Here is a bank in Lichenstein offering cryptocurrency services. I thought cryptocurrency was going to end banks! The bank is going to offer trading of ethereum, bitcoin, bitcoin cash, litecoin and ripple, as well as cold storage services. The chief client officer of the bank writes:
Customers of Bank Frick can now buy or sell ethereum, bitcoin, bitcoin cash, litecoin and ripple, or just leave the assets in the bank for safe storage in cold wallets.
With our new offering, financial intermediaries such as asset managers and trustees can successfully differentiate themselves in the market and offer their customers added value,” Büchel says, adding:
I always remember cryptocurrency enthusiasts telling me how the benefits of it are things such as eliminating the middleman and trustless transactions. If you use the bank to store your cryptocurrency, you are trusting the bank and adding a middleman. I've always been skeptical of people who don't believe that banks will serve a purpose if cryptocurrencies succeed. It's still very difficult to store private keys. There is almost no difference between one storing their private keys under their bed and storing cash under the bed except that a string of numbers represents money opposed to physical paper bills. Additionally, transferring cryptocurrency for beginners is a daunting task. Imagine sending $250,000 Bitcoin and worrying about if you mistyped a number. I expect to see more intermediaries popping up to help with storage and transferring of cryptocurrencies. The current system is just too difficult especially for people new to the space.
Uber for Cryptocurrency
I'm just joking, but the co-founder of Uber, Garrett Camp, is back with a new project. His own cryptocurrency, Eco. The whitepaper describes it as:
Eco is designing a global currency protocol, an open source platform that is not controlled by any single individual, organization or nation. Eco aims to create a verified network of global universities and reputable organizations to help design, build and operate an evenly distributed and cooperative financial infrastructure
Garrett first bought Ethereum and Bitcoin about a year ago. He wanted to build a currency that had a radically different approach:
“I realized it might be better to release a new project from a different philosophical standpoint with cooperation from a lot of universities, scientists, and research institutes—like the Internet,” he said, in terms of its path to development.
It sounds like it could be promising, but as you begin to read the whitepaper you begin to question the project. He describes a concept called "lazy nodes" where nodes in the network are incentivized to only do the bare minimum and nothing more. For those of you not familiar with nodes. Nodes are used in blockchains to verify transactions and relay transactions. In Bitcoin, many people aren't incentivized to run full nodes anymore because it's more efficient and profitable for people to put their computing power behind buying mining equipment. Eco is trying to sound this problem. In the whitepaper it says:
The Eco network operates based on collective incentive, rather than individual reward. When a block is successfully mined, tokens are evenly distributed to all other nodes immediately. The financial motivation to increase hashing power is removed, since reward is distributed to all other nodes. The motivation for the node operator becomes to provide just enough hash power to verify that transactions are valid within a collectively agreed upon level of maximum latency. Thus the platform becomes collectively motivated to achieve optimal energy efficiency.
This sounds like the socialist version of cryptocurrency. I just don't see this being a good solution for incentivizing people to run nodes. The premise of Eco is assuming that people will be altruistic and give up computing power so they break even. The reason that Bitcoin worked so well is that the system provided a financial incentive. It's the very basis of proof of work. It would be less expensive to help the network than try to cheat it.
Some Other Things I Read Today
- Overstock: $250 Million tZero ICO Under SEC Review
- Subpoenas Signal S.E.C. Crackdown on Initial Coin Offerings
- Towards a Practice of Token Engineering
- The Bullish Case for Bitcoin (part 4 of 4)
- Twitter Scammers Use Verified Accounts to Trick Crypto Holders
- This $1 Trillion Money Manager Just Joined the Crypto Frenzy
If you enjoyed what I wrote, you should also follow me on Twitter @amlewis4.
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