All posts by Andy Gordon

Why the Government’s Approach to Crypto Won’t Last

Crypto is in a tough spot…

One of those lousy, unsought, “damned if you do, damned if you don’t” spots.

You see, it needs a well-thought-out and fair regulatory regime.

And it needs the government to get it right.

What Are the Chances?

Man, that’s a big ask.

It’s like inviting Uncle Sam to tax your money but not too much… to raise the interest rates but not too much… to shrink government but not too much…

How do you arrive at “too much” or, for that matter, “too little”?

Chances are, when you invite the government into your personal or professional life, you usually regret it.

You simply don’t expect them to get this stuff right.

What I hope for?

That they don’t get it completely wrong.

That’s what I’d like with crypto.

It’s pretty clear that the government wants to throw the hammer down on scamsters and schemers…

What the SEC calls “bad actors.”

Great. I agree with the SEC when it says that a thinly traded and volatile market is ripe for fraud from many different actors.

Question is, can it do this and also maintain a light touch?

Can it choose its targets with a minimalist approach?

Can it regulate what is absolutely necessary and leave the rest alone?

As I said, it’s a big ask.

Some Surprising and Not-So-Surprising Signs

Ninety-nine times out of 100, the answer is “of course not.”

But this time may be different.

The government has recently shown surprising signs of NOT wishing to drown the crypto sector in overly restrictive regulations.

A great sign?

It came from the chairman of the Commodities Futures Trading Commission (CFTC) in a recent Senate hearing. He said that “do no harm” was the right approach for distributed ledger technology…

Just as it was some 40 years ago for the internet.

The SEC has also chipped in with some surprisingly sensible statements. A recent one said that ICOs “can be effective ways for entrepreneurs and others to raise funding.”

This is real ground for optimism.

But, alas, the government has also been sounding… well, like what we’ve come to expect from Washington.

Consider these statements that come from Congressional testimony and an article co-written by SEC Chair Jay Clayton and CFTC Chair Frank Giancarlo…

  • “We are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections.”
  • “Cryptocurrencies are now being promoted, pursued and traded as investment assets, while their much-touted utility as an efficient medium of exchange is now a ‘distant secondary characteristic.’”
  • “Experience tells us that while some market participants may make fortunes, the risks to all investors are high. Caution is merited.”
  • “The SEC is devoting a significant portion of its resources to the ICO market.”
  • “The SEC has made it clear that federal securities laws apply regardless of whether the offered security – a purposefully broad and flexible term – is labeled a ‘coin’ or ‘utility token’ rather than a stock, bond or investment contract.”
  • “Simply calling something a ‘currency’ or a currency-based product does not mean that it is not a security.”
  • “Market participants should treat payments and other transactions made in cryptocurrency as if cash were being handed from one party to the other.”

Don’t get me wrong.

None of these statements are unreasonable.

They point to three valid concerns…

First, frivolous ICOs created by so-called entrepreneurs wishing to make a quick buck need to be reined in.

Second, fraudsters need to be identified and prosecuted.

And third, companies can’t circumvent security regulations merely by calling their coins “utility tokens” or a currency.

What Makes Me Nervous?

It’s what they said about “Main Street” investors…

[Our] concern [is] that too many Main Street investors do not understand all the material facts and risks involved.

This is classic Big Brother – “we’ve got to protect the little guys from their own ignorance” – talk.

I was inundated with this kind of talk when startup investing was limited only to accredited investors.

It took several years for the SEC to get off its hindquarters and extend startup investing opportunities to EVERYBODY, as the JOBS Act intended.

But there’s no JOBS Act here.

The government is free to act in the name of investor protection to limit and even bancryptos and ICOs.

What Will the Government Do?

A hint came last September.

The SEC’s new Cyber Unit will “recommend enforcement actions” relating to cryptocurrencies against those who violate securities laws.

So it looks like the SEC is shifting into a more aggressive approach.

But then there’s this hint…

In testimony to the Senate, the SEC said it would apply the same “facts and circumstances” analysis to determine whether ICOs and cryptocurrency markets should be classified as securities.

Instead of a broad crackdown on ICO activity, the SEC plans to continue enforcement on a case-by-case basis.

So perhaps not so aggressive, after all.

Some may even call this approach “balanced.”

Which, to me, is just another way of saying it can’t last.

A Leap in the Making

Blockchain technology is allowing us to make the leap from systems based on trust in people and institutions to trust in math.

One recent crypto roundtable chose this motto for its conference: “No leaders. No rulers. In code we trust.”

Meaning…

The government is NOT to be trusted. The banks are NOT to be trusted. Fiat money is NOT to be trusted.

And individuals with wealth or power? NOT to be trusted.

How much longer can the government remain “balanced” in the face of such a radical creed?

Blockchain technology has already created much wealth among its creators and adherents. It’ll create much more when it commercializes and scales.

So before answering, we need to acknowledge another question lurking below the surface…

How much longer can it remain committed to disrupting the existing financial order and replacing fiat money?

History says not long.

The blockchain is something new and potentially powerful.

Who will be the ones to unleash its power?

The government? The banks?

Or people who distrust both but trust code?

Nobody knows. If somebody tells you they do, they’re lying.

We all have a vision of how the world could change for the better, and it’s always according to our own principles.

So I’ll leave you with a bit of wisdom from the Liverpudlian gang, circa 1968…

You say you want a revolution
Well, you know
We all want to change the world
You tell me that it’s evolution
Well, you know
We all want to change the world.

Okay, they didn’t have crypto in mind.

But, from the sound of it, they could have.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

Why These Cryptos Fail to Toe the Line

Most cryptos fell in January. All the big ones anyway. I’m talking about the top six (by market capitalization).

The seventh? That’s NEO.

It’s called “China’s Ethereum” by some. Like its American cousin, it specializes in smart contracts.

It nearly doubled in January, from $74.54 on January 1 to $145.76 on January 31.

NEO’s price follows its own path because its main applications will be in China, not the West. And the majority of investors are Asians, not Westerners.

As an investor in NEO, I must admit, it was nice to see.

And it wasn’t the only cryptocurrency to do so.

VeChain (VEN) is a top-20 altcoin. It shot up 146% in January. Like NEO, it’s another China-centric coin, developing blockchain solutions for Chinese companies.

Populous, currently ranked 23rd by market cap, rose 72% last month. Its platform, currently in beta, garnered some positive comments and interest from the crypto investment community.

The first week of February didn’t see a turnaround. As I write, bitcoin is already down another 20%… Ether is down 29%… and Litecoin is down 6% (but all three are now heading up!).

Like those in January, though, some coins have not fallen in line.

Tether, with a current ranking of 16 and a market cap of $2.2 billion, is holding its value so far this month.

So are a few other much smaller coins, like bitCNY. It has a cap of around $32 million.

BitCNY is a decentralized cryptocurrency based on the BitShares blockchain that is pegged to the Chinese yuan. The demand of bitCNY emanates from users who desire that the token get the same purchasing power as the yuan.

In a nutshell, bitCNY is a token that represents the amount of BitShares (BTS) equivalent to one yuan.

From around $0.14 at the end of January, as I write, the token is trading at $0.17, a rise of 14%.

Market pegged assets are NOT leveraged to sudden price booms like many other digital coins. They simply follow the price of the asset they are pegged with.

Because bitCNY operates differently from other coins, it can go up while the vast majority of coins go down.

Russian startup Revain, on the other hand, is a more typical crypto. The company built an unbiased feedback platform where reviews cannot be changed or deleted. Revain hopes to stop the spread of fake news and ratings manipulation.

Revain has a market cap of more than $300 million, ranked No. 58. Its price went up 18% in the first week of February.

Apart from Revain, bitCNY and Tether, 16 other coins are up in the month of February. Here’s a list of the top 12 as I write…

Source: Coinmarketcap.com

Two coins are up by triple digits and six by double digits.

But the only one that’s a top 20 coin by market cap is Tether (currently ranked No. 16).

Most of these coins are tiny. The top gainer, Quebecoin, has a market cap of $680,000.

Small caps can sometimes be manipulated. For example, bitcoin Diamond, the second-top-ranked coin, is extremely volatile, even for a cryptocurrency. Its volatility can be traced to suspected pump-and-dump schemes emanating from Asia.

Is that what’s happening with E-Coin (ECN)? Take a look at its seven-day chart…

As I write, it’s up almost 4,000% in the last 36 hours. And I can’t figure out why!

Its price hike seems to have come from transactions totaling less than $50,000 that occurred on CoinExchange in the last 24 hours.

E-Coin is a European exchange service that works with bitcoin, Litecoin and dollars. It seems to be on the up and up.

But until I know for sure what’s going on, I’m keeping my distance.

The variety of cryptos you can buy and sell is truly amazing. But recent market activity seems to be ignoring that, not quite treating them as an undifferentiated whole but also failing to take into full account the huge differences in technologies and prospects among the cryptocoins.

There are very few that manage to break free of a falling market and rise.

Today, I’m seeing this dynamic again. The market has turned up, and I count only seven coins out of the top 100 that have gone down in the last 24 hours.

When there is a shortage of concrete metrics to go by, investment sentiment plays a bigger role in boosting or withdrawing support.

That seems to be the case here…

At least for now.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

Revealed: The Only Crypto Investment Strategy That Makes Sense

As I write, it’s a red day. The second one in a row, actually.

Most cryptos are down… just like yesterday.

Obviously, the crypto world has been taking some hits recently.

Late last week, a Japanese cryptocurrency exchange reported more than $500 million worth of NEM (New Economy Movement) was stolen. And there’s more…

Earlier this month, French Minister for the Economy Bruno Le Maire restated his intention to include bitcoin as a major topic of debate at the upcoming G20 Summit in March.

Theresa May, England’s ineffectual leader, says her government is considering imposing regulations on crypto, preferably in coordination with the U.S.

And to top things off, China and Korea also made noises about more restrictions.

It sure seems like the noose is tightening around crypto…

On the other hand, any serious investor who has thought about the risks that crypto brings to the table probably had the same reaction I had…
Nothing really surprising or new here.

If any of these developments shocked or scared you, you clearly haven’t focused on the risk of owning crypto.

That’s okay… because we have.

And we’re willing to share with you some of our thinking on this important topic.

Our first piece of advice?

Don’t listen to the financial press.

The Mainstream Press Gets Crypto Risk Wrong

The mainstream press spends an inordinate amount of time reporting on government action (or inaction), hacks like the one that just happened with Japan’s Coincheck and price drops like the roughly 3% to 10% drops across the board we’ve seen yesterday and today.

Don’t get me wrong. It’s news. It should be covered. But the press offers little meaningful context or perspective.

Its reporting is shallow, misleading and often just plain wrong.

Let’s address the recent headlines one at a time…

Hacks. Yes, it’s lousy that these happen. And the pain is very real to those whose wallets are emptied. (By the way, Coincheck has pledged to pay back the losses to those affected by its recent hack.)

But it’s not a threat to the overall viability of the crypto space.

For one, unlike in the days of the Mt. Gox hack, there are a dozen major exchanges now. Though the amount stolen from Coincheck was more than what was purloined from Mt. Gox ($530 million versus $460 million), it was a much smaller amount when compared to the total value of crypto coins today.

The amount of NEM hacked? Less than one-tenth of 1% of crypto’s total market cap.

Let’s give the market some credit here. It reacted exactly as it should have. It’s not a big deal. The hack was reported on Friday. By Sunday, NEM was trading at a price exceeding the pre-hacked price.

There would have to be a series of large hacks squeezed into a short period of time to make a meaningful dent in the market.

That’s simply not in the cards.

Government actions and pronouncements. This has been a divisive issue from the get-go. Some crypto followers believe government regulation is sorely needed and would put crypto on firmer ground.

Others believe that governments will treat crypto as a major threat (which it is!) and overreact with excessively restrictive regulations that would suffocate this emerging and still somewhat fragile market.

First of all, governments – even one as powerful as the U.S. government – cannot destroy crypto. It’s global and decentralized. It largely operates outside of U.S. approval and jurisdiction.

But a government can control and restrict the use of crypto within its borders. It can close the bank accounts of crypto companies. And it can forbid the creation of any and all related businesses.

When China essentially did this, crypto investors simply moved their accounts to other countries.

But what if, say, the U.S., England, the EU and China acted in unison to ban crypto?

It could spell the end of crypto as we know it. At the very least, it would be a major setback.

But even then, it would be premature to write crypto’s obituary. Whether it would reach the level of a catastrophic event would depend on what’s happening in a half-dozen hubs, including Korea, Japan and Switzerland, as well as up-and-coming crypto centers like India, Canada, Australia, Brazil, and South Africa.

I suspect crypto would survive and re-emerge down the road.

By the way, this is NOT a likely scenario, at least not in the short term.

The U.S. does not have good relations with many of these governments, and the Trump White House doesn’t mind forging its own solitary path on global issues of the day.

And after Trump? By then, crypto could be too ubiquitous to oppose.

A bearish market. Let me set the stage for this…

The crypto market went up more than 35X last year. Most of the reasons were legit, based on crypto’s massive and very real upside potential.

But the market was also fed by FOMO (fear of missing out) and unexciting returns in the more traditional asset classes. So crypto leaned a little too far ahead of its skis.

It was due for a breather. So what’s the risk involved?

How hard the fall is. And how long it lasts.

As for how hard, we’ve seen the drop already. It was a big one. Bitcoin’s price was halved.

The key is how long the drop will last.

Last year, drops lasted from a few days to a couple of weeks.

On the other hand, in previous years, when bitcoin peaked to just under $1,000 in late 2013, it took three years for the coin to revisit and then exceed that price.

Could something like that happen again? And if so, what would cause it?

If draconian government measures or a spate of hacks fail to deflate the market, the one remaining X-factor would be a slower-than-expected evolution of blockchain technologies impacting the real world.

Sebastien Meunier calls this dynamic “market fatigue.” I call it the “instant gratification” trap – born of impatience sprinkled with overconfidence.

Disruptive technology of this scale and impact doesn’t happen simply overnight. (See my article here for more of my thoughts on this.)

The Curse Comes at Dawn

So, if these aren’t serious risks, what are?

It’s the curse of being at the dawn of a new technological age.

Everything is so new – the technology, protocols and products.

Think about what it was like at the dawn of the consumer electronics age. Remember Sony’s Walkman?

The first mini-cassette Walkman hit the market in 1979. By the early 1980s, they had become wildly popular. But this was mobile music 1.0. Its days of domination began to wane with the introduction of Apple’s iPod in 2001. By 2006, 60 million iPods had been sold.

In 2010, Sony stopped making Walkmans.

We’re in the cryptocurrency 1.0 era.

The technology is still largely unproven. Perhaps bitcoin’s established and growing brand will make it very hard or impossible to replace it with a better crypto.

Perhaps not.

Walkmans didn’t have the extra layer of protection provided by bitcoin’s “network effects.” Then again, bitcoin has a new crypto rival coming out literally three times a week (or more), all of them claiming to do bitcoin’s job better… or cheaper or safer or faster.

Walkmans never faced such intense competition.

I expect the blockchain technology to work and to scale, with cryptocurrencies part and parcel of the success story.

But it won’t necessarily be cryptocurrencies 1.0.

Heck, it may not even be version 2.0 or 3.0.

Let me repeat something I said last year: “We’re basically in the experimental, pre-commercial phase of blockchain technology… Mass consumption is still years away.”

Which is why Adam and I are covering our bases…

The Best of Each Generation

We can’t ignore bitcoin’s status as the gorilla of the crypto world.
Nor can we ignore the fact that many altcoins are developing intriguing technologies that could represent significant upgrades to what bitcoin and some of the older 1.0 cryptocurrencies do.

So, in addition to recommending bitcoin to our followers, we track and recommend the best altcoins we can find.

It’s a strategy that will give us a piece of the action in each generation from crypto 1.0 through succeeding generations.

As we move ahead, we’ll be keeping the best of the earlier generations as they prove their worth. And the ones that don’t? We’ll recommend our members sell them when it’s clear to us that they’ve been superceded by better blockchain technologies.

This is a long-term, multiyear crypto investing strategy – the opposite of a sexier but far riskier (and dangerous) instant gratification mode of investing.
Instead of impatience and overconfidence, our strategy is predicated on open-mindedness, humility, steadfastness and a long-term outlook.

We’re in it for the long haul. It’s not everyone’s cup of tea.

Five years from now, nobody will remember the dip crypto took in the last two days. And, with a portfolio hopefully sporting some big winners, nobody will care.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

These Five Startups Shine Brightest at Vegas Tech Show

Why go to Vegas?

I don’t gamble.

And I’m not into seeing past-their-prime performers like Celine Dion or the Righteous Brothers command the stage.

For me, there’s only one reason…

To get a peek at some of the amazing technology on display at the Consumer Electronics Show (CES).

The massive exhibition attracted 1,200 exhibitors and 185,000 visitors. Adam and I went there last week as guests of Indiegogo and its co-founder Slava Rubin and CEO David Mandelbrot.

The company had one of the bigger booths among the 800 companies at the Eureka Park venue in the Sands Expo halls. Eureka Park, by the way, is reserved for startups only.

Over a sumptuous dinner one evening, Slava told us that an increasing number of visitors to the Indiegogo site are interested in buying equity stakes in companies. Until recently, Indiegogo offered only perks and rewards.

It’s always a positive to welcome aboard a company of Indiegogo’s stature and success. Indiegogo is a true crowdfunding pioneer. Over the past 10 years, it has raised $1.3 billion for 800,000 entrepreneurs.

So why is the company reaching out to us?

Because Indiegogo sees a similar opportunity in equity crowdfunding. The fact that it’s partnered with MicroVentures, a highly regarded equity funding portal and one of our favorites, will make it even easier for us to work with it to find high-quality startup deals.

Tooling around Eureka Park, I saw a number of impressive products. I suspect some of them will end up raising via Indiegogo/MicroVentures.

Below are the five that stood out the most to me. Keep in mind that while I found their technology fascinating, whether they evolve into successful businesses is another matter. As such, don’t construe what follows as investment recommendations.

Aris MD: The things you learn at CES! The co-founder of Aris, Chandra Devam, told me my kidney and lungs are different from yours in shape, location and pathology (or just plain wear and tear). Surgeons aren’t really sure where to cut. They have a general idea, but that’s it. Aris’s virtual reality /augmented reality technology takes a diagnostic image – an MRI, for example – and lets the surgeon practice in immersive reality before the surgery.

Aris MD’s Goggles

Source: Aris MD

I put on these goggles at its booth. And, with a little help, I extracted a person’s brain. What came into view was a 3-D image floating right in front of me. There was no tumor, but if there was, I would have been able to see its true shape, size and depth. Amazing.

Robomart: Imagine tapping a button on your phone and in five minutes, a vehicle packed with fresh food items stops in front of your house. No driver or human to be seen. No cash register to bother with. No money exchanged. You simply take what you want and you’re automatically debited. This will be the model competing with Uber Eats and Amazon’s Whole Foods hookup – not just an order, but a range of selections from the entire food store coming to you.

A Robomart delivery vehicle

Source: Business Insider

Hologruf: It’s 3-D, portable and easy to install. Hologruf’s hologram system projects signs and displays that float in midair.

Imagine you’re in an auto dealership and the car drives right up to your seat as a hologram. Hologruf wants to make that a reality. Seeing its holograms up close, I can attest to their outstanding quality.

BLOCKS: You’re familiar with building your own pizza or hamburger… but how about your watch?

It makes perfect sense. Smart watches can now do so many things, BLOCKS founder Omer El Fakir told me it makes no sense to manufacture a one-size-fits-all watch anymore. With BLOCKS, you start off with a core that has smartphone notifications, fitness tracking, Alexa personal assistant and other features…

And go from there.

You can add functions by buying individual modules. For some, that may mean a fingerprint sensor module. For others, an air quality monitor module. Or perhaps all you want is an extra battery module.

My favorite module? Probably the flash memory, which keeps your data safe and close by.

The core costs $259. The modules cost between $30 and $40 each. Would you buy one? I’m tempted.

Olli: Branded as the world’s first 3-D-printed car and first self-driving car to incorporate the artificial intelligence capabilities of IBM Watson, Olli is the brainchild of Local Motors. I took a tour while taking on the persona of a near-blind person. As I entered the vehicle, it told me where I could find a free seat, alerted me to my stop and gave me directions to my destination when I left the vehicle.

An Olli 3-D-printed car

Source: Local Motors

Olli has gone through several iterations and is still under development. The company has scheduled several deliveries for mid year, when the Olli team will be monitoring how it performs in different environments and use cases.

It wasn’t easy picking my top five. There were many others I also liked. Hopefully, down the road a bit, I’ll be seeing a couple of these companies on crowdfunding sites.
Technology is just part of the equation of what makes a startup successful in the long run. But developing exciting technologies that also address real needs gives these companies a leg up out of the gate.

It doesn’t get any easier. But having talked to dozens of founders at the show, I think they know that already.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Source: Early Investing 

Crypto Forecast: From $731 Billion to $10 Trillion

A broker from a big bank just did something I’d never do…

He put a number on the potential value of the blockchain market.

If you think, as I do, that blockchain technology will expand from dozens of uses to hundreds and then thousands, how can you calculate a precise market value for that?

It’s like Thomas Edison trying to predict in the late 1800s how much the electricity market would be worth a few decades into the 20th century.

Did he realize at the time that almost everything, not just lights, that we make and use would be electrified?

Probably not. How could he?

(Perhaps the one thing he thought would be electrified – vehicles – didn’t catch on until more than 100 years later!)

I believe at some point in the future (10 years? 20 years?), most of the services we’ll be using on a daily basis will be enabled by the blockchain.

Again, how can you put a price on such a ubiquitous technology?

Is it in the tens of billions? Hundreds of billions? More?

A Report From Deep Inside Wall Street

That’s the best thing about the report this broker put together.

It does not come from crypto investors talking their own book… initial coin offering companies hyping their future growth… or blockchain evangelists espousing best-case scenarios as a given.

Mitch Steves, the author of this report, is a traditional Wall Street equity analyst. He works for the RBC Capital Markets subsidiary.

His only connection to blockchain and crypto?

Among the companies in his bailiwick is NVIDIA. It makes graphics processing units for mining cryptocurrencies.

By the way, he says the $4 billion-plus market for mining cryptocurrency is here to stay.

Steves says that blockchain technology is misunderstood – that store of value and payment use cases are the most commonly cited but “the least interesting.”

The single most “positive technology” breakthrough is the one staring us in the face: The blockchain, the underlying technology, HAS NEVER BEEN HACKED.

(And, in my opinion, WILL NEVER be hacked.)

This is no small thing. Steves compares Box, a content management platform, to Filecoin, a decentralized blockchain equivalent, to highlight the differences…

With Box, your data is owned and controlled by a third party that has access to your information (a photo loaded can be retrieved by anyone with access to Box servers – employees). With Filecoin, your storage is distributed and decentralized, making the holders unable to retrieve your photo (they would need to hack every computer on the decentralized network – blockchain). Your information is now secure, and without your private keys, it cannot be accessed.

This is an early case of how a globally decentralized network of computers can work using the blockchain. Steves calls this network of computers the “World Computer.”

He says that same concept can be applied to a “wide variety of decentralized applications (aka ‘dapps’).”

I completely agree.

Rose-Colored Glasses?

What Steves is saying is reasonable and, frankly speaking, not entirely novel. People who aren’t playing close attention may be confusing hacks of exchanges and individual wallets (which has happened) with hacks of the blockchain itself (which has never happened).

But insiders have well understood the security benefits of putting data, transactions, assets, documents and sensitive information on the blockchain… and how the blockchain makes it fast, easy and secure to track these things.

But it’s nice hearing this confirmed by a big bank with no vested interest in the crypto or blockchain markets.

And because Steves hails from outside the crypto community, he openly acknowledges the “many risks to crypto.” No rose-colored glasses for him.

Among the risks, he lists the possibility of an attack if a single entity were to garner more than 50% of the computing power (which, I should add, would be pretty near impossible).

Other risks mentioned? Coordinated attacks to manipulate prices… and the potential for smartphone wallet hacking.

The Worth of the Market Crypto Will Address?

How he arrives at this big round number turns out to be the most disappointing part of his 36-page report.

He basically took a third of the roughly $30 trillion in assets held in offshore funds and gold. Just a rough stab, in other words.

But perhaps that’s as it should be. At this early stage, trying to do anything more would be a reach.

We simply don’t know how big this number will be. Anybody who says differently is lying to themselves or everybody else.

However, I believe it will be a big number. Blockchain technology is driving a surge of innovation in the development of new protocols and blockchains.

There’s a long way to go. And nothing is a given at this point. But decentralized computer technology has the potential to reinvent huge swaths of the global economy.

With that kind of upside, even a modest investment could yield quite a large return. We can help you identify the best blockchain technologies raising money.

Just click here if you’re interested.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Source: Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​

Bitcoin Hits $18,000 – What’s Driving It Higher?

On Thursday, bitcoin hit a new all-time high of $18,197.

While the price has since retreated a bit to around $16,000, the recent moves have been nothing short of spectacular.

The world is wondering, what’s driving prices higher?

If you regularly read Early Investing, you should already have a good idea.

This is cryptocurrency going mainstream. The idea of independent, cryptographically secured currency is catching on.

In today’s chaotic world, it’s an incredibly attractive proposition. Something that’s not attached to tainted governments and banks and that will appreciate in value if the network grows.

It’s a form of money selected by the people, not forced on them.

And for the foreseeable future, bitcoin will continue to be the king of this market. It’s the reserve currency of the cryptocurrency world. It has the biggest network, the most liquidity and, importantly, the best brand.

The limited number of bitcoins available, combined with the incredibly fast rate of adoption, has led to the feeding frenzy we’re seeing today.

Here’s how I described it back in July.

There are only 21 million bitcoins that can exist. Fifteen million already exist today, and the rest will be mined over the coming decades.

It’s not a lot of coins to go around, is it?

Each coin costs around $2,600 today. If bitcoin goes mainstream, the price will go orders of magnitude higher.

So far, this thesis is playing out.

As I’ve described here many times, bitcoin has rapid viral organic growth. That’s the engine.

Viral simply means it spreads naturally among networks of people, like a rebellion, virus or new technology.

Organic means there’s no advertising budget. People desire it and tell their friends about it.

And right now, people want a financial asset that’s not connected to the traditional financial system… one that’s technologically advanced and that offers a real alternative.

Viral organic growth is one of the most powerful forces on the planet. And that’s what’s fueling the growth of cryptocurrency.

This force needs to be powerful in order for bitcoin to succeed, because the establishment doesn’t like cryptocurrency.

We’ll need to fight for it and demand fair treatment for cryptocurrencies from government. I hope newcomers realize this is not just a speculative asset.

Cryptocurrencies are critical to the movement to build a decentralized new financial system.

It’s the biggest market in the world. The stakes are high, and there will be pushback.

Altcoin Growth Cycles

As more people get involved in bitcoin and make money off it, a portion of them will start dabbling in alternative cryptocurrencies, often called “altcoins.”

The largest U.S. exchange, Coinbase, now offers three cryptocurrencies. (Until last year, it only offered bitcoin.) Those three are…

  1. Bitcoin
  2. Litecoin
  3. And Ethereum.

And while bitcoin is grabbing all the headlines, the altcoin market is doing even better.

There are now 15 coins with market caps of more than $1 billion. A year ago, there was just a single coin valued in the billions, and that was bitcoin – it was valued at $768 per coin with a market cap of $12 billion.

The price of Litecoin has risen from $3.92 to more than $96.

In the last year, Ethereum has soared from around $7 to more than $428. It’s now the second-largest coin by market capitalization (total value of all coins).

A year ago, the total value of all cryptocurrencies was around $14 billion, with bitcoin making up $12 billion of that. Today the overall cryptocurrency market is worth $426 billion, with bitcoin accounting for $302 billion of that.

Do the math… Altcoins are rising much faster than bitcoin alone.

As I often say, there’s room for dozens, if not hundreds, of long-term winners in this space. Remember, we’re talking about building an entirely new financial ecosystem here.

Now hundreds of teams are racing to build the next big coin. Competition can do wonders in a market this large and fast-growing.

Many of the best coders on the planet have been attracted to the cryptocurrency space by the world-changing mission (and the money).

It’s all happening. Right now.

And no, it’s not too late to get involved. We are still so, so early. If you’re worried about buying at an all-time high, I recommend “averaging in.” By that I mean buy the same amount of cryptocurrencies at regular intervals over time. Just keep in mind that bitcoin has always had sharp corrections.

Good investing,

Adam Sharp
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

My Thanksgiving Conversation With Johnny Shines a Light on the Real Reason to Invest in Bitcoin

My Thanksgiving was full of good cheer, as I expected. The food followed the usual script: The dark meat was better than the white… the stuffing was better than the mashed potatoes… and the pies were amazingly good.

What was different? A new topic dominated the conversation.

Yep, you guessed it: cryptocurrency.

I sat next to Johnny, one of my favorite people and a really smart dude. I don’t see him too often. I live in Maryland and he lives in Virginia. He commutes to Texas every week, working for a global energy company. His specialty is oil. This week he’s in London. Next week, who knows?

We began talking oil, then North Sea oil, then Norway’s huge oil windfall, then its $1 trillion sovereign wealth fund, grown this large thanks to oil revenues. At this point, I commented, “It’s going to be interesting to see whether the fund will invest in bitcoin, some other cryptocurrency or a blockchain-based company.”

The Case Against Bitcoin

Johnny said, “Those cryptocoins? They’re awfully risky, aren’t they? Why would the government of Norway invest in those?”

Johnny was just getting started. He proceeded to cover the entire spectrum of reasons why he wasn’t buying into that “crazy crypto bug.”

When he stopped, he looked at me in anticipation of… what? A fierce counter-offense? A point-by-point refutation? Anything I could tell him about cryptocurrency that would change his mind right there and then?

Well, none of that happened. Instead, I said, “You’re mostly right.” And I meant it.

When he said that bitcoin was new and largely unproven, he was mostly right. Compared to gold, it was born a minute ago. Compared to most fiat currencies, bitcoin is still in its infancy.

On the other hand, it’s proven to help millions of people who use it to transfer money. It’s a proven store of value to millions of users trapped in countries with runaway inflation, like Venezuela.

But its track record is relatively brief. Johnny’s mostly right.

When he said bitcoin wasn’t real, he was also right. It’s a man-made fabrication, a convenience, a proxy for value, just a piece of code that represents value.

Of course, paper money is also a convenience (though one backed by sovereign governments). Bitcoin is faster and cheaper to use and is backed by thousands of computers around the world that track the bitcoin blockchain and ensure it’s not abused.

When he said that bitcoin was in a bubble, he was roughly right. Not that the current bullish sentiment lifting bitcoin’s price to new heights is wrong. But sentiment can be fickle and can turn against an asset class, driving prices down as quickly as they had gone up. Who am I to say that bitcoin is immune to such a reversal? Of course it’s not.

When he said that bitcoin was like a ship with no captain, he got that right too. But it’s not all that different from the internet. No single organization or entity controls or guides the internet. Blockchains (sometimes called the interchain), the technology behind bitcoin and other cryptocurrencies, is just as freewheeling… and unpredictable.

Invest Like a Business Would

As I said, for the most part, Johnny was right.

It was his conclusion that was wrong.

One thing I’ve learned as an investor through the years is that you can always find a reason NOT to make an investment. There’s no such thing as the “perfect investment” or the “sure thing investment.” There is risk and uncertainty in every investment. It’s the differences in levels of risk and uncertainty that give asset classes their unique attributes.

Bitcoin certainly has its share of risk and uncertainty. No bitcoin enthusiast would argue otherwise.

And it would certainly be foolish to invest all your money or too much of your money in bitcoin. But none?

This is where Johnny and I part ways.

Here’s the wrong way to look at it: If you’re risk-averse, don’t invest.

Here’s the right way: It would be extremely risky NOT to give yourself at least some exposure to the cryptocurrency space.

Investors who think otherwise need only look at what businesses are doing. These entities don’t experience our emotional ups and downs. They make cold-blooded business decisions. And they have to grapple with the same uncertainties investors do.

The blockchain technology is unproven and in its infant stages. Businesses aren’t sure if infrastructure and digital identity problems can be solved in time to allow industries to adopt tokenization on a massive scale.

The road forward is strewn with obstacles. Businesses can’t see the future of cryptocurrency any better than you or I can.

But, ready or not, hundreds of companies in industries such as banking, insurance, technology, international trade and healthcare are spending millions of dollars on exploring and developing blockchain technology to make transactions more transparent, timely and secure.

Here’s the thing: They can’t afford not to.

If massive tokenization of industries does take place, businesses simply can’t take the chance of being left behind.

And neither can you!

Early Is When the Serious Money Is Made by Serious Investors

At this very moment, tokens are funding the rollout of hundreds of decentralized (and disruptive) technologies.

A few examples include cloud storage (Filecoin, Storj), digital advertising (Basic Attention Token, adToken), marijuana (PotCoin) and dentistry (Dentacoin).

Sure, it’s early. But it’s not too early to capture some exposure to the cryptocurrency space. Whatever fits your comfort range, be it investing 1%, 3%, 5% or 10% of your investible savings, DO IT NOW. It’s not too late, but sooner is better than later.

Because investing early is how you make big money. It’s at the heart of the investing premise we take very seriously here at Early Investing. By writing just a modest check today, you’re giving yourself a chance to reap a huge financial reward down the road.

So let me share with you a piece of advice I’ve been giving to the paid members of our First Stage Investor service…

I don’t care who you are or what your investment goals are, you cannot afford to ignore [cryptocurrencies] and ICOs.

Message delivered. Now go ahead and enjoy your leftover turkey!

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

Crypto Community Remains Extremely Bullish on ICOs

Dear First Stage Investor,

Cryptocurrencies are flying high. Initial coin offerings (ICOs) have already raised a record-breaking $3 billion-plus this year.

But last weekend, as my plane circled over LAX and prepared to land, I was curious…

Was the crypto community overconfident? Was there going to be an obnoxious level of self-congratulatory backslapping at the conference I was invited to?

I was about to find out.

StartEngine held its ICO 2.0 Summit in Santa Monica, California, last week.

I was going to hear a dozen-and-a-half ICO pitches… and was hoping to walk away with one or two that captured my interest.

(As it turns out, I did find one… a potential First Stage Investor portfolio recommendation. It’s an exciting investing opportunity that addresses a gigantic market in an extremely clever way.)

As I feared, there was a little too much cheerleading. No one mentioned a day of reckoning. “A bubble? So what?” was a comment that neatly captured the mood of the conference.

But, to this particular crowd’s credit, these people weren’t totally oblivious to some of the issues casting a shadow over the crypto space.

Their biggest worry? The Securities and Exchange Commission, followed by the possibility that crypto is in a bubble.

Here are some of the more interesting comments I heard on these and other areas of concern…

What Will the SEC Do?

Several lawyers I talked to mentioned the big clue that SEC Chairman Jay Clayton gave just two days prior to the conference.

During unscripted remarks in the middle of a speech at the Institute on Securities Regulation in New York, he said, “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security.”

While some disputed the legal basis of what Clayton said, the lawyers I spoke to at the conference mostly agreed it’s a strong sign as to which way the SEC is leaning as far as ICO regulation.

(This gets into the legal weeds about what qualifies as a security, an issue that deserves its own post. I’ll be writing about it soon after the Thanksgiving holiday.)

If, as feared, the SEC rules that digital coins are actually securities and thus subject to securities regulations, that would make ICOs more complicated and expensive.

Sara Hanks, the CEO of CrowdCheck, said that ICO entrepreneurs should think very carefully about doing an ICO outside of a security designation.

“Even if you have a ‘Plan B’ to revise the legal status of your ICO after the fact, if the SEC says they’re a security, you’d be going down a very expensive path,” Hanks cautioned.

As for the “no harm, no foul” point of view? Hanks pointed out that “a lot of consumer complaints would trigger fed action.”

“The SEC doesn’t hate tokens, but it does hate fraud,” she said.

With consumer complaints on the upswing, this is no minor point. So far this year, the crypto exchange Coinbase has been named in 330 complaints involving hacking, compared to just seven in 2016.

Howard Marks, the CEO of StartEngine, framed the issue best. He said that bringing ICOs out of the shadows and making them compliant with the law is the ICO community’s greatest challenge.

Bubble Behavior?

The issue of a possible crypto bubble was raised several times at the conference. But it was typically raised as a red herring, only to be dismissed by the person who raised it.

Lou Kerner, a partner with Flight Ventures, basically echoed the view that Adam and I have been putting forth.

IT’S EARLY.

Kerner likened crypto’s current state to where Amazon was after its first few years. The stock had risen from $1.50 to $86, an increase of 57X. Is that a bubble?

The online retailer is now trading for around $1,135. Kerner said crypto’s current slide is a blip. There’s no bubble. “Wait 20 years and you’ll see,” he said. Point nicely made.

Mike Jones, CEO of Science Inc., said that bubbles burst when demand contracts. Demand for cryptocurrencies, he said, is rising and will continue to rise.

He’s right. We’ve pointed out that bitcoin exchange Coinbase is adding a mind-blowing 40,000 to 50,000 new users per day. And the institutional investors haven’t even climbed on board yet!

“It’s still too early – even with securitized ICOs,” Jones said. “Institutional investors are simply not interested and remain on the sidelines for now.”

Just one brave person admitted the possibility of a bubble (in ICOs, not cryptocurrencies). Others took issue with his view.

Miko Matsumura, the co-founder of Evercoin, for example, likened the ICO market to a pillow fight. He pointed out that ICOs comprise only $2.5 billion, or 1.2%, of a total crypto market of $208 billion.

“Nobody is getting seriously hurt,” he said. “Everyone has experienced massive gains… and lots of folks are having fun.”

We’ll see if the SEC buys that argument. It’s not known for its fun-loving ways.

A Trio of Concerns

There are several concerns that are definitely worth keeping in mind for ICO entrepreneurs.

  1. Global issues. One entrepreneur who’s in the middle of an ICO campaign told me he had to hire a lawyer in every country he wants to offer coins in. Each country has different rules and regulations about such offerings. He said it’s very complicated, not to mention expensive.
  1. The “know your customer” process. ICO campaigners who ignore KYC rules risk the wrath of the SEC, said Hanks.
  1. A cult of decentralization. Not all smart contracts (on the blockchain) will be enforceable. In the real world, not everything can be decentralized. I was impressed that such a blasphemous point of view was put forward at a crypto conference. Meanwhile, all 15 ICO pitches I heard pushed some form of new decentralization.

Disrupt/decentralize ridesharing? There were two pitches just on this intriguing idea. It’s something to chew on.

The Most Intriguing Fact I Heard

Fidelity has a team of 25 people working full time on crypto. I knew CEO Abigail Johnson was a big believer in crypto, but the news about the team was surprising.

The amount of money sloshing around in the U.S. stock and bond markets totals more than $26 trillion and $31.2 trillion, respectively. If Fidelity can figure out a way to turn a tiny slice of this market into ICO investors, it would be a major coup.

And it would keep the crypto/ICO markets humming along for many years to come.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing

Bitcoin’s Next Fork Canceled

Bitcoin’s fork, which was scheduled to take place on November 16, has been canceled.

Support for the fork simply faded. Criticisms came mostly from longtime developers. Interestingly, many of them still agreed on the idea of larger blocks, which the new protocol would have provided. But they felt bullied and didn’t like how the decision to fork was made – which was in an invitation-only meeting, by the way.

So, what’s next?

Bitcoin still needs to scale. Increasing block size was an obvious way to do it. But it’s not the only way. Other technological solutions will likely compete with larger block sizes as the way to move forward.

Whatever is decided in the future, greater attention will be paid to forming a consensus in all corners of the bitcoin community.

I want to make clear that we’re still big believers in bitcoin and maintain that it should make up 50% of your cryptocurrency portfolio.

We fully expect bitcoin to continue to be the dominant digital coin. After all, this wasn’t the first time something like this happened. Bitcoin Classic, Bitcoin Unlimited and Bitcoin XT all proposed software upgrades and also failed to gain adoption.

Bitcoin’s price is slightly down this morning. Cancellation of the fork has eliminated uncertainty and should allow prices to continue to rise.

Thank you for your email inquiries regarding the fork. We’ll continue to keep you informed of further developments on this front.

Good investing,

Andy Gordon
Co-Founder, First Stage Investor

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing 

Why These Banks Want to Join the Blockchain Revolution

Like anything new and revolutionary, cryptocurrency has its believers and its skeptics.

Both are making a ruckus.

The mainstream press isn’t helping matters. As far as I can tell, it’s gamified the subject. The side – whether it’s pro or con – with the most quotes published wins.

What a load of rubbish! We all know that multiple opinions expressing the same point of view do not represent “proof,” no matter how passionately they’re expressed.

And it sure does make for a noisy room.

Is the technology real? Does it have legs? Is it disruptive, if not revolutionary?

Here’s the thing. I’m not interested in your opinion.

Don’t tell me. Show me.

It’s pretty simple. Are you blowing the technology off? Or are you actively exploring or developing it?

Sorry, JPMorgan CEO Jamie Dimon, you can’t say it’s a fraud and also have your bank adopt it.

That’s just utter nonsense.

A more valid exercise is to note what potential users of blockchain technology are doing.

And what better sector to hone in on than our antiquated global financial system where billions of people move trillions of dollars every day.

Remarkably, cost, speed and security are about the same now as they were 50 years ago. The major innovations have been in convenience, thanks to the ATM and advances in online banking.

But ATM use can come with fees. And online banking still has some surprising bugs. I recently found this out firsthand after learning that the online account balance I see is different from the online account balance my bank (PNC) sees. Totally confusing.

Global trade and cross-border payments are also surprisingly clunky. For example, letters of credit involve several banks, hefty fees and long waits. When I ran my global trade and finance business about a decade ago, I avoided the wait by doing something called “import factoring.” It cost me a precious 2% to 3% to get the cash quickly, but it was worth it.

The beauty of blockchain? With it, all but a small fraction of that 2% to 3% would go away. Trade finance, security clearance and settlements, cross-border payments, and insurance are all areas where blockchain technology can make a big difference.

Just another opinion? Well, let’s focus not on what the banks are saying, but what they’re doing.

Here’s a look at their blockchain-related activity so far, courtesy of Outlier Ventures…

Who’s missing? PNC is one (surprise, surprise). Chase is another. That’s about it.

All the other large commercial banks are eyebrow-deep in blockchain initiatives.

And as you can see, they already have “proof of concept.” That means the technology does what it’s supposed to do in controlled settings or on a small scale.

Rigorous live-use testing awaits. That’s going to be key.

All the major banks – except Goldman Sachs, Banco Santander and Morgan Stanley – recently completed an academically tested prototype to automate and digitize money transactions around trade on R3’s Corda ledger.

Again, the actual field testing of Corda’s settlement algorithms is just beginning. We’ll know more soon.

JPMorgan, Wells Fargo and asset management firm Northern Trust are using Hyperledger Fabric for private equity deal record-keeping.

These big banks believe the reduced costs, greater speeds and more user-friendly interfaces are all within reach. Now, that doesn’t mean it will happen… or, if it does happen, that things will go smoothly.

From 2013 to 2016, financial institutions filed 2,700 patents in areas like blockchain technology. It’s hard to imagine that all this activity will yield nothing.

Innovation is coming to the banking industry, and blockchain technology is leading the charge. Let’s zoom in on three companies for a closer look…

  • Mastercard: Daily transactions are mounting, as are the challenges to capture, store and protect all the transactional data that credit card companies collect.

Mastercard is turning to the blockchain for a possible solution. It recently filed a patent for the creation of a blockchain-based “uniform settlement system.” Basically, Mastercard wants to create a ledger to store a verifiable and immutablerecord of data, such as purchase orders, invoices and transaction data.

Among other things, doing so would vastly enhance the security of the data it collects. This is no small thing in light of the massive Equifax breach.

  • Bank of America: It leads all other banks in number of blockchain patents filed so far with at least 39. The patents include internal security tools, cryptocurrency aggregation, risk detection systems and storage, and direct person-to-person payments. Bank of America is working closely with Microsoft Azure to explore blockchain solutions for supply chain finance.

Microsoft itself just announced that its own enterprise blockchain framework will be online by 2018. It’s not clear how soon Bank of America’s patented technology might be ready for the marketplace. What is clear is that it wants to be a leader in blockchain utilization.

  • JPMorgan: Imagine two banks doing business with each other. Each has its own “private” blockchain. Each has large corporate customers. The banks need to protect data about their clients. But they also need to reveal the amount and type of currency, the rate of exchange, and the institution initiating the transfer.

This is where Quorum comes in.

JPMorgan designed Quorum for its institutional clients. Built on top of Ethereum, it features private smart contracts. One of its first uses is as a settlement layer for cases ranging from simple equity trades to complex derivatives.

In its early iterations, Quorum can run transaction settlements on a blockchain with the ability to both protect proprietary data and interact with a public blockchain.

Authorities would be able to audit the internal blockchain for compliance while companies do business on the public one. A nice start.

By the way, JPMorgan is a member of the Enterprise Ethereum Alliance, the largest open-source blockchain alliance in the world. It has more than 150 members, including Microsoft, Mastercard, Intel, Scotiabank, ING, BP, Cisco and the Indian government.

My gosh, it’s early. But, given all this activity (as opposed to just words), I don’t see bitcoin or Ethereum going away. The rewards of building, accessing or investing in the best blockchains will be enormous.

It’s early, but not too early.

Blockchain technology is on the cusp of overhauling the global financial system as we know it. Perhaps the Bank of America said it best…

“[It’s] very important… to reserve our spot [early] even before we know the commercial applications…”

Good investing,

Andy Gordon
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing