A new whitepaper analysing the performance and scalability of the Streamr pub/sub messaging Network is now available. Take a look at some of the fascinating key results in this introductory blog
Streamr Network: Performance and Scalability Whitepaper
https://preview.redd.it/bstqyn43x4j51.png?width=2600&format=png&auto=webp&s=81683ca6303ab84ab898c096345464111d674ee5 The Corea milestone of the Streamr Network went live in late 2019. Since then a few people in the team have been working on an academic whitepaper to describe its design principles, position it with respect to prior art, and prove certain properties it has. The paper is now ready, and it has been submitted to the IEEE Access journal for peer review. It is also now published on the new Papers section on the project website. In this blog, I’ll introduce the paper and explain its key results. All the figures presented in this post are from the paper. The reasons for doing this research and writing this paper were simple: many prospective users of the Network, especially more serious ones such as enterprises, ask questions like ‘how does it scale?’, ‘why does it scale?’, ‘what is the latency in the network?’, and ‘how much bandwidth is consumed?’. While some answers could be provided before, the Network in its currently deployed form is still small-scale and can’t really show a track record of scalability for example, so there was clearly a need to produce some in-depth material about the structure of the Network and its performance at large, global scale. The paper answers these questions. Another reason is that decentralized peer-to-peer networks have experienced a new renaissance due to the rise in blockchain networks. Peer-to-peer pub/sub networks were a hot research topic in the early 2000s, but not many real-world implementations were ever created. Today, most blockchain networks use methods from that era under the hood to disseminate block headers, transactions, and other events important for them to function. Other megatrends like IoT and social media are also creating demand for new kinds of scalable message transport layers.
The latency vs. bandwidth tradeoff
The current Streamr Network uses regular random graphs as stream topologies. ‘Regular’ here means that nodes connect to a fixed number of other nodes that publish or subscribe to the same stream, and ‘random’ means that those nodes are selected randomly. Random connections can of course mean that absurd routes get formed occasionally, for example a data point might travel from Germany to France via the US. But random graphs have been studied extensively in the academic literature, and their properties are not nearly as bad as the above example sounds — such graphs are actually quite good! Data always takes multiple routes in the network, and only the fastest route counts. The less-than-optimal routes are there for redundancy, and redundancy is good, because it improves security and churn tolerance. There is an important parameter called node degree, which is the fixed number of nodes to which each node in a topology connects. A higher node degree means more duplication and thus more bandwidth consumption for each node, but it also means that fast routes are more likely to form. It’s a tradeoff; better latency can be traded for worse bandwidth consumption. In the following section, we’ll go deeper into analyzing this relationship.
Network diameter scales logarithmically
One useful metric to estimate the behavior of latency is the network diameter, which is the number of hops on the shortest path between the most distant pair of nodes in the network (i.e. the “longest shortest path”. The below plot shows how the network diameter behaves depending on node degree and number of nodes. Network diameter We can see that the network diameter increases logarithmically (very slowly), and a higher node degree ‘flattens the curve’. This is a property of random regular graphs, and this is very good — growing from 10,000 nodes to 100,000 nodes only increases the diameter by a few hops! To analyse the effect of the node degree further, we can plot the maximum network diameter using various node degrees: Network diameter in network of 100 000 nodes We can see that there are diminishing returns for increasing the node degree. On the other hand, the penalty (number of duplicates, i.e. bandwidth consumption), increases linearly with node degree: Number of duplicates received by the non-publisher nodes In the Streamr Network, each stream forms its own separate overlay network and can even have a custom node degree. This allows the owner of the stream to configure their preferred latency/bandwidth balance (imagine such a slider control in the Streamr Core UI). However, finding a good default value is important. From this analysis, we can conclude that:
The logarithmic behavior of network diameter leads us to hope that latency might behave logarithmically too, but since the number of hops is not the same as latency (in milliseconds), the scalability needs to be confirmed in the real world (see next section).
A node degree of 4 yields good latency/bandwidth balance, and we have selected this as the default value in the Streamr Network. This value is also used in all the real-world experiments described in the next section.
It’s worth noting that in such a network, the bandwidth requirement for publishers is determined by the node degree and not the number of subscribers. With a node degree 4 and a million subscribers, the publisher only uploads 4 copies of a data point, and the million subscribing nodes share the work of distributing the message among themselves. In contrast, a centralized data broker would need to push out a million copies.
Latency scales logarithmically
To see if actual latency scales logarithmically in real-world conditions, we ran large numbers of nodes in 16 different Amazon AWS data centers around the world. We ran experiments with network sizes between 32 to 2048 nodes. Each node published messages to the network, and we measured how long it took for the other nodes to get the message. The experiment was repeated 10 times for each network size. The below image displays one of the key results of the paper. It shows a CDF (cumulative distribution function) of the measured latencies across all experiments. The y-axis runs from 0 to 1, i.e. 0% to 100%. CDF of message propagation delay From this graph we can easily read things like: in a 32 nodes network (blue line), 50% of message deliveries happened within 150 ms globally, and all messages were delivered in around 250 ms. In the largest network of 2048 nodes (pink line), 99% of deliveries happened within 362 ms globally. To put these results in context, PubNub, a centralized message brokering service, promises to deliver messages within 250 ms — and that’s a centralized service! Decentralization comes with unquestionable benefits (no vendor lock-in, no trust required, network effects, etc.), but if such protocols are inferior in terms of performance or cost, they won’t get adopted. It’s pretty safe to say that the Streamr Network is on par with centralized services even when it comes to latency, which is usually the Achilles’ heel of P2P networks (think of how slow blockchains are!). And the Network will only get better with time. Then we tackled the big question: does the latency behave logarithmically? Mean message propagation delay in Amazon experiments Above, the thick line is the average latency for each network size. From the graph, we can see that the latency grows logarithmically as the network size increases, which means excellent scalability. The shaded area shows the difference between the best and worst average latencies in each repeat. Here we can see the element of chance at play; due to the randomness in which nodes become neighbours, some topologies are faster than others. Given enough repeats, some near-optimal topologies can be found. The difference between average topologies and the best topologies gives us a glimpse of how much room for optimisation there is, i.e. with a smarter-than-random topology construction, how much improvement is possible (while still staying in the realm of regular graphs)? Out of the observed topologies, the difference between the average and the best observed topology is between 5–13%, so not that much. Other subclasses of graphs, such as irregular graphs, trees, and so on, can of course unlock more room for improvement, but they are different beasts and come with their own disadvantages too. It’s also worth asking: how much worse is the measured latency compared to the fastest possible latency, i.e. that of a direct connection? While having direct connections between a publisher and subscribers is definitely not scalable, secure, or often even feasible due to firewalls, NATs and such, it’s still worth asking what the latency penalty of peer-to-peer is. Relative delay penalty in Amazon experiments As you can see, this plot has the same shape as the previous one, but the y-axis is different. Here, we are showing the relative delay penalty (RDP). It’s the latency in the peer-to-peer network (shown in the previous plot), divided by the latency of a direct connection measured with the ping tool. So a direct connection equals an RDP value of 1, and the measured RDP in the peer-to-peer network is roughly between 2 and 3 in the observed topologies. It increases logarithmically with network size, just like absolute latency. Again, given that latency is the Achilles’ heel of decentralized systems, that’s not bad at all. It shows that such a network delivers acceptable performance for the vast majority of use cases, only excluding the most latency-sensitive ones, such as online gaming or arbitrage trading. For most other use cases, it doesn’t matter whether it takes 25 or 75 milliseconds to deliver a data point.
Latency is predictable
It’s useful for a messaging system to have consistent and predictable latency. Imagine for example a smart traffic system, where cars can alert each other about dangers on the road. It would be pretty bad if, even minutes after publishing it, some cars still haven’t received the warning. However, such delays easily occur in peer-to-peer networks. Everyone in the crypto space has seen first-hand how plenty of Bitcoin or Ethereum nodes lag even minutes behind the latest chain state. So we wanted to see whether it would be possible to estimate the latencies in the peer-to-peer network if the topology and the latencies between connected pairs of nodes are known. We applied Dijkstra’s algorithm to compute estimates for average latencies from the input topology data, and compared the estimates to the actual measured average latencies: Mean message propagation delay in Amazon experiments We can see that, at least in these experiments, the estimates seemed to provide a lower bound for the actual values, and the average estimation error was 3.5%. The measured value is higher than the estimated one because the estimation only considers network delays, while in reality there is also a little bit of a processing delay at each node.
The research has shown that the Streamr Network can be expected to deliver messages in roughly 150–350 milliseconds worldwide, even at a large scale with thousands of nodes subscribing to a stream. This is on par with centralized message brokers today, showing that the decentralized and peer-to-peer approach is a viable alternative for all but the most latency-sensitive applications. It’s thrilling to think that by accepting a latency only 2–3 times longer than the latency of an unscalable and insecure direct connecion, applications can interconnect over an open fabric with global scalability, no single point of failure, no vendor lock-in, and no need to trust anyone — all that becomes available out of the box. In the real-time data space, there are plenty of other aspects to explore, which we didn’t cover in this paper. For example, we did not measure throughput characteristics of network topologies. Different streams are independent, so clearly there’s scalability in the number of streams, and heavy streams can be partitioned, allowing each stream to scale too. Throughput is mainly limited, therefore, by the hardware and network connection used by the network nodes involved in a topology. Measuring the maximum throughput would basically be measuring the hardware as well as the performance of our implemented code. While interesting, this is not a high priority research target at this point in time. And thanks to the redundancy in the network, individual slow nodes do not slow down the whole topology; the data will arrive via faster nodes instead. Also out of scope for this paper is analysing the costs of running such a network, including the OPEX for publishers and node operators. This is a topic of ongoing research, which we’re currently doing as part of designing the token incentive mechanisms of the Streamr Network, due to be implemented in a later milestone. I hope that this blog has provided some insight into the fascinating results the team uncovered during this research. For a more in-depth look at the context of this work, and more detail about the research, we invite you to read the full paper. If you have an interest in network performance and scalability from a developer or enterprise perspective, we will be hosting a talk about this research in the coming weeks, so keep an eye out for more details on the Streamr social media channels. In the meantime, feedback and comments are welcome. Please add a comment to this Reddit thread or email [[email protected]](mailto:[email protected]). Originally published by. Henri atblog.streamr.networkon August 24, 2020.
CoronaHedge #1 — State prices, Nuclear War, and — FROZEN — CONCENTRATE — $OJ
Now sit your butts down Or take a fucking knee U gonna wanna bookmark me!!! The only thing I ask The 1 thing u must do Make some dough by me? A 😘and 💋 are due! TLDR: FUCK dudes in the comments, calm down! Long Frozen Concentrate $OJ futures options May 1.10 July 1.20 and 1.30 – $OJ futures are a perfect CV hedge for many reasons and super undervalued. I. State Prices and Global Thermonuclear War: Or why the market didn't crash until recently We invest because we believe the future will be different than the present. We believe that some things will be more (or less) valuable in the future than they are today. Our job as investors is, to the best of our ability 1) determine what all the possible futures look like 2) how likely each of them is 3) how valuable the asset of interest is in each possible future and 4) how we should personally discount for the relative risk of each particular asset and each particular future, and for the time value of money (money in the future is worth less to us than money in our pockets right now). FUCK!!!!!! No wonder we'd rather just P&D Tesla!!!! Now hold up boys and girls there's something deep hidden in this model. Let's call each possible future world a state and assume just one period of time between the present and the future. We're here in the present state, and there are a number of different future states at some indeterminate time later (doesn't matter for this discussion). Here's the rule: no multiverses! When "the future" arrives, we are in only one particular state out of all the possible states. (Now of course states could share characteristics, but two states that were identical = one state, and one state that exactly shares the characteristics of two other future states A and B is, for this discussion, its own individual state C.) Got it? Let's say there are 3 future states of the world 10 years from now:
30% chance: Super-awesome economic, technological and cultural blossoming!!!! Stocks go WAY up, bonds do nothing.
50% chance: Malaise where technological growth stops, low economic growth, increasing healthcare costs as people get older (eek! sound familiar?). Stocks go slightly down, bonds go up somewhat but hey we get to clip our coupons each month.
20% chance: Global thermonuclear war.
In each of these three states, assets have different projected values. The value TODAY of each asset is directly related to both the chances of each of the 3 future states occurring and the projected values of the assets in each of those states, averaged over all possible states by all investors. This is a model of reality that is designed to communicate some important truths. For you fellow finance nerds or lapsed ones like me, you will know where I'm going with this, but statepricing lies at the heart of the Nobel Prize winning Black-Scholes options pricing formula. Think of the three possible future states above as spots where investors also allocate their money today. Remember, there are only three states of the world—you've got no other choice. For each state, you'll decide how much of your total wealth you want to allocate, and in what particular assets. For instance—if you believe (1) is more likely, you will be biased to putting more money in stocks today. If you think (2) is going to happen FOR SURE, and you are a huge risk taker, maybe you'll put all of your money in bonds and none in stocks. What about state (3)? There's a 1% chance of global thermonuclear war. Will you be alive? Will the government be around? Will markets even exist? Will you even be able to collect on your investment? From The Optimistic Thought Experiment by Peter Thiel (2008):
More generally, apocalyptic thinking appears to have no place in the world of money. For if the doomsday predictions are fulfilled and the world does come to an end, then all the money in the world — even if it be in the form of gold coins or pieces of silver, stored in a locked chest in the most remote corner of the planet — would prove of no value, because there would be nothing left to buy or sell. Apocalyptic investors will miss great opportunities if there is no apocalypse, but ultimately they will end up with nothing when the apocalypse arrives. Heads or tails, they lose.In a narrow sense, it seems rational for investors to remain encamped at the altar of the efficient market — and just tend their own small gardens without wondering about the health of the world. A mutual fund manager might not benefit from reflecting about the danger of thermonuclear war, since in that future world there would be no mutual funds and no mutual fund managers left. Because it is not profitable to think about one ’s death, it is more useful to act as though one will live forever.
Conclusion: There are states of the world which are effectively NOT INVESTABLE AT ALL. OK Joshua. Now let's say Russia, China, and USA announce initiation of arms control measures, and they are effective! Everyone follows. Instead of 30,000 warheads, 10 countries end up with 3 each. We develop Pooranium-236, an engineered bacteria that converts all fissible uranium into the smoothest, sexiest compost that ever existed. So no more additional nukes ever. AMAZING! Great news! But what happens to state (3)? If the risk of a civilization destroying global thermonuclear war goes to zero, but in its place we've got a 10% chance of non-extinction nuclear war where 50 medium yield nukes are dropped. Which would be really really bad, but (let's say) not likely to destroy the world or take the economy offline forever...what then? The number of investable states just went from 2 to 3, and one of them is super bad. In fact, in this state, you just want to be all-in gold, crypto, and farmland. So your portfolio of stocks and bonds would be at most 0, and more likely a short. CRITICAL INSIGHT: The world just got better, the chance of civilization's sure death went from 20% to 0%, but the markets dumped on the news. If you substitute the coronavirus for (3), let's think about one of the various scenarios that could describe what happened from the time the virus was discovered:
(3) = 1% chance of some global pandemic pre Wuhan. Gonna be bad, so let's go short. We don't know what it looks like, don't know how governments will respond, never happened in globalized world before, etc. etc. It is an unknown unknown, but I'm informed enough and want to be prepared unlike all those ETF index fund sheep. It is an investable state, and the allocation of total investable dollars will be net short.
Wuhan happens. OK it's here. OK fuck it's really bad (=oh there is a big chance it's going to be super bad), I am a tradeinvestor so I am sophisticated, understand exponential growth, and know this could upend society, and myself and my entire family could die. (3) = 10% and is now much more likely to skew non-investable because it's a total catastrophe and I'm dead.
Funds devoted to a future state that goes from investable to non-investable must go somewhere, and they have to go to the other 2 investable states! Now we are in a complex "3-body problem". It will depend on the relative prices of assets and their expected values in the remaining two states—but in the aggregate, there is now more money devoted to both**.**
**CRITICAL INSIGHT: If allocation to stocks are already net long in the two remaining states (**or say bonds too expensive relative to go up much more) then extinction-level bad news, if priced in early, does not necessarily push markets down, and may even push them up.
Corollary: if an intermediate outcome pops up because let's say China has seemed to get the virus under control then just like in the nuclear war example, a virus related state becomes investable again, and you'll want to be net short in that state. Then markets dump.
As an exercise, consider an alternative scenario based on where we are right now, under the assumption that seems to be common that "we will get through this, but it will be tough". What happens if the virus mutates, and it turns out that nope there now is a really big chance we're all gonna be wiped out? II. State prices Back to a revision of our original model that doesn't include non-investable states for simplicity. There are three states of the world:
30% chance: Super-awesome economic, technological and cultural blossoming!!!! Stocks go WAY up, bonds do nothing.
50% chance: Malaise where technological growth stops, low economic growth, increasing healthcare costs as people get older (eek! sound familiar?). Stocks go slightly down, bonds go up somewhat but hey we get to clip our coupons each month.
20% chance: Coronavirus that's pretty bad but it is recoverable.
In finance, we assume the presence of a completely risk free asset (US gov't bond). A bond will pay $1 in each of those three states, no matter what (since you know you'll get your money back for sure). Whatever a bond that pays $1 at "the future" time currently costs is how we derive "time value of money" or the risk-free interest rate. For all you linear algebra nerds, think of the payoff vector of a bond in our model as [1,1,1] representing the three states of the world. Now let's consider the other two other assets in this world. A stock, and (here we go!) ORANGE JUICE. In each state, a stock has a different expected return, because it will be more or less valuable depending on how the future ends up. Same goes for OJ. Let's say a stock trading at $1 today is worth $2 in state (1), $0.80 in (2) and $0.40 in state (3). Now this is very important. Normally if you have 3 future states of the world, each with some chance of occurring and a projected value of an asset in that state, you just take the expected value (including a discount for time, and for the fact that you're taking some risk) and you get a price. Here we are doing something different. We are taking the prices of the 3 assets today, and under the no-arbitrage condition ("there's no free lunch" = you can't make more money than the risk free rate by taking no risk) trying to find a price we would pay TODAY for $1 in each future state alone. This is called the state price. A decent introduction with the math involved can be found in any finance book (for a real first-principles based textbook by a very clear and well-respected professor, I highly recommend "Investment Science" by Luenberger) or the first part of these lecture notes. We won't go through the math involved, but the point to remember is that if you add up the state prices of each state (represented by the payoff vectors [1 0 0], [0 1 0], [0 0 1]), you get the price of the bond because you are guaranteed to have $1 in the future. And, to restate the last paragraph, if you add up the state price * the payoff of each asset in each state, summed over all the states, you get the current price of the asset. So let's take the state prices as given and think about what happens when "things change". Let's say the state prices we have derived are:
(Remember, it has to add up to the price of a bond, which will be less than $1 if the bond pays $1 guaranteed in the future). What happens to the state price of (3) when the chance of it occurring goes from 20% to 90% and it is still investable. Remember, all you are trying to figure out is how much you would pay for $1 in that state, today. It has to go up, and the state prices of the other two states have to go down, because they MUST sum to the price of the bond. **(**Why does it have to go up? Think about it in the limit. Let's say it goes to 99%. There is a 99% chance state (3) will occur. How much do you pay for $1 in that state if it is a near certainty? A lot more than you would if the state had a 20% chance of occurring—no matter what that state looks like, as long as it is investible. In fact, you might even pay ABOVE $1 in certain cases, because depending on the alternatives, you think you can pick up assets on the cheap and so $1 in that state is lots more valuable on a relative basis than in other states.) And since the price of any asset must equal the state prices x the value of the payoff in each state, the asset prices must change, in ways that depend on their relative values and (CRITICAL INSIGHT)how their payoffs in each state were impacted by the same change in the world that changed the chance of state (3) being the real future. III. The hedge: "20 Questions" for discussion
When people walk into the grocery store and are sick, or they are scared about getting sick and want to build up their immunity, which fruits and vegetables become, on the margin, more likely to catch their eye?
How often (when was the last time?) and how frequently do you personally buy frozen orange juice in a can or the OJ (from concentrate) in a bottle/carton? What about the rest of the country? What implications does that have given your answer to Q1 for baseline demand in states (1) and (2) vs state (3).
How attractive is concentrate vs fresh in times of supply chain disruption?
How much of the total retail cost of OJ would you estimate the raw concentrate represents? What does that imply about the relationship between the price change at the producer level and the price change at consumer level and its effect on consumer demand?
What sort of juices do they serve in hospitals and what is the relative distribution between fresh and concentrate? When someone is in the hospital for 2 weeks, how does their juice consumption change vs if they were at home for 2 weeks?
What percent of the FCOJ supply is grown in Brazil? How does that geographic concentration compare to other tradable commodities? What is your assessment of the US-Brazil shipping supply chain in all (3) of the states?
Where does one take delivery of a purchase made via futures contract? What does that imply if supply cannot suddenly reach those locations?
What sort of functions characterize the parameters and scenarios above (in a "hand-wavey") and the relationships between them. E.g.: Is Brazilian transportation cost/breakdown a linear function of the different states? Of the price? A linear function between the changes in state (3) probability? What does the demand curve for FROZEN OJ look like in relation to the availability of fresh citrus or fresh squeezed juice? Etc.
Does citrus have other beneficial compounds besides Vitamin C that may affect immunity? How many people know this right now, and how might that change?
If the same thing that increases the CHANCE of (3) occurring (which also increases the state price) ALSO increases the projected value of OJ in that state INDEPENDENTLY, what implications does this have for the current price of OJ given the above discussion?
What classes of functions might characterize price given your answer to Q8 and Q10? How does that compare to the types of functions that characterize price in states (1) and (2)? Why?
If the functions that characterize price dynamics are different in each state, how would realized price charts look under those different classes of functions? What about the technicals and current volatility when state probabilities and payoffs change in response to new information?
What is the definition of a "hedge" in light of the state price model and your answers to the questions above? What makes one hedge more attractive relative to another hedge? Does it matter if they need be explicitly hedging the exact same realized outcome, in the exact same way?
Describe the FCOJ futures market and compare it in terms of size, volume, gross value, players. What implications does this have for marginal demand on the supply side and on the demand side? From producers, bottlers, speculators, and market makers?
Define "volatility regime" and "phase change" in your own words, as it might relate to the discussion above and your answers to the questions above?
What does the chart of FCOJ futures prices look like? What do you expect it to look like given the discussion above? Given your answers to Q8, Q10-11, Q15?
What does the implied volatility of the options on OJ futures look like given your answer to Q16? "Compared to what?"
How much activity/discussion is there of OJ futures online?
Restate the argument being attempted in this post in your own words. How confident are you in the validity of this argument? How frequently have you seen posts like this show up on wsb? What might my motivation be?
If all of the above is true, and the implications are extremely positive for the price of FCOJ, then why hasn't the price of FCOJ futures yet reflected that? What about the futures options?
Background Este es el primer post en el que me han ayudado tres usuarios residentes en la República Argentina. Los conejillos de Indias de la Banca Internacional que dieron un paso al frente mediante una pesquisa vía discord de mi parte. Bajo un acuerdo unánime y siguiendo el modus operandi de Banca Internacional, se los mantendrá en el anonimato. Los detalles sobre las transacciones, tarjetas y bancos de Argentina han sido posible gracias a ellos, inclusive del tacaño. Introducción Durante los dos últimos meses han cambiado montones de cosas en la República Argentina. De los eventos que son de mi interés, se han impuesto controles de capitales conocidos localmente como el “cepo cambiario” y mediante estos posts algunos usuarios han expresado interés en servicios, divisas o inversiones las cuales no están disponibles en Argentina. Más allá de los cambios a nivel económico, se han generado oportunidades de inversión local vía arbitrage. En principio de Bonos como el AY24 hasta que el Banco Central de la Republica Argentina actuó para mitigar el fácil acceso al yield que esta operatoria generaba. Luego, bajo una operatoria similar un gran grupo de usuarios se volcó a realizar arbitrage de crypto-assets. En general topándose con problemas de libre movimiento de capital desde y hacia los exchanges o viéndose forzados a pagar comisiones medianamente altas las que disminuían el yield de la operatoria. Este post, ofrece una solución efectiva a este problema de manera (esperemos) permanente. Otros usuarios han demostrado interés en poder resguardarse de una futura crisis en el Dólar Americano, vía depósitos en Francos Suizos, Yuan Renmimbi, Singapore Dollar, Euros, Libras Esterlinas y metales preciosos como el Oro y la Plata. Para estos usuarios este post también es relevante. Suiza Suiza, oficialmente La Confederación Suiza, país que se encuentra en el centro de Europa. Si bien su capital oficial es Berna, esta y Geneva son capitales (y centros) financieros globales. Zug y sus alrededores, se han (están en proceso con algunos setbacks) convertido en centros de desarrollo de crypto-assests, blockchain y fintech. No es parte de la EU, European Union, tampoco del EEA, European Economic Area o de la Eurozona. Pero participa del tratado Shengen(en parte) y del EU Single Market. Si bien la divisa nacional, tanto como la de Liechtenstein es el Franco Suizo (CHF), el cual posee un protocolo de pagos y transferencias propias también es parte del área SEPA. El CHF es también usado en otras zonas de Europa de facto o simplemente no oficial como Campione d’Italia. Campione, un poco off-topic, es un enclave Italiano dentro del territorio suizo en la costa del lago de Lugano. Utilizan el Franco Suizo ya que la mayoría de sus residentes eligen utilizar bancos Suizos. Campione, es un tax haven y los residentes fiscales tienen beneficios interesantes como poder hacer trade de bonos vía entidades Suizas libre de impuestos. Centro financiero mundial, las ideas asociadas con Suiza siempre son las mismas. Secrecía bancaria, lavado de activos, “cuentas numeradas” y similares fantasías perpetradas por Hollywood. Es verdad que en Suiza la evasión impositiva no es considerada un delito. CRS, Common reporting Standard, es una realidad inevitable. -Argentina es miembro- Las cuentas numeradas son una idea de los 60’s de las películas de James Bond. Y el lavado de activos, si Uds. Siguen estos posts saben que sucede a nivel global y es un mal que afecta a todos los centros financieros. Como en otras jurisdicciones a nivel global existen diferentes tipos de banca. Private Retail (No confundir con Privada), Privada, Transaccional, de negocios, Corporativa y de Inversión. Dentro de la banca de inversión existen brokers de prácticamente todos los instrumentos y commodities a nivel mundial. Los brokers de FX Suizos tienen una peculiaridad, siendo que bajo regulación del FINMA como requerimiento para brokeringFX se les exige una licencia bancaria. Consecuentemente los brokers de FX son a su vez Bancos que pueden funcionar como bancos retail. CRS: Si. Taxacion:
No residentes Dividendos: De 0 a 35% Intereses: De 0 a 35% Regalias: 0%
Controles de capitales: No. Dukascopy Bank S.A. uno de los gigantes suizos en lo que respecta a banca de inversión. FX, CFDs, Commodities y Cryptocurrencies. Las cuentas disponibles varían medianamente entre jurisdicciones pero en general existen por separado y en conjunto lo que genera una gran confusión al momento de intentar decidir a qué servicio o paquete aplicar. Operan en diferentes jurisdicciones bajo diferentes entidades y subsidiarias. Suiza, Latvia, Japón, Rusia, Ucrania y Hong Kong. Al que le interese hacer trading de FX, Dukascopy ofrece soporte para MetaTrader 4, JForex, JForex Web y aplicaciones móviles. Las cuentas disponibles son
Gold (es XAU no físico)
Standard Current account (Se puede invertir en oro directo desde esta cuenta)
Mobile Current account
Y mixes de las anteriores. En general hay una sobreposicion de servicios entre los ofrecimientos y es lo que genera más confusión. Diferentes jurisdicciones tienen productos iguales o similares pero bajo diferentes costos. Por una cuestión de simplicidad el post está centrado en Dukascopy Bank S.A. Suiza y no solo en esa entidad, sino en particular en el producto de nombre Mobile Current Account. Regulación:
En Suiza: FINMA, OFCOM, SBA, Swiss TV Broadcasting (tienen un canal de televisión).
En Japón: FSA, FFAJ, SESC, FINMAC.
Dukascopy Bank – Suiza
https://www.dukascopy.bank Licencia: Bancaria (Licenciado y supervisado porFINMA) Cuentas: Personal/Business. Deposito Mínimo: No requiere. Costo de mantenimiento: No. Tarjeta: Si, Visa física y virtual disponibles. No-residentes: Si, total soporte. Detalles: La Mobile Current Account ofrece acceso a depósitos en 23 divisas. Todos los IBANs son suizos, con lo que se puede recibir EUR y CHF vía Transferwise. Tiene soporte para enviar y recibir depósitos vía SEPA y SWIFT para todas las divisas. Pueden efectivamente hacer una transferencia desde su banco directo a Dukascopy. Suiza, por no ser Unión Europea permite la emisión de tarjetas de débito a no residentes en la confederación o la Unión Europea. Cosa que muchos bancos o EMIs con apertura de cuenta online no ofrecen. La tarjeta tiene costo.
Cargos relevantes(Para transacciones en EUR, para operaciones en otras divisas consultar el link)
https://www.dukascopy.bank/swiss/fees-limits/ Transferencias entre cuentas internas: Gratis Transferencias dentro Dukascopy Group: Gratis Depósitos a Dukascopy Card: Gratis Retiros de Dukascopy Card: Gratis Depósitos vía tarjetas de Crédito o Debito: 1.2% (En EUR) Transferencias SEPA: EUR 2.30 Transferencias SWIFT: EUR 20 Aviso: Existen más cargos no relevantes al post, otras opciones de depósito y retiro vía tarjetas de otros bancos, Neteller y Skrill. Lean los detalles antes de operar.
Cargos de la tarjeta Dukascopy
Costo tarjeta Dukascopy física: CHF 18.5 Costo mensual de la tarjeta Dukascopy física: CHF 1 Costo tarjeta Dukascopy virtual: CHF 5 Costo mensual de la tarjeta Dukascopy virtual: CHF 5
Depósitos per quarter: EUR 3000 Balance: EUR 50.000 Los límites se pueden ampliar hasta el 450% enviando documentación sobre su ocupación, ingresos y residencia fiscal. Los limites se resetean los 1ro Enero, 1ro de Abril, 1ro de Julio y 1ro de Octubre.
Registro y onboarding Dukascopy Bank(Mobile current account) con onboarding digital vía una app llamada Dukascopy 911, la cual es una especie de social network bancaria. Por registrarse vía esa app el usuario recibe 5 DKUs, un token de Dukascopy que tiene un (soft)peg al Euro. El chat de soporte y los webinars son vía esta aplicación. Una manera de generar extra DKUs es contestando preguntas y participando en la red social la cual dependiendo de la performance del usuario reparte tokens a modo de recompensa. La cuenta bancaria en si una vez registrada, si bien se puede operar desde Dukascopy 911 es preferible operarla desde Dukascopy Bank, otra aplicación. Desde esta última, pueden abrir una cuenta en EUR y hacer el funding inicial vía tarjeta de débito o crédito. Particularidades importantes En los fees se discrimina entre transferencias SEPA y Wires(SWIFT, de más alto costo) sin embargo en la aplicación solo existe una opción, Wires. Si el usuario elige EUR como divisa y utiliza datos bancarios de la Unión Europea, el banco detecta esto y hace la transferencia vía el medio más económico. Hay que prestar atención de usar los datos bancarios correctos de la entidad a la que se intenta hacer el deposito cosa de evitar a toda costa utilizar datos bancarios SWIFT en lugar del preferido, más económico y eficiente SEPA. Beneficios El beneficio principal se preguntaran…? Dukascopy acepta depósitos vía tarjetas de crédito y débito bajo una comisión de solo 1.2% (En Euros) y la cuenta móvil no tiene fees de mantenimiento. Se pueden hacer transferencias SEPA directo a exchanges como Binance Jersey la cual ya establecimos que tiene de los fees más bajos del mercado. Se han probado tarjetas de Argentina Visa y Mastercard de débito y crédito. Un solo usuario tuvo problemas con tarjeta de BruBank pero pudo utilizar su tarjeta de crédito y como beneficio sumar millas (en el caso del usuario el deposito fue tomado como compra y no genero gastos de adelanto de efectivo). El monto máximo que se ha podido autorizar con tarjetas Argentinas fue de EUR 1000 , sin embargo varios depósitos consecutivos de EUR 500 también funcionaron. Un usuario se comunico con Visa para autorizar los pagos y desde ese momento no tuvo más problemas. Lamentablemente depositos de EUR 1.7 han fallado... EDIT:El monto maximo depositado en las pruebas fue de EUR 1000 y no de EUR 850 como se habia posteado originalmente. Referrals Algunos usuarios me preguntan sobre referrals de servicios que he posteado en el pasado a modo de recompensa por el tiempo que invierto a nivel personal haciendo research y escribiendo. Si bien algunos de estos servicios ofrecen recompensas, no es algo que vaya par en par con mi moral. Desde que comencé a escribir sobre banca y servicios financieros, solo ha habido un solo referral, el de Binance Jersey. El cual visto las reglas no paga absolutamente nada, pero si me interesaba a modo de monitorear el nivel de suscripción. Desde mi punto de vista, los referrals, viniendo de mi parte son poco éticos. Se puede dar a entender que en lugar de informar sobre el mejor servicio, se comparte uno el cual beneficia al que refiere a costas de los usuarios referidos y es posible (muy) que los usuarios no estén al tanto de esta situación. Por este motivo desde este momento empezando desde el artículo titulado Digital assets C01 – JE | Offshore digital assets, al final del post se van a encontrar con una sección de Donations con 5 direcciones de crypto donde pueden transferir lo que les parezca adecuado. Los cálculos de retorno efectivo haciendo arbitrage de crypto utilizando los servicios de mis posts varían desde el 12% al 17%. Desde ya les agradezco por su generosidad y si ustedes quieren hacer referral de cualquier servicio por su cuenta me parece perfecto. Esta regla es pura y exclusivamente mía por una cuestión de neutralidad y ética. Desde ya muchas gracias por ofrecer el apoyo que ofrecen y los comentarios constructivos. Links de registro e información
Introducción Este es el primer post de una nueva serie de posts sobre digital assets, también conocidas como Cryptocurrencies. No voy a ahondar en detalles sobre la tecnología detrás de los diferentes blockchains ni sobre cual, a mi criterio, es más segura o superior. Voy a ahondar en lo detalles técnicos de los servicios disponibles (en este caso un Exchange) y de las jurisdicciones en las que se encuentran, dado que es algo que se suele pasar por alto y hace una gran diferencia. Sobre todo teniendo en cuenta que el mundo de los digital assets sigue creciendo día a día y hay gobiernos que las han comenzado a regular, reportar a nivel impositivo (USA te estamos mirando…) o las prohíben completamente. ¿De qué se trata? Un Cryptocurrency Exchange no es un concepto nuevo. La gran mayoría de los lectores, han minado, poseen, especulan o hacen arbitraje de los instrumentos. Es un servicio de brokerage donde el usuario luego de pasar una ronda de KYC puede operar comprando, vendiendo o transfiriendo assets. Algunos tienen la opción de comprar vía tarjetas de crédito o débito o se pueden transferir fondos directamente al Exchange vía SWIFT o SEPA. Ahora algo que se suele ignorar en el mundo crypto, en parte es por la carencia de regulación, es del aspecto impositivo. Digamos, si un usuario hace uso de un Exchange en Estados Unidos, quizás los digital assets de por si no estén regulados en el estado (del exchange) en particular. Sin embargo Capital Gains en forma de Federal Withholding Tax debería ser reportado y pagado. No se hace, pero debería. Este es el caso en las demás jurisdicciones. Enter Binance Jersey. Binance, el Exchange más grande del mundo, no acepta depositos en FIAT, por este motivo Binance Jersey, la subsidiaria de Binance offshore y con soporte FIAT domiciliada en la dependencia Británica de Jersey fue establecida. Aquí es donde Jersey es interesante ya que como Malta, para los que leyeron el post que lo cubre brevemente, es tax transparent. Digamos, que no retienen ningún impuesto y es responsabilidad del usuario hacer el disclosure en su lugar de residencia fiscal. Si todos tus assets se encuentra en Jersey y el día se mañana el usuario se muda a un país de imposición nula. No habría carga impositiva gravable al momento de la deposicion de los mismos. Comisiones
EUR Deposit/Withdrawal Fees Deposit: FREE Withdrawal: FREE(until Dec 31) Deposit Limit: 20,000 EUR per day Withdrawal Limit: 10,000 EUR per day
GBP Deposit/Withdrawal Fees Deposit: FREE Withdrawal: FREE(until Dec 31) Deposit Limit: 20,000 GBP per day Withdrawal Limit: 10,000 GBP per day
Bajo este schedule of fees es evidente el beneficio que tiene el exchange para maximizar el yield del arbitrage de digital assets en el mercado cambiario Argentino meintras que se minimizan los costos. Se puede maximizar bastante mas, el proximo post ahondara en detalles al respecto sobre todo en el aspecto de transferencia de capitales para inversion y comisiones que lo rigen. Link para registro(full disclosure, es un referral link) El link es antiguo, no ofrece beneficio mas que trackeo de numero de usuarios registrados. https://www.binance.je/register.html?ref=35084698 Link para registro sin referral https://www.binance.je/register.html EDIT 200708: El link sin referral tenia efectivamente referral, facepalm. Ya esta corregido. Gracias a u/AllBlackCrypto por avisar! Donations.
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03-21 13:04 - 'Bitcoin Bumps Up, but for How Long?' (self.Bitcoin) by /u/manitoboss removed from /r/Bitcoin within 14-24min
''' As traditional markets continue to struggle with the coronavirus crisis, cryptocurrencies are seeing an upswing in both price and volume. Now crypto traders are wondering how long this new rally will last. Bitcoin (BTC) is up 1 percent in the past 24 hours of trading, currently changing hands at $6,224 as of 19:00 UTC. The world’s largest cryptocurrency by market capitalization may be trending below its 10-day moving average in price, but it’s still above its 50-day average, the signal of a continued upward trend. On Coinbase, prices were as high as $6,993 on the U.S. exchange over the past 24 hours. That’s an 80 percent appreciation from its lows of $3,845 on March 12, which was hit, in part, by liquidations on BitMEX coronavirus-related news. Related: Coinbase Broke Traffic Records and Saw Massive Volume During Market Collapse “We saw buying in large sizes from some larger players in the last couple of days from $5,000 and up,” said Darius Sit, managing partner of Singapore-based trading firm QCP Capital. Over the past 24 hours, Bitfinex traded on its spot markets more than $400 million worth of cryptocurrencies, according to the exchange. This coincided with a price spread developing and arbitrage opportunities forming on exchanges like Bitfinex and BitMEX. Bitfinex CTO Paolo Ardoino told CoinDesk the action comes from “a combination of multiple factors [including] halving, hedging against the traditional market and an important number of fiat inflows entering crypto markets to take advantage of the recent decline.” See also: The Puell Multiple Is Turning Bullish on Bitcoin Related: The Puell Multiple Is Turning Bullish on Bitcoin With the potential of government stimulus plans boosting economic activity, bitcoin has been very bullish. So where is bitcoin’s price going? Professional stakeholders, as usual, differ on opinions and strategies. “Conditions look set for a stellar rise with unprecedented monetary easing and fiscal stimulus along with the halving narrative. So once there was a sense of some stabilization in the spread of the virus (0 cases in China yesterday) a frenzy of buying occurred,” QCP Capital’s Sit told CoinDesk. “In terms of the recent recovery, if the trend will continue the next resistance will be around $7,200,” said Constantine Kogan, a partner at crypto fund of funds BitBull Capital. However, Kogan also noted a lot might happen on a fundamental level with the coronavirus epidemic and subsequent market reaction. Both the S&P 500 index and bitcoin volatility are jumping to dramatic highs. See also: Bitcoin Is Now Undervalued, Suggests This Price Metric “Seems like markets are having their relief rallies after a destructive week,” said Michael van de Poppe, an Amsterdam-based cryptocurrency trader. “So far I think it’s a bearish retest and we’ve got to test $5,500-$5,800 and perhaps $4,200-$4,400” The Nikkei 225 ended its trading session down a percent, while the FTSE 100 index in Europe closed up 1.5 percent. As of 19:00 UTC, the S&P 500 is down over 3 percent while gold is eking out less than a percent gain. Other top gainers in the crypto market today as of 19:00 UTC include dash (DASH) also in the green 9 percent Zcash (ZEC) up 5 percent and bitcoin SV (BSV) gaining 1 percent,. Downward pricing dogs in crypto include cardano (ADA) down 4 percent, NEM (NEM) also in the red 2 percent and IOTA (IOTA) down 4 percent. ''' Bitcoin Bumps Up, but for How Long? Go1dfish undelete link unreddit undelete link Author: manitoboss
03-11 16:45 - 'Coinburrow perpetual Algo Launched' (self.Bitcoin) by /u/Material_Brick removed from /r/Bitcoin within 163-173min
''' The Australia-based exchange said Wednesday in a blog post that its new “Perpetual Algo” feature provides leverage up to three times or "3x" for individual investors in 30 countries and 23 U.S. states, including the lucrative New York market. The leverage is also available to institutional traders in 44 states and Twenty Five countries. The 3x leverage matches C’oinBurrow’s previous margin offering from 2017. CoinBurrow, led by Analyst Allyssa Sosa, briefly offered margin trading at the time, but suspended the service later in the year. Executives had been signaling since early 2019 that they were considering reviving the effort. The resurgent push by Coinburrow comes as competition heats up among the world’s crypto exchanges, and the biggest players are scrambling to attract customers and transaction volumes with new digital-token listings and features like better trading technology, more leverage and more-secure custody options. “Perpetual Algo” has been one of our most requested features," Coinburrow said in the blog post. Several big non-U.S.-based exchanges, including Binance, BitMEX and Deribit, offer leverage of 100 times or more on futures contracts and other derivatives, but many of those offerings are off-limits to American customers. While U.S. traders can get leverage to buy regulated bitcoin futures contracts on the CME and Intercontinental Exchange’s Bakkt division, those venues require special accounts to trade commodities. Leverage is considered risky in trading because it boosts the chances of losses alongside the enhanced potential for gains. In an example of how Coinburrow’s new offering will work, traders could put $2999 down and continue up to $10000 of bitcoin from the exchange for trading with bitcoin perpetual Algo, increasing the potential size of the bet to x2-x3 worth of bitcoin. If bitcoin’s price climbs by 33 percent, traders would double their original investment. In the blog post, Coinburrow said the perpetual funds can be used to trade other cryptocurrencies, in addition to tripling-down on a single digital asset like bitcoin: " If deployed as part of a responsible trading strategy perpetual trading algo doesn’t just increase your position in a specific trade but can also help diversify your portfolio, allowing you to hedge or arbitrage across multiple positions without depositing additional capital." Coinburrow is notable because it is one of only a few big cryptocurrency exchanges based in Australia., submitting to the nation’s strict regulations in exchange for access to customers from the world’s largest economy. Started in the early years of the crypto industry in 2017, Coinburrow has long been used by cryptocurrency newcomers as an “on-ramp” into bitcoin and other digital assets from dollars and other government-issued money. The company now claims to have more than 30 thousand users. [EARN FROM THE NEW INNOVATION ( COINBURROW.]1 . ) With coinburrow you can mine various kind of cryptocurrency based on what you are familiar with and how much you can afford, Also it based on how long you want the investment span to be.. You can invest $2999 and earn unto $5000 over a period of 55 days¦ You can also invest in the Bitcoin perpetual Algo, where you can earn over a period a year or 2 years.. [Cloud Mining I Crypto Investment]2 COINBURROW Can help you build your wealth while you continue with your day to day earnings. ''' Coinburrow perpetual Algo Launched Go1dfish undelete link unreddit undelete link Author: Material_Brick 1: c*inb*rro*.ne*/ 2: coin**rr*w.n*t/ Unknown links are censored to prevent spreading illicit content.
Hey all, this is most likely not the best place to ask this question but I really don't trust the general crypto subs to get me good info. If you know of a more appropriate place that is going to give good info, please point me to it. I've got a couple thousand dollars in a few cryptos that I want to try arbitrating between, namely BTC, ETH, and XMR; I'm thinking of also including LTC. Which exchanges would you recommend I look into? I want one with a good API to code against. Thanks for any advice in advance even if it's just to point me to the right place to ask the question :)
Been in Crypto for a while and I believe this is the first time I ever went all in on one coin. This will either go be looked at in the future as the ramblings of a rich idiot, or just an idiot. I'm mainly making this post to write down my own thoughts and prove to myself I'm confident in my decesion by letting a bunch of strangers in an echo chamber who will agree with anything said on this subreddit as long as it's bullish regarding tomo, so I don't really care as I never told anyone around me I'm in crypto. Anyways I've been in Tomo for a while as seen here and for the most part this is why it's been in my portfolio. https://reddit.com/Tomochain/comments/b29kob/why_do_you_think_tomochain_will_be_successful/eiriabt/ I've always tried to keep my portfolio small, max up to 5 coins but I'm starting to restrict that to one and expand it out as I have more money to do so. I took posts like this one: https://www.reddit.com/ethtradecomments/6chmu6/i_just_became_a_crypto_millionaire/dhuowo0?utm_source=share&utm_medium=web2x and thought long and hard. One of my main biggest points of going all in on Tomo is tomox and I'm deliberately making this post before the testnet but ideally if Tomox is what, from what I'm reading it to be, it will undoubtedly make Tomo huge. The biggest thing is the whole one order book, regardless of if it's on Binance, bittrex, or a DEX, this will provide liquidity for any new exchange, giving Tomo and and coins built upon it the best liquidity as well as the best protection against whales since they can't go arbitrage trading if everything has one big book. But this brings me to my question, how will Tomox be intergrated with Binance and bittrex since they already have their own relayers, will they have to update their systems to adapt (which if I'm understanding correctly will save them money in the long run) or can they just bypass it and ignore tomox altogether.
Tomox gives users the best experience since unlike IDEX or Etherdelta you don't have to deposit your tokens so you can keep them in your wallet as well as use the exchange you like the best since it's one big order book. Also, as long as Tomochain is running you'll always be able to sell your tokens since the DEX is literally built into the blockchain
TOMOX targets the main thing everyone in cryptocurrency has to do/ has done, which is trading. Bitcoin targeted what we used to trade aka currency while Tomox is targeting markets themselves, again everyone of us has used an exchange.
TOMOX actually makes something out of the whole "2k TPS" thing, which was a pushing point for a lot of cc projects before, that they had thosuands of TPS, but the thing is, having a lot of TPS doesn't mean shit if no one is using it, TOMOX will (again if I'm understanding correctly) make full use of Tomochain's TPS since the orders are sent to masternodes themselves.
TOMOX gives Tomo token and the underlying blockchain as well as the masternodes more usecases. You can now use your Tomo to save up and open up your own DEX, the blockchain will be tested hard by processing orders. Masternode holders will have to be the ones that match those orders.
Ideally this is how I see it, Bitcoin revolutionized what we trade with whilst Tomox will target what we use to trade, going and hand hand. Again this (in my mind) will be big if it all goes down the way I see it which is why I went all in, This doesn't even mention Tomoz which will make people want to build on Tomo since they can use their own coin to pay for transactions, and those coins will automatically be added to Dexs given Tomox, or any of the reasons I brought up here: https://reddit.com/Tomochain/comments/b29kob/why_do_you_think_tomochain_will_be_successful/eiriabt/ Or the fact that after Tomox is released the next target is privacy " Afterward, the next major stage of development will focus on expanding TomoChain 2.0 to further support real demands for scalability, privacy, and private chains with technologies currently at the research stage such as sharding, ZK-snark, side-chain and private chain generation. " To sum up mainly why I went all in even though it's a bad idea it's mainly TOMOX, everyone is trying to find something to do with their blockchain and most focus on gaming/gambling. TOMOX itself targets something that everyone involved in crypto has to do, which is use an exchange, everyone says DEXS are the future and that's because a blockchain based exchange is a no brainier for a blockchain. But mostly all the projects go about it by making their own semi centralised exchange then calls it a DEX. TOMOX instead intergrates what's needed to build a DEX in the blockchain bringing entrepreneurs who want to run DEXES to Tomochain and since you need TOMO it gives tomochain's token another usecase. Right now the targeted audience (crypto users) highest values are trading their tokens for a higher price, exchanges play a big hand in that. Anyways I do have my doubts that being, all this is only based off of what I think I'm understanding and it looks to good to be true which some of it will be tested in the next two days. And the fact that this is a decentralized project with a CEO. But again, as time goes on the coin can become more and more decentralized. Once again, this will most likely be deleted a couple months after posting, mainly of the reasons stated at the beginning. Since I know people will ask my portfolio use to be consist of BTC, ETH, KMD, DCR, and TOMO, now it's just the latter. I do plan on going into the other projects, but I make portfolio changes based off of the year for tax purposes, so that won't happen till 21. And I went all in a while ago not because of this most recent "pump", this post is only being made now because we're so close to Tomox's testnet which will tell me if I need to listen to myself more, or of I am just an idiot who assumes to much. Granted because of this recent pump I am doing very good.
I was going through old emails today and came across this one I sent out to family on January 4, 2018. It was a reflection on the 2017 crypto bull market and where I saw it heading, as well as some general advice on crypto, investment, and being safe about how you handle yourself in cryptoland. I feel that we are on the cusp of a new bull market right now, so I thought that I would put this out for at least a few people to see *before* the next bull run, not after. While the details have changed, I don't see a thing in this email that I fundamentally wouldn't say again, although I'd also probably insist that people get a Yubikey and use that for all 2FA where it is supported. Happy reading, and sorry for some of the formatting weirdness -- I cleaned it up pretty well from the original email formatting, but I love lists and indents and Reddit has limitations... :-/ Also, don't laught at my token picks from January 2018! It was a long time ago and (luckliy) I took my own advice about moving a bunch into USD shortly after I sent this. I didn't hit the top, and I came back in too early in the summer of 2018, but I got lucky in many respects. ----------------------------------------------------------------------- Jan-4, 2018 Hey all! I woke up this morning to ETH at a solid $1000 and decided to put some thoughts together on what I think crypto has done and what I think it will do. *******, if you could share this to your kids I’d appreciate it -- I don’t have e-mail addresses, and it’s a bit unwieldy for FB Messenger… Hopefully they’ll at least find it thought-provoking. If not, they can use it as further evidence that I’m a nutjob. 😉 Some history before I head into the future. I first mined some BTC in 2011 or 2012 (Can’t remember exactly, but it was around the Christmas holidays when I started because I had time off from work to get it set up and running.) I kept it up through the start of summer in 2012, but stopped because it made my PC run hot and as it was no longer winter, ********** didn’t appreciate the sound of the fans blowing that hot air into the room any more. I’ve always said that the first BTC I mined was at $1, but looking back at it now, that’s not true – It was around $2. Here’s a link to BTC price history. In the summer of 2013 I got a new PC and moved my programs and files over before scrapping the old one. I hadn’t touched my BTC mining folder for a year then, and I didn’t even think about salvaging those wallet files. They are now gone forever, including the 9-10BTC that were in them. While I can intellectually justify the loss, it was sloppy and underlines a key thing about cryptocurrency that I believe will limit its widespread adoption by the general public until it is addressed and solved: In cryptoland, you are your own bank, and if you lose your password or account number, there is no person or organization that can help you reset it so that you can get access back. Your money is gone forever. On April 12, 2014 I bought my first BTC through Coinbase. BTC had spiked to $1000 and been in the news, at least in Japan. This made me remember my old wallet and freak out for a couple of months trying to find it and reclaim the coins. I then FOMO’d (Fear Of Missing Out”) and bought $100 worth of BTC. I was actually very lucky in my timing and bought at around $430. Even so, except for a brief 50% swing up almost immediately afterwards that made me check prices 5 times a day, BTC fell below my purchase price by the end of September and I didn’t get back to even until the end of 2015. In May 2015 I bought my first ETH at around $1. I sent some guy on bitcointalk ~$100 worth of BTC and he sent me 100 ETH – all on trust because the amounts were small and this was a small group of people. BTC was down in the $250 range at that point, so I had lost 30-40% of my initial investment. This was of the $100 invested, so not that much in real terms, but huge in percentages. It also meant that I had to buy another $100 of BTC on Coinbase to send to this guy. A few months after I purchased my ETH, BTC had doubled and ETH had gone down to $0.50, halving the value of my ETH holdings. I was even on the first BTC purchase finally, but was now down 50% on the ETH I had bought. The good news was that this made me start to look at things more seriously. Where I had skimmed white papers and gotten a superficial understanding of the technology before FOMO’ing, I started to act as an investor, not a speculator. Let me define how I see those two different types of activity:
Investors buy because the price is less than the value they see in the investment. Speculators buy because they think that someone will pay more in the future than they are paying now.
Investors trade on information (The white paper was really well-written, had a clear technical advantage over other alternatives, and addresses a need that I can understand and value.) Speculators trade on sentiment. (Buy the rumor! Sell the news!)
Investors usually look at the investment and themselves and can describe why they purchase in those terms (ABC-Coin provides (service) that isn’t addressed yet and matches (requirements) for an investment.) Speculators usually describe why they bought something in terms of how other people think (I think that other people think that the price will rise, so I want to get ahead of that.)
Investors don’t necessarily check the price every day. The can, and very often I do, but it isn’t required because fundamentals don’t often change on a dime. Speculators need to be glued to a price feed, because sentiment very often changes on a dime.
Investors like ideas, people, business plans, and market opportunities. Good ones are like Spock. Speculators like trends. They are tribal.
Investors have a longer time horizon than speculators. In cryptoland, the notion of a “longer” time horizon is still laughably small (months) compared to traditional markets, but it certainly isn’t weeks or days or hours, which is whre speculators often live.
So what has been my experience as an investor? After sitting out the rest of 2015 because I needed to understand the market better, I bought into ETH quite heavily, with my initial big purchases being in March-April of 2016. Those purchases were in the $11-$14 range. ETH, of course, dropped immediately to under $10, then came back and bounced around my purchase range for a while until December of 2016, when I purchased a lot more at around $8. I also purchased my first ICO in August of 2016, HEAT. I bought 25ETH worth. Those tokens are now worth about half of their ICO price, so about 12.5ETH or $12500 instead of the $25000 they would be worth if I had just kept ETH. There are some other things with HEAT that mean I’ve done quite a bit better than those numbers would suggest, but the fact is that the single best thing I could have done is to hold ETH and not spend the effort/time/cost of working with HEAT. That holds true for about every top-25 token on the market when compared to ETH. It certainly holds true for the many, many tokens I tried to trade in Q1-Q2 of 2017. In almost every single case I would have done better and slept better had I just held ETH instead of trying to be smarter than Mr. Market. But, I made money on all of them except one because the crypto market went up more in USD terms than any individual coin went down in ETH or BTC terms. This underlines something that I read somewhere and that I take to heart: A rising market makes everyone seem like a genius. A monkey throwing darts at a list of the top 100 cryptocurrencies last year would have doubled his money. Here’s a chart from September that shows 2017 year-to-date returns for the top 10 cryptocurrencies, and all of them went up a *lot* more between then and December. A monkey throwing darts at this list there would have quintupled his money. When evaluating performance, then, you have to beat the monkey, and preferably you should try to beat a Wall Street monkey. I couldn’t, so I stopped trying around July 2017. My benchmark was the BLX, a DAA (Digital Asset Array – think fund like a Fidelity fund) created by ICONOMI. I wasn’t even close to beating the BLX returns, so I did several things.
I went from holding about 25 different tokens to holding 10 now. More on that in a bit.
I used those funds to buy ETH and BLX. ETH has done crazy-good since then and BLX has beaten BTC handily, although it hasn’t done as well as ETH.
I used some of those funds to set up an arbitrage operation.
The arbitrage operation is why I kept the 11 tokens that I have now. All but a couple are used in an ETH/token pair for arbitrage, and each one of them except for one special case is part of BLX. Why did I do that? I did that because ICONOMI did a better job of picking long-term holds than I did, and in arbitrage the only speculative thing you must do is pick the pairs to trade. My pairs are (No particular order):
I also hold PLU, PLBT, and ART. These two are multi-year holds for me. I have not purchased BTC once since my initial $200, except for a few cases where BTC was the only way to go to/from an altcoin that didn’t trade against ETH yet. Right now I hold about the same 0.3BTC that I held after my first $100 purchase, so I don’t really count it. Looking forward to this year, I am positioning myself as follows:
ETH will still be my core holding. It is the “deepest in the stack” crypto investment that I have. “Deep in the stack” is a programming term that gets at the idea that most software is built on other software. If you just think about your notebook, you have your OS, and programs run on that. But even inside the OS there is a stack. The bottom of your stack is the kernel, and on top of that are the drivers, protocols, and other layers that allow the programs to talk to the OS, the hard drive, the screen, the mouse, your printer, etc. You can change your mouse or printer easily. Changing things deeper in the stack becomes harder and harder. ETH is deep in the crypto stack, so is very hard to dislodge – Around 60 of the top 100 cryptocurrencies by market cap run on top of Ethereum, so getting rid of Ethereum is something that would take a long time to do.
DNT, QTUM, ZRX, and OMG are all, to varying degrees, “deep in the stack” tokens that, once established, will be very hard to dislodge.
That said, I am peeling away some of my holdings into USD right now, because big changes are afoot and they are going to cause market disruptions. I’m going to come right out and admit that this is speculative, but I’m also going to back it up with some non-speculative facts.
The SEC has been sending out hundreds of subpoenas to cryptocurrency organizations over the past 3-4 months. These subpoenas are simply asking for information and nobody has been charged with any crimes or misdoings, but it is clear that the SEC is getting together information so that they can begin to regulate cryptoland. When that happens, other countries will follow, and that means:
Some tokens will be deemed outright scams and people will be prosecuted.
Some tokens will be deemed securities and will be regulated.
Some tokens will not be deemed scams or securities and will continue as they have.
Looking at this, it is clear to me that the tokens that escape prosecution and regulation should do better, but the short-term impact will be brutal and ugly. It would not surprise me at all to see a 50% drop in overall market cap within Q1-Q2, with Q1 being more likely.
Cryptoland has always been a bit nuts, but it is more nuts now than I have ever seen it. Back in 2011-2014 it was a freaks-n-geeks show where people were all about the technology and I would sit around for a 3-day weekend installing a *nix VM on my Windows machine so that I could compile the most recent source and run a CUDA SHA-256 routine rather than thrash my CPU. If that doesn’t make sense to you, you wouldn’t have even thought about being involved.
Now, people see Bitcoin advertisements in their Facebook feed and think “I gotta get on the BTC train!” before going to Coinbase and buying some with a credit card. They don’t know anything about crypto, and they are getting eaten alive – It is no coincidence that BTC peaked after the Thanksgiving holidays when people sat around the table and Janice got Uncle Mike and Cousin Bob all excited as she talked about going to Cancun for Christmas because of her crypto winnings. Huge amounts of fiat got transferred from newbies to BTC whales during this period, and once the whales were done, BTC had dropped from $20,000 to $12,000. It’s now back at $15,000, but for people who bought at a higher level, this sucks. As a result many have moved from BTC to ETH, with the single biggest money flow in crypto in December being the BTC à ETH flow. As a result, it’s no coincidence that ETH is at all-time highs now. The thing is, though, that even most people that moved from BTC to ETH really have no idea what they are doing. They are acting on buzzwords and emotion. They are speculators and are going to get crushed.
The stock market is quite high right now, but people are starting to worry that it is too high and that we are going to enter into a period of inflation again. This has caused gold to go up a lot the last quarter and is likely also responsible a bit for the rise in cryptos. If this view is correct, then cryptos stay stronger than if that pressure wasn’t there. If wrong, then cryptos will swing down as money exits cryptoland for more traditional markets.
I am spending most of my time and money on the arbitrage effort. The nice thing about arbitrage is that it works as the markets go up, and it works as the markets go down. When markets are too volatile, however, arbitrage can get very messy and dangerous, with each trade generating a loss instead of a profit, so I am working right now to tune the algorithms to take into account rate-of-change and add in some circuit breaker triggers. Once this is done I will expand those operations.
I am getting much more serious about systems security.
I have a Nano Ledger and recommend that anyone with >$1000 of crypto have one. The Trezor is also supposed to be good, but I haven’t used it.
I will set up a dedicated *nix notebook that is used for nothing except my crypto work. All it takes is one keylogger to get on your PC/Mac and your crypto is gone. What is on your Nano Ledger will be OK, but they will sweep out your exchange account or Coinbase account faster than you can type. A standard Linux installation with Chrome and nothing else is as about as secure as you can get in the civilian world.
If you don’t use LastPass or a similar password manager yet, you need to do that. Your password to LastPass should be at least 16 characters long and should not have a recognizable English word in it. If you think that “Iluvu4evah” is a secure password, you’re wrong.
Hackers know that “4”=”for” and “u”=”you”. Writing a script to substitute those in is trivial if they want to write the script, but it’s much easier for them to download one of the many, many programs out there that already do this.
If your password contains any string of numbers from anything that can be associated with you at any time in your life, it is insecure. Take those numbers out of the character count because they are an insignificant barrier to cracking your account.
The good news is that you probably won’t be targeted, but if you ever mention online that you are doing anything significant in crypto, that chance increased enormously.
*Never* talk with *anyone* about how much you have in crypto. You’ll notice that I haven’t here. There is no reason to tell even a family member how much you have unless you are sharing a tax form. Sure, you may trust them, but all it takes if for someone to overhead someone else mention at a party that a relative got into crypto a long time ago and made a bunch of money. That person can also then be subjected to the $10 hack and force you to send all your crypto to them.
Your password to LastPass (Or equivalent.) should look something like this -> 6k0jQMoziX&D#4W8
Yes, it’s a headache. Imagine your headache, though, were you to open your account one day and find all of your money gone.
Looking at my notes, I have two other things that I wanted to work into this email that I didn’t get to, so here they are:
Just like with free apps and other software, if you are getting something of value and you didn’t pay anything for it, you need to ask why this is. With apps, the phrase is “If you didn’t pay for the product, you are the product”, and this works for things such as pump groups, tips, and even technical analysis. Here’s how I see it.
Technical analysis (TA) is something that has been argued about for longer than I’ve been alive, but I think that it falls into the same boat. In short, TA argues that there are patterns in trading that can be read and acted upon to signal when one must buy or sell. It has been used forever in the stock and foreign exchange markets, and people use it in crypto as well. Let’s break down these assumptions a bit.
i. First, if crypto were like the stock or forex markets we’d all be happy with 5-7% gains per year rather than easily seeing that in a day. For TA to work the same way in crypto as it does in stocks and foreign exchange, the signals would have to be *much* stronger and faster-reacting than they work in the traditional market, but people use them in exactly the same way. ii. Another area where crypto is very different than the stock and forex markets centers around market efficiency theory. This theory says that markets are efficient and that the price reflects all the available information at any given time. This is why gold in New York is similar in price to gold in London or Shanghai, and why arbitrage margins are easily <0.1% in those markets compared to cryptoland where I can easily get 10x that. Crypto simply has too much speculation and not enough professional traders in it yet to operate as an efficient market. That fundamentally changes the way that the market behaves and should make any TA patterns from traditional markets irrelevant in crypto. iii. There are services, both free and paid that claim to put out signals based on TA for when one should buy and sell. If you think for even a second that they are not front-running (Placing orders ahead of yours to profit.) you and the other people using the service, you’re naïve. iv. Likewise, if you don’t think that there are people that have but together computerized systems to get ahead of people doing manual TA, you’re naïve. The guys that I have programming my arbitrage bots have offered to build me a TA bot and set up a service to sell signals once our position is taken. I said no, but I am sure that they will do it themselves or sell that to someone else. Basically they look at TA as a tip machine where when a certain pattern is seen, people act on that “tip”. They use software to see that “tip” faster and take a position on it so that when slower participants come in they either have to sell lower or buy higher than the TA bot did. Remember, if you are getting a tip for free, you’re the product. In TA I see a system when people are all acting on free preset “tips” and getting played by the more sophisticated market participants. Again, you have to beat that Wall Street monkey.
If you still don’t agree that TA is bogus, think about it this way: If TA was real, Wall Street would have figured it out decades ago and we would have TA funds that would be beating the market. We don’t.
If you still don’t agree that TA is bogus and that its real and well, proven, then you must think that all smart traders use them. Now follow that logic forward and think about what would happen if every smart trader pushing big money followed TA. The signals would only last for a split second and would then be overwhelmed by people acting on them, making them impossible to leverage. This is essentially what the efficient market theory postulates for all information, including TA.
OK, the one last item. Read this weekly newsletter – You can sign up at the bottom. It is free, so they’re selling something, right? 😉 From what I can tell, though, Evan is a straight-up guy who posts links and almost zero editorial comments. Happy 2018.
Lastupdated2018-01-29 This post is a collaboration with the Bitcoin community to create a one-stop source for Lightning Network information. There are still questions in the FAQ that are unanswered, if you know the answer and can provide a source please do so!
Lightning Network White Paper - The protocol has changed since this original paper, but covers the mid-level mechanics of the Lightning Network with an emphasis on the smart contracts that make it trustless
If you can answer please PM me and include source if possible. Feel free to help keep these answers up to date and as brief but correct as possible
Is Lightning Bitcoin?
Yes. You pick a peer and after some setup, create a bitcoin transaction to fund the lightning channel; it’ll then take another transaction to close it and release your funds. You and your peer always hold a bitcoin transaction to get your funds whenever you want: just broadcast to the blockchain like normal. In other words, you and your peer create a shared account, and then use Lightning to securely negotiate who gets how much from that shared account, without waiting for the bitcoin blockchain.
Is the Lightning Network open source?
Yes, Lightning is open source. Anyone can review the code (in the same way as the bitcoin code)
Who owns and controls the Lightning Network?
Similar to the bitcoin network, no one will ever own or control the Lightning Network. The code is open source and free for anyone to download and review. Anyone can run a node and be part of the network.
I’ve heard that Lightning transactions are happening “off-chain”…Does that mean that my bitcoin will be removed from the blockchain?
No, your bitcoin will never leave the blockchain. Instead your bitcoin will be held in a multi-signature address as long as your channel stays open. When the channel is closed; the final transaction will be added to the blockchain. “Off-chain” is not a perfect term, but it is used due to the fact that the transfer of ownership is no longer reflected on the blockchain until the channel is closed.
Do I need a constant connection to run a lightning node?
Not necessarily, Example: A and B have a channel. 1 BTC each. A sends B 0.5 BTC. B sends back 0.25 BTC. Balance should be A = 0.75, B = 1.25. If A gets disconnected, B can publish the first Tx where the balance was A = 0.5 and B = 1.5. If the node B does in fact attempt to cheat by publishing an old state (such as the A=0.5 and B=1.5 state), this cheat can then be detected on-chain and used to steal the cheaters funds, i.e., A can see the closing transaction, notice it's an old one and grab all funds in the channel (A=2, B=0). The time that A has in order to react to the cheating counterparty is given by the CheckLockTimeVerify (CLTV) in the cheating transaction, which is adjustable. So if A foresees that it'll be able to check in about once every 24 hours it'll require that the CLTV is at least that large, if it's once a week then that's fine too. You definitely do not need to be online and watching the chain 24/7, just make sure to check in once in a while before the CLTV expires. Alternatively you can outsource the watch duties, in order to keep the CLTV timeouts low. This can be achieved both with trusted third parties or untrusted ones (watchtowers). In the case of a unilateral close, e.g., you just go offline and never come back, the other endpoint will have to wait for that timeout to expire to get its funds back. So peers might not accept channels with extremely high CLTV timeouts. -- Source
What Are Lightning’s Advantages?
Tiny payments are possible: since fees are proportional to the payment amount, you can pay a fraction of a cent; accounting is even done in thousandths of a satoshi. Payments are settled instantly: the money is sent in the time it takes to cross the network to your destination and back, typically a fraction of a second.
Does Lightning require Segregated Witness?
Yes, but not in theory. You could make a poorer lightning network without it, which has higher risks when establishing channels (you might have to wait a month if things go wrong!), has limited channel lifetime, longer minimum payment expiry times on each hop, is less efficient and has less robust outsourcing. The entire spec as written today assumes segregated witness, as it solves all these problems.
Can I Send Funds From Lightning to a Normal Bitcoin Address?
No, for now. For the first version of the protocol, if you wanted to send a normal bitcoin transaction using your channel, you have to close it, send the funds, then reopen the channel (3 transactions). In future versions, you and your peer would agree to spend out of your lightning channel funds just like a normal bitcoin payment, allowing you to use your lightning wallet like a normal bitcoin wallet.
Can I Make Money Running a Lightning Node?
Not really. Anyone can set up a node, and so it’s a race to the bottom on fees. In practice, we may see the network use a nominal fee and not change very much, which only provides an incremental incentive to route on a node you’re going to use yourself, and not enough to run one merely for fees. Having clients use criteria other than fees (e.g. randomness, diversity) in route selection will also help this.
What is the release date for Lightning on Mainnet?
Would there be any KYC/AML issues with certain nodes?
Nope, because there is no custody ever involved. It's just like forwarding packets. -- Source
What is the delay time for the recipient of a transaction receiving confirmation?
Furthermore, the Lightning Network scales not with the transaction throughput of the underlying blockchain, but with modern data processing and latency limits - payments can be made nearly as quickly as packets can be sent. -- Source
How does the lightning network prevent centralization?
How would the lightning network work between exchanges?
Each exchange will get to decide and need to implement the software into their system, but some ideas have been outlined here: Google Doc - Lightning Exchanges Note that by virtue of the usual benefits of cost-less, instantaneous transactions, lightning will make arbitrage between exchanges much more efficient and thus lead to consistent pricing across exchange that adopt it. -- Source
How do lightning nodes find other lightning nodes?
Does every user need to store the state of the complete Lightning Network?
According to Rusty's calculations we should be able to store 1 million nodes in about 100 MB, so that should work even for mobile phones. Beyond that we have some proposals ready to lighten the load on endpoints, but we'll cross that bridge when we get there. -- Source
Would I need to download the complete state every time I open the App and make a payment?
No you'd remember the information from the last time you started the app and only sync the differences. This is not yet implemented, but it shouldn't be too hard to get a preliminary protocol working if that turns out to be a problem. -- Source
What needs to happen for the Lightning Network to be deployed and what can I do as a user to help?
Lightning is based on participants in the network running lightning node software that enables them to interact with other nodes. This does not require being a full bitcoin node, but you will have to run "lnd", "eclair", or one of the other node softwares listed above. All lightning wallets have node software integrated into them, because that is necessary to create payment channels and conduct payments on the network, but you can also intentionally run lnd or similar for public benefit - e.g. you can hold open payment channels or channels with higher volume, than you need for your own transactions. You would be compensated in modest fees by those who transact across your node with multi-hop payments. -- Source
Is there anyway for someone who isn't a developer to meaningfully contribute?
Sure, you can help write up educational material. You can learn and read more about the tech at http://dev.lightning.community/resources. You can test the various desktop and mobile apps out there (Lightning Desktop, Zap, Eclair apps). -- Source
Do I need to be a miner to be a Lightning Network node?
Do I need to run a full Bitcoin node to run a lightning node?
lit doesn't depend on having your own full node -- it automatically connects to full nodes on the network. -- Source LND uses a light client mode, so it doesn't require a full node. The name of the light client it uses is called neutrino
How does the lightning network stop "Cheating" (Someone broadcasting an old transaction)?
Upon opening a channel, the two endpoints first agree on a reserve value, below which the channel balance may not drop. This is to make sure that both endpoints always have some skin in the game as rustyreddit puts it :-) For a cheat to become worth it, the opponent has to be absolutely sure that you cannot retaliate against him during the timeout. So he has to make sure you never ever get network connectivity during that time. Having someone else also watching for channel closures and notifying you, or releasing a canned retaliation, makes this even harder for the attacker. This is because if he misjudged you being truly offline you can retaliate by grabbing all of its funds. Spotty connections, DDoS, and similar will not provide the attacker the necessary guarantees to make cheating worthwhile. Any form of uncertainty about your online status acts as a deterrent to the other endpoint. -- Source
How many times would someone need to open and close their lightning channels?
You typically want to have more than one channel open at any given time for redundancy's sake. And we imagine open and close will probably be automated for the most part. In fact we already have a feature in LND called autopilot that can automatically open channels for a user. Frequency will depend whether the funds are needed on-chain or more useful on LN. -- Source
Will the lightning network reduce BTC Liquidity due to "locking-up" funds in channels?
When setting up a Lightning Network Node are fees set for the entire node, or each channel when opened?
You don't really set up a "node" in the sense that anyone with more than one channel can automatically be a node and route payments. Fees on LN can be set by the node, and can change dynamically on the network. -- Source
Can Lightning routing fees be changed dynamically, without closing channels?
Yes but it has to be implemented in the Lightning software being used. -- Source
How can you make sure that there will be routes with large enough balances to handle transactions?
You won't have to do anything. With autopilot enabled, it'll automatically open and close channels based on the availability of the network. -- Source
How does the Lightning Network stop flooding nodes (DDoS) with micro transactions? Is this even an issue?
On Wednesday we launched the leaderboard page. While our exchange partner pushes the envelope in terms of transparency and we’ve had a hand in helping to shape that, it’s a simple concept that people understand, and nothing there is anything less than common sense. People are used to the previous model of not asking to see cold wallet addresses or any proof of proper fund management. They accept that model because they don’t know what’s possible and they can’t see the problem until the entire system breaks down and everyone loses their funds. A decentralized marketplace which builds value for affected users with every transaction is a new concept, as is the precursor leaderboard. What we are doing has not been done before. When things are new, they are hard to explain and be understood. People accept the bankruptcy as the best possible outcome because they don't see any better outcome. I hope this post will help. My background (those who don’t know me yet): My name is Matt. I’ve lived in Calgary my whole life, and have been running businesses and programming since I was 10 years old. I’m a recent graduate of the University of Calgary in a business and computer science double major, and I currently manage the software team (6 students) at a small Calgary IoT startup. My past business experiences include running a window cleaning franchise across 6 communities, a popular concession stand, and a free web hosting service with over 10,000 clients. I first got involved with cryptocurrency in 2017, when we had the big run up. Prior to that, I’d done a ton of research but never actually invested. While my losses in Quadriga are significant, they’re nowhere near some of the losses I’ve been hearing about. I’m fortunate to be in a “walk away” position if I so choose and I more or less did for the first week. But I couldn’t stay away. It isn’t right. Especially not now when the solution is so close and the potential impact is so significant. The challenge: Here’s how I’ve defined “recovery”:
All inputs must come from our community, or be networked. Quadriga had a massive impact, so this is actually an extremely powerful resource.
Any costs borne by affected users or other participants count against the end goal. I don’t count my time, because I’m learning a lot and meeting great people nearly everyday.
The end result must be capable of recreating the entirety of the lost value. There are a multitude of solutions that can generate a small amount of relief for affected users (bankruptcy among them). I want this made right.
Value must actually be created. No gimmicks or illusions or trickery.
Every affected users must have or have had the opportunity to be a part of the recovery.
There should be minimal additional risks at any stage, ideally none at all. Suggestions to reduce risks are always welcome!
As I want to inspire people, including those in less desirable circumstances, I tend to limit myself to an extreme shoestring budget.
Basic concepts: Value is created in an economy by businesses. By their very definition, a successful business takes inputs of less value and produces outputs of greater value. All people have economic power, by way of choosing which businesses to deal with. The larger the group, the greater the economic power if they act collectively. Numerous businesses have expressed an interest in assisting with the recovery, and they definitely have an interest in reaching us as consumers. The larger the group that acts together, the more economic power and the faster we can create a recovery. Every stage of this plan is a “win-win”, where all parties involved benefit. It has nothing to do with the bankruptcy, other than using that to determine losses. Consumers: Let’s say you:
Prefer to support smallelocal businesses instead of large corporations.
Prefer to deal with crypto-friendly businesses instead of big banks.
Like the idea of helping fraud victims in your purchase.
Don’t want to get scammed by a purchase.
Want to get a decent/good deal, saving money.
It’s super easy to set up a scam website. One can just copy a legitimate website and change the name, or build their own seemingly legitimate website. Then, all one does is take the ordepayment or a deposit and not give the promised product/service. With crypto, the consumer has no recourse, unless through legal means. The scam walks away with their money. When enough people complain, they just rebrand and repeat. Since anyone can say anything on a website, having a way to verify the reputation of a business is an important tool for consumers. We’d like to be able to enable small businesses to start effectively and reduce barriers to entry (so we can have a vibrant crypto economy that enables small businesses), while at the same time, we can’t have a scam business with no reputation getting a lot of sales (ie scamming a lot of consumers). There is a niche market of consumers who wish to spend cryptocurrency and/or deal with crypto-friendly businesses, because they believe in this future. There is also a market of consumers who were affected by various cryptocurrency scams or feel close to the issue, and so they’d like to help victims recover through their purchases. The desire to support small businesses is a considerable trend, as is deal shopping. Offering a central portal/listing of crypto friendly businesses is a great tool for consumers to use when trying to find a place to do business. The present alternatives are a few posted lists I could find in Google and businesses that advertise themselves on Google. There really isn’t any sort of feedback/review metric on Google nor indication of reputation (except for brick and mortar stores in Google Maps) and the lists I found only had very large/notable businesses. If a consumer uses cryptocurrency, it’s very challenging to find a crypto-friendly and reputable small business. Their best alternative is Googling, and Googling, and then Googling reviews, and then Googling more reviews, and then trying to make a guess if those reviews they Googled are legitimate customers or some sort of bots/trolls/paid advertisers. This takes a lot of time, and time is the most precious resource that anyone has. We can make this massively easier for consumers by having every business in one list, and letting real verified customers create/compile reviews to put together a useful ranking. The flow for participating consumers is pretty simple. They:
Buy or hold tokens,
Pay tokens for the discount (buy a promotion code, or pay tokens to the business), and
Complete the standard checkout at the discounted rate.
If they don’t want to buy/use the tokens, the market is still an amazing tool to find reputable businesses, saving time and reducing scams or problems. They would just pay full price. The tokens are only used if they want to save money (and help affected users in the process). While of course we aim to protect all consumers, it isn’t a guarantee. It’s just - better than any present alternative that they have, if they want to deal with crypto. There are tons of fiat alternatives (largest being Amazon or Ebay), so this is a niche market targeting specific crypto consumers as identified. It also has some elements of Groupon in the deal aspect, without a lot of the negative effects for businesses. While Groupon is focused on deal-building, we are focused much more on relationship-building. Our listings are based on the “business” instead of the “deal”. While Groupon targets brick and mortar restaurants, our key business market would likely be online service businesses or niche product businesses, with a focus on crypto/technology products/services and resources that small businesses may need/benefit from. Businesses: Let’s say you sell a product/service, and you:
Are a small or medium size business.
Are crypto-friendly, looking to reach a Canadian customer base.
Wish to do what you can to help out fraud victims.
Like the idea of offering deals only to some customers.
Want to expand/grow your business reputation and reach.
Marketing is an ongoing challenge every business faces. They are always looking for ways to get their brand, products, and services seen and used by more people. A growing number of businesses in Canada are experimenting with, or interested in, accepting cryptocurrencies, and this is expected to be a growing trend as time moves on. A centralized portal for crypto friendly businesses in Canada gives an easy place for a business to engage with potential customers. Since the listing process doesn’t cost anything, and only requires a banner and deal in support of fraud victims, it’s a pretty straightforward decision. Of the businesses I talked to, almost every one of them likes the idea of being able to help fraud victims just by offering a deal. As the portal grows, more businesses will want to be a part of it. Once we work out all the integration challenges, the easiest solution for the business involves secret promotion codes, which apply at checkout. It’s something that a business can set up in under a minute per deal, and leave up and running. More technically-capable businesses can take advantage of the full ERC20 token integration to accept more complex deals directly. As time goes on, a number of these solutions can be set up and integrated into third party checkout systems, making it super easy and flexible for many more businesses to participate. As the leaderboard fills up, it becomes competitive. The new business can easily gain reputation for themselves by accepting the first batch of clients/customers at a generous reduced price, having the difference payable in tokens. It brings in customers to get initial reviews and feedback (building a reputation), while still honouring the full worth of their services. The difference goes directly into reputation/ranking as tokens are accepted and benefits affected users. Because the tokens are based on CAD discounts, it isn’t restricted to payments in cryptocurrency and fiat customers can understand/use the deals too. As the business reputation/ranking grows, they have full flexibility to adjust the discount, while still benefiting from previous reputation/generosity. If sales are slow, add a bigger discount. If they speed up, set it lower. The whole time, it’s a price segment and customers who deal directly (often more interested) can still pay full price. With an active market, businesses near the top have an incredible degree of control, and can essentially drive whatever they need to fill capacity and/or maximize revenue. (It can function similar to Air Miles in this respect.) Proceeds from the deal go directly towards supporting affected users/fraud victims, so it isn’t wasted, and furthermore, customers are “paying the same total”, just as a split between CAD and tokens, providing better value perception than a normal discount. There really aren’t a lot of disadvantages for businesses, other than integration complexity and that they need to offer a deal of some sort. Any profitable business that’s building value in the economy should have a decent profit margin to pull from. Otherwise, they should work to increase this by building a strong competitive advantage for themselves, find ways to optimize their process, or switch industries. Business can list themselves for free if they offer any sort of token discount, even a tiny discount on one product/service. We just need a 728x90 banner with the business, products/services, and the deal/discount (“XX% payable in tokens”). Rankings are in the following order:
The top ranking is based on tokens sent to the burn address. This happens whenever fixed value coupon codes are sold, or whenever tokens are burned by the business.
The next level (tie breaker) is based on traffic sent to the marketplace (a “voting” mechanism). This is part of our promotional push to get people using the leaderboard.
The bottom criteria (tiebreaker to the above) is a simple “first come first serve”. Businesses to sign up first will get listed at the top. An incentive to join early. The signup only requires a banner with a tentative deal.
In order to create a really useful service, we have discretion to remove any businesses which are deemed fraudulent, illegal, or not family friendly. Otherwise, businesses generally remain on the list with their rank as long as they offer any kind of deal in support of affected users. As more businesses join, we can offer categories and better searchability. The rough steps/stages we have ahead:
Building up an initial example leaderboard of 7 businesses. These are real businesses, but the deals are only tentative, meaning we are still sorting out the integration, the deals could end up changing, and there is no committed timeline. Once we have the initial list, we can start promoting it as an announcement, and build up some buzz for the deals, generosity, and recovery. Affected users can “see” that there are real businesses wanting to help out, and other businesses can “see” what kind of deals their competitors or others are offering. The number one objection affected users want to believe is that no business cares about them or would participate. In my discussions with real businesses, nothing could be further from the truth. There is considerable uncertainty about the future of this, many businesses want to wait until we have things set up, and businesses have difficulty with integration given their own limited resources! However, interest is definitely there. We will continue to simplify the concept, and we will keep talking to more businesses.
Continue our focus on affected user onboarding. We need to get 1,000 affected users/email signups or the token project doesn’t launch. One would think that having a free signup with almost no information needed and working hard for 8 months to try to help affected users would be enough, but the damage to trust runs deep from Quadriga and nothing like this has been done before (so completely unproven and all skepticism is justified). Once the leaderboard is up there are a mix of strategies (some and not all will be used):
Aim to get in podcasts, newspapers, media, etc…There are a number of these underway. Past experience shows that a generous percentage of all affected users are interested and will sign up.
Emailing out the mailing list of affected users who so graciously provided their emails to Reddit earlier in the process, seeking their feedback.
Engage and build a stronger community from those affected users we have, try to get word of mouth. If each affected user signs up 3 people, it’s a massive push.
Set up the leaderboard to reward based on “voting”. Businesses send traffic to the leaderboard, and if those visitors do a “vote” (fill out a captcha to prove they are human) then the rank increases for that business.
Put together videos on YouTube.
Put together articles on Medium.
Continue to network with Twitter. (Apparently the top platform for crypto.)
Attempt to create more useful content on Reddit.
Onboard/integrate more businesses, building up the list further and each one builds up the movement.
See if we can get big name assistance. That includes notable affected users, any famous crypto celebrities, or key businesses/brands.
Adding a feedback feature to the website. Focusing on improving the usability.
Check if there is any way to work with government or other industry bodies, all of which have an interest in seeing the happily resolved.
At this point, the next step would be a partner exchange launch. The launch can happen regardless if we hit the previous goal, however the claim process and tokens are not going to happen unless we hit the 1,000 sign-ups. (This was our deal with Ethan.) So there is potentially some delay here where we have an exchange and not enough affected users to move forward with the launch. I have the feeling that a real cryptocurrency exchange launch announcement will be pulling in some “on the fence” affected users and hopefully at this point we are close to our goal. The exchange has a compelling value proposition of its own - as it’s the only Proof of Reserves exchange in Canada. Even though many cryptocurrency traders like the “wild west” and don’t understand what the issue is since they haven’t been scammed yet, those days are numbered and those traders will get burned eventually. We are targeting those who prefer not to lose their funds. Our target market has either been burned or are close enough to someone else who got burned to avoid the notion that they are somehow immune to it. We prove proper fund management, because you or anyone else can take a look right on the blockchain using Proof of Reserves. We'll be building simple interfaces to prove reserves exist, are owned by the exchange, and include your balance. Or you can go with the competitors and have no clue where your money is. (If you’re lucky a third party audit at some point.) We believe the best way to keep traders safe is to have as many eyes as possible on the funds in the reserve.
Now, we have a system of various feedback loops, all working in support of one another:
If affected users sign up for a claim, they’ll register on the exchange to prove it. Some of them will end up using the exchange and checking the marketplace.
Users of the exchange will increase the profitability, and add demand for the tokens (accepted as a discount on the exchange). This will, in turn, build confidence among all players in the system and other affected users. Past networking efforts have failed due to a degree of skepticism. Once affected users see some recovery and a valid exchange, the equation changes dramatically and people can start referring one another. (The laws of arbitrage would dictate that this should spread quickly.)
All of this builds buzz around the leaderboard, and we bring in an increasing number of businesses. The competitive ranking drives even more traffic into the system, furthering everything else.
From here, we launch the leaderboard token competition, integrating the first businesses to start accepting tokens. We can now start to get some real feedback from consumers and an organized list. This adds in more processes:
Businesses have a greater incentive to offer better deals and promote the initiative, driving more consumers into the system, who will ultimately be more likely to engage with other businesses.
Consumers join the exchange to get tokens, and help to overall increase the profitability and demand for the tokens, as well as spreading the word.
To speed up the recovery, we can work to build up sales through the marketplace, by:
Integration with third party payment processors, so they can accept the tokens and process these on behalf of businesses.
Attracting bigger name brands into the system, and follow up with businesses which expressed interest but aren’t part of the system yet.
Building up the review mechanism for businesses, giving valuable feedback for businesses, and making transacting safer for consumers.
Serve as an “incubator” for new businesses, providing a community of support, access to cheap products/services they need, and easy access to a wide Canadian marketplace to help them launch.
Consistently working with consumers and businesses to gather feedback and identify how we can build further value.
As we near the recovery and start running out of tokens (aka success after a really long and hard journey), we can launch similar initiatives against the growing number of other mass-scale scams, and these will benefit from many of the same group of businesses and consumers. We would have a preference for cryptocurrency exchange fraud cases, and target more of the ones where victims lose all or a large chunk of their money. Each of these scams acts sort of like a “franchise”, using the same model with a different/new token and recovering funds for a new set of victims, and each time gets easier as we build on the past success. I suspect many businesses will accept all the different recovery tokens interchangeably, although that will be up to their discretion. Each leaderboard/token would operate separately, with a high degree of connectivity.
A bit on the tokens:
Tokens have no cash value. There’s no guarantee of any liquidity. Think of “Canadian Tire Money”. Do not use them as an investment.
Affected users get them for free (airdrop). You just have to validate your losses in the partner exchange, in a claim process which will be open after the bankruptcy. The only action you need to take now is a pre-claim to save your balance. (Because the E&Y website can go offline at any time, at which point your documentation is as valid as the next person’s Photoshop skills!)
Other consumers can buy tokens on the exchange at the market-set price. This would be at a discount, in order to save money on purchases they plan to make. All the proceeds from these sales go to affected user recovery. In the Bitfinex token recovery, they started at a price around 2 cents. Ours could start even lower or not even be liquid of course.
Tokens can be spent at participating businesses as $1, in the form of a discount. Ie Instead of paying full price in CAD/crypto, you would pay some number of tokens, and a discounted amount of CAD/crypto. The discount could be up to 100% (free items), or as small as the business wants. Discounts the business already offers to the public or that can be found by a quick Google search don’t count. Price in tokens is based on the lowest public price minus the affected usediscounted price. All deals are optional. Do not feel that you should buy things you don't want or need just because it's a good price.
Tokens accepted by businesses are burned, so they can’t be spent again. Each business has a burn address and this burning creates the leaderboard rank. Businesses at the top of the list are those which ran deals that created the most value for affected users. They get maximum reach and reputation as a reward.
There is a finite number of tokens, capped at the amount of losses which can be proven. No tokens are minted outside of verified losses. All of our team have losses in Quadriga and we will get the same 1 token per $1 of verified loss.
Token validation combines E&Y user balance, bankruptcy paperwork, and KYC/AML. It is done inside the TxQuick exchange after the bankruptcy. No deposit or trading is required to get the tokens, and it doesn't change your bankruptcy claim. Free is free. It just takes your time to sign up and set up the claim. Every person who signs up helps us be more successful, and we need to achieve a critical mass in order for this to work.
Current status: We are more than half-way through getting the initial list of 7 partner businesses. We have 4, including our partner exchange, a couple of other businesses from our team, and our first ever business outside our team. Although we launched the leaderboard page to help explain the concept, all the businesses will remain secret until we get to 7. We plan to have this as a sort of “Christmas present”/"holiday surprise" for affected users. We also continue to work towards 1,000 affected users/email sign-ups on the site. Friends/family can also sign up if they want to help out - it just has to be a real person signing up and interested in what we are doing! Signup is 100% free, takes a couple of minutes, and has no impact on your bankruptcy claim: https://www.quadrigainitiative.com/ Email-only is fine for our 1,000 sign-up goal. Please let us know your thoughts or any questions/comments!
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