What on earth is happening?
I remember a few years back, sitting around one evening with some friends and discussing the first trillion dollar company — Apple or Microsoft? Apple made it, but lost the crown shortly, and Microsoft marched up and took it. A 1–2 finish, with a little parity at the end. Recently, Apple became the first $2T company and hardly anyone even batted an eye.
The stock market has become an insane charade, but it churns on. How much longer can it go, this little engine that could?
The stock market is an exchange which allows investors to buy and sell ownership tokens — stocks — you could even think of as membership tokens. Nothing a company does directly controls the stock price except the bits of data and information which can allow it to interact with its stock price via the medium of investor confidence.
Implausibly, investor confidence is being purchased as a commodity by the federal government, creating no end of anxiety among analysts. A crash could be coming, but maybe we’ll make it to the next phase of technological innovation before that happens — and if it does, it could change the game of investing. The building blocks are on the scene already, but when will real money begin to leave stocks and fiat currencies for the crypto universe?
The cryptocurrency markets that are popping up all over the world at an astonishing rate are similar. They represent a new technology being assembled piecemeal around the globe. Coinbase is one such market, but then so is Kyber Swap, a decentralized exchange. Coinbase and Kyber could scarcely be much more different in terms of structure and organization, but they’re both serving the same core liquidity need: cryptocurrency. These tokens and coins that only exist digitally are hot commodities today, as investors jockey for position in the coming digital makeover of our online ecosystems.
They’re largely designed by different people to accomplish different goals, but everything from Bitcoin to Ethereum’s smallest ERC20 token is part of something very similar to what the stock market represents. When I speak of tokens representing ownership in networks of people and computers which specialize in particular tasks — am I speaking of a cryptocurrency token or a stock?
am I speaking of a cryptocurrency token or a stock?
The scale in crypto is a lot smaller, for now, which magnifies returns quite magnificently on occasion, but the nascent cryptocurrency communities which facilitated the rapid growth in the space in recent years show no signs of stopping. Just today, at the time of writing, the popular Kraken exchange has received approval to become a bank. It seems crypto won’t stay in its infancy much longer.
Ethereum is growing up, too. It is a network whose market cap was recently surpassed by the sum of the market caps of tokens (networks) built upon it, and it is the heavy favorite for the immediate future with a game-changing technology upgrade on the immediate horizon. Though experts differ in their expectations as to when precisely the launch will take place, most seem to agree that this will happen anywhere from this November to January, 2021. ETH2 is scheduled to launch with absurdly fast transactions, a new proof of stake model, and other amazing bells and whistles designed to keep Ethereum in its place as the forefront of blockchain development.
Despite the massive market share currently held by Ethereum and its offshoots, growth is likely to begin to accelerate in altcoins such as Ripple (XRP) as practical applications for the technology in established business realms such as banking and trading become far more commonplace. Ripple intends to make it faster and cheaper to send money worldwide than it ever has been, with applications including the Stellar Lumens network which was forked from Ripple and the Ternio Blockcard which was built upon Stellar.
Cosmos (ATOM) is a fast, secure, and highly interoperable public blockchain which promises extremely fast transactions, low fees, a relatively small total cryptocurrency pool, and ease of use for developers. I favor Cosmos because its inflationary economic model is quite rewarding, but my doubts about it exist too. It may be that Cosmos is too rewarding, and there are many networks which walk this line.
Another promising upstart is the Polkadot network, which is almost half the size of Ripple at the time of this writing and offers slightly better staking rewards than ATOM without a 21-day unbonding period. This keeps the token pool more liquid, which seems like it would increase volatility, but Cosmos ATOM’s token price has fallen farther and faster in the recent pullback, casting doubts on the assumption that 21-day lockup is the best way to minimize volatility.
Ultimately, Apple and Microsoft are networks comprised of investors who provide capital to the business operations conducted by the employees of the business to provide value back to the investors in the form of profits and for the customers in the form of goods and services.
Blockchains can be thought of in the same way, but the capital available is currently a much smaller amount and the “companies” have unique accountability models for their “employees,” which at the very least seems riskier because it is novel. There is stiff competition for customers in the early blockchain economy, and most of the work happening today is foundational — maybe think of it as a bunch of different approaches to core B2B services upon which the consumer facing next generation of technologies will develop.
Oh, The Possibilities!
Think of the blockchain, then, as the railroad and postal service that will allow the future Sears & Roebuck Co. to begin to build their businesses. There are different networks with different structures and different features, but ultimately the only reason any of us are interested in it has to do with the way blockchain-based features will impact our already-technological lives.
- Identity verification and management will make voting and payments a snap, while also rendering them largely impossible to hack.
- Social media will probably face intense pressure from decentralized blockchain solutions, and user accounts’ monetization options will increase exponentially.
- Saving money will make you far more than traditional savings accounts would, provided that you’re able to choose the appropriate vehicle to hold your money.
- Investing money will become similar to real estate investment, with users vying for tokens in the best and most useful network environments — location! location! location! may become the new cryptocurrency investing mantra.
Despite all of the wild speculation out there, we do have great reason to think that blockchain is about to be a central part of our daily lives. As the technologies continue to acquire requisite approvals and investments, the possibilities for blockchain continue to explode.
Would you like to build a powerful neural net? Perhaps you could use the Golem network’s computing power to do the training faster and cheaper than anywhere else — and because it is decentralized, nobody will even need to approve your request to do it.
Would you instead prefer to create your own social currency to enable users to interact with you in a particular way online? I haven’t done this one yet, but it’s becoming easier all the time — instead of ever collecting your user’s money, you could require your user to stake your currency and then burn it — increasing the value of your remaining tokens instead of collecting a payment from your user.
I’ve spent the past ten years of my life developing and selling technologies of one sort or another. Now that I’m nearing my tenth month of full-time blockchain market investing and analysis, I’m making money less rapidly than I would like but I am filled with optimism watching a new generation of companies vie for position to become Apples, Microsofts, and even Facebooks unlike anything we’ve seen before.
A bright future is not difficult to envision with a new pantheon of crypto-backed platforms such as Cent (social media), Publish0x (Medium), OpenSea (eBay), and more. Whether these nascent efforts will fill the shoes of their predecessors remains to be seen, but one thing seems more certain than ever: technology is developing at an increasing pace that seems poised to leap forward even more rapidly in the next few months.
Nothing in this article constitutes financial advice. Content provided only for entertainment and informational purposes. If it were financial advice, it would probably be terrible because its author is a philosopher and a bit of a scientist, but by no means any sort of authority on anything financial at all. All investments carry risk and the author of this article assumes no responsibility for any gain or loss incurred by a reader under any circumstances.
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