Tag: Crypto

The Big ‘Crypture’

I’m not quite sure if anyone has given some careful thought – in the heat of this ‘Crypto mania’. More specifically, have you ever considered the ramifications of the blockchain and its impact on the global economy?

This is an attempt to perform a calculated prophecy, based on the conversations we’ve had with like-minded visionaries.

An introspection into this ‘much-talked-about technology’ has led to endless possibilities.

Presently, every Tom, Anastasia, and Patel are pursuing short-term gains. You are all probably investigating ways in which they too can “cash in” by investing in new digital currencies.

This frenzy is mainly driven by how some of the altcoins are performing in value. Some digital coins are rising as much as 1000% in a ‘Crypto bull-run’. But the real appeal for digital “currencies” comes from the security, speed, and cost of transactions they facilitate.

A case for Cryptos

Most of you are understandably looking at it solely from an investment point of view – after all, greed never sleeps.

Also, let’s not forget the anonymity it affords one – great for criminals and money launderers. Because of the increased risk, monetary authorities and regulatory bodies will make a case for tighter controls.

They may even push for the outright banning of this new currency altogether.

Retail banks, are currently entrusted with the movement of your funds (electronic transfers) and are governed by economic monetary policy. This happens under the watchful eye of big brother – the Reserve Bank.

These commercial banks are the “primary targets” so to say of the blockchain. They were, therefore, the first to react by investing or attempting to start up their own blockchains.

Such projects, however, prove to be expensive and still risky ventures given that no-one knows the source and destination of the blockchain.

Banks are nevertheless having to either make quick decisions about whether they get on board or partner with developers of Cryptos such as Ripple).

We also look at other financial institutions such as credit lending facilities and money transfer institutions. They are also are naturally in partnerships with the banks. They, however, stand to get wiped out by the blockchain if you think about it.

Really, who would want to cough up a 10% commission or a transfer fee for money sent abroad to your family? You could simply use something like IOTA which, by the way, is as a Crypto hovering around 3-5 USD (at time of publishing) per unit.

It is capable of transacting very quickly and securely with no transaction fees!

And how so you may ask? Those details are listed clearly on their respective websites.

Peer review functionality

It is the belief that the plan for Cryptos’ was to enable anyone to have access to a shared (decentralized) peer-to-peer type service that enables the secure transacting of literally – anything!

You can look at the blockchain working in the same manner as BitTorrent or E-Mule (for those who remember that far back). In the way, that data, albeit mostly bootlegged music, videos, and software, was distributed and downloaded on the web.

“Blockchain is essentially a quick peer-to-peer transaction of digital currency”

The value of Cryptocurrencies is now driven by how well it works as a system. You must look more closely at the added value it can offer society from a functional, practical, convenient, and of course, cost-saving perspective.

A real threat?

So, what does that then mean for companies like Visa, Mastercard, or even a digital banking app like PayPal?

You can also imagine the implications for investment banks and their traders. That is if markets such as the very volatile foreign exchange (Forex) are completely abandoned and substituted by Cryptos.

There are now many an exchange for Cryptos in the appearing monthly.
You will be able to switch or trade Bitcoin for Ethereum, Litecoin, IOTA, or Ripple.

Handy if you need them quickly for a specific transaction, country, or product that accepts digital currency.

More practical uses of Crypto

The purpose of ‘Cryptos’ running on the blockchain is, therefore, to change the way we transact and pay for goods and services.

The aim was to make it a ‘form of exchange’ but also to provide the resources for you to “mine” and own them. This can be an alternative income generator alleviating the need for job creation. It can also be a substitute vocation for those you who were perhaps made redundant by automation and AI.

So, once you mine the currency (provided you have the infrastructure and pay the overheads), you can use it to get the things you need or must pay for.
Your electricity bill, for example, can then be processed and paid for directly from an IOTA-holding wallet.

Speaking of electricity, we came across a very insightful article (referenced in the resource section) focusing on the impact of energy consumption that global rampant mining will cause the price of electricity and the environment.

Coupled with the switch to electric cars this could surely force you to invest in better ways to generate electricity. That is if we are to maintain sensible levels of sustainability.

Whether the price of electricity goes up or down will be determined by how quickly energy providers globally will be able to meet this surging demand.

We can surely be in a position to observe the upcoming impact on electricity consumption from next year.

More and more of the global population are beginning to mine altcoins for themselves.

As we head into the festive season and bonuses are being paid out, be responsible for how you splash out. Do your research first – even if it means waiting a year to see how it all plays out.

22 December 2017
The big Crypt-ture

I’m not quite sure if anyone has given some careful thought, whilst in the heat of this Crypto mania, to the actual ramifications of the blockchain and its impact on the global economy. So, this is an attempt to perform a calculated prophecy, based on the conversations had with like-minded visionaries. An introspection into this much talked about technology has led to endless possibilities and here is how:

Presently, every Tom, Anastasia, and Patel are pursuing short-term gains. Relentlessly investigating ways in which they too can “cash in” on the new digital currency from an investment point of view. This is mainly driven by how the altcoin is performing in value. But the real appeal for each digital “currency” comes from the security, speed and of the transactions it permits, as well as the fact that it is decentralized, free from additional admin charges and commissions.

Also, let’s not forget the anonymity it affords one – great for criminals, money launderers. Because of the increased risk, monetary authorities and regulatory bodies will definitely make a case for the tighter controls or the outright banning of this new currency altogether.

Retail and commercial banks, are currently entrusted with the movement of funds (electronic transfers) and are governed by economic monetary policy set up by the watchful eye of their big brothers – the Reserve Banks. These are the “primary targets” so to say of the blockchain, and were, therefore, the first to react by investing or attempting to start up their own blockchains. Such projects, however, prove to be expensive and still risky ventures given that no-one knows the source and destination of the blockchain.

Banks are nevertheless having to either make quick decisions as to whether they get on board (some are partnering with developers of Cryptos such as Ripple), or get left in the dust when it comes to adopting a disruptor that clearly works better than what they are currently using or offering to their clients.

But we also must look beyond banks towards institutions such as credit lending facilities and money transfer institutions, who also are in partnerships with the banks. They stand to get wiped out by the blockchain if you think about it. I mean, who will want to cough up a 10% commission or a transfer fee on money sent abroad to your family when you can use something like IOTA which, by the way, is as a Crypto hovering around 3-5 USD per unit. It is capable of transacting very quickly (even more so than the known altcoins as it uses a different technology altogether) and securely with no transaction fees. And how so you may ask? Those details are listed clearly on their respective websites. This begs the question – what does that then mean for companies like Visa, Mastercard or even PayPal?

You can also imagine the implications for investment banks and its traders if markets such as the very volatile foreign exchange (Forex) are completely abandoned and substituted by Cryptos. There are now many an exchange for Cryptos in the appearing monthly.

So, you will be able to switch or trade Bitcoin for Ethereum, Litecoin, IOTA or Ripple if you need them for a specific transaction, country or product/service that only deals in that digital currency.

While most people are understandably looking at it solely from an investment point of view – as greed never sleeps – its purpose is actually about changing the way we transact and pay for goods and services. The aim is to make it a currency not only accessible to attain but also if you have the resources to “mine “and own them, can be an alternative income generator alleviating the need for job creation – or a substitute for those who are perhaps made redundant by Automation and AI. So, once you mine the currency (provided you have the infrastructure and pay the overheads), you can use it to get the things you need or must pay for. e.g. your electricity bill can be processed and paid for directly from an IOTA-holding wallet.

And speaking of electricity, I came across a very insightful article (referenced in the resource section) focusing on the impact energy consumption that global rampant mining will cause the price of electricity and the environment. Coupled with the switch to electric cars this could surely force us to invest in better ways to generate electricity if we are to maintain sensible levels of sustainability.

Whether the price of electricity goes up or down will be determined by how quickly energy providers globally will be able to meet this surging demand. We can surely be in a position to observe the upcoming impact on electricity consumption from next year as more and more of the global population begin to mine altcoins for themselves.

I also believe that the initial plan for Cryptos’ was to enable anyone to have access to a shared (decentralized) peer-to-peer type service which allows for secure transacting. One can look at the blockchain working in the same manner as BitTorrent or E-Mule (for those who remember that far back). In the way, that data, albeit mostly bootlegged music, videos, and software, was distributed and downloaded on the web.

“Blockchain is essentially a quick peer-to-peer transaction of digital currency”

So, while the value of Cryptocurrencies is now driven by a demand in terms of how well it works as a system, we must also look more closely at the added value it can offer society from a functional, practical, convenient and of course, cost-saving perspective.

As we head into the festive season and bonuses are being paid out, be responsible for how you splash out. Do your research first – even if it means waiting a year to see how it all plays out.

22 December 2017
Out with the old school…

Creative destruction has become our new favourite buzzword. It also aptly describes this new wave or phenomenon of Crypto-mania driven by the blockchain and its shining star – the Bitcoin.

Suddenly, people who normally would not bat an eye at trading are now asking how to invest in Crypto.

We must note that anything that goes up very abruptly and abnormally – eventually comes tumbling down. The same way the big dot.com bubble burst and left many in dire straits after they over-indulged in overvalued tech companies.

Turbulent history

Bitcoin will eventually find its peak and there will be a mass sell-out and a ‘crash’ at some point.

We even had the likes of an ironical skeptic – the dubious Ponzi-scammer dubbed ‘the Wolf of Wall Street’ Joel Belmont. He attempted to pre-empt a crash of Bitcoin.

The funny thing is, however, most of the critics are people who have not invested themselves. Perhaps they suffer from a case of ‘sour grapes’ or they simply don’t understand how it works to even get involved.

Doubt is prompted by fear of an unknown. Most investors themselves don’t understand the complex algorithms that went into designing the blockchain. However, it is proving to be resilient and gaining intrinsic value by the day.

A new industry borne

Bitcoin (at the time of writing), which was hovering around $17000 after breaking its latest resistance level, and poised to reach the $20000-mark.

Creative destruction does not result in the reinventing of the wheel. It does, however, make the previous version look ancient very quickly. So while Bitcoins may not even last long, it has brought about its add-ons or spill-over effects.

There are now hundreds of cryptocurrencies. While not all and most will not experience huge price surges like that of Bitcoin, Ethereum, or recently Dash, they are still in circulation.

One of the spill-over effect includes the creation of jobs for new entrepreneurs, gamers, and developers across the globe.

Though it might be too late for investors to delve into the above-mentioned ‘big boys of crypto’, institutions are constantly developing blockchain solutions.

The fact of the matter is that the use and process of a blockchain makes sense and will, and is in the process of removing the old currency system.

Now, this may take a while before it completely phases out fiat money. This will also hopefully, much to the delight of governments and fiscal authorities, help eradicate the scourge of counterfeiting.

Applications of blockchain

Think about the big picture, the blockchain technology will allow you or any institution smart enough to copy or modify a part of the anonymously written code. Blockchain is open-source, so anyone smart enough can create their own.

We can now have Crypto for shopping, for buying cars; getting your salary paid by a multi-national company irrespective of where you are based; or paying for using Internet services (IoT).

The latter already exists and is called IOTA – read more about it on the resources page.

This technology can enable one to find creative ways to monetize a cryptocurrency to serve any purpose. This while providing a secure and lightning-quick means to transfer funds.

Litecoin and Dash boast amazing speeds of under 10 seconds to complete international money transfers.

It would be interesting to observe any bank try and beat that without charging an arm and leg for that type of service!

The motor industry

The critics, who thought Elon Musk was crazy for inventing electrically powered battery motors to run engines and now trucks – are now eating their shorts.

Not only did Tesla´s market capitalization beat that of Ford and recently BMW, but it also outperformed petro/diesel-powered vehicle companies. Outdoing them in speed and performance, attractive looks, and practicality – Tesla is changing the motor industry.

Manufacturers like Volvo, Porsche have now rolled out their own hybrids cars. They are looking to go the route of fully electric motors within a short matter of years.

Such notable paradigm shifts in the way we do things embody the beautiful concept of creative destruction. Those that shun it get left behind.
And while it is not all about the monetary gains, you can own the coins to use for transactions rather than for investment.

It will serve you better, in the long run, to get in the know of what is out there.

Beware of scammers

Be wary and vigilant, as like with money and investment, there are sharks out there (offering deals). The aim is to exploit you and many other unknowing technophobes looking to make a quick buck or two from Crypto.

Mining Cryptocurrencies (is particularly conducive for gaming enthusiasts) and using them to benefit you quickly and securely in the way of a new digitized future.

Some Internet pirates in desperation use anonymous digital currency such as Monero. They now use java-scripted mining devices (hidden behind ads) to drain hash power unsuspecting from your web-page browsers.

The way forward

Everyone is trying to get a piece of the action! There are also legitimate paid commission-based add-ons for trading as well – opening up a new world of digital earning online.

Don’t get left behind. But as with any investment, and a caution to the wise: Cryptocurrencies are highly volatile, and should not substitute any investment portfolio. They should only and always account for a fraction of your overall investment.

13 December 2017
Globalization 2.0

The implementation of globalization has not been without its major flaws. Abolishing it, however, is paramount to anti-socialist behaviour or looking inwards. This concept is against the tendencies of human nature.

If you read up on any definition of globalization, you will see that the intention was always genuine. The need to integrate and collaborate for the mutual benefit of nations.

It can, however, like any product (like knowledge), be exploited out of selfish desires and lead to exploitation.

Of course, it also doesn’t mean that globalization must apply to every sector of your economy. Some inward investment is always healthy. It should, however, not lead to extreme nationalism for a fear of loss of national identity.

Trust issues

The problem, like many others, lies in the hands of politicians who are controlled and dictated to by a handful of large corporations. These ‘corps’ have one and only self-interest – profit, power, and control.

The main concern for sovereign governments is that ‘giving up’ or sharing one’s technological, innovative, or manufacturing secrets to other countries. The premise is that this would make them ‘vulnerable’.

The real issue lies in a lack of trust – leading to the notion: “I will not let you know how I do it because you may use it against me – in trade or war”.

Despite the existence of supposedly ‘compartmentalized’ trading blocs and free trade areas like NAFTA, EU, ECOWAS, SADC, etc, the rate of globalization has sped up significantly in the past decade.

This is due to boundless advances in information technology as accurately predicted by Neoclassical Growth Theory.

Information technology has now given us valuable new tools to identify and engage in economic activity.

Tech provides access to and faster, more informed analysis of information, transfers of assets, and collaboration.

The impact on finance

A globalized world means that with the aid of technology, you can buy and sell shares of an Italian firm from a desktop in Namibia!

You would then only have to deal with the commissions and transaction fees (capital gains tax) locally pertaining to your online trades.

And think about it, on a micro-level. If globalization is entirely a bad concept then no-one should be using Amazon, eating MacDonalds, or watching Netflix in protest. Hard to imagine, isn’t it?

We must praise its positive outcomes and work hard against the negative impacts. The negative ones are also giving rise to a new era of extreme nationalism or populism.

You can only do your bit by promoting and backing policy-makers who can enforce good trade laws. This would force both local and international competitors to play by the same rules.

Penalties for financial misconduct should be a lot greater to deter exploitation. Rather, perpetrators still get the proverbial slap on the wrist.

The creative destruction of the financial system will be brought about by cryptocurrency and its underlying blockchain technology.

Depending on its uptake, and whether the authorities can legitimize its legality, we may see individuals and governments using decentralized currencies.

The Venezuelan president is investigating the concept of a national cryptocurrency dubbed ´Petro´. They would use it to alleviate dependency on (heavily interest-ridden) loans.

10 December 2017
A digital force awakens

When it comes to providing means of storing, sending, and receiving money, banks and their affiliated institutions, have enjoyed a monopoly for centuries.

They (especially central banks which allegedly are owned powerful families) have the authority to influence countries and their governments. We will not go into the level of control as this paves the way for conspiracy theories which though not proven – are not farfetched.

So, it’s only expected that when some new and unknown entity threatens their prosperity, they start to react.

Blockchain frenzy

How banks are responding is evident by how they are fervently building their own blockchains. This, however, defeats the purpose of a having decentralized system.

Bitcoin and cryptocurrencies get their appeal not just because they are very secure. But because unlike fiat money, they are not heavily regulated and can be mathematically restricted.

The 21 million unit limit on Bitcoin by default places it closer to the status of gold (which is also not infinite). But what happens when all are mined in 2041?
Bitcoin’s current ‘value’ of over $30 000 (adjusted), could move up again, according to the traditional laws of supply and demand as it becomes rare.

To unlock more value the creators will split it again. The first major splits (forks) gave rise to Litecoin and Bitcoin Cash. Both cryptocurrencies are racing to newer heights daily.

How banks operate

Now back to the banks – they make money from our deposits and these deposits are backed up by our reserve banks.
Reserve banks lend retail banks money which they essentially just print. The banks must ‘turn it’ and pay it back with interest (repo rate).

So, technically we ‘empower’ banks by depositing our money so they can invest the funds in all sorts of mechanisms. Such mechanisms include the credit and loans to you, your businesses, equities, and property.

Then, they also invest in high-risk investment vehicles like currency trading, derivatives (futures). They are essentially the biggest regulated and legal Ponzi-schemes. They also make a significant amount of the daily fees they charge you.

A quick example

Let’s quickly put things into context. A bank with over a million customers transacting daily. Let’s say they charge you a 10 cent (conservative figure) transaction fee for depositing, withdrawing from another bank, or an intra-bank transfer.

They then make 0.10c x 1 000 000 = 100 000 units of the currency on the day. This equates to 1,2 million Euros, Dollars, Rands, or Yen annually. And that is just off your transactional fees!

Then they also charge you monthly service/maintenance fees. Those are to cover the convenience of you having an account and, for services like online banking.

This is what cryptocurrencies can potentially wipe away from banks we all go the digital currencies route. Granted, how you acquire and transfer Cryptocurrencies are not as straightforward as receiving paper money – yet.

That, coupled with the stigma around ‘Cryptos’, means there is still a barrier to entry for the ‘open-source’ monetary system.

Banks will try and bring about their own blockchains to address security concerns around making transactions. For them, however, it would still be business as usual when it comes to the charges.

Birth of Fintech

Some newer financial institutions, however, are already progressing in the favour of you and me – one such is the European based N26 Bank.

We often end up paying for things all month without even having to go to an ATM. It works as a traditional bank would, however, allows the (smart) card to be used as a credit card (backed by Mastercard) would.

This allows you to quickly purchase goods online, book events, flights ticket, and accommodation. Basically, all things you still can’t do with your debit card.

In countries like Sweden and Estonia, card and digital systems have been a thing for a long time now.

Some of these Fintechs are adopting or partnering with Cryptos companies to deliver their services. One such as the relationship the one between a German bank and the crypto Ripple.

Click image to purchase Ripple here

It would be interesting to see what governments and financial institutions do to ‘protect’ their payment systems. Likewise, it will be equally fascinating to observe how they adapt in general to the new digital era upon us.

25 November 2017
The not-so mysterious world of cryptocurrency

Warren Buffett once referred to financial derivatives as “weapons of mass destruction” . He warned that they are detrimental to the global economy and financial markets.

Cryptos have a way of creating something supposedly of intrinsic value out of nothing. This is as dangerous as propaganda that leads to conflict or promotes struggle.

They are backed up by a cloud of non-regulatory policies by states who themselves, still traditional monetary policy measures.

And this is despite their full understanding of the instruments of financial wizardry.

In economics, the term creative destruction, however, has a paradoxically positive meaning. It is perfectly suited to the new form of “crypto”- currency (Bitcoin) that is not as mystic as it seems.

A brief history

Money is a concept that probably also met up with resilience when it was first supposedly introduced by the Chinese. They started carrying folding money during the Tang Dynasty (A.D. 618-907).

The instability generated by uncontrolled usage and denomination, however, soon led to rapid inflation. This prompted the Chinese to drop it, only for it to be taken up again later when it got stabilized by the adoption and use by the West.

They developed paper money as an offshoot of the invention of block printing. Block printing is like stamping.

Ironically that very same term ‘block’ is the foundation behind the Bitcoin – which is generated using blockchains (digital public ledger).

We won’t get into the mechanics of Bitcoins. We will, however, attempt to increase awareness on why and how this new payment method could cause positive ripples in the financial global system.

What is Bitcoin?

As per Wikipedia, and as simple as it can get in terms of a description: Bitcoin is a cryptocurrency and a digital payment system.

It was supposedly invented by an unknown programmer, or a group of programmers, under the alias Satoshi Nakamoto in 2009.

Though the anonymity creates an element of distrust about the agenda of its creators, it is surprisingly more transparent than derivatives.

Cryptocurrency uses a system of cryptography (encryption) to control the creation of digital ‘coins’ and to verify millions of transactions.

These transactions include are a basic movement of funds between two digital wallets and get submitted to a public ledger and await confirmation through encryption.

This video is a great and simple way for you to understand the above because it is best understood when explained as a larger picture. Check out this useful and basic video on Bitcoins.

That is quite a feat worth acknowledging because 11 years of existence is nothing compared to gold’s multiple century reigns.

Now 2009 was not long ago considering the Bitcoin is now ‘worth’ well over $20 000 each (updated to 2021 levels).

For centuries, gold has been our standard of trade or backing of all types of currency until it was ‘uncoupled’ by Nixon in 1971.

The future of trade and commerce is in the digital sphere – are you in the know?

Potential currency?

For something to become the standard measure or mode of trade it, however, needs to be stable. So, while the technology behind Bitcoin (the Blockchain) is relatively sound, its actual price needs to find its firm nesting.

Established currencies trade on markets via exchange rates with relatively minuscule increments of change in price and value. In comparison, Bitcoin can jump in value by $1000 within (minutes or seconds) – prompting skepticism about its stability.

Google Engineer Ray Kurzweil, who is revered as a “prophet” for his mysterious predictions, such inconsistency undermines the cryptocurrency’s value as a currency.

The aim is nevertheless to relieve our dependency on money or more so, the iron grip and often abusive control that some banking institutions have over consumers.

You could even argue that the recent surge in its price is being fuelled by agents of the traditional banking industry. They naturally feel threatened by the fact that they may not fully understand it and its inherent potential. So they (cash-flush) could inflate it for an inevitable ‘burst’.

But the currency though very volatile in its movement has remained buoyant. It has now held for well above $10 000 for sustained periods since its inception. Gold is now approx. $1,900.

Bitcoins provide more guarantee than financial derivatives especially because of their open-source approach to its existence and use.

Complexity

The tricky part is simply getting to grips with the vastly abundant information about it and how you could even generate it.

It is still a great backup ‘of a backup’. We rely on technology and more specifically the Internet for transactions and the associated traffic for our daily lives.

A simultaneous crash of a few major servers, however, could send it all tumbling back into the digital abyss. But as with money and other forms of currencies, only time will tell.

Bitcoin will just have to further prove its resilience and stability in the long run.

Getting attention

It is certainly not a ‘fly by night’ thing because it has sparked the interests of both public and private institutions globally. China even made a bold move to block the Bitcoin market from trading within its borders at some stage.

China is notorious for blocking things that stem from the ‘West’ only to later introduce it under their own control to protect their financial sector.

So, we can be rest assured that the creator is not Chinese! Sweden has allegedly passed legislature to make it an accepted form of currency.

Currently, banks and governments are frantically creating their own sets of blockchains to ensure they are not caught off-guard.

Read more about the implications of Cryptocurrency on the financial sector.

Bitcoin also gets its collective strength (intrinsic value) from its limited quantity in circulation (19 million out of a finite 21 million).

Spillover effects

Bitcoin has also paved the way for others such as Ethereum, (mostly used for smart contracts and by developers) which is also seeing good growth.
Then there is Litecoin, which was formed as part of a controversial yet civil split from the originators of Bitcoin to use ‘variant technologies’.

All these platforms (companies) now use the blockchain to create all types of cryptocurrencies to capitalize on the spoils of this digital revolution.

There are also several institutions that are offering late-comers a chance to benefit from the spoils of using and investing in digital currency.

Naturally, all these schemes with their investment packages would require a ‘buy-in’ and marketing to attract more takers.

Such Crypto ‘companies’ are likened to a pyramid scheme and subject to many investigations by fiscal and criminal authorities.
But that is how Bitcoin, its promoters, and the market were initially treated.

Interested? Check out the following useful links to their official websites to help you get started.

You can learn more about them, about mining them, or simply buy some Bitcoin here.

RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK WHEN INVESTING IN CRYPTOCURRENCIES.

7 November 2017

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