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November 2017

Gladius ICO Review – Decentralized DDoS Protection

DDoS (Distributed Denial of Service) Protection is a fundamental element for the success of any large website.

Gladius are attempting to disrupt the industry – dominated by large players such as Microsoft – through the introduction of a decentralised DDoS protection system.


YOU WILL LEARN:


What Is DDoS?

What Is Gladius?

How Are Gladius Improving DDoS Protection?

Is Gladius A Good Investment?

 

CONTENTS

  1. What is Gladius?
  2. How Will Gladius Work?
  3. What are the Current Market Solutions?
  4. How Will Gladius Improve on These?
  5. Will the Token Price Increase?
  6. The Team
  7. Barriers to Success
  8. The Roadmap
  9. ICO/Token Sale Details + How To Buy Gladius Tokens
  10. Conclusion
  11. Follow Future Posts

1. WHAT IS GLADIUS?

In our own words:

  • Gladius is a decentralized cyber security tool, which aims to prevent denial of service (DDoS) attacks. Correctly implemented, this will result in an improved content delivery service and improved website loading times. 

What Is A DDoS Attack?

  • A DDoS attack is where a person aims to make a web host, server or website unavailable for use by flooding it with traffic, causing it to crash. Alternatively, they are sometimes used as a means of obtaining private company or customer data.
  • DDoS attacks are becoming more common and incredibly easy for a person to achieve; with the necessary bot available for just $5.
  • A recent, high-profile attack saw websites such as: Twitter, Netflix and Reddit shut down for more than 24 hours.
  • DDoS attacks have cost companies $150 billion worldwide so far this year. 


2. HOW WILL GLADIUS WORK?

Gladius will utilise a combination of the decentralised nature of Ethereum’s blockchain, peer-to-peer networking and DDoS Protection Software to create a decentralised DDoS protection software. 

There are two persepctives to consider when discussing Gladius; network users and contributors. Let’s begin with the network contributors:

Network Contributors

Users from around the world will download the Gladius desktop client, join a local protection pool (a group of Gladius users close to one another geographically) and begin renting their spare internet bandwidth in return for payment in Gladius tokens; a system very similar to Substratum.

Each pool will have a host who will determine aspects such as:

  • Who is allowed into the pool
  • Which clients to accept
  • The appropriate charge for doing so.

These pools allow sites to cache their content close to users and when a site is under attack, the requests are routed to all of the independent members within the pool. These members then individually verify the requests to ensure only trusted connections are let in.

If you are interested in becoming a network contributor, you can check out  their calculator so you can see exactly how much you would earn.

Network Users

The network users will be the websites looking to make use of Gladius’ DDoS protection.

Website owners will purchase GLA tokens from exchanges and pay network contributors with these in return for their services.

 

3. WHAT ARE THE CURRENT MARKET SOLUTIONS?

We say this time and again yet this incredibly important point is so often overlooked:

Businesses are created for one purpose; to solve market problems

If a business does not solve a real problem, it is unlikely that it will succeed.

So what market problems are Gladius specifically solving?

There are currently two main techniques used to try and prevent DDoS attacks: DDoS Mitigation Solutions and Decentralized Delivery Systems, we’ll discuss why neither of these offer a perfect solution below. 

DDoS Mitigation Solutions

Programmes that attempt to sort the ‘good’ traffic from the ‘bad’ traffic. They attempt to identify a websites patterns of traffic and prevent the access of anything it considers abnormal.

These systems can struggle to sort the right from wrong, which can result in not only the ‘bad’ traffic entering the network but also preventing wanted visitors from accessing a site. DDoS Mitigation Solutions are also becoming easier for attackers to circumvent if operated manually – cloud based operations often see more success.

Decentralized Delivery Systems

This is where traffic is sent to multiple individual hosts, potentially worldwide, before routing to its desired destination in an attempt to make any DDoS attack either ineffective or at least much more complicated.

While this method is considered reasonably effect, commercial content delivery systems are incredibly expensive, so not suitable for all. As well as this, they are still vulnerable to the more sophisticated types of DDoS attack.

4. HOW WILL GLADIUS IMPROVE ON THESE?

While both of these approaches are considered somewhat effective, neither are complete solutions and thus they can be improved. Gladius hopes to be just that and has three distinct benefits when compared to the previously mentioned methods.

It should be noted that we are not blockchain or DDoS Protection experts and you should carry out your own research to decide if you think Gladius are capable of offering their claimed advantages

1. Faster Content Delivery

Clients will always be directed to the node closest to them in location, this will be done using a location based DNS server, ensuring the process is completed in the shortest time possible. As mentioned above, previous decentralized delivery systems would potentially send clients worldwide to complete this process, only lengthening the wait time. 

The importance of CDN can be found here.

2. Increased Protection

By combining the two previously mentioned methods of protection, Gladius can guarantee a more secure service; the distribution of data to multiple servers helps to create a more secure system.

A final proxy server will also hide the true IP address of the client from any attack, making successful disruption much more difficult. 

3. Affordable Cost

The cost of the service is determined by the pool host and since there will be a number of different pools to choose from, there is a need to keep prices competitive. As well as this, the decentralized nature of the project means there is no middleman involved.

As a result, prices will automatically be lower than a centralized system but will still maintain value for both clients and hosts.

It is important to remember that an ICO’s whitepaper often acts as their main marketing tool, for this reason, we like to take a critical look at their claims as you can see below:

OUR THOUGHTS

Content Delivery Time

Content delivery speed is very important, especially when considering that Google favours faster loading websites meaning that it is more likely for a website to appear near the top of Google searches with high page loading times.

However, you would have to question the level of impact that Gladius’ systems will make – will a few milliseconds make a significant difference to Search Engine Optimisation

Increased Protection

The importance of this aspect simply cannot over-stated – any other benefit that Gladius can offer is simply a ‘cool extra feature’. Whether Gladius can truly offer improved protection is fundamentally the most significant part of this project.

As we’re not DDoS experts, it’s impossible for us to comment with certainty whether Gladius’ claims of increased protection are valid or not. However, we can highlight the underlying nature of the blockchain technology – which Gladius is built upon – that is to offer improved security and privacy in many different area.

Due to the decentralised and virtually unhackable nature of the blockchain, we would think it most likely correct that Gladius’ claims of increased protection are valid.

Affordable Cost

Since prices are set by the pool managers, they should in theory be cheaper, this may not automatically happen though. If the initial uptake of the system is minimal and only a few pools are created, pool managers may decide to charge a higher price.

This may be more prevalent when it comes to the content delivery speed aspect; if there are certain areas with only one or two pools, managers may be able to charge a premium to clients wanting to be cached here.

Overall, we believe the Gladius will potentially be offering real solutions to problems in the market if they’re able to successfully build their platform as expected.

Having discussed the project and its benefits, we’ll now take a look at whether the token price is linked to the success of the platform or not.

 

5. WILL THE TOKEN PRICE INCREASE?

This is another incredibly important point that people often overlook when investing in Cryptocurrencies – is the token price truly linked to the platform usage?

Investing in Cryptos is not the same as traditional investing – when you buy shares in a company, you’re buying ownership. As the company makes increased profits, the share price will increase and your investment value will rise also.

With the majority of Cryptocurrencies, the tokens don’t represent shares.

Therefore, it’s possible for the company to be successful (i.e the CEO and employees get rich) and yet the token prices may actually fall if they aren’t correctly linked to platform usage.

The ONLY factors determining token price are supply and demand on exchanges.

Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following two questions:

1. Demand – Will there be token demand on the exchanges?

2. Supply – Will there be excessive inflation hindering prices?

Let’s first look at demand:

What Are The Sources of Demand?

In order for a website to use the Gladius DDoS protection service, they will have buy to pay in GLA tokens. In order to pay in GLA tokens, website owners will have to buy them from the exchanges.

As more websites begin using Gladius’ DDoS services, there will be higher demand on exchanges and token prices will increase.

As such, the GLA token price has been tied to the success of the Gladius system.

What Is The Likely Inflation Rate?

Gladius will be creating a fixed supply of tokens meaning zero inflation rate. However, that doesn’t mean new tokens won’t be entering onto exchanges;

A total of 60% of tokens will be sold in the ICO, meaning that another 40% will enter the market at some time so how is this extra 40% distributed?

  • 15% – Founders – This will include an 18 month minimum holding period so these tokens will not cause an inflationary pressure
  • 15% – Operations – This pool will be sold over time in order to assist with operating costs. As this is 1/4 of the quantity sold in the token sale, this won’t cause excessive inflation.
  • 10% – Team – In the whitepaper, the vesting period for this is listed as ‘varied’, meaning that we cannot predict when these extra tokens will enter the exchanges. However, even if we assume that the team wishes to sell all of their tokens, 10% is a relatively low figure and shouldn’t cause excessive inflation.


Overall, the inflation rate should be relatively low and the demand will be based entirely on the success of Gladius. As such, we are able to simply analyse whether we believe this project will be a success – while factoring in price – in order to determine if this is a worthy investment.

6. THE TEAM

As our regular readers will know, one of our mantras here at Crypto Gurus is to “invest in people, not ideas”. It’s based off the principle that an idea is only as good as the people who execute it. As investors, we strongly believe in this principle.

The 12-member strong team includes several advisors and designers alongside it’s three original co-founders. The first thing that jumps out about the co-founders is their age; all three are still at university. This is not to say they lack experience however; Niebylski boasts 8 years of experience in computer programming, including a spell with Bloomberg LP.

What appeals to us more is that the co-founders clearly identified that they could not achieve this project alone and went out and secured team members with the necessary experience.

Two names that offer just this are Jeremy Epstein and Michael Terpin; Epstein offers 20 years of international marketing experience, as well as being the marketing faculty member for the prestigious Blockchain Research Institute, while Terpin has multiple Bitcoin endeavours including: BitAngels, Bitcoin Syndicate and CoinAgenda.

While this is a relatively small team, there are a lot of things to like about the individuals involved and while it could be considered a negative that they have been together for less than 12 months, the progress they have made in that time, for me, dissolves any of those fears.

Sidenote

Some of you may recognise Jeremy Epstein as a previous member of the IOTA team, he was actually let go from that project after failing to disclose his affiliation to one of their most vocal competitors.

As well as this, an agreement was reportedly reached with Epstein that he would not join any further projects, since IOTA had brought him in as a lead advisor, that he also failed to honour.

Epstein seems to have taken advantage of some clever search engine optimisation (SEO), in order to place himself above the competition; looking at some of his work, there is not too much that stands out as impressive. A series of grainy YouTube videos in front of a whiteboard do not present the appearance of a ‘Professional Blockchain Genius’ as he describes himself.

This is not an attack on Epstein but it certainly brings into question whether he is the right kind of person to be involved in Gladius; a young team which may need strong guidance cannot afford to carry someone who may still possess a conflict of interests.

You may be wondering if there is there anything else currently standing in Gladius’ way? We’ll now take a quick look at a few hurdles Gladius must overcome in order to succeed:

7. BARRIERS TO SUCCESS

With a new project such as Gladius, it is important to identify any obstacles that may hinder their progress, we have highlighted a few potential hurdles:

Adoption

An internet search for DDoS protection brings up results from companies such as Microsoft and Cloudflare, with the number of high profile options available, you have to question why would someone choose an untested project such as Gladius? Gladius may not be helped by the continued scepticism that surrounds cryptocurrency either.

Countering this though, you could argue that Cryptocurrencies and some of their benefits may have become mainstream enough by the release of the platform that Gladius will be able to convince various websites to use their systems.

Slow Growth

Following on from the point above, Gladius may find initial uptake slow; the number of websites rushing for this at release may be minimal. They may have to rely on smaller companies to present their case but once people see that their system works, more may begin to come onboard. This could take time, however, as bigger companies may seek years of successful data as proof.

8. THE ROADMAP

November 24th 2017 – Public Token Sale: The first public sale of tokens for the platform.

March 2018 – Full DDoS and CDN Launch: The beta release of the Gladius network. Fully featured with the cornerstones of their CDN and DDoS mitigation services.

August 2018 – Full Public Launch: The first official public release of the network. Websites and businesses of all shapes and sizes will be able to use the Gladius network to speed up and protect their sites. Full support and assistance will be included.

December 2018 – Further System Optimizations and Stretch Goals: The final bells and whistles of the platform. From the various stretch goals, to bullet-proof security and everything in between.

9. ICO/TOKEN SALE DETAILS + HOW TO BUY

  • ICO/Token Sale Link – https://gladius.io/register
  • Referral/Affiliate Code – N/A
  • ICO Start Date – November 24th 2pm UTC
  • ICO End Date – December 30th
  • Token Price – 600-500 GLA = 1 ETH
  • Bonuses Available – Maximum bonus of 20% (600 GLA per 1 ETH)
  • Token Supply – 48.2 Million (60% sold in token sale)
  • Soft Cap – $4 Million
  • Hard Cap – $12.5 Million
  • Current Raise (28th Nov) – $6.7 Million
  • Accepted Currencies – ETH
  • How to Participate – Click this link and follow the instructions

Very Important Point:

Token price is irrelevant when investing. Hard cap is all that matters for judging whether an ICO is cheap or expensive and market cap is all that matters once the Crypto hits the exchanges.

If you want to learn more about this fundamentally important aspect of investing, make sure to have a read of our brief explainer article.

 

10. CONCLUSION

DDoS protection services are becoming more and more important with the increased growth in the number of websites. Gladius is offering a real solution to a problem and has tied their token price to the platform usage very well.

It could be relatively difficult to begin convincing websites to use their system over more established alternatives to begin with. However, with a very modest maximum raise of just $12.5 million, there is significant upside potential for this project.

Combined with the fact that $6.7 million has already been raised and the planned system launch is not that far away – March 2018 – in Crypto terms at least, this could provide an interesting opportunity for investors.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.


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This article has been provided by our Business Analyst; Aaron Laver.

KuCoin vs COSS – Battle Of The Profit-Sharing Exchanges

KuCoin vs COSS

Profit-sharing exchanges allow you to to accrue passive income by simply holding the exchange’s tokens in your wallet.

The idea of sharing exchange fees with token holder is, in our opinion, a fantastic opportunity for investors. Therefore, today we will be discussing our extensive comparison of COSS and Kucoin – the two competitors in the space.


YOU WILL LEARN:


What Is A Profit-Sharing Exchange?

Is Passive Income A Good Investment?

Is KuCoin Better Than COSS?

 

CONTENTS

  1. What Is A Profit-Sharing Exchange?
  2. KuCoin Project Overview
  3. COSS Project Overview
  4. KuCoin vs COSS
  5. Are They Both Illegal Securities?
  6. Where Can You Buy KuCoin & COSS?
  7. COSS Since Our Last Video (For Our Followers)
  8. Follow Future Posts


1. WHAT IS A PROFIT SHARING EXCHANGE?

An online exchange is a website which allows you to convert one Cryptocurrency for another e.g. if you want to ‘exchange’ your Bitcoin for Ether.

For providing this service, an exchange will usually charge around 0.1% – 0.3% fee.

You can check out a more in-depth list of exchange fees here.

Usually, exchanges keep these fees to themselves. However, during the past year, we have seen the arrival of profit-sharing exchanges.

Who Do They Share The Fees With?

Profit-sharing exchanges share fees with their token holders.

The incentive for the exchange owners is two-fold;

  1. ICO – The exchange are able to sell their tokens – which should carry future value – in an ICO in order to raise funds and build the platform
  2. Customer Loyalty – The structure also encourages customer loyalty because, all traders who hold tokens will essentially be paying some of their fee back into their own pocket with each trade they make on the platform.

The incentive for token holders should be relatively obvious – they are able to collect regular payouts for simply holding the tokens. Here at CryptoGurus, we are huge fans of passive income so the premise behind profit-sharing exchanges is very appealing to us.

Let’s now move onto our brief project overview of KuCoin.


2. KUCOIN PROJECT OVERVIEW

The first distinction to make when explaining the KuCoin project is between the exchange name (KuCoin) and the associated tokens (KuCoin Shares).

‘KuCoin shares’ are the tokens that investors are able to purchase on exchanges and entitle them to the profit-sharing of the exchange.

Payout Structure

  • 50% of fees – Token Holders
  • Up to 40% of fees  – Referrals From Token Holders
  • 10% of fees – KuCoin Exchange

Let’s hypothetically say a trade occurred and an associated fee of $100 was charged.

From this, $50 would be distributed between all token holders. $40 would go towards whoever referred the person (via the referral scheme) making the trade and $10 would be kept by the exchange.

Token holders are paid in whichever tokens a trade consists of e.g. if the pair ETH/BTC is traded, token holders will all receive a small cut of both ETH and BTC.

If ARK/ETH is traded, token holders will receive small amounts of ARK and ETH. As such, token holders will accrue many different types of Cryptocurrencies over time.

KuCoin Exchange Profit Sharing

What If Nobody Referred The Trader?

What would happen in the situation where a trader signed up to the KuCoin exchange without being referred by someone else?

This is an answer that we searched for but were unable to find. Therefore, we believe that this 40% probably instead goes to the exchange, bringing about the following fee split model:

  • 50% of fees – Token Holders
  • 50% of fees – KuCoin Exchange

We do find it slightly shady that we weren’t able to find information about this because this will actually be a relatively common occurrence that someone signs up without being referred.

The Referral Scheme

While we’ve stated above that 40% of the fees goes toward the person that referred the trader, this was said to simplify the above explanation and isn’t entirely accurate.

Instead, this 40% fee is actually dispersed through 3 different layers of referrals. For the most easily understood description of this, we recommend scrolling down to the picture below – pictures are always easier to understand than text!

However, we’ll also explain it here for those who prefer to read:

  • 20% of your direct referral fees will be paid to you
  • 12% of second degree referral fees will be paid to you
  • 8% of third degree referral fees will be paid to you
  • In total, a maximum of 40% of fees will flow back up through the referral scheme

As we said, it’s best to use the diagram below for the easiest explanation!

KuCoin Referral Scheme

KuCoin’s Token Buyback Program

10% of net profits will go towards KuCoin’s token buyback program.

With these profits, the team will buy their shares back on exchanges and burn them (get rid of them indefinitely). As a result, this should reduce the overall supply and should bring the price down in the long-term.

The aim is to reduce the total supply by 100 million, leaving a total of 81 million tokens outstanding.

If this sounds like a big positive to you, wait until you read ‘Our Thoughts’ on this where we’ve run the calculations and it’s clear that this element has only been thrown into the platform to impress investors who don’t dig deep enough to see how worthless it actually is!

What Is The Fee Charged On KuCoin Exchange?

KuCoin are charging a flat fee of 0.1% for every trade that occurs on the platform.


OUR THOUGHTS

At the beginning of this article, we emphasised how we are big fans of passive income and, in particular, the idea of a profit-sharing exchange. As always, we’ll highlight our opinions on some of the points listed above.

Payout Structure

The payout structure is excellent – offering 50% to platform users incentivises them to remain loyal to the exchange and the additional 40% for the referral scheme encourages people to invite others, creating a network effect.

The team takes a relatively low cut of regular fees but still keep a large enough cut to align their incentives with those of token holders.

On the other hand, we find it misleading when they claim that they only keep 10% of the fees for themselves. After all, this only occurs when a new person joins and is tied to three higher levels of referrers – many people may sign up to the platform without a referrer.

Also, we’re not a fan of the fact that token holders are paid in many different tokens. While it’s a cool concept, the result will most likely be users having to individually convert all of these into the currencies that they actually wish to hold.

Having said that, we always try to present some negativity in our analysis to highlight some flaws behind projects in our analysis. In all honesty, the payout structure is excellent and it’s the main reason that we believe KuCoin has excellent long-term prospects.

Referral Scheme

As mentioned, this is an excellent idea as it encourages more users to educate others about the project and greater exposure can lead to a more successful project – if the team is capable of growing the platform in line with user acquisition.

Token Buyback Program

At first, we believed that this is a good addition to have – a token buyback program nearly always adds a positive element to any project… and then we ran a few calculations.

KuCoin are claiming that they will use 10% of net profits to fuel their token buyback program so how much will this really contribute?

Let’s assume that KuCoin collect 10% of the fees per trade as they say that they will. They will have expenses with their operations so let’s also assume that they have a net profit margin of 20%.

A fee per trade is 0.1%. Collecting 10% of this will mean they receive 0.01% per trade.

With a profit margin of 20%, the net profit would be 0.002% per trade. If 10% is pledged towards the token buyback program, that will equate to 0.0002% per trade.

If our calculations are correct, the token buyback program would contribute around just $2 per $1 million trading volume.

This is a great example of a team throwing in something which sounds promising to investors but has very little real value.

You can buy KuCoin here if you wish.


3. COSS PROJECT OVERVIEW

The COSS project has a very similar outline to their plan. Therefore, in order to avoid wasting the reader’s precious time with extensive details of a similar project, we will briefly outline the COSS project and then discuss the differences in the following section.

COSS is a profit-sharing exchange also which shares 50% of fees with token holders. The remaining 50% of fees are retained by the COSS team.

Payouts are made weekly to token holders and all ERC-20 tokens can easily be converted to Ether at the click of a button.

COSS charge a variable fee that ranges from as low as 0.04% up to a maximum of 0.2% based on your 30-day trading volumes.

See below for more details on the fees paid:

In a 30 day period if you trade x amount you’ll be charged x percentage fee:

e.g if you trade $0-$5,000 in a 30-day period, you’ll be charged 0.2% per trade.

$0 – $5000 = 0.2% fee

$5,001 – $10,000 = 0.18% fee

$10,001 – $25,000 = 0.16% fee

$25,001 – $50,000 = 0.14% fee

$50,001 – $100,000 = 0.12% fee

$100,0001 – $250,000 = 0.10% fee

$250,001 – $500,000 = 0.08% fee

$500,001 – $1,000,000 = 0.06% fee

$1,000,0001+ = 0.04% fee

COSS run a referral scheme. With each person that an individual refers, 10% of their 30-day trading volume is added to yours which gets you closer to being in the next category of cheaper fees (as seen above).

For more details, you can check out our COSS video recently ** Please ignore the sound quality, the professionalism wasn’t great when we began on YouTube **.

 

 

Later on in the section titled ‘COSS Since Our Last Video’, we will discuss our opinion on the COSS project specifically further.

For now, we will begin with the comparison between KuCoin and COSS.

You can buy COSS here if you wish


4. KUCOIN VS COSS: WHICH IS BETTER?

Before we begin this section, it’s essential to highlight the price difference first.

At the time of writing, KuCoin Shares have a market cap of $57 million while COSS has a market cap of $5.2 million.

Therefore, the question isn’t really whether KuCoin is better – the question is whether KuCoin is 11x better (57/5.2 = 11)?

Please bear this is mind as we go through the following section:

What Are The Similarities?

  • 50% Profit-Sharing – Both projects share 50% of fees with token holders
  • Timing – Both projects launched at similar times

What Are The Differences?

  • Price – KuCoin has a market cap 11x the value of COSS. Therefore, when making a comparison, KuCoin should be considerably better in order to justify this. This will be analysed shortly
  • Referral Schemes – The referral scheme of COSS assists traders with reducing their own fees but they receive no other financial compensation. KuCoin offer up to 40% of the actual fees to referrers
  • Buyback Program – COSS has no buyback program. KuCoin is instilling a buyback program using 10% of net profits
  • Exchange Interfaces – The COSS exchange has an easy-to-use interface but lacks some of the more advanced features of KuCoin such as the ability to add trading indicators to the exchange’s graphs
  • Daily vs Weekly – COSS pays out users weekly whereas KuCoin pays daily
  • Fees – COSS charges a variable fee based on trading volumes, KuCoin charges a flat fee
  • Current Trading Volumes – KuCoin is 16.8x higher for 24 hour trading volumes
  • Selecting The Right Listings – Correctly picking the correct new listings is where has KuCoin excelled and COSS struggled so far but this could be about to change
  • Ether Conversion – COSS offers relatively easy conversion from other currencies to Ether, KuCoin does not as far as we’re aware


OUR THOUGHTS

Referral Schemes

The KuCoin referral scheme is far better than COSS. KuCoin referrers receive real, financial payouts instead of just a discount on fees. A referral scheme can be a very effective tool at increasing exposure for a Cryptocurrency so it is evident that KuCoin’s strong referral scheme is a clear advantage for the platform.

Buyback Program

KuCoin is implementing a buyback program whereby they will be using 10% of net profits to buy tokens and burn them. COSS will not have such a program. However, if you remember from before, we pretty much ripped KuCoin’s token buyback program to shreds.

We can’t really give COSS a win here because they aren’t offering a buyback program but we certainly prefer their honesty in this, rather than KuCoin claiming their program will raise prices when the whole token buyback program will contribute a pitifully small amount (assuming our calculations are correct).

Fees

Due to their variable fee COSS could turn this element into a huge advantage for attracting serious traders. Let’s explain:

Traders tend to have very high trading volumes – duh – so with COSS’ variable fee based on 30-day trading volumes, many traders could find themselves paying significantly less fee per trade on COSS compared with other platforms. With traders making many trades on a daily basis, this difference can seriously add up over time.

On top of this, traders can become token holders and, therefore, they will effectively be paying 50% of this small fee back into a pot with which they share also. The combination of these two things, could be huge for COSS.

Not to mention, that attracting traders to the platform, is ideal also because this would vastly increase the trading volume and thus the weekly payouts to token holders.

However, there is a big IF here. Over the past few months, expectation around COSS has been relatively high yet they have failed to live up to promised potential.

For them to attract traders, they would have to manage two things:

  1. Increased Trading Volume – Traders needs significant liquidity so they can buy and sell coins very rapidly. Liquidity comes through high trading volumes and, without that, traders simply won’t use COSS. This may seem like a chicken and the egg scenario but we will shortly discuss how COSS can build their initial trading volume through clever targeting of smaller coins.
  2. Improved Interface – Traders need to see trading tools on the platform so that they can add their indicators in order to judge prices. COSS’ interface is currently very poor but we will be discussing very soon about their plans to upgrade it.

Exchange Interfaces

COSS has a much more simplistic style, while KuCoin is more advanced and faster. We would argue that, for this reason, COSS might be better for beginners who haven’t experienced much trading before while KuCoin exchange would be better for everyone else.

The issue for COSS arises in the fact that not many beginners are likely to be using their site – beginners will most likely be located on the big exchanges e.g. Bitfinex, Bittrex and thus COSS are somewhat tailored to an audience they are unlikely to ever cater for.

KuCoin, on the other hand, has a very fast interface with relatively advanced trading indicators that is likely to draw more advanced traders to the platform.

A positive for COSS is that they have recognised their need for an upgrade of the interface and investors can at least feel assured that this improvement is coming soon.

Daily vs Weekly

The benefit here is pretty obvious – who would prefer to wait a week instead of receiving payment immediately? As long as KuCoin are able to consistently manage this, they have the upper hand but this is a pretty insignificant point in all honesty.

Current Trading Volumes

The higher the trading volume, the higher the fees which means more payouts to token holders.

KuCoin Trading Volume

COSS Trading Volume

With the difference in 24 hour trading volumes that can be seen in this picture, it’s clear to see why KuCoin is priced so much higher than COSS.

KuCoin’s trading volume is 16.8x greater than COSS so it could potentially be argued that the price difference could be even higher than 11x.

Note: This doesn’t quite encapsulate the entire picture though as this would be making the assumption that the same trading volume for the two exchanges means the same payouts. In truth, due to the two exchanges having different fee structures, this won’t exactly be the case.

Also, markets are forward-looking and the counterargument could be made the COSS has significant potential – but has been wrongly focused on elements other than their exchange thus far – and, therefore, could have similar potential with more focused management which is exactly what we should soon see.

Selecting The Right Listings

This is arguably the most important element for a new exchange to get right in order to grow quickly and is one of the key reasons why KuCoin has been more successful than COSS so far.

What we mean by this is the following:

There is little point in a new exchange listing ETH/BTC because investors already have the option to trade this pair on many far more reputable exchanges with much higher liquidity so why would they choose to trade it on a new exchange?

KuCoin’s Red Pulse Exclusive Deal

Instead, newer exchanges must grow by focusing on coins which aren’t widely traded but have relatively strong demand e.g. Red Pulse on KuCoin.

As we can see from the screenshots, KuCoin is the only exchange to be trading Red Pulse which is very impressive considering it has a market cap of $22 million and a 24hr trading volume of nearly $750k.

By listing this coin alone, KuCoin have gained over 3x COSS’ trading volume. If COSS had landed this deal, the token price would have increased 4x logically.

COSS, however, have failed to list any coins exclusively – coins that anyone wants at least – and have mostly just added coins which are readily available on larger exchanges.

As a result, little trading volume has been seen on the platform outside of trading their own native tokens.

If we compare the two Twitter feeds from the exchanges, it’s immediately obvious to see that COSS have previously mis-targeted this while KuCoin are adding new listings daily.

COSS’ Twitter Feed

KuCoin’s Twitter Feed

 

A New Start For COSS?

So far, this has painted a very negative outlook for COSS and rightly so – the management has been very poor over the past few weeks. However, we believe that this could actually be their turning point. COSS have recently listed the recent Hydrominer ICO exclusively on their exchange and will be listing Gatcoin also.

COSS Hydrominer Announcement

COSS Gatcoin Announcement

Gatcoin ICOBench Rating + Hard Cap Shows They Could Be A Half Decent ICO

 

While these aren’t superstar ICOs, they do clearly represent a change in tactics for COSS – they have now understood that they must build from the bottom and work their way up instead of attempting to directly compete with the big exchanges from the beginning.

 

Personally, we believe that this intelligent shift in tactic has come around in line with COSS’ recent announcement that they would focusing on their exchange with more of their time.

While the team has been a disappointment thus far, this is a positive sign which we believe many investors may have looked over – explaining why prices are so low. 

Edit: Since writing this article, the price of COSS has spiked 22% in the past 24 hours which could have been a result of this realisation from traders.

Another positive aspect that can be seen for COSS is actually mentioned above when we discussed Red Pulse: ‘If COSS had landed this deal, the token price would have increased 4x logically.’ This sentence alone shows the potential that the COSS tokens have while they have such a cheap price.

What if they landed 3 of these deals over the next month? It’s a big IF again hence the project is undoubtedly high risk – high reward.

 

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OUR THOUGHTS – CONCLUSION

KuCoin has a significantly better interface and referral program and they have been far more successful than COSS in their plans thus far. COSS has been a disappointment so far and massively underperformed their potential.

However, this is all in the past and, our aim as investors, is to look to the future. KuCoin has very strongly leadership and have shown all the signs of a project which could excel even further in the future, potentially hitting newer heights as they grow more.

The ability of COSS to build a community has never been in question – as seen by their significant number of people signed up to the platform – but their decision-making regarding listing choices has been misguided.

As such, COSS has previously been somewhat disappointing – hence it’s priced 11x lower than KuCoin – but is now more focused on their exchange more than ever and is finally exhibiting signs of intelligent leadership.

Without price factored in, KuCoin is the obvious selection here. However, with price accounted for, we would say that both projects are potentially appealing.

KuCoin is a safer option due to its higher price tag, while COSS is riskier but has a higher potential reward due to its lower price tag.

As a result, either could be selected for a portfolio dependent on risk appetite and, arguably, both are good selections. Whether you decide to invest in both, just one of them or neither, we always recommend remaining well diversified with a portfolio – especially with such low market cap coins which carry much more risk!

It would be amiss not to discuss some of the risks involved with both coins surrounding the hot topic of securities in the Cryptocurrency space so we will now move onto that.


5. ARE THEY BOTH ILLEGAL SECURITIES?

To give a bit of background information, currently there are no regulations in the Cryptocurrency space for the majority of countries. Therefore, neither coins are at immediate risk.

However, when reading about issues in Cryptocurrencies such as the recent lawsuit laid upon the Tezos foundation, it’s a stark reminder that regulations will eventually be introduced.

This Won’t Be The Wild West Forever.

As such, there is concern around both of these project due to the fact that some would say their tokens fall under the category of ‘security tokens’.

Issuing of securities is illegal in other industries except for accredited investors only. In accordance with this, some countries may decide that these two projects are in violation of the law as a result.

How Will They Combat This?

Both projects are already aware of this issue and have addressed it in their plans which is why they both plan to transition to become decentralised autonomous organisations (DAOs).

If this were to occur, governments would have great difficulty affecting either project as there is no single source of failure with a DAO.

Whether this will work or not is something we simply cannot predict at this stage. In fact, whether or not they will even face a real threat is something nobody can predict – the regulations for the vast majority of countries haven’t even been announced yet.

On top of this, we would be surprised if either project hasn’t already begun other plans to ensure they’re in accordance with securities laws as they are both attempting to build real projects for the long-term.

However, this is still a consideration that all investors should bear in mind so don’t say we didn’t warn you! 


6. WHERE CAN YOU BUY BOTH COINS?

The easiest and cheapest place to buy both coins is on their own exchanges which you can find through our links below. Please note, these are affiliate links so if you would like to show us support, you can use the links below and we receive a small payout. If you don’t wish to, feel free to not use the links below! 

Buy KuCoin Here

Buy COSS Here


7. COSS SINCE OUR LAST VIDEO (FOR OUR FOLLOWERS)

A few weeks ago, we put out a video discussing COSS and our belief that it’s valuation would increase. As a result, several of our investors jumped on-board and have been worried as the price has fallen since.

This is our message to all of these followers.

We have to admit that we jumped in on COSS at the wrong time and we apologise if anyone who follows us did the same – it had dipped back to $0.12 after increasing above $0.20 so we believed that this retracement presented an opportunity.

In reality, the poor focus from the management of the project has dragged the project down even further.

What Do We Think Of The Project Now?

It’s easy to see prices falling and lose faith in it, as a result. We’re only human and we’ve done the same thing at times.

If you wish to sell at this point, we completely understand.

Personally, we aren’t selling our tokens because we believe the project is still undervalued and we’re finally seeing some positive signs from the management after weeks of very poor performance! 

Believe us, we’ve felt the pain as COSS’ price has dropped just as much as you!

While we’re not adding to our positions at this time, we are also not planning to sell either.

As we said before, this was always going to be a high risk/reward investment which is why we always recommend that investors remain well diversified and never commit too much to any position, especially risky ones!

We’re In This Together

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.

 

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What Is Utrust? Full Review

What is UTRUST? In this UTRUST review, we will explaining how they are positioning themselves to become the Paypal of Cryptocurrencies.

Through the introduction of buyer protection, UTRUST are merging the safety of fiat currencies payment systems with the many advantages of Cryptos. This could be a huge step towards mainstream Cryptocurrency adoption so keep reading if you want to learn more…

 


YOU WILL LEARN:


What Is The UTRUST Project About?

Are They Solving Real Market Problems?

Is UTRUST A Good Investment?

What Is The CryptoGurus Opinion On UTRUST?

 


CONTENTS

  1. What Is UTRUST?
  2. How Does UTRUST Work?
  3. What Problems Are UTRUST Solving?
  4. Will UTRUST Token Prices Increase?
  5. The Team
  6. Roadmap
  7. ICO/Token Sale Details
  8. Extra Points 
  9. Conclusion
  10. Follow Future Posts


1. WHAT IS UTRUST?

In our own words:

  • UTRUST will be a payment gateway that aims to become the Bitcoin/Cryptocurrency contender to Paypal.
  • It will unique to other Crypto payment gateways in that it offers buyer protection – just like Paypal – hence eliminating some of the most significant risks involved with Bitcoin/Crypto payments.

Utrust Buyer Benefits
What Are Payment Gateways?

A payment gateway is an API that websites can use as a means of accepting payments. Still confused, right?
The easiest thing to say here is that Paypal is an example of a payment gateway. As is Stripe.

Essentially, they are a method to allow websites and shops to accept alternative payments types to using your debit/credit card.

The Next Big Step For Mainstream Adoption?

In our opinion, payment gateways are one of the biggest steps in introducing Cryptocurrencies to the masses. Imagine if, when buying things online, you had the option to pay with Cryptocurrencies and the process was as simple as checking out with Paypal.

Suddenly, we could see a huge rush of Cryptocurrency users actually spending their coins for real purchases, rather than just HODLing them.

“Tom, isn’t this already possible through payment systems like Bitpay and Monetha?”

I’ll move on to Bitpay shortly under the section labelled ‘Current Market Problems’ but, for now, I would like to discuss Monetha because there isn’t much of a difference functionally between them and UTRUST and yet the difference that does exist changes everything.

Monetha was a recent ICO that I was quite excited about; it is a payment gateway that is also intending to be the Crypto-contender to Paypal.

However, Monetha have missed out something huge; Buyer Protection

Let’s say you order a product and it arrives faulty or it never even turns up. Using Paypal’s buyer protection, you can request your funds back and have them validly returned to your bank account.

With Monetha, this isn’t possible; once you’ve paid for the item, the funds are gone and you cannot get them back. From a buyer’s perspective, this simply isn’t acceptable.

In today’s world, buyer protection is an absolute must. Without it, Cryptocurrency payments will appear scary and off-putting.

The key to on-boarding the general public is to provide a Cryptocurrency payment system that is very similar to what they are already comfortable with (e.g. similar to Paypal) and buyer protection is fundamentally important for this.

UTRUST will offer customers buyer protection.

Their plan is to use the benefits of Cryptocurrencies (unhackable, cheap and trustless) and merge them with the safety of fiat currency payment systems (buyer protection and a number to call if things go wrong) such as Paypal.

With UTRUST, users will be able to spend their Cryptocurrencies in a safe and reliable manner.

UTRUST will be the ‘first cryptocurrency payment platform to deploy consumer protections’.

We’ve briefly covered what UTRUST is and why buyer protection is essential to encourage mainstream Bitcoin/Cryptocurrency adoption.

Now let’s run through the buying process so you can understand the next biggest selling point in this UTRUST ICO  which relates to how it works.


2. HOW DOES UTRUST WORK?

Utrust How Does It Work? CryptoGurus.comThe process goes like this:

  1. Merchants will list products on their website as normal and integrate the UTRUST system just like Paypal
  2. The buyer selects an item to buy and checks out via UTRUST (choosing this over Paypal if he wishes to use Cryptocurrencies)
  3. The buyer selects on of their existing Cryptocurrency wallets as a source of funds (e.g. their Bitcoin, Ethereum, Litecoin wallet)
  4. The buyer will be shown the total amount to be paid including a a 1% commission and exchanges conversion fee (from Crypto money to fiat money)
  5. The buyer hits the ‘Buy Now’ button and their chosen Cryptocurrency is converted into fiat currency immediately (for an additional fee)
  6. This fiat currency (USD, EUR etc.) is held in escrow hence the buyer protection
  7. Once the holding period is over, the merchant will receive their fiat currency.

Huge Selling Point:

Merchants receive FIAT currency (USD, EUR etc.) NOT Bitcoin/Cryptocurrencies

Until recently, most people thought that shops would have to begin accepting Bitcoin and other Cryptocurrencies for us to spend them.

That’s not the case; once platforms such as UTRUST and TenX are running, we will be able spend Cryptocurrencies while shops can still receive their regular currency. It’s a huge win-win

What If There Is A Dispute?

  • The buyer will open a dispute. The merchant and buyer will enter a resolution chat between the two of them in order to try to settle the dispute
  • If both parties are still not happy after 7 days, the buyer can escalate the claim to a UTRUST mediator
  • The UTRUST mediator will collect evidence from both sides and have the final say on which party is correct
  • If the buyer is correct, a refund will occur with an additional 2% fee charged to the merchant
  • If the merchant is correct, the funds will be released and they will be paid
  • If one party is found to be lying, their trust score will decrease found to be lying, their trust score will decrease 

What Does The Trust Score Mean?

  • The trust score dictates how long funds are held in escrow
  • If a merchant has a very low trust score, the buyers’ funds will be held for a long time for a long time
  • As the merchant uses the platform and is found to be reliable and honest, their trust score will grow over time and funds will be released to them much more quickly with each purchase
  • There is clear incentive for merchants to maintain a high trust score and, therefore, there is an incentive to act in a trustworthy manner within the UTRUST platform


3. WHAT PROBLEMS ARE UTRUST SOLVING?

Utrust or Paypal CryptoGurus.com

We say this time and again yet so many people I speak to seem to forget this incredibly important point:

Businesses are created for one purpose; to solve problems

  • Netflix was created to solve the problem of having to rent individual movies from a store for expensive prices (remember Blockbuster?!)
  • Uber was created to solve the problem of expensive taxis

If a business does not solve a real problem, it is incredibly unlikely that it will succeed.

So what market problems are UTRUST specifically solving?

There are 2 main competitor sectors so we will discuss how they’re solving the problems of both of these sectors:

  1. Regular (Fiat) Currency PaymentsPaypal, Stripe etc.
  2. Cryptocurrency PaymentsBitpay etc.

Paypal Market Problems

  • Seller FeesPaypal charge a minimum of 2.9% but can go as high as 5% after hidden fees are accounted for.
  • Physical GoodsPaypal only apply buyer protection to the purchase of physical goods
  • Exchange fees According to the UTRUST Whitepaper, Paypal and Bitpay ‘provide exorbitant internal exchange rates’ when converting between foreign currencies
  • FraudPaypal is a centralised system that holds your money and is therefore subject to hackings and fraud
  • Fake Chargebacks Paypal merchants suffer from fake chargebacks – when a user asks for their money to be returned with no legitimate reason – because the system is set up heavily in favour of the users and they are believed without producing much evidence

UTRUST’s Solutions

  • Seller FeesUTRUST will charge 1% for seller fees
  • Physical Goods UTRUST will cover all physical good plus the majority of virtual goods and services also
  • Exchange FeesThe UTRUST whitepaper dictates that they will ‘connect to multiple cryptocurrency exchange providers to offer very low exchange rates’
  • Fraud With the UTRUST system, you will hold your own funds (and your private keys) so the risk of fraud is eliminated
  • Fake Chargebacks UTRUST will implement a fairer system where both merchants and buyers will provide evidence equally. A UTRUST mediator will then fairly decide which side is correct.

Our Critique

  • Seller FeesUTRUST regularly quote 1% as their fee. However, this doesn’t include the conversion from Cryptocurrencies to fiat currency. With this included, what will the real fee be?
  • Physical GoodsPaypal doesn’t cover services or virtual goods. There must be a reason for this decision so what is it? Perhaps, it is too difficult to mediate if there is a dispute with services or virtual goods?
  • Exchange FeesUTRUST claim that Paypal and Bitpay ‘provide exorbitant internal exchange rates’ when converting between foreign currencies. Without real numbers provided, it is difficult to know if this point is valid

Bitpay Market Problems

  • No Buyer ProtectionIf the merchant doesn’t deliver the item or it is faulty, buyers have no means of getting their money back
  • Bitpay only accepts BitcoinBitpay doesn’t accept other commonly used Cryptocurrencies
  • Exchange feesBitpay and Paypal ‘provide exorbitant internal exchange rates’ when converting between foreign currencies

UTRUST’S Solutions

  • Buyer Protection Buyers will be able to appeal and potentially be refunded if the merchant has not been truthful or the product is not as expected
  • UTRUST will accept many CryptocurrenciesIn their whitepaper, UTRUST describe how they will accept Bitcoin, Ethereum Litecoin, Dash and Monero to begin with. They also plan to add to this list regularly
  • Exchange FeesThe UTRUST whitepaper dictates that they will ‘connect to multiple cryptocurrency exchange providers to offer very low exchange rates’


4. WILL TOKEN PRICES INCREASE?

This is another incredibly important point that many people overlook when investing in Cryptocurrencies.

When you invest in a company, you are buying shares. As the company makes profits, the shares increase in value. In other words, you are investing in the value of the company rising.

With the majority of Cryptocurrencies, the coins/tokens don’t represent shares. Therefore, the company can increase in value (i.e the CEO and employees get rich) and yet the coin/token may actually fall in value. 

The ONLY factor determining token price is supply and demand on exchanges.

Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following question: 

Will there be token demand on the exchanges?

If the answer is no, token price will fall. If the answer is yes, the token price COULD rise. This idea is the most important element of any investment and yet so misunderstood with Cryptos.

So, let’s look at the demand.

What Are The Sources of Demand?

  1. The Token Buyback Program
  2. Using The UTRUST Token = Zero Conversion Fee

1. The Token Buyback Program

  • Token Supply will begin at 1 billion
  • UTRUST will a ‘percentage of transaction fees’ to buy tokens on the exchanges and burn them
  • This will reduce the overall supply of tokens, driving up price
  • A maximum of 50 million tokens will be burnt every year
  • The goal is to reduce the tokens to a total supply of 100 million

1. Our Critique

  • What percentage of the transaction will it be? 75% of the fee is very different to 10%
  • Burning 50 million tokens is perhaps possible in the beginning but this gets more difficult as supply reduces and it costs more to buy 50 million tokens. Will they be able to manage it?
  • Once the total supply reaches 100 million, the buyback program will stop. What will cause token prices to rise now? Admittedly, this point is moot for many years until they reach this time

2. Using the UTRUST Token = Zero Conversion Fee

  • If you choose to use the UTRUST token, the 1% fee will be waived

2. Our Critique

  • Unless people plan to use UTRUST very regularly, will people really convert their tokens from other Cryptocurrencies and hold them as UTRUST tokens?
  • For me, the answer is no BUT UTRUST seem to think that they buyback program is the most significant means of raising token price so this point isn’t too much of an problem.


SORRY TO INTERRUPT…

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5. THE TEAM

Utrust Team CryptoGurus.com


When looking through an ICO team, the famous phrase ‘Invest in people, not ideas’ come to mind. It’s based off the principle that an idea is only as good as the people who execute it. As an investor, I believe strongly in this principle.

Sadly, however, it is very difficult to analyse the team of any ICO. ICOs have team profiles on their website. The problem is: guess who writes their profiles? They do. Anyone can write a good profile on themselves.

Regardless, the UTRUST team appear to be strong. Their CTO has been the ‘former CTO in a leading digital payment platform company and is the current head of Development of a Swiss-based Cybersecurity company’ and other team members have similarly qualified background.

Finally, I like the size of the team – they have 17 members in their core team with a further 16 advisors. This is a much higher number than you see for many other Cryptocurrencies with similar valuations.


6. THE ROADMAP

Utrust Roadmap CryptoGurus.com

  • Q1 2018 – They will have the first API ready to test
  • Q2 2018 – Development will continue and theback-end interface for mediators will be added
  • Q3 2018 – ‘The initial pilot launch will feature a curated selection of merchants’

Our Critique

  • With the initial pilot launch occurring in Q3 2018, the platform won’t actually be fully functional for another year
  • This is such a long time away – especially in Crypto-world – that is raises the question of whether it is best to invest in the ICO or wait until afterwards once the hype has dropped down and token prices might potentially be cheaper?
  • After all, the only factor driving demand over the next year before the platform launches is speculation
  • You have to ask yourself if you think that speculation will drive prices up after the ICO or whether a new, shiny ICO will come along in the meantime and people will sell their UTRUST tokens to fund their next purchase?

The decision is entirely up to you – we are not attempting to encourage or discourage anyone with their choice.

We simply aim to open the eyes of investors by exploring all possible options in our analysis.

With that in mind, let’s move onto the ICO/token sale details next.


7. ICO/TOKEN SALE DETAILS

  • ICO/Token Sale Link – https://utrust.io/ico
  • Referral/Affiliate Code – N/A
  • Pre-ICO Start Date – 28th August 2017 (Finished)
  • ICO Start Date – 2nd November 2017, 2pm UTC
  • ICO End Date – 9th November 2017, 2pm UTC
  • Token Price – $0.065 (6.5 cents)
  • Bonuses Available – N/A
  • Token Supply – 1 billion
  • Soft Cap – N/A
  • Hard Cap – $49 Million
  • Accepted Currencies – BTC & ETH
  • How To Participate – Click this link and follow the instruction

Very Important Point:

Token price is irrelevant when investing. Hard cap is all that matters for judging whether an ICO is cheap or expensive and market cap is all that matters once the Crypto hits the exchanges.

If you want to learn more about this fundamentally important aspect of investing, make sure to have a read of our brief explainer article


What Happens If The Hard Cap Isn’t Reached?

  • If UTRUST’s hard cap isn’t reached, the unsold tokens will be burnt
  • For example, if only 500 million tokens are sold in the ICO, the remaining tokens will be    destroyed
  • This protects your investment from being diluted


8. EXTRA POINTS TO CONSIDER

  • UTRUST’s Pre-ICO sold out in just 90 minutes, raising $1.5 Million
  • Since then they have ‘boosted their infrastructure’ and are looking to sell out their main token sale as quickly as possible
  • It is impossible to say whether they will hit their hard cap or not. However, it is fair to say that there could be high demand during the ICO
  • Therefore, IF you plan to participate, I would recommend signing up beforehand and being ready with your contribution immediately after the ICO opens


9. CONCLUSION

  • We believe that the project is very strong
  • The price is relatively cheap; with a hard cap of $49 million, this would put the UTRUST platform as the 91st most expensive project on coinmarketcap.com (at time of writing)
  • However, the platform will not be released for general use for another year – in ‘crypto-land’, this is a very long time
  • People may sell their tokens after the ICO in order to fund other purchases. This could make you think that an investment post-ICO might better than during the ICO

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.


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This article has been provided by the CEO; Tom Heavey.

What Is Power Ledger? Full Investor Review

What is Powerledger ICO Review

What is Power Ledger? In this Power Ledger review, we’ll be discussing how the project could represent the first step in a plan to revolutionise the energy industry forever.

With the growing popularity of renewable energy, more and more people are left with excess energy which they wish to resell. Selling it ‘back to the grid’ offers terrible prices due to the monopoly held by energy companies.

Power Ledger will double the price you receive through the introduction of a peer-to-peer network.

 


YOU WILL LEARN:


How Will Powerledger Revolutionise The Energy Industry?

How Are Powerledger Better Than The Alternatives?

Is The Token Price Linked To The Success Of The Platform?

Is Powerledger A Good Investment?

 

 


CONTENTS

  1. What Is Powerledger?
  2. How Does Powerledger Work?
  3. What Problems Are They Solving?
  4. Will Powerledger Token Prices Increase?
  5. The Team
  6. Roadmap
  7. Since The ICO
  8. Extra Points
  9. Conclusion
  10. Follow Future Posts


1. WHAT IS POWERLEDGER?

Power Ledger is an Australian based peer-to-peer energy trading platform which integrates with the existing electricity system.

As a platform, it supports a number of different applications including: Peer-to-Peer (P2P) Trading, Wholesale Market Settlement, Electric Vehicles and Carbon Trading.

These applications are not just conceptual; they are proven and already deployed in certain communities and energy markets around the world.


2. HOW DOES POWERLEDGER WORK?

To explain how Powerledger works, it’s first necessary to understand the two types of tokens related to Powerledger:

  1. POWR Tokens (For sale on exchanges)
  2. Sparkz (Only used within the platform)

POWR Tokens

POWR tokens are ‘access tokens’. In other words, they allow users access to the platform – and thus, without them, you cannot use Powerledger.

Once purchased, users can convert them to Sparkz via a smart holding contract and then they can use their Sparkz on the platform.

Sparkz Tokens

Sparkz are the tokens used within the platform. They cannot be bought externally on exchanges and they can only be gained by converting POWR tokens.

The value of Sparkz depends on the cost of local energy. These tokens can always be sold in return for your local currency.

To gain a greater understanding of how Powerledger works, let’s now look at the process from two perspectives:

  1. Energy Sellers
  2. Energy Buyers

Energy Sellers

An energy seller is someone who produces more electricity than they consume which – common in locations such as Australia due to the vast amounts of sun and high prevalence of solar panels – and thus wish to sell their excess energy

The Process:

  1. Sell your excess power to energy buyers in return for Sparkz on the app/website
  2. Convert your Sparkz to your local fiat currency via app/website e.g. USD, AUD etc.

That’s it. You’ve just sold your energy to other app users and for a much better price than you would have been offered compared to selling it back to the grid.

Energy Buyers

The Process:

  1. Buy POWR tokens from exchanges in order to access the platform
  2. Convert your POWR tokens to Sparkz
  3. Use your Sparkz to buy excess energy off people for great prices
  4. Use the energy you bought and you can even re-sell the excess that you don’t use


3. WHAT PROBLEMS ARE POWERLEDGER SOLVING?

Peer-to-Peer (P2P) Trading:

The issue with the current system arises due to the stranglehold that the energy corporations have over the market.

Due to the oligopolistic nature (several key players with no outside competition) of the industry, these companies can offer consumers virtually whatever price they want because consumers have little alternative in choice.

We’ll give a higher level of detail below to explain further how the current system works in Australia and how Power Ledger are significantly improving upon it.

The Current System

Excess energy can currently be sold back to the grid, through the local utility company, for 7c/kwh. The utility company then sells this on at a much higher price.

Power Ledger’s System

Power Ledger will be doubling this payout from 7c/kwH to 15 c/kwH for energy sellers, producing a clear incentive for them to make the switch to selling via Power Ledger instead of the regular system of selling back to the grid.

How Can Power Ledger Offer Such Good Prices?

Power Ledger will be hosted on the Ethereum network which means they can make use of smart contracts to cut out the middleman and reduce costs to a fraction when compared with the energy companies.

On top of this, Power Ledger are not even offering ridiculously good prices based on a fair market valuation – the current system is underpaying consumers and Power Ledger are bringing in a more fair price in terms of general open market standards.

5c/kwH will go towards paying for the usage and maintenance of the power lines plus a small cut from this will be paid to the Power Ledger team.


4. WILL THE TOKEN PRICE INCREASE IN VALUE?

This is another incredibly important point that many people overlook when investing in Cryptocurrencies.

When you invest in a company, you are buying shares. As the company makes profits, the shares increase in value. In other words, you are investing in the value of the company rising.

With the majority of Cryptocurrencies, the coins/tokens don’t represent shares. Therefore, the company can increase in value (i.e the CEO and employees get rich) and yet the coin/token may actually fall in value.

The ONLY factor determining token price is supply and demand on exchanges.

Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following question:

Will there be token demand on the exchanges?

If the answer is no, token price will fall. If the answer is yes, the token price COULD rise. This idea is the most important element of any investment and yet so misunderstood with Cryptos.

I’ve written a short article explaining how important it is to understand this. You can check it out here.

So, let’s look at the demand.

What Are The Sources of Demand?

In order for consumers to buy power from the Power Ledger platform, they will first have to go to exchanges and buy POWR tokens. Otherwise, they cannot use the platform.

Therefore, as more people wish to use Power Ledger, there should be a greater demand on exchanges for the tokens, thus driving prices higher.

As a result, Power Ledger have very effectively linked their token price to the usage of the platform.

 

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5. THE POWERLEDGER TEAM

As our regular readers will know, one of our mantras here at Crypto Gurus is to “invest in people, not ideas”; you could have the greatest idea in the world but without proper execution, it will not matter.

An Impressive Team

With three names jumping out as being particularly strong after a little digging: Dr. Jemma Green, John Bulich and Dr. Gov Van Ek. Dr Green spent over ten years working in investment banking in London, while at the same time completing a Masters degree and two postgraduate diplomas at Cambridge University.

She is also a research fellow at Curtin University Sustainability Policy (CUSP). The other two are the founders of Ledger Assets, a venture that has successfully created and commercialized a number of blockchain systems and applications including Uproov.com.

The team seem to have a good mixture of experiences and knowledge bases, all of which seem suited to what they are trying to achieve.

A Strong Advising Team

As well as this, lead Board Advisor Bill Tai has been a highly successful venture capitalist for a long time, Richard Branson hosted the team at the 2017.

Necker Island Blockchain Summit and Elon Musk has even reached out to Dr Green for more information on the project.

We feel this the correct time to mention how impressed we are by the sheer abundance of information provided by Power Ledger.

Not only do they provide the obligatory Whitepaper, there is also a detailed slide presentation helping to outline the way the system works (which was presented at the Necker Island Summit) and an extensive token paper among other things.

To us, this shows a team that have not only done their homework but are also determined to successfully bring this project to market.   


6. THE POWERLEDGER ROADMAP

Q4 2017:

  • Application Development: The first applications to be in beta testing after the token sale will be the Microgrid/Embedded Network Operator/Strata and the Electric Vehicle Trading Applications.
  • Green Energy Loyalty Rewards Program: The green energy incentive formula weighted towards renewable producers will begin and accelerate renewable energy generation.

Q1 2018:

  • Begin Distribution of Growth Pool: Early Application Hosts will be gifted POWR tokens to incentivize their use of and contribution to the platform.
  • Technology Layers Transition: Power Ledger will complete the transition to a modified fee-less Consortium Ethereum network.

Q3 2018:

  • First Asset Germination Event: Power Ledger and Platform Application Hosts will begin conducting Asset Germination Events, where POWR token holders will receive priority to become co-owners and beneficiaries of renewable assets. 
  • Marketing and Partnerships: As new applications are developed potential Application Hosts will be targeted and/or Power Ledger may directly deploy the application.

Q4 2018:

  • Beta Test of New Applications: Begin beta test of Autonomous Asset Management and Neo-Retailer and Carbon Trading Applications.

Q2 2019:

  • Frequent Asset Germination Events: Asset Germination Events will be frequently conducted by Power Ledger and its Application Hosts, driving the intrinsic value of the token.
  • Transition to Public Blockchain: Power Ledger aims to be operating fully on a public PoS blockchain.

Q3 2019:

  • PowerPort and Future Applications: Begin beta testing of the PowerPort Application, as well as Wholesale Market Settlement, Distributed Market Management, and other future applications that cannot even be imagined yet!


7. SINCE THE ICO

With an ICO price of $0.088 per token, the Power Ledger token has trebled in value since trebled in value.

There was significant hype around the project during the ICO which has continued ever since and this provides positive indications for the short-term prospects of Power Ledger also.

 

8. EXTRA POINTS TO CONSIDER

Growing Marketplace (Positive)

With the amount of research and funding into renewable energy resources growing rapidly, we are sure to see technological advancements increase the efficiency of the renewable sector.

This should lead to an increased quantity of energy production from regular people and thus an expanding marketplace for Power Ledger to grow into

Consistent Energy Supply (Negative)

A side note we’d like to include is one that is relatively obvious when talking about Solar Power, but needs mentioning – the varying levels of energy production that could be achieved across the globe.

A household in Australia would produce a much greater quantity of surplus energy, than houses in cooler climates which could hamper development in certain locations.


9. THE CRYPTOGURUS CONCLUSION

Short Term

Currently, market prices are driven by speculation rather than usage – look at IOTA, for example, it’s used by virtually nobody and yet is valued at over $1 billion. This is entirely based on the potential it holds for the future – not its current usage.

With Power Ledger, it’s fair to say that the potential is huge. Because of this, we expect to see prices rising in the short term based on speculation alone.

Long Term

In the long term, the team, technology and practical use cases are all there; this cannot be said for most ICO’s.

The number of successful trials as well as the committed partnerships only supports this stance and the fact that both Richard Branson and Elon Musk seem to see something in the project would be more than enough for most casual investors.

It certainly seems to favour long-term, organic growth; the nature of token as discussed means that as Power Ledger are able to draw more hosts on board, the value should only increase.

However, it’s very important not to overlook the many risks involved with this project – it would be naive to expect the energy companies not to attempt to disrupt Power Ledger in some way.

With their deep pockets, we wouldn’t be surprised for a smear campaign to be produced about Power Ledger in order to protect their own businesses.

Furthermore, the difficulty of achieving their goal is immense. Is it realistic? It’s a huge ask for certain.


As investors, we are always looking at the risk vs reward when considering any investment. In the case of Power Ledger, we believe that the reward does justify the risk so we would consider adding this to our portfolio.

However, due to the large risks involved, we would only consider a relatively small allocation towards this project (5% or less) for our own portfolios. This is, in no way, a recommendation for anyone else!

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

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Disclaimer: None of the above is financial advice. Always do your own research.


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11 Reasons To Avoid BitConnect

Bitconnect Scam - 11 Red Flags

While cryptocurrencies like Bitcoin attempt to break new boundaries, BitConnect’s goal is to become the biggest Ponzi scheme in history.

Are the rumours true or is there really a trading bot behind the scenes? Let’s discuss.

 

YOU WILL LEARN:


How BitConnect Are Claiming They Can Pay Investors So Much

Our 11 Red Flags

What Is The CryptoGurus Opinion On BitConnect?

 



CONTENTS

  1. What Is BitConnect?
  2. How Does BitConnect Work?
  3. Are They Solving Market Problems?
  4. The BitConnect Team
  5. Our 11 BitConnect Red Flags
  6. When Will BitConnect End?
  7. Mt Gox Potential?
  8. Conclusion
  9. Follow Future Posts 


1. WHAT IS BITCONNECT?

In their words:

BitConnect Coin is “an open source, peer-to-peer, community driven decentralized cryptocurrency that allows people to store and invest their wealth in a non-government controlled currency, and even earn a substantial interest on investment”. 

In our words:

It is an investment programme that promises entirely unrealistic returns, with very little evidence to support their claims.

2. HOW DOES BITCONNECT WORK?

The process works like so:

    • You deposit Bitcoin on a given Bitcoin address in order to purchase BitConnect Coins from the BCC Exchange.
    • You then lend your BCC back to BitConnect whose trading bot’ will make use of their ‘Volatility Software’ in order to accrue daily interest on your investment
    • The level of interest you receive depends on the level of your investment but your money remains locked in the system for between 120 and 299 days – dependent on the level of your investment
    • You are paid daily interest and receive your initial investment, plus all of the intreest accrued, once the lockdown period has expired.
    • You are then able to withdraw your funds in USD, or reinvest back into the system.


3. ARE BITCONNECT SOLVING REAL PROBLEMS?

With all of our reviews, we include a section about the market problems that the Cryptocurrency is solving. We do this because we believe that the underlying technology of Cryptocurrencies is truly staggering.

The potential to improve on the current systems that we’ve created through the innovative use of the blockchain is truly remarkable.

Contrasting this, is BitConnect who solve zero market problems.

In fact, as they’re most likely a scam, they’re adding to many of illegitimacy connotations surrounding Bitcoin and all Cryptocurrencies in general. Good job BitConnect.


4. THE BITCONNECT TEAM

There is not a single piece of information regarding the team on the BitConnect website. There is no mention of when the company was founded, who owns it or where it is physically based out of. The owners also pay an annual fee to keep their details hidden from public record.


5. OUR 11 BITCONNECT RED FLAGS

1. Their Website

When you first open their website you are certainly not met with an abundance of information, in fact you have to dig pretty deep to even find out what BitConnect claim to do.

In between the grammatical errors you can find an entirely unhelpful animated video featuring buzz phrases such as “financial freedom” and “Income stability in an unstable world”.

2. No Whitepaper

BitConnect have no whitepaper; the go to document for most ICO investors. It is incredibly rare and concerning for a project to not produce one.

3. No Long-Term Aims or Ambitions

The BitConnect roadmap only goes as far as November 2017; beyond this date, there seems to be no further aims or objectives for the company. Looking at past stops on their roadmap, the primary focus seems to be on marketing and driving new money into the project, as opposed to any kind of project development.

This potentially highlights the real motivation for those involved.

4. ‘GUARANTEED PROFITS!!!’

This phrase alone makes me shiver a little; we all know that you can never guarantee profits, especially in an industry as volatile as Cryptocurrencies. Yes, the overall market has been on the rise for a while but no-one can say for sure what is around the corner. It’s simply not realistically possible to GUARANTEE profit for all of their users.

A great article from Crypto Investor calculated the exact figures behind their claims. He found that if all of BitConnect’s claims were true, a $10k investment accruing compound weekly interest would return $337,253 in year.

Extrapolating this further, the same $10k investment would be worth just under $15 trillion after six years. Usually, we would explain how unrealistic this is but, in this case, we’re talking about a $10,000 investment returning the GDP of a small country in six years; come on now.

5. No Transaction History

While we’re not asking BitConnect to give me their secret algorithm, if there is one, it would be nice for investors to at least have access to a transaction history. Currently, there is no proof as to how this bot makes its money, or where any money is being held.

This just raises more questions and a reluctance to answer will only continue to raise further suspicions.

6. The 5m Disappearing Coins And $1 billion Market Cap

On November 3rd 2017, BitConnects market cap dropped by nearly $1.5 billion in less than two hours due to a recalculation of the coins circulating supply; dropping from 7.1 million to 2.1 million coins.

We have no idea what happened to those 5m tokens that were taken out of supply – it’s just another ridiculous page in BitConnect’s fairytale that will end in a swift collapse.

7. They Want Bitcoin, Not BitConnect Coin

You also have to ask yourself why the company are asking to receive Bitcoin as opposed to their own coin? Is this because they know that once the plug is pulled, the BitConnect Coin is going to be worthless?

Once the site is shutdown the owners will still hold Bitcoin, which will still have a significant market value, while the users will be left empty handed. 

8. The BitConnect Exchange

The BitConnect exchange currently deals with nearly 95% of all transactions involving BCC. Since they possess the only exchange BCC can be readily traded on, the chances for market manipulation are extremely high.

With the core premise of BitConnect being a scam in the first place, it’s fair to say that we would expect market manipulation is occurring also.

9. Misuse Of The Referral System

It has seen a recent overhaul but the initial referral system offered by BitConnect just did not seem sustainable; it was an eleven tiered pyramid with users able to collect 0.01% interest for an infinite number of referrals past this.

This has led to a number of YouTube promoters collecting upwards of thirty thousand referees and allowing them to claim they have made ridiculous amounts of money through the system.

BitConnect have recently announced that a change in the system. Ironically, they’ve illustrated this change through the use of a pyramid diagram!

10. Dash and Vitalik Buterin

For a long time, people have been wanting to hear the opinions of some of the Cryptocurrency elite and, while many have kept quiet, Vitalik Buterin (Co-Founder of Ethereum) was recently asked his opinion about the project on Twitter.

His response was rather short but it certainly speaks volumes; “If 1%/day is what they offer, that’s a Ponzi”.

Another opinion came from the offical Twitter account of Dash, who many believe have one of the smartest and brightest teams around and it simply said “CoinMarketCap, take BCC down! You are supporting a Ponzi scheme! #scam”.

A respected company like Dash wouldn’t lodge accusations lightly; they have to be 99.99% sure that their statement is true otherwise they are risking an awful lot. Let’s be honest, we’re all 99.99% sure.

11. Companies House

November 7th 2017 could soon be considered an important day in cryptocurrency; BitConnect Ltd. were issued with a notice from Companies House that read as follows.

“Companies Act 2006 (Section 1000(3)): The Registrar of Companies gives notice that, unless cause is shown to the contrary, at the expiration of 2 months from the above date (November 7th 2017) the name of Bitconnect Ltd. will be struck off the register and the company will be dissolved. Upon dissolution all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia, and accordingly will belong to the crown.”

While we are not able to say with complete certainty that the BitConnect involved is our BitConnect, mainly down to the fact that their owners pay an annual fee to keep all of their details hidden. The market certainly seemed to think this was true as their coin price dropped by more than 25% in the days following this issue.


SORRY TO INTERRUPT…

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6. WHEN WILL BITCONNECT END?

Speaking to other Crypto-enthusiasts, it’s pretty clear that the majority of people know that BitConnect is a Ponzi scheme and yet people still continue to invest. Why is this?

The issue is that the price of BitConnect coins simply keeps on increasing. The reason behind this is because, other than relatively irregular complaints, BitConnect continue to pay out the promised rates.

How Are BitConnect Paying People?

The answer is not a trading bot. No trading bot in the world can turn $10,000 into $15 trillion in any time frame.

Realistically, there are probably 2 ways:

  1. Using new investors’ money to pay the old investors i.e Ponzi scheme 101
  2. The BitConnect team are most likely investing their earnings into Bitcoin. As the price of Bitcoin increases, they are able to sell off small amounts to pay investors anything extra that they need to.

When Will BitConnect Stop?

Many people are saying that these two elements above are key and, as long as money continues entering BitConnect and the value of Bitcoin keeps rising, BitConnect could continue for a long time.

We don’t agree; the letter – as quoted above – issued to BitConnect by the UK government brings in the question of regulations.

In regular financial markets, Ponzi schemes usually collapse as soon as their true nature becomes evident. In the case of BitConnect, this hasn’t occurred which is why we believe that governments will step in as regulations are gradually brought into the market from around the work.

With the threat of strong legal action, it’s likely that the BitConnect team may take their money and run – they’ve already made many millions, why would they continue with the threat of jail time looming over their heads?

7. MT GOX POTENTIAL?

What Happens When BitConnect Collapses?

For some cryptocurrency followers, this situation trigger thoughts of the MT Gox Exchange collapse in 2014. For those who don’t know, the MT Gox exchange handled 80% of all Bitcoin transaction at the time and it suddenly shutdown and filed for bankruptcy.

It is not officially known whether this was an act of fraud or embezzlement, or whether the system was in fact hacked as their CEO claimed. The end result was the equivalent of nearly $100 million disappearing overnight and faith in cryptocurrency being shaken with the market taking a big hit.

The worry here is, if many people’s beliefs surrounding BitConnect turn out to be true, the sudden disappearance of a top 20 cryptocurrency (based on current market cap) could begin a series of negative discussion and could once again see the market plummet. 

This of course depends on how developed the market is at the time – if BitConnect were to collapse before Cryptocurrencies gained mainstream adoption, it could be devastating on the market.

If it were to occur at a time when the market is more educated about the underlying blockchain technology, it seems less likely to cast negative connotations on the whole market – you wouldn’t think that the internet is bad because of an internet scam but you may have thought that before you knew much about the internet.

8. CONCLUSION

Stay as far away as you can from BitConnect.

While there is no denying that people are making money from this system, there is very little information that supports any form of legitimacy and their entire system relies on the continual input of new money.

If this revenue stream dries up then there is no future to the system. Equally, if the price of Bitcoin was to take a hit, BitConnect’s would equally struggle to pay investors.

For us, the introduction of regulations could be the end for BitConnect and the market may some day looking back at the day BitConnect received the letter from Companies House as the moment it all began to collapse.

We’re going to end with the famous quote “If it seems too good to be true, it probably is”.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.


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Substratum Project – Post ICO Review For Investors

What is Substratum ICO Review

Substratum is an ambitious Cryptocurrency attempting to lay the foundation for the decentralised internet.

If successful, they could overcome many of the current issues that the internet suffers – censorship and many others – and provide an incredible opportunity for investors looking for the next big Cryptocurrency.

 


YOU WILL LEARN:


Substratum – What Is The Project About?

Are They Solving Real Market Problems?

Will The Token Price Increase?

Is Substratum A Good Investment?

 

 


CONTENTS

  1. What Is Substratum?
  2. How Does Substratum Work?
  3. What Problems Are Substratum Solving?
  4. Will Substratum Tokens Increase In Price?
  5. The Team
  6. The Roadmap
  7. Since The ICO
  8. Our Conclusion
  9. Follow Future Posts


1. WHAT IS SUBSTRATUM?

In their words:

Substratum are “an open-source network that allows anyone to rent their computer as a hosting server”. The Substratum Network is a worldwide collection of nodes that uses industry-leading cryptography to deliver secure content anywhere, all without the need for VPNs or Tor.

In Our Words:

Substratum are attempting to create the foundation of the decentralised internet through the introduction of decentralised servers.

2. HOW DOES SUBSTRATUM WORK?

The Current System

Before we talk about Substratum, it is important to comment on how web hosting works on the current centralized web (this a very oversimplified overview);

  • Websites are essentially a group of files that need to be stored on a computer connected to the internet
  • These computers are known as “servers” as they serve up a websites files when a person visits a particular domain name e.g. CryptoGurus.com
  • Currently, companies such as GoDaddy and Blue Host operate within those role as web hosts
  • Customers pay these companies to put their files on the GoDaddy (or other company) web server and this is known as buying hosting

For a slightly more advanced yet still concise description, check out the video below:

This is a video from Bluehost above. We have zero affiliation to them – their video has only been included as this is one of the best, simple explainer videos.

Substratum’s System

Look around you right now and you’ll probably see of a few of your devices (mobile phone, computer, tablet etc.). These devices are most likely only using a small overall percentage of their processing power.

Substratum works by storing website securely files on your phone. Then, your phone will transmit these files to the network, using a small amount of processing power from your phone. Your phone effectively becomes one of the servers on the network.

The idea is that regular servers are producing lots of processing power in order to connect to the internet and host websites. Why not use the extra processing power from everyday devices instead of a single central server?

As many devices around the world are all contributing to the network, Substratum are providing a decentralised system which has many benefits but we’ll get into that in a bit.

First, we’ll talk about why anyone would choose to let Substratum use their devices’ operation power.

Why Let Substratum Use Your Device?

When you opt in to your device becoming a node within the network, you are paid a micro-transaction in SUB (Substratum’s currency) for each and every time that your device carries out an action to help run one of the hosted websites to run efficiently.

Users can then cash out their SUB for fiat currency (USD, GBP etc.) on exchanges.

In other words, there is a financial incentive to help contribute to the network and users won’t have to do anything other than switch their device on.

Won’t This Slow My Device Down?

When discussing the Substratum project with people, their immediate reaction is usually concern as they believe that it will cause their phone/computer etc. to overheat or use too much processing power and slow the device down.

This is where Substratum becomes very clever – your device contributes a varying amount of processing power based on its current usage.

Therefore, during the day while your using your phone, it will contribute a minimal amount or, perhaps even nothing. During the night, however, while your device is using virtually no processing power for itself, it is able to provide a greater contribution to the network.

As a result, your devices will earn you more money while you sleep.

Here at CryptoGurus, we’re very keen on sources of passive income so this is a huge selling point for us.

We’ve talked about why people would want to become a host on the network. In the section titled ‘What Problems Are Substratum Solving?’, we’ll discuss why websites would benefit from choosing Substratum as their host but, first, let’s run through the process that a website goes through to use Substratum.

How Do Websites Get Hosted?

The process is very simple – website owners will sign their website up to the hosting service via the Substratum website/app in the future in order to begin the hosting service.

They will then pay via the CryptoPay system which is a simple API – similar to Paypal – that allows easy checkout and purchases for website owners.

They will have the option to pay in a variety of Cryptocurrencies which will then be automatically converted to SUB and distributed to the network contributors.

3. WHAT PROBLEMS ARE SUBSTRATUM SOLVING?

Substratum vs The Current System

In the following section, we will be outlining a few of the problems currently surrounding the centralized web and detailing Substratum’s solutions to them. After that, we will highlight one of Substratum’s biggest advantages it holds over its main rival – Maidsafe.

Problem # 1 – Digital Censorship

In many countries internet censorship and restriction is rife; government intervention means users are unable to access certain websites. This is a problem all over the world with countries such as Russia and China leading the way. The current way around this for users to use complex and potentially expensive software such as Tor and VPNs.

Both Russia and China have also recently based laws, banning the use of VPNs for the general public, further exacerbating the problem. The beauty of the decentralized web is that censorship cannot exist; governments are unable to get involved due to the lack of a central access point.

Problem # 2 – Ease of Use

As mentioned above, the current solution for the censorship problems is to use software such as Tor or VPNs, these can be notoriously complicated for the average internet user. Substratum have placed a focus on good user experience and created a product that requires no special software; it can all be completed from any browser.

Problem # 3 – Privacy, Security and Encryption

With a single centralised server – i.e. the current system – there is a single point of failure. This means that a hacker only has to gain access to this location or a fault to occur for a catastrophic outcome for all websites hosted on that server.

The beauty of decentralisation is that there are millions of locations all contributing to the network. Therefore, a hacker would either have to hack all of these locations simultaneously – not possible – or hack the underlying technology called the ‘blockchain‘ which is also virtually impossible as it would require a quantum computer and no examples of these currently exist.

Problem # 4 – High Hosting Costs

Hosting fees are currently very high for businesses wishing to get their websites on the internet; centralized web hosts charge a company whether their content is doing anything or not.  When you host with Amazon Web Hosting services, for example, you are charged a flat monthly fee regardless of whether your website receives visitors or not. On top of this, you’re also charged a variable fee as visitor numbers increase.

With Substratum, however, you are only charged for each request that is processed. In layman’s terms, you might pay a variable fee but you pay zero flat fee plus the variable fee will be minimal in comparison with traditional web servers.

Problem # 5 – Net Neutrality

This is a large topic at the minute; censoring and content regulation means that people have no control over what they do or do not want on the internet, it is really just a matter of corporate money changing hands. The founder of the worldwide web himself, Tim Berners-Lee, is a big advocate of net neutrality.

Substratum say that “With the Substratum Network, ALL websites and applications will have EQUAL ability to be broadcast in an equal and fair manner”. Also, any member of the network will have the ability to vote content up or down.

This allows people to identify bad players like child pornography or terrorism and get them removed from the network.

Implementing a community-based system for highlighting good content and removing negative content is an idea that we strongly advocate due to much evidence proving the efficacy of this model as Reddit has proven.

Substratum vs Competitors

Now if you know a little about cryptocurrency, you may be thinking

“But Aaron, haven’t other projects already tried to achieve this?”

The answer is yes. The most direct comparison would be Maidsafe, who are also aiming to decentralize the web.

Maidsafe however have seen a few barriers to success; they require users to host their websites through a subdomain. In simple terms this means that rather than listing your website as ‘cryptogurus.com’ for example, Maidsafe would require the domain name to in fact be ‘cryptogurus.maidsafe.com’.

Now this is not an appealing idea for us, so you can only imagine how unappealing it would be to large operators such as Amazon or eBay.

4. WILL THE TOKEN PRICE INCREASE IN VALUE?

This is another incredibly important point that many people overlook when investing in Cryptocurrencies.

When you invest in a company, you are buying shares. As the company makes profits, the shares increase in value. In other words, you are investing in the value of the company rising.

With the majority of Cryptocurrencies, the coins/tokens don’t represent shares. Therefore, the company increase in value – i.e. the CEO and employees make lots of money – while the coin/token price may actually decrease in value.

The ONLY factor determining token price is supply and demand on exchanges.

Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following question: 

Will there be token demand on the exchanges?

If the answer is no, token price will fall. If the answer is yes, the token price COULD rise. This idea is the most important element of any investment and yet so misunderstood with Cryptos.

So, let’s look at the demand.

What Are The Sources of Demand?

For anyone to host their website on the Substratum network, they must either buy SUB from the exchanges or they can pay using other Cryptocurrencies. If they are buying SUB on the exchanges, this will increase demand on the exchanges and cause prices to rise – this is great for investors like you or us.

What If They Pay With Other Cryptos?

If website owners pay with other Cryptos than SUB, then surely there will be no demand for SUB, right? Wrong.

The Substratum app/website, will automatically convert whichever Crypto it is into SUB in order to pay the people offering their device operating power to the network. In order for them to be able to do so, the Substratum company must regularly buy back SUB from the exchanges.

This will create buying pressure on exchanges and drive prices up.

In this sense, the usage of the platform is linked very well to the usage of the platform – as the platform grows in popularity, so too should the valuation of their tokens.

Another point to add to this is the comparison with Maidsafe in relation to price. While it is only fair to point out that Maidsafe are a team who have been working on their project for much longer, they have a valuation of 6.5x that of Substratum (at time of writing). This could be seen an indication that Substratum has room for growth in relation to prices.


SORRY TO INTERRUPT…

If you’re enjoying the article, don’t forget to bookmark the page for regular ICO reviews and market updates.

Already done that? Come and say hi to us personally in our Facebook Group! We never spam – we only keep followers up-to-date with the best content and answer as many questions as possible.

Anyway, let’s get back to the content!


5. THE TEAM

One of our mantras here at Crypto Gurus is to “invest in people, not ideas”; you could have the greatest idea in the world but without proper execution, it simply won’t succeed.

The Substratum team consists of 22 developers, designers, architects and project managers, most of whom have been working together for the last 13 years. During this time, they have developed and deployed software solutions for a number Fortune 500 companies including: Apple, Disney and Facebook.

We believe that this is a huge challenge for them to attempt in building such a network and it brings with it many inherent risks but, they are a capable team, and this is a positive indication that they could be the right team for the task. 


6. THE ROADMAP

Substratum Roadmap Post ICO Review

You can see the roadmap image as shown above.

The most important update to inform you of the initial alpha release which is planned for Q4 2017 or early Q1 2018.

Buy The Rumour, Sell The News

As the famous dictates, it’s likely to see prices rise in the build up to this day and a drop in prices shortly after. This could represent a good buying opportunity that we are considering.


7. SINCE THE ICO

Substratum’s ICO closed on August 14th 2017 with tokens being sold at a value of 3000 SUB per ETH. This would put token price at around $0.09-$0.10 depending on the timing that individuals contributed.

Currently (16.11.17), Substratum tokens are valued at $0.152, resulting in a 50+% gain for ICO contributors.

This price increase has been driven be speculation as progress is currently very limited in terms of producing an actual product as we discussed before in the roadmap.

The Token and ICO Fund

At the close of their ICO sale, Substratum had raised a total of $13.8 million, this including a $5 million investment from US based payment and processing company Render Payment Systems (Who were in turn given 50 million SUB).

How Will They Spend Funds?

  • 60% – Product Development
  • 30% – Product Awareness
  • 10% – Network Infrastructure

An appealing element here is the 30% allocated to product awareness; it is important to remember that cryptocurrency is still in a very early adopter market and Substratum recognise this.

The growth of the token will only come through participation and this is not possible if people do not know about the project.


8. Conclusion

A decentralized web is viewed as the future by almost everyone and with China and Russia both recently passing laws banning the use of VPNs by the general public, the need for a solution grows even greater.

Short Term

By ‘short term’, we’re referring to a 3-6 month period – for any time frame less than that, you should consult a trader to study the graphs; an addition we will be making to our team very shortly.

Within this 3-6 month period, we expect prices to rise further due to the overall trends of Cryptocurrencies gaining traction within mainstream media and the introduction of financial institutions to the Cryptocurrency market which we expect will cause a flood of extra investments.

Long Term

While the team is highly qualified and the idea is incredible, the project is highly ambitious and could struggle to gain mainstream adoption. However, if they are able to do so, the payoff based on current token valuations could be huge.

For any investor, it’s always a question of Risk Vs Reward. In the case of Substratum, the risk and reward are both high but we believe that the reward outweighs the risk and, therefore, we would consider adding SUB to our portfolios.

Due to the risky nature, only a small allocation of our portfolio would be dedicated to this project. Please note that this is our personal plan but we are not making any recommendations for others.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

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Disclaimer: None of the above is financial advice. Always do your own research.

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This article has been provided by our business analyst; Aaron Laver.

Bitcoin Fork Cancelled: Why Is This Good?

BTC Segwit2x Fork Failed

Bitcoin has cancelled the planned hard fork – Segwit2x. This represents a momentous occasion as it symbolises the first time in history that we are aware of where the community is more important than the wealthy 1%.

In today’s article, we’ll be covering why the fork has failed and why it was considered to be bad by the community in the first place.

 

YOU WILL LEARN:


The Original Goal Of Bitcoin’s Fork – Segwit2x

Why The Fork Failed

Why The Fork Was ‘Bad’

 

 

CONTENTS

  1. What Was The Fork All About?
  2. Why Was The Fork Cancelled?
  3. Why Did The Community Hate The Fork?
  4. Follow Future Posts


1. WHAT WAS THE FORK ALL ABOUT?

The original aim of the Bitcoin Fork was to “increase the blocksize and improve Bitcoin scalability”.

(Side note: For the majority of this article, I am discussing the 2x part of Segwit2x as this is the contentious part – I believe the majority of the community are happy with the Segwit element which began implementation months ago.)

The Pro Segwit2x argument goes like this:

  • Years ago, Bitcoin was very cheap and fast
  • As more people have begun using Bitcoin, the network has become overworked
  • This has caused Bitcoin to become slow and expensive as a means of transferring money
  • Currently, it can handle around 6 transactions per second
  • If we double the block size, the network speed would double, fees would drop and the network would improve.

The Counterargument is:

  • Doubling the block size may increase transaction speed but the the increase is only from roughly 6 to 12 transactions per second
  • To put this into context, Visa is able to handle 24,000+
  • Therefore, is the increase from 6 to 12 really going to help much?
  • No. And if it doesn’t help much, why take the risk and make an untested change that could damage the network?
  • This point is especially valid when you consider that there will be future solutions such as the lightning network which can increase the transactions by a multitude of thousands.
  • Surely, it makes more sense to continue developing the network without a huge risk until a serious solution such as this is possible to use?

There is also another key point to talk about which is how the decision was made in a boardroom by a group of CEOs – not the community – but we’ll get into that in the next section to explain why Segwit2x failed.

2. WHY WAS THE FORK CANCELLED?

The hard fork was called off because the majority of people in the Bitcoin community were strongly against it and the intention was never to divide the community. 

In other words, the reason behind cancelling Segwit2x is because most people were against it and, as a result, it was beginning to cause a split in the Bitcoin community which is bad for Bitcoin.

That’s the official reason at least.

For us, it’s more likely that the team behind the fork realised that they had already lost before the fork had even begun so there was no point continuing with their plans. This was evident because of the following reason:

  • Bitfinex were offering people the opportunity to buy Bitcoin and B2X futures. This is essentially a bet on what the price would be after the fork and is usually a good representation.
  • Bitcoin futures had a price of around $6,300 while B2X futures were priced as low as $1,300 just before the fork was cancelled.
  • With such a huge difference in prices, it’s a pretty obvious choice which coin miners would choose to mine – Bitcoin.
  • Even though 75% of miners were signalling that they would back B2X, several had dropped out and it’s highly likely more would have, especially as signalling doesn’t really mean anything binding.
  • Without many miners to mine B2X, the coin would have simply died or, at least, failed miserably

So why don’t we believe that they cancelled the fork for the good of the community instead of for their own financial gain?

Why Are We So Cynical?

You might call us cynical by saying that we believe profits are the real reason that the hard fork was cancelled. However, ask yourself this:

The  #NO2X has been so common over the past couple of month as a symbol of the community fighting back against the fork. It has been clear for a long time that this fork would split the Bitcoin community so why is it only now that the fork has been called off?

Anyway, let’s move on to why there was such strong opposition to the fork from within the Bitcoin community.


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3. WHY DID THE COMMUNITY HATE THE FORK?

Bitcoin is a decentralised currency. The emphasis is on decentralised here because this is the most important premise behind Bitcoin – the idea that nobody controls it and we, as a community, all decide on how it should run.

This is what separates Bitcoin from any currency that has ever existed before; they are all controlled by central authorities.

Did The Community Vote For The Fork?

Based off this, you might think that the community voted for the hard fork, right? After all, if we have an equal say and Bitcoin is decentralised then surely we must have?

No. The decision to carry out a hard fork – Segwit2x – was made by a group of CEOs in a boardroom meeting; the CEOs of the top mining pools and other major Bitcoin related companies.

In other words, a group of around 40-50 people made a decision about what should happen to the Bitcoin network without consulting anybody else.

To quote Richard Heart: “What could be more cancerous to a censorship proof cryptocurrency than a backroom signed agreement”. You can check out that quote – with a lot more swear words in the video below (it will jump straight to that quote if you hit play).

And this point is why the Bitcoin community has been so strongly advocating that the fork is ,not only bad for Bitcoin in general, but also lays the foundation for a dangerous principle – that Bitcoin can be controlled by CEOs instead of the community.

We Won

The community won the second that the fork cancelled.

Rather than the fork setting this dangerous precedent of how CEOs can control the network, the community has proven this isn’t the case and the users will decide how Bitcoin evolves over time.

If it hasn’t already sunk in, this is a huge moment for Bitcoin and the fundamental premise of decentralisation whereby the community holds the power, not the CEOs.

This a moment of celebration but also wariness as another principle has been set during this event – how easy it is to manipulate a market through a hard fork. If you don’t agree, answer one question for us:

Do you think that the CEOs bought altcoins before they announced the fork?

The majority of these altcoins shot up 20-30% in the few hours after the announcement and we would be willing to put money on the fact that the CEOs who cancelled the fork made huge amounts of money by tactically buying alts just before the made the announcement.

In the regular financial market, this would be considered insider trading but, in Crypto-land, this type of occurrence is commonplace and often looked past.

How Is This Dangerous?

This is dangerous because it has triggered it has most likely triggered the following thought for scammers out there in the community – of which there are many – ‘why don’t we create a hard fork and then cancel it? If we buy the altcoins before we make the announcement, we will make more money than any scam ICO has ever made.

If you’d like to learn more about the dangers of this, along with how we can prevent this as a community by educating people that forked coins are not free coins, check out our article and video here.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

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Disclaimer: None of the above is financial advice. Always do your own research.


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Bitcoin Cash Hard Fork – How Will This Affect Your Investment?

BCH Hard Fork

On November 13th Bitcoin Cash is forking to fix its biggest problem – a problem which has led to ridiculously high fees and pointless transactions.

If the fork is able to fundamentally upgrade some of Bitcoin Cash’s issues, it could be the start of a bull run for ‘Bitcoin’s biggest rival’. Today, we’ll talk about how all of this could affect your investment.

 

YOU WILL LEARN:


Why is Bitcoin Cash Forking?

When is Bitcoin Cash Forking?

Will You Get A Free Coin?

How Will This Affect Your Investment?

 

 

CONTENTS

  1. What Is Bitcoin Cash?
  2. Why Is Bitcoin Cash Forking?
  3. How Will They Fix The Issue?
  4. Will You Get A ‘Free’ Coin?
  5. How Will This Affect Your Investment?
  6. Follow Future Posts 

1. WHAT IS BITCOIN CASH (BCH)?

Many of you may not even be aware of this as the big news in Cryptos recently has all been about the recently cancelled Bitcoin fork. However, the previous fork of Bitcoin called Bitcoin Cash is about to hard fork again.

In today’s article, we’ll go through some information to explain why Bitcoin Cash is forking again, how it will affect your investment and whether this had all been timed intentionally to disrupt Bitcoin

A Recap of Bitcoin Cash

For those who can’t remember, Bitcoin Cash is a hard fork that occurred on August 1st 2017 from the original Bitcoin. The split occurred because a part of the Bitcoin community believed that the upgrades to Bitcoin were simply not enough.

They argued that the change from 1mb to 2mb block sizes (which would double transaction speeds) was insufficient to allow the network to grow and be used by millions – potentially billions – of people worldwide.

Therefore, Bitcoin Cash was created as a hard fork of Bitcoin with an upgrade to 8mb blocks which increased transaction speed 8x

That’s the short recap, now let’s move on to why Bitcoin Cash is going to undergo a hard fork very soon.

2. WHY IS BITCOIN CASH FORKING?

When Bitcoin Cash split from Bitcoin, only 5% of the original Bitcoin miners were mining it. Also, the price was much less than Bitcoin; launching at around 1/10th of Bitcoin’s price.

With those numbers, Bitcoin would be far more profitable to mine than Bitcoin Cash resulting in very few people choosing to mine BCH.

If the team behind Bitcoin Cash had allowed this to happen, the network would have struggled to survive which is why they introduced a Difficulty Adjustment Algorithm (DAA) that began by severely reducing the difficulty of mining Bitcoin Cash and then regularly updated this difficulty in order to ensure that BCH always remained similarly profitable to Bitcoin.

In turn, this promoted some Bitcoin miners to mine Bitcoin cash too and allowed it to ‘survive as a minority chain’. While this strategy may have worked in the short term, it has caused issues for the longer term viability of the network.

What’s The Problem With This? 

We’ll briefly break down some background information for you guys now to explain why this has caused problems:

Bitcoin was built so that a new block would be found every 10 minutes, regardless of how many miners are searching for them. This is achieved by constantly updating the difficulty; when there are more miners, difficulty increases and, when there are fewer miners, difficulty decreases.

Bitcoin Cash was intended to be the same. However, the reality has been far from that. Due to the constant varying numbers of miners working to mine Bitcoin Cash, the difficulty varies so much that there have been times where blocks are found as infrequently as once every 4 hours and as regular as 61 in a single hour (1 per minute)

Obviously, this is nowhere near the target value of 1 block found every 10 minutes.

What’s The Downside Of Random Block Times?

These are the main issues:

  1. Varying transaction times
  2. Excessive fees paid to miners at times
  3. Too low fees paid to miners at other times causes them to switch to Bitcoin
  4. Too many blocks mined

Arguably the most significant issues from the list above – as far as the Bitcoin Cash development team are concerned – is the fact that too many blocks have been mined and therefore BCH have now mined more blocks than Bitcoin.

Why Does Block Number Matter?

Every 210,000 blocks, the mining rewards for Bitcoin halves – originally, miners were rewarded with 50 Bitcoin for every block they added. Then, it was 25 Bitcoin and now it’s 12.5. You can actually see a live updating website which shows when the next Bitcoin halving event is occurring here if you wish.

Due to the poor difficulty adjustment algorithm that Bitcoin Cash has been using, they are 7,800 blocks ahead of Bitcoin. In layman’s terms, this puts Bitcoin Cash (BCH) 55 days closer to reaching the next halving event than Bitcoin.

The sooner that BCH reaches the mining reward halving, the sooner that mining rewards will decrease. 

What Will Happen When BCH Mining Rewards Halve?

Imagine you are a miner and you’re able to switch between mining Bitcoin and Bitcoin Cash with relative ease. Now, let’s say that you can see a 100 day period coming up where Bitcoin Cash is offering just 6.25 BCH per block whereas Bitcoin is still offering 12.5 BTC.

Which Would You Mine?

From the perspective of a business driven by profits, it’s an obvious choice for Bitcoin Cash miners to switch back to Bitcoin.

This could lead to a miner exodus from the Bitcoin Cash network which would be a devastating blow – it would reduce transactions speeds to horrendous levels and most likely cause price to fall as a result.

Summary So Far

To summarise so far, Bitcoin Cash is undergoing a hard fork to alter the initial difficulty adjustment which was critical for their short-term survival but slowly destroying them in the long-term.

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3. HOW WILL BITCOIN CASH FIX THE ISSUE?

In order to overcome this problem, Bitcoin Cash will be forking in order to introduce a new difficulty algorithm which aims to ensure more stable block times regardless of how many miners are mining it.

When Is Bitcoin Cash Forking?

Bitcoin Cash will fork on November 13th

Doesn’t that date sound a little close to when Bitcoin has originally planned to hard fork occurring on 15th November? My guess is that Bitcoin Cash are having their hard fork so soon before Bitcoin’s as a method of trying to disrupt Bitcoin.

The aim could be to prove that they can overcome their biggest issue to date while Bitcoin is undergoing its largest threat to date.

As it turns out, Bitcoin have delayed their fork due to a lack of consensus within the community.

4. WILL YOU GET FREE COINS?

Most of you will probably be thinking of the original Bitcoin Cash hard fork throughout this article and wonder if you’ll receive a ‘free coin’ as a result.

In this case, the answer is almost certainly no.

Firstly, forks never actually produce a free coin. If this were the case, why wouldn’t Bitcoin fork every week and produce hundreds of free coins for the coin holders.

If you want to learn more about where the true value of the ‘free coin’ comes from, check out our article here.

On top of that, a new coin is only produced when two groups within a cryptocurrency disagree during a hard fork and thus split off, going in different directions.

In the case of this Bitcoin Cash hard fork, it seems to be unanimously agreed throughout the community that this fork is needed and thus there is no need to create a second coin.

5. HOW WILL THIS AFFECT YOUR INVESTMENT?

The truth is, this won’t really affect your investment much if you’re already invested into Bitcoin Cash.

If anything, this is an upgrade to the network and could provide the necessary stimulus for BCH to enter a bullish period in the market.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.

6. FOLLOW FUTURE POSTS

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This article has been provided by our Business Analyst; Joseph Abiy.

The CryptoRuble – A 13% Tax On The Crypto Economy?

CryptoRuble-2-min-forest-min

Russia recently introduced The CryptoRuble so that they can take a 13% cut of Crypto profits from all around the world. 

Think of The CryptoRuble as ‘the world’s Crypto tax’ and Russia as the wealthy benefactors. Welcome to the new, borderless Crypto economy.

 

YOU WILL LEARN:


What Is The CryptoRuble?

Are Russia Actually A Huge Fan Of Cryptocurrencies?

Is The CryptoRuble A 13% Global Tax?

 

CONTENTS

  1. Russia’s Crypto Ban & CryptoRuble
  2. Does Putin Hate Cryptos?
  3. Taxing The World’s Economy
  4. Will The Tax Work?
  5. Follow Future Posts

 

1. Russia’s Crypto Ban & The CryptoRuble

Within the last month, two major announcements have come out of Russia regarding the future of Bitcoin and other Cryptocurrencies:

  1. Russia has announced that they plan to ban Bitcoin/Cryptocurrency exchange websites citing safety concerns for their citizens with Segiei Sehvetsov of the Central Bank of Russia quoted as saying “We cannot stand aside. We cannot give direct and easy access to such dubious instruments for investors
  2. Russia are planning to introduce the CryptoRuble – a Cryptocurrency which will remain the same price as the regular Ruble (Russia’s currency). The CryptoRuble will be ‘fully controlled by the state and won’t have the decentralised nature of digital currencies’

Does this mean Putin hates Bitcoin and Cryptocurrencies?

Nobody knows for sure. Personally though, we think it’s the opposite of this;

We believe that Putin is a huge fan of Cryptocurrencies and is trying to turn Russia into the world’s Crypto hub.

It’s for this purpose that he is introducing a 13% tax for any unexplained Bitcoin/Cryptocurrency earnings – we believe that he wants to funnel Crypto money through Russia via the CryptoRuble.

Before we get into that though, let’s provide a little bit of background of why we believe this by discussing some of Putin’s previous Cryptocurrency quotes.


2. Does Putin Hate Cryptos?

Putin is somewhat divided when it comes to Cryptocurrencies; on one hand, he has regularly met the founder and genius behind Ethereum (the world’s 2nd largest Cryptocurrency), Vitalik Buterin, telling him that Russia “are doing a great deal to create a favourable business climate… so that working in Russia is beneficial and pleasant.

On the other hand, Putin has been quoted as saying that “The use of cryptocurrencies bears serious risks” due to money laundering, tax evasion and funding for terrorism. It all seems a little confusing on the surface, right?

One moment Putin is anti-cryptos, the next he is supporting them

For this one, you have to read a little deeper into it to find the truth (in our humble opinions);

Putin fully understands the potential behind Cryptocurrencies – hence he is pro-cryptocurrencies – and he understands that they cannot simply be stopped due to their decentralised nature. However, he has previously been unable to benefit from them.

In fact, with money leaving the Ruble and being converted into Cryptocurrencies, the Russian government and banking system have lost out because of Cryptocurrencies thus far.

So what are Russia to do?

Their solution is to utilise the remarkable technology behind Cryptocurrencies (the blockchain) in a way which benefits the Russian government and this is where The CryptoRuble comes in, carrying with it a 13% tax.

3. Taxing The World’s Economy

The CryptoRuble’s 13% Tax

At this point in time, we don’t know very much about the CryptoRuble other than knowing it will be pre-mined and ‘fully controlled by the state hence it won’t have the decentralised nature of digital currencies’.

What we do know for sure though is details of the exchange between the Ruble and the CryptoRuble. This part is absolutely key:

  • If the source of earnings is fully trackable and can be proven, it will be possible to convert between the Ruble and CryptoRuble for free
  • However, if the source of earnings cannot be tracked, there will a 13% added tax

If The Earning Cannot Be Tracked, A 13% Tax Will Be Added

Let’s look at an example to understand how important this truly is:

  • Let’s say a UK freelance writer is paid in Bitcoin. We’ve picked freelance writer but it could be literally any job in the world
  • If he converts this Bitcoin straight to UK Pounds and records it as earnings, he will pay a minimum of 20% and as much as 45% income tax, depending on his salary
  • If he chooses not record those earnings, he might get away with paying no tax or he might get caught and arrested for fraud. It’s a big risk.

What if he uses the CryptoRuble?

  • Instead, if he converts his bitcoin to the CryptoRuble, he can do so for a very small fee on an exchange (0.1%)
  • Then, he can convert this CryptoRuble to regular Rubles for just a 13% tax
  • From there, he can switch his Rubles to UK pounds very easily and for under 1% 
  • Now, he has paid just 14% tax
  • Our freelancer has just paid less tax while remaining fully compliant with the law

What About The Future?

  • Currently, Cryptocurrencies like Bitcoin are only really paid to people within the industry so this issue isn’t so big for other countries
  • However, as they gain mainstream adoption, we could quite easily see more commonplace examples such as an electrician being paid in Bitcoin to avoid taxes etc.

How Does Russia Benefit?

  • Cryptocurrencies have been bad for governments and banks as they’ve caused money to leave national currencies
  • Due to the decentralised nature of Cryptocurrencies, Putin knows that they cannot simply be stopped
  • Instead, he has created a system which promotes a massive influx of money into the Ruble from countries all around the world
  • Best of all, Russia receive a 13% tax while the country of origin receives nothing

You have to give it to them; the idea is pretty genius


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Anyway, let’s get back to the content!


4. Will The Tax work?

Short Term

In the short term, we think the answer is a definite yes.

If we’re realistic with ourselves, we all know people who will attempt to avoid tax. While this system won’t allow them to completely avoid paying tax, it will allow them to pay a much lower sum without even breaking a single law!

Would you choose to pay a lower tax, while complying with the law?

Long Term

In the long term, however, we believe that other countries will introduce their own state-backed Cryptocurrencies. Why do we think this?

If The CryptoRuble was the only state-backed Crypto, money from all around the world would flow through it in order to take advantage of the cheap tax. For other countries, this means losing the ability to take on earnings.

From an economic standpoint, countries simply can’t allow this to happen so they will be forced to act. They can’t shut down Cryptocurrencies due to their decentralised nature. They can try to ban them but there are relatively simple ways for people to work around this.

Instead, the best option is for countries to compete with The CryptoRuble by offering their own state-backed Cryptocurrency.

Putin himself, sees this as the reality we are headed for, as we can see from his quote stating that if Russia do not implement The CryptoRuble, then “in 2 months, our neighbors in the Eurasian Economic Community will do it.”

What Tax Will Other Countries Apply?

This is the most interesting question for us. We are based in the UK so let’s use the UK government as an example:

If they introduced a government-backed Cryptocurrency but demanded a 30% tax from anyone cashing out with proper explanation, residents of the UK would surely choose to use the CryptoRuble instead as this would mean 16% less tax.

As a result, for the UK government to incentivise tax-payers to use their Cryptocurrency, they would have to offer similar rates to people cashing out the CryptoRuble.

How Will This Play Out?

For this reason, we can see this playing out in 3 ways:

  1. Governments enter a bidding war to offer low tax rates – this is unlikely
  2. Governments ban their residents from cashing out via other government-backed Cryptos
  3. Many governments agree on a minimum rate they will not decrease tax below – a cartel agreement formed between many Governments
  4. A combination of banning residents from using foreign cryptos and forming a cartel i.e number 2 and 3 combined

Number 1 seems unlikely as governments simply can’t afford to enter a bidding war and lose income taxes as a result.

Number 2 seems relatively likely but a simple VPN will make it possible for tax-payers to evade this.

Number 3 seems likely. However, if you are familiar with the first-mover advantage, the principle is particularly relevant in relation to cartels and dictates that a single country is likely to break the agreement in order to gain an advantage.

You might argue that this doesn’t apply to governments because the political ramifications would keep countries in line. To this, we would say:

Do you really think all countries around the world care about political ramifications?

History has clearly shown us that the answer is no. With Cryptocurrencies being truly global, it only takes one country to step out of line in order for the agreement to break down.

Number 4 is the most likely option in our opinion – a combination of banning the use of foreign state-backed Cryptos and agreeing to form a cartel.

The cartel will reduce the number of people attempting to use foreign Cryptos and the ban will aim to ensure that the majority of people won’t switch to a foreign currency when a country eventually breaks the cartel.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

Would you like your ICO reviewed? Contact Us

Disclaimer: None of the above is financial advice. Always do your own research.


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Come join us to follow future articles and personally chat with us:

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This article has been provided by the CEO; Tom Heavey.

What Is Market Cap? Does Price Even Matter?

Market Cap or Price - Cryptos

In today’s article, we will be discussing why price is zero indication of whether a Cryptocurrency is cheap or expensive is – a coin could be $100 and still be cheaper than a coin worth $0.01.

 


YOU WILL LEARN:


Why Crypto prices mean nothing 

What market cap means

Why market determines cheap or expensive

How to find the real list of cheap Cryptocurrencies

CONTENTS

  1. Does Price Matter?
  2. How To Find Cheap Cryptocurrencies
  3. What Does Market Cap Mean?
  4. Why Only Market Cap Matters
  5. How Does This Affect Investing?
  6. Follow Future Articles


1. DOES PRICE MATTER?

“What’s the best Cryptocurrency under $1?”

People regularly ask this question while in search of the ‘next cheap cryptocurrency to invest in’ but it makes absolutely no sense as a question.

You’re probably thinking:

“What’s the problem with this?”

If you don’t know, we strongly suggest that you keep reading!

The easiest way to explain is to simply show you a picture of a list of the top Cryptocurrencies. Check out the screenshot below and notice the red box we’ve used to circle the price of a Crypto named Ripple.

Price or Market Cap - Ripple

It’s listed as the 4th biggest cryptocurrency on Coinmarketcap.com (the biggest website for checking up-to-date Crypto prices) and yet a single token costs just $0.21 (21 cents).

How can that be? It’s so cheap that surely it can’t be one of the biggest cryptocurrencies?!

Now, we’ve included the same picture again below and we want you to look at it and do 2 things:

  1. Look at all of values under the price column for those top 10  (red column) 
  2. Now look at the values under the column ‘market cap’ (blue column)

Price or Market Cap Crypto Top 10

Do you notice that the top 10 cryptocurrencies (including Bitcoin) aren’t ordered in terms of price? But they ARE ordered from the highest market cap to the lowest.

Why Is That?

Because the ‘value of a cryptocurrency coin/token’ has nothing to do with price BUT it has everything to do with market cap.

And that’s why…

When you are trying to find the next cheap cryptocurrency that may increase 100x, you need to stop looking at price and start looking at market caps.

In a second, we’re going to explain exactly what crypto market cap means and why it’s so important.

First though, we know that some of you have probably found this information helpful and are ready to move on which is why we’re going to give you this tip right now which is…


2. HOW TO FIND CHEAP CRYPTOCURRENCIES

We’re not talking about fake cheap coins that may cost just 21 cents but aren’t really cheap at all. We’re talking about genuinely cheap coins that have the potential to increase 10x, 100x, maybe even 1000x.

All you have to do is go on the 2nd best website in cryptocurrencies (guess which is number #1) called Coinmarketcap.com which is where we took those screenshots from above from.

It will automatically show you the top 100 coins, ordered by market cap. In other words, ordered from most expensive to least expensive.

As you scroll down the list, you’ll gradually reach the cheaper coins which have the potential to increase a whole lot more than the coins at the top.

Beware: Do not take this as advice for coins you should buy! These coins nearer to the bottom are cheaper for a reason and they’re also a much bigger risk.

The higher the reward, the bigger the risk.

What you need to do is learn how to analyse coins to see which of these cheap coins are undervalued; this is the Warren Buffett method of investing and this is our way too at Crypto Gurus.

Better yet, what if someone analysed the market and found cheap coins for you? Check out our articles page, hit the ‘Reviews’ tab and you can see some of our research on the most undervalued coins in the market right now!

Now that you guys know what a cheap cryptocurrency actually is – one with a low market cap, not necessarily a low price – let’s move on to what market cap actually means.


3. WHAT DOES MARKET CAP MEAN?

Market capitalisation is the market value of a Cryptocurrencies outstanding coins. In other words, if you were to add up the price of all of the circulating coins of a Cryptocurrency, you would find the market cap.

For the mathematicians out there, you’ll probably prefer a formula so here it is:

Market Cap = Coin Price x Coin Supply

Another way to think of the market cap is this:

The market cap is the amount of investment currently in a Cryptocurrency. Remember this sentence because it’s very important!

Let’s rearrange the previous formula quickly so that we can see coin price more easily:

Coin Price = Market Cap / Coin Supply

Now, we’ll use an example to explain why coin price means very little.


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4. WHY ONLY MARKET CAP MATTERS

Let’s say you have a coin called Crypto Gurus Coins:

  • The Crypto Gurus Coin has $100 million invested into it i.e. it has a market cap of $100 million
  • The Coin supply is also 100 million

What will the price be?

Coin Price = $100 million/100 million
Therefore, the coin price = $1

But, what happens if we reduce the supply to 10 million?

Coin Price = $100 million / 10 million
Now, the coin price = $10

Even though the same amount of money is invested in the coin, as ingle coins is suddenly worth 10x the value before. Why is that? 

Because token price is affected by supply

 This point above is also incredibly important and you should try to remember it! The reason that this is so important is because: 

All cryptocurrencies have a different supply

Let’s say a coin has a supply of 100 billion. How much will have to be invested for it each token to cost $1?

Using our formula:

Coin Price = Market Cap / Supply
$1 = Market Cap / 1 billion

The market cap would have to be $1 billion. In other words, the total investments in the coin would have to be $1 billion for the token price to just be $1.

Unless the coin is amazing, there is very little chance of this and so it could be overvalued even if it cost just $0.50

What about a coin with a supply of 1 million?

In this case, if just $1 million were invested in the coin, each one would be worth $1!

Which coin do you think is more likely to reach a price of $1? Obviously, it’s the one with a supply of just 1 million And, it’s for this exact reason that you cannot use the token price as a guide!

A coin can be $10 and be very cheap while another coin can be $0.01 and expensive


5. HOW DOES THIS AFFECT INVESTING?

When we say ‘cheap’ and ‘expensive’, we’re referring to the amount invested in them because this is the key factor to decide how much they can increase:

  • A ‘cheap’ coin can increase 10x, 100x, 1000x relatively easily
  • An expensive coin cannot increase so much because it is already expensive

Let’s use an example to explain:

  • Coin A has a market cap of $10 million
  • Coin B has a market cap of $100 million

Therefore, the total investments in Coin A are $10 million and the total investments in Coin B are $100 million

For Coin A its market cap to increase 10x, it would simply require that the investments increased to $100 million i.e. a $90 million increase

For Coin B to increase its market cap 10x, it would require that investments increased to $1,000 million ($1 billion) i.e. a $900 million increase

Which is more likely to increase 10x?

Assuming all other things are equal, coin A is much more likely to increase 10x because it requires much less extra investment to do so.

When investing, you always have to consider the risk/reward ratio – coins with lower market caps might have much higher potential returns but they also carry higher associated risk.

A smaller percentage of any portfolio should be committed to the higher risk coins. In other words, larger market cap coins should make up a larger portion of a good portfolio than smaller cap coins.

That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.

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Disclaimer: None of the above is financial advice. Always do your own research.


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This article has been provided by the CEO; Tom Heavey.