Reader’s Digest Week 7 2019

The Buttcoin Standard: the problem with Bitcoin

A critical opinion piece on Bitcoin by the author of the book “Attack of the 50 foot blockchain”, (David Gerard)[https://twitter.com/davidgerard] published on the very fine Block Crypto.

Facebook makes first Blockchain Aquisition with Chainspace

Facebooks blockchain team is expanded through a acqui-hire of the blockchain startup Chainspace. I’m sure Zuck’ is going to mess up his expansion into the space of peer-to-peer, digital cash by NOT building on Bitcoin.

ABRA wallet introduces Bitcoin investment option for stocks & ETFs

I wrote about this news here.

Zcash bug could have been used to create tokens

While Bitcoins slogan is “Don’t Trust. Verify.”, the centralized token Zcash will now have to ask it’s users to “Please Trust Us. ’Cause We Can’t Verify.”

How Zcoin’s privacy technology compares to the competition

While researching more on the security of so-called privacy coins, I found this great overview on the Zcoin website.

Bitcoin’s taproot privacy tech is ready

Bitcoin’s development is not noisy, but the Bitcoin core devs are also hard at work on privacy features.

Saving fee markets with second-price auctions

One of the biggest remaining questions with Bitcoin, as the BIS has pointed out, is the fee market for transactions once block-rewards are halved to insignificance. The Block reports some possible solutions.

The Block’s list of crypto research tools and researches

A good list of tools to bookmark for yourself when diving deeper down the crypto rabbit hole.

Bitcoin is a hedge against the cashless society

This article doesn’t present a great case for Bitcoin, due to it’s transparent forever-storage of transactional data, but it highlights why (digital) cash will persist in the information age. On a side note, living in China, I find the nightmarish scenarios on Chinese surveillance exaggerated and not well documented. There’s more hearsay about Chinese policies than sources.

The case for electronic cash

This article by the great Hasu drives home the point why Bitcoin is your digital cash of the future.

The state of Ethereum 2.0

Some interesting insights into the inner-workings of Ethereum.

Circle Research 2018 Crypto Retrospective report

Quickly get up to speed or recap the state of crypto with this easy to read presentation.

Taking my profits from MARC

Yesterday MARC released their MVP which left my rather unimpressed and led me to reduce take profits and reduce my position by 80%.

I jumped on to MARC while the coin was dumped from its initial ICO price to 4.000 Satoshis and had a coin emission of 1.200% APR in mid-December. Since my purchase the coin has seen a daily peak at 15.000 Satoshi, during which time I had been able to reinvest my masternode dividends and increase my stake from 1 masternode to 5 masternodes with 1.000 coins collateral each. I’ve taking some profits since the positive price trend reversed while I was waiting for the major roadmap goals to materialize.

The MVP of the arbitraging platform yesterday is disappointing in two ways.

1. The platform UI is bad and won’t drive utility/demand for MARC.

2. Minimum investment is 1.000 MARC with profits of 72% APR paid out in MARC.

While my second point sounds not too bad at first glance, simply holding a MARC masternode currently still yields MARC coins at 640% APR. It’s simply irrational to invest via the MARC arbitraging platform at this time with coin emissions exceeding the profits multi-fold. Plus, the coin emission continues to pressure the price for MARC coins on the exchanges.

Lastly, the MVP is so unimpressive that I doubt there is real arbitrage trading going on in the background. I suspect the minimum investment is simply used to start up a MARC masternode in the background, fill the pockets of the developers with their own coins, and pay a meager dividend to the investors.

Thus, yesterday I’ve sold 4 of my 5 masternodes at market price of around 6.000 Satoshi. I’m keeping 1 masternode shared with an investor of mine to account for a possible upside of the coin. For the time being, I will compound my dividends from this masternode, instead of selling them daily, unless a major price dip of more than 35% daily should occur.

More difficult at this time is to find a promising investment opportunity, but I have my eyes set on some dividend yielding masternode coins like Trittium, Altbet, SafeInsure, Polis and Blacer. At the same time I’m evaluating an entry into the coins mentioned on my coin radar 1 & 2.

Invest in Stocks and ETFs with Bitcoin

For the first time people around the world, including countries like China, Venezuela and Russia, will be able to hold a Swiss bank account in their pockets. With this account they will be able to access global stock and indice markets. They will be able to micro-invest in NASDAQ listed Apple stocks, buy the EURO STOXX 50 ETF and expose themselves to China and buy Moutai Kweichow stocks from the Shanghai Composite exchange. Anyone can also hedge their local hyper-inflated currency against the USD or EUR without asking their government or bank for permission.

All of the above is enabled via Bitcoin, or more precisely BTC collateralized debt. The solution provided by ABRA is similar to a contract-for-differences CFD stored and executed on the Bitcoin ledger. All assets on ABRA are synthetic assets, simulating the return of the actual investment, by means of options and securities, rather than a single conventional investment purchase. The underlying security for these CFDs is always Bitcoin. Thus, all differences in the assets value over time will be settled automatically via smart-contracts and in cash. Here, cash meaning digital and permissionless Bitcoin.

ABRA and Bitcoin will effectively enable:

1. Open access to conventionally hard to reach markets
2. Level access to investment opportunities for everyone with access to a internet-enabled smartphone.
3. Exposure to Bitcoin with a hedge.
4. Private and unregulated control over your capital without ABRA or the asset issuer even knowing who you are.
5. Security of your capital locked in Bitcoin smart contracts that nobody can touch until you decide to settle it.

Currencies, Stocks and ETFs via Bitcoin on ABRA offer ultimate privacy and ultimate control. For me, this is the future of personal banking. Building on Bitcoin means that no government is able to stop ABRA from delivering the bank in your pocket, effectively leveling investment opportunities on a global scale. In the same way that the internet leveled access to information, ABRA levels access to monies. A global digital financial infrastructure that, for people who don’t understand Bitcoin, is the best gateway into collateralized digital securities, without the risk of actually holding Bitcoin. With ABRA, all of the users effectively become Bitcoin hodlers, even though they’re only exposed to the price fluctuations of the specific assets held in their ABRA portfolios.

For Bitcoin hodlers this is good news too. If ABRA is succesful and collateralizes every single asset on the global stock markets, there won’t be enough Bitcoin to underly all these investments with Bitcoin. The price of Bitcoin would have to go up consequently. The total value of all of the assets held by ABRA users through the app becomes part of Bitcoin’s overall market cap.

For the future, ABRA is even planning to turn the ABRA app on your phone into a lightning network node, ensuring the transaction fees occurring when settling in Bitcoin remain economically.

The biggest caveat to all this financial revolution is that an element of trust is required in the meantime. Investors have to trust that ABRA effectively hedges their risk exposure. ABRA has a sound track record of this so far, settling close to a billion dollars in transaction volume in over 100 countries during last year’s Bitcoin decline of 85%. “We didn’t break a sweat.” said former Netscape founder and CEO of ABRA Bill Barhydt in an interview on the What Bitcoin Did podcast.

Trading vs. bots and making 20% profit

Over the weekend the price of my MARC coins dropped from 10.000 Satoshi by about 35% to 6.500 Satoshi. As I was on Chinese New Year’s holiday I didn’t take note of the dump, until it had already happened. Back in the office I looked at what happened to the price and could be the reason.

An attentive trader mentioned on Discord that the price was being manipulated by trading bots, exploiting the the average Joe’s laziness of looking into the exchanges order book and selling right into the bots bids and asks.

“Looking at the MARC market on Crypto-Bridge via the bitshares explorer, two bots (cryptobridge-marketmaker and kaldera56) are really driving the price down. Legitimate sellers are dumping into their buy orders. The bot immediately puts a sell order on the coins it just bought and puts in another buy order lower than the one before. […] Look at all of cryptobridge-marketmaker orders on both sides of the order book.”

cryptobridge orderbook via bitshares explorer

Naturally I went and looked at the orderbook myself and saw the pattern unfolding in front of me, and tried to fight the machines. As the bots were only dealing with minuscule amounts of 0.3 MARC, roughly $ 0.06, per order it was a fight which didn’t involve too much financial risk. I bought all the tiny sell-orders up and bought into the next limit order sell-wall so that the market price shown on the exchange would jump up. I didn’t never sold into the bots sales orders. Well, at least not until I had driven the bid price up again by roughly 20% or 1.200 Satoshi per coin.

To reward myself for bringing up the price the nicely I finally rewarded myself by selling of around 600 MARC at a mean price of 7.000 Satoshi. While I’m not keen on selling my position in MARC I was excited by my ability to move the market. After roughly 4 hours of pereptually clicking and buying tiny amounts of MARC from the bots I made about $200. Had I been selling my coins at the market price 4 hours earlier I would have made roughly $50 dollars less. While this approach is not necessary worth my time, it was fun and I am definitely going to look out for greater opportunities to move the market and profit from it.

Reader’s Digest Week 5 2019

• Maker Investment Thesis

Chris Burniske and Joel Monegro from Placeholder VC about the crypto-backed stablecoin DAI as a trustless credit resource. If you find DAI interesting check out Wrapped Bitcoin and compound.finance for a glimpse at more financing possibilities.

• Grin and the Mythical Fair Launch

Arjun Balaji and Hasu, who are both worth following on twitter, with a retrospective piece on how fair or unfair the distribution of the first GRIN token is and how other coins compare to that.

• Benefits of a daily diary and topic journals

Derek Sievers has inspired me to have now page and his latest writing got me started with my own daily journal.

• The Block Week in Review

Quality content journalism on crypto can always be found on theblock.com and this weeks’ review has a great opinion piece on the latest fundraiser for polkadot.com

• Bitcoin doesn’t incentivize green energy

One of Bitcoins weakest spot is its energy consumption, and this critical article argues even more so that Bitcoin is economically drawn to use “dirty” energy.

Arbitraging.co goes back to the roots

After releasing many updates from early December to late January that made the platform significantly worse than better, Arbitraging.co is turning back the wheel. The, conveniently named, biggest arbitraging platform in the cryptosphere with a market capitalization of roughly $ 15 million, has, and still is, rolling out major “downgrades” to make the platform more valuable than it has become under ever-increasingly changes to the function of the platform

Most notably, Arbitraging.co has tried to warm its community and potential new investors to a new internal exchange model allowing only in blocks of predetermined prices. While this change was aimed to decrease the the sales pressure from those selling their daily profits generated through the arbitraging bot, it effectively curtailed demand for the token making it impossible for current users to gain any value from their investments into the platforms native token ARB. Further trying to “fix” things the developers behind the platform closed down liquidity to external exchanges blocking users from freely trading their token, and losing trust in the platform to perform a legit business. The ensuing de-listing of ARB on CoinMarketCap.com, took away whatever was left of credibility marketing presence the project had left.

For a few days now things seem to change and progress is actually geared towards correcting past mistakes, increasing the platforms liquidity and gaining back users trust. In one of the first steps, Arbitraging.co CEO David Peterson, revealed his true identity in a, admittedly odd, youtube video in an effort discredit rumors that the platform is a scam and its instigators soon to exit scam. Just days later the development team fulfilled their promise, and a very much demanded feature, to pay out arbitraging profits in ETH directly. Just days ago the platform than changed its exchange module back to what it was most of 2018: a bid/ask driven exchange between token holders.

Arguably, these features help to regain trust in the intentions of the Arbitraging.co team and have led to many of the users to go back at recommending the platform as a legit investment platform. Further steps to upgrade the platform are underway, and the team has set hopes high for a listing on a TOP10 exchange with a complementing ARB/USDT pair within days. A successful listing like that would increase the utility of the ARB token by an order of magnitude and lend more credibility to long-term sustainability of the project.

How GIN saved me from troubles with MARC’s Fake Stake Exploit

A few days ago the DLS from the University of Illinois published their findings regarding vulnerabilities primarily concerning Proof-of-Stake blockchains recycling code from Bitcoin and PIVX. Due to the amount of cross-polination of ideas and code reused across cryptocurrencies, this exploit affected at least 26 currencies, and most probably another dozen or more lesser lesser known coins.

The exploit enabled attackers to disengage honest networks nodes verifying transactions on the blockchain, without the attacker requiring to commit any stake or collateral to the network, meaning an attack could always have been carried out economically from an attacker point-of-view. A second attack using the same exploit variables could have enabled an attacker to fake his stake on the network, receive blockrewards and sell those on the exchange. The exploit effectively broke the tokenomics of the chains involved, and goes to show how Proof-of-Stake is still very much a research project, while Bitcoins Proof-of-Work has proven invulnerable to such attacks for more than 10 years now.

One of my favorite coins right now, MARC, is one of those coins having recycled code and adopt the vulnerability in its code base.

MARC wallet loading

On Sunday the MARC developers then released an updated wallet that was going to fix the vulnerability and make the blockchain secure again. I was quite happy to see a swift reaction from the team and went about the backup and update of my MARC wallet immediately. Though, this was my first time upgrading a blockchain wallet holding significant assets in locked coins, the process was straightforward, besides having to learn how to add networks nodes to the wallet manually.

My wallet update was done within an hour of work and research, and another 2 hours of waiting for the blockchain to resync. However, the update meant that all Masternodes on the network had to reboot and thus blockrewards would come in again only after another days wait. As this procedure was the same for all masternodes, I wasn’t too worried about an unfair disadvantage and just waited for my nodes hosted on GIN and Clicknode to restart properly.

However, my nodes hosted on Clicknode, and as far as I know nodes hosted on Zcore, have not updated their wallets and VPS fast enough, so that their hosted nodes ended-up on different diverging forks of the blockchains. This is due to the lost connectivity, causing nodes to be out of sync with each other and creating conflicting checkpoints, resulting in a chain split with stacked nodes.

In summary, I experienced the service on the GIN platform the fastest and most reliable among hosting platforms and moved my masternodes from competing cheaper platforms back to GIN this week. Quality service does not come free, and the $5 hosting fee per month once again seem well spent on GIN, especially considering that I would have missed out on blockrewards potentially worth more than $5 if I had stayed on platforms unable to restart the masternodes properly.

Taking the Myers-Briggs Personality Type Indicator

I’m currently reading Ray Dalio - Principles, in which the billionaire investor and fund manager goes to great length to talk about personality types and how their characteristic behaviors influence their decision making and performance within teams and organizations. Mr. Dalio seems to have put great emphasis on creating company where people and situations are analyzed deeply and then matched to each other for maximum efficiency and profitability. Prompted by Mr. Dalios enthusiasm about the different types of personalities and how they typically react to certain stimuli, I followed his recommendation and just did theMyers-Briggs Type Indicator instrument(MBTI).

The MBTI personality instrument is aimed to give you insight into four main character traits:

    1. The way you direct and receive energy
    2. The way you take in information
    3. The way you decide and come to conclusions
    4. The way you approach the outside world

Each of these divisions has two possible preferences a person might choose over the other. Thus, there is a possibility of 16 types that the MBTI is trying to explain. The type explains how you would most likely react in a certain situation. It doesn’t set you any borders and would make you incapable of reacting in another way, its just how you react instinctively, intuitively and without further training of your other characteristics. As these are merely preferences the results are fluid, whereby 2. and 4. make up the core of your personality and are most significant in determining your personality.

The MBTI is a self-reporting instrument, that depends on the honesty of the individuals taking the instrument. This is problematic as an individual might manipulate the instrument according to his or her desired result. Two other common critics of the instrument I find important, though surmountable, argue that its results are too vague and unreliable. Critics argue that the results are vague and general, so as to allow any kind of behavior to fit any personality type, making the MBTI appear just like another astrological chart which people give a high accuracy because their are supposedly tailor-fit. The instruments unreliability is something I even thought about while taking the instrument, and in 2013 Fortune Magazine [found], people obtained different type classifications after retaking the instrument only five weeks later.

Intuitively, I give this criticism a lot of validity, and believe that in order to obtain a useful outcome, you have to know yourself quite a bit already before taking the instrument in the first place. Knowing yourself will help you step around its obvious weaknesses and get a result that you can work with. Having said that, I did find the results surprising and helpful at the same time.
Furthermore, I am convinced, the instrument is only helpful to me if I am consisting in working with the results in the longterm.

My assessment indicated my personality type to be

Introversion | Sensing | Feeling | Perceiving

ISFP

Most interestingly for me is that my reported type is in fact the exact opposite for each of the 4 divisions, resulting in a ENTJ type. Notably, the best-fit result is only achieved after a learning session and self-reflection, stacking the reported and estimated result against each other, finally letting the individual choose the type he feels best about. This Best Fit Type method is what I, now that I have finished the instrument, think makes the MBTI so powerful. MBTI makes you the expert of your result in conception, interpretation and consequence. The MBTI showed me which type I am, by letting me discern what I am not. If you plan to take the MBTI, make sure you reflect on the Best Fit decision long enough to make a carefully thought out decision leading to a useful result.

Having just done the MBTI assessment today I am still reflecting on its results. I have yet to fully understand the “whole type” theory and use it to my full advantage. Next, I will ask my wife Jade to complete the instrument, so that we can use our personality preferences in leading a harmonious and mutually beneficial relationship. It will also be fun to share our different approaches to work and social life, with our potential weaknesses laid bare.