Luck is when preparation meets opportunity. The hard part is recognizing the opportunity.
(Updated 7/6/2018 — based on developments)
The Cardano opportunity is a risk and maybe a pickpocket.
Life…is a risk.
The news today…the news any day…the last few crypto-days…is mixed.
From a layman’s point of view – one who has made a few good calls – I thought that the next great cryptocurrency opportunity was here. The early cryptocurrencies were the introductions, the experiments and the tests.
A lot of people have made a lot of money in this space since 2009. Some of these newly minted multimillionaires have used this opportunity to push Fintech further. To create a second generation of cryptocurrencies with smart contracts and added tokens. To allow others to use their blockchains for good or ill.
From Bytecoin (stay away) to Monero (use at your own risk). And we must not forget the private angle. Others in this new space felt that the current governments obstructed the development of this technology as they, the Darknet users, actively created systems to hide behind a wall of code. Or give the user the choice to secure his accounts or make them public.
The principal problem with the private angle, is that we the users, do not often know who created these coins. We have no customer service. The risk, therefore, is great. To state otherwise is to be oblivious or perhaps to take that risk in hopes of a great return.
Is there a third way, however? A third generation of cryptocurrency? Not a compromise, as I have postulated before, but a “realist” coin? One that exists and uses the regulations to its benefit, rather than subjecting itself to the laws of all nations? In other words, can Cardano (ADA) use the law of nations to its advantage, while enticing a new breed of users?
It does not look promising.
We live in the real world after all. We earn and save and spend our money on real things in real stores, where real people stuff our groceries in real bags. We use fiat money, by and large, to do this. And there are many advantages to using fiat, except for micro-payments across borders. Cryptocurrency handles the latter much better. But cryptocurrency has other problems.
Although, I’m no supporter of the IMF (International Monetary Fund) its current director made some interesting remarks recently.
Christine Lagarde, Managing Director at the IMF, indicated in her speech recently, “…this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya…”
What does that tell you? Aside from the fact that she said it? Is Lagarde sounding the alarm or is she helping to clear the way for the banking industry to adopt the blockchain technology? If so, what type of cryptocurrency would governments accept? After all, the governments are the banks.
In the US, the company with the cheapest product wins the government business – a lot. Yes, there are affirmative action quotas (reverse discrimination policies) to follow, but the product used, needs to be under budget – until later, when the corruption and incompetence is discovered and the whole project exceeds the projected budget, plus some.
Would PoW cryptocurrencies be used by governments? Unlimited budgets are things of the past. Yes, China and Russia can offer inexpensive power (electricity) to cryptocurrency miners, having built the power stations on the backs of their subjects (tax and spend), however, freer countries cannot often hide such corruption for long.
PoS cryptocurrencies might fit the bill, however. In fact, Ripple is fitting the bill nicely now. More and more businesses and banks are signing on. But Ripple is not really PoS, is it? It does not encourage people to save and earn interest, it only entices them the buy, hold and sell. Perhaps to use their system. It is no longer user-friendly – if it ever was. But it is a pre-mined animal for the current financial system. Centralized and existing in the regulatory environs – and earning money for its investors. And it has been accused of being an ongoing ICO.
Back to Lagarde. She also said, “For now, virtual currencies…pose little or no challenge to the existing order of fiat currencies and central banks…[b]ecause they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.” (Underlining emphasis mine.)
Volatility is a given with cryptocurrencies. They are not often pegged to a basket of goods or a fiat money supply. On the other hand, they are not – in theory – able to cause inflation. Many Cardano-like coins are potentially inflationary, however. PoS coins often have set rates of constant “production” — i.e., printing.
Energy. There’s the big one. Bitcoin, for example, uses as much power as hundreds of thousands of homes, certainly. And there are worries, that continued unchecked, the blockchain beast might use as much electricity as entire countries.
That is a non-starter for whole countries, if they are constrained by objectivity and budgets. So, what is better? What kind of cryptocurrency would entice the average Joe, the high-power banker and, at the same time, dissuade governments from clamping down on the process? Where whole nations could participate?
It would need to be – IMO – a cryptocurrency (or more than one) with wide acceptance, ease of use, an international governance structure, economical, secure, and transparent under certain circumstances. (By that I mean, an objective set of published rules whereby the ‘coin’ would, under the circumstances outlined, provide identity information to third parties.) Whatever else the cryptocurrency could add, given the needs and desires of the populace, would be up to them. Smart contracts. Machine to machine payments etc.
Naturally, the acceptable cryptocurrency would require scalability. In other words, be flexible enough to increase business in an efficient fashion.
Such a cryptocurrency, could become a new world reserve cryptocurrency, if it was not subject to the whims and laws of every separate bureaucracy – used a system of governance akin to Maritime Law – as has been suggested. It can be argued that Bitcoin is like this today.
This would be, as some have called it, the third stage in the evolution of cryptocurrency. And, perhaps, a stage in the re-development of a base or reserve monetary system, decentralized at its heart and beholden to its users, not its users’ users.
Efficient, secure, regulate-able, sustainable and trusted, all based upon the original concepts of peer to peer networks. With the added benefit of creating a voluntary user base to extend the network.
Let’s face it, Bitcoin would be much faster if everyone connected and kept their computer on. But why waste energy? Why download the blockchain when cryptocurrencies like Cardano offer more efficient ways of participating – and obtaining PoS rewards?
The trick will be in the regulation. And how Cardano can manage what will certainly absorb much of their nest egg, that we the user must be willing to provide.
Can Cardano outpace Ripple and become a serious international player in short order?
Read between my lines. Probably not. Why?
Cardano was created by Charles Hoskinson and others, who also helped to create Ethereum Classic or ETC. ETC said, essentially, that the manifesto (the code as immutably written) was more important than humans who were harmed in the DAO Hack of Ethereum. Ethereum made it right (moral) by forking away the problem — “arresting the thieves.” ETC said “no, let the thieves steal” and here is free ETC to steal again. The immutable blockchain must be obeyed — like their God. And you think Cardano is not “jaded” by that same nonsense? That statements from Hoskinson’s blog about having “hardcore socialists” (more thieves) working for him on this project should make anyone on Earth, aside from other thieves, feel good?
Advice? Get thy money out of ADA. Too many red flags.