CWC Newsletter #6 (Dec. 9, 2019)

By KJ Kingsley, Analyst


Top Updates:


1. Capitulation and Depression within Crypto Twitter. With prices no where near all-time highs, many investors on social media have voiced their concerns about the future viability of not only a specific cryptocurrency but the larger space. Although there is much fear and doubt being sowed within the space, many investors need to revisit their investment thesis to better allocate their resources while limiting risk. I believe that we are still very early in the blockchain race, and I think this period is similar to the early 2000s and the internet boom. We haven’t seen the rise of Google, Facebook, or Amazon yet, but the blockchain space will one day incorporate all of these companies into a new economic reality where we are paid for our data, our security and identity are protected, and our most prized possessions may be digital rather than physical.


2. Ethereum’s network upgrades and other pressing issues. This past week saw the successful upgrade of Ethereum’s network where it adopted the code for Istanbul, a phase within a two-year long upgrade geared towards solving scalability, security, and user experience issues. In addition, a developer found a bug on Ethereum’s largest decentralized application (Dapp) called MakerDao , a stablecoin where Ethereum users “lend” their Ether token for interest so that others may borrow those Ether token for trading on leverage, loans, or other financial instruments. The bug would have allowed a nefarious user to liquidate all of the Ethereum locked up in the Maker Dao contract, which would amount to hundreds of millions of dollars. This is just the latest alarming development in the two-year roadmap for Ethereum’s largest upgrade since its launch in 2015.


3. EOS’s latest rankings. The two largest ratings agencies have contrasting views on EOS. On one hand, the Weiss Crypto Ratings have issued a “C-“ for the EOS blockchain. This new ranking is lower than EOS’s previous rating of “B,” and Weiss Crypto Ratings have indicated that they are concerned with issues involving decentralization, congestion, and collusion. Although Weiss Crypto Ratings rated EOS an “A” over a year ago, this slow decline reveals that EOS has some complications that need to be resolved. On the other hand, the CCID Research Institute of the Ministry of Industry and Information Technology of China published the 15th Global Public Chain Technology Evaluation Index and ranked EOS the #1 blockchain in the world. Bitcoin was ranked 9th and Ethereum came in 2nd. The polarization surrounding EOS shows that there are competing views that need a middle ground.


4. The Global Push for Government Digital Currencies. Across the world, central banks are working with cryptocurrency projects to deploy their own nationalized digital currency from such governments like China, Venezuela, Uruguay, France, and the Marshall Islands. China is poised to launch their long-awaited digital currency (first announced in 2016) and are planning to test it in the cities of Shenzhen and Suzhou soon. China is accelerating their launch in response to their growing unease of the looming release of Facebook’s Libra. The Bank of France is interested in exploring a central bank-issued digital currency in 2020. The Republic of the Marshall Islands will release their national digital currency, SOV, which will use the eosio source code, the same code that powers the EOS mainnet. With the advent of central banks entering the cryptocurrency space to issue their own tokens, these banks will have to look at large, proven blockchains. State Street, last week, let go over 100 blockchain developers because they realized that it would be more cost effective if they would use a public blockchain (Ethereum, EOS, Tezos) rather than build out their own private blockchain. A ripe space for investment speculation would be to bet on which public blockchain national governments will use to launch their own national digital currency.

5. The Value of Bitcoin’s Upcoming Halving Event Reconsidered. About every four years the bitcoin blockchain experiencing something called a “halving” where the rate of bitcoin mining is halved by 50% so that the rate of inflation and rate of bitcoin mining revenue decrease. The next bitcoin halving will occur next year. For the past 2 “halvings,” the bitcoin price rallied to new highs because of these economic forces. In relation to bitcoin’s halving, another crypto called Litecoin (which is based on bitcoin’s technology) experienced their halving in August 2019. Litecoin investors hoped that the price of Litecoin would skyrocket similar to bitcoin’s price movement after past halvings. Although the price did rally, in the months that followed, the price of Litecoin declined from $145 to $45 while the overall security of Litecoin also suffered. The miners who secured the Litecoin blockchain were persuaded to leave Litecoin because the halving made their mining operations more expensive and the token price was unable to support their break-even bottom lines. Bitcoin fanatics are speculating that bitcoin’s halving next year will be the catalyst for the next bull run and new all time highs. However, with the debacle that ensued within the Litecoin community after their recent halving, it would be prudent to approach the bitcoin halving with some weariness.


6. Block.One will Launch Voice Social Media Dapp in February 2020. This past week saw the company behind EOS, Block.one, announce that they will launch the beta version of their social media application, Voice, on February 14, 2020. After speaking about Voice at their June 2019 event, many users and investors have been in the dark about the developments surrounding this new application poised to rival Facebook. Block.one claims they have spent around $150 million to develop Voice and the application will be launched on a combination of public and private eosio blockchains. With the recent congestion problems on the EOS mainnet due to the increased demand of CPU resources to transact, Block.one is weary about having a commercial-scale Dapp that may not function if it is on a congested blockchain. However, other EOS pundits have indicated that the Voice Dapp will be the gateway for users to explore the EOS landscape in addition to the other EOS sisterchains such as Wax, Worbli, Telos, and BOS. If Block.one is successful in onboarding millions of users onto their Voice platform, it would mark a positive turning point in the public’s relationship towards blockchain technologies.


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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