Snott

Author: snott

  • Crypto Investing Principles

    Crypto Investing Principles

    The Cryptocurrency landscape is widely different than the traditional investment landscape. So, while most metrics don’t apply to cryptocurrencies (like Price to Earnings, Price to Book, Enterprise Value, etc) there are still fundamentals that can be used to measure any particular cryptocurrency chance of success.

    To this end, I have created a set of 10 Crypto investing principles to provide guidance when buying any of the 7000+ available cryptocurrencies out there.

    This will help you in identifying scams early and give you discipline to not invest in cryptos that have very little chance of success.

    The Crypto Investing Principles

    1. Volume and liquidity: Lots of coins have fake volume or are pumped and dumped constantly, picking low cap coins means you won’t be able to capitalize on price movements because there is no one that will purchase your order. Does the coin has at least a BTC or ETH pair with GOOD Volume? Decentralization of holdings are also an important factor, you don’t want a handful of addresses owning a big portion of the supply.
    2. Fundamentals: 
      • Does it REALLY need a token/coin? Should it be in it’s own blockchain, why not use an existing blockchain or token? This flow chart will help you determine this.
      • Inflationary of deflationary model? It’s harder for inflationary coins to increase in price because new coins are coming into the market faster than buyers. The higher the inflation, the more diluted you are.
      • Utility. How does the coin fit into the overall solution, do users of the blockchain need to get it. Good utility drives demand.
      • Novell, does it solve a real problem?
      • Tokenomics, Token Economics, a pretty good explanation can be found on BlockGeeks site.
    3. Team: Is the team all-round, seasoned, and not shillers? teams that do “announcements of announcements” are worth nothing and just want to pump their own coin. Also look at advisors and overall track record of the whole team.
    4. Forget about the USD value of coins that do not have a USD pair, you would need to go trough either ETH or BTC to be able to sell those, so you are better off trying to maximize your BTC/ETH value at the time you decide to sell.
    5. Future: Coin prospects, competition, roadmap, adoption
    6. Network effects: This makes the crypto better as more users interact with it.
    7. Transparency: Was there an ICO, what price? How’s the team using the funds? What milestones have they achieved?
    8. Don’t buy into FOMO, look for all the stuff above and wait for a good entry point, also consider dollar cost averaging (ie. buy small chunks regularly).
    9. Consider crypto a high risk/high reward environment, never put more money that you can afford to lose.
    10. Copycats have little or no value at all, a forked blockchain cannibalizes the original blockchain, taking value away from it but not enough to make the old one worth less than the new chain. Examples are the 8913280918903812 Bitcoin forks, all of the Monero forks, Ethereum vs Ethereum Classic, etc. A fork of any blockchain with an additional feature sucks from an investment standpoint.

    Do I need a Blockchain?

    blockchain-flow-chart
    Taken from the Cryptology Eprint Archive

    Subsequent posts will leverage these principles to analyze particular cryptocurrencies and uncover insights as to the investment thesis.

  • Blockstack in plain english

    Blockstack in plain english

    From the whitepaper:

    “We present the design and implementation of a new

    internet, called Blockstack, where users don’t need to trust remote servers. We remove

    any trust points from the middle of the network and use blockchains to secure critical

    data bindings. Blockstack implements services for identity, discovery, and storage and

    can survive failures of underlying blockchains.”

    Wow, a new Internet! this must be awesome, but, what does that even mean? In this blog post I will explore Blockstack and attempt to put it in a way that both techies and non-techies can understand it.

    The original concept of the Internet was that anyone could be able to communicate freely over an open communication channel without involving third parties in the process. In the original concept of the Internet, I was supposed to email you, and only you would be able to read that email and reply to me, privately, without no-one snooping into the conversation. On this Internet I could create a webpage, put whatever I want on it and have people all around the world interacting with me (this is still true to some extent)

    Today, those email services turned into data farms that harvest your data and analyze every email sent/received to have ads follow you everywhere. Today, putting up a website means you have you play nice with Google and Facebook (ie. by their rules) or few people would be able to find you.

    These are just a couple of examples on how what the Internet should have been is no longer true. Enter Blockstack.

    Blockstack makes all these big players giant “data lockers” that you can conveniently use to store your data, but that data is locked away from anyone but you. This means you can have all your files stored on this giant data centers, with massive redundancy, but no one would be able to harvest your data.

    How does Blockstack does this? By creating a 3-part decentralized platform that turns the client-server model on its head:

    Identity

    Instead of “Login with Facebook” you have “Login with Blockstack”, where you get a digital set of keys that lets you own your identity. This identity is stored on a blockchain which makes it extremely hard near impossible to tamper with. You sign in to apps locally without remote servers or identity providers.

    Storage

    The “data locker” part. Blockstack’s storage system allows you to choose your storage provider and control the data within it. Data is encrypted and easily shared between applications.

    Tokens

    Payment system within the platform. Blockstack uses Bitcoin and other crypto-currencies for simple peer-to-peer payments. Developers can charge for downloads, subscriptions, and more. This also prevents spam and allows decentralized registration of domains, this means that in the Blockstack world, you don’t need to pay Godaddy to register a domain, you pay thenetworkto register a domain.

    If you put all these 3 things together, it means you can register whatever available domain name on your own, start a website/application, host all its files in Dropbox (for example) and have anyone in the world connect to that website or install your app without any third parties involved. Pretty cool huh? This is the new Internet, the way the old Internet should have worked!

    Finally, here is an awesome video that explains what Blockstack is and why it was created:

    https://www.youtube.com/watch?v=7SmC7AuZNWY

    If you would like to learn more, here are some additional resources:

    The Blockstack whitepaper: https://blockstack.org/whitepaper.pdf

    The software repository: https://github.com/blockstack

    The YouTube channel for tutorials and talks about Blockstack: https://www.youtube.com/channel/UC3J2iHnyt2JtOvtGVf_jpHQ

    As a final note, in order to use Blockstack you need “The Blockstack Browser” which is a small app that works alongside Firefox/Chrome and enables you to access this new Internet. You can easily install it from here:

    https://blockstack.org/install

    Once installed you can create you identity and browse the decentralized app store which already has some cool apps lying around!