What Is Ripple? Full Investment Review | Latest News

What Is Ripple? Cryptocurrency Review

Ripple Review – Ripple is a cryptocurrency aiming to work with the banks, allowing them to send money across borders with ease.

In this extensive review, we’ll be discussing whether Ripple is the great investment that many people consider it to be and how you can buy & store your XRP coins.

YOU WILL LEARN:


What Is The Ripple Project?

Will The Ripple Token Increase In Price?

How To Buy And Store Your Ripple Tokens

 

 

CONTENTS

  1. What Is Ripple
  2. How Does Ripple Work?
  3. Are Ripple Solving Real Problems?
  4. Will The Ripple Token Price Increase?
  5. Team & Roadmap
  6. Selling Points
  7. Barriers To Success
  8. Extra Points
  9. Where To Buy & Store Ripple Tokens
  10. Ripple Price Spike
  11. Conclusion
  12. Follow Future Posts

 

1. WHAT IS RIPPLE?

In Their Words

Ripple is a global real-time settlement network; its system aims to connect banks around the world to allow for cross-border payment systems.

In Our Words

Ripple is a Cryptocurrency which is aiming to work with the banks. As the core premise of Bitcoin and other Cryptocurrencies is to replace banks, Ripple has faced some serious backlash in the Crypto-world for its plans to assist banks Cryptos are aiming to replace banks, Ripple are going against

 

2. HOW DOES RIPPLE WORK?

Central Currency – XRP

There are 3 elements to the Ripple platform that they regularly discuss (xCurrent, xRapid, xVia). However, for the purpose of this article, we’re only going to be discussing the main area which our readers will be familiar with – allowing banks to send money abroad.

Ripple works by providing a bridge between currencies:

Let’s say a bank wished to trade their GBP for an American banks USD. With the current system, this takes several days and can be costly.

Ripple works by introducing a central currency, XRP.

In other words, instead of directly trading GBP for USD, the UK bank would trade GBP for XRP and then trade XRP for USD.

The reverse process would occur from the perspective of the US bank.

Extra Step?

While this may actually add an extra step to the process, each trade takes around 5 seconds and incurs a tiny fraction of cost.

As a result, the banks have now traded GBP for USD in 10 seconds (compared to the old system of several days) and for less than a 0.1% fee.

Above, we’ve described how the process occurs to use Ripple’s currency, XRP, as a means of speeding up cross-border trade while reducing fees.

Below, we’re going to describe another advantage that Ripple offers – providing liquidity for smaller currencies.

Liquidity Pool

Let’s say:

  • Bank A has South African Rand (ZAR)
  • Bank B has Thai Baht (THB)
  • These two banks would like to trade their currencies.
  • In other words, Bank A would like to send ZAR from South Africa to Thailand and Bank B wants to send THB to South Africa

Within the current system, this is very difficult to achieve because there is very low liquidity when trading ZAR/THB

What Does Liquidity Mean?

Liquidity essentially means the number of buyers and sellers in a market. The more people buying and selling, the higher the liquidity.

Higher liquidity makes it much easier to buy or sell:

Imagine you’re in a room with 2 people wanting to buy your currency and 2 people selling it. Now, imagine you’re in a room full of hundreds of people wanting to buy and sell.

Which room do you think it would easier to make a trade in? The more buyers and sellers, the easier it is to trade.

Ripple’s Liquidity Solution

This is one of the reasons that it can be very difficult to trade smaller currencies such as the South African Rand and Thai Baht; because there isn’t enough liquidity to facilitate easy trading.

Therefore, Ripple will be using their token as liquidity pool. In other words, every currency will first be traded with XRP. This process is identical to the process outlined above so we won’t go further into detail here.

Instead, we’ll discuss how having a central currency increases liquidity in a market:

Let’s say the following trades occurred in one day by 3 banks – a UK bank, a US bank and a European bank (ignore the inaccurate conversion rates used for simplicity):

  • £1 Million GBP traded for $1 Million USD
  • £1 Million GBP traded for €1 Million EUR
  • $1 Million USD traded for €1 Million EUR

If you look at each of these pairs alone, they have a trading volume (liquidity) of 1 Million per day in their respective trading pairs – GBP/USD, GBP/EUR , USD/EUR.

Introducing XRP

Now, we’ll look what happens if we introduce a central currency (XRP) and carry out the exact same trades:

Note: The example above involves 2 Million of each currency being traded per day hence we’ve used those same values below

  • £2 Million GBP traded for XRP
  • $2 Million USD traded for XRP
  • €2 Million EUR traded for XRP


Hopefully, you can now see from this example that the liquidity of each trading pair (GBP/XRP etc.) has now risen from 1 Million per day up to 2 Million.

Higher liquidity results in easier trading. For lesser traded currencies such as the Rand and Baht, this provides a huge benefit.

 

3. ARE RIPPLE SOLVING REAL MARKET PROBLEMS?

#1. PROBLEM – Slow Settlement Speeds

In their current state, cross-border payments require a number of intermediaries to be involved in the process. This means that payments can take anywhere between three and five days to reach completion.

RIPPLE’S SOLUTION

The Ripple payment protocol will allow transactions to be completed within 5-10 seconds as opposed to 3-5 days

#2. PROBLEM – High Operational Costs

The number of intermediaries involved in the process not only affect settlement speeds but also cause transaction fees to be higher. The current average transaction fee for a $500 payment stands at $5.56.

RIPPLE’S SOLUTION

The average transaction fee for a $500 payment is reduced by over 60% to $2.21

#3. PROBLEM – Payment Failure

Currently an average of 4% of all cross-border payments fail, a failed payment is of course of no benefit to any party involved.

RIPPLE’S SOLUTION

All payments made using Ripple will be trackable on the blockchain

#4. PROBLEM – Smaller Currencies

Let’s imagine a bank wanted to send a payment of South African Rand to a another bank and receive Thai Baht in return. As an uncommon trading pair, it may take a significant amount of time for someone to match the trade.

RIPPLE’S SOLUTION

Ripple will provide a liquidity pool in order to improve on liquidity issues

#5. PROBLEM – High Liquidity Costs

Payments into emerging markets often require pre-funded local currency accounts around the world, as a result liquidity costs are often high.

RIPPLE’S SOLUTION

Ripple payments are a fraction of the cost of this

 

4. WILL THE RIPPLE 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 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 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?

This section is actually very difficult for us to write as we’ve struggled to find sufficient information.

It appears online that there is significant confusion surrounding this topic so we’re going to outline the two potential options which could be true:

  1. Banks Must Hold XRP Tokens
  2. Banks Don’t Need To Hold XRP Tokens

From our research, it’s very unclear whether banks must first buy XRP tokens – to hold for liquidity purposes – or if they are able to use Ripple’s own liquidity pool.

IMPORTANT: This difference above may not sound too significant but it is absolutely fundamental to determine if XRP is a good investment or not. We would NEVER invest without knowing which of these two options is correct.

Below, we will explain why this difference is so important by highlighting the demand for tokens with both scenarios:

Scenario #1. Banks Must Hold XRP Tokens

This scenario assumes that banks must hold Ripple in their own liquidity pool in order to use the Ripple services.

Banks are going to be very keen to use Ripple as it provides an incredible improvement on the current Remittances options.

Therefore, there will be significant demand for XRP tokens.

It should be noted that banks will be able to XRP directly from Ripple but they have committed to selling a maximum of only 1% of XRP per month (more on that in a second).

Therefore, if banks wish to buy more XRP tokens than this, they will be forced to buy them on exchanges. As a result, this increased demand on exchanges should drive up token prices.

If this scenario is correct, we are bullish on Ripple and we would consider adding some to our portfolio – they are providing a solution to a big problem for banks and investors shouldn’t undervalue this. 

However, we cannot commit to an investment as we cannot be sure that this scenario is correct. If scenario 2 is correct instead, we would remain well away from Ripple as an investment.

Scenario #2. Banks Don’t Need To Hold XRP Tokens

In this scenario, we’re assuming that banks don’t need to hold XRP tokens. We’ll explain how this is possible through an example.

Let’s say a bank wants to send GBP abroad and receive USD.

The UK bank would trade GBP for XRP and then trade XRP for USD.

It’s clear from this process that XRP needs to bought and sold to facilitate this trade BUT what if a bank is able to use Ripple’s pool of XRP tokens?

If they were buying XRP tokens from Ripple’s pool, there would be no requirement to ever buy tokens on exchanges.

With zero demand on exchanges – other than speculation from investors which isn’t sustainable in the long-term – there would be reason for XRP tokens to increase in value.

Simply put, there would be no demand and tokens would be worth virtually nothing.

If this scenario is correct, we would never invest in Ripple.

Throughout the rest of this article, we will continue to analyse other elements of the project as per our usual format. However, we want to be very clear on one aspect:

If scenario 2 is correct and banks are able to use Ripple’s liquidity pool without purchasing tokens themselves, everything else in this article is irrelevant; it’s a bad investment in our eyes.

What Is The Likely Inflation Rate?

Ripple created a limited supply of tokens, (100 billion XRP) meaning a zero inflation rate but this does not mean new tokens won’t enter the market.

Ripple, themselves, still hold 55 Billion XRP. These were not previously subject to any lockup period which led to the concern that Ripple could flood the market at any point drastically reducing the XRP token price as a result.

We will cover the news in more detail later but the announcement that these tokens have now been placed in escrow ensures no more than 1 billion XRP will be sold each month. With approximately 38 Billion tokens in circulation, this would represent an inflation rate of around 32% per year and is thus relatively high.

Obviously, just because 1 Billion XRP tokens can be sold each month, it doesn’t mean that they will and the inflation rate may be far lower.

Regardless, it’s a concern for us.

As a comparison, Ripple say that the average amount sold and entering the market during the last 18 months is 300 million XRP per month.

Conclusion

The token supply is a concern for us. Furthermore, the token demand is also a concern due to the reasons given above. If we were able to find more information and found scenario 1 to be the truth, we would continue forward with our analysis.

If we found scenario 2 to be true, we would end our analysis as they would simply not be a worthy investment in our eyes.

 

5. THE RIPPLE TEAM & ROADMAP

The Ripple 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. However, with Ripple already being an already established and operating currency we will just highlight a few key players.

The Ripple Team

Above is a just small section of the Ripple team; in total the team consists of upwards of 150 employees and is generally considered to be the largest of any cryptocurrency and one that is still looking to expand.

CEO Brad Garlinghouse has worked for companies such as AOL and Yahoo, as well as holding board positions with a number of companies showing himself to be well respected by his peers.

Marcus Treacher is another name for us to highlight; Ripple’s Global Head of Strategic Accounts has significant experience in the banking industry having spent 12 years with HSBC as Global Head of Payments Innovation as well as serving as chair of the Global Advisory Board for SWIFT between 2010 and 2016.

Their board of directors also have significant experience in policy, regulation and finance.

The Ripple Roadmap

Ripple was originally launched in 2012 and has of course seen significant progress since then. It is for this reason that the company offers no real roadmap at this time but has the overall aim of increasing the size of the RippleNet. As a well-established currency, this is not a concern for us.

 


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6. SELLING POINTS

Practical Use Cases

One argument presented by many revolves around Ripple being a potential ‘safe’ currency. There is a belief that even if the crypto bubble were to burst, Ripple would still be able to continue.

This is put down to the number of practical uses cases the currency serves but also their connection to the banks. Price is obviously determined by demand though so even if the system continues, there is no guarantee that the XRP token would retain its value.

 

7. BARRIERS TO SUCCESS

Adoption

This is one that seems to constantly appear during our reviews and stems from the negative connotations that still surround cryptocurrency, even though it is now seeing more mainstream appeal. The project is only going to see success if it is adopted by both banks and consumers.

Ethical Argument

This is one that seems to constantly arise when speaking about Ripple and it stems from their connection to the banks. Many believe that this goes against the principles of cryptocurrency; which was originally supported because of its decentralized nature, by connecting with the banks is losing its identity for some.

 

8. EXTRA POINTS

One idea we found when researching Ripple surrounds people travelling across borders to find work and provide for their families.

This is one that we hadn’t previously thought about but there are a number of people leaving areas such as South America and travelling to America for example in order to provide.

When it then comes to them sending money back to their families, they of course face the issues previously discussed.

The Ripple protocol would be of great benefit to these individuals. While this is of course the case with many cryptocurrencies, Ripple will provide this in a system which is connected with the banks, rather than dissociated with them.

Some may argue that this is a negative point while others would say that it provides legitimacy to such transfers – the decision is up to you.

 

9. WHERE TO BUY AND STORE RIPPLE 

Where To Buy Ripple Tokens

Ripple tokens are available for purchase on the following exchanges:

  1. Binance
  2. Bithumb
  3. Bittrex
  4. Bitfinex

Where To Store Ripple Tokens

When it comes to storing Ripple tokens you have  a number of options, the option we recommend would be to use a hardware wallet such as the Ledger Nano S. This obviously means that your tokens are stored offline and are generally considered to be the safest option as a result.

This is of course just a suggestion; you may prefer to store your tokens on an online exchange or another method entirely, each option has its own benefits and it’s important you find the one that best suits you.

Buy Ledger Nano S Here

 

10. RECENT PRICE SPIKE

We have discussed the currency in depth but what caught our attention and inspired this review was the recent price spike witnessed by XRP, with the token reaching an all-time high of over $1. We obviously cannot say for certain why this has occurred but we are going to highlight a couple of potential reasons.

American Express Partnership

This partnership was originally announced on November 16th but has found its way back into the news these past few weeks.

Ripple have previously held relationships with 5 banks testing their system since June 2016, including the Canadian Imperial Bank of Commerce and Italy’s Unicredit but the announcement that a partnership had been reached with both American Express and Santander is one that turned heads.

American Express customers in the USA will be able to send instant cross-border payments to Santander customers in the UK. Could the announcement of a viable link between two significant parties like the USA and UK have been what caused the recent price spike?

Lockup Confirmed

We personally believe that this announcement could be the biggest reason that XRP price has surged recently.

As previously mentioned the Ripple team hold a large amount of XRP, these were previously not subject to a lock in period and there was a worry that these tokens could enter the market at any time and flood the market.

This would have of course led to a sharp decrease in the price of XRP.

On December 13th, it was confirmed that Ripple had placed 55 billion XRP into escrow within this 1 billion XRP will be released on the first day of every month for the next for the next 55 months.

Any unspent XRP from month 1 will be placed back into escrow to be released on day 1 of month 56 and so on.

This ensures investors are always able to calculate the maximum supply that can enter the market and will eliminate any worries people would have previously had about Ripple flooding the market.

This allows investors to have a stronger level of confidence in the XRP project knowing the chance of their investment significantly decreasing overnight has been reduced.

 

11. THE CRYPTOGURUS CONCLUSION

Ripple will most likely provide an unbelievable solution for many banks around the world, allowing them to send cross-border payments with ease. We expect that Ripple will have a very successful future.

However, we’ve found some serious concerns for investors looking to buy XRP tokens. Therefore, we most likely wouldn’t invest into Ripple.

This is one of those situations where the general idea of the project is amazing but the devil truly is in the details – it’s because of incidents such as this which are why we like to delve into the details of a project and provide a more comprehensive review.

 

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What Is Quantstamp? Full Investment Review

What Is Quantstamp? Full QSP Review

Quantstamp Review – The smart contract auditing platform designed to fix many of the flaws seen with Ethereum smart contracts. 

Smart contracts are a potentially revolutionary advancement in technology. However, one simple flaw can cause the contract to fail, leading to disastrous consequences for users.

As a result, the demand for smart contracts is growing exponentially. With Quantstamp’s ability to audit smart contracts in a scalable manner, the potential of this project could be huge.

In this extensive review, we’ll be analysing the project to see whether it is a worthy investment, we’ll discuss which Quantstamp wallet is best to safely store your coins and we’ll touch on a company concept known as proof-of-caring.

YOU WILL LEARN:


What Is The Quantstamp Project?

Will The Quantstamp Token Increase In Price?

How To Buy And Store Your Quantstamp Tokens

Why Do We Believe Quantstamp Is An Excellent Investment?

 

CONTENTS

    1. What Is Quantstamp?
    2. How Does Quantstamp Work?
    3. Are Quantstamp Solving Real Problems?
    4. Will Quantstamp Token Prices Increase?
    5. Team & Roadmap
    6. Selling Points
    7. Barriers To Success
    8. Extra Points
    9. Where To Buy & Store Quantstamp Tokens
    10. Conclusion
    11. Follow Future Posts

 

1. WHAT IS QUANTSTAMP?

In Their Own Words:

“A security verification protocol for smart contracts that improves the security of Ethereum. The advantages of the security protocol include automation, trust, governance and ability to compute hard problems over a distributed network.”

In Our Words:

The Quantstamp project is aiming to improve the security of Ethereum smart contracts by fixing fatal flaws in their code such as those which led the the DAO failure in 2016 or recent parity wallet hacks.

Current Progress

Quantstamp have already demonstrated the demand for their platform with their recent smart contract audit of the Request Network ICO.

 

2. HOW DOES QUANTSTAMP WORK?

The Quantstamp protocol will consist of two parts;

  1. Automated Software – The automated software checks the smart contract contract code for flaw
  2. Manual Checks –  In the long-term, Quantstamp aims to allow for fully automated smart contract checks via their software. However, until this becomes a reality, Quantstamp will be semi-automated i.e. they will use a combination of automated software combined with human participants that manually check the contracts and receive tokens as a reward.

In this section we will focus on the auditing process; as it is the main focus of the Quantstamp project. We will cover a few other processes later as we discuss the uses of the Quantstamp token (QSP).

The Auditing Process

If a developer wants to deploy a smart contract, they can submit their code to the Quantstamp project.

Depending on the security needs of the programme, the developer can choose how much bounty to send i.e. how much financial reward they will pay for the auditing. The more that they offer, the more likely it is that many developers will manually study the code.

A report is then produced which classifies the smart contract issues based on their severity,  ranging from 1 for a minor warning, up to 10 for major vulnerability.

Private Or Public

When requesting an audit, the developer can choose to have a private report which is encrypted and only accessible by the developer, or the developer could choose to have a public report meaning anyone would be able to view it.

Foolproof?

While Quantstamp cannot 100% guarantee flawless source code, it does provide a much higher degree of assurance that the code is secure by using both automated and crowdsourced methods.

In order to understand exactly how the automated and manual checks of smart contracts will occur, let’s look at the different categories of individuals that will help the network to improve over time:

Software Contributors (Automated) – In order to move towards a fully automated system, Quantstamp will need to upgrade their software. Not only will Quantstamp hire developers with the use of their ICO funds, they will also encourage the community to contribute by offering financial rewards in the form of QSP tokens to software developers who provide software. This software will be open-source, meaning that other members of the community will also be able to verify its validity

Validators (Automated) – These individuals simply run a node on the network. In other words, they contribute computer processing power but no technical expertise. In return, they receive QSP Tokens.

Bug Finders (Manual) – As mentioned before, the initial stages of Quantstamp will involve manual smart contract checks which will be carried out by bug finders. As a result, they are paid in QSP Tokens

 

3. ARE QUANTSTAMP SOLVING REAL MARKET PROBLEMS?

Problem – Smart Contracts Can Have Flaws

To quote Quantstamp’s whitepaper: “Blockchain networks are secure but smart contracts are not”; there have been a number of events over the last few years that have proved this to be the case; For example, a hacker famously stole $55 million in Ether from the DAO in June 2016, leading to its collapse.

Technically though, he didn’t steal anything because he actually followed the rules outlined by the smart contract. In other words, due to an avoidable mistake in the smart contract, a huge amount was taken from investors. This contentious time in Ethereum’s history  is what ultimately split the community and led to the creation of Ethereum Classic.

Issues like this raise serious trust issues around Ethereum smart contracts and will most likely result in distrust from the public, leading to slower adoption.


QUANTSTAMP’S SOLUTION

We’ve pretty much covered this in the previous section but we’ll recap also – Quantstamp will provide a scalable method to audit smart contracts. To begin with, this will be carried out manually but, in the long term, the process will be completed automatically with the use of software developed by Quantstamp themselves and the community.

The result of this should be to avoid smart contract bugs, allowing them to function correctly. In turn, this should increase public adoption by avoiding PR disasters such as those seen in the past with the famous collapse of the DAO.

With the rapid increase in the number of platforms being hosted on the Ethereum network, it would be an understatement to say that there could be a huge demand for this project.


4. WILL THE QUANTSTAMP 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 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 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?

The demand for the Quantstamp platform stems from projects requiring their smart contracts to not contain fatal flaws. The demand for this is growing at a rapid rate as more and more projects are being hosted on Ethereum. However, this doesn’t automatically create demand for the token.

In the case of Quantstamp, projects can only make use of Quantstamp’s services through the purchase of tokens via the exchange. As more projects wish to use Quantstamp’s services, the demand for the token will rise and the price should also.

The Result?

The price of the Quantstamp token is sufficiently linked to the demand for the platform. Quantstamp has passed this test.

What Is The Likely Inflation Rate?

Quantstamp created a fixed supply of tokens meaning a zero inflation rate but this doesn’t mean that new tokens won’t enter the market though. A total of 65% of the tokens were sold during the ICO, meaning 35% of the tokens will enter the market at some point so how will they be distributed?

  • 20% Team and Advisors – Quantstamp state that these tokens are locked in for a minimum holding period but no time-scale is given, this should still mean that no inflationary pressure is felt.
  • 10% Core Activities Reserve – This pool will be sold over time in order to assist with operating costs. This is less than 1/6 of the quantity sold in the token sale, meaning inflation won’t be excessive.
  • 5% Community Development – These will also most likely be released over a long period of time but, even if they were all listed at once, the small percentage means little effect would be had.


Overall, the inflation rate should be relatively low and token demand will be based entirely on the success of the Quantstamp project. As such, we can 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.


5. THE QUANTSTAMP TEAM & ROADMAP

Quantstamp 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.

Above is a small subsection of the Quantstamp team; a team consisting of eleven members (soon to be thirteen with the arrival of two new Senior Engineers) and eight additional advisors. The first names to look at are the Co-founders: Richard Ma and Steven Stewart.

Ma has experience as an algorithmic trading fund manager but it is Stewart that really stands out. Hired by the Canadian Department of National Defence as a computer systems analyst, before he had even completed his undergraduate degree, he is clearly a stand out individual. Another member with stand out credentials is Vajih Montaghami; a man with experience as a software engineer at both Amazon and Google.

Moving on to their advisors, the first name on their list, Evan Cheng, has spent seven years as a senior manager at Apple before moving on to his current position as a director of engineering at Facebook. He is also becoming somewhat well know in the Cryptoverse; having served as an advisor for both Cindicator and Chainlink recently.

Other impressive advisors include Chris Miess; the former CFO of TenX, Min Kim; who has worked with Tim Draper, a man we have previously profiled in our Datawallet review and Dr Vijay Ganesh; a professor at the University of Waterloo who is very highly regarded by his peers.

Quantstamp Roadmap

Quantstamp were founded in June 2017 and have achieved significant progress in a short amount of time; just four months later they completed their first successful, semi-automated audit of Request Network.

Notable milestones for the company’s future include:

  • February 2018 – Complete an audit using version 1 of the analysis software
  • April 2018 – Deployment of the test network
  • August 2018 – Release mainnet version 1


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 6. SELLING POINTS

First Mover Advantage

Despite the vast need for smart contract auditing, Quantstamp are the only project we are aware of that are offering it at this time

Coinbase Networking

Recently, Quantstamp pitched to Coinbase, one of the largest projects in the Crypto-space. While the report about the pitch was rather vague, it’s certainly a positive sign that the team are networking with such a huge name.

Growing Demand

It seems like there is a new ICO launched on the Ethereum network virtually ever day. With the rapid growth of the prevalence of smart contracts, and particularly those hosted on Ethereum, we would expect huge demand for Quantstamp’s services over the next few years.


7. BARRIERS TO SUCCESS

Overall, we are huge fans of Quantstamp and believe they are potentially one of the most undervalued projects in the market (currently positioned at 120th).

However, as investors, we always aim to be as critical as possible and search for barriers to success which is why we’ve highlighted a few potential hurdles below:

Trust/Adoption

Quantstamp say that current smart contract security efforts rely on users trusting that no bad actors exist within in a company. However, their project involves trusting a system that has gone through limited testing. However, they have completed a successful audit of the Request ICO so they soon should witness an increased demand for the project.

Competition

While Quantstamp should not face any direct competition, a number of companies are focusing on smart contract creation and the lowering of costs involve, including Etherparty and Blockcat. If as mentioned before, people are slow to trust the Quantstamp system then these competitors will begin to come into play.

8. EXTRA POINTS TO CONSIDER

Full automation

Many people argue that smart contract audits could never be fully automated; human judgement is required to understand the logic and intent of a smart contract. For example, software can spot bugs which may cause the contract to malfunction but they may not be able to detect errors that cause coins to be sent to the wrong person, or detect that the wrong formula is being used to calculate the payoff of a smart contract.

Tier 1 Investors

A final positive point that jumped out to us here at CryptoGurus was that a number of their tier 1 investors agreed to a lock in period for their investments. While the time period was unspecified, the investment totalled more than $1 million and we view that kind of long term commitment to a project as a huge positive.

Proof-of-Caring

Quantstamp also announced plans for version 2 of their proof-of-caring concept. This is a way of rewarding loyal members of their community and was originally established before the presale offering incentives such as early access. It has not yet been announced what will be involved with version 2 but will run along the same lines.

For us, this is little more than a nice marketing scheme but it does show a commitment from Quantstamp and that they recognize the importance of their community.

 

9. WHERE TO BUY & STORE QUANTSTAMP

Where To Buy Quantstamp Tokens

Quantstamp tokens are available for purchase on the following exchanges:

  1. Binance
  2. Kucoin
  3. Huobi

Where To Store Quantstamp Tokens

Quantstamp is an Ethereum-based token which means it can be safely stored on any ERC-20 compatible wallets. Our favourite option is MyEtherWallet which you can download via the link below:

Download Quantstamp Wallet HERE (MyEtherWallet)

For instructions on how to download and install MyEtherWallet, check out the video below (not produced by us).

 

10. THE CRYPTOGURUS CONCLUSION

To close out this review, we will finish with our conclusion; it is clear there is a need for securing smart contracts and Quantstamp are providing a very reasonable solution. The success of this project will depend on the level of adoption witnessed and the fact that Quantstamp have already successfully completed a semi-automated audit offers a lot of hope.

Not only do the team seem in this for the long haul but the fact that a number of big investors agreed to a lock in period for their investments, shows how many important players see the long term potential of this project.

Considering that Quantstamp is currently placed at 120th (not even in the top 100!) in the market at the time of writing, we believe that this project could be undervalued and we are personally considering an investment.

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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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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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.


5. FOLLOW FUTURE POSTS

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