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What Drives My Crypto Investing: Four Key Factors For Your Consideration

natxlawNov 16, 2018, 10:13:28 PM

Cryptocurrency is the future of money. Whether you like it or not, that is the way it is. The adoption rate of crypto makes it a matter of when, not if there will be mass-adoption. This is as predictable as a giant blaze in California when you have spent 10 years letting brush pile up and not building any fire breaks, and making everyone paranoid about the normal smaller forest fires.

So where do I see the major growth happening? I have identified 4 major trends to watch for in the adoption of crypto. I am not a financial adviser so none of this material should be considered financial advice.

1. End of Traditional Banking

Crypto means no more waiting here

It is a waste of time, life and money (all of which are value which can be qualified as money) for you to sit in a line of cars at a bank on a corner on Friday, burning gas, waiting to deposit your paycheck and get your weekend spending cash. This will be over. this means intersections in downtown with a now empty building on all four corners. Those bank branches are a tiny node on the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network that is no more functional than your cell phone as a bank. Your cell phone does not require a team of 20 people. You no longer have to pay those 20 people to make work for you. What you now call "a bank" will be reduced to a phonebook. Banks will become nodes on networks like Ripple and Lightning where they will leverage their customer lists to try to be the least expensive facilitators of transactions and beg you to let them hold your coins in their wallets so they can open more payment channels. People may still go to them the way your great grandmother was still paying $2/month for her AT&T rotary phone rental, but they will have to scale it back a ton, and all the money they used to require as operating expenses will be remonetized in cryptos like Bitcoin and Litecoin. Ripple is intended for this as well, but Ripple does not have a hard cap, so bankers will be tempted to print more of these rather than allow them to be purely deflationary. Bitcoin is deflationary, meaning there are only 21,000,000 of them so the larger the volume of transactions that happens in Bitcoin, the more value each coin must represent. They started out representing $.0008 USD (1250 Bitcoins per Dollar about the amount of electricity required to mine them at the time) now they represent $6000 USD. With Ripple, they can create more tokens, so this kind of growth will be unlikely. Instead of letting a $1 investment go to over 7 million, they will most likely issue more coins. 

2. Banking of the Un-banked

Access to international finance will lift billions out of poverty, and create trillions of dollars in new value to be monetized by cryptocurrency.

There are 2 B B billion (with a B) people in the world who have access to a cell phone but not access to clean water. These two B B billion people will become B B bankers. 

You have been told a lot of lies about these people, from your church, your politicians, and especially your missionaries and charities that want to "help" them. The fact is, these people have valuable natural resources, but without access to the global financial system, they cannot monetize them. 1 million dollars worth of coffee is useless if you cannot sell it. Projects like Stellar Lumens are going to give people who did not have the power to engage in international banking because they did not have one of those banks we talked about in part 1 (on every street corner) are now going to be able to get a fair price for their goods. They will not be giving away 90% of the value of their coffee to a middleman who turns around and calls it "fair trade." This value that previously did not exist, will now be monetized into the non-inflationary cryptos like Bitcoin and Litecoin after it has been utilized on the Stellar Lumen network or possibly Ripple. This means a larger financial system where these 2 billion people are players, which means you can stop paying your church to dig wells for these folks, and they can trade labor and goods with you.

 3. Micropayments

What do you do that is worth less than 1 penny? Lots of things. You are reading this article right now, and you are getting paid nothing for that, but I have paid less than a penny to provide you that opportunity. How does this change your world?? This small payments allow us to make a proper accounting for the small amounts of value that are exchanged in acts like 'watching a commercial' or 'watching a video.' Now we know that a fight night on HBO is a $50 pay per view transaction, but how much is that 30 minutes of weather channel worth (and who should pay who)? What about ESPN?. 

ESPN is the big offender. If you have it in your pay TV package, you are paying $40 a month for it weather you watch it or not. Some of the other channels you actually watch are getting less than they should because of this. Content providers have screamed at Time Warner about this for 3 decades, and now micro-payments finally provide a solution. Companies like Theta Token, and Basic Attention Token are tackling these issue.

Imagine you turn on the TV and pay one tenth of a penny (.001 USD) per minute while you watch TLC, but earn two cents a minute while you are watching the commercials. The Theta token (thetatoken.org) attempts to do exactly this, by creating a network were people are able to monetize their hard drive space and bandwidth that they are not using to help content providers replace server farms and cloud storage. Right now, you are paying $90 for cable TV and unlimited internet, now you can cut back to just the internet for $50 a month, but when you are not using it, you are earning Theta tokens while other people use your connection. When you sit down to watch TV, you may have $60 worth of entertainment credit waiting on you, so instead of watching reruns of Pawnstars on Discovery, you decide to watch something expensive that used to be Pay Per View. It may sound preposterous now, but in 5-10 years, you will go into Walmart to buy your Roku (has storage has internet) and it will say "Pays for premium content with average use!" on the box. All that ESPN you pay for now that you don't watch is right back in your pocket. The loser the Disney corporation, the winner: again, it's you!

10 years from now, you will pay for your cell phone, internet and your rental car, by the minute or the second. With services like PayPie, you may see your pay come into your bitcoin wallet on a minute by minute or second by second basis while you work. 

4. The Tokenization of Everything

Tokens provide  owner records for anything, that are as easy to exchange with others as sending Bitcoin.

Here I've saved the most important for last, and this is one you should carefully consider. I repeat the disclaimer that this is not financial advice and i am not a financial adviser. This one is important but unlike the others, it could be very bad for you in the short term, though it will be good for most of the readers in the long term.

I will presume that anyone having read this far knows crypto well enough to have at least put some BTC into a Jaxx wallet. What made Bitcoin so great is that finally the world had a means of ensuring that only one person could hold an electronic token. You do not send Bitcoin, your transaction settles. When you create a transaction, it either gets mined into the blockchain, or it does not, there is no possibility of the coins you "send" becoming "lost." Your transaction either settles, or it does not. 

Tokens Make Transactions Simple and Low Cost

Because of the security and uniqueness of digital tokens in a cryptocurrency system, we now have the power to digitize and electronically track assets like stocks, bonds, real-estate, cars, and anything else you might want to trade ownership of (percentage shares of a small business), by assigning it a unique digital token.

How does this change your world? Now instead of paying a $1000 for title search when selling a house, you pay $50 to get enough tokens to access a blockchain like Propy where a rock solid chain of custody is preverified and you just add your transaction to the ledger. Your local politician who's family now owns the title companies that get chosen by your municipality to do the title work can go straight to hell.

With your real estate electronically verifiable, if you want to take out a loan against the property, it can be done in a matter of seconds, by tying the electronic token representing the property into a smart contract (we'll talk about those in another article).

Tokens Bring Honesty to Ownership Records: A Good Thing Unless You're Crooked

However, the advent of these tokens presents a significant danger to your retirement because it will expose banker dishonesty. Right now, if you have a trading account with FeeTrade, ChuckieSquab or whoever, you do not own the shares you think you do. If you buy 1000 shares of GE, maybe they buy 100 shares, and they keep a stack of cash around to pay you if you cash out. This is called, rehypothecation, and it is completely legal, just like fractional reserve banking (banks lending out several dollars for every dollar you deposit in an account). This hurts you two ways, 1) when you buy the stock, that should make it go up. When they don't buy it for you, it does not go up and you make less money right off 2). If the stock does go up, the bank does not have it. The future of stock/bond accounts is going to be like your bitcoin wallet. You will have tokens the way people in old times had physical stock certificates. The problem: currently every share of GE has multiple owners and the advent to the "tokenization of everything" is going to expose this. There simply will not be enough shares to go round. The banks will have two options 1) tank the price of the securities so they have enough cash to pay for the shares they have sold at a much lower price 2) declare themselves insolvent and pay a fraction of what they owe (a much lower price). I don't have any money in traditional investment accounts except what I cannot avoid.

Other Losers from Tokenization

If you are an accountant, you may want to start looking for ways to make yourself useful that do not include audits. With everything tokenized on the blockchain, an audit can be performed with the click of a mouse. Protocols like Propy, Veritaseum, and Ethereum itself, will provide extremely cheap means to tokenize and transfer ownership of every imaginable item of value, so again,  bad for middlemen, great for buyers and sellers. 


These are not the only four factors involved in the blockchain/cryptocurreny revolution, but they are the four that I have chosen to focus my attention upon. I would love to hear yours in the comment section. All the blockchain is is a truth mechanism that is stable enough to reliably exchange value. It is replacing its current competition, centralized authority, because it is superior in every respect. The centralized controllers are fat and happy on money that you and I leave on the table (sometimes without even knowing) so they can be expected to fight cryptocurrency with all they have, but no one cannot defeat an idea whose time has come.