I’m writing to you exactly one year on from the first time bitcoin ever reached $10,000.
Today, it’s hovering around $4,300.
In terms of crypto prices, 2018 has been abysmal. Drop after drop, followed by small rallies and then even bigger drops.
Perhaps the biggest drop of the year came a couple of weeks ago when crypto’s market cap dropped by almost $100 billion in a matter of days.
Over the course of a week or two, the amount of money in crypto essentially halved.
The price of Ethereum is now well below £100. Back in January it was worth over ten times as much.
If you’ve invested in crypto this year, chances are you’ve not had a good time of it.
Even if you followed the number one rule in crypto investing – never invest more than you’re happy to lose – you probably still feel pretty hard done by.
When will it all turn around? Well, that’s hard to say.
Right now, I kind of take Jeffery Sprecher’s approach.
Jeffrey Sprecher, CEO of Intercontinental Exchange (ICE) and chairman of the New York Stock Exchange, spoke enthusiastically about cryptocurrencies at the Consensus Invest conference in New York on Tuesday. With Bitcoin down more than 80% from its highs, he said he’s been seeing headlines asking “Will digital assets survive?”
“I’d say the unequivocal answer is yes,” he said, adding that “we’re kind of agnostic to price.”
Crypto is here to stay.
What the price will be one week, one month or one year from now is anyone’s guess.
But over the longer term, it’s only going to go up.
If you’ve been reading Crypto Wire, you’ll have seen all the many applications crypto has in the real world. And how it is already being adopted by major players in major industries, from finance to advertising to supply chain to transport, to energy.
However, it bears repeating that we are still very early.
The true scope and applications of this technology are not understood by most companies or individuals. That is going to take time.
Personally, I find it extremely exciting to be part of the birth of a new paradigm. To see the potential and see it slowly coming to fruition.
But as with anything new. No matter how good the idea or execution is, it will not go smoothly.
If all you’re looking at is the price, you’re going to have a bad time.
I’ll repeat what I said in Crypto Wire back in June here because I think it’s important.
Owning the future
The reason I write Crypto Wire is not to keep you updated on the short-term price swings, or even the mid-term ones for that matter.
No, I intend to give you much more value than that. Prices are easy to find. What I’m aiming to give you is not.
I want to give you the inside line on a technology that I truly believe will impact all of our lives.
And I want to help you see and realise that potential for yourself. Be that through investing in the most promising cryptos, or simply by helping you see the scale of what’s happening here. In the long run, that could be even more valuable.
How so? Let me explain with an example.
It’s the same tired example that many, many people use to illustrate the potential of crypto. But we’re going to look at it from a different perspective.
For this example, we’ll look at the internet. But it would work just as well for phone lines, the postal service, or any number of technological leaps.
Imagine that in the early 90s you had thought about the potential of the internet. Not even the technical potential, in terms or something like Google. No, something much simpler.
Imagine you’d really thought about the potential of websites, and what people could use them for.
Had you thought about the nature of the internet and of websites for a bit, you might have realised websites could become a new type of shop. A new type of mail order service.
At the time, most mail order sales came through adverts in newspapers and magazines. People would see an advert in a magazine and call up to buy the product through mail order.
Had you been informed about websites, and been thinking about their potential, maybe you’d have realised that a website could become both the magazine advert and the phone line.
This was what Jeff Bezos did.
“I came across the fact that web usage was growing at 2,300 percent per year. I’d never seen or heard of anything that grew that fast, and the idea of building an online bookstore with millions of titles — something that simply couldn’t exist in the physical world — was very exciting to me,” he said in 2010.
As I’m sure you know, that online bookstore was Amazon. And Bezos is currently the world’s richest person.
There are countless other stories out there from people who made incredible fortunes by studying a new technology when it was in its infancy and coming up with ideas for its usage.
Most of the ideas aren’t even revolutionary. All Bezos did was combine mail order with websites. He was well-informed about the internet and regularly thought about its potential use cases.
The point being, you don’t have to be the creator of a technology to make money from it. In fact, not being directly involved in it can often help you because you can look at it from a different perspective.
Crypto goes even further than that though. Unlike technological leaps from the past, you can directly invest in it as an ordinary person.
That’s the key thing for me. You can set yourself up to benefit from crypto’s massive potential, and be a part of it, by simply owning some of it.
I hope that the more you read about crypto, the more opportunities you will see for the use of this tech.
And if you want to go full Bezos and design your own killer decentralised app (DApp) that would be fantastic. But you don’t have to. You are helping crypto simply by owning and staying informed about it.
As I say, right now, it’s not about the price. Right now it’s about picking the right projects and learning about a technology that will one day be a big part of all of our lives.
If you aren’t subscribed to Crypto Wire yet, you can take out a trial here.
Now, with all that in mind. Let’s take a look at this month’s biggest crypto stories, because there are some big ones.
This month’s biggest crypto stories
Bakkt delays opening until January
Bakkt, Bakkt, Bakkt!
Over the last few months Bakkt has been the word on every crypto investor’s lips.
If you have somehow missed all the Bakkt hype, you can find out what it is here.
But to sum up, it is ICE’s entry into crypto trading and crypto futures. ICE is the company that runs the New York Stock Exchange and many other major exchanges around the world.
Bakkt was expected to launch in December. But it has now pushed that date back to January. What’s the reason? Too much demand. At least that’s the reason it’s giving.
Here’s what its CEO, Kelly Loeffler, wrote on Medium:
Given the volume of interest in Bakkt and work required to get all of the pieces in place, we will now be targeting January 24, 2019 for our launch to ensure that our participants are ready to trade on Day 1.
Nasdaq launching bitcoin futures
Now Nasdaq has decided to launch its own bitcoin futures market, too.
The Nasdaq is moving ahead with plans to launch bitcoin futures as early as next year, despite an ongoing bear market for crypto.
The world’s second-largest stock exchange is partnering with VanEck to launch cryptocurrency products, including derivatives, according to a representative from the investment management firm.
Amazon launches “managed blockchain” service
That’s right. Amazon has created a fully managed blockchain service for Amazon Web Service customers.
Amazon Managed Blockchain is a fully managed service that makes it easy to create and manage scalable blockchain networks using the popular open source frameworks Hyperledger Fabric and Ethereum*.
Blockchain makes it possible to build applications where multiple parties can execute transactions without the need for a trusted, central authority. Today, building a scalable blockchain network with existing technologies is complex to set up and hard to manage. To create a blockchain network, each network member needs to manually provision hardware, install software, create and manage certificates for access control, and configure networking components. Once the blockchain network is running, you need to continuously monitor the infrastructure and adapt to changes, such as an increase in transaction requests, or new members joining or leaving the network.
Amazon Managed Blockchain is a fully managed service that allows you to set up and manage a scalable blockchain network with just a few clicks. Amazon Managed Blockchain eliminates the overhead required to create the network, and automatically scales to meet the demands of thousands of applications running millions of transactions.
*Hyperledger Fabric available today. Ethereum coming soon.
So basically what Amazon is offering is a centralised blockchain, which is basically just an inefficient database.
Without decentralisation, the benefits of blockchain go out the window. You’re relying on a central authority to control and authorise everything. And if that central authority gets hacked or compromised, you’re screwed.
However, this is a big step in the right direction. Amazon is one if the biggest companies in the world and it is now actively pushing blockchain solutions.
There has been talk out of the Ethereum communities recently that companies which start out wanting or creating private blockchains eventually see the benefits of decentralisation and make the switch.
So you could think of these centralised solutions as a kind of “foot in the door”. And it’s very promising that Amazon has publicly stated it will be using Ethereum.
Switzerland’s biggest stock exchange, SIX, expects all exchanges to run on blockchain within ten years
You may remember that SIX is going to start running its stock exchange on blockchain, beginning next year.
It also believes that within ten years, all exchanges will transition to running on blockchain.
Although stock and bond dealing on SIX and most other exchanges are now fully electronic, the underlying processing steps are often based on old protocols of paper and post.
“The existing system could be completely replaced by the digital exchange in about 10 years,” Thomas Zeeb, head of securities and exchanges at SIX, told Reuters.
SIX Digital Exchange (SDX) is scheduled to launch in mid-2019 and initially run parallel to the existing SIX platform, which involves three steps to complete a purchase or sale of securities, often over several days.
Two of them vanish in a blockchain distributed ledger, meaning a transaction can be completed in fractions of a second.
“The moment that brokers, banks, insurance companies and big asset managers really see the cost advantages, they’ll move relatively quickly,” Zeeb, a Canadian, said.
Although many exchanges are working on such projects, including Deutsche Boerse (DB1Gn.DE), SDX is the Swiss stock exchange’s reaction to threats posed by start-ups.
As I said, crypto is changing the world. But it’s going to take time.
Now, if you would like to learn how to make money when prices crash – rather than just watching in horror – I have some good news for you.
On Wednesday, my colleague Eoin Treacy will be revealing his number one strategy for making money from falling stock prices – as much as £1,500 per trade.
He’ll be explaining how to do it in a special webcast, and it will be free to watch for Exponential Investor readers. To get your viewing pass, all you need to do is click here.
Until next time,
Editor, Exponential Investor