Blockchain update

[*T*]

Re: Blockchain update

with 1 billion bolivars that you can't get into another currency because of capital controls, you buy stock, real assets in limited supply.







i recommend the latest series of interviews at macrovoices- free with registration- especially part 4 focused on the work of luke gromen.

kind of looks a lot like bitcoins path, except crypto as a class is not a limited asset, and so collapsed. gold's chart would like this except for the paper markets. note that bitcoin collapsed exactly when futures trading started.

Sorry, what collapse? News to me.

[touchring]

Re: Blockchain update

https://www.cnbc.com/2018/01/10/poli...x-evasion.html

Authorities raid South Korea's largest cryptocurrency exchanges

• Police and tax agencies raided South Korea's largest cryptocurrency exchanges this week for alleged tax evasion
• South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts
• The crackdown comes as the South Korean government attempts to calm frenzied demand for cryptocurrency trading

If you think about it, cryptos are no different from casinos?

[touchring]

Re: Blockchain update

http://www.bbc.com/news/business-42645081

South Korea is considering a law to ban cryptocurrencies such as Bitcoin being traded on local exchanges.Justice Minister Park Sang-ki said virtual currencies were "great concerns" and that the ministry was preparing a bill to ban trading.
However, South Korea's presidential office said later that a ban had not yet been finalised and was one measure being considered.

If South Korea bans trading of cryptos, other Asian countries will quickly follow on as no one wants to be the last one to act, and be accused of not "protecting consumers".

[patrikkorda]

Re: Blockchain update

The South Korean government can shut down the exchanges, but it cannot shut down cryptocurrencies. Ironically, this will make cryptocurrencies more expensive in South Korea.

Although I'm fairly confident that the crypto space should fall for the next few months, there is no doubt that, if South Korea shuts down their exchanges, cryptocurrencies will be expensive in South Korea relative to the rest of the world.

[touchring]

Re: Blockchain update

The South Korean government can shut down the exchanges, but it cannot shut down cryptocurrencies. Ironically, this will make cryptocurrencies more expensive in South Korea.

Although I'm fairly confident that the crypto space should fall for the next few months, there is no doubt that, if South Korea shuts down their exchanges, cryptocurrencies will be expensive in South Korea relative to the rest of the world.

This is quite true. When crack is banned, the price goes up many times!

[seobook]

Re: Blockchain update

This is quite true. When crack is banned, the price goes up many times!

Those sorts of drugs are a consumable where addicts chase dopamine rush highs that become ever more elusive as they burn out some of their dopamine nerve axons.
https://www.slideshare.net/dustinfry...e-on-the-brain

For virtual assets like cryptocurrencies and domain names, liquidity drives price.

• When Bitcoin Cash was added to Coinbase it jumped & capital that was reallocated into it caused Bitcoin to slide.
• One of the reasons Coinbase is in no rush to add any other cryptos is if Bitcoin tanks it kills the narrative for most of the other coins as well. If narrative of Bitcoin becomes impaired over the longer term then sales pitch of "next Bitcoin" is much less sexy.

Adding friction / cost / uncertainty to financial transactions may increase the profit margins for remaining exchanges, but it should be a net negative for prices of the asset class overall as people feel they will have to pay a bigger fee or face more uncertainty to enter or exit the position.

Compare currencies to other financial markets or asset classes.

• If homes saw dramatically higher interest rates for any loan terms beyond 5-years, would home prices go higher or lower?
• If people could get a 3.5% 30-year loan to buy gold & keep the first $250,000 of gains tax free on cashing out, would gold prices go higher or lower?

As far as virtual assets go, comparing crytpocurrencies to domain names isn't all that far fetched.

• Both were speculative markets that had heavy investment from mainland China for a period of time, viewed as desirable for their portability to get around capital controls.
• In domain names Chinese investors preferred short 3 & 4 letter domains (nicknamed CHIPS) bought for their "scarcity." In some cases some of the purchases were in off-beat TLDs, but the highest prices were consistently in .com. ccTLDs can also sell for good prices in some cases, but there is typically a steep fall off in prices between .com and .net or .org & then another steep fall off between .net or .org and stuff like .info, .biz, and all the new TLDs that launched a few years back.
• Bitcoin proper is akin to .com domain names. To stretch the analogy a bit, Etherium would be like the combined market of country level domains (ccTLDs) .co.uk, .de, .fr, .ca, etc ... since many ICOs trade on the Etherium chain.
• What happened to domain prices as a flood of new TLDs were launched a few years ago? They tanked. They not only went nowhere, but they also impacted the prices of other existing domains - especially the oddball stuff like hyphenated names, 3 and 4 word longer domain names which are harder to remember than short & brandable names, domains in less desirable existing TLDs like .info or .biz, etc.
• Who bought up some of the popular domain portfolios that had accumulated over many years? GoDaddy (Marchex portfolio, Kevin Ham portfolio, Michael Berkens / Worldwide Media portfolio, Names.com / Donuts portfolio, Elite Domains portfolio, DomainSource portfolio). They have the ability to sell the most names (often at lower prices than what other sellers would sell at) because they can put their aftermarket inventory front-n-center on their website as people go to register new domain names. They play a similar role as Coinbase does, where the exchanges help determine liquidity, which in turn helps determine price. They have nearly 50% marketshare on domain registrations. And as they gain share in premium sales they have more sales data to use to price their remaining premium names.
• GoDaddy also to some degree controls the liquidity of the other new TLDs, having the ability to arbitrarily drop extensions which they feel are overpriced or have other issues with. Some TLDs - like .xyz - did clever pricing promotions & bundling to try to drive adoption, but most of them served to sustaining purpose, which is why the volumes registered fall off a cliff when the promotional price period ends. Anything above free is too expensive for some distractions that have no redeeming qualities & no longterm value. And even free is a bad deal if it turns into a negative option recurring subscription for something with no use.

There can still be rare one-off sales for big money on rather illiquid domains, but the broader market price has trended downward as the marketplace has become more saturated.

[patrikkorda]

Re: Blockchain update

• When Bitcoin Cash was added to Coinbase it jumped & capital that was reallocated into it caused Bitcoin to slide.
• One of the reasons Coinbase is in no rush to add any other cryptos is if Bitcoin tanks it kills the narrative for most of the other coins as well. If narrative of Bitcoin becomes impaired over the longer term then sales pitch of "next Bitcoin" is much less sexy.

I think you have the causal relationship in reverse order. Yes, Bitcoin Cash (BCH) jumped when it was added to Coinbase. This is true for any cryptocurrency when it is added to an exchange. As an example, Janus (JNS) recently jumped ~10,000% overnight while Bitcoin (BTC) and the rest of the market was down because it was added on some exchange. Did JNS cause BTC to fall? No, that would be absurd. Neither did BCH cause BTC to fall. BTC is still the driver. A more fundamental insight is that BTC has been losing market share, and lots of it, because it has exorbitant fees due to the 1MB blocksize limit. It is truly staggering how much market share BTC has lost in the past 12 months. It dominated for nearly 8 years with ~90%+ market share until it started to slide last March. As of today, it has 33% market share. In the long-term, its market share will dwindle down to zero.

As for the reason why BCH was listed on Coinbase in the first place: Roger Ver (the CEO of bitcoin.com and major proponent of BCH) is a childhood friend with Brian Armstrong (the CEO of Coinbase). They both recognize that BTC is practically unusable at this point because of its exorbitant fees.

Adding friction / cost / uncertainty to financial transactions may increase the profit margins for remaining exchanges, but it should be a net negative for prices of the asset class overall as people feel they will have to pay a bigger fee or face more uncertainty to enter or exit the position.

If buying/selling gold were made illegal in the state of Washington, I believe the price of gold would go up in the state of Washington. I believe the price of BTC (and therefore the entire market since it is still a driver) will fall for the next few months, perhaps even longer, because I have seen these episodes of exuberance in BTC before: there is a run up, the price goes parabolic, early birds take profits, the price crashes, and then the price bleeds for a while.

Compare currencies to other financial markets or asset classes.

• If homes saw dramatically higher interest rates for any loan terms beyond 5-years, would home prices go higher or lower?

The answer is lower, but I think this has more to do with the supply of money and credit. When credit is cheap, asset prices tend to go up and vice-versa.

As far as virtual assets go, comparing crytpocurrencies to domain names isn't all that far fetched.

I don't think you need to go as far as domain names specifically. A name in and of itself is important. For example, I have a friend who sold an instagram username that he registered early on for over $10,000 a few years ago. Being a fan of Mayweather, I registered ~TBE on ripple (XRP) in 2013 as my address because their addresses have usernames instead of just randomly generated letters (or "keys"). I doubt you can get a three character address now that it is a mature cryptocurrency.

Things I see coming in the pipeline: Decentralized exchanges which cannot be shut down (sort of like torrents), built-in exchanges for some cryptocurrencies, and a whole new debate unfolding. Simillar to the scalability debate which happened last year which made scalable cryptocurrencies like XRP explode ~50,000%, the upcoming debate will make certain cryptocurrencies explode as the narrative takes hold. In the meantime, I think the BTC price will bleed out (and therefore the rest of the market) until we find a new floor.

[touchring]

Re: Blockchain update

As far as virtual assets go, comparing crytpocurrencies to domain names isn't all that far fetched.

I disagree with the comparison of cryptos with domain names. Domain names are a real virtual asset protected by governments and law. If it's stolen, you have legal recourse to get it back. Domains have a basic utility - they are used to resolve homepages and @ emails. Domains can pay dividend through PPC although the amount varies. Domains can be branded and you can build a business model around it.

The Internet cannot survive without domains, whereas even if cryptos are banned by the UN, lives continue like they have never existed.

[patrikkorda]

Re: Blockchain update

The Internet cannot survive without domains, whereas even if cryptos are banned by the UN, lives continue like they have never existed.

Currently, there are 1,438 cryptocurrencies out there according to coinmarketcap. I believe the vast majority of them, perhaps even all of them, will eventually go to zero.

However, it is important to acknowledge the difference between any particular cryptocurrency on the one hand and blockchain technology on the other. Wheeled luggage became commercialized much later than it should have been, but once it was, there was no going back. Similarly, blockchain technology is essentially a combination of things that have already existed and should have been combined much sooner. Nevertheless, the genie is finally out of the bottle. Blockchains are here to stay. They will only get faster, cheaper, and more scalable as time goes on.

The ultimate irony is that government crackdowns will only speed up the development of blockchains. Blockchains are not spiders, you cannot rip off their heads to kill them. In fact, they have no heads. Blockchains are starfish - cut off their limbs and they regenerate - cut their central disc in half and you end up with two starfish. We already saw this process unfold in file sharing peer-to-peer technology.

[seobook]

Re: Blockchain update

Domain names are a real virtual asset protected by governments and law. If it's stolen, you have legal recourse to get it back. Domains have a basic utility - they are used to resolve homepages and @ emails.

Sure.

But where the audience attention goes is where the real sustained value is.

To some degree that is controlled at the browser & operating system level, along with other major traffic channels like Facebook & Google.

Value can be stripped by third parties.

Google priority inbox can prevent marketing emails from hitting the inbox. One quarter where Groupon missed badly they mentioned this as a leading cause. They paid Google AdWords for the traffic to drive the sign ups based on some estimated lifetime customer value, then after that vertical cooled Google changed the math ex-post-facto to further drive Groupon into the ground. It was a mistake for Groupon to say no to Google's acquisition offer.

Email spam filters can in some cases be so aggressive that emails do not even land in the spam box, but instead are automatically deleted. I learned this when I hooked up my hand rolled support desk software with Outlook email, where, much to my dismay, emails from my server to me were flagged as spam and auto-deleted before even hitting the inbox or spam bin!

I am sure you saw the bit about Facebook announcing lowering the prominence of news articles in their feed once again over the past weekend.

Next month Google Chrome web browser will start blocking ads from showing on websites where the ad formats are deemed annoying.

Google's mobile search results can have 2 screens full of ads followed by a screen of scraped content before the organic results appear, but one of the annoying ad formats is having 31% of the above the fold screen space on a mobile device as ads. If 1 in 40 pageviews is flagged as "annoying" per those sorts of arbitrary guidelines, Google will show NO ADS for any pageview on your site.

Oh, and Google also funds/subsidizes some of the other third party ad blockers in addition to bolting an ad blocker into their Chrome web browser.

Now some of Google's web services not only have banner ads for Chrome at the top of the page, but some of the services work EXCLUSIVELY with Chrome.

Internet Explorer 6 for the win!
https://www.theverge.com/2018/1/4/16...-web-standards

Domains can pay dividend through PPC although the amount varies.

Very few people make a living this way.

The money on that front was good about a decade ago.

Yahoo! paid above-market revenue share rates to partners to show growth which aimed to hide their ongoing loss of search share. Yahoo! even offered select partners feeds which included the CPC in the feed so they could arb away the value of the clicks.

That created a vicious cycle though. Because if you pay someone else 90% to drive "traffic" for a term like car insurance quotes and someone is paying $40 a click for that traffic...the traffic that is "generated" via the arb is of lower quality than traffic created by someone typing a keyword phrase into a search box. So what happens is after about 50% of the clicks for that big money term are arb, advertisers adjust by cutting their bids in half.

So Yahoo! goes from making $40 a click on 10,000 clicks to making $20 a click on 20,000 clicks. Same gross revenues BUT they paid partners something like $18,000 for those clicks. So that drops the Yahoo! net revenues from $40,000 to $22,000. Do that enough times and suddenly Yahoo can't offer legitimate search partners enough money to compete against Google's bid. Thus Yahoo! further loses share.

Once Yahoo outsourced search to Microsoft, Microsoft quickly gutted some of the lower quality traffic partners and lowered CPC on some of the lower quality arbitrage stuff.

Once that happened the competitive bid which was propping up domainer CPC revenues fell through the floor.

Google then started to drive down the revshare they offered partners.

And, concurrent with the above changes, web browsers not only added search boxes, but made the address bar a search box, which pushed some of the direct navigation traffic away from typing domain names to doing search queries. And even on branded terms there are often ads above the organic results. And about half of consumers can not distinguish the difference between ads and organic results in the search result pages.

Domains can be branded and you can build a business model around it.

In most markets valuations have moved away from generically descriptive names toward more brandable names.

But even there, valuations are in most cases heavily down across the board.

Lots of value in domain names in many years gone by was all the VC funded startups. Now some startups just go with a mobile app & an $8 domain which adds an extra word to their core name.
join___.com
welcometo___.com
_____online.com
___app.com
get____.com
etc.

or even use extensions like .co or .io, combined with the above sorts of names.

And then they only upgrade to the core more expensive names after the business has been derisked some.

This means there are say a few hundred or a few thousand decent priced purchases by startups each year, rather than almost every startup buying an expensive domain name only to have a 90%+ chance of failing anyhow.

The Internet cannot survive without domains

In some emerging markets people think Facebook is the internet. Yes that is an app tied to a domain name, but increasingly more attention & time is being funneled into fewer websites.

This is reflected in the fact that outside of China, depending on what stats you use, Google & Facebook are eating somewhere between 85% and 100%+ of all online ad spending growth.

And that's before Google turned their web browser into an ad blocker.

Currently, there are 1,438 cryptocurrencies out there according to coinmarketcap. I believe the vast majority of them, perhaps even all of them, will eventually go to zero.
...
The ultimate irony is that government crackdowns will only speed up the development of blockchains. Blockchains are not spiders, you cannot rip off their heads to kill them. In fact, they have no heads. Blockchains are starfish - cut off their limbs and they regenerate - cut their central disc in half and you end up with two starfish. We already saw this process unfold in file sharing peer-to-peer technology.

Ultimately the value relies in belief in the technology as much as in the actual technology.

I know you called the Ripple rise well in advance, but what do the next starfish evolution look like?

[touchring]

Re: Blockchain update

Very few people make a living this way.

The money on that front was good about a decade ago.

This is true, can't deny it. Utimately, I think the abiity to be valued is where Domains lose to crytos at this moment.

Let's say if a company claims to have rights to Mars land and starts to sell plots of Mars land. Without knowing how much minerals there is in the land, or whether mankind can explore and mine Mars in even our lifetime, how do you value Mars land? And does the company that sells it actually have the right to the land. If there's no way to value, then the sky is the limit.

[patrikkorda]

Re: Blockchain update

Ultimately the value relies in belief in the technology as much as in the actual technology.

I know you called the Ripple rise well in advance, but what do the next starfish evolution look like?

I agree. Beliefs, stories, and narratives are crucial. The standard view on blockchains is as follows:

1st generation: a digital cash (e.g., bitcoin)
2nd generation: a smart contract and developer platform (e.g., ethereum)
3rd generation: interoperability, machine to machine payments, IoV

The problem with this narrative is that we haven't even solved the 1st generation yet. The original promise was fast, cheap, private, and scalable transactions and it turns out bitcoin today is the exact opposite. There is still plenty of money to be made in solving the 1st generation. Ripple (XRP) isn't the ultimate solution because it lacks decentralization and privacy. On the other hand, the cryptocurrencies that claim to provide decentralization and privacy lack scalability. In fact, all of the "privacy" coins out there today, like Monero, are even less scalable than bitcoin - which is pathetic considering bitcoin can only process a handful of transactions per second.

The winner of the 1st generation, which in my opinion is a prerequisite for 2nd and 3rd generation layers to come along, is a digital cash that is both scalable, fast, cheap (like ripple) but also decentralized and private (like monero). While there isn't a single cryptocurrency out there that meets this criteria today, there are some in the pipeline that will meet this criteria soon enough.

[dcarrigg]

Re: Blockchain update

This is true, can't deny it. Utimately, I think the abiity to be valued is where Domains lose to crytos at this moment.

Let's say if a company claims to have rights to Mars land and starts to sell plots of Mars land. Without knowing how much minerals there is in the land, or whether mankind can explore and mine Mars in even our lifetime, how do you value Mars land? And does the company that sells it actually have the right to the land. If there's no way to value, then the sky is the limit.

Now where have I heard this story before?

[dcarrigg]

Re: Blockchain update

I agree. Beliefs, stories, and narratives are crucial. The standard view on blockchains is as follows:

1st generation: a digital cash (e.g., bitcoin)
2nd generation: a smart contract and developer platform (e.g., ethereum)
3rd generation: interoperability, machine to machine payments, IoV

The problem with this narrative is that we haven't even solved the 1st generation yet. The original promise was fast, cheap, private, and scalable transactions and it turns out bitcoin today is the exact opposite. There is still plenty of money to be made in solving the 1st generation. Ripple (XRP) isn't the ultimate solution because it lacks decentralization and privacy. On the other hand, the cryptocurrencies that claim to provide decentralization and privacy lack scalability. In fact, all of the "privacy" coins out there today, like Monero, are even less scalable than bitcoin - which is pathetic considering bitcoin can only process a handful of transactions per second.

The winner of the 1st generation, which in my opinion is a prerequisite for 2nd and 3rd generation layers to come along, is a digital cash that is both scalable, fast, cheap (like ripple) but also decentralized and private (like monero). While there isn't a single cryptocurrency out there that meets this criteria today, there are some in the pipeline that will meet this criteria soon enough.

My local independent auto mechanic has a poster on the wall that says:

PICK TWO:

- Job done properly
- Job done quickly
- Job done cheaply

In the same vein, I'm pretty sure there's a law about information in this universe that goes something like:

PICK TWO:

- Decentralized
- Private
- Fast (in comparison to centralized or public information using the same technology)

If you think about it, it works as well with windmills and smoke signals as it does with blockchains. Decentralization and privatization have the burden of being relatively inefficient, if only because it means you need a more complicated way to save and access information in "more securely" and functionally "in more spaces."

[touchring]

Re: Blockchain update

The winner of the 1st generation, which in my opinion is a prerequisite for 2nd and 3rd generation layers to come along, is a digital cash that is both scalable, fast, cheap (like ripple) but also decentralized and private (like monero). While there isn't a single cryptocurrency out there that meets this criteria today, there are some in the pipeline that will meet this criteria soon enough.

The winner will also need to survive government bans on exchanges. China has banned exchanges, South Korea soon, triggering a fall of Bitcoin price. As the price falls, other countries will frantically impose their own restrictions and bans as no government wants to be accuse of being slow to protect consumers from the "bitcoin scandal".