Tag: ETH

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investing crypto technology

Token2049 Singapore proves: Web3 alive and kicking

I am sending this newsletter from Singapore, where the area around Marina Bay has been dominated for the past week by over twenty thousand visitors to Token2049, the largest Web3 event in the world. Although the conference officially ended on Thursday, some of  the more than 800(!) side events are still going on. Solana even held its own event Solana Breakpoint on Friday and Saturday, when the Formula 1 weekend was already in full swing.

'Hate the game, don't hate the players.' Some pre-war marketing tactics are still current in the Web3 world

Vitalik Buterin star of Token2049 

Amid the usual self-promotional talk and non-discussion, one speaker stood out: Vitalik Buterin, co-founder of Ethereum. Buterin emphasized that Ethereum, once plagued by slow and expensive transactions that prevented mass adoption, can now perform large numbers of transactions quickly and cheaply.

Buterin then overshadowed the content of his own speech by breaking into a song. Still, it was an engaging and rare human moment at an otherwise marketing-dominated event.

It remains painful to see top athletes such as Lando Norris and Max Verstappen sit on panels with their crypto sponsors. McLaren is sponsored by crypto exchange OKX while rival exchange Bybit is a major contributor to Red Bull Racing's immense budget.

Verstappen and Norris had to answer hard hitting questions such as "is teamwork in Formula 1 as important as in business". It would be nice if for once Verstappen would answer: 'how nice that you asked, those other 900 employees of the team are just goofing around and I actually do everything myself; I put the stickers on the car myself the night before a race, pump up the tires in the morning and refuel the car neatly after the race as well'.

It remains unclear whether, apart from the ego of the proud sponsor parading next to "his" driver on the podium, anyone is any the wiser from such a kind of obligatory freestyle. Other crypto-sponsors in Formula One such as Stake (Alfa Romeo), Tezos (Red Bull), Kraken (Williams) and Fantom (Alpine) were less visible. 

Buterin's presentation made one curious about the film that has been released about him. Investor Fred Wilson said:

"This film is about the Ethereum blockchain and the developer ecosystem. But in reality, it's a chance to spend just under ninety minutes with Vitalik, where you learn more about him, how he lives, thinks and how he became who he is today.
I've been in the blockchain business for almost 15 years. I am a fan and holder of Bitcoin. I am a fan and holder of Solana. I am a fan and holder of Ethereum. I am a fan and holder of many other protocols, tokens and communities. I am fully into all of these.
But I must say that Vitalik has a special place in my mind and heart. He doesn't just talk pretty words; he lives by his beliefs and leads from those principles. He is a very special human being. And this film manages to show that in a great way."

Hopefully the film will soon be available to the general public, as at the moment it can only be seen through a complicated streaming service - which is onchain, of course.

Solana with its own phone

Token2049 covered four floors of booths and stages in the immense Marina Bay Sands convention center, but the main networking took place during the side events. For days, it was virtually impossible to eat or drink anything in the dozens of restaurants around Marina Bay, as all the hospitality venues had been rented out by companies for private events.

Although Token2049 officially ended on Thursday, Solana took over with the Solana Breakpoint conference on Friday and Saturday. Here it introduced the Seeker, a cell phone integrated with the Solana ecosystem. Linking a proprietary hardware device like a phone to a crypto ecosystem offers a new dimension to the growing diversity of Web3 applications, and in a market dominated by Apple, Samsung and Chinese phone makers, it is a very brave move. Whether it becomes successful is a question for another day.

Another theme that kept popping up during Token2049 was the increasing integration of the Web3 industry with the traditional financial sector, or TradFi. Still, the future of this arranged marriage remains unclear for now, at least until after the U.S. presidential election.

The Web3 world is openly hoping for a victory for Trump, who is more crypto-friendly than Harris. Or as one Indian-American Web3 insider said, ''I am brown and I know Trump doesn't like brown people; but he is pro-business and pro-crypto. So if he wins and helps our business grow, I'll make sure I help myself. Then we won't need Kamala." This rather cynical sentiment was quite prevalent this week.

Spotlight 9: Nvidia remains in the lead

Following the interest rate cut announced by the Fed, the stock market closed at record highs and the U.S. jobs market also did extremely well. It is interesting to end the third quarter by looking back at the performance of tech stocks in this calendar year so far.

At three quarters of 2024, the bottom line: Nvidia is not a one-day wonder

The clear winner this year is without a doubt Nvidia, up over 140%. If we look back a little further at what buying Nvidia shares would have yielded exactly one year ago, the chipmaker's success is even more eclatant. A $4,351 investment in 100 shares of Nvidia a year ago would be worth $11,338.71 today, which is an incredible gain of $6,987.71.

Again, I repeat it almost every week, I don't give financial advice, but I also don't want to shy away from what I think is an inescapable conclusion: Nvidia can hardly go wrong in the coming years because the demand for its products will remain high as long as the AI hype among the big players like Microsoft, Google, Meta, Amazon and Oracle continues.

Only when the world's biggest tech companies begin to doubt the return on their investments in AI, will Nvidia have a harder time growing in revenue and profits. Until then, it is an industry leader with no direct competitor.

Meta's more than 60% increase this year should not go unmentioned. Although that is partly explained by the sharp correction last year, the ad-driven network's margins remain as high as ever.

TON fastest riser in crypto

Despite the arrest of Telegram founder Pavel Durov, Telegram-affiliated TON has been a phenomenon this year, with 144% increase

Bitcoin (BTC) has outperformed stocks following the Federal Reserve's decision to cut interest rates by 50 basis points on Wednesday, but the real winners in the crypto world are the altcoins.

Total3, an index that tracks the market capitalization of the top 125 cryptocurrencies, excluding Bitcoin and ether (ETH), was up 5.68% since the announcement of the rate cut. In contrast, Bitcoin's market capitalization rose only 4.4%.

The success of TON, which today stands for The Open Network but evolved from Telegram Open Network, continues to be linked to the growth of Telegram. A whole ecosystem of "Telegram Mini Apps"(TMA) is now emerging around Telegram that enable all sorts of applications, from gaming to fund raising, from which the TONcoin benefits.

Today the exciting week in Singapore concluded with the always spectacular Formula One Grand Prix at the Marina Bay circuit. As an opening act for Lando Norris and Max Verstappen, 30 Seconds to Mars (with multi-talented Jared Leto) and Kylie Minogue performed, while after the race Lenny Kravitz demonstrated how to stay cool in leather pants in 90 degrees and almost 90% humidity. All in all, it was a fantastic week.

Thanks for the interest and see you next week!

Categories
crypto

Bitcoin, Ethereum, the stock market and the war

There is a tremendous amount of talk about the value of crypto compared to stock prices and especially since the beginning of the Russian invasion of Ukraine on Feb. 24, three weeks ago today. So I did a comparison of how Bitcoin and Ethereum are doing compared to the S&P 500, and the results are quite surprising.

As the starting date of comparing the two benchmarks of crypto, Bitcoin and Ethereum, with the most widely used gauge of stock markets, the S&P 500, I took the date of Ethereum's IPO on Kraken, Aug. 7, 2015. Completely arbitrary, of course, but I could hardly take a date from before Ethereum existed. To avoid making too long a row, I went on to look at the prices on Jan. 1 of this year, then Feb. 24, which was the day of the invasion three weeks ago, and today's position.

I understand that it is debatable to compare an index of 500 largest stock market funds to two cryptocurrencies. But the S&P 500 constitutes about 70% to 80% of the market value of U.S. exchanges. Bitcoin and Ethereum together represent over 60% of the entire crypto market of nearly $2,000 billion. Hence the choice of Bitcoin, Ethereum and the S&P 500.

First, let's look at Bitcoin:

Bitcoin:

  • August 7, 2015: $276
  • January 1, 2022: $47686
  • February 24, 2022: $35000
  • March 17, 2022: $41000
  • Percent increase between Aug. 7, 2015 and today: 14755%

Anyone who bought Bitcoin for $100 on August 7, 2015, had received 0.36 Bitcoin for it, and those are worth nearly $15,000 today. In short, 150 times your deposit back on every dollar.

Since January 1, Bitcoin has fallen 14%; the day of the humanitarian peace mission, cough, the drop was a whopping 26% compared to the first day of this year, but since then Bitcoin has risen 13% again.  

The second crypto to watch is Ethereum.

Ethereum:

  • Aug. 7, 2015: $2.77
  • January 1, 2022: $3683
  • February 24, 2022: $2336
  • March 17, 2022: $ 2820
  • Percent increase between Aug. 7, 2015 and today: 101705%

Anyone who bought Ethereum for $100 on August 7, 2015 had received over 36 ETH for it, and those are worth over $100,000 today ($101080 to be exact). In short, that's over two thousand times your deposit back on each dollar.

Since Jan. 1, Ethereum has fallen 23%, but has rebounded 13% since the start of the war.  

Finally, we look at the main gauge of stock prices, the Standard & Poor's 500.

S&P 500:

  • Aug 7, 2015: 2000 points
  • Jan. 3, 2022: (because Jan. 1 fell on a Saturday, U.S. stock markets did not open until Monday, Jan. 3, those slackers): 4796 points
  • February 24, 2022: 4225 points
  • March 17, 2022: 4357 points
  • Percent increase between Aug. 7, 2015 and today: 119%

Since Jan. 1, the S&P 500 is down only 9% (compare that to Bitcoin and Ethereum) yet up 3% since the start of the war.  

Conclusions:

  • *opendoor alert* over the long term, think at least 5 years, Bitcoin and Ethereum have proven to be much better investments than traditional stocks - despite all the huge declines in between
  • this calendar year, the S&P 500 remains strong, compared to a 14% decline in Bitcoin and a chilling -23%decline in Ethereum
  • since the start of the war, crypto has risen more than the S&P 500, but 13% rise for cryptos against 3% rise for the S&P 500 is not particularly spectacular
  • the myth that crypto is immune to "normal" economic influences such as interest rate increases, war and rising energy prices has been punctured.

And this despite all the rumors that wealthy Russians have been stepping into crypto en masse in recent weeks, with all the assets they did manage to liquidate.

sources: Coinmarketcap, Google Finance and Yahoo Finance.

Categories
crypto

Those who cannot take their losses very well should stay out of crypto

The most frequently asked question of 2022 is without a doubt: how much money should I invest in crypto? Over the next few months, I will share how I try to build a balanced crypto portfolio with limited active trading. This is NOT advice. It is mainly to prove that it is possible to invest in crypto without reaching for your phone like crazy every second because you are afraid of missing the next hype or crash in Bitcoin.


In 2017, legendary investor Fred Wilson (Twitter, Tumblr, Zynga, Etsy, Coinbase, etc) gave this answer, based on the investor's profile:


- young, aggressive risk taker - 10% of net worth in crypto
- sophisticated investor seeking a high performing portfolio - 5% of net worth in crypto
- average investor, slightly conservative, but with some appetite for risk - 3% of net worth in crypto
- retiree seeking to preserve portfolio value and generate income - 0% of net worth in crypto

A detailed and careful answer. And, in my opinion, completely unnecessary. Some elderly people are incredibly well able to make a substantial dent because their house is already paid off up to and including the geraniums. While many young, aggressive risk takers have to sell their textbooks and become delivery drivers at Gorilla's when they get their memecoins see evaporate. Because I don't know any young aggressive knuckleheads who manage to limit their crypto gambling to 10% of their net worth, as Wilson advises. (I'd like to see more research on the investment decisions women make; are there still fewer women than men in crypto, or are they really just smarter because quieter about it?)

When people ask me how much to invest in crypto, I always answer with a counter-question: can you stand to see everything you put into crypto go up in smoke? Evaporate to nothing? Binance, Binance, alles ist vorbei? And just as important: will you get into a fight with your partner if you lose everything?

The couple lunatics go-getters who then remain always ask the same follow-up question: which crypto should I buy? To that question, too, Fred Wilson was kind enough reply to give:

"A diverse set of crypto assets would include Bitcoin, Ethereum, the other major layer one blockchains (Solana, Flow, Avalanche, Polkadot, Algorand, etc), the major Defi protocols (Uniswap, Aave, Compound, etc), storage protocols (Filecoin, Arweave, etc), telecommunications protocols (like Helium), some layer two protocols (like Stacks, Polygon, etc), some gaming assets (like Axie, Decentraland, etc), a maybe some NFTs."

Wilson sometimes forgets to indicate which of these companies he himself, or his fund Union Square Ventures, has already invested in. But that doesn't make his answer any less relevant. Previously, Wilson stated that he and his spouse have invested 5% of their assets in crypto, both directly and through funds.

In the coming months, I will share here how I try to put together a crypto portfolio using a more conservative methodology than Wilson. No gaming assets or NFTs for me, those are too difficult and time consuming for me to understand properly. I am in crypto for the long term and want to reduce all costs as much as possible, preferably passive HODL-end.

Summary:

1. I am convinced that "something huge" will come out of crypto innovations. Decentralization and transparency bring an intrinsic new value that cannot be achieved in other ways.

2. I believe strongly in the crypto market, but I don't have the guts to assume I can pick the winners. This has proven difficult with every disruptive advance in technology. The challenge is to identify potential winners early.

The plan is to buy layer 1 tokens in proportion to market cap that are as Proof of Stake as possible, i.e. have lower energy consumption than Bitcoin. It has the disadvantages that Ethereum will be over-represented (well over half of my crypto portfolio) and that I will always get fast-growing hypetokens into my portfolio too late.

Of course, everyone dreams of that one stale token that rises 45 million percent in value, like Shiba Inu did in 2021. Whoever bought SHIB for $100 at 1 minute past 12 on Jan. 1, 2021, and sold them again in December, got to credit over $45 million. But I would then fret about the right time to sell, which is why I avoid these tokens.

My goal is to eventually have at least 100 tokens in my portfolio that each have a minimum market cap of $1 billion. The crypto market is not that big yet. Preferably I will automate all trading through a liquidity pool, but more on that in the coming months. In any case, the goal is to make the portfolio transparent for everyone. And it is explicitly not investment advice. It just needs to make clear that it is possible to invest in crypto without reaching for your phone every second like a crazed neurotic for fear of missing the next bitcoin swing.