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.

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.

How to Spot a Cryptocurrency Scam

Whenever you see red flags, it’s best to stay away and not get involved. How do you detect so-called red flags? Most often than not, it’s a gut feeling that something is not right or something is off. That’s all great, you might say, but what if you don’t have very good intuition. If that’s the case we’ve put together a list of signs you can watch out for. 

Exaggerated claims or guaranteed payouts. Unfortunately, there’s no such thing as a “guaranteed” payout in most kinds of investments. There’s always the risk of losing. In fact, out of every 10 trades, only one or two of them turn out to be winners. Some investors do get lucky, but they account for less than 1% of the population. To put into perspective, if someone assures you of winning the lottery, you’re pretty sure the game is rigged or the person is a scammer.

Nonexistent businesses or fake photos of their premises. Investment scams are easily caught when doing a fact-check on their base of operations and business offices – you won’t find any. That alone tells you they don’t want to be found by people asking for their money when the scam blows up.

A lot of unverified facts and/or shady past:. Doing a fact-check on these people behind the scams can also raise a red flag. It’s either they don’t exist or they have a previous history of scamming other people and being involved in one of their elaborate displays of opulence and extravaganzas. Remember their names and steer clear from anything that has to do with them.

You see a lot of complaints when you Google search. Scammers are cleverer these days, using the word “scam” as one of their SEO keywords to trick people into clicking these links to know if they really are. Instead, they end up going to one of their landing pages or paid reviews and articles promoting their company or explaining why they are not a scam. This might not always be true with all companies and cryptocurrencies that has the word “scam” in search suggestions, but suffice to say, scammers are using this tactic to get people involved.

Tech-savvy investors can turn the tables on these scammers by using the same tool they trick people with – the Internet. Research and cryptocurrency education are your best allies to thrive in today’s technology-driven world.

That said, we’ll end this blog post with a cryptocurrency investment “hall of shame.” These are companies that have unfortunately scammed people of their money and disappear with the profits.

The Hall of Shame

Gladiacoin – founded in November 26, 2016, this ponzi scheme promised to double Bitcoin in 90 days, which include 2.2% payout dividend. It folded on June 2017 with investors losing millions of dollars. Gladiacoin can no longer be reached in their now-defunct website https://www.gladiacoin.com/. Their coin was never listed in Coinmarketcap.

Onecoin a ponzi scheme which promoted a cryptocurrency with a “private blockchain” and run by people who have been previously involved in these shady investment scams. Authorities began shutting down Onecoin’s offshore offices in 2017 and have people arrested and filed appropriate charges to perpetrators, including the CEO.

Bitconnect generally regarded as a pump-and-dump and ponzi scheme for its high-yield investment program. It reached an all-time high when it was listed as one of the top 20 cryptocurrencies in Coinmarketcap at $460 apiece, and folded in January 2018 at only $5.92. Thousands have lost their savings, retirements, and are now in huge debts for buying cryptocurrencies which is now a little more (or less) than a dollar. It is now ranked 554 in Coinmarketcap at $0.9 apiece.

How You Should Look At Cryptocurrencies When It Comes To Your Financial Goals

Cryptocurrency can have a lot of potential as an investment if you have an informed and disciplined approach. You could invest in the long term, or as a one-time goal. Whatever the reason for investing in cryptocurrency, you should always have the reason why you’re investment top of mind. Maybe it’s a holiday tour in Europe, a luxury cruise in the Caribbean, or perhaps that amazing sports car, or home theatre system you’ve always wanted.

Perhaps you want to start out your own business when you retire, or create multiple streams of income with your cryptocurrency investments. Whatever your reason why is, cryptocurrency seems to be a very promising investment proposition. Your “why” will help you stay focused and committed to the task at hand. If you stay connected to your goals, you’re less likely sell because of panic or over-extend yourself.

The Internet has no shortage of success stories about Bitcoin, from the legendary pizza shop in UK selling two boxes of pizza for 10,000 BTC, the college dropout from Brooklyn who made the first dedicated ASIC miner, the teenage-school-boy-turned-Bitcoin investor from Idaho, to the Bitcoin millionaires and entrepreneurs the likes of Jered Kenna, and the Winklevoss Twins. But don’t pay attention to the hype. You’re not likely to become an overnight success story. You’ll have to do your homework and make smart decisions, otherwise you’ll run the risk of losing out big.

 

It’s Never Too Late

When talking about investing in cryptocurrencies at this point in time, people often speak of “missing the boat.”

“Bitcoin went insanely high in 2017, and I missed the boat.”

“If only I have bought Bitcoin and Ethereum back when they’re still pretty cheap. Now, it’s too late.”

Truth is, cryptocurrency is a relatively young industry. It entered the scene in 2009 and it’s continuously growing and improving for the last nine years. Sir Richard Branson is only one among many influencers who believe there might be currencies in the future that would match or even surpass Bitcoin as a digital asset and as a medium of exchange.

Just think back to the beginnings of Myspace. A lot of investors thought it was too late to invest in or create a new social media because Myspace was dominating the internet. Now Facebook is dominating and looks to rain supreme in the foreseeable future.

Vitalik Buterin proved cryptocurrency can be more than just a medium of exchange when he created the first platform and currency with a programmable blockchain – Ethereum.

Soon, Bitcoin will be more accessible to millions of everyday users, commercial establishments, and businesses worldwide through a second layer, known as the Lightning Network, which could render transaction speeds ten times or even a hundred times faster.

These are cryptocurrency’s first wobbly steps in creating a better way to transact and store value in a completely decentralized financial system.

In comparison, many of our industries today are decades-old and have already produced some of the world’s technological breakthroughs; things we often take for granted like the cars we drive at work, the phones we take our pictures with, or the Internet we use every single day.

These industries just keep getting better with each passing year. The automotive industry didn’t stop with Ford’s “Model T” or Mercedes-Benz’s “Motorwagen”; today we have hybrid, electronic and self-driving prototypes by Tesla and Google.

The Internet didn’t stop with email, TCP/IP and packet-switching; now, there’s Worldwide Web, HTTPS, cloud computing, streaming media, free Internet calls, video conferencing, mobile apps, and a host of other features people thought were not possible with the Internet (back then, it took several hours to upload/download a single jpeg image).

And let’s not forget our mobile phones which started out as clunky, metal-and-plastic bricks with large keypads and small monochrome backlit screens. Today, we have Apple and Android Phones which crosses between mobiles phones and mini-computers with HD cameras, internet and browsing capability.

People still invest in these technologies despite some of them being half a centuries-old. Cryptocurrency isn’t even half as old as many of our industries. Much of our cryptocurrency and blockchain space is uncharted territory, waiting to be explored, and harnessed to its full potential.

So, is it too late to invest in cryptocurrencies? Of course, not. In fact, we’re just getting started.

 

Knowing Your Investment Goal

Generally, we want to invest our discretionary income (disposable income minus living expenses) into something we want to enjoy much later. It’s the kind of money we can part with or set aside, and won’t have any hard feelings if everything goes south.

We don’t want to use money we pay our bills and mortgages, or buy groceries with. Or, heaven forbid, owe huge sums of money from banks at interest just to buy cryptocurrencies and ICOs. More often than not, this attitude of chasing the hype and FOMO will get people crushed.

People often invest in cryptocurrencies as a retirement option. This is not a good idea. Cryptocurrencies are highly volatile and should not be relied upon to retire with.  A safe and conservative approach is to set a small amount of discretionary income, say fifty to a hundred dollars a month, (depending on your income) to buy Bitcoin and other large-cap currencies – also known as dollar-cost averaging. Investors stick with that amount regardless of how often or how much the markets turn. It’s like a savings account, in a way, but in cryptocurrency.

Some people don’t wait for retirement and want to get out as soon as they have the opportunity. They want to store up some money as an employee so they can start out on their own. Maybe a small business, an S-corp, or an LLC. And what better way to grow capital than to invest?

Cryptocurrency exchanges are a good place to start when studying markets that would potentially grow in value. You can take short courses in financial literacy on how to invest in stocks and apply those concepts in cryptocurrencies such as asset allocation and portfolio management. Or, you can take it to the next level by learning some codes and understanding how cryptocurrencies work under the hood.

Some investors become full-time cryptocurrency traders and investors over time. These are usually angel investors, and venture capitalists – people who make risky financial decisions in order to make a lot of money. Returns can vary widely from zero to ten times the initial capital. Investment options include ICOs and new or emerging cryptocurrencies. The goal is to maximize returns while minimizing risk exposure.

Other reasons for investing in cryptocurrencies is simply to gain first-hand experience. Few people were lucky enough to have hit the jackpot, or bought in just before the big breakout out of sheer luck. However, these are just rare occurrences, and we need to be aware of “survivor bias” when it comes to personal stories and testimonials about people who got rich trading or investing in cryptocurrencies. Most people hear about 1% of the population who actually made it, but forget the 99% who failed.

 

A Smart Way to Invest

Your investment capital will depend on your age, income, priorities, and investment goals. Tax laws can also impact your ROI. You can check the legal status of cryptocurrency in your country from Coin.dance’s site (https://coin.dance/poli), or seek competent legal advice about the possible implications of investing in cryptocurrencies.

That said, here’s a sample of how you might want to structure your cryptocurrency investment. Let’s look at it from the perspective of a middle-class employee earning a net income of $3,500 a month.

The first step is to subtract the living expenses from the net income. What you’re left with is your discretionary income which you can freely use to plan for your future or hedge against financial losses. (Note: Do not invest all of your discretionary income. You should put it aside for entertainment, holidays, emergencies, and donations to good causes.)

 

$ 3,500.00               net/disposable income (after-tax)

2,500.00                    living expenses


= $ 1,000.00               discretionary income

 

Another option is to have multiple income streams, or side jobs aside from your typical 9-5. From here we’ll set up an account and possibly allocate our resources, thus:

20% emergency account
40% freedom/savings account
30% capital investment
10% trading/speculating

 

Here is a good way to look at our income. The first two (emergency and freedom/savings) are considered a necessity because of the fact that life is unpredictable. Anything can happen, so it’s always best to prepare for the unexpected. Remember Murphy’s Law: “If something can go wrong, it probably will.”

Your emergency and freedom account act as your “safety net” against life’s unpleasant surprises. An emergency account is used to cover your expenses like medical bills, repairs, etc. Others may spend them on health, car, and home insurances, which is also a viable option.

Freedom/savings account will cover your living expenses for six to twelve months in case you get laid off or choose to leave the company (some companies may offer a severance package, but not always).

The last two (capital investment and trading/speculating) is where you make crucial financial decisions that could potentially change your life or move yourself upward in today’s economy. You can have a choice between entrepreneurship and becoming a full-time trader/investor.

Being an entrepreneur gives you greater control over your finances. In the context of a cryptocurrency or blockchain-based business, you could run a cloud mining rental service, pool mining website, or cryptocurrency exchange. Once your company gains traction, you can start growing your business by raising capital through crowd-sales (check the legal status of ICOs in your country). Some start-ups may go with crowd-sales straightaway.

You can become a full-time cryptocurrency trader and invest heavily in cryptocurrencies where you’re constantly on the lookout for trading and investing opportunities, such as breakouts, funding blockchain start-ups, and ICOs. Beginners are often discouraged from getting involved in cryptocurrency trading and investing particularly those with very little or no background in dealing with financial markets. We don’t recommend this option unless you have an entire backup plan. Full-time cryptocurrency traders should have millions of dollars in fiat currency just in case they lose everything.

Some look at investing as the polar opposite of entrepreneurship, requiring a different strategy and mental disposition. For one thing, investing is market-dependent and may not necessarily have a steady cash flow, whereas in an entrepreneurship, cash flow is the difference between growth and going out of business.

Finally, the last 10% of your investment might be used for trading in a speculative market, particularly new, or small to medium cap currencies, tokens, and altcoins. Bitcoin and Ethereum are worth less than a dollar at launch; today, they’re valued by the hundreds and thousands. Although we can’t compare them with new, emerging currencies, we can’t discount the possibility of such a currency taking the same path in the near future (think EOS, Monero, and Dash)

Should I Invest In Initial Coin Offerings?

Blockchain projects and start-ups open up a new world of opportunities for many cryptocurrency investors and venture capitalists. Initial coin offering allows investors to gain a decisive edge as pioneers and early adopters of new cryptocurrencies, and the latest applications and innovations in blockchain technology.

There’s a lot of success in recent Initial Coin Offerings (ICOs) of 2017, raising more than 3 billion USD in capital investments and token sales. (More about this later.) It became the latest buzz since Ethereum, and today we have more than 600 tokens created through these events – and counting.

However, ICOs recently came under fire and had been thoroughly scrutinized, or banned outright in some countries, due to their mostly unregulated status and reports of unsuspecting investors losing thousands, or even millions of dollars in ICO scams. In fact according to a report by the Wall Street Journal, around $300 million was money raised by coin offerings has gone to fraud or scams.

In this chapter, we’ll look at ICOs from a well-founded, and unbiased point of view, considering both pros and cons to help us come up with our own financial decisions whether or not to invest in them.

 

What are Initial Coin Offerings?

An initial coin offering is the stage or period in the development of a blockchain project where start-up companies or a group of people generate funds through crowdselling – a form of crowdfunding that issues tokens to contributors. Upon completion, creators and organizers of an ICO would launch the project (cryptocurrency, blockchain app, platform, etc.) and distribute tokens to all its participants. Some ICOs have their tokens already listed and traded in exchanges before the network launch to stimulate hype and move its value up through market price actions (e.g., EOS).

Some investors and regulators compare ICOs to initial public offerings (IPOs) because they’re both used to generate funds by issuing financial instruments tradable in a public exchange. However, such reference is made irrespective of the time of their execution.

Unlike IPOS, most ICOs are done when start-up companies have yet to prove themselves, and there’s nothing to back their claims except for several pages of whitepaper outlining their business model or concept. Participants usually buy indirectly through the ICO’s website and receive their tokens at a specified distribution date.

IPOs, on the other hand, are done on a public exchange, after companies have long been established and have already proven their worth. The main goal of an IPO is to raise capital to support its operations and to grow the company on a massive scale.

The financial instruments issued by ICOs and IPOs may also be classified as securities, but they may not exactly be of the same type. Tokens sold prior to, or within an ICO period are considered IOUs or (loosely) bonds with a set face value. After a successful launch, tokens are issued to all the participants, at which point, they may no longer be considered IOUs or bonds, but more like shares in an IPO where their value is determined by the market. But the main purpose of ICOs and IPOs from an investor’s point of view is essentially the same.

Currently, there are no fixed regulations about ICOs. However, there are a few who perform KYC on their contributors. It’s the mostly unregulated status of ICOs that make investing in these blockchain-based ventures extremely high-risk. But on a positive note, they can also be extremely profitable by as much as tenfold compared to other markets. In contrast, IPOs are highly regulated and closely monitored by authorities to protect the rights of investors. Certified investors in an IPO must also meet certain qualifications before they can be allowed to invest on a stock.

ICOs typically last for several weeks and may consist of token sale “rounds.” Prices of tokens increase in value with every round. Some ICOs run for months and had their tokens already listed on exchanges before the project launches. There’s also a pre-sale or pre-ICO where tokens are sold at wholesale prices to institutional investors and some small investors to jumpstart the project. Some pre-ICOs offer perks and exclusive bonuses to early adopters.

ICOs can be a great way to raise funds, and not just for companies looking to create a new cryptocurrency. Anybody from traditional companies, tech companies, and even Venezuela is getting in on the act. However, the United States is trying to block American citizens from purchasing the digital currency issued by Venezuela which, according to President Nicolas Maduro, raised $5 Billion.

In fact, ICOs have become a new mode of crowdfunding, blending investment returns with the possibility of an actual physical product.  Indiegogo, the crowdfunding platform is testing out a new product where you can invest in ICOs and blockchain. The first ICO they helped sell tokens for was called The Fan-Controlled Football League, a fantasy-style league which lets the football audience decide everything in real time. They are selling up to $5 million worth of tokens.

From Fiat to Cryptocurrency – How Close Are We?

The word’s first cryptocurrency came about in January of 2009 to address a common problem considered to be one of the underlying causes of the Great Recession: the lack of restraint in money creation. The economic crisis of 2007-2009, brought the reliability of financial institutions into question, and had people asking why and how it all happened.

Most often, the answers to these questions will have one common denominator – money, or more specifically, fiat currency. Did the unknown person who first created cryptocurrency in 2009 did so to replace fiat currency altogether? Or only as means to curb the effects of inflation and provide an alternative means of exchange?

 

Why We Use Money

Money is very much a part of our everyday lives that we often take for granted why we have to use money in the first place. Obviously, we’re using it to pay for goods, services, and debts. But have you ever asked yourself how much it’s really worth? For instance, is a dollar bill really worth a hundred dollars just because it says it is?

The straightforward answer is ‘no’, it doesn’t have intrinsic value. It’s only a piece of paper, much like your paycheck, sanctioned by the government to pay for goods, services, and debts within the country. Governments use fiat currency as a store of value. This value changes over time due to inflation and deflation. Although it doesn’t have a fixed or real value like gold and silver, it makes up for its shortcomings by making transactions a lot easier for us.

Hence, fiat currency has value only because it is backed by a central authority and because it serves its purpose – to establish a financial system that allows people to transact and conduct their businesses using a standard currency. In other words, we use money because we trust the government who issued it that it’s worth something, and because it makes buying, selling, pricing, and storing wealth more convenient.

 

Who Makes Our Money?

Strictly speaking, governments don’t make our money; only central banks do. However, governments can make certain things like small pieces of printed bills to have value with the words, ‘let it be done’, which translates into Latin as ‘fiat.’ This is how we get the term ‘fiat currency.’

Governments cannot sanction the indiscriminate creation of money without adversely affecting the economy. The hyperinflation of Zimbabwe perfectly illustrates how a government can ruin the entire economy by permitting the creation of untold stacks of money. This resulted in prices of goods and services going astronomical. For instance, 100 trillion Zimbabwean dollars could only buy you a candy bar. Eventually, the Zimbabwean dollar went out of circulation and the country started using foreign currencies.

If creating too much money causes prices to catch up resulting in inflation, why do countries still increase their money supply? The answer to this question is complicated. But suffice to say, our governments and financial institutions have a hand in all of this, and we, as users of fiat currency, have no control over it – until a new kind of currency came along.

 

Bitcoin, and the Birth of Cryptocurrency Mining

The appearance of the world’s first cryptocurrency sparked very little interest. Nobody understood why people should even spend time and money on something which doesn’t exist in physical form. But as more people started using cashless transactions without having the physical form of money, it dawned on them that fiat and cryptocurrencies share a common feature: they now exist and are being used electronically, and they are both used as a store of value.

However, there’s one BIG difference: the first one is backed by a central authority, while the other is not. In the world of cryptocurrency, everyone can create more currency by way of mining rewards in which they will have to solve,  or to more precisely, find the right hash required by the network to confirm blocks of transactions which are added on top of the blockchain. To avert inflation, only a specific number of blocks could be mined at a given time and it will have a fixed supply. In the case of Bitcoin, the code was set to 21 million BTC.

Another key difference, which is also a byproduct of not having a central authority, is decentralization. In a decentralized banking system, everyone can have a copy of a distributed ledger, known as a blockchain ledger. In Bitcoin, such ledgers are stored partially or in full on nodes, i.e, computers linked to the network which miners have access to. These nodes also need consensus before transactions can get through. As a result, fraudulent or invalid transactions are easily caught and rejected by the network.

Bitcoin introduced a Utopian view of how an idealized banking system would look like. But is it going to deliver on that promise, or are we headed for the worst bubble ever seen in the history of mankind? To answer this question, we need to turn on how things are going in the cryptocurrency mining business.

 

Mining Profitability and the Current Price Bubble

Profitability for cryptocurrency mining is very promising indeed. Recent data from https://bitinfocharts.com/ shows how much you’ll earn at 1 TH/s mining crytpocurrencies. At this rate, you’ll earn 3.5887 USD/day for Bitcoin, 1.9947 USD/day for Bitcoin Cash, 0.108 USD/day (1 MH/s) for Ethereum, and a staggering 3.4973 USD/day (1 KH/s) for Monero.

Profitability calculators such as https://www.coinwarz.com/ is a lot more conservative when it comes to the calculations, weighing in several factors in addition to the hash rate such as power consumption (watts per hour), power cost, pool fees, bitcoin difficulty, block reward, Bitcoin to USD exchange rate, and hardware cost.

For instance, you just bought an AntMiner S9 that comes with a PSU for 3000 USD. Using the the Bitcoin mining calculator, we can see that 14 TH/s, using 1.375 kWh at 10 cents per kW, and a pool fee of 1%, yields 1134.61 USD per month. Scale it down to 1 TH/s and you’ll get 81.0436 USD per month. In 30-days of mining, you’ll get 2.70 USD per day, which is slightly lower to the estimated daily profit from https://bitinfocharts.com/ at 3.5887 USD/day.

Genesis Mining offers a mining package of 1TH/s for 2 years at 830 USD. Assuming that Bitcoin to USD rate stays the same for 2 years straight (which is very unlikely), using bitinfochart’s estimated daily profit would yield 2583.864 USD by the time the contract expires. Subtracting the cloud mining fee gives you a net profit of 1,753.864 or 2.4025 USD per day.

You might consider this profit too small; but that’s the reality of mining as far as the number goes. Compare this to how much you’d earn in two years, putting that same amount of money in the bank and you’ll quickly notice just how great the differences are. This brings us to the all-important question of how our financial system will turn out given the numbers and the current situation our banks are now facing.

 

Cryptocurrency as a Store of Value

There’s no question when it comes to mining profitability nowadays with the current uptrend of Bitcoin and other major currencies. However, as of date, we don’t see a lot of countries using cryptocurrencies to pay for goods and services. But this will probably change as more people turn from mere speculators to users, miners, and investors. Countries like Zimbabwe will probably use cryptocurrencies to curb their inflation, stabilization the economy, taking the power away from the government and the central banks and putting it where it belongs – in the hands of the people.

We might not have exact numbers as to how many people are now into cryptocurrencies, but their presence can be felt with the unprecedented rise in their prices. What we’re seeing right now could be the first signs of mass adoption where every people in the world will have cryptocurrency wallets in their mobile phones and laptops. Consequently, this would mean a more stable currency like fiat, and hence be able to function much like it.

There’s much to be seen as to the long-term effects of replacing fiat with cryptocurrency in the global economy. Some speculate this shift could result in mass disruption as fiat currencies lose their value over cryptocurrencies. But as we can see, banks are now looking into the possibility of adapting to this new wave of digital banking to avoid being wiped out by the tides of change.  More likely we’ll see a slow transition as cryptocurrencies become increasingly common.

Interested in mining? Learn the basics of cryptocurrency mining at CryptEdu.com or start  hassle-free cloud mining at Cryptmin.com today.