Value Investor's Guide to Crypto Currencies by Snow Mexican LSD
Value Buyer's Guide to Crypto Currencies by Snow Mexican LSD
This is a comprehensive, no nonsense guide to getting rich slowly, via crypto currencies.
- Governance - How are decisions made.
2)Trajectory of Infrastructure
3)Independence of Development
4)Privacy of User
5)Protection from scams, fraud.
6User Friendliness at a Protocol Level
Afterword - Tips
Mindset and Philosophy
Chapter One - Governance
(Who the fuck is making this shit?)
The first thing to look for is who is making the crypto technology. Technology refers to the software that the currency runs on. Each program, or software has different attributes. Much like how gold and silver are both money, but look different and boil at different temperatures.
So who is making this? Have they done something like this before? Are they trustworthy? Their credentials, are they solid? Specifically look at the lead developer and the advisors. Many startup cryptos will take on senior advisors that are experienced in the field and know what they are doing.
Ok, so now you know you is making the currency. Now you need to know who actually controls the currency. Aren't they the same thing? No. The person creating the currency has quite a few options for as to what happens later on. Sometimes, miners get to vote where the currency goes in the future. Like whether or not they should issue more of the currency. Miners might vote yes, so that they could mine more coins and make more profit.
Let's take another example. Say the developers of currency XYZ decide that the people who hold the currency will each get a vote. In fact they decide that each coin gets one vote. The people with the most currency would naturally vote that the developers do not issue more currency. That way their personal stashes would not deflate in value due to an increased supply.
Figure 1 Voting Rights/ Issue: Whether or Not to Issue More Currency
Miners Get a Vote Owners Get a Vote
Vote: YES Vote: NO
Reason: Mine more currency to make more $ Reason: No more coins means current coins do not decrease in value
Vote by switching mining systems Vote by using coin's voting power
Every currency needs computers to store the transactions. These computers are called nodes, and are actually a software that can be run from a home computer. Some currencies have decided that people who run nodes will get a vote in the decisions that will change the fate of the currency.
- Trajectory of Infrastructure
(Where the fuck is the currency going)
Each currency has a vision. Anonymity, security, un-hackability. These are all attributes that make the coins different, just like gold and silver have different shines and boiling points.
Some questions to ask:
How available will this currency be to the public? The currency should be able to be used in any country, by any person of any language. The easier it is to use the more people will use it.
Look in the news, the whitepaper, and talk forums to see what the future vision is. Will it fork in the future? Will they change any of their main attributes? Change is not all bad, especially if the change will adapt the current software in order to become more accessible or faster/more secure.
- Independence of development
This has much to do with number one, but I was too dumb to put that together. This is all about who runs the currency. Developers who also run the currency is never a good idea. They could program the currency to pull money out of your account!!
Many good currencies like bitcoin and dash have the ability to be changed by ANYONE. You could go online, post an idea about bitcoin, and if enough miners agree with you, you could execute your idea, and get paid well for it.
- Privacy of user
(If you can confidently buy drugs with it, its a good currency)
I am not glorifying the use of bitcoin and the darkweb. There is however, intrinsic value in the ability to have no one know who has sent money to who. This will lead to a world with far less barriers to entry in business; lets give you an example.
I'm a hippie who lives in a van down by the river, I'm really good at making guitars. Unfortunately for me and my hombres, the national guitar association has too many rules. Guitars have to be made with a certain wood, health standards, and have to be sold on certain markets, with even more rules. I'm just a mom and shop kind of guy and all these rules are hella killing my vibe.
With this currency, I would be able to bypass all these rules, I would have no barriers to entry and my success or failure would be solely based on my ability to make guitars.
This is a pretty bad example, but just remember, these currencies will level the playing field between the rich and the poor. Everyone will thrive or fail based on the reputation they themselves create in their lifetime, not the reputation of their parents or friends.
5)Fraud and Hackability
(Protect your shit)
Fiat currency has banks. With online currency, the currency itself is its own bank. The strength or lack thereof depends on how well the block-chain (crypto-software) was written.
The currency should protect against fraud. Some currencies are entirely control by who owns the most. If I own 51% of this kind of currency, I could pay you for some goods, say 10,000 XYZ coin. Then I could go the the main currency software and enter a program that would cause the coin to be refunded. The software would make me prove that 51% of the market agrees with this decision. I would validate that by voting with my coins and the program would refund my money. This is real and is called double spending.
EVERY currency you invest in should be as un-hackable as possible. Be secure.
- User Protection at a Protocol Level
(How the fuck does the average person use this?)
The program should be pretty easy to use. Bitcoin can be received and sent from a phone, same with Ethereum and Litecoin. However, the standards are getting ever steeper as big companies like Microsoft and wall street firms are starting to get into the game.
Some currencies have the unique ability to run applications or programs right on the currency. As of late, these programs have been so complex you would need a masters degree in programming to use them. Within two years, this problem should be fixed.
Some companies are using pictures and buttons on their currency platforms. This allows the average Joe to decipher the operations with pictures.
Let me break it down. Say there is a program you are dealing with at McDonald's. You have McDonald's Coin in your MC-Coin account. Instead of having to program and manually write software to exchange currency, you just go to an App, press the button that shows Sprite, and your McDonald's Coin is transferred. This sounds pretty obvious, but the first currencies used to operate in a way where only programmers could use them. That's not the way the future will work.
AfterWord - Tips
(Random Shit that wouldn't make sense in the list)
• If the currency does not have a website, do not buy.
• If the website does not have a whitepaper, do not buy.
• The list of 6 things is only a guide, coins should most likely pass more than the 6 questions I have provided for you.
• In order to predict a market, think "what would the masses do?"
It's like betting on a beauty pageant. You aren't betting on which woman you think is the prettiest. You are betting on who you think everyone else thinks is the most attractive.
• Hold long term, do not get discourage by short term losses, and don't get greedy for short term gains, the market doesn't care about you.
• Read the whitepaper, most people don't.
• Only invest what you can afford to lose
• Don't trust news sources. When the market is up and everyone is saying "isn't this great?" is when you should sell. When the market is down and everyone is saying "We were wrong it was a bubble!" -is when you should buy.
Mindset and Philosophy
(This is mostly just a recap of everything else)
Let me brag real quick. I turn 600 into 10,400 in 6 months. I invested in Ethereum when it was around $10. I saw that it was like bitcoin but was able to be programmed to do certain things at certain times, like transfer automatically if certain conditions were met. I also saw it as a platform where other currencies could be created from. I intended to hold for at least 6 months.
The moral of this story is think long term, and only invest in something that has value. In terms of Ethereum, the value is the actual function of the platform. In economics this is called Use Value.
You are investing in more than just a coin. You are investing the the potential economy that the coin will create. For example, when you buy McDonald's coin, you are investing in the idea that burgers can be bought with numbers on a phone. You are also investing in the potential that this idea may be applied to other foods.
Say that the founders of McDonald's coin choose to change the platform to be usable to Wendy's, Subway, and Dairy Queen. Suddenly this coin has even more value. Startups may use this coin for catering services and this coin could be traded among friends for non-food goods and services. The applied value becomes even more valuable.
Go out there and make money you crypto beast.