All posts by Captain

Crypto Asset Proliferation, Liquidity, and the Bancor Protocol

I believe crypto assets will be the future, and asset managers from around the world better heed this brave new world. Very soon, crypto assets will become a core part of a well-diversified portfolio. Some enterprising portfolio managers will allocate up to 5% of the portfolio wealth to crypto assets. Others will limit it to 1%. Slowly but surely, the movement will gain momentum. Today, all crypto-assets are valued over $100 billion, We’re already in serious money territory.

The Future of Crypto Assets

The future of crypto-assets would be the proliferation of many of them. If you think the 700 odd crypto assets today is a lot, wait till you get tens of thousands. If it benefits a few projects, it will benefit a lot of them. Today, not even 0.1% of the world population owns crypto assets. Imagine when entrepreneurs from around the world will be able to use them to build future economic value on the blockchain.

So one big problem that portfolio managers will encounter when investing in crypto assets is liquidity. No good manager worth his salt will touch a situation akin to ‘penny stock’ where there are a few buyers in town, usually looking for a quick pump and dump. In addition to liquidity, access to markets is also essential, i.e. the asset manager needs to be able to make a decision on a buy or sell for a crypto-asset and make sure his traders are able to execute that trade without a lot of slippage or excessive fees. This goes for both buying and selling these assets.

Crypto Asset Management Challenges

Crypto assets are a special breed of asset class, and today, as big as the market is, still lacks proper, regulated exchanges that can keep up with the volume. Centralized exchanges like Poloniex and Bittrex do a good job when the market is $10 billion, but we’re at an order of magnitude above this. Relying on centralized exchanges to add tens of thousands of crypto assets in the future is a fools errand. Of course, we may see a stock-market like situation where custody and trading are separated, in which case there can be tens of thousands of crypto-assets traded, just like today’s stocks. However, this brings in the problem of custody, and that is very tricky especially with crypto assets. Did we already mention that crypto assets are a special breed in and of themselves?

So what’s the solution to the liquidity problem, and how should new crypto assets ensure that they are able to meet the requirements for a liquid market that will attract money in the market required to fund their projects?

Enter Bancor

Bancor is a new crypto protocol that allows for the decentralized exchange of crypto tokens (currently only on the Ethereum platform), without requiring counterparty risk. The difference between Bancor and other types of decentralized exchanges is that there is no counterparty required, which means the portfolio manager doesn’t need to worry about who is on the other side of the trade. Only a smart contract is on the other side of the trade!

Depending on the project requirement, they can choose how deep the order-book is with the smart contract. This is calculated as a reserve ratio. For example, if a project raises 25,000 ETH and wants to keep 10% deep order books, they’ll keep 2500 ETH in the smart contract, locked away for trading purposes.

Just like regular order books, the price increase with each buy and decreases with each sell. The major point is that there is liquidity in the market without the need of a counterparty.

Newer crypto projects will be incentivized to use the Bancor protocol to issue tokens because they can attract a larger investor base. This won’t be a problem today, but will become more significant in a 5 year time frame.

Photo Credit: Nick Harris

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Bancor Allows Anyone to Create and Trade their Own Cryptocurrency

Bancor Crypto

Bancor is new interesting crypto protocol that aims to make it really easy for small communities and individuals to issue their own tokens, while retaining price discovery without being listed on exchanges. Intrigued? Read on.

Market Without an Exchange

The biggest feature that the Bancor protocol provides is the ability for a token to have a market but without having to be listed on an exchange. Anyone who’s been in the crypto community long enough knows how hard it can be to list smaller tokens on exchanges. This is not surprising – exchanges make their money on volumes, and if the trading volume is low, they don’t want to go through the overhead of maintaining that token.

However, the proliferation of the token economy means that many different use-cases arise, not all of them having a high trading volume. Smaller communities and individuals could theoretically issue their own tokens for local causes, but they would never garner the types of volumes established global currencies do. If exchanges don’t list them, there is no market and thus no price discovery mechanism.

This is where Bancor comes in. For the first time (that we’re aware of), Bancor provides a way to create a market for a token but without the use of centralized exchanges. It works through a smart contract on Ethereum. The full details are beyond the scope of this introductory post, so read the whitepaper.

But in a nutshell, when a token raises money, it keeps some of it in a reserve, and issues tokens. These tokens trade in the market based on their utility. The smart contract is written so it can create a supply of new tokens whenever needed, by sending ETH (or another ERC20 token) to the contract. This causes the price of the token to increase. By a similar mechanism, whenever someone converts their tokens into ETH (or another ERC20 token), the price of the token decreases.

Note that this whole mechanism is a ‘conversion’ and not an ‘exchange’. One fear is that the prices may be manipulated by whales if they hold supply via the smart contract and also via external exchanges. This also means that during distress, those who are able to exit their positions first are at a significant advantage over those who are not, since the price continues to spiral downward with selling.

A Basket of Tokens

With a full reserve, the Bancor protocol also allows for the creation and redemption of ‘ETF-like’ baskets but of tokens instead of stocks. The price arbitrageurs will make a profit by ensuring the prices stay in sync. This can provide a fairly stable mechanism for a basket of tokens created using Bancor.

Bancor will have an ICO soon. Check out their website to learn more about the project and keep up to date with their progress.

Photo Credit: pedrosimoes7

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Fund Yourself Now (FYN) Targets the Crowdfunding Industry

Fund Yourself Now FYN

Every once in a while we here at Crypto Sailor come across a crypto project that tackles a real problem in a real industry. Fund Yourself Now (FYN) is one such project. Fund Yourself Now is an Ethereum-based crypto project that takes aims at the rapidly growing crowdfunding industry. The industry scope is high – it is a large and growing industry. If FYN can get even a small chunk of the industry, it will be quite valuable.

So what does FYN offer? It is a smart-contract platform built specifically for crowdfunding on the Ethereum blockchain. By being built on the Ethereum blockchain, it removes the element of trust usually required for centralized crowdfunding applications in general.

By removing this centralized trust, Fund Yourself Now is able to create a better accountability and incentive structure for a crowdfunding campaign. This benefits both the projects looking for backers and the backers themselves, since both sides have an incentive to be honest. Ethereum of course offers the team the ability to create a better form of crowdfunding via the use of smart contracts.

A big problem that Fund Yourself Now solves is to keep the team accountable to the backers who are financially invested in the project. The team does this by a smart contract enabled milestone-triggered payment solution. This way the team cannot just abandon the project and take all the money. Instead, the team gets the money only subject to meeting minimum requirements as outlined in their milestones before the backers put any money into the project. In addition, the project backers will have more say in how the funds are distributed via a voting mechanism. This provides some power to the people who are backing projects financially, and doesn’t leave everything at the mercy of the team, that can find it easy to abuse the trust shown by the backers.

Another very interesting aspect of Fund Yourself Now is the creation of a coin marketplace. This marketplace will act as a medium of exchange between the various project-specific tokens and rewards. Since everything is in the form of blockchain tokens, such an exchange will benefit all the projects that are launched on Fund Yourself Now. It also provides much needed liquidity to the backers of the project, who can trade them in the secondary market depending on how the project is making progress. This will allow the backers to ‘exit’ a project that isn’t going according to their vision or what they originally signed up for.

Finally, there is a social reputation system built into Fund Yourself Now platform, which should help with bringing in more transparency. Although this usually isn’t a huge problem in the traditional crowdfunding arena, it is a big step in the right direction for the crypto-backed projects that tend to remain anonymous even while raising a lot of money. With social reputation, there is less incentive for projects to disappear overnight.

Fund Yourself Now is an ambitious attempt at using Ethereum’s smart contracting platform to build a better experience for all parties involved in the crowdfunding process.

Check out the project here.

Photo Credit: Nick Miller

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Starbase Creates Incentivized Project Management on Blockchain

Starbase

Starbase is a really interesting new crypto-project that aims to help other companies and projects in the space attract the right talent and incentivize the people properly to ensure everyone works towards success. In the sea of new ICOs being launched as crypto markets reach record-breaking highs, it is easy to be distracted by all the noise. Starbase however is different in that it is not a quick way to make money for the founders but instead is a great way to help the whole cryptocurrency ecosystem move forward.

A Three-Pronged Approach

Starbase is building a three-pronged approach towards new projects in the crypto community. In our view, this is a great use of resources, and something that will be appreciated by the whole community if it works as advertised.

  • Projects: Projects can list on Starbase in order to attract both money and talent. Any crypto project will need both to succeed. By creating a single place that brings all the stakeholders together, Starbase is building a model where new crypto projects are incentivized to move to the platform instead of start from scratch.
  • Investors: For investors, Starbase provides a quick and easy way to find new investment avenues, especially in the nascent crypto-token economy that is just taking off all over the world. In addition, since the Starbase team will do a first-pass due diligence, and the platform will likely not list balatant scams, investor risk is reduced.
  • Workers: There are many talented people in the crypto-economy who were early adopters and believe in the vision of crypto changing the world for good. However, it is very hard for these talented workers to find the right project fit and also be able to gain in the upside of a project they contribute. Starbase solves this problem by making sure that these workers get paid in the project tokens. This way, the workers are incentivized to give their best because if the project succeeds, they make more money. It is a win-win for the projects and workers.

Starbase is building the next-generation blockchain-based crowdfunding platfrom to help grow the entire crypto-economy and move it forward. Of course, the use of Starbase isn’t limited to crypto-projects. However, we expect that the earliest projects to be built on the Starbase platform will come from within the crypto-economy.

Any project needs money to succeed. Therefore, investors are a key piece of the puzzle. In addition, many of my readers are interested in investing in crypto and ICO, so let’s address the key advantages to investors.

Starbase will implement a voting system to weed out obvious scams and really bad projects. This will not be fail-proof of course, but it should reduce the total risk of complete scams or failed projects that investors usually take in other ways. If you see a completely random crypto project in Bitcointalk, the likelihood of it being a scam would be higher than if you spotted the same on Starbase.

Also, the tokens being created by the Starbase platform are liquid like any Ethereum-based ERC20 token. This has become the de-facto standard Ethereum token today. Therefore, plenty of exchanges and platforms will be able to support the tokens.

So Starbase aims to build a whole new crypto-ecosystem that could benefit the entire community. If you want to discuss more, head over to the Bitcointalk thread.

Starbase Email: captain@cryptosailor.com

Photo Credit:  lukas schlagenhauf

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Populous Builds Trade Invoicing Platform on Ethereum

Populous Trade Invoicing
Populous is a new crypto project that aims to build a decentralized trade invoicing platform on Ethereum. The project aims to undergo its ICO in July 2017.

Trade invoicing? Yes – one of the most profitable and underestimated markets in the financial industry. What is it you ask? Well simple – it’s the buying and selling of trade invoices of businesses. The reason it is a huge deal is because it provides liquidity especially to smaller businesses. The idea is to find lenders that will lend to the business not as secured debt against its assets, but rather as debt secured by the invoice.

A Trade Invoicing Example

As an example, think of Mom-n-Pop store in New Orleans. Mom-n-Pop store sells children’s toys to Target. However, Target being the giant corporation, it will not pay Mom-n-Pop before the product is delivered. Indeed, there is a whole accounts payable cycle, which can be as long as 120 days for the business. During the time, Mom-n-Pop will need to foot its own bills to grow business.

Now say Mom-n-Pop got a new offer to sell to Walmart. Great! However, Walmart requires the toys to be created and sent to them well in time for Christmas. However, the previous large invoice from Target is pending, so now Mom-n-Pop has no money to create toys for Walmart. How will to get the liquidity – cash in hand – to create these toys, sell to Walmart, and ensure the children in Connecticut are spoiled rotten a little more for holidays?

Enter trade invoicing. Mom-n-Pop goes to an investor that is looking for some high rates of return. Considering how much your bank pays you, there are lots of them these days. The investor has money to lend to Mom-n-Pop but needs a guarantee that his money will be paid. This happens through invoice financing. The loan from the investor is secured against the invoice. As long as Target pays Mom-n-Pop, the investor will get paid. If Target doesn’t pay, say because it is goes bankrupt before it can pay its suppliers, then the investor loses money. Since there is always a risk, the investor will demand a decent rate of return. Mom-n-Pop can now use the cash from the investor to make toys to sell to Walmart. When Target pays out, the money goes to the investor, and any interest is paid through existing profits or from the Walmart expansion. Everyone’s happy.

Enter Populous

So how does Populous work? Glad you asked. Go read the whitepaper. Seriously, never invest in an ICO without reading the whitepaper.

Populous creates a peer-to-peer lending platform that is able to work on the blockchain through ‘stablecoins’ called Pokens. Pokens represent real-world currencies, since that’s the currency most businesses operate in. It provides quantitative information like the Altman Z-score that provides information on probability of bankruptcy, so you know what you’re investing in.

As you’d expect, the system works with a borrower and an investor, but there’s also an administrator. The platform administrator approves and manages clients’ accounts and actions. This is needed to liaise the blockchain with the external world.

Populous is built on Ethereum, and its ICO token is PPT.

Check out the ICO on the homepage. Also check out the Bitcointalk announcement thread.

Photo Credit: Chiaochi

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EncryptoTel on Track to Sell Out ICO Before its End Date

EncryptoTel ICO close to finish

EncryptoTel, a crypto-project that we previously introduced to our readers, is on track to finish its ICO well before its deadline of 31st May, as it nears the maximum amount for the ICO. EncryptoTel has capped their ICO at a value of $3 million, or 31st May, whichever is hit first. As of this writing, the EncryptoTel ICO has already raised $2.4 million of the $3 million maximum. The EncryptoTel ICO started on 24th of April 2017. For enthusiasts, the EncryptoTel ICO is still live at their official ICO site.

EncryptoTel is working on the private telecommunications niche, with a coverage of over 100 countries on the roadmap. In addition, it is offering developer APIs so other products or resellers can use the service while using the EncryptoTel technology in the background.

EncryptoTel is opening up an entirely new niche of crypto products by combining its token not just with another blockchain token, but with the real world. The team, smartly, is focusing on a real problem faced by many in the crypto community and the outside world. However, the people in the crypto community tend to be more privacy conscious, and therefore will be more willing customers.

The reception of the EncryptoTel will tell us a lot about the future adoption of blockchain and the service/product world. EncryptoTel is using the blockchain to create a privacy-focused communications network that can be used by blockchain enthusiasts and others. If it has a successful ICO and subsequent trading, EncryptoTel can pave the path for other companies that are working on products or services while integrating blockchains, without that being the primary product or service.

Therefore the industry participants are closely watching the progress of EncryptoTel ICO. Going by the current statistics, it seems like the ICO would be a success. However, for the token to be considered profitable, it will need to trade at a premium to its ICO price, and attract more investors from the early adopters.

Check out the ICO here, and the Bitcoin thread here.

Photo Credit: Flickr

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BOScoin Aims to Solve Blockchain Governance

BOScoin is a new crypto project that is taking aim at the problem of governance and smart contracts on blockchains. It is self-described as “Self-Evolving Cryptocurrency Platform for Trust Contracts”. Trust Contracts are quite similar to smart contracts that my readers are very well aware of (e.g. Ethereum smart contracts). These are executable contracts on the blockchain, with rules guaranteed and enforced by the decentralized network. BOScoin uses Owlchain, which consists of the Web Ontology Language and the Timed Automata Language.

However, BOScoin goes beyond, and has a “Congress Network”. This is an important part of the blockchain governance model that BOScoin creates. It helps the system become more robust against attacks like The DAO attack on Ethereum. In addition, BOScoin is able to scale to a much larger number of transactions per second than Bitcoin or Ethereum.

This model of governance is a radically different one than the first generation blockchain governance frameworks developed by the likes of Ethereum and Lisk. In fact, other projects offering similar governance structures like Tezos are really popular with investors, including the billionaire Tim Draper who was an early Bitcoin supporter but is moving towards ICO investing through his venture capital fund.

Ideas like BOScoin hold the potential to leave blockchain contracts with the human-understandable wiggle room – after all, very few things in the real world of human perception and morality are so clearly black-and-white like computer code. This might even help BOScoin scale beyond online contracts into legitimate legal contracts, or at least peer-to-peer contracts that would make it safer for people to enter into than say an Ethereum smart contract.

BOScoin is undergoing an ICO. You can discuss more about BOScoin and the team behind this project on their public slack.  As with all crypto projects covered here, we strongly recommend that investors first read the whitepaper before putting any money down, and only invest if they understand the idea and like it for the long-term, not just short-term speculation that can easily burn you.

BOScoins will be distributed in the ICO, and the distribution is shown in the image:

Non-fully-automated blockchain contracts are emerging, and several projects are working on solving this problem from different angles. Crypto investors should research this new emerging trend, and position themselves to take advantage of these coins at an early stage, for the next 6-12 months.

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Exscudo Aims to Bridge Traditional Finance and Crypto Finance

Exscudo

Exscudo is a new crypto project that aims to bridge the gap between traditional-finance and crypto-finance. By incorporating a clever mix of decentralized and centralized technologies, Exscudo is able to provide a vision for a seamless transition between cryptocurrencies and fiat, and vice versa. This can become an important on-ramp for projects going forward, and also for established cryptocurrencies like Bitcoin and Ethereum. Exscuso is currently undergoing its ICO until May 31st.

Value Proposition of Exscudo

It would be an understatement to say that crypto-finance is on a rapidly growing upward trajectory. The total market capitalization of Crypto is over $30 billion. That’s a significant level today, even when compared to traditional financial products. However, even more than the size, it is the growth of the market that is staggering. It’s up more than 100% in less than 6 months – a growth rate that any traditional financial player would kill to have.

However, crypto is still niche. Very niche. It is hard for people to wrap their heads around Bitcoin, let alone all the cryptocurrencies, crypto-assets, protocol-tokens, crypto-tokens, ICOs etc. Thus, there is a huge market opening for a crypto company that operates in the crypto-financial space but bridges the gap with traditional finance. After all, the traditional financial products hold trillions of dollars, and compared to all the wealth in the world, crypto is small potatoes.

The First Steps

The first step towards building this bridge is to provide for the ability to connect the traditional financial assets with crypto-assets. For this, there needs to be a robust exchange that is able to take traditional currencies and convert them into crypto-assets. You need a high-reliability, high-speed trading platform that can help fuel this transition.

Enter the Exscudo exchange. It is aimed to be built around the highest quality standards, that meets the robust demands of the financial industry, i.e. it can scale really well. This is important because the amateur hour in crypto is over. When the exodus happens, there needs to be on-ramps into crypto that can handle the types of volumes and transactions we can expect.

Exscudo is building the exchange as a semi-centralized, semi-decentralized and open source project, but with proprietary bits as well. This may be much better than existing on-ramps in the ecosystem.

Beyond Just an Exchange

Exscudo has plans to develop the crypto on-ramps much beyond a mere exchange. The exchange is just a necessary first step towards bridging the crypto and traditional finance worlds. The team has several products on the roadmap already, some of which are –

  • An exchange
  • Trading charge/Information for Traders
  • Crypto debit card, so you can spend your crypto funds
  • A wallet to send/buy/exchange currencies quickly
  • A decentralized messenger application
  • Merchant services to accept crypto payments

As you can see, each of the above items on the roadmap is a step towards legitimizing crypto-assets and crypto-financial services in the eyes of the traditional financial industry. Each component can help bring more and more people into the crypto-economy from the traditional economy, thus helping not just Exscudo but the entire crypto ecosystem in the process.

Check out the Exscudo ICO currently ongoing.

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EncryptoTel – the Future of Private Communications

EncryptoTel

EncryptoTel is a new crypto-project with an ICO currently ongoing.  It is quite different from many of the other crypto-projects that you may encounter, in that the product it offers isn’t just another blockchain. Instead, EncryptoTel uses blockchain technology and aims to transform the private telecommunications space – ambitious for sure, but at least something different from all other ICOs we’ve seen recently.

The product being sold by EncryptoTel should make crypto enthusiasts feel right at home. After all, this is a tech-savvy crowd that understands the importance of privacy in everyday life. With the recent NSA revelations, private telecommunications is becoming increasingly important in a global world. And what better way to make use of this than a crypto-project!

EncryptoTel offers dial-up numbers in over 100 countries, which means it has a very wide coverage area already. It uses encryption to ensure private calls, and also has API integrations so you can use it with external services. There are also rewards for onboarding new clients, which can help grow the service beyond its initial roots.

The EncryptoTel ICO is currently ongoing. The crowdsale has a cap of $3 million, and a time until 31st May, whichever comes earlier. Based on the current trends, it looks like the project may be able to raise the full cap of $3 million. As of this writing, the project has already raised $1.58 million worth of crypto. The EncryptoTel ICO also accepts funds in a variety of different currencies, including BTC, ETH, ETC, and Waves.

Check out the ICO here, and the Bitcoin thread here.

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Lunyr Reaches ICO Milestone, Silences Critics

Lunyr ICO goal

Lunyr has reached its minimum funding goal of 25,000 ETH (around $1.25 million at the time of press) for its ICO. This milestone has marked the minimum amount the Lunyr team needs to go ahead with the project. This means the project will go ahead as planned, without any hiccups in the ICO process. Several critics, especially on the popular forum Bitcointalk were skeptical that Lunyr will reach its ICO goal. However, the project easily met its goal, with more than 2 days to spare before the end.

Unusual ICO Structure

The Lunyr team had adopted a slightly unusual structure for their ICO by refusing to give bonuses for early participation. Everyone in the ICO was treated equally no matter what time the investment was made. This ensured that all investors were on equal footing, with the same ICO price of 44 LUN per ETH invested (LUN is an Ethereum-based ERC20 token on Ethereum that powers the Lunyr system).

The decision was unusual in that many ICOs prefer to have an early-bird bonus for investors that buy in early. This gives predictability to the minimum floor for the project. However, the downside is that people who hear about the project later are penalized, even if they are as enthusiastic about the project. Also, early participation encourages more speculation than uniform distribution.

With the fairer investor ICO distribution, Lunyr was, however, incentivizing people to invest at the last minute, especially the whales. This is because they will have more information about the project as time passes, and they would like to use all the information available to reduce risk and make an investment decision. Therefore, progress seemed slow, although keen observers knew this behavior would take place.

The ICO is still open for 2 more days.

Progress Before the ICO

One of the reasons for hitting the ICO limit today was the team’s release of their frontend interface on how the final product would look, which was well received by the community. Here’s how the UI looks. The progress showed the seriousness of the team behind Lunyr in delivering the project, and showed their commitment.

Check out Lunyr here.

Photo Credit: urban_data

ETH Address: 0xC059456BB0E2e9A2ACD5a4c8384b29a89E1a3642

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