcoin. Bitcoin Cash could not built on or inherit all the existing infrastructure. Herein lies the problem - It may not have the time.

This phenomenon whereby Bitcoin chain slows down and finally grinds to a halt because it is unable to react to a sudden drop in miner defection, is still in play. Thus far the price of Bitcoin have kept mining profitable. This stage is fast coming to an end.

Bitmain has just stopped mining with S7 on Hashnest leaving only S9. 



As of today at a BTC price of $6100 the profit margin for BTC mining on Hashnest is 22.5%. Bitmain's S9 are the most efficient industrial miners in use today. When BTC price was $8000 the profit margin was around 60%. I believe that mining with S9 will be unprofitable if BTC's price falls below $5000.


For mining to remain profitable at $5000, the mining difficulty must decrease. Miners will shut down operations or moved to mining Bitcoin Cash which also means that the price of Bitcoin Cash must increase. If this process takes place in an orderly fashion then BTC price and BCH price will converge to equality. However this process will hardly be orderly or even predictable. If  BTC loses miners suddenly, the death spiral will set in. But will Bitcoin Cash be the winner even with BTCs' demise?

It really depends of how the future shapes out for crypto. Will there be many coins for different purposes, will there be one coin to rule them all or will there be only one coin? This has yet to be determined.

The more important question is, upon which protocol will all or most decentralised financial applications be built? Before we answer this question we have to consider another fundamental blockchain issue. Proof Of Work or Proof Of Stake.

This is a security issue. Proof of Work implies that the cost of a 51% attack is so exorbitant in the case of BTC that even governments will not attempt it. This makes BTC the most valuable blockchain because it is the most secure. Proof of Stake implies that the people owning the tokens will not attack their own basis of  wealth. Which of these two system is more secure or should we have a hybrid system like what Ethereum is proposing.

In technology two things are evident. Good enough is enough for a technology to be adopted. Take the example of TCP/IP. From mere packet transfers to online streaming today. The technology need not be perfect to start with. Users will put up with the quirks because the benefits outweighs the inconvenience. The second is being first to market. Bitcoin was first to market and has remained unassailable thus far. 

My current belief is that Proof of Stake is good enough. This is proven by Bitshares and Steemit. These two systems are still operating live, and now occupy the number 1 and 2 spots in transactions activity. 

I predict that EOS will be first to market as the protocol upon which most or all financial applications will be built. EOS is the first blockchain protocol that can scale and be used at an enterprise and industry level. You can fit all of Steemit and Bitshares in it and still have room for more.

A bigger and better Steemit 2.0 will be built by Block One on EOS. Bitshares is poised to move to EOS. Everipedia an improved version of Wikipedia is set to launch on EOS. You could build versions of  Youtube, Facebook, Twitter and more on EOS. The advantage is that you do not need to run your own servers to do so. Imagine running an operation like Facebook without investing in the servers and specialist personnel to maintain them. Yes that can be done on EOS. Every existing centralised social media platform can be cloned, disrupted and displaced. I expect that most of the existing centralised social media platform, will move to EOS, before they are disrupted because they can and the cost savings are enormous.

A new world is upon us. Aptly named DAWN. Will it spell the end for Bitcoin? Maybe, maybe Not, but the future is exciting.


Thursday, June 21, 2018

The Fourth Reason Why EOS Will Take Blockchain Mainstream - Fairness

Fairness

Governance does not equate to fairness. We could easily have Governance in favour of the strong or those in control of making and changing the rules.

We are all born "good", with a consensus notion of what is "Fair". Basically we all know the difference between right and wrong and good and bad. It is the basic tenet of "Do unto others ----- ". While there are times when the few that differ from these standard norms may hold the sway, in time, the view of the majority always prevails, and ultimately we will arrive at the right path.

Immutability.
Bitcoin introduced to us the concept of truth and immutability. For the first time we can embedded 'a factual truth' into a blockchain and nobody will be able change it. The concept of, code is law, was born. For the first time a contract could be executed exactly in the way the contracting parties intended and no law or judge could alter the way the code executes. The path towards immutable smart contracts and notary functions on the blockchain was in full swing.

Then the DAO hack happened. 300 million dollars in Ethereum were stolen by a "clever" coder who in his defence said that he did nothing wrong as the code executed exactly as it was designed. Yes designed but not intended. Clearly this was not fair, therefore the developers of the Ethereum chain rolled back the transactions and thus broke the law of immutability of the blockchain. ( actually perhaps because most of the money stolen belong to them! )

But is immutability really that great a feature. Sure it takes away the abuses of the middleman but it also leaves behind a plethora of cases of loss from unintended consequences.

1) Loss of funds through loss of passwords
2) Loss of funds from fraud and security hacks
3) Loss of funds through errors in program codes

In a worst case scenario we could roll back the blockchain but this may also include all the innocent real and correct transactions within that time period as well.

Selective transaction reversal
EOS introduces the concept of selective transaction reversal. At any time if 15 of the 21 block producers agree, they can freeze and/or reverse a transaction. They become in effect the police and executors of transactions on the blockchain.

However they can only do so at the direction of the ECAF. What prevents them from acting on their own and in their own interest is the wrath of the community. Their position as one of the 21 block producer is continually "on review".

This chart on the producer vote summary is interesting. At the time of writing 26% have voted and we are starting to see the dominance of the small voters block (blue). Clearly this faction will be bigger than any whale or collusion of whales when the whole community exercise their right to vote.

This is the brilliance of the EOS system. The block producers with all their power can only exercise them with the tacit consent of the community. They have to hold themselves to the highest level of conduct, and to be seen as continuous positive contributors to the community or they will be removed by the community. There will be no nonsense like the recent censorship and years of protracted argument as in Bitcoin. The EOS ecosystem will adapt and change quickly.

We all want to live in a world where the people we elected to wield power over us are actually nice to us. This is only true in the EOS ecosystem. I guarantee that you will never see a block producer overtly expressing his or her own bias and prejudices in public. Yes deep down we are all bias and prejudice to some degree, but in the EOS ecosystem you have to keep them in check if you ever wish to hold any position of power and authority.

This underlying tenet driving all of us to behave "correctly" is what will make for a fair and equitable community. I have never seen EOS supporters speak ill of any other communities or of each other. Remember the the Go/NoGo vote? What a demonstration of co-operation and civility among competing individuals, of different ethnicity and across different continents. What a breath of fresh air. What a change to the crypto ecospace. This will bring in the crowd. The silent majority. I am all in.

http://eos-bp-votes.dapptools.info/s/api/block-producer-votes-stack-html/1/30

Perhaps weight should be given towards quantity and quality of votes
Quantity = Number of Tokens
Quality = Number of Voters


Thursday, June 14, 2018

A Heads Up For EOSdac

A note about investments.

Investors put money into a security either for a return or capital gain. Most of us will be familiar with stocks and shares in private or public companies.

With the advent of blockchain companies small investors other than startup investors were able to invest in companies like Bitpay and Coinbase through investment aggregators like Bank To The Future.

Fast forward and the token ICOs on the Ethereum platform were all the rage.

The next phase will be airdrops on the latest blockchain platform EOS. EOSdac is the first.

EOSdac is currently 15 Cents and 104 on Coinmarket Cap. It has increased in price quite quickly since the EOS mainnet went public last night.

Owning EOSdac is owning a share in a decentralised block producer as EOSdac sits firmly at number 3 on he EOS block producer list. It stands to reason that EOS holders are likely to vote EOSdac as a block producer because they all hold EOSdac tokens from the Airdrop on 15 April 2018. We can expect EOS to maintain its' position as one of the 21 Block Producers.

Financial Reward
With the block producers actually producing blocks we can make accurate calculations.
EODdac earns on average 900 EOS a day

EOSdac Block Reward  900 @ $11X 360 = $3,564,000

The circulating supply based on Coinmarket Cap is 660755177  add the 300,000,000 held by developers and we get a total supply of 960,755,177 tokens

Earnings per token is therefore = 0.0037 cents or@ 13.1 cents = 2.83% Annual Return

This would mean that the market have priced the token appropriately

We can expect that the price of EOSdac will be directly proportional to the price of EOS

Looking at it another way.

900 EOS a day = 328500 EOS per year = 0.00034 EOS per year per token
10000 EOSdac = Cost $1000 = Returns 3.4 EOS PA = No End Limit
1 Bitmain S9 = $1400 = uneconomic after 6 month = Will never recover cost


Price Upside

The price of EOSdac will directly correlate with the price of EOS which is expected to rise as the airdrops and Dapps start operating on the EOS platform.

Bitfinex and Binance have not started trading EOSdac so I would expect the price to increase when they do. You can trade EODdac on CoinEx.

Price Downside

EOSdac drops out of the 21 block producer status.

Friday, June 8, 2018

EOS - The Value Proposition

I suppose this is what most people are interested in. How high will the price of EOS go? The pure technocrats do not care. They are in it for the technology and most probably will not even hold any EOS other than to use in their application and protocol developments. The rest of us will always need to seek assuring warm comfort in on our token holdings and "bet".

For those of you that lament that you were too late and you wished that you had bought Bitcoin when it was only worth pennies, do not despair. Contrary to popular perception, most of the early investors are not millionaires. Many have lost their "fortune" because they lost their keys or crashed their hard drives. Many others lost their "fortune" investing in scams and other nefarious schemes. Even hodlers will not be spared as they could be holding on to a coin that goes to zero. The only safe course is to understand how this ecosystem develops and to change your crypto portfolio as the landscape changes.

There are of course those we know of who have made it "big" so to speak. However making a fortune and keeping it are two very different things. This is true in the real world as well as the crypto world. The person sitting on a pile of crypto wealth today could very well be sitting on nothing but fresh air tomorrow. This is because there is really no intrinsic value in crypto tokens.

Intrinsic value meaning a value derived from a useful property of the commodity. Platinum has more value as an industrial metal than its' use in jewellery. Gold has more intrinsic value as a store of value because nations hoard it, than in the industrial and ornamental use of the metal.

Bitcoin as a token has no intrinsic value at all and its' value is only derived from its' usefulness as currency and a store of value. This means that if that usefulness diminishes or become obsolete, its' value will also decline proportionally. We can take the example of feathers and shells, which in one period of time had value, but those properties that gave it value were replaced by other commodities that better exhibited those properties.

For Bitcoin to possess and hold intrinsic value it had to be a protocol on which all other financial applications are build upon. This is where it has failed and I am afraid will lead to its' decline in both as a store of value and as a currency. First mover advantage in holding on to just a property ( scarcity, immutability, transportability ) is not enough as other tokens also share the same properties. It has to be the bedrock on which every financial application is built upon so that its' position cannot be usurp, because for that to happen you will have to take down the whole social and financial infrastructure first.

Failing this Bitcoin has to acquire mass adoption so that everyone in the world uses it and nation states hoards it. This it has failed to achieve. As a token it is only worth what the collective human mind space is willing to exchange for it.

Crypto currencies are not going away. When we look at this space we must not overlook the forest for the trees. Tokens are like individual species of trees making up the forest. Under changing conditions certain species thrive and others die away, but this crypto forest will continues to grow and capture a bigger share of the global net worth.

Here is my value proposition for EOS.

EOS is the first industry grade protocol that is ready for the mass on boarding of every financial application to dis-intermediate the financial middlemen. Assuming that this turns out as I expect in the next few weeks, we can navel gaze on what the valuation of 1 EOS token will look like.

For a reference perspective global net worth is estimated to be around 280 trillion dollars. Gold accounts for about 8 trillion and total global real estate is estimated to be around 214 trillion. These are all asset classes of which crypto is but one asset class with a valuation of only 350 billion.

Current EOS valuation is 14 Billion - $14

1) If EOS rise to number 2 in market cap. it will have a valuation of 70 billion - $70

2) If EOS gets to number 1 in market cap, it will have a valuation in excess of 100 billion - > $100

3) If EOS is a compared to a global company with tokens representing shares in this company then it would be a global company with shareholders in every country of the world. Apple Inc, a largely American held company, is at the moment the largest company in the world with a valuation close to 1 trillion dollars. If EOS were to become the largest company in the world it need to have a valuation in excess of 1 trillion dollars - >$1000

At this moment EOS is a GO 100% unanimous. Magic. Let's see if we get to Stage 3. GO EOS.











The Third Reason Why EOS Will Take Blockchain Technology Mainstream - App and Dapp

Apps and DApps 

Bitcoin was introduced by software developers to the world in 2009. It survived and grew because a few people saw the innovation in the technology, got hooked, nurtured it and promoted it. Gradually other software developers, users and speculators bought into the revolution and a movement was born.

The main push for Bitcoin was use as a currency. You could pay anyone anywhere in the world nearly instantly and with very low fees. So begun a game of cat and mouse with authorities because, a parallel monetary system, if it takes root, strikes at the very core of established power structures.

Unfortunately for the authorities, Bitcoin is decentralised software and despite their best efforts Bitcoin found more and more users worldwide, and established financial media like Bloomberg and CNBC started introducing it into the mainstream financial mindspace. When institutions started introducing financial products based on Bitcoin, Bitcoin has arrived. However this is a fast moving space and mainstream will always be steps behind.

The internet is where it is today because of all the applications that was built on it like Email, Webpages and streaming media. Applications that we use without any understanding of how the underlying technology works. Bitcoin was meant to be this underlying layer on which applications like coloured coins, notary services and others were to be built. However many of the op-codes in Bitcoin were disabled making it difficult or impossible to build these applications, perhaps because developers realise that as it was, Bitcoin could never scale to the millions of transaction required to accommodate these applications. That started the great debate on how to scale Bitcoin.

While this argument was going on, Ethereum emerged in 2013 specifically as a platform to build smart contracts and decentralised applications. It became the platform on which smart contract tokens were issued for all kinds of uses. The huge increase in price of Ethereum reflected how relevant and useful this concept was but again, as demonstrated by an app called Crypto Kitty Ethereum could not scale to the required level either.

And so we have EOS. It claims to do everything Ethereum can and at scale. That this claim is taken seriously is reflected in the price. Even without a running blockchain it holds the number 5 spot in Market Capitalisation. 

Apps and Dapps will take EOS mainstream.

The EOS blockchain will launch tomorrow. ( June 9 ) This will bring in the next phase of the crypto revolution. Apps that can on board huge number of users will be build on this platform.

Everipedia is set to overtake and replace Wikipedia and in 2017 has millions of users and more than 5 million page views per month and growing. These are numbers that Ethereum is unable to accommodate. Free transactions on EOS is also an important factor.

Ethfinex a decentralised exchange to be built by the very successful Bitfinex. All exchanges are centralised to handle the huge number of transactions. Ethfinex and many similar decentralised exchanges are being built on EOS.

This article introduces some of the apps that will be live on EOS in the near future, very quickly after the launch. Many apps currently built on Ethereum will move over to the EOS platform just so that it can run as designed.

What it amounts to is that EOS will pick up users like Bitcoin and Ethereum never did and these users will not need to hold any EOS tokens. This is important because needing to hold tokens in order to use an app just adds friction. You do not not need to hold any tokens to click a like on Facebook, so a decentralised Facebook like app has no chance of usurping Facebook if it needs tokens to interact and use.

If EOS manages to pick up uses on a grand scale, it will just suck up all the oxygen in the crypto space and leave other coins lagging. That EOS will change the shape and landscape of the crypto space is certain. What is uncertain is what it will look like when the dust settles.

Will there be only one coin left standing or will there be different coins for different purposes? Will EOS be a platform on which everything including Bitcoin is built? Will another platform that is even more decentralised overtake it?

We will see, but for the foreseeable future, it is hard to envisiage how EOS can be overtaken. Especially with no other technology even close to achieving scalability on the horizon.

Thursday, June 7, 2018

The Second Reason Why EOS Will Take Blockchain Technology Mainstream. - Power To Users

Power To The Users

Bitcoin as well as Ethereum depends on a balance of interest between Users, Developers and Miners to keep each other in check. We are comfortable with this principle as it reflects the checks and balances we have between the legislative, judicial and executive branches of government. On deeper analysis we see that reality does not reflect theory. In all cases the system fails and some fails spectacularly.

Ethereum failed when the "imutable ledger" was rolled back basically with the blessing of the creator. Maybe it will never happen again but then it will always be a MAYBE. The stain is there - forever.

Bitcoin was plagued with years of indecision and infighting about increasing the blocksize and ended up with a chain split to resolve the disputed. This was what it was designed to do and we ended up with 2 significant chains in Bitcoin and Bitcoin Cash.

In both the above two examples the uses had very little say. They can only express their opinion after developers allowed them to choose.

EOS is different.

Block One are the developers and they release the software as an open source project for anybody to adopt, fork and use. Even though they will still continue to maintain the software they profess no interest in how their software is used, and have no control in its' adoption.

Block producers are the "miners" and they earn 1% of the 5% annual coin inflation. At any time there will be 21 block producers sharing 25% and 175 standby block producers sharing the remaining 75%. Being a block producer is very lucrative and all will aspire to get voted to be one of the 21 main producers.

Users vote for block producers at every block. This incentives block producers to work very hard at "serving" their users. They consider themselves servants and can be voted out at anytime. They have no security of tenure.

It would seem that a good strategy would be to bribe the uses to vote for them for example by sharing the mining fees. However this practice has been made illegal and no block producer will even think of adopting this as a policy.

Block producers will have to be seen to make positive contributions to the community. They have to continually campaign for users votes and support. They need to be innovative and relevant and to respond to any negative feedback immediately.

Another interesting feature is that no group can directly or indirectly hold greater than 10% of the coins. This prevents whales from controlling the ecosystem. The year long ICO was designed to spread the tokens to an as wide audience as possible.

Every blockchain is like a country with its' own governance system, checks and balances. Like countries the elected representative always profess to serve the people, and after being elected they are always subjected to corruption and regulatory capture. The temptations are too hard to resist.

The EOS blockchain is designed from the outset to give maximum power to the users. The system was designed with empowerment of the users as much as possible. It will be interesting to see how this plays out.

EOS has yet to be launched as its' own blockchain. So when is it ready? I think that it was "ready" the moment the balances on the two chains were verified, after all the software has already been tested for a whole year. Perhaps as a serious project they must be seen to be not too hasty and yet not too slow. Maybe it has to be an auspicious date like June 8.








Sunday, June 3, 2018

The First Reason Why EOS Will Take Blockchain Technology Mainstream. - Free Transactions

FREE TRANSACTIONS!

Free transactions means you can interact with the EOS blockchain free of charge. You can transfer your tokens from one wallet to another free of charge.

Lets say you have a social media app like "Twitter" for example running on the EOS platform. The developer will have to stake EOS tokens to get access to bandwidth to host his application. The more popular his app gets the more bandwidth they will need and so will have to purchase or "borrow" EOS tokens for staking.

The users can post their "tweets" without paying any fees! ( In Memo.cash you will still have to pay a small amount of BCH to make a post.) Free transactions means anyone can join and use even if they don't hold any tokens. This removes the biggest hurdle in on-boarding new users to their app. Works exactly like Twitter and Facebook without the costs. This makes it possible take the app viral and scale.

So how does the economics work?

App developer

1) They can make an airdrop onto EOS token holders and therefore publish their app to the whole of the EOS community. Instant publicity and user base. 

2) They could airdrop 80% of their tokens and hold back 20%. If their tokens trade on the exchange they have effectively raise finance for their project without doing an ICO which in itself carries costs, and legal implications.

3) They could monetise their app just like Facebook and Google ie displaying advertising.

4) Best of all they can host their app without running huge server farms. So they can have a Facebook, Google or Ebay like application without the costs.

User

1) Free to post and interact with the app means that they can bring in their whole social network without any friction. They can use the EOS blockchain without knowing that they are using it.

2) They can earn reward tokens from the developer for using the app.

3) Their personal data  will become their own property and valuable. This change in "ownership" will have wide implications for the world. It delivers the holy grail of blockhain technology which is to return power to the individual. Nothing can be taken from us without our permission.

4) If they hold EOS tokens they will receive a string of airdrops like dividends with the bulk of it immediately after the mainnet launches.

5) They will be able to stake their EOS tokens to earn "dividends" be it for bandwidth or ram.

EOS

1) The aspect of locking up tokens removes them from the circulating supply and so will increase the tokens value. 

2) Being able to scale from day one is most significant. This by itself will bring over many of the apps that have already deployed on Ethereum but have floundered because of scaling issues especially in relations to cost of transactions. If EOS proves that it really can scale from day one then there is no stopping its price from "going to the moon".

3) EOS is not designed to be money. But being free to transact and being able to scale to billions of users may just make it so. 

By the look of things EOS have grasps and resolved many of the issues that are still besetting the more established blockchains like Bitcoin and Ethereum. We have always said that the future belongs to blockchain but it may not be Bitcoin. Looks like EOS has a good chance of being just that.

Just watching the worldwide EOS community come into coalescence, is just magical and awe inspiring. Nothing like this have ever happened before. Coins are usually "launched" and then toss down the mountain to gather momentum and users. This process actually brings everybody up to he mountain to lift the boulder together before tossing it down the mountain. It is a community that has learned from all the difficulties of the past 10 years, since the launch of Bitcoin. GO EOS!

Friday, June 1, 2018

A Final Note Just Before The Eos Mainnet Launch

This is a chart of all the announced Dapps and Airdrops that will be coming on to the Eos network.

You can get a better grasps on all the different Apps here.




This is such an exciting time to be watching the Genesis block come into existence. This just means that even just 1 token can lead to thousands of tokens and airdrops distributed free to your EOS wallet in the immediate future.

I venture to predict that EOS will displace Bitcoin (BTC) as the biggest market cap coin before the year is out.

1) All the airdrops above will spur the FOMO crowd. There is nothing more bullish than the FOMO push.

2) Most launch coins experience an initial selloff. EOS will be different. the success of the launch will bring in many investors who do not want to risk a failed launch. When successful the demand will be bigger than the supply.

3) This article is quite revealing about the true nature of EOS tokens. One billion tokens may sound like a huge amount for the value to reach $1000 or more but in reality many of these tokens will be tightly held.

All the Dapps will airdrop and following the airdrop will need to purchase EOS tokens in order to run their apps on the EOS platform. Watch this video

https://www.youtube.com/watch?v=EZfQ9YRtlmU

4) Finally watch this video for the live EOS launch

https://www.youtube.com/watch?v=WJVi8DOmSvw

I will update this post as the launch progresses.


Friday, April 27, 2018

A Heads Up For EOS

I have not posted in a while. This will be a very short post and a heads up to all my readers for EOS.

Why EOS?

1. Dan Larrimer have proven that himself with Bitshares and Steemit that he knows how to build successful platforms. EOS is his third platform and judging from the success and stability of the first two we can have confidence that this will be his best yet.

2. EOS is still in the ICO stage and has about another 30 days to go. Already the price is rising daily. This indicates that whales are starting to take position in this asset. I expect EOS to reach the number 3 spot in market capitalisation before 1 June and to be the number 1 coin before the year is out.

3. One of the main feature of EOS is that Block One funds projects to develop on EOS that will in turn air drop their tokens to EOS holders.You will get so many air drop coins continuously after launch that this pressure will just keep driving the value of  EOS.

4. Anyone who wants to use the EOS platform must own EOS tokens for accessing bandwidth on the platform. This locks up a huge amount of EOS tokens giving scarcity value to the balance of EOS token traded. Owning EOS is like owning real estate in the virtual world.

5. In almost all blockchains, you need to move some token (transaction fees) to make transactions. EOS is different. It is Free To Use. You can see an example of this in Steemit. This is the one feature that will propel EOS to the number 1 coin in the near future. Facebook will never be what it is today, if you have to pay to make post or likes.

6. The most startling statement is that the developer ( Block One ) explicitly states that EOS has no value, not good for anything and no promise of exchanging it for Real EOS tokens. What a statement to make if your aim is to sell something! yet the news around EOS all aims towards it being a real product. So this I see this as an opportunity. It is the reason why the price is not higher. There are many people waiting for more certainty before they invest. The current price incorporates this risk, and with risk is opportunity.

The reality is that this is a legal position taken by Block One. Sort of a nudge nudge, wink wink, " EOS has no value, You know what I mean, huh? " The last thing that you want is for EOS to be deemed a security by some authoritarian jurisdiction like the US and China. The current ICO specifically excludes US and Chinese citizens from participating.


This I find is a good video

https://www.youtube.com/watch?v=mCYIQxb1OYc


Monday, February 12, 2018

CoinEx Token CET - Ground Floor Profit Opportunity

Bitcoin Cash came into existence on 1 August 2017. We may one day learn who the anonymous miner was who dedicated a significant amount of mining hashrate to make that event possible. However, Haipo Yang, the CEO of ViaBtc must have played a significant role in that event.

ViaBtc originally a miner, added an exchange to their business after BCH launch, but was soon caught up the the big China crackdown. ViaBtc closed their chinese operations in September 2017 and incorporated in the UK as CoinEx in December 2017.

CoinEx started operations in February 2018 and quickly differentiated themselves from all other exchanges by using Bitcoin Cash (BCH) as the base trading pair.

This post is to postulate a potential profit opportunity for investors in their newly issued token CET. 10 billion tokens are on issue. Should anyone invest in this token?

1) Founder - Haipo Yang
    This link shed some light into what makes this guy tick. Most of the other major Chinese exchanges moved their base to Hong Kong, Taiwan, South Korea or Japan. He chose the UK. This is quite a decision and to pivot BCH as the base trading pair is another audacious move.

    If you have followed him and ViaBtc and invested in Bitcoin Cash, you would have profited from that decision. CET is not an ICO token so investing in CET is not investing in CoinEx but it could be the next best thing. Based on what I have seen, Haipo Yang is successful at what he does, thinks outside the square, an put his plans into motion very quickly.

2) Exchange fees.
     CET will have a use case. It can be used to pay trading fees on their CoinEx platform. This immediately gives the token a value. Presumably its' value will increase as the exchange gains in prominence. As an example we can look at another similar token Binance Coin (BNB) This token is used on the Binance exchange, is valued at $9.13 and stands at No 28 in market capitalisation. CET is valued at $0.005. Note however that BNB has only 200 million tokens on issue while CET will have 10 billion.

3) Deflationary plus dividends.
    The equivalent in CET of 20% of CoinEx quarterly profit will be burnt each quarter. This means that they have a policy to distribute 20% of their profits to CET holders every quarter, treating CET holders like shareholders. We wont know how much their profit will be, but Bitfinex is rumoured to make as much a 1 million a day in revenue. Successful exchanges are very profitable.

4) Gas for a decentralised exchange.
     Plans are afoot to use CET as gas in a new decentralised exchange. Most exchanges are rushing to setup decentralised exchanges as exchanges are regularly being hacked. I believe that Bitfinex and Binance have these plans as well.

     An example of a working decentralised exchange is Bitshares. This exchange uses bitshares token as trading fees but is hamstrung because it needed Gateways costing more fees. How CoinEX plans to setup their decentralised exchange is not known but I think that they could very well be first out of the box with a working decentralised exchange.

5) Airdrops through Voting
     One interesting aspect about Coinex is the voting system. You vote for the two coins in each round with native CET tokens. These new listing often come with airdrop 1:1 with CET as only the top 2 coins get listed. EG if Hydro list in a week you get 1000 Hydro for your 1000 CET tokens. If Hydro is priced at $1 on listing then your $.01 ( 1 cent) CET is worth $1.00. Thats 100X in 1 week.
    This is unique to CoinEX and really shows the innovative nature of this company.

6) USDT credit default swap contract
     Essentially you are gambling on the default risk of USDT holders.

2. If you believe there’s a default risk (price drop), you can choose to buy USCB contracts. When a default happens leading to a drop of USDT/USD price e.g. to USDT/USD=0.4, a USCB contract will get 1-USDT/USD=0.6 BTC. 

3. If you don’t believe there’s a default risk (price increase) , you can choose to hold USCA contracts and sell USCB contracts. If no default happens, meaning USDT/USD=1, each USCA contract will bring you 1 BTC and the amount you get from selling USCB is the extra profit. 

7) Other benefits.
     There are other benefits but these are hard to value.

CET tokens just started trading on 11 February. On this basis there should be upward price movements when the coins are useable for trading fees and properly valued after the first quaterly burn.

1 billion CET tokens was distributed free to ViaBtc and CoinEx customers. There would be other "air drops" to selected groups as they are using this strategy to draw customers to their platform. It is not a "moon" coin but the potential for profit exist. This is only my opinion and not investment advise.

Update : As CET tokens are continually being released thus diluting the existing pool, I would update this coin to a Watch. The potential is there but it may take a year or more. 

Use my Referral Link for CoinEx if you wish :
https://www.coinex.com/account/signup?refer_code=sd5fn

Monday, February 5, 2018

Tether In A Bitcoin Bear Market, And Can Tether Be A World Currency?

What is Tether.

Tether is a token issued on the Bitcoin and Ethereum blockchain. and promises to pay out 1 USD for every Tether issued. This led to the community;s concern as to whether the $2 billion in reserve exist. Tether.io did not, could not or would not provide proof of this. News of Tether.io parting company with their auditors made the situation worse.

Lets examine the facts

1)  The price of Tether remained stable throughout this controversy, meaning that even though there was a strong and targeted campaign against it, Tether holders remained steadfast. There was no sell off and the number of Tether issued actually increased. Action speaks louder than words. Therefore we have to conclude that Tether must have an important role in the Crypto economy.

2) One year ago the daily volume of Tether traded was about a million dollars. Today it is 3.5 billion dollars. This is a phenomenal increase. Something is happening.

3) There were claims that Tether was issued to prop up the price of BTC. This can't be true because the price of BTC is down in spite of the increasing number of Tether issued.

Like it or not, Tether is now a huge part of the Crypto economy. It is already second behind BTC in trading volume. ( Adjusted : BTC 6.5 Tether 3.5 billion ) I have no doubt that Tether will surpass BTC in trading volume soon, especially with BTC losing utility and usage daily.

A "Reserve Bank" For Crypto

Does Tether.io have 2.2 billion USD deposited and/or in assets as they claimed? It is dangerous for Tether to reveal their fiat holdings as these can be subjected to confiscation. More than likely if it exists they will mostly be in accounts not directly attributable to them.

They could be held in pledges and guarantees in fiat or assets. However this is done, all that is necessary is for their holders to believe that they can have their Tokens converted to USD on demand as promised. This really makes Tether.io for all intent and purposes "A Bank". It exist because we believe it is solvent. If not there would have been a huge "run on the bank".

This means that USDT can be just printed into existence by Tether.io at whim. We have no way of knowing if they have the full reserve backing for every Tether they issue. What this means is that Tether is now basically backed by the full faith and trust of the Crypto community. This is the reality. If this is not true Tether will not exist, as they have not or cannot prove that they have full reserves. They only have their promise to convert Tether tokens on demand.

It is possible that the number of Tethers issued follows demand, so that its' value always remain at approximately 1 USD. If the units of Tether issued was fixed then demand would have push the price upwards. There must be some mechanism that is keeping the price of Tether stable. Perhaps it is the belief that there is 1 USD backing every Tether issued.

Now comes an interesting thought. What if the whole world starts pricing everything is Tether. Initially we will view Tether the same as 1 USD, but over time Tether may be deemed to be  the stable unit of monetary value and the USD gets to be priced in Tether, together with every other world fiat currency. If this happens, Tether becomes a world currency! This is not so far fetched as how we view money is a generational thing. The younger generation have more faith in the Crypto economy because they are basically excluded from the legacy economy.

Is Tether a huge risk to the Crypto economy? Will Tether crash to zero?

The whole crypto market is crashing. The only Token increasing in market capitalisation is Tether. Based on this it is unlikely that Tether will crash ahead of other tokens. More than likely it is actually underpinning the whole crypto economy.

Can a government shut Tether.io down? The Chinese government is already clamping down on anything crypto. The currency most at risk is the USD. I really have no clue. If the US government could shut down Tether's accounts, I am sure that they would. All that is needed for crypto to survive is for one country to legalise it and Japan has.

We will have to watch this play out, but the bigger the market cap of Tether the harder it will be to shut it down. The value of a token is in the minds of the people using it, and Tether may actually get the full appreciation, support and protection of the whole crypto community.

Tether is not a threat to the crypto economy. It is a stable unit of measure for the crypto economy.  Even the legacy economy does not have this stable unit of measure. Hopefully a system of decentralised governance for Tether may evolve.

Tether in a bear market

Having seen so many boom and bust cycles in the Bitcoin space I have come to appreciate the value of a stable coin like Tether. A market indexed to BTC rises and crashes with the price of BTC. When the market is index to Tether, each coin will rise and fall on its' own merit.

Current demand for Tethers is fuelled by investors wanting a stable unit to hold value while the crypto market is falling. These investors have not cashed out. Perhaps they are looking to buy back in when they belief the market have bottomed out. Perhaps its' arbitrage value is significant. Maybe it will be a hedge against inflating fiat currencies. Time will tell.

Questions Questions and more Questions.

a) What happens when the market turns bullish again? Will supply and demand for Tethers still be kept in equilibrium?

b) Who is the counter party for Tether is a bear market?

c) Will unscrupulous parties print Tethers out of thin air to manipulate the market?

d) Can Tether become a world currency?

Update 10/2/2018

Another interesting observation on Tether is that its' trading volume is equal to its' market cap at the moment. Meaning that the trading volume is at least 1X the number of coins issued. All other coins trade at only a percentage to its' market cap eg Bitcoin at 0.05X. (1/20th) If this observation holds then Tether will have the highest trading volume if its' Market Cap reaches 8 Billion or with the issue of anoher 6 Billion coins.

Tether is an interesting development as it really can be the glue that connects the whole crypto market. It is an issued token so it is not subjected to mining. It is built on the Bitcoin blockchain as a second layer and is therefore secured by the Bitcoin blockchain. Compared to all the other wannabe stable coins, Tether has achieved the network effect.

It has a very interesting use case in that centralised exchanges uses it to offload most of their KYC AML requirements to Tether.io.

Its' function as in intermediary coin between those who believe that the market is rising and those that believe that the market is falling in any particular coin can only gain more usage and prominence.

Another feature is that it trades in a small price band of +/- 10%. This could be deliberate in the sense that more Tethers will be issued if the price trades above 1 USD and redeemed f it trades below. It now makes it possible for risk adverse traders to enter the market knowing that there is a floor bottom for the price of Tethers. This will bring more liquidity to the whole crypto market.

The Tether database is under reconstruction at the moment, perhaps due to the recent 30 million hack. Even with this negative news the price of Tether did not tank, and Tether continues to trade on the exchanges.

Pushing the virtues of Tether does not mean that I am pro Tether against all the other coins. In fact it means that I am pro Crypto. Tether being a stable coin allows all other coins to rise and fall on their own merits against it. This makes it somewhat like Shapeshift.

Can you see where this is leading? If Tether wallet becomes a spending wallet, it means that you can spend whatever coins you have in Tether on the fly. Merchants need only worry about one currency Tether, and for he moment it is equivalent to USD.

There is no mental gymnastics required to convert between Bitcoin or Ethereum or Litecoin or whatever coin when spending or receiving Crypto. The decision to use or hold any particular crypto or fiat comes before or after the Tether transaction by both parties if needed.

This reasoning taken to the extreme may mean that we could easily drop the USD equivalent. It could just become a stable Tether in its' own right. Can this happen/ I think yes. Will it happen? This is hard to predict.

Tether's advantage here is that it has achieve the most network effect as a stable coin. It is neutral. No one holds Tether expecting the coin to "go to the moon" so to speak. That aside, if Tether.io ever goes for an ICO, their tokens will be a very good buy.

There has been much controversy about the connection between Bitfinex and Tether. I do not know much about the politics in this relationship but I think that it has been positive for Bitfinex and probably all exchanges that uses Tether without dealing in fiat. I hear from a reliable source that Bitfinex is giving out a $1.01 dividend in its' 3rd quarter. That is 100% its' share value and comes after 2 previous dividend issue of  25 cents and 37.5 cents respectively. Without a doubt Tether provides liquidity to the Crypto market and more Tether can only mean a stronger Crypto industry.




Wednesday, January 31, 2018

Will Bitcoin Segwit Recover its' All Time High Or Go to Zero?

Bitcoin Segwit proponents have spent more that the last 2 years arguing that BTC is a store of value and should not be used for everyday transactions. They have even proposed that transactions can be conducted on Ethereum and Litecoin. Now they are actively touting Lightning as the killer innovation that will make Bitcoin great again.

I find this argument hard to swallow because experience tells me that it is difficult to win customers and nearly impossible to win them back, if they left because of poor customer service. It is no different for Bitcoin. BTC is a product and transactions on the blockchain is a service. Gaining converts was hard, very hard. Now look at how easy it is to lose them.


Using the Sent From Addresses as an approximation to number of users, we see that in less than a month ( 4 January to 1 February ), the number of users fell 60% from 536K to 218K. 

Where have these "customers" gone?

Since the all time high of 19.5K on 17 December, BTC price have dropped to 10K today. Some call it a correction but I will argue that the correction ended 7 January.  Since then the drop in price have tracked the decline in the number of users as shown in the graph above.



It looks like even the most ardent supporters of BTC are no longer buying into the promises of Core developers. BTC's price drop is more than just a correction and the bear market, because Ethereum's price is bucking this trend. 

Since 1 August a large number of BTC users have moved to Alt coins and many have gone all-in to Bitcoin Cash. It would now appear that, even those vehemently against Bitcoin Cash are leaving and moving to Ethereum. This can only mean that Ethereum will soon replace BTC as the top coin in terms of market share.

What about the flippening?

Bitcoin Cash is only 6 months old. The flippening will happen soon enough after BTC loses its' market dominance to Ethereum. Bitcoin Cash will have to convince the market that it is the real Bitcoin and that Bitcoin Segwit was the fork, before it can unseat Ethereum. This will happen because Ethereum was never designed to be a monetary token. For now it can be a "store of value".




Thursday, January 25, 2018

Lightning Destroys Bitcoin's Security Model.

Bitcoin stands on three pillars, the users, the miners and the developers. The weakest link here was the developers but fortunately Bitcoin has self correcting features which resulted in the forking off to a new development team (Bitcoin Cash).

Lightning destroys Bitcoin's security model.

One of the most fascinating attribute of bitcoin was that the system pays for its' own security. It may seem trivial now but ask yourself back then, how do you pay someone to secure your protocol with coins that are worth nothing? This was the chicken and egg problem. All prior solutions, including governments,  have all relied on trusted entities to perform that function.

Miner's reward = Block Reward + Transaction Fees  =  12.5  + E[xT]

The principle idea is that as the Block rewards decreases every four years the block reward will be replaced by transaction fees.

T is allowed to increase as fast as the technology for block space allow while keeping x as low as possible.

This requires larger block sizes. Even one that can accommodate billions of transactions (T) in say 10 years. We can be sure that technology will come to the rescue. For example, as we will move to 5G networks, developing countries will skip  1G, 2G, 3G and even 4G to move directly into 5G with the rest of us. This development will happen as sure as they skip landlines entirely to move into mobile networks.

Lightning network changes the security model to :

Miner's reward = Block Reward +  ( Transaction Fees - Lightning Fees ) =  12.5  + { E(xT) - E(yL) }

As the block rewards decreases the transaction fees must also increase. The idea here is to make on-chain transaction very expensive and move all smaller transactions to the Lightning network or side chains.

T is capped and x is allowed to increase as much as demand for settlement allows.
L is allowed to increase indefinitely and y is kept very small.

Transactions to get on and off the lightning channels are part of total T. If it is not obvious yet, as x increases it also gets more expensive to open and close a lightning channel. So how would one get on to lighting if it gets too expensive to open a channel. You will have to subscribe to a channel node directly. That is put your money into a "banking" node. These "banking" nodes will now be in a position to allow or deny services to you ie Be A bank!

At the moment we tend to assume that miner's cost are denominated in dollars or fiat. Therefore as the transaction cost grows to thousands of dollars it will keep pace with costs and miners will be happy. But will they? When we get to the situation where the unit of transaction is bitcoin and not dollars, then the block reward will tend to zero in BTC terms. The only real reward are the on chain transaction fees.

Miners are price takers. They get to determine their income by selecting from a smorgasbord of fees. "Banking" nodes become price setters. They put up that smorgasbord of fees. It will be in their interest to set Lightning fees as high as possible and Mining fees as low as possible.

Nodes were never meant to be compensated in the Bitcoin protocol. They are placed on the user side of Bitcoin's 3 legged equation. They pay for the cost of running a node because their business model requires it. It is their cost to use the system.

Lightning has not taken hold yet and we are far away from "banking" nodes. It could work if miners do not have a choice. But miners have a choice in Bitcoin Cash. Miners will not put up with a situation where they get elbowed out of the system, just as happened with the original core developers.

Bitcoin's security is one of its' greatest strength.

Bitcoin uses proof of work to secure the protocol. This is the most secure system we know. Nothing has ever worked before bitcoin. To emphasise this point, the fastest and most powerful chips are used to mine bitcoins even before they are deployed into mainstream computers. The technology to secure Bitcoin is bleeding edge and will remain so.

Any departure from this is a compromise and introduces some level of centralisation or trust. Proof of stake requires some form of centralisation, moderated in different iterations of the POS model. Without Bitcoin coming first, POS cannot take off on its' own. Bitcoin made it possible for value to flow into the POS tokens.

Trust but verify

It can be argued that not everyone can run a Bitcoin Cash node because of the cost and we have to trust a small number of these expensive nodes. However, any business or organisation that needs to verify their transactions real time will have to run a node. We could have hundreds of thousands of nodes across all sectors and industries. We don't have 100% trusted nodes but we have enough, just as we may not have 100% honest miners, but we have enough.

We cannot say the same for "banking" nodes because their profitability depends on their control of miners revenues, and thus the erosion of Bitcoin's security model. You will not be allowed to verify or audit their setups.


Monday, January 22, 2018

A Rating Agency For Cryptocurrency - Blue Sky For Bitcoin Cash.

The announcement that Weiss will release the first crypto curriency ratings on 24 January 2018, will be the most significant development in the crypto space.

 

Basically Weiss have developed an algorithm to rate cryptos base on 4 criterias

Risk Index   -  Volatility 

Reward Index  -  Profit potential

Technology Index - Whitepaper

Fundamental Index - General Useability


By my reckoning if this rating is accurate then Bitcoin Cash stands head and shoulder above all the others.

1) It scales which puts it above Bitcoin Segwit and Ethereum

2) It is true to the original Satoshi whitepaper 

3) It is a small world network meaning that it is immune to Sybil attacks.

4) It is gaining adoption everyday with large enterprises

5) Price have increased from 300 to $2500 with low volatility in downward price movements

6) It competes on the most secure hashing algorith

7) Biggest development team with at least 4 clients


Look for the price of Bitcoin Cash to strengthen on this news. It will also push the awareness of Bitcoin Cash to people old and new to cryptos.


Update 25/1/2018  The Weiss rating report is a subscription service priced at $936 per annum with a 50% discount for early bird subscriptions. It currently rates Ethereum and EOS at B, Steemit and Cardano at B- Bitcoin at C+ Bitcoin Cash is C-. 


Weiss Announces First Bitcoin and Cryptocurrency Grades by U.S. Rating Agency

Risky Crypto Market to Get the Clarity Only Impartial Ratings Can Provide
Palm Beach Gardens, FL — Weiss Ratings, the nation’s leading independent rating agency of financial institutions, will issue letter grades on cryptocurrencies, including Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, NEM, Litecoin, Stellar, EOS, IOTA, Dash, NEO, TRON, Monero, Bitcoin Gold and many others.
The new Weiss Cryptocurrency Ratings, to be released January 24, are the first by a financial rating agency. They are based on a groundbreaking model that analyzes thousands of data points on each coin’s technology, usage, and trading patterns.
“Many cryptocurrencies are murky, overhyped and vulnerable to crashes. The market desperately needs the clarity that only robust, impartial ratings can provide,” said Weiss Ratings founder, Martin D. Weiss, PhD. “We’re proud to be the first to bring that benefit to investors — to help them cut through the hype and identify the few truly solid cryptocurrencies. Our ratings are based on hard data and objective analysis. But they're bound to create controversy, including some grades that may come as a surprise to some people.”
Weiss Ratings, which began in 1971, rates 55,000 institutions and investments. Unlike Standard & Poor’s, Moody’s, Fitch and A.M. Best, Weiss never accepts compensation of any kind from the entities it rates. Its independence and accuracy have been noted by the U.S. Government Accountability Office (GAO), Barron’sThe Wall Street Journal, and The New York Times, among others.
The Weiss Ratings Scale
Investors should interpret the Weiss Cryptocurrency grade scale with these terms:
A = excellent
B = good
C = fair
D = weak
E = very weak
A plus or minus sign indicates the upper third or lower third of a grade range, respectively. In addition, an F grade is assigned to cryptocurrencies that have failed or are subject to credible allegations of fraud.
Important Caveats
Before acting on, or reacting to, any single grade, investors should be aware of the following five caveats:
Caveat 1. Do not misunderstand the Weiss Ratings scale. Other rating agencies use a scale from triple A to single C.  In that scheme a B grade is “junk” and a C is close to failure. In contrast, Weiss Ratings’ B is “good” and C is “fair.” Based on a study of the Weiss Ratings by the U.S. Government Accountability Office, an institution is not categorized “vulnerable” unless its grade is D+ or lower.
Thus, cryptocurrencies do not have to achieve an A grade to merit interest by investors. A “B” or even “B-” also qualify as the investment rating equivalent to “buy.” At the same time, investors should not be overly alarmed by a “C” rating. It is a passing grade; and for investors, implies the equivalent of “hold.”
Caveat 2. No safe cryptocurrencies. At this early stage in their evolution, there is no such thing as a “safe” cryptocurrency. All investors in the sector must be willing to accept wide price volatility, undefined regulatory risk, frequent market irregularities, and deficiencies in platforms such as currency exchanges.
Caveat 3. Frequent ratings changes. The metrics used to evaluate cryptocurrencies can change more rapidly than those of other investments. Therefore, when using Weiss Cryptocurrency Ratings, investors should expect frequent upgrades and downgrades.
Caveat 4. Opinion. Although Weiss Cryptocurrency Ratings are based on objective analysis free of conflicts of interest, they should not be interpreted as be-all-end-all evaluations. Every grade issued by any rating agency is ultimately an opinion, to be used by the public in the context of opinions from analysts, developers and users.
Caveat 5. Incomplete. No ratings model, no matter how well designed, can evaluate all factors; and this is especially true in new, unchartered sectors like cryptocurrencies. For example, to fully evaluate the blockchain software programs of each new cryptocurrency, teams of expert blockchain developers would need to audit and thoroughly test the code. Although that effort would be an important step forward, especially for developers and certain institutions, it is beyond the scope of this project. Instead, to help guide investors to cryptocurrencies with the most robust technology, the Weiss Ratings evaluates each blockchain technology by using a series of the proxy metrics described below.
The Model
The Weiss Cryptocurrency Ratings model is built from the ground up with five basic layers:
Layer 1. Current data on each currency’s technology, performance and trading trends
Layer 2. Proprietary formulas that convert the data into comparable ratios.
Level 3. Proprietary sub-indexes that aggregate the ratios to measure key factors and features considered critical to the potential success or failure of investments in each cryptocurrency
Level 4. Aggregation of the sub-indexes into four key indexes, each meriting a separate letter grade
Level 5. Aggregation of the four key indexes into an overall letter grade
Thus, each Weiss Cryptocurrency Rating represents the pinnacle of a pyramid built from tens of thousands of calculations that feed up to a final grade.
Disclosure of Model Components
To be consistent with the transparency that has become the hallmark of the cryptocurrency space, Weiss Ratings’ intent over time is to disclose as much as possible about its model.
However, decades of experience in the financial marketplace indicate that, once armed with the specific formulas or processes of a ratings model, some rated entities seek to game the system: They try to manipulate data they can influence or control with the goal of achieving an unfair advantage. To help avoid this outcome, disclosure must proceed in phases, beginning with a broad description of the four key indexes in the Weiss Cryptocurrency Ratings model. These are:
  1. The Cryptocurrency Risk Index. A composite of sub-indexes that measure (a) relative and absolute price fluctuations over multiple time frames, (b) declines from peak to trough in terms of frequency and magnitude, (c) market bias, whether up or down, and other factors.
  2. The Cryptocurrency Reward Index. A composite of sub-indexes that evaluate (a) returns compared to moving averages, (b) absolute returns compared to a benchmark, (c) smoothed returns compared to a benchmark, and other factors.
  3. The Cryptocurrency Technology Index. A composite of sub-indexes calculated by a manual analysis of publicly available white papers, public discussion forums or announcements, and open source code to evaluate the protocols underlying each cryptocurrency. Factors considered include the level of anonymity, sophistication of monetary policy, governance capabilities, the ability or flexibility to improve code, energy efficiency, scaling solutions, interoperability with other blockchains and many more.
  4. The Cryptocurrency Fundamental Index. A composite of sub-indexes that evaluate transaction speed and scalability, market penetration, network security, decentralization of block production, network capacity, developer participation, public acceptance, plus other key factors.
Each of these indexes is appropriately weighted, compared and then evaluated in terms of how it interacts with the other three indexes systemically. The end result of the analytical process is the Weiss Cryptocurrency Rating.
Overall, Weiss Cryptocurrency Ratings provide a well-rounded, solidly-grounded opinion based on hard facts and steeped in four decades of ratings experience. They can serve as much-needed cryptocurrency GPS for investors.