Tag: cryptoindustry

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Business & Society

Why Big Money Get Crypto Mostly Wrong

Things are not as they seem in the investment world. We have a false image of the greatness of venture capital. What is behind all the failing crypto projects and why can’t even venture capital get it right?

In essence venture capital (VC) is a company or investment firm that provide financial support to small, emerging companies with the potential for significant growth. Usually, a venture capital firm get a stake in the company, and they provide additional resources like management expertise and industry connections to help the company succeed. At first glance it sounds like it’s a given success for a small company when they get support from a venture capital firm. It’s a Dragons Den scenario in many ways. However, the success rate of venture capital investments is notoriously low. In fact, 63% of startup failures occur in the tech industry, and 75% of venture capital-backed startups fail. Being successful in business is difficult even with capital and know-how. Blockchain companies face an even tougher road to success.

Since Bitcoin was released the staggering amount of 80,000 blockchain projects have launched. However according to the China Academy of Information and Communications Technology only 8% of them are still active and the average lifespan is only 1.22 years. Gartner estimates that only 5% of blockchain projects make it to production, and 90% of those will need to be replaced within two years to remain competitive. The statistics give us a sobering view of the crypto industry. We can easily conclude that it’s smart to invest in the biggest crypto projects that have been around for multiple years.

But what are the reasons why blockchain companies struggle?

Firstly, the industry is in an early-stage and lack of adoption is a problem. Many crypto companies are struggling to guide themselves in an unclear regulatory setting. In the US, crypto companies can suddenly be dragged into court by authorities for unclear reasons because the regulatory landscape is still being created. Intense competition between crypto companies is another reason for projects failing. The crypto space is difficult to predict as its still in many ways hype driven and not only the most sound and useful coins win the market race. Funding issues and technological difficulties are also a significant contributor to the fail rate of crypto companies. Few companies survive the freezing cold crypto winter that we are in the middle of. They are forced to cut spending when markets are down, and venture capital is in many ways the only way to succeed. Another likely reason for the huge fail rate in the crypto space is that its surprisingly easy to launch your own crypto token and many unserious people are eager to get their hands on some crypto cash. There are thousands of poop coins that really stink. However, building a solid crypto project that stand the test of time requires a high level of skill and knowledge and is a time-consuming process. No wonder that most crypto projects fail.

It may seem crazy, but venture capital firms continue to pour billions into the space and clear regulatory guidelines are being created. Most money will clearly be lost but some companies will win big time. Clearly even big money gets it wrong when it comes to crypto investments.

No wonder it’s a high-risk and high-reward game.

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Business & Society

Crypto’s Crazy Way to Adoption

Things have always been crazy in crypto, but not this loud. Now days even my 80-year-old neighbor have heard about recent crypto crashes. How did we get here and what does the road to adoption look like?

KEY TAKEAWAYS

· Bitcoin grew up as an outcast and a joke. Until its technology disrupted the financial world. The ride to full adoption is turbulent, but crypto is here to stay.

Bitcoin was born after the global financial crisis in 2009, but without a buzz. In fact, all we heard from Bitcoin were crickets. The jaw-dropping blockchain technology of Bitcoin was ignored. The first time we heard from Bitcoin was when a guy bought 2 pizzas for 10,000 Bitcoin on May 22, 2010. It took three years before Bitcoin started to have some traction across the world.

In 2013, The city of Vancouver opened the first Bitcoin ATM and Germany considered Bitcoin as a financial instrument, but not e-money. The US Drug Enforcement Administration were busy seizing Bitcoin for the first time in 2013. Plenty of shady people used Bitcoin for transactions without understanding that every transaction is transparent and law enforcement agencies started having an eye on the blockchain. Various Bitcoin payment processors set-up business and crypto exchanges emerged, and things were picking up. Then in 2014 the world’s largest exchange Mt. Gox was hacked and filed for bankruptcy. Since Mt. Gox handled about 80 percent of the world’s Bitcoin transactions most people thought the crypto industry was dead. Bitcoin became a joke and people started to refer to Bitcoin as magic internet money.

Bitcoin is ‘probably rat poison squared’

The fight against crypto went viral as headlines in media read: The Great Bitcoin Scam, You’d be Crazy to Actually Spend Bitcoin, Warren Buffett said that Bitcoin is ‘probably rat poison squared’. Since blockchain technology eliminates the middleman in economic transactions traditional banks started spreading fear, uncertainty, and doubt about Bitcoin. Meanwhile they quietly started stacking up on Bitcoin themselves. Now days, major banks use blockchain technology to increase the speed and efficiency of transactions.

Bitcoin has had dramatic mood swings up and down in a four-year cycle. At the top in 2021 one Bitcoin cost almost 70,000 USD before falling to 16,500 in 2022. However, if we look at the Bitcoin price since its birth no traditional asset beats its increase. The price of Bitcoin will likely continue to be volatile until the traditional finance sector fully embraces it.

In 2022 the craziness continued. TerraUSD , Celsius and Three Arrows Capital crashed. Then the world’s second biggest exchange FTX kick the crypto space in the nuts and laughed when they bought real estate with customer funds. Then they filed for bankruptcy. The contagion of the FTX crash is still a major concern for other exchanges and crypto lenders who owned the FTX token FTT.

Currently the war on crypto has turned its focus on the greatest problem that really has nothing to do with the groundbreaking technology of blockchain. Lack of regulation fosters criminal activity and the biggest investors from the traditional financial sector are still on the sideline waiting for regulatory clarity before investing fully. Nation states have not been able to keep up with the fast pace of digital technology. Crypto will not be adopted by the public for years to come.

So, there we have it folks. The road to public adoption of blockchain technology is rocky to say the least. Disruptive developments in society seem to follow a path.

Gandhi said it best “First they ignore you, then they laugh at you, then they fight you, then you win.”

In the end, the good of crypto will win if we are willing to have a grown-up debate and a healthy look at the vast opportunities of crypto currencies and blockchain technology. The tech is clearly steadfast and a part of our future.

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Business & Society

Crypto crisis — Should I buy or sell?

We have been bombarded by grave crypto news for months now. It’s a bad crisis. Seriously bad. What to do with our hard-earned cash?

Media have jumped on the opportunity to make dramatic click-bait headlines portraying an apocalyptic situation for the crypto industry. The contagious shitstorm started with the collapse of TerraUSD, Three Arrows Capital and Celcius Network and continued with fraudulent practices by crypto exchange FTX and Alameda Research.

It’s like a thrilling HBO series.

It’s an ongoin crisis. The contagion effect of the collapse of FTX and Alameda Research caused Voyager and Blockfi to go bankrupt, and the problems will continue lower down the crypto food chain. The industry is wondering why the crypto villain, SBF, is not arrested and is still free to party in his penthouse in the Bahamas. Rumor has it that prominent politicians and high-profile people in regulating organizations have been paid off.

What’s worse? Well, we have the imminent global depression and the war in Ukraine. Limitless printing of fiat currency and inflation is making us considerably financially weaker. Global macro-economic factors tell a worrying tale, and the crypto market is no different.

We cannot possibly buy crypto now right!?

The word in the crypto space is that people who invest long-term should consider buying in a shitstorm. Those looking to make a quick buck should walk away. If you bought your first crypto in 2021 it’s too late to leave the party without a loss. You might as well have a sleep-over. Make some popcorn, take a warm blanket and cuddle-up on the sofa, and enjoy the thriller. It’s only pretend money anyway right!?

But seriously. We need to look at least 16 months into the future before we can expect a clear uptrend in the crypto market. The reason for the wait is not because of the current situation. Crypto enthusiasts are waiting for the next Bitcoin halving which is on the 29th of March 2024. Until then there will likely not be much price action. The Bitcoin halving-cycle has been right so far in predicting when the price of Bitcoin will go up and down. That trend is still your friend.

If we look through the shitstorm we will see a much more developed crypto landscape. Research shows that crypto currency is a legitimate investment. In fact, investment research shows that 2 percent of the total investment portfolio should be crypto currency such as Bitcoin.

Moreover, considering that most banks invested in blockchain related companies in 2021, newcomers are in a good spot right now to enter the market. After the crypto market downturn in 2021, KB Financial Group, United Overseas Bank, Citigroup, Goldman Sachs, and Commonwealth Bank of Australia have continued their investments in the crypto space. The word on the streets is that it’s smart to follow in the footsteps of big players. We can be sure that banks are in it for the money.

Those involved in the crypto space are slowly starting to buy to increase their positions before next bull run around March 2024. But remember, this is edutainment only and I am not a financial advisor. It’s wise not to invest. But it’s also wise to invest after doing your own research.

One thing is likely. The sky clears after the storm.

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Business & Society

Predicting the future for profit

Following the trail of institutions and big-time investors is wise to make profits in crypto. So called ’smart money’ will be where the future is. What will the future look like in crypto?

Disclaimer: This is education only, and not financial advice. Please, do your own research and consider what is best for your financial situation. Be careful friends.

Smart money is the capital that is being controlled by institutional investors, billionaires, central banks, funds, and other financial professionals. Companies and institutions and big-time investors employ the smartest people around to look into the future. No one really knows what the thrilling future of crypto exactly will look like, but there are a few signs.

We are amid the fourth industrial revolution, and this societal shift has in store great changes. In the next 5 years we can predict a further digitalization of things, business, and society. I see the following scenarios in the future:

1. A further digitalization of our existence will mean a dramatic increase in data. This data needs to be stored somewhere. So, investing in digital assets that store data is probably wise.

2. As more and more virtual land is bought by big brands, investing in the metaverse is also likely to be profitable.

3. Layer 1 protocols are also likely to blossom as thousands of dapps are being built on them. It is very likely that the biggest ones will survive the bear market.

4. The banking industry is looking at blockchains that can make cross border transactions more efficient, faster, and cheaper. They will also upgrade the way they do their business. Therefore, look for coins that are ready for iso 20022.

When we have a likely picture of the future, we can use the information to find crypto currencies that are involved in the development of society and business. We need a picture of the future to have a long-term mindset in investing.

My take on the current market:

October has the nickname pumptober, but this october is more likely to be mediocre or even red. Not even Bitcoin can withstand the vast array of negative macro-economic factors affecting the world. As Russia’s war on Ukraine drags on along with a looming recession it is difficult to predict crypto prices. Even crypto experts are guessing or just following their gut…

We are in a bear market and the price of crypto coins are likely to continue going down slightly or stay flat until the end of the year at least. Some predict that prices will continue being boring all through 2023. Boring meaning a slight upturn each month beginning in early 2023. The real action upward is likely not to start until April 2024.

Crypto has an index that measures what emotion and different sentiments are driving the market. The Fear & Greed Index is now showing ‘extreme fear’ among investors which may cause a strong selling pressure. Basically, investors are too worried to invest. However, those believing crypto regard ‘extreme fear’ as a buying signal.

Coins on my radar:

Bitcoin, Ethereum, Solana, Cardano, Filecoin, XRP, Algorand, Sandbox, Decentraland. But there are many more to consider.

Please consider the following rules in investing in crypto:

· Stay up to date with crypto news.

· Think long-term.

· Be ready to lose it all.

· Keep your money on cold storage.

Be careful. Not investing is wise. Investing after doing your own research is also wise.

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Business & Society

Banks hinder innovation by blocking the FinTech industry

Banks may be considered secure, but they are failing to provide satisfactory and effective services for billions of people and hinder the development of the financial sector. Is FinTech the solution?

Crises do not only foster personal growth but also societal developments. The 2008 global financial crisis led to the growth of an innovative financial industry called fintech. FinTech is short for Financial Technology and is used to describe an industry that combine new technology and financial services. Commonly FinTech companies offer digital payments instruments, lending, crowd funding and open banking as well as cryptocurrency. The Swedish FinTech sector has grown more than fifteenfold since 2008 and is proud to offer a healthy innovative environment for about 450 FinTech companies. Stockholm is a hub for many FinTech companies such as Klarna, Avanza, Qliro and Nordnet.

However, innovation can be disruptive. FinTech is seen as a threat to traditional banks as it eliminates the middleman in economic transactions. Traditional banks are making it harder for people to interact with FinTech companies by banning the use of debit and credit cards for cryptocurrency purchases. The Swedish bank Handelsbanken have blocked the use of debit cards on the crypto exchange Binance and the credit card company Remember have blocked all crypto purchases. Since the beginning of 2022 it is not possible to buy crypto with a Swedish debit or credit card on any of the major crypto exchanges.

The official explanation for blocking crypto payments is that it protects the customers for risky investments and from fraud. Hang on! What‘s’ going on here? I am not a gambler, but I am sure that I can use my debit/credit card when I go to a casino. I know I can use it to buy a few margaritas in the nightclub… I do not need any bank to decide for me what an risky investment is.

The only reasonable explanation for blocking crypto payments is that crypto is seen as a threat to the core business model of traditional banking. It is common knowledge that traditional finance is fearful of the transformative power of the crypto industry. At first glance it may seem natural that traditional banks protect themselves, but it is a violation of freedom when they try control how we spend our money.

On a broader scale these measures by the banks pose a threat to the FinTech industry and hinders innovation. The FinTech industry is a growing part of the financial system in Sweden and have earned 0.15 percent of the nation’s GDP. Some FinTech firms use blockchain technology and crypto currency in their business model. Sweden is increasingly seen as an international player in the FinTech industry and traditional banking will go through changes in the fourth industrial revolution. It’s a fact that major global banks use blockchain technology as a way to improve their service. But blocking banking card transactions to crypto exchanges sends another very clear message.

The traditional banking sector is seen as a secure with government guarantees but it has failed to help those in most need. There are approximately 1.7 billion unbanked people in the world and most of them are women. In developing countries 94 percent of the population has a bank account but in developing countries the figure falls to 63 percent. On a global scale 72 percent of all males have a bank account and 65 percent of women do.

FinTech has potential to provide banking services for the unbanked and help to solve the problem with financial inequality. I would like to ask the traditional banking industry how one can live without having a basic checking of savings account!? How can a person live a normal life when there is no way to get a loan or difficult to pay for groceries. How are banks helping the poor?

Well, let’s not forget. Banks are not our friends. The world would be wise to consider what the FinTech industry can do to improve the current financial system. Lets create a sound financial system for the benefit of mankind. A system that do not exclude either traditional banks or the crypto industry.

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Business & Society

Growing pains of the crypto industry

Scams, hacks and rug pulls are causing billions in losses for investors and harming crypto businesses. Exchanges and decentralized finance companies go bankrupt. Rogue states use anonymous crypto currencies to fund military spending. Governments ban certain blockchain solutions and traditional finance are in a shoot-out with the crypto industry. Is this normal for the emergence of new technologies?

The internet started its public journey in the beginning of the 1990s and today 4.4 billion people are estimated to use the internet. When internet was launched to the public a range of problems occurred for users. Spam and viruses were so common that every computer needed antivirus software. Illegal content and pornography basically took over the internet. Later major issues appeared when the old Internet Protocol called IPv4 had to be changed to IPv6 to get more internet addresses. The biggest problem is still that half of the world’s population do not have internet access. The point is that technological developments will go through problems before they are adapted to our needs. Rome was not built in a day.

It’s not easy for the crypto industry to adapt to its own rapid development. Laws and regulations in the crypto space cannot keep up. For example, recently the virtual currency mixer Tornado Cash was sanctioned and caused worries in the Ethereum ecosystem. The problem is that Tornado is an open-source software that use the Ethereum system to make it difficult to trace cryptocurrency transactions. Apparently, North Korea used Tornado Cash to launder $7 billion worth of crypto currency on the world’s second biggest blockchain Ethereum and used the money to boost their military spending. The founder of Ethereum Vitalik Buterin did not see that coming.

Clearly regulation and laws are an essential part of a healthy society but sanctioning a piece of open code is clearly problematic. Privacy is an important part of the crypto space and that does not mean that privacy is equal to illegal behaviour. We do not want others to know about our digital wallet or about our health data that will be stored on a blockchain in the future. We certainly cannot blame blockchain technology in general for creating software that can increase privacy. When Facebook used our internet data in questionable ways to profit, the US government tried to make sense of what they did and to enforce regulation. But we never blamed the internet for how it was used to profit from consumer data the way Facebook did.

The S curve is a way to measure how far a technology is being adopted by society. If we look at where the crypto industry is in terms of adoption in comparison to the dawn of the internet its only 1993 in the crypto space. Do you remember the first time you used Explorer to surf the internet? The S curve tells the story that the crypto space is somewhere in between the innovator and early adopters’ phase of development. Think of the adoption rate like a scale from 1 to 5 and the crypto industry is nearly in the second phase. The fact that there are more than 20000 crypto assets it’s obvious that innovators have centre stage and you and me (early adopters) see opportunities in the field, but the public remains sceptical. Crypto is like an energetic cocky teenager and growing pains are natural.

Have a great day!

Henrik

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Business & Society

Crypto helping billions to get internet access

The crypto industry is changing the world. Industry by industry.

It is surprising that mainstream media ignores what is happening in the fourth industrial revolution. Sure, we hear about crypto currencies crashing and that the industry is just a hype, but never how the blockchain technology is changing the world. It’s all a scam anyway, right!?

Previous articles have mentioned the fourth industrial revolution because we need to understand the times that we are living in. It’s worth repeating that we are living in a technological revolution. Staying well-informed about the developments in society will teach us about history and give us a glimpse of the future. Obviously, we need to be aware of what is going on to be competitive as a company or a successful investor. Multiple industries are disrupted by the blockchain technology, and the trillion-dollar telco industry is a prime example.

There are a 1000 plus mobile network operators, but half of the world is still not connected to the internet. Big time players in the telco industry have tried but failed to reach more people. Even google tried but did not find a successful business model. But the hybrid mobile network named World Mobile with its blockchain technology created an interesting business model that has potential to help 3 billion in getting internet connection. The sexy part is that World Mobile has found a way for anyone to participate in supporting the network and even make money doing it. Service providers are incentivized to participate in the long-term sustainability of the world mobile network and rewarded in the crypto currency World Mobile Token. Basically, there are two ways to be involved in World Mobile services.

An entrepreneur or private entity can invest in setting up an AirNode that provides users access to the network. For example, in Africa, local entrepreneurs can work with World Mobile to set up an aerostat or a tower to strengthen the wifi-capacity of the network. Imagine investing in a floating balloon with 3G connectivity that is sent 400 yards above ground to provide internet connection for an entire village. The technology can run on solar power and is so advanced that the balloon will self-deflate if there is a storm coming and go back up when the storm has settled. It’s a win-win business idea. This technology provides internet access to those who connect to the network and the person or company that set up the hardware is paid in World Mobile Token. Yes, the tokens can be converted into traditional fiat money.

People can also choose to support the network by becoming a EarthNode operator anywhere in the world. EarthNodes have blockchain capability and function as the brain of the system and interconnects all other nodes. EarthNodes records and process all transactions that take place on the network and investors in this structure also get paid in World Mobile Token. Those who use the network to connect to internet pay for text messages, calls and data using local currency.

The tokenomics of World Mobile Token is like many other crypto projects. Those who invest or participate in the ecosystem is contributing to its growth and safety and is therefore rewarded in a crypto currency. This decentralized grass-root business model is revolutionary as it provides unique ways for small businesses to set up shop.

World Mobile is making efforts in Africa to provide internet access to remote areas and have potential to supply 3 billion people with internet connection. Now that’s what I call a valuable use case of blockchain technology.

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Business & Society

The best argument for the crypto industry

The public may say that crypto is a joke and stocks a smart investment. People may think that you are stupid for investing and discussing crypto with someone who is skeptical can be frustrating. What is the biggest argument that the crypto industry is here to stay and a valid investment?

The looks I get when I say that I am interested in crypto is telling. People frown and get quiet. Some dare to say that Bitcoin has no value and no use case at all. Sometimes I avoid the subject but occasionally I wish I had an argument for crypto that would turn a critic into a believer.

It is somewhat unimageable what is happening in our modern society and easier to stick to what we know than learning about societal developments. But we need to understand that in the age of the internet of things our existence is rapidly turning digital. Digital.

The internet of things is a global online network that is being built and it has been estimated that 30 billion devices are connected to the internet. We are clearly living online, and the fourth industrial revolution is in full force. It is completely natural that smart watches, cars, houses, lamps and even fridges are connected to the internet. If the phone is stupid and not able to connect to the internet you may not even be able to pay for parking or for public transportation. We need internet to update the electric grid, for government agencies to run smoothly, for hospitals to treat patients effectively, in military activities, for banking services and to pay for basically everything. Without internet access we are not even able to borrow a book at the library. We trust the digital age for a large part of our communication. According to my 12 years old daughter wifi is the definition of life. If you ask me, not being able to start the Facebook app is a definite up-side of an off-line existence.

Considering that the cost of cyberwarfare has quadrupled since 2015, it is clear that rouge nation states regard the internet as a corner stone of our existence and therefore a target for attacks. When the internet breaks, we break. As the age of internet of things has disrupted our way of life it is blatantly obvious that we need to fully accept that our money also needs to get digital and that new companies will blossom within the sector.

The first electronic cash system E-Cash was invented in the early 1980s. E-cash managed to collaborate with banks but went bankrupt because society was not ready for such a ground-breaking technology. At the present time we can’t imagine not being able to transfer money across the internet. The problem is that we are in between two worlds now. We have the traditional fiat system with physical cash, and we keep track of this money online. We allow banks and governments to count and control what and how much money we have. We also have the digital crypto industry that is completely online and do not need banks to count or control our digital money. The cashless society is rapidly growing, and nations are looking into a central bank digital currency that can move freely within and across borders, and we need better digital solutions for our money. Furthermore, the argument that even banks are investing in crypto currencies and blockchain technology is also good.

What’s also confusing for people is that blockchains is not just money but can be programmed with smart contracts to solve various problems. Explaining to a crypto critic that we are in the midst of a digital transformation of society, seem to be the best argument for having digital money. As we move every part of our existence to the internet it is also smart to invest in digital companies. Right!? Blockchain companies are software companies that provide various services online. It’s as straight forward as that. To someone who is investing in stocks one could say that many crypto companies are just like a traditional technology company.

Why are crypto critics afraid of something that seem straight forward? Blockchains are a software solution to a problem. Well, I understand that people are sceptical of putting our money online since personal computers basically need to update every time they start. It takes time for people to trust that code can benefit mankind to such a large extent.