CWC Newsletter #18 (Mar. 16, 2020)

By KJ Kingsley, Analyst


Crypto Bloodbath Rant: It was Needed so Stay Calm And Carry On


This past week saw the largest declines in cryptocurrency prices that brought many investors to their knees. Bitcoin was revealed to not be a good store of value, Ethereum's decentralized finance dream imploded, and many cryptocurrencies across the board saw their valuations cut in half.


But I think that, even though the US Stock Market is also experiencing much volatility and steep declines, there was a need for a shake-up in the cryptocurrency space. There is too much dead weight and fluff that is valued too high in the hundreds of millions of US dollars.


Similar to the dotcom bust of the late 1990s and early 2000s where websites such as pets.com and others were receiving million dollar valuations, there is still not a definitive dotcom bust scenario for cryptocurrencies. I need to see many non-essential blockchains go to $0, and the solidification of a small handful of about 10 blockchains that will be the foundation for the new internet and digital world.


Currently, there are (1) too many payment tokens, (2) too many smart contract platforms, (3) too many testnets, and (4) too many privacy coins.


Why do we need more than a couple payment tokens? I get that Bitcoin, Tether, and other stablecoins are essential in creating efficient payment channels, but why do we need Litecoin, Stellar, Bitcoin Cash, Bitcoin SV, XRP, and Dash? They all are attempting to provide payment tokens with robust transactions per second, scalability, and a great user experience. But do I need all of these?


For smart contract platforms, why do we need Tezos? Neo? Tron? All of these different smart platforms do not provide value for the blockchain ecosystem. But rather, the fanatical followers and speculators who hold these tokens (Tezos, Neo, Tron, Ethereum Classic) just FUD (fear, uncertainty and doubt) and slander leading smart contract platforms like Ethereum and EOS that they view are a threat to their token value.


I'm looking at the Tezos bag holders who have flooded social media platforms to pump the price of the token. In my mind, Tezos is just another version of EOS without any true stress tests, inferior transactions per second, unsustainable annual inflation, and no substantial application development on the Tezos platform. And don't get me started with the Chainlink community, please see Chainlink's inadequacies that helped Ethereum's MakerDao to lose $4 million last week.


Even the current problems arising from the gold-standard of smart contract platforms, Ethereum, should dissuade developers and investors from pumping more time and money into this broken protocol. When I say broken, I explicitly mean the long delays and hiccups in upgrading the scalability of the protocol, the in-fighting between miners and developers through ProgPoW, and the catastrophes of their burgeoning decentralized finance ecosystem with the hacks of bZx, MakerDAO, and Chainlink.


How is Cardano, a testnet that still needs to launch their mainnet after raising funds in 2017, still valued at around $700 million when it hasn't been battle-tested in the wild? EOS was launched in 2018, a year after a year-long funding round beginning in 2017, and it has more transactions per second, became anti-fragile by the public's continuous manipulations in every way imaginable, and is constantly being upgraded.


Privacy coins seem redundant when developers of base protocols (Ethereum and EOS) are coding in privacy features into their blockchains. I understand that prior to these latest developments there was a need for privacy coins like Monero or Zcash. But look at PEOS on EOS and zero knowledge-based technologies on Ethereum to show that privacy coins will become a thing of the past.


This should serve as a wake-up call for blockchain developers, investors, and speculators that the cryptocurrency space is not a gambling den where people drive Lambos and shout expletives to the Moon but a space that needs to build value and products that fit the needs of larger demographics.


I envision a blockchain future that includes Bitcoin, Tether, Ethereum, EOSIO, and other sovereign stablecoins that will usher in the new dawn. I believe that once the carnage of steep declines in the crypto market subsides, those blockchains will come out on top.


Ultimately, it doesn't take a rocket scientist to see that with the coronavirus, more services and employment will be done remotely and online. The need to secure data transmissions while working online will be of utmost importance to all businesses. Although blockchain technologies in the past decade has attempted to replace traditional payment rails, decentralize finance, or tokenize physical assets, the real value is the revolution in database infrastructure. I am looking at EOSIO CTO Dan Larimer who spoke at the US Capitol in late January 2020 about EOSIO's database revolution to become the de facto database technology for the next iteration of the digital world.


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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