Excerpt from my weekly newsletter, it strives to a comical/semi-serious take on the market, specifcally alt-coins in particular. Let me know what you think. I'm still mastering Markdown, so bear with the spartan formatting...
The Shitcoin Report
May 8, 2016
Weekly Market Outlook
Alt Coins had some serious windfalls this past weekend when Stellar (STR), Ripple (XRP), NEM (XRP), and Bytecoin (BCN) all had record gains from the 45-120% level(s). Before we delve into the who’s, the what’s, and the why’s, it is important to mention that with the increasing popularity of Bitcoin came the rise of the Shitcoin. It is intended, for all intents and purposes, as an alternative often masquerading as an improvement on the original cryptocurrency. However, in the short term, it presents opportunities for those with suitable risk appetite as it allows relative newcomers to acquire significant volumes of digital currency at rock bottom prices with the promise of further growth in the future.
Some of the challenges inherent in the sector involve transaction speed, transaction cost, computing and electricity power requirements, mining rewards, and verification schemes (Proof-of-Work, Proof-of-Capacity, Proof-of-Stake, etc.) Some of these coins attempt to offer solutions to one or more of these various issues, and some of them may even succeed at doing it. The problems arise when growth potential is stymied by the unscrupulous: hacking, 51% attacks, volume pump and dumps that often cause, at a minimum, serious bruising, currency depreciation, hard-forks or, depending on the issue involved, relegating the fledgling crypto-coin into the growing historical dustbin of online arcade tokens.
That being said, they do present opportunities for astronomical short term gains, but given the nascent nature of cryptocurrencies and the seemingly infinite bitcoin surrogates that are birthed by the minute, the investor or trader should proceed cautiously through these waters by trading without emotion, setting adequate (and realistic) targets for escape, and paying close attention to the ebb and flow nature between the routine rise of alts in the short term and the overall growth of the more stable “quote” currencies such as BTC, ETH, and LTC.
Individual Profiles
LUMENS (STR)
Lumens is the cryptocurrency of Stellar.org, a supposed non-profit aimed at serving as a platform that “connects banks, payment systems, and people”. It promises the possibility of remittances (sending money across borders, think Mexico), micropayments, mobile branches and money, and services for the underbanked. Their primary market is obviously people lacking banking access in developing countries. This would normally be an interesting project except for the fact that it involves Jed McCaleb (founder of Mt. Gox, and co-founder of Ripple), feel free to Google his name for some juicy soap opera drama and the fact that he seems to depart his projects with threats, promised market destruction, or bankruptcy.
The Stellar project is backed by Deloitte; however, this wasn’t the first time that one of McCaleb’s projects got serious investor support, Wells Fargo once supported Ripple in its infancy, staffing up a strategic team to usher in a new age of cryptocurrency banking. Needless to say, they ended up canning the entire team and abandoning the idea entirely. Source: http://www.coindesk.com/history-ripple-stellar-tell-all-report/
RIPPLE (XRP)
Another darling of McCaleb, Ripple intended to be the launchpad for Wells Fargo to get into the cryptocurrency market by being the first big player to engage in bank-to-bank transactions through crypto/blockchain technologies. The focus here is bank-to-bank, not person-to-person, meaning that unless banks choose to adopt this, it’s pretty much vaporware. Wells Fargo ended up abandoning the project, and now there are some feeble attempts at keeping the idea afloat by suspending currency creation. Ripple started out as a good idea, with inherent limitations to currency growth thereby making them increase in value over time, coupled with its aim of better facilitating banking transfers, it was envisioned as a bridge between ACH/SWIFT transactions and the crypto-market. Unfortunately, taking a page from a George R.R. Martin novel, the evil villain engaged in underhanded tomfoolery to sabotage it before running off to start a fork of it, STR. Read the article under STR for more of this juicy tale.
NEM (XEM)
NEM is an interesting upstart; it was not created out of a fork of anything unlike most of the Shitcoins. It uses an “innovative” Proof-of-Importance algorithm, which is essentially a “reputation” based blockchain algorithm. There are no blockchain rewards for mining, instead you receive transaction fees and node rewards for participation. It was rolled out of alpha testing on June 25, 2014, and ended its beta by October 20, 2014 and launched in March 31 of 2015.
The NEM chain becomes immutable after 360 blocks making long range attacks on POW and POS verification models “obsolete”. Block times are fast at one minute at block. NEM also features something called “Mosaics”, which allow assets to be customized by divisibility, quantity, transferability, and description. Other than these innovative features, NEM seems to be the creation of a smaller team. There appears to be no company involved, unlike a lot of the others. It is also a favorite of Asian markets, frequently getting traction at the Japan open; it is also popular in Korea.
It has gained over 100% value in the last two days, and given that it has primacy status in Asian markets, it presents a Shitcoin alternative to Ether (another darling of Asian markets, notably Korea that apparently has the majority of the market share). It definitely warrants watching or picking up some of it as it seems like this could be a legitimate buy-and-holder.
LBRY Credits (LBC)
LBRY’s aim is to become a 21st century art and cultural patronage platform that allows artists and content creators outside of the social media sphere to earn compensation for their work. Some of the interesting aspects of the platform is that it eschews censorship, promotes artistic freedom, and offers an alternative to “making it in the art world” in contrast to the more conventional approach of attracting bougie cultural elites and/or having to fundraise on a Patreon-like platform. Essentially, you upload artistic work and you can be compensated for it. In short, it is a decentralized Youtube that allows direct compensation rather than having to earn ad revenue for the corporate hegemony. It utilizes P2P, and content creators can set a price per stream or download the content (like an iTunes). While the blockchain details are pretty straightforward and offer little to no difference than many other competitors, the utilization of it is different in that LBRY is designed to promote the discovery, access, and optional purchase of digital content. This contrasts it with MaidSafe that attempts to enable many uses, rather than a decentralized protocol.
LBRY is already gaining pretty steady traction and increasing in value. Should it catch on, it would essentially serve as another market for YouTubers to get their content exposed and possibly earn revenue on. This warrants a look.