What Is Bitcoin Backed By?. Hint: The correct answer is
How to Recover Your Funds If You Lose Your Bitcoin Wallet
What's Bitcoin Backed By?
What is Bitcoin Backed By?
I stored bitcoins online ... aaaand they're gone.
/SorryForYourLoss is a place to showcase the top minds of bitcoin (and cryptocurrencies) failing to secure their precious internet money properly. It's a memorial for the countless incidents of thefts, scams, hacks, goxxes, .. etc.
In a recent spillover of internet-based long-form intellectual new media into the mainstream, Eric Weinstein appeared as a guest on Ted Cruz's podcast. Eric was well prepared. Cruz played the role of a charitable and engaged critic while avoiding direct confrontation. The conservation laid bare the intersection of the anti-corporate socialist left and anti-government libertarian right and the potential of these forces as a combined political interest. There was a strong sense of shared acknowledgement of the current crisis and they touched on all the culture war aspects. But I'm more interested in what Eric has pointed to now several times as the root cause of the systemic decline, and what seems to be the original trigger for the slow decay and building of tension that has ultimately led to the rise of darker elements on both the left and right that we see today: a Great Decoupling of productivity (GDP) and wage growth in the early 1970's. The significance of this time period has also been highlighted by Eric's boss, Peter Thiel. We are referred to https://wtfhappenedin1971.com/, where a collection of charts give the impression that a profound change in the foundations of the economy took place, effectively causing a divergence of all kinds of metrics related to equality, wealth creation, the complexity of regulation, and implicitly downstream effects like political polarization, incarceration rates, and age of marriage. The simple, seemingly persuasive answer is that the effective cancellation of the gold standard set us on a path towards borrowing ever larger sums to avert financial crises as they arise, and the return to a currency backed by something provably scarce, i.e. bitcoin, is a solution. I can't say I'm convinced it's that simple. And Eric doesn't mention currency specifically as the problem. So what I want to know is, was 1971 a real inflection point, the real root of inequality and dysfunction we see today? Was the removal of limits on the Fed's ability to print money a mistake? Or was there some other government action or change at that time that was the real cause? Do we need to let stock market crashes happen from time to time? A year ago, u/gwern posted a 1986 Atlantic article that described a lot of the problems in black America that are still around 4 decades later and offered more in the way of nuance and insight than most of the discourse we see today. What struck me on revisiting it was how the timing of the decline of Chicago aligns with the early 1970's trigger hypothesis:
In 1970 thirty-seven percent of the population of the area was below the poverty line; in 1980 the figure was 51 percent. In 1970 the unemployment rate was 9.5 percent; in 1980 it was 24.2 percent. In 1970 forty percent of the residents of the neighborhood lived in families with a female head; in 1980 the number had grown to 72 percent. In 1980 of the 54,000 residents 33,000 were on welfare. Experts agree that all of the numbers are even worse today.
My mental model for social issues is that they are mostly rooted in economics. If you have a society that generates wealth, you can pay teachers, doctors, and police well enough to attract competent candidates and the competition necessary to create real expertise. You can afford to build and maintain good infrastructure and spend time on figuring out how to best help the disadvantaged. You have the resources to advance technology and support the arts. You get all the positive feedback loops that come with this. When wealth generation becomes concentrated and restricted, public institutions start to struggle, people feel they have less opportunity, and social issues start to bubble up like the formation of outgroups of all kinds. A massive oversimplifation, I know, but a useful general framework to approaching issues that avoids (mis)placing blame on cultural degeneracy, "evil" corporations, or other common scapegoats that are largely symptoms of greater problems. Today, this mindset seems to align with the conservative right, but in the 1986 article it's the "liberal answer" to the problem of ghettos that I identify with:
In Chicago the harbinger of the change was the closing in the late fifties of the stockyards, which for half a century were the sine qua non of lower-class grunt work and a heavy employer of blacks. Chicago lost 200,000 jobs in the seventies; small shut-down redbrick factories that used to make products like boxes and ball bearings dot the city, especially the West Side. The lack of jobs, the argument continues, caused young men in the ghetto to adopt a drifting, inconstant life; to turn to crime; to engage in exaggeratedly macho behavior -- acting tough, not studying, bullying women for money -- as a way to get the sense of male strength that their fathers had derived from working and supporting families. As Murray believes that one simple step, ending all welfare programs, would heal the ghettos, the unemployment school believes that another simple step, jobs, would heal them. "When there's a demand for the participation of the black underclass in the labor force, most of the so-called problems people talk about will evaporate in a generation," says John McKnight. an urban-research professor at Northwestern University.
Indeed, Mr. McKnight. And up until this spring, it looked like the Trump presidency's aggressively pro-jobs and pro-American workers policy was showing promise of vindicating this view - the presence of BLM and racial tensions leading up to 2016 had all but subsided by 2018-2019. I wonder just how little backlash the George Floyd incident would have caused if the pandemic hadn't undone the economic progress of the past 3 years. Mind you, that "progress" was but a tiny step in the right direction in terms of improving wages and opportunities for the lowest earners. And for all the times the "audit the fed" meme hit the top of the_donald, it now seems impossible that the current administration has any capability or willingness to take the drastic steps needed to address the real root cause that apparently started 50 years ago. To do that, we may need an actual revolution.
So, last wipe, I thoroughly enjoyed the game. I struggled until I got to about level 35ish, but eventually I got my bitcoin farm going (not full 50 GPU) and my booze generator going, and I was making some decent rubles. I could buy decent gear, the scopes I wanted, the ammo I liked (which was rarely m995,7n37, or m61, btw). And then I could go in raid, do my quests, find items, kill players, take their stuff and leave. Or, I could die and lose all my gear, and it would sting, but not break me. But when I did raids, I almost ALWAYS stayed until <10 minutes remaining, sometimes even getting out with spare seconds left. Yes, by about level 45, I eventually started making more money than I could spend, but ONLY after 50 GPU's in the BC farm and booze generator combined. Now this wipe, instead of enjoying the raids, I'm getting frustrated trying to find progression halting items. Then, when I do find them, I'm STRONGLY encouraged to turtle up, hide until the coast is clear behind counters or in bushes, then extract at 10:01. I'm also having to buy expensive weapons like SVD's to finish quests, which I had to do last wipe too, but my rouble flow was much much higher. I can kill a 3 man squad, and make 200k, because their armor was zero'd out and too high cost to repair and their guns with all their fancy attachments are worth 75k. Or, I can die and lose about that much. There is no real risk/reward any more. Then, when I'm having a particularly bad day dying, I can't even lean back on looting stuff like factory keys and fuel conditioners now, AND WHAT LITTLE BIT OF FIR I SELL HAS ATROCIOUS FEES. I sold 3 packs of bolts for 14k ea and the fee was 12k. It's like BSG isn't even trying to micro adjust the game to dial back the ruble flow. Instead it's full on scorched earth. Only the people with the absolute best combat skills or the most time to rat around have the ability to make any decent money. On top of that, I'm level 33 and JUST got my last FIR flash drive. I have crashed against the rocks to the tune of MILLIONS trying to get a LEDX and 3 FIR graphics cards from Interchange, thanks to RNG. I can't even start Shooter Born In Heaven, and I would be 3/4 done with it by now if I had it 10 levels ago. I'm sure* 3/4 of the subreddit will come by to tell me to quit crying, git gud, it's hardcore, roubles are easy to make, its a BETA, etc.. Well here's my Beta feedback. The game isn't fun when I lose every ruble I scrape up trying to do quests with specific gun/armor requirements and finding FIR items in hotspots, and hiding to avoid losing those items, all while BSG -heavily- deflates the economy and punishes rule obeying players in the name of stamping out RMT. *Left out a word. Edit: let me just say, I don’t mean this as a personal attack towards Nikita or the other devs. It’s simply just my experience, and my thoughts. I don’t have answers on how to make the perfect balances and compromises, or fixes on RMT etc. I just wish it had been publicized ahead of time, something like “Okay guys, next wipe we’re gonna experiment with making it real hard.” Also I’ve gotten a lot of responses saying “you’re not supposed to run the best gear every raid.” And my reply is, my standard kit is a Vepr KM, 6B23 armor, a Ratnik helmet, and comtacs, with self made BP ammo from the hideout. I’ve just recently started adding TV10 armor rigs into the mix. I’m not a META player who has to have iglonik or M995 every raid. I’m not trying to say I want to do that either. For one CONSTRUCTIVE bit, I feel like items should have two different FIR tags. One for flea/resell, one for quests, and the quest one staying if you died with it. That would make life better to me and to a very large population of power players. Also, between FIR changes, reduced loot spawns, increased flea fees, reduced trader sell prices, any 1-2 of those are survivable but all of them together, with more to come I'm sure, are crushing. That's all I'm saying. EDIT Again : I just saw what Jaegers giving for guns. THAT is nice. That makes up a little bit for the stuff like fuel conditioners.
My Provisional List of COVID Anomalies, Red/ False Flags & Clear Indications of Scumbaggery And Scambuggery. LIHOP, MIHOP Or HOAX/SCAM? Def Not As Described. Very Much Updated Since 1st Posting. Please Let Me Know What I’ve Missed Or Add Links. Repost, Due To Strange Disappearance of 90% Of My Post.
Not going to add to my existing paranoia by speculating, but here it is updated... Here’s my Top 22 list of suspicious shenanigans and red flags surrounding the COVID narrative:
The Imperial College Death data - Neil Ferguson and Gates-funded Imperial College, London Model that ‘persuaded’ Johnson and Trump to lockdown. Projected 500K deaths in UK and 2.2m deaths in US, EVEN WITH LOCKDOWN. Less than 10% accuracy but 110% alarmist, and evidence that the coding was deliberately flawed and designed to inflate numbers. Gates funding everyone involved in the staged 'debacle'.
Wholeheartedly willing to get downvoted, but this RMT obsession has to stop.
This sub hasn't got a clue, I swear. Huge sweeping changes to the game mechanics are a terrible way to combat RMT. It's basically an admission that your anti-cheat doesn't work. Most MMOs suffer in some way from an RMT problem; WoW, Runescape, even Destiny 2 has RMT issues if you just look. Thing is, the anticheat in those games actually works worth a damn, so the entire playerbase doesn't have to suffer from endless tinkering with in-game systems. Before you hit me with 'it's a hardcore game, deal with it, it's supposed to be grindy', just stop. Just don't bother. I've heard it time and time again, and it's bullshit. You know it's bullshit just as well as I do. The changes BSG have been making recently to nerf all forms of progression only make the game 'more hardcore' for people who work full time and don't have the same amount of *time* as streamers who dedicate their entire life to this game. That's not 'hardcore'. The game's difficulty mechanically is 'hardcore' and always have been, and I love it. These changes, though, in my eyes, are just time-wasting for the sake thereof. Since when does the amount of time one has to invest in a game define how fucking hardcore it is? Would you describe WoW as more hardcore than Tarkov because of how long you have to play to progress? Or perhaps beating all three Witcher games back to back is 'hardcore' because it took a long time. Are ARMA or DCS inherently less hardcore than Tarkov because an operation can be completed in an afternoon? No, judging how hardcore a game is by the amount of time one has to invest in it is a joke. *No game* should give enormous *mechanical advantages* to those with more time on their hands. There's already an inherent skill advantage that comes from that amount of practice, designing the mechanics to also reward only those with that much time is a kick in the teeth to all the people who love this game but can't invest that level of time. And yeah, you can go ahead and say 'ummm actualllly it's a beta, so they can do what they like, stop whining', and yep. Yes, they can. You're correct. However, comma, that doesn't mean I have to pretend to like it. Yes, I did buy EoD and no, I don't regret it because of all the fun I've had til now. But suggesting people who don't like the current direction the game is going in aren't allowed to voice their opinion because the game's in beta is fucking ludicrous. What do you think the purpose of a playable beta is? Nikita is more than welcome to ignore all the people who don't like these new changes, but what gives people on this sub the right to tell me that I'm not entitled to an opinion on the product I've chosen to financially support. It's such a toxic, capital-G Gamer attitute to suggest that 'Tarkov is OUR game because we're willing to dump several full days a week into grinding for our Bitcoin farms. You should just go and play something else, this clearly isn't a game for you. Go play Call of Duty.' I shouldn't even have to express how utterly reductive and childish that is. Grow up. I'm getting HUGE red flags with the way this game is currently going, because it's all too similar to a game I used to love, The Culling. That game blew up on launch and a bunch of high profile streamers suggested changes to the game, and the devs went ahead and implemented all of them without so much as *thinking* about how they'd affect the average player. Look at where that game is now. Servers shut down, because the average player simply stopped having fun. I'm not saying BSG is even close to that bad, but this endless tinkering with mechanics for the nebulous, vague purpose of 'RMT' has to stop or I don't know if the 'little guys' are gonna stick around much longer. EDIT: I AM AWARE THAT RMT != CHEATING. But cheating is what makes RMT viable. RMTers need to keep items in supply, and to do that, they cheat. It's much more profitable. Ergo, if you stamp out cheaters, the RMT problem becomes significantly diminished. EDIT 2: u/ArxMessor makes a great point that Tarkov is an MMO and therfore should have some kind of grind. I agree. However, most MMOs use systems like weekly bounties etc to ensure even players with only maybe 10 hours a week to invest in the game can still keep up and compete. Tarkov currently rewards time investment *exponentially* which removes all possibility of catching up. EDIT 3: Yep, my DMs right now are very much confirming the things I said above about a certain subset of this community. Thanks, Gamers. EDIT 4: I get it, Destiny anti-cheat is ass. I made a mistake there, since I don't play Trials of Osiris. However, do you see Bungie making the win requirement for Trials 50 wins instead of 9 or whatever just to slow down the hackers? Of course not, because it hurts normal players more. Edit 5: My first gold! Thanks kind stranger.
DDDD - The Rise of “Buy the Dip” Retail Investors and Why Another Crash Is Imminent
In this week's edition of DDDD (Data-driven DD), I'll be going over the real reason why we have been seeing a rally for the past few weeks, defying all logic and fundamentals - retail investors. We'll look into several data sets to see how retail interest in stock markets have reached record levels in the past few weeks, how this affected stock prices, and why we've most likely seen the top at this point, unless we see one of the "positive catalysts" that I mentioned in my previous post, which is unlikely (except for more news about Remdesivir). Disclaimer - This is not financial advice, and a lot of the content below is my personal opinion. In fact, the numbers, facts, or explanations presented below could be wrong and be made up. Don't buy random options because some person on the internet says so; look at what happened to all the SPY 220p 4/17 bag holders. Do your own research and come to your own conclusions on what you should do with your own money, and how levered you want to be based on your personal risk tolerance. Inspiration Most people who know me personally know that I spend an unhealthy amount of my free time in finance and trading as a hobby, even competing in paper options trading competitions when I was in high school. A few weeks ago, I had a friend ask if he could call me because he just installed Robinhood and wanted to buy SPY puts after seeing everyone on wallstreetbets post gains posts from all the tendies they’ve made from their SPY puts. The problem was, he actually didn’t understand how options worked at all, and needed a thorough explanation about how options are priced, what strike prices and expiration dates mean, and what the right strategy to buying options are. That’s how I knew we were at the euphoria stage of buying SPY puts - it’s when dumb money starts to pour in, and people start buying securities because they see everyone else making money and they want in, even if they have no idea what they’re buying, and price becomes dislocated from fundementals. Sure enough, less than a week later, we started the bull rally that we are currently in. Bubbles are formed when people buy something not because of logic or even gut feeling, but when people who previously weren’t involved see their dumb neighbors make tons of money from it, and they don’t want to miss out. A few days ago, I started getting questions from other friends about what stocks they should buy and if I thought something was a good investment. That inspired me to dig a bit deeper to see how many other people are thinking the same thing. Data Ever since March, we’ve seen an unprecedented amount of money pour into the stock market from retail investors. Google Search Trends \"what stock should I buy\" Google Trends 2004 - 2020 \"what stock should I buy\" Google Trends 12 months \"stocks\" Google Trends 2004 - 2020 \"stocks\" Google Trends 12 months Brokerage data Robinhood SPY holders \"Robinhood\" Google Trends 12 months wallstreetbets' favorite broker Google Trends 12 months Excerpt from E*Trade earnings statement Excerpt from Schwab earnings statement TD Ameritrade Excerpt Media cnbc.com Alexa rank CNBC viewership & rankings wallstreetbets comments / day investing comments / day Analysis What we can see from Reddit numbers, Google Trends, and CNBC stats is that in between the first week of March and first week of April, we see a massive inflow of retail interest in the stock market. Not only that, but this inflow of interest is coming from all age cohorts, from internet-using Zoomers to TV-watching Boomers. Robinhood SPY holdings and earnings reports from E*Trade, TD Ameritrade, and Schwab have also all confirmed record numbers of new clients, number of trades, and assets. There’s something interesting going on if you look closer at the numbers. The numbers growth in brokers for designed for “less sophisticated” investors (i.e. Robinhood and E*Trade) are much larger than for real brokers (i.e. Schwab and Ameritrade). This implies that the record number of new users and trade volume is coming from dumb money. The numbers shown here only really apply to the US and Canada, but there’s also data to suggest that there’s also record numbers of foreign investors pouring money into the US stock market as well. However, after the third week of March, we see the interest start to slowly decline and plateau, indicating that we probably have seen most of those new investors who wanted to have a long position in the market do so. SPX daily Rationale Pretty much everything past this point is purely speculation, and isn’t really backed up by any solid data so take whatever I say here with a cup of salt. We could see from the graph that new investor interest started with the first bull trap we saw in the initial decline from early March, and peaking right after the end of the crash in March. So it would be fair to guess that we’re seeing a record amount of interest in the stock market from a “buy the dip” mentality, especially from Robinhood-using Millennials. Here’s a few points on my rationalization of this behavior, based on very weak anecdotal evidence
They missed out of their chance of getting in the stock market at the start of the bull market that happened at the end of 2009
They’ve all seen the stock market make record gains throughout their adult lives, but believing that the market might be overheated, they were waiting for a crash
Most of them have gotten towards the stage of their lives where they actually have some savings and can finally put some money aside for investments
This stock market crash seems like their once-in-a-decade opportunity that they’ve been waiting for, so everyone jumped in
Everyone’s stuck at their homes with vast amounts of unexpected free time on their hands
Most of these new investors got their first taste in the market near the bottom, and probably made some nice returns. Of course, since they didn’t know what they were doing, they probably put a very small amount of money at first, but after seeing a 10% return over one week, validating that maybe they do know something, they decide to slowly pour in more and more of their life savings. That’s what’s been fueling this bull market. Sentiment & Magic Crayons As I mentioned previously, this bull rally will keep going until enough bears convert to bulls. Markets go up when the amount of new bullish positions outnumber the amount of new bearish positions, and vice versa. Record amounts of new investors, who previously never held a position in the market before, fueled the bullish side of this equation, despite all the negative data that has come out and dislocating the price from fundamentals. All the smart money that was shorting the markets saw this happening, and flipped to become bulls because you don’t fight the trend, even if the trend doesn’t reflect reality. From the data shown above, we can see new investor interest growth has started declining since mid March and started stagnating in early April. The declining volume in SPY since mid-March confirms this. That means, once the sentiment of the new retail investors starts to turn bearish, and everyone figures out how much the stocks they’re holding are really worth, another sell-off will begin. I’ve seen something very similar to this a few years ago with Bitcoin. Near the end of 2017, Bitcoin started to become mainstream and saw a flood of retail investors suddenly signing up for Coinbase (i.e. Robinhood) accounts and buying Bitcoin without actually understanding what it is and how it works. Suddenly everyone, from co-workers to grandparents, starts talking about Bitcoin and might have thrown a few thousand dollars into it. This appears to be a very similar parallel to what’s going on right now. Of course there’s differences here in that equities have an intrinsic value, although many of them have gone way above what they should be intrinsically worth, and the vast majority of retail investors don’t understand how to value companies. Then, during December, when people started thinking that the market was getting a bit overheated, some started taking their profits, and that’s when the prices crashed violently. This flip in sentiment now look like it has started with equities. SPY daily Technical Analysis, or magic crayons, is a discipline in finance that uses statistical analysis to predict market trends based on market sentiment. Of course, a lot of this is hand-wavy and is very subjective; two people doing TA on the same price history can end up getting opposite results, so TA should always be taken with a grain of salt and ideally be backed with underlying justification and not be blindly followed. In fact, I’ve since corrected the ascending wedge I had on SPY since my last post since this new wedge is a better fit for the new trading data. There’s a few things going on in this chart. The entire bull rally we’ve had since the lows can be modelled using a rising wedge. This is a pattern where there is a convergence of a rising support and resistance trendline, along with falling volume. This indicates a slow decline in net bullish sentiment with investors, with smaller and smaller upside after each bounce off the support until it hits a resistance. The smaller the bounces, the less bullish investors are. When the bearish sentiment takes over across investors, the price breaks below this wedge - a breakdown, and indicates a start of another downtrend. This happened when the wedge hit resistance at around 293, which is around the same price as the 200 day moving average, the 62% retracement (considered to be the upper bound of a bull trap), and a price level that acted as a support and resistance throughout 2019. The fact that it gapped down to break this wedge is also a strong signal, indicating a sudden swing in investor sentiment overnight. The volume of the break down also broke the downwards trend of volume we’ve had since the beginning of the bull rally, indicating a sudden surge of people selling their shares. This doesn’t necessarily mean that we will go straight from here, and I personally think that we will see the completion of a heads-and-shoulders pattern complete before SPY goes below 274, which in itself is a strong support level. In other words, SPY might go from 282 -> 274 -> 284 -> 274 before breaking the 274 support level. VIX Daily Doing TA is already sketchy, and doing TA on something like VIX is even more sketchy, but I found this interesting so I’ll mention it. Since the start of the bull rally, we’ve had VIX inside a descending channel. With the breakdown we had in SPY yesterday, VIX has also gapped up to have a breakout from this channel, indicating that we may see future volatility in the next week or so. Putting Everything Together Finally, we get to my thesis. This entire bull rally has been fueled by new retail investors buying the dip, bringing the stock price to euphoric levels. Over the past few weeks, we’ve been seeing the people waiting at the sidelines for years to get into the stock market slowly FOMO into the rally in smaller and smaller volumes, while the smart money have been locking in their profits at an even slower rate - hence an ascending wedge. As the amount of new retail interest in the stock market started slowed down, the amount of new bulls started to decline. It looks like Friday might have been the start of the bearish sentiment taking over, meaning it’s likely that 293 was the top, unless any significant bullish events happen in the next two weeks like a fourth round of stimulus, in which case we might see 300. This doesn’t mean we’ll instantly go back to circuit breakers on Monday, and we might see 282 -> 274 -> 284 -> 274 happen before panic, this time by the first-time investors, eventually bringing us down towards SPY 180. tldr; we've reached the top EDIT - I'll keep a my live thoughts here as we move throughout this week in case anyone's still reading this and interested. 5/4 8PM - /ES was red last night but steadily climbed, which was expected since 1h RSI was borderline oversold, leaving us to a slightly green day. /ES looks like it has momentum going up, but is approaching towards overbought territory now. Expecting it to go towards 284 (possibly where we'll open tomorrow) and bouncing back down from that price level 5/5 Market Open - Well there goes my price target. I guess at this point it might go up to 293 again, but will need a lot of momentum to push back there to 300. Seems like this is being driven by oil prices skyrocketing. 5/5 3:50PM - Volume for the upwards price action had very little volume behind it. Seeing a selloff EOD today, could go either way although I have a bearish bias. Going to hold cash until it goes towards one end of the 274-293 channel (see last week's thesis). Still believe that we will see it drop below 274 next week, but we might be moving sideways in the channel this week and a bit of next week before that happens. Plan for tomorrow is buy short dated puts if open < 285. Otherwise, wait till it goes to 293 before buying those puts 5/5 6PM - What we saw today could be a false breakout above 284. Need tomorrow to open below 285 for that to be confirmed. If so, my original thesis of it going back down to 274 before bouncing back up will still be in play. 5/6 EOD - Wasn't a false breakout. Looks like it's still forming the head-and-shoulders pattern mentioned before, but 288 instead of 284 as the level. Still not sure yet so I'm personally going to be holding cash and waiting this out for the next few days. Will enter into short positions if we either go near 293 again or drop below 270. Might look into VIX calls if VIX goes down near 30. 5/7 Market Open - Still waiting. If we break 289 we're probably heading to 293. I'll make my entry to short positions when we hit that a second time. There's very little bullish momentum left (see MACD 1D), so if we hit 293 and then drop back down, we'll have a MACD crossover event which many traders and algos use as a sell signal. Oil is doing some weird shit. 5/7 Noon - Looks like we're headed to 293. Picked up VIX 32.5c 5/27 since VIX is near 30. 5/7 11PM - /ES is hovering right above 2910, with 4h and 1h charts are bullish from MACD and 1h is almost overbought in RSI. Unless something dramatic happens we'll probably hit near 293 tomorrow, which is where I'll get some SPY puts. We might drop down before ever touching it, or go all the way to 295 (like last time) during the day, but expecting it to close at or below 293. After that I'm expecting a gap down Monday as we start the final leg down next week towards 274. Expecting 1D MACD to crossover in the final leg down, which will be a signal for bears to take over and institutions / day traders will start selling again 5/8 Market Open - Plan is to wait till a good entry today, either when technicals looks good or we hit 293, and then buy some SPY June 285p and July 275p 5/8 Noon - Everything still going according to plan. Most likely going to slowly inch towards 293 by EOD. Will probably pick up SPY puts and more VIX calls at power hour (3 - 4PM). Monday will probably gap down, although there's a small chance of one more green / sideways day before that happens if we have bullish catalysts on the weekend. 5/8 3:55PM - SPY at 292.60. This is probably going to be the closest we get to 293. Bought SPY 290-260 6/19 debit spreads and 292-272 5/15 debit spreads, as well as doubling down on VIX calls from yesterday, decreasing my cost basis. Still looks like there's room for one more green day on Monday, so I left some money on the side to double down if that's the case, although it's more likely than not we won't get there. 5/8 EOD - Looks like we barely touched 293 exactly AH before rebounding down. Too bad you can't buy options AH, but more convinced we'll see a gap down on Monday. Going to work on another post over the weekend and do my updates there. Have a great weekend everyone!
Can someone explain to me what the point of ampleforth is?
I mean I get the essentials. The rising market cap translates into a rise in the quantity. But why is this a desired trait? I don't get it. Let's take a generic token B and compare it to ampleforth A. A has a marketcap of 1m and B too. Let's say both cost $1. Now let's say you own 10 of both and send 1 of each to a different person. Now overnight the marketcap of both rises to 2m. You now own 9 of B which is worth $18 in total because the price doubled, and 18 of A worth $18 because the quantity doubled. So in the end you still effectively transfered $2 in value because you missed out on the additional token you would have gotten. You have effectively done the same thing with both tokens. If the point of ampleforth is to be a (semi) stablecoin it fails to do so. Now on top of that the whole existence of ampleforth is depending on the existence of another currency in which its price target is denominated. It can't be independent of such a currency, so if the goal is to be a currency that replaces all others, then it fails to do so as well. I've also read that ampleforth tries to be a DeFi primitive. The context was that if you use collateral such as ETH, then you might get liquidated if the price changes, but whenever this was mentioned, it was never explained how ampleforth prevents this. It makes no sense to me. Let's say you lock up $100 of ETH and $100 of ampleforth in a smart contract, and get 2 C tokens, one backed by ETH and one by AMPL. Let's say the liquidation price is $50. If the market cap of both lose 50% of their value, then your ETH would get liquidated. But since the quantity of ampleforth has been halved as well the smart contract holds half of the originally locked up AMPL, which will make the smart contract liquidate your assets as well. You could prevent this by excluding ampleforth in smart contract wallets from contraction/expansion but then people would just deposit them in smart contract when they know that there will be a contraction the next day, which makes this solution unfeasible. So as a collateral it also fails. They also say that ampleforth is worth investing in because its price is uncorrelated to bitcoin. But this makes only sense to me if the quantity you hold is fixed. If the marketcap of ampleforth correlates to bitcoins, then the quantity you hold and thus the value you hold in ampleforth will fluctuate as much as bitcoin. Which means that it is no different from any other token which also correlates to bitcoin, even if the price is uncorrelated. So as an investment it makes no sense as well. Especially since this projects only redeeming quality makes absolutely no difference in the end. Please can someone explained to me what the purpose of ampleforth is? There seem to be a lot of people that are really excited but I haven't found a single one that could explain to me what exactly it is that makes ampleforth worth it.
Flatten the Curve. #18. The current cold war between China and America explained. And how China was behind the 2008 Wall Street financial Crash. World War 3 is coming.
China, the USA, and the Afghanistan war are linked. And in order to get here, we will start there. 9-11 happened. Most of the planet mistakenly understood terrorists had struck a blow against Freedom and Capitalism and Democracy. It was time to invade Afghanistan. Yet all of the terrorists were linked to Saudi Arabia and not Afghanistan, that didn't make sense either. Yet they invaded to find Bin Laden, an ex CIA asset against the Soviet Union and it's subjugation of Afghanistan. The land in the middle of nowhere in relation to North America and the West. It was barren. A backwater without any strategic importance or natural resources. Or was there? The survey for rare earth elements was only made possible by the 2001 U.S. invasion, with work beginning in 2004. Mirzad says the Russians had already done significant surveying work during their military occupation of the country in the 1980s. Mirzad also toes the line for U.S. corporations, arguing, “The Afghan government should not touch the mining business. We have to give enough information to potential investors.” Rare Earth Elements. The elements that make the information age possible. People could understand the First Gulf War and the Geopolitical importance of oil. That was easy, but it still didn't sound morally just to have a war for oil. It was too imperialist and so they fell in line and supported a war for Kuwaiti freedom instead, despite the obvious and public manipulation at the UN by Nayirah. This is some of her testimony to the Human Rights Council. While I was there, I saw the Iraqi soldiers come into the hospital with guns. They took the babies out of the incubators, took the incubators and left the children to die on the cold floor. It was horrifying. I could not help but think of my nephew who was born premature and might have died that day as well. After I left the hospital, some of my friends and I distributed flyers condemning the Iraqi invasion until we were warned we might be killed if the Iraqis saw us. The Iraqis have destroyed everything in Kuwait. They stripped the supermarkets of food, the pharmacies of medicine, the factories of medical supplies, ransacked their houses and tortured neighbors and friends. There was only one problem. She was the daughter of Saud Al-Sabah, the Kuwaiti ambassador to the United States. Furthermore, it was revealed that her testimony was organized as part of the Citizens for a Free Kuwait public relations campaign, which was run by the American public relations firm Hill & Knowlton for the Kuwaiti government (fun fact, Hill & Knowlton also have extensive ties with Bill Gates). So the public was aghast at her testimony and supported the war against the mainly Soviet backed, but also American supported and Soviet backed Saddam Hussein, in his war against Iran, after the Iranians refused to Ally with American interests after the Islamic Revolution. But that was oil, this was Rare Earth Elements. There was a reason the war was called, Operation Enduring Freedom. This natural resource was far more important in the long run. You couldn't have a security surveillance apparatus without it. And what was supposed to be a war on terror was in actuality a territorial occupation for resources. Sleeping Dragon China is next, and where there's smoke, there's fire. Let's go point form for clarity. • China entered the rare earth market in the mid-1980s, at a time when the US was the major producer. But China soon caught up and became the production leader for rare earths. Its heavily state-supported strategy was aimed at dominating the global rare earth industry. • 1989 Beijing’s Tiananmen Square spring. The U.S. government suspends military sales to Beijing and freezes relations. • 1997. Clinton secures the release of Wei and Tiananmen Square protester Wang Dan. Beijing deports both dissidents to the United States. (If you don't understand these two were CIA assets working in China, you need to accept that not everything will be published. America wouldn't care about two political activists, but why would care about two intelligence operatives). • March 1996. Taiwan’s First Free Presidential Vote. • May 1999. America "accidently" bombs the Belgrade Chinese Embassy. • 2002 Price competitiveness was hard for the USA to achieve due to low to non-existent Chinese environmental standards; as a result, the US finally stopped its rare earth production. • October 2000. U.S. President Bill Clinton signs the U.S.-China Relations Act. China's take over of the market share in rare earth elements starts to increase. • October 2001. Afghanistan war Enduring Freedom started to secure rare earth elements (Haven't you ever wondered how they could mobilize and invade so quickly? The military was already prepared). • 2005. China establishes a monopoly on global production by keeping mineral prices low and then panics markets by introducing export quotas to raise prices by limiting supply. • Rare Earth Elements. Prices go into the stratosphere (for example, dysprosium prices do a bitcoin, rocketing from $118/kg to $2,262/kg between 2008 and 2011). • In a September 2005. Deputy Secretary of State Robert B. Zoellick initiates a strategic dialogue with China. This was presented as dialog to acknowledge China's emergence as a Superpower (which China probably insisted on), but it was about rare earth elements market price. • October 2006. China allows North Korea to conduct its first nuclear test, China serves as a mediator to bring Pyongyang back to the negotiating table with the USA. • September 2006. American housing prices start to fall. (At some point after this, secret negotiations must have become increasingly hostile). • March 2007. China Increases Military Spending. U.S. Vice President Dick Cheney says China’s military buildup is “not consistent” with the country’s stated goal of a “peaceful rise.” • Mid-2005 and mid-2006. China bought between $100b and $250 billion of US housing debt between mid-2005 and mid-2006. This debt was bought using the same financial instruments that caused the financial collapse. • 2006. Housing prices started to fall for the first time in decades. • Mid-2006 and mid-2007. China likely added another $390b to its reserves. "At the same time, if China stopped buying -- especially now, when the private market is clogged up -- US financial markets would really seize up." Council on Foreign Relations-2007 August • February 27, 2007. Stock markets in China and the U.S. fell by the most since 2003. Investors leave the money market and flock to Government backed Treasury Bills. I've never seen it like this before,'' said Jim Galluzzo, who began trading short-maturity Treasuries 20 years ago and now trades bills at RBS Greenwich Capital in Greenwich, Connecticut.Bills right now are trading like dot-coms.'' We had clients asking to be pulled out of money market funds and wanting to get into Treasuries,'' said Henley Smith, fixed-income manager in New York at Castleton Partners, which oversees about $150 million in bonds.People are buying T-bills because you know exactly what's in it.'' • February 13, 2008. The Economic Stimulus Act of 2008 was enacted, which included a tax rebate. The total cost of this bill was projected at $152 billion for 2008. A December 2009 study found that only about one-third of the tax rebate was spent, providing only a modest amount of stimulus. • September 2008. China Becomes Largest U.S. Foreign Creditor at 600 billion dollars. • 2010. China’s market power peaked in when it reached a market share of around 97% of all rare earth mineral production. Outside of China, there were almost no other producers left. Outside of China, the US is the second largest consumer of rare earths in the world behind Japan. About 60% of US rare earth imports are used as catalysts for petroleum refining, making it the country’s major consumer of rare earths. The US military also depends on rare earths. Many of the most advanced US weapon systems, including smart bombs, unmanned drones, cruise missiles, laser targeting, radar systems and the Joint Strike Fighter programme rely on rare earths. Against this background, the US Department of Defense (DoD) stated that “reliable access to the necessary material is a bedrock requirement for DOD” • 2010. A trade dispute arose when the Chinese government reduced its export quotas by 40% in 2010, sending the rare earths prices in the markets outside China soaring. The government argued that the quotas were necessary to protect the environment. • August 2010. China Becomes World’s Second-Largest Economy. • November 2011. U.S. Secretary of State Hillary Clinton outlines a U.S. “pivot” to Asia. Clinton’s call for “increased investment—diplomatic, economic, strategic, and otherwise—in the Asia-Pacific region” is seen as a move to counter China’s growing clout. • December 2011. U.S. President Barack Obama announces the United States and eight other nations have reached an agreement on the Trans-Pacific Partnership later announces plans to deploy 2,500 marines in Australia, prompting criticism from Beijing. • November 2012. China’s New Leadership. Xi Jinping replaces Hu Jintao as president, Communist Party general secretary, and chairman of the Central Military Commission. Xi delivers a series of speeches on the “rejuvenation” of China. • June 2013. U.S. President Barack Obama hosts Chinese President Xi Jinping for a “shirt-sleeves summit” • May 19, 2014. A U.S. court indicts five Chinese hackers, allegedly with ties to China’s People’s Liberation Army, on charges of stealing trade technology from U.S. companies. • November 12, 2014. Joint Climate Announcement. Barack Obama and Chinese President Xi Jinping issue a joint statement on climate change, pledging to reduce carbon emissions. (which very conveniently allows the quotas to fall and save pride for Xi). • 2015. China drops the export quotas because in 2014, the WTO ruled against China. • May 30, 2015 U.S. Warns China Over South China Sea. (China is trying to expand it's buffer zone to build a defense for the coming war). • January 2016. The government to abolish the one-child policy, now allowing all families to have two children. • February 9, 2017. Trump Affirms One China Policy After Raising Doubts. • April 6 – 7, 2017. Trump Hosts Xi at Mar-a-Lago. Beijing and Washington to expand trade of products and services like beef, poultry, and electronic payments, though the countries do not address more contentious trade issues including aluminum, car parts, and steel. • November 2017. President Xi meets with President Trump in another high profile summit. • March 22, 2018. Trump Tariffs Target China. The White House alleges Chinese theft of U.S. technology and intellectual property. Coming on the heels of tariffs on steel and aluminum imports, the measures target goods including clothing, shoes, and electronics and restrict some Chinese investment in the United States. • July 6, 2018 U.S.-China Trade War Escalates. • September 2018. Modifications led to the exclusion of rare earths from the final list of products and they consequently were not subject to import tariffs imposed by the US government in September 2018. • October 4, 2018. Pence Speech Signals Hard-Line Approach. He condemns what he calls growing Chinese military aggression, especially in the South China Sea, criticizes increased censorship and religious persecution by the Chinese government, and accuses China of stealing American intellectual property and interfering in U.S. elections. • December 1, 2018. Canada Arrests Huawei Executive. • March 6, 2019. Huawei Sues the United States. • March 27 2019. India and the US signed an agreement to "strengthen bilateral security and civil nuclear cooperation" including the construction of six American nuclear reactors in India • May 10, 2019. Trade War Intensifies. • August 5, 2019. U.S. Labels China a Currency Manipulator. • November 27, 2019. Trump Signs Bill Supporting Hong Kong Protesters. Chinese officials condemn the move, impose sanctions on several U.S.-based organizations, and suspend U.S. warship visits to Hong Kong. • January 15, 2020. ‘Phase One’ Trade Deal Signed. But the agreement maintains most tariffs and does not mention the Chinese government’s extensive subsidies. Days before the signing, the United States dropped its designation of China as a currency manipulator. • January 31, 2020. Tensions Soar Amid Coronavirus Pandemic. • March 18, 2020. China Expels American Journalists. The Chinese government announces it will expel at least thirteen journalists from three U.S. newspapers—the New York Times, Wall Street Journal, and Washington Post—whose press credentials are set to expire in 2020. Beijing also demands that those outlets, as well as TIME and Voice of America, share information with the government about their operations in China. The Chinese Foreign Ministry says the moves are in response to the U.S. government’s decision earlier in the year to limit the number of Chinese journalists from five state-run media outlets in the United States to 100, down from 160, and designate those outlets as foreign missions. And here we are. You may have noticed the Rare Earth Elements and the inclusion of Environmental Standards. Yes these are key to understanding the Geopolitical reality and importance of these events. There's a reason the one child policy stopped. Troop additions. I believe our current political reality started at Tiananmen square. The protests were an American sponsored attempt at regime change after the failure to convince them to leave totalitarian communism and join a greater political framework. Do I have proof? Yes. China, as far as I'm concerned, was responsible for the 2008 economic crisis. The Rare Earth Elements were an attempt to weaken the States and strengthen themselves simultaneously. This stranglehold either forced America to trade with China, or the trade was an American Trojan horse to eventually collapse their economy and cause a revolution after Tiananmen Square failed. Does my second proposal sound far fetched? Didn't the economy just shut down in response to the epidemic? Aren't both sides blaming the other? At this POINT, the epidemic seems to be overstated doesn’t it? Don't the casualties tend to the elder demographic and those already weakened by a primary disease? Exactly the kinds who wouldn't fight in a war. Does this change some of my views on the possibility of upcoming catastrophes and reasons for certain events? No. This is Chess, and there are obvious moves in chess, hidden moves in chess, but the best moves involve peices which can be utilized in different ways if the board calls for it. Is all what it seems? No. I definitely changed a few previously held beliefs prior to today, and I would caution you in advance that you will find some previously held convictions challenged. After uncovering what I did today, I would also strongly suggest reading information cautiously. This is all merely a culmination of ending the cold war, and once I have events laid out, you will see it as well. At this moment, the end analysis is a war will start in the near future. This will be mainly for a few reasons, preemptive resource control for water and crops, population reduction can be achieved since we have too many people, not enough jobs, and upcoming resource scarcity. Did you notice my omission of rare earth elements? This is because of Afghanistan. I would wager China or Russia is somehow supporting the continued resistance through Iran. But events are now accelerating with China because the western collation has already begun to build up their mines and start production. Do you remember when Trump made a "joke" about buying Greenland? Yeah. It turns out that Greenland has one of the largest rare earth mineral deposits on the planet. Take care. Be safe. Stay aware and be prepared. This message not brought to you by the Bill and Melinda Gates Foundation, Microsoft, Google, Facebook, Elon Musk, Blackrock, Vangaurd, the Rockefeller Foundation, Rand Corporation, DARPA, Rothschilds, Agenda 21, Agenda 30, and ID 2020.
You may be in quarantine, but that doesn’t mean we aren’t! For those who don’t know, every month this subreddit makes a millionaire out of one comment, and donates. With danger out and about, take some time and comment to enter! [Drawing Thread #52]
I thought this year would be a lot more normal.
Introduction: Welcome to anyone and everyone coming from /popular. To be honest, I probably should've expected this, given that most of us are staying home. For those who aren't familiar: every month, we ask for comments for entry, and we pick one who represents our winner. This process is completely random and verifiable, using the Bitcoin blockchain as a sophisticated die. Following this, people then donate to the winner using a variety of mediums, and the winner would go on to be a "millionaire" (arguably, our definition of that term is pretty loose). So once again, thank you for your support. The post lasts for 24 hours before getting locked, so make sure you place your comment before 7 PM ET. In addition, I may make a [Part 2] if we reach the limit. If that happens, I will sticky a comment on this post temporarily. Let's make a millionaire! In Case You Missed It:
REQUIRED: Leave only one (1) top level comment in reply to this thread! (Replying to other comments will not qualify. You must be thirty days old or older to comment.)
A random user who commented will be chosen, and everyone donates a dollar to make a millionaire.
February 19 at 7:00 PM ET (epoch timestamp: 1582153200 (a bit tricky taking DST into consideration, it’s been updated)) is the cutoff for accounts. If you have created your account after this point, you are not eligible to enter and your submission will be disqualified automatically.
March 22 at 12:00 PM ET (epoch timestamp: 1584892800) will begin the process of selecting the winner. At this time, the [Draw] post will be online and start the process of waiting for the blockchain, in order to select the winner randomly and verifiably.
Mini Survey: NOTE: A Google account is required to respond to hinder tampering, but you are not obligated to answer. So I’ve been thinking about this for a while: people are not having pleasant experiences with PayPal. If the account isn’t blocked, then there are issues with fees, fear of the seizure of funds, and the risk of revealing personally identifiable information. However, it is the largest platform used by /MillionaireMakers, and is the provider of most donations on this subreddit. This survey is purely to see how people feel about this. Unless if the winner chooses to not accept PayPal, we will continue to offer this service for tonight’s thread. My questions are: 1) How would you feel about a ban on the PayPal service here on /MillionaireMakers? 2) Would removing PayPal as a service affect your ability to donate? 3) Should /MillionaireMakers remove PayPal? I will periodically post results here. If you are interested in responding, please answer here, answers will not be accepted at the time the [Draw] is posted: https://docs.google.com/forms/d/e/1FAIpQLSffkP3SKdTi9lLPbtO8taG4_-cdctYlAf8SvohvzoJvTOYdhw/viewform?usp=sf_link Drawing Process Mini-Update: This is as short as they come, leroy627 has made a commit to the repository that adds backwards-compatibility up to Python 3.5. Procedure will be run with the following conditions: the first comment of duplicates are kept for the month of March, and any ineligible comments will be removed. If you are interested in more information, see [Drawing Thread #51]: https://reddit.com/millionairemakers/comments/f7jdxz/alright_were_getting_back_into_the_flow_happy/
Sunday at 12 PM ET (16 UTC), we will be picking our winner, and you won’t want to miss it. The post will be labeled [Draw], and one comment will be selected out of the many made here to make a winner! Remember, this is about generosity, making an impact, and uniting to make someone's life better. It takes three minutes to donate a bit to the winner, whether you're well off and want to donate a couple bucks, or going through tough times and can only donate a few coins. Every cent makes cents, and counts! If a lone $1 can get you a mask for obvious reasons, then imagine the possibilities with $1,000,000. You can get a full-body suit, new doors, and someone to love you! Admittedly, for the wrong reasons, but the option is there. A million dollars can make someone’s suffering less sufferable. Spread the word: have your friends and family comment, post the link to your friendly-neighborhood social media network, and share it to anyone interested.
Let’s make a millionaire!
Why, kind Haiku? Why? Am I to atone in home? Perhaps. I’ll get by.
Hey all, I've been researching coins since 2017 and have gone through 100s of them in the last 3 years. I got introduced to blockchain via Bitcoin of course, analyzed Ethereum thereafter and from that moment I have a keen interest in smart contact platforms. I’m passionate about Ethereum but I find Zilliqa to have a better risk-reward ratio. Especially because Zilliqa has found an elegant balance between being secure, decentralized and scalable in my opinion.
Below I post my analysis of why from all the coins I went through I’m most bullish on Zilliqa (yes I went through Tezos, EOS, NEO, VeChain, Harmony, Algorand, Cardano etc.). Note that this is not investment advice and although it's a thorough analysis there is obviously some bias involved. Looking forward to what you all think!
Fun fact: the name Zilliqa is a play on ‘silica’ silicon dioxide which means “Silicon for the high-throughput consensus computer.”
This post is divided into (i) Technology, (ii) Business & Partnerships, and (iii) Marketing & Community. I’ve tried to make the technology part readable for a broad audience. If you’ve ever tried understanding the inner workings of Bitcoin and Ethereum you should be able to grasp most parts. Otherwise, just skim through and once you are zoning out head to the next part.
Technology and some more:
The technology is one of the main reasons why I’m so bullish on Zilliqa. First thing you see on their website is: “Zilliqa is a high-performance, high-security blockchain platform for enterprises and next-generation applications.” These are some bold statements.
Before we deep dive into the technology let’s take a step back in time first as they have quite the history. The initial research paper from which Zilliqa originated dates back to August 2016: Elastico: A Secure Sharding Protocol For Open Blockchains where Loi Luu (Kyber Network) is one of the co-authors. Other ideas that led to the development of what Zilliqa has become today are: Bitcoin-NG, collective signing CoSi, ByzCoin and Omniledger.
The technical white paper was made public in August 2017 and since then they have achieved everything stated in the white paper and also created their own open source intermediate level smart contract language called Scilla (functional programming language similar to OCaml) too.
Mainnet is live since the end of January 2019 with daily transaction rates growing continuously. About a week ago mainnet reached 5 million transactions, 500.000+ addresses in total along with 2400 nodes keeping the network decentralized and secure. Circulating supply is nearing 11 billion and currently only mining rewards are left. The maximum supply is 21 billion with annual inflation being 7.13% currently and will only decrease with time.
Zilliqa realized early on that the usage of public cryptocurrencies and smart contracts were increasing but decentralized, secure, and scalable alternatives were lacking in the crypto space. They proposed to apply sharding onto a public smart contract blockchain where the transaction rate increases almost linear with the increase in the amount of nodes. More nodes = higher transaction throughput and increased decentralization. Sharding comes in many forms and Zilliqa uses network-, transaction- and computational sharding. Network sharding opens up the possibility of using transaction- and computational sharding on top. Zilliqa does not use state sharding for now. We’ll come back to this later.
Before we continue dissecting how Zilliqa achieves such from a technological standpoint it’s good to keep in mind that a blockchain being decentralised and secure and scalable is still one of the main hurdles in allowing widespread usage of decentralised networks. In my opinion this needs to be solved first before blockchains can get to the point where they can create and add large scale value. So I invite you to read the next section to grasp the underlying fundamentals. Because after all these premises need to be true otherwise there isn’t a fundamental case to be bullish on Zilliqa, right?
Down the rabbit hole
How have they achieved this? Let’s define the basics first: key players on Zilliqa are the users and the miners. A user is anybody who uses the blockchain to transfer funds or run smart contracts. Miners are the (shard) nodes in the network who run the consensus protocol and get rewarded for their service in Zillings (ZIL). The mining network is divided into several smaller networks called shards, which is also referred to as ‘network sharding’. Miners subsequently are randomly assigned to a shard by another set of miners called DS (Directory Service) nodes. The regular shards process transactions and the outputs of these shards are eventually combined by the DS shard as they reach consensus on the final state. More on how these DS shards reach consensus (via pBFT) will be explained later on.
The Zilliqa network produces two types of blocks: DS blocks and Tx blocks. One DS Block consists of 100 Tx Blocks. And as previously mentioned there are two types of nodes concerned with reaching consensus: shard nodes and DS nodes. Becoming a shard node or DS node is being defined by the result of a PoW cycle (Ethash) at the beginning of the DS Block. All candidate mining nodes compete with each other and run the PoW (Proof-of-Work) cycle for 60 seconds and the submissions achieving the highest difficulty will be allowed on the network. And to put it in perspective: the average difficulty for one DS node is ~ 2 Th/s equaling 2.000.000 Mh/s or 55 thousand+ GeForce GTX 1070 / 8 GB GPUs at 35.4 Mh/s. Each DS Block 10 new DS nodes are allowed. And a shard node needs to provide around 8.53 GH/s currently (around 240 GTX 1070s). Dual mining ETH/ETC and ZIL is possible and can be done via mining software such as Phoenix and Claymore. There are pools and if you have large amounts of hashing power (Ethash) available you could mine solo.
The PoW cycle of 60 seconds is a peak performance and acts as an entry ticket to the network. The entry ticket is called a sybil resistance mechanism and makes it incredibly hard for adversaries to spawn lots of identities and manipulate the network with these identities. And after every 100 Tx Blocks which corresponds to roughly 1,5 hour this PoW process repeats. In between these 1,5 hour, no PoW needs to be done meaning Zilliqa’s energy consumption to keep the network secure is low. For more detailed information on how mining works click here. Okay, hats off to you. You have made it this far. Before we go any deeper down the rabbit hole we first must understand why Zilliqa goes through all of the above technicalities and understand a bit more what a blockchain on a more fundamental level is. Because the core of Zilliqa’s consensus protocol relies on the usage of pBFT (practical Byzantine Fault Tolerance) we need to know more about state machines and their function. Navigate to Viewblock, a Zilliqa block explorer, and just come back to this article. We will use this site to navigate through a few concepts.
We have established that Zilliqa is a public and distributed blockchain. Meaning that everyone with an internet connection can send ZILs, trigger smart contracts, etc. and there is no central authority who fully controls the network. Zilliqa and other public and distributed blockchains (like Bitcoin and Ethereum) can also be defined as state machines.
Taking the liberty of paraphrasing examples and definitions given by Samuel Brooks’ medium article, he describes the definition of a blockchain (like Zilliqa) as: “A peer-to-peer, append-only datastore that uses consensus to synchronize cryptographically-secure data”.
Next, he states that: "blockchains are fundamentally systems for managing valid state transitions”. For some more context, I recommend reading the whole medium article to get a better grasp of the definitions and understanding of state machines. Nevertheless, let’s try to simplify and compile it into a single paragraph. Take traffic lights as an example: all its states (red, amber, and green) are predefined, all possible outcomes are known and it doesn’t matter if you encounter the traffic light today or tomorrow. It will still behave the same. Managing the states of a traffic light can be done by triggering a sensor on the road or pushing a button resulting in one traffic lights’ state going from green to red (via amber) and another light from red to green.
With public blockchains like Zilliqa, this isn’t so straightforward and simple. It started with block #1 almost 1,5 years ago and every 45 seconds or so a new block linked to the previous block is being added. Resulting in a chain of blocks with transactions in it that everyone can verify from block #1 to the current #647.000+ block. The state is ever changing and the states it can find itself in are infinite. And while the traffic light might work together in tandem with various other traffic lights, it’s rather insignificant comparing it to a public blockchain. Because Zilliqa consists of 2400 nodes who need to work together to achieve consensus on what the latest valid state is while some of these nodes may have latency or broadcast issues, drop offline or are deliberately trying to attack the network, etc.
Now go back to the Viewblock page take a look at the amount of transaction, addresses, block and DS height and then hit refresh. Obviously as expected you see new incremented values on one or all parameters. And how did the Zilliqa blockchain manage to transition from a previous valid state to the latest valid state? By using pBFT to reach consensus on the latest valid state.
After having obtained the entry ticket, miners execute pBFT to reach consensus on the ever-changing state of the blockchain. pBFT requires a series of network communication between nodes, and as such there is no GPU involved (but CPU). Resulting in the total energy consumed to keep the blockchain secure, decentralized and scalable being low.
pBFT stands for practical Byzantine Fault Tolerance and is an optimization on the Byzantine Fault Tolerant algorithm. To quote Blockonomi: “In the context of distributed systems, Byzantine Fault Tolerance is the ability of a distributed computer network to function as desired and correctly reach a sufficient consensus despite malicious components (nodes) of the system failing or propagating incorrect information to other peers.” Zilliqa is such a distributed computer network and depends on the honesty of the nodes (shard and DS) to reach consensus and to continuously update the state with the latest block. If pBFT is a new term for you I can highly recommend the Blockonomi article.
The idea of pBFT was introduced in 1999 - one of the authors even won a Turing award for it - and it is well researched and applied in various blockchains and distributed systems nowadays. If you want more advanced information than the Blockonomi link provides click here. And if you’re in between Blockonomi and the University of Singapore read the Zilliqa Design Story Part 2 dating from October 2017. Quoting from the Zilliqa tech whitepaper: “pBFT relies upon a correct leader (which is randomly selected) to begin each phase and proceed when the sufficient majority exists. In case the leader is byzantine it can stall the entire consensus protocol. To address this challenge, pBFT offers a view change protocol to replace the byzantine leader with another one.”
pBFT can tolerate ⅓ of the nodes being dishonest (offline counts as Byzantine = dishonest) and the consensus protocol will function without stalling or hiccups. Once there are more than ⅓ of dishonest nodes but no more than ⅔ the network will be stalled and a view change will be triggered to elect a new DS leader. Only when more than ⅔ of the nodes are dishonest (66%) double-spend attacks become possible.
If the network stalls no transactions can be processed and one has to wait until a new honest leader has been elected. When the mainnet was just launched and in its early phases, view changes happened regularly. As of today the last stalling of the network - and view change being triggered - was at the end of October 2019.
Another benefit of using pBFT for consensus besides low energy is the immediate finality it provides. Once your transaction is included in a block and the block is added to the chain it’s done. Lastly, take a look at this article where three types of finality are being defined: probabilistic, absolute and economic finality. Zilliqa falls under the absolute finality (just like Tendermint for example). Although lengthy already we skipped through some of the inner workings from Zilliqa’s consensus: read the Zilliqa Design Story Part 3 and you will be close to having a complete picture on it. Enough about PoW, sybil resistance mechanism, pBFT, etc. Another thing we haven’t looked at yet is the amount of decentralization.
Currently, there are four shards, each one of them consisting of 600 nodes. 1 shard with 600 so-called DS nodes (Directory Service - they need to achieve a higher difficulty than shard nodes) and 1800 shard nodes of which 250 are shard guards (centralized nodes controlled by the team). The amount of shard guards has been steadily declining from 1200 in January 2019 to 250 as of May 2020. On the Viewblock statistics, you can see that many of the nodes are being located in the US but those are only the (CPU parts of the) shard nodes who perform pBFT. There is no data from where the PoW sources are coming. And when the Zilliqa blockchain starts reaching its transaction capacity limit, a network upgrade needs to be executed to lift the current cap of maximum 2400 nodes to allow more nodes and formation of more shards which will allow to network to keep on scaling according to demand. Besides shard nodes there are also seed nodes. The main role of seed nodes is to serve as direct access points (for end-users and clients) to the core Zilliqa network that validates transactions. Seed nodes consolidate transaction requests and forward these to the lookup nodes (another type of nodes) for distribution to the shards in the network. Seed nodes also maintain the entire transaction history and the global state of the blockchain which is needed to provide services such as block explorers. Seed nodes in the Zilliqa network are comparable to Infura on Ethereum.
The seed nodes were first only operated by Zilliqa themselves, exchanges and Viewblock. Operators of seed nodes like exchanges had no incentive to open them for the greater public. They were centralised at first. Decentralisation at the seed nodes level has been steadily rolled out since March 2020 ( Zilliqa Improvement Proposal 3 ). Currently the amount of seed nodes is being increased, they are public-facing and at the same time PoS is applied to incentivize seed node operators and make it possible for ZIL holders to stake and earn passive yields. Important distinction: seed nodes are not involved with consensus! That is still PoW as entry ticket and pBFT for the actual consensus.
5% of the block rewards are being assigned to seed nodes (from the beginning in 2019) and those are being used to pay out ZIL stakers. The 5% block rewards with an annual yield of 10.03% translate to roughly 610 MM ZILs in total that can be staked. Exchanges use the custodial variant of staking and wallets like Moonlet will use the non-custodial version (starting in Q3 2020). Staking is being done by sending ZILs to a smart contract created by Zilliqa and audited by Quantstamp.
With a high amount of DS; shard nodes and seed nodes becoming more decentralized too, Zilliqa qualifies for the label of decentralized in my opinion.
Generalized: programming languages can be divided into being ‘object-oriented’ or ‘functional’. Here is an ELI5 given by software development academy: * “all programs have two basic components, data – what the program knows – and behavior – what the program can do with that data. So object-oriented programming states that combining data and related behaviors in one place, is called “object”, which makes it easier to understand how a particular program works. On the other hand, functional programming argues that data and behavior are different things and should be separated to ensure their clarity.” *
Scilla is on the functional side and shares similarities with OCaml: OCaml is a general-purpose programming language with an emphasis on expressiveness and safety. It has an advanced type system that helps catch your mistakes without getting in your way. It's used in environments where a single mistake can cost millions and speed matters, is supported by an active community, and has a rich set of libraries and development tools. For all its power, OCaml is also pretty simple, which is one reason it's often used as a teaching language.
Scilla is blockchain agnostic, can be implemented onto other blockchains as well, is recognized by academics and won a so-called Distinguished Artifact Award award at the end of last year.
One of the reasons why the Zilliqa team decided to create their own programming language focused on preventing smart contract vulnerabilities is that adding logic on a blockchain, programming, means that you cannot afford to make mistakes. Otherwise, it could cost you. It’s all great and fun blockchains being immutable but updating your code because you found a bug isn’t the same as with a regular web application for example. And with smart contracts, it inherently involves cryptocurrencies in some form thus value.
Another difference with programming languages on a blockchain is gas. Every transaction you do on a smart contract platform like Zilliqa or Ethereum costs gas. With gas you basically pay for computational costs. Sending a ZIL from address A to address B costs 0.001 ZIL currently. Smart contracts are more complex, often involve various functions and require more gas (if gas is a new concept click here ).
So with Scilla, similar to Solidity, you need to make sure that “every function in your smart contract will run as expected without hitting gas limits. An improper resource analysis may lead to situations where funds may get stuck simply because a part of the smart contract code cannot be executed due to gas limits. Such constraints are not present in traditional software systems”.Scilla design story part 1
Some examples of smart contract issues you’d want to avoid are: leaking funds, ‘unexpected changes to critical state variables’ (example: someone other than you setting his or her address as the owner of the smart contract after creation) or simply killing a contract.
Scilla also allows for formal verification. Wikipedia to the rescue: In the context of hardware and software systems, formal verification is the act of proving or disproving the correctness of intended algorithms underlying a system with respect to a certain formal specification or property, using formal methods of mathematics.
Formal verification can be helpful in proving the correctness of systems such as: cryptographic protocols, combinational circuits, digital circuits with internal memory, and software expressed as source code.
“Scilla is being developed hand-in-hand with formalization of its semantics and its embedding into the Coq proof assistant — a state-of-the art tool for mechanized proofs about properties of programs.”
Simply put, with Scilla and accompanying tooling developers can be mathematically sure and proof that the smart contract they’ve written does what he or she intends it to do.
Smart contract on a sharded environment and state sharding
There is one more topic I’d like to touch on: smart contract execution in a sharded environment (and what is the effect of state sharding). This is a complex topic. I’m not able to explain it any easier than what is posted here. But I will try to compress the post into something easy to digest.
Earlier on we have established that Zilliqa can process transactions in parallel due to network sharding. This is where the linear scalability comes from. We can define simple transactions: a transaction from address A to B (Category 1), a transaction where a user interacts with one smart contract (Category 2) and the most complex ones where triggering a transaction results in multiple smart contracts being involved (Category 3). The shards are able to process transactions on their own without interference of the other shards. With Category 1 transactions that is doable, with Category 2 transactions sometimes if that address is in the same shard as the smart contract but with Category 3 you definitely need communication between the shards. Solving that requires to make a set of communication rules the protocol needs to follow in order to process all transactions in a generalised fashion.
There is no strict defined roadmap but here are topics being worked on. And via the Zilliqa website there is also more information on the projects they are working on.
Business & Partnerships
It’s not only technology in which Zilliqa seems to be excelling as their ecosystem has been expanding and starting to grow rapidly. The project is on a mission to provide OpenFinance (OpFi) to the world and Singapore is the right place to be due to its progressive regulations and futuristic thinking. Singapore has taken a proactive approach towards cryptocurrencies by introducing the Payment Services Act 2019 (PS Act). Among other things, the PS Act will regulate intermediaries dealing with certain cryptocurrencies, with a particular focus on consumer protection and anti-money laundering. It will also provide a stable regulatory licensing and operating framework for cryptocurrency entities, effectively covering all crypto businesses and exchanges based in Singapore. According to PWC 82% of the surveyed executives in Singapore reported blockchain initiatives underway and 13% of them have already brought the initiatives live to the market. There is also an increasing list of organizations that are starting to provide digital payment services. Moreover, Singaporean blockchain developers Building Cities Beyond has recently created an innovation $15 million grant to encourage development on its ecosystem. This all suggests that Singapore tries to position itself as (one of) the leading blockchain hubs in the world.
Zilliqa seems to already take advantage of this and recently helped launch Hg Exchange on their platform, together with financial institutions PhillipCapital, PrimePartners and Fundnel. Hg Exchange, which is now approved by the Monetary Authority of Singapore (MAS), uses smart contracts to represent digital assets. Through Hg Exchange financial institutions worldwide can use Zilliqa's safe-by-design smart contracts to enable the trading of private equities. For example, think of companies such as Grab, Airbnb, SpaceX that are not available for public trading right now. Hg Exchange will allow investors to buy shares of private companies & unicorns and capture their value before an IPO. Anquan, the main company behind Zilliqa, has also recently announced that they became a partner and shareholder in TEN31 Bank, which is a fully regulated bank allowing for tokenization of assets and is aiming to bridge the gap between conventional banking and the blockchain world. If STOs, the tokenization of assets, and equity trading will continue to increase, then Zilliqa’s public blockchain would be the ideal candidate due to its strategic positioning, partnerships, regulatory compliance and the technology that is being built on top of it.
What is also very encouraging is their focus on banking the un(der)banked. They are launching a stablecoin basket starting with XSGD. As many of you know, stablecoins are currently mostly used for trading. However, Zilliqa is actively trying to broaden the use case of stablecoins. I recommend everybody to read this text that Amrit Kumar wrote (one of the co-founders). These stablecoins will be integrated in the traditional markets and bridge the gap between the crypto world and the traditional world. This could potentially revolutionize and legitimise the crypto space if retailers and companies will for example start to use stablecoins for payments or remittances, instead of it solely being used for trading.
Zilliqa also released their DeFi strategic roadmap (dating November 2019) which seems to be aligning well with their OpFi strategy. A non-custodial DEX is coming to Zilliqa made by Switcheo which allows cross-chain trading (atomic swaps) between ETH, EOS and ZIL based tokens. They also signed a Memorandum of Understanding for a (soon to be announced) USD stablecoin. And as Zilliqa is all about regulations and being compliant, I’m speculating on it to be a regulated USD stablecoin. Furthermore, XSGD is already created and visible on block explorer and XIDR (Indonesian Stablecoin) is also coming soon via StraitsX. Here also an overview of the Tech Stack for Financial Applications from September 2019. Further quoting Amrit Kumar on this:
There are two basic building blocks in DeFi/OpFi though: 1) stablecoins as you need a non-volatile currency to get access to this market and 2) a dex to be able to trade all these financial assets. The rest are built on top of these blocks.
So far, together with our partners and community, we have worked on developing these building blocks with XSGD as a stablecoin. We are working on bringing a USD-backed stablecoin as well. We will soon have a decentralised exchange developed by Switcheo. And with HGX going live, we are also venturing into the tokenization space. More to come in the future.”
Additionally, they also have this ZILHive initiative that injects capital into projects. There have been already 6 waves of various teams working on infrastructure, innovation and research, and they are not from ASEAN or Singapore only but global: see Grantees breakdown by country. Over 60 project teams from over 20 countries have contributed to Zilliqa's ecosystem. This includes individuals and teams developing wallets, explorers, developer toolkits, smart contract testing frameworks, dapps, etc. As some of you may know, Unstoppable Domains (UD) blew up when they launched on Zilliqa. UD aims to replace cryptocurrency addresses with a human-readable name and allows for uncensorable websites. Zilliqa will probably be the only one able to handle all these transactions onchain due to ability to scale and its resulting low fees which is why the UD team launched this on Zilliqa in the first place. Furthermore, Zilliqa also has a strong emphasis on security, compliance, and privacy, which is why they partnered with companies like Elliptic, ChainSecurity (part of PwC Switzerland), and Incognito. Their sister company Aqilliz (Zilliqa spelled backwards) focuses on revolutionizing the digital advertising space and is doing interesting things like using Zilliqa to track outdoor digital ads with companies like Foodpanda.
Zilliqa is listed on nearly all major exchanges, having several different fiat-gateways and recently have been added to Binance’s margin trading and futures trading with really good volume. They also have a very impressive team with good credentials and experience. They don't just have “tech people”. They have a mix of tech people, business people, marketeers, scientists, and more. Naturally, it's good to have a mix of people with different skill sets if you work in the crypto space.
Marketing & Community
Zilliqa has a very strong community. If you just follow their Twitter their engagement is much higher for a coin that has approximately 80k followers. They also have been ‘coin of the day’ by LunarCrush many times. LunarCrush tracks real-time cryptocurrency value and social data. According to their data, it seems Zilliqa has a more fundamental and deeper understanding of marketing and community engagement than almost all other coins. While almost all coins have been a bit frozen in the last months, Zilliqa seems to be on its own bull run. It was somewhere in the 100s a few months ago and is currently ranked #46 on CoinGecko. Their official Telegram also has over 20k people and is very active, and their community channel which is over 7k now is more active and larger than many other official channels. Their local communities also seem to be growing.
Moreover, their community started ‘Zillacracy’ together with the Zilliqa core team ( see www.zillacracy.com ). It’s a community-run initiative where people from all over the world are now helping with marketing and development on Zilliqa. Since its launch in February 2020 they have been doing a lot and will also run their own non-custodial seed node for staking. This seed node will also allow them to start generating revenue for them to become a self sustaining entity that could potentially scale up to become a decentralized company working in parallel with the Zilliqa core team. Comparing it to all the other smart contract platforms (e.g. Cardano, EOS, Tezos etc.) they don't seem to have started a similar initiative (correct me if I’m wrong though). This suggests in my opinion that these other smart contract platforms do not fully understand how to utilize the ‘power of the community’. This is something you cannot ‘buy with money’ and gives many projects in the space a disadvantage.
Zilliqa also released two social products called SocialPay and Zeeves. SocialPay allows users to earn ZILs while tweeting with a specific hashtag. They have recently used it in partnership with the Singapore Red Cross for a marketing campaign after their initial pilot program. It seems like a very valuable social product with a good use case. I can see a lot of traditional companies entering the space through this product, which they seem to suggest will happen. Tokenizing hashtags with smart contracts to get network effect is a very smart and innovative idea.
Regarding Zeeves, this is a tipping bot for Telegram. They already have 1000s of signups and they plan to keep upgrading it for more and more people to use it (e.g. they recently have added a quiz features). They also use it during AMAs to reward people in real-time. It’s a very smart approach to grow their communities and get familiar with ZIL. I can see this becoming very big on Telegram. This tool suggests, again, that the Zilliqa team has a deeper understanding of what the crypto space and community needs and is good at finding the right innovative tools to grow and scale.
To be honest, I haven’t covered everything (i’m also reaching the character limited haha). So many updates happening lately that it's hard to keep up, such as the International Monetary Fund mentioning Zilliqa in their report, custodial and non-custodial Staking, Binance Margin, Futures, Widget, entering the Indian market, and more. The Head of Marketing Colin Miles has also released this as an overview of what is coming next. And last but not least, Vitalik Buterin has been mentioning Zilliqa lately acknowledging Zilliqa and mentioning that both projects have a lot of room to grow. There is much more info of course and a good part of it has been served to you on a silver platter. I invite you to continue researching by yourself :-) And if you have any comments or questions please post here!
It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
[Draw #56] The comments have been collected, and the winner will soon be selected!
I’m posting this early so I won’t have to later.
TL;DR - This post is for the sole purpose of choosing a winner. If you commented in this [Drawing Thread], you are entered in the drawing and don't need to do anything else. By 16:00 UTC, the winner will be selected. The Bitcoin (BTC) blockchain will be used to pick this winner. This can be verified at any device running Python 3.5, and you do not need to own Bitcoin in order to participate. Additionally, all information to replicate the Drawing at home is available on Dropbox and GitHub, scroll down for more information. Importantly, this post WILL NOT BE EDITED in order to keep the integrity of the Drawing. To verify this, there will not be an asterisk during the time passed since its creation. The winner will be announced in a stickied comment. DISCLAIMER:Some of the information may be unrevised, but procedures are the same as prior draws. Thank you. Off Topic: The [Discussion] Thread at /millionairemakersmeta is open. All comments are welcome there for any inquiries. [Discussion for Spring and Summer 2020]:https://reddit.com/millionairemakersmeta/comments/g3a53t/_/ Explanation! The Bitcoin (BTC) blockchain will be used to choose a winner. Once the time listed has passed, there will be an active check to determine the blockchain's winning hash. Like before, this subreddit will wait for the 3rd Block after the time (being 16:00 UTC) to select the winner. If a block is discovered by 15:59 UTC, it will not be counted towards the counter of three blocks. If it's discovered by 16:00:00 UTC, then it will decrease the counter. This can be checked by seeing the timestamp given to it by blockchain explorers. You are able to see how this subreddit will verify the winner by checking the GitHub repository, which also includes a back-up plan in case of an emergency. Standard Protocol: This post will not be edited! This is to prevent tampering of the hash or files by any of the moderators. To prove this, look for the lack of an asterisk near the time since creation. To verify if a hash for a file is that of Draw #56, upload the file of choice to a SHA-256 generator, and match it with its respective hash output. The result you receive should be the same as what is listed here. If you are interested in doing this for yourself, download Python 3.5 or better and follow the path to the folder labeled: MM56 Status Reports: I will be commenting on the progress of the drawing via the comments, so other users can keep track of the progress. These comments will be pinned at the top of the post and be distinguished. Most likely, after 1:00 PM ET, the pinned comment will be announcing the winner. If you can run Python yourself and follow the instructions, you will be able to find the winner. Make sure the hash released from the blockchain and the total number of participants match with what is described below. In addition, thank you for your patience. Information Used For Draw #56:
GitHub Repository: https://github.com/lilfruini/CommentGathering-MillionaireMakers/tree/masteMM56 SHA-256 of Comment IDs: e57ae28b92664cd67bc89c1a707184b460d353347ef7f4b96bc544a3eae3f561 SHA-256 of Authors: dad8b4ce5524db48bd19a719577f6db218329c05c1d08b733d7ee45d39b30523 SHA-256 of DQed Age: 98217fc99f543ed3ac8395c1fba6d054c63af5aadc18b8f894cb8a72f99bf2a7 SHA-256 of Multiple Posters: ff2255ce3934be2c098207232ab91eb460fed516898eef6123b0e17adf537ac0 SHA-256 of Truncated IDs: 7623ea9d10884d7bc50f6d0bc0734b0234d80faefc61439219f6af8fe96f7db2 Block Selection: The Third Bitcoin Block After 19 July 2020 - 16:00:00 UTC Total Participants: 7,738
One of the most common comments made by people when I am presenting or writing about Bitcoin is the ‘but-it’s-backed-by-nothing’ position. On the face of it, it seems like a fair comment. ETC Group, a London-based investment firm, is set to list a Bitcoin exchange-traded product on Deutsche Börse’s Xetra electronic trading market later this month.Per Tuesday’s press release, the ETP, called Bitcoin Exchange Traded Crypto (BTCE), will be physically backed 100 percent with Bitcoin which will be stored with the custodian BitGo. Bitcoin is not backed by a company's earnings, or the strength of a government and rule of law. There's also no interest or dividends. Why would anyone want or need to use bitcoin? Losing a phone or hardware wallet containing cryptocurrency is inconvenient, but it shouldn’t be fatal. Provided you’ve backed up your private key, recovering your coins is a simple exercise. Bitcoin has the characteristics of money (durability, portability, fungibility, scarcity, divisibility, and recognizability) based on the properties of mathematics rather than relying on physical properties (like gold and silver) or trust in central authorities (like fiat currencies). In short, Bitcoin is backed by mathematics.
YouTube Crypto Scams BTC $1T Settlement In 2020 Coinsquare Scandal
According to Chainalysis, almost one million Bitcoin ( BTC ) is held by illicit actors in the space with over half being held by darknet markets. Bitcoin held by illicit entities. Source ... We switch formats and bring to you our sprint show where we break down our normal show into 2 quick-hitting seshs for all our awesome listeners. - Crypto Curiosity - What is Bitcoin backed by ... Bitcoin is an idea, a technology, a network, freedom, outside the financial system and not backed or supported by a central bank or government entity. Timeline: 0:00 - Introduction Bitcoin is backed by a computer network, encryption, people who have or support bitcoins, time, energy, notoriety, the demand for a sound digital currency, the free market, etc.. Is there anything ... Bitcoin is not anonymous by default, so it is up to users to utilize available tools like Wasabi wallet to preserve their financial privacy. Those who do not learn these basic techniques run the ...