Welcome to Cryptoinvestor Weekly. The only newsletter for professional and institutional crypto investors.
Before getting directly into this week’s issue, we’ll start out with some . . .
News From Nomics
The main news from Nomics is that we continue to gear up for our January MVP launch.
Our mission is to grow the decentralized financial system by making it accessible, useful, and understandable to investors.
In order to accomplish this, we’re building the data backbone for professional cryptoinvestors. This backbone will initially be provided via an API as a service product. Our product roadmap revolves around a “Triple A” feature set: that is, our core product archives, aggregates, and analyzes both on- and off-blockchain cryptoasset data relevant to investors and traders.
In January we’ll be excited to show you what we’ve been working on towards this end.
Update Regarding The Hodler Giveaway
Note about the Holder giveaway that closed last Friday: due to some support delays, we’ll be announcing the winner tomorrow. Rest assured that all entries have been processed and the selection process will be random and fair. Look out for tomorrow’s announcement revealing the winning entries.
On to the newsletter . . .
Issue 13 of Cryptoinvestor Weekly
It’s been a great 2017.
Despite high volatility levels, 2017 was the breakout year for cryptoassets in terms of price movement and mainstream (i.e. magazine cover) awareness.
On January 1st of 2017, the top 20 cryptocurrencies had a market cap of $17B. On December 30th of this month, the market cap was $504B (a 2,848% increase). Buyers and holders of cryptoassets are no longer crypto-anarchists and early adopters; indeed, in 2017 my Uber driver, my family, and my house manager joined the HODler ranks.
As this movement crosses the chasm toward mainstream adoption, irrational exuberance is skyrocketing. Nothing typifies this more than the skyrocketing price of Ripple’s XRP token, whose value now makes Ripple (the company) is worth more than Uber and Ethereum. (In January of 2017, I could never have predicted that the market cap of a 100% pre-mined and centrally-issued and controlled token, with 60% of those tokens held by the parent company, would be worth more than Ethereum).
Which brings us to . . .
This Week’s #1 Pick (Our Most Recommended Article)
By the same fund that brought us The Bear Case for XRP: Bitcoin Futures Edition comes a buy-side analysis of XRP from an investor’s perspective. With XRP receiving so much capital inflow, it’s important for investors to understand what they’re purchasing.
From The Article:
Ripple is designed to work with existing institutions to facilitate the ability to quickly transact any asset globally. While the Ripple protocol has a native currency, XRP, this cryptocurrency is only required to pay transaction fees on the Ripple network. It can be used in other instances, but banks have the option to transact IOUs in any asset, including USD, EUR, and other fiat currencies, directly on the Ripple network. Ripple is primarily designed as a back-end infrastructure tool that facilitates a decentralized exchange of assets between banks.
We recognize that the Ripple protocol has an opportunity to displace legacy inter-bank networks, but we must distinguish between a good use for a blockchain and a good investment opportunity. We believe that the Ripple protocol satisfies the former, but that XRP does not satisfy the latter. The Ripple protocol can impact trillions of dollars of economic activity, but this commerce is unlikely to be conducted in XRP.
Roundup Of The Rest
This is, hands down, the best analysis of cryptoassets that I’ve ever seen.
From our very own Flippening podcast, this
It’s our most highly-produced episode so far, and it’s the world’s 1st interview with a professional crypto liquidity provider.
Chances are good that you’ve never met a professional crypto liquidity provider. And before meeting today’s guest in Zug, Switzerland, I’d never met one either.
Our guest is Benjamin Roberts, the co-founder of Citizen Hex: an Ethereum and ERC-20 token liquidity provider.
Citizen Hex works to increase the likelihood that, when traders place buy and sell orders for ERC-20 tokens on various crypto-exchanges, that those orders go through.
This conversation is a deep dive on what it means to be a market maker and liquidity provider in crypto markets.
- How Ben sees see the cryptosphere from his vantage point as a liquidity provider.
- What a liquidity business look like at an operational level.
- Why Benjamin felt locked out of the traditional financial world.
- How Ben thinks about “value added” vs. “rent seeking” activities in the cryptocurrency space.
- What exchanges do or don’t do to encourage the participation of market makers on their platforms.
- The distinction between infrastructure and information.
- Why Ben thinks that the philosophy in the crypto space should be one of openness.
You can listen to the episode on . . .
Ben provides some incredibly compelling content. I’d recommend listening.
This is a pretty interesting BTC options trading strategy.
“The Bitwise HOLD 10 Private Index Fund holds the top 10 cryptocurrencies weighted by market cap and rebalanced monthly. It’s a traditional investment vehicle. You buy shares, not coins.”
The minimum investment is $25K.
Decentralized exchanges are one of the open financial system’s most important inventions and it’s important that crypto investors understand how they work.
In this video, Loi Luu of Kyber Network, Thomas Greco of OmiseGo & Will Warren of 0x discuss the future of decentralized exchange with Nick Tomaino of 1confirmation.
From The Article:
0x is a protocol for decentralized exchange (DEX) of ERC20 tokens. ZRX is the native token of the protocol. At its core, 0x is a system of smart contracts that can be used by anyone—it is open-source and completely free to use. Developers can use the 0x protocol as infrastructure to build user-facing decentralized exchange applications. 0x is one of the early examples of a protocol using the franchising go-to-market strategy.
Of the many technical approaches to building DEXs, we believe that 0x’s is the best. 0x utilizes off-chain matching of orders and on-chain execution of trades. This allows for a large number of individual trades to take place quickly without bloating the blockchain with unfilled/cancelled orders.
From The Article:
In hopes of shining a light on the actual “costs” and efforts involved in ICO’ing, below I provide a behind-the-scenes summary of what it actually takes to hold a professional ICO at the end of 2017:
- We spent about $2M on preparations for our token sale, with the largest chunks going to technology, legal, token economy planning, security, and marketing. $500K was spent on legal fees alone.
- More than 30 full-time in-house resources worked on the project, assisted by 40+ extended team members, two major law firms, a big four accounting firm, three economists, and a dozen part-time community managers.
With Bitcoin’s Lightning Network Version 1 RC here, and mainnet beta implementations on the way, it’s important to consider how Lightning might affect altcoins whose utility are primarily rooted in facilitating cheap and fast transactions.
From The Article:
Serial tech entrepreneur and investor Rick Marini has launched the first-ever fund-of-funds for cryptocurrencies, called Protocol Ventures.
Why it matters: An increasing number of investors are interested in cryptocurrencies as values skyrocket, but they aren’t yet comfortable parsing through white papers or picking from the dozens of nascent crypto hedge funds. This is where Marini says his fund-of-funds can help.
The fund: Starting with $1 million of his own money, Marini hopes to eventually grow the fund to at least $100 million.
An important and not unlikely simulation of our economic future.
From The Article:
A key vulnerability in the Russian economy is the access to SWIFT, the standardised network for interbank transactions. After Russia’s invasion of Ukraine, there were many calls to prohibit Russia’s access to SWIFT. Among transfers between Russian banks, only 5-10% went outside the SWIFT system. It has sometimes been called the ‘nuclear option’ of economic warfare to block a state from its access to SWIFT and Prime Minister Medvedev have said that there would be ‘no limits’ to the Russian response if they were de-swifted. Russia is indeed right to be worried; when the EU imposed sanctions Iran’s access to SWIFT, the Iranian’s capability to move money out of Iran was disrupted. Hyperinflation ensued and the rial lost 50% of its value against the dollar and have not rebounded since.
When trust is guaranteed by a protocol instead of financial institutions, mostly based in the West, the capability of the West to leverage economic power is reduced, which has been a key component of its grand strategy since the Second World War. Decentralized protocols are impossible for one state to sanction. A successful implementation of a national cryptocurrency, as pioneered as well in Estonia and Tunisia, or larger implementation of global ones, will mitigate the impact of Western sanctions in general and the option of sanctioning of SWIFT in particular.
Using public blockchains, transactions can be made quicker, cheaper and without the involvement of any third parties. Today, an international transfer requires several days and multiple institutions: banks, clearinghouses and SWIFT. Transactions with cryptocurrencies, such as Dash and Litecoin, cost between 1-2 cents and take seconds or minutes. The use of Bitcoin already gives North Korea opportunities to circumvent Western sanctions.
From The Article:
The woes of an early bitcoin investor. Until recently, people who paid virtually nothing for the virtual currency and watched it soar had only one way to enjoy their new wealth — sell. And many weren’t ready.
Lenders on the fringe of the financial industry are now pitching a solution: loans using a digital hoard as collateral.
While banks hang back, startups with names like Salt Lending, Nebeus, CoinLoan and EthLend are diving into the breach. Some lend — or plan to lend — directly, while others help borrowers get financing from third parties. Terms can be onerous compared with traditional loans. But the market is potentially huge.
Roughly 40 percent of Bitcoin’s market cap is held by something like 1,000 users. That’s a lot of digital millionaires needing houses, yachts and $590 shearling eye masks.
Final Thoughts: What You Can Do To Help
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Of course, hit me up after you’ve shared and I’ll do my best to send you swag when we’ve got some.
See you next week!