Market report


London Block Exchange

5th January 2017

Incentives that are pushing crypto projects closer to the sun.


Incentives that are pushing crypto projects closer to the sun.

During times in which two thirds of the top cryptoassets by market cap are booming on average by 25% in 24 hours, it seems some projects are flying closer to the sun than others. We believe the ecosystem is promoting the incentives behind it.

Some vocal figures in the cryptosphere regretfully acknowledge that “95% of crypto mania is driven by the absence of cynical reporting”. They believe that we “need to differentiate between getting billions of dollars of digital paper wealth and actually achieve something meaningful for society.”

It’s indeed strange that yesterday, when CNBC’s ‘Fast Money’ trader Brian Kelly announced a new ETF run on his own crypto fund, CNBC’s coverage of the launch only talked about how easy it will be to gain exposure to cryptoassets with one click.

We’re all very eager about the underlying technologies powering this new asset class and its potential to give back power to the people; but there’s a reason why Satoshi Nakamoto decided to reference the 2008 financial crisis in Bitcoin’s genesis block.

It’s okay if some people are lured by the apparently easy profits, as long as they “stay for the decentralized revolution” in individual freedom and financial sovereignty which will lead to a “restructuring of global economics and power”.

So, what are these incentives and how might they play out in the coming months? In the beginning, crypto projects focused on creating a scarce digital asset that would be distributed widely among its early adopters to incentivize them to make it valuable.

These days, crypto projects have understood that doing it the other way around nets them the largest profits. The method now is to create copious amounts of a digital asset, distribute small amounts of it to certain exchanges and ride the way to the top of the market cap rankings! The market cap ranking is coincidentally the metric the media and new investors are using to determine the success of a project.

This change in projects’ approach to the market is one of the proposed reasons as to why it is important we do not identify Satoshi Nakamoto, and how we can actually be grateful for his purposefully lost coins. The space can at least have one shred of legitimacy moving forward in case all other humans fail.


But Ripple’s XRP is still ahead in the market cap game

We don’t want to come across as irrationally bearish in the past section — we are just promoting yet-to-be-created frameworks that will be able to accurately compare different cryptoassets.

Some already exist, but only for certain cryptocurrencies, such as the Network Value to Transactions Ratio (sometimes called bitcoin’s PE ratio). Another example is an extension of the famous macroeconomic equation of exchange, advanced for investment valuation purposes.

So let’s get to some good news. We’ll talk a little bit more about Ripple (as everyone is writing about it on crypto’s Bloomberg terminals) with the remaining insights in the sections below.

On the bright side, Ethereum’s ether finally broke an important, if only symbolic, price level. It’s trading at £1,050 ($1,400) on Korea’s Bithumb, an exchange that has typically been leading bitcoin and ether’s price actions over the past few months.

This is important as Ethereum is the crypto project that has delivered the most significant developments, both in terms of code that’s shipped and blockchain theory that’s advanced and picked-up by other teams in the space.

It had reached £300 ($414) last July after a parabolic bull run that started in the beginning of 2017 (that we covered in our Year in Review report) so the recent rise was clearly not a random speculative trade over the past semester.

This last surge is definitely healthy, as Ethereum’s network is already handling over 1 million transactions per day. They also just announced millions in grants for research around the scaling problems that most blockchain projects face.

However, before the weekend comes — a time in which major dips have taken place in the past — we would like to share some more criticism that has been surfacing regarding Ripple and its XRP token, now that even the New York Times is discussing it.

In brief, XRP’s thesis is to first create a highly traded token and then use it to provide liquidity to banks for international payments. The first point was clearly achieved, with XRP’s market cap now larger than Bitcoin if we consider its 100 billion tokens.

But — and this is a big but — from anecdotal evidence and also from the way banks are using Ripple’s products, it seems the XRP token is not a key part of the system. The token is therefore presumably unnecessary for success in the war Ripple is fighting against the SWIFT system.

We seriously recommend you read the five links of the previous couple of paragraphs if you either have bought or want to buy XRP, as there’s a risk it can go down as the Icarus of cryptoassets. Then again, even dogecoin is worth 1 billion now!


To prepare for tomorrow!

Coinbase and its exchange, GDAX, announced that they “have made no decision to add additional assets” to their platforms following an increase in the amount of fake information circulating on social media. Ripple’s XRP price decreased 15% after.

RaiBlocks (XRB), the token with a 70x increase in the past month we mentioned yesterday, just won Binance’s Community Coin of the month. It has now a chance of being listed on the exchange for free. Is Binance’s kiss of death still a thing?

Tron (TRX) is a Chinese project focused on digital entertainment. It climbed to 6th place in CoinMarketCap’s ranking, after growing 125x in the past 30 days. It’s promoting a partnership tomorrow and its TronDogs game is launching soon.


An insight a day keeps the losses away

The Royal Bank of Canada agrees that blockchain applications will bring more value to the underlying ‘fat protocols’. Here’s a list of 23 apps in the making!

Those who bought Bitcoin at the top seem to be crushing the cryptoassets market with this alts boom — but how can you do it consistently and live the dream?

Even Mark Zuckerberg is talking about cryptocurrency’s impact on the world. He wants to understand if power can be taken back from centralized systems!

  • CNBC
  • genesis block
  • Ripple
  • Ether
  • XRB
  • Coin Market Cap