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The ICO train continues unabated and the Bitcoin Fork

The ICO train continues unabated

Two topics today, one is on bitcoin and the other on neverending ICO madness. If you go to http://coinmarketcap.com and click on assets you can see the total market cap across different assets.

Most of these companies are less than 1 year old, EOS being less than just a few months old. And almost all of these companies have raised via ICO. We’ve had several inquiries in the past week of some very promising and ambitious companies.

We’ve got a new article in the pipeline that compares all the legal jurisdictions for ICO’s thus far. Also we have a new article on corporate structuring for ICO’s

In order to participate in an ICO, one would send bitcoin to an address which the ICO company has declared is the official address. Once you send your BTC to that address, you will get the newly issued token in return. One should follow directions of individual project if you are interested, this is just a primer to explain that to partake in an ICO, one generally needs ethereum or bitcoin, which brings us to our next topic of today:

Bitcoin is about to fork, and why you should care

Blockchains are chains of blocks which keep track of native assets sometimes called ‘cryptocurrency’. Miners do calculations to ‘find’ the next block.

All of the miners agree on a certain chain of blocks, but if some of the miners disagree and when this happens, there is something called a ‘fork’ -where you wind up with 2 distinct chains.

We have a critical event coming up on august 1st for bitcoin, which has been raging for literally months called the ‘block size debate’. Certain miners think the block size should be increased, and others believe it will stay the same. 

Therefore the bitcoin blockchain WILL split on august 1st 2017, and it’s called Segregated witness. I’ll spare you the technical nuance, but SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. Events like this represent a volatility, and opportunity to make (or lose) money. Some people will sell bitcoin as they feel it’s a risk (things changing is generally riskier than things staying the same), others will buy in as it creates potentially a longer term more sustainable network. 

My opinion is that it’s much ado about nothing. Bitcoin has a relatively hard time with governance and making decisions to change. Bitcoin is the largest coin by market cap and has been since it’s inception as the first coin. But others are more interesting from a purely technology standpoint, and still others are completely worthless!

The interesting thing about these markets is that there is nothing new under the sun. You buy low sell high. In the last week there was a major pullback. Z-cash pulled back to around $140, and within a week it was back up to $200.

Very volatile, but interesting. I’m interested in Z-cash because it has a breakthrough in mathematics called a ‘zero-knowledge proof’ that some other coins do not have.

While some coins such as Z-Cash represent technological breakthroughs, many coins and assets have zero redeeming qualities, and some are a joke (literally) – for instance, according to wikipedia, “DogeCoin was Introduced as a ‘joke currency’ on 8 December 2013… but as of June 2017, it has a capitalization of US$340 million.”

I’m not recommending a buy on Dogecoin! Back to bitcoin, shall we?

One thing to note is that bitcoin has forked in the past, several times. See this chart below and note that none of these hard forks caused any irreparable damage. Many were intentional.

What is happening in the past to bitcoin in terms of forks. 

Now why should you care and how can you make money off of this?

There have even been fork events which actually ended up benefiting those who were a previous holder of token before a split. An example of this would have been the hacked “DAO” event where the Ethereum blockchain hard forked and created Ethereum (proper – or ETH) and Ethereum (classic – or ETC). 

Token holders who held before this split ended up doubling and having both ETH and ETC which turned out to be an Unexpected benefit to all. In case you don’t know what Ethereum is, this website whatthefuckisethereum.com – despite the vulgar name, this site does a great job explaining ethereum based on your demographic. Oddly enough, I was shown this by a banker – who was previously an entrepreneur no less – the world certainly is changing quickly. 

What’s the TL;DR here? In the runup to this hard fork it’s a good buying opportunity due to the uncertainty. If it’s anything like the ethereum event where people split, it’s possible you may wind up with double the tokens (so to speak) on two different chains. Then, you could decide to sell one or both of hese. 

If you are looking for an excuse to get into bitcoin – buy on the dip and get in before the fork! Furthermore, South Korea has officially sanctioned bitcoin exchanges, which means that we can expect more growth from this market.

This is not professional advice, do your own due diligence, and out of transparency, I hold some of the assets described in this letter.

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NOTICE: The contents of this article are not to be considered as a legal opinion or tax advice or investment advice and should not be relied upon as such. Far Horizon Capital Inc does not hold itself out as a legal or financial or tax advisor. If you wish to receive a legal opinion or tax advice on the matter(s) in this article please contact our offices and we will refer you to an appropriate legal practitioner. Use of our website FlagTheory.com is subject to our terms and conditions.

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