Crypto: Will there be real developments in 2018?

It is not easy to keep an eye on the “long game” during periods of mania like the one we are experiencing. The attention of the world is on the currencies, but people like CNBC are missing the point. The bulk of the iceberg lies below the water. The same is true with crypto. That is where you should keep your eyes as well.

via 2018: The Year the Crypto Sh*t Starts Getting Real at Never Stop Marketing…

Valuing cryptoassets when data can be wrong or fake

CoinMetrics with a post on how reliable crypto data may be among various sources. Despite access to a lot of raw data, there’s a lot of issues with interpreting that data. It’s part of the ongoing problem of figuring out how to value cryptoassets:

So to conclude, on-chain volume and transaction count can both be faked and can be tricky to estimate. Exchange volume must be viewed fairly skeptically. Market cap has a whole host of methodological issues. Generated coins and fees, however, are much more concrete.

via On data and certainty at Coin Metrics

Coinbase earned over $1 billion in revenue in 2017

Coinbase, the bitcoin trading broker that has exploded in popularity as cryptocurrencies surge and nose dive, has encountered an unusual problem for a Silicon Valley startup: Too many investors are trying to get in. The six-year-old company crossed $1 billion in revenue last year, Recode has learned from industry sources, a tremendous rise fueled by layman interest in both bitcoin and competing virtual currencies that users can buy and sell through the app.

via Bitcoin broker Coinbase booked $1 billion in revenue last year at Recode

Robinhood fact of the day

From the always excellent Token Economy newsletter:

There are currently almost 900,000 people in line to get early access to Robinhood Crypto.

If you don’t read it already, check out the Token Economy #33: Dogfooding at Token Economy

Shamcoin finds lots of similarities in ICO whitepapers

Interesting use of IA to analyze upcoming ICO whitepapers from Shamcoin.

It’s easy to find patterns from the matrix, and as next steps we would be adding more signals to make relative comparisons even more interesting.

Overall, there was a lot of homogeneity among this set of ICOs, which they also found when they looked at past ICO projects.  They are doing some impressive things to uncover fraud in ICOs.

Check out the charts and full post Whitepaper analysis of upcoming ICOs relative to existing coins at Shamcoin

Blockchain’s pendulum of innovation

Crypto expert Jill Carlson on the pendulum of innovation, and where it lies in regards to blockchain currently.

Out of the altcoin wreckage, 2015 saw an awakening to the fact that infrastructure is a critical component of the promise of blockchain technology. While it looks very different this time around, a similar realization is emerging from the token mania of the last year. 2018 is witnessing the pendulum again swing back to innovation in infrastructure.

There is perhaps no better example of rearchitecting infrastructure around assets than the innovation currently happening with decentralized exchange. In the first few weeks of the year, 0x has already achieved more than $10 million worth of transactions in a single day.

Self-custody also looks poised to make huge strides. Private key management by individuals and institutions alike has long been a critical UX issue. Ledger’s fundraising round should position it to bring hardware wallets even more mainstream. Radar Relay’s integration with Ledger takes the market a long way in terms of balancing usability, access to liquidity, and secure self-custody. MobileCoin’s use of SGX and remote attestation, while perhaps not the ideal cypherpunk solution to key management, also marks an important experiment in private key custody.

Brayton Williams on what to expect in crypto in 2018

Boost.vc cofounder Brayton Williams recapped some of teh mindboggling numbers for crypto in 2017 in a recent post:

2017 was certainly the year of cryptocurrencies. No one can doubt that.

  • Crypto market cap (from Coinmarketcap.com) went from $18.2B to $610B (33X).
  • Coinbase reached the #1 app on the IOS appstore.
  • Altcoins flourished as BTC dominance shrunk from 88% to 39%.
  • $3.7B was raised by ICOs.

And goes on to point out how the focus was alll about money.

However 2017 was all about the MONEY (and Cryptokitties). Crypto became a real asset class and money flew in. Why? The economy is strong, people have money and everyone is looking for new yields. Crypto was providing those yields and thus more and more money came flocking in. But the price of these assets has started to massively outgrow their true utility and fundamentals.

He cites Vitalik Buterin’s recent frustration with the fact that the rypto community has not yet produced even close to the value of money that has been poured in the market as a whole. However, he believe 2018 will attract a lot more talent:

The money inflow we saw in 2017 was almost necessary for our next step of fulfilling the real promise of cryptocurrency. People follow money. We are now seeing designers, UX experts and product people joining the space, which is what I think we were really missing. Cryptokitties was the first example of good UI meets blockchain and I think in 2018 that wave will hit us harder.

He then looks at why so many projects and teams are stuck at the building stage, rather than the shipping stage.

This brings up the question: Why aren’t projects shipping? Outside of normal product timelines (most projects are less than 6 months old and things take time), this is what I have come up thus far:

  1. The building blocks of the decentralized web are very new. Teams are building many things from scratch which takes time.
  2. The teams are highly technical but less product oriented. Thus many are building/experimenting with cool tech but these same people aren’t skilled in end user product development.
  3. What is the rush when you have 10+ years of runway.
  4. Token project market caps are EXTREMELY HIGH and are built on hopes and dreams. A mediocre product with minimal traction isn’t as alluring.
  5. Lambo. Scams. No intention from start to deliver.

Read the full post 2018 Crypto: The year of TALENT and SHIPPING – Brayton Williams – Medium at Medium

Venezuelan government cashing in on Bitcoin mining through extortion & police raids

Here’s an interview with an anonymous Bitcoin miner in Venezuela, where the government is taking some extreme, and apparently unlawful, measures to cash in on Bitcoin mining.

I recently published, “Ground Zero In the Venezuelan Bitcoin Scene” and randomly received a message from an anonymous Twitter account complimenting the article. They also told me that I missed the real story. Of course I asked, “What was that?” They responded alluding to the Venezuelan Government’s involvement in Bitcoin mining. I thought to myself, now there is a story.

There have been other claims of issues in Venezuela, and there’s certainly an air of desperation that makes it seem possible, though there obviously remains a question of veracity in regards to the answers given here. Here’s an excerpt of some of the questions and answers:

There are stories of the government confiscating computers and mining equipment from people. Tell us about this.
Yes, sometimes the police squad that visits your place decides to seize your mining equipment, and there is absolutely nothing you can do about it.

What do they do with the equipment?
Rumor has it they install them on government facilities.

It is not a secret the Venezuelan government is rumored to be using the confiscated mining equipment to run their own farms and making the people who they took it from to set it up. Tell us about these secret operations?
This is the worst case scenario, but I’ve heard multiple stories like this. If for some reason they don’t like you at all during the raid, they would confiscate your equipment and have you install it for them. They even “hire” you as an infiltrator and they make you rat out other miners.

How does the government and police find miners?
There is an intelligence police division exclusively for mining hunting. They accomplish so by monitoring electric power consumption looking for irregular situations.

Read the whole interview at Extortion, Police Raids and Secrecy: Inside The Venezuelan Bitcoin Mining World at Hacker Noon

Looking beyond Bitcoin riches

From the New York Times recent article on looking beyond Bitcoin (and the crypto mania), which has seen too much of a focus on money. There are true technology changes and there will be some big winners. Well worth a read. Here’s a few more excerpts:

The true believers behind blockchain platforms like Ethereum argue that a network of distributed trust is one of those advances in software architecture that will prove, in the long run, to have historic significance. That promise has helped fuel the huge jump in cryptocurrency valuations. But in a way, the Bitcoin bubble may ultimately turn out to be a distraction from the true significance of the blockchain. The real promise of these new technologies, many of their evangelists believe, lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralized and egalitarian system. If you believe the evangelists, the blockchain is the future. But it is also a way of getting back to the internet’s roots

The article cites the move from open protocols to the current state of internet we have now.

For all their brilliance, the inventors of the open protocols that shaped the internet failed to include some key elements that would later prove critical to the future of online culture. Perhaps most important, they did not create a secure open standard that established human identity on the network. Units of information could be defined — pages, links, messages — but people did not have their own protocol: no way to define and share your real name, your location, your interests or (perhaps most crucial) your relationships to other people online.

Facebook is the ultimate embodiment of the chasm that divides InternetOne and InternetTwo economies. No private company owned the protocols that defined email or GPS or the open web. But one single corporation owns the data that define social identity for two billion people today — and one single person, Mark Zuckerberg, holds the majority of the voting power in that corporation.

And there’s a good summation of the ultimate potential of blockchain to fix some of the problems that have arisen.

The blockchain evangelists think this entire approach is backward. You should own your digital identity — which could include everything from your date of birth to your friend networks to your purchasing history — and you should be free to lend parts of that identity out to services as you see fit. Given that identity was not baked into the original internet protocols, and given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility. Now it is an attainable goal. A number of blockchain-based services are trying to tackle this problem, including a new identity system called uPort that has been spun out of ConsenSys and another one called Blockstack that is currently based on the Bitcoin platform. (Tim Berners-Lee is leading the development of a comparable system, called Solid, that would also give users control over their own data.) These rival protocols all have slightly different frameworks, but they all share a general vision of how identity should work on a truly decentralized internet.

 

Full article at Beyond the Bitcoin Bubble at The New York Times

Crypto & Taxes, in the NYTimes

“Every time you transfer a cryptocurrency, you might trigger a gain and pay a tax,” said Selva Ozelli, a tax lawyer and accountant who has recently written about the tax implications of virtual currencies.In late 2016, the I.R.S. made it clear that it was searching for cryptocurrency tax evaders: The agency sent a broad request to Coinbase, the largest Bitcoin exchange in the United States, requesting records for all customers who bought digital currency from the company from 2013 to 2015.Coinbase balked, but a court ruled that it must provide the records of roughly 14,000 customers, fewer than 1 percent of its patrons, who made transactions involving more than $20,000 of virtual currencies.

via When Trading in Bitcoin, Keep the Tax Man in Mind at www.nytimes.com