One of the Best Long-Term Crypto Investments: Knowledge
Navigate cryptocurrency volatility by recognizing new uses of technology.
For the average American, cryptocurrency may be just a fad: at best a speculative investment tool, at worst a haven for money laundering and cyber terrorists seeking ransom.
But in fact, blockchain technology - underlying both cryptocurrencies and the promising, loosely regulated world of decentralized finance, or Defi - is not entirely one-dimensional.
There are, of course, enormous financial opportunities (and risks) everywhere you turn your head. But dig a little deeper than cryptocurrency price fluctuations and surface-level discussions about where the chart will go next, and you won't be disappointed.
Dig deeper, and you'll find that blockchain technology has generated a Russian nesting doll that never ends with innovation and potential: non-conforming loans for 200 million seconds, decentralized independent organizations, or DAOs, can compete with corporate power, and so on.
The best investment an average person can make in this space is not in a particular currency or code. It's about knowing more about what's happening and what's possible. Here are some of the most interesting recent developments in encryption:
- Circulate Bitcoin.
- The future of Ethereum.
- Edward Snowden weighs in on encryption.
- The debate about the environmental impact of cryptocurrency.
- Blockchain enables previously usable things.
- Diverse, and growing society.
Circulation of Bitcoin
For many investors and consumers, cryptocurrency remains an appropriate place and an alternative investment. It has become more strange because of its inaccessibility in brokerage accounts and 401 (k) plans.
Well, there's now an informal, low-voltage way to get exposed to bitcoin, all while continuing your normal life.
Alex Adelman, CEO, and co-founder of Lolli explains what his company is doing: "We have created the first and leading Bitcoin rewards company that gives people Bitcoin free of charge when they shop online and in-store at their favorite merchants," Adelman said in an interview at Consensus 2022, a several-day cryptocurrency conference held in June in O.
Adelman said: "We've just launched a new Card Boosts - this gives people the ability to actually earn in store in places like CVS, Safeway, and Shake Shack."
Lolli, which started as an extension of the browser that enabled eCommerce customers to recover Bitcoin for their purchases, now has more than 1,100 online and brick-and-mortar partners. Card Boosts essentially allows users to convert any credit card to a Bitcoin rewards card.
After tying their cards and before shopping at one of Lolli's partners in the store, users simply go to the Lolli app and activate Card Boost - then sit down and enjoy the free cryptocurrency in their Lolli account.
Several national chains are Lolli partners, including Starbucks Corp. (index: SBUX) (10% Bitcoin back), 7-Eleven, and McDonald's Corp (MCD) (both return 5%). Adelman says the app has more than 500,000 users.
The future of Ethereum: when does "integration" happen?
Even those who passively follow cryptocurrencies may be aware of the Ethereum blockchain's long-planned and highly anticipated conversion from proof of work to a proof-of-bet system. This move should make the famous blockchain safer, and scalable, lower gas charges (i.e. transaction costs), and reduce electricity consumption by more than 99%.
Some also expect this move to make the cryptocurrency Ether (ETH) more valuable as the new ETH rate created may drop by up to 90%. ETH incinerated through gas charges should exceed the newly created ETH frequency, reducing supply and putting upward pressure on price.
Sounds great, right? The only problem is that "The Merge", formerly known as Ethereum 2.0, has been running for years now.
So, when does The Merge happen? Opinions differ.
"Sure by the end of this year, this is happening. Sandeep Nailwall, co-founder of Polygon, a popular service to scale Ethereum, said, "It's going to happen this year, I'm 100% sure."
Patrick O'Grady, head of engineering at Ava Labs, was more guarded with his outlook. "This is no comment for me," O'Grady said at the conference. Ava Labs is the company behind the widely used Avalanche smart contract platform.
Edward Snowden weighs on encryption
Edward Snowden, one of the most beloved and distorted figures in the world, was in consensus... Broadcast video of course. Snowden fled to Russia in 2013 after leaking the presence of top secret espionage by the National Security Agency. He was quickly charged with three felonies related to the theft of government property and espionage.
Snowden is now chairman of the nonprofit Press Freedom Foundation. Regardless of one's views on the former government contractor, one is uniquely qualified to discuss privacy and freedom issues.
However, the issue of cryptocurrency as an investment inevitably emerged when it happened.
"In general, I do not encourage people to put their money into cryptocurrencies... That's what keeps me away, I think, from a lot of people in society, "Snowden said.
"Like, I use bitcoin to use it. In 2013, Bitcoin was what I was paying for servers anonymously - or rather by the pseudonym, because it wasn't anonymous - was the reason why these files were transferred to these reporters, "Snowden said, referring to his leak of classified documents.
"Everyone is divided into tribes because of cryptocurrency financing. They're trying to make money from cryptocurrency. They don't think in the first place, "What networks will serve us in the next 100 years to transfer value?" "
Snowden continued: "I am concerned about a world where identity is being used against us. I'm worried about a world where our money is being used against us. And what we need more than anything is free money... "Not in the sense of airdropping," Snowden said, referring to a promotional encryption tactic that gives users free codes. "in the sense of independence".
Discussion on the environmental impact of cryptocurrency
There is an ongoing intense debate about the environmental impact of cryptocurrency, in particular Bitcoin. In essence, Bitcoin is simply turning electricity into value. It's a kilowatt-hour securitization.
Proof of work, the method used by the Bitcoin network to verify transactions and mint new cryptocurrencies, requires Bitcoin miners to demonstrate the completeness of a certain amount of computational work. This discourages network manipulation by making such an attack a financial and useless requirement. It also requires energy to do the work.
It is undeniable that the power requirements of the Bitcoin network are great. Cambridge Bitcoin's electricity consumption index links bitcoin's annual power consumption to about 92 TWh. This is more than Finland consumes in a year.
However, crypto advocates resent such a superficial accusation of the young asset class and see the problem as more accurate.
Snowden, for example, directly addressed the idea of "cryptocurrency is terrible for the environment":
"These [arguments] largely refer to ancient business proof algorithms, which are kind of an old institution," Snowden said. While Ethereum is currently a proof of action, The Merge directly addresses this problem, and few other prominent cryptocurrencies use the old system.
"But even where proof of work is used, the energy mix is greened, it improves, right? This is energy that would have been wasted or landlocked. Even if they do not exist, we need to understand that the energy produced will be used. "
Snowden is far from the only annoying one in this case. When asked about the biggest misconception of the public about cryptocurrency, almost all of those present were in consensus on the same page: it was the environmental issue. Arguments ranged from the view that miners' demand encourages a transition to renewable energy to the claim that miners use only excess energy and therefore have no marginal impact on carbon emissions.
Others still object to framing the conversation itself.
"Everyone is criticizing this new world of cryptocurrencies" because of energy use, Adelman said. "They don't look at themselves in the mirror and say," How much energy does a physical bank waste? Printing copper and nickel craft coins? And what does that look like for the world if we can remove that from the equation and have really decentralized funds? "" Adelman said.
Blockchain enables previously non-extendable objects
Blockchain technology allows much more than just the spread of cryptocurrencies. Regardless of decentralization, blockchain features such as distrust, transparency, and automation allow all kinds of entities, transactions, services, and new projects.
For example, blockchain is used to record, verify and report Russian war crimes in Ukraine in an attempt to reject misinformation, preserve the historical record, and hold war criminals accountable.
The new applications of blockchain technology do not stop there, as illustrated by two other great examples of what is now possible:
Decentralized independent organizations or development assistance offices. DAOs will play a bigger and bigger role in the world - and that seems a lot obvious. DAOs are often briefly described as an alternative to the company, which are member-owned entities that are operated and controlled transparently through a set of programmed rules. Wikipedia is sometimes given as a close analogy to a DAO-like structure that many people are familiar with.
While DAOs may seem unabusive on the surface, "there are definitely areas where there is tension," said Ethereum co-founder Vitalik Butterin in an interview in June 2021 with podcaster Lex Fridman.
Butyrate said: "The concept of corporate taxation, for example - will disappear as a revenue stream if all companies are theoretically replaced by DAOs'. In 2021, Buterin donated $1.2 billion at Shiba Inu (SHIB) to the DAO created to fund India's COVID relief efforts at a time when the delta variant was destroying the country of 1.4 billion people.
Aaron Wright is CEO of Tribute Labs, which makes technology that helps power DAOs. "In Tribute Labs, we have 13 days... "They can all make contracts in the real world, they can get property, they can hire people, and all the basic foundational pieces are there," Wright said on a committee at Consensus.
"I don't know if DAOs will kind of triumph over everything, I don't think the world is binary, frankly. I think it's the same conversation with the Internet and the media - it's not like The New York Times stopped working, it kind of turned, "Wright said.
DAOs, like many things in the blockchain world, are becoming popular much faster than regulations can show for their rule. But the fact that there are debates about what DAOs will invade and think about experiences about their role in eliminating corporate taxes suggests that governments will eventually have to reckon with these new organizations.
Fast loans. The capabilities of blockchain and Defi become more spectacular than DAOs. Defi allows you to "build interesting abstractions that you can't really build in the financial world," O'Grady of Ava Labs said at the Concurrence Conference, where he gave his favorite example: Quick Loans.
"You can borrow countless money, basically, from some Defi protocol like Aave and then do something in the chain (block), and then your transaction will come back if you don't pay the money at the end. Let's say Joe Shmo got into his stockbroker and says, "I want to borrow $200 million for 10 seconds." They'd be like, "What are you talking about?" O'Grady said, "No."
However, in encryption, this is possible. The case for the main use of a fast loan arises when there is an arbitrage opportunity - the same currency, for example, trading at different rates in two different exchanges. Let's say you noticed this opportunity, but you only have $100 in your name. Fast loans allow you to take advantage of the opportunity anyway.
"The borrowing fee may be $200 million for a single block such as $100 or something. So you can do some huge arbitrage trade as one person. If it's profitable, you repay it. If not, you will not, and the deal returns as if it never happens. "
"The transaction may take milliseconds to process. So you're borrowing $200 million for a split second... "It's like a $200 million nonconforming loan that you only charge if you make money," O'Grady said.
While fast loans are a great product completely alien to traditional finance, there is one logistical obstacle that prevents any old person from becoming a reviewer overnight: fast loans require technical competence for coding and execution.
A colorful, diverse, and growing society
The crypto community is full of enthusiastic, intelligent, and eccentric people - all on full display at the June conference. It is difficult to capture cultural quirks, in particular, with words, except perhaps for example a man scouring the floors of the Austin Convention Centre in a Jedi outfit, waving a light plastic saber; a Dentist "broke into" boring non-replaceable monkeys, or NFTs, and made hundreds of thousands of dollars; Defi announces 30% revenue earned from passers-by; Grumbling about NFTs "Dickbutt", which even after the market sell-off can still fetch thousands of dollars.
There is certainly a lot of organization ahead, and the crypto community has welcomed a lot of it. But the world of encryption and Defi is already a community, and its members are as passionate and religious as ever. Cryptocurrency may suffer from a bear market, but the crypto community is not.
The average person has been able to buy cryptocurrencies via public exchanges for at least a decade. It is no longer completely new, and this idea may scare strangers to avoid the area altogether. But apart from the cryptography's focus on society and its near-global annoyance at the poor environmental image, there is another widely held belief: it's still too early.