Crypto has work to do

Join thousands of others who receive this daily analysis of crypto markets & news in their inbox every morning - subscribe now.

Crypto will have to fulfill its promises one day.

The invention of cryptocurrencies and blockchains are dominating the press, attracting billions of dollars of investments, and are the daily focus for many of the smartest entrepreneurs and developers around the world. Unfortunately, the attention and resources are ahead of the actual functionality of the technology at the moment.

Here are a few examples:

  • Transaction volumes have been decreasing — Fewer transactions are occuring today than just 9 months ago. Some of this is due to less hype around the crypto mania that occurred at the end of 2017, but some of it is also due to the lack of scalability on certain blockchains. The technology is only valuable if people can use it.

  • No one is using dApps — Decentralized applications are suppose to be the future of consumer applications. If they are built correctly, we should see great user experiences in a decentralized world. The most popular dApps have very few users today though, with some having as few as a couple hundred. The user experiences need to improve and the underlying technology has to become more scalable.

  • Stablecoins are not stable — The point of a stablecoin is to sustainably hold a predetermined value (usually $1). In recent days, we have seen most stablecoins trading at a premium or discount to their targeted $1 value. Some of the discrepancy is due to market dynamics, while others are due to technology not working correctly.

  • No one is buying tokenized securities — Many advantages will be created by tokenizing or digitizing every stock, bond, currency and commodity. The problem is that majority of the projects trying to raise capital as a tokenized security are being unsuccessful. Investors do not understand the nuances, the capital markets are suffering the effects of a crypto bear market, or issuing teams do not have the skill set and experience to reach the right audience for fundraising.

These issues are not the most encouraging data points, but they are important. We have to remember that we are still in the early days. No matter how much excitement there is, software developers have to write code, entrepreneurs need to build companies, and users will have to use the products and services.

The internet had bad user interfaces, slow dial-up connections, and few users in the beginning. Many people thought the impact would be large, but few people understood just how pervasive and important it could become. As Bill Gates says, “most people overestimate what they can do in one year and underestimate what they can do in ten years.”

Crypto, and Bitcoin specifically, is less than 10 years old. Very few people thought it could grow from $0 in value to over $100 billion market cap in that time frame. Luckily, it did. This leads me to the question: What if we are actually underestimating the impact of crypto and blockchain?

History tells us that we are likely thinking too small. The technology will empower entrepreneurs to build products and services that we can not imagine today. It won’t happen overnight though.

As Jeff Bezos said, today’s “quarterly results were fully baked three years ago.” I can’t wait to see what the work of 2017 produces three years from now….


The “Off The Chain” podcast has been downloaded 110,000+ times in 120 countries. You can listen to the latest episode with Josh Brown, CEO of Ritzholt Wealth Management now: Click here for Off The Chain podcast


Civil cancels its ICO: The Civil Media Co., a startup that hopes to use the blockchain to address some of the woes afflicting the world of journalism, is going back to the starting board in its plans to raise money through an initial coin offering. Civil had raised $1.3 million from 681 investors, with $1.1 million coming from ConsenSys, a seed investor in Civil. On Tuesday, Civil said its was canceling the token sale and would offer full refunds to those who had bought tokens. Read more.

The most expensive private lawsuit i crypto is settled: A lawsuit over Augur, a decentralized platform for prediction markets on real-world events, has come to an end as court records show that the case was dismissed on Oct. 12. Matthew Liston, the former CEO of Augur, filed the lawsuit back in April, alleging that three other founding members of Augur, Jack Peterson, Joseph Charles Krug, and Jeremy Gardner committed acts of fraud, oppression, and malice along with investor Joseph Ball Costello. According to Liston, the alleged "fraud" resulted in his forced removal from the project and the company in 2014. Read more.

Bitfinex appears to have moved its business to a Hong Kong bank: Recently, Bitfinex briefly banked with HSBC through a private account via Global Trading Solutions, and subsequently suspended all fiat deposits for nearly a week. Now, according to a source familiar with the matter, Bitfinex appears to be banking with Bank of Communications through a private account of PROSPERITY REVENUE MERCHANDISING LIMITED. The Hong Kong-based bank, which is partially owned by HSBC Holdings, has been using Citibank as the intermediary bank for U.S. dollar wire transfers to Bitfinex. Read more.

Decred is turning its entire $21 million crypto treasury over to investors: From fits and starts on ethereum's transition to proof-of-stake to Tezos' launch, governance has been one of the persistent conversations in crypto this year. But for all the promise, one long awaited approach to blockchain governance, Decred's Politeia software, went live today at 1300 UTC. Politeia gives holders of the cryptocurrency a way to exercise control over every aspect of the project, meaning it puts the Decred treasury in their hands. That treasury currently holds DCR 570,000, valued at roughly $21 million. Read more.

Ethereum Foundation awards nearly $3 million in startup grants: The Ethereum Foundation just awarded nearly $3 million in grants to a number of blockchain startups and developers as part of its ongoing grant program. The Ethereum Foundation Grants Team released its fourth wave of grants. All told, $2.86 million was awarded to 20 different individuals or groups for work on client diversity, usability, scalability, security and simply for building tools. Read more.

If you enjoy reading “Off The Chain,” click here to tweet to tell others about it.

Nothing in this email is intended to serve as financial advice. Do your own research.

Subscribe now