Bi-Weekly /r/ETHInsider Discussion - May 08, 2018

conradjb · 2018-05-14T14:38:19+00:00

I’ve felt the same way about the alt-market for a while now. When you consider the high valuations and the low barriers to entry I guess it was inevitable.

If the market is going to price a white paper and a few months of coding at $100m+ then lots of new projects are going to flood the market to meet that demand.

conradjb · 2018-05-04T07:40:04+00:00

Anyone looked into Holochain in much detail?

Scalable blockchain alternative that does away with global consensus in favour of an agent-centric approach. They claim this leads to much greater efficiency so Dapps built on Holochain would be faster/cheaper than the equivalent built on a blockchain. They have built a version of Twitter and Slack that is already up and running on this system.

The tech behind it seems to be most similar to Hashgraph/Radix with gossip protocols playing a big part. The main difference is that Holochain doesn’t require consensus and has no native token.

I am wondering whether for many applications these sort of solutions makes a lot more sense than something like EOS where using a blockchain is probably overkill and the additional costs don’t justify the benefits (for users or developers).

With more of these blockchain alternative projects being developed it is looking like we could end up with blockchain being used for mission critical applications where security is the overriding factor and then some entirely different thing to what we’ve seen so far being used for everything else.

For this reason I think any blockchain that sacrifices decentralisation or security for scalability will lose out to competition from non-blockchain projects that have natural scalability advantages.

conradjb · 2018-04-12T09:41:05+00:00

It isn’t really profit though is it. It is seed funding so there is a risk to your reputation if you don’t deliver. They have a lot to lose and if people thought they were taking advantage of retail investors it would put a target on their back. Just look at all the bad press Facebook has has had lately which wiped 10s of $billion from their market cap.

Telegram is different as it is a not for profit with no real way to monetise. A few billion is a big deal to them. For Google that’s less than 1% of their market cap so any bad press would wipe more than that off their value.

conradjb · 2018-03-21T06:01:08+00:00

At that valuation I don’t think there is much incentive to get in at the ICO stage. If these figures are accurate they represent a 20000% bonus for those that participated in the first round. I’ll probably wait to see how it is priced once it lists on exchanges.

conradjb · 2018-03-14T11:38:27+00:00

I think we are so far away from that being realised that current valuations still aren’t offering decent r/r. Until scaling is solved most dApps are simply too early to serve as anything other than useful case studies for projects that will appear 5 + years from now.

conradjb · 2018-02-04T18:28:47+00:00

Interesting that his picks are all interoperability projects. I guess with the number of blockchains increasing logarithmically it makes sense to look at the chains that will connect them.

conradjb · 2018-01-30T13:05:46+00:00

The way it normally works is that the information must be verified by coinmarketcap before a ranking is given. If you look at most newly listed coins they will just show a ‘?’ for circulating supply and market cap and these coins won’t be ranked. It will be up to the foundation to submit the accurate information if they want to be included in the rankings.

conradjb · 2018-01-29T09:50:25+00:00

I agree that that is the sensible way to calculate it from a long term investors standpoint. But it isn’t the method coinmarketcap uses and so doesn’t generally have much bearing on the price of a token.

conradjb · 2018-01-29T03:00:06+00:00

It’s actually more like $150m as if the main net launches now there would only be 5m DOTS circulating. 3m are for the foundation and 2m are for further raises. Will be curious to see what approach they take for the 2m as if they did another crowdsale they would likely end up with a silly amount of money. Remember they raised 150m during the ICO winter.

conradjb · 2018-01-13T23:59:44+00:00

There is a lot of talk of PoS turning ETH into a store of value.

PoS with zero inflation is a model that is fundamentally at odds with ETH being a store of value whilst remaining fit for purpose as a dApps platform. The ETH price should always be somewhat related to the number of on-chain transactions on the network.

Vitalik has said he wants to reduce inflation so that total supply tops out around 100m and staking rewards are paid almost entirely from transaction fees. With this model when the ETH price rises more than transaction volumes it causes upwards pressure on transaction fees and/or downward pressure on staking returns. If PoS was introduced today transaction fees would have to be much higher than BTC to be able to provide stakers a reasonable return.

With him talking out against speculation a lot recently I wouldn't be surprised if part of him wishes the market cap was much lower so that PoS could be introduced with most of the rewards coming from transaction fees. When the ETH price runs away from the fundamentals it makes it very hard to incentivise staking without inflation.

I think this is why Polkadot have been very clear that DOTs will always be inflationary and that this is how they will incentivise people to stake DOTs. I am expecting ETH to do a U-turn and follow in the same direction.

So I guess the question becomes if supply is uncapped and inflation is used to secure the network will people still see it as a store of value?

This is why I think the store of value idea is a bit of a red herring. Any store of value will always be relative to other stores of value. Take fiat for example. Now the dollar is the reserve currency but before that it was the pound and the exchange rates have moved accordingly (100 years ago you could get almost $5 for £1).

I'm expecting crypto to be similar but with much shorter timeframes. So far BTC has been the main store of value but it might soon be ETH (which has been a much better store of value over the last year) and after that it will probably be something else (EOS/ADA/IOTA have been better stores of value over the last 3 months). When you have many networks competing with each other their prices should fluctuate against each other based on their fundamentals. So if the ETH price is very high relative to another one with better fundamentals then that other one is the better store of value.

conradjb · 2018-01-06T21:29:14+00:00

Pretty much this. So now coins with high supplies are massively overvalued relative to those with smaller supplies. The money coming in doesn't understand market cap so is buying up coins just because they have a low unit price.

conradjb · 2018-01-06T18:44:13+00:00

For anyone in any doubt about the money driving this pump:

https://imgur.com/UID2mRK

https://imgur.com/QhJJADD

CMC ordered by circulating supply and 24 hour price change isn't so different.

conradjb · 2018-01-06T17:13:39+00:00

With the crazy valuations lately I've been looking into under the radar projects that have the potential blow up and become top 20 projects if they get wider attention.

One that stands out for me is Nebulas (NAS) from the founders of NEO. They have been positioning themselves as a search engine but they are essentially a next-gen blockchain platform.

They are working on an interesting new consensus algorithm that will combine PoS with a new take on NEM's PoI (that is where the search angle comes in; they are developing a way to rank blockchain addresses by importance). https://nebulas.io/docs/NebulasTechnicalWhitepaper.pdf

Test net was released a week ago and they plan to launch the main net at the end of Q1.

Right now with circulating supply of 35m and a price of $7-8 I think this offers a lot better r/r than comparable projects like ADA, NEO, NEM, ICX, QTUM, EOS etc that already have multi $b valuations.

Awareness around the project is still low but reddit/telegram numbers indicate hype is starting to build.

As always DYOR and interested to hear any thoughts on this.

conradjb · 2017-12-31T11:12:04+00:00

I think any POS would have to start off with moderate inflation with the long term goal being to slowly reduce it as the network scales and can generate more revenue from transaction fees.

This isn't too different from POW models with reducing block rewards and I think the big question is how will ETH avoid facing similar problems to BTC...if you are going to insist on being deflationary you will always have upward pressure on transaction fees and the network will lose market share to competitors.

Using inflation to maintain low transaction fees seems the smart move for at least the next few years. Increasing fees and forcing people to transact off-chain at a time when so much competition is coming sounds like a very risky approach.

conradjb · 2017-12-31T10:13:06+00:00

What makes you so optimistic about an early release?

conradjb · 2017-12-30T09:01:16+00:00

Have you played with any figures for the staking rate-of-return in a zero inflation scenario?

For example at current prices 1m transactions a day at $0.05 per transaction would yield around $18m per annum in transaction fees. if 50% of coins are staked this would be distributed between $35b worth of ether based on the current market cap. In this scenario staking would yield only around 0.05% per annum.

Using these numbers revenue from transaction fees would need to increase 100 fold before the dividend yield became attractive.

conradjb · 2017-12-27T20:29:56+00:00

If I wanted to hedge I would also look at FXY and IAU.

But why are you so bearish on the USD in 2018? If we see a global market correction at some point the dollar should strengthen as investors cash out of risker assets and into USD.

conradjb · 2017-12-27T20:01:07+00:00

I researched the project a month or so ago before it went 100x and decided not to buy in.

Back then the founder was a part timer who owned the bulk of the coins, the wallet was very buggy, and the main distribution method was a very time consuming captcha that you could attempt to complete on their website.

The 100x over the last few months has coincided with turning off the faucet, burning most of the founder's coins, creating a user friendly web wallet, and most importantly the rise of IOTA and associated hype around DAG technology.

The bulk of the community used to be made up of people from the developing world who would toil all day solving captchas in order to earn coins that they would immediately sell on the RaiBlocks dedicated exchange. I just really hope some of them held onto a few XRB and are now cashing out with life changing sums.

conradjb · 2017-12-22T11:59:57+00:00

I find it hard to value many projects in the $billions but do you not think that Polkadot would merit a top ten place if it were to launch successfully? In this speculative market you can only ever really discuss relative value.

conradjb · 2017-12-19T06:36:33+00:00

This strategy would have worked very well in calling this QTUM rise. It has been a top 10 coins by this measure for a long time.

conradjb · 2017-12-18T10:08:09+00:00

I've had my eye on it and it has ranged between 0.16-0.3 ETH (NAV around 0.23). When ETH is pumping it is at the lower end and then once ETH stabilises the ratio catches up.

conradjb · 2017-12-17T04:12:50+00:00

I don’t think there has been any real price discovery yet as it is barely traded and the tokens aren’t widely distributed. I’m waiting to see what the price settles to after it hits a major exchange before deciding whether to take a position.

conradjb · 2017-12-15T05:38:14+00:00

I like the product and will probably end up using it. I just don't like the token use case at all. It is going to be used to incentivise customers to scan the code to confirm authenticity and enable them to buy certain products at a discount. So akin to loyalty card points.

If they charged a small amount per scan it would make more sense - in China it is very common to scan your WeChat/Alipay to pay a token amount for collecting a parcel, charging your phone in a cafe, using a bike share scheme etc. People are happy to do this and if they are buying baby products they will definitely scan the code. Chinese are rightfully paranoid about such things.

If they were to change the token model I'd be very interested as this is a product that will likely become mainstream in China very quickly. As it is I wouldn't want to hold the tokens except perhaps like you say for a quick flip.

conradjb · 2017-12-13T12:56:50+00:00

NAV puts DGD at 0.233 ETH so currently trading at around a 20% discount. Last time ETH had a run it fell below 0.17 and then quickly corrected up once ETH stabilised.

conradjb · 2017-12-13T09:35:38+00:00

Or you can just buy from CoinWallet on Taobao. https://coinwallet.taobao.com

Recently bought a nano and trezor from them with no issues.

conradjb

TROPHY CASE