Ethereum - Still just getting warmed up. Now it gets interesting

mrees999
By mrees999 on Wed, May 31, 2017 - 5:51pm

All of this hubbub about Ethereum, now trading over $230 regularly. It was $10 - January, $50 in March, $150 April, $230 May - 23x.

And that wasn't enough?

 

That's right.  All of this was done with no major exchanges in China - the 1 billion + population country that does most of the Bitcoin Trading.

 

Until now.

 

Ready for another surge?

 

 

13 Comments

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
All about the Basic Attention Token (BAT)

The initial coin offering for the BAT was held today.  The new kind of public funding for projects for the new paradigm is now in full swing.  It sold all of its 34 million dollars worth of tokens...

 

in 24 seconds.

 

Still getting your head wrapped around this new paradigm?  Time to take it seriously?

 

Take some time to study the BAT and you will know why I was there.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Mike Krieger was pissed off about the BAT ICO..

https://libertyblitzkrieg.com/2017/05/31/bats-ico-raises-35-million-in-2...

Meanwhile, it appears people were willing to spend thousands of dollars in transaction fees to cut the line. Here’s what Ethereum co-founder Vitalik Buterin noted on Twitter earlier:

This seems to imply that anyone with big pockets who can afford to pay thousands in transaction fees to get a huge allocation will always be able to squeeze out the little guy in ICOs. Is this what we want? It’s not what I want.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
It's easy to see that Mike Krieger is a rookie

It's easy to see there is a lot of confusion for the BAT ICO today (Just think, that sentence would not have made any sense a year ago).

It was sold out in three blocks (less than one minute). It was available on the liqui.io exchange for sale within two hours.  This means that the exchange had to already make arrangements with the BAT developers to have the needed information to include in their computers.  

BAT is a product for an exchange. That is their business. It is evident that they were one of the high bidders to get the product, so they had the liquidity to sell to their customers.  This exchange has consistently been first.  They are out-hustling the industry and deserve kudos for getting the tokens to the public so quickly. Yes in the process they made 7x. I would have loved to make 7x for two hours of 'work, ' but you have to realize they probably spent months doing this work to offer it. The 7x for the portion they bought likely didn't cover the engineering work and programming it took to offer it for sale. This was a loss leader for them.

I wouldn't expect Mike or others brand-spanking new to this world to understand that.   A lot of confused people just assumed it was big whales that swooped in and bought out everybody and they are 'crying' about it. They are fools.

Dollars to donuts the other exchanges likely did the very same thing for the very same reasons.  They just aren't as efficient as Liqui. We should be thanking them because they will get them out to the public so quickly for those paying attention and acting rather than crying and complaining about it. They will also make a profit hopefully - that's why businesses are in business. I was quite happy to pay my 20 cents per token in the first hour (They are cheaper at this moment). 

I was happy to pay 25 cents per ether token too less than three years ago when very few people knew anything about it but I had the vision. Now it stays above $230 per token, and I still think it's a hell of a deal at that price. I have no trouble picturing BAT at 100x value considering it was created by the same guy who invented much of the web as you know it.

Some people get so caught up in thinking of only today - they don't see the big picture as the paradigm changes again under their feet. 

At 17 cents, a 10x ROI is $1.70. That's still highway robbery. At $17.00 it would be a 100x gain...still peanuts.  Am I going to complain I couldn't buy it at 3.5 cents?

Small minds go nowhere. Think BIG.  Have vision.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Thank you Mrees...

I will say that Krieger is one of the good guys.. very liberty minded, very level headed in general.  He is positive on crypto's.  

That being said, I think you are correct and he completely misses the points you made.. while these actions (the anti-crowd nature of this particular crowd sourced ICO) do seem to have other positive benefits, like the funding of the exchange structure.  Not sure why Vitalik also seems to miss the point : ) 

As always, I appreciate your unique and insightful commentary!

Hey.. another subject;  DASH

I don't know near as much as you Mrees... but DASH sounds promising. .especially in terms of the structure of a long term ecosystem of miners, etc. Do you have an opinion on DASH and more to the point, on the concerns raised about the long term unsustainability of the BTV and ETH ecosystems (meaning miners, foundations, core programmers, etc).  Thank you!

 

MJB's picture
MJB
Status: Silver Member (Offline)
Joined: Jan 5 2016
Posts: 117
Jim...

I watched this interview a few days ago.. X22 has some great guests on the spotlight.

Amanda is on DASH's payroll.She is a spokeswoman, cheerleader. Of course she is saying these things.. When she gets into the DASH foundation being more funded than BTC projects, well think about it. That means that a lot of DASH is concentrated in the founder's hands.It is more centralized.

Is this a bad thing? Not necessarily but one reason I like BTC more is because of it decentralized nature.. it may be more messy but its more 'free' make sense?

I think DASH will be around long term but won't preform as well as ETH/BTC. 

Just my 2 cents.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
Vitalik comments - Ethereum Fee Structure

There is a lot of discussion going on among the developers of ethereum right now about the cost of gas (The transaction fees paid to the nodes for processing transactions). The priority for processing is based on capitalism with people needing priority ‘packages’ willing to pay a higher fee to get their token transfer through will get bumped up. There is a maximum limit to the fee so people can’t accidentally send a million dollars’ worth of ether to pay the fee.

They have had to adjust this fee throughout the almost 2-year life of the network to account for the fluctuation in the price of ether. This is an open source project and the last code revision from last fall was made to stop a hacker from creating unlimited new addresses that remained empty as a sort of spam attack. One of the mechanisms for this fix was to leave the gas price in a certain range and let the miners themselves have a sliding range that they can opt to use to set a minimum bar.

Vitalik and the core team can, and do, issue recommendations to the miners - but they miners themselves are free to ignore the suggestion. As it is not centrally managed, a democracy of the miners themselves essentially ‘vote’ in the manner for which they set the fee minimum for their own mining machines.

With that in mind – the last update range was set when the price of ether was less than $10.  Now it is 23 times that price the fee range suggested back then no longer makes sense.

So in context, Vatalik was giving his message mostly for the miner audience to remind them that now it is harder for ‘regular’ people to get priority as the max range is now over $2,000 to get a "first class seat". This has the effect of squeezing out regular people and makes the miners look greedy. The core team’s new suggestion on their forums is to get the miners to slide their optional fee settings back down to reasonable levels considering the huge surge in price that is expected to continue. The mantra of the core team is to remain to their roots of being a network for the world, not just the rich. Idealistic Vitalik regularly has shown disdain for the shallow wealthy that bring no social ethical betterment of the world (Rent Seekers). 

It will be up to the miners themselves to comply, as again, this network is not centrally controlled by design and changes are ‘voted’ on by the actions of the miners themselves. The network itself is becoming bogged down during the ICO surges and only a max of 25 transactions per second can go through at this stage. This is about eight times better than bitcoin bottleneck and Microsoft has announced designed plans to raise it to at least 100 transactions per second on the native chain. Other technology side-chains are expected offload transactions and allow millions per second in the coming months with new technology now going through the final stages of testing.

So although the BAT was indirectly referenced as the cause of the spike \ and resulting fee price, it appears it wasn’t a commentary on the BAT itself – only the result on the network \miners \and fee structure currently in place. He offers proof that adjustments might be necessary and may be appealing to their sense of collective betterment of the network verses personal greed. It is likely that all of the early purchases of the BAT token paid a similar fee for priority. If so, the three blocks that processed the transactions – in theory using $2,000 fee at 25 transactions per block earned that miner that won the right to process that block made $50,000 in fees. – And the next two miners did the same. This is in addition to the award of five ether as the reward for processing the block (Another $1,150 at the ether price of $230). It really paid to be a miner yesterday – and will likely be in the future during the big and popular ICOs. This is popular with miners but it currently hurts the network for anybody else trying to get their every-day transactions through during these spikes.

The next hard-fork version is due this summer with the roadmap defined “Metropolis” version of Etherum which is the third of four major releases. We expect that the fee structure for the gas fee will be adjusted to account for the price surge to make it more in-line. The entire mining structure is slated to end with the fourth release where they discontinue the ‘proof of stake’ method and reward system. These are growing pains through a network acting as a paradigm shift

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
About Dash

Dash is interesting. I liked it at $8 and sold most of it at less than $70 so it has been good to me.  I like Amanda she's local to me and has attended my local Bitcoin Meetup group. 

Dash has gone through several public "re-makes" when it started - it co-founded by Cody Wilson. from the 'build your own gun' fame.  I even donated a little bit of money to help it jump-start for the development team years ago as I think privacy is important. Back then it was called "Dark Coin". They rebranded to a more friendly sounding 'DASH"

They have an interesting governance model which I really like that allows a bit of the transfer fee to go to the developers to incentives them to continue to work on the project and get paid for it. Most coins (if not all) before then strictly developed by unpaid volunteers, or by core teams that receiving pay from the ICO and hoping it went up in value.  With this income, they pay Amanda as a spokesperson and she does a fine job.  

The token itself relies on a two-step type of node structure if you want privacy. You have 'tumbler' nodes the mix and match coins so that it is harder to trace the incoming coins from the outgoing coins. It follows a model like "coin-join". The 'tumbler nodes' get paid a separate fee than the true miners. If privacy isn't a concern, their marketing team has had success in making it a payment platform for vendors and is gaining more adoption. The miners run a custom algorithm that seems, on the surface at least, to make attacks on the network much harder.

The problems I have with it:  It is more centralized. The creators still own a disproportionate amount of the tokens. Not that this is necessarily a bad thing. Satoshi still is considered to own more than a million bitcoins which represent more than 5% of outstanding supply. The privacy factor is questionable, It has been demonstrated that the tumbling method can be defeated by agencies dedicated to doing so and will if a cause is worth the effort. This might be useful if tracking down a terrorist but perhaps their consideration of a 'cause' includes somebody protesting a corrupt government somewhere? It becomes a slippery slope.

Zcash - type tokens and Zero-ring signatures is a much better technology in my opinion. The privacy is built into the token itself rather than a second layer that might be spoofed or have a non-friendly agency decide to run a tumbler node themselves to monitor the transactions.

Some of the zero-ring coins have problems themselves with a possibly massively bloated blockchain because it must store everything about a transaction not knowing sender\receiver there is nothing you can trim off like bitcoin\ethereum.

In the end, ethereum itself will incorporate zero-ring technology and the privacy will be built into the token. In my opinion, it makes Dash obsolete eventually. It might also make all of the zero-ring coins also obsolete at some point. Who knows how far down the road that will be.  Until then, the uneducated people will continue to put speculation money into them. Heck, even educated people might as well until the music stops. Perhaps they find another trick that makes them unique and useful.  Who knows? I put my own money into projects I find more interesting and useful to change paradigms.

 

 

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Thanks MJB - Dash

I did gather that she was associated with the coin.. what I was really trying to understand was what mrees gets into.. i.e. the question of long term sustainability of .. well.. any coin based on the incentive structure built into it.  She brought up the differences between Dash and ETH/BTC and predicted that long, long term they (ETH/BTC) would not survive because of these factors.    

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Thanks for the Opus on miner rewards Mrees!

So in context, Vatalik was giving his message mostly for the miner audience to remind them that now it is harder for ‘regular’ people to get priority as the max range is now over $2,000 to get a "first class seat". This has the effect of squeezing out regular people and makes the miners look greedy. The core team’s new suggestion on their forums is to get the miners to slide their optional fee settings back down to reasonable levels considering the huge surge in price that is expected to continue. The mantra of the core team is to remain to their roots of being a network for the world, not just the rich. Idealistic Vitalik regularly has shown disdain for the shallow wealthy that bring no social ethical betterment of the world (Rent Seekers).

This is just super insightful... I don't think any of us would have been able to unravel the various issues and motivations going on here.. Krieger obviously did not understand all the context.

I will remind folks reading this that we have an investing space here that is full of froth, and very much subject to fundamentals.  As compared to manipulated markets.. you can definitely profit in this market based on simple information/knowledge asymmetry... In other words the smarter guy or gal can actually win here.  There is a huge amount of dumb money playing in the crypto space... and I will once again thank Mrees for gracing us with his commentary here at PP.com.      

skipr's picture
skipr
Status: Bronze Member (Offline)
Joined: Jan 9 2016
Posts: 97
Paul Craig Roberts on cryptos

Does he have some valid points?

http://www.paulcraigroberts.org/2017/05/31/bitcoin-standing-gold/

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
Silly Roberts. Bits are for kids.

Roberts doesn't have a grasp on crypto. He thinks bitcoin and all crypto have the same properties and can be easily replaced one for another. He's stereotyped them into one category. 

He thinks the Fed and central banks could wipe them out - and they might cause trouble if they wanted as they can print money to buy which costs them nothing, and then could dump which costs them nothing.

But they are in favor of them. In your own research, you will see hundreds of articles which show support in the last year although they were suspicious a few years ago when they weren't understood as well. The explosion of innovation is because they didn't disrupt them years ago. With the world economy in shambles - crypto economics is their last, best hope and they know it.  None of them want to be left technically behind and they see AI, Robotics and blockchain coming together to make jobs obsolete. 

Those who aren't in front of the future will die by it. Innovate or die.  Roberts is stuck in the past if he's offering advice like this and hasn't even taken the time to do a Google search on central bank views on blockchain technologies.

Many will be created - but they are competing against themselves and 90% of them are scams or garbage. The strong ones will stay around and will attract people to them if they are useful and valued.  I can't think of anybody in a game-theory strategy would want to disrupt that except for some small time thinkers stuck in the past and aren't in charge of keeping populations from revolution.

Smart people keep their eyes over the horizon and not the rear view mirror.

 

 

 

 

Afridev's picture
Afridev
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 128
Some basics on cryptocurrencies?

Raining outside so delaying preparing the new beds to get a basic grasp around Cryptocurrencies. Some articles that seem interesting:

Blockchain: https://medium.com/the-intrepid-review/how-does-the-blockchain-work-for-...

Tokens: https://medium.com/@balajis/thoughts-on-tokens-436109aabcbe

Don't understand everything they write, but probably others do smiley

Most likely largely outdated (and shown here before), to put things in perspective: http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in...

If a couple of % of traditional 'wealth' would flow into Cryptos (existing and future), that would already be a major shift. Putting a little traditional currency in Crypto seems to be an example of the asymmetry Nassim Nicholas Taleb describes in Antifragile, limited downside against potentially much larger upside. Ramblings...

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 372
Training classes available

I've recorded a few of the classes I've given and made the available if you look through this discussion group.   It's tough to find digestible and reliable information on blockchain technology that is consistent and trustworthy. Which is why I decided to make my own.

More to come on that. But the few I've linked on this group will get you going.

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments