Overnight News Heading into Thursday August 27th 2020 (News Yet to be Traded 8:00 PM - 4:00 AM EST)
ADXN ($14.40) Addex and the SIB Swiss Institute of Bioinformatics Receive Innosuisse Grant to Repurpose Potent Dopamine Antagonist Using Computational Modelling
ALGT Allegiant Announces Seven New Routes With Fares As Low As $29* Each Way
TLSA ($3.97) Tiziana Life Sciences CEO Updates Shareholders on its Patent Portfolio, Clinical Pipeline, and Strategy in an Exclusive Interview
LBTYA Liberty Global Publishes Offer Prospectus for Sunrise Communications Group Tender Offer
NSP DEADLINE ALERT: Rigrodsky & Long, P.A. Reminds Shareholders Of Insperity Of Upcoming Deadline
CGG ($1.88) Adds Second Azimuth to Northern Viking Graben Multi-Client Survey
UAA ($9.88) Under Armour Sued By UCLA Over $280M Sponsorship Contract Breach
PHG Philips to expand its image-guided therapy devices portfolio through acquisition of Intact Vascular
CCC Clarivate Announces Appointment of Stefano Maestri as Chief Technology Officer
RDY Dr. Reddy's Laboratories announces the launch of Penicillamine Capsules USP, 250 mg in the U.S. Market
End of Day and After Hours News Heading into Thursday August 27th 2020 (News Traded 4:00 PM - 8:00 PM EST)
ABT ($103.19) Abbott's Fast, $5, 15-Minute, Easy-to-Use COVID-19 Antigen Test Receives FDA Emergency Use Authorization; Mobile App Displays Test Results to Help Our Return to Daily Life; Ramping Production to 50 Million Tests a MonthNSP DEADLINE ALERT: Rigrodsky & Long, P.A. Reminds Shareholders Of Insperity, Inc. Of Upcoming Deadline
CLVS ($4.96) FDA Approves FoundationOne® Liquid CDx to Serve as Rubraca® Companion Diagnostic to Identify Eligible Patients with BRCA1/2-Mutant, Metastatic Castration-Resistant Prostate Cancer
DSS ($6,27) Interview to Air on Bloomberg International on the RedChip Money Report
AMC ($5.60) AMC ready to open another 170 theaters for weekend
NTAP NetApp Stock Spikes After Earnings Crush Estimates
RIOT ($3.41) Riot buys more bitcoin miners, sees hashing capacity over 2 EH/s next year
FE FirstEnergy Utility Crews Mobilize to Assist Hurricane Laura Power Restoration Efforts in Texas
MESO Mesoblast Reports Substantial Operational Progress and Financial Results for the Year Ended June 30, 2020
GME GameStop Announces Second Quarter Fiscal 2020 Earnings Release Date
SPLK Splunk Slides as Revenues Miss Amid Business Model Shift
MSFT Microsoft Brings Back Halo Veteran to Get Delayed Game Back on Track
ET ($6.46) Army Corps seeks reversal of Dakota Access pipeline ruling
Testing the Tide | Monthly FIRE Portfolio Update - June 2020
We would rather be ruined than changed. -W H Auden, The Age of Anxiety This is my forty-third portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars). This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary Vanguard Lifestrategy High Growth Fund – $726 306 Vanguard Lifestrategy Growth Fund – $42 118 Vanguard Lifestrategy Balanced Fund – $78 730 Vanguard Diversified Bonds Fund – $111 691 Vanguard Australian Shares ETF (VAS) – $201 745 Vanguard International Shares ETF (VGS) – $39 357 Betashares Australia 200 ETF (A200) – $231 269 Telstra shares (TLS) – $1 668 Insurance Australia Group shares (IAG) – $7 310 NIB Holdings shares (NHF) – $5 532 Gold ETF (GOLD.ASX) – $117 757 Secured physical gold – $18 913 Ratesetter (P2P lending) – $10 479 Bitcoin – $148 990 Raiz app (Aggressive portfolio) – $16 841 Spaceship Voyager app (Index portfolio) – $2 553 BrickX (P2P rental real estate) – $4 484 Total portfolio value: $1 765 743 (+$8 485 or 0.5%) Asset allocation Australian shares – 42.2% (2.8% under) Global shares – 22.0% Emerging markets shares – 2.3% International small companies – 3.0% Total international shares – 27.3% (2.7% under) Total shares – 69.5% (5.5% under) Total property securities – 0.3% (0.3% over) Australian bonds – 4.7% International bonds – 9.4% Total bonds – 14.0% (1.0% under) Gold – 7.7% Bitcoin – 8.4% Gold and alternatives – 16.2% (6.2% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments The overall portfolio increased slightly over the month. This has continued to move the portfolio beyond the lows seen in late March. The modest portfolio growth of $8 000, or 0.5 per cent, maintains its value at around that achieved at the beginning of the year. [Chart] The limited growth this month largely reflects an increase in the value of my current equity holdings, in VAS and A200 and the Vanguard retail funds. This has outweighed a small decline in the value of Bitcoin and global shares. The value of the bond holdings also increased modestly, pushing them to their highest value since around early 2017. [Chart] There still appears to be an air of unreality around recent asset price increases and the broader economic context. Britain's Bank of England has on some indicators shown that the aftermath of the pandemic and lockdown represent the most challenging financial crisis in around 300 years. What is clear is that investor perceptions and fear around the coronavirus pandemic are a substantial ongoing force driving volatility in equity markets (pdf). A somewhat optimistic view is provided here that the recovery could look more like the recovery from a natural disaster, rather than a traditional recession. Yet there are few certainties on offer. Negative oil prices, and effective offers by US equity investors to bail out Hertz creditors at no cost appear to be signs of a financial system under significant strains. As this Reserve Bank article highlights, while some Australian households are well-placed to weather the storm ahead, the timing and severity of what lays ahead is an important unknown that will itself feed into changes in household wealth from here. Investments this month have been exclusively in the Australian shares exchange-traded fund (VAS) using Selfwealth.* This has been to bring my actual asset allocation more closely in line with the target split between Australian and global shares. A moving azimuth: falling spending continues Monthly expenses on the credit card have continued their downward trajectory across the past month. [Chart] The rolling average of monthly credit card spending is now at its lowest point over the period of the journey. This is despite the end of lockdown, and a slow resumption of some more normal aspects of spending. This has continued the brief period since April of the achievement of a notional and contingent kind of financial independence. The below chart illustrates this temporary state, setting out the degree to which portfolio distributions cover estimated total expenses, measured month to month. [Chart] There are two sources of volatility underlying its movement. The first is the level of expenses, which can vary, and the second is the fact that it is based on financial year distributions, which are themselves volatile. Importantly, the distributions over the last twelve months of this chart is only an estimate - and hence the next few weeks will affect the precision of this analysis across its last 12 observations. Estimating 2019-20 financial year portfolio distributions Since the beginning of the journey, this time of year usually has sense of waiting for events to unfold - in particular, finding out the level of half-year distributions to June. These represent the bulk of distributions, usually averaging 60-65 per cent of total distributions received. They are an important and tangible signpost of progress on the financial independence journey. This is no simple task, as distributions have varied in size considerably. A part of this variation has been the important role of sometimes large and lumpy capital distributions - which have made up between 30 to 48 per cent of total distributions in recent years, and an average of around 15 per cent across the last two decades. I have experimented with many different approaches, most of which have relied on averaging over multi-year periods to even out the 'peaks and troughs' of how market movements may have affected distributions. The main approaches have been:
An 'adjusted income' approach - stripping out the capital gains components of Vanguard funds to reach an estimate of underlying income generation, both across the entire investment period, and during the sharpest low of the Global Financial Crisis
A long-term asset class approach - relying on long-term historical data on averages of the income produced by various asset classes
A 'tax method' approach - this derives an income estimate as a percentage of the portfolio by drawing on taxable investment income totals from tax return records
Simple historical rolling average - this is a rolling three-year measure, based on the actual distributions record of the portfolio
Average distribution rate approach - this method uses a long-term average of annual distributions received as a percentage of the total portfolio since 1999
Each of these have their particular simplifications, advantages and drawbacks. Developing new navigation tools Over the past month I have also developed more fully an alternate 'model' for estimating returns. This simply derives a median value across a set of historical 'cents per unit' distribution data for June and December payouts for the Vanguard funds and exchange traded funds. These make up over 96 per cent of income producing portfolio assets. In other words, this model essentially assumes that each Vanguard fund and ETF owned pays out the 'average' level of distributions this half-year, with the average being based on distribution records that typically go back between 5 to 10 years. Mapping the distribution estimates The chart below sets out the estimate produced by each approach for the June distributions that are to come. [Chart] Some observations on these findings can be made. The lowest estimate is the 'adjusted GFC income' observation, which essentially assumes that the income for this period is as low as experienced by the equity and bond portfolio during the Global Financial Crisis. Just due to timing differences of the period observed, this seems to be a 'worst case' lower bound estimate, which I do not currently place significant weight on. Similarly, at the highest end, the 'average distribution rate' approach simply assumes June distributions deliver a distribution equal to the median that the entire portfolio has delivered since 1999. With higher interest rates, and larger fixed income holdings across much of that time, this seems an objectively unlikely outcome. Similarly, the delivery of exactly the income suggested by long-term averages measured across decades and even centuries would be a matter of chance, rather than the basis for rational expectations. Central estimates of the line of position This leaves the estimates towards the centre of the chart - estimates of between around $28 000 to $43 000 as representing the more likely range. I attach less weight to the historical three-year average due to the high contribution of distributed capital gains over that period of growth, where at least across equities some capital losses are likely to be in greater presence. My preferred central estimate is the model estimate (green) , as it is based in historical data directly from the investment vehicles rather than my own evolving portfolio. The data it is based on in some cases goes back to the Global Financial Crisis. This estimate is also quite close to the raw average of all the alternative approaches (red). It sits a little above the 'adjusted income' measure. None of these estimates, it should be noted, contain any explicit adjustment for the earnings and dividend reductions or delays arising from COVID-19. They may, therefore represent a modest over-estimate for likely June distributions, to the extent that these effects are more negative than those experienced on average across the period of the underlying data. These are difficult to estimate, but dividend reductions could easily be in the order of 20-30 per cent, plausibly lowering distributions to the $23 000 to $27 000 range. The recently announced forecast dividend for the Vanguard Australian Shares ETF (VAS) is, for example, the lowest in four years. As seen from chart above, there is a wide band of estimates, which grow wider still should capital gains be unexpectedly distributed from the Vanguard retail funds. These have represented a source of considerable volatility. Given this, it may seem fruitless to seek to estimate these forthcoming distributions, compared to just waiting for them to arrive. Yet this exercise helps by setting out reasoning and positions, before hindsight bias urgently arrives to inform me that I knew the right answer all along. It also potentially helps clearly 'reject' some models over time, if the predictions they make prove to be systematically incorrect. Progress Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets Portfolio objective – $2 180 000 (or $87 000 pa) 81.0% 109.4% Credit card purchases – $71 000 pa 98.8% 133.5% Total expenses – $89 000 pa 79.2% 106.9% Summary The current coronavirus conditions are affecting all aspects of the journey to financial independence - changing spending habits, leading to volatility in equity markets and sequencing risks, and perhaps dramatically altering the expected pattern of portfolio distributions. Although history can provide some guidance, there is simply no definitive way to know whether any or all of these changes will be fundamental and permanent alterations, or simply data points on a post-natural disaster path to a different post-pandemic set of conditions. There is the temptation to fit past crises imperfectly into the modern picture, as this Of Dollars and Data post illustrates well. Taking a longer 100 year view, this piece 'The Allegory of the Hawk and Serpent' is a reminder that our entire set of received truths about constructing a portfolio to survive for the long-term can be a product of a sample size of one - actual past history - and subject to recency bias. This month has felt like one of quiet routines, muted events compared to the past few months, and waiting to understand more fully the shape of the new. Nonetheless, with each new investment, or week of lower expenditure than implied in my FI target, the nature of the journey is incrementally changing - beneath the surface. Small milestones are being passed - such as over 40 per cent of my equity holdings being outside of the the Vanguard retail funds. Or these these retail funds - which once formed over 95 per cent of the portfolio - now making up less than half. With a significant part of the financial independence journey being about repeated small actions producing outsized results with time, the issue of maintaining good routines while exploring beneficial changes is real. Adding to the complexity is that embarking on the financial journey itself is likely to change who one is. This idea, of the difficulty or impossibility of knowing the preferences of a future self, is explored in a fascinating way in this Econtalk podcast episode with a philosophical thought experiment about vampires. It poses the question: perhaps we can never know ourselves at the destination? And yet, who would rationally choose ruin over any change? The post, links and full charts can be seen here.
Link to Coindesk:https://www.coindesk.com/data-centralization-2030 The next 10 years will witness the systematic manipulation of human life at a scale unrivaled in history. For all the recent controversies over privacy and surveillance, the real threat is ahead of us. Unless new approaches to online identity and data management take hold, both governments and private actors will move inexorably from knowing you to shaping you. Blockchain-enabled decentralization will develop as the only viable response to the iron logic of data centralization. Blockchain believers often talk as though today’s early-adopter use cases, such as cryptocurrency trading and decentralized finance, will lead straight to mass market adoption. As the inevitable ‘killer apps’ appear, so the story goes, blockchain-based systems will conquer the mainstream. One might imagine that we’ll all soon be trading digital collectibles and relying on token-curated registries for accurate information. Governments will lose control over money, and blockchain-based smart contracts will replace court-enforced legal agreements. Uber, Facebook and the banks will wither away in the face of tokenized alternatives. This narrative is wishful thinking. In most markets, intermediaries will endure for the same reasons they always have: they provide value. The Ubers and Facebooks – and yes, even the banks – tame complexity and produce coherent, convenient, de-risked experiences that no decentralized community can ever match. Early adopters use blockchain-based systems for ideological reasons or to get rich on cryptocurrency speculation. The billions behind them in the mainstream will not. The lock-in power of network effects creates high barriers for alternative economic systems. And the need for trust disqualifies decentralized solutions that are havens for criminals, incapable of effective compliance or vulnerable to catastrophic attacks – which, regrettably, means virtually all of them today. Truly decentralized blockchain systems will reach critical mass not out of hope but out of necessity. Powerful actors and mainstream users will adopt blockchain as a counterbalance to digital behavior-shaping by governments and private platforms. Dramatic innovations such as decentralized autonomous organizations (DAOs), which manage activity automatically through smart contracts, will become significant at the end point of this process, once the foundations are in place. Big data and artificial intelligence, pitched as freeing us from human frailties, are becoming powerful tools for social control. This is occurring along two parallel tracks: surveillance authoritarianism and surveillance capitalism. Through massive data collection and aggregation, China’s social credit system envisions an airtight regime of perfect compliance with legal and social obligations. Many other governments, including liberal democracies, are adopting similar techniques. The potential for catching terrorists, child predators and tax evaders is simply too appealing – whether it’s the real objective or a cover story. "WHAT WE NEED IS A TECHNOLOGY THAT ALLOWS FOR SHARING WITHOUT GIVING UP CONTROL. FORTUNATELY, IT EXISTS." Meanwhile, private digital platforms are using troves of data to shape online experiences consistent with their business models. What you see online is, increasingly, what maximizes their profits. Companies such as Google, Amazon, Tencent and Alibaba can build the best algorithms because they have the most data. And they aren’t interested in sharing. Regulatory interventions will fail to derail the self-reinforcing momentum for ever more centralized data repositories. They may even accelerate it by creating layers of compliance obligations that only the largest firms can meet. Europe’s General Data Protection Regulation (GDPR) actually increased the market share of Google and Facebook in online advertising, and so it is not surprising to see such incumbents actively welcoming the prospect of more regulation. The only lasting solution is to change the economics of data, not to impose private property rights; that would accelerate the market forces promoting data centralization. Giving you “ownership” over your data means giving you legal cover to sell it, by clicking “OK” to a one-sided contract you’ll never read. The problem is not ownership, but control. In today’s algorithm-driven world, sharing and aggregating data increases its value, producing better models and better predictions. The trouble is that once we share, we lose control to centralized data hogs. What we need is a technology that allows for sharing without giving up control. Fortunately, it exists. It is called blockchain. Blockchain technology is, fundamentally, a revolution in trust. In the past, trust required ceding control to counter parties, government authorities or intermediaries who occupied the essential validating roles in transaction networks. Blockchain allows participants to trust the results they see without necessarily trusting any actor to verify them. That’s why major global firms in health care, finance, transportation, international trade and other fields are actively developing cross-organizational platforms based on blockchain and related technologies. No database can provide a trusted view of information across an entire transactional network without empowering a central intermediary. Blockchain can. Adopting any new platform at scale, along with the necessary software integration and process changes, takes time – especially when the technology is so immature. But today’s incremental deployments will serve as proofs-of-concept for the more radical innovations to come. Chinese blockchain networks are already managing tens of billions of dollars of trade finance transactions. Pharmaceutical companies are tracking drugs from manufacturing to pharmacies using the MediLedger platform. Boeing is selling a billion dollars of airline parts on Honeywell’s blockchain-based marketplace. Car insurance companies are processing accident claims in a unified environment for the first time. These and other enterprise consortia are doing the essential technical and operational groundwork to handle valuable transactions at scale. The need for transformative approaches to data will become acute in the next five years. Every week, it seems, another outrage comes to light. For instance, users who posted photos under Creative Commons licenses or default-public settings were shocked they were sucked into databases used to train facial-recognition systems. Some were even used in China’s horrific campaign against Uighur Muslims. Clearview AI, an unknown startup, scraped three billion social media images for a face identification tool it provided, with no oversight, to law enforcement, corporations and wealthy individuals. The examples will only get worse as firms and nations learn new ways to exploit data. The core problem is there is no way to share information while retaining control over how it gets used. Blockchain offers a solution. It will be widely adopted because, behind the scenes, the current data economy is reaching its breaking point. Outrage over abuses is building throughout the world. The immensely valuable online advertising economy attracts so much fraud that the accuracy of its numbers is coming into question. Communities are looking for new ways to collaborate. Governments are realizing the current system is an impediment to effective service delivery. The technologist Bill Joy famously stated that no matter how many geniuses a company employs, most smart people work somewhere else. The same is true of data. Even giants such as Google, Facebook and Chinese government agencies need to obtain information from elsewhere in their quest for perfect real-time models of every individual. These arrangements work mostly through contracts and interfaces that ease the flow of data between organisations. As Facebook discovered when Cambridge Analytica extracted massive quantities of user data for voter targeting, these connection points are also vulnerabilities. As tighter limits are placed on data-sharing, even the big players will look for ways to rebuild trust. The blockchain alternative will begin innocuously. Government authorities at the subnational level are deploying self-sovereign identity to pull together information securely across disparate data stores. This technology allows anyone to share private information in a fine-grained way while still retaining control. You shouldn’t have to reveal your address to confirm your age, or your full tax return to verify your stated income. The necessary cryptography doesn’t require a blockchain, but the desired trust relationships do. Once people have identities that belong to them, not to banks or social media services, they will use them as the basis for other interactions. Imagine a world where you never need to give a third-party unnecessary data to log into a website, apply for a job, refinance a mortgage or link your bank account to a mobile payment app. Where you can keep your personal and professional profiles completely separate if you choose. Where you can be confident in the reputation of a car mechanic or an Airbnb or a product made in China without intermediaries warping ratings for their own gain. The convenience of user experiences we enjoy within the walled gardens of digital platforms will become the norm across the vastness of independent services. We will gradually come to view access to our personal information as an episodic, focused interaction, rather than fatalistically accepting an open season based on preliminary formal consent. Major hardware companies such as Apple, which don’t depend on targeted advertising, will build decentralized identity capabilities into their devices. They will add cryptocurrency wallets linked behind the scenes to existing payment and messaging applications. Stablecoins – cryptocurrencies pegged to the dollar, pound or other assets – will help tame volatility and facilitate movement between tokens and traditional currencies. Privately created stablecoins will coexist with central bank digital currencies, which are under development in most major countries throughout the world. Once this baseline infrastructure is widely available, the real changes will start to occur. DAOs will begin to attract assets as efficient ways for communities to achieve their goals. These entities won’t replace state-backed legal systems; they will operate within them. As numerous controversies, crashes and hacks have already demonstrated, software code is too rigid for the range of situations in the real world, absent backstops for human dispute resolution. Fortunately, there are solutions under development to connect legal and digital entities, such as OpenLaw’s Limited Liability Autonomous Organisations and Mattereum’s Asset Passports. Today, the legal machinery of contracts strengthens the power of centralized platforms. User agreements and privacy policies enforce their control over data and limit individuals’ power to challenge it. Blockchain-based systems will flip that relationship, with the legal system deployed to protect technology-backed user empowerment. Large aggregations of information will be structured formally as “data trusts” that exercise independent stewardship over assets. They will operate as DAOs, with smart contracts defining the terms of data usage. Users will benefit from sharing while retaining the ability to opt out. "DATA WILL BE TREATED NOT AS PROPERTY BUT AS A RENEWABLE RESOURCE, WITH THE COMPETITION FOR ECONOMIC VALUE IN THE APPLICATIONS BUILT ON TOP OF IT." Many significant applications require aggregation of data to drive algorithms, including traffic monitoring (and eventually autonomous vehicles); insurance and lending products serving previously excluded or overcharged customer groups; diagnosis and drug dosing in health care; and demand forecasting for economic modeling. Collective action problems can prevent constructive developments even when rights in data are well defined. DAOs will gradually find market opportunities, from patronage of independent artists to mortgage securitization. The big data aggregators won’t go away. They will participate in the decentralized data economy because it provides benefits for them as well, cutting down on fraud and reinforcing user trust, which is in increasingly scarce supply. Over time, those who provide benefits of personalization and targeting will more and more be expected to pay for it. A wide range of brokering and filtering providers will offer users a choice of analytics, some embedded in applications or devices and some providing services virtually in the cloud. Governments will focus on making data available and defining policy objectives for services that take advantage of the flow of information. Data will be treated not as property but as a renewable resource, with the competition for economic value in the applications built on top of it. The most powerful benefit of open data built on blockchain-based decentralised control is that it will allow for new applications we can’t yet envision. If startups can take advantage of the power of data aggregation that today is limited to large incumbents, they are bound to build innovations those incumbents miss. The surveillance economy took hold because few appreciated what was happening with their data until it was too late. And the cold reality is that few will accept significantly worse functionality or user experience in return for better privacy. That is why the blockchain-powered revolution will make its way up from infrastructural foundations of digital identity and hardware, rather than down from novel user-facing applications. This vision is far from certain to be realized. Business decisions and government policies could make blockchain-based data decentralization more or less likely. The greatest reason for optimism is that the problem blockchain addresses – gaining trust without giving up control – is becoming ever more critical. The world runs on trust. Blockchain offers hope for recasting trust in the networked digital era.
How To End The Cryptocurrency Exchange "Wild West" Without Crippling Innovation
In case you haven't noticed the consultation paper, staff notice, and report on Quadriga, regulators are now clamping down on Canadian cryptocurrency exchanges. The OSC and other regulatory bodies are still interested in industry feedback. They have not put forward any official regulation yet. Below are some ideas/insights and a proposed framework.
Typical securities frameworks will cost Canadians millions of dollars (ie Sarbanes-Oxley estimated at $5m USD/yr per firm). Implementation costs of this proposal are significantly cheaper.
Canadians can maintain a diverse set of exchanges, multiple viable business models are still fully supported, and innovation is encouraged while keeping Canadians safe.
Many of you have limited time to read the full proposal, so here are the highlights:
Effective standards to prevent both internal and external theft. Exchange operators are trained and certified, and have a legal responsibility to users.
Regular Transparent Audits
Provides visibility to Canadians that their funds are fully backed on the exchange, while protecting privacy and sensitive platform information.
Establishment of basic insurance standards/strategy, to expand over time. Removing risk to exchange users of any hot wallet theft.
Background and Justifications
Cold Storage Custody/Management After reviewing close to 100 cases, all thefts tend to break down into more or less the same set of problems: • Funds stored online or in a smart contract, • Access controlled by one person or one system, • 51% attacks (rare), • Funds sent to the wrong address (also rare), or • Some combination of the above. For the first two cases, practical solutions exist and are widely implemented on exchanges already. Offline multi-signature solutions are already industry standard. No cases studied found an external theft or exit scam involving an offline multi-signature wallet implementation. Security can be further improved through minimum numbers of signatories, background checks, providing autonomy and legal protections to each signatory, establishing best practices, and a training/certification program. The last two transaction risks occur more rarely, and have never resulted in a loss affecting the actual users of the exchange. In all cases to date where operators made the mistake, they've been fully covered by the exchange platforms. • 51% attacks generally only occur on blockchains with less security. The most prominent cases have been Bitcoin Gold and Ethereum Classic. The simple solution is to enforce deposit limits and block delays such that a 51% attack is not cost-effective. • The risk of transactions to incorrect addresses can be eliminated by a simple test transaction policy on large transactions. By sending a small amount of funds prior to any large withdrawals/transfers as a standard practice, the accuracy of the wallet address can be validated. The proposal covers all loss cases and goes beyond, while avoiding significant additional costs, risks, and limitations which may be associated with other frameworks like SOC II. On The Subject of Third Party Custodians Many Canadian platforms are currently experimenting with third party custody. From the standpoint of the exchange operator, they can liberate themselves from some responsibility of custody, passing that off to someone else. For regulators, it puts crypto in similar categorization to oil, gold, and other commodities, with some common standards. Platform users would likely feel greater confidence if the custodian was a brand they recognized. If the custodian was knowledgeable and had a decent team that employed multi-sig, they could keep assets safe from internal theft. With the right protections in place, this could be a great solution for many exchanges, particularly those that lack the relevant experience or human resources for their own custody systems. However, this system is vulnerable to anyone able to impersonate the exchange operators. You may have a situation where different employees who don't know each other that well are interacting between different companies (both the custodian and all their customers which presumably isn't just one exchange). A case study of what can go wrong in this type of environment might be Bitpay, where the CEO was tricked out of 5000 bitcoins over 3 separate payments by a series of emails sent legitimately from a breached computer of another company CEO. It's also still vulnerable to the platform being compromised, as in the really large $70M Bitfinex hack, where the third party Bitgo held one key in a multi-sig wallet. The hacker simply authorized the withdrawal using the same credentials as Bitfinex (requesting Bitgo to sign multiple withdrawal transactions). This succeeded even with the use of multi-sig and two heavily security-focused companies, due to the lack of human oversight (basically, hot wallet). Of course, you can learn from these cases and improve the security, but so can hackers improve their deception and at the end of the day, both of these would have been stopped by the much simpler solution of a qualified team who knew each other and employed multi-sig with properly protected keys. It's pretty hard to beat a human being who knows the business and the typical customer behaviour (or even knows their customers personally) at spotting fraud, and the proposed multi-sig means any hacker has to get through the scrutiny of 3 (or more) separate people, all of whom would have proper training including historical case studies. There are strong arguments both for and against using use of third party custodians. The proposal sets mandatory minimum custody standards would apply regardless if the cold wallet signatories are exchange operators, independent custodians, or a mix of both. On The Subject Of Insurance ShakePay has taken the first steps into this new realm (congratulations). There is no question that crypto users could be better protected by the right insurance policies, and it certainly feels better to transact with insured platforms. The steps required to obtain insurance generally place attention in valuable security areas, and in this case included a review from CipherTrace. One of the key solutions in traditional finance comes from insurance from entities such as the CDIC. However, historically, there wasn't found any actual insurance payout to any cryptocurrency exchange, and there are notable cases where insurance has not paid. With Bitpay, for example, the insurance agent refused because the issue happened to the third party CEO's computer instead of anything to do with Bitpay itself. With the Youbit exchange in South Korea, their insurance claim was denied, and the exchange ultimately ended up instead going bankrupt with all user's funds lost. To quote Matt Johnson in the original Lloyd's article: “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.” ShakePay's insurance was only reported to cover their cold storage, and “physical theft of the media where the private keys are held”. Physical theft has never, in the history of cryptocurrency exchange cases reviewed, been reported as the cause of loss. From the limited information of the article, ShakePay made it clear their funds are in the hands of a single US custodian, and at least part of their security strategy is to "decline to confirm the custodian’s name on the record". While this prevents scrutiny of the custodian, it's pretty silly to speculate that a reasonably competent hacking group couldn't determine who the custodian is. A far more common infiltration strategy historically would be social engineering, which has succeeded repeatedly. A hacker could trick their way into ShakePay's systems and request a fraudulent withdrawal, impersonate ShakePay and request the custodian to move funds, or socially engineer their way into the custodian to initiate the withdrawal of multiple accounts (a payout much larger than ShakePay) exploiting the standard procedures (for example, fraudulently initiating or override the wallet addresses of a real transfer). In each case, nothing was physically stolen and the loss is therefore not covered by insurance. In order for any insurance to be effective, clear policies have to be established about what needs to be covered. Anything short of that gives Canadians false confidence that they are protected when they aren't in any meaningful way. At this time, the third party insurance market does not appear to provide adequate options or coverage, and effort is necessary to standardize custody standards, which is a likely first step in ultimately setting up an insurance framework. A better solution compared to third party insurance providers might be for Canadian exchange operators to create their own collective insurance fund, or a specific federal organization similar to the CDIC. Such an organization would have a greater interest or obligation in paying out actual cases, and that would be it's purpose rather than maximizing it's own profit. This would be similar to the SAFU which Binance has launched, except it would cover multiple exchanges. There is little question whether the SAFU would pay out given a breach of Binance, and a similar argument could be made for a insurance fund managed by a collective of exchange operators or a government organization. While a third party insurance provider has the strong market incentive to provide the absolute minimum coverage and no market incentive to payout, an entity managed by exchange operators would have incentive to protect the reputation of exchange operators/the industry, and the government should have the interest of protecting Canadians. On The Subject of Fractional Reserve There is a long history of fractional reserve failures, from the first banks in ancient times, through the great depression (where hundreds of fractional reserve banks failed), right through to the 2008 banking collapse referenced in the first bitcoin block. The fractional reserve system allows banks to multiply the money supply far beyond the actual cash (or other assets) in existence, backed only by a system of debt obligations of others. Safely supporting a fractional reserve system is a topic of far greater complexity than can be addressed by a simple policy, and when it comes to cryptocurrency, there is presently no entity reasonably able to bail anyone out in the event of failure. Therefore, this framework is addressed around entities that aim to maintain 100% backing of funds. There may be some firms that desire but have failed to maintain 100% backing. In this case, there are multiple solutions, including outside investment, merging with other exchanges, or enforcing a gradual restoration plan. All of these solutions are typically far better than shutting down the exchange, and there are multiple cases where they've been used successfully in the past. Proof of Reserves/Transparency/Accountability Canadians need to have visibility into the backing on an ongoing basis. The best solution for crypto-assets is a Proof of Reserve. Such ideas go back all the way to 2013, before even Mt. Gox. However, no Canadian exchange has yet implemented such a system, and only a few international exchanges (CoinFloor in the UK being an example) have. Many firms like Kraken, BitBuy, and now ShakePay use the Proof of Reserve term to refer to lesser proofs which do not actually cryptographically prove the full backing of all user assets on the blockchain. In order for a Proof of Reserve to be effective, it must actually be a complete proof, and it needs to be understood by the public that is expected to use it. Many firms have expressed reservations about the level of transparency required in a complete Proof of Reserve (for example Kraken here). While a complete Proof of Reserves should be encouraged, and there are some solutions in the works (ie TxQuick), this is unlikely to be suitable universally for all exchange operators and users. Given the limitations, and that firms also manage fiat assets, a more traditional audit process makes more sense. Some Canadian exchanges (CoinSquare, CoinBerry) have already subjected themselves to annual audits. However, these results are not presently shared publicly, and there is no guarantee over the process including all user assets or the integrity and independence of the auditor. The auditor has been typically not known, and in some cases, the identity of the auditor is protected by a NDA. Only in one case (BitBuy) was an actual report generated and publicly shared. There has been no attempt made to validate that user accounts provided during these audits have been complete or accurate. A fraudulent fractional exchange, or one which had suffered a breach they were unwilling to publicly accept (see CoinBene), could easily maintain a second set of books for auditors or simply exclude key accounts to pass an individual audit. The proposed solution would see a reporting standard which includes at a minimum - percentage of backing for each asset relative to account balances and the nature of how those assets are stored, with ownership proven by the auditor. The auditor would also publicly provide a "hash list", which they independently generate from the accounts provided by the exchange. Every exchange user can then check their information against this public "hash list". A hash is a one-way form of encryption, which fully protects the private information, yet allows anyone who knows that information already to validate that it was included. Less experienced users can take advantage of public tools to calculate the hash from their information (provided by the exchange), and thus have certainty that the auditor received their full balance information. Easy instructions can be provided. Auditors should be impartial, their identities and process public, and they should be rotated so that the same auditor is never used twice in a row. Balancing the cost of auditing against the needs for regular updates, a 6 month cycle likely makes the most sense. Hot Wallet Management The best solution for hot wallets is not to use them. CoinBerry reportedly uses multi-sig on all withdrawals, and Bitmex is an international example known for their structure devoid of hot wallets. However, many platforms and customers desire fast withdrawal processes, and human validation has a cost of time and delay in this process. A model of self-insurance or separate funds for hot wallets may be used in these cases. Under this model, a platform still has 100% of their client balance in cold storage and holds additional funds in hot wallets for quick withdrawal. Thus, the risk of those hot wallets is 100% on exchange operators and not affecting the exchange users. Since most platforms typically only have 1%-5% in hot wallets at any given time, it shouldn't be unreasonable to build/maintain these additional reserves over time using exchange fees or additional investment. Larger withdrawals would still be handled at regular intervals from the cold storage. Hot wallet risks have historically posed a large risk and there is no established standard to guarantee secure hot wallets. When the government of South Korea dispatched security inspections to multiple exchanges, the results were still that 3 of them got hacked after the inspections. If standards develop such that an organization in the market is willing to insure the hot wallets, this could provide an acceptable alternative. Another option may be for multiple exchange operators to pool funds aside for a hot wallet insurance fund. Comprehensive coverage standards must be established and maintained for all hot wallet balances to make sure Canadians are adequately protected.
Current Draft Proposal
(1) Proper multi-signature cold wallet storage. (a) Each private key is the personal and legal responsibility of one person - the “signatory”. Signatories have special rights and responsibilities to protect user assets. Signatories are trained and certified through a course covering (1) past hacking and fraud cases, (2) proper and secure key generation, and (3) proper safekeeping of private keys. All private keys must be generated and stored 100% offline by the signatory. If even one private keys is ever breached or suspected to be breached, the wallet must be regenerated and all funds relocated to a new wallet. (b) All signatories must be separate background-checked individuals free of past criminal conviction. Canadians should have a right to know who holds their funds. All signing of transactions must take place with all signatories on Canadian soil or on the soil of a country with a solid legal system which agrees to uphold and support these rules (from an established white-list of countries which expands over time). (c) 3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7. (d) A security audit should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the audit will be made public. Canadians must be able to validate the right measures are in place to protect their funds. (e) There is a simple approval process if signatories wish to visit any country outside Canada, with a potential whitelist of exempt countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. All exchanges would be required to keep a compliant cold wallet for Canadian funds and have a Canadian office if they wish to serve Canadian customers. (2) Regular and transparent solvency audits. (a) An audit must be conducted at founding, after 3 months of operation, and at least once every 6 months to compare customer balances against all stored cryptocurrency and fiat balances. The auditor must be known, independent, and never the same twice in a row. (b) An audit report will be published featuring the steps conducted in a readable format. This should be made available to all Canadians on the exchange website and on a government website. The report must include what percentage of each customer asset is backed on the exchange, and how those funds are stored. (c) The auditor will independently produce a hash of each customer's identifying information and balance as they perform the audit. This will be made publicly available on the exchange and government website, along with simplified instructions that each customer can use to verify that their balance was included in the audit process. (d) The audit needs to include a proof of ownership for any cryptocurrency wallets included. A satoshi test (spending a small amount) or partially signed transaction both qualify. (e) Any platform without 100% reserves should be assessed on a regular basis by a government or industry watchdog. This entity should work to prevent any further drop, support any private investor to come in, or facilitate a merger so that 100% backing can be obtained as soon as possible. (3) Protections for hot wallets and transactions. (a) A standardized list of approved coins and procedures will be established to constitute valid cold storage wallets. Where a multi-sig process is not natively available, efforts will be undertaken to establish a suitable and stable smart contract standard. This list will be expanded and improved over time. Coins and procedures not on the list are considered hot wallets. (b) Hot wallets can be backed by additional funds in cold storage or an acceptable third-party insurance provider with a comprehensive coverage policy. (c) Exchanges are required to cover the full balance of all user funds as denominated in the same currency, or double the balance as denominated in bitcoin or CAD using an established trading rate. If the balance is ever insufficient due to market movements, the firm must rectify this within 24 hours by moving assets to cold storage or increasing insurance coverage. (d) Any large transactions (above a set threshold) from cold storage to any new wallet addresses (not previously transacted with) must be tested with a smaller transaction first. Deposits of cryptocurrency must be limited to prevent economic 51% attacks. Any issues are to be covered by the exchange. (e) Exchange platforms must provide suitable authentication for users, including making available approved forms of two-factor authentication. SMS-based authentication is not to be supported. Withdrawals must be blocked for 48 hours in the event of any account password change. Disputes on the negligence of exchanges should be governed by case law.
Continued review of existing OSC feedback is still underway. More feedback and opinions on the framework and ideas as presented here are extremely valuable. The above is a draft and not finalized. The process of further developing and bringing a suitable framework to protect Canadians will require the support of exchange operators, legal experts, and many others in the community. The costs of not doing such are tremendous. A large and convoluted framework, one based on flawed ideas or implementation, or one which fails to properly safeguard Canadians is not just extremely expensive and risky for all Canadians, severely limiting to the credibility and reputation of the industry, but an existential risk to many exchanges. The responsibility falls to all of us to provide our insight and make our opinions heard on this critical matter. Please take the time to give your thoughts.
Two Roads Diverge | Monthly FIRE Portfolio Update - May 2020
Two roads diverged in a yellow wood, And sorry I could not travel both And be one traveler, long I stood And looked down one as far as I could To where it bent in the undergrowth Robert Frost, The Road Not Taken This is my forty-second portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars). This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary Vanguard Lifestrategy High Growth Fund – $727 917 Vanguard Lifestrategy Growth Fund – $42 128 Vanguard Lifestrategy Balanced Fund – $78 569 Vanguard Diversified Bonds Fund – $110 009 Vanguard Australian Shares ETF (VAS) – $187 003 Vanguard International Shares ETF (VGS) – $39 987 Betashares Australia 200 ETF (A200) – $225 540 Telstra shares (TLS) – $1 726 Insurance Australia Group shares (IAG) – $7 741 NIB Holdings shares (NHF) – $5 652 Gold ETF (GOLD.ASX) – $117 714 Secured physical gold – $18 982 Ratesetter (P2P lending) – $11 395 Bitcoin – $159 470 Raiz app (Aggressive portfolio) – $16 357 Spaceship Voyager app (Index portfolio) – $2 492 BrickX (P2P rental real estate) – $4 477 Total portfolio value: $1 757 159 (+$62 325 or 3.7%) Asset allocation Australian shares – 41.4% (3.6% under) Global shares – 22.2% Emerging markets shares – 2.3% International small companies – 3.0% Total international shares – 27.4% (2.6% under) Total shares – 68.8% (6.2% under) Total property securities – 0.3% (0.3% over) Australian bonds – 4.4% International bonds – 9.7% Total bonds – 14.1% (0.9% under) Gold – 7.8% Bitcoin – 9.1% Gold and alternatives – 16.9% (6.9% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments This month featured a further recovery in the overall portfolio, continuing to effectively reduce the size of the large losses across the first quarter. The portfolio has increased by around $62 000, leading to a portfolio growth of 3.7 per cent. This means that around half of the large recent falls have been made up, and the portfolio sits around levels last reached in October of last year. [Chart] Leading the portfolio growth has been increases in Australian shares - particularly those held through the Betashares A200 and Vanguard VAS exchange traded funds, with both gaining over four per cent. Most other holdings remained steady, or fell slightly. Markets appear to be almost entirely disconnected from the daily announcements of the sharp effects of the global coronavirus pandemic and the resulting restrictions. Bond and equity markets seem to have different and competing expectations for the future, and equity markets - at best - are apparently intent on looking through the immediate recovery phase to a new period of strong expansion. [Chart] On some metrics, both major global and Australian equity markets can be viewed as quite expensive, especially as reduced dividends announced have largely yet to be delivered. Yet if historically low bond yields are considered, it can be argued that some heightening compared to historical equity market valuations may be sustainable. Reflecting this moment of markets holding their breath before one of two possible futures plays out, gold and Bitcoin remain elevated, and consequently above their target weightings. Perhaps the same contending forces are in evidence in a recent Australian Securities and Investment Commission study (pdf) which has found that average Australian retail investors have reacted to uncertainty by activating old brokerage accounts, trading more frequently, and holding securities for shorter periods. My own market activity has been limited to purchases of Vanguard Australian shares ETF (VAS) and the international share ETF (VGS), to bring the portfolio closer to its target allocations. Will Australia continue to be lucky through global slow downs? Despite this burst of market activity in the retail market, it is unclear how Australian markets and equities will perform against the background of a global economic slowdown. A frequently heard argument is that a small open trade exposed commodities provider such as Australia, with a more narrowly-based economy, may perform poorly in a phase of heightened risk. This recent Bank of England paper (pdf) makes the intriguing suggestion that this argument is not borne out by the historical record. In fact, the paper finds that industrial production in Australia, China and a mere handful of other economies has tended to increase following global risk shocks. A question remaining, however, is whether the recovery from this 'risk shock' may have different characteristics and impacts than similar past events. One key question may be the exact form of government fiscal and monetary responses adopted. Another is whether inflation or deflation is the likely pathway - an unknown which itself may rely on whether long-term trends in the velocity of money supply continue, or are broken. Facing all uncertainties, attention should be on tail risks - and minimising the odds of extreme negative scenarios. The case for this is laid out in this moving reflection by Morgan Housel. For this reason, I am satisfied that my Ratesetter Peer-to-Peer loans have been gradually maturing, reducing some 'tail risk' credit exposures in what could be a testing phase for borrowers through new non-bank lending channels in Australia. With accrued interest of over $13 000, at rates of around 9 per cent on average, over the five years of the investment, the loans have performed relatively well. A temporary sheltering port - spending continues to decline This month spending has continued to fall even as lockdown and other restrictions have slowly begun to ease. These extraordinary events have pushed even the smoothed average of three year expenditure down. [Chart] On a monthly basis credit card spending and total expenses have hit the lowest levels in more than six years. Apparently, average savings rates are up across many economies, though obviously individual experiences and starting points can differ dramatically. Total estimated monthly expenditure has also fallen below current estimates of distributions for the first time since a period of exceptionally high distributions across financial year 2017-18. The result of this is that I am briefly and surprisingly, for this month, notionally financially independent based on assumed distributions from the FIRE portfolio alone - at least until more normal patterns of expenditure are resumed. Following the lines of drift - a longer view on progress made Yet taking a longer view - and accounting for the final portfolio goal set - gives a different perspective. This is of a journey reaching toward, but not at, an end. The chart below traces in purely nominal dollar terms the progress of the total portfolio value as a percentage of the current portfolio goal of $2.18 million over the last 13 years. It also shows three labels, with the percentage progress at the inception of detailed portfolio data in 2007, at the start of this written record in January 2017, and as at January 1 of this year. [Chart] Two trend lines are shown - one a polynomial and the other exponential function - and they are extended to include a projection of future progress out to around 18 months. The line of fit is close for the early part of the journey, but larger divergences from both trend lines are evident in the past two years as the impact of variable investment returns on a larger portfolio takes hold. There are some modest inaccuracies introduced by the nominal methodology adopted - such as somewhat discounting early progress. A 2007 dollar had greater 'real' value and significance than is assigned to it by this representation. The chart does demonstrate, however, the approximate shape and length of the early journey - with it taking around 5 years to reach 20 per cent of the target, and 10 years to reach around half way. Progress Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets Portfolio objective – $2 180 000 (or $87 000 pa) 80.6% 108.4% Credit card purchases – $71 000 pa 98.3% 132.3% Total expenses – $89 000 pa 78.8% 106.0% Summary With aspects of daily life slowly and incrementally adjusting to a 'new normal', the longer-term question for the portfolio remains around how markets and government actions interact in a recovery phase. The progress of the portfolio over the past 13 years has seemed, when viewed from afar as in chart above, predictable, and almost inevitable. Through the years it has felt anything but so smoothly linear. Rather, tides and waves have pushed and pulled, in turn stalling progress, or pushing it further ahead than hopes have dared. It is possible that what lays ahead is a simple 'return leg', or more of the same. That through simple extrapolation around 80 per cent of the challenges already lay behind. Yet that is not the set of mind that I approach the remainder of the journey with. Rather, the shortness of the distance to travel has lent an extra focus on those larger, lower probability, events that could delay the journey or push it off-course. Those 'third' risks types of tail risks which Morgan Housel points out. In one sense the portfolio allocation aims to deal - in a probabilistic way - with the multiple futures that could occur. Viewed in this way, a gold allocation (and also Bitcoin) represents a long option on an extreme state of the economic world arising - as it did in the early 1980s. The 75 per cent target allocation to equities can be viewed as a high level of assurance around a 'base case' that human ingenuity and innovation will continue to create value over the long term. The bond portfolio, similarly, can be seen as assigning a 15 per cent probability that both of these hypotheses are incorrect, and that further market falls and possible deflation are ahead. That perhaps even an experience akin to the lengthy, socially dislocating, post-bubble phase in Japan presided over by its central bank lays in store. In other interesting media consumed this month, 'Fire and Chill', the brand new podcast collaboration between Pat the Shuffler and Strong Money Australia got off to an enjoyable start, tackling 'Why Bother with FIRE' and other topics. Additionally, investment company Incrementum has just published the latest In Gold We Trust report, which gives an arrestingly different perspective on potential market and policy directions from traditional financial sources. The detailed report questions the role and effectiveness of traditionally 'risk-free' assets like government bonds in the types of futures that could emerge. On first reading, the scenarios it contains appear atypical and beyond the reasonable contemplation of many investors - until it is recalled that up to a few years ago no mainstream economics textbook would have entertained the potential for persistent negative interest rates. As the paths to different futures diverge, drawing on the wisdom of others to help look as far as possible into the bends in the undergrowth ahead becomes the safest choice. The post, links and full charts can be seen here.
Satoshi Nakamoto and Bitcoin are not the only contents in Blockchain, This public chain which is possible modifying global finance trending is the "brave wind and waves" for DeFi
DEFI is extending rapidly, Market value is skyrocketing Every single employee and employer will be shocked by DeFi in Blockchain industry, There has not been a single concept existed can compare to DeFi since block chain technology created ,sparking the fire to spread through the whole block chain industry; Even the founder of Bitcoin and Blockchain Satoshi Nakamoto may not considered that the DeFi trending will exceed Bitcoin. Defi has become the hot topic in Blockchain field since the beginning of 2019;DeFi is the abbreviation for Decentralized Finance, also called open finance, meaning to build decentralized contracts which belongs to open financial system. DeFi is dedicating to provide time free, space free financial activities to all the people, it is what we called decentralized finance. In the current financial systems, all financial services are controlled or adjusted unitedly by centralized finance system, whether the basic function such as deposit and transfer, loan or derivatives transactions are monitored and distributed by centralized financial organizations; DeFi is hoping to build a transparent, addressable and inclusive P2P financial system, minimizing the trust risks, simplifying the transactions payment process, expanding transactions scenarios. DeFi platform has 3 obvious advantages compare to traditional centralized financial systems. 1.Global financial services are applying broadly, allowing everyone getting financial services through internet or smart phones which based on decentralized financial system built-in blockchains, including all the services that current banks organizations provide. 2.Blockchain techniques have high openness characteristic, everyone has the right to access, but nobody has central control right, achieving decentralizing for financial transactions. This point is the original purpose for creating Bitcoin by Satoshi Nakamoto. 3.Cross border will be more convenient and more economical. DeFi is applying the openness trait in Blockchain, avoiding expensive commission during global payment, allowing financial transaction to be more convenient, efficient when minimizing the global transferring cost. Due to these benefits, DeFi is able to occupy first place at the triennial palace examination for block chain industries because of the benefits above. Capitalist is taking up the positions of the fallen and rising to fight one after another; According to the data within block chain fields on Aug 20, the market value for the whole DeFi industry is reaching 11.3billion dollars, which is the signal for passing the top digital currency industry; at the meantime, all the transactions are reaching 429million dollars in all decentralized exchanges; The total loan is reaching 1.5 billion on loan platform; The fixed asset is reaching 6.37billion dollar value for DeFi. For global depressed economic, DeFi industry capital is exceeding most financial industries. When the river rises, the boat floats high. DeFi related project is gaining large profits in the vigorous blockchain exploitation processes. Token price is skyrocketing in DeFi. In two years, Total value DeFi project is rising to 10billion or more, From reasonable perspective, The whole DeFi ecosystem is filling with industry bubble, which is missing the flexibility and grounded projects. Superior projects have something in common. The so-called decentralized finance in DeFi, It consists two parts, which are decentralization and finance, under current circumstances, most projects only achieve “Financial “part in the industry, real decentralizing has not been achieved; For most DeFi projects, the first customized version was not satisfied the marketing expectations, most core functions will need to be updated, so the initial team has to have complete authority to control the projects in order to complete on-time and efficiency updating jobs. This means that all the DeFi projects we see, most projects are controlled by initial creating team. Is controlled DeFi belongs to real DeFi? Does any single project can achieve Finance +decentralized? New born AITD may satisfied blockchain expectation for DEFI, AITD Blockchain new generation foundation public chain at business level is built for “Decentralization +Finance. As the marketing needs increasing annually for finance industries， such as banks, insurances, securities. AITD is following the trend closely, connecting the idea and purpose of DeFi, building a healthy, complete decentralized financial ecosystem; Blockchain DeFi+AITD are extending to new direction for insurance, Trust, pledge, cross region payment. INSURANCE: AITD is innovating the current medical system by integrating insurance easy use scenarios, let’s using medical insurance as an example. AITD blockchain is not only storing digital information prove to blocks, but also achieving message sharing; AITD is able to break through the each steps in insurance process, solving asymmetry problem, allowing information transparency during insurance process for upstream and downstream, achieving value flows; Providing the rewarding mechanism for information provider through information sharing, leading medical system information publicized, breaking through each circulation for Medical- insurance-monitoring, realizing medical electronic and electronic insurance business, achieving insurance business stored in block chain networks through blockchain smart contract, achieving auto insurance verification, intelligent insurance claiming goal. PLEDGE The essence of Pledge is new Smart business, as a new model are becoming the main track for real application, achieving to be the solid foundation for decentralized finance. Financial services should not be built under opacity lonely island. AITD is dedicating to build a finance system that allows everyone visiting as long as internet is available, letting value flow freely; According to the high intelligence and high transparency characteristic, AITD will bring new revolutionized storm to global financial system. The transforming direction for Pledge is open finance, open finance is the future morphology for finance. In the future, we are building highly ecological operating systems, fully integrating the innovative characteristics for front technology, smart business, open organization, digitalized finance, forming delicate business system. TRUST: which is connecting block chain techniques is incorporating innovation, freedom, equality gene.In the premise of Justice and fair, Block chain Trust is containing market value maintaining promotion system, which is able to observe the instant experiences feedbacks for global users through constant updating, promoting changes for products, perfecting uses experiences’ .AITD collective Trust has high transparency rate, requiring real name authentication for loan corporation and investors themselves, processing transparency for each project’s process, dedicating to build a safe, stable, transparent, efficient online and offline platforms for medium , small, micro sized companies which have capital demand and person who has financing needs; innovating the traditional Trust operation mode, practicing facilitating health industry through technology, applying assets operation idea of integrating “smart” ”capital” idea, collaborating with medical fields experts who made great contributions in this field;dedicating to facilitate medical resources, medical research abilities and financial capitals high efficiency integration. CROSS REGION PAYMENTS: Block chain payment techniques are changing “traditional assets flow and information flow” operation modes through the structure and improving traditional high cost transferring, low transparency rate, transactions risks through unique advantages of block chains; AITD has comprehensive, strong international bank card fund collecting products and diverse overseas or local payment receiving methods, which are able to provide global one station online payment solution proposals, allowing users to transfer from anywhere, anytime in the world, enabling merchant to accept different kinds of payments habits, processing exchange rate payment automatically; According to cross region payment scenarios, transferring speed and low cost advantages will be concentrated, platform will collaborate with other platforms within the globe, assisting these platforms which have global community backgrounds to explore payment channels. AITD is incorporating block chain technology and finance to the maximum level. In the original thoughts of Bitcoin from Satoshi Nakamoto，counting on Bitcoin to modify the current financial system mode, allowing real freedom for currency, open sources, decentralization, flowing throughout the society and applying, creating multiple finance scenarios Trust Consensus; AITD+DeFi can achieve things that bitcoin cannot achieve. AITD advantages, self-owned public chain Traditional DeFi projects are distributed on the Ethereum or other networks, traffic jam, low experience rate, high processing fee, internet jam, resisting developer and so on, DeFi projects is suggesting user and developer quitting in Ethereum; AITD which belongs to DeFi is facing the same problems, but AITD team has already found the best solution for this problem. We will explain it later. The current situation that DeFi industries are facing：Although there are too much complaining towards Ethereum, the new or old projects cannot kept without Ethereum. According to the DeFi prime data, in 242 DeFi projects that collecting one time, 197 numbers of DeFi are deployed on Ethereum, EOS and Bitcoin only contain 22 and 23 , DeFi project number is approaching to zero on other public chains, Ethereum is considering as the second leading factor for blockchain industries after Bitcoin, determining the fate of DeFi. Why are DeFi (such as hot Compound, Uniswap) not existing in other public chains? Ultimately, the reason for public chains hardly generate Defi (except Ethereum) due to the following 3 reasons. 1）.Public chain which considers Ethereum as the first public chain, possessing competitive advantages in kinds of assets, total number of assets. 2） Unlike Ethereum, other public chains are not paying much attention to DeFi. they are losing the initiation for following the trend now 3） DeFi Decentralization governing after scaling, causing costs for moving Ethereum to other public chain are hard to estimate. Actually, after DeFi shocked digital currency encrypted market, each public chain is entering DeFi military prepared competition, capital, techniques, human resources are constantly devoting into DeFi; Finally, there is no single public chain exceeding Ethereum or challenging Ethereum.Pulic chain problems are the pain points for the industry. Ether researcher once said that “According to the jam in Ether network, even worse than ICO bubble, this is not exaggerated, During the prosperous period for ICO in 2018, Each transaction processing fee is reaching 5.4 US dollars. However, at the 5:00pm in Aug 13th , this number is skyrocketing and reaching 7.4 us dollars, It is 15 times high comparing to 0.5 US dollars in the previous month;DeFi prosperity on Ether is marketing behavior which is against humanity. Under this circumstances, the trend for searching new public chain is necessary; what is the AITD team solution? The answer is public chain To avoid anti humanity sanction by Ether public chain and also to build a complete, efficient DeFi ecosystem. AITD team is researching and developing self-owned public chain in block chain for three years, providing multi block chain scenarios services to large user groups on AITD block chain. In the future,AITD will provide reliable, safe, convenient blockchain services to users in basic public information search, copyright administration, tracing for certified products, ensuring product security scenarios, achieving multi-path communication which Bitcoin is not able to process; Meanwhile, AITD chain is achieving self-closing loop for ecosystem, extending the spirit of DeFi to insurance, Trust, Pledge,Cross border payment etc in multiple financial scenarios, achieving decentralized finance for real. Current block chain network is independent internet relatively, encountering information island problems; Isolation of the internet is not supporting collaborative operation between each blockchain network. Isolation limit applied fields for the blockchain techniques at maximum level; However, AITD is dedicating to build a strong extensibility block chain networks, when it achieves fast, safe cross chain data visit, it also builds a valuable internet for the whole block chain industry. Valued internet+ Blockchain decentralized finance, AITD have strong ambition, dedicating to provide value of 11.3billion the best application in financial world, we will wait for the expecting result.
New Lands, or New Eyes? | Monthly FIRE Portfolio Update - April 2020
The real voyage of discovery consists not in seeking new landscapes, but in having new eyes. - Marcel Proust, Remembrance of Things Past This is my forty-first portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars). This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary Vanguard Lifestrategy High Growth Fund – $697 582 Vanguard Lifestrategy Growth Fund – $40 709 Vanguard Lifestrategy Balanced Fund – $76 583 Vanguard Diversified Bonds Fund – $110 563 Vanguard Australian Shares ETF (VAS) – $174 864 Vanguard International Shares ETF (VGS) – $31 505 Betashares Australia 200 ETF (A200) – $215 805 Telstra shares (TLS) – $1 625 Insurance Australia Group shares (IAG) – $7 323 NIB Holdings shares (NHF) – $5 904 Gold ETF (GOLD.ASX) – $119 458 Secured physical gold – $19 269 Ratesetter (P2P lending) – $12 234 Bitcoin – $158 360 Raiz app (Aggressive portfolio) – $16 144 Spaceship Voyager app (Index portfolio) – $2 435 BrickX (P2P rental real estate) – $4 471 Total portfolio value: $1 694 834 (+$127 888 or 8.2%) Asset allocation Australian shares – 40.9% (4.1% under) Global shares – 21.7% Emerging markets shares – 2.2% International small companies – 3.0% Total international shares – 26.9% (3.1% under) Total shares – 67.8% (7.2% under) Total property securities – 0.3% (0.3% over) Australian bonds – 4.5% International bonds – 9.9% Total bonds – 14.4% (0.6% under) Gold – 8.2% Bitcoin – 9.3% Gold and alternatives – 17.5% (7.5% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. Comments This month featured a sharp recovery in the overall portfolio, reducing the size of the large losses experienced over the previous month. The portfolio increased by over $127 000, representing a growth of 8.2 per cent, which is the largest month-on-month growth on record. This now puts the portfolio value significantly above the levels of a year ago. [Chart] The expansion in the value of the portfolio has occurred due to an increase in Australian and global equities markets, as well as substantial increases the price of Bitcoin. This is effectively the mirror image of the simultaneous negative movements last month. From a nadir of initial pessimism in late March, markets have generally moved upwards as debate continues about the path of a likely economic recession and recovery from Coronavirus impacts over the coming year. [Chart] First quarter distributions from the Australian and Global Shares ETFs (A200, VAS and VGS) were received this month. These were too early to fully reflect the sharp economic activity impacts of the Coronavirus and lockdown period on company earnings. Despite this, they were significantly down on a cents per unit basis on the equivalent distributions last year. Totalling around $2700, these distributions formed part of new contributions to Vanguard's Australian shares ETF (VAS). The rapid falls in equity have many participants looking forward to a return to normalcy, or at least more open to the pleasing ideas that nerves have been held in a market fall comparable to 2000 or 2008-09, and that markets now represent clear value. As discussed last month, there should be caution and some humility about these questions, if some historical perspective is taken. As an example, the largest global equity market in the world - the United States - remains at valuation levels well above those experienced in previous market lows. Portfolio alternatives - tracking changes under the surface A striking feature of the past year or so has been the expansion of the non-traditional or 'alternatives' components of gold and Bitcoin as a proportion of the overall portfolio. Currently, when combined these alternative assets form a greater part of the portfolio than at any point over the past two years. The chart below shows that since January 2019 the gold and Bitcoin component of the portfolio has lifted from around its long term target level of 10 per cent, to now make up over 17 per cent of the portfolio. In the space of the last four months alone, it has lifted from 13 per cent. [Chart] With no purchases of either gold or Bitcoin over the period, the growth in the chart is the result of two reinforcing factors: A substantial fall in the value of the equity portfolio - reaching nearly $200 000 since the recent February market peak has naturally and mathematically led to a commensurate increase the proportion of other assets. Increases in the value of gold and Bitcoin - have also played a role with a total appreciation of around $150 000 across the two assets over the past 16 months. In fact, the value gold holdings alone have increased by over 40 per cent since January last year. Further appreciation of either gold or Bitcoin prices, particularly if any further falls in equity markets occur, could easily place the portfolio in the same position as experienced in January 2018. At that time these alternative assets made up 1 in every 5 dollars of the portfolio, an unusual, and in that case temporary phenomenon. This represents a different portfolio and risk exposure than that envisaged in my portfolio investment plan. Yet, equally it is critical to recall what the circumstances would likely be for this to arise. Simultaneously high gold and Bitcoin prices are more likely to occur in a situation of severe capital market dislocation, or falling confidence. On the other hand, should confidence and equity market growth be restored, both of these portfolio components could fall back to lower levels. It is difficult to tell which state of the world will eventuate, a key reason for diversification across asset types. United States government debt is already at record levels - equivalent in real terms to levels last seen when it emerged out of the Second World War - despite no similar national effort having being undertaken. Future inflation can potentially partly manage this burden, however, the last sustained episode of persistently high inflation rates during the decade of the 1970s spelt negative real returns. Where investors expect future inflation or financially 'repressive' policies of inflation exceeding interest rates, the economic growth required to 'grow out' of debt can be affected. At this point, my inclination is to address this circumstance gradually through time by re-balancing of distributions and new contributions, rather than to realise capital gains by selling assets at one, or several, points in time. Chasing down the lines - falling average spending in lockdown Since the implementation of lockdown restrictions, average credit card expenditure has fallen by nearly 30 per cent. This has taken credit card expenditure to lower than any similar period in the past six years. Partly as a result of this - as the chart below shows - a new development is occurring. The previously fairly steady card expenses line (red) is now starting to bend down towards, or 'chase', the rolling average distributions line (in blue). [Chart] The declining distributions line is a result of some previous high distributions gradually falling outside of the data 'window' for the rolling three-year comparison of distributions and expenditure. This intriguing picture will probably change before a cross-over occurs, as lockdown restrictions ease, and as the data feeding into the three year average slowly changes over time. Progress Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets Portfolio objective – $2 180 000 (or $87 000 pa) 77.7% 104.6% Credit card purchases – $71 000 pa 94.8% 127.6% Total expenses – $89 000 pa 76.0% 102.3% Summary Last month market volatility theoretically took progress down to below most of my financial independence benchmarks on an 'All Assets' (i.e. portfolio and superannuation assets) basis. This position has reversed this month. As markets have recovered and with additional spare time in the lockdown period, I have continued to seek out and think about different perspectives on the history and future of markets. Yet it must be recognised that there is a natural limit to the utility of these ponderings. The shape of the future is always uncertain, and in this world, confident comparisons and analogies with past events can be perilous. Comparisons with past periods of financial market crises miss the centrality of government action as a causal influence on the path of virus affected economies and markets. A virus and recovery is not the same as a global financial crisis originating in housing finance markets addressed through monetary and fiscal stimulus. Most developed country governments have quickly applied the same, if not larger versions of responses as applied in the global financial crisis, a distinguishing step that also makes analogies with the great depression era problematic. Similarly, a pandemic is not hitting and interacting with the shattered economic and health systems of the 1918-19 Spanish flu. Overlaying all of this is the imperfect and partially disconnected relationship between the economy today, and equity markets that discount and focus on the future. This makes all history's lessons more than usually caveated and conditional. One avenue for managing through these times is to focus on what does not change - the psychological difficulty of accepting alterations in financial circumstances and the capacity of markets movements to cruelly surprise us in both timing and direction. One of the best texts to read to get a sense of both of these in such times is Benjamin Roth's A Great Depression Diary. This tells of the day-by-day changes observed in everyday urban life and investment markets, from the point of view of an American small retail investor living through the times. This month also saw the exciting news that Pat the Shuffler and Strong Money Australia are combining efforts to produce a new podcast. Speaking of which, Big ERN's reflections on the current implications of sharemarket market movements for seekers of financial independence have been filled with insight and wisdom. This interesting piece (video) - the latest in a 'virus' market series - from New York University's Professor of Finance Aswath Damodaran on asset performances through the past few months - is a more technical and detailed discussion of how markets have re-priced businesses and profits. Finally, the recently released Hmmminar interview series provides a more heterodox set of speakers and ideas on current markets, presented by Grant Williams. Unlike predicting the future, seeking out different perspectives on it is perhaps the easiest it has ever been in history. While it is not always possible to change the course taken, it is possible to look at the same horizon with new eyes. The post, links and full charts can be seen here.
Murmurs of the Sea | Monthly Portfolio Update - March 2020
Only the sea, murmurous behind the dingy checkerboard of houses, told of the unrest, the precariousness, of all things in this world. -Albert Camus, The Plague This is my fortieth portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars). This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary Vanguard Lifestrategy High Growth Fund – $662 776 Vanguard Lifestrategy Growth Fund – $39 044 Vanguard Lifestrategy Balanced Fund – $74 099 Vanguard Diversified Bonds Fund – $109 500 Vanguard Australian Shares ETF (VAS) – $150 095 Vanguard International Shares ETF (VGS) – $29 852 Betashares Australia 200 ETF (A200) – $197 149 Telstra shares (TLS) – $1 630 Insurance Australia Group shares (IAG) – $7 855 NIB Holdings shares (NHF) – $6 156 Gold ETF (GOLD.ASX) – $119 254 Secured physical gold – $19 211 Ratesetter (P2P lending) – $13 106 Bitcoin – $115 330 Raiz* app (Aggressive portfolio) – $15 094 Spaceship Voyager* app (Index portfolio) – $2 303 BrickX (P2P rental real estate) – $4 492 Total portfolio value: $1 566 946 (-$236 479 or -13.1%) Asset allocation Australian shares – 40.6% (4.4% under) Global shares – 22.3% Emerging markets shares – 2.3% International small companies – 3.0% Total international shares – 27.6% (2.4% under) Total shares – 68.3% (6.7% under) Total property securities – 0.2% (0.2% over) Australian bonds – 4.8% International bonds – 10.4% Total bonds – 15.2% (0.2% over) Gold – 8.8% Bitcoin – 7.4% Gold and alternatives – 16.2% (6.2% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. Comments This month saw an extremely rapid collapse in market prices for a broad range of assets across the world, driven by the acceleration of the Coronavirus pandemic. Broad and simultaneous market falls have resulted in the single largest monthly fall in portfolio value to date of around $236 000. This represents a fall of 13 per cent across the month, and an overall reduction of more the 16 per cent since the portfolio peak of January. [Chart] The monthly fall is over three times more severe than any other fall experienced to date on the journey. Sharpest losses have occurred in Australian equities, however, international shares and bonds have also fallen. A substantial fall in the Australia dollar has provided some buffer to international equity losses - limiting these to around 8 per cent. Bitcoin has also fallen by 23 per cent. In short, in the period of acute market adjustment - as often occurs - the benefits of diversification have been temporarily muted. [Chart] The last monthly update reported results of some initial simplified modelling on the impact of a hypothetical large fall in equity markets on the portfolio. Currently, the actual asset price falls look to register in between the normal 'bear market', and the more extreme 'Global Financial Crisis Mark II' scenarios modelled. Absent, at least for the immediate phase, is a significant diversification offset - outside of a small (4 per cent) increase in the value of gold. The continued sharp equity market losses have left the portfolio below its target Australian equity weighting, so contributions this month have been made to Vanguard's Australian shares ETF (VAS). This coming month will see quarterly distributions paid for the A200, VGS and VAS exchange traded funds - totalling around $2700 - meaning a further small opportunity to reinvest following sizeable market falls. Reviewing the evidence on the history of stock market falls Vladimir Lenin once remarked that there are decades where nothing happen, and then there are weeks in which decades happen. This month has been four such weeks in a row, from initial market responses to the coronavirus pandemic, to unprecedented fiscal and monetary policy responses aimed at lessening the impact. Given this, it would be foolish to rule out the potential for other extreme steps that governments have undertaken on multiple occasions before. These could include underwriting of banks and other debt liabilities, effective nationalisation or rescues of critical industries or providers, or even temporary closure of some financial or equity markets. There is a strong appeal for comforting narratives in this highly fluid investment environment, including concepts such as buying while distress selling appears to be occurring, or delaying investing until issues become 'more clear'. Nobody can guarantee that investments made now will not be made into cruel short-lived bear market rallies, and no formulas exist that will safely and certainly minimise either further losses, or opportunities forgone. Much financial independence focused advice in the early stages of recent market falls focused on investment commonplaces, with a strong flavour of enthusiasm at the potential for 'buying the dip'. Yet such commonly repeated truths turn out to be imperfect and conditional in practice. One of the most influential studies of a large sample of historical market falls turns out to provide mixed evidence that buying following a fall reliably pays off. This study (pdf) examines 101 stock market declines across four centuries of data, and finds that:
Large falls can lead to strong rebounds - After large falls of up to 50 per cent, the probability of a large rebound is higher.
Future returns after large market falls are generally positive - Returns following such a severe crash are systematically higher than otherwise.
Smaller market falls, however, may accurately signal poor future returns - Smaller declines (10-20 per cent) are more likely to be followed by further declines, although the strength of the relationship is weaker and less consistent.
Even these findings should be viewed as simply indicative. Each crisis and economic phase has its unique character, usually only discernible in retrospect. History, in these cases, should inform around the potential outlines of events that can be considered possible. As the saying goes, risk is what remains after you believe you have thought of everything. Position fixing - alternative perspectives of progress In challenging times it can help to keep a steady view of progress from a range of perspectives. Extreme market volatility and large falls can be disquieting for both recent investors and those closer to the end of the journey. One perspective on what has occurred is that the portfolio has effectively been pushed backwards in time. That is, the portfolio now sits at levels it last occupied in April 2019. Even this perspective has some benefit, highlighting that by this metric all that has been lost is the strong forward progress made in a relatively short time. Yet each perspective can hide and distort key underlying truths. As an example, while the overall portfolio is currently valued at around the same dollar value as a year ago, it is not the same portfolio. Through new purchases and reinvestments in this period, many more actual securities (mostly units in ETFs) have been purchased. The chart below sets out the growth in total units held from January 2019 to this month, across the three major exchange trade funds holdings in the portfolio. [Chart] From this it can be seen that the number of securities held - effectively, individual claims on the future earnings of the firms in these indexes - has more than doubled over the past fifteen months. Through this perspective, the accumulation of valuable assets shows a far more constant path. Though this can help illuminate progress, as a measure it also has limitations. The realities of falls in market values cannot be elided by such devices, and some proportion of those market falls represent initial reassessments of the likely course of future earnings, and therefore the fundamental value of each of those ETF units. With significant uncertainty over the course of global lock-downs, trade and growth, the basis of these reassessments may provide accurate, or not. For anyone to discount all of these reassessments as wholly the temporary result of irrational panic is to show a remarkable confidence in one's own analytical capacities. Similarly, it would be equally wrong to extrapolate from market falls to a permanent constraining of the impulse of humanity to innovate, adjust to changed conditions, seek out opportunities and serve others for profit. Lines of position - Trends in expenditure A further longer-term perspective regularly reviewed is monthly expenses compared to average distributions. Monthly expenditure continues to be below average, and is likely to fall further next month as a natural result of a virus-induced reduction of shopping trips, events and outings. [Chart] As occurred last month, as a function some previous high distributions gradually falling outside of the data 'window' for the rolling three-year comparison of distributions and expenditure, a downward slope in distributions continues. Progress Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets Portfolio objective – $2 180 000 (or $87 000 pa) 71.9% 97.7% Credit card purchases – $71 000 pa 87.7% 119.2% Total expenses – $89 000 pa 70.2% 95.5% Summary This month has been one of the most surprising and volatile of the entire journey, with significant daily movements in portfolio value and historic market developments. There has been more to watch and observe than at any time in living memory. The dominant sensation has been that of travelling backwards through time, and revisiting a stage of the journey already passed. The progress of the last few months has actually been so rapid, that this backwards travel has felt less like a set back, but rather more like a temporary revisitation of days past. It is unclear how temporary a revisitation current conditions will enforce, or exactly how this will affect the rest of the journey. In early January I estimated that if equity market fell by 33 per cent through early 2020 with no offsetting gains in other portfolio elements, this could push out the achievement of the target to January 2023. Even so, experiencing these markets and with more volatility likely, I don't feel there is much value in seeking to rapidly recalculate the path from here, or immediately alter the targeted timeframe. Moving past the portfolio target from here in around a year looks almost impossibly challenging, but time exists to allow this fact to settle. Too many other, more important, human and historical events are still playing out. In such times, taking diverse perspectives on the same facts is important. This Next Life recently produced this interesting meditation on the future of FIRE during this phase of economic hardship. In addition, the Animal Spirits podcast also provided a thoughtful perspective on current market falls compared to 2008, as does this article by Early Retirement Now. Such analysis, and each passing day, highlights that the murmurs of the sea are louder than ever before, reminding us of the precariousness of all things. The post, links and full charts can be seen here.
Upon the Fortune of this Present Year | Monthly FIRE Portfolio Update - November 2019
My ventures are not in one bottom trusted, Nor to one place; nor is my whole estate Upon the fortune of this present year Therefore my merchandise makes me not sad Shakespeare, The Merchant of Venice (1596) This is my thirty-sixth portfolio update. I complete this update monthly to check my progress against my goals. Portfolio goals My objectives are to reach a portfolio of:
$1 598 000 by 31 December 2020. This should produce a passive income of about $67 000 (Objective #1) - Achieved
$1 980 000 by 31 July 2023, to produce a passive income equivalent to $83 000 (Objective #2)
Both of these are based on an expected average real return of 4.19 per cent, or a nominal return of 7.19 per cent, and are expressed in 2018 dollars. Portfolio summary Vanguard Lifestrategy High Growth Fund – $797 618 Vanguard Lifestrategy Growth Fund – $45 218 Vanguard Lifestrategy Balanced Fund – $81 294 Vanguard Diversified Bonds Fund – $109 367 Vanguard Australian Shares ETF (VAS) – $158 769 Vanguard International Shares ETF (VGS) – $28 471 Betashares Australia 200 ETF (A200) – $268 114 Telstra shares (TLS) – $2 057 Insurance Australia Group shares (IAG) – $9 996 NIB Holdings shares (NHF) – $8 100 Gold ETF (GOLD.ASX) – $98 376 Secured physical gold – $15 868 Ratesetter (P2P lending) – $16 915 Bitcoin – $128 630 Raiz app (Aggressive portfolio) – $17 535 Spaceship Voyager app (Index portfolio) – $2 377 BrickX (P2P rental real estate) – $4 418 Total portfolio value: $1 793 753 (+$33 713) Asset allocation Australian shares – 43.2% (1.8% under) Global shares – 22.9% Emerging markets shares – 2.4% International small companies – 3.2% Total international shares – 28.4% (1.6% under) Total shares – 71.6% (3.4% under) Total property securities – 0.2% (0.2% over) Australian bonds – 4.8% International bonds – 9.8% Total bonds – 14.6% (0.4% under) Gold – 6.4% Bitcoin – 7.2% Gold and alternatives – 13.5% (3.5% over) Presented visually, below is a high-level view of the current asset allocation of the portfolio. [Chart] Comments This month the value of the portfolio increased again by around $33 000 in total, building on the previous two months of growth. [Chart] The equity part of the portfolio has grown by around $50 000 to now reach over $1.25 million for the first time. This increase includes new contributions and the last part of the previous June distributions being 'averaged into' equity markets. The equity component of the portfolio has increased by around 40 per cent this calendar year. The only other major movement in the monthly value of the portfolio has been a sharp downward movement in the price of Bitcoin, and a small increase in the value of bond holdings. [Chart] The contributions this month went entirely into the Vanguard Australian shares ETF (VAS.ASX), to reduce the gap to both the overall target equity allocation, and to achieve the target split between Australian and global shares. From this month onwards I expect more regular variations in whether new contributions go to either Australian or global shares, based on keeping this target allocation constant. Charting errors and wrong bearings - the nature of long-term returns Over the last month, as the end destination starts to appear a little clearer in the distance, the issue of the nature of long-term returns has been front of mind. There is a strong literature and body of academic work around long-term equity return expectations. Much of this has informed my thinking, and has over time found its way into the corners of financial independence movement through the avenues of the so-called Trinity and Bengen '4 per cent' studies (pdf), and a range of calculators that use historical data to help guide investors expectations around feasible future returns. Yet, as I have noted before, future states of the world are not drawn from the same distribution as the past - or as the British writer G K Chesterton evocatively put it - 'wildness lies in wait'. Most often this issue is glided over neatly (including by myself) with assured sounding phrases such as 'based on history'. The works of Nassim Taleb, most particularly Fooled by Randomness, and The Black Swan, provide a fuller perspective on these issues. Recently though, reading a 2017 paper Stock Market Charts You Never Saw provided a unique and arresting view of their application to long-term return projections. The paper is long and detailed, but makes some fundamental points for consideration. It provides a challenging perspective on investment returns that falls almost completely out of mainstream discussions of the topic in the financial independence arena. To summarise, the paper highlights that:
Long-term average equity returns are just mean averages - While they have a stable property over the long-term, this is an inherent statistical property of these values being long-term averages of diverse sets of returns. They are not a reliable forward-looking promise of likely returns. In the words of the paper: 'history documents, but does not constrain'.
Time (in the market) does not always heal all wounds - Investors who spend their dividends and avoid market timing - in other words an average FI investor - can reasonably expect to encounter 30 year periods of low real returns, with US investors facing three such periods in the twentieth century alone.
Typical charts of long-term equity returns can be misleading - Through behavioural finance findings it is clear that presented with a chart showing a seemingly inevitable rising line of equity returns over a long-time frame, an impression of safety and inevitability can be created. The paper highlights a range of ways in which standard charts on equity returns can obscure important facets of investors actual experiences.
No investor actually experiences the longest set of historical returns - While it is comforting to know that equity returns have averaged (for example) six per cent over a century, or two, this information is not as relevant for an investor who is more likely to be invested in a discrete 30-50 year period in which deviations from historical averages can be significant.
One-off events should not be dismissed - While the temptation is continuously present to believe that events like the Great Depression could never happen again, careful review of equity returns yields some distinctly similar periods of sustained low or negative real returns.
Comparisons of bond and equity returns are often oversimplified - It is not an immutable truth that equities outperform bonds, at least when the US historical record is considered. Rather, a more complicated picture emerges of returns over long periods. Sometimes, equities have outperformed bonds, but at other times, bonds have out-performed equites.
As the paper notes: "When investment advisors counsel that stocks are the best bet for a long investment horizon, they should append the acknowledgement: “if my market timing is good.” When advisors argue for stocks over bonds, they should append the caveat “as long as you are not French, or Italian, or Japanese, or Swiss, and provided that the 20th century is a better guide to the future than the 19th century.” For real investors with their limited time horizons, who may reside anywhere in the world, there have been times when both stock recommendations were bad." The issue of the primacy of total returns, compared to income returns is also bracingly challenged with reference to the drawdown phase: Once portfolio accumulation ceases with retirement, portfolio income must be spent to live. Under those circumstances real price return, over short periods lasting two or three decades, becomes an important metric. By that measure, an investment in stocks has been dicey indeed. Usefully, the paper sets out (at the end) both conventional charts, and alternative representations of the same returns data, aimed at illustrating the hidden biases and properties of standard charts of market returns. In short, the paper poses challenges to many conventional investment tenets assumed to be true and widely repeated within financial independence discussions. Often these tenets are promoted with the sound and well-meaning goal of reducing new or existing investors caution or level of worry around possible falls in equity markets. The question this work implicitly poses is, in the process, are distorted expectations unintentionally being promoted? Drawing out the lessons - understanding and responding to risks What are the practical implications of this? The most obvious is to look closely at how data is presented and to think carefully about how the assumptions implicit in that presentation line up against ones own situation. Some other implications include:
Projections based on earning stable and uniform returns should be undertaken with caution - Multi-decade periods of low returns can happen, and mathematical models of compounding smooth returns don't capture their impacts.
By taking an equity position an investor is simply undertaking a probabilistic bet, with no guarantees - That is, equity investment over the long-term usually pays offs, but some risk is inescapable.
Diversification across markets and time represents a workable response to risk - Investing regularly and across geographic markets can help current investors capture some of the positive 'survivorship' bias that was denied to individual investors in many countries across the twentieth century.
In other words - to paraphrase Shakespeare's Antonio - not trusting ones ventures to one ship, place, or a fortune upon the present year. Progress Progress against the objectives, and the additional measures I have reached is set out below. Measure Portfolio All Assets Objective #1 – $1 598 000 (or $67 000 pa) 112.2% 153.0% Objective #2 – $1 980 000 (or $83 000 pa) 90.6% 123.5% Credit card purchases - $73 000 pa 103.0% 140.4% Total expenses - $89 000 pa 84.5% 115.1% Summary As the year begins to draw to a close, a restlessness to see its final outcomes, in dividends and portfolio growth presses itself forward. It is in fact a small echo of one of the strong temptations of the middle of the FI journey - a desire to wish away time itself. Some potential upcoming changes and uncertainties in work situation have added force to this temptation, forcing some thoughts about different potential balances between work and other elements of daily life could be. By distance, the intended journey is around ninety per cent over. At times this introduces both an elegiac quality to, and a premature desire to mark, possible 'lasts' along the journey. Yet the extraordinary current state of financial markets gives pause. Policy makers and advisors casually discuss negative rates and their implications, even as Australian and US equity markets hit new highs. In a sense, it feels a more psychologically testing time to be closer to my higher target allocation for equities than any time before. The diversification in the portfolio can be thought of as a series of small hedges against different potential futures playing out. By far, the largest probability (or potential future) at 75 per cent, is that the historical dominance of equity as a generator of real returns continues to function. The remainder of the portfolio can be seen in some ways as a offsetting hedge against large equity market falls, or some other disturbance in financial markets with negative implications for equity. At base, however, I remain comfortable with the 'balance of probabilities' implied in the target asset allocation. This month saw a new (v)blogger Mx Lauren join the Australian FI scene, as well as the suggestion by Money Magazine of a new 'simplified' retirement rule of thumb to consider. A further piece of fascinating reading was this piece by Ben Carlson in Fortune Magazine, explaining the key role of earnings growth in recent US market return. It posits that the recent strong performance of US equities is attributable to fundamental earnings growth, rather than simply an unjustified expansion in the price investors are willing to pay for that growth. This - in addition to Shakespeare's pre-modern enjoinment to diversify - is potentially another reason to not confine considerations to one market, and one place, as December distributions slowly drift into sight. The post, links and full charts can be seen here.
CryptoDiffer teamHello, everyone!We are glad to meet here:Max Freeman (@maxfreeman4), Project Lead at Epic CashYoga Dude (@Yogadude), PR&Marketing at Epic CashXenolink (@Xenolink), Advisor at Epic Cash Max Freeman Project Lead at Epic Cash Thanks Max, we are excited to be here! Yoga Dude PR&Marketing at Epic Cash Hello Everyone! Thank you for having us here! Xenolink Advisor at Epic Cash Thank you to the CryptoDiffer team and CryptoDiffer community for hosting us! CryptoDiffer teamLet`s start from the first introduction question:Q1: Can you introduce yourself to the community? What is your background and how did you join Epic Cash? Yoga Dude PR&Marketing at Epic Cash Hello! My background is Marketing and Business Development, I’ve been in crypto since 2011 started with Bitcoin, then Monero in 2014, Ethereum in 2015 and at some point Doge for fun and profit. I joined Epic Cash team in September 2019 handling PR and Marketing. I saw in Epic Cash what was missing in my previous cryptos — things that were missing in Bitcoin and Monero especially. Xenolink Advisor at Epic Cash Hello Cryptodiffer Community, I am not an original co-founder nor am I a developer for the Epic Cash project. I am however a community member that is involved in helping scale this project to higher levels. One of the many beauties of Epic Cash is that every single member in the community has the opportunity to be part of EPIC’s team, it can be from development all the way to content producing. Epic Cash is a community driven project. The true Core Team of Epic Cash is our community. I believe a community that is the Core Team is truly powerful. EPIC Cash has one of the freshest and strongest communities I have seen in quite a while. Which is one of the reasons why I became involved in this project. Epic displayed some of the most self community produced content I have seen in a project. I’m actually a doctor of medicine but in terms of my experience in crypto, I have been involved in the industry since 2012 beginning with mining Litecoin. Since then I have been doing deep dive analysis on different projects, investing, and building a network in crypto that I will utilize to help connect and scale Epic in every way I can. To give some credit to those people in my network that have been a part of helping give Epic exposure, I would like to give a special thanks to u/Tetsugan and u/Saurabhblr. Tetsugan has been doing a lot of work for the Japanese community to penetrate the Japanese market, and Japan has already developed a growing interest in Epic. Daku Sarabh the owner and creator of Crypto Daku Robinhooders, I would like to thank him and his community for giving us one of our first large AMA’s, which he has supported our project early and given us a free AMA. Many more to thank but can’t be disclosed. Also thank you to all the Epic Community leaders, developers, and Content producers! Max Freeman Project Lead at Epic Cash I’m Max Freeman, which stands for “Maximum Freedom for Mankind”. I started working on the ideas that would become Epic in 2018. I fell in love with Bitcoin in 2017 but realized that it needs privacy at the base layer, fungibility, better scalability in order to go to the next level. CryptoDiffer team Really interesting backgrounds I must admit, pleasure to see the team that clearly has one vision of the project by being completely decentralized:) Q2: Can you briefly describe what is Epic Cash in 3–5 sentences? What technology stands behind Epic Cash and why it’s better than the existing one? Max Freeman Project Lead at Epic Cash I’d like to highlight the differences between Epic and the two highest-valued privacy coin projects, Monero and Zcash. XMR has always-on privacy like Epic does, but at a cost: Its blockchain is over 20x more data intensive than Epic, which limits its possibilities for scalability. Epic’s blockchain is small and light enough to run a full node on cell phones, something that is in our product road map. ZEC by comparison can’t run on low end devices because of its zero knowledge based approach, and only 1% of transactions are fully private. Epic is simply newer, more advanced technology than prior networks thanks to Mimblewimble We will also add more algorithms to widen the range of hardware that can participate in mining. For example, cell phones and tablets based around ARM chips. Millions of people can mine Epic that can’t mine Bitcoin, and that will help grow the network rapidly. There are some great short videos on our YouTube channel https://www.youtube.com/channel/UCQBFfksJlM97rgrplLRwNUg/videos that explain why we believe we have created something truly special here. Our core architecture derives from Grin, so we are fortunate to benefit on an ongoing basis from their considerable development efforts. We are focused on making our currency truly usable and widely available, beyond a store of value and becoming a true medium of exchange. Yoga Dude PR&Marketing at Epic Cash Well we all have our views, but in a nutshell, we offer things that were missing in the previous cryptos. We have sound fiscal emission schedule matching Bitcoin, but we are vastly more private and faster. Our blockchain is lighter than Bitcoin or Monero and our tech is more scalable. Also, we are unique in that we are mineable with CPUs and GPUs as well as ASICs, giving the broadest population the ability to mine Epic Cash. Plus, you can’t forget FUNGIBILITY 🙂 we are big on that — since you can’t have true privacy without fungibility. Also, please understand, we have HUGE respect to all the cryptos that came before us, we learned a lot from them, and thanks to their mistakes we evolved. Xenolink Advisor at Epic Cash To add on, what also makes Epic Cash unique is the ability to decentralize the mining using a tri-algo model of Random X (CPU), Progpow (GPU), and Cuckoo (ASIC) for an ability to do hybrid mining. I believe this is an issue we can see today in Bitcoin having centralized mining and the average user has a costly barrier of entry. To follow up on this one in my opinion one of the things we adopted that we have seen success for , in example Bitcoin and Monero, is a strong community driven coin. I believe having a community driven coin will provide a more organic atmosphere especially when starting with No ICO, or Premine with a fair distribution model for everyone. CryptoDiffer team Q3: What are the major milestones Epic Cash has achieved so far? Maybe you can share with us some exciting plans for future weeks/months? Yoga Dude PR&Marketing at Epic Cash Since we went live in September of 2019, we attracted a very large community of users, miners, investors and contributors from across the world. Epic Cash is a very international project with white papers translated into over 30 languages. We are very much a community driven project; this is very evident from our content and the amount of translations in our white papers and in our social media content. We are constantly working on improving our usability, security and privacy, as well as getting our message and philosophy out into the world to achieve mass adoption. We have a lot of exciting plans for our project, the plan is to make Epic Cash into something that is More than Money. You can tell I am the Marketing guy since my message is less about the actual tech and more about the usability and use cases for Epic Cash, I think our Team and Community have a great mix of technical, practical, social and fiscal experiences. Since we opened our YouTube channels content for community submissions, we have seen our content translated into Spanish, French, German, Polish, Chinese, Japanese, Arabic, Russian, and other languages Max Freeman Project Lead at Epic Cash Our future development roadmap will be published soon and includes 4 tracks: Usability Mining Core Protocol Ecosystem Development Core Protocol Epic Server 2.9.0 — this release improves the difficulty adjustment and is aimed at making block emission closer to the target 60 seconds, particularly reducing the incidence of extremely short and long blocks — Status: In Development (Testing) Anticipated Release: June 2020 Epic Server 3.0.0 — this completes the rebase to Grin 3.0.0 and serves as the prerequisite to some important functional building blocks for the future of the ecosystem. Specifically, sending via Tor (which eliminates the need to open ports), proof of payment (useful for certain dex applications e.g. Bisq), and our native mobile app. Status: In Development (Testing) Anticipated Release: Fall 2020 Non-Interactive Transactions — this will enhance usability by enabling “fire and forget” send-to-address functionality that users are accustomed to from most cryptocurrencies. Status: Drawing Board Anticipated Release: n/a Scaling Options — when blocks start becoming full, how will we increase capacity? Two obvious options are increasing the block size, as well as a Lightning Network-style Layer 2 structure. Status: Drawing Board Anticipated Release: n/a Confidential Assets — Similar to Raven, Tari, and Beam, the ability to create independently tradable assets that ride on the Epic Blockchain. Status: Drawing Board Anticipated Release: n/a Usability GUI Wallet 2.0 — Restore from seed words and various usability enhancements — Status: Needs Assessment Anticipated Release: Fall 2020 Mobile App — Native mobile experience for iOS and Android. Status: In Development (Testing) Anticipated Release: Winter 2020 Telegram Integration — Anonymous payments over the Telegram network, bot functionality for groups. Status: Drawing Board Anticipated Release: n/a Mining RandomX on ARM — Our 4th PoW algorithm, this will enable tablets, cell phones, and low power devices such as Raspberry Pi to participate in mining. Status: Needs Assessment Anticipated Release: n/a The economics of mining Epic are extremely compelling for countries that have free or extremely cheap electricity, since anyone with an ordinary PC can mine. Individual people around the world can simply run the miner and earn meaningful money (imagine Venezuela for example), something that has not been possible since the very early days of Bitcoin. Ecosystem Development Atomic Swaps — Connecting Epic to other blockchains in a trustless way, starting with ETH so that Epic can trade on DeFi infrastructure such as Uniswap, Kyber, etc. Status: Drawing Board Anticipated Release: n/a Xenolink Advisor at Epic Cash From the Community aspect, we have been further developing our community international reach. We have been seeing an increase in interest from South America, China, Russia, Japan, Italy, and the Philippines. We are working on targeting more countries. We truly aim to be a decentralized project that is open to everyone worldwide. CryptoDiffer team Great, thank you for your answers, we now can move to community questions part! Cryptodiffer Community You have 3 mining algorithms, the question is: how do they not compete with each other? Is there any benefit of mining on the GPU and CPU if someone is mining on the ASIC? Max Freeman Project Lead at Epic Cash The block selection is deterministic, so that every 100 blocks, 60% are for RandomX (CPU), 38% for ProgPow (GPU), and 2% for Cuckoo (ASIC) — the policy is flexible so that we can have as many algorithms with any percentages we want. The goal is to make the most decentralized and resilient network possible, and with that in mind we are excited to work on enabling tablets and cell phones to mine, since that opens it up to millions of people that otherwise can’t take part. Cryptodiffer Community To Run a project smoothly, Funding is very important, From where does the Funding/revenue come from? Xenolink Advisor at Epic Cash Yes, early on this was realized and in order to scale a project funds are indeed needed. Epic Cash did not start with any funding and no ICO and was organically genesis mined with no pre-mine. Epic cash is also a nonprofit community driven project similar to Monero. There is no profit-driven entity in the picture. To overcome the revenue issue Epic Cash setup a development fund tax that decreases 1% every year until 2028 when Epic Cash reaches singularity with Bitcoin emissions. Currently it is at 7.77%. This will help support the scaling of the project. Cryptodiffer Community Hi! In your experience working also with MONERO can you please clarify which are those identified problems that EPIC CASH aims to develop and resolve? What’s the main advantage that EPIC CASH has over MONERO? Thank you! Yoga Dude PR&Marketing at Epic Cash First, I must admit that I am still a huge fan and HODLer of Monero. That said: ✅ our blockchain is MUCH lighter than Monero’s ✅ our transaction processing speed is much faster ✅ our address-less blockchain is more private ✅ Epic Cash can be mined with CPU (RandomX) GPU (ProgPow) and Cuckoo, whereas Monero migrated to RandomX and currently only mineable with CPU Cryptodiffer Community
the feature ‘Cut Through’ deletes old data, how is it decided which data will be deletes, and what are the consequences of it for the platform and therefore the users?
On your website I see links to download Epic wallet and mining software for Linux,Windows and MacOs, I am a user of android, is there a version for me, or does it have a release date?
Max Freeman Project Lead at Epic Cash
This is one of the most exciting features of Mimblewimble, which is its extraordinary ability to compress blockchain data. In Bitcoin, the entire history of a coin must be replayed every time it is spent, and comprehensive details are permanently stored in the blockchain. Epic discards spent transaction inputs and consolidates outputs, storing neither addresses or amounts, only a tiny kernel to allow sender and receiver to prove their transaction.
The Vitex mobile app is great for today, and we have a native mobile app for iOS and Android in the works as well.
Cryptodiffer Community $EPIC Have total Supply of 21,000,000 EPIC , is there any burning plan? Or Buyback program to maintain $EPIC price in the future? Who is Epic Biggest competitors? And what’s makes epic better than competitors? Xenolink Advisor at Epic Cash We respect the older generation coins like Bitcoin. But we have learned that the supply economics of Bitcoin is very sound. Until today we can witness how the Bitcoin is being adopted institutionally and by retail. We match the 21 million BTC supply economics because it is an inelastic fixed model which makes the long-term economics very sound. To have an elastic model of burning tokens or printing tokens will not have a solid economic future. Take for example the USD which is an inflating supply. In terms of competitors we look at everyone in crypto with respect and also learn from everyone. If we had to compare to other Mimblewimble tech coins, Grin is an inelastic forever inflating supply which in the long term is not sound economics. Beam however is an inelastic model but is formed as a corporation. The fair distribution is not there because of the permanent revenue model setup for them. Epic Cash a non-profit development tax fund model for scaling purposes that will disappear by 2028’s singularity. Cryptodiffer Community What your plans in place for global expansion, are you focusing on only market at this time? Or focus on building and developing or getting customers and users, or partnerships? Yoga Dude PR&Marketing at Epic Cash Since we are a community project, we have many developers, in addition to the core team. Our plans for Global expansion are simple — we have advocates in different regions addressing their audiences in their native languages. We are growing organically, by explaining our ideology and usability. The idea is to grow beyond needing a fiat bridge for crypto use, but to rather replace fiat with our borderless, private and fungible crypto so people can use it to get goods and services without using banks. We are not limiting ourselves to one particular demographic — Epic Cash is a valid solution for the gamers, investors, techie and non techie people, and the unbanked. Cryptodiffer Community EPIC confidential coin! Did you have any problems with the regulators? And there will be no problems with listing on centralized exchanges? Xenolink Advisor at Epic Cash In terms of structure, we are carefully set up to minimize these concerns. Without a company or investors in the picture, and having raised no funds, there is little scope to attack in terms of securities laws. Bitcoin and Ethereum are widely acknowledged as acceptable, and we follow in their well-established footprints in that respect. Centralized exchanges already trade other privacy coins, so we don’t see this as much of an issue either. In general, decentralized p2p exchange options are more interesting than today’s centralized platforms. They are more censorship resistant, secure, and privacy-protecting. As the technology gets better, they should continue to gain market share and that’s why we’re proud to be partnered with Vitex, whose exchange and mobile app work very well. Cryptodiffer Community What are the main utility and real-life usage of the #EPIC As an investor, why should we invest in the #EPIC project as a long-term investment? Max Freeman Project Lead at Epic Cash Because our blockchain is so light (only 1.16gb currently, and grows very slowly) it is naturally well suited to become a decentralized mobile money standard because people can run a full node on their phone, guaranteeing the security of their funds. Scalability in Bitcoin requires complicated and compromised workarounds such as Lightning Network and light clients, and these problems are solved in Epic. With our forthcoming Mobile Mining app, hundreds of millions of cell phones and tablets will be able to easily join the network. People can quickly and cheaply send money to one another, fulfilling the long-envisioned promise of P2P electronic cash. As an investor, it’s important to ask a few key questions. Bitcoin Standard tokenomics of disinflation and a fixed supply are well proven over a decade now. We follow this model exactly, with a permanently synchronized supply from 2028, and 4 emission halvings from now until then, with our first one in about two weeks. Beyond that, we can apply some simple logical tests. What is more valuable, money that can only be used in some cases (censorable Bitcoin based on a lack of fungibility) or money that can be used universally? (fungible Epic based on always-on privacy by default). Epic is also poised to be a more decentralized and therefore resilient network because of wider participation in mining. Epic is designed to be Bitcoin++ Privacy, Fungibility, Scalability Cryptodiffer Community Q1. What are advantages for choosing three mining algorithms RandomX+, ProgPow and CuckAToo31+ ? Q2. Beam and Grin use MimbleWimble protocol, so what are difference for Epic? All of you will be friends for partners or competitors? Max Freeman Project Lead at Epic Cash RandomX and ProgPow are designed to use the entirety of a CPU / GPU’s unique processing capabilities in a way that other types of hardware don’t work as well. You can run RandomX on a GPU but it doesn’t work nearly as well as a much cheaper CPU, for example. Cuckoo is a “memory hard” algorithm that widens the range of companies that can produce the hardware. Grin and Beam are great projects and we’ve learned a lot from them. We inherited our first codebase from Grin’s excellent Rust design, which is a better language for community participation than C++ that Beam currently uses. Functionally, Mimblewimble is similar across the 3 coins, with standard Confidential Transactions, CoinJoin, Dandelion++, Schnorr Signatures and other advanced features. Grin is primarily ASIC-targeted, Beam is GPU-targeted, and Epic is multi-hardware. The biggest differences though are in tokenomics and project structure. Grin has permanent inflation of 60 coins per block with no halvings, which means steady erosion of value over time due to new supply pressure. It also lacks a steady funding model, making future development in jeopardy, particularly as the per coin price falls. Beam has a for-profit model with heavy early inflation and a high developer tax. Epic builds on the strengths of these earlier mimblewimble projects and addresses the parts that could be improved. Cryptodiffer Community Some privacy coin has scalability issues! How Epic cash will solve scalability issues? Why you choose randomX consensus algorithem? Xenolink Advisor at Epic Cash Fungibility means that you can’t distinguish one unit of currency from another, in example Gold. Fungibility has recently become a hot issue as people have been noticing Bitcoins being locked up by exchanges which may of had a nefarious history which are called Tainted Coins. In example coins that have been involved in a hack, darknet market transactions, or even processing coin through a mixer. Today we can already see freshly mined Bitcoins being sold at a premium price to avoid the fungibility problem Bitcoin carries today. Bitcoin can be tracked by chainalysis and is not a fungible cryptocurrency. One of the features that Epic has is privacy with added fungibility, because of Mimblewimble technology, Epic has no addresses recorded and therefore nothing can be tracked by chainalysis. Below I provide a link of an example of what the lack of fungibility is resulting in today with Bitcoin. One of the reasons why we chose the Random X algo. is because of the easy barrier of entry and also to further decentralize the mining. Random X algo can be mined on old computers or laptops. We also have 2 other algos Progpow (GPU), and Cuckoo (ASIC) to create a wider decentralization of mining methods for Epic. Cryptodiffer Community I’m a newbie in crypto and blockchain so how will Epic Cash team target and educate people who don’t know about blockchain and crypto? What is the uniqueness of Epic Cash that cannot be found in other project that´s been released so far ? Yoga Dude Pr&Marketing at Epic Cash Actually, while we have our white paper translated into over 30 languages, we are more focused on explaining our uses and advantages rather than cold specs. Our tech is solid, but we not get hung up on pure tech talk which most casual users do not need to or care to understand. As long as our fundamentals and tech are secure and user friendly our primary goal is to educate about use cases and market potential. The uniqueness of Epic Cash is its amalgamation of “whats good” in other cryptos. We use Mimblewimble for privacy and anonymity. Our blockchain is much lighter than our competitors. We are the only Mimblewimble crypto to use a unique cocktail of mining algorithms allowing to be mined by casual miners with gaming rigs and laptops, while remaining friendly to GPU and CPU farmers. The “uniqueness” is learning from the mistakes of those who came before us, we evolved and learned, which is why our privacy is better, we are faster, we are fungible, we offer diverse mining and so on. We are the best blend — thats powerful and unique Cryptodiffer Community Can you share EPIC’s vision for decentralized finance (DEFI)? What features do EPIC have to support DEFI? Yoga Dude PR&Marketing at Epic Cash We view Epic as ideally suited to be the decentralized digital reserve asset of the new Private Internet of Money that’s emerging. At a technology level, atomic swaps can be created to build liquidity bridges so that wrapped Epic tokens (like WBTC, WETH) can trade on other networks as ERC20, BEP2, NEP5, VIP180, Algorand and so on. There is more Bitcoin value locked on Ethereum than in Lightning Network, so we will similarly integrate Epic so that it can trade on networks such as Uniswap, Kyber, and so on. Longer term, if there is market demand for it, thanks to Scriptless Script functionality our blockchain has, we can build “Confidential Assets” (which Raven, Tari, and Beam are all also working on) that enable people to create tokenized assets in a private way. Cryptodiffer Community If you could choose one celebrity to promote Epic-cash, who that would be? Max Freeman Project Lead at Epic Cash I am a firm believer that the strength of the project lies in allowing community members to become their own celebrities, if their content is good enough the community will propel them to celebrity status. Organic celebrities with small but loyal following are vastly more beneficial than big name professional shills with inflated but non caring audiences. I remember the early days of Apple when an enthusiastic dude named Guy Kawasaki became Apple Evangelist, he was literally going around stores that sold Apple and visited user groups and Evangelized his belief in Apple. This guy became a Legend and helped Apple become what it is today. Epic Cash will have its OWN Celebrities Cryptodiffer Community How does $EPIC solve scalability of transactions? Current blockchains face issues with scalability a lot, how does $EPIC creates a solution to it? Xenolink Advisor at Epic Cash Epic Cash is utilizing Mimblewimble technology. Besides the privacy & fungibility aspect of the tech. There is the scalability features of it. It is implemented into Epic by transaction cut-through. Which means it allows nodes to remove all intermediate transactions, thus significantly reducing the blockchain size without affecting its validation. Mimblewimble also does not use addresses like a BTC address, and amount of transactions are also not recorded. One problem Monero and Bitcoin are facing now is scalability. It is evident today that data is getting more expensive and that will be a problem in the long run for those coins. Epic is 90% lighter and more scalable compared to Monero and Bitcoin. Cryptodiffer Community what are the ways that Epic Cash generates profits/revenue to maintain your project and what is its revenue model ? How can it make benefit win-win to both invester and your project ? Max Freeman Project Lead at Epic Cash There is a block subsidy of 7.77% that declines 1.11% per year until 0, where it stays after that. As a nonprofit community effort, this extremely modest amount goes much further than in other projects, which often take 20, 30, even 50+ % of the coin supply. We believe that this ongoing funding model best aligns the long term incentives for all participants and balances the compromises between the ends of the centralized/decentralized spectrum of choices that any project must make. Cryptodiffer Community Q1 : What are your major goals to archive in the next 3–4 years? Q2 : What are your plans to expand and gain more adoption? Yoga Dude Pr&Marketing at Epic Cash Max already talked about our technical plans and goals in his roadmap. Allow me to talk more about the non technical 😁 We are aiming for broader reach in the non technical more mainstream community — this is a big challenge but we believe it is doable. By offering simpler ways to mine Epic Cash (with smart phones for example), and by doing more education we will achieve the holy grail of crypto — moving past the fiat bridges and getting Epic Cash to be accepted as means of payment for goods and services. We will accomplish this by working with regional advocacy groups, community interaction, off-line promotional activities and diverse social media targeting. Cryptodiffer Community It seems to me that EpicCash will have its first Halving, right? Why a halving so soon? Is a mobile version feasible? Max Freeman Project Lead at Epic Cash Our supply emission catches up to that of Bitcoin’s first 19 years after 8 years in Epic, so that requires more frequent halvings. Today’s block emission is 16, next up are 8, 4, 2, and then finally 0.15625. After that, the supply of Epic and that of BTC stay synchronized until maxing out at 21m coins in 2140. Today we have a mobile wallet through the Vitex app, a native mobile wallet coming, and are working on mobile mining. Cryptodiffer Community What markets will you add after that? Yoga Dude PR&Marketing at Epic Cash Well, we are aiming to have ALL markets Epic Cash in its final iteration will be usable by everyone everywhere regardless of their technical expertise. We are not limiting ourselves to the technocrats, one of our main goals is to help the billions of unbanked. We want everyone to be able to mine, buy, and most of all USE Epic Cash — gamers, farmers, soccer moms, students, retirees, everyone really — even bankers (well once we defeat the banking industry) We will continue building on the multilingual diversity of our global community adding support and advocacy groups in more countries in more languages. Epic Cash is More than Money and its for Everyone. Cryptodiffer Community Almost, all cryptocurrencies are decentralized & no-one knows who owns that cryptocurrencies ! then also, why Privacy is needed? hats the advantages of Private coins? Max Freeman Project Lead at Epic Cash With a public transparent blockchain such as Bitcoin, you are permanently posting a detailed history of your money movements open for anyone to see (not just legitimate authorities, either!) — It would be considered crazy to post your credit card or bank statements to Twitter, but that’s what is happening every time you send a transaction that is not private. This excellent video from community contributor Spencer Lambert https://www.youtube.com/watch?v=0blbfmvCq\_4 explains better than I can. Privacy is not just for criminals, it’s for everyone. Do you want your landlord to increase the rent when he sees that you get a raise? Your insurance company to raise your healthcare costs because they see you buying too much ice cream? If you’re a business, do you want your employees to see how much money their coworkers make? Do you want your competitors to trace your supplier and customer relationships? Of course not. By privacy being default for everyone, cryptocurrency can be used in a much wider range of situations without unacceptable compromises. Cryptodiffer Community What are the main utility and real-life usage of the #EPIC As an investor, why should we invest in the #EPIC project as a long-term investment? Xenolink Advisor at Epic Cash Epic Cash can be used as a Private and Fungible store of value, medium of exchange, and unit of account. As Epic Cash grows and becomes adopted it can be compared to how Bitcoin and Monero is used and adopted as well. As Epic is adopted by the masses, it can be accepted as a medium of exchange for store owners and as fungible payments without the worry of having money that is tainted. Epic Cash as a store of value may be a good long term aspect of investment to consider. Epic Cash carries an inelastic fixed supply economic model of 21 million coins. There will be 5 halvings which this month of June will be our first halving of epic. From a block reward of 16 Epic reduced to 8. If we look at BTC’s price action and history of their halvings it has been proven and show that there has been an increase in value due to the scarcity and from halvings a reduction of # of BTC’s mined per block. An inelastic supply model like Bitcoin provides proof of the circulating supply compared to the total supply by the history of it’s Price action which is evident in long term charts since the birth of Bitcoin. EPIC Plans to have 5 halvings before the year 2028 to match the emissions of Bitcoin which we call the singularity event. Below is a chart displaying our halvings model approaching singularity. Once bitcoin and cryptocurrency becomes adopted mainstream, the fungibility problem will be more noticed by the general public. Privacy coins and the features of fungibility/scalability will most likely be sought over. Right now a majority of people believe that all cryptocurrency is fungible. However, that is not true. We can already see Chainalysis confirming that they can trace and track and even for other well-known privacy coins today such as Z-Cash. Cryptodiffer Community
You aim to reach support from a global community, what are your plans to get spanish speakers involved into Epic Cash? And emerging markets like the african
How am I secure I won’t be affected by receiving tainted money?
Max Freeman Project Lead at Epic Cash Native speakers from our community are working to raise awareness in key markets such as mining in Argentina and Venezuela for Spanish (Roberto Navarro called Epic “the holy grail of cryptocurrency” and Ethiopia and certain North African countries that have the lowest electricity costs in the world. Remittances between USA and Latin American countries are expensive and slow, so Epic is also perfect for people to send money back home as well. Cryptodiffer Community Do EPICs in 2020 focus more on research and coding, or on sales and implementation? Yoga Dude PR&Marketing at Epic Cash We will definitely continue to work on research and coding, with emphasis on improved accessibility (especially via smartphones) usability, security and privacy. In terms of financial infrastructure will continuing to add exchanges both KYC and non KYC. Big part of our plans is in ongoing Marketing and PR outreach. The idea is to make Epic Cash a viral sensation of sorts. If we can get Epic Cash adopters to spread the word and tell their family, coworkers and friends about Epic Cash — there will be no stopping us and to help that happen we have a growing army of content creators, and supporters. Everyone with skin in the game gets the benefit of advancing the cause. Folks also, this isn’t an answer to the question but an example of a real-world Epic Cash content — https://www.youtube.com/watch?v=XtAVEqKGgqY a challenge from one of our content creators to beat his 21 pull ups and get 100 epics! This has not been claimed yet — people need to step up 🙂 and to help that I will match another 100 Epic Cash to the first person to beat this Cryptodiffer Community I was watching some videos explaining how to send and receive transactions in EpicCash, which consists of ports and sending links, my question is why this is so, which, for now, looks complex? Let’s talk about the economic model, can EpicCash comply with the concept of value reserve? Max Freeman Project Lead at Epic Cash In V3, which is coming later this summer, Epic can be sent over Tor, which eliminates this issue of port opening, even though using tools like ngrok.io, it’s not necessarily as painful as directly configuring the router ports. Early Lightning Network had this issue as well and it’s something we have a plan to address via research into non-interactive transactions. “Fire and Forget” payments to an address, as people are used to in Bitcoin, is coming to Epic and we’re excited to develop functionality that other advanced mimblewimble coins don’t yet have. We are committed to constant improvement in usability and utility, to make our money system the ease of use leader. We are involved in the project (anyone can join the Freeman Family) because we believe that simply by choosing to use a form of money that better aligns with our ideals, that we can make a positive change in the world. Some of my thoughts about how I got involved are here: https://medium.com/epic-cash/the-freeman-family-e3b9c3b3f166 Max Freeman Project Lead at Epic Cash Huge thanks to our friends Maks and Vladyslav, we welcome everyone to come say hi at one of our friendly communities. It is extremely early in this journey, our market cap is only 0.5m right now, whereas the 3 other mimblewimble coins are at $20m, $30m and $100m respectively. Epic is a historic opportunity to follow in the footsteps of legends such as Bitcoin and Monero, and we hope to become the first Top 5 privacy coin project. Xenolink Advisor at Epic Cash Would like to Thank the Cryptodiffer Team and the Cryptodiffer community for hosting us and also engaging with us to learn more about Epic. If anyone else has more questions and wants to know more about EPIC , can find us at our telegram channel at https://t.me/EpicCash . Yoga Dude Pr&Marketing at Epic Cash Thank you, CryptoDiffer Team, and this wonderful Community!!! Cryptodiffer TEAM Thank you everyone for taking your time and asking great questions Thank you for your time, it was an insightful session Spread the love
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