Joel Comm's Blog, page 16

How Government Regulation Will Change The Way You Invest In Cryptocurrencies

(Disclaimer: Author holds investments in bitcoin.) The launch of Bitcoin was supposed to be a declaration of independence. It was the people telling the government that we now had the technology to create our own currency. We didn’t need a central bank to tell us how much interest to pay or to set the rules […]

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How To Accept Bitcoin In Your Business Risk-Free

There’s currently around $200 billion of bitcoin floating around in people’s digital wallets. For many of their owners, those bitcoins have proved to be a valuable asset. They’re happy to leave them to rise in value and build up their wealth. For others though, those giant piles of coins are exactly what they’re supposed to be: a currency that they want to exchange for goods and services. But businesses are reluctant to accept them. In July last year, Bloomberg reported that just three of the Internet’s top 500 retailers were willing to accept the cryptocurrency. The biggest reason is clear enough. When the payment you take for a product can lose as much as a quarter of its value within a week, pricing becomes difficult. A seller that paid $80 for a product and sold it online for $100 in bitcoin could find that he has only $75 a week later–and no business at all not long afterwards. On the other hand, they could find that they’ve earned an additional 10 percent the day after the sale with no extra effort. While those fluctuations are exciting, business owners tend to want stability. They want to be sure that the payments they receive for their goods and services cover their costs and deliver a reliable profit. It’s the only way that they can stay in business. So how can you take advantage of the availability of billions of dollars of a new currency without leaving yourself vulnerable to the currency’s volatility? How can your business join the cryptocurrency world and accept bitcoin risk-free? There are options and smart businesses are making good use of them. In 2013, a man in Florida called a Lamborghini dealership in Newport County, CA and asked if he could buy a Tesla from them using bitcoin. Other dealers had already turned him down, he said. The dealership was cautious. The car cost $103,000. But the company didn’t want to reject a sale so it accepted the payment using Bitpay. The buyer paid 91.4 bitcoins and the seller received the money in dollars. According to CNN, news of the sale prompted ten more potential buyers to call the dealership. Bitpay still allows businesses to accept payments while receiving fiat. Users of bitcoin transfer their payments using the company’s payment platform. The firm locks in an exchange rate and delivers fiat to the seller’s bank account. Companies can advertise to wealthy bitcoin owners and accept their payments without exposing themselves to the coin’s volatility. A number of other companies now offer a similar service. CoinGate extends the acceptance to more than 40 different kinds of altcoins with instant conversion to euros or dollars. These tools, and more are surfacing, allow business to accept bitcoins risk-free. They can also allow businesses to receive their payments in bitcoin. While that brings back the risk, it’s worth noting that if the Newport Beach car dealer had kept the bitcoin, he would have sold that Tesla for around $1.5 million in today’s money. Some risks might well be worth taking.

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How Your Business Could Use the Blockchain

As news about the rise of Bitcoin has spread, entrepreneurs have needed to ask themselves what it means for their businesses. Usually, that’s involved deciding whether to accept a cryptocurrency, and concluding “not yet.” Digital coins might have made for interesting investment assets but they’re still too volatile to function as a reliable currency. But cryptocurrencies are only one use for a distributed ledger. Bitcoin might be stealing the headlines but behind the scenes businesses as large as banks and global distributors are experimenting with smart contracts coded into the blockchain to see how they could improve their processes. As those uses spread, they’ll touch every other business. A smart contract is a piece of code that tells a program to enact a set of instructions if certain conditions are met. Those conditions could include a digital wallet receiving a payment and the instructions could be as simple as issuing a digital receipt. But when that “receipt” is a title of deed or some other document required by law, transaction processes start to move a lot faster. Instead of manually checking whether a transaction has been made before issuing an export certificate, for example, the blockchain can function as a public ledger signed in front of thousands of people and impossible to change. So if your business sends money overseas or exports abroad, your payments might be managed using the blockchain. That was always the intent of Ripple. That coin may no longer be flying through the roof but that’s because banks have found they don’t need to use the cryptocurrency; the blockchain structure itself is enough. The various stages a product has to pass through on its way from producer to customer will also be managed by the blockchain and its smart contracts. Safety checks and customs clearances will become much faster as the blockchain processes each stage and automatically issues the paperwork needed to move to the next. The blockchain will enhance the supply chains that feed the raw materials to those producers in exactly the same way. If you or your businesses trades in real estate, you could find many of the legal and notary services you currently have to buy will be replaced by a click of a button. When you can write a transaction into a distributed ledger, you don’t need a notary to witness an agreement or a rental contract. Just hit send in a digital wallet and receive a legal document or even a key code for a rental apartment. And once you’ve made your money, the financial institutions that manage your funds for you will be using the blockchain to track your investments. Already banks as large as Bank of America have been experimenting with the blockchain to keep track of the sale of derivatives and other financial assets. You’re unlikely to see much of this. Just as you won’t be carrying Bitcoins in your pocket, you might never actually see the blockchain in your office. Most of it will be backroom stuff used by the shipping firms and banks that you use. But you’ll feel the difference in lower expenses and in faster, cheaper, and more secure transactions for your business.

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The Difference Between A Cryptocurrency Speculator And A True Bitcoin Believer

There are two kinds of people in the crypto world. There are people who are looking to ride the highs and make money speculating on different coins. And there are people who truly believe in Bitcoin and the blockchain, and look forward to seeing a time when digital currencies replace dollars and euros for making transactions. Each group behaves in different ways. In fact, they behave in opposite ways. When the price drops, speculators rush to sell. They worry that any fall could be the moment the bubble bursts so they offload much of their Bitcoins, and push the price down further. They also lose money. For true believers those falls are an opportunity. They might not know what price Bitcoin will reach when it stabilizes, but they do expect it to last. They know that Bitcoin won’t disappear so they buy when the price drops. When the coin rises again, they’ll either be able to turn a profit or they’ll know that they’ll have saved money when they’re ready to spend. True believers also use Bitcoin. They don’t just hodl. They look for ways to accept Bitcoins in their businesses. They use cryptocurrency payment APIs to add Bitcoin payments to their websites. Even if they convert the coins back to fiat as soon as they receive them to ensure stability, each payment is a thumbs-up for the future of Bitcoin. And true believers look beyond the price of a cryptocurrency. They look at what it’s for. Cryptocurrencies aren’t created to make money for speculators. They’re launched to support businesses or services. They provide a way for companies to track movements of money or goods. They’re a tool for increasing security and reducing fraud. Speculators bought Ripple, pushing up its price and increasing demand for more purchases. But true believers understood that the bank transfers that Ripple was created to enable didn’t need the cryptocurrency. They needed the blockchain infrastructure beneath it, but it was always possible for banks to make faster and cheaper international transfers using a blockchain without using Ripple. Those who understood how Ripple worked stayed away. Speculators who looked only at the candlesticks in the graph searched for patterns and made losses. That means believing in Bitcoin and the blockchain won’t just prepare you for a future in which digital currencies are regularly used across the Web. They’ll also make you a better speculator. When you believe in cryptocurrencies, you want to know exactly what each coin does. When you can’t wait for the day Bitcoin stabilizes and is universally accepted, you hold through the falls and buy in the dips. When you recognize what the blockchain will do for businesses, you look for ways to install it in your own business before your competitor does. There are plenty of differences between cryptocurrency speculators and true Bitcoin believers but there’s one that stands out the most: true believers are much better placed for the cryptocurrency revolution.

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Birth of CrypoKitties to Drive New Bitcoin Craze

The world of cryptocurrency has birthed its first hit game. Cryptokitties, from San Francisco design team AxiomZen, is like a mixture of Pokemon and Ethereum. The game uses Ethereum’s blockchain to create and track tokens that take the form of digital kittens. The kittens can breed and they can also be bought and sold in online auctions. The game started with 100 “Founder Kitties,” and the blockchain will churn out a new “Gen 0” kitty every fifteen minutes until November 2018. Those kitties are listed for sale at a price based on the average of the last five kitties sold plus 50 percent. That price declines over the next 24 hours until it reaches a level that someone is willing to pay. Players can “sire” two kitties that they own or they can pay, using ETH, to sire with someone else’s kitty. Pregnancies, which the game calls “cooldown periods,” range from an hour to as much as a week. Kitties with shorter cooldown times sell for higher prices but each siring increases the time needed. Each kitty comes with a genome made up of 256 bits that determine its background color, appearance, cooldown time, and so on. Occasionally, a siring will produce a “Fancy Cat.” The idea is simple, especially if you’re already familiar with the blockchain and cryptocurrency. But it’s already taking off. Players have spent around $4.5 million on the game. The most valuable Kitty sold for 246.9 ETH, around $117,712. It’s possible that CryptoKitties will be the next Pokemon or Beanie Babies. It’s also possible that it won’t spread beyond the realm of cryptocurrency early adopters–and they don’t include too many teenage kitty fans. Kitties can currently only be purchased on a computer or laptop running Chrome or Firefox, and payments  have to be made through MetaMask, a digital wallet. That’s likely to reduce adoption. Unlike Bitcoin, kitties can’t be mined. But they can be sired, a process that, like mining, generates a fee. Each transaction is registered on the Ethereum blockchain, ensuring its integrity. Players also get to own their pets. Unlike games run by large companies, there’s no chance of the database and ownership registry disappearing if AxiomZen decides to move on. The real benefit of CryptoKitties then, is that it’s a great introduction to the world of cryptocurrency for people still doubtful about its value. (It’s a topic I discuss on my Bad Crypto Podcast.) It’s not easy to explain to someone why they should buy bitcoin or where the price of a bitcoin comes from. It’s much easier to explain that this kitty is more expensive than that kitty because it’s prettier, closer to Gen 0 and has a short cooldown period. Explain that the name of the kitten and the buyer’s ownership of it is entered into a digital registry and they’ll get it. In the process, they’ll get bitcoin. Whether or not CryptoKitties turns out to be the next Pokemon, curiosity about these digital cats might well help to drive new interest in digital currencies.

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7 Investors Who Put Millions Into Cryptocurrency

If you’re looking for advice about cryptocurrencies, the most important voices to follow come from those who have put their money where their mouth is. Investors who have poured large sums into bitcoin, ethereum and other blockchain-backed currencies aren’t just telling other people what to do. They have real skin in the game. When they tell people that they’re holding on and not selling, you can be confident that they really do have faith in digital currencies. Here are seven people with major cryptocurrency investments who are happy to tell other people what they’re doing. Marc van der Chijs Marc van der Chijs knows an emerging opportunity when he sees one. He used to be based in China where his investments included tudou.com, a Chinese YouTube. Since moving to Canada, he’s gone big into cryptocurrency. He’s now a director of FirstCoin.com, an investment bank for token and coin offerings. Follow his tweets for an optimistic but pragmatic view of cryptocurrency. Ari Paul Ari Paul is the CIO and co-founder of BlockTower Capital, a specialized cryptocurrency investment company. His background is in investment management, and he also blogs about crypto investing at the TheCryptocurrencyInvestor.com. It’s a site that should be on every cryptocurrency holder’s reading list. Michael Novogratz Michael Novogratz has certainly put his money where his mouth is. In December 2017, as the dollar price of bitcoin was dropping significantly, he tweeted that 30 percent of his net worth was in crypto assets. However, he also noted that his cryptocurrency investment firm Galaxy Digital had put a crypto hedge fund on hold. He remains bullish on cryptocurrencies but watch his actions to track short-term movements. The Winklevoss Twins Tyler and Cameron Winklevoss might be best known for accusing Mark Zuckerberg of stealing their idea for a social network, but they now run Gemini, a cryptocurrency trading platform. In April 2013, when bitcoin was worth $120, they bought $11 million worth of coins, about 1 percent of all the coins in circulation at the time. That purchase has since made them among the first bitcoin billionaires. Barry Silbert In December 2014, the US Marshall’s office sold off 50,000 bitcoins that it had seized from Silk Road, an online marketplace mostly used for selling illicit goods. All but 2,000 of those bitcoins were bought by Barry Silbert, the founder and CEO of Digital Currency Group, a cryptocurrency investment firm. That early purchase at $350 per coin turned $16.8 million into more than $670 million within three years. He’s still giving cryptocurrency investment advice. Tim Draper Of those 50,000 bitcoins, the remaining 2,000 went to Tim Draper. A traditional venture capitalist who runs his own VC firm, Draper has also become an evangelist for all things crypto. Like other bitcoin investors, he remains optimistic even when the market falls. Read his tweets to find out why. Juthica Chou Juthica Chou is the president and co-founder of LedgerX. Her background is in traditional derivatives trading but LedgerX is the first platform for buying bitcoin options that’s federally regulated. It provides a way for institutional investors to take part in the growth of cryptocurrency. She’s not on Twitter, but the blog at LedgerX gives a great insight into the long term prospects of cryptocurrency.

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What To Do When Bitcoin Falls

Bitcoin has been running through another of its volatile periods recently. After climbing from around $3,000 in September to around $7,850 more recently, the price of the currency fell back, reaching as low as $5,600. It’s since recovered some of its lost ground but for anyone with large bitcoin holdings, the movements have been large enough to strike some serious fears. It wouldn’t be the first time. Between June 11th and July 16th, the price of bitcoin fell by a third from just over $3,000 to a little under $2,000. At the start of September, it was worth about $5,000; two weeks later, you could buy a bitcoin for $3,226. So when the price of bitcoin takes a dive the first thing to remember is that this is normal. Investing in a cryptocurrency isn’t like buying a government bond. There are no guarantees and no regulations. The price moves all over the place–and just as it can drop like a rock, it can also rise like a rocket. And often in quick succession. The second thing to do is to look for the reason for this movement. The fall in mid-November came after a specific event. A group of developers and miners called off a plan to hard-fork the currency again. Segwit2x would have created a new form of bitcoin that allowed for larger blocks. In effect, it would have created faster and cheaper transactions. When the plan failed, some people moved their money into Bitcoin Cash, a faster form of bitcoin created from a previous fork. The coin shot past Ethereum to hit a market capitalization of $30 billion. The value of Bitcoin Cash doubled in 24 hours. That’s a good reason for a decline. Bitcoin Cash has some advantages that bitcoin lacks. Some investors would have been holding out for the fork so when it went through they bought what was available. Analysts expected the price of bitcoin to flatten out at around $5,000. There’s no way to know whether they’re right, of course. No one can predict which way the market will go–no matter how well-versed they are on cryptocurrencies–so you just have to make your own predictions. Deciding whether to stick or bail, or even buy and hope that the market rises again  is always going to be something of an intelligent gamble. Once you’ve found the reason for a sudden price drop, you’ll have to decide whether you think that reason has a price floor or whether it’s fatal enough to send the price even lower. There are no easy answers when investing in bitcoin. Just understand that the ride is always going to have some scary moments, and when those moments strike, ask yourself whether a ride this rough is really for you. If you’re prepared to hold on through those dips, and if you can afford to lose your investment, then don’t sweat the falls any more than you should get too excited about the sudden rises. But if you do need that cash, you might want to look at those dips as a warning to find somewhere more stable to keep your savings.

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How Tim Ferriss and Gary Vee Cracked the Code on Writing Bestsellers

Smart people learn from their mistakes. Smarter people learn from other people’s mistakes. A good business book, written by someone who has been there and done that, will always contain plenty of success strategies and describe risks that paid off. But it should also talk about the failures from which the author recovered and the gambles that didn’t work.  They’re just as important. And no less important is that the book should keep you turning the pages and remembering information. If you don’t get to the end, the author has failed. If you can’t remember what you’ve read, you’ll have lost the lesson. Bestselling books that keep readers reading and give them real, actionable wisdom always have two things. They have a hook and a thread. The hook is the book’s central idea, that one concept that remains with you long after you’ve put the book back on the shelf. Tim Ferriss, for example, had a simple idea: outsource everything you don’t have to do yourself. He’d taken that idea to an extreme — even hiring people to manage his online dating for him — and he wanted to tell everyone how that outsourcing worked. But he didn’t call his book “Outsourcing: A guide to doing less.” He called it “The 4-Hour Workweek: Escape 9-5, Live Anywhere And Join The New Rich.” That’s much more powerful and it’s not just smart marketing. He focused not on the process but on the result and distilled the book’s 416 pages into one simple idea. It’s much easier to remember that hook than to remember the principles of outsourcing. John Gray did the same thing with his relationship bestseller “Men Are From Mars, Women Are From Venus.” If you’ve read the book, you might remember something about men retreating into caves and women… doing something else. But the hook in the title sums up the book’s main argument that men and women are fundamentally different and need to treat each other differently. That wasn’t a revolutionary new idea but the way John Gray presented his position in the title was a hook that has stuck in everyone ever since. The Thread Pulls You Through Even harder to produce than a strong hook is a tight thread. Authors of bestselling business books will usually have years of experience and enough stories to fill volumes and hold audiences for hours. Books work best, though, when that experience and those anecdotes are chosen carefully so that they follow the book’s hook. Gary Vaynerchuck’s “Crush It: Why NOW Is The Time To Cash In On Your Passion” had both a great hook that connected the book’s knowledge to Gary’s wine-making experience and it maintained that message all the way through. It was valuable knowledge that kept its focus –and that’s much harder to do than it sounds, especially when you’re describing case studies or talking about your own experience. It’s much too easy to lose your way and write a book that’s a tangled mess. Amazon sells nearly two million business books but only a fraction of them have become bestsellers. The ones that made it to the top hooked their readers with a strong, central idea and held onto them with a central idea stretched into a tight, straight thread.

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The Most Important Lesson From The Samsung Note 7 Smartphone Crisis

It’s going to be a case study in business schools. It’s also going to set the standard for things that can go wrong for a business. The habit of Samsung’s Galaxy Note 7 smartphone to spontaneously combust is about as bad a situation that a company can face. Dramatic, dangerous and potentially affecting millions of people, the Note 7 was a supreme test for the company’s crisis management team. They didn’t get it completely right but they didn’t get it completely wrong either. What they did do was give all of us a lesson in dealing with our business nightmares. The basic process of crisis management is to: 1. Identify the problem; 2. Fix the problem and compensate the victims; and 3. Make sure it doesn’t happen again. And the company has to do all of those things publicly while showing concern and communicating that it cares. Samsung dropped the ball at the first step. The company failed to identify the problem with its batteries. It switched a supplier and rolled out a recall and replacement that it thought had solved the problem. If that replacement had worked, the story might have ended there. Samsung would have taken a hit to its reputation but people would quickly have moved on. But the problem was much deeper and more likely to have been the phone’s slim design that brought the positive and negative electrodes together. So the replacement phones also went up in smoke, including one that caught fire on a plane. Now Samsung had two crises: customer purchases that could burn down their homes; and company replacements that could bring down a plane. At first, Samsung’s reaction to the recall problem was slow and clunky. It looked confused. But it soon got things right. The company sent customers fireproof return boxes, complete with protective gloves, that they could use to send their phones back safely. And it killed the phone completely, a decision that wiped as much $17 billion off the company’s market value and left the field open to its competitors. But it was the right decision. Compare that move with Toyota’s attempt to hide its gas pedal problem that was blamed for uncontrolled acceleration. The car company tried to blame floor mats even as fatal accidents continued to happen. It was eventually fined $1.2 billion and had to recall more than 8 million vehicles… but only after as many as 89 people had died. Owners of small businesses are less likely to face disasters the size of those that afflicted Samsung… or Toyota. But we do sometimes get things wrong and a one-in-a-million chance of a problem sounds fine until you sell a couple of million units. The most important lesson to take away from Samsung’s actions is first to make sure that you identify the problem quickly and accurately. Then take all the steps you need to fix it, even when those steps are expensive. It might cost a lot of money in the short term but it will save money in the long term and might just save the company.

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These Bitcoin Experts Could Help You Understand Cryptocurrency

Once you understand Bitcoin it’s hard to forget about it. Cryptocurrency is a complicated business. There’s the blockchain and the forks and the coin offerings and the changing prices. There are government policies and mining technologies, exchanges and Chinese dealers. Something happens almost every day in the crypto world, and you need to be on top of things. That means knowing where to turn for help. Here are seven experts who can guide you through cryptocurrency’s stormy seas. Bobby Ong The co-founder of CoinGecko, a ranking site for cryptocurrency, Bobby Ong also curates Fintech Street, a newsletter about financial technology. Sign up to get explanations of cyptocurrency’s role in the growing fintech industry right in your mailbox. Nick Szabo Claimed by some as the real Satoshi Nakamoto, Nick Szabo is a cryptocurrency pioneer. His blog is rarely updated (and requires some pretty intensive reading) but his tweets are both more frequent and easier to follow. Add his thoughts to your feed and know that every link you follow will be relevant and every tweet from the man himself will be a worthwhile addition to the cryptocurrency discussion. Gavin Andresen One of the leaders of Bitcoin’s early development, Gavin Andresen’s reputation took something of a knock when he endorsed Craig Wright’s claim to be Satoshi Nakamoto. That claim might have been surprising but his blog remains a key place to understand the latest cryptocurrency developments. Don’t look for frequent updates but do trawl through the old posts and follow his tweets for regular comments on cryptocurrency developments. Andrea O’Sullivan Cryptocurrency is largely male-dominated but Andrea O’Sullivan stands out not just as a rare woman in an industry filled with men but for her insight. The co-author of Bitcoin: A Primer for Policymakers, you can follow her cryptocurrency thoughts at ThinkLab–and at a bunch of other places too. As always, the best bet is to follow her Twitter stream to see where she’s been writing lately. Paul Vigna Paul Vigna is “The Wall Street Journal’s resident zombie expert.” He’s written about the Walking Dead and science fiction, but is also the author of two books on bitcoin and digital currencies. You find his thoughts on cryptocurrency in between the posts on the contents of crypts on his blog. While other bitcoin experts are often developers who like to get technical, Paul Vigna is a reporter who knows how to keep the writing clear and interesting. Look for him in The Wall Street Journal too. Susanne Chishti Susanne Chishti is the CEO of Fintech Circle, an institute that teaches people who want to become fintech professionals. When you want to learn more about how cryptocurrency affects the rest of the financial market–and if you’re considering building a career in digital money–she’s the place to turn. Andreas M. Antonopoulos Andreas M. Antonopoulos is the author of Mastering Bitcoin, among other cryptocurrency books. You can start with those but a better bet for people wondering what this bitcoin thing is all about is his YouTube videos. Sit back, relax and enjoy one of the easiest and clearest explanations to ease you into Bitcoin knowledge.

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