Tag Archives: Crypto

Crypto VC’s to Crash: “YOLO”

Despite cratering crypto markets and a slowdown in venture funding, crypto VC’s are upping the ante. From a report out yesterday in Reuters:

Even as the crypto sector shivers in the bleak winter, venture capitalists are pouring money into digital currency and blockchain startups at a pace that’s set to outstrip last year’s record.

In the first half of the year, VCs bet $17.5 billion on such firms, according to data from PitchBook. That puts investment on course to top the record $26.9 billion raised last year, a warmer and happier time for bitcoin and co.


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Overall US venture funding fell in the first half of the year. But US crypto investments are on pace to increase almost 50% over 2021.

Why are crypto VC’s behaving so differently? Because they don’t have much choice.

Numerous venture firms recently raised huge crypto funds. Predictably, Andreessen Horowitz is at the front of the conga line, raking in $4.5 billion in May.

Electric Capital pulled in $1 billion, and Bain Capital launched a $560 million fund.

All that money has to go somewhere. But deploying giant crypto funds today could be a big mistake.

Giant funds have to focus on late stage deals. After all, there’s no way a16z is going to hand out 1,000 seed-stage checks of $4.5 million.

It’s simply more meetings, diligence, and oversight than any firm could handle.

So they’ll put a lot of that in late stage megarounds. Since the startups are close to going public, their valuations depend on public markets.

But markets in public tech stocks and crypto tokens are extremely unpredictable right now.

These firms may pay prices that public markets soon find laughable.

If that weren’t bad enough, the SEC could soon be breathing down the necks of VC firms.

Yesterday, the SEC announced that it’s investigating Coinbase for offering unregistered securities. Crypto VC’s have likely sold similar securities.

The crypto venture market looks seriously overheated. I see companies with no product or customers getting valuations of $100 million or more regularly.

You don’t often see that in non-crypto deals. And there’s no reason why the rules should be any different for crypto.

I think crypto could have some awesome applications. Cheap international money transfer may be the best use case.

But thus far, speculation has been rife and useful projects few.

Meanwhile, I’m going to keep investing in great early stage companies with awesome products and happy customers. And if a crypto company can deliver that, a salute!

More on tech:

Inside the Seed Funding Slowdown

Why Technical Founders Win

The Top 5 Things I’ve Learned from Angel Investing

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The End of Celsius — the Beginning of Crypto Regulation

Cryptocurrency lender Celsius Network has stopped all withdrawals, imperiling the savings of 100,000 users. From The Wall Street Journal:

A few months ago, Mike Washburn’s cryptocurrency investment looked like a winner.

Now he’s just hoping to get his money back.

Mr. Washburn, a 35-year-old plumber in Otsego, Minn., had $100,000 in an account at Celsius Network LLC, one of the largest lenders in the cryptocurrency world. Recently widowed, Mr. Washburn said he and his two children moved in with his parents, and he planned to buy a house with his savings. The Celsius account offered him yield higher than would a traditional bank account, and the company was well-known in the crypto community.


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Celsius promised rates of over 18%, versus around 1% in a traditional bank account. Users flocked to the platform, perhaps unaware of the risk compared to a traditional bank.

The assets Celsius holds to pay those high rates plummeted in value as crypto markets crashed this year. And some of its investments are only semiliquid, making it difficult to meet redemption requests from depositors.

Yesterday, certain investors tried to engineer a short squeeze in Celsius tokens.

It caused some run-up in the price, but the tokens remain down over 75% in the last year. I would expect this attempt to fail in the long term, given the overall instability of the Celsius platform.

Source: Coinmarketcap.com

Some savers may have looked at the 18% Celsius was offering, noted that it was 18 times as much as the bank, and piled in. But comparing a crypto lending product to a US bank account is “apples and bowling balls.”


A bank account provides FDIC insurance for up to $250,000. What’s more, any interest is paid in US dollars, a much more stable currency than most crypto tokens.

I think Celsius is finished as a platform.

Any deposit-taking institution operates on trust. Even if it weathers the current storm and manages to stay solvent, who will trust Celsius with their money in the future?

The even greater impact of the Celsius implosion will be on crypto regulation. The industry has often tried to avoid regulation, espousing a libertarian ethos.

That ends when plumbers in Minnesota are losing their life savings. Once their constituents are losing everything and barraging their representatives with phone calls, politicians become motivated to investigate and pass new laws.

What’s more, pols and regulators see opportunities to make names for themselves by sticking it to unsympathetic crypto fat cats.

It may take several years, but expect stiff regulations on cryptocurrency to come out following this crash.

I expect crypto lending and stablecoins to be the first targets for regulation. They are the most similar to the heavily regulated banking industry in that they take deposits and aim for stability.

What do you think is next for Celsius and the crypto market at large? Leave a comment at the bottom and let me know.

More on tech:

Hedge Fund Tiger Global Losing $136 Million a Day, Down 52%

Managing a Crisis the Sequoia Way

Why Tech Stocks Are Oversold

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$1 Billion Still Missing from Bitfinex Hack

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Last week, the U.S. government made its largest asset seizure ever: $3.6 billion worth of bitcoin.

The money came from the 2016 hack of the Bitfinex exchange. The culprits: Ilya Lichtenstein and Heather Morgan, a young couple from New York City.

Perhaps the most interesting detail in this story is that approximately 24,000 bitcoins are still missing from this hack. They would be worth over $1.1 billion at current prices.

So where are they? Perhaps percolating around the same places where Lichtenstein and Morgan laundered theirs.

The criminal complaint alleges that the couple laundered some of their stolen coins using non-fungible tokens (NFT’s). This could explain why people will pay hundreds of thousands or even millions of dollars for an image of an ape.

If two criminals work together, trading the NFT between various accounts they control at ever-increasing prices, all they need is one bagholder to come in and make the illusion real. They take his money, give him the little jpeg, and laugh all the way to the bank.

Another fascinating aspect of this story is how they were caught:

The authorities said they traced the flow of funds through the unhosted wallets and across exchanges, according to the complaint, finding transactions that landed in accounts on exchanges that the two alleged launderers had in their real names. In one instance, according to the complaint, two of these accounts shared a login from the same location in New York.

This is a common mistake: mixing anonymous and real identities. Ross Ulbricht, creator of the Silk Road, did this by logging into his private VPN and his personal Gmail account from the same cafe in San Francisco.

If authorities find a pattern that when an anonymous account is used, your account also tends to be used from the same IP address, you’re going down.

In all, I think this case is good for the crypto industry. The less it seems like a free-for-all, the more legitimate it becomes.

The more legitimate it becomes, the broader adoption will be.

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More on tech:

Tech Plunge Hits Early Stage Startups

How Solana Could Wipe Out Visa and MasterCard

Hedge Funds Pull Back from Tech Amid Big Losses

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This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been great so far.

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Solana Is the Most Popular Crypto of 2022

In what’s begun as a tough year for cryptocurrencies, Solana has attracted more investors than any other coin. The high speed network landed $6 million in inflows so far this year.

Larger competitors like Bitcoin and Ethereum have seen outflows in the tens and hundreds of millions of dollars.

What I find particularly striking is that Solana’s market cap is only a fraction the size of its larger peers. Bitcoin has a total value around $800 billion, and Ethereum nearly $400 billion.

Meanwhile, Solana is worth just $44 billion. Nonetheless, it managed to beat these much larger protocols in attracting investors.

This is a pattern I expect to continue long term. Solana can process tens of thousands of transactions per second for virtually nothing.

Compare that to Ethereum, where completing a single transaction costs about $46!

Would merchants accept a credit card that cost them $46 in transaction fees every time someone used it? Of course not.

Ethereum’s high fees will severely limit its use cases until the fees come down.

Bitcoin looks better at about $2 a transaction. But Solana charges mere fractions of a cent.

A new technology that’s dramatically faster and cheaper will win, regardless of the market. I expect Solana to continue to gain value relative to the older protocols.

At least until a swifter competitor enters the ring!

More on tech:

How Solana Could Wipe Out Visa and MasterCard

A Day in the Life of an Angel Investor

Is Fathom the Future of Blockchain?

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Is Fathom the Future of Blockchain?

I was blown away when I read how fast Solana can process transactions. But there’s a new kid on the block: Fathom.

Fathom is even faster than Solana on one important metric:

Solana averages 50,000 transactions per second, versus 14 per second on Ethereum. Fantom is not as fast as Solana, but it’s still way ahead of Ethereum; in a test run back in 2018, its blockchain processed 25,000 transactions per second. But Fantom has a pretty solid claim to being the fastest blockchain if you look at time to finality. This is arguably the most important statistic, as that’s the moment when a transaction has been fully validated on the chain. Fantom’s time to finality is about a second, versus 13 seconds on Solana and more than a minute on Ethereum.

To me, the metrics that matter are:

1) How long until my transaction is done?
2) How much does it cost?

Both Solana and Fathom are very cheap to run, and Fathom seems a little faster in finalizing transactions.

Both are light years ahead of Ethereum. I would expect to see Ethereum slowly fade unless there’s a major update to leapfrog the newer protocols.

Fathom is worth about $7 billion today. Could it one day be worth 100 times that, my bar for highly speculative investments?

I think it’s possible. Visa and Mastercard together are worth $830 billion. Add in American Express, and you’re at almost $1 trillion.

And that doesn’t cover banks that charge tons of wire fees. A protocol that could replace these high fees with near-zero ones could be worth $1 trillion or more.

The question is, which blockchain will dominate? I don’t know.

I would favor backing a lot of promising tokens early in the hope that one of them returns 100 or 1000 times one’s initial investment.

This is the same approach I take investing in startups. It can work well when there are numerous small, promising competitors and the likelihood of a winner-take-all outcome.

But buying all those tokens is a lot of work! An ideal investment vehicle would be an ETF that owns all the major coins (Bitcoin, Ethereum, Solana, etc.) and another that owns high speed smaller coins (Fathom, Near, etc.).

The SEC does not allow ETFs to directly hold cryptocurrency. Like so much of what the SEC does, this policy is counterproductive.

It should should approve crypto ETFs so that investors can spread their bets. If the government’s goal is protecting people’s savings, anything that aids diversification is a plus.

I’m excited to see what the future of finance will look like!

We may soon be living in a world where you can send anyone money in seconds for (almost) free. A world in which politicians can’t devalue your savings on a whim.

That’s a future worth building for!

More on tech:

A Day in the Life of an Angel Investor

How Solana Could Wipe Out Visa and MasterCard

This Week in the Venture Bubble

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This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

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GameStop Now Accepting Dozens of Cryptocurrencies

GameStop Corp. is now accepting dozens of cryptocurrencies including Bitcoin and Dogecoin, per a report from Investor Place yesterday.

These cryptocurrencies can be used at any one of GameStop’s locations or online. GameStop is using the Flexa network, which supports a wide variety of cryptocurrencies.

This comes shortly after AMC Entertainment Holdings, Inc. began accepting crypto payments, including Bitcoin and Ethereum.

Meme stocks trying to draw in the adjacent crypto community is a wise move. All marketing costs money, but accepting crypto provides a bunch of press attention for the minimal cost of joining the Flexa network.

Flexa appears quite robust, with tens of thousands of retail locations on its platform. It reminds me of a Square for crypto; easy payment acceptance for merchants.

If GameStop ever delivers streaming games on its own platform, crypto payments could be particularly useful. Unlike with credit cards, customers from all over the world could purchase access with no foreign exchange fees.

Will accepting crypto payments make or break GameStop or AMC’s business? Of course not.

But for businesses that rely on foot traffic, anything that builds buzz at low cost is a huge win!

What do you think of GameStop and AMC accepting crypto payments? And who do you think will be next?

Let me know in the comments below.

This is the last blog for this week. I’ll see you again on Monday.

Merry Christmas!

More on markets:

Hedge Fund Paid Researcher to Write Misleading Reports on Seeking Alpha

Parody Site Sues Citadel to Stop Shutdown

How Did High Dividend Stocks Perform In the Last Crash?

Photo: Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

NFT Market is Growing 38,000% a Year, and AMC May Jump In

At its recent earnings call, AMC Entertainment Holdings, Inc. CEO Adam Aron revealed that the company may create its own non-fungible tokens (NFTs).

These unique pieces of digital art are exploding in popularity, per DappRadar:

In Q3, the NFT space generated over $10.67 billion in trading volume. This represents an outstanding 704% increase from the previous quarter and a colossal 38,060% increase year-over-year.

AMC is in a great position to dominate this market. Its partnerships with movie theaters could give it access to invaluable intellectual property, such as Marvel superheroes.

The movie studios would also gain by partnering with AMC. The theater chain already has a huge following among the young investors active in NFT’s.

Consider that a Degenerate Ape NFT recently sold for $1.1 million. Whatever its artistic merits, I suspect IP with broad recognition like the Avengers will be quite a bit more valuable.

Will minting NFT’s, creating its own crypto token, or accepting bitcoin make AMC a world-beating business all by itself? Of course not.

But AMC is doing what tech startups have done for years: experimenting with different products to find out what the market wants. If it hits pay dirt, it can expand that offering, driving lots of revenue.

I commend Aron and the AMC team for being so innovative. Best of luck!

More on markets:

AMC Fails to Deliver Jump 2700%

Let’s Make Our Own Index Fund!

Citadel Builds Huge Position in AMC Call Options

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Polygon: Crypto’s Killer App?

Everyone loves Ethereum, right? It’s widely used and has a ton of code already out there for developers to slot into their projects.

But there’s one problem.

Ethereum can only process about 15 transactions per second. And the huge amount of computing power needed has gotten expensive. Some transactions can cost over $100 each.

What if there were a way to take the developer-friendly world of Ethereum and make it much, much faster?

That’s where Polygon comes in. Polygon can run at up to 65,000 transactions per second, far faster than even Visa’s huge network.

But developers can still use Ethereum-compatible blockchains and take advantage of the huge amount of code already available on Ethereum.

Similar to an API company like Plaid, the success of a smart contract platform like Polygon is all about developer adoption. The more widely it’s used, the more valuable it becomes.

Given that developers can write code on a platform they’re used to, I think Polygon will have a big advantage over most. It shows in the numbers: daily active users have gone from 750 at the beginning of the year to 192,000 in August.

Polygon is being used for a lot more than price speculation. The most popular project is QuickSwap, which lets you trade 100 cryptocurrency pairs quickly and easily.

My favorite project is Polymarket, where you can bet on real world events like elections or court cases. This could be useful for predicting the weather, a major need of agriculture businesses.

So will I be buying Polygon?

Despite its impressive technology, in a high risk investment like this, I’m looking for the possibility of a 100x return. I’d look for the same in a tech startup.

At a fully diluted market cap of $18 billion, Polygon may have already become so successful that it doesn’t make an ideal investment for me.

But I’ll be watching this awesome team to see what they come up with next!

More on tech:

How Elrond Could Take Over Payments Worldwide

How Tech Could Stop Wildfires

How Solana Could Wipe Out Visa and MasterCard

Photo: “File:Raspberry Pi Bitcoin Mining (14673305874).jpg” by Gareth Halfacree from Bradford, UK is licensed under CC BY-SA 2.0

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Save Money on Stuff I Use:

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If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

AMC May Issue Its Own Cryptocurrency, Per CEO

Fascinating news from AMC:

AMC Entertainment Holdings Inc., already bolstered in the past year by technology, may go even further by issuing its own cryptocurrency.

The Leawood-based company’s CEO, Adam Aron, said on CNBC that the company is getting “hyperactive” when it comes to cryptocurrency, though he added that the idea is one of several the giant theater chain is working on.


I think this is an excellent idea. AMC’s business is on an upward trend, but it still suffers from heavy debt.

Its debt, at nearly $6 billion, far exceeds its cash balance of $1.8 billion, per the most recent quarterly report.

AMC could use a lot more capital to pay off that debt and free itself to pursue a bright future. But shareholders recently voted against the issuance of new shares that could’ve brought in over $1 billion.

They don’t want their ownership position diluted, of course.

But issuing a cryptocurrency dilutes no one. It’s essentially free money.

Given the intense interest in AMC by the meme crowd, I would expect these coins to do rather well. AMC could use that money to pay off some debt and be in a stronger position for the future.

Kudos to CEO Adam Aron for this innovative idea! I hope he pursues it.

More on markets:

Robinhood Exec Dumped AMC Right Before He Limited Trades, Lawsuit Alleges

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

How Elrond Could Take Over Payments Worldwide

I recently sent a wire transfer. The money was destined for a promising tech startup. I was so excited!

Then I logged into my account a few days later and noticed a mysterious $20 charge. Next to it, the dreaded words “Wire Transfer Fee.”

Eww. Why should sending what amounts to a text message cost $20? Because they can, that’s why.

I found another bank that offers free wire transfers, which is very rare. But this experience got me thinking: what if we blew up this system?

That’s where a new cryptocurrency called Elrond comes in. Since its launch last year, this innovative coin’s price has gone vertical:

But what’s even more impressive than that is its capabilities. The Elrond Network can process up to 263,000 transactions per second.

That’s more than ten times Visa’s capacity and over 25 times Ethereum 2.0’s.

It also uses a new technique called adaptive state sharding. This means that the network can create more nodes, which process transactions, as the network grows. It can also merge them if participants leave.

This means a network that scales up and down easily. No other cryptocurrency that I know of has this feature.

So what does it cost to process payments on Elrond?

Practically nothing. In fact, someone recently transferred $17 million for less than a penny on the Elrond Network.

Take that, banksters!

One fly in the crypto ointment could be Know Your Customer (KYC) regulations. These require identity verification for all accounts and payments and are designed to avoid money laundering.

But the entire banking industry handles KYC for just $500 million a year. The blockchain could actually make it easier and cheaper by letting banks share that info. That way, each bank doesn’t have to go through the process again with the same person.

So, does Elrond work as an investment? I’m not sure, and I’m eager to hear your thoughts on that. Leave a comment at the very bottom. (I don’t own Elrond currently.)

For anything this high risk, I’d like to see the possibility of a 100x or greater return, just like with early-stage startups.

The fully diluted market cap currently sits at $8 billion. Can it get to $800 billion?

That will depend on how much of the existing financial structure it replaces.

More on tech:

How Solana Could Wipe Out Visa and MasterCard

Why I Just Invested in Kippo, Where Gamers Find Love

The Hamster Crypto Trader That’s Outperforming Me

Photo: “Hobbit House from Lord of the Rings by Michael Matti” by Michael Matti is licensed under CC BY-NC 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order.