Weekly Crypto Recap [26/10/18 – 1/11/18]

Week in Brief


 

Bitcoin turns 10: the Satoshi whitepaper that questioned the necessity of the financial system that we know today

 

The institutional herds are coming — Fidelity, the 5th largest asset manager in the world announce the launch of Fidelity Digital Assets

 

Total crypto market cap is down 1.7% w/w, with 75% of the top 100 coins by market cap trading down w/w. In the last 24 hours, 87% of the top 100 are trading up whilst BTC is down 1.29% and ETH is down 1.92%. BTC, ETH and XRP lead the market cap respectively.

 

Market Performance


Top Stories


 

Bitcoin turns 10: the Satoshi whitepaper that questioned the necessity of the financial system that we know today

 

On the 31st of October 2008, coinciding with both the beginning of the global financial crisis, with the collapse of Lehman Brothers, and Halloween itself, notorious Satoshi Nakamoto unveiled the Bitcoin whitepaper to the world. Whether the pseudonymous creator of Bitcoin is a male, female or a group of individuals is up for debate. Yet the imperceptible timing of this release cannot have been a coincidence, for, in the first block ever created, the genesis block, Satoshi inscribed a clear message for all to see:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”

Whilst Wall Street crumbled under the midst of the largest financial crisis since the great depression and possibly the greatest financial scandal of all time, an alternative financial infrastructure was being quietly developed online in order to destroy the current status quo.

Although Bitcoin would not be discovered by the mainstream until the speculative mania of 2017, the foundations for a new way of transferring value between individuals was already firmly laid. No longer would banks be necessary for individuals to transact trustfully with one another. Instead, a financial system had been built with trust inherently baked into the Bitcoin code. Such trust is immutable, it cannot be tampered with, it cannot be censored and it cannot be seized.

The world is still waking up to what Satoshi coined a “purely peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution.” But as we loom on the edge of another global financial crisis, how much longer will individuals place trust in intermediaries who continually exploit everyone but themselves. Bitcoin has provided an exit sign for individuals to leave this corrupt system and become their own bank. Such financial freedom is arguably one of the most impactful inventions one will see in their lifetime. One thing is for certain, Bitcoin is here to stay.

 

The institutional herds are coming — Fidelity, the 5th largest asset manager in the world announce the launch of Fidelity Digital Assets

 

Fidelity, the renowned asset management franchise, announce the launch of their cryptocurrency investment vehicle, Fidelity Digital Assets, aimed at onboarding institutional investors to the marketplace. The firm is currently the 5th largest asset management company in the world, with a total of $7.2 trillion of customer assets under their control. This dwarfs the current market cap of the cryptocurrency industry, a mere $200 billion at the time of writing. If just 10% of their total assets were to become cryptocurrency assets in the future, this would sharply bring the cryptocurrency market estimation towards a trillion itself. Alongside the other institutional investment onramps which are around the corner, such as Bakkt, early retail adopters are almost certain to cash in big on their curiosity and foresight.

Based in Boston, the limited company aims to bring industry-grade custody solutions for institutional investors not possible with traditional unregulated cryptocurrency exchanges. They will achieve this with a geographically diverse set of cold storage locations which are disconnected from the internet itself and vault protected. At current, Institutional investors are simply not willing to risk the large sums of capital they have at their disposal on exchanges which could be shut down, hacked or exit scammed at any moment. Instead, such market participants need assurance from regulated and familiar mechanisms that their funds are secure at all times.

The firm will also provide a cryptocurrency trading platform alongside 24/7 institutional advisory services to cater to the market that never sleeps. Tom Jessop, founder of Fidelity Digital Assets states that “This is recognition that there is institutional demand for these assets as a class, family offices, hedge funds, other sophisticated investors, are starting to think seriously about this space.”. Ultimately, it is clear that the institutional herds are coming with the funds needed to really push this market into a new era, for better or worse. Optimistically, this institutional jumpstart could be exactly what the market needs right now to keep momentum, allowing the underlying technology to continue to improve at an exponential rate.

 

Meanwhile


 

Cryptocurrency titan, Coinbase, receives a further $300 million dollar investment in their most recent round of funding, leading to a total valuation of over 8 billion dollars (Coindesk).

Bakkt is set to be launched in December, a cryptocurrency exchange founded by the intercontinental exchanges (ICE) seeking to solve the custody problem for institutional investors, confirming a new era of investment from retail to Wall Street may be on the horizon (Bitcoinist).

The US Securities and Exchange Commission (SEC) launches a Strategic Hub for Innovation and Financial Technology, in hopes of updating individuals on SEC regulatory issues, in order to be more transparent and create greater confidence in the market. (The Daily Hodl).

 

What We’re Reading At BBOD


 

Bitcoin At 10: The Satoshi Whitepaper

Why Bitcoin and Crypto Have No Future

MappleChange: The Story of Another Cryptocurrency Exchange Exit Scam

 

What We’re Listening To At BBOD


 

Reflections on the 10 Year Anniversary of The Bitcoin Whitepaper

Radical Markets: Uprooting Capitalism and Democracy for a Just Society

What Bitcoin Did: Crypto Custody

 

Fundamental Pick: Elastos (ELA)

BBOD Rating [10/10/2018]


SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

 

Overview


Currency Code ELA
Transaction Start Date 01/02/2018
Total Supply 33,647,865
Circulating Supply 7,722,239
Protocol Type Blockchain Platform
Base Protocol ELA
Where To Buy LBank, Huobi, CoinEgg, Kucoin

 

Problem To Solve


Since the inception of the Internet, it has become impossible for content creators to claim individual ownership of their works and to ensure such original creators reek the monetary benefits from their creative outputs. This is the result of the Internet’s inability to provide unique content which cannot be copied by individuals and spread freely over its vast distributed network. With over 3 billion individuals having access to the Internet, who all possess the ability to copy original content with ease, trying to stop the flow of illegal content between parties is simply impossible. Moreover, it is not only individual actors who take advantage of the ability to stream content globally, well-known centralised digital content providers such as Spotify, Youtube and Netflix all profit substantially from monetising digital content which is not of their own creation. Ultimately, this process often leaves original content creators with a tiny fraction of the actual profit they should be receiving for their creative endeavours and large corporations with the majority.

On the opposite side of this dilemma, individuals themselves no longer physically own much of the digital content they consume. People simply pay for subscription services and become drip fed by whichever corporation they choose to worship. Many may argue that, in fact, this is not an issue for the individual, as digital content has never been so easy to consume, yet is convenience necessarily a good thing without rights to ownership? In the past, individuals collected physical possessions over the period of their lifetime, such as books, records and photo albums, which could then be passed down to their family. This not only acted as a memoir of deceased loved ones but also a mechanism of passing value down through generations. Today, little of what we consume is actually ours and consequently, we cannot monetise our possessions when needed for ourselves or our children.

 

The Solution


In order to tackle the dissemination of creator content, Elastos [ELA] proposes a unique Blockchain design philosophy which detaches original content from the internet itself and runs separately on what Elastos has coined the ‘Smartweb’. Here creators content will not be uploaded to the internet that we know today, rather, it will be placed on a decentralised application on Elastos ‘Runtime’ software. ‘Runtime’ will enable individuals to store, view and exchange original content peer-to-peer on their personal smartphones or computers without connecting to the internet itself. Instead, Elastos will utilise the Blockchain only to confirm transactions between parties and verify their identity without needing a third party.

Thus, creators using the system will have the ability to attach their personal identity to their unique content on the Blockchain, allowing them to track exactly how many individuals are consuming their content, ensuring all revenue is sent directly to the original artist rather than unnecessary intermediaries. Moreover, Content creators will have the ability to introduce the concept of digital scarcity to their work, limiting the amount of digital content that can be bought by consumers to a fixed number. As in all markets, scarcity often creates increased incentives for individuals to purchase an item in a specific timeframe whilst supply remains fixed, increasing adoption and price over time. Such mechanisms should allow creators to reek the financial rewards they deserve for digital content, unlike in the current status quo.

Additionally, the Elastos ‘Runtime’ ecosystem will benefit consumers of the network, by allowing them access to original content which they will digitally own, verified by their Blockchain Identity. Unlike in today’s markets where one merely owns the right to use a product for a specified amount of time via a subscription service, consumers of Elastos ‘Runtime’ network will have unconditional ownership of their digital assets. Much like in the physical content world before the era of the internet, this will allow individuals to generate future revenue if they decide to sell some of their digital content. For instance, perhaps, due to the scarcity of the digital content when first purchased, such an asset has now significantly increased in price as there is now huge demand and virtually no supply, one could benefit akin to selling a rare piece of art. This mechanism creates an entirely new smart economy by allowing anyone to participate in wealth generation through peer to peer free markets without the interference of costly and unnecessary third parties.

 

Summary


Ultimately, Elastos allows digital content to be stored, viewed and traded in a secure and transparent manner. Without the need for third parties, creators are guaranteed to be rewarded with fair compensation for their creative output whilst consumers can benefit from their digital content ownership. Within this closed environment, the projects native ELA token will be used to pay for access to content that individuals desire. ELA can then be spent within the Elastos ecosystem itself or transferred to any other financial network.

 

Catalysts


  • Rewarding Content Creators: Since the introduction of the internet, content creators have lost out significantly as they have no means of stopping the dissemination of their artistic works. Moreover, unnecessary intermediaries have profited substantially by providing user-friendly interfaces which consumers have gravitated towards due to their ease of use. This is only set to continue as more individuals have access to the internet and product offerings become more sophisticated. Elastos provides a way out of the traditional content economy that allows creators to become the sole beneficiaries of their work, an idea that would not be possible without Blockchain technology and certainly appealing to creators themselves.
  • A Universally Beneficial Ecosystem: Not only does Elastos benefit content creators, but it also allows consumers themselves to take back the ownership of their digital content. This should attract individuals who are fed up with paying for subscription services that have the right to remove content at any time. Elastos allows consumers to benefit from the financial rewards of having exclusive ownership of digital content by exchanging such content in a peer-to-peer manner. Individuals can also feel confident that their purchase decisions are directly affecting the lives of the artists they admire.
  • Longevity and Strength of The Elastos Team: CEO Rong Chen began work on Elastos after leaving a senior role at Microsoft in 2000. Over time, the project has evolved in line with the pace of technology to now include Blockchain technology, which now allows it to function. The foresight and longevity of the project suggest the team is certainly in this for the long haul. Elastos now comprises of over 52 team members, with well-respected Blockchain advisors including Jihan Wu (CEO of Bitmain) and Hongfei Da (Founder & CEO of NEO).

 

Risk Factors


  • Challenging Traditional Oligopolies: The market for content streaming services is fierce, with a few key playing dominating the space, such as Spotify, Youtube and Netflix. If Elastos is to overcome the huge amounts capital these companies have at their disposal, they are going to need to pursue aggressive marketing strategies in order to establish themselves as an alternative competing brand. Despite this, the overwhelming benefits for content creators who utilise the platform should push the market forward, if they decide to limit content exclusively outside of the traditional system.
  • Copying Copyright Material: Although digital content will be detached from the Internet on the Elastos ‘Runtime’ software, this does not stop consumers from screen-capturing videos, text or rerecording audio. Individuals desire to find content for free will prevail if they search hard enough. Regardless, individuals who choose to do this will only receive knock-off versions of an original file of lesser quality, unlike today where original files can easily be copied and disseminated.
  • Verification: Elastos have failed to state how they will verify content is uploaded by the original creator. Although a Blockchain ID will be assigned to each piece of digital content, there is nothing stopping someone else uploading a file to the ‘Runtime’ system and claiming it as their own. In order for this to occur, however, the fake uploader would have to possess the original file and upload it before the original content creator, a rare circumstance.

 

Conclusion


Elastos provides an innovative alternative ecosystem for content creators and consumers to maintain full control of their digital assets and monetise them without the need for unnecessary intermediaries. The projects key strength is the ability to create a marketplace for digital content detached from the internet itself, Elastos ‘Runtime’, utilising the Blockchain only to verify the identification of content creators and to implement trustless peer-to-peer transactions. This has the potential to create an environment outside of the traditional corporate structure that will allow consumers to truly own their digital content and content creators to be rightfully rewarded for their creative endeavours. If Elastos can market their brand effectively, content creators could start transitioning exclusively over to the platform, leaving consumers no alternative but to adopt the system if they wish to enjoy their favourite artists. With support from cryptocurrency giants such as Bitmain and NEO and a dedicated team of 18 years, Elastos seem capable of successfully implementing their idea. Thus, as the mainstream begins to adopt decentralised applications, Elastos is certainly one to watch.

 

BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

 

Disclaimer


BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

 

How Do Ethereum Smart Contracts Work

smart contracts.jpeg

 

Most of us must have used the term ‘Smart Contracts’ in a blockchain discussion with colleagues or friends without completely realising the impact Smart Contracts can have on the entirety of the socio-economic framework our society thrives on.

We have mentioned multiple times in this blog that Blockchain as a technology is revolutionary.

We refrain from calling ourselves maximalists of any particular cryptocurrency. Rather, you may call us blockchain/crypto maximalists.

Coming back to the topic at hand, you may already know by now what Blockchain is and how it works. If not, feel free to read our previous blog posts. Now, let us delve into a more intriguing topic of what are smart contracts.

 

What are smart contracts

Quoting Wikipedia,

“A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.”

The above definition basically states that smart contracts as the name suggests are contracts that can be programmed, verified without third parties, are trackable and are immutable unless explicitly mentioned in the contract.

There are numerous blockchain platforms that let you create custom smart contracts for varied use cases. Some of them are Ethereum, Hyperledger fabric, R3 Corda, Stellar, Achain, etc.

 

How do smart contracts work

We will now try to understand smart contracts right from its inculcation.

Smart Contracts were first introduced by cryptographer and Computer Scientist Nick Szabo in 1994. A rough idea of smart contracts could be understood by analysing vending machines. You select a particular snack and enter the appropriate amount into the machine, the snack then presents itself to you. Just like that, magic.

However, sometimes the machine fails (mainly because of poor programming and centralisation), something which is tackled very efficiently when it comes to blockchain.

A Smart Contract needs several mathematical moving parts for it to function seamlessly.

  1. A Blockchain platform – for it to perform and verify transactions on chain
  2. Public Keys and Private Keys – the Smart Contract must have access to the private keys that it plans on controlling.
  3. Conditions – Clear conditions must be defined by the Smart Contract so that relevant transactions are carried out. (a simple if loop on the blockchain)

Smart Contracts are highly beneficial in a wide variety of domains as they let you create contracts that are secure, fast and are standardized for numerous use cases.

The use cases of smart contracts are so vast that we would probably need more than one post to elaborate on each of them. However, we will try to cover as much as possible in one post.

We will define this with 3 different examples that will adopt Smart Contracts in growing stages.

  1. Minimal
  2. Partial
  3. Complete

Let’s take a real-life scenario where smart contracts could possibly be used in the near future. In this example, we will consider Uber. Uber, as we all know, are disruptors of traditional taxis and are probably the largest cab hailing service in the globe. Smart Contracts potentially have the capability of disrupting this disruptive service.

 

Minimal

In this scenario, we will modify the payment system that Uber uses after completing a ride. You will ideally link your credit card to Uber which automatically deducts the fees when your ride completes.

If you do not prefer digital money, you will pay cash to the Uber driver based on the amount that shows up on your phone. Uber runs an algorithm that calculates how much fees should be charged to the rider based on the distance covered and the traffic/wait time.

Now, this can be completely automated if linked with a smart contract.

At the end of each ride, Uber will send a message to the smart contract linked with your profile and the appropriate amount gets deducted seamlessly. This use case is much similar to current day credit cards, however, Smart Contracts are more secure.

 

Partial

In the Partial scenario, we take the application of Smart Contracts up a notch and eliminate human drivers completely.

With the innovation Tesla, Uber and Google are doing on the grounds of self-driving cars, it isn’t long until you see self-driving private cars and cabs doing everyday rides on the freeway.

Now, imagine you book an Uber and it turns up to be a self-driving car. At the end of your ride, a Smart Contract can be programmed such that the fees charged are deducted directly from your crypto wallet and only after the payment of fees, will the doors of the cab open.

The Uber cab may have one or many owners and the fees will then get transferred to their accounts based on the logic written in the smart contract.

 

Complete

Now, this scenario is utopian and far-fetched but the possibilities of this happening cannot be outright denied.

In this scenario, an Uber is not owned by anyone but itself. The car in and of itself is a decentralised autonomous entity. This concept is adapted from ‘Internet of Money’ by Andreas Antonopoulos. (Highly recommended read)

Consider a self-driving car that has no owner. All the rides that it takes go towards the maintenance and fuel costs that it has to undertake. It saves the excess money for major upgrades or unforeseen circumstances.

But the car essentially has no owner and all the money it gets from rides can be used for varied purposes, all determined purely by the car on its own.

When you hail a ride from such a vehicle, at the end of each ride, the smart contract automatically deducts money from your wallet and sends it to the DAE (Decentralised Autonomous Entity), which is your Uber in this case.

The Uber then uses the same money for fuel or maintenance which again makes the use of Smart Contracts.

Uber or self-driving cars is one such example. You can put numerous transactions on the Smart Contract, including real estate transactions.

Smart contracts have use cases in everyday lives. Things you couldn’t imagine without the internet now; in the future, you wouldn’t imagine it without Smart Contracts!

Another real-life use case of Smart Contracts is how BBOD settles transactions on your Ethereum wallet.

We run a proprietary non-custodial smart contract using which you can trade on BBOD without transferring funds to the central wallet. Your funds stay safe in your very own Ethereum wallet.

We hope this blog post gave you a brief idea of how Smart Contracts work. In future posts, we will explore more in and around the blockchain ecosystem. Stay tuned!

 

How To Create An Ethereum Wallet Using Metamask

 

This post walks you through the setup process of MetaMask in Google Chrome. We choose Chrome as it is more widely used than any other browser. However, the process to install MetaMask plugins in Firefox and Opera is also the same.

 

What is Metamask?

MetaMask is essentially a browser plugin that is supported by Chrome, Firefox and Opera. It lets you set up your very own Ethereum wallet right in your browser. You can make transactions into and out of your Ethereum wallet with ease using MetaMask.

 


Step 1: Go to https://metamask.io/


 

Click on the GET CHROME EXTENSION button which is highlighted in the below image.

 You can select Firefox or Opera right below the highlighted box if you use those browsers. The steps that follow are similar. You will be asked to add the MetaMask Extension to your respective browser.

You can select Firefox or Opera right below the highlighted box if you use those browsers. The steps that follow are similar. You will be asked to add the MetaMask Extension to your respective browser.

 


Step 2: Install MetaMask Extension


 

Click on the ADD TO CHROME button to add it to your chrome extension list.

 The browser will check the compatibility and a dialogue box will pop up as shown below. Click on the Add Extension button to proceed.

 

The browser will check the compatibility and a dialogue box will pop up as shown below. Click on the Add Extension button to proceed.

 

Picture3.png

 

Step 3: MetaMask added successfully!


You have now successfully added MetaMask to your browser. Congratulations!

 

Step 4: Open MetaMask


Open a new tab and click on the small orange fox icon in the top right corner of the browser as shown in the below figure.

Picture5.png

 

Step 5: Accept Terms


 This will open a popup window with details. The Accept button will be greyed out. You can either read the Terms of Use or scroll to the bottom of the pop-up window as shown in the below images.

 Note - let's be honest, who reads terms and conditions anyway? Well, terms and conditions are extremely important because they provide information about the product and terms of use. Never ignore them.

Note – let’s be honest, who reads terms and conditions anyway? Well, terms and conditions are extremely important because they provide information about the product and terms of use. Never ignore them.

After you have read the Terms of use, click on the Accept button highlighted in the below image.

Picture7.png

This will be followed by a bunch of terms that you should read and accept as shown below.

Privacy Notice

Picture8.png

Phishing warning

Picture9.png

 

Step 6: Create a Wallet


You must now enter a secure password with at least 8 characters in the boxes provided.

Picture10.png

After entering the password and before clicking the create button as shown in the below figure, please take your time to understand the look and feel of the MetaMask fox as he follows around your mouse pointer. Pretty neat design, eh?

Picture11.png

 

Step 7: Wallet Seed Words


You will now come across 12 words that let you restore your MetaMask accounts. Make sure you keep them safe and secret. I have masked the words below except for the last word economy, for flair. You can either choose to copy the words somewhere safe or save it as a file in your computer. Both options are present as buttons below.

Picture12.png

 

Step 8: Congratulations! Wallet created!


You now have a MetaMask wallet!

 Clicking on each of the options mentioned will perform a particular action.

Clicking on each of the options mentioned will perform a particular action.

  • View account on Etherscan – This will take you to Etherscan.io where you can see all the transactions that have happened on your public address.
  • Show QR Code – This will show your public address as a QR code.
  • Copy Address to Clipboard – This copies your public address to your clipboard.
  • Export Private Key – This is very IMPORTANT as access to the private key determines access to your wallet.

You can also edit your wallet name to whatever you want by clicking on the edit option. I have changed it to ‘My First ETH Account’ as shown below.

 

Step 9: Public and Private Keys


You can now view your public and private keys. DO NOT SHARE YOUR PRIVATE KEYS with anyone.

The following screenshots show public keys and private keys (which are hidden because they shouldn’t be shared)

Public key

Private Key

 

Step 10: MetaMask Wallet Overview


You can now do transactions in ETH directly from your browser! You can explore the BUY and SEND buttons as shown in the below steps.

 

Step 11: Buy / Send ETH


 You can buy ETH from Coinbase or Shapeshift as shown below.

COINBASE

Picture18.png

 

SHAPESHIFT

Picture19.png

You can also send ETH to other recipients by specifying their addresses and the amount you want to send.

Picture20.png

 

This concludes the MetaMask setup tutorial. 
Hopefully, this brief tutorial successfully helped you create an Ethereum wallet on your browser using MetaMask.