Should You Use Libra? – Understanding the True Intentions behind Facebook’s Cryptocurrency

Facebook Libra

Facebook has made it official, confirming suspicions about a blockchain project they’ve been working on for more than a year. Libra is Facebook’s next step to becoming a dominant force in FinTech sector.

Crypto-users saw this as a nod to cryptocurrency as an established payment option, but for some, it’s just a way to lure people away from traditional banks and payment services.

One Currency for Everyone

Throughout history world currencies has been associated with the most powerful countries like the British pound sterling and the US dollar. Whoever has control of the globally accepted currency has the potential of affecting the world’s economy.

Facebook’s announcement cannot be taken lightly. With roughly 30% of the world’s population currently on Facebook, it’s not hard to see why Libra can cause massive disruption in the financial sector. Crypto users estimated to be around 25 million pales in comparison to the sheer volume of would-be Libra users including the unbanked and the underserved.

This could lead to the rise of a “supercurrency” where only one currency exists for cashless, online, and cross-border transactions. As technology improves and more people gain access to free internet, digital currency and cashless transactions will become the norm, and fiat currency as we know it will cease to exist.

How Libra Works in a Nutshell

We’ve seen some attempts to create a borderless currency in the late 20th century like the gold-backed dollar, or more recently cryptocurrencies like Bitcoin and Ethereum. Facebook decides to do things differently.

Libra aims to be the first borderless currency with the stability of state-backed fiat and the security features of blockchain technology. It’s a stable coin like Tether and TrueUSD, but with some level of decentralization that employs validator nodes (a total of 100 nodes) to process transactions. There are currently 28 which includes Visa, Mastercard, Coinbase, Paypal, Ebay, and Facebook.

Libra will also address the problem of slow transaction throughputs encountered by decentralized currencies like Bitcoin and Ethereum. Whereas Bitcoin could only make seven transactions per second (TPS), Libra can process up to a thousand. That’s five times faster than PayPal, although much slower compared to Visa’s 1700 to 4000 TPS. Still, Libra is a significant improvement to many large cap cryptocurrencies in terms of transaction speed.

Unlike most coins listed on Coinmarketcap, Libra isn’t meant to be traded but is a way to store wealth outside of banks and financial institutions and making cashless transactions. Facebook, along with Libra’s founding members will put together a “Libra reserve” where all of people’s money will be pooled together creating an immense repository of all the world’s currencies. It’s like Facebook having its own “superbank.” This can have severe consequences on traditional banking and, if successful, could lead to closures.

Calibra – Facebook’s Wallet &Payment Processor

Facebook will have its own wallet and payment processing app known as “Calibra” which is distinct from the social media platform and the messaging app. Hence, all transactions made by users on the app are not mingled with user activity on social media. Facebook assures data will be stored anonymously for research purposes and will not be used to market goods and services to people on social media. Thus, if you buy a new pair of sports shoes with Libra through your Calibra wallet, you won’t be bombarded with ads of sports items on social media. Whatever shows up on your newsfeed still depends on your browsing activity.

This, in a way, prevents another Cambridge Analytica type of situation where tech giants and corporations could take advantage of user information for their own good. Meanwhile, this would encourage a lot of businesses to advertise on Facebook as more people get attracted to the idea of using instant,cashless, borderless transactions much cheaper than traditional bank transfers and payment services. Question is, can we trust Facebook with our money and spending habits?

A Friend or Foe of the Government

By allowing Facebook to gain access to the financial sector, governments can achieve what it failed to do with permission-less, decentralized, censorship-resistant currencies like Bitcoin, Ethereum, or the untraceable privacy coin like Monero. Unlike Bitcoin, Libra is a “permissioned” coin in which validator nodes (the founding members of Libra Association), have been selected based on a given criteria. These are usually multinational companies with at least $10 million staked on the Libra project.

This puts every node under the radar, and governments could very easily knock on their doors and make demands of them. Think of what this could mean to your privacy. Would it be worth the risk in exchange for a much cheaper and faster way to use money? For the 1.7 billion unbanked, and the rest of the world’s population suffering from high fees, it is a much better alternative to being denied from or being constantly ripped off with fees that are considered discriminatory. They just want to use money the way it supposed to work.

On the other hand, Facebook Libra could turn into a “mono-bank” where all of the world’s currency is sucked into. Facebook can turn the table on traditional financial institutions by depriving them of customers on the payments side. Furthermore, if Facebook succeeds in holding the majority of people’s wealth in Libra reserve, banks will slowly lose their ability as informed lenders while Libra gains the upper hand by becoming a lender itself.

Conclusion

Facebook is playing the long game in its bid to become the most dominant force in cashless, borderless transactions and online advertising. This is a crucial moment which will decide the fate of many traditional financial institutions. They can either make concessions or slug it out to the bitter end. But ultimately, it will depend on us, users, from all countries across the globe whether Facebook’s vision of putting us all under one currency will come to fruition.

Decentralization Is the Way Forward for Cryptocurrency Mining – Here’s Why

Cryptocurrency mining – the power behind our decentralized currencies – has reached a fork in the road of its young life. Giga Watt filed for bankruptcy in late November this year, Genesis Mining is facing hard times, and Bitmain’s future is in limbo.

But despite massive depreciation, and miners leaving the cryptocurrency space en masse, it’s not all doom and gloom for cryptocurrency as a whole. Institutional investors are coming into the crypto space, and the recent decline in mining could be good for persistent miners, mining farms and pools worldwide.

 

How Centralized Mining Failed

If there’s one lesson for miners to learn from in this bear market, it is keeping down the cost of mining, with emphasis on efficiency over scaling up. Over the course of the year, mining has been increasingly unprofitable even for some enterprise miners. There are a number of compounding factors for the dry spell such as:

  • recent decline in the cryptocurrency market
  • strict regulations and increased power rates for cryptocurrency mining
  • rapid increase in mining difficulty – faster than market demand and cryptocurrency adoption
  • cost of outlays in running the business increase with size (e.g. bigger facilities, cooling systems, power consumption, hiring more employees for maintenance and upkeep)

Diminishing returns over a period of time (e.g., Bitcoin rewards halve every four years) coupled with volatility in the cryptocurrency markets makes it very risky for miners to scale up beyond a certain threshold. In many cases, mining profitability is only as good as the market conditions. The recent turn of events with the price of cryptocurrency, and the equivalent of approximately 1.3 million Antminer S9 units turning off as of late proves how large-scale miners have become so dependent on cryptocurrency markets in terms of mining profitability.

The arms race towards bigger mining facilities and acquiring more efficient but expensive mining hardware also tends to backfire for some mining businesses who are now struggling to pay off their debts. State regulations have also put a lot of strain to the mining industry by imposing higher rates for cryptocurrency mining. This, along with rapid increase in network hash rate/difficulty, and a long drawn-out bear market spells disaster for many businesses in the cryptocurrency mining industry, particularly those who have overspent with expectation of higher returns through market demand and cryptocurrency adoption.

Enterprise-level miners might have increased their mining power with a large share of the network hash rate which might have previously worked but because of the way proof-of-work cryptocurrencies such as Bitcoin are built large-scale miners are running into difficulties. Miners are finding with increased network hash rate there will come a point where mining and maintenance costs start to eat up their gains unless they find access to abundant or much cheaper energy source as soon as possible, or if cryptocurrency continues to gain widespread adoption. (Imagine if every miner in the world does the same thing and Bitcoin suddenly drops to $1,000. How long can these enterprise miners hold on until Bitcoin goes back up again to $20,000 or until mining difficulty drops significantly lower?)

Lastly, centralized mining puts a lot of strain to the power grid that governments won’t have much of a choice but impose exorbitant rates for mining operations in order to “force” miners to slow down, or run the risk of overloading the grid, severely affecting all other industries in the country. The only option for large-scale miners at this point is scaling down and help redistribute hash power to the cryptocurrency network, e.g. shipping their mining rigs to places with abundant and more affordable energy source. (In Venezuela, it only costs $531 to mine Bitcoin).

 

Why Decentralized Mining Is Crucial for the Cryptocurrency Space

More secure compared to centralized mining. Centralization of mining power misses the whole point of having a decentralized cryptocurrency such as Bitcoin. Cryptocurrency mining was never meant to be a centralized endeavor, but a shared obligation to secure the network where one’s willingness to share computing power to mine transactions and prevent double spend attacks is rewarded with cryptocurrency. Centralization creates weaknesses to an inherently secure decentralized network by establishing a single point of failure and opens up the possibility of double spends and censoring transactions. (This inevitably results in weaker adoption and/or the cryptocurrency’s demise.)

Distributes risks and rewards to miners. Higher hash rates do make a difference who gets the mining reward. But at the end of the day, it all boils down to probability. Suppose every miner in the world mines at exactly the same hash rate. The way Bitcoin’s algorithm was designed meant that there is no particular way to tell who will be the first to find the next hash since they would all be making random guesses at a given rate. Higher hash rates increases the likelihood of being the first to make the right guess, but so is the risk (power consumption = money lost). A better alternative to mining centralization is by using mining pools or by having small mining farms spread out to places where cost of running the mining the business is much cheaper.

 Distributes power consumption. With less centralization in mining power, miners will be able to utilize cheaper electricity instead of relying solely on the power grid. It would also encourage miners to be more creative and explore ways to make cryptocurrency mining a lot greener, or, as mentioned earlier, find places with abundant supply of energy source (e.g. hydroelectric, geothermal, solar, etc.)

 

Final Thoughts

The 2018 bear market has been an eye-opener for all of us, not only in terms of volatility and value of cryptocurrency, but also the dangers and consequences of going beyond what is intended for in cryptocurrency mining – decentralized and cost-effective. Bitcoin was just as secure back when people mined them in their PCs and laptops as it is today with more powerful ASIC miners and GPUs. It’s just a matter of perspective. Hopefully, this year has brought us some important lessons to help us with our journey in cryptocurrency for the year 2019.

Should You Be Worried About The State of Cryptocurrency?

Markets crash every so often, whether it’s stock, commodity, or cryptocurrency. Just recently, Amazon stock has lost 25% of its value in a span of 3 months. Nearly 40% of Facebook’s share value has been wiped out since July; Google lost 19%. Apple is down by 26% since October. By and large, 2018 has been particularly bearish, not just for cryptocurrencies, but tech stocks as well – quite the opposite of what we’ve seen last year.

 

“What Goes Up Must Come Down” 

Market cycles are normal with any type of investment vehicle. The price crash on both cryptocurrency and stock in Q4 strongly suggests that we are indeed going through a market downturn or a bear market. In other words, the fact that both cryptocurrency and investment funds are down suggests there isn’t anything wrong with cryptocurrency but instead it’s just a natural market fluctuation.

Bitcoin, has lost around 75% of its market price from its all-time high of $19,309 in December 2017. Speculation for Bitcoin’s price is considered as one of the main reasons for the run-up resulting in a price crash after further gains became unattainable.

 

Making the Most from a Price Crash

Market volatile in cryptocurrency is something experienced traders and investors have all been accustomed to. Truth is, what we’re seeing right now with Bitcoin and other cryptocurrencies is just one of the many examples of a price downturn in recent years. Here are some ways we can get by in a cryptocurrency bear market. As always, please note that this is not investment advice and is written solely for informative purposes.

HODL. Hodling is another one of those internet sensations that came about because of the immediacy of Twitter. For the unaware, it is essentially a “buy and hold” strategy used by cryptocurrency users and investors. Hodling can take a lot of patience, and mental resolve, with an almost stoical attitude towards cryptocurrency investment. In other words, they’re not into crypto just for the short-term gain, but look forward to using it more as it slowly reaches worldwide adoption.

Dollar Cost Averaging (DCA). Regarded as one of the most conservative and safer approach to cryptocurrency investing, which allows investors to accumulate crypto-assets over time. Similar to hodling, DCA requires discipline, and the ability to stick to the plan regardless of price actions in the market. It usually involves a fixed amount spread over a period of weeks or months. DCA can be considered as a “contrarian” approach to investing because investors can have more during a bear market and buy less during a bull market – the opposite of what most people tend to do which is giving in to fear of missing out (FOMO) and herd mentality.

Entry and Exit Strategies. A lot of cryptocurrency traders have an exit strategy such as placing stop loss orders below their entry points in order to minimize potential losses. Here’s an example of how an entry and exit strategy can be used during a bear market. Unfortunately, there is no guarantee that investors would be able to recoup their losses since it would all depend on future price actions. We’ll be using Bitcoin in this particular scenario.

From this hypothetical situation, it is entirely possible for traders and investors to recoup or even take some profit off of the bear market. However, it’s also possible for Bitcoin markets to go much deeper, exacerbating one’s losses and making it more difficult to recover. We don’t recommend this method unless you truly understand the cryptocurrency market and are quite familiar working with exchanges. Also, please bear in mind that selling cryptocurrencies for profit is a taxable event under state laws regarding cryptocurrencies.

Educate Yourself about Cryptocurrency. Spending some time learning about this emerging technology could be one of your most valuable investments in this day and age. Cryptocurrency will continue to evolve and will be more accessible to millions of users in years to come. Read books about cryptocurrency, enroll in blockchain and cryptocurrency courses, and steer clear from get-rich-quick schemes and cryptocurrency scams. Having a better grasp of cryptocurrency and its underlying technology (blockchain) helps clear out all the noise and drama surrounding cryptocurrency and allows you to make wise investment decisions.

 

 

**Please note that this is not investment advice and should no way be treated as such. It is for informational purposes only. Before you make any trade or investment you should consult a licensed financial advisor who is familiar with your current situation.

Banks and Blockchain Transactions – Which Is Better?

Many cryptocurrency critics believe that blockchain transactions are far too slow to be ever applicable for mass adoption within banking and financial institutions, failing to understand blockchain and cryptocurrency technology is still in its infancy.  In this post, we’re going to look at the pros and cons of each system and explore the future of payment systems.

Banks and payment systems look in some ways more efficient than blockchain transactions, but in many cases, they’re actually more involved. In fact, as soon as they’re being used to make cross-border payments and settlements, they start to reveal some flaws. They, too, can become slow, expensive, or worse – they can lock people out through no fault of their own, and for no apparent reason.

Bank-to-bank transactions through SWIFT network take three to five working days to reach its destination, which is extremely slow by cryptocurrency standards. In contrast, an average person with no connection to a bank or money transfer service can securely send and receive Bitcoin anywhere around the world with just a smartphone and a stable Internet connection in as short as ten to fifteen minutes without the risk of being censored out by the system.

Wire transfers cost somewhere between $10 to $30, plus 6% spread on foreign exchanges. In other words, if you’re sending $5,000 from Australia to Canada, you’ll pay as much as $330 on that single transaction. This doesn’t account for differences in rates from country to country (fees for sending money from US to Africa can be as high as 15%).

Bitcoin’s transaction fees peak at around $55 in December 2017 during a massive buying spree. But most of the time, sending Bitcoin to someone anywhere around the world will only cost a fraction of a dollar, to as high as $10 depending on priority and network load. And since it’s considered a borderless, global currency, users can forget about foreign exchange rates.

Companies like Abra have been using Bitcoin as a cheaper alternative to international settlement systems. Interestingly, certain banks like the ones in the Philippines allow remittances using Bitcoin, and recipients can take their pesos straight out of the ATM without an ATM card or a bank account.

Within the cryptocurrency ecosystem, on-chain and off-chain implementations can have a significant impact both on energy consumption and transaction throughputs. As a general rule, the more it shifts toward decentralization, the more challenges it needs to deal with scaling; but as more features become centralized, the more scalable it becomes. How these challenges will be overcome in the next couple of decades is anybody’s guess.

Some of the proposed on-chain solutions is the move towards proof-of-stake consensus algorithm (e.g., Ethereum Casper), and delegated proof-of-stake (e.g. EOS and Cardano). Off-chain solution include Lightning Network (e.g. Bitcoin), and side-chains. Improving the blockchain’s inner workings not only helps with efficiency, but also makes energy consumption more manageable.

 

Conclusion

Cryptocurrency might not be as nimble as people would expect from banks when it comes to local micro-transactions. However, we’ve seen some progress lately, with SegWit adoption being used in 40% of all Bitcoin transactions, enabling shorter confirmation times, significantly lower fees, and Lightning Network integration. Users can start experimenting with Lightning wallets in their beta version (Eclair, Zap, RawTX, etc.), and buy small stuff from online stores like the ones made by Blockstream specifically for that purpose.

Cryptocurrency will only get better as time goes by, and we’ve already seen some progress from greener solutions, to mining hardware, and software development. There’s no limit to the number of ways cryptocurrency can solve many of its challenges. All it takes is an open mind and a little bit of creativity.

 

The Top Cryptocurrency and Blockchain Projects in 2018

There’s been a change in the outlook for cryptocurrency during the past few months. People seldom talk about the markets or the price of Bitcoin. Volatility has been causing a lot of uncertainty, and mainstream adoption came to a virtual standstill.

Nonetheless, the cryptocurrency space showed remarkable resilience as blockchain projects continue to expand its borders with more lateral thinking and “out-of-the-box” blockchain solutions. We’ll explore some of their use-cases and find out whether these currencies and platforms are the next big thing.

 

Why People Invest in These Projects

Despite the recent lull in cryptocurrency trading and mining, blockchain projects and ICOs are very much in the business for 2018. Investors and tech companies remain optimistic about the future of the cryptocurrency space amidst tightening restrictions and negativity. In fact, according to Coindesk, the amount of money raised in ICOs in the first quarter alone exceeded the total amount last year.

Most ICOs and blockchain projects didn’t end up well for a lot of investors (more than 90% failed to deliver). However, there are a few examples like Binance and EOS which turned out as good investments. Binance became one of the leading cryptocurrency exchanges with a BNB market cap of over $1 billion – the second most valuable token on Coinmarketcap. EOS, on the other hand had a successful, albeit controversial mainnet launch, and is now a full-fledged decentralized application platform second only to Ethereum.

Smart investors consider the current state of affairs as a golden opportunity to hunt for new projects with the greatest potential, particularly in their early stages when they are mostly undervalued. Investing early on has the advantage of maximum gains with the least amount of exposure. For instance, a hundred dollars’ worth of investments at ten cents per token won’t break the bank if things go south. But if it turns out to be a real investment, gains will be exponential (e.g., BNB and EOS tokens are worth a hundred times more than their initial price in 2017)

 

 

Blockchain Projects to Watch for in 2018

Finding a good investment can be a real challenge since we’re dealing with dozens of new blockchain projects and ICOs every month. If you’re lucky enough, you might be able to land on some big winners from a list of projects. But before anything else, please bear in mind that this is not investment advice, and you are solely responsible for any gains or losses. That said, here are five of the most talked-about blockchain projects in 2018.

 

Zilliqa (ZIL). Launched in January, the project puts a lot of work in building a highly scalable decentralized platform using a method known as “sharding.” Unlike in Bitcoin, each node will be working in parallel within a group of nodes called “shard,” verifying a subset of all the transactions occurring at the same time (also called parallel processing). Sharding works perfectly in many centralized systems (Ultima Online, Google, etc.). However, it presents an immense technical challenge when applied on a decentralized environment. Ethereum has been working hard on it as part of its on-chain scaling solution in hopes of solving the security/scalability/decentralization trilemma. Zilliqa’s entry into the whole sharding scene threatens to steal the thunder from Ethereum by becoming the first to come up with a workable solution. Some estimates it to be around January 2019. Key features include:

  • faster transaction throughputs (speed improves as the network grows)
  • employs practical Byzantine Fault Tolerance as a consensus mechanism
  • reduced energy consumption (mining is spaced a hundred blocks apart)
  • maintains a decentralized network structure (a new shard is created for every 600 nodes)

Basic Attention Token (BAT). Cutting the middleman goes beyond peer-to-peer transactions to include decentralized, blockchain-based digital advertising in the form of an open-source, ad-free browser with its own currency. Brave Browser is one of today’s hottest Internet browsing software because it allows users to block ads and trackers completely free. In fact, as many as 3 million people have already been using Brave, becoming one of Google Play’s top ten in the Android browser category. The project is moving towards the creation a decentralized advertising platform using its own currency – Basic Attention Token – to incentivize both content creation and user attention. It works in some ways like Google Ads but in a more transparent and decentralized manner. The key advantages of BAT from an investor’s point of view include:

  • good potential for adoption (sold out BAT worth $35 million in 30 seconds)
  • strong support from the community (Brave browsing experience receive a lot of positive feedback from users)
  • a solid team of experienced developers (founded by no less than the co-founder of Mozilla, Firefox, and creator of JavaScript)

Kin (KIN). Canadian messaging app company Kik Interactive is making headway into cryptocurrency adoption with the launching of Kinecosystem. The company hopes to build a community of users and developers sharing resources, and making digital goods and services. However, unlike most blockchain startups with no real users, Kin’s integration into the Kik Messenger meant its value could potentially rise with over 300 million active users.  The company is now moving towards the next phase, inviting all developers and content creators in building the ecosystem for large KIN payouts. Gains will take time, but you might want to consider its advantages, namely:

  • KIN’s practical use-case as a digital currency on an existing application (Kik has been in use since 2010)
  • user base is mostly made up of digital-natives (teens, millennials, and active mobile users)
  • Kik’s emphasis on anonymity

DeepBrain Chain (DBC). Blockchain companies like DeepBrain Chain sees decentralization as the future of the AI industry. Development of AI applications use up a huge amount of computing power. DeepBrain Chain works by utilizing computational resources across millions of nodes on the neural network in building AI applications which are then published onto the blockchain. Nodes that successfully deploy mirror images will receive payouts in DBC. It plans on migrating out of NEO to its own mainnet in Q4, with its own consensus algorithm (proof of importance and delegated proof of stake). The goal is to become the deep learning machine for the AI industry. Successful adoption is achievable through:

  • growth in people’s interest in the AI industry
  • reduced computational cost of AI companies through resource-sharing
  • secure, decentralized method of storing AI information.

Wormhole. Bitcoin Cash might soon be able to run smart contracts through its proposed protocol layer known as Wormhole. Developers plan on forking the Omni Layer to create a platform for smart contracts on top of Bitcoin Cash. Much of it is still in the works as of this moment, but news is, they’re going to issue a token named “Wormhole Cash.” Investors and crypto-enthusiasts are keeping track of its progress since it is expected to have a very high demand upon release.

 

Conclusion

The cryptocurrency space has been constantly evolving even as the noise and the hype surrounding cryptocurrency have mostly faded. Cryptocurrency is here to stay, and we’ll be seeing more projects in the near future that will bridge the gap between the average user and blockchain technology.

Implications of Cryptocurrency Adoption to the Economy

Currency has gone through many forms and different stages of development. Throughout history, people have always been looking for a better means to store wealth in the most secure way possible. Cryptocurrency promises to be a much better alternative to fiat or gold by unlocking its true potential as a decentralized form of money.

What are the implications of adopting a singular currency on the world’s economy, and will it solve our problems with the current financial system?

 

Gold as a Standard of Value

In theory, anything can be used as money, from cowry shells, to salt (“salarium,” where we got the word “salary”). Whereas in the past, people used to barter with grain, livestock, jewelry, nowadays, we use paper, stamped coins, and electronic data. Gold and silver turned out as the most predominant form of money for thousands of years because they possess certain qualities which make them ideal as a measure of value.

Cryptocurrencies like Bitcoin makes an allusion to these precious metals because it mirrors some important qualities of its real-world counterpart (in fact, this could be the inspiration behind Bitcoin’s gold-inspired logo). We’ll learn why such reference is essential in understanding cryptocurrency’s role on the future of finance and its implications to the world economy.

 

The First Decentralized Currency

Gold has for millenniums been accepted as money, even before the adoption of state-backed fiat currencies. Anyone can turn in their gold to any bank in exchange for gold certificates or banknotes, and it will be counted as money. Under this system, gold was considered as a “decentralized” form of money.

In its early days, banks were mostly self-regulated and are bound by the fact that they cannot issue more than is redeemable without facing the risk of a bank run. However, everything changed after so many banks got into trouble issuing more money than it could pay for. They adopted a “Keynesian” approach to their monetary policy, thus ending the reign of the gold standard, and giving rise to quantitative easing, fractional reserve banking, and currencies which were nothing more than public debts and glorified IOUs.

The concept of a “decentralized currency” was put on the backburner for decades, until 2008-2009 when the world’s economy and the whole financial system came crashing down, and a mysterious author rekindled the world’s interest in a decentralized form of money – cryptocurrency. It’s no surprise that Bitcoin bears a striking similarity to gold, some even calling it as “digital gold,” for sharing the same features which make it suitable as a measure of value and store of wealth.

 

 

The Real Cost of Inflation

One of the earliest records of inflation can be traced back to 3rd century Rome when government spending went far beyond its means and began increasing its money supply with silver coins of lesser quality. This offered a false sense of security and prosperity as the government stretched its resources thin in waging wars and funding its pet projects. People soon realized that their silver coins were nothing but cheap imitations, as prices of commodities soared by 1000% across the Roman Empire.

Western and European countries committed the same error by inflating currencies through deficit spending in order to fund the war effort. Belligerents on both sides took a heavy toll on their own economy and their own people. Price levels and interest rates have gone up after the war, and millions of people have lost their jobs as many industries came to a grinding halt.

By then, the only plausible way to cure inflation is to create more of it. But after growing concerns about the value of the U.S. dollar, countries started to redeem their dollar holdings in gold. Deficit spending, balance of payments, and the run on gold eventually led to the collapse of the Bretton-Woods system, and all industrialized countries started using “floating currencies.”

The long-term effects of inflation led many people to find ways to secure their own wealth against the uncertainty of the current financial system.

 

The Need to Re-establish a Standard of Value

The gold standard made it possible for countries to maintain a more stable economy because it restrained governments from inflating the money supply and made it easier to keep track of prices of goods and services. It served as a reliable tool where one’s currency can be measured against, making it a real store of wealth as opposed to state-backed fiat which could lose all of its value overnight.

Nowadays, we have cryptocurrency which is being used as a medium of exchange, store of value, and platforms for decentralized applications. Some of the positive effects of re-establishing a standard of value on our currencies include:

Stabilize pricing. Having a standard of value on our currencies like gold or cryptocurrency makes it easier to see the relationship between money supply and the country’s real GDP. In a highly industrialized country, increased productivity meant prices will fall relative to the money supply (deflationary). Some analysts believe a deflationary currency (Bitcoin and other similar cryptocurrencies) is bad for the economy and should be avoided because it slows down borrowing and buying activity. Inflation, on the other hand, will induce consumerism since people would have more to spend. But nominal GDP (not the real GDP) arising from inflation, amongst other factors, doesn’t necessarily mean the economy is much better. It just meant everything is getting more expensive than it used to. Left unchecked, it can actually lead to situations mentioned earlier.

 Simplify trades and exchange rates. Trading goods and services with other countries can cause trading imbalances due to the fact that all currencies are “floating currencies”, except in few countries where the value of currencies is pegged to the US dollar. Since exchange rates of floating currencies are in a constant flux, it would be difficult to determine the price of certain commodity is at a certain point in time. By establishing a standard of value to all of our currencies, we might be able to make international trades and exchanges rates much easier and straightforward.

 Minimize deficit spending. One of the biggest problems in our current financial system is that it gives too much freedom for governments to spend more than they reasonably should. Quantitative easing and fractional reserve banking encourages more spending and borrowing, but only a fraction of it might actually go to productive endeavours, thereby pushing countries even deeper into debt. By adopting a system of checks and balances in the production of money, governments will be more accountable on how they chose to spend their resources.

 

 

Gold or Cryptocurrency?

 

Many people are advocating the return to the gold standard because it makes them feel safer, more secure, and gives them the ability to store wealth and manage their own resources as they see fit. But in this digital age, storing wealth can be as simple as having your own account on a global ledger, which cannot be controlled by anyone. Cryptocurrency offers a much better way, not only as a store of wealth but as a means of encouraging reforms in our current financial system.

 

3 Myths about Cryptocurrency – How Some Investors Got It Wrong

Smart investors know when it comes to nascent, disruptive technologies like tech startups, cryptocurrency and blockchain, their potential value goes beyond income generation and market analysis. Investors need to look at the bigger picture and understand the role of disruptive innovation in changing the way our industries work.

 

Investors Missing out on Tech Stocks

Tech stocks and startups were mostly underrated in the late 90s. Google’s share price was a little less than a hundred dollars in 2004; Amazon’s stock price was less than forty. But after more than a decade, their total market cap surpassed the $800 billion mark – a far cry from what they’re used to be worth.

Some investors have missed out on a good investment opportunity because they didn’t understand how an abstract concept of a digital space can be put to good use with its limitations in user base, hardware, and IT. But it’s only a matter of time before the online and e-commerce industry took off with more efficient and robust connectivity, cloud computing, and mobile access.

Even world-renowned investor and CEO of Berkshire Hathaway, Warren Buffet, admits missing out on Google and Amazon because he didn’t understand many of their business models and that he should have had a better sense of the company’s outlook over the long term.

Is it possible for investors repeating the same mistake over cryptocurrency because they didn’t understand decentralized currency, or the “Internet of money?”

 

What Some Investors Are Wrong about Cryptocurrency

Prominent investors, CEOs, and financial institutions have had some negative views about cryptocurrency, comparing Bitcoin’s rise to the tulip bubble, an artificial gold, or even rat poison. Others are neutral, describing it as a collectible material like artwork or baseball cards.

While some of these views are not entirely wrong (but rat poison, seriously??) it’s important not to make sweeping generalizations about cryptocurrency. Business Insider estimates the cryptocurrency market to be roughly $700 Billion and about to get bigger. Seventy billion dollars is a fair amount of change and nothing to sneeze at. Here are some claims about cryptocurrency which are not accurate.

 

  1. “Cryptocurrency is worthless as an investment.”

Investors have plenty of reasons to believe cryptocurrency is a useless form of investment – from not having a physical form like gold, to not having an underlying asset, or the ability to create value. The fact is, many of our online businesses are extremely valuable despite not having a physical form. Digital assets like online content, research material, customer database, and software applications can be worth millions of dollars. Brands can be worth a lot of money. For example, Amazon’s brand is estimated to be worth $150 billion. Not bad for something that is just a combination of logos, corporate identity, colours, and systems is it?

But how can cryptocurrency be worth anything? With the internet age and social media, it gave us a new concept of ascribing value to something other than pure monetary value.   A phenomenon known as the “network effect” which is when more people use a particular good or service the more valuable it becomes. Facebook and other social media companies are a good example of this.  Facebook is valuable because more than 100 million people use the platform monthly. Cryptocurrency will grow in value, not because it’s a money-making asset like a stock, but because more and more people will have access to it.

To offer us some perspective, the total supply of fiat being used in online retail is around $2.4 trillion, and is projected to double by 2021 (Statista). It is possible, after dealing with issues on government regulation, scalability, and ease of transaction, that most, if not all of our online transactions over the Internet will be using a singular currency. Could it be cryptocurrency? If it turns out to be the case, then we would understand what $4.8 trillion mean on cryptocurrency’s worth.

 

 

  1. “Cryptocurrency doesn’t give anything of value.”

Some investors hold on to the notion that all good investments give value – but cryptocurrency is not one of them. They believe for something to have value, it should be useful and be able to solve people’s problems.

Unfortunately, defining value solely from the standpoint of money-making misses the point of why people value certain things. Vincent Van Gogh’s “Starry Night” is nothing more than oil painting on canvas, yet sold for more than $80 million at an auction. Gold serve no practical use aside from jewelry and store of value, yet people spend hundreds of thousands in mining operations.

On the most basic level, cryptocurrency is just a bunch of ones and zeros; a computer program and network protocol for keeping track of everybody else’s transactions in an open and transparent manner, yet it provides one of the most fundamental human need – security. People who lived through the financial crisis of 2008, or suffering the effects of hyperinflation in Venezuela knows what it means to have most of their savings and retirements wiped out due to economic instability. Was it a coincidence that the first cryptocurrency, Bitcoin, came out during the aftermath of the Great Recession?

Suffice to say, people will turn to a more secure method of storing wealth like precious metals or cryptocurrency, so long as the current financial system remains flawed and susceptible to misuse.

 

  1. “Cryptocurrency cannot function as a normal currency.”

Fiat became the standard currency since the abolition of the gold standard, beginning with UK in 1931, and the US in 1933. But for thousands of years, gold and silver had been the currency of choice in many civilizations. China was among the first to deviate and introduced the concept of paper money in 10th century AD.

Cryptocurrency, particularly bitcoin, is often compared to “digital gold” because, like gold, it has a finite supply and has already been used as a medium of exchange; it is durable, i.e., virtually resistant to hacking and has no single point of failure; it is divisible, fungible, and a store of value. However, because it is highly volatile, it is not yet suitable as a unit of account. In fact, it’s one of the main reasons aside from scalability why some investors believe cryptocurrency cannot function as a normal currency.

But looking at bitcoin’s price since 2013, we see that its value has been going up, with some few spikes and price drops along the way. Gold follows a similar trend, going from $20 in 1901, to $1,060 in 2015. In contrast, fiat’s value has always been declining and is bound to lose its value at some point.

Historically, one of the reasons why governments left the gold standard is that people chose to store their wealth in gold when they felt their currencies are losing value. This in turn, severely limits governments’ ability to control the money supply. Cutting ties between gold and fiat currency was seen as the most logical solution.

Smart investors who understood macroeconomic trends buy portions of gold and silver to hedge against the rapid decline of fiat currencies. Won’t it make perfect sense if people in the future will start buying cryptocurrencies for the very same reason?

 

Conclusion

Cryptocurrency’s value as an investment largely depends on the majority of people choosing to support a currency or a store of value that cannot be controlled by a few individuals. It may not entirely replace fiat as a medium of exchange, but the fact that people have been afforded with this freedom creates checks and balances in our financial system. That alone makes cryptocurrency a valuable asset, not just for investors, but for the common user.

Facebook’s Update on Crypto-related Ads – Why Should It Matter?

Facebook hit the news when it back peddled on its decision to ban cryptocurrency ads outright from the social media platform. This has now made technology companies, cryptocurrency and blockchain communities optimistic this move will set off a precedent for other advertisers to follow, particularly Google and Twitter, who earlier warned of a similar ban on cryptocurrency ads.

What are the implications of Facebook’s reversing its view on cryptocurrency, and what are we to expect about the future of blockchain technology?

 

What Changed After the Update?

Facebook now accepts cryptocurrency ads, but only from pre-approved advertisers who filed their cryptocurrency products and services onboarding request. ICOs and promotions associated with deceptive high-yield investment programs are still banned from advertising.

The update took effect after a six-month hiatus in cryptocurrency ads on Facebook. Apparently, the tech giant have found compelling reasons for reversing some of its decision after being dismissive on anything crypto-related. (uhhh… money of course!) There are also some rumblings Facebook plans on stepping into the cryptocurrency space with their own initial coin offering.

So far, legitimate cryptocurrency businesses like Cointelegraph.com have not been able to boost their posts a day after the ban was lifted. It’s very likely that Facebook is implementing more stringent rules and are, indeed, checking on the advertiser’s credentials with painstaking effort. We’ll learn more about the specific details of the screening process as they unfold.

 

Not a Complete Turnabout

Facebook didn’t go all the way, and instead chose to “loosen” some its policy on cryptocurrency advertising. A recent post from the product management director indicates an eligibility check, which takes into account licenses and pertinent documents submitted by each applicant. Facebook wants to avoid another Bitconnect incident or turn it a breeding ground for ICO scams (70% of advertised ICOs failed to materialize).

There’s no guarantee that every cryptocurrency and blockchain businesses would receive their stamp of approval. The least they can do for now is hope they don’t get screened out or send the wrong signal to the management and mistake them for ICOs or HYIPs. Facebook is open to the idea of revising this policy as they see fit and encourages everyone to give their feedback.

 

More KYCs and Background Checks on Advertisers

All advertisers in cryptocurrency must be “pre-approved” before posting ads on Facebook. To do so, they have to disclose information about their company such as:

 

  • purpose and nature of their business
  • Facebook ad account ID
  • website domain
  • licenses and credentials
  • company name
  • business address

You can apply for your pre-approval HERE

 

 

 

 

 

 

Facebook, basically, performs due diligence on advertisers on behalf of its users, which is a good thing for cryptocurrency. Done right, this might actually boost investor confidence. With stricter regulation in place, Facebook hopes to open more opportunities which could further mass adoption for cryptocurrency, and significantly increase ad revenue to the company.

Meanwhile, cryptocurrency and ICO scams might have a hard time after the update, but that doesn’t necessarily mean Facebook won’t have any of those. In fact several cryptocurrency and ICO scams were still able to get through, ironically, even after the ban on cryptocurrency ads.

 

What Changed Their Mind?

Facebook wasn’t so clear about the reason for partially lifting the ban on crypto-related ads. People have their own views and offer some explanation as to why this is the case.

Missing Out On Revenue. At times, Facebook is more worried about optics then revenue. This isn’t necessarily a bad thing but when it comes to crypto, Facebook has constantly missed the boat. This is evident when Facebook took a massive hit in market value recently. One of the main reasons for the price dip is the lack of awareness in its underlying technology; censoring out everything crypto-related from their platform could only serve to aggravate the situation. By encouraging users to learn more about the cryptocurrency through ads and meaningful social interaction, they might as well rack up huge profits along the way.

Facebook’s Launching Its Exploratory Blockchain Group. For a tech company this huge, it’s not difficult to imagine Facebook having its own native currency in the near future. Their announcement about the launching of an exploratory blockchain group has led to some rumours about their future involvement in the cryptocurrency space. If true, then this could mean adoption on a massive scale with its two billion plus users worldwide.

 

Conclusion

Facebook’s decision to lift the ban on crypto-related ads is a statement on cryptocurrency’s future utility as a store of value, or even as a medium of exchange. There’s no denying that cryptocurrency and blockchain technology has become a major force in shaping our current financial system. They might, as well, be a part of it instead of closing doors on an opportunity which could probably give them a decisive edge along the way.

If you’d like to know more about cryptocurrency, blockchain and minning, you can pick up the Living Book HERE

Why Airdrops Might Be the Next Big Thing for Cryptocurrency

A lot of governments are trying to regulate or censor cryptocurrency but closing doors on them only leads to new and innovative pathways to get around these obstacles. In fact, people can fly over these obstacles and drop them out of the sky – an airdrop.

Airdrops are free cryptocurrencies and tokens waiting to be claimed. As part of their initiative to spread the word, blockchain companies and startups have set aside a portion of their crypto-assets to do several of those –basically free coins for the taking.

 

Airdrops as an Effective Marketing Tool

Businesses use different strategies to get customers, but there is one particular method which always seems to make an impact regardless of the industry they’re in. Giving something valuable for free would almost always elicit a positive response from potential customers.

In the context of blockchain businesses, an airdrop is the equivalent of giving away product samples or gift cards to encourage buyers and users to take the next step. It might be as simple as coming back to learn more about the cryptocurrency or ICO (creating traffic to the website) or spreading the news about an airdrop. If the project seemed very promising, they might choose to join the ICO or buy more tokens to qualify for upcoming airdrops.

Airdrops have already been used for quite some time to raise awareness about a blockchain project or startup. They’re becoming more widespread as blockchain businesses move away from online and social media advertising and adopt censorship-free promotions. People can get information about airdrops from airdrop hosting sites like Airdropalert.com, Airdrops.io, ICOdrops.com, and forum sites like Bitcointalk.

 

Airdrops Target Specific Users

Despite recent advances in A.I., paid advertising is essentially a hit-and-miss strategy. Airdrops increase the likelihood of user engagement because they only target specific users. People who come to airdrop hosting sites might have learned about them through word-of-mouth, or they might have stumbled upon airdrops out of their own curiosity.

The target audience are most likely users with some experience dealing with cryptocurrencies. They’ll have their own Bitcoin, Ethereum, or wallets that support multiple currencies, and have already used them for quite some time. The other part are newcomers who wants to learn more about cryptocurrencies and get some free coins.

The chance of having successful adoption for every airdropped cryptocurrency or token is a lot better than if they were spent on paid advertisements which are a lot more expensive and don’t guarantee success. Think of it in terms of how Costco built their business. They didn’t (and still don’t) spend a lot of money on commercials or advertising. This ensures they keep their prices competitive with other large bulk discount stores. Instead, they use free samples of cheese, condiments, salad dressing etc as an incentive to increase sales and transactions in the store. Essentially airdrops allow crypto companies to become the next Costco.

 

How Airdrops Work

Airdrops use a different cryptocurrency or token (usually Bitcoin, Ethereum, or ERC20 tokens like EOS) as giveaways to promote their own. Blockchain startups and ICOs rarely publish airdrops on Google or Facebook, if at all. They’re usually listed in airdrop hosting sites where users can check the status of the airdrop and provide links to these sites.

There are basically three ways to airdrop.

Taking snapshots of the blockchain. Blockchain projects will set a date for taking snapshots of the blockchain. If you happened to make a Bitcoin or Ethereum transaction during the snapshot, you might soon find some free cryptocurrencies or tokens sitting in your wallet. In most cases, people are aware about the airdrop and learned them through airdrop hosting sites.

Requiring users to sign up for the airdrop. Some airdrops will require information about the recipients, especially their wallet addresses, emails, telegram, or twitter accounts. It’s basically a marketing strategy to get more users onboard and start a community. Unfortunately, not all airdrops are real or have value; some are used as a ploy to get information from users. Steer clear from airdrops asking for sensitive personal information or private keys.

During a hard fork. Blockchain projects can create free coins by forking an already existing blockchain. They usually have a community working on a blockchain project based on the original. Users get an equivalent amount of “free coins” depending on how much they own prior to the fork. They’ll get free cryptocurrencies tradable for fiat every time the blockchain forks. Bitcoin has had three forks since 2017: Bitcoin Cash, Bitcoin Gold, and Bitcoin Private.

Some airdrops will incorporate a referral system where users get additional coins free for every successful invite. Others require users to have a specific amount of cryptocurrencies or tokens to become eligible for the airdrop. Dapps which are set to launch on the EOS blockchain once EOS migrates from the Ethereum blockchain will give away tokens based on the amount of EOS tokens users have.

 

Conclusion

Cryptocurrency companies will always have a plethora of ways to market and promote themselves. But whatever strategy a company chooses, airdrops should like be included in that strategy, especially with the constant updates to advertising rules on Facebook and Google.  In fact, online and social media advertising might no longer be a huge traffic driver even if these companies choose to lift the restrictions on cryptocurrency. Try as they may, there seems to be no limit on the number of ways cryptocurrency communities can innovate and stay censorship-free.

Gone Hunting – How Bounty Hunters Are Pushing Borders for Cryptocurrency

Bounty hunters conjure up images of the Wild West where people search for outlaws to get rewards. (Blame Hollywood for that.) In a decentralized world of cryptocurrencies, bounties are given to anyone who fulfils a given task or solve a particular problem, not with cash but with cryptocurrencies and tokens.

So why talk about bounties when people could just get them through mining contracts or buying from exchanges? We’ll look at the implications of bounty hunting for cryptocurrency and why this could help solve specific problems the industry is currently facing.

 

Bounty Systems in the Cryptocurrency Space

Cryptocurrency goes beyond cashless, decentralized peer-to-peer payment systems by adding a new sector of the cryptocurrency economy. Primarily a mining industry, it quickly grew to include trading, investing, blockchain startups, ICOs, and now, a system of rewarding people for offering their work to the community.

With the arrival of bounty systems in the cryptocurrency space, we might well be seeing a revival of interest in rebuilding a decentralized economy. Bounty hunting invites everyone to participate without spending a dime on expensive mining equipment, or putting investor’s money on the line. All it takes is a range of skills in online marketing, coding, and a little bit of “hunting.”

Bounty hunting programs come in many forms. The most popular ones include signature campaigns, content creation, social media likes and/or posts, debugging, and coding. There are even bounties for tracking down hackers, fraudsters, and cyber-criminals; almost like a bounty hunter in a real sense.

 

 

Building Stronger Communities with Bounties

More people are taking interests in bounty hunting as barriers to entry in the crypto-space become more challenging during the past few months (crackdown on ICOs, mining farms, and cryptocurrency exchanges). Bounty systems provide a clever solution to get around excessive prohibitions and create an environment which could benefit all members of the community using their own resources.

Development teams and startups have benefitted a lot from bounty hunting programs. It accelerated the process of building new applications for blockchain and raising awareness about cryptocurrency by outsourcing some of the best talents in the cryptocurrency community. In return “hunters” are given cryptocurrencies like Bitcoin, Ethereum, or ICO tokens as bounties.

ICOs have saved a lot on marketing campaigns by using their own tokens as rewards. Bancor (BNT), and Iconomi (ICN), are just a few examples of successful ICOs that used bounty system as part of their marketing strategy. Some bounties were also offered for bug fixes. Status (SNT), had been giving away $1 million worth of tokens to anyone who can submit potential solutions to bugs in their software.

 

 

Bounty Hunters Reshaping the Online Industry

Global freelancing sites were among the first to “decentralize” the jobs market, allowing both sides to find the right people for the job, and the most rewarding work aside from the usual 9-5 jobs. Competitive industries such as online marketing, advertising, and software development come to these sites to fill the gaps in their workforce or hire additional personnel on a shoestring budget.

Bounty hunting sites might well become the future of decentralized freelancing for blockchain businesses. Bitcointalk.org, Bounty0x.io are among the few sites which offer bounty hunting programs for tasks like:

 

  • Signature Campaign
  • Content Creation
  • Social Media Posts/Tweets
  • Coding and Debugging Software
  • Translating into Different Languages

 

Majority of bounty hunting programs aims at increasing people’s awareness about a new blockchain project and cryptocurrencies as a whole. Cryptocurrency is pretty much uncharted territory as a niche topic for most content creators. Hence, competition for writers and YouTube creators in the cryptocurrency industry may not be as tough as popular ones. Likewise, bounty hunting can also be an alternative source of income for coders with some background in distributed systems. Finally, people can work as translators for their ICO company’s whitepaper, any cryptocurrency for that matter.

For blockchain companies who bank on Google and Facebook for advertising, this seems to be the best, if not the only recourse, to circumvent their decision to ban cryptocurrency-related advertising on their platforms. But this might only be just the beginning, and cryptocurrency community could come up with more creative ways to grow without them. (Hint: the Internet, by design, is a decentralized network and has no single point of failure).

On the bright side of things, blockchain companies won’t be spending much on paid Google and Facebook ads. Instead, they can allocate their resources as bounties to spread the word about cryptocurrency or about a new startup company.

 

Some Potential Drawbacks to Keep in Mind

Bounty systems are also a potential for misuse, especially ICOs and promoters of cryptocurrencies who might use them for their pump-and-dump schemes. Bounty hunters might not realize they had a hand in spreading FOMO on an ICO or worthless cryptocurrency until it’s too late.

Bounty hunters might also end up with nothing after spending hours fulfilling the bounty task, or their tokens turn out to have very little value after the ICO. Not all bounty hunting programs are legit or turn out as expected. We still have to do our research and due diligence to have a high chance of success.

 

Conclusion

Bounty hunting as a two-way process helps build our cryptocurrency community. It calls on everyone, from every part of the world to participate in a global effort to bring cryptocurrency and blockchain technology into perfection. By doing so, we’re also sharing with everyone the very thing that runs our cryptocurrency economy.