/edit: Hi /r/all. While I have your attention, I want to take 5 seconds of your time and bring some exposure to something that is threatening our existence as the human race. If you aren't interested, please skip down to the main article. I'm talking about finding a way to live sustainably on this planet, regenerative agriculture, where we get our food from, and how we can make sure that our kids and grandkids have something left once we leave.

Please consider reading up on Permaculture, sustainable living, Forest gardening, Backyard Chickens, etc. Consider following what I did and do it for yourself. This all used to be a useless lawn.

Bored for a night? Go watch "Sustainable" on Netflix.

Look into people like Geoff Lawton, Mark Shepard, Sepp Holzer, these people are going to save us.

Want to make a small change yourself? Grow a tomato plant on your balcony in a pot. Reduce transport of the tomatoes you eat, and make ~$50 per plant in saved money. Want to do something bigger? Plant a fruit tree in your backyard. Maybe two. Maybe a raspberry bush. You are now part of saving the human race.

If everyone reading this planted a fruit tree, or even some wild flowers, we could save the bees.

While you are at it, planting a fruit tree has been shown to be one of the best investments on the planet. There's pretty much no investment on the planet that is more financially lucrative (while still being nearly bullet-proof safe) than planting a fruit tree.

You can get a tree at an end of sale auction for literally 5-10 bucks, and that tree will produce THOUSANDS of dollars of fruit for you in it's lifetime. Go spend $200 bucks at an end of season sale, plant 10-20 trees (if you have room), and that $200 will be worth tens of thousands of dollars of saved money.

Do it right, set it up right and it's almost no work because you offload the work to nature - as it has done for the last few billion years. Go learn how, let me show you how. If you do it right, it's zero work after you have planted and wood-chipped, and all you do is pull dollars off a tree.

---

Original post starts below. I apologize for the shilling of Permaculture, but I think loss of topsoil will impact us all if we don't reverse it soon. We need soil, we need bees, we need food. We need to stop buying December Bananas in Canada. We need to start supporting local permaculture sustainable farms. We need to do this or we may not make it, and our grandkids stand no chance.

---

I also expended the "now what happens" section, to explain how these pullbacks are a good thing, make crypto more stable, and why we keep seeing larger ceilings after every pullback... this stuff is really important for you to make money on this thing, if that's your goal....

I've made a similar post in a few spots, and this is something that is absolutely critical for people to understand... what impacts price, and what is going on lately. Price has only a very minor correlation with money invested, and a major correlation with opinion.

... and Humans are an emotional bunch.

So what drives price of any commodity, crypto, gold, pizzas, whatever? The money invested in it, right? Kind of, but not really. What if I told you that you could theoretically raise bitcoin from $15k to $20k by spending $1, and lower it from $25k to $1k by spending the same $1? Crazy right?

AN EXAMPLE

This is going to start out slow, I want to make sure I get everyone on the same page before I pick things up and lift the curtain. Stick with me here....

This is an example to help illustrate why prices aren't driven by money invested, but rather consensus and opinion. Lets imagine the following exists (we will use bitcoin as an example, but this is how everything on the planet works)

Lets say Bitcoin is currently priced at $10k (the last sale). From $11k to $99k, every $1k there is someone with a sell order of 1 full bitcoin. From $9k to $1 dollar, every $1k on the way down there is someone with a buy order of 1 full bitcoin.

So, right now if you wanted to buy bitcoin you have several options... meet the lowest seller's price of $11k, or, put your own buy order up, above the highest buyer's bid order (overcut them). If you decide to just place an order, the price doesn't change. If you decide the buy the $11k bitcoin, now bitcoins value is $11k, with a new lowest sell offer of $12k, and a highest buy bid of $10k. Someone else comes in an overcuts the buy bid and puts 1 BTC for sale for $11k. No trades are made until someone matches a buy/sell.

Okay, that's kindergarten stuff, most people here understand that. So how much money drove the price up in this situation? $11k, and BTC price raised 11/10, 1.10, or 10% from the last sale. Now the entire marketcap of BTC raised 10% (last sale multiplied by circulating supply). So it takes $11k to drive a 10% increase, right? Not at all. Lets look at what happens when news is released.

News comes out that Warren Buffet thinks bitcoin is a scam, a bubble, and he wouldn't touch it with a 10 foot pole because he only invests in things he understands and he doesn't understand crypto. People panic everywhere, and believe "this guy is smart, I'm overvaluing this thing".

Suddenly people don't want to buy this scam anymore, and the buy orders for $11k, $10, and $9k are taken down.

At the same time, the people wanting to sell start to panic and just want out. The guy at $32k (who just had that offer up "just incase it moons") drops down to $11k sell order. The guy at $12k, who was the lowest, now undercuts him to $10k.

The other buyers see the sellers undercutting and think that if these people want out, why am I buying in. The $8k guy pulls his offer, and so do the $7k, $6k and $5k guys. The highest offer is now $4k.

The sellers panic further and the $14k guy undercuts the $10k guy and puts up a $9k sell. The $15k, 17k and 11k guys all see this flurry of panic and now a storm undercutting is triggered, to $8k, $7k, and $6k. The $8k order pulls his again and goes down to $5k.

The price on the buy and sell orders has moved around a ton, but no sales have actually happened yet. Technically, BTC is still "worth" $11k, and the market cap reflects that. All this horseshit has happened, and it only happened in 10 seconds, but the price hasn't moved yet.

The $27k guy wakes up and checks his phone. He had a $27k offer just incase the price moved also, and he also only has a tiny infinitesimal fraction of a BTC. Well, he decides "he's out" and fills $1 worth of the part of the $4k guys buy offer.

The latest price information is now updated, and BTC fell from $11k to $4k price per BTC with the movement of a single dollar.

This is exaggerated example, but this is what moves price. Not money in vs money out. The ONLY THING that moves price is perception.

OPINION FLOW AND NOT MONEY FLOW

Now the above example only happens if everyone simultaneously believe the same thing... this the asset they are holding is a steaming turd. What happens in reality is there's no black and white, it's shades of gray. It's flow in vs flow out. But again, not flow MONEY, but rather OPINIONS.

If 66% of the holders of something all of a sudden unanimously decide that their asset is overvalued, then they panic sell. Even if 33% of the people decide they are going to buy up as much as these panic sellers sell, if the panic is strong enough, and they are slitting eachother's throat to sell, then the buyers just happily sit and let them do that, and time their buys in. Very little money has to actually change hands in order for this price to crash, all that matters is the FLOW OF OPINION has to be swift and violent, and in majority. The sellers will leapfrog eachother on the way down, faster than the buyers scoop up their sales, and the net result is a crashed price.

Note, this happens both ways... fear, uncertainty and doubt (FUD) as well as overhyped FOMO (Fear of missing out).

So now what happens?

Time goes by and all holders opinions of their asset hasn't changed. They still think it's worth $11k and they got great deals scooping up what these sellers were selling. The weak hands have left the market and have been replaced with holders. Overall, now a higher percentage of holders believe in the product they are holding and are unwilling to sell for the panic prices of the last week. Panic sellers were also replaced by new money, people who have wanted in for a while and are now in on their perceived ground floor.

Also, people who bought BTC at $1 ten years ago and have been looking for an exit to cash profits have now been replaced by either long term holders, or by these new people who are thrilled to have finally entered, and they are looking to hold long.

So what happens on pullbacks? The number of people waiting to jump off the ship has decreased. The new ground floor is established. Are we done? Who knows, this could go on for another year, but what matters is that people who want off are getting off and people that want on are getting on.

People who have panic sold and never believed in this in the firstplace... people who have wanted out for 10 years... they have been replaced by people who are now getting in on THEIR GROUND FLOOR, and are going to be holding long. The market is suddenly increasingly more stable today than it was yesterday, even though prices are down.

This is a good thing. This is why crypto keeps bouncing back from pullbacks and reaches new higher ceilings and floors each time. Old money who wanted out, and new panic holders, they are gone. They are replaced with adopters, holders, believers in this technology. These people aren't selling anytime soon, because they believe that this thing is going to revolutionize the world. Every crash brings more of these people in, and removes more panic sellers out.

Moving forward

Now news releases start coming out about how stock ETFs are being created, NASDAQ index funds, bank support, government support. Companies are using this tech, and companies who use blockchain for transportation are putting non-blockchain companies out of business.

The people on the outside looking-in feel they are missing out. They now start coming in and buying. They start overpricing eachother on their buy orders, and eventually it gets close enough to a sell order that someone decides they are just going to meet the sell price. The sale goes through.

Sellers (HODLERs) see this action, and they start pulling sell orders off the table almost as fast as they fill. Sure some trades go through, and incoming money is driving the price up as market orders are filled. But what's also happening is people are seeing this flurry of volume, and sellers are pulling sell orders and placing them higher.

Junk coins and pump and dump scam coins are dying by the millions. In their ashes, good solid technology projects whose coins have fundamental economic reasons for growth, these are rising. Corporate partnerships continue forming. The real world continues to create actual use cases. Companies start storing more and more corporate information on blockchain. Public companies use blockchain to store scientific research (See Canadian Research Council announcements), and blockchain acts as a Library of Alexandria. People can travel out of country without any monetary exchange, using their chosen cryptocurrency to buy the things they need abroad. The world is slowly actually USING this technology.

Money is coming in, but more importantly, OPINION IS CHANGING. Literally nothing could have happened in terms of fundamentals, partnerships, etc... this can all be driven entirely emotional, so long as it's wide-spread and strong. Infact, the market could THEORETICALLY rebound in this way from $4000/BTC to $1 MILLION PER BITCOIN by the sale of ONE PENNY. $4000 sound low? Does that number make you uncomfortable? We may go that low. We may not. If we do, I'm not panicking and selling, I'm buying more.

SO WHAT HAS HAPPENED IN THE LAST FEW MONTHS? and where are we going?

A lot of new money has come in from Nov-Jan, and they don't really know what they are investing in. Sure some of them have done great research and are smart investors but most people aren't and isntead they are buying Symbols and Names and trading on speculation. They are treating their favorite coins like a sports team, and will follow them irrationally off a cliff.

These new people came in and invested in cryptocurrency because their OPINION was heavily influenced in Nov, Dec, Jan, from media. They saw this money making machine called crypto. They were willing to pay huge, ride the wave up, keep buying, etc. They were "ground floor adopters" and were going to get rich.

They outnumber the old money by A LOT. Their OPINION MATTERS. It matters the most.

To keep this in perspective, they are also a VAST MINORITY of "new money" that will enter the game in the next decade. This cycle will continue over and over and over.

Their opinion rose nearly unbounded and price rose accordingly. Market cap rose from 10B to 750B, and it could have been VERY LITTLE actual money that did this. How much did it need to be though? Literally ONE PENNY, theoretically. All that matters in moving price is MOMENTUM OF OPINION. I believe it has been estimated that as low as 6B USD was responsible for the bull rush.

These people then started hearing "Bubble", "Scam", Fake news about governments banning. They don't understand how technology wins, always. Crypto is beyond government control. If they could have stopped Bitcoin they would have done it already.

WHO IS DRIVING ALL THIS?

Most investment opportunities go first to "accredited investors". You need to have multimillions in order to get in on the ground floor for most stock IPOs, and we're seeing that start to happen with coin ICOs. Bitcoin was a joke for the first few years, while lunatics picked it up. At this point, it was really too late to get in "early", and who would have wanted to anyways, it was all still a joke. So Wallstreet, banks, governments have generally watched on the sidelines as average Joes who were crazy enough to be early adopters and toss $100 on fake internet money slowly became millionaires.

Not only that, but the idea of blockchain started to become understood. The power and value in it became understood. Not only as a way to track "monetary value" but for many other applications as well. Platforms were created, business uses brainstormed, products started being made. This thing started taking off, and wasn't a joke anymore. But regardless, big money wasn't in on the ground floor. They have stakeholders opinions to think of, and what do they say to investors when they lose all their money on magic internet points?

But they have woken up now. This thing has "popped" many times now and keeps recovering. This thing won't die. could they have been wrong all along? If they want in, how do they get in? They are no dummies, they have been controlling the world their whole lives? Look at the media experiment that Trump is doing? He is testing just how we work... you can do literally anything and we remember it for like 30 seconds, until the next news story comes out. We change opinions very easily. We are swayed very easily. We are their puppets. Media controls the world. They know their way in.

They have ONE WEAPON against cryptocurrency.

YOUR OPINION OF IT.

And they know it.

Media.

That's why FUD is so powerful and needs to be respected. It's why we need to read more than titles on news articles. We need to question what we read, whether it's good news or bad news. We need to think about "what are the motives of the person saying this to me". Does the government have a conflict of interest when they state that crypto is gambling? Do they have skin in the game?

What about wall street? Does WEISS ratings possibly have incentive to come out with poor ratings? Do banks have incentive to lock accounts in order to "protect" customers from "unsafe investments" when their entire business model revolves around holding as much of your money as possible and making money off it? Do you think banks have any super secret hidden interest in preventing you from storing your money elsewhere? I'm not sure, maybe you can critically think about that.

Just understand that this goes both ways. When crypto is booming and Fox news is showing people how to buy $4 ripple on prime time, you may want to start putting in some stop loss orders. When the suicide hotline is stickied at the top of /r/cryptocurrency and everyone is panic selling, you may want to start picking up some firesale deals.

So, the question is this... Is crypto undervalued or overvalued at it's price today? Where is the price going long term? I'm not talking about it's use case, I'm talking about in the court of public opinion, where is THAT going? Because THAT is what is going to drive price in the future.

Without a crystal ball, this is of course impossible to know. Do your own research and form your own opinion. It could very well be that the technology having a use-case will in and of itself drive opinion, and thus price. But make sure you understand that it's not the technology itself, it's not the value of the business itself, it's not the use case itself that will drive price, it is the publics OPINION of that thing which drives price. They are intertwined, but they are NOT the same thing.

TLDR: VERY VERY little money has to move around in order to swing prices drastically, up or down. Money in and out doesn't drive price, OPINION does. How do you let the news you read impact your opinion?How are you being played (on both sides, shilling and FUD).

Something is only worth what people think it's worth. Often that's based on reality, value, business, money, but often it's entirely emotional.

Structure your portfolio in a balance, intelligent way, using risk methodology.. Invest money you are willing to lose. Support legitimate technology and teams who are actively driving their product to completion, coding, and marketing. Stop trying to make money overnight in pump and dump scams, or pyramid schemes.

Every day, take one coin, do a deep dive on it, learn it inside and out. Look into their team and their past. Do that every day for a year, and you just learned 365 coins inside and out. Ask yourself the following key questions:

Have those members consistently jumped ship on previous projects? Is that where you want to invest in? Is their team capable of executing on their vision? Are they trying to solve world hunger, and their team is a few 16 year olds in a garage? How active is their github? Are they adding chunks of code regularly, or is a ghost town? Are they marketing their product at all? Or is marketing the only thing they are doing?

What are the economics of their coin itself? Is it required to be used to gain access to their technology? Are there burns? How premined is it, and what portion do the founders hold?

What about their vision? Are they trying to solve a problem that needs to be solved? What are the economics of that problem and how much money does the solution potentially save clients?

These are all questions you should be asking when you give your money to someone else. We're a lot more stable than we were - a correction was bound to happen. Too much early money wanted to cash in profits. These people have been replaced by new money who is holding on their own ground floor. The whole industry in general is still in very early stages. Rest assured that anyone reading this is still very much an early adopter. Just make sure you are investing in actual technology, and supporting capable teams, and not buying air. Buy the Googles and Amazons of Crypto, not the pets.com or flooz.com of cryptos.

Happy investing everyone.

/EDIT: some have asked to donate some crypto. Do me a favour instead, sub to my YouTube channel (link at top) watch my videos how to get started properly, and plant your own trees and establish food sovereignty for your family and your community, and help save the bees, save our topsoil, and sequester carbon to reverse global warming. My goal is to get a gardener back into every home on the planet. THAT is how we heal this world.

The discourse in the daily is a bit ridiculous TBH, newbies are constantly entering the market while things are green and it is scary AF to see all your value plummet the first few times.

It doesn't help anyone to scold newbies asking about the bear market and I'm constantly seeing shit like "well if you need your money back soon you shouldn't be investing in crypto". Even if that's true, there are plenty of nicer ways to say it and we don't need to be driving away newbies who will ultimately help grow the market. We are all in this together, that is the whole point of decentralized finance.

Anyone who invests in crypto, whether an old holder or a day treader, has a vested interest in the democratization of crypto.

This implies that every day there will be new converts who will need to learn, who will have questions answered a thousand times, who will make mistakes a thousand times made etc.

To treat with condescension, with rudeness, with that stinking humor of "sir I know everything" is not a sign of intelligence: you are just a worthless human unable to rejoice that another human is entering a field that you master.

That you are bitter, it's sad and pathetic, but at the limit we can understand: in this case keep malicious comments for you. If what you said isn't going to help anyone, stay silent.

Here it was a little rant because I'm tired of seeing "old crypto investors" allowing themselves toxic comments that do nothing good to anyone, with the sole aim of satisfying their twisted egos online.

​

And welcome to all NEWBIES : D

​

Edit : Thank you for the rewards, but above all thank you for the positivity of your messages ... if it can help a single newbie to dare to ask his question without being afraid of being demolished, mission accomplished :))

Edit 2 : we are on the front page. If it can help people take the crypto leap and come and ask for our help, we will have won something worth all the cryptos in the world.

With so much uncertainty right now it would be a good time to take some time to go over what happened recently and how to invest moving foward. We've seen a peak bubble at around 850 billion total market cap in the first week of January, consolidated down to $750 billion and have now just experienced a 40% correction.

What's happening now and how bad will it get?

---

First of all you should realize that there is a January Dip that happens every year, when we see a roughly 20-30% decline around mid January. This year its been much more severe though for several additional factors that have compounded on top.

Different theories exist on why this happens (its actually the mirror opposite of the "January Effect" that happens in the US stock market), but the two major theories are:

1) Asian markets pull into fiat because of Asian New Year spending needs

2) People in the US sell in January to defer their capital gains tax liability an extra year

While this cyclic event has lead to a healthy correction in the last few years, this year we got these new factors making more fear as well:

• Yet more scary news on China cracking down on crypto exchanges

• Korea regulatory uncertainty

• European governments talking about regulations

• BTC futures contracts are now expiring this week, and possible manipulation there with contract hedging pushing the price down

• Bitconnect Ponzi finally collapses

• We had a new breed of speculators come in during the November/December timeframe after media made cryptocurrency mainstream following the Bitcoin 10K landmark. While cryptocurrency markets have always had too much hype, the latest rise wasn't just over-enthusiasm in fundamentally sound cryptocurrencies like Monero and Ethereum, but mass inflows of fiat into vaporware and complete nonsense without any use case. Many people came in to essentially gamble on symbols on an exchange, and are thus short term oriented and quick to sell on any slight downturn, which such further adds to selling pressure.

So in essence we got a storm of scary news along with the usual cyclic downturn. Currently I don't see this as being a systematic crash like Mt.Gox was that would lead to a long term bear market because the fundamental ecosystem is still intact, and I suspect that after about a month we should consolidate around a new low. All the exchanges are still operational and liquid, and there is no breakdown in trust nor uncertainty whether you'll be able to cash out. What range the market trades in will all depend how Bitcoin does, right now we've already broken below 10K but I'm seeing a lot of support at around $8000, which is roughly where the long term MA curve settles. We don't know how bad it will get or what the future will bring, but as of right now we shouldn't be in a bear market yet.

What should you do if you recently entered the market?

If you did buy in the last few months at or near ATH, the very worst thing you can do now is sell in panic and lose your principal. You shouldn't have more money in crypto than you can afford to lose, so it shouldn't be a problem to wait. You have to realize that 30% corrections in crypto are relatively common, just last fall we had a 40% flash correction over more China fears. Unless there is a systematic breakdown like we had during Mt.Gox, the market always recovers.

The other worst thing you can do is unload into Tether as your safety net. If there is one thing that could actually cause a long term destruction of trust within the cryptocurrency investment ecosystem, its Tether having a run up on their liabilities and not having enough reserve to cover the leverage. It would not only bring down exchanges but lead to years of litigation and endless media headlines that will scare off everybody from putting fiat in. I don't know when the next Mt.Gox meltdown will occur but I can almost guarantee it will involve Tether. So stay away from it.

What should long term investors do?

For long term holders a good strategy to follow each year is to capture profit each December and swallow the capital gains taxation liability, park a reserve of fiat at Gemini (whose US dollar deposits are FDIC-insured) and simply wait till around late January to early February to re-enter the market at a discount and hold all year until next December. You can keep a small amount in core coins in order to trade around various Q1 opportunities you anticipate. Others may choose to simply do nothing and just keep holding throughout January which is also a perfectly fine strategy. The cyclical correction usually stabilizes toward late January and early February, then we see a rise in March and generally are recovered by end of April. Obviously this decision whether to sell in December to profit on the dip and pay tax liability or to just hold will depend on your individual tax situation. Do your own math sometime in November and follow suit.

Essentially revaluate your positions and trim your position sizes if you don't feel comfortable with the losses.

How to construct your portfolio going forward

---

Rather than seeing the correction as a disaster see it as a time to start fresh. If you have been FOMO-ing into bad cryptos and losing money now is a time to start a systematic long term approach to investing rather than gambling.

Follow a methodology for evaluating each cryptocurrency

---

Memes and lambo dreams are fun and all, but I know many of you are investing thousands of dollars into crypto, so its worth it to put some organized thought into it as well. I can't stress enough how important it is to try and logically contruct your investment decisions. If you follow a set methodology, a checklist and template you will be able to do relative comparisons between cryptocurrencies, to force yourself to consider the negatives and alternative scenarios and also sleep comfortably knowing you have a sound basis for your investment decisions (even if they turn out to be wrong).

There is no ideal or "correct" methodology but I can outline mine:

1) Initial information gathering and filtering

Once I identify something that looks like a good potential investment, I first go to the CoinMarketCap page for that symbol and look at the website and blockchain explorer.

• Critically evaluate the website. This is the first pass of the bullshit detector and you can tell from a lot from just the website whether its a scam. If it uses terms like "Web 4.0" or other nonsensical buzzwords, if its unprofessional and has anonymous teams, stay away. Always look for a roadmap, compare to what was actually delivered so far. Always check the team, try to find them on LinkedIn and what they did in the past.

• Read the whitepaper or business development plan. You should fully understand how this crypto functions and how its trying to create value. If there is no use case or if the use case does not require or benefit from a blockchain, move on. Look for red flags like massive portions of the float being assigned to the founders of the coin, vague definition of who would use the coin, anonymous teams, promises of large payouts...etc

• Check the blockchain explorer. How is the token distribution across accounts? Are the big accounts holding or selling? Which account is likely the foundation account, which is the founders account?

• Read the subreddit and blogs for the cryptocurrency and also evaluate the community. Try to figure out exactly what the potential use cases are and look for sceptical takes. Look at the Github repos, does it look empty or is there plenty of activity?

2) Fill out an Investment Checklist

I have a checklist of questions that I find important and as I'm researching a crypto I save little snippets in Evernote of things that are relevant to answering those questions:

• What is the problem or transactional inefficiency the coin is trying to solve?

• What is the Dev Team like? What is their track record? How are they funded, organized?

• Who is their competition and how big is the market they're targeting? What is the roadmap they created?

• What current product exists?

• How does the token/coin actually derive value for the holder? Is there a staking mechanism or is it transactional?

• What are the weaknesses or problems with this crypto?

3) Create some sort of consistent valuation model/framework, even if its simple

I have a background in finance so I like to do Excel modeling. For those who are interested in that, this article is a great start and also Chris Burniske has a great blog about using Quantity Theory of Money to build an equivalent of a DCF analysis for crypto.

Here is an Excel file example of OMG done using his model. You can download this and play around with it yourself, see how the formulas link and understand the logic.

Once you have a model set up the way you like in Excel you can simply alter it to account for various float oustanding schedule and market items that are unique to your crypto, and then just start plugging in different assumptions. Think about what is the true derivation of value for the coin, is it a "dividend" coin that you stake within a digital economy and collect fees or is it a currency? Use a realistic monetary velocity (around 5-10 for currency and around 1-2 for staking) and for the discount rate use at least 3x the long term return of a diversified equity fund.

The benefit is that this forces you to think about what actually makes this coin valuable to an actual user within the digital economy its participating in and force you to think about the assumptions you are making about the future. Do your assumptions make sense? What would the assumptions have to be to justify its current price? You can create different scenarios in a matrix (optimistic vs. pessimistic) based on different assumptions for risk (discount rate) and implementation (adoption rates).

If you don't understand the above thats perfectly fine, you don't need to get into full modeling or have a financial background. Even a simple model that just tries to derive a valuation through relative terms will put you above most crypto investors. Some simple valuation methods that anyone can do

• Metcalfe's Law which states that the value of a network is proportional to the square of the number of connected users of the system (n^2). So you can compare various currencies based on their market cap and square of active users or traffic.

• Another easy one is simply looking at the total market for the industry that the coin is supposedly targeting and comparing it to the market cap of the coin. Think of the market cap not only with circulating supply like its shown on CMC but including total supply. For example the total supply for Dentacoin is 1,841,395,638,392, and when multiplied by its price in early January we get a market cap that is actually higher than the entire industry it aims to disrupt: Dentistry.

• If its meant to be just used as just a currency: Take a look at the circulating supply and look at the amount that is in cold storage or set to be released/burned. Most cryptos are deflationary so think about how the float schedule will change over time and how this will affect price.

Once you have a model you like set up, you can compare cryptos against each other and most importantly it will require that you build a mental framework within your own mind on why somebody would want to own this coin other than to sell it to another greater fool for a higher price. Modeling out a valuation will lead you to think long term and think about the inherent value, rather than price action.

Once you go through this 3-step methodology, you'll have a pretty good confidence level for making your decision and can comfortably sit back and not panic if some temporary short term condition leads to a price decrease. This is how "smart money" does it.

Think about your portfolio allocation

---

You should think first in broad terms how you allocate between "safe" and "speculative" cryptos.

For new investors its best to keep a substantial portion in what would be considered largecap safe cryptos, primarily BTC, ETH, LTC. I personally consider XMR to be safe as well. A good starting point is to have between 50-70% of your portfolio in these safe cryptocurrencies. As you become more confident and informed you can move your allocation into speculative small caps.

You should also think in terms of segments and how much of your total portfolio is in each segment:

• Core holdings - BTC, Ethereum, LTC...etc

• Platform segment - Ethereum, NEO, Ark...etc

• Privacy segment - Monero, Zcash, PivX..etc

• Finance/Bank settlement segment - Ripple, Stellar...etc

• Enterprise Blockchain solutions segment -VeChain, Walton, WABI...etc

• Promising/Innovative Tech segment - Raiblocks, IOTA, Cardano...etc

You should also think about where we are in the cycle, as now given so much uncertaintly its probably best to stay heavily in core holdings and pick up a few coins within a segment you understand well. If you don't understand how enterprise solutions work or how the value chain is built through corporations, don't invest in the enteprise blockchain solutions segment. If you are a technie who loves the technology behind Cardano or IOTA, invest in that segment.

Think of your "circle of competence"

---

This is actually a term Buffet came up with, it refers to your body of knowledge that allows you to evaluate an investment. Think about what you know best and consider investing in those type of coins. If you don't know anything about how supply chains functions, how can you competently judge whether VeChain or WaltonChain will achieve adoption?

This where your portfolio allocation also comes into play. You should diversify but really shouldn't be in much more than around 12 cryptos, because you simply don't have enough competency to accurately access the risk across every segment and for every type of crypto you come across. If you had over 20 different cryptos in your portfolio you should probably think about consolidating to a few sectors you understand well.

Continually educate yourself about the technology and markets

---

If you aren't already doing it: Read a bit each day about cryptocurrencies. There are decent Youtubers that talk about the market side of crypto, just avoid those that hype specific coins and look for more sceptical ones like CryptoInvestor. If you don't understand how the technology works and what the benefits of a blockchain are or how POS/POW works or what a DAG is or how mining actually works, learn first. If you don't care about the technology or find reading about it tedious, you shouldn't invest in this space at all.

Summing it up

---

I predicted a few days ago that we would have a major correction in 2018 specifically in the altcoins that saw massive gains in Decemeber/early January, and it seems we've already had a pretty big one. I don't think we'll have a complete meltdown like some are predicting, but some more pain may be incoming.

Basically take this time to think about how you can improve your investment style and strategy. Make a commitment to value things rather than chasing FOMO, and take your time to make a decision. Long term investment will grant you much more returns as will a systematic approach.

Take care and have fun investing :)

Edit March 2018: Lol looking back I'm regretting starting the title with "Why we won't have a long term bear market" now, I was more karma whoring with that catchy title than anything. We recovered up to 11K from this post, but then crashed again hard later in February-March because of a slew of reasons from Tether subpeona to unforseen regulatory issues.

1) Initial information gathering and filtering

Once I identify something that looks like a good potential investment, I first go to the CoinMarketCap page for that symbol and look at the website and blockchain explorer.

• Critically evaluate the website. This is the first pass of the bullshit detector and you can tell from a lot from just the website whether its a scam. If it uses terms like "Web 4.0" or other nonsensical buzzwords, if its unprofessional and has anonymous teams, stay away. Always look for a roadmap, compare to what was actually delivered so far. Always check the team, try to find them on LinkedIn and what they did in the past.

• Read the whitepaper or business development plan. You should fully understand how this crypto functions and how its trying to create value. If there is no use case or if the use case does not require or benefit from a blockchain, move on. Look for red flags like massive portions of the float being assigned to the founders of the coin, vague definition of who would use the coin, anonymous teams, promises of large payouts...etc

• Check the blockchain explorer. How is the token distribution across accounts? Are the big accounts holding or selling? Which account is likely the foundation account, which is the founders account?

• Read the subreddit and blogs for the cryptocurrency and also evaluate the community. Try to figure out exactly what the potential use cases are and look for sceptical takes. Look at the Github repos, does it look empty or is there plenty of activity?

2) Fill out an Investment Checklist

I have a checklist of questions that I find important and as I'm researching a crypto I save little snippets in Evernote of things that are relevant to answering those questions:

• What is the problem or transactional inefficiency the coin is trying to solve?

• What is the Dev Team like? What is their track record? How are they funded, organized?

• Who is their competition and how big is the market they're targeting? What is the roadmap they created?

• What current product exists?

• How does the token/coin actually derive value for the holder? Is there a staking mechanism or is it transactional?

• What are the weaknesses or problems with this crypto?

3) Create some sort of consistent valuation model/framework, even if its simple

A simple model that just tries to derive a valuation through relative terms will put you above most crypto investors. Some simple valuation methods that anyone can do:

• Metcalfe's Law which states that the value of a network is proportional to the square of the number of connected users of the system (n2). So you can compare various currencies based on their market cap and square of active users or traffic.

• Another easy one is simply looking at the total market for the industry that the coin is supposedly targeting and comparing it to the market cap of the coin. Think of the market cap not only with circulating supply like its shown on CMC but including total supply.

• If its meant to be just used as just a currency: Take a look at the circulating supply and look at the amount that is in cold storage or set to be released/burned. Most cryptos are deflationary so think about how the float schedule will change over time and how this will affect price.

Once you have a model you like set up, you can compare cryptos against each other and most importantly it will require that you build a mental framework within your own mind on why somebody would want to own this coin other than to sell it to another greater fool for a higher price. Modeling out a valuation will lead you to think long term and think about the inherent value, rather than price action.

Once you go through this 3-step methodology, you'll have a pretty good confidence level for making your decision and can comfortably sit back and not panic if some temporary short term condition leads to a price decrease. This is how "smart money" does it.

Think about your portfolio allocation

You should think first in broad terms how you allocate between "safe" and "speculative" cryptos. For new investors its best to keep a substantial portion in what would be considered largecap safe cryptos, primarily BTC and ETH. I personally consider XMR to be safe as well. A good starting point is to have between 50-70% of your portfolio in these safe cryptocurrencies. As you become more confident and informed you can move your allocation into speculative small caps.

You should also think in terms of segments and how much of your total portfolio is in each segment:

• Core holdings - BTC, Ethereum
• Smart contracts platform segment - Ethereum, Polkadot, ALGO, Solana …etc
• Privacy segment - Monero, Zcash …etc
• Finance/Bank settlement segment - Stellar ...etc
• Enterprise Blockchain solutions segment -VeChain ...etc
• Promising/Innovative Tech segment: NANO, ADA, Tezos ...etc

You should also think about where we are in the cycle, as now given so much uncertaintly its probably best to stay heavily in core holdings and pick up a few coins within a segment you understand well. If you don't understand how enterprise solutions work or how the value chain is built through corporations, don't invest in the enteprise blockchain solutions segment. If you are a techie who loves the technology behind a coin, invest in that.

Think of your "circle of competence"

This is actually a term Buffet came up with, it refers to your body of knowledge that allows you to evaluate an investment. Think about what you know best and consider investing in those type of coins. If you don't know anything about how supply chains functions, how can you competently judge whether VeChain will achieve adoption?

This where your portfolio allocation also comes into play. You should diversify but really shouldn't be in much more than around 12 cryptos, because you simply don't have enough competency to accurately access the risk across every category and for every type of crypto you come across. If you had over 20 different cryptos in your portfolio you should probably think about consolidating to a few sectors you understand well.

Continually educate yourself about the technology and markets

If you aren't already doing it: Read a bit each day about cryptocurrencies. There are decent Youtubers that talk about the market side of crypto, just avoid those that hype specific coins and look for more sceptical ones like CryptoInvestor. If you don't understand how the technology works and what the benefits of a blockchain are or how POS/POW works or what a DAG is or how mining actually works, learn first. If you don't care about the technology or find reading about it tedious, you shouldn't invest in this space at all.

————————————————————————

There is no tldr haha. That was a pretty long one and I think it just about covers everything. Hope it helps!

Hi all, a few weeks ago I made a post listing all the top 50 coins by category.

I have added all that information into an infographic, as well as adding new coins, new categories and making some changes based on your feedback.

I hope you find it useful.

Edit: Due to popular demand I have added Moons (MOON)

Edit 3: Version 2.0 is below. Thanks for everyone's feedback.

Changes:

1. Certain coins are easier to see
2. Some categories moved for less confusion, e.g. privacy coins are now under currency along with stablecoins.
3. Icons have been added for ERC20, BEP2/BEP20, and Forks
4. Some descriptions changed slightly for accuracies
5. Some typos fixed (e.g. USDC instead of CSDC)
6. Stellar moved out of the distributed computing category as it doens't offer an on-chain programming language or on-chain smart contracts, it now bridges the currency and finance categories.

​

https://preview.redd.it/ldgh69f4ioc71.png?width=1690&format=png&auto=webp&s=61f1cf41a1f8d9f912507a5c3971e4434189a21e

​

Edit2: Thanks for all the fantastic feedback and awards. I'm working on a version 2 which will address some of the issues people have had.

1. Certain coins hard to find/unclear
2. I didn't intend for privacy coins to look like it was a subset of store of value, however it looks like people are interpreting it that way. I am going to move it under currency and change a few things round so similar categories are grouped together.
3. Thinking of adding icons next to coins indicating additional properties of that coin, e.g. ERC20 token, BSC20 token, Fork of bitcoin
4. Description of DeFi section is off, because some of the projects are centralised, so am changing it to just 'financial services'
5. Various small typos/capital letter inconsistencies.
6. Changing Stellar/XLM to just currency, and possibly make it part of the DeFi group, as the smart contracts are not executed on chain, and so it can't really be considered distributed computing.

https://preview.redd.it/0e63xzwctjc71.png?width=1723&format=png&auto=webp&s=12514060a09a160f1eb12d40436c0020e6018ffe

Intro

Yesterday, somebody in the comments of some thread asked for an ELI5 on why US bond rates matter and what their relationship is with markets and economies. What I wrote ended up being more like an ELI12, and also ended up being quite long; in any case, I have decided to modify it a bit and turn it into its own post.

What are bonds

First, an introduction on what bonds actually are.

Simply put, a bond is the "asset side" of governmental or corporate debt. When a government or corporation borrows money, the borrower now holds a liability, and the lender holds an asset, which is expected to return them their original investment (the money they lent) plus profit (interest) at some later date. A bond is basically a token that says some government or company owes you some amount of principal by some date known as the maturity date (usually 3 months to 30 years, depending on the type of bond), plus interest. Because bonds are a tokenization of debt, they can be easily traded in a liquid, open market, just like stocks. This means that the original lender does not need to be the person who is repaid when the bond matures; the repayment and interest simply goes to whomever holds the bond at the time.

There are two main types of bonds: corporate bonds, and government bonds.

Corporate bonds are the main way companies raise money, apart from selling shares.

Government bonds are how the government raises money to cover budget deficits (ie: when the government spends more than they have the tax revenue to spend, they borrow the remainder by selling bonds to whomever will buy them). If nobody is buying the government bonds, the interest will go up organically due to supply and demand until people are willing to buy them. Government bonds are often known as treasuries, and are broken down into three categories: treasury bills (short-term maturity), treasury notes (mid-term maturity), and treasury bonds (long-term maturity).

One of the main buyers of US government bonds is the Federal Reserve, which is the name of America's central bank. This is the entity that is able to actually print US dollars. Everyone has heard of things like how the US government recently ran huge deficits due to "stimulus spending", and that it printed the money it needed for that spending. Well, this is a slightly inaccurate picture of how it works. The government chooses fiscal policy, which means they build the budget and they set the tax rates. They are the ones who choose to overspend and run a deficit. However, they don't choose monetary policy: they cannot print money. This power was delegated by congress to the Federal Reserve over 100 years ago.

So, when the government runs a deficit, they sell bonds to borrow the money. If the FED chooses to, it can print a whole bunch of money and then lend that money to the government (ie: the taxpayer) by buying the government bonds with it. That is how newly printed money actually gets into the economy: the FED prints it and then lends it out to companies and to the government by buying corporate and government bonds. When the FED buys a bunch of treasuries (government bonds), it is really lending out freshly-printed cash to the American people (since the government's liabilities are really the taxpayers' liabilities), and the people then owe that money, with interest, back to the FED by the time the treasury matures.

When the FED decides to buy up the government's bonds in order to lend to the taxpayers the money that congress is spending, they are also putting downward pressure on the bond interest rate. This is because, if the FED decided not to lend a bunch of money to the government to cover its deficits, the bond interest would organically rise through supply & demand until other buyers (individuals, companies, foreign investors, whatever) are willing to buy those bonds.

So, when the FED wants to keep bond interest low, they achieve this indirectly by creating what is basically artificial demand for US bonds by buying a ton of them with money that they printed at no cost to themselves. Due to how supply & demand works with debt, the more demand there is for bonds, the lower the interest those bonds offer.

So, the Federal Reserve executes its main task of managing the US bond rate by choosing how much government debt it buys. If they want bond rates to go up, they will print less cash and buy fewer bonds. If they want it to go down, they will print more cash and buy more bonds.

The FED is essentially a whale with the power to print money, who uses said printed money to manipulate the US bond market, ostensibly for the good of everybody.

The risk-free rate

The interest rate on American government bonds is considered one of the most important variables in the American (and even worldwide) economy. This is because the American gov is considered the de-facto safest borrower of all borrowers in the world. In other words, if I buy an American government bond, I am lending my money to the entity that is considered to have the smallest risk of defaulting in the world (maybe this is arguable, but regardless this is a premise that is at the core of the world economy; what's important is that people believe it).

There is a concept in economics called the "risk-free rate". This is the interest you can get for lending your money to a 0-risk borrower, and should logically be the lowest interest rate you see anywhere in that economy. Of course, there is always technically some risk when you lend money, so the risk-free rate is technically imaginary. However, in practice, just about everybody considers the US bond rate (specifically, treasury bills, the US bond with the shortest maturity) to be the risk-free rate, as the risk is considered to be so low as to be negligible.

So, if buying American gov bonds is the safest way to lend money, it means that every single other form of loan must pay higher interest. Why? Because every other borrower is considered higher risk, and for me as a lender, I will not accept less interest for greater risk. So, if American bond interest goes up, all other loan interest (corporate bonds, bank loans, mortgages, credit cards, whatever) will organically go up, because everything must pay greater interest than American bonds to compensate for greater risk. This is simply a matter of supply & demand mechanics.

So, American bond interest is kind of like the baseline or the "sea level" for all interest rates in the entire economy. This even stretches to other countries, because anyone can buy a bond from the US gov, and they are considered the safest borrower in the world, so nobody will ever lend money to anybody else unless they are compensated with greater interest than US bond interest.

The cost of capital

So, if US bond rates go up, and therefore all interest in the economy goes up, that means money itself has gotten more expensive. Loan interest is literally just the cost of money (known as the cost of capital). The lesser the interest, the cheaper it is for me to acquire money right now. When you realize that the entire world runs mainly on debt, it becomes clear how significant this phenomenon is.

So, when US bond rates go up, the price of capital itself goes up. That means it becomes more costly for businesses to raise money, more costly to mortgage a house, more costly to open a line of credit to buy investments, more costly to spend with credit cards, more costly to use leverage in securities markets, etc.

This means that growth goes down, spending goes down, wages go down, etc. It also means the prices of goods go down (or at least climb slower), because people aren't willing to pay as much, since capital itself is more expensive to acquire.

What happens when prices go down? Well, that's a reduction in inflation. So, when inflation is getting too high, the FED (central bank) will make bond interest go up to apply recessive forces on the economy to curb said inflation.

If inflation is low, the FED might reduce bond interest in order to make the cost of capital lower to juice the economy, prop up securities markets, and incentivize growth. Too much growth though, and we end up with inflation again, meaning the FED might increase rates again. This causes a sort of wave-like dance between bond rates and the heat of the economy.

So, the FED influences bond rates ostensibly to keep the economy balanced: not too hot and inflationary (can be very bad) and not too cold and deflationary (also can be very bad).

It is also worth noting that the FED wields a couple other levers it can use to increase or decrease the cost of capital (ie: the general interest rates in the economy) that are separate from bond rates. They can change the reserve requirements of banks (what percentage of total assets a bank must hold in reserve). If banks need to hold more in reserve, then they have less liquid money to lend out, so the supply of capital goes down, so market interest (cost of capital) rises. Also, the FED can change the discount rate, which is the amount of interest they charge banks for short-term loans (24 hours or less) from the FED itself. When these rates go up, banks are disincentivized from borrowing from the FED, so the banks end up with less liquid capital, which means they need to be more conservative about the loans they themselves give out, which makes the supply of capital go down and thus the cost of capital go up.

What does this mean for markets?

When bond rates go up, most investment markets go down. Why? Well, the higher bond rates go, the more I can make by investing in bonds, without the risk going up. So, as bond rates go up, it becomes more and more attractive to move my wealth out of riskier markets like stocks and into what is considered the safest investment market in the world: US bonds. Since rates going up means I get greater returns on my bond investments, but the risk doesn't change, US gov bonds become more and more sensible to an investor as the rates increase.

Of course, bonds rates going up a smidgen doesn't actually suddenly make bonds a strategically more sound investment than riskier things like stocks. In fact, US bond rates have been so comically low for so long that it hasn't made much sense to buy bonds in years (decades, really). However, when people hear that the FED is going to increase bond rates, they think "bond rates going up means people will sell stocks to buy bonds, so I better sell now to front-run that", which is the main thing that actually causes stocks to fall when bond rates increase.

How crypto will fare with increasing bond rates is unknown, because rates have been declining ever since BTC was born, until very recently. Personally, I imagine crypto will follow stocks down if rates go up too much, but nobody knows for sure.

Some historical context

US bond rates hit an ATH in 1981 around 15% (edit: some sources seem to say 20%; unsure which is correct). Unsurprisingly, the stock market hit a low at the same time (like I said before, the orthodox narrative is that there is an inverse relationship between bond rates and most securities markets). Think about how ridiculous 15% bond rates are. That would mean you could buy what is definitionally the safest investment available and get 15% returns each year. By contrast, the safest stock ETFs (still way riskier than US bonds) average like 7% a year.

So, in the 80s, you could double your money every 5 years while accepting what is usually considered 0 risk. Ever wonder why boomers seemed to get wealthy so easily? This is one of the reasons.

Since the ATH in 1981, the treasury bond rate has fallen continuously until Covid hit, at which point it pivoted at a low of about 0.5%. Since then, it has been going back up, but is still extremely low, at around 1.5%.

Since bond rates going down means stocks go up (at least, this is a very popular narrative, though some disagree), the stock market has been in a tremendous and arguably unnatural bull run for about 40 years, only pausing twice very briefly for "corrections" circa 1999 and 2008.

Since US bond rates have gotten so close to 0%, they can't really lower them any further without going negative (which is actually a thing, and some countries are trying negative interest now. This is an extremely weird rabbit hole that nobody really knows the true consequences of yet. Imagine getting paid to borrow money. Several countries have been experimenting with this over the last 7 years, and a few I believe for even longer). The chair of the FED (Jerome Powell) said a few months back that they have no intention of going to negative interest rates, so that means these past 40 years of propping up markets by reducing bond rates has probably come to an end.

You could think of the continuous lowering of rates for the last 40 years as the FED spending its ammunition to prop up markets and propel economic growth, but now that rates are barely above 0% and the FED isn't willing to go negative, they are out of ammo. Not only are they out of ammo when it comes to lowering the rates, but one might also argue they are also currently incentivized to increase rates to combat rising inflation.

This is why there is fear. The FED has been sticking its hands in for 40 years to prop up markets, and now it seems they are going to stop, at least for now.

I hope this ELI5 ELI12 ELI-an-Intro-to-Econ student about why US gov bond rates are such an important concept for understanding global economics has been enlightening!

What is a DAO? Standing for Decentralized Autonomous Organization, a DAO is an internet-native blockchain-derived investor-directed venture capital fund organization managed by all members. At its core they have an objective to provide a decentralized business model for all future enterprises. Mark Cuban called them “the ultimate combination of capitalism and progressivism.”

One important aspect is that all code is open-source. This is done with the aim to eliminate human error, manipulation, and third parties, by having an automated crowdsourced process of decision-making. Unlike a company, DAOs have democratized organizations allowing all members to vote for any implemented change. The DA organization is represented by transparent computational rules, secured on the digital ledger across the internet, hardened against forgery by timestamping, and disseminated as a distributed database. The DAO is controlled by the members; no managers or basses are needed.

Bitcoin in essence is the first fully functional DAO with programmed rules and functional autonomy through consensual protocol; the miners and nodes signal voting through support.

DAOs need four things really;

• A set of rules,
• A funding token,
• Voting right provisions,
• A clear structure & roadmap

DAOs	A traditional corporation
Flat hierarchy.	Hierarchical.
Voting required for any changes.	Changes demanded from sole party, voting may be offered.
Voting outcome implemented automatically.	Tallied internally and outcome handled manually.
Services handled automatically in a decentralized manner.	Human handling, centrally controlled automation, prone to error and manipulation.
All activity transparent and public.	Activity private.

Creation of a DAO:

• Step one; create a smart contract that once launched the rules can only be changed by coded governance system.
• Step two; sources of funding must be determined and governance must be engaged, typically funded via token sale that come with voting rights.
• Step three; deploy smart contract on the blockchain from which point onward stallholders will decide future organization. The dev(s) have no more influence than any other stakeholder.

​

How can I join a DAO?: Just invest in their token, and boom, you’ve joined. The smart contract token you just bought establishes the DAO’s rules, most likely you have to stake the token or another in the DAO to get voting rights and influence operations. This is typically done by deciding on and creating governance proposals. The fact that you need to stake to create proposals is to prevent spam proposals, and only (typically) proposals will pass if a majority of stakeholders approve (different percentage majority per DAO; specified in the smart contract).

What’s the point? Where is the need? Are we all not internet native, or soon will be? DAOs are internet-native organizations with technological advantages compared to traditional companies. They have and establish a higher level of trust then say, the classical corporate hierarchy. Only the open source code needs to be trusted which is transparent thus auditable and verifiable at any time. This solves the economic principle-agent-dilemma where there may be a conflict of priorities between a group and those making the decisions for the group. The answer is community governance where incentives are aligned. There are charity DAOs, ones for NFT investments, for funding projects by Black women and non-binary artists, for funding women and non-binary crypto founders, some are exclusive social clubs, and others are for-profit business applications. I’ve even seen freelance DAO networks of contractor.

Examples of DAOs: Aragon, MakerDAO (MKR), DAOstack, DASH, JennyDAO, Jelurida, SharkDAO, DAOhaus, RaidGuild, Proof Of Humanity, Opolis, BanklessDAO, MolochDAO,

Downsides of DAOs: No organization is perfect, decentralized or autonomous or not. This is extremely new technology that continues to attract criticisms over legality, security, and structural issues. As a DAO can be distributed across multiple jurisdictions, there is no legal framework. One may have heard about ‘The DAO’ crashing, as back in 2016. ‘The DAO’ was launched on Ethereum and raised $150 million in ETH (largest crowdfunding effort at the time) but a few days later developers expressed concern about a bug that would allow malicious actors to drain funds, and while a proposal was set forth to fix it an attacker took $60 million worth of ETH. At the time, 14% of all circulating ETH was invested in ‘The DAO’. Chaos ensued and a hardfork was implemented on ETH. Those who disagreed moved to support an earlier version of the ETH network, which became known as Ethereum Classic, or ETC. Point being if any gaps in the contract framework aren’t closed before launch, it can lead to potential theft and money loss. There is no such thing as a fully D & A organization. Depending on governance, there are only various levels of decentralization. While the network may have independent but equal network actors, the smart contract rules themselves will always be a centralized loss of direct autonomy; architecturally and geographically decentralized yes but logically centralized on the protocol. Upgrading of code is often delegated to experts who understand techno-legal intricacies of code and are therefore a point of centralization.

Future of DAOs: Despite the potential for DAOs to revolutionize the industry, and be a disruptive force to corporate structuring as a whole, they face security and legality issues. As we all know the SEC claims some blockchain based companies might have made illegal offers of unregistered securities. There is also a lack of understanding about cryptocurrencies from new investors, not to mention the technical competence one needs to understand the computational infrastructure and consensus mechanisms within the smart contract to feel good about investing in it. It’s not all bad though, Wyoming just became the first state to recognize DAOs as legal entities. DeepDAO says there are about 181 DAOs, with an ecosystem’s total assets under management (AUM) of $13.4 billion.

Somewhere, in some business boardroom, people are trying to figure out how to integrate self-driving cars into DAOs of autonomous taxi drivers. You order an Uber and it comes, no company, just code.

Sometimes I feel that this subreddit is still stuck in 2017 talking about dead coins, whereas there’s this whole wonderful world of defi and web3 filled with life changing gains that I never see talked about here. But I want that to change so I’m putting together this huge list of all the cool things you can do in defi and web3.

Trustless Loans

Defi is revolutionary for this. With Maker (or many other protocols), you can deposit collateral & take a loan on your assets to use in the real world wherever. This process involves no bank, no intermediary fees and offers much higher yield than trad finance. In fact, Tesla just did a real estate backed loan with maker dao.

​

https://preview.redd.it/pa8dz8uan5v81.png?width=1650&format=png&auto=webp&s=5e304f1bad425e5f8fc4d74ad574c99144aae374

Lottery

Want to join the lottery? Well, PoolTogether isn't just any lottery. It's a DeFi protocol allowing for "no loss lotteries." How? Users are able to deposit funds, & yield is given to a verifiably random address in the pool. Losers can then still withdraw their assets.

​

https://preview.redd.it/cxdhkz5vn5v81.jpg?width=1017&format=pjpg&auto=webp&s=2e5a9657ec4839cc0175e3987fb97957017656b2

Aave Flash loans

If I told you that you could get millions of dollars in assets in seconds, with no bank, with no collateral, and at no risk to the lender... I'd probably sound crazy, right? Well, flash loans on Aave are built to be repaid in the same tx, otherwise it'll revert and fail. You can do this to perform arbitrage trades and other cool things.

​

https://preview.redd.it/vvo2akyxn5v81.jpg?width=574&format=pjpg&auto=webp&s=ef6e331a505d1c9a3b9814d5d979dfc51b699672

Gambling

Want to place a bet? There are many options to choose from on Ethereum, the most popular being augur. This is a global, no-limit betting platform where you can bet on sports events, economics, world events, and a whole lot more on a decentralized marketplace.

​

https://preview.redd.it/thvxkqtwn5v81.jpg?width=1200&format=pjpg&auto=webp&s=6a96eec9d9b201dcf23373d075447582045a97ac

Yield farms

Not interested? Do you prefer to just hodl your coins and not think about them? Why not earn some passive interest in the process! Head over to YFI & join the yield farms, with many different options to choose from. The YFI community works hard at developing strategies for their vaults, acting like a high interest savings account. Users can deposit & immediately start earning yield!

​

https://preview.redd.it/yc8bosuyn5v81.jpg?width=1200&format=pjpg&auto=webp&s=e7b30cdb16cf1d4a1e5d0649251e81f802517eb3

DEX liquidity providing

Speaking of liquidity mining... Do you have assets that you’re bullish on and that you want to put to work? Many DeFi protocols such as Uniswap, Sushiswap, & Curve are in need of liquidity. Deposit tokens of your choice to start earning yield in different tokens, & earn trade fees on swaps! Careful though as this exposes you to impermanent loss.

​

https://preview.redd.it/p4oqabd0o5v81.jpg?width=1200&format=pjpg&auto=webp&s=12f2b0e93b1d6deadb1fab38d02e7ea97475ed0f

Lido (staked eth)

Do you hate having to worry about opportunity cost of locking up your eth? Of course, that's not a problem for DeFi. Simply access liquid staking derivatives in order to unlock liquidity and put it to use. sETH represents staked ETH on Lido. After depositing, these sETH can be used in DeFi.

​

https://preview.redd.it/zldclbe1o5v81.png?width=820&format=png&auto=webp&s=9cacfd74f24133883b14f06d63d0de6ced475fc0

Curve

This protocol is an absolute behemoth with about $20 billion in TVL making it the largest protocol by total value locked. Visit Curve to start earning complex, double digit yields on your holdings. Curve has incentivized stablecoin pools, which people use to trade high volumes with minimal slippage, and even conduct arbitrage for yield.

​

https://preview.redd.it/hk5c8ph2o5v81.jpg?width=1200&format=pjpg&auto=webp&s=1e134b3eeed1b1ea55defa2a7c20cf0c9f3fb983

You can stake your CRV tokens on convex finance to earn yields from curve trading volume and bribes from protocols trying to incentivize liquidity. This is a whole rabbit hole that I will make another post about.

​

Abracadabra

Have some more appetite for risk? Go beyond just yield farming and take on leveraged yield farming! Some protocols allow users to deposit interest-bearing assets, and borrow stablecoins Tokens earning yield on CRV can be used as collateral for Abracadabra, for maximized composability.

​

https://preview.redd.it/1ksh04x3o5v81.jpg?width=1200&format=pjpg&auto=webp&s=7f1578b6bb30ab67d755ee876b849dd58bf6e1b1

Balancer

Want to balance pools?Balancer is a liquidity provision dapp allowing users trade on various tokens. Rather than swapping tokens in several pools, Balancer only ever transfers the net amount of tokens out of a single pool, resulting in significantly cheaper trades.

​

https://preview.redd.it/iyin68z4o5v81.jpg?width=1000&format=pjpg&auto=webp&s=a72e544836c19642d7008975e1388eb78379e488

Synthetic stocks/forex

Want to trade other real world assets on the blockchain? Synthetix offers a platform for users to swap various synthetic tokens like stocks, forex, or even precious metals! They use oracles which take data off-chain and bring them on-chain to offer tokens which are pegged to real life assets...

​

https://preview.redd.it/7j5swst5o5v81.jpg?width=1200&format=pjpg&auto=webp&s=b8a64e4121f821e296e41e42116afe044be90b99

Defi pulse index

Don’t want to think about it all too much and just wanna passively invest in an index? Of course it's possible. There are a handful of DeFi native indexes that offer exposure to a basket of assets in a single, convenient token. This can be an index of the top tokens in DeFi, a basket of NFTs, or anything else you could imagine.

​

https://preview.redd.it/qa7xiu47o5v81.jpg?width=833&format=pjpg&auto=webp&s=79a642ab587aaa9ca298005fb11e3788cec678fc

DYDX

Want to trade with leverage? DYDX offers the perfect interface for this! On it, you can trade perpetuals at any time on a variety of different contracts that are supported. It uses StarkWare's layer 2 solution for increased security, fast withdrawals, and cheap trades.

​

https://preview.redd.it/bm39i488o5v81.jpg?width=709&format=pjpg&auto=webp&s=c4ad25d6459e379345196667661cad46ae636a0d

Airswap

Want to swap tokens p2p?

AirSwap offers a unique P2P DEX: entirely open-source, supporting gas-less swaps. You can set up a trust-less trade with any counter-party, to conduct swaps that will only occur once specified conditions are met. This is perfect for OTC.

​

https://preview.redd.it/uhxd0479o5v81.jpg?width=1200&format=pjpg&auto=webp&s=56f364750cbc5ca9e4a792948fd5d4f29fec43fd

Fixed forex

Want to trade various forex currencies? Fixed Forex provides an alternative to USD denominated stable coins. It allows liquidity providers exposure to currencies such as EUR, KRW, GBP, CHF, AUD, and JPY. On the DEX, you can make trades with no slippage & minimal fees.

​

https://preview.redd.it/7r496x2ao5v81.jpg?width=1188&format=pjpg&auto=webp&s=8e84218f447f1127b53e26edea74cdada96c9e98

Barnbridge

Want to tokenize your risk? Barnbridge is a fluctuations derivatives protocol for hedging yield sensitivity and market price for assets. Using tranched volatility derivatives, Barnbridge lets you clarify the exposure to risk you want to take on a specific token.

​

https://preview.redd.it/7vdxiavao5v81.jpg?width=1200&format=pjpg&auto=webp&s=fdd9919fc582e7ad532d3788521d36d437c6f86e

Gnosis

Want a multi sig? Gnosis provides a dApp for easily making multi-signature wallets that require multiple addresses to approve a transaction. This is especially useful for project treasuries, daos, and anything else you could imagine. These are customizable in many unique ways.

​

https://preview.redd.it/sqei6pgdo5v81.png?width=800&format=png&auto=webp&s=2f1e94ff4c15992ba6c86186b6192da1e3f6f133

I wrote this article yesterday, to explain how a coin comes into play on the blockchain. I later realized that a lot of people may not know the differences between a “coin” and a “token”, so I’m going to explain that here!

Let’s start off with what a blockchain even is! A blockchain is just software that is open source and distributed across many computers. These computers that run the blockchain software are considered “nodes”, and they keep track of the blockchain ledger, and any coins, tokens, and transactions associated with it.

The “coins” on the blockchain are just data (ones and zeroes) that is already written into the software. Using Bitcoin as an example, all 21 million Bitcoins are already in the Bitcoin software, and ownership of these coins is designated through the use of public and private keys, which gives the owners access to their Bitcoin on the blockchain. Also, with each new transaction block that is mined, new Bitcoins are awarded to the miners that processed these blocks. I touched on this whole process in my previous post.

In other words, “coins” on a blockchain are just part of the software itself, and are there from it’s inception.

Tokens work a bit differently, in that they’re smart contracts that are deployed onto a blockchain, and are not innate to the blockchain software itself. Using Ethereum as an example, a token (such as an ERC-20 token), is something that a user creates, and deploys onto the blockchain software via smart contracts. When a token is added to the blockchain, the creator of the token is able to write the rules for how a token will work i.e. the max supply, tokenomics, burn rate, functions, etc. All of this is handled in the smart contract portion of it’s creation. Tokens do not have their own blockchain, so they have to abide by the rules of the governing blockchain i.e. Ethereum.

Hopefully this helps to explain the differences between a “coin” and a “token”!

What is a smart contract? How do smart contracts work? And what are they good for? I'll try to answer these questions in this post.

What are smart contracts?

A smart contract is an agreement between two or more parties in the form of computer code. The contracts are stored on the blockchain and cannot be changed. Transactions that take place in a smart contract are processed by the blockchain, which means they can be sent automatically without the intervention of a third party. When you enter into an agreement with a smart contract, no confidential advisor is required. The transactions only take place if the conditions in the agreement are met.

What can smart contracts do?

Smart contracts help you exchange money, stock or anything else of value in a transparent, trustless manner, all while avoiding the services of an intermediary and the possibility of conflict. Smart contracts provide you:

• Autonomy - You are the one who makes the deal and you don't have to rely on an intermediary to confirm transactions. The execution is automatically managed by a decentralized network, which excludes manipulation of contracts.
• Speed ​​- Automated contracts can save you hours on manual paperwork.
• Security - Smart contracts are secured with similar cryptography that encrypts websites. In short, it keeps your documents safe.
• Savings - Because they disable the presence of an intermediary, smart contracts can save you a lot of money. Where, for example, you would normally have to pay a notary to witness your transaction, this is now regulated by the blockchain.
• Backup - Unlike files on your computer, data on the blockchain is duplicated many times over. So you do not have to be afraid of losing something that is registered on the blockchain. Also, there is no way anyone can say they lost the contract or the dog ate it.

A smart contract in effect

As an example; If you were to register cinema tickets on the blockchain using a smart contract, then as a visitor you will receive the tickets in your personal wallet. You only have to show the address to which the tickets were sent upon entry and the cinema can immediately be sure that you do not have any fake tickets and that you have actually paid for your tickets. This gives a better customer experience and the cinema can save a lot of costs in this way because it no longer needs ticket processing services.

But why is this so safe?

Thanks to blockchain technology, we can decentralize smart contracts so that they are fair and trusted. Decentralization means that they are not controlled by one central party, such as a bank or the government.

The blockchain is a shared database managed by many different computers (nodes). As a result, not one person or company has control over it. It also means that it is almost impossible to hack it and therefore smart contracts can be executed securely and automatically without anyone being able to change them.

Best practices for smart contracts

In principle, smart contracts can be used for any type of transaction, it does not have to be financial. Here are some industries where smart contracts can be used conveniently.

Insurances

The insurance world could be shaken up considerably by blockchain technology. An example of a smart contract was a project run by a French insurance company called AXA. AXA offered flight insurance that were paid out if the policyholder's flight was delayed by more than two hours. AXA was running a pilot project that payed out insurance via smart contracts on the Ethereum blockchain. Unfortunately the project has been discontinued.

The smart contract worked with an “if / then function”: IF the flight was delayed by more than two hours, THEN the policyholder would be paid. Because the smart contract was connected to a database that keeps track of flight times, the function could be performed automatically and paid for via the Ethereum blockchain. This would have saved a lot of time for AXA, but also for the policyholder. This is just one example of the many options that smart contracts offer.

Healthcare

Within healthcare, smart contracts will be used to record and securely transfer data. We can already see examples of smart contracts used in the medical industry, such as the company Encrypgen, for example. This is an application that uses blockchain to transfer patient data in a secure manner, eliminating the need for third-party access. In this way, the patients are in control of their own data. If researchers want to use patient data, they have to pay for it. The patient also chooses whether the data may be sold or not.

Governments

Governments guarantee that it is extremely difficult to manipulate the voting system, but despite that, smart contracts could alleviate all concerns by providing an infinitely more secure system. Smart contracts could also prevent low voter turnout. Much of the small turnout is due to a clunky system consisting of lining up a queue, showing your identity, and filling out forms. With the use of smart contracts, anyone can transfer their votes securely online, which is expected to generate much more response.

Business management

There is still a lot of room for improvement within business management and smart contracts can help a lot. Why do administration when everything is registered on the blockchain anyway? Right, the blockchain is already doing the work for you. You also do not have to make a pay slip every month. The money automatically goes to your employees as soon as they have fulfilled the agreements. Companies can simply set up a smart contract that states: IF the date is 10/20/2020, THEN $2500 will be sent to employee A. This means that employees will always be paid on time and that they will never be underpaid. The advantage of the company is that it is all automated, saving them a lot of time and money!

Fundraising (ICOs)

In principle, anyone could create their own token and sell it to the general public in order to raise money for a project. In 2017 there was a real ICO craze, where some projects managed to raise tens of millions within hours. There was even an EOS ICO that lasted for a year and racked up more than $ 4 billion in total!

If you want to organize an ICO (Initial Coin Offering) you create a token and a contract to sell the token. The function of the smart contract in this case would be: if person A sends an X amount of ETH, person A gets an X amount of tokens.

Smart contracts in a nutshell

The most important features of a smart contract are:

• Digital Agreement - A smart contract is an agreement in the form of computer code.
• Blockchain - Transactions are processed by a public database, based on blockchain technology.
• Confidentiality - A transaction can only take place if the conditions in the agreement are met.

Conclusion

It will be a while before smart contracts are everywhere in everyday life, but we can say with some certainty that the technology has a lot to offer.

I hope this post helped you with:

• Getting a better understanding of smart contracts
• Understanding the significance of smart contracts within the crypto space.

​

• Next post: NFTs
• Wondering which crypto wallet you need? Check my post about wallets here.

Follow me on Twitter: https://twitter.com/MosDefi
Or follow me on Medium: https://mosdefi.medium.com/

Someone in the daily said they couldn't wrap their mind around stop limit orders, so I replied to them with what ended up being a rather massive explanation for the 3 types of orders in the post title. I think a lot of beginners (both in the stock market and crypto) struggle with these concepts, so I thought I would post the entire explanation as a guide. So, here it is!

Ok, so there are limit orders, stop orders, and stop-limit orders. The third one combines the concepts of the first two.

Let's start with a sell limit order. Perhaps you hold a bunch of some asset currently at $1. You decide that if it hits $1.50, you want to sell. So you make a limit sell order. This is simply an order that will be automatically triggered at the first opportunity to sell at or above the limit price you chose, $1.50. It will only fill if you can get a price equal to or better than the limit price. You're basically publishing an offer to the world, saying "if ever anyone wants to buy at $1.50 or higher, I am down, and my computer will automatically do the trade with you".

But imagine you also want to automatically sell if it gets to $0.50 or lower, because you believe that would indicate free fall and you'd want to just cut your losses. A sell limit order wouldn't work here, because a limit order is triggered so long as it can be filled at the limit price or better. So, if you set a sell limit for $0.50 while the price is currently $1.00, it would be instantly triggered and your position would be sold at $1.00, because $1.00 satisfies the condition of being equal to or better than the $0.50 limit price. So, this doesn't do what you want. That's were stop orders (aka stop-losses) come in. A stop order will trigger a sell at the best available market price once the stop price has been reached. So, if you set the stop price to $0.50, then once the market price passes below that threshold, your position will be sold at the best available market price in that moment (which will usually be very very close to the stop price you set).

So, here is the difference between a limit order and a stop order: in a limit order, the limit price is just a threshold above which you will accept a trade and below which you will not. It's basically like an open offer to sell at some price. With a stop order, the stop price is not a threshold below which you will accept a trade. Instead, it is a trigger: once the market price passes your stop price, then your position will be sold instantly to the highest bidder in that moment.

Now, this means that usually your position will be sold basically right at the stop price (or very close, like $0.4998), because if your position is being sold to the highest bidder the moment the price touches your stop price, the highest bidder will basically be buying at the stop price. However, there are exceptions.

For example, in the stock market, there is after-hours trading when you can't trade, but special people can. Now, imagine the day closes with the price at $0.55, and your stop price is $0.50. During after hours, a bunch of whales dump the stock, and by open tomorrow morning, it is at $0.20. Your stop loss will be instantly triggered and you will sell at $0.20, not $0.50 like you wanted. This is because the triggering event of the market price passing your stop price happened (during after hours), so the position was sold at the earliest possible time at the highest available price, which happened to be at market open the next day at $0.20.

Another example is this: imagine a gigantic whale decides to sell an absurd amount of your crypto just a tiny bit above your stop loss price, at like $0.501. This triggers a massive selloff and the price drops off a cliff. It therefore drops past your stop price, so automatically you get in line to sell at the highest available price. But the demand to buy at $0.50 has already come and gone, and there aren't enough buyers to keep up with the sellers, so by the time your transaction actually gets filled, it ends up being at $0.45, not $0.50. This is called price slippage, by the way.

A third example: imagine your exchange goes down for 10 minutes when the price is at $0.52, but once it comes back 10 minutes later, the price is at $0.25, since other exchanges were running during those 10 minutes. Now your stop order will be filled at $0.25. Not ideal.

This finally brings us to the stop limit. The stop limit combines both limit orders and stop losses. They require that you specify two prices: the stop price, and the limit price. If the market price passes the stop price, that triggers the creation of a limit order with the limit price you specified. Let's consider a couple cases where you might want to use this.

Let's say, like before, you believe if the price gets as low as $0.50, then that signals that you need to exit. However, you are definitely not willing to sell below $0.30. You would rather just hold and hope it recovers one day than sell that low. So, you make a stop limit order where the stop price is $0.50 and the limit price is $0.30. The moment the price gets as low as $0.50, the stop will be triggered, which will then create a limit order whose limit price is $0.30. So, the stop price is the trigger to decide you want to make a sell offer, and the limit price is the lowest you are willing to sell for once the stop trigger actually happens. 99% of the time, this stop limit order will mean you end up selling basically right at $0.50, just like the stop order we talked about earlier. Once the stop price is passed, your limit order will be created for $0.30, which will immediately be filled at like $0.499, because that is the current price, and it satisfies the condition of the limit order, which is to sell at or above the limit price of $0.30. However, in the off-chance that your stop price is triggered at $0.50, but the price then somehow teleports down to $0.25 (after hours trading, price slippage, or your exchange going down) then your position would not be sold, because the price is below the limit price you set. If the price eventually recovered to $0.30, your position would then be sold at that price, if you hadn't cancelled it by then.

Another use case would be this. Say, once again, you believe that if the price drops below $0.50, that is a red flag that you should exit your position. However, you believe that if it does get that low, there is a very good chance that there will be a dead cat bounce (where something makes a short-lived partial recovery while it is in its death throes). You bet that, if this coin gets as low as $0.50, it will briefly make it back up to $0.70 before crashing fully and dying. So, you make a stop limit order with $0.50 stop price, and a $0.70 limit price. If ever the price gets as low as $0.50, you will now automatically publish an offer to sell at $0.70 (ie: a limit order with $0.70 limit price will be created). If the price now rebounds up to $0.70 like you thought it would, your order will be filled and you will sell at $0.70. If it doesn't end up rebounding that high, your order won't be filled, and you'll end up holding. It's like saying "I believe if we go as low as $0.50, that's a good indication we are crashing hard, so I will try to exit at $0.70 shortly thereafter during a bounce, but if I can't get that good of a deal, I guess I'll just hold and hold and hope it recovers one day".

So, in summary: A limit order is an open offer to sell at a certain price or better that you publish to the market. A stop order is a trigger threshold, which, if passed, means your position will be sold ASAP at current market price. A stop limit order is a trigger threshold, which, if passed, creates a limit order.

Finally, I want to note that all these examples have to do with selling, but these types of orders exist for buying as well. It works the same way, but everything is flipped. For example, if you want to buy a coin, but only if it dips below $0.25 so that it's affordable to you, then you would make a limit buy order with $0.25 as the limit price, and you would automatically buy that position if ever someone is willing to sell at that price (ie: the market price dips that low).

I hope this helps somebody!

Currently, there is a post on the frontpage saying that ADA is overhyped. While the author has some points, most of them can be countered pretty easily. Let me explain

Disclaimer: I am mainly comparing ADA to ETH in this post, and I do not prefer one coin over the other. While I will try to be as objective as possible, for transparency reasons I want you to know that I hold both of them in my personal Portfolio

Let me now list all the arguments people use against Cardano

"ADA doesn't have a working product"

Actually, this isn't correct. First of all, they already have a working POS system, which can't be said about ETH. ADA already has a lot of strategic partnerships, for example the Ethiopian government, which is planning to use a licenced copy of the blockchain to store its students data.

"ADA has been in development for years!"

Yes, but so does any other crypto, ethereum is still in development, too. This is what makes it great. A working product is a less risky investment, but it also leads to less potential growth. IOHK is developing cardano slowly because they want to get it right and are backing it with research This approach is, in my opinion, the best possible one, as it should eliminate potential fatal errors before a full rollout.

"ADA is only big because Charles is manipulating its community!"

Charles is engaging with its community all the time, thats right. But he isn't shilling ada. Everything he says is backed by facts, the only thing he is doing is keeping the community updated on the project and providing transparency in the development process. In stark contrast to a lot of other crypto devs, which usually have limited community engagement, Charles is keeping the ADA community up to date, and I am thankful for that

"ADA will never kill ETH"

It doesn't have to. Multiple PoS chains can coexist, that's the point of decentralisation. Not being forced to use a certain service by a certain company. Charles himself never said that ADA is an eth killer, quite the opposite, he thinks ADA and ETH can co-exist

I am really excited about the future of cardano because I think it is an amazing project with lots of potential. I will keep loading my bags with ada because I believe in it's team and technology

But please take everything I said with a grain of salt, I am just a random person on the internet

Edit: typo