Cryptoassets Quotes

“Cryptoassets, like gold, are often constructed to be scarce in their supply. Many will be even more scarce than gold and other precious metals. The supply schedule of cryptoassets typically is metered mathematically and set in code at the genesis of the underlying protocol or distributed application.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“The only way attackers can process invalid transactions is if they own over half of the compute power of the network, so it’s critical that no single entity ever exceeds 50 percent ownership. If they do, then they can perform what’s referred to as a 51 percent attack, in which they process invalid transactions. This involves spending money they don’t have and would ruin confidence in the cryptoasset. The best way to prevent this attack from happening is to have so many computers supporting the blockchain in a globally decentralized topography that no single entity could hope to buy enough computers to take majority share.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“When reading the white paper, the first question to ask is: What problem does it solve? In other words, is there a reason for this cryptoasset and its associated architecture to exist in a decentralized manner? There are lots of digital services in our world, so does this one have an inherent benefit to being provisioned in a distributed, secure, and egalitarian manner? We call this the decentralization edge. Put bluntly by Vitalik Buterin, “Projects really should make sure they have good answers for ‘why use a blockchain.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Standing for decentralized autonomous organization, The DAO was a complex dApp that programmed a decentralized venture capital fund to run on Ethereum. Holders of The DAO would be able to vote on what projects they wanted to support, and if developers raised enough funding from The DAO holders, they would receive the funds necessary to build their projects. Over time, investors in these projects would be rewarded through dividends or appreciation of the service provided.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Starting at the end of 2014 and for the first half of 2015, the Ethereum Foundation encouraged battle testing of its network,”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“We’re in a Goldilocks period for cryptoassets, where the infrastructure and regulation has matured considerably, but most of Wall Street and institutional investors have yet to enter the fray.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“some cryptoassets are commodities, this could open them up to different tax treatment than if they were considered solely as property. Commodities fall under the 60/40 tax ruling, meaning 60 percent of the gains on a commodity transaction are treated as long-term capital gains and 40 percent are treated as short-term capital gains. This is different from taxing stocks where profitably selling an equity after 12 months is classified as a long-term capital gain with a current tax rate cap of 15 percent. Selling prior to 12 months would be considered a short-term gain with the tax ramification based on an investor’s income bracket.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“IRS Notice 2014-21, which provides a bit more information on tax guidance related to bitcoin and virtual currency, we find an attempt at further clarification: Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as convertible virtual currency. Bitcoin is one example of a convertible virtual currency. Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies.29 In this case, bitcoin is considered a “convertible” virtual currency.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“bitcoin and issued guidance on its tax treatment with IRS Notice 2014-21. Without detailing the fine print of the ruling,27 the basic message was that although bitcoin may be called a virtual currency, for tax purposes the IRS would treat it as property. For example, stocks, bonds, and real estate are also considered property.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“key feature that needs to be reinforced from Christensen’s quote is the need to “set up an autonomous organization.” Just setting up an innovation lab within a company is not a guarantee of success. These labs must be allowed to function as autonomous organizations, without the tunnel vision of existing business and profit models.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“One of the more interesting recent consortiums was the Enterprise Ethereum Alliance. It went public in late February 2017, and its founding members include Accenture, BNY Mellon, CME Group, JPMorgan, Microsoft, Thomson Reuters, and UBS. 25 What is most interesting about this alliance is that it aims to marry private industry and Ethereum’s public blockchain. While the consortium will work on software outside of Ethereum’s public blockchain, the intent is for all software to remain interoperable in case companies want to utilize Ethereum’s open network in the future.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Ripple has been a popular startup for incumbents to work with, and some of them are creating projects that utilize its native asset, XRP. Incumbents such as Bank of America, RBC, Santander, BMO, CIBC, ATB Financial, and more use Ripple’s blockchain-based technology to achieve faster and more secure financial transactions. 15 If realized, these efforts could not only reward the companies that utilize Ripple but also potentially benefit Ripple’s own cryptoasset, XRP, which can be used as a bridge currency to help settlements on the Ripple network.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Christensen outlines: Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use. Disruptive technologies like cryptoassets initially gain traction because they’re “cheaper, simpler, smaller.” This early traction occurs on the fringe, not in the mainstream, which allows incumbents like Mr. Dimon to dismiss them. But cheaper, simpler, smaller things rarely stay on the fringe, and the shift to mainstream can be swift, catching the incumbents off guard.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“the majority of companies in the financial services space have opted for blockchain implementations void of cryptoassets. It is increasingly common for these implementations to be referred to as distributed ledger technology (DLT), which differentiates them from the blockchains of Bitcoin, Ethereum, and beyond.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“produced a document called, “A Securities Law Framework for Blockchain Tokens.”26 It is especially important for the team behind an ICO to utilize this document in conjunction with a lawyer to determine if a cryptoasset sale falls under SEC jurisdiction”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“require restructuring of the current cryptoasset landscape. While most ICOs meet the first two conditions, the third condition is up for interpretation. Do investors buy into an ICO as an “expectation of profit,” or do they buy into an ICO to gain access to the ultimate utility that will be provided by the blockchain architecture? While the distinction may seem small, it can make all the difference.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“If an asset meets the following criteria, it will likely be considered a security: 1. It is an investment of money.25 2.   The investment of money is in a common enterprise. 3.   There is an expectation of profits from the investment”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“The Howey Test is the result of the 1946 U.S. Supreme Court case, SEC v Howey Co, which investigated whether a convoluted scheme to sell and then lease tracts of land qualified as an “investment contract,” also known as a security. The Howey Test determines whether something should be classified as a security, even if it is referred to differently in an offering to avoid regulatory action”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“It’s best practice that an ICO also have a minimum and maximum amount that it plans to raise. The minimum is to ensure the development team will have enough to make a viable product, and the maximum is to keep the speculation of crowds in check.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“the protocols themselves are not companies. They don’t have income statements, cash flows, or shareholders they report to. The creation of these foundations is intended to help the protocol by providing some level of structure and organization, but the protocol’s value does not depend on the foundation. Furthermore, as open-source software projects, anyone with the proper merits can join the protocol development team. These protocols have no need for the capital markets because they create self-reinforcing economic ecosystems. The more people use the protocol, the more valuable the native assets within it become, drawing more people to use the protocol, creating a self-reinforcing positive feedback loop. Often, core protocol developers will also work for a company that provides application(s) that use the protocol, and that is a way for the protocol developers to get paid over the long term. They can also benefit from holding the native asset since inception.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“protocol layer must be directly monetized for the applications on it to work. Bitcoin is a good example. The protocol is Bitcoin itself, which is monetized via the native asset of bitcoin. All the applications like Coinbase, OpenBazaar, and Purse.io rely on Bitcoin, which drives up the value of bitcoin. In other words, within a blockchain ecosystem, for the applications to have any value, the protocol needs to store value, so the more that applications derive value from the protocol, the more the value of the protocol layer grows. Given many applications will be built on these protocols, a protocol should grow to be larger in monetary value than any single application atop it, which is the inverse of the value creation of the Internet.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“a blog titled, “Fat Protocols.” Monegro’s thesis is as follows: The Web is supported by protocols like the transmission control protocol/Internet protocol (TCP/IP), the hypertext transfer protocol (HTTP), and simple mail transfer protocol (SMTP), all of which have become standards for routing information around the Internet. However, these protocols are commoditized, in that while they form the backbone of our Internet, they are poorly monetized. Instead, what is monetized is the applications on top of the protocols. These applications have turned into mega-corporations, such as Facebook and Amazon, which rely on the base protocols of the Web and yet capture the vast majority of the value.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Despite the relative youth of venture capital, many cryptoasset firms are now turning the model on its head. The disruptors are in danger of being disrupted. For the innovative investor, it’s key to realize that cryptoassets are not only making it easier for driven entrepreneurs to raise money, they’re also creating opportunities for the average investor to get into the earliest rounds of what could be the next Facebook or Uber. Welcome to the colliding worlds of crowdfunding and cryptoassets.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“It is clear that Gibraltar sees an opportunity and is making a play for itself as a virtual currency hub. Albert Isola, Gibraltar’s Minister for Financial Services and Gaming, said, “We continue to work with the private sector and our regulator on an appropriate regulatory environment for operators in the digital currency space, and the launch of this ETI on our stock exchange demonstrates our ability to be innovative and deliver speed to market.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Grayscale Investments offers the largest capital markets vehicle with bitcoin exposure, clocking in at north of $200 million or roughly 1 percent of all bitcoin outstanding as of March 2017. Grayscale was established in 2013 by its parent company, Digital Currency Group (DCG).”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Cold storage, on the other hand, means the machine that stores the cryptoasset is not connected to the Internet. In this case, a hacker would have to physically steal the machine to gain access to the cryptoassets. Some methods require that the machine storing the cryptoasset has never touched the Internet. Not once. While that sounds extreme, it is a best practice for firms that store large amounts of cryptoassets. It is not necessary for all but the most security-conscious investor. What does it even mean to store a cryptoasset? This refers to storage of the private key that allows the holder to send the cryptoasset to another holder of a private key. A private key is just a string of digits that unlocks a digital safe. The private key allows for the holder of that key to mathematically prove to the network that the holder is the owner of the cryptoasset and can do with it as he or she likes.24 That digital key can be placed in a hot wallet or in cold storage, and there are a variety of services that provide for such storage.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“Cold storage, on the other hand, means the machine that stores the cryptoasset is not connected to the Internet. In this case, a hacker would have to physically steal the machine to gain access to the cryptoassets. Some methods require that the machine storing the cryptoasset has never touched the Internet. Not once. While that sounds extreme, it is a best practice for firms that store large amounts of cryptoassets. It is not necessary for all but the most security-conscious investor.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“While exchanges, by default, will store the assets they trade, that is not always the safest place to store the asset long-term. Cryptoassets are stored in either a hot wallet or cold storage. The hot in hot wallet refers to the connection to the Internet. A wallet is hot when it can be directly accessed through the Internet or is on a machine that has an Internet connection.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“As the use of bitcoin and cryptoasset exchanges have grown, there has also been the growth of insurance plans for exchanges. One such insurer is Mitsui Sumitomo Insurance, which offers loss protection to a number of exchanges.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

“The most regulated exchanges, such as Bitstamp, GDAX, and Gemini, offer the fewest cryptoassets because they wait to ensure an asset is past a certain level of maturity before adding it to their platform. Other exchanges, such as Poloniex or Bittrex, add assets much earlier in their lives, so more aggressive or adventurous traders tend to use these platforms.”
― Chris Burniske, Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond