World of Blockchain Gaming: Revolutionizing the Gaming Industry

Blockchain Gaming: The Future of Gaming

TLDR:

There are many advantages of blockchain in the gaming industry. The technology guarantees the ownership, transparency, and security of gaming assets, which is crucial for both gamers and game creators. Crypto games are becoming more popular as they offer distinctive benefits that transform the gaming business. One of these benefits is that gamers can buy, sell, and trade digital assets because of blockchain tokens.
The greatest immersive gaming and cryptocurrency experiences are what blockchain game creators are aiming to create. These game producers may build a more comprehensive gaming environment that supports a variety of digital assets, including in-game objects, virtual currency, and collectibles by employing a blockchain.
With gaming firms embracing the potential of blockchain gaming, web3 gaming is quickly emerging as the new norm. The gaming industry will become more decentralized and integrated as blockchain gaming use rises. By incorporating blockchain technology into gaming platforms, new revenue streams can be generated for both game producers and users, allowing for safe and transparent transactions.
The benefits of blockchain-based gaming have been quickly acknowledged by the gaming industry as it provides a more interesting and rewarding experience. Gaming on the blockchain gives users the opportunity to actually own their in-game currency, which they can then trade, sell, or apply to other games. Additionally, blockchain enables the creation of distinctive and cutting-edge gaming mechanics like player-driven economies and decentralized governance.
Blockchain gaming industry participants are aiming to advance the technology and make it accessible to everyone as the gaming sector continues to change. With more developers looking into the possibilities that blockchain technology can bring to the gaming industry, the future of blockchain gaming is bright.
Blockchain games offer the potential to have a huge impact on the gaming industry by giving both gamers and developers access to a more safe and transparent environment. And more businesses incorporate this technology into their platforms as blockchain gaming acceptance increases, we may anticipate a more decentralized and connected gaming industry. Blockchain gaming has a promising future, and it will surely change how we connect and experience the gaming industry.

Introduction

The gaming industry has always been one of the most innovative and fastest-growing multi-billion dollar industries, according to Taylor Goethe or REPORTER. With advancements in technology, gaming has come a long way from the days of simple arcade games to immersive 3D graphics. One such technology that is making waves in the gaming industry is blockchain technology.

Blockchain-based gaming offers a whole new world of possibilities for gamers and game developers alike. Gaming and blockchain allows for increased ownership and control of in-game assets, improved transparency and security, and new opportunities for monetization. In this article, we will delve deeper into blockchain-based gaming and its impact on the industry.

What is Blockchain Technology?

Blockchain technology is a decentralized system that allows for secure transactions without intermediaries. It is essentially a digital ledger where each transaction is recorded as a block, which cannot be altered or deleted once it has been added to the chain.

The key feature of blockchain technology is its decentralization, which means there is no central authority controlling transactions. This makes it extremely secure, as there is no single point of failure or vulnerability.

What are Web3 Technologies?

Web3, also known as Web 3.0, refers to the next generation of the internet, where users have full control over their data and are able to interact with decentralized applications (dApps) directly.

In the context of gaming, web3 technologies allow for greater player autonomy and ownership via NFTs (non-fungible assets). It enables players to truly own their in-game assets and eliminates the need for intermediaries such as game publishers or marketplaces.

Blockchain Gaming: Benefits and Opportunities

Blockchain technology has the potential to redefine the gaming industry in many ways. Here are some of the benefits and opportunities it offers:

1. True Ownership of In-Game Assets: Blockchain gaming enables players to have true ownership of their in-game assets, such as skins, weapons, and other items in their crypto wallet. These assets can be stored on the blockchain as non-fungible tokens (NFTs), allowing players to trade, sell, or lease them without restriction, creating a decentralized marketplace.

2. Enhanced Security and Fraud Prevention: Blockchain technology provides a transparent, tamper-proof, and decentralized ledger that ensures the integrity and authenticity of in-game transactions. This helps prevent hacking, cheating, and other fraudulent activities that can plague traditional gaming platforms.

3. Cross-Platform Compatibility: Blockchain gaming enables interoperability between different games and platforms. This means players can use their assets across multiple games, creating a more connected and cohesive gaming ecosystem. It also encourages developers to collaborate and build on each other's work, fostering innovation.

4. Monetization for Players: By owning and trading their in-game assets, players can potentially earn income through their gaming activities. This can lead to new revenue streams for gamers, incentivizing them to invest more time and effort in playing and improving their skills.

5. Decentralized Gaming Economies: Blockchain technology allows for the creation of decentralized, player-driven economies within games. Players can trade, sell, or lease their assets in these economies, while developers can create new assets and generate revenue through a variety of in-game mechanisms.

6. Transparency and Fairness: Blockchain solutions offer a transparent system that can aid in the elimination of unfair advantages or manipulative practices by developers or third parties. Smart contracts can ensure the equitable distribution of in-game assets and rewards, resulting in a more balanced and enjoyable gaming experience for all players.

7. Crowdfunding and Community Involvement: Blockchain technology enables developers to raise funds for their projects through token sales and other decentralized funding methods. This empowers the gaming community to support and invest in projects they believe in while also allowing developers to maintain creative control and independence.

8. Reduced Transaction Costs: Blockchain technology can significantly reduce transaction fees for in-game purchases and asset trading by eliminating intermediaries and utilizing cryptocurrencies. This can result in lower costs for both players and developers, making gaming more accessible and affordable.

9. Enhanced Privacy: Blockchain gaming offers increased privacy and data security for players, as their personal information is not required to participate in decentralized gaming platforms. This can help protect players from identity theft and other privacy concerns associated with traditional gaming platforms.

10. New Gaming Experiences: The adoption of blockchain technology can pave the way for novel gaming experiences and genres that leverage the unique features of this technology. For example, decentralized virtual worlds and player-driven economies can create new and engaging experiences for gamers.

Increased Ownership and Control

The blockchain gaming market makes it easier to own and control in-game assets. Because assets are stored on a decentralized ledger, players can truly own them and they cannot be taken away or deleted by gaming companies, publishers or marketplaces.

1. True Ownership of In-Game Assets: Blockchain gaming lets players own skins, weapons, and other stuff. As non-fungible tokens (NFTs), these assets can be traded, sold, or leased freely on the blockchain, establishing a decentralized marketplace.

2. Improved Security and Fraud Prevention: Blockchain technology creates a transparent, tamper-proof, decentralized ledger that verifies in-game transactions. This prevents typical gaming platform hacking, cheating, and other fraud.

3. Cross-Platform Compatibility: Blockchain gaming allows cross-platform compatibility. Players can share assets across games, creating a more integrated gaming ecosystem. It encourages developers to collaborate and innovate.

4. Players can make money by owning and trading in-game assets. This can create new revenue streams for players, encouraging them to play and improve.

5. Decentralized Gaming Economies: Blockchain in gaming enables player-driven gaming economies. Developers can produce new assets and gain cash through in-game processes, while players can trade, sell, or lease their assets.

6. Transparency and fairness: Blockchain gaming eliminates unfair advantages or manipulative actions by developers or other parties. Smart contracts can distribute awards and in-game assets fairly, making gaming more pleasurable for everyone.

7. Crowdfunding and Community Involvement: Blockchain technology lets developers fund their projects through token sales and other decentralized approaches. This encourages gamers to support and invest in projects they believe in while giving developers creative flexibility and independence.

8. Lower Transaction Costs: Eliminating intermediaries and using cryptocurrencies reduces transaction fees for in-game purchases and asset transactions with blockchain technology. Players and developers may pay less, making gaming more affordable.

9. Increased Privacy: Decentralized gaming systems don't require users' personal information, which increases privacy and data security. This can prevent identity theft and other privacy issues on traditional gaming platforms.

10. New Gaming Experiences: Blockchain technology can enable new gaming genres and experiences. Decentralized virtual worlds and player-driven economies can offer unique gaming experiences.

Overall, blockchain gaming benefits players and developers. Blockchain technology can improve security, monetization, and gaming experiences.

Improved Transparency and Security

The blockchain ecosystem offers improved transparency and security as each transaction is recorded on a digital ledger that cannot be altered or deleted. This eliminates fraud and cheating in games, making them more fair for all players.

Blockchain technology improves transparency and security, which can help the gaming sector eliminate fraud and cheating. Blockchain-based games record transactions on a digital ledger, which has many benefits:

1. Tamper-Proof Transactions: Blockchain technology uses a distributed network of nodes with copies of the digital ledger. To change or delete a transaction, a majority of these nodes must agree, making data manipulation impossible. Blockchain technology guarantees in-game transaction integrity.

2. Transparency: All network participants can see every blockchain transaction. Players may verify transactions, trades, and rewards to avoid cheating, which builds trust.

3. Reduced Fraud: Blockchain technology's security and transparency prevent fraud. Since blockchain transactions are verified, players cannot fake in-game assets or manipulate their account balance.

4. Smart Contracts: Blockchain gaming often uses self-executing contracts with the conditions of the deal put into code. This promotes justice and transparency by distributing prizes, in-game assets, and other aspects according to specified rules.

5. Secure Player Identity: Blockchain technology can generate secure player IDs, allowing players to build a unique digital identity without centralized systems. This eliminates identity theft, hacking, and gaming disruption from multiple accounts and bots.

6. Anti-Cheat Measures: Blockchain-based games can use transparency and immutability to develop anti-cheat mechanisms. The blockchain records all game events and transactions, making cheating easy to spot.

7. Fair Ranking Systems: Blockchain technology allows transparent and verifiable ranking systems to rate players fairly depending on their in-game performance. This encourages healthy competition and improves gaming for everyone.

New Opportunities for Monetization

Web3 game technologies enable new forms of in-game monetization. Play-to-Earn (P2E) is a new business model where players can earn in-game items or currency by participating in the game rather than purchasing them. This allows players to monetize their time spent playing games, which was not possible with traditional games outside of gambling apps.

Web3 technologies, including blockchain and decentralized applications (dApps), have given rise to new forms of in-game monetization, significantly transforming the gaming landscape. One of the most notable developments is the "Play-to-Earn" (P2E) business model, which enables players to earn in-game items or currency by actively participating in the game rather than solely relying on purchases.

The P2E crypto gaming model offers several advantages and opportunities for both players and developers:

Empowering Players: The P2E model allows players to monetize their time and effort spent playing a game on the blockchain, which was not possible on traditional gaming platforms. Players can earn in-game assets or currency by completing quests, challenges, or achieving specific milestones. This creates a more inclusive and rewarding gaming experience, attracting a wider audience.

Incentivizing Engagement: By enabling players to earn rewards through active participation, the P2E model encourages greater engagement and retention. This can lead to a more vibrant and dedicated gaming community, as players are motivated to invest their time and skills to progress and unlock new in-game features and opportunities.

Decentralized Economies: Web3 technologies facilitate the creation of decentralized, player-driven economies within games. In these economies, players can trade, sell, or lease their earned assets with others, creating a dynamic and self-sustaining ecosystem. This can lead to new revenue streams for both players and developers for games build with a transaction fee tax.

Cross-Platform Synergy: Web3 technologies enable the interoperability of in-game assets across multiple games and platforms. This means that players can use their earned assets in various gaming environments, creating a more connected and cohesive gaming ecosystem. This also encourages collaboration between developers and the creation of shared digital economies.

Attracting New Players: The P2E model can help attract a new demographic of players who may not have been interested in gaming before due to the lack of financial incentives. By offering the possibility to earn rewards and generate income, P2E can appeal to a wider audience, increasing the overall popularity of gaming.

Innovative Game Design: The P2E model has inspired new game genres and mechanics as developers explore creative ways to integrate earning opportunities within gameplay. This can lead to the creation of novel gaming experiences that leverage the unique features of Web3 technologies and decentralized systems.

New Forms of Collaboration and Community Building

Web3 technologies also enable new forms of in-game collaboration and community building. Players can interact directly with each other through decentralized applications (dApps), allowing for greater player autonomy and creativity.

Blockchain and dApps have expanded the gaming industry's community building and in-game collaboration. Web3 technologies empower players and create a more autonomous and creative gaming experience by removing intermediaries and letting players interact directly.

Web3 technologies enable the following in-game cooperation and community building:

1. Decentralized Social Platforms: Web3 technologies allow games to create decentralized social platforms where users can interact, collaborate, and connect without centralized servers or services. This can create lively and engaged gaming communities that are more censorship-resistant.

2. Peer-to-Peer Trading: Decentralized applications (dApps) let users exchange in-game assets directly without third parties. This makes trading more efficient, transparent, and collaborative.

3. Shared Virtual Places: Web3 technologies allow participants to share virtual spaces to socialize, collaborate, or play together. These decentralized virtual worlds let gamers govern themselves and create personalized experiences for the community.

4. Decentralized Governance: Players can influence game creation and direction on blockchain-based gaming platforms. Players can submit modifications, vote on decisions, and participate in game creation, strengthening community and ownership.

5. Collaborative Game Development: Web3 technologies enable developer-player collaboration in game development. Developers can use decentralized crowdfunding to get ideas, feedback, and financing from the gaming community.

6. Esports and Competitive Gaming: Web3 technology can improve esports by ensuring openness, fairness, and secure player identities. This can level the playing field, promoting healthy competition and teamwork among players, teams, and organizers.

7. Decentralized Gaming Tournaments: Players can compete in tournaments without centralized event organizers using blockchain technology. This can lower entrance barriers and give gamers more chances to show off and work with others.

Pay-to-Win (PTW) Model in the Gaming Industry

Pay to Win (PTW) is a controversial business model in gaming where players can purchase in-game items or currency to gain an advantage over other players. While this model generates significant revenue for game publishers, it often leads to an unfair advantage for paying players, making the game less enjoyable for non-paying players.

However, with blockchain-based gaming, PTW models become less prevalent as players truly own their assets, eliminating the need for intermediaries such as game publishers or marketplaces that profit from PTW models.

Pay to Win (PTW) is a controversial gaming business strategy that gives gamers an unfair edge by buying in-game items or currency. Game publishers benefit from this arrangement, but non-paying gamers may feel disadvantaged.

Blockchain-based gaming could change PTW models and make gaming fairer. The main causes are:

1. True Ownership of In-Game Assets: Blockchain technology lets players own their non-fungible tokens on a decentralized ledger (NFTs). Players can buy assets through gameplay or peer-to-peer trading instead of through game publishers or marketplaces.

2. Play-to-Earn Model: Blockchain-based games commonly use a P2E model, which lets players earn in-game currency or things by playing. Non-paying gamers can earn valuable assets by playing the game, which can level the playing field.

3. Decentralized Marketplaces: Blockchain gaming lets users trade, sell, and lease in-game goods without game publishers or centralized platforms interfering. This creates a more open, competitive economy where players determine asset values, minimizing PTW practices.

4. Community-driven Creation: Decentralized governance mechanisms in blockchain-based gaming platforms allow gamers to influence game development. The community can decide on PTW-prohibiting rules, which can make games more balanced and fair.

5. Transparency and Fairness: Blockchain technology's visible and tamper-proof ledger protects in-game transactions and assets. This can eliminate unfair advantages or manipulative techniques by developers or third parties, making games more balanced and fun for everyone.

Play-to-Earn (P2E) Model in the Blockchain Gaming Industry

The play-to-earn (P2E) model in blockchain gaming is a business model where players can earn in-game items or currency by participating in the game and completing certain tasks rather than purchasing them. This allows players to monetize their time spent playing games, which was not possible before, and will disrupt the current gaming ecosystem according to Diana Ambolis of Blockchain Magazine.

However, the P2E model also has its downsides. It may lead to increased competition among players as they strive to complete tasks faster than others to earn rewards. This may also lead to a "grind" mentality where players feel compelled to play for extended periods of time just to earn rewards.

The blockchain gaming play-to-earn (P2E) paradigm allows players to earn in-game currency and products by actively participating and completing tasks. This model has many pros and cons.

1. Increased Competition: P2E players compete to complete tasks and challenges faster to gain rewards. Casual gamers may not enjoy this competitive setting.

2. "Grind" Mentality: Players may feel motivated to play for long hours to gain prizes and maximize in-game assets. Players focus more on incentives than gameplay, which can lead to addiction, fatigue, or decreased enjoyment.

3. Earnings Inequality: The P2E approach may create discrepancies between players with different skill levels, time, or resources. Skilled or dedicated players may build up in-game assets, while casual or less-skilled players may fall behind, extending the gap between them.

4. Exploitation of Players: Unscrupulous developers or publishers may design games that intentionally encourage excessive grinding or purchasing, taking advantage of the P2E model to benefit from players' thirst for rewards. Exploitative game mechanics that favor profitability over player happiness or well-being might result.

5. Market Saturation: The success of the P2E model may lead to an inflow of games that use it, generating market saturation and making it harder for players to locate games with fun gameplay and fair earning potential.

6. Sustainability Concerns: The P2E model relies on fresh players and a strong in-game economy to keep prizes valuable. The Play-to-Earn (P2E) model in blockchain gaming may face challenges if the player base or the in-game economy experiences a decline. New players and a robust in-game economy are needed to ensure the long-term sustainability, if either of these elements falters, the P2E model might struggle to remain viable. Some even go as far as stating P2E is killing blockchain gaming, according to Huobis research.

If applied fairly and responsibly, the P2E model can benefit users and the gaming industry despite these drawbacks. Developers and publishers should focus on player satisfaction and a viable in-game economy. They can ensure that the P2E model continues to offer fresh experiences and build a more inclusive and rewarding gaming environment by doing so.

Advanced AI NPCs in the Gaming Industry

AI advancements are poised to revolutionize non-playable characters (NPCs) in the gaming industry. Advanced AI NPCs use machine learning (ML) and natural language processing (NLP) to offer more natural conversations and intelligent decision-making. These lifelike NPCs can enrich interactive experiences and enable new game mechanics and content.

Jeremy DSouza of Engait claimes AI can help make in-game characters smarter and more adaptable by using techniques like pattern learning and reinforcement learning. This allows non-player characters (NPCs) to evolve through self-learning from their actions, making the games more challenging and immersive for the players. AI can also enhance the user experience in blockchain gaming by providing more efficient, secure, and transparent ways to engage in digital transactions and access virtual assets, according to Chirag of Appinvetiv.

Game studios are experimenting with advanced AI characters in development versions of games.

A few goals are:
- Provide narrative designers and writers with training in conversation design.
- Consider adding advanced AI NPCs to existing games, expansion packs, or new releases.
- Test audience reactions by featuring NPCs in meet-and-greets or Q&As.
- Balance dynamic NPC interactions through a mixture of scripted and generated conversations.

Advanced AI NPCs can drive industry growth as players are willing to engage more. Blockchain Studios can capitalize on this by charging monthly subscriptions from token profits, offering customization options, and incorporating modded AI NPCs into the gaming market.

Why Game Developers are Showcasing Interest in Blockchain Technology?

Stan Peterson of Coingape expresses the idea that one key benefit of the adoption of blockchain gaming for developers is the ability to provide players with true ownership of their in-game assets. This unique feature has piqued the interest of many game developers who recognize the potential benefits that blockchain gaming can offer.

Some of the benefits for developers of creating blockchain-based games with open economies include:

1. Increased Player Retention: By allowing players to have true ownership of their in-game assets and transfer them freely between games and marketplaces, developers can create a more engaging gaming experience. This can lead to higher player retention, as players are more likely to remain invested in games that offer them greater control and freedom over their assets.

2. Cross-Platform Synergy: Blockchain gaming enables the interoperability of in-game assets across multiple games and platforms. This means that players can use their earned assets in various gaming environments, creating a more connected and cohesive gaming ecosystem. This can encourage collaboration between developers and the creation of shared digital economies, benefiting all parties involved.

3. New Monetization Opportunities: Open economies within blockchain games can create new monetization opportunities for developers. By allowing players to trade, sell, or lease their in-game assets, developers can earn a share of the revenue generated through these transactions. This can lead to additional revenue streams and help support the long-term sustainability of the game.

4. Enhanced Reputation and Brand Loyalty: By adopting blockchain technology and creating open economies, developers can position themselves as pioneers in the gaming industry, attracting a dedicated and enthusiastic player base. Offering true asset ownership and cross-platform compatibility can foster brand loyalty as players appreciate the freedom and control that these features provide.

5. Incentivizing User-Generated Content: Open economies in blockchain games can encourage the creation of user-generated content, such as custom items, skins, or game modifications. Developers can benefit from this content by integrating it into their games and potentially earning revenue from the sale or usage of these creations.

6. Lowering Barriers to Entry: By leveraging blockchain technology, developers can reduce the barriers to entry for new players as they can easily transfer their assets from one game to another. This can help attract a wider audience and increase the overall popularity of the game.

By integrating blockchain technology, developers can position themselves at the forefront of the gaming industry, capitalizing on the growing interest in the nft market and open gaming ecosystems.

Conclusion

The use of blockchain in gaming is an emerging frontier that presents various advantages over traditional gaming, such as improved transparency and security, increased ownership and control of in-game assets, and new opportunities for monetization. Web3 technologies enable greater player autonomy and creativity, opening up new gaming solutions in the form of collaboration and community building.

As AI advancements continue, the gaming industry stands to benefit significantly, leading to a transformation in NPC quality and more immersive worlds. The future of gaming looks bright, with blockchain technology presenting greater opportunities.

by Eric Kazee

Looking Ahead: The Crypto Market in 2023

In this unprecedented whiplash economy, the rest of 2023 should be full of interesting events. Crypto is definitely affected by macroeconomic developments and central bank edicts, but that doesn't mean that this year will be a year of greater separation from the larger economy's central planners. Uncorrelation from the macro economy will necessitate greater retail adoption, which will necessitate more intensive education from those of us in the crypto ecosystem. If crypto winter of 2022 taught us anything, it is that we must return to emphasizing fundamental principles for those who want to participate in blockchain-based economies. I noticed that the crypto space has shifted away from educating retail investors and advising professional investors to focus on the fundamental reasons why crypto exists in the first place. Since we've lost our way, refocusing on trustless systems, self-custody/security, thoroughly researching project missions and founders, and generally not engaging in foolish activities, goes a long way toward creating the type of environment required for long-term growth and prosperity. Here are Alpha Stake's predictions for blockchain development in 2023.

Economic Outlook

GDP Growth:

Crypto analytics since 2020 shows the market cap of crypto is closely tied to the macroeconomic environment, particularly in the United States. The US economy is in an unusual state. The Fed has been able to control the economy for several decades using various tools such as interest rate adjustments, open market operations, issuing bank reserve requirements, overnight repos, the discount window with discount rates, term deposit facilities, and central bank liquidity swaps. Since 2020, all of these operations have been severely disrupted. With an inverted yield curve, the bond market is now signaling lower GDP growth in the future by valuing short-term bonds over the 10-year horizon. This occurred despite the Fed's erratic policies, which ranged from the lowest interest rates since its inception to the steepest curve rate hike in history, rising from 0.25% to 4.5% in less than a year.

Rate hikes 2022-present
Meeting date	Rate change	Target range
Source: Fed’s board of governors
March 15-16, 2022	+25 basis points	0.25-0.5 percent
May 3-4, 2022	+50 basis points	0.75-1 percent
June 14-15, 2022	+75 basis points	1.50-1.75 percent
July 26-27, 2022	+75 basis points	2.25-2.5 percent
Sept. 20-21, 2022	+75 basis points	3-3.25 percent
Nov. 1-2, 2022	+75 basis points	3.75-4 percent
Dec. 13-14, 2022	+50 basis points	4.25-4.5 percent
Jan. 31-Feb. 1, 2023	+25 basis points	4.5-4.75 percent

Although the rate hike curve is steep, the effects will lag. We have yet to see what this will inflict on the markets or the general economy. Individuals’ savings are low, but their money market accounts and T-bill investments are higher since average savings interest rates at a bank are well below 0.5%. Real Estate has yet to take the brunt of these rapid changes because most folks took advantage of the low-rate environment and are locked in without being affected by the higher rates. Corporates that survived or thrived throughout Covid are sitting on healthy cash balance sheets and many are debating about the need for real estate purchases or leases since hybrid or strictly remote work was proven to work for many companies and brought about more efficiency or just bottom-line savings.

However, business loan terms are usually refinanced more frequently than retail. Thus, the higher rates will begin to eat into industries causing more capital to go to service debt vs R&D, employment, or acquisitions. This will lead to stagnation and overall slow-down.

While the Fed is attempting to fight inflation, which means less overall spending on goods and services to bring down prices, and they also want less employment. The higher unemployment metric is a strange data point in this environment of the lowest W2-worker participation and the highest number of baby-boomer retirees leaving the job market. Demographics alone should cause the central planners to adjust their expectations of not only the financialization of the middle class who are seeking alternative means to earn money versus the standard non-farm payroll job, but replacement workers could never refill the high number of boomers leaving the workforce. So, open job demands will remain high and current workers will continue to demand higher wages due to less competition.

With more technological aid, most industries will continue to produce at current levels or even higher. The most onerous restraints for industries in all developed Western nations are regulatory burdens and the high costs of compliance. If the goal is higher and ever-expanding GDP to cover higher interest rates on magnificently large debts, smarter policies must be enacted to streamline approvals, allow more free competition in nascent spaces, encourage entrepreneurial innovations, and take on more risks with government-sponsored entities and grants.

However, at least for the cryptocurrency space, it seems our government agencies are doing the exact opposite. We witnessed a definitive lack of regulatory scrutiny for several bad actors within the crypto space and a lack of cooperation with honest agents who sought guidance and clarity for the important work they are attempting. As of the first month of 2023, we are slightly up from 2022 all-time lows but remain far from 2021 highs. Many believe the crypto ecosystem will remain stagnant until the risk-off Quantitative Tightening (QT) period is over. QT is their attempt to pull liquidity out of the economy as many central banks around the world are attempting to do. However, much pressure is on the Fed to not break things too drastically domestically. Other nations that denominate much of their debt in U.S. dollars are also struggling to fulfill their obligations with a strong dollar that becoming harder to acquire. Many nations are facing even higher energy inflation, food production inflation, and capital flights from unstable nations such as Russia and China are finding Western real estate safe havens which cause more strain on the local Western citizenry. So, non-U.S. nations need a weaker dollar to grow their economies because everyone over-printed currencies and kept Quantitative Easing in place for too long.

As quoted by the IMF’s Gita Gopinath and Pierre-Olivier in October 2022 How Countries Should Respond to the Strong Dollar, “As of now, economic fundamentals are a major factor in the appreciation of the dollar: rapidly rising US interest rates and a more favorable terms-of-trade—a measure of prices for a country’s exports relative to its imports—for the US caused by the energy crisis. Fighting a historic increase in inflation, the Federal Reserve has embarked on a rapid tightening path for policy interest rates. The European Central Bank, while also facing broad-based inflation, has signaled a shallower path for their policy rates, out of concern that the energy crisis will cause an economic downturn. Meanwhile, low inflation in Japan and China has allowed their central banks to buck the global tightening trend”.

Commodities

The only saving grace for most emerging economies is to focus on their richest commodities and export them for a premium to compromised developed Western nations who seek much-needed raw inputs to maintain their industries and farmland production due to disassociation with China, a cut-off of Russia, and a compromised Ukraine.

Human Resources

Human resources are another asset that emerging markets may not want to lose. With low birth rates in Europe and other developed countries, the demand for replacement workers is increasing. Immigration policies will relax, and brain drain will be a major threat. Remote work may be the solution for professionals who can fulfill their responsibilities in front of a computer regardless of where they are. Developing countries should do more to allow their most talented university graduates to negotiate remote work and help build their home country by capturing a larger tax base.

This is especially important for the decentralized digital assets ecosystem. With greater openness to innovations and alternative financial systems, smaller nations can free themselves from the cycle of dependence on the IMF or WEF, or any other agency to rescue them when there’s economic turmoil caused by decisions made in other nations whose currencies they are entangled with. Many blockchain projects desire talent from around the world. The talent can remain local and operate servers (nodes, validators) in their home countries. This benefits the workers who are paid in uncorrelated digital assets, blockchain technology advances in the local area, and many talented individuals will seek to train others to expand their work capacity (jobs creator). The benefits are exponential, and many are advancing the conversation about these opportunities.

As quoted by Mayur Kamat, Head of Product at Binance, “What’s the next thing you want to do? Is it something that may potentially change the world and how people view financial investments, inclusion, and freedom? If yes, there's never a better time than now. There’s so much room for growth and innovation, and some of the brightest minds are working here”. You can read more about Mr. Kamat’s journey at,

The Builder: How Binance Product Lead Mayur Kamat is Helping Build The Future of Web3

2022-03-23

Mayur Kamat’s resume includes some of the most prominent tech companies, from Google to Microsoft. Now, he brings his experience to take on a new challenge as the Head of Product at Binance.

Market Trends

Equity Markets

Equity markets began the year not really believing what Jerome Powell was declaring for interest rate hikes and Quantitative Tightening. Market conditions moved slightly towards the end of 2022 with a quote from CNBC, “Stocks slipped on Friday to end a brutal 2022 with a whimper, as Wall Street wrapped up its worst year since 2008 on a sour note. The Dow Jones Industrial Average slid 73.55 points, or 0.22%, to close at 33,147.25. The S&P 500 shed 0.25% to end at 3,839.50. The Nasdaq Composite ticked down 0.11% to 10,466.88”.

After the first month of 2023, the Forbes Advisor stated, “After logging its worst annual performance in 14 years in 2022, the S&P 500 kicked off 2023 with a very strong January. The benchmarked index gained a smidgen more than 6% for the month as the first wave of fourth-quarter earnings reports came in better than many had feared. In the background, inflation data suggest that Federal Reserve policy measures are starting to cool off red-hot price gains, while gross domestic product and labor market readings show that the U.S. economy remains on solid footing—for now”.

Since the beginning of 2023, optimism is high for growth potential, and many believe the Fed and other Central Bankers will ease by mid-year. However, others believe the rates will be held higher for longer, and max pain will occur throughout the first half of 2023, with relief from the bear market only being seen towards the end of 2023. This is if the stock and bond market associate with the physical economy more closely. The Fed's fight against rising interest rates will take time to appear in the real economy. However, the stock market is a forecaster of future overall GDP and there could be premature front-running of what is to develop. The crypto market front-runs the equities market by about 6 months, so, the upswing for crypto in the first 6 weeks of 2023 is signaling a trend pivot of equities by late summer.

Physical Goods

Market outlook for the used cars expects a crash along with real estate. The larger question, however, is how much liquidity will be left in the market to allow these sectors to rebound quickly or slowly.

If trust in physical assets is low for recovery, larger investors may seek yield by investing in virtual economies such as the metaverse or web3. The first cycle of NFT assets is over, and builders are infusing more use cases into virtual assets. Many lessons were learned in 2020 and 2021 that will fuel innovation towards ongoing community building and thus increase value creation with each project.

With the decline of the ESG narrative and the increased awareness of the need for oil, natural gas, and nuclear energy sources, more investment may go toward infrastructure efforts for American and European energy sustenance. Since a renewed focus on re-shoring much of Western manufacturing, more cheap energy and regulatory policy changes are needed to meet our most basic needs. Cryptocurrency can assist in these efforts by enabling more transactional transparency between those who contribute to the energy grid and those who want to know the exact sources of their energy consumption. Projects such as Energy Web (EWT) are almost ready for prime-time. Grid+ (GRID) is a project that not only hopes to acquire uses to transfer their tokens for energy payments but also uses their hardware as a secure wallet for digital assets.

Bond Market

Safe havens for 2023 look to be defense stocks with geo-political activities around the world. Many hedge funds may outperform in comparison to the previous 10 years of monetary easing and an ever-increasing stock market. Diversifying back into bonds and fixed income with higher interest rate yields is a safe placement for excess capital until a definitive pivot is noticed. Corporate bonds are also a solid play until equities recover.

Venture Capital

Deal flow will slow for insider Limited Partners of private Venture Capital funds, but deal quality should improve, which could pay off exponentially in the coming years. Most managing partners will become much more picky about the startups in which they will invest. With so much capital on the sidelines, however, placements must be made. As a result, founders with a solid product/market fit and a competent team will receive headline-grabbing investments in 2023.

Crypto Economy

Improved infrastructure within the cryptocurrency economy is enabling more strategies for investors. For example, there are defi platforms that enable shorting (ByBit), forms of forex trading (Vela), and purchasing options (Deribit). Investment diversification allows more professional traders, whether day traders or swing traders, to enter the market, and curious investors will interact with UX interfaces they are familiar with. Retail will lead the next rally now that decentralized crypto exchanges, built on blockchains such as Solana, are nimble and fast enough to compete with centralized exchanges. Institutional investors will remain on the sidelines for a longer period of time until regulatory clarity is improved and the consequences of 2022 are fully realized.

Geopolitical Risk

The next black swan event that no one in the investment world will see coming could be a disastrous turn of events of escalation with the Russian conflict. If Russia continues to advance, they will eventually engage a NATO nation. If Russia begins to take heavy losses due to superior weapons being supplied to Ukraine by NATO nations, desperation may cause the Russians to launch nuclear weapons. Either outcome is becoming more likely as the war continues, however, these are not the only two outcomes possible. Investors must keep a close eye on developments and prepare for worst-case scenarios that will affect market moves dramatically.

Cryptocurrency Developments and Opportunities

Emerging Technologies

The biggest advancement that captured the imagination of the general public in late 2022 was Artificial Intelligence (AI). With the advent of Chat-GPT, many now realize the power of one of Cathy Woods’ Ark Invest’s great innovation pillars along with energy storage, robotics, DNA sequencing, and blockchain tech. The development of these sectors will disrupt classical models of investing tremendously. Even bigger will be the convergence of these innovations to create synergy toward a new reality we can barely fathom.

As of now, it’s not certain how AI will impact digital assets other than ensuring blockchain-based authenticity in a rapidly expanding deep-fake era. Developers and users at every level can bring products to market much faster with the addition of AI supplementation to code writing, user experience interface, and website copy.

Creating more content, products, and deeper knowledge bases in a cheap energy environment will require the protection of the blockchain for individuals, companies, and organizations to maintain their sovereignty, privacy, and security, which is bullish. The exponential growth of technology platforms will require an increase in server power. Current capacity can be expanded quickly in centralized entities such as Google Cloud, Amazon Web Services, or IBM/Microsoft’s Azure, however decentralized expansion of edge data centers is also needed to maintain the values of the blockchain listed above. Regulatory barriers may stymie the development of blockchain-based businesses, but not the advancements in technology.

Regulatory Development

Although Gary Gensler of the Securities and Exchange Commission (SEC) met with Sam Bankman-Fried on many occasions, my speculation is to develop schemes for FTX’s regulatory capture of the custody crypto market, he has yet to provide a clear path for anyone else in crypto.

The year of deleveraging and lack of monetary controls for companies that held other people’s cryptocurrencies created an environment of thieves and scallywags who lost billions of dollars. With such irresponsible behavior, law enforcement, the courts, lawmakers, and regulatory bodies are focused on crypto-based companies like never before. Since the lack of rule-making and guidance has lasted so long within the U.S., with the few actions taken by regulators being ad-hoc and onerous, the only thought about what comes next is a heavy and damaging regulation-by-enforcement hand.

The only way to prepare for what's to come is for crypto consumers and citizens to rally support for Representatives and Senators who understand the technology and want to act in good faith toward better behavior and clarity about what's required to operate in the United States. Even if it means creating sandboxes or completely rewriting security laws to accommodate fast-moving modern technologies. The industry may be stifled if innovators expend too much energy, time, and resources determining what is legal or moving out of the country to set up shop offshore.

Digital Assets Advances

After the many failures of 2022, many investors did not cash out of the crypto space, but instead, crypto investment capital poured heavily into Defi projects. According to The Defiant’s Owen Fernau in November 2022, “DeFi protocols are experiencing double-digit increases in the number of users over the past week, according to data from Nansen, the blockchain analytics platform.

MakerDAO, DeFi’s largest protocol with $6.5B of total value locked (TVL), has increased addresses by a third in the last week. And other top 10 protocols have also attracted huge jumps in users, with Aave, a lending protocol, notching a 70% increase, and Curve, a DEX, a 63% spike.

Lender Compound and yield booster Convex also drew 30% rises in users, according to the data Nansen shared with The Defiant”.

Although the total value within Defi protocols dropped from $165B in April to $42B by December, the overall number of users went up. Despite a drop in token value and a mass exodus of institutional investors from the space, retail investors are the crypto enthusiasts driving the market again and are seeking solutions within the Defi ecosystem.

Ethereum upgrades are continuing with the Shanghai revision that unlocks staking. A highly anticipated event that should establish a true benchmark measure within crypto when individuals are free to stake and un-stake at will. The interest rate earned at any given time will be equivalent to the fixed-income bond index in traditional markets.

Staking and liquid staking continue to innovate. Projects such as Bancor are developing schemes to reduce or eliminate impermanent loss, more efficiency via multi-chain access, and like Uniswap’s latest innovation, liquidity providers can choose a range to provide their capital for swaps. From Uniswap’s medium post: “In V3, LPs can choose a custom price range when providing liquidity. This allows for concentrating capital within ranges where most of the trading activity occurs”.

Stable Coin Battles

Stable coins will face increased scrutiny in a post-FTX “show me proof of your reserves” environment. The battle for stable-coin acceptance by U.S. regulators will intensify. Most likely only one or two crypto projects will be “allowed” to issue stable coins, fully backed by U.S. Treasuries, and no allowance for retail customers to earn interest on stable coins moving forward. The payoff for the winner is enormous as interest on the T-bills alone will net Billions of profits every year.

Privacy Priority

Zk-snarks (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) development increased in cryptocurrencies to invest by gaining attention for investors seeking privacy and autonomy to transact without spying eyes. Privacy coins have been around for years, ZCash, Dash, and Monero (which were targeted by regulators in 2022). However, crypto investors demand for this same level of privacy to be extended to other chains also. Litecoin stepped up and created a means to turn on or keep off private transactions. Investment firm A 16z had the foresight in 2021 and invested in Matter Labs to help bring zkSync technology using zk-SNARKS to Ethereum. So, 2023 should bring more main net realization of privacy solutions for other blockchains, new and existing.

Crypto Acquisitions

With the decline in overall market capitalization for publicly traded or well-known private crypto-based companies, the possibility of buyouts by established financial institutions has increased. This will be their fast track to capturing the technology and ensuring that they capitalize on the next upswing or outright displacement of old systems..

Gaming

The NFT bubble opened the door to a new block-chain based digital value creation. The next iteration will connect entertaining games with unique digital assets that can be used outside the game. Standards must be developed to establish baseline rules for intellectual property rights, display rights, and cross-platform compatibility, as well as to ensure the NFT maintains its scale, functionality, and overall appearance. With more non-crypto native influencers, from Gary V to Tim Ferris, entering the space and expanding the utility of NFTs, the value and growth of communities will only increase. Gamification must be incorporated into non-fungible tokens, whether they originate within a game or are minted by a celebrity; thus, allowing creativity to expand for token holders.

Real World Assets Tokenized

We will see an increase in physical items tokenized this year in the cryptocurrency industry. Tokenization is occurring but much is done on small-scale items that can be easily shipped to individuals to take possession. However, government entities must become involved for larger items such as tokenizing real estate. Hopefully, more foresight from token issuers will lead this effort with legislation guidance written and handed to lawmakers before they ask for ideas. Once a structure is in place to read, audit, and verify the smart contract code by regulatory bodies, a multi-trillion-dollar worldwide market will be unleashed. However, before large-scale items are tokenized, we will continue to see collectibles, art, and slightly larger items like automobiles transfer ownership via the blockchain.

Conclusion

The adoption of AI, along with other innovations, is expected to create synergies that will disrupt classical models of investing. The blockchain industry will require protection to maintain its privacy, security, and sovereignty values. Crypto regulation development is crucial to provide clarity and better behavior for crypto-based companies. However, before centralized finance can take hold again, the adoption of Defi protocols is increasing. Leading the way are Ethereum upgrades, and along with Shanghai, developers are also hoping for Proto-Danksharding by fall. Other L1 tokens are closely watching Ethereum’s developments and seeking ways to create unique value propositions while developing interoperability solutions.

The NFT (Non-Fungible Token) market experienced explosive growth in 2021, but it faced a significant decline in 2022, leading some to question whether it was just a passing fad. However, in late 2022, NFTs made a slight comeback with new use cases and developments. The gaming industry is driving the demand for NFTs, as players use NFTs to purchase and trade in-game items, skins, and virtual real estate.

2023 is expected to be a year of continued growth and innovation for the crypto industry. AI, blockchain, and other disruptive technologies are expected to converge, creating new opportunities for developers and entrepreneurs. Regulatory developments, stablecoin battles, larger DeFi participation, and the growing demand for privacy solutions are expected to shape the industry's landscape in the coming year.

by Eric Kazee

2022 Crypto Year In Review - PDF Document

by Eric Kazee

Part 4 DPoS: The Big Money Backers (Originally Posted June 2020)

Alternative Consensus Mechanisms To Proof-Of-Work

For previous topics covering delegated proof of stake, see Part 1 DPoS: The Protocols, Part 2 DPoS: The Validators, and Part 3 DPos: The Delegates.

A definitive uptick in Proof of Stake (PoS) occurred in 2020. Proof of Stake (PoS) is a consensus model different from the first-generation cryptocurrencies’ Proof of Work (PoW) model. Included with PoS is every variant, such as Delegated Proof of Stake (DPoS), Liquid Proof of Stake (LPoS), Nominated Proof of Stake (NPoS), and Bonded Proof of Stake (BPoS). For a detailed explanation of each consensus model listed, see Stakin’s article, “The Proof of Stake Guidebook.” With proof-of-stake, validators are required to generate new blocks by staking tokens and operating proprietary software instead of miners utilizing high energy outputs to solve complex math problems to win new block generation as within proof-of-work consensus models.

With more protocols utilizing PoS models, more demand for validators arises within the cryptocurrency ecosystem. Most validators are smaller operations, but more protocol developers need a larger percentage of enterprise-scaled validator teams. Professional validation requires not only high levels of technical skill but also large outlays in capital expenditures for infrastructure. Who finances enterprise-scale validators? A variety of visionary backers invest in server-side professionals who deploy fast, highly secured, and scalable PoS blockchains. They range from angel investors to venture capitalists. Investors familiar with Distributed Ledger Technology (DLT) seek to invest in layer-one protocols (tokens) and companies that enable base-layer protocols (equity). This pioneering class of investors focuses a large percentage of their investment strategy in PoS-based projects to gain maximum leverage in DLT’s governance influence and economic expansion.

Slashing Risk

A consensus model is a means for all nodes operating and validating blocks to stay in sync while adding new blocks to the blockchain. If a node attempts to add a block whose hash value does not match the other nodes, the block is rejected. For some staking chains, if a validator misses blocks due to careless mistakes or malicious behavior, the validator is slashed by code. Slashing is the process of punishing a Validator by taking away staked tokens and/or not allowing the team to validate blocks for several rounds.

Why is slashing important to investors? For some protocols, slashing includes penalizing the delegates who vote for the validator being slashed. Although most protocols do not punish the delegates as severely as the validator, slashing could risk thousands of dollars if a delegate is heavily invested. Professional investors who want to ensure their token stacks are safely growing will only invest in validators who operate a commercial infrastructure business, are properly staffed, and have disaster recovery protocols in place. So far, only a few validator companies are organized with the necessary business and legal structure to receive such funding.

Most validators are self-funded small teams or operate under bootstrapped conditions with proceeds from angel investors. Funding is critical for talented teams to upgrade equipment and expand to levels that match their capabilities. Although PoS coins were around since the inception of Peer Coin in 2012, the space is still considered nascent, but the last 2 years experienced rapid growth. According to CryptoSlate.com, pure PoS tokens make up 3.10% of the sector, DPoS makes up 2.86%, and masternodes now only make up 0.49% of the cryptocurrency space. Development is early, and there is much room for additional talent to grow alternative consensus methods to PoW. To date, most new protocols launched in 2020 are built with some variant of PoS consensus code.

The Players of Distributed Ledger Technology (DLT)

Several companies foreshadow what will soon become the industry standard for enterprise-scale validators. Companies such as StakeFish, Chorus One, STAKED, EverStake, and Infinity Stones. In addition to staking, professional node services are offered for various projects, such as Bison Trails, Blockdaemon, and SKALE. Most businesses on the scale of the firms listed above were backed by institutional funding. Those within the crypto space are familiar with firms highly dedicated to blockchain projects such as Galaxy Digital, a16z, Coinbase Ventures, etc. However, other players who did not originally include DLT projects in their portfolio are investing, such as Kleiner Perkins backing Bison Trails, or Bonfire Ventures backing Figment Networks. Even the oil company Shell backs Blockdaemon’s promise to expand support for validators’ onboarding to new Web3 projects.

Backing entities that perform work with physical infrastructure is more attractive to some traditional equity investors versus investing directly in digital assets. The demarcation of ownership and rights is clearly laid out by established business legal structures and case law. Having recourse to physical collateral is a natural comfort for investors delving into a new asset class of investments. Until a greater understanding of DLT is established and evidence of its potential is seen in consumer behavior, investing solely in digital assets will remain the playground of a few whale investors.

The next question for institutional investment in DLT is private ledgers vs. public ledgers. Entities such as State Street Corporation, one of America’s oldest banks, have demonstrated interest in blockchain technology since 2015, just as many other members of the R3 consortium. However, using IBM’s Hyperledger proved these entities were attempting to develop internal well-controlled blockchains of whom validators would be selected by the consortium. After proofs of concept were established and teams within large financial institutions sought solutions to legacy problems, a turn towards a private-public blockchain hybrid is trending. From the Coindesk article, “State Street Slashes DLT Developer Team as Bank Rethinks Blockchain Strategy,” an inside source states. “They are moving away from this giant in-house DLT initiative.” The shift in thinking may open opportunities for validators outside of financial institutions to assist in meeting their technology demands. “Now, however, the bank is now describing its approach as ‘ledger-agnostic,’ and relying more on outside providers.”

Conclusion

Large enterprises can maximize distributed ledger technology (DLT) by balancing public and permissioned blockchain networks. This will allow companies to benefit from decentralization’s security, transparency, and efficiency while keeping data and transaction control. To build a foundation, venture capitalists, businesses, and governments must invest in validator operations, large and small. DLT has huge promise, but only with the correct infrastructure. Balanced public and permissioned networks would enable digital asset exchange, smart contracts, decentralized finance, and more. This balance would also ensure that enterprises can control their data and transactions while benefiting from decentralization. Governments, enterprises, and venture capital firms must invest in infrastructure development because the potential of DLT is now limitless.

by Eric Kazee

Part 3 Delegated Proof-of-Stake: The Delegates (Originally Posted May 2020)

Delegated Proof-of-Stake Overview

For previous topics covering delegated proof of stake, see Part 1 DPoS: The Protocols and Part 2 DPoS: The Validators.

Delegates are delegated proof of stake (DPoS) coin/token holders who stake their cryptocurrency and vote for block-producing validators. Staking involves locking up tokens in a wallet or web-based portal to gain rights to vote and receive block rewards. Each protocol varies on the consensus mechanism, but most allow delegates to vote for multiple validators to verify transactions and ensure the blockchain network remains operational. Validators must validate transactions, reach a consensus, and the next block is produced by a validator that the protocol chooses based on the number of tokens staked to that validator. Although staked tokens are locked from trading, the tokens remain in the possession of the owner. Thus, when tokens are staked to support a validator, only the power of the staked tokens is directed to the validator, but the validator does not have access to the tokens.

The Ideal Crypto Delegate

When developers are structuring DPoS protocols, they are attempting to solve the blockchain trilemma by optimizing speed or scalability, decentralization, and security. Current DPoS systems do effectively solve the blockchain trilemma, but only with select groups of professional software and hardware managers to ensure the chain operates as designed. Usually, this is a subset of the validators who has the most votes staked toward them. Whether the protocol allows the top 20 or the top 50 to reach consensus, process transactions, and create new blocks, only these top validators earn rewards. The other validators are on standby and must market to users to earn more votes to move into the top positions. But the original goal of Proof of Stake (PoS) was to get the whole community involved in the blockchain project and make everyone holding the native cryptocurrency a node instead of just Proof of Work (PoW) miners making decisions about chain upgrades.

To keep community involvement without demanding individuals buy special hardware, stay connected to the internet 24/7, or quickly upgrade software when patches or improvements are pushed out, DPoS allows engagement by voting for validators who are responsible for software and hardware upkeep. Thus, voting is attached to the staking process.

An ideal delegator will evaluate potential validators and research their qualifications. The delegator will review the team’s hardware or cloud server computing specs, credentials, the team’s plan for community engagement, plans for protocol ecosystem improvement, and what percentage of earned staking rewards they intend to share with voters.

Once a delegate knows which validator(s) they want to vote for, the next step is staking tokens. Delegates fully committed to the protocol’s mission will stake the maximum number of digital assets they can afford to enhance the chances of validators they believe to be the best gaining top positions. If a delegate believes they have chosen the best validator(s), they want the validator teams to be responsible for chain updates, decentralized app developer recruitments, keeping the chain free of malicious actors, and informing their constituents of chain events (good and bad).

Voting is ongoing. Some protocols have epochs, which are dedicated time zones to cast votes for new validators; other chains allow votes to occur at any time, causing validator positions to be in constant flux. So, after a delegate stakes their coins and votes, the ideal behavior is to stay involved with ongoing developments in the protocol’s ecosystem. Staying informed about each validator's securing the network behavior, accomplishments, and other events could influence votes, and it strengthens the protocol via community governance.

Engagement is especially important when proposals are presented to the community; a protocol needs the maximum number of delegates involved. Proposals could include anything from protocol software upgrades to funding requests for conferences or MeetUps. When educated Delegators pay attention to every proposal, the chances of ensuring the blockchain project continuously moves in a positive direction increase.

The ideal delegate will go beyond voting for good proposals and also evangelize for the project. Delegates empowered with a voting voice expand the community by telling others about the project and creating a compound network effect of involvement.

Problems with DPoS and Delegators

Although developers and validators attempt to create an environment where delegates are highly engaged, a track record is forming for DPoS systems that reflect the same problem as real-world political involvement, voter apathy.

Projects may begin with high delegate engagement, but after the initial vote, participation falls at a steep rate. EOS attempted to hinder this by introducing vote decay. If a delegate does not recast previous votes, a gradual loss of voting power occurs until all power is decayed after 2 years. According to EOS Authority, vote decay averages around 4% and can reach as high as 21%. However, an upgrade solution passed that allows voter proxies to refresh votes on delegates’ behalf, and there are tools within some wallets that allow individual users to auto-refresh votes.

An issue with rewarding delegates with a portion of block rewards is the danger of a race to the bottom for validators to gain attention by giving away the most rewards, regardless of their technical prowess. This is especially problematic for talented smaller teams that need ongoing funding to operate. It takes much time and energy to convey to Delegates other benefits of voting beyond rewards. Teams must put forth the effort to communicate how competent teams catch bugs before they are destructive to the chain, engaged teams think creatively about community outreach efforts, technical excellence means making efforts to improve the software code and provide details about new functions, and the burden is on knowledgeable teams to communicate plans that may never happen if certain Validators are voted to controlling positions. However, even after such efforts, there is no guarantee that a percentage of Delegates will only care about short-term gains.

Lack of involvement with chain developments ties in directly with governance. Protocol developers envision mass participation with decisions about protocol updates, expansions, and project funding. Usually, better and uncorrupted decisions come from many disinterested parties. However, if the majority of Delegate Stakeholders are uninterested in the daily maturation of the ecosystem, there is a higher chance for collusion, neglect, or bad decision-making by those who are responsible for the blockchain’s upkeep. Continuous governance presents advantages and disadvantages to every proof-of-stake model, but it's critical to building value and eventually either attracting mass adoption or providing enterprise-level solutions.

New Delegates Secure A Network

As DPoS protocols mature and their value increases, more institutions that can control more tokens will enter the space. The first wave of this phenomenon, which has been growing steadily since 2018, is cryptocurrency exchanges and venture capitalists controlling large sums of tokens. The irony is that this is good for the security of the protocol.

Cryptocurrency trading exchanges can hold users’ tokens and dedicate a large percentage, not used in day-to-day trading, towards staking. Initially, this was done without retail traders’ knowledge; now, most exchanges promote a token rewards-sharing program called either staking pool, soft staking, or lending. While encouraging users to stake, the percentage of staking rewards kept by exchanges ranges from 0.5% to 50%. Although staking with an exchange is simple and convenient, the ideal situation is for users to maintain control of their tokens. Beyond staking rewards, the power to vote and participate in the governance of a DPoS chain is outsourced to the exchange, which may not participate in governance or vote on decisions that go against the token owner’s beliefs.

Increased value is attracting larger players into DPoS participation. Crypto Funds are noticing projects beyond Bitcoin, Ethereum, and ICOs. As reported by Nathan Reiff in 2018, “According to a report by Benzinga, the number of hedge funds with a cryptocurrency or blockchain focus stands at roughly 150.” Now, we can count over 800 cryptocurrency funds launched. The funds are primarily focused on non-DPoS coins, however, DPoS tokens, with built-in inflation rewards, could offer more stability to funds and provide steady return rates without the need for trading. CryptoFunds are positioned to offer custodian crypto asset solutions and will be arbitrators of voting powers for DPoS systems. Many may need nudging to involve themselves with governance, but Alpha Stake has plans for providing them guidance in such decisions.

Other investment sectors with growing interest in digital assets are venture capitalists and family offices. V.C.s and family offices are more flexible with investment allocation and can direct a percentage of their portfolios toward digital assets more readily than traditional fund managers. Many are seeking Alpha in a time of risk-on with equity markets and bond yields near zero. 2021 may offer exceptional real estate deals, however, timing is crucial, and some markets may not behave as in previous cycles. For example, commercial real estate and office space may undergo dramatic changes with the newfound "work-from-home" culture. Infinite Quantitative Easing begs the question of fiat currency's worth even as the strongest reserve currency, the U.S. dollar. Cash is good to have on hand for short-term deflationary-priced asset purchases, but unless our economies undergo massive expansion, fiat currencies worldwide are bound to experience levels of weakened purchasing power for hard assets. Thus, hard money alternatives, such as gold or bitcoin, will grow toward stability and present a viable long-term hold collateral option versus fiat currency holdings. For families who are familiar with digital assets, only a little guidance is needed about quality DPoS assets. Those who want deeper involvement in web3 development, are prime candidates for self-custody, proposal voting, and reaping the rewards offered by delegated proof-of-stake blockchains.

Delegated Proof-of-Stake Conclusion

Amongst the many advantages of involvement within the cryptocurrency space, staking, governance, and consistent rewards stand out as superior forms of consensus models. Most new DLT chains are building their network's consensus algorithms in a DPoS-like model, and even legacy chains like Ethereum are moving towards a proof-of-stake model that will mimic DPoS based on pools created by retail and institutional investors. Staking not only promotes loyalty within a highly liquid digital asset trading environment, but more importantly, staking empowers users to guide and direct protocol development toward a foundation that is ready for all the complexities of Web3.

by Eric Kazee

Part 2 DPoS: The Validators (Originally Posted April, 2020)

Delegated Proof of Stake's Stake in Crypto

To read Part 1 of this series, click DPoS: The Protocols.

For the sake of clarity, throughout this article, the primary designation given to those who commit and verify new blocks to the chain is Validator. Other names used interchangeably with validators are witnesses, block producers, super representatives, harvesters, consensus nodes, fishermen, and even bakers!

To meet the cryptocurrency demand of a 24/7 uptime network, the computation, memory, and security requirements of a global virtual machine or web-based delegated proof of stake (DPoS), or some form of DPoS consensus, has proven to be the optimal solution over proof-of-work and proof-of-stake thus far in blockchain development.

Earlier attempts at pure proof-of-stake were insufficient to meet the demands of enterprise-level blockchains.

A problem with securing this type of network is to guard against a 51% attack by individuals or groups who buy over half the tokens. It is a problem but not a great threat since anyone who performs a 51% attack risks the value loss of their tokens and trust for the platform, thus hurting themselves.
A second problem with PoS is scalability. If every computer that is on and connected to the network participates, the relays between these computers to validate transactions will not transmit optimally. Some personal computers may stake many tokens and are chosen often as a node validator to verify transactions but if their home networks are slow, the entire system lags. Imagine someone staking from a wallet on their mobile phone. Maybe when our devices are on a 6G network this will no longer be an issue to verify blocks.
The third problem with pure PoS is called ‘Nothing at Stake’. Normally blockchain miners within a Proof of Work environment are incentivized to forge the next block on the longest chain (official chain) due to the extreme electrical costs of being a witness to the consensus mechanism. Therefore, no bitcoin miner will attempt to gain credit for solving consensus puzzles on a shorter, illegitimate chain. For Proof of Stake, there are no opportunity costs involved with signing multiple chains and attempting to gain rewards from shorter chains each round. There are several solutions proposed for the ‘Nothing at Stake’ problem, but each will either introduce slashing penalties, require seasoning of staked tokens (at the detriment of new-comers), or use the transactions to build the blockchain and the senders are the miners (however this does not scale well).
A 4th problem with pure proof-of-stake is ‘Weak Subjectivity’. When a new node comes online, it must ask a trusted source about the latest hash. Most chains rely on existing nodes to communicate this info so new nodes are on the correct chain. Another option is to broadcast the correct hash by way of 3rd party oracle. Either way, it is a potential weakness that a large stakeholder could deceitfully override the correct chain with a false hash and cause every other node to point to an incorrect chain.
DPoS allows every token holder to participate in governance and rewards, however, only clearly identifiable entities with large stakes, highly secured computer/server equipment, protocol expertise, and 24/7 high-speed network uptimes can operate a block-producing node.

DPoS Validator Requirements:

DPoS protocols require various public identity requirements, staking levels, technical expertise, and hardware. An evaluation of requirements from protocols such as NEO, EOS, Waves, Tezos, Ark, Bitshares, and Loom required too many variables to list in this article. However, a common theme for most is a public identity that requires a website and some social media presence. Staking levels range from hundreds to hundreds of thousands of tokens; however, the monetary value will be discussed below along with hardware and network costs. Finally, public campaigning will encourage a diverse group of people to stake tokens, and a limited number of delegates with a larger stake will be responsible for transactions and creating blocks for a share of the block reward.

The technical requirements are surprisingly moderate and do not require much processing power to operate the node. The average minimum spec requirements are close to those listed below.

Most allow nodes deployed on Windows, macOS, or Ubuntu. Some even prefer a proprietary console such as Wave’s Docker.
4 x CPU 24 cores (48 threads) @ 1.87GHz.
16 GB RAM (EOS requires significantly more, 512 GB).
1 TB SSD Storage. (EOS requires significantly more, 8 TB).
100 MBps uplink.
2 x CPU 28 cores (56 Cores & 112 threads) @ 2.50 GHz.
Failure tolerance/recovery backup.
HSM for bare metal servers.
System technical requirements.
Time requirements (24/7 Operation).

In general, most DPoS DLT systems advise their potential Validators in the same manner as Cosmos,

Validators must set up a physical operation secured with restricted access. A good starting place, for example, would be co-locating in secure data centers.

Validators should expect to equip their datacenter location with redundant power, connectivity, and storage backups. Expect to have several redundant networking boxes for fiber, firewall and switching and then small servers with redundant hard drive and failover. Hardware can be on the low end of datacenter gear to start out with.

We anticipate that network requirements will be low initially. The current testnet requires minimal resources. Then bandwidth, CPU and memory requirements will rise as the network grows. Large hard drives are recommended for storing years of blockchain history.

— Validators Overview Guide (Cosmos 2018)

Validator Compensation:

Compensation only matters after expenses to run a full node are accounted for, for example, VSystems lists hardware requirements as listed above; however, a comparable instance on Amazon Web Services' EC2 with an instance i3 large makes a good virtual substitute. The AWS i3 large instance costs $200—$400 per month for 2 servers, and they estimate those costs will increase by 10% every 2 years. (Gadikian, 2020)

Depending on the size of the team, from hobbyist to enterprise-grade, and level of commitment, from a personal computer to a stand-alone bare metal server with HSM security, adequate computing power, redundancy, custom tooling, and more, costs can range from $50 per month to $10k per month. There are mid-sized teams validating whose expenses range from $2k — $8k.

For simplicity's sake, let’s focus on the mid-sized Validator team for the average, using DPoS blockchain. Estimated costs:

Upfront physical hardware: $8k
Datacenter: $1500/month: secured cage $3k/month
Tooling/Monitoring/Development Time: 21k/month (Human resources @ 250k salaries/yr)
Backups: Another Datacenter with same hardware $12k, ongoing cost $2k/month
First-year total costs are close to $350k, thereafter near $24k/month

To become profitable, validation operators must keep costs low by hiring quality engineers for a low upfront salary, choosing an ideal location (cheaper to operate a node in some countries), using virtual machines, and adding hardware efficiencies (if using and upgrading bare metal).

Another technique, many Staking as a Service companies use, is staking to multiple chains. This helps them move closer to economies of scale, offer more variety to investors, develop new products/techniques in-house to sell, and compete in new blockchains’ bounty competitions for prizes.

Net income from pure block rewards for a professional team operating on a top 100 chain, that is voted to a validating position by delegates and receives top percentile rewards for their work, can expect a range of 15k — 800k /year per chain. A large range, but other factors affect profit such as token price, cash-out frequency, and percentage of rewards a team can competitively keep.

Some teams report negative returns. This could be due to low or no commission rates for the Validator via chain code, or they choose to charge Delegators low commission rates. Some teams share 100% of their Block rewards with Delegators for their votes. So, if rewards are mostly given away, the Validator could operate at negative income. There are numerous reasons a team would do this, but they usually draw income from other sources.

The Importance of Proof of Stake and Quality Validators:

Beyond technical knowledge, excellent hardware, and an economic foundation for continuous improvement, there are other attributes that make top-tier Validators. Delegated proof-of-stake consensus requires great validators, which increases the chance of protocol success exponentially. Every validator knows technical aspects of the protocol that retail and sophisticated token investors do not. Some protocols ensure only proprietary specifications are shared with validators.

With knowledge asymmetry and capabilities for community malfeasance, Validators must constantly earn trust from token Delegates and fellow Validators. Technical proficiency must be paired with ethics and goodwill. Validators must avoid chain sabotage, but also missing block production. For deliberate misconduct or negligence, some protocols introduced “Slashing” or financially punishing Validators and sometimes the Delegates who voted for them.

Alpha Stake seeks Validators who are motivated to improve the base protocol layer. Protocol ecosystem enhancement such as direct coding, white-hat hacking, and submitting proposals for upgrades are advanced skills desired in Validators, but not necessarily expected. Other means of contribution include recruiting developers to build middle-ware or dApps on top of the protocol. Validators can host community events such as hackathons or conferences. Positive impact can happen by way of virtual education modules, writing articles, hosting podcasts, or producing videos for public consumption.

Validators’ responsibilities extend beyond security, processing transactions, and validating block production, they are the drivers of trust, promotions, and business robustness of the blockchain. Every project seeks to dominate a sector, gain commercial viability, or onboard mass adoption. A key factor to enable these ultimate good outcomes are technically sound, reliable, engaged, and trustworthy Validators.

The Future of DPoS Consensus Mechanism:

Eventually, every DLT chain that matters will develop enterprise-scaled Validators rotating through the top positions. The politics of maintaining and advancing the protocol will be abstracted away from retail token holders. The winners of leading chains will grow and require server warehouses the size equal to Google’s locations. The validation process in the future will be bankrolled by venture capitalists, banks, and family offices to accommodate the ever-expanding footprint of server-side edge data centers needed to meet future demand, making user votes obsolete.

For any new layer 1 protocol developments, the Validators with track records of excellent reputation will be called upon to secure their blockchain. No protocol creator(s) could afford to risk anything less.

Professional Validators are needed to establish trust not only for new financial systems, but also for diverse parties involved in supply chain logistics, education credentialing institutions, automotive & aviation OEMs who incorporate IOT technology, international portable healthcare data sharing including digital IDs, and most important, trusted to handle inter-government cooperation for cross border attestation and provenance of agreements, titles, judgments, treatises, and any other legal documentation.

Hopefully, thoughtful Validators will continue accessible channels of communication to keep enthusiasts, at all levels of token wealth, in the loop of the protocol's inner workings.

Most Validators today are niche-minded workers. Many were trained in traditional IT departments to be a segment of that department to support a corporation that barely knows they are there. Now it is time for people skilled enough to become Validators to take a leading role in what comes next. Now it is time for Validators to be seen, vocal, and innovative.

Distributed Ledger Technology seeks to operate the decentralized internet, called Web 3.0 or Web3. The next generation of the internet seeks to work in tandem and eventually replace legacy cloud computing services such as AWS, MS Azure, VMware, and IONOS by 1&1. Cloud backup databases such as Oracle Cloud, Rackspace, and IBM Cloud are services DLT not only seeks to disrupt but overtake as an industry standard.

The final attribute Validators need is courageous resilience. Many obstacles block the path of entrepreneurs, but DLT and DPoS networks create special pushback from entrenched entities that resist what’s coming next. Many walls must be climbed, broken through, or knocked down while continuously creating new blocks. Those who are willing to pledge unwavering dedication to delegated proof-of-stake consensus advancement will be the victors.

by Eric Kazee

DPoS: The Protocols (Originally Posted 4/2020)

What is Delegated Proof of Stake (DPoS)

DPoS is a system with a fixed number of elected validators (also called block producers or witnesses). Block Producers are selected to validate transactions, take alternate turns to create blocks, and secure the blockchain from malicious actors. The network's token holders (electors) vote block producers into Validator positions. Each protocol determines the weight of votes (usually the number of tokens staked) and the number of validator candidates electors can choose per cycle. Users normally stake the tokens they own in a special wallet developed for the specific blockchain protocol. Alternatively, voters can choose to proxy their vote to another voter, who will vote for validators on their behalf. Validators receive token rewards for work performed and usually share rewards proportionately with electors who voted for them.

The threat of DPoS Validator blockchain systems to traditional finance is that they could replace an accountant, administrator, banker, or anyone tasked with determining which financial transactions are valid and in what order they should appear in the ledger. DPoS is also a decentralized governance environment that utilizes the protocol’s rules to reach a unified consensus via democratic voting. DPoS results in high transaction speeds, staking that rewards passive profits, wide scalability, and low or no transaction fees for end-users.

Examples of DPoS systems

Bitshares

Bitshares is the original DPoS consensus blockchain created by Dan Larimer using a new technology called Graphene. Built primarily to solve the problem of sovereign trading without a centralized platform, it is billed as the first Decentralized Asset Exchange (DEX). An overview of the purpose and goals of Bitshares is explained on their website as follows:

Blockchains must have high performance and scalability in order to deliver the speed required by cryptocurrency and smart contracts. Designing BitShares from the ground up means it can meet demands to process more transactions every second than Visa and MasterCard combined. Delegated Proof of Stake ensures the BitShares network can confirm transactions in an average of just 1 second, limited only by the speed of light.

To achieve industry-leading performance, BitShares borrowed lessons from the LMAX Exchange, which is capable of processing 6 million transactions per second. These were the key points:

Keep everything in memory.
Keep the core business logic in a single thread.
Keep cryptographic operations (hashes and signatures) out of the core business logic.
Divide validation into state-dependent and state-independent checks.
Use an object-oriented data model.

By following these simple rules, BitShares is able to process 100,000 transactions per second without any significant effort devoted to optimization. (Bitshares, 2020)

ARK

Ark’s innovation is a leader in DPoS development. They lead with an emphasis on solving the blockchain trilemma, as explained on their website.

Extant blockchain platforms face a range of well-known and seemingly intractable challenges [3]. These include what is commonly known as the "blockchain trilemma," referring to the balance that blockchains strive to attain between:

Scalability (handling large volumes of transactions at high speed)
Security (guaranteeing the validity of transactions and protecting data)
Decentralization (distributing transaction validation among nodes to eliminate a central point of control and to ensure accuracy and fairness).

Development of the ARK Technology stack began with consideration of the trilemma and further reflection upon two crucially related challenges, namely:

Interoperability (enabling independent chains to exchange value and information), sustainability (creating self-sufficient and self-governing environments). (ARK.io, 2020)

Ark operates with consensus from the top 51 delegate nodes, which alternate validating blocks randomly every 7 minutes. Blocks are linked every 8 seconds. Inflation for delegates totals about 7.8 million ARK per year.

Industries of interest for ARK include supply chain management, the Internet of Things, government, and gaming. Ark also has proposals that are voted upon by the delegates for approval.

EOS

The most prominent DPoS chain originated from Block.one, which went live June 2018. Launched by the Genesis Validators, the community voted for the top 21 validators, called Block Producers. EOS.io software, also created by Dan Larimer, is open-sourced, and any developer can build upon its foundation. Primary development continues from Block.one, where Brendon Blummer, CEO, and Dan Larimer, CTO, continue to work from their 4.1 billion dollar token war chest to develop the EOSio ecosystem. The video tutorial on Coinbase gives a good overview of the EOS.io software and EOS token. (See video link below)

Lessons Learned from Dan Larimer

Below are excerpts from Dan that illustrate the expansive capabilities of blockchains built with DPoS consensus.

Dan’s overall goal with Bitshares was to create a free society or a non-violent alternative to governance. A lofty goal, but it truly undergirds all the efforts of the three highest-performing blockchains in existence. However, one problem with decentralized communities is, does everyone share such a high vision?

“My prior blog post created quite a controversy among many in the BitShares community. I cast a vision for BitShares as an non-violent alternative to government. These ideas are considered niche and a distraction by some. Today I am going to justify the raw business benefits of a vision.”

--(Larimer, 2015)

Bitshares was also the first self-sustaining blockchain with a decentralized autonomous organization (DAO) funding development from the treasury. Ironically, Dan was forced to move on from the project he created due to DAO votes not funding ongoing research & development for his team.

Dan’s next move was, in conjunction with co-founder Ned Scott, to create Steem, a content media platform that could compete with established media with no ads and peer-to-peer rewards.

However, the greater vision was always there for Dan, as Scott states:

“Steem was born out of ideas about insurance and mutual aid: it was the idea that people would be able to help each other peer-to-peer if they were struggling to solve problems or needed assistance. It quickly grew into a much larger vision and Steemit was born as a place where individuals get rewarded by a community for posting and voting on content.”

--(Scott, 2019)

Dan left the Steem project on March 15, 2017, due to conflicting visions of STEEM’s development. It seems Dan wanted Steem to expand towards smart contracts with more open-source community software development, but Ned wanted more closed development only for the media content platform. Steem recently forked after being purchased by Justin Sun of TRON. The new chain is called HIVE.

EOS is the culmination of the development of Graphene technology to encompass abilities such as DEX ready tokens, a smart contracts platform, the ability to handle social media platform demands, cross-blockchain communication, and decentralized data storage solutions. Dan and other developers continue to build a variety of use cases on this open-source platform.

DPoS Opportunities.

Developers realize the superior benefits of delegated proof of stake architecture. The blockchain trilemma of security, decentralization, and scalability is solved. Everyone involved in the ecosystem has a stake in the chain, with potential inflationary benefits while helping to secure the chain. Moreover, democratic voting for chain upgrades and customization without forks enables future-proofing as technology advances.

Opportunities to affect change through governance abound for a growing variety of DPoS ecosystems. DPoS pioneer chains such as BitShares and Steem/HIVE inspired other projects to build on the DPoS model, such as ABBC, TRON, Tezos, Lisk, Elastos, and others.

Each chain has a platform, or wallet, within which tokens are staked. However, trading exchanges are also offering staking rewards for those wanting exposure to rewards without a custom wallet. Binance pioneered the trend and Kucoin, Huobi, Kraken, and even Coinbase offer staking rewards for those who leave their tokens within exchange wallets. However, keeping cryptocurrency on exchanges excludes you from one of the most important features of DPoS, governance.

While exchange platforms control tokens, the exchange can block producers, validators, and proposals on your behalf. This currently causes Validator entrenchment, and some individual token holders believe these votes are unjust. If individuals want democratic governance over who securely validates the blockchain and votes for chain proposals, they must stake tokens within their self-custody wallets.

Beyond staking rewards and the power to vote, the next innovation is inter-blockchain communication. DPoS chains are leading development towards utilizing token-based services from one chain onto another chain. Once chain silos are broken, the decentralized universal virtual computer will become more powerful, uncensorable, and ubiquitous in every industry.

The final frontier for a fully blockchain-based universal economy is privacy. Businesses need transaction privacy, governments need documentation privacy, and most importantly, individuals need privacy for every action they want private on the blockchain. Once a middle layer, such as LiqidAPPS, is able to guarantee privacy even between blockchains, mainstream adoption follows.

by Eric Kazee

Yes, It's Time to Build, But How? (Originally Posted April, 2020)

In response to Marc Andreessen’s “IT’S TIME TO BUILD”, I composed a postmortem of the pandemic’s consequences and supplemented my ideas for moving forward in this new policy climate.

Marc is co-founder of the Silicon Valley venture capital firm Adreessen Horowitz (a16z), a firm that exudes excellence in its support for entrepreneurs, and I became an even bigger fan when they created a fund dedicated to Distributed Ledger Technology.

The visionary who realized “Software Is Eating the World”, also recognizes the need to build America back to its preeminence and lead the Western world to rediscover greatness.

Yet it begs the question, what are our current values? Is it enough to only ignite the desire to build pragmatic industriousness as a value, or what combination of values produces a legacy for future generations? Which values can create and sustain a long-term boom cycle and build America into the next golden age?

One technique to answer such questions is to examine what people valued post-World War II and compare that mindset to our values today.

The culture of America since post-WWII is dramatically different. However, the period of 1949–1971 is the last reference point for explosive growth throughout America, which also increased prosperity and security for many across the world.

So, let’s peek into the zeitgeist of the post-war era and glean a few nuggets of value that fueled their success.

Please keep in mind that observations are generalizations from the postwar era and do not apply to every individual person or entity.

Thankfulness: After the war, victor/survivor euphoria, relief, and belief in a new beginning without a menacing threat, motivated the thankful to build in light of not taking life for granted.
Enemy Concern: The collective “red scare” from a new Soviet Union-based power, produced healthy anxiety and motivated Americans to build quickly, stay innovative, and fund friendly developing nations to spread our influence and buffer them from the Communists’ Marxist ideas.
Belief: Americans believed the word of their fellow man more readily during post-war recovery. Business deals could be done on a handshake, and a person’s word was their bond.
Just Wages: The economy was open to more educated workers due to the GI Bill. Also, recognizing the Civil Rights of many citizens provided more access and opportunities for builders. Wages for the middle class increased at a healthy rate partially due to businesses with new-found prosperity, being willing to negotiate pay at an individual level, and being more liberal with ongoing raises and benefits.
General Trust: Most Americans trusted government entities to fulfill their duties and improve society. The public sector trusted American businesses that were helpful during the war to build and innovate, which helped the government gain successful outcomes either through services, goods, or tax revenue. People bestowed a higher trust for our institutions including social and welfare agencies, the press/media, education institutions, unions, the courts, financial institutions, the Church, corporations, and even content coming out of Hollywood.

Advantages we possess today over the post-WWII period.

“More people in more places can now compete, connect and collaborate with equal power and equal tools than ever before.”

— Thomas Friedman

Today, we have what it takes to build whatever we want. We have the tools, technology, processes, and means to connect with a large pool of talented humans quickly, as well as tons of capital (literally now).

The internet not only connected us and provided massive data to increase our shared knowledge at an exponential rate, but the expansion improved other areas of our economy as well, from manufacturing to farming.

We know optimal project management techniques, from waterfall to PERT to Agile. We have the tools and documented experience to work with remote teams in any time zone. We can source materials and products from around the world due to well-developed logistics. Oil is even cheap again if we purge ESG standards!

Lack of will, imagination, and complacency with the status quo are true shortcomings of the investor and political classes. However, I will add another crippling element that plagues every American industry, corruption.

Critics of our current elites express their views courageously. Leaders such as Marc Andreessen, Elon Musk, Glenn Beck, and Chamath Palihapitiya push for better behavior, new challenges, and greater risk-taking.

Once we move beyond Slow Moe Joe and complete the 2024 race, having a political leader who is about building efficiently (no red tape, bureaucracy, or heavy-handed regulations) will be a plus. Also needed are enough senators, house representatives, career government bureaucrats, governors, county judges, mayors, and city officials focused on building and willing to empower citizens. Political leadership is good for an initial jump-start, and after COVID-19 diminishes, we may be ready to fully cooperate with one another for a while.

However, this is not sustainable. Over a short period of time, parties will fall back into their trenches, and anyone who attempts to cross no man’s land will suffer greatly.

Business executives who listened to consultants’ advice on how to get more productivity out of their employees while keeping wages stagnate, will go back to their schemes for more bonuses, bigger share-holder dividends, and buy-back stock propping.

Those who figured out non-profit schemes will continue increasing overhead admin costs at the expense of their initial ground-level mission.

Architects and engineers who took cues from “The Big Dig” and numerous bridges-to-nowhere projects, taught these professionals to become specialists in budget overruns, delays, and skimming schemes. Even NASA suffered from such corruption. At its height, NASA’s budget was 4.41% of the Federal budget in 1966. After decades of steady downward cuts, now only 0.47% Fed budget goes to NASA, which in constant dollars is 50% less than the height (Wiki, 2020). Now, private sector entities make advances NASA gave up pursuing decades ago.

K–12 education will neglect the high-tech lessons learned during the Corona Virus lockdown and revert to the inefficiencies of industrial-age educational models. Universities will continue the pillaging of young adults’ future earnings to grant access to limited social club seats, for a certificate of professional career consideration.

Churches will stay in the small corner that secular society painted them in.

The media will continue toxic outlays of social gossip and political-fueled accusations instead of pointing to social advancements, providing useful guidance for those who want to build, or just get back to straight news reporting.

After the damage of COVID-19, Social Welfare agencies and political agents that back them will again over-reach with “helpfulness” and attempt to force their Utopian ideas on those lacking instead of listening to those they are helping or follow solutions that are proven to sustainably lift people out of destitute situations with dignity.

Once businesses begin to turn profits again, Unions will go back to old playbooks of agitation to push more concessions, creating a less competitive American business, or sap more dues from workers who are forced to join their roles by corrupt political fiat.

Sleazy attorneys will continue to take advantage of our court system. Unscrupulous judges who take frivolous lawsuits, promote an over-litigious society. Thus, the legal system will continue to cripple itself and hurt American businesses.

There is not enough paper on the planet to talk about all the disgraces of Hollywood. Hope for many different stories being told through the arts that reflect the values, graces, and noble fights within much of America has little to no chance of being funded by film studios.

Will financial institutions go back to their Wall Street ways? Will they continue suppressing fintech innovations, stifling cryptocurrency advancements, locking out investment opportunities, not bothering to bank the current unbanked, continuing money surveillance practices for government overlords, and continuing to use the pen to rob value from the masses only to suffer minor fines from the same overlords they report citizens’ and businesses’ information? Yes, they will.

Before we can fulfill the utilitarian goals laid out by Marc Andreessen, these problems must be addressed.

So, what do these problems have in common, what’s lacking?

A Moral Imperative:

“We cannot live only for ourselves… A thousand fibers connect us with our fellow men; and among those fibers, as sympathetic threads, our actions run as causes, and they come back to us as effects.”

— Herman Melville

To be fair, most problems that led to a lack of building in this nation are systemic problems. Even if individuals realize the dysfunctions within their industry, there is little one-off individuals can do to reform entrenched systematic rot.

However, with any major change, all that’s needed is a 1/3 population sample. From the American Revolution to abolishing indoor cigarette smoking, 1/3 of the population will resist your ideas, 1/3 don’t care, and all that’s needed is 33% of the population in agreement.

Thus, a unified effort is needed for lasting change. The people to lead us into the next age of builders must not only know what to do but also foster the best mentality to sustain the gains.

Are those with 7 generations worth of wealth in their coffers afraid of losing it all, or their woeful children losing it all? Are they so complacent and indulged that they believe everyone in America is comfortable and OK? Or, do they despise people not in their social circles so much, that instead of deploying capital to bolster talent, they would rather build bigger gated community walls at any sign of social disturbance?

The Church (every believer in traditional Western theology) is the most important institution in which Americans are losing faith. Why? I list several of many reasons below, but primarily, the impetus to do “the right thing” when no one is looking, must come from a code that is more important than anything this world has to offer. A code that has no respect for a person and is consistent for everyone, at all times, and in all places.

Before expounding further on the importance of Judeo-Christian ethics, I must emphasize that moral integrity truly exists with atheists, agnostics, or those who are part of other major religions. However, I am contrasting the differences in modern America versus post-WWII America, and in post-WWII America, the vast majority of citizens were Christians (Catholic, Anglican, Protestant) or Jews, of whom the Bible/Torah primarily informed them of ethical and work behavior.

What we value today:

Listing the same values of Americans post-WWII, let’s explore a few changes.

Thankfulness: An attitude of gratitude is not the primary description for the average American today. Are too many of us over-protected within this litigious society and expect someone else to be at fault for any problems that arise? Maybe it’s because we are insulated from major difficulties, even from the experiences of our recent wars. Could our exposure to constant click-bait panic-inducing media, political leadership crises, and an education system that constantly pushes American cynicism to cause a bit of cynicism? Are activist groups causing anxiety and anger, so people feel they must fight an unending string of Social Justice causes before they can see anything around them to be thankful for and constantly improve upon?
Enemy Concern: The closest common concern to the USSR is Communist China. However, before COVID-19, many of our elites were China apologists who want to get along with the regime for business opportunities. A large percentage of our populace does not fear the detriments of Socialism or full-blown Communism. With no common enemy, many are not motivated to improve America’s standing. Many in the West no longer value an individual’s sovereignty and the importance of self-expression without fear. These values act as a buffer against tyrants who are quick to seize private property and steal productivity from its people.
Belief: American belief in our neighbors, business dealings, or institutions is reflected in our litigious society. Every agreement must be accompanied by documentation. Even personal relationships, such as marriage, are engaged in less and with more prenuptial agreements.

“Still, among all American women over 15, less than half (47 percent) are married today, the lowest since the turn of the 20th century, and down from a peak of 65 percent in 1950, the report found.”

— (Megan Gannon, 2013)

Just Wages: Wage stagnation was once reserved for difficult industry periods or universal economic downturns. However, wage stagnation is a common technique used by companies today. For most workers, the only means to a pay increase is to leave and work for another company. I saw the trend in the early 1990s as H.R. departments benchmarked pay rates based on geography. So, if a professional in Mississippi performs the same tasks as a similar credentialed person in New York, the New York person may be paid up to 40% more simply based on location, even if the employer is an international entity, not bound by geography. Overall, this is only one technique used by unscrupulous companies to squeeze productivity at a lower and lower cost. Conferences are conducted to share ideas on employee workplace happiness techniques, non-monetary perks, productivity motivations, and worker retention without a pay increase.
General Trust: Trust is broken in most areas of American life as expounded above. The best hope to establish functional financial and legal systems is to introduce a Trustless system.

The Way Forward:

A covert figure named Satoshi Nakamoto invented Bitcoin. Why was this necessary? Satoshi Nakamoto recognized the need for a different system of value capture and transacting outside the auspices of central authorities. A few years later, Vitalik Buterin envisioned a need for contractual agreements between two individuals or entities without a middle agent.

Many other sincere freedom developers work on blockchain technologies that provide solutions for structural Reset.

A reset retools and improves every industry in which we have lost trust, and builders can unify behind a clear vision with many milestones yet to accomplish.

The only ones who can sustain • next-generation internet • self-banking systems • smart contract binding agreements • secure and portable medical, educational, and ID records • encrypted and private communications • organizing and securing A.I. and robotics • time stamping content to blockchain • safety audits via logistics tracking from source to final destination • new energy distribution and credits.

If built with integrity, tomorrow’s powerful, whether A.I. or a super-rich elite, will obey a foundation that demands justice, optimizes opportunity and provides equal treatment under the law of code.

by Eric Kazee

Family Office Choices Post COVID-19 Pandemic Collapse (Originally Posted April 2020)

During the COVID-19 pandemic, articles and “experts” continue to suggest doubling down in equity markets even while the main street economy is sinking. Although there are quality investment opportunities, they must be evaluated more carefully as most asset classes will not behave as they have in the past due to hefty government interventions. Most calls for investment action through the end of 2020 are premature, even to the point of naiveté. Political uncertainty combined with uncharted monetary and fiscal policies requires unprecedented thinking. The real downward trend of many market sectors hasn’t begun.

So, what to do with cash reserves in a hyper-quantitative easing and multifaceted fiscal stimulus environment? Many choose to hold cash until enough of a downturn allows asset acquisitions internationally for pennies on the dollar. Yet, holding cash for too long risks depreciation. Some will seek equity plays in businesses they are familiar with. However, unless your business sector is one of the few benefiting from higher pandemic sales, changes in business models may produce a different ROI than past performances. Traditional safe havens are performing mediocrely (precious metals) or generating little to no yield (bonds). So, where are we now, and what’s considered good positioning during this great uncertainty period sponsored by COVID-19?

Traditional Markets

Cash is again king, but with so much currency created, by every central bank on the planet with the means to do so, cash quickly loses its luster in the post-COVID-19 world. The U.S. Treasury via the Federal Reserve is attempting to support markets at unprecedented levels, but they work with blunt tools and are not detailed specialist investors. Only those who are targeted and closest to the money will benefit. Thus, even with near-term bonds and equity prop-ups, stagflation may be the best hope for the next several years as the real economy seeks to adjust. Zombie and underperforming companies will continue to survive and appear to thrive, which could offer up mega bull traps. The true market price becomes more and more difficult to discover.

During such uncertainty, volatile price swings will affect traditional safe havens such as precious metal commodities. When investors are forced to make market margin calls, large liquidations of assets such as gold or T-bills will help cover positions. Thus, even safe harbors will take in burning ships. Public shares in general may fair better than private equity, but what is the tell for things going back to “normal”? Unfortunately, there is a new normal from here, but there’s one canary in the coal mine of the post-COVID-19 market, the Federal Reserve’s balance sheet. Hopefully, the Fed will sell its balance sheet assets quickly and unwind Treasury’s Special Purpose Vehicles. When within a 3–4 trillion balance sheet range, it will signal a new thriving economy and less burden on the U.S. Treasury, and thus future tax payments, for trillions of debt. This is if they attempt to get back to business as usual.

Real Estate

When deflation of physical goods and real estate strikes, it will feel like great buying opportunities; however, as current owners attempt to unload properties at deep discounts, be aware of credit markets drying up and the new heightened 3rd party risk, government mandates. Residential, commercial, multi-family, and even alternatives like trailer parks and storage will soon avail themselves to fire sales. The problems for new owners are numerous.

What happens if there is a problem with the vaccine and a second outbreak wave?
If mortgage delinquency evictions occur en masse, as expected, will new government regulations halt any new evictions and mandate more forbearance while individuals or businesses are receiving relief payments? Which could last well into 2021.
Even if the virus is eradicated, how many small to mid-sized businesses will continue their commercial leases and pay for excess office space vs continue most employees working remotely?
The consumer appetite may change dramatically. If any property serviced the supply chain for products that are no longer in demand, the property owners must quickly re-purpose or sell to an Amazon-like player if the location is geographically positioned well.
Whether you want to leverage a property or flip, banks are tightening, and surely private lenders will hold on to their cash positions at a higher percentage. Plans to multiply leveraged assets or off-loading to financed buyers must factor in more difficulty.
RE investments will continue as a primary choice for Family Offices to preserve, grow, and protect wealth with smart investments. However, during this period, due diligence must be more rigorous and stringent to ensure sound decisions.

Main Street Business

How will inflation become a part of the private equity story, especially the American small to mid-sized business story? During this time of hurry up and wait, small and mid-sized businesses are waiting for relief that’s coming very slowly. The pressure to maintain a full workforce while waiting on funds and the pressure to keep a full workforce in order to have loans forgiven will have one of two effects on many businesses.

The first scenario; is a business does not float its payroll until stimulus checks arrive and fully releases low-wage employees. Once they have the funds deposited, they will attempt to hire back the employees who were let go to save themselves from owing large loans. However, what if one employee is not willing to come back to that job and chooses to look for other opportunities during the phase of receiving unemployment checks? The unemployment check could be equal to or greater than what their old job paid, so the worker could truly “afford” not to come back. The business will need to do more with less in an economy with lower demand. Within a year or two, businesses will make a decision to go into greater debt to pay back the stimulus loan, fire more employees and run on a skeleton crew, or file for bankruptcy to make everything go away.

The second scenario; is that a business keeps everyone employed until stimulus support arrives. However, with changes in spending patterns, demand for many goods or services will not return to pre-Corona virus outbreak levels. Thus, sales are made at deep discounts to entice customers to spend. Ensuing deflation squeezes the business’ margins to such a degree that when loans are forgiven, the business will eliminate the expense of labor and send many more to the unemployment rolls. If unemployment insurance and federal benefits continue or increase over an extended period of time, people will believe they have enough money saved to spend more liberally. However, the supply side will be severely crippled at this point. Once the first wave of spending depletes most goods, surviving businesses will raise prices to not run out of goods quickly or avoid overbooking for their services.

The prices of goods and services rise as more helicopter money is spent to purchase the goods and services that everyone wants. At this point, more programs will attempt to come online to help small and mid-sized businesses either start up or expand. However, consumer demand moves faster than the long grind of starting a business or expanding without failure. The small percentage of people with the expertise, discipline, vision, and courage to start a Main Street business is small, and most of this generation’s entrepreneurs will suffer greatly due to the COVID-19 experience and never start a business again.

Where to Go:

Technology markets should be the first market movers after normalization with communication tools, automation, 3-D printing, robotics, AI, and most importantly, Blockchain or Distributed Ledger Technology (DLT).

DLT provides the rails to enable many other technologies to operate in the post-COVID-19 environment. Blockchain ensures distributed security, new audit capabilities, better operational checks, and faster settlements of contracts and transactions.

Layer 1 platforms continue to compete for market share in the nascent DLT ecosystem. However, technological advances are moving fast due to teams’ ability to focus more on development versus marketing during a 3-year bear market for cryptocurrencies. Most projects are meeting or exceeding their roadmaps, except for the leading player, Ethereum, which seems to be 1–2 years from full enterprise-ready development.

Newer entrants are on the cusp of enabling the next generation of interconnectedness, called Web 3.0.

What’s needed for trustless exchanges that move much quicker than the Fed’s emergency stimulus packages?
What’s needed to enable the Internet of Things to interact securely from threats of hacks?
What is needed to measure and verify machine and software activities without human auditing?
What is needed for contractual agreements between individuals and/or businesses in real time with confidence and without the need for lawyers to overlook and advise on the agreements?
What is needed as we move away from China as a primary source of low-cost manufacturing to ensure goods come from quality origins and ship with an accurate manifest?

Projects answer the call; like Digibyte (DGB) or XRP, to transact currencies to a unique public key wallet address connected to a unique digital ID.

Hedera Hashgraph (HBAR) or Power Ledger (POWR) can handle the technical requirements of the Internet of Things, for devices and human user interfaces, securely.

VChain (VET) or Accumulate (ACME) focuses on international logistics and product life-cycle verification.

Smart contract platforms consist of highly advanced players such as Cardano (ADA), Cosmos (ATOM), and EOS.

Most next-generation smart contract platforms utilize some form of Proof of Stake, a consensus method upgrade planned for Ethereum (ETH). Alpha Stake believes delegated proof of stake (DPoS) protocols hold the most current value and are flexible enough to capture future value.

Summary:

As economic paradigms shift, it’s critical to explore various DLT projects and how they could shape the new economy. Traditional technologies are exposing their inadequacies, outright failures, and enhancing uncertainties during the pandemic. Fears of current systems not meeting the needs of people in every economic market structure demand answers to pressing problems.

Now industry leaders, political leaders, non-profits, and advocacy groups are seeking solutions, even in areas rarely considered before COVID-19. Those who invest now will benefit from the new economy once the benefits of DLT are fully understood and platforms move from niche community projects to enterprise applications. A new economy that expands exponentially due to the capabilities of reaching and including billions of unbanked people with a cell phone, can connect to micro-transactions, establish unique identities, and agree to bind smart contracts. Expansion continues due to new economies such as micro-grid energy trades, localized manufacturing, and machine-to-machine transactions, including an entire virtual world monetized via DLT.

Family offices that are not investigating DLT solutions can continue with traditional investments, but in a post-COVID-19 world, most assets are now high-risk investments. The risk and volatility of Blockchain kept many Family Offices away from the space. Now, with volatility and uncertainty increasing across most asset classes, is it time to consider a portfolio’s percentage toward a new technology that will eat the world? The outlook for DLT’s expedited adoption and projected payoff of 100x–1,000x from its current market value looks more feasible.

by Eric Kazee

Distributed Ledger Technology: Blockchain Investing With Confidence 2023

Distributed Ledger Technology (DLT) Introduction:

DLT is a blockchain technology that continues to evolve and mature. They are gaining more and more significance in the investing strategies that family offices implement. These technologies have the ability to transform a wide variety of businesses by delivering transparency, security, and efficiency. Additionally, they have the potential to provide new opportunities for growth and wealth generation. In this article, we will explore some key considerations for family offices looking to invest in distributed ledger technologies.

Distributed ledger technology, also known as DLT, is a type of blockchain technology that is still developing and becoming more advanced. In the following paragraphs, we will discuss several important factors that family offices should take into account before investing in distributed ledger technologies.

DLT and its potential use beyond bitcoin.

Family offices should start by gaining a comprehensive understanding of the emerging technology and its potential uses. This involves knowing how blockchain and other distributed ledger technologies function, such as their decentralized and secure nature, their capacity to support peer-to-peer transactions, and the use of smart contracts. Additionally, family offices must comprehend the many blockchain solutions and platforms available, such as public and private blockchain networks, as well as the consensus techniques employed by these networks.

Family offices should be aware of the various ways in which blockchain technology may be implemented in several industries, including finance, supply chain management, healthcare, and real estate. By comprehending the possible applications of blockchain technology, family offices can make more educated investment decisions and even find new growth and diversification opportunities.

Focus on the long-term ledger potential.

Family offices assessing investments in distributed ledger technologies should keep in mind that blockchain and distributed technology are still in their infancy and relatively new. This indicates that the market may see short-term volatility and unpredictability, which can be difficult for investors. Despite these obstacles, family offices should concentrate on the long-term potential of the technology and the companies developing it.

The capacity of blockchain technology to build new business models that are decentralized and secure systems for digital transactions and data storage is one of its primary advantages. This has the potential to disrupt numerous industries, including finance, investment management, supply chain workflow, lower-cost healthcare, and real estate, with enhanced transparency and efficiency. Through tokenized models in these industries, distributed ledger technology has the potential to reduce costs and generate substantial value over time.

When analyzing companies powered by blockchain, family offices should seek out teams with a long-term outlook for the underlying technology and its possible applications beyond what’s possible today. In an open-source world of engineers crafting building block tools, the infrastructure allows collective uses of emerging technology solutions. In addition, they should seek and know each organization’s point of failure with a sound understanding of all that must go right in order to make the business model work for the future, a sound business plan for the present, and a history of generating outcomes.

Consider a diversified fintech approach.

Just as Web2 fintech companies have upended various sub-sectors of the financial services industry by modernizing payments, inter-bank communication, and credit scoring, amongst other things. DLT is another phase of emerging digital disruption for not only financial institutions but also a diverse range of industries. Given the early stage of the technology and the wide range of use cases and applications, family offices should consider a diversified approach to investment products. This may include investing in diverse types of assets, such as liquid cryptocurrencies, decentralized finance (DeFi), blockchain-based start-ups, non-fungible tokens (NFT), and established companies exploring the use of distributed ledger technologies in their operations.

Look for blockchain experience.

When investing in start-ups and early-stage companies working on distributed ledger technologies, family offices should look for experienced management with a record of success in the technology sector who can produce their blockchain analytics for you. Buying and selling private market companies in the blockchain space can be difficult; thus, benchmarks are still being established.

However, there are many clues within a decentralized network concerning the health of any project. Interviews with industry insiders, end-to-end tracking of hardware and software digital wallets, security best practices adopted by the team, the tokenomics of their digital assets, and how do they fit within the goals of the larger crypto ecosystem. These teams will be better positioned to navigate the complex and rapidly evolving landscape of distributed ledger technologies and capitalize on the opportunities they present.

Evaluate the maturity of the project.

When evaluating potential investments in distributed ledger technologies, family offices should assess the maturity of the project or company. It is well known amongst crypto investors that each cycle produces great gains in distinct domains of crypto. 2014-2016 was the great development of Layer-1 projects, -2016-17 it was the age of the new dApp ICOs, 2019 produced the summer of Defi, 2020-21 brought in a NFT boom, etc. This includes evaluating factors such as the stage of development, the strength and experience of the team, and the level of adoption and usage of the technology or platform. As investors, we seek to be early and capture the maximum upside, however, many projects are developing and maturing underground, and only appear new to those who were not paying attention. Timing is sometimes more important than the strength of the idea or team. Investing in more mature projects or companies may provide a greater level of stability and lower risk compared to investing in early-stage projects, whose ideas are yet to be tested.

Stay informed about digital securities regulatory developments.

Family offices should stay informed about regulatory developments related to distributed ledger technologies. This will help them to anticipate and respond to changes in the regulatory environment that could impact their investments. If there are no dedicated officers, the family office should work with a trusted partner who communicates clearly and consistently on market developments.

It is important that family offices assess the regulatory climate and the effects of regulations in multiple places. Of course, the United States has the heaviest hand in regulations, which provides a lead and signals for other jurisdictions to follow. For now, some countries have taken a more permissive approach to blockchain and cryptocurrency, while others have implemented stricter regulations. This can have a significant impact on the growth and adoption of the technology, as well as the potential for investment returns. Family offices should also be aware of any specific regulations or compliance requirements that apply to the industries or use cases in which they are considering investing.

Regulations should paralyze judgment about digital investments, just awareness is enough to prepare for and react appropriately to any changes in the regulatory environment that may have an effect on their investments. This includes conducting an analysis of the regulatory climate in each of the various jurisdictions, as well as being aware of any special legislation or compliance requirements that are relevant to the industries or use cases in which they are considering making an investment. Some families may better monitor market trends if they work with a reliable partner who is able to provide the information in a clear and consistent manner.

Conclusion

Selecting the right DLT project for your portfolio is a crucial decision that can have a significant impact on your long-term investment returns. However, much of the heavy lifting could be outsourced to investment funds. At Alpha Stake, we specialize in seeking and providing the best-in-class options for our limited partners to invest in digital assets. When evaluating potential funds, it is important to consider factors such as fund flexibility, liquidity, and responsiveness to limited partners.

Fund flexibility is important because it allows the fund to adapt to changing market conditions and take advantage of new investment opportunities. A fund that can quickly pivot its strategy or adjust its portfolio in response to market changes is more likely to generate strong returns over the long term.

Liquidity is also a critical consideration, as it determines how easily you can access your funds and move them in and out of different investments. A fund with high liquidity can help you to manage your risk and capitalize on new opportunities, while a fund with low liquidity and long lock-up periods will restrict your ability to respond to market changes and could potentially limit your returns.

Finally, it is essential to be attentive to limited partners since this ensures that the fund is responsive to the requirements and issues that are being raised by its investors. Funds that are attentive to the needs of their limited partners are more likely to be open and transparent, as well as to communicate clearly and concisely, both of which can contribute to increased levels of trust and confidence in the fund.

By considering these factors and evaluating the different options available, family offices and other investors can make more informed decisions about which cryptocurrency funds to include in their portfolios. This can help maximize returns and minimize risk in the rapidly evolving cryptocurrency market.

Information contained herein should not be construed as general financial advice. Please consult your personal financial advisor before considering investing in a digital asset fund. Allow a professional to provide an alternative to all funds in which you are considering investing, and only consider funds that allow you to buy with full disclosure. All potential investors must understand the high risk of investing in bitcoin, ethereum, polkadot, or transactions onto blocks, centralized crypto exchanges such as Coinbase, or decentralized public ledgers and take the necessary precautions and due diligence before investing. The opinions expressed herein are solely those of the author and not those of any references listed within the article. If you choose to invest, contact Alpha Stake, LLC at https://alphastake.fund/ready-to-invest/

by Eric Kazee