An Inside Look At China’s Government Controlled Cryptocurrency Project

China, a country that has exerted more control over cryptocurrency than most,

continues to move forward in its efforts to introduce a government-controlled cryptocurrency. A group of Shanghai reporters recently got a chance to learn about this secretive project during the Global Blockchain Summit Forum, sina.com.cn reported. The visit shed light on the extent of the government’s efforts to create a national cryptocurrency. The reporters visited the Bank of China Credit Card Industry Development Co., Ltd. Hangzhou Blockchain Technology Research Institute.

Standards Announced

China’s ministry of industry and information technology revealed last week that it has already conducted a study exploring a framework for standardizing blockchain technology domestically. The ministry’s information and software services division and the China Electronics Standardization Institute proposed that a new technical committee to be established.

The embracive stance toward blockchain technology is in stark contrast to China’s crippling curbs against local cryptocurrency markets which have seen initial coin offerings (ICOs) outlawed and crypto exchanges phased out to effectively shutter domestic trading markets.

The China Banknote Bank Credit Card Industry Development Co., Ltd., one of the core companies of the China Banknote Printing and Minting Corporation, is the earliest team to study digital currency and blockchain technology within the central bank system, sina.com.cn reported. The team last year established the Banknote Blockchain Technology Institute. Leading the team is the central bank’s science and technology leader Zhang Yifeng. According to Yifeng, the overall research and development team is less than 100 people.

The Project Progresses

The China Boxer Blockchain Technology Research Institute has applied for 22 blockchain technology invention patents so far, sina.com.cn reported. The team’s underlying technology architecture has been completed and the central bank’s digital billing business has also been completed, according to Yifeng. Currently, it is promoting the opening and closing of a blockchain registration platform. Yifeng said the most important part of the blockchain is to re-optimize the technology in combination with the actual business while looking for application scenarios.

Not only can the participants of the platform use it, they can also conduct institutional certification and circulation, and achieve mutual trust and cooperation among all parties. The biggest difference between digital currency and the existing electronic payment is that it can be account-based or non-account-based, Yifeng said. Digital currency seeks to facilitate the convenience, speed and low cost of a retail payment system, while at the same time providing security and protection of user privacy.

Only The Official Cryptocurrency Recognized

Only the statutory digital currency issued by the central bank is the real digital currency, he said. Not bitcoin or Ethereum. The digital currency represented by bitcoin is actually a digital asset with stronger attributes, more volatility, and mostly lacks intrinsic value, he said. Digital currency still needs to satisfy the basic attributes of money, and the basic characteristics of value scale, exchange media, payment instruments, and value storage have not changed.

The coins issued by ICO are even more ridiculous, Yifeng said. In addition, he asked, how can a sovereign credit currency act as a liquidity instrument and payment instrument? There is no clear timetable for the launch of the legal digital currency, he said. Meanwhile, the Blockchain Technology Research Institute will establish cooperative relationships with a number of universities and research institutes to promote research in areas such as cryptography algorithms, zero-knowledge proofs, and distributed technologies. At the same time, it will apply for more financial technology patents.

The Digital Billing Platform based on blockchain technology that was undertaken by the Group of China Boxer Blockchain Technology Research Institute in 2016 was successfully tested on the Stock Exchange on Jan. 25 this year, according to sina.com.cn. Fan Guiluo, chairman of China Bills Credit Card Industry Development Co., Ltd., said that blockchain, as a trusted technology, will be used under the trustworthy system of the Chinese banknote printing and minting company.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

An Inside Look At China's Government Controlled Cryptocurrency Project

Taxing All Bitcoin Buying Will Backfire for the IRS

 

Bitcoin has a remarkable way of teaching people very rapidly about the law of unintended consequences.  

A great example is when the Chinese government began inspecting regulated exchanges in February 2017. Believing that the exchanges might get shut down (they eventually did), buyers flocked to Localbitcoins, a peer-to-peer exchange whose volume surged 3,600% in the course of a month. By trying to keep better track of and control bitcoin users in China, the government drove them to a method that was much harder to surveil. In the U.S., the Internal Revenue Service's (IRS) treatment of bitcoin taxation has arguably had a similar effect.

By effectively telling taxpayers they need to calculate capital gains taxes for every $25 gift card purchased with bitcoin, the IRS is giving them one more reason to treat bitcoin less like a payment protocol and more like digital gold. But perhaps more importantly from a public-policy perspective, the agency's guidance may encourage citizens to use unregulated foreign cryptocurrency exchanges and transact using privacy coins such as zcash and monero. It's almost certainly a contributing factor behind the estimated 0.5% self-reporting rate among bitcoin users come tax time. The vast majority of bitcoin users I know understand that paying taxes on short- and long-term capital gains is not only required by law, but also fair.  The same cannot be said for the taxing of purchases of low-dollar items under the guidance that the IRS issued four years ago.

The 2014 guidance

Stepping back, when that guidance came out in March 2014, the market looked very different. It had been less than a month since Mt Gox ceased all withdrawals, and a teenage Vitalik Buterin had just introduced a "client that looks like Android that can run apps" called ethereum. I was at Coinsummit 2014 the week the IRS published its guidance stating that digital currency would be treated as property, even if it was being used to buy baseball caps or MP3s.

At the conference, I asked Vinny Lingham, then CEO of Gyft.com, what support his company might offer for customers who had purchased gift cards with bitcoin on his platform over the past year. His answer was that while Gyft could make it easier to track spending, it would be unable to verify the cost basis of any bitcoin used to make purchases. As a result, all purchasers of these gift cards would either: 1) manually track all their purchases, sales, gains, losses, and transfers 2) stop using bitcoin to purchase gift cards or 3) become white collar criminals who don't report a portion of their taxes.

I don't think it's a mere coincidence that 2014 was the year the bitcoin community started to bifurcate between those who invested in it as store of value and those who used it as a currency to make purchases. This division only grew sharper in the years, and led last year to the fork in protocols of bitcoin and bitcoin cash. To be sure, there were many factors behind the split: from the differing incentives between startups and other factions of the community to bitcoin's deflationary nature and rapid price appreciation.

But by ignoring the consumer-usage angle and focusing solely on investing and speculating, the IRS further incentivized HODLing and discouraged everyday purchases with digital currency. Bitcoin's track record as a speculative investment has not disappointed, either, with the value of bitcoin up 2,000 percent since the IRS first released its guidance, while daily transactions (an admittedly unscientific measure of bitcoin's use as a payment method) have merely doubled.

In the IRS' own interest

As an agency narrowly focused on maximizing revenue, the IRS is probably indifferent to the way people choose to use bitcoin, so long as gains are reported and taxes paid. But by discouraging the real-world use of cryptocurrencies as money for purchasing goods, the IRS is reducing the incentive for companies in the space to build robust tools to track spending and improve tax reporting. There might be a straightforward way for the IRS to mitigate these consequences, though.  

A year ago, Coin Center, a non-profit research and advocacy center focused on the public policy issues facing cryptocurrency technologies, published a piece entitled "Bitcoin taxation is broken. Here's how to fix it."  In this post, Executive Director Jerry Brito argued that when bitcoin or other cryptocurrencies are used to purchase goods such as coffee or socks, they are being used not as investments, but similar to the way in which foreign currencies are used by Americans to purchase goods abroad.

Brito went on:  

"Say you buy 100 euros for 100 dollars because you're spending the week in France. Before you get to France, the exchange rate of the Euro rises so that the €100 you bought are now worth $105. When you buy a baguette with your euros, you experience a gain, but the tax code has a de minimis exemption for personal foreign currency transactions, so you don't have to report this gain on your taxes."

By implementing a similar de minimus exemption for cryptocurrency gains under $200, the IRS could massively simplify the tax code in this area and make it more likely that bitcoin users will report their gains properly.  These ideas are not entirely dissimilar from ones I proposed in a 2014 paper on the same subject.  Not only would this spare bitcoiners from having to keep records of every piddling purchase they make or live in fear of prosecution, it might also improve overall tax compliance. How's that for counterintuitive results?

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

Taxing All Bitcoin Buying Will Backfire for the IRS

Two Largest Cryptocurrency Exchanges Look to Exit Asia Due to Impractical Policies

Binance and Bitfinex, two of the largest cryptocurrency exchanges

in the global digital currency market, may completely move out of Asia this year, due to impractical policies.

Binance and Malta

Last week, Binance, easily the biggest digital currency trading platform with a $1.4 billion daily trading volume, moved out of Asia and relocated to Malta, a country within the European Union. In its official statement, the Binance team and its CEO Changpeng Zhao, better known to the community simple as CZ, stated that they agree on the government of Malta’s long-term aim to evolve the country into “The Blockchain Island.”

CZ stated:

“After meeting with Parliamentary Secretary, Mr Silvio Schembri, we were impressed by the logical, clear and forward thinking nature of Malta’s leadership. After reviewing a proposal bill, we are convinced that Malta will be the next hotbed for innovative blockchain companies, and a centre of the blockchain ecosystem in Europe. Binance is committed to lending our expertise to help shape a healthy regulatory framework as well as providing funds for other blockchain startups to grow the industry further in Malta.”

For awhile, Binance has clarified its stance towards cryptocurrency-to-fiat trading, and firmly told its investors and users that plans to integrate cryptocurrency-to-fiat pairs are not on the horizon. But, its relocation to Malta and potential establishment of new banking partners could allow Binance to add cryptocurrency-to-fiat pairs with ease, without regulatory uncertainty and conflict with banking service providers.

Already, Binance has revealed its plans to launch a decentralized digital asset exchange called Binance Chain. Although the entire concept of a decentralized exchange defeats the purpose and renders the existence of centralized exchanges unnecessary, the Binance team’s aim from the beginning has been to provide every service that can be accommodated to a wide of users. Hence, given the roadmap of Binance’s development, it is only logical for the company to move from cryptocurrency-only trading, to decentralized exchange, to cryptocurrency-to-fiat trading.

Bitfinex to Switzerland

Another major cryptocurrency exchange Bitfinex, a Taiwan and Hong Kong-based trading platform that processes cryptocurrency-to-US dollar trades, has been eyeing permanent relocation to Switzerland, as CCN previously reported. For many years, Switzerland and Zug in particular, have been known as the blockchain capital of the world, primarily because of its friendly regulations towards initial coin offering (ICO) projects and cryptocurrency businesses. Most notably, EOS, the sixth largest cryptocurrency in the world with a $4.5 billion market valuation, is based in Switzerland. Bitfinex CEO Jean-Louis van der Velde emphasized that the company has had constructive talks with Swiss authorities, and is carefully considering its move

from Asia to Switzerland.

“We are looking for a new permanent home for Bitfinex and the parent company iFinex, where we want to merge the operations previously spread over several locations,” said Velde.

The relocation of Bitfinex from Taiwan to Switzerland would lead to two of the world’s biggest cryptocurrency exchanges leaving Asia to Europe within a single month. If leading cryptocurrency businesses continue to move out of Asia due to impractical regulations to Europe, it could lead to Japan, South Korea, and Hong Kong losing their dominance over the global market, and could trigger competition amongst global economies to house cryptocurrency businesses.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

Two Largest Cryptocurrency Exchanges Look to Exit Asia Due to Impractical Policies

How blockchain will disrupt Google, Apple, Amazon, and Facebook

In the eyes of “experts,” when it comes to blockchain,

there is often no middle ground — it will either be boom or bust, nothing in between.I for one have become a big proponent of blockchain technology, especially the crypto-economics used to jumpstart powerful network effects.But with so many opinions and noise floating around, I thought it would be beneficial to take a deep dive into the ramifications of blockchain technology as it relates to today’s top tech companies.Will blockchain based alternatives unseat Google, Amazon, Facebook, and Apple? After in-depth research into the business models, here is what I found…

A quick explanation

For those new to the space, blockchains are immutable (unchangeable), often trustless ledgers — creating digital scarcity and the possibility for much more. Due to their decentralized nature (run by a community vs a single entity) and their economic incentive models (tokens), they potentially represent a major threat to the status quo — at least that is what enthusiasts would have us believe (more on this later in this article).

Basically, this means that anything that was once done/stored on paper can now be accomplished and recorded on the blockchain, creating an infinite and unchangeable “paper” trail of ownership records, programmable contracts, financial information, personal data and much more. And at least in theory, it would be owned by the users — something unheard of today.

The GAFA tech gods

As we enter 2018, we are entering into an era of unparalleled tech dominance. Companies like Google, Amazon, Facebook, and Apple control more and more of our everyday lives — owning our data and everything around it. The inherent network effects and flywheels these companies built are unprecedented — both in their scope and ability to stave off competition. In this connected world where things are constantly changing, I thought it could be beneficial to analyze/theorize blockchain based competitors to combat the tech giants of today — specifically to focus on what it would take to win.

Google

Google is one of the most complicated companies today, with dozens of divisions and products that dominate our daily life. We will skip most of these areas and instead focus on their primary business model — advertising.

1. Google Search

Google is the dominant search engine with over 77% of global searches going through Google Despite the fact that 1.3B people (there are only 7.6B people globally) live behind China’s Firewall, Google still owns over ¾ of the search engine market. This dominance has fueled Google’s historic rise. 86.5% of Alphabet’s revenue comes from advertising, primarily search ads

2. Youtube

Youtube is the second largest search engine in the world, and easily the largest user-generated video platform. Users upload an impossible 100 hours of content to Youtube every minute. And Credit Suisse believes that in 2015, Youtube and Google Play accounted for ~15% of Google’s revenue (up from 4% in 2010), and forecasted to reach 24% by 2020. Considering Google only paid $1.65B to acquire them in 2006, that is one hell of a deal.

3. AdSense — display advertising

The other piece of Google’s advertising supremacy is their partner network, AdSense. AdSense allows sites to monetize through Google’s advertising platform without worrying about the backend or finding advertisers. Instead, Google handles everything and takes a between 32 and 49 percent of ad revenue generate (the rest going to publishers).

According to Investopedia, AdSense revenues accounted for $15.5B, ie 23% of Google’s total revenue in 2016. Unfortunately, advertising as a business focuses on eyeballs over quality, leading to much of the degradation and clickbaity titles of today. I don’t see the advertising model changing drastically anytime soon, meaning Google’s great success with AdSense is likely to continue (and grow).

How blockchain beats Google

Google’s business is all about eyeballs, attention and “supposed transparency.” Their slogan of “don’t be evil” and mission to openly share information with the world are notably at odds. This creates a scenario where Google’s platform is god and only those that play by his/her rules are allowed in the garden of Google.

But, crypto complicates things for Google. Google’s dominance is primarily driven by the network effects of big data and AI combined with the force of habit — a near perfect storm. At the same time, however, many in the tech community are worried about the role tech giants play in our lives, especially as it relates to selling our personal data. And as we have seen, the tech community is taking some shots from politicians and users over their role in the recent US election.

1. Search

A blockchain based browser/search engine could solve the problem of misaligned incentives. I have started using DuckDuckGo (a privacy-focused search engine) after my research for the book (The Big Four — How Today’s Tech Companies Monopolize the Future) revealed the extent of Google’s power and control over my life. Rather than collecting my personal information to sell better ads, DuckDuckGo (DDG) only occasionally shows ads — and solely based on the actual search query. Imagine that.

DDG’s approach has major advantages for users, namely disintermediating value with personal data — but there are issues as well. The reason Google dominates is their data and AI expertise. They know us better than we know ourselves and are able to deliver better experiences as a result. It is the reason Antitrust action will almost never occur in the US — our definition of monopoly is based on consumer price gouging and poor experiences — the opposite of what today’s top tech companies deliver.

You want the best results for you, and you want them now. Google delivers this. A blockchain based search engine (BBSE) could theoretically win here. Combined with an identity coin like Citizen, a BBSE could use consumer data and preferences (without ever owning/controlling them) to display better, more personalized search results for users.

And if advertising was added, BBSE users would benefit as well, earning tokenized “commissions” in exchange for seeing the ads — removing the adversarial relationship that exists today. Unfortunately, I foresee this as being a long ways off. To change user behavior, you need a 5–10x better solution than the existing product. To get to the point where a BBSE which surpasses Google’s market share (currently 77–80%) will take years. Most people too freely give up their data and information without reading the terms of service (myself included).

2. Video

Competing with Youtube presents many of the same challenges as tackling search. There is one major advantage however, the creators create the platform and value. And because Youtube advertising isn’t effective for the vast majority of creators,

this could be interesting.

According to our analysis, the average CPM that can be expected from YouTube videos is between $0.50 and $5.00. That means that for every 1 million views of your videos, you can expect to make between $500 and $5,000.

That is pretty horrible, especially considering podcast ads earns 5–20x higher CPMs (cost per 1000 impressions). Because Youtube is so competitive and the ability to earn is limited, it makes logical sense that creators would cross-populate content. On a new blockchain based video platform (BBVP), there would be less competition and thus a greater percentage of attention.

If incentives were added for creators to create content and onboard audiences, the rewards suddenly get more interesting. The first mover advantages create inherent network effects and time urgency — bring over your subscribers before some other Youtuber does. That said it would still take time, especially to bring sufficient eyeballs to make good money.

But with strong enough token incentives and quality content, it seems safe to say that news would spread. The question is how fast. Odds are a BBVP would take several years to mature. Youtube has over 100 hours of video uploaded every minute — that is a lot of evergreen, SEO rich content. And because Google favors Youtube, it would be hard to steal search traffic.

Steemit/Dtube is currently working on building a Youtube killer but has a long long way to go to create a credible threat. That said Steemit is one of the most active blockchain projects/cryptocurrencies with a market cap of $1.49B and processes over 1M transactions per day (820k/day as of July 2017) — things are happening!

3. Adsense

Advertising ruined the internet and journalism. When the world switched from subscriptions to display ads, quality started to slide. Today clickbait is king. More eyeballs and pageviews (hence those annoying freaking slideshows) have created a world where artificial attention is rewarded. We have seen the quality of journalism and content degrade — prioritizing provocative headlines, flashy thumbnails and accidentally promoting an asshole like Trump.

NOTE: Trump won because he created controversy, driving eyeballs (ie ad dollars) and thus rankings/ratings around the globe. Our disgust forced us to read and forced his image and message everywhere like an inescapable evil billboard. A blockchain based publication model (BBPM) could, in theory, solve this. Medium does a decent job of illustrating the point (although not profitable), by allowing users to upvote/Clap for articles they enjoy (up to 50 Claps). A similar model could redistribute dollars to the sites and publications we appreciate most.

And there are companies/organizations trying to do just that, both with and without blockchains. This is a hard proposition though because the majority don’t understand the power/risk of personal information. Most people are fine with “being the product” and profiting (receiving free content/access) for their contribution to the system.

In my opinion, the one and only way a blockchain based answer to Adsense could succeed would be tokenized incentives for early adopters (users and publishers) to the system where Adsense ads had an if/then statement attached. If a user is BBPM member, no ads. If not then display ads.

In order to participate in the BBPM, publishers could jointly collude to “monopolize” the market, creating a linearly sliding scale of advertising intrusiveness across all web properties to encourage laggards to convert (ie overtime sites across the internet become less and less usable and more and more ads/spammy until readers joined the BBPM)

That said, I don’t see a “mafia-like” approach like this being adopted or believe change can happen in under a generation (hard to go from free to paid and be okay with it). Hopefully, it will help kill clickbait…

Amazon

The company Bezos built to sell books online is now arguably the most dominant and diversified company on earth, and the odds-on favorite to crack the $1T market cap first. This seems to be the consensus, at least among technologists. But the majority are often very wrong, so let’s dive deeper.

Understanding the empire

Amazon’s business is made up of five primary divisions: Amazon.com, AWS, Alexa, Whole Foods Market and Amazon Prime. Each on its own would be an impressive business. Combined they create the world’s largest flywheel.

I don’t believe Alexa, Whole Foods or Amazon Prime have any risk of blockchain based disruption (at least in the foreseeable future). The nature of these business models isn’t easily decentralized.

And while decentralized AI could be an interesting component to building an Alexa killer, I believe the bulk of the effort to be merging multiple technologies and disciplines (voice, AI, APIs, hardware) which seem highly unlikely in the foreseeable future

1. Amazon.com

Amazon’s is the most monopolistic and well-positioned marketplace the Western world has ever seen. Last year they did $136B in revenue with double-digit growth every year. 2017 estimates show a staggering 44% of US e-commerce occurred on Amazon.com (Source: Recode). And Amazon has been growing at least 13% YoY (year-over-year) for each of the last 5 years.

It isn’t just a monopoly, it is accelerating. But there is another layer to unpack — Amazon Basics, where Amazon analyzes 3rd party seller data and copies the best performing products. Ultimately Amazon wants to replace ALL 3rd party sellers/products with Amazon Basics versions. Amazon wants to (and will) own the customer and every ounce of margin that comes with it. Marketplaces die when the creator becomes the competitor.

2. Amazon Web Services (AWS)

Amazon should spinout AWS before regulators start antitrust actions) Amazon built AWS for their marketplace. They needed the ability to host images and information for Amazon.com and Bezos being Bezos, built the product in a modular fashion. As AWS grew, Amazon constantly cut prices to crush competition, making

AWS the easy choice.

Your margin is my opportunity

Today ~42% of the web is powered by AWS. That is more than double Microsoft, Google and IBM (combined). Yet given the easy-to-use system and affordable pricing, it makes sense.And growth isn’t slowing, quite the opposite actually. AWS accounts for 10% of Amazon’s overall revenue, with $4.6B in Q3 of 2017 (up 42% over last year) and $1.2B in profit (up 36% over last year). Amazon owns the infrastructure the majority of the internet is built on, can decentralization change that?

How blockchain beats Amazon

I have my money on Amazon. They are the best positioned of the tech giants to own the future. That said, blockchain can create challenges for Bezos’ beast, it depends how it is implemented, incentivized and evolves.

1. E-commerce

While Amazon owns e-commerce today, there are many projects focused on building decentralized marketplaces. Most miss the point though. The issue isn’t Amazon’s ~15%+ transaction fee, that is par for the course and the cost of doing business. And besides, consumers could care less how much sellers pay in fees, it doesn’t affect them.

(Plus 10% is a fraction of the 5–10x improvement needed to switch — it wouldn’t be meaningful enough for sellers to abandon Amazon entirely).

Yes, sellers care about fees, but what is more important is control. As referenced previously, Amazon sellers (like myself previously — more on my backstory here) play on Amazon’s playground. You never knew if/when you will be uninvited — or Amazon could copy your product (Amazon Basics) and cut you out. This creates a constant fear of suspension. If 80%+ of your business is on Amazon, what happens if you lose access?

A decentralized marketplace NEEDS to be built first and foremost by sellers. That is doable in my opinion. Most sellers would do ANYTHING to control their company’s destiny. If that means promoting a blockchain based e-commerce platform (BBEP), you can bet your ass they would — even without tokenized incentives. Adding incentives further accelerates adoption among sellers. But buyers are another story. Here tokenized “discounts” or “bonuses” could be used to lure buyers to the platform.

The challenge is that most sellers cannot easily access their customer base on Amazon. And to contact them and try to bring them off-Amazon can result in suspension. Plus sellers wouldn’t want to send their own customers (ie from their standalone site or email list) to an unproven, competitive marketplace unless it was as an affiliate for other products. Here an Amazon Affiliates type program would be necessary (ie: I sell X and recommend Y related products to past customers on the BBEP, earning tokens for each signup/sale).

This could also be employed for heavily incentivized buyer-to-buyer and publisher-to-buyer referral programs to get customers “in-the-door.” If sufficient supply and trust were built, the platform would start to take off, with crypto-economics driving adoption. If the user experience is inferior, however, this would take a lot of time. Plus consider the options. If Amazon has 100x the product selection, why would consumers use a BBEP? You need better prices or a huge token incentivizes initially — or today’s massive “speculative-esque” belief in the business and team to drive token appreciation.

2. File storage & web services

To be honest, decentralized file storage seems like overkill for many applications. With dirt cheap AWS/S3 file storage, you need a compelling case to justify relatively unproven blockchain based web services (BBWS). Even the CIA (and 2000 other US government organizations) prefer AWS to their own systems — the security is superior and the price is unbeatable.

Currently, the only use case that seems valuable is decentralized file storage for other decentralized apps and protocols. When full decentralization is necessary (or wanted), it makes sense to use a service like Sia or Storj. But even then, it will take time to scale the eco-system, ie primary customer base. Without enough dApp traction, who will blockchain based storage systems (BBSS) serve? This creates a bit of a chicken-egg scenario…

Storj claims a fully decentralized storage system where users are able to buy/rent harddrive space autonomously will make that storage cost 10–100x cheaper than centralized solutions. To store 1T of data on Storj today costs $15/mo plus additional bandwidth fees (for downloads). Google Drive is a flat $10 for that same Terrabyte (plus comes with all the additional functionality of Google Docs etc…)

Compared to AWS S3, Storj does better. While AWS/S3 is $0.023/GB/mo, Storj is only $0.015/GB/mo. But that is only a 34% improvement, well shy of the 5–10x improvement typically needed to switch products/service providers.

That said, some of the top VCs like Union Square Ventures, Sequoia Capital, and Andressen Horowitz all invested in Filecoin so maybe I am totally wrong here. A BBSS is the simplest blockchain model to understand. Users are easily incentivized to provide storage space and customers/enterprises can save a little money on storage. But usually when an opportunity is obvious, it isn’t a great opportunity and becomes pretty competitive, so only time will tell…

Facebook

As of June 2017, Facebook hit an unprecedented 2B MAUs (monthly active users). That is nearly â…“ of the population. While there are several divisions within Facebook (thanks to a few successful acquisitions), Facebook is at its core a social media and communications company. We will focus on Facebook.com, Instagram, and Whatsapp/Facebook Messenger as these are their three primary businesses and those ripest for blockchain disruption.

1. Facebook.com

Facebook has over 2B monthly active users — yet despite the massive market penetration, they are still growing 16% year-over-year. How is that possible?This is due in large part to the brilliant leadership of Mark Zuckerberg where Facebook bet the farm on mobile — it worked. They were able to go from ~135M MAUs (mobile only) in early-mid 2012 to over 1.15B in Q4 of 2016.

The lion share of growth has been mobile advertising — with mobile now accounting for 86% of their revenue — better than ANYONE expected. Today digital advertising is a duopoly, with Google and Facebook attracting between 57–84% of global digital (outside of China) depending on the source. (Source — FT.com, Recode). Scarier still is the fact that the duopoly is taking >99% of new growth is digital ad spend (as of Q3 2016).

2. Instagram

Facebook acquired Instagram in 2012 for a $1B for a pre-revenue company with 30M users (formed only 2 years prior). After waiting 3 years to monetize (to focus on growth), Instagram turned on ads and became a cash cow.

And with 100M new MAUs every 6 months, Instagram is exploding in popularity. Copying Snapchat Stories certainly helped (which Zuck was 100% happy to rip — pixel by pixel). Snap’s stock has dropped 50% since the ill-timed (controversial and greedy) IPO. Plus Instagram addresses a different market (millennials) and use case than the Facebook— building their advertising base even larger.

3. Whatsapp and Facebook Messenger

I refuse to consider Facebook messenger a messaging app as it is just the messaging feature of Facebook — thus messages from Facebook come through and grossly distort the usage numbers. Either way, Whatsapp and Facebook Messenger are the two largest “messaging apps” worldwide.

Facebook bought Whatsapp in February of 2014 for a whopping $19B, which again seemed absurd. But Facebook’s business has ALWAYS been built around attention, eyeballs, and waiting to monetize. And if Instagram is any indication, they know what they are doing. Stern Agee, the financial services company estimates Whatsapp could be generating close to $5B in revenue with over 2.3B users by 2023. I would go bigger.

Due to Whatsapp’s more private, intimate nature, it creates growth opportunities that an outward facing site like Facebook and to some extent Instagram cannot match. Essentially even if/as people become more reserved about social media, sharing and controlling their data, Whatsapp can still win — rigging the game in Facebook’s favor.

How blockchain beats Facebook

Of all the Big Four, blockchain poses the largest threat to Facebook. Facebook’s business is built on attention, advertising and collecting user data. A network out of Harvard originally built for college hookups is now worth $524B — and users never saw a dime. They see quite a few ads though.

1. Facebook.com

A decentralized version of Facebook seems obvious at this point. In a social ecosystem without a centralized party, algorithms can be optimized for user happiness, rather than engagement. The biggest problem with Facebook (and Google) is that they are advertising-based businesses. Facebook makes their money on impressions, making it more and more user-hostile over time to drive ad revenues.

From a purely economic standpoint, this means Zuck wants users on Facebook as close to 24 hrs a day as humanly possible. Obviously, this isn’t sustainable, and studies show social media usage (especially Facebook) have a net negative impact on happiness. In the long term this is not sustainable for Facebook — the more you use Facebook, the worse you feel. Russian election hacking and Jew hate based targeting aside, Facebook could have a serious problem on its hands if more and more users start to churn — which appears to be the case.

Why else would Facebook be actively trying to reduce user addiction? Enter a blockchain based competitor… The token incentive structure should be pretty straightforward. Like Airbnb’s refer a friend and you both get $10 credit, a blockchain based social network (BBSN) could rewards users with BBSN tokens for referrals, creating popular content, posting daily etc…

Tokens could represent virtual economies in the network (buying/selling stickers, access to certain bonuses, or even upvote/downvote micropayments) or they could be positioned as advertising prerequisites, where users could “sell” their attention or engagement to advertisers.

It seems highly likely a BBSN will pop up to compete with Facebook. The question is, will tokenized incentives be enough to overcome Facebook’s enormous network effect? I believe yes, but think it will take at least ½ a generation.

2. Instagram

Same as above, plus with the added bonus of influencers. Because Instagram is more focused on one-to-many communication, users that build followings could sell access tokens to advertisers looking to promote products in a more transparent and simple fashion.

Although outside of the target market here, I would give a blockchain based social photo site (BBSPS) a decent chance at gaining significant traction

3. Whatsapp

The odds of a blockchain based messaging app (BBMA) taking off are pretty slim. There are so many messaging apps, why build a blockchain based one? Most messaging apps are encrypted anyway so the trust and security level is relatively high.

The big challenge, however, is scale. As of July 2017, there were over 55B Whatsapp messages sent every day (Source — AndroidPolice). Crypto kitties crashed Ethereum’s network, and that was only a few hundred thousand “transactions”. But cryptocurrencies built on a centralized service is a different story.

The popular messaging app Kik just completed a successful ICO, raising $98M to build a “KIN” currency into their app. With 300M users as of May 2016, it is no surprise that Kik had to quickly switch off ethereum’s net to handle their volume. Rumors are circulating that Facebook may be looking to (or starting to) implement Litecoin for p2p payments.

This would be a landmark moment not just for Facebook but for cryptocurrency — bringing decentralized, non-governmental payments to the masses. If this is the case, Facebook could set itself up as the dominant p2p payment system. Here is why.

The banking and financial services infrastructure is old, outdated and expensive. Even newer, leaner companies like Paypal charge $0.30 + 2.9% on every transaction they process. And Venmo is in the process of starting to charge as well. And while these may seem tiny, especially compared to traditional banking, cryptocurrencies unlock a totally new dimension of money — one that approaches 0% fees with no middlemen or hoops to jump through.

As we have seen, the peer-to-peer payments market is exploding, forecasted to reach $86B in 2018 in the US alone. And with global mobile payments expected to exceed $930B, this opportunity dwarfs the digital advertising space.

If Facebook goes big on implementing either an established cryptocurrency or creating FBcoin, they could own the messaging and p2p payments spaces.

Apple

Apple is the most valuable company and arguably the most beloved brand worldwide. It is also a money printing machine to the tune of $215B in 2016. And that was a down year…

The iPhone and iOS

The iPhone makes up the lion share of Apple’s revenue, 69.4% of (Q1 2017). And if we are being honest, the iPhone is the connection with consumers — the driver of iTunes, the App Store, AirPods, accessories… pretty much the whole shebang. This creates potential problems going forward…

How blockchain beats Apple

Of all the tech giants, Apple is the least threatened by blockchain because ~80% of revenue comes from hardware. That said, there could be issues with decentralized apps and token economies inside Apple’s closed ecosystem. The largest implications center around iOS and the App Store.

iOS + the App Store

Apple is the antithesis of decentralization. A future of dApps built on a decentralized blockchain could create a nightmare scenario for Apple.

The most obvious issue is monetization. How could Apple justify charging users to download freely distributed, open-source apps? I don’t see that ending well. And the App Store is incredibly valuable for Apple, bringing in $8.6B per year. It has also given iOS a big leg up on Android, bringing in 75% more revenue than Google Play despite the difference in downloads. But in a blockchain based future that revenue probably goes away.

More importantly, Apple isn’t friendly with outsiders — they love control. In an open-source world, would Apple become more developer and user-friendly? I do not know. Given the fact that Apple slows down your old iPhone when they launch a new one seems to indicate they are milking the smartphone craze for all it is worth.

And up until recently, consumers were also lied to concerning the “upgradeability” of iPhone parts. No one knew iPhone batteries were interchangeable… I cannot see a company so focused on secrecy adapting well to blockchain-based applications and transparency.

That said, Apple has better security than their Android counterparts which will be increasingly important as consumers store cryptographic assets directly on their mobile devices. If Apple adapts, this could be a big win. If not, it could accelerate their undoing — especially because ALMOST everything depends on the iPhone ecosystem.

Closing thoughts

Blockchain technology is creating an interesting and ever-changing world.

While we have seen hundreds of ICOs promising everything under the sun, little has actually been accomplished or implemented to date. And though I am bullish on blockchain, in the long run, I believe we are headed for a coming crypto winter where teams build, markets (and market caps) crash and only the strong survive.

Thinning the herd will benefit the community, forging stronger teams and bonds among blockchain devs and the ecosystem at large. The big questions to be answered are timeline and scale. Crypto enthusiasts claim Bitcoin and blockchain are the best things since sliced bread, but actions speak louder than words.

What are your thoughts? Which tech companies are you betting on and where do you see dApps, tokenization and blockchain based tech taking over the world? Would love to hear predictions and educated guesses in the comments section below. Which areas of the economy will be most impacted in the coming 5 years? 10 years?

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

How blockchain will disrupt Google, Apple, Amazon, and Facebook

Bitmain’s Ethereum cryptocurrency ASIC could give us our graphics cards back

Mining machine manufacturer Bitmain are supposedly developing an ASIC

 

(application-specific integrated circuit) for Ethereum – a cryptocurrency that is currently ruled by GPUs alone. This move could potentially cut down the demand for graphics cards from miners, which would be great news for gamers, but potentially very bad news for AMD and Nvidia.The information comes from senior analyst Christopher Rolland of the investment and trading group, Susquehanna, and reported by CNBC.

“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC for mining Ethereum, and is readying the supply chain for shipments in 2Q18," Rolland says. "While Bitmain is likely to be the largest ASIC vendor and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development."

This could be a big hit to the customer base of both Nvidia and AMD, although the latter will likely be hit hardest by the potential change in the market – Rolland suggests Ethereum mining accounts for 20% of AMD’s sales. Ethereum currently maintains second from pole position in market cap – second only to Bitcoin – and the virtual currency has, up to now, been dominated by graphics cards to fund its Ether-powered network.

Doubts over the profitability of ASIC miners for Ethereum mining have been at the forefront of discussion for some time. ASIC miners are widely used for Bitcoin mining, although Ethereum has been assumed ‘ASIC-resistant’, due to a reliance on memory – which is currently difficult for graphics card manufacturers to acquire. Bitmain’s new miner supposedly incorporates three motherboards, each with 32 one gigabyte DDR3 modules and six ASIC chips – reports Hexus. Popular miners for ASIC-heavy cryptocurrencies, such as Bitmain’s own AntMiner S9 packed with 189 ASIC chips, utilise far less memory.

It’s not all memory limitations, however. The profitability of Ethereum ASIC miners has been in doubt ever since Ethereum’s inception and the inevitable change to a proof of stake algorithm (one which removes the onus from mining new coins) sometime in the future. This change, however, has been a long time coming, and could still be a long way away. As for AMD, their graphics card business has been booming thanks to the cryptocurrency market, and this business drying up could be especially bad for them. Rolland has since downgraded AMD’s stock outlook from neutral to negative, which represents a potential huge downward slide in share value if it comes to pass. Nvidia, on the other hand, don’t seem all too worried.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

Bitmain's Ethereum cryptocurrency ASIC could give us our graphics cards back

A Guide to Airdrops Part 1:
The Beauty of Airdrops

We’re sure you’ve all heard the idea that ‘airdrops are free money!’

As wise investors and skeptical purveyors of the cryptospace, we are rightfully incredulous of such a claim. “Free money?”

Sounds like bullshit. In some cases, you’re right. However, in many cases, you’re actually wrong. Because airdrops are so muddled with B.S. and worthless coin drops and require some level of technical knowledge of how cryptocurrency works beyond “send money from wallet A to person in wallet B,” and sometimes even involve the transfer of private keys, many people in the cryptospace stay away from them. But if you’re willing to navigate through the sea of B.S. and find the many (yes, many) projects that actually offer legitimate airdrops that can be cashed out for real value, then you actually can get “free money” in this space fairly easily.

How Much?  

This number depends on you and your personal situation as well as the cryptosphere in general at a given moment in time. How much free time do you have? What projects are offering the airdrops at this current moment? How long do you have to wait for it? Do you need to stake anything? Will the price of the coins drop or rise by the time you finally get around to selling your free airdrop? How much disposable income do you have available to accumulating coins specifically for the purpose of obtaining “free ones”?

Okay, I Get It but Can I At Least Get a Rough Estimate?

So, like I said above, it’s hard to get a ‘rough’ estimate. But if you stay on top of these, and you’re diligent about the opportunities that you pursue, and you have roughly $4,000 of disposable income to invest and ‘hold’ certain coins, you earning an extra $1,500+ per month is not out of the question at all, and that’s a conservative estimate.

Will you become a millionaire/rich off of airdrops? Probably not. But there is a great chance that you can earn yourself several thousand dollars of additional passive income each year doing little to no work without having to ‘gamble’ on making good choices on the markets, and that’s something that 99 percent of people on this planet should want to take advantage of.

So Why Are These Projects Giving Away These Coins?

Because there’s something in it for them and it costs them relatively little to nothing to do so.

Here’s a brief explanation:

1. They have a new project that they just released, and they don’t want to have their project destroyed by folks that simply bought the coin during the ICO to make a quick profit the day that it launches on exchanges. So, they build in a staking mechanism or some other sort of incentive to encourage people to hold the coin, rather than selling it. This encourages folks to not only buy it, but hold it – shortening up the sell side of the order books (generally), and forcing the price upward gradually. This strategy doesn’t always work, but it has been very effective in the past, and it’s a formula that a lot of different crypto projects have attempted to duplicate for that reason alone.


2. A hard fork is another common reason for “free coins.” This isn’t necessarily the developers doing; this is just a consequence of initiating a contentious hard fork on any chain. Basically, whenever a contentious hard fork occurs, it ‘copies’ the history of the chain up to that point. So, all of the transactions that occurred in the past are still valid.

Suppose there’s a coin called “ExampleChain.” ExampleChain has existed since 2011, and it has a lengthy history in the community. Some developers decide they’re going to create a hard fork for this chain called “BetterExampleChain” and it’s set to initiate tomorrow. Everything that’s a part of ExampleChain’s history is part of the “BetterExampleChain” blockchain up until the point of launch tomorrow. So, if Billy sent Jill 20 “ExampleChain” coins the week before, the “BetterExampleChain” has that recorded as Billy sent Jill 20 “BetterExampleChain” coins the week before.

So, when “BetterExampleChain” launches, Jill will have 20 “BetterExampleChain” coins in her wallet. And why wouldn’t she?

What Wallet?

So, let’s say Jill has no clue what the hell “BetterExampleChain” is. That doesn’t matter. If “BetterExampleChain” is a true hard-fork, then Jill should be able to “claim” her coins.

What Do You Mean “Claim?”

Basically, Jill has a few options here:

• Jill can claim her new ‘BetterExampleChain’ coins by configuring the ‘BetterExampleChain’ wallet by inputting her public key and private key (proof that she really is the owner of this wallet), and she’ll gain access to the new tokens. *We’ll get into how to manage this private key issue later.


• Perhaps Jill has her coins on an exchange that has the private key to her wallet. However, that exchange has decided to do the work for Jill and will compensate her by adding the corresponding amount of ‘BetterExampleChain’ coins to her wallet.


• Jill has her coins in another wallet service like Coinomi that’s been known to support airdrops. They decide to do the work for Jill and deliver her coins to her.

Thus, if you’re someone that’s looking to make a bit of extra money through cryptocurrency, but you don’t want to risk an absurd amount of money doing so, airdrops may be the way to go. Keep in mind though – airdrops are not without risk. There’s a chance that the price could drop while you’re staking or waiting for an airdrop. Folks in the cryptocurrency world have been known to pick up a coin solely to stake it for an airdrop or to qualify as a ‘holder’ at the time of the ‘snapshot,’ then they’ll quickly “dump” or sell their holdings immediately thereafter. Thus, if you’re not wise about the strategy that you use for an airdrop, you may find yourself losing out.

However, the chances of coming out with a net loss during this process is usually tangibly less than it is for those trading on the open markets. You don’t have to participate in airdrops, but they often present themselves as a viable means of acquiring some ‘easy money’ in crypto. 

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

 

A Guide to Airdrops Part 1: The Beauty of Airdrops

Bitcoin is Gaining Legitimacy in Europe as Dutch Court Deems it

Transferable Value

Earlier this week, a Dutch court described bitcoin as a transferable value

during a case that requested Koinz Trading BV to pay mining proceeds worth $5,000, or 0.591. The court explicitly stated that property rights apply to bitcoin, given that as a cryptocurrency, it is able to transfer value in a peer-to-peer manner. The court went on to note that the cryptocurrency is a legitimate transferable value.

“Bitcoin exists, according to the court, from a unique, digitally encrypted series of numbers and letters stored on the hard drive of the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from one wallet to another wallet. Bitcoins are stand-alone value files, which are delivered directly to the payee by the payer in the event of a payment. It follows that a Bitcoin represents a value and is transferable. In the court’s view, it thus shows characteristics of a property right. A claim for payment in Bitcoin is therefore to be regarded as a claim that qualifies for verification,” the court document translated by Cointelegraph read.

Differences in Bitcoin Regulation

In the US, cryptocurrencies are considered as commodities, at least by the US Commodities and Futures Trading Commission (CFTC). In Japan, the government acknowledged cryptocurrencies as a legal currency, allowing citizens and businesses to utilize cryptocurrencies to send and receive money. In the Philippines, cryptocurrencies are seen as a remittance method, that provides an efficient method for transaction settlement.

Generally, while cryptocurrencies as a whole are considered as different types of assets or money, they are considered legitimate by most governments. The Dutch court, if it had decided cryptocurrencies was not a legitimate transferable value, it would have requested the company to pay the proceeds in Euros. However, that was not the case, as the court specifically ordered the business to pay 0.591 bitcoin to the petitioner.

In many regions, the legality of bitcoin still remains unclear. In India for instance, the government has offered no additional information apart from an ambiguous message that bitcoin is neither legal or illegal. Consequently, businesses have integrated their own Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, to stay compliant with the country’s existing regulations on financial companies, which can highly impractical and costly.

Europe

However, in Europe, at least within the EU, bitcoin is considered as an asset and a transferable value. In the recent G20 Summit, an international forum participated by the 20 leading economies of the world, global financial watchdog Financial Stability Board (FSB) emphasized that cryptocurrencies like bitcoin are considered assets, and they do not pose danger to the stability of the global financial industry.

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. The market continues to evolve rapidly, however, and this initial assessment could change if crypto-assets were to become significantly more widely used or interconnected with the core of the regulated financial system,” read the statement of the FSB. Conclusively, if the global cryptocurrency market and businesses within it continue to function as a strictly regulated market with compliant businesses, cryptocurrencies like bitcoin will always be considered as legitimate assets.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

Bitcoin is Gaining Legitimacy in Europe as Dutch Court Deems it Transferable Value

Establishing ethical guidelines for marketing cryptocurrencies

The marketing of cryptocurrencies and Initial Coin Offerings (ICOs)

is currently operating like the Wild West. From Ethereum to Litecoin to Neo, there are over 1,300 offerings in the burgeoning crypto market, and people like James Altucher are here to profit off the confusion. However, change is afoot. Facebook banned advertising of ICOs and cryptocurrencies, Google just joined suit and even Twitter is attempting to rein in the fraudsters. We need to establish what regulations must you follow to avoid liability and what ethical guidelines should the industry establish on its own to foster trust and legitimacy.

The Cryptocurrency Regulatory Landscape in Flux

So far, the U.S. is taking a cautionary approach to regulating cryptocurrencies and ICOs, issuing more statements than clear-cut regulations. This Coinbase article on ICO regulation summed up the government’s confusing approach well: “Be careful. ICOs are risky and dangerous. It’s possible that a token, depending on the circumstances, might not be a security, but it probably is. If the token resembles a security, again on a case-by-case basis, then you need to follow existing securities regulation for an ICO.” So, an ICO may be a security and governed by securities laws. Or maybe it isn’t. This lack of clarity poses risks for everyone from investors to entrepreneurs to marketers of running afoul of the law. Moreover, it poses questions of ethical duty: What rules should we follow? Should government put regulations in place?

There are many experts in the crypto industry that bemoan any mention of regulation, as the markets frequently react negatively to them. The anti-regulation sentiment is strong among Bitcoin investors, too. A recent survey by Lendedu showed that nearly 50% believe the government should not play a stronger role in regulating Bitcoin and virtual currencies in 2018. On the other hand, some experts say that the market is ready and even needs regulation to stabilize and gain the trust of mainstream investors. “I believe we need more regulation. It will hurt in the short term, but I believe it will eventually add a zero to the market cap,” said Protocol Ventures founder Rick Marini in an Q&A with VSC. “There’s a lot of big money—pension funds, endowments, institutional money—that is sitting on the sidelines, waiting for clarification.”Indiegogo Moves to Set a Standard and Self-Regulate

We should be looking to platforms like Indiegogo for inspiration on what a self-regulated crypto market should look like. Previously limited to the crowdfunding space, Indiegogo has chosen to follow all securities regulations in its initial foray into the crypto sphere in order to protect both sellers and investors and make the market more accessible to everyone.

Indiegogo partnered with FINRA-registered broker-dealer MicroVentures when it launched its equity crowdfunding portal last year to “help ensure [its] equity crowdfunding offerings are SEC compliant,” and it will similarly offer SEC-compliant ICOs. This is despite, as Indiegogo readily admits, the fact that many ICOs today are conducted outside of securities laws. For sellers, Indiegogo provides a registered broker-dealer that can facilitate token pre-sales inside current SEC regulations in addition to providing critical investor accreditation validation, know-your-customer (KYC), anti-money-laundering (AML) services. Additionally, it is not a free-for-all market—the company is carefully curating its selection of vetted token pre-sales to prevent shady ICOs from being offered on the platform.

Currency Ratings are Vital to Self-Regulation

The cryptocurrency industry should also consider creating independent cryptocurrency rating agencies a la S&Ps and Moody’s that rate bonds. While the 2008 market crash proved that these credit-based rating services are not perfect, that’s actually a good thing. The flaws in existing systems give the crypto industry a baseline for best practices and a way to learn from past mistakes. This could be accomplished via independent analyst teams that interview companies that are planning ICOs, and issue reports on the need for a coin in their stated use case, the financial strength of said company, management team pedigree, venture capital support, and then deliver A-F rating scale on the comfort with such an offering. In keeping with crypto’s purely market-based structure, non-governmental oversight seems more appropriate, especially if the market provides enough incentive for competing analyses.

It is possible that a truly crowdsourced rating prediction system could also be developed to supplement or even supplant the independent analysts. Studies have shown that non-expert “crowds” can be astonishingly effective at predicting outcomes. For example, UC Berkeley’s Good Judgement Project found that it can improve outcome predictions by training ordinary people to make more confident and accurate predictions over time as “superforecasters.” If applied with appropriate safeguards from manipulation, this crowd prediction model can also be applied to rating cryptocurrencies. Not only may it prove to be more accurate than ratings agencies, it’s very much in line with the decentralized nature of the cryptocurrency world.

I tend to believe clear and nationwide regulation of cryptocurrency will help stabilize the market and make it safer and more appealing to mainstream investors. But government regulation challenges the technical and cultural core of cryptocurrency as a decentralized market and a store of value that’s not tied to any one government-issued currency. Self-regulation of marketplaces and marketing could be the perfect middle ground. Effective self-regulation, exemplified at Indiegogo, can protect the future of the industry, the viability of cryptocurrencies, and even stem further government regulations. Of course, there is no guarantee this will stop regulation or even that users will want to adopt any rules. But the “good guys”—which is probably the majority of us—have a duty to act ethically and with the best of intentions when dealing with all types of investments, including the new frontier of cryptocurrencies. We can literally have the livelihoods of our friends and neighbors in our hands when doing this kind of work and we should all act accordingly.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Marketing.
Interested or have Questions, Call Me, 559-474-4614

Establishing ethical guidelines for marketing cryptocurrencies

An In Depth Look Into Blockchain Technology

Blockchain, a brainchild of the of the mysterious pseudonym Satoshi Nakamoto,

is an indisputably ingenious innovation. The technology allows digital information to be distributed to users without being copied, thus creating the spine of a new kind of internet. The Blockchain technology was originally invented for the sole purpose of governance of the digital currency, Bitcoin, however, tech pioneers have devised and continually devise other potential uses for arguably the most disruptive technology.

Bitcoin (BTC), tagged – quite appropriately the “digital gold”, currently has a total currency value of close to $9 billion (USD) with Blockchain technology being central to its development as well as other emerging altcoins. Similar to the internet, understanding how the Blockchain works is not a strict requirement for utilizing the technology. However, having a basic knowledge of the Blockchain technology would help you get a grasp of why the technology is revolutionary.

Distributed Database

Essentially, Blockchain works like a spreadsheet which is duplicated thousands of times across a network of nodes. This spreadsheet, by design, gets regularly updated with trade transactions.

This is essentially how the Blockchain functions i.e. information on a Blockchain exists as a shared database that is continually updated and reconciled. One of the amazing benefits of the Blockchain technology is the fact that this database of information and trade transactions is not stored in any single location and not governed by one central node or computer. Records kept on a Blockchain is indeed public and easily verifiable by anybody.

The fact that the Blockchain is not governed by any central node – instead, it is hosted by millions of nodes/computers concurrently over the internet – means it cannot be hacked.

Durable and Robust

Blockchain technology, similar to the internet, has a built-in robustness. The Blockchain stores blocks of records that are the exact same across its network and as such, this stored information cannot:

• Be governed by a central authority &


• Does not have any single point of failure

Since the invention of the first Blockchain based digital currency (Bitcoin) back in 2008 to this recent date, there has been no significant disintegration of the Bitcoin Blockchain (problems recorded with Bitcoin to date have been as a result of hacking or mismanagement). These issues are not attributed to the underlying concept of the Bitcoin Blockchain but to bad intentions (hacks) and human error. As with the case of the internet’s (which has been around for about thirty years) durability, the Blockchain technology is revolutionary and it is set to stay as it gets developed further.

Incorruptible and Transparent

The Blockchain technology network functions in a state of consensus whereby it automatically checks-in with itself on a ten-minute loop. Essentially, the Blockchain technology functions as a self-auditing ecosystem of digital assets’ value, it reconciles all transactions that occur in ten-minute intermissions. Each group of these reconciled transactions is called a “block”. As a result of the Blockchain automatically reconciling transactions, there are two resultants properties yr.

• Transparency:


• Transaction records are embedded within the Blockchain network as a whole and it is publicly accessible by every and anybody.


• Incorruptible:


• The Blockchain cannot be corrupted. To alter any unit of information on the Blockchain network, a huge amount of computing power is required to override the entire network.

While there is a possibility of this occurring theoretically, it is not practically feasible. Taking control of the Blockchain network to garner bitcoins would destroy the value of the digital currency itself.

A Network of Nodes

The Blockchain is made up of a network of computing nodes i.e. computers that are connected to the Blockchain network. These connected nodes (computers) use a client to perform transaction validating and relaying tasks, they automatically receive a copy of the Blockchain when they (nodes/computers) join the Blockchain network. Collectively, these nodes create a powerful second-level network. Each node that joins the Blockchain network is an “administrator” of the network and has an incentive for its participation as part of the Blockchain network i.e. ‘mining’ Bitcoin (in the case of the Bitcoin Blockchain).

‘Mining’ is sort of a misnomer, in actuality, it means each of the nodes competes to win Bitcoin (BTC) by cracking computational puzzles. While Bitcoin was the primary reason for the Blockchain technology invention, currently, there are over 800 altcoins available in the crypto sphere. Likewise, there have been other adaptations of the Blockchain technology concept with the Ethereum Blockchain especially being used as a working board for alternate Blockchain adaptations in industries ranging from finance, transportation, e-commerce etcetera.

Heightened Security

Blockchain technology offers an enhanced security for digital information via its storage of records across its network, thus eliminating the risks associated with records being held at a central location. Additionally, the Blockchain technology being decentralized translates as the network lacking a centralized point of vulnerability that can be exploited by hackers.

The Blockchain technology’s added security also comes from the use of encryption technology as its security methods, unlike the internet whereby users mostly rely on the ‘username-password’ system which opens up well-documented security issues. In the Bitcoin Blockchain, there exists the public and private “keys”. The public key which is a long, randomly-generated string of alphanumeric digits is the users’ address on the Blockchain. Users receive Bitcoin to this address (also called a wallet address).

The private key is a password (also a long, randomly-generated string of alphanumeric digits) acts as a personal user’s password for their wallet address. This private key is used to access your digital assets. While the Blockchain safeguards your digital assets (Bitcoin in this illustration), users are mandated to safeguard their private keys.

How Blockchain Technology Works

So, let’s break down how the Blockchain technology actually functions. When a new transaction occurs or an existing transaction is edited, these information enters into a Blockchain. This information is evaluated and verified by the nodes connected to the Blockchain via the execution of algorithms.

Since the Blockchain is consensus-based, a majority of connected nodes would need to come to a consensus about the validity of the history and signature of the transaction information after which the new block of transaction information is accepted into the Blockchain ledger and a new block is added to the transaction chain. Otherwise, the block of information is denied and not added to the chain. The distributed consensus model allows the Blockchain run as a distributed ledger without the need for a centralized governance.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Bitcoin.
Interested or have Questions, Call Me, 559-474-4614

An In Depth Look Into Blockchain Technology

Major Differences Between Mobile And Desktop Marketing

 Major Differences Between

Mobile And Desktop Marketing

Around the globe, mobile is taking over. While there is no denying that mobile is where you need to be targeting your customer base, is that true for all industries and audiences? What about workers that sit at a desktop computer or laptop all day? Reaching these consumers takes finesse, and you need to plan your marketing strategy accordingly. That's why a dual campaign is important to reach your business’s promotional goals.

Communications executives outline the major differences between

mobile and desktop marketing.

Amount Of Content

What works as the right amount of content on a desktop may not be the right amount on a mobile device. On mobile, you shouldn't have more content than you can reasonably expect a visitor to scroll through and consume. Make it simpler for them to understand exactly why they should scroll because you're working with a lot less real estate than on a desktop to get that point across.

Priorities

On a desktop screen, it's possible to fit several calls to action. Add this to your cart, sign up for our newsletter, here's five ads, etc. A mobile device should only showcase one actionable item at a time. Order each CTA vertically in order of importance to your business. Attempting to fit two or more side by side will be too busy for users and dilute their effectiveness. Less is more.

Image Format 

An issue many brands have when maintaining a cross-platform strategy is posting images in formats that do not match best practices for their destination. Images cropped to a portrait-aspect ratio tend to have better performance on mobile, while landscape-aspect ratios tend to perform better on desktops. Optimizing for the target destination is often overlooked, but can have a sizable effect on ROI.

Location

As is true in real estate, location is important when it comes to developing mobile- or online-first campaigns. Consider where people are engaging with your campaigns. If they're interacting with your campaign during their commute, in between meetings or from their couch, are you meeting their expectations for the amount of effort they have to put in?

Content Fitting With User Habits 

Most mobile usage is done on the go, while standing in line, waiting for a movie to begin or an order to arrive, etc. You have a very limited window. Content should be short and engaging with easy-to-follow calls to action. Remove as many potential obstacles as you can. Make content easy to share, pre-populate contact information and make purchasing something simple with as few steps as possible.

How People Use Their Devices

Marketers need to decide between mobile and desktop based on the differences in use. For example, we have our smartphones with us 24/7, but we rarely run deep online research on them. My advice would be to combine mobile and desktop: Mobile can be used as an alert or interesting hook to an offer, while the discovery phase should be mobile optimized, but better fit the desktop.

User Intent

The key is recognizing that there is a distinction when it comes to intent between devices. A consumer searching for your product on their mobile device likely has a different intent than when they are at their desktop. Your copy needs to address both the audience and intent, which will differ by device. Use data to drive your investment once you have segmented your reporting.

Fewer Words, More Visuals

The rule "fewer words, more visuals" is not a surprise when we speak about desktop marketing, but it's a must in mobile marketing. Ads should be as short and eye-catching as possible. Use visuals that speak to pain points and solutions, and provide call-to-action (CTA) buttons.

Facebook Video Ads 

If you're marketing through a Facebook video ad, keep in mind that most people look at Facebook on their phones. They may be checking it under the table in a meeting when they're bored. For that reason, their volume will be turned off. Therefore, your video must be compelling and easy to understand without sound. Facebook will allow you to add captions to your video if needed.

Attribution 

People don't complete the main goal (purchase/lead) of a website on a mobile device. Rather, they do it on a desktop and use their mobile device as a research tool throughout the buying journey. If a marketer were to only measure the last touch as a success metric, they would have trouble finding mobile ROI. You need to attribute all steps of the journey to the final sale.

Altering States Of User Experience

When creating content and selecting platforms to expand reach, it's important to keep UX design top of mind as it will affect the way your consumers interact with your content. Just as code appears differently on mobile and desktop, marketing assets and content are experienced differently on both. Marketers that focus on creating excellent UX/UI design will see the most ROI from their campaigns.

Multi-Screen Opportunities

Although there has been a boom in consumer mobile purchases, desktop marketing isn’t dead. While mobile marketing should capture attention quickly and be shareable, there’s a unique opportunity for marketers to thoroughly flesh out messages on desktops. Plus, most consumers use more than one screen so you can capture them with a cohesive message across all channels — mobile or desktop.

Chuck Reynolds

Marketing Dept

Contributor

Please click either Link to learn more about Marketing.
Interested or have Questions, Call Me, 559-474-4614

Major Differences Between Mobile And Desktop Marketing

The Night $1 Million in Crypto Began Raining From the Sky

Free cryptocurrency tokens fell from balloons in Mainframe's first "airdrop"

in Hong Kong on March 20, 2018. It was part of a giveaway in which the secure messaging company will release a total $1 million worth of crypto coins. The crowd, most of them wearing masks, squinted up at the raft of multicolored balloons floating near the ceiling, trying to make out the silhouettes of the coins suspended inside each one. And then, against the backdrop of Hong Kong’s neon-rainbow skyline, they raised their hands as the countdown began: “10, 9, 8…FREEDOM!” they screamed, amid a shower of confetti. Suddenly, the loud popping of a fireworks show filled the room as the balloons exploded, and the crypto tokens they contained fell into eager hands.

The spectacle Tuesday evening, held at the inaugural Token 2049 conference, released tens of thousands of dollars’ worth of free digital money. But it was just the first of 25 events in which a Utah-based secure messaging startup called Mainframe will give away about $1 million of its cryptocurrency—by literally making it rain crypto coins upon the heads of enthusiasts.

It’s also an example of the creative lengths to which blockchain companies are going in order to stay in-bounds of a threatened crackdown by the U.S. Securities or Exchange Commission on initial coin offerings, or ICOs. The SEC has said ICOs—in which companies sell digital tokens in order to raise startup capital—could constitute an illegal sale of securities. But Mainframe and others have found a way to dodge that dreaded label: Just give the crypto away for free.

Enter the so-called “airdrop,” in which companies bestow a sprinkling of their crypto coins upon select supporters via the Internet. Now, Mainframe is pioneering a version of that concept in the real-life, physical world. “We are taking it literally,” Mick Hagen, Mainframe’s CEO and founder, told Fortune just moments before the tokens splashed down like it was Times Square on New Year’s Eve. “We thought, what if we do a real airdrop?”

It’s believed to be the first time anyone has introduced a brand new cryptocurrency via physical distribution (though in actuality, Mainframe’s tokens were to be exchanged for codes, which could then be redeemed online for virtual “MFT” coins). Mainframe initially sold its tokens in a private pre-sale exclusively for accredited investors (several of whom witnessed the airdrop), raising 27,000 of Ethereum cryptocurrency that’s currently worth some $15 million.

The capital will fund Mainframe’s development

of a messaging service that is not only encrypted, but masks the trajectory of messages using “dark routing,” in order to be “censorship-resistant and surveillance-resistant.” Such technology, the company argues, will better preserve users’ freedom.

But while Mainframe had originally considered holding an ICO,

it felt it unwise “given the regulatory environment.” SEC chairman Jay Clayton said in November that he had “yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security,” and testified in a Senate hearing last month that he believed ICOs were in violation of the law. In a separate hearing on ICOs in Congress last week, Mike Lempres, chief legal and risk officer for cryptocurrency exchange Coinbase, said the company does not trade ICO tokens because it “cannot take the risk of inadvertently trading an asset that is later found to be a security.”

It’s unclear if Mainframe’s literal “air drop”

would pass legal muster in the United States, or if regulators in other countries will agree the gimmick does not violate securities laws. Whereas the SEC has mostly been concerned with protecting investors from financial harm, Mainframe also wanted to make sure its token recipients would be safe from physical injury. “There were a lot of different logistics to work through. We don’t want anyone to get hurt,” added Hagen, who describes himself as a Princeton drop-out and Mormon on his Twitter profile. After all, the tokens, roughly the same size and weight as poker chips (and valued at 0.1 Ether, or about $56 apiece), could be dangerous if dropped from high.

So Mainframe opted to insulate the tokens with inflatables.

“When the balloons fall it shouldn’t hurt because of the balloon,” Hagen said. “We want people to walk away thinking, this was a fun airdrop.” The display conjured visuals of the economic idea, advocated by former Federal Reserve chairman Ben Bernanke, of “helicopter money.” A metaphorical term for how a central bank could stimulate the economy by creating money from thin air, Bernanke wasn’t literally suggesting dropping it from a helicopter.

Mainframe, however, did consider that possibility.

“We were thinking drones, but if [the token] hits somebody’s head, it might hurt,” Hagen said. For those who missed the first-ever live airdrop, Mainframe will bring the show to four more cities in the next two weeks—Shanghai, Beijing, Seoul, and Tokyo—with more to follow. The company is calling this method of distribution “proof of being,” a play on Bitcoin’s method of verifying transactions, known as proof of work.

There are also two other ways to scoop up the free tokens if you can’t attend in person: “Proof of freedom,” which Hagen said could be some form of expression about Mainframe such as an essay, video or blog; and “proof of heart,” which the company is not yet willing to explain in detail. But Hagen is envisioning it as an antidote to the “get rich quick” mindset that has pervaded the crypto world, a way to ensure Mainframe token holders aren’t just in it for the money. After all, the airdrops strictly limit attendees to leaving with just a single token. “We wanted to have methods to make sure we have true believers in technology, and true believers in Mainframe,” Hagen said.

Chuck Reynolds

Marketing Dept

Contributor

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The Night $1 Million in Crypto Began Raining From the Sky