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CWC Newsletter #1 (October 18, 2019)

By Taylor Ryker, Analyst

Top 10 Updates:

1. EOS upgrades to network. (1) Activation of “first payer” in the EOS code so that decentralized applications (DApp)can pay for the resources to their users. This is important because it will allow for a better user experience where they won’t need to pay EOS tokens to use the network and DApps. (2) EOS authenticator (app in the App Store) is refined so that users can use their smartphones to transact EOS tokens without an EOS wallet—this is important because it provides another layer for better user experience so that they can sign into different DApps, similar to how users sign in to their Facebook account to use other applications on the internet.

2. EOS solves online identity authentication issue. Mobile payment companies and e-commerce companies are having a difficult time preventing fraudulent purchases online. It is a million dollar losing situation that current technologies are unable to mitigate, even with the latest smartphone technologies. The missing ingredient in addition to biometric technologies on smartphones is blockchain authentication, which EOS addresses fully. Block.One, the creator of the EOS code, has released an EOS authenticator that developers have released on the App Store, which is akin to how users sign into Facebook to use other online non-Facebook services. One of the killer features of EOS is that it will be able to verify identity authentication, which could even be used to allow US citizens to vote in future elections.

3. Industry begins to adopt EOS and its technology. Deutsche Bank this past week successfully tokenized bonds on the EOS network. This is important because it shows that the EOS network can be a network for decentralized finance, or in other words tokenizing securities, such as bonds, stocks, and shares in real estate.

4. EOS Competition is stifled by technology or regulators. (1) Ethereum, the major competitor to the EOS network, last week had their annual conference and revealed that their major upgrade for scalability will take at least 2 more years with an expected roll out in 2020. EOS has already solved the scalability issue and many pundits are speculating that Ethereum’s network could be better scaled by using EOS as its base layer. (2) The SEC shut down the major Venture Capital-backed, billion dollar valuation token sale for Telegram’s TON network, a widely popular messenger mobile app, because it was deemed an unregistered security. This is important because two weeks ago, Block.One was fined $24 million for selling EOS tokens by the SEC but was granted a waiver that stated that EOS was not a security. This is creating a strong moat that protects Block.One and EOS value as a utility token. Additionally, it also signals to other crypto tokens that they need to register with the SEC, but this will lead to overheads that are unaffordable with any new competition to EOS.

5. Mark Zuckerburg’s “Voice” Speech @Georgetown. Zuckerburg, on Thursday, Oct. 17th, gave a speech about the importance of freedom of speech and how Facebook is aiming to be a better platform for the globe in preserving the voice of the people (Zuckerburg said the word “voice” over 35 times). This is interesting and important because (1) Facebook’s Libra cryptocurrency is taking heavy negative hits with the withdrawal of powerful allies such as MasterCard, Visa, and PayPal; (2) Block.One’s killer DApp called “Voice” is a social media platform gearing towards replacing Facebook by paying the user for their data and content; and (3) this speech indicates that Zuckerburg is aware of Block.One’s Voice social media application and is attempting to co-opt the idea for Facebook’s profit.

6. Bubble is Popping and Distrust of FANG. The current debacles of the WeWork IPO and the losses in stock prices of Lyft and Uber show that these tech companies are not really tech companies in the sense that they are really businesses in the car or real estate industry. The profitable tech companies, such as FANG, are mainly in cloud services, data gathering/selling, and streaming services. Data is the most valuable commodity in the 21st century and the next evolution in tech companies will be based on cryptocurrencies because of (1) the loss of trust by centralized tech companies such as Facebook and Google; and (2) the user will be able to profit from their own data.

7. Governance is the Biggest Obstacle for EOS currently. Governance is the most heated debate within the EOS network because the majority of companies that are securing the EOS network are primarily based in China, which signals that the network is becoming centralized. EOS works the best when it’s decentralized and the companies that secure the network are geographically dispersed across the globe because if a country bans EOS or cryptocurrencies it will allow for the network to survive by having the other securing companies outside of that particular country’s jurisdiction. There are two governing proposals that were submitted to the global community this week and investors are keen on how this will unfold because once the governance issue is resolved, EOS will be the prime leader in the cryptocurrency space due to (1) superior scalability to be able to transact for commercial enterprises, (2) US regulators allowing EOS to monopolize the space, (3) superior user experience in that the user won’t have to know that their mobile DApps are powered by EOS, and (4) the ability for the user to profit from their individual data unlike services that sell user’s data for free services such as Google Maps, Facebook, etc.

8. Regulators Reject Another Bitcoin ETF. This is just the latest Bitcoin ETF to be rejected by the SEC. For the past three years, different groups have proposed a Bitcoin ETF to the SEC just to see it rejected. This is important because it indicates that Wall Street does not want to fully legitimate Bitcoin as a commodity therefore barring any valid competition with other financial instruments. I believe that Block.One’s intimate relationship with the SEC potentially signals that the EOS token might be the cryptocurrency that the financial industry may want to use to compete with other tokens like Bitcoin and Ethereum dominating the world.

9. Bitcoin Mining Attractive in Texas. Billionaire investor Peter Thiel, creator of PayPal and first investor to Facebook, is pouring money in the hundreds of millions into Bitcoin Mining Farms in West Texas to (1) leverage the growing renewable energy sector that has seen the boom of wind and solar farms on cattle farms, and (2) to replace China’s bitcoin mining supremacy by allowing the US to have a growing control over the bitcoin network. This is important because it shows that some US investors are determined to dominate the cryptocurrency space by having it under US jurisdiction even though the SEC is choking cryptocurrency innovation and incentivizing cryptocurrency companies to leave the US for more favorable places such as Malta, Singapore, and Hong Kong.

10. Historically, new technology is a hard sale. I read an article detailing the long timeframe in the public adopting new technologies. Whether that be mistrust of new technologies by older generations or the fear that current cultural practices will be replaced (see: email replacing handwritten letters, cars replacing a romantic horse culture, or sharing economy replacing owning things), the current adoption of blockchain and cryptocurrencies may take longer than a couple years. Seatbelt technologies took over half a decade for the US public to fully embrace the importance of vehicle safety. The only case where the US public quickly adopted a new technology literally overnight was the introduction of the polio vaccine due to the fact that the poster child of polio was President Franklin Roosevelt. The mass adoption of EOS may need to take more than two years and needs a catalyst to either scare the public into needing to use EOS or an economic calamity that incentivizes the public to use EOS so that they may be able to get paid to supplement their incomes.

Disclaimer: KJ Kingsley is not a financial advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.

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