Investing Through The Eyes Of A Crypto Trader

The last few years could rightfully be described as a rollercoaster when it comes to cryptocurrencies. Bitcoin became a household name overnight, and just as quickly, its bubble burst. Initial coin offerings (ICOs) enjoyed a boom but now their success is dwindling. Meanwhile, security token offerings (STOs) and other breakthroughs are vying to fill the void.

 

To navigate and understand where the cryptocurrency market is headed, I spoke to Anatoly Radchenko, the CEO of United Traders, which is an advanced investment and financial services company. At the age of 28, Radchenko was named the Best Private Investor twice and started a hedge fund. He has significant experience with financial markets in general, and a unique first-person perspective on trading cryptocurrencies.

Over the past year and a half, the crypto industry has become quite well-known. What happened?

“The period from 2016 to 2017 was the most interesting in the crypto market. ICOs appeared on the scene, and everyone had very high expectations. These prospects are still there today, but are much more grounded. In the beginning, expectations were too high, and were in a very short timeframe. That is why everyone quickly became disillusioned and the bubble burst—and why 2017 was very difficult for all traders. Even with top funds like Novograts and Pantera Capital, investors lost about the same amount as if they personally held bitcoin”.

Radchenko explains that in traditional markets, not all assets are correlated with the market—but with the crypto market, all assets fell alongside it. It was difficult to find a safe haven. So 2017 taught traders, especially new ones, that the markets are quite volatile. Many traders used leverage, which led to large losses and eventually to the elimination of all positions. They came with high expectations for a quick profit—and it did not quite pan out – he added.

Can we expect a rebound in the market?

“I think that the drop is a good thing, because a drop in value will ultimately lead to a decrease in volatility. When a large number of people have at least one bitcoin each, they press the button and the losses snowball. Now, though, most bitcoins will once again belong to large holders. This will reduce the circulation of bitcoins in the market, which in general should stabilize the markets a little bit. Such a strong drop also made investments possible for many serious players who were suddenly able to afford it”.

Radchenko is circumspect on what will happen next since, of course, everyone has different predictions about what will happen with cryptocurrencies—to the point that many experts are sick of being asked what they think at all. Wall Street’s main advisor has said he is tired of forecasting crypto, and recently wrote on Bloomberg that he is refusing to comment on the topic.

“We even decided to make a little joke out of it with a fun, quick quiz where anyone can predict what comes next”, Radchenko adds.

Do you think cryptocurrency prices were manipulated—and if so, by who and how?

“In principle, when the price was at $6,000, everyone understood that, okay, someone buys, someone sells. But with sharp movement from $6,000 to $3,000, many people got knocked off track. And it happened without any significant events. I do think Tether and Bitfinex, which are being probed by the Department of Justice, are at play here. I also think this may be some kind of manipulation by the same bitmix”.

Radchenko explains that a bitmix is an exchange which accepts only bitcoins. It is very easy to register. Most people—let’s call them gamblers—switched to this platform and there was high turnover. If you look at the volume on the bitmix, the total could reach 5 or 6 billion a day relative to the volume on the Binance and Bitfinex exchanges. So it turns out that we find ourselves in a situation widely talked about in classical markets: the volume of derivatives, which in one way or another indirectly affect the underlying asset, or spot price of the asset itself, is much higher. This holds true for gold and oil too. And with crypto, we do not have regulation or a central supplier, so prices differ everywhere. There is a lot of systemic and financial risk.

What are some rules for investing in crypto?

A great rule is to try to invest in large projects, because money tends to go toward money—that is, projects with good marketing. Another good rule is that there is no need to try to guess the bottom. It is better to allocate your assets evenly and in equal parts into different projects, because, once again, the price now does not reflect anything. As we recently saw, iOS just grew 30% in a day. Why did this happen? Nobody knows. And you will never guess whether it will start growing today or tomorrow. It is necessary to be patient and not try to look for the bottom.

With regard to the challenges traders faced in 2017, it’s hard to be happy when people lose money because of their inexperience. But the most important thing a trader must understand is that, even if he has been mistaken when it comes to his predictions and transactions, all is not lost. The market will be there tomorrow and the day after tomorrow and in a year. A trader must always have a margin of safety (or cash) in order to somehow correct a situation that has gone wrong. Do not go all-in and expect instant results. Gamblers get mowed down.

How do scam projects affect the industry and the value of currencies? Do a large number of them affect the cost of other cryptocurrencies?

Scam projects have always existed and will always exist. Most people try to focus on good projects, but there have always been both bad and good projects and novice investors might not be able to tell the difference. But I do not think most projects that failed were necessarily the result of organized criminal groups, for example. They did not intend for the funds to disappear. A lot of guys who raised money for ICOs had no background building businesses, and knew nothing about corporate culture or hiring staff, much less how to conduct B2B and B2C relations. They just had an idea, investors invested a lot of money in the idea, and the idea did not go anywhere. Plus, the crypto market fell. It was kind of a game, and they lost. I do not think most people wanted to throw their investors under the bus.

What trends await us in 2019? Maybe some that will be transferred from 2018 and so on?

The first is the development of various protocols, services, and chains for bitcoins, like Lightning. These are faster, reliable, simplified ways of banking and the user experience will only continue to improve in 2019. The second is the emergence, I hope, of the framework for security tokens. When companies collect money, they can only issue tokens a year later, so this year we will see how Telegram tokens, for example, will behave. Also, as services like Facebook have their own internal currencies (like it’s said to be creating for WhatsApp transfers) it will drive adoption so that people start to understand how, say, the Facebook cryptocurrency differs from Bitcoin, what decentralization is in general, and why it is needed. Finally, we will also see the use of blockchain technology by corporations.

Can you talk about how the ICO boom happened and whether it will happen again?

It can easily happen again, but it will just be called something else and have another mechanism. The rules will change a little bit, the names will change, the marketing will change, and the boom will repeat. I think security tokens will be the next boom.

And what is the importance of security tokens now for the industry?

The fact that your rights are described, and, roughly speaking, the company has some responsibility. These security tokens can have dividend distribution properties, they can have voting properties — that is, they can have properties like a security, but they can be stored and transmitted to each other like tokens.

With security tokens it is always clear how many there are, where they lie, who they lie with, how to find a buyer, seller, etc. It will help to make the market liquid and transparent. That is, it can lower the barriers for medium investors to invest during the earlier stage of a company. As a rule, all the best companies look at how they can attract Google Ventures, Andreessen Horowitz, Sequoia, and so on. But security tokens can also drive the democratization of investments in good companies.

How will current utility tokens, including security tokens, be regulated in the future?

This is actually, probably, one of the most difficult issues, and, in my opinion, no one knows, and everyone is waiting for that answer. I think the Security and Exchange Commission should listen to other regulators from other countries and figure it out. They cannot simply talk about how thing should be.


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Author: Gerald Fenech
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Paxos Standard To Be A Base Token on Binance

An exchange is only as good as its liquidity. There are hundreds of exchanges to choose from, and many have chosen Binance, which was originally based in China and funded through an ICO. Binance is far and away the largest exchange in the world by volume and users, most days almost doubling the volume of its nearest competitor.

As we reported yesterday, Binance is in the process of creating a combined stablecoin market they’re calling USDⓈ, and now within that market Paxos Standard is to be a base token, CCN has learned.

At time of writing, PAX was still only trading against USDT in the market, but according to a press release received Tuesday morning, several other pairs will soon be added to the exchange.

When trading commences, PAX will have six trading pairs listed on Binance’s USDⓈ Markets against BNB, BTC, ETH, XRP, EOS and XLM.

USDT is still by far the most used stablecoin on Binance, but it seems they are testing the waters with other tokens. The situation prior to the addition of the above-named pairs was that the user would have to convert PAX to USDT in order to trade on most of the pairs in the USDⓈ market listings. While this is still somewhat the case following the move, it demonstrates that Binance is looking to experiment. And, for what it’s worth, at time of writing PAX was trading at a premium against USDT – 2 cents. Over the course of $1 million that adds up to a $20,000 arbitrage opportunity. For its part, Paxos’ Dorothy Chang, head of Marketing, says that clients who want to see more pairs should use the Pax token on the exchange and request more pairs be added:

More will be added according to customer demand, so if people want more- they should keep asking Binance to add more pairs to trade with PAX.

Trading of the new PAX pairs should open on the morning of November 29th. If the volume on these new pairs is significant enough, Binance will add more pairs, as it has done with USDT. There is still no word on when or if Binance will integrate USDC or GUSD. To be fair, these tokens are both issued by competing exchanges – in the case of USDC, the creator, Circle, owns Poloniex, which is senior in age to Binance and would love to unseat it as the king of exchanges. But Paxos is issued by itBit, which also operates an exchange.

The creation of the USDⓈ Market on Binance opens speculation that Binance may be working on its own stablecoin offering. They certainly have the scratch to back it, but historically they have shied away from too much interaction with the banking system, preferring to be a clearinghouse and premier trading platform for multiple cryptocurrencies.


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Author: P. H. Madore
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“Yelp! Of Blockchain” Acquires $1.4M in Seed Investments for Broken Review Industry Improvement

Review.Network, a blockchain-based startup that is focused on enhancement of the review and market research sector, revealed today that it managed to successfully obtain $1.4 million (USD) from seed investors. The capital backing, which was also provided by private investors, will be allocated to paying the team and to the platform’s developmental process.

LIONBIT

The “the Yelp! Of Blockchain,” as it is often referred to, currently has 100,000 beta users and it is backed up by a group of experienced individuals in areas such as tech, academia, and financing.  The company also announced the official start date of its Initial Coin Offering (ICO), which is planned to begin on Sept. 1st, 2018.

“Worldwide, consumers often form opinions and make decisions — like where to eat, sleep, drink, play and even work — based on online reviews,” stated the CEO and Co-Founder of Review Network, Filip Karaicic.

He went on to point out the two most important issues which are currently plaguing the review industry today: efficacy and transparency.  As reports and data have revealed, people are more inclined to giving reviews when they went through a negative experience with the service or product, meaning that an accurate representation is not given for all sides of the matter; and there are also many fake reviews.

Karaicic states that through the use of a distributed ledger and AI [artificial intelligence] technologies, they have developed a way to incentivize reviews and guarantee their accuracy.

“We also figured out a way to allow brands to tap into our validated reviewer base for market research. This funding, which we’re thrilled to announce, validates our approach and will help us develop this event even faster.”

TIP


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Cryptocurrency Is Just One Of Seven Types Of Cryptoassets You Should Know

Two years ago, the entire cryptoasset market had a value of $9 billion. Had it been a public company, it would barely have cracked the S&P 500 index. Fewer than two years later, the cryptoasset market is $300 billion in size, roughly double the market capitalization of RBC, Canada’s largest lender.

The explosion (and recent pull-back) of value in cryptoassets like bitcoin and ether has captured the imagination of developers, and the attention of the media, governments, central banks, the investing public, and regulators. It has made enthusiasts euphoric, Nobel laureates skeptical, and old-school billionaires dyspeptic. Charlie Munger of Berkshire Hathaway went so far as to call bitcoin “noxious poison.” Is there any other kind of poison?



To be sure, there is a lot of hype in this market, and the industry must confront such implementation challenges as scaling technology and regulatory uncertainty. But beyond the hype and mania, something profound is happening—the creation of an entirely new digital asset class.

This new asset class will transform every industry in the economy, from financial services to pharmaceuticals, media to manufacturing. Existing assets like stocks and bonds will become digital assets and new yet unforeseen assets will emerge, enabling new decentralized business models based on collaboration and clever code. Understanding the various types of cryptoassets, and the different functions they serve, is crucial to thriving in this new decentralized digital economy.

In the updated version of Blockchain Revolution, we break them down into at least seven categories:

  • Cryptocurrencies like bitcoin, the granddaddy of all cryptoassets, are instruments of exchange, stores of value, and units of account. To wit, bitcoin today holds over $100 billion dollars and supports billions a day in global transactions. Banks are taking notice, going from “bitcoin bad, blockchain good,” to “bitcoin, yikes!” JPMorgan and Bank of America are speaking openly about the risks cryptocurrencies pose to their business, and Goldman Sachs and TMX Group’s Shorcan are moving swiftly to trade these assets.
  • Platform tokens like ether of the Ethereum blockchain, the $40 billion mega-unicorn and Canada’s most successful start-up ever, are designed to support decentralized applications that eliminate intermediaries in virtually every facet of the economy. Ethereum has also emerged as the leading platform for initial coin offerings (so-called ICOs), where a project can tap into global pools of capital. To date, over $7 billion has been raised through ICOs, 70% of them using Ethereum’s standard, ERC-20. Ethereum and its challengers, Cosmos, Aion, and ICON, will form the backbone of the next era of the internet.
  • Utility tokens are programmable blockchain assets that have utility in an application such as Golem, which aims to aggregate the power of the world’s smartphones into a decentralized supercomputer that anyone can use to run computations in exchange for golem tokens. Think Amazon Web Services without Amazon.

  • Security tokens are native digital bonds, equities, and other securities that trade peer to peer without financial intermediaries. Why should a stock trade settle T+3 when buyer and seller can trade directly and settle T+0 on a decentralized exchange? The Canadian Securities Exchange intends to get into this market. Others would be wise to follow. ICOs have already upended venture capital. Bay Street will be next.
  • Natural asset tokens represent tangible goods like gold, oil, or carbon in peer-to-peer markets with real-time settlement. For example, the Royal Mint partnered with the Chicago Mercantile exchange to create Royal Mint Gold, a digital gold token backed by gold bullion in the Royal Mint’s vaults. The entire commodities market is up for grabs, as is mass-market carbon trading.
  • Cryptocollectibles are entirely unique digital assets. Consider CryptoKitties, an app that enables users to purchase, raise, and even breed unique virtual pets. As of January 2018, Cryptokitties’ 235,000 users had conducted $52 million in transactions. Companies like Everledger and others are enabling the tracking and trading of these rare and very real collectibles on the blockchain.
  • Crypto-fiat currencies are issued and governed by central banks. In 2017, Venezuela shocked many by announcing its launch of “the Petro,” a cryptocurrency backed by the country’s vast oil reserves. The Federal Reserve and Bank of Canada should take notice: implemented properly, crypto-fiat currencies can make markets more efficient, transparent, and inclusive, and central bank policy more responsive to crises and shocks.

This Cambrian explosion of crypto assets will precipitate one of the greatest reorganizations of wealth and transformations to the global economy in our history. This represents a second kick at the can—an opportunity to assure that everyone has the ability to benefit from the prosperity of the digital age.

Which Type of Crypto Asset Do You Mainly Invest Into? Are You Going To Explore More Crypto Avenues? Feel Free To Comment Below And Let Us Know!



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Author: Alex Tapscott
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Token Swaps: What Are They and How Do They Work?

So, your token is being sent to a new blockchain…


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Far from an elaborate crypto scam, the decision to carry out this process, known as a “token migration” or “token swap,” has become increasingly popular among blockchain projects. Notably, two of the top 25 cryptocurrencies trading globally – Tron and EOS – are in the midst of such a transition, and at least two more top 30 tokens are expected to soon follow suit.

With millions – even billions – of dollars worth of tokens involved in each migration, the stakes are high. But despite this, the blockchain industry remains largely uninformed on token migrations and their implications. In a sampling of experts, CoinDesk found that even industry leaders were sometimes unable to answer basic questions about the process.
Nonetheless, much about token migrations can be discerned from those pioneering the shifts. For those who have undergone such transitions, they often represent a difficult but necessary step in realizing their project’s vision.

For Shawn Wilkinson, founder of decentralized storage startup Storj, which started its token migration in 2017, the rewards simply outweighed the risks.

He told CoinDesk:
“The idea is that you just need to rip the band aid off and be on a set of tracks that isn’t going to go off a cliff.”


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But why would a project need to complete a token migration in the first place?
Often, the shifts are carried out by projects that begin by using the ethereum blockchain to raise money and distribute their tokens. The tokens distributed at this phase typically act as “placeholders” for those that will eventually be used when the project is live.
One benefit of this strategy is that traders don’t have to lock up this capital. Rather, they’re able to exchange these placeholder tokens on exchanges while they develop their technologies.

Therefore, a “token migration” has come to describe the process by which token holders’ balances are transmitted from their ethereum wallets to a given project’s new compatible wallets. After the switch, tokens have effectively “moved” from one blockchain to another.
However, it’s important to note that token migrations are not exclusively linked to live blockchain launches, and also take place when projects merely shift from one protocol to another.

For example, Storj’s token migration was prompted by its decision to move from a bitcoin-based protocol to ethereum due to scalability issues.
“We became increasingly aware that if we didn’t do [the token migration], the consequences would be pretty big,” Wilkinson said.

For users and investors, the degree of their involvement in the token migration process varies – typically according to where they store their tokens.
For those who store their tokens on exchanges, it is unlikely that they will have to take any steps to participate in the migration. Major exchange Binance, for example, says it handles “all technical requirements” of the process for the EOS, Tron, ICON and Ontology migrations.

San Francisco-based exchange Kraken also aims to reduce the difficulty of the process.
“We pause funding ahead of the transition, swap all the old coins for new and when we resume funding, all the old balances are for the new coins,” Kraken co-founder and CEO Jesse Powell explained. “It’s really as simple as that.”
However, users who store their tokens in wallets may need to initiate the process manually.

More specifically, they must undergo token registration, also called “mapping,” in order to send their tokens from the previous blockchain to the new network.
In practice, this process typically entails generating a project-specific key (for example, an EOS key) and sending tokens to it from the key address where the tokens were initially stored after purchase, prior to the mainnet launch (for example, an ethereum key).
Projects typically implement cut-off periods by which users must swap their tokens. In projects such as EOS, these are ‘hard’ deadlines after which tokens on the old blockchain will be “frozen” and inaccessible to users.

But despite exchanges’ efforts to simplify token migrations, risk is not entirely diminished.
“I don’t think there’s any perfect way to do a token migration,” Wilkinson said. “It’s always a pain, it’s always miserable, and there’s always, not a small chance, a very hefty chance, that you could screw things up.”

Dialogue with their communities is one way projects can mitigate a (thus far) common problem: a lack of awareness amongst token holders.
According to Wilkinson, despite initiating Storj’s token migration in 2017, users are still migrating their tokens one year on. Storj has continued to support its token migration, but for projects with hard token freeze deadlines, token holders stand to lose their money if they are unaware of the migration process.

Perhaps the most significant risk associated with token migrations is that they are not “trustless” processes.
Instead, users must place their trust in those in charge of the project to implement the shift according to plan. However, because token migrations are relatively novel, there is often no blueprint for their execution.
For this reason, Wilkinson said, “A lot of the stuff around the [Storj] migration we built from scratch.”
Though these risks are no small matter, they are not unexpected for such “bleeding edge” technologies, he added.

As for what projects currently undertaking token migrations should keep in mind, Wilkinson concluded:
“You have to make a bunch of correct assumptions to get it just right. What I found that worked for us is, we knew where we wanted to go, and we had to have a healthy bit of communication with our community to get them on board with the concept.”


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Author: Annaliese Milano
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EOS’s $4 billion crypto-democracy has just launched—and it’s probably going to be ruled by fat cats

Nothing has embodied the mania around cryptocurrency and initial coin offerings quite like EOS: its developers raised an eye-popping $4 billion during the past year by selling crypto-tokens for a system that wasn’t even built yet. Now the network is finally ready to go live, but getting its blockchain up and running was unexpectedly difficult—and the process raised important questions about how best to launch a new one.


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What—and who—is EOS? The new blockchain system is supposed to be a much faster and more efficient alternative to Ethereum. Ethereum was designed to be not only a cryptocurrency but also a platform for running blockchain-based computer programs called smart contracts. But it’s slow to process transactions, because every node in the Ethereum network must keep track of every account balance and the state of every smart contract. EOS’s developers say that by delegating the responsibility for processing transactions to just 21 “block producers,” which are to be elected by the community of token holders, the system will be able to achieve thousands of transactions per second (compared with just 15 per second for Ethereum)

A startup called Block.one is spearheading the development of EOS’s software. Its CTO, Dan Larimer, previously created the blockchain-based financial services platform BitShares as well as Steemit, a cryptocurrency-powered publishing platform. Each relied on a novel consensus protocol called “delegated proof of stake,” which Larimer is also using with EOS.

No miners: In cryptocurrencies like Bitcoin, nodes called “miners” spend lots of computing power competing for chances to add “blocks” of transactions to the chain in return for digital coins. EOS dispenses with mining in favor of allowing token holders to elect block producers, with voting power corresponding to the number of tokens an individual or organization holds. The approach should speed up transaction processing, but it has also drawn critics. Ethereum creator Vitalik Buterin has argued that it makes the system vulnerable to vote-buying that would let someone consolidate power over the network.

Frozen tokens: EOS tokens have been for sale and tradeable on the Ethereum blockchain since June 2017. But they weren’t based on EOS’s blockchain—it hadn’t been built yet, so the tokens were running on the Ethereum network. A couple of weeks ago, Ethereum-based EOS tokens were “frozen” so that their value could be transferred to the real chain. Only today were they unlocked, ending a drawn-out voting process.

That’s because the network finally reached the voting threshold required to elects its 21 block producers. That couldn’t happen until token holders had “staked” 15 percent of all the tokens in the system to vote for candidates (the tokens aren’t spent; they’re used as digital chits but returned once voting is over). Voting requires holders to use their private cryptographic keys, which is technically complicated and risky if people aren’t careful. That could be why it took so long—some holders may have lacked the technical competency to vote, and others may not have had access to their private keys if their tokens were held in exchanges. Another theory is that holders with large quantities of tokens were waiting to see what others did before casting their votes—a hypothesis reinforced by how quickly the tally jumped from 110 million to 150 million today after nearly two weeks of sluggish movement.

Central questions: Was EOS mistaken to institute token-based voting? Is the process “decentralized” enough, given that the top 100 holders own around 75 percent of the tokens? Perhaps more important, will the entire EOS network be decentralized enough now that it has chosen its 21 block producers? And will that even matter if it performs as advertised? Compromising decentralization for the sake of speed and efficiency might actually spur mainstream commercial success. First, though, the network will have to figure out how to govern itself efficiently. No pressure: its investors only have $4 billion on the line.



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Author: Mike Orcutt
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