Reasons TRON might be the root source of crypto-troubles today:
First, some background: A post hours ago by steemit-maven @kingscrown explained today's selloff as based on some indices removing Korean cryptocurrency pricing from their average-pricing algos. This SEEMS to make sense, and indeed might be a contributor to today's melee; BUT, it's always VERY hard to determine exactly WHAT is causing an overall market to make lots of volatility. Obviously if cryptocurrencies are going to have ridiculous up days, for which no one complains, then it should ALSO be expected cryptocurrencies will have ridiculous down days as well. But the main worry is always? Is this the crash which will destroy > 90% of all cryptoassets on the earth? Tough to say, but it's best to provide more than one explanation for a volatile day, and we've used some long experience in stock markets to provide some more info which will perhaps inform your future actions...
#1 TRON's decline began before bitcoin's decline
TRON topped out on January 5th after an insane 4 week run from obscurity to one of crypto's biggest market caps.
TRON lost $18 billion in USD value before bitcoin even finished topping out for the week (yesterday). What caused the decline in the first place? The TRON whitepaper of all things-- some sources on Twitter "outed" the whitepaper as a "cut & paste" copy of other previous work, and then Charles Lee chimed-in with a retweet of that "outing" and TRON's demise began. We're not saying TRON is a fraud or anything; after all, Charles Lee himself copied almost ALL of bitcoin so he's really not one to talk (and he should remember that). However, a sniff of underhandedness is something cryptocurrencies which just rose 1,000% don't take kindly. In our view, the rise and drop in TRON is more indicative of a trend in cryptoworld for 2018, than the drop is an indictment of TRON. What do we mean by that?
#2 TRON represents the new leader-class in crypto:
TRON's run has been based on the simple one-liner: "it's the iTunes of the decentralized crypto-net" (paraphrased).
If you know anything about the history of Napster and iTunes, you'll see that's a KIND comparison. What Amazon is doing for self-publishing books, TRON aims to do for ALL media, right? Simple story, people love it, and TRON is SUCH a new concept it was easily ripped into the heavens along with some other fellow "story-stock" app-coins (app-tokens?). The point is, everyone from the shoe-shine kid to CEOs of multi-national companies to world leaders is now aware of cryptoCURRENCY, but they need something to rip and scream "there's more!". TRON makes sense to people, and therefore represents the NEXT understanding in crypto; namely, it can be used for more than just currency. While this was readily proven already by the darknet's PirateBay and Silk Road years ago, the popularity of "smart-contracts" is slightly broadening that reach beyond just MONEY or CURRENCY. In short, how can a decentralized exchange allow, say, MUSICIANS to get paid for their content creation without having to pay several middlemen to get their content to the masses? TRON represents ONE of the many use cases crypto-assets can serve in what we'd call the "dark" apps. We say "dark" bc while it COULD be disruptive, it's most LIKELY disruptive via somewhat DUBIOUS means in the early days. We could go on, but in short, TRON represents a new kind of crypto-asset, and it's rise and fall will tend to be the 2018 "app-coin" tail that wags the proverbial "cryptoworld" dog, and not the other way around.
#3 TRON's decline is outsized vs its longevity.
While TRON is new on the crypto-scene (AUGUST 27 2017!), it's loss since Jan 5, 2017 has been OUTSIZED. Namely, it's lost $18 billion in value, down 47% from just 3 days ago! Compare this to the almost 10x bigger and zillion times older bitcoin, and that's a MASSIVE dent in the crypto-market armor. Bitcoin, while only down about 14% from it's high from just a day ago, is down about $39 billion.
#4 Bitcoin's undergone much worse
There's already been many "tough-news days" bitcoin has undergone, so there's really nothing out there which would spook cryptomaniacs today as relates to the major coins. But in TRON, there's been some discover since it's massive multi-week rise. Perhaps the #1 discovery is just how NEW and "on the come" this currency is. Try to think of it this way, TRON reached approximately $40 BILLION valuation in less than a half year. Even with Snap's near overnite-success it took several YEARS as well as A WORKING APP and even some revenues to reach that level-- a level it's not even touting right now! In short, TRON is/was WAY WAY ahead of itself, and the market just told you that in the past 4 days. So while Bitcoin and the other major cryptos have endured much much worse than anything else that's happened in the past 48 hours, TRON has NOT. Therefore, the massive almost $20 BILLION drop in TRON is scaring the market. Why? Because markets are ultimately smart, and cooler heads usually prevail. There MIGHT be a story which makes TRON at $40 billion valuation seem reasonable, but with zero history and nary a product the market has correctly said "it's too high" (for now, and maybe forever?)
#5 Justin Sun's picture?
Have you seen the guy behind TRON? Look, we remember Bill Gates' picture when he was just starting out in New Mexico, so this isn't a VERDICT of the kid. But just like Bill Gates was ridiculed, it's pretty easy to lose confidence in cryptoworld in general when you see a picture of one of it's newest "leaders" and it's this....
You can see how some doubts may emerge that the whole cryptoworld has gone nuts, and induce some selling, no?
#6 Is TRON a serious entity? The crypto investment markets read this as "Is crypto a real entity"?
Did a young-looking pimpled Bill Gates make comments like this which aren't focused on product but on "mentions"?
click/read this... (it's just one sentence)
Question? On what are today's crypto-leaders focusing? Business, or bullocks?
TRON not only represents an ICON (much like mint jelly is the icon for serving lamb for dinner) foretelling a shift in punter focus in the cryptocurrency world from 2017's "year of the alt-currency" to 2018's "year of the app-coins", but it's also become app-coins posterchild at the moment, and we expect this to last on the order of at LEAST weeks if not a few months until it's relieved of the duty by the next hot sector in crypto. Expect PLENTY of copycat tokens in the coming weeks/months.
We, as always, wish cryptoworld the best, but simply wish to state that days like today will become more common, not less, as certain absurd things happen like an app-coin rising in mere months from obscurity to "FANG"-like popularity, which warrants inspection by "cooler heads" who know how to value things-- including the very founders of the appcoin's themselves. After all, who's more likely to have initiated a selloff, a bunch of punters trading $1,000 at a time in TRON, or those who owned LOTS of Tron since the early days? We point to Charles Lee selling his Litecoin at almost the very top. While we respect his decision, and think he's probably doing it for the right reasons, it still represented the top in what we'd call "alt-coins" (by altcoins we mean cryptos like Ether and Litecoin who's gains outstripped bitcoin's in 2017)-- to this day.
Is TRON's drop in the past 100 hours the straw that breaks the camel's back? That's a much much bigger question, and we leave it to you readers in the comments....
Good Luck Steemians!
Nice post, very informative thank you for sharing.
Did you do the research yourself? Do you analyse cryptocurrencies on a regular basis? Would love to hear more of your opinion on many others. Keep the good data coming.
We do 100% our own research, theories, and predictions.
We value originality; if it isn't original work it has no value and therefore we don't want to read it or post it.
We do regular analysis, yes, of certain crypto themes ranging from historical & topical to "overnite" recommendations based purely on a proprietary algo we created [on more than a half-dozen recommendations already, the algo has produced positive results on all but one-- a (1.5)% loss.
Our main focus is expanding the knowledge base for ourselves and everyone around us-- in the "open source" spirit.
The correlations you draw here are quite laughable. Honestly, you think because a lot of people heard about a coin and pumped it to the moon due to hype is causing all of this in the market?
No. There are many factors at play here.
TRON fits a very small piece of the puzzle. Yes, TRON is overbought.
Yes, TRON was due for a correction.
Look now? The correction is complete? This coin will quietly gain steam now that we have approached the apex of the descending triangle.
I think the way you are viewing this situation is skewed. Especially when you say things like "outgained in 2017", which proves you arent acknowledging the whole situation (that Bitcoin has done the rags to riches scenario ALREADY, and each coin does it at their ownn time)
Sorry, I'm not trying to come across as a hater. I just find it hard to draw the same conclusions as you. Good analysis!
spif, thank you.
Honestly, if we've inspired your response, that's enough for us. Dialogue is important; disagreement is something we revere as important.
We DID say "it's best to provide more than one explanation for a volatile day"; in other words, we don't claim to have the ONLY answer, we're just suggesting that if you look at cryptoworld in general, and one of it's hottest performers is outed publically as a fraud, that can shake confidence in an entire market.
If you don't believe us, look at Warren Buffetted coming out of the woodwork to mock crypto this week-- an even which FOLLOWED the TRON fall. Maybe old Buffetted was having a conversation with Munger and Munger said "for instance, take a look at this TRON..." and then proceeded to use it as a proxy for all of crypto's hopes and dreams. We take into consideration EVERYTHING, and if there are examples of fraud, sometimes the babies get thrown out with the bathwater, NO? That's where the expression was born.
In your last paragraph, specifically we mean there are stages to the growth of a sector (or bubble). If you lived thru the internet stock bubble, you'd know this is true. Whereas the eBay's and Amazon's were the big performers in 1998 and early 1999, by the end of 1999 the best performers were stocks no one ever heard in late 1998-- stocks like PurchasePro and Ariba. Markets go thru phases, and bitcoin's phase is over, as proven by all the cryptos which massively outperformed it in 2017. The main crux of our article, is you SHOULD be looking for the next big thing in crypto in 2018, if you're going to be involved in it at all.
Why stick in bitcoin, even if $100,000 is the goal? If bitcoin goes to $100,000 you can bet there will be a whole new THEME of crypto which will VASTLY outperform that 500% growth in bitcoin price from it's December high. We are suggesting that a highly volatile performer like TRON is telling you something: The next phase in crypto is APPS. So much so, that even the ones which may be fraudulent (PurchasePro for example!) will rise with the tide, and probably moreso than the ultimate survivors.
So mostly our article is about timing, and about how the market is refocusing away from what worked in 2017, and onto what WILL work in 2018.
Thanks so much for your comment, feel free to rip our response apart too!
Interesting piece of writing and some crazy theories which I disagree with. But too cool!, nevertheless
Thanks.
Our writing is indeed not for everyone, but if we even introduced new concepts to think about in the future, we've done our job. Disagreement brews truth over time, as it puts focus on the right QUESTIONS to ask-- at least. Can we agree on that?
;-)
What an exellent read. Thank you. I, for some reason, really enjoyed this part as I'm not a fan of Charlie (for some unknown reason, just dont like his vibe...)
We go back on forth on him. On the one hand, we MIGHT believe he's honest when he says he sold all his Litecoin to remain unbiased. However, we'd also like to know how much bitcoin and bitcoin cash he owns to give us a full picture.
Like anyone in the early days of something, they are frequently critical of the 2.0 versions, the newest generation of adopters. remember that girl in high school who was into a band you never heard before, but 10 years later EVERYONE was listening to them? She was early, and guess what? When the band got popular you can bet she didn't like them anymore, and didn't like the new fans either. Charles Lee reminds us of that a little. We prefer Szabo, he's a bit more of a purist and probably got involved win crypto for the original right reasons (in a word: decentralization)
Thank you for this post. I've been wondering what the deal with TRON is ever since I had some dropped into a couple of my exchange accounts. It was strange to see the value of these free coins go from $0 to $200.
Like so many alt-coins, or even bitcoin, it's hard to know what to value these things. Not only are the coins themselves in a legal Wild West, but so is the trading of these coins. So many things that are illegal on stock exchanges (wash trading) -- are openly happening on the crypto exchanges. So price manipulation tactics are alive and well, it seems.
Plus there's the manipulation around pre-mined coins and being able to drive price with fake scarcity (like founders holding 60-80% of the coins).
And what the heck is a market cap anyway -- just the current buying price multiple by the # of outstanding coins?! It's one of the only measures we have, but it really sucks with you think about it.
So hard to tell what's actually hot in all this smoke. We need, and eventually will get, a big, ole dumpster fire to see what value really exists.
Market Capitalization = Stock Price * Outstanding Shares
It's the measure of the value of a business. In stocks, it's very important, and typically it changes based on the returns the business is earning. It's very important, and will end up being important in crypto too. Particularly if a cryptocurrency doesn't make any money; then, it's value is just based on trust ONLY.
For instance, if TRON makes money some day, and ownership of a TRON token earns you the right to get some of those profits, as an owner, then TRON market cap will reflect those earnings. But if say Ripple never earns any money, or its tokens don't pay tokenholders if it DOES earn money, then Ripple probably won't end up being worth anything in the end, if trust is lost.
So the price of a token, and a token's market cap, depends on a few different factors. In bitcoin, one of the main factors is that bitcoin will stop printing more bitcoin at 21mm tokens. SO THEY SAY. Bitcoin is run by a majority vote, so when 21mm are printed, they could just vote to raise that to 42mm or 1 billion. Think about it, if you made your liviing being the #1 and #2 miners of bitcoin, wouldn't you vote to continue mining? Something no one thinks about in crypto-- nor dares talk about it.
For bitcoin ... when no new coins are mined, the idea is the transaction fees pick up the slack to incentivize miners. But you're right, there is no reason a consensus couldn't emerge to increase the # of coins. However, that would possibly upset enough people to have a serious hard fork because it violates a foundational principle for store of value.
I believe many of the tokens are completely based on trust and have zero correlation to the success of the company (as they would with stocks). Ripple is one good example -- the XRP token is essentially a legacy piece that is not part of the core protocol -- so banks can use Ripple without using XRP (and probably would). Ripple, Inc can succeed as a company and that has zero bearing on XRP price, except that buyers will make the faulty correlation of good news for Ripple, Inc = good news for XRP. So it is absolutely trust. But I cannot think of any reason Ripple, Inc would share any of their winnings with XRP holders -- what's the incentive. How would they even do that? The only way I can think of offhand is to publicly burn some of their XRP to make it more scarce.
I don't know enough about TRON -- does the token have any usage on the network (like ETH that is burned anytime you move around ERC-20 tokens)? If it's not used on the network and it's not stock in the company (making it a security) -- then it's nothing but but a crowdfunding campaign. But with Kickstarter, you know you're not getting much in return.
Of course, the same could be said for bitcoin or gold. In bitcoin, the value seems to come from energy spent by miners to secure the network, plus the network effects Bitcoin currently enjoys over other cryptos. But, yeah, in the end if there's no trust, there's no value. At least, Bitcoin makes no claim to tie a company's success to the token when that success doesn't directly relate to increase token usage.
Yes, and it's spot-on you mention hardforking, bc that's exactly what's been happening, right? Bitcoin Cash is effectively an increase in tokens, DOUBLE.
So in effect, we've already violated the 21mm limit a few times. Of course, we're still not counting the future when miners vote in their own best interests.
It's probably true on Ripple, and then extrapolate that to MOST all of cryptocurrencies/tokens/entities. Unless stated and unchangeable in the code, one must be wary of tokens which don't pay anything out.
We DO however think there will be tokens which act more like shares, but that's another legal bugaboo itself.
The difference with gold, is that it's hard to lose it, and humans have been using it for the longest of any commodity-backed "money". that counts. Bitcoin is not even a decade old. Even the now-crappy dollar is over 200 years old, and has at least been backed by gold for most of its lifetime. In fact, the dollar's main problem came about bc Nixon dropped the gold-standard. That should tell you something about gold right there.
gold also has some uses, in addition to being rare. If it weren't rare, it'd probably replace copper in wiring (in nuclear weaponry circuits, it DOES replace copper).
We know people argue against this feature, but honestly, bitcoin has zero value even esthetically. Its private keys can be written on a strip of paper and swallowed by mice. Mice don't eat gold, if you hide it inside some cinder blocks in your basement, even if you die without telling anyone it's there, there's still a chance your grandkids might find it before the demolition company does.
Spot on! Great points. I really like the idea of some coins actually functioning more like shares. The thought that one day we could have decentralized versions of the NYSE is fascinating.
One a sidenote with the hardforks -- one feature I like about them is it allows kids to take their new game with new rules to a different playground. This allows the other kids to figure out which game they like more, and in which cases they like it more. It's much better than the endless Ford vs Chevy or Mac vs PC debates (like block size). There is no single version of the truth about what's best right now, it's too early. So hard fork it. Put your code where your mouth is & stop talking trash. Run the experiment. Learn from the experiment. Adapt. Move forward.
The value will sort itself out later. I'm not sure it ultimately changes the scarcity aspect so much. Time will tell how that plays out. In the end, there's room for more than one winner.
Looking back to the teachings of Plato, we'd see that anarchy is not just bliss, but VERY SHORT in time vs the other forms of government (and by government we REALLY mean societal structure). So while we agree the world WOULD SHOULD and WILL go 100% de-centralized, it won't last bc wicked men with big stakes in competitive concepts to the freedom of decentralization wont' allow it. Just look at the dollar itself, if you held billions of the stuff, you wouldn't let some artificial digital currency cause it's value to plummet, you'd hire mercenaries and pay off politicians before you let that happen. So expect a battle in the future, and expect crypto to be made illegal to own. It's one thing to SAY you can hold a hidden decentralized coin, but it's another thing to risk jailtime to do so. Not many of us are criminals at heart, humans generally obey authority MOST of the time. And if the majority of humans obey the law, they don't take kindly to those who don't, it's like cheating. It doesn't matter if the cheater feels justified, what matters is the majority of people do NOT agree with him out of sheer "jealousy" but really it's just that "unfair" gene we all have-- the one that drive's all those psych experiments like "Prisoner's Dilemma" etc...
At some point in the future, when the powers make it all illegal, one will have to decide whether to join the dark side or the light side of the force. Ironically, the "dark side" is probably the moral superior to the light side, but that doesn't mean good honest hard working people will choose the dark side.
In theory the forking makes total sense. In practise, well, that's another matter. Most votes will be cast in self-interest, not for the "better product" or "better game". This is why many times a benign dictator is far superior than a democracy. Democracies, in the purest form, quite frankly are dark dark things, similar to how people VIEW anarchy. Ironic, but true. Benign dictatorship is the thing of Solomon and David in the Bible, whereas democracy is the thing of mob rule and the crucifixtion. Not getting religious here, just referencing stories most everyone knows due to Bible being one of the oldest books. We'd use Beowulf but the story just isn't as broad, eh?
Our big question is, how flawed is bitcoin, and will this lead to a Google vs AltaVista moment in the history of this stuff. If bitcoin is AltaVista, then what is the next Google? That's what we should be researching. Which lead's us into the next article planned-- Raiblocks. They may have arrived at something even Satoshi and Szabo didn't vet.
your last statement is true, so long as the bad fork goes to zero value. But in say Bitcoin Cash, it's not, and in fact it's been gaining in Bitcoin since inception. So effectively it's been acting like a doubling of the 21mm bc indeed, there MIGHT be room for both, as you say.
I guess I put the possibility at zero that the right arrangement or rollout happens for any project/coin/platform/protocol/consensus. So the ideas will need to evolve. Without running the experiments and seeing which ones work as they scale, we will be stuck in endless debate. Technology doesn't wait for endless debate -- it moves on without us.
I agree that the best technology may not win out, but I think that will have to do with how a given platform combines a series of variables and ultimately how they help people get from A to B (transferring money, data, identify, etc...). In the end, there will not be a single winner, but a series of winners who best address their respective problems. And the variables at play include the tech, transaction fees, open vs closed source, game theory, economic incentives for all participants, and many more... The bigger a platform gets, the more people/businesses have serious money tied up in it, the more likely a community is to fracture over how these variables combine.
No one knows how their platform will work in the wild any more than a poet knows how readers will interpret the poem.Dan Larimer found easier to move onto new projects to refine his ideas than change the existing projects -- and so he forked himself from BitShares to Steem to EOS.
So you're right ... we need to keep an eye out for the next thing. And you're also right -- the next thing might already be here now.
Exciting times, huh?
Good post, read all the way through and upvoted.
I found this news article below before searching for informative posts on steem and reading yours. The news article plays somewhat to the same tune as your analysis, i.e. the TRON team seem to have no issue being a little disingenuous
https://www.ccn.com/tron-uses-creative-marketing-to-hype-baofeng-partnership/
Thanks for the link, it reminds us VERY MUCH of all the shennanigans which occured in the internet bubble. We remember a time when small internets would pay giant blue-chip CEOs in stock to do a partnership which made for a big soundbite but really weren't anything more than paying shares for hype. We suspect TRON won't be the LAST entity to use such tactics, but so long as crypto prices keep inflating we'll see a TON of this in 2018. Again, this type of thing is EXACTLY why we wrote the article.
EDIT: We forgot almost the most important point which is now included in the article but posted below in case you already read the full article...
What caused the decline in the first place? The TRON whitepaper of all things-- some sources on Twitter "outed" the whitepaper as a "cut & paste" copy of other previous work, and then Charles Lee chimed-in with a retweet of that "outing" and TRON's demise began. We're not saying TRON is a fraud or anything; after all, Charles Lee himself copied almost ALL of bitcoin so he's really not one to talk (and he should remember that). However, a sniff of underhandedness is something cryptocurrencies which just rose 1,000% don't take kindly. In our view, the rise and drop in TRON is more indicative of a trend in cryptoworld for 2018, than the drop is an indictment of TRON. What do we mean by that?
Not sure plagiarizing a whitepaper (TRON) and branching off open source code (Charlie Lee & Litecoin) are the same thing or even remotely close.
in the regular world, sure, they might be different, perhaps legally. But when you boil it right down, people in Silicon Valley are copying LOTS of stuff, and always have. Lots of the copying doesn't require a patent, just ask Steve Jobs and his mouse. Another example is the employee who left Google's Waymo division and copied the code for self-driving cars and took it to his next gig. maybe he WROTE the code and felt justified?
Charles Lee piggybacked off Bitcoin; we have a ton of respect for how he conducts himself (until proven otherwise), but bottom line is he's no Satoshi. Lots of credit should go to the guy who had the guts, execution and courage to start it all. Charles Lee is nothing more than a "pilot fish" living off the scraps of the great unknown shark. Nothing wrong with that, we just don't put 100% stock in his criticisms, even if we agree with them (TRON) at first.
Keep an open mind!
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