Why can't the drums never stop?
A man goes on vacation to a tropical island. As soon as he gets off the plane, he hears drums. He thinks, "Wow, this is cool." He goes to the beach, he hears the drums, he eats lunch, he hears drums, he goes to a luau, and he hears drums. He TRIES to go to sleep, he hears drums. This goes on for several nights, and gets to the point where the guy can't sleep at night because of the drums. Finally, he goes down to the front desk. When he gets there, he asks the manager, "Mister, that's it!! Why won't those drummers stop?! I can't get any sleep!" The manager replies, "No! The drums must NEVER stop. It's terrible if the drums stop drumming." "Why?" "When drums stop... bass solo begins."#welcome, #earn, #tangled, #crypto,
Why can't the drums never stop?
A man goes on vacation to a tropical island. As soon as he gets off the plane, he hears drums. He thinks, "Wow, this is cool." He goes to the beach, he hears the drums, he eats lunch, he hears drums, he goes to a luau, and he hears drums. He TRIES to go to sleep, he hears drums. This goes on for several nights, and gets to the point where the guy can't sleep at night because of the drums. Finally, he goes down to the front desk. When he gets there, he asks the manager, "Mister, that's it!! Why won't those drummers stop?! I can...
Volatility and #Crypto: The Good, The Bad, and the Ugly Truth
If you plan on, or already are, involved in any market it’s time to embrace this unavoidable aspect of the economic game.
Widowmaker of the untrained trader.
Destroyer of margin trading degenerates.
Equalizer of Illusion.
Whatever you want to call it, Volatility is an omnipresent reality in markets. It is the force of radical price discovery and the gauge of emotional economic stability.
Being the #financial/mathematic primitive that measures the degree of price deviation within a set timeframe, volatility is known to be a reliable metric for profiling the risk of an asset.
Typically, the higher the volatility, the harder it is to predict its price, the riskier the asset is considered. The lower the volatility, the more stable the price, the lower the chance of being incorrect, and the safer the asset is considered to be.
Among novice traders, young investors, and mass media, volatility gets a bad rep. It is seen as a sign of indecision and a lack of certainty. In fact, the fluctuations are often demonized as being signs of an inefficient and immature market.
It's not that this is wrong, but it's missing the bigger picture.
Regardless of an asset's maturity, Prices are not constant.
They never were.
They never will be.
Everything from, #Bitcoin to #Ethereum, and even the oldest asset of all time, #gold, fluctuates in price on a daily basis.
Why?
The externalities that humans experience in life are a reflection of their aggregate internal state. The collective consciousness of humanity superimposes its perspective outwards into the markets. Given how variable every individual person's perspective is, there is a constant battle between the sequencing of consumption and the sequencing of production (a fancy way of saying supply vs. demand).
You see, humanity is an emotional creature. It allows its short-term feelings to obfuscate its view of the world causing it to detach from reality. This dissonance results in a bias that deludes us from understanding a very subtle, fundamental truth about finance and economics.
Price does not equal value
Price and value are two completely separate and subjective principles, one rooted in finance, the other in human nature.
Think about it for a second.
If you are thirsty, what's more valuable to you, $10 or an ice-cold bottle of water? Sure the $10 price tag may seem absurd, but when compared to dying of dehydration, it’s a bargain.
Or perhaps a better illustration for the crypto native would be made through the banana desert example.
Imagine you get stuck on a desert island. All you have is a ledger hardware wallet with 1,000 #BTC on it and each BTC is worth $1,000,000. But you have no food, no water, no people to talk to, nothing but miles of salty sea and dry sand around you. Would you trade the wallet for all the food and water you will need? (If you said no, welcome to my world, we going to heaven rich AF. Just kidding, we gonna survive MFER.) But in all reality, at some point, you would be willing to give it all away for a banana tree.
Who makes the most money from this knowledge?
Professionals.
Why?
Because professionals have a deep understanding of mass psychology and insights into the true nature of market operations. They see the sharp bidirectional gyrations in price in short time frames not as hurdles to deal with or fear, but as opportunities to take advantage of.
On the side of tradfi we have investor extraordinaire, Warren Buffet. Known for his persistent thesis around value investing. Simply put, the method he used to become one of the greatest financiers in history was by identifying mismatches between the price of stocks and the fundamental value those companies provided to society. He quantified the perceptive emotional illusion of society.
On the side of the crypto markets, we have CZ from #Binance. I have incredible respect for the man, but I also understand how he makes money. As an exchange operator, he does not care whether the price goes up or down, all that matters to him is that people buy and sell so that he can collect trading fees. The more emotionally unstable his customers are, the more likely they are to engage in high-frequency reactive/impulsive trading and the more money they bring him.
Nothing is good or bad, but our thinking makes it so.
— William Shakespeare.
How can we expect prices to be stable, if the perspective of people who are pricing things and those that are purchasing them are unstable? (not to mention the tool we use for pricing is also totally unstable).
Besides, while there is definitely an important role for stability in life; if everything in life was stable, humanity would be disincentivized from taking risks and in turn be bored out of its mind.
If things just went up in price forever we would all be living on a planet of investment geniuses. If things went down forever there would be no concept of value preservation.
Volatility is a necessary part of the greater human experience.
This leads us to the next idea, if crypto is the most volatile asset class, and it is the volatility of markets that humanizes economics, then crypto must be the most humane market of all.
Well… yes and no.
Notorious for its ability to rise and fall 10% per day like clockwork, #cryptocurrency is the pinnacle of risk. Even though this “high-risk” asset likes to have its price jump around the chart, its value proposition to society has been able to drive the industry from absolute nothing into the trillions of dollars. Bringing life-changing wealth to some, and total devastation to others…
Crypto gets its volatility from a unique mixture of four factors:
1) It is a very young, emerging sector
2) It began its ascension through retail
3) There is no historic model to quantify its value proposition.
4) Massive manipulation.
Lets take a look at crypto volatility from a few different angles:
The Good
Washing out toxic leverage.
Some institutions become obnoxiously greedy. They allow their manipulative tactics to get the best of them and begin over-extending themselves. While it is definitely heartbreaking to see individual people lose their life savings from these events, it is also healthy to watch shitty institutions crumble.
Giving a chance for people with very little money and an incredible knack for markets to rise from poverty.
Everybody knows by now, the higher the risk, the higher the reward, it's just a simple law of financial physics. The less somebody has to lose by taking a wild chance, the more likely they are to take that chance and the more possible it becomes for them to make a truly life-changing trade/investment.
The Bad
Margin trading in crypto is like juggling flaming knives with a blindfold on.
Like a casino from hell, the crypto markets have financial instruments that allow users to take leverage; some as high as 100x. Obviously seeing this potentiality of returns blinds people from rational thinking. The unknowing end user does not, and will not read the disclaimers, nor will they understand the pain of getting liquidated until it’s too late.
Fortunes have been flushed down the toilet with seemingly random, sharp price movements because of the all too natural desperate desire for people to change their lives in the blink of an eye.
Easy come. Easy go.
The Ugly
Volatility is a game of asymmetric uncertainty that is owned by insiders.
Understanding the power of volatility, large market participants such as hedge funds utilize hyper-complex strategies such as delta-neutral exposure (where they have positions open in both directions and collect funding rates) to protect their own portfolios while manipulating the market to legally steal money from the uninformed.
In the world of crypto, market makers will fake volume, suppress price, trigger false signals, and do anything else that would cause mental harm to the regular participants.
They will create botnets, use anonymous identities, and hire “influencers” to promote their ideas through social media and then rugpull the sh*t out of retail traders, while acting innocent and blaming the volatility of the industry…
Remember friends,
On its own, volatility is neither good nor bad. It is just a tool.
When used in conjunction with extensive knowledge, it is a tool of great wealth creation. When in conjunction with the absence of knowledge it is a dangerous burden.
What people do with volatility determines its role in society.
Stay sane.
Make good decisions.
Never give up.
Volatility and #Crypto: The Good, The Bad, and the Ugly Truth
If you plan on, or already are, involved in any market it’s time to embrace this unavoidable aspect of the economic game.
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Built on open-source software, in a transparent degen-ridden environment where activity is irreversible and without legal recourse, Defi is a honeypot of massive value that is laden with risk.
Existing at the intersection of #finance and #technology, DEFI has been heralded as the frontier of innovation and the solution to the woes of the traditional financial system.
Over the last ~3 years, a tsunami of protocols and applications have been harping on this promise, all claiming to provide some kind of unique value proposition that will enrich the lives of its user and protect them from the evils of legacy finance…
Assuming that these projects did have good intentions (which most of them don’t) the moat of informational asymmetry due to the complexities of the technology itself creates an enormous spread between truth, security, and reality. Moreover, #DEFI inherits the underlying primitive of sovereignty from crypto, where the responsibility of asset ownership and management is entirely in the hands of the users, a level of responsibility that consumers have never been faced with.
While this noble, utopian mission has attracted the attention of people from around the world and drawn in hundreds of billions of dollars in TVL, it has not been able to express the potential implications of its development.
Even though all of the experimentation that has been taking place has flooded networks with more value, the level of security in the industry has not changed at all. (arguably, with #Ethereum moving to POS it might have even degraded).
Therefore the only genuine way to protect yourself and your assets from the whirlwind of fuckery that is monitoring your wallets and trying to steal your money is by equipping yourself with knowledge.
Sure, it may not sound sexy. But if you can understand the fundamental touchpoints that can cause financial ruin, you will be far more emotionally prepared and most likely much wealthier.
So without further ado, let's put into focus how genuinely broad and varied the surface area of risk in DEFI really is.
MEV (Maximum Extractable Value)
Ah, the good ole art of on-chain extortion.
MEV is a contentious topic in the world of crypto. Perhaps nowhere more so than in the DEFI sector.
Simply put, MEV is a botnet that is looking to front-run your transaction and squeeze out any potential excess value, that should trickle back to you. Imagine paying for a $17 shirt with a $20 bill and the clerk at the register told you there is no change because of the physical entropy he has to exert in order to manually organize the bills…
In DEFI, every single function from lending to trading is subject to MEV. These pretentious bots can reorganize/sandwich/delay your transactions, prioritize their own, and force you to miss opportunities. The best way to engage in on-chain finance is minimally; try to reduce the amount of interactions that must be done.
Oracle Manipulation
Given that DEFI protocols depend exist in blockchain environments that are not aware of information that exists outside of themselves, they need a method by which to get their data from somewhere.
This is done through oracles.
Oracles are the connective tissues between on-chain and off-chain data. They are pipelines that funnel information from the real world into the digital economy.
Whenever you go to an exchange like #Uniswap and see the price of Ethereum, what is happening behind the scenes is that Uniswap is asking an Oracle network (#chainlink) to quote you a price from trusted sources. That Oracle then scans/queries other venues that provide the requested data point (#Binance, KuCoin, 1inch, etc) and provides a spot price to trade at.
In this process of receiving a request, going to find the request, and fulfilling the request, subversion exits in two general ways:
1) Origin of Data is corrupted.
The sources from which oracles get information collude to produce fake information or their servers are hacked and the data is spoofed. Chainlink might trust Binance for ETH price, but what happens if the information on Binance does something egregious (wicks the price 10x)?
2) Oracles themselves are corrupted.
Given how valuable the information that oracles provide is, it is not outside the realm of consideration that the oracles could be provoked through incentives by external forces to provide incorrect information.
Smart Contract Bugs
The most fundamental form of risk exists in DEFI.
Smart contracts may be mathematically sound, but when their hard-coded structures are met by extremely savvy hackers that can identify logical loopholes and find exploits to drain protocol liquidity, cause mass token minting, or manipulate protocol functions, it is the end user that ends up paying the ultimate price.
Besides being subverted by malicious entities, poorly coded contracts might just result in internal systemic failures. A function that is accidentally defined incorrectly can result in an error that locks liquidity permanently or a single line of code that does not map the relationship between token owners and their rights to send the token can freeze assets in wallets with no ability to ever move them.
Logic that might hold up in a closed alpha on a testnet somewhere will not be the same as the logic in a public mainnet.
The ultimate combination of the two smart contract failures can be seen with the painful example of Terra/Luna (r.i.p. billions of dollars).
Price Volatility
You might have heard this one before, #crypto assets are volatile.. very volatile.
Where traditional financial instruments, such as stocks, might swing +/- 3% in a day, it is totally normal for a crypto asset to swing upwards of +/- 15% in that same day.
When it comes to DEFI, we're not talking about the price risk you have regarding just holding an asset, we are talking about how the price movement can impact the more exotic forms of portfolio exposure. There are two general classes of this exposure:
1) providing liquidity (impermanent loss)
When tokens are provided to an AMM and the price deviates from the exact rate at the moment of deposit, impermanent loss takes place. If ETH is at $2,000 and somebody provides liquidity to an ETH/USDC pool they would supply an equal amount of 1ETH+$2,000 USDC. Doing so would obviously incur basic transaction costs, already putting them in the hole, but then if the price of ETH rises to $2,200 then the user will only be entitled to claim 1.1 ETH + $1,800 USDT. Considering there would be another basic transactional cost incurred the user would have to be exposed to an unknown duration of providing liquidity to cover those base costs from the generated yield. Moreover, the user would have to now go through more intermediaries in order to balance out their position proportionally (selling the 0.1eth for USDT). The reason this is called impermanent loss is whenever price fluctuations exceed the returns that could have been had by simply holding the asset. Think about it, the person who provided liquidity provided $4,000 worth (1ETH @ $2,000 + $2,000). When they withdrew, they got $4,000 worth (minus fees). If instead of providing the liquidity they had just held the same assets they would have $4,200 (1ETH @ $2,200 + $2,000).
2) lending/borrowing (liquidations)
Image ETH is trading at $2,000. Say you want to borrow $2,000 USDT. In order to do this, you must provide excess collateral in ETH to take the loan. So you lock up 2 ETH ($4,000) and take out the loan. Next week, ETH plummets to $1,000. Now the collateral you posted is worth $2,000; a level that is algorithmically considered risky (if you only have $2,000 worth of collateral for a $2,000 loan, you are not incentivized to pay it back). To protect the lender, your assets get market sold (likely at $1,100ea) and you're stuck with $1,000 instead of your original 2 ETH.
Underlying Blockchain Mishaps
Even if a protocol is designed properly and everything seems to be working fine, there is a not-so-subtle dependency of that protocol on the network to which it is deployed.
Validators behaving out of line, consensus mechanisms proving to be inadequate, and sudden outages, among other things can trickle up the stack and result in damaging effects to the DEFI users.
Governance Issues
As a decentralized entity, a DEFI project must have some form of governance in place to steer the project’s development and oversee its operational specifications.
In the event of a sudden revolt from the governing committee that results in some radical parameter adjustment holds the DEFI user in a perpetual limbo of uncertainty. While most of the time the governing body will be aligned with a vision of progression, that vision is highly subjective to interpretation.
Not to mention that flash loan attacks have taken place where proposals are forcefully pushed by entities that acquire large enough token amounts on the open markets just to vote on their own proposals.
Social Engineering
Wicked, evil, and disgusting.
There are no heroes in this industry. Everybody is fighting for themselves. The insane majority of projects simply do not give a sh*t about you.
Scammers will create the most elaborate systems to subvert your conscious mind. They will pretend to be representatives from a project or exchange you are involved with. They will call you, text you, email you and do anything else possible to trick you into doing some kind of action.
The most common forms of social engineering are:
1. Pretending to offer you free tokens.
2. Pretending they are official reps from other projects.
3. Asking you for help through a DM and offering a reward.
4. Telling you they can help you make money.
5. Sending you a link to click… (this is financial suicide).
If anybody contacts you about anything remotely related to the above. IGNORE them. If you feel worried about anything, opt to go directly through the official interfaces (website/app) that you use and reach out to the projects. Official moderators/admins will not initiate contact with you directly without your prompting.
Misrepresentation (Rugpulls)
Still in its infancy, this sector lacks any standard framework of definitions. So many idiotic projects throw around buzzwords in an attempt to sound convincing and tempt unknowing users.
One of the most painful to watch is when a Memecoin starts offering people a DEFI ecosystem for #NFT financialization that can help solve the interoperability problem between blockchains.
If the last message made sense to you, beware, you will be taken advantage of. If you caught on the stupidity of it, kudos you are protected.
The misrepresentation of intentions is called a Rug Pull. As the name might hint out, people put money into a project and then the rug gets pulled right out from under them. Shadowy super coders create fake contracts to collect money and then at some point just “poof” and disappear with the funds.
As a general rule of thumb, if a project’s slogan/mission statement is chock full of buzzwords, stay TF away.
There are many more complex security vectors that arise whenever interchain operations are introduced and advanced multi-lingual social engineering tactics are considered.
All that matters at the end of the day for your safety is the understanding that risk does not get removed with blockchain architecture, it is merely transformed into a new type of risk.
DEFI’s siren call is the displacement of human infrastructure with automated smart contract infrastructure. Trading off human error with mathematical logic. Even though intuition might guide us into believing that mathematics is more reliable than humans, the truth of the matter is that humans have room to correct errors, mathematics does not know the difference. Therefore, the risk profile of this transition of trust is nearly impossible to quantify.
Just don't forget that there is no such thing as a safe investment in crypto.
May your journey through Decentralized finance be fruitful and may your bags always be protected.
Stay safe out there!
Built on open-source software, in a transparent degen-ridden environment where activity is irreversible and without legal recourse, Defi is a honeypot of massive value that is laden with risk.
Existing at the intersection of #finance and #technology, DEFI has been heralded as the frontier of innovation and the solution to the woes of the traditional financial system.
Over the last ~3 years, a tsunami of protocols and applications have been harping on this promise, all claiming to provide some kind of unique value proposition that will enrich the lives of its user and protect them from the ev...
Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for evaluating the state of a project’s well-being through the lens of a birds-eye view.
It can help formulate decisions on what areas might require more attention, set performance goals, and organize a foundational understanding that a project is headed.
*Note, SWOT is an analysis of operational/fundamental elements. This is not a model to be used for technical or #trading purposes. (NFA, DYOR)
Rarely (if ever) used in #crypto, it is time to apply this timeless method of evaluation to the digital asset space.
Today, #Solana, one of the most performant L1 #blockchains in the industry will get a SWOT.
Strengths (Internal) (Helpful)
1. High Transaction throughput
Handling ~4,500 TPS on average, the Solana network can theoretically, potentially be capable of achieving over 700,000 TPS. Couples with its low latency the network has tremendous potential to draw in a wide range of applications/use cases that it would be able to sustain.
2. Strong Developer Adoption
Having over 2,000 developers puts Solana in second place (behind only Ethereum) of being the most actively developed network. The hackathons that are constantly being held have brought so much positive responses from developers desiring and willing to join Solana that it seems this trend will continue to grow.
3. Well Funded
Backed by prominent venture capital firms and drawing attention from many new financial institutions, the foundation that oversees Solana’s development has deep pockets to weather long periods of uncertainty and pursue growth and development.
4. Monolithic Architecture
Having all core functionality baked into a single software structure creates very strong dependencies between the network and the token.
5. Healthy TVL distribution
The balance of Solana’s native token SOL is not overly concentrated in any single protocol; it actually has one of the best distributions of TVL across all L1 and many L2s.
6. Strong Nakamoto Coefficient
The Nakamoto coefficient is a measure of #decentralization. Floating around 34, Solana boasts one of the highest measures across all L1 chains.
Weaknesses (Internal) (Harmful)
1. Constant Outages
Notorious for its random halts and network outages, Solana catches so much heat from degen decentralization maxis on Twitter about how it’s always going out. If more valuable operations are to arrive on Solana, outages must not be present as they would ultimately deter end users.
2. Subject to mass Spam
Thought to be one of the major causes of the network halting, Spam is rampant on Solana due to its low fees and fast transaction times. By virtue of its nature, spam is low-value/malicious activity that denies potentially important/valuable transactions from taking place. Which results in failed transactions and confused users.
3. Lack of Modularity
While its monolithic architecture provides benefits, it does come at the tradeoff of being rigid. Potentially denying it of novel developments that are being utilized in the broader industry.
Opportunities (External) (Helpful)
1. Mobile Platform
Launching the SAGA mobile phone and creating its own accompanying app store has the potential to tap into a vector of adoption that has not been contended and does not have competition.
2. Retail Adoption due to low fees & high speed
The vast majority of users will not use a platform that requires long wait times and incurs high operational costs. Consumers are fickle, they want what they want, when they want it! That is absolutely logical and Solana delivers!
3. Utilization as defacto DEPIN chain
Decentralized physical infrastructure has been a hot topic with the potential to generate massive transactional velocity. Solana’s strong geographic distribution and underlying equipment lends itself perfectly to processing this kind of information. Two major infrastructure projects, Helium and Render, recently migrated to Solana highlighting this use case.
4. Utilization for GameFI
Gaming is a highly contended sector and considered to be one of the most promising in terms of mass onboarding use cases. Blockchains capabilities to financialize gaming has sparked a new category of competition that has had hundreds of millions of dollars thrown at it. Even in the current difficult market cycle Solana Ventures has over $150 million USD allocated just for this purpose.
Threats (External) (Harmful)
1. Competition from new L1’s
There has been a new generation of blockchains popping up (Aptos, SUI), all vying to displace older projects with their superior performance. Undoubtedly, as there are more advancements in technology these new L1s do have the potential to offer an exponentially better user and security experience than their predecessors.
2. New technological landscape of Modularity in the industry
With constant conversations about rollups, sidechains and nested blockchains buzzing around the absence of modularity in Solana’s network might leave it out of this evolution.
3. Affiliation to FTX and SBF
There is a strong connotation between SOL and the sh*tshow of the FTX platform’s debacle. While this is no longer considered likely to be catastrophic to the network, it is still something that is constantly brought up in conversations around Solana.
4. Unbalanced User Base
Solana is an extremely technically complex project that demands a high level of education in order to properly understand all of its nuances. As it stands, the spectrum of users is extremely divergent; on the one hand, there are brilliant developers and technologists that support the network, on the other hand, there are absolute buffoon degens that cannot understand what makes the network different from anything else.
Odds are that my bias might have intruded on the objectivity of this #analysis, nevertheless, regardless of what this analysis shows, I am personally ultra-bullish on Solana over the next few years.
I see all of the weaknesses as just opportunities for improvement and the threats as just FUD inherent to all projects.
You might have noticed that there is no talk about regulation, that is because regulation would apply to absolutely every project and this SWOT is focused on Solana.
I might have missed something and would tremendously appreciate some feedback.
Thank you so much for reading,
I hope this serves you well on your journey.
Live long and prosper 🥂
Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for evaluating the state of a project’s well-being through the lens of a birds-eye view.
It can help formulate decisions on what areas might require more attention, set performance goals, and organize a foundational understanding that a project is headed.
*Note, SWOT is an analysis of operational/fundamental elements. This is not a model to be used for technical or #trading purposes. (NFA, DYOR)...
VeChain convinces investors at Consensus 2023 with cutting-edge technology and global sustainability initiatives
• Vechain’s Web3 as a service platform VORJ was the major highlight of the consensus 2023 event.
• The VORJ platform speeds up the development process with one-click setups of the Web3 projects.
Like every year, a major event in blockchain space – the Consensus 2023 – took place last week as several platforms disclosed and shared details about the progress they made and their future plans going ahead.
Enterprise-grade Layer 1 smart contracts platform VeChain made one of the most important announcements. VeChain has been at the center of major developments taking place in the blockchain and the Web3 space. VeChain said that its team had a great time at the Consensus 2023 “with the crypto, technical, and senior teams meeting talent and building connections across the #crypto-verse”. In its official announcement, VeChain noted:
"We shared our latest tools and tech with new audiences, with #Web3-as-a-Service platform, Vorj, stealing the limelight -> deploying tokens and NFTs with no code and no cost caught people’s attention."
VeChain convinces investors at Consensus 2023 with cutting-edge technology and global sustainability initiatives
• Vechain’s Web3 as a service platform VORJ was the major highlight of the consensus 2023 event.
• The VORJ platform speeds up the development process with one-click setups of the Web3 projects.Like every year, a major event in blockchain space – the Consensus 2023 – took place last week as several platforms disclosed and shared details about the progress they made and their future plans going ahead.
Getting Involved In and Exposed to Crypto
If you are somebody who possesses strong convictions of a technological future and enough emotional resilience to cope with the barrage of FUD that accompanies this space, there is tremendous opportunity smiling at you.
P.s. None of this is financial advice.
What sets apart the conscious being that is man from all other forms of life on earth is our ability to not only plan for the future but to proactively participate in the construction of it.
While it may be impossible to predict how society will continue to evolve with perfect accuracy, we can however have a strong sense for the direction of its evolution.
Short of a solar EMP that permanently disrupts the radio frequency waves on Earth and renders computers useless, it is safe to say that moving forward, every faculty of human life will converge toward technology.
The lowest-hanging fruit en route to this convergence also happens to be an area of extreme interest to every sane person on the planet; #finance.
Regardless of how many boom and bust cycles have swept through the industry, there is (should be) no doubt about the fact that cryptocurrency is the technological realization of finance.
As the world strengthens its acknowledgment of this maturing economic sector's permanence, a radical shift in behavior is taking place.
Organizations and individuals from every class are rushing to get exposure.
This then leads us to the next question, how can somebody get involved in crypto?
Buy the Digital Assets
This is the most straightforward method to get involved.
While it may seem simple and obvious on the surface, buying crypto is a form of art. Excessive fees, regulatory ambivalence, and sharp short-term movements can confuse and even dissuade participation.
With the abundance of onboarding applications available today, understanding when and how to enter still eludes the vast majority of people.
Highly desirable for those looking to own the underlying assets and arguably the form of exposure with the highest risk due to price volatility, direct ownership is not the most optimal choice for everyone. It demands extreme organizational dedication around the security and storage of it; a level of organization that the vast majority of users do not have or simply do not want to be tasked with.
Mining
There are two ways to get into mining:
A. set up your own equipment
Not for the lazy and not for the technically challenged.
So many people are deluded by the demands of mining. It is commonly thought that mining is a “set it and forget it” approach. That couldn’t be further from the truth.
The complex process of setting up your own mining rig requires a strong basic understanding of hardware and networking. Then after it is set up you must constantly monitor the equipment to make sure that everything is running properly. You must be able to keep up with the developers of your network to always patch any incoming software updates.
You must work out a strong financial model that accounts for the amortization of equipment, constant energy costs, fluctuations in network emissions, adjustments of hash rate, and of course, the cryptocurrencies price. Then you must work out a secure storage plan and ultimately an exit strategy. Moreover, the landscape of machinery is always advancing, as new devices with greater performance become available, your equipment loses its prominence and your operation becomes less profitable.
B. cloud mining contract (not advised)
Due to the high-touch daily monitoring and complex technical process of mining, there are online services that provide consumers with contracts to rent out servers and electrical consumption remotely, in return for the cryptocurrency that is extracted from the efforts of their machines.
While there is merit to all attempts at getting into crypto, this one I personally am not a fan of. These contracts are designed to derisk and make money for their operators.
Company Stocks
Misunderstood by crypto-natives and decentralization maxis, owning #stocks of companies that have Crypto on their balance sheets or are somehow involved in the industry translates to a form of exposure vicariously.
In some jurisdictions around the world, there is no simple way for large institutions or wealthy individuals to get involved in the digital asset industry without being scrutinized by their nosey governments. Some organizations even have legally binding operational agreements that downright forbid them from allocating capital outside of their confined sectors.
This grade of exposure is unique in the vector of value it captures. Owning Bitcoin directly is a radically different risk/reward profile than owning shares of a company involved in BTC markets.
Whether public or private, there are 4 general classes of stocks to explore:
A. Mining companies
Mining is one of the most prominent business models of public companies involved in crypto. Riot, Marathon, Cipher, Canaan, among others are such companies. Prices/valuations of these companies tread tightly with the greater crypto market price cycles, but do have a small degree of difference in their volatility (it is smaller).
B. Equipment Manufacturers
Companies producing ancillary products that support the crypto industry. I'm not just talking about BitFury or Bitmain that produce ASIC miners, I'm talking about everything from NVIDIA to AMD for graphics cards and ECX for cooling equipment. Whenever close attention is paid, there is tremendous opportunity to be found.
C. Holding companies
The traditional definition of a holding company is one that holds a vested interest in a group of other companies. Here I am referring to any business that is willing to hold crypto on its balance sheet instead of just dollars or other legacy financial instruments. The best example of this is Michael Saylor and Microstrategy. While Microstrategy is an Enterprise Business Intelligence company, the fact that it holds so much BTC in its treasury gives the stock price a very unique trading pattern versus other similar companies.
D. Exchanges
Were talking about centralized exchanges of course. Exchange businesses earn money regardless of the general market cycle. Their models allow them to benefit from activity/velocity on their platforms rather than price. Coinbase, Gemini, OKX, Binance, and countless others. The vast majority of exchanges are not publicly traded, therefore these opportunities are typically available only to private groups of insiders/investors.
* Hedge funds and VC firms also qualify for this category. However, they are money managers that have radically different risk tolerance and time horizons.
Earn Crypto
This is the silent kingpin of all methods.
Highly favored due to the absence of sensitivity to price. Earning #crypto is a subtle adaptation of DCA. Of course, if you earned $1,000 in BTC and a week later it falls down to $900, it doesn’t feel too great. However, if you earn $1,000 BTC again while at the lower price, you will accumulate more #BTC. Once the price rebounds, you would have in effect earned more than just $2,000; you earned $1,000 + ($1,000 + ~11%).
A. cashback
This is such an undervalued vehicle for accruing crypto. Surely the raw size of cashback is never going to be huge. But, odds are that you need to eat. If you are spending #money anyway, you might as well be earning some cashback rewards for doing so. There are plenty of platforms that now provide users cashback every time they make a purchase, the two that I personally use are Fold App and Lolli. (Happy stacking!)
B. Incentives for the use of platforms
Almost every new product that arrives on the market needs to have some kind of user acquisition game plan in place. Majority of the time, these plans are to provide some kind of incentive, in the form of cryptocurrency, for people to use/test their platforms. These can range from something as simple as signing up for an account and simply interacting with a GUI to something more complex as proving liquidity on a DEX. (or even using a platform like #tangled 😉 )
C. Hackathons & Bug Bounties
This one is for the developers among us. Protocols and software applications are constantly providing incentives for finding vulnerabilities in their codebases. Both early-stage and mature companies will have some form of bug bounty available all year round. Occasionally, coding festivals called “hackathons” (a mixture of the words Hacking and marathons) are hosted, where teams from around the world come to compete against one other in utilizing their development skills for creative problem-solving.
D. Writing contests
There has been a consistent rise in platforms that provide rewards for creating content. Hackernoon and Publish0x are constantly partnering with sponsors to host creation contests. If you are talented at or just love to write, this might be an option for you!
Get an Industry Job
As unsexy as it might present itself, this is one of the most effective ways to get exposure. Aside from the personal reputation and skillsets that you will develop along the way, you will build a network of like-minded individuals that will provide you with a wealth of insights and knowledge that would otherwise be impossible to gain. Cheeky? Maybe. True? Absolutely.
There are two calibers of companies to consider, startups and established giants. Startups are tricky to work with as they might offer to provide their own token as payment. High risk as you would then be dependant on their success before you have any chance of securing your value. More established companies might offer to provide payments in stablecoins. The choice is yours.
There is no right or wrong way to find yourself getting into crypto. As is the case with anything else in life, trial and error, is the only guaranteed path to improvement.
There are certainly other creative ways to find exposure, such as marrying a hodler or divorcing one. Scamming perhaps? But let's assume that everybody who is here, has a moral compass and leave these manipulative tactics of social engineering and dramatic politics off the table.
Thank you for reading.
I hope you found some insight throughout this passage that will provide you with a greater understanding of how broad the actual landscape of opportunities really is.
Live long and prosper 🥂
Getting Involved In and Exposed to Crypto
If you are somebody who possesses strong convictions of a technological future and enough emotional resilience to cope with the barrage of FUD that accompanies this space, there is tremendous opportunity smiling at you.
P.s. None of this is financial advice. What sets apart the conscious being that is man from all other forms of life on earth is our ability to not only plan for the future but to proactively participate in the construction of it.
While it may be impossible to predict how society will continue to evolve with perfect accuracy, we canBuy...
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⭐BITCOIN TRADERS GETTING DICED AS WE AWAIT RANGE BREAKOUT!⭐
Bitcoin and Crypto live charts! Lets do some Bitcoin live TA, Bitcoin live trading and look at look out the next scenarios for Bitcoin and altcoins. Let's Go‼️💯
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Blockchain: Layers 0–3
The 4 Layers of #Crypto Networks
Blockchains are like Onions, they have layers
- Shrek on distributed ledger technologies
Odds are that if you are alive in the 21 century, you have heard the term #blockchain at least once. It is the magic pixie dust that powers distributed ledgers and imbues #cryptocurrencies such as Bitcoin and Ethereum with “trust”.
Since its arrival in the public domain, some 14 years ago, this nascent technology has undergone countless iterations and become the colloquial backbone of the digital economy.
Throughout its evolution, hundreds, if not thousands, of different versions of blockchains have arrived on the marketplace all claiming to be different and promising to solve some kind of existential problem. Regardless of the variance in their designs or marketing tactics, at the highest level, the overarching purpose of all blockchain technology can be boiled down to the distribution and securitization of information under a ridged data structure.
Given the hyperbolic rate of innovation taking place in the sector, it becomes difficult to understand what exactly they are providing and distinguish them from one another.
Ultimately, one of the most effective methods used in the industry today for classifying/categorizing them is according to the four-layer framework based on the function of their implementation.
Layer 0 — (L0) — The infrastructure.
This is the foundation upon which distributed computation takes place.
A helpful way to think about layer 0, is to think about traditional internet protocols. Hardware and networking reside on this layer.
In order for a blockchain to operate there must be equipment that hosts software to interact with circuit boards that are fed binary code in order to configure their transmission, connectivity, and other base functionality.
Just like phones require radio frequency waves to actually capture signals and connect to one another, Blockchains need some kind of medium through which they send their messages. For older-generation networks such as Bitcoin, the traditional internet protocol TCP/IP catalyzes this. This has been necessary but sub-optimal as there is a dependency on centralized ISPs (Internet Service Providers).
Moreover, blockchains (up until recently) have not been compatible. They have been siloed systems that do not have a standard for communicating with each other. Recent innovations such as IBC (Inter-Blockchain-Communication) provided by the Cosmos network, have begun to slowly disintermediate ISPs by allowing blockchains to send messages between themselves.
Tl,dr: elements beyond just data structure, hardware and networking.
Examples of Layer 0: #Cosmos, Polkadot, Avalanche
Layer 1 — (L1) — Independent Core Functionality
Synonymous with architecture, security, decentralization, and ownership; Layer 1 refers to the core tenets of how a distributed ledger is implemented.
Sometimes referred to as the “implementation layer” Layer 1 pertains to the fundamental operations of an individual distributed ledger.
Designed to provide guarantees of immutability, Layer 1 includes all of the unique elements of a blockchain such as block time, programming language, client software, and consensus mechanism.
Given that security is the main driving force here, layer 1 is considered to be the settlement layer for transactions, much of the narrative of trust in #decentralized systems comes from this layer.
Constrained by the physical bounds of computation (i.e. bandwidth) L1 suffers from diminishing operational efficiencies alongside increased adoption (as more users join the network, it becomes slower).
Tl,dr: a blockchain network’s basic functionality.
Examples of Layer 1: #Bitcoin, #Ethereum, #Solana
Layer 2 — (L2) — The Scalability
Secure computation is expensive and confined within a tight range of processes, that is where the entire reason for being for Layer 2 comes in, to increase the efficiencies of its underlying Layer 1.
Inheriting the primitives and security guarantees from their mother chain; Layer 2s move the vast majority of computation off the main layer and periodically push attestations of their activity back to the base chain. That is why some decentralization maximalists refer to L2s as “off-chain” activity.
Once the boundaries/maximal capabilities/threshold of layer one were realized, innovation at this layer began to blossom. Resulting in many interesting technological solutions such as sidechains, state channels, rollups, and sharding being developed.
Sidechains are exactly what they sound like, a chain that runs in parallel to another chain. Many similarities to an L1 in the sense that they are open ledgers with a sequenced list of transactional blocks that provide some kind of guarantees, sidechains differ primarily in their consensus models. Layer 1 consensus models are optimized for security and decentralization whereas layer 2 sidechain consensus models are optimized for throughput; thus making them more centralized.
State channels are secure communication pipelines. Employed through a bi-directional multi-signature structure, this technology is not as transparent as the other alternatives and does not have a consensus model for miner/transaction validation. Instead, all of the activity that takes place on a state channel happens privately between the channel’s service providers. Closer to being considered almost fully off-chain.
Rollups are far more complex than the prior two to explain, but at the highest level, rollups are somewhere between an L1 and L2. Nested on the main layer rollups keep transactional data secure within the original environment. However, the processing of transactional data happens off-chain.
A Layer 1 can have many different Layer 2’s deployed to it.
A high-level way of thinking about this technical topology is federations, smaller states within a nation. If you live in America, you can choose which state you prefer. Every state will have its own specific laws and ideologies but all states will share basic human laws under the umbrella of the federal government.
Tl,dr: an extension of a blockchain’s operational functionality and capacity.
Examples of Layer 2: Lightning Network, Polygon, Optimism, Arbitrum
Layer 3 — (L3)— The Applications
Perhaps the most intuitive of all the layers, end-user functionality exists on layer 3.
Tasked with abstracting away the technical complexity of blockchain technologies, L3 is where DAPPs and user-facing protocols are hosted.
This is where the digital world of binary code and smart contracts finds its real-world applicability. Interaction with this layer involves a GUI (graphic user interface) for utilizing the broad range of trusted encrypted software tooling such as proving liquidity, trading, making payments, and staking among other things.
Tl,dr: Tokens, #wallets, DEXs, #NFTs and everything in between.
Examples of Layer 3: AAVE, Uniswap, Compound, OpenSea, Metamask
This should now give you a concrete understanding of what the term “Layers” means in the general context of crypto and blockchain.
There does exist another conversation around blockchain layers that pertains to the low-level structure of the technology itself. If you are interested in finding out how blockchain architecture is structured I provided an introductory framework called: “The 5 Layers of Technology in Blockchain Crypto Networks”.
It's been an absolute pleasure going over this!
I hope you find this helpful on your journey through the blockchain 😁
Thank you for reading!
See you all on the other side 🥂
Blockchain: Layers 0–3
The 4 Layers of #Crypto Networks
Blockchains are like Onions, they have layers
- Shrek on distributed ledger technologiesOdds are that if you are alive in the 21 century, you have heard the term #blockchain at least once. It is the magic pixie dust that powers distributed ledgers and imbues #cryptocurrencies such as Bitcoin and Ethereum with “trust”.Lay...