We are delighted to welcome Michelle Tsing as the newest member of the Kambria Advisory Board. Michelle brings a wealth of experience from both blockchain and robotics/AI industries. Michelle co-founded a blockchain payments startup in 2015 after serving as Commercial Counsel for PayPal, and is currently a strategic ICO advisor for other startups as well.

Michelle is a mentor for SVI Academy and Hack Temple and advises a number of startups in 3D printing, AI, biotech, and social sharing. In addition, Michelle founded Robotics for Good: Chatbots, Messaging, and AI community; and donates her time to both The Loving AI XPRIZE Project and Robots Without Borders. She is also producer and host of Laptop Radio at Stanford University.

As an Advisor, Michelle will assist us in building strategic partnerships and marketing, including organizing conferences, hackathons, meet-ups, and other events. She will also review technical materials and put her legal skills to work by advising Kambria on various legal matters.

About Kambria

Kambria is the first blockchain project to build an open innovation platform for frontier technology. Kambria will allow for many verticals, including Biotech, Space, and Autonomous Vehicles to be developed and thrive in the ecosystem. We are focusing first on the AI and Robotics vertical with the backing of our well-established robotics company, OhmniLabs. Through existing partnerships with top universities and large international corporations, as well as access to talented developers, we aim to build an ecosystem that can bring the next wave of frontier technology to provide value to billions of people around the world.

If you have any questions about our project or our team, please feel free to contact us via email at info@kambria.io or to message us through Telegram. We always love hearing from you!

The Kambria Team

. . . . . . . . . . . . . . . . .

Website: https://kambria.io/Whitepaper: https://kambria.io/Kambria_White_Paper_v2.pdfTelegram (ENG): https://t.me/kambriaofficialTelegram (KOR): https://t.me/KambriaKoreaTelegram (VIE): https://t.me/KambriaVietnamTelegram Announcement Channel: https://t.me/kambriaTwitter: https://twitter.com/KambriaNetworkFacebook: https://facebook.com/KambriaNetworkReddit: https://www.reddit.com/r/KambriaOfficial/Medium: https://medium.com/kambria-networkEmail: info@kambria.io

Covesting is a copy trading platform for cryptocurrency investors. The platform allows users to automatically copy the trades made by other cryptocurrency traders, some of whom are touted as being experts in the space. Investors are able to realize the same profits as traders and traders are rewarded a “success fee” for allowing others to copy their trades.

Overview

Cryptocurrency investing has the potential for high rewards. During its short existence the market has provided many investors with high returns which attracts new speculators to the market each day. However, these risks do not come without taking sufficient time and gaining specific knowledge to be successful. Many would-be investors lack the time and analytical skills to keep up with ever-changing markets and are unable to match the experience of professional traders in researching and trading the markets. This difficulty is the reason Covesting was created — to allow the average investor to leverage professional skills in order to capture the tremendous opportunities in cryptocurrency investing.

With Covesting, investors can tap into the cryptocurrency community using a peer-to-peer platform to copy the trades of other traders. Simply learn about top traders on the site while searching and comparing all of the strategies provided by model traders. From here, investors follow traders whose trading model is most suitable to them. Next investors allocate funds in order for the platform to copy all model trades. Investors can manage their portfolio by following new strategies or unfollowing any strategy at any time.

In addition to copy trading, the Covesting portal will also provide educational articles and videos; market news; blog posts from cryptocurrency traders and analysts; and message boards for community members.

It will also provide a trading terminal. Currently, there is no fully-functional platform where investors can execute trades based on quotes from multiple exchanges. Covesting wants to change that by allowing traders to access quotes from one single account.
allowing them to execute trades based on quotes from multiple exchanges.

ICO Metrics

Token Symbol: COV
Max supply of tokens: 20,000,000
Mining algorithm: token is not mined but runs on the Ethereum network.
Token standard: ERC20
Type of cryptocurrency: token

Platform and Players

The Covesting ecosystem involves 3 groups of people, all of whom stand to profit from growth of this venture: 1) investors; 2) model traders; and 3) token holders. Investors will be able to leverage the expertise of model traders as described above and thereby profit from successful trades. Model traders will also profit from successful trades since they are able to develop followers through the platform to whom them may not otherwise have access. Creating a personal fund requires technical knowledge, programming skills, legal paperwork and marketing costs that many successful traders are unwilling to organize. Token holders will benefit through the payment of fees by users, as well as by sharing profits from successful trades. Here is how the money will flow:

Entry Fee

All investors are charged a 2% entry fee for each deposit to his/her account. This commission is put towards the value of COV tokens so that the value will rise over time.

Token Sales

Once an account is funded, investors can purchase COV utility tokens in order to follow model traders. Demand for tokens will correlate with the volume on the platform; the more investors and traders use the platform, the higher the value of the token.

Profit Sharing

Successful trades will result in profits to all parties. The allocation will be:

• 72% for the investor
• 18% for the model trader
• 10% to token holders

Rewarding Token Holders

Covesting will allocate at least 50% of all earnings to a Buyback and Burn program where tokens are purchased on exchanges and “burned.” “Burned” tokens are taken off the market thereby decreasing the total supply of tokens. This lower supplies should lead to a higher value of the tokens over time.

Concerns

Anyone considering in participating in the Covesting ICO should consider the risks which include but are not limited to:

• Slow adoption by new investors who will need to learn both about cryptocurrency and copy trading
• Competitive offerings by other platforms including Coindashh and Etoro
• A decline or correction in the market which may result in many unsuccessful trades causing investors to lose confidence in both the market and the platform

Progress & Roadmap

As January 2018, Covesting has completed both their pre-ICO and public ICO having reached its hardcap on December 31, 2017 and raising over $15 million. Going forward the project will continue front-end and back-end development, API testing, testing of mirror-trade execution and latency testing. Covesting plans to list its token on an exchange and to release a beta version of their platform in Q1 2018. You can read more about the roadmap by clicking here.

Team

Covesting offers a strong team with a background in trading, investment banking, blockchain, artificial intelligence, data, and fintech (Saxo Bank, SEB Bank, JP Morgan, Zurich Insurance and others.) The accumulated trading experience of the team is over 60 years.

CEO and Co-Founder Dmitrij Pruglo has over 12 years of experience dealing in various asset classes: foreign, options, futures, equity, commodities, complex OTC structured products and bonds. He has in-depth knowledge of most trading platforms available on the market today and has been involved in the development of several algorithmic trading strategies.

COO and Co-Founder Tim Voronin is an experienced equity and derivatives trader, entrepreneur and early adopter of cryptocurrency.

Covesting advisors include technologists and business leaders in the financial markets. The company will be headquartered in London.

Conclusion

This project certainly addresses a need in the space by providing investors an easy way to engage with cryptocurrency via copy trading. And its commission structure rewards all parties involved for the success of trades and the platform in general. The platform is poised to take advantage of the growing cryptocurrency market by providing connecting talented traders with budding investors.

Website: https://covesting.io
Whitepaper: https://covesting.io/Covesting_White_Paper.pdf

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

VeChain Overview & Applications

VeChain’s mission is to connect the world. Through the use of both the Ethereum blockchain and their own proprietary RFID (radio frequency identification) technology, VeChain is striving to to digitize and interconnect all things on a transparent, virtual network. Sounds cool, right? Like the future is now. But what does this look like? Let’s take a look at a couple of use cases:

VeCahin in the Automotive Sector

Right now the automotive industry is composed of thousands of participants that need to collaborate on a regular basis. Unfortunately, most of the communication between participants is done in traditional, old-school ways. Think paper. VeChain’s goal is to enhance collaboration by creating a digital ID for each car. This ID would be used throughout the car’s life cycle to enable record keeping from a mechanic; to allow data tracking for insurance purposes; and to transfer of ownership to a new driver. Smart. Very smart.

VeChain in the Agricultural Sector

In the agricultural industry, VeChain wants to help producers certify environmentally friendly and organic products. Using sensors and mobile feedback devices to collect data on soil and weather conditions, farmers would upload real-time information to the cloud for consistent monitoring. The information could be used to make better decisions what when and where to plant, to improve the quality and quantity of crops and to potentially minimize the negative impact of fertilizers and pesticides on the environment.

Logistics and Supply Chain

By incorporating the blockchain, VeChain will be able to better connect parties in a supply chain. Suppliers will be able to access information on a secure platform using a private key and manage goods down to the single unit for the very first time. After a client places an order, the warehouse management system uploads the data onto the blockchain. Information concerning where and when the goods were picked up is uploaded to the blockchain as an immutable receipt.

Luxury Goods

VeChain is on a mission to help manufacturers crack down on counterfeit goods.Their NFC (near field communication) technology uses embedded chips to track the source and authenticity of luxury goods such as handbags. With these chips, manufacturers can trace the product end-to-end and gain better lifecycle management and consumers can learn the unique story behind the product by simply scanning the embedded chip with the VeChain mobile application or an NFC reader.

These are just a few examples; VeChain has partnered with multiple companies from different countries including the accounting, retail, and healthcare industries. Major partners include Price Waterhouse Coopers (a Big Four accounting firm) and DVN GL (a global provider of assurance services.) VeChain has also partnered with Kuehne & Nagel, a German logistics giant based in Switzerland whose business accounts for 10% of the global shipping market share. All of these partnerships are important because they open the door to clients of these partners who may end up using and investing in VeChain.

In addition, VeChain plans to develop its own blockchain so that developers can create their own dAPPS (decentralized applications). VeChain’s cloud platform will include interface documentation, a developer toolkit and more to offer BaaS — blockchain as a service — to similar to what is possible on other smart contract platforms such as Ethereum, NEO, and EOS.

VeChain started developing its solution way back in 2015. And it completed its ICO — in just two days — in August 2017.

ICO Metrics

• Token Symbol: VEN
• Max supply of tokens:873,378,637
• Mining algorithm: token is not mined but runs on the Ethereum network.
• Token standard: ERC20
• Type of cryptocurrency: token

How Tokens Work in Vechain

VeChain tokens (VEN) are the lifeblood of the VeChain ecosystem. They are used to transfer value between entities; all participants must use VEN to get products and services. The more users there are, the higher the value of the token considering the total supply of tokens is capped.

Concerns

One of the biggest concerns with VeChain is their competition; many investors compare the company to Waltonchain (WTC). Waltonchain is also focused on supply chain management and utilizes RFID technology to help track counterfeit products using its own blockchain. But VeChain has managed to secure some sizeable partnerships and the market overall is huge so many investors feel there is room for both of these young companies.

Progress & Roadmap

VeChain was started in June 2015. Since then it was launched several improved versions of their smart contracts platform and continued to define use cases. In Q4 2017 VeChain was supposed to launch their B-a-a-S cloud platform but as of Q1 2018, the VeChain website says the platform is “coming soon.” In Q4 2017, VeChain notified investors of a rebranding campaign which will change the company name to VeChain Thor. The new ticker symbol will be VET.

Team

Sunny Lu is the CEO of VeChain. He is the former CIO and CFO of Louis Vuitton, one of the top luxury goods brands in the world. He has been instrumental in forging top partnerships for VeChain across many industries, not just luxury goods. VeChain has a robust team of 60+ directors and project managers who sit at VeChain’s headquarters in Shanghai and offices in Singapore, Paris, and Tokyo.

Conclusion

VeChain has taken on an ambitious project that spans many industries. The potential is huge, but the wide breadth may leave room for niche solutions that identify and solve specific pain points in each industry. That said, VeChain is and has been an ongoing entity for several years and have managed to solidify partnerships with top companies and brands across industries. Their seasoned and experienced management team is in a good position to move VeChain from its current top 20 position to top 10 if it continues to execute on its plan.

Website: https://www.vechain.com
Development Plan (not a white paper): https://cdn.vechain.com/vechain_ico_ideas_of_development_en.pdf

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

As much as we all dislike paying taxes on our cryptocurrency investments, we need to bone up on and comply with tax laws in our own jurisdiction or face possible penalties for non-payment. Taking a few minutes to read this article may save you a world of headache later.

This article will cover:

• Basic tax laws around the world
• FAQ about tax laws in the US
• What countries are free of crypto taxes
• The key to easy tax prep
• How to get free tax support in the US

Basic Tax Laws Around The World

The European Union

In the European Union, cryptocurrency is taxed as currency and not property. Therefore, buying and selling cryptocurrency does not incur a value-added tax (VAT.) However, cryptocurrency may be subject to other taxes, such as “wealth”, capital gains or income taxes.

That said, tax treatment in the EU varies from one country to another. In Finland and Germany, for example, capital gains tax and a “wealth” tax can be imposed. Over in Austria, cryptocurrency is subject to income tax. In Spain profit and loss from cryptocurrency sales are included in the annual tax return, although the percent charged varies according to the volume of profit — the higher the profit, the greater the percentage. And in Sweden profits are only taxed if your “hobby” of trading results in profits of 25 or more “Bitkoyn” in one year. In the EU The Netherlands is more or less one of the semi crypto tax havens (for the time being); although cryptocurrency holdings are subject to a relatively minimal “wealth” tax, no taxes need to be paid over capital gains!

United Kingdom

In the UK, cryptocurrency is taxed the same as foreign currency with respect to gains and losses on each transaction. However, cryptocurrency transactions that constitute “speculative transactions” may not be subject to any tax. Ask your accountant more specifically about local laws.

Australia

In Australia, cryptocurrency transactions are treated the same as barter arrangements and cryptocurrency is considered to be an asset for capital gains and loss purposes, instead of currency. While businesses must properly document and record their cryptocurrency transaction, individuals are exempt from taxation for personal use if cryptocurrency was used as payment for goods and services or if the value of the transaction is less and AUD 10.00.

Canada

Similar to Australia, payment in cryptocurrency for goods and services in Canada is taxed as a barter transaction. Salaries in Canada are also subject to taxation as are profits from mining for commercial purposes.

Japan

In Japan cryptocurrencies viewed like asset that can be used in making payments and transferred digitally. Therefore, digital currencies are no longer bear a consumption tax of 8%. However, trading digital currencies — as opposed as using it for payment — is taxed using capital gains guidelines.

The United States

In the United States, cryptocurrency has been a taxable asset since 2014. It is taxed as property rather than currency which means that the tax treatment is very similar to stocks, bonds and other investment property.

While you do not have to report the initial purchase of cryptocurrency on your returns, you do have to report all sales and exchanges for that year on your tax return. And contrary to popular opinion, crypto-to-crypto trades are not excluded from taxation as like-kind exchanges. They are considered to be the sale of one asset for another, which is a taxable event.

FAQ about tax laws in the US

Here are some frequently asked questions about cryptocurrency taxation in the US. And not to ruin the fun, but the answer to all of them is Yes.

Q: What if I sell my coins or tokens for traditional money or buy something with my coins? Is that a taxable event? A: Yes.

Q: What about privacy coins? Are those taxable? A: Yes.

Q: Are mining earnings taxable? A: Yes.

Q: If my employers pay my wages in cryptocurrency, are my wages taxable? A: Yes

Q: If I received cryptocurrency for work I did as an Independent Contract, do I have to pay taxes? A: Yes

Q: Are virtual currency winnings from gaming taxable? A: Yes

Q: Are gambling winnings taxable? A: Yes

Get the idea? More likely than not, cryptocurrency income is taxable. The bright side is that losses are deductible. And miners can write-off expenses and depreciate their equipment similar to a standard business.

Crypto Tax Havens

If you’re really adverse to paying cryptocurrency taxes, are there any countries that don’t tax gains? Yes! Some of these countries are (at the time of writing) Hong Kong, New Zealand, Switzerland, Barbados, Malaysia and Mauritius.

So if you are living in one of the above-mentioned countries, enjoy the capital freedom. And if you are not from these countries, then you might want to move there!

The Key to Easy Tax Prep (U.S.)

Taxpayers who fail to comply with tax laws may become subject to penalties. The key to complying with tax laws and accurately assessing crypto-related taxes is by maintaining records of all transactions. Unlike most brokered securities, blockchain-based currencies don’t keep information that is automatically recorded and reported to tax authorities. So good recordkeeping is the responsibility of you and your accountant. Make sure to keep backup copies of all digital transactions.

What sort of paperwork is required? In most cases, you don’t have to report when you made your initial actual purchase, but you should keep good records of how much you paid and how much it sold for. You then report the sale in the appropriate year’s tax return.

How to Get (Free) Tax Support in the US

Regardless of where you live, don’t risk misfiling or overpaying on your crypto return. Hire a professional accountant if you need help figuring out your tax liability.

If you live in the US and need help preparing your crypto tax returns, we recommend reaching out to the experts at Happy Tax. As the first and only national FinTech firm to offer bitcoin and crypto tax preparation and accounting, Happy Tax has the most experienced bitcoin and crypto tax preparation practice in the country. Their tax returns are 100% prepared by US-based licensed Certified Public Accountants. Clients include miners, day traders, casual investors, early adopters, and businesses accepting bitcoin as a payment method. Happy Tax prepare taxes for clients in all 50 states.

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

Fast forward six months and ICOs caught my attention. As I started learning more about crypto, I couldn’t help but catch the “get-rich-quick” ICO bug that had infected every Facebook group I regularly perused. By the end of 2017, the ICO market had grown 100X since the first quarter. ICOs had raised over $5 billion dollars for projects around the world. Time to take a closer a look said my inner crypto-millionaire.

What is an ICO? An ICO (initial coin offering) is an investment vehicle for cryptocurrency projects. They are very similar to IPOs (initial public offerings) for traditional stocks. Take a quick look at our article defining ICOs here.

Why Have ICOs Become So Popular?

Lots so reasons. The main one being the ability to raise money from individuals investors like you and me, thereby circumventing greedy bankers venture capitalists who have controlled the system and benefitted from huge returns for decades. Time for the little guy to make a profit! (And to take on the inherent risk of start-up investing.) Shouldn’t we have a shot at huge profit potential, too? ICOs represent the democratization of traditional capital investing. And who doesn’t love democracy?

Now, before investing in an ICO, there’s a ton of fine print. Of course, you’re familiar with the balance between risk and reward, right? The higher the potential reward the higher the risk. So make sure you know what you’re doing and what you’re getting yourself into before participating in an ICO. Unlike traditional investing, there is very little — if any — government oversight with this process. You can’t rely on the securities regulation or consumer protection laws to bail you out should the project go south.

Oh, and did I mention ICOs are very popular with scammers? Anyone remember Confido? That was a doozy; the founders scammed investors and disappeared with $375,000 raised through their ICO, about $1000 of which were mine. That sucked… I probably should have watched this video first to learn how to identify scammers.

Lastly, unlike investing with fiat, investing with cryptocurrency could result in an irreversible loss of your tokens if you don’t follow the project’s protocol as stated. So be sure what learn about the investing process before you choose to dive in with the sharks. There are no refunds. And um, another thing — over half of ICOs have failed. Did I mention that? This is not for the faint of heart. To the brave, capable and/or foolish, read on.

Before Participating

First thing’s first — read the whitepaper. If you can’t take at least one hour to read and understand the project’s whitepaper, then you have no business in investing your funds. Got it? So don’t be lazy — take time to read the dang thing. Figure out if the project has an actual product or whether you’re investing in a “whitepaper” ICO — a project that’s just on paper with no product or service to speak of. Where are they in the development process? Are you only investing in an idea or something more legitimate?

Next thing — do some of your own due diligence. Learn as much as you can about the project and the team by doing your own online research. Go on every social media account the project has. Popular community hangouts are Slack and Telegram. Join those groups and to learn what’s being discussed and to get a feel for how responsive and engaged the team is with their investors. (Be on the lookout for fake channels.) Read the LinkedIn bio for every team member you can find. Ask relevant questions in Telegram. Do your homework!

Also, figure out some of the basics the project has identified for investing. Does the ICO have a maximum or minimum amount each investor can contribute? Do they have a soft or hard cap for the total ICO investment from all investors? Do they have KYC — or Know Your Customer — provisions which prevent you from participating. If you live in the United States, the answer to the last question is probably “yes,” which means you may get a message like the one below and be prohibited from investing.

Create a Blockchain Wallet

Ok, now that you have your big boy pants on and know what’s up, you’re ready to start the process. You will first need a wallet that you control. This distinct from a wallet that sits on an exchange — it needs to be one for which you have access to the private key. This is important because this is the address to which the tokens you purchase will be sent.

If you know how to use MyEtherWallet than you’re in good shape. If you don’t, then watch this video on how to create a new wallet in MyEtherWallet.

Fund Your Wallet

Make sure you have moolah in your wallet in the amount of your investment. You’ll likely be asked to send either Ether or Bitcoin as your funding source so be sure you have at least that amount handy. Where do you get Ether or Bitcoin? From your exchange. If you don’t know how to buy coins from an exchange, watch this video.

Transfer Your Coins

The next step is to transfer your coins to the project using the “target address” or “public address” the project has provided. Be sure to double and triple check that you have the correct information and that you got this information from the company itself — not someone trying to run a SCAM. This is very important! The address may appear on the company’s website, in a pdf they provide or in a pinned post on messaging channels such as Slack or Telegram. Again, be sure the information comes from the proper source.

Receive Your Coins

The last step is for you to receive your coins. Depending on the project this can occur: 1) instantly after investing; 2) after a certain amount of investment has been achieved; or 3) after a lock-up period. Be sure to keep up with the project to make sure you receive your coins.

Move Coins to Cold Storage

If you want to further safeguard your investment, move your coins to cold storage — such as a hardware wallet — after you receive them.

Continuous Monitoring

Once the ICO has ended, you need to continue following the project. You’ll want to check and see if and when your coin get listed on an exchange. You’ll want to know when a major project milestone is achieved, such as the launch of the mainnet. And you’ll want to stay abreast of any changes that require you to take action like being required to swap your coins. Since you’re in this for a profit, stay aware of all developments so that you can take profit at an appropriate time, invest more or just re-evaluate the project over time. Crypto is a very dynamic space so it’s important to stay current with your investments.

Congratulations! You are now an ICO investor. May the odds forever be in your favor. And be sure to return the favor. If you have a friend or relative interested in learning about ICO investing, share this article and what you’ve learned with them.

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

Before learning about cryptocurrency, I had never read a whitepaper. Now I read one to two per week. It’s the least I can do when trying to decide whether to invest in a new crypto project. Although there really aren’t any rules on what a white paper should include, a good white paper will provide details about the utility of the project, technical specifications, evidence-based market research, risk analysis, security procedures, and so forth. Hopefully, it’s written in a way that makes it easy for the reader to understand the value the project holds and what problem it is trying to solve.

Why Read a Whitepaper?

While most folks these days read cryptocurrency whitepapers to decide whether to invest in the project’s ICO, there are several other reasons to find a cozy chair and spend an hour reviewing the merits of a new project. Maybe you’re just interested in the project and what to learn more. Maybe you want to invest after the ICO has already taken place. Or many you want to contribute to the project’s open source code or even get hired by the team. Regardless of the reason, reading the whitepaper is a great place to start and it’s table stakes for getting investors, businesspeople, and developers interested in the idea.

Elements of a White Paper

So what are the elements of a good white paper? At a minimum, the white paper should cover the following topics:

1. What does the project do?

This is pretty straight-forward — in reading the white paper you should be able to figure out the exact function or purpose of the project. What does the technology actually do? Does it create a new cryptocurrency? Does it create a decentralized travel agency? Or does it create a platform where buyer and sellers can exchange real estate? If you can’t figure out what the project does right away, chances are the idea is not fully baked or the white paper is not well-written.

2. Why is this project being developed?

The second element the white paper should address is WHY the project is being developed. What problem is the project trying to solve? What is the scope of this problem? And who does it impact?

The WaBi white paper, for examples, does a great job of addressing the problem it’s trying to solve — it is trying to prevent counterfeiting in China, which “claims thousands of lives and costs billions of dollars.”

3. How Will These Issues Be Solved?

For many people, this is where it can get hairy. You understand the problem and why it should be solved, but you get caught up in the HOW. This happens to the best of us — especially those of us without a technical background. Sludge through this part of the white paper if you must and then look for other resources, such as articles and videos, to help you understand the tech and why it is or is not viable.

I recently invested in a “tech-heavy” project called ICON. Their mission is to “hyperconnect the world.” Lofty goal. And while I can understand the benefit of connecting disparate communities, I don’t honestly say I understand the HOW. The introduction to ICON’s architecture states,

“ICON constitutes a network where various blockchain-based independent Communities are connected via C-Rep to form a greater community, or ICON Republic. In ICON, blockchain network constituting Republic is called Nexus, and C-Rep is configured as Portal, so that blockchains connected to Nexus can handle token transfers and various transactions quickly and reliably through Portal. A Nexus can connect to another Nexus-equivalent blockchain network, and this allows blockchain networks to scale and expand in diverse ways.’

C-Rep, Republics, Nexus, Portal — that’s a lot of terminology to understand. Fortunately, each one is spelled out in the subsequent text of the white paper and I’m able to grasp the over gist that ICON’s protocol will connect networks and allow them to communicate.

To the extent that you’re able to understand the project’s technical aspects, you should consider them critically. If the project incorporates a blockchain, is it required? Is it worth going through the expense of creating a decentralized blockchain when a modest web app with a centralized database will do? Does decentralization ultimately benefit the project’s purpose? Food for thought.

4. Who Is On the Team?

The next critical element to understand is who is leading the project. Who is on the team? What is their experience? How long have they been working on relevant or related projects? Do they have the experience to execute their grand plan?

Do not underestimate the importance of a vibrant and creative team. A great team can turn a crappy idea into a great one. It’s called pivoting. Conversely, a weak team can run a great idea into the ground. Make sure you research your team members — look them up on LinkedIn and Google their names individually. You would be surprised at the number of scams projets pull with their team members. Look for all-stars and nothing less. The team for Hedera Hashgraph, for example, is top quality.

“The team is led by Dr. Leemon Baird and Mance Harmon. Baird is the inventor of the Hashgraph algorithm. He has 20+ years of tech and start-up experience and has a Ph.D. in Computer Science from Carnegie Mellon. Harmon is also a seasoned executive with extensive leadership experience in both government agencies and tech startups. Both co-founders have been working together for over 2 decades. They founded two other tech startups together before Swirlds Inc. and Hedera.”

5. When Will Milestones Be Completed?

First of all, if the white paper does not include a roadmap, that’s a bad sign. At a minimum, the white paper should include the project’s progress to date; if there hasn’t been any progress, then you’re reading about an idea and not a real business.

A bona fide roadmap will include milestones for the next 12 to 18 months. Typical project milestones include the exchange launch, the test-net launch, and main-net launch. Think critically about the milestones. Are they realistic? Are they too long or short? If you’re an investor, when will you be able to realize a profit and does that timeline work for you?

6. What Are the Tokenomics and How Will Funds Be Used?

Lastly, if you’re reading a whitepaper for a future ICO, you will want to analyze the “tokenomics” of the project — the economics related to how tokens will be created, how many will be issued, at what price, and what they will be used for. Here are few issues to consider:

Fundraising caps

What is the hard cap for the project? What is the maximum amount of money the project will raise? Consider that amounts for $50 million are very high. On the flip side, raised amounts under $5 million may be too small for the project to succeed.

What is the cap for individual investors? Can some wealthy investors control the project? If so then others will be beholden to their decisions when they sell.

Bonuses

Are pre-sale bonuses being offered? This is a tactic used to attract whales. A 30–40% bonus is probably reasonable for most projects. That said, if the bonus created too large of a gap between the lowest paid price per token and the highest during ICO, this could result in the early dumping of the token, IF presale tokens are not locked for 3–6 months after being listed on an exchange. Yes, I know — it’s a lot to consider!

Token supply

And what about the token supply? How many tokens will be issued? And what will happen to unsold crowdsale tokens? Will they be:

1. Burned — permanently destroyed, which reduces the total supply?
2. Kept by the company?
3. Distributed in a certain way?

Each option can impact the total or circulating supply massively, so it is important to be aware of the project’s plan for unsold tokens.

Token value and market cap

At what price does the token value have to reach in order for you to realize an appropriate return on your investment? How does this price compare to the potential market cap of the project based on its industry? Let’s say a reasonable market cap for a project in the same industry is $50 million. But in order for the token to reach a $10.00 valuation, the market cap of your project would have to reach $100 million based on the total or circulating token supply. Comparing the two projects suggests that a $5.00 valuation may be more reasonable. How would this relate to the price you paid for the token?

Use of funds

How will the funds be used? How much of the money raised will be allocated for:

• Product development
• Marketing expenses
• Operational expenses
• Strategic partnerships
• Legal and compliance fees
• Bonuses for founders and developers

Be sure that all of these metrics are clearly stated and justified in the white paper. If they are not, then be sure and bring them up to the community managers in the group’s Telegram or Slack channels. Chances are if you have these concerns other investors do, too.

Red Flags

By now you should have an idea of red flags in a white paper. In addition to some of the points already mentioned, you’ll want to identify poorly written white papers with grammar or spelling mistakes. Consider that is the project can’t get these details right that they do sloppy work as a whole. And always check for plagiarism in the whitepaper; it indicates a high likelihood that the project is a scam.

Moreover, is the white paper thorough? Does it answer all of your questions or does it leave too many unanswered? And does it look more like a marketing pamphlet instead of a mostly technical and business document?

Beyond the White Paper

While the points highlighted here are a great place to start, eventually you will have to develop your own feel for the viability and potential of the project. Yes, this means using your own experience and listening to your gut. What about the project resonates with you? What about the idea strikes your fancy? Do you really think the team can pull it off? Zoom out, look at the big picture and make a decision based on your own instinct.

If you don’t have a great feel for this kind of thing, then start reading more white papers. And then read comments from other investors and experts about the viability of those projects. With enough exposure and practice, you can develop analytical skills here and make great investing decisions. Oh, and be sure to check out our other article How to Research an ICOwhich takes you beyond the four corners fo the white paper. To your success!

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

But before we get ahead of ourselves, let’s take a close look at Ethereum and ERC20 tokens to learn how this all actually works.

What Does ERC20 Stand For?

ERC stands for Ethereum Request for Comments. This is the name for the proposed system within Ethereum and 20 was the number of that proposal or request.

What Does ERC20 Do?

ERC20 refers to a technical standard that allows developers to create tokens that are interoperable on the Ethereum platform.

Before the ERC20 standard was created, anyone who wanted to build on the Ethereum platform had to “reinvent the wheel,” so to speak, which meant each contract was slightly different. Practically speaking, this meant that exchanges and wallets had to write custom code to support each token.

Today, with ERC20, exchanges and wallets only have to implement this code once in order to support the various coins. This is why, MyEtherWallet, for example, can support any ERC20 compliant token without having to be updated. In Exodus wallet, your ERC20 tokens share the same receiving address as your Ethereum address. That is because these tokens live on the Ethereum blockchain. They are not independent of Ethereum and rely on the platform.

That said, many of projects that initially start as ERC20 tokens eventually migrate to their own platform. At that time, the ERC20 token needs to be swapped for the new token or coin on the project’s mainnet. Of course, some tokens are specifically used for DApps (decentralized applications) to be used on the Ethereum network in the future so those remain as ERC20 tokens.

Already there are tons of ERC20 tokens — in fact, the vast majority of tokens on the market are ERC20 tokens. Here is a list of ERC20 tokens via Etherscan.io. Or you can go to CoinMarketCap.com and sort the token list by platform.

How Does the Standard Work?

ERC20 defines guidelines for Ethereum tokens to follow within the larger Ethereum ecosystem, allowing developers to accurately predict the interaction between tokens. These guidelines are largely a set of functions the public can use in order to interact with that coins. The functions in include how the tokens are transferred between addresses and how data within each token is accessed. Because these functions can be identified by other smart contracts, the interaction between tokens is seamless.

Let’s take a look at these functions. First, there are three optional features one can include:

• Name
• Symbol
• The number of decimals which indicates how divisible the token will be. Most will have 18 decimals like Ether (the native token of the Ethereum network.)

The six mandatory functions of an ERC20 token are:

• TotalSupply — when this limit is reached, the smart contract will refuse to create new tokens.
• BalanceOf — indicates the number of tokens a given address has.
• Transfer — takes a certain amount of tokens FROM the total supply and give them to a user.
• Transferfrom — which can be used to transfer tokens from any 2 users who have them.
• Approve — verifies that your contract can give a certain amount of tokens to a user taking the total supply into account.
• Allowance — checks whether one user has a sufficient amount of tokens to send to someone else.

Two events that are triggered when a contract takes a relevant action are:

1. Transfer — broadcasts the details coins moving from one contract to another onto the network
2. Approval — broadcasts the details of approvals of tokens from one address to another onto the network

An ERC20 token is generated by a set of smart contracts. Every transaction, therefore, goes through the smart contract. Outside of the ERC20 standards, developers can build more functions for the token in the smart contract. For example, token smart contracts can be programmed to have a lock-up period for the token before they become transferable. Or the smart contract can even be programmed to “mine” new tokens under certain conditions. The creation of new ERC20 tokens — adding to the token supply — can be done by virtue of issuing the smart contract code. This is referred to as “minting” (a term applied to the same process on other platforms as well.)

A Word of Caution For Investors

Of course, there are 2 sides to every token. With all of these functions and events defined for tokens in advance, it becomes very easy for a developer to create new tokens upon the Ethereum blockchain. That is why the vast amount of ICOs are built on Ethereum. Since it’s so easy to create a token and market it, little technical skill is required. Please keep this in mind when reviewing an ICO or existing token projects before investing. Be sure and determine what the project is doing above and beyond just creating a token. What is the token’s functionality in and out of the ecosystem? Will it provide a DApp? How realistic is it that this team will be able to fully develop the project? There are more skills required than just implementing the base token.

Conclusion

With all of these functions and events defined for tokens in advance, it becomes very easy for a developer to create new tokens upon the Ethereum blockchain. Speaking the same language via the use of ERC20 technical specifications saves a lot of time and resources. And it makes it easier for wallets to accept these tokens. Are you ready to create your own token now?

Disclaimer: This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.

What is Money?

Let’s take a step back for a minute and talk about the origin and definition of money. Money is anything that can be used as a medium of exchange, store of value and unit of account which can be used to buy or sell goods or services from or to anyone that accepts its value as money. Many things can be and have been used as valid money, including shells, stones, and feathers in prehistoric societies.

Societies started using different mediums of exchange 6000 to 9000 years ago as a form of money instead of the impractical barter trading (insert the classic 1-cow-for-3-chickens trade example here.) Traders needed to use something scarce and with intrinsic value and, eventually, about 3000 years ago, people started to use gold and silver as their primary forms of money. Gold and silver worked as excellent stores of value because it was rare and labor-intensive to mine.

Advanced societies started to develop systems of money within their societies or nations, which lead to recognizable, standardized units (coins) that represented the intrinsic value of what it was made of. Currency was born as the medium of exchange and unit of account that is used in a system of money usually within a society or nation. Therefore, currency can be money, but money doesn’t necessarily have to be a currency. For example, a gold coin can be a currency and used as money. However, the same weight of gold (not minted as a coin) can be used as money to store or exchange for goods or services but isn’t a currency in that shape or form.

Governments then started issuing representative currencies — paper money — as claim checks against gold and silver that was deposited or held in the treasury. Currency back then — including the US Dollar — was “as good as gold” because you could always turn it into gold. However one would have to trust the government to actually hold enough gold in reserve to redeem the bank notes.

The next step in the development of money was the rise of computers that allowed banks and financial institutions to maintain ledgers with the amount of currency held in deposit. By inputting transactions in those ledgers, money could be transferred between accounts, without physically being moved. Currency could now be represented by digital figures in computers. (By the way, ledgers of accounts were also being used before the age of digital money or even before the age of currency; ancient societies already used ledger accounting thousands of years ago.)

Fast forward to the Nixon administration in 1971 and we are presented with a new monetary system — where US currency is no longer backed by gold or anything of (intrinsic) value. Enter the era of “fiat currency” — currency backed by nothing and is only money because the government decides it is. Now governments and central banks can create new currency without limit. If it’s not backed by an underlying asset, then what’s to stop governments from “printing” more?

Limited Supply

Sound familiar? The fact that cryptocurrency is not backed by anything is one of the main arguments against its acceptance. However, unlike fiat currency, many digital currencies — such as Bitcoin — cannot be created out of thin air. Bitcoin uses cryptography to regulate the number of new coins available on the network and an effort in the form of computer calculations and using electricity (in case of Proof of Work) needs to be done to generate them. Similar to gold, this is referred to as “mining.” There is a set number of Bitcoins (21 million) that can ever be created. Therefore, Bitcoin, unlike fiat currency, is a scarce digital asset.

Deflationary Versus Inflationary

You are probably familiar with the concept that fiat currency is inflationary. “Inflationary” means its value decreases over time because the circulating supply grows faster than the demand for it (economic growth), thereby decreasing the purchasing power (value) of the currency.

On the other hand, cryptocurrency is deflationary, meaning the value of many coins increases over time. Since its creation in 2009, the value of Bitcoin, for example, has increased from zero to over $8,000 at the time of this article. (It’s all-time high was $17,900 in December 2017.) This increase is due to its rise in popularity, no doubt, but also to the fact that there are a finite number of Bitcoins that will ever be created. That number is 21 million. Therefore, merely holding or investing in Bitcoin — even without using it as a form of payment — can be beneficial.

Cryptocurrency as a Payment System

Cryptocurrency is digital cryptographic currency whose payment network facilitates the transmission of value from one person to another. So not only is cryptocurrency used as currency — duh — but it’s also a payment system. PayPal, for example, is a payment system, but it uses the dollar as its currency. The Bitcoin payment system, on the other hand, uses Bitcoin. Transactions are tracked on a digital ledger that is maintained by a distributed network instead of a bank.

Peer-To-Peer

This “peer-to-peer” aspect is similar to cash and vastly different from using credit card payment processors or remittance companies like Western Union to send payment. Now we can send money to anyone anywhere in the world who has the capability to accept it. And you don’t need a bank to confirm the transaction. Confirmation is done via the blockchain. How cool is that!

Quick Payment and Settlement

Because cryptocurrency payments are peer-to-peer, they are quick and easy to do since they don’t have to be routed through and wait for the approval of a third party. Sending a crypto payment is as easy as sending an email. You simply access your wallet or exchange, enter the receiver’s address and amount and press Send. The receiver gets his/her payment almost right away without having to wait for it to settle.

This is distinct from the current credit card settlement or international remittance process, for example, which is surprisingly complex. Check out this video (from 3:49 to 5:16) to see how the process works including authorization (4 steps), authentication (6 steps) and clearing and settlement (7 steps.) All of this takes about one week and requires a ton of fees to run. Crypto in comparison is practically instantaneous and very cheap. Intermediaries such as PayPal, Visa and banks would theoretically no longer be necessary for settling payments.

Censorship Resistant Value-Transfer

Another important benefit of cryptocurrency is that, for the most part, no one can prevent you from sending crypto to anyone you want. You don’t have to meet your bank’s KYC (“Know Your Customer”) requirements to send payment around the world and no government can stop you either. In this type of network, the user is in charge of his or her money. No wonder banks and many governments are scared!

Hedge Against Hyperinflation and Government Control

In the developing world, where over 2 billion people don’t have a bank account, the rise of cryptocurrency may be even more meaningful. First, cryptocurrency is a way to “bank the unbanked” — meaning it is a way to allow those who don’t have access to bank accounts a way to save and transfer money.

Second, crypto is a hedge against volatile, government-controlled fiat currency that is entrenched in political turmoil. Take a look at what’s happened in Zimbabwe (hyperinflation), Nigeria (currency controls) and Venezuela (hyperinflation) over the past few years where corruption has severely devalued the local currency. In 2016, the government of India declared that the 500 and 1000 rupee banknotes would be removed from the country’s financial system overnight. Citizens were caught off-guard completely with this demonstration of government control. Over in Greece, citizens faced an economic crisis starting in 2009 as a result of mounting government debt. The economy collapsed, banks closed, and people could not withdraw cash from banks, which basically meant nobody could do anything. The situation in Greece provides a perfect use case for cryptocurrency as a replacement for cash. In all cases, imagine how cryptocurrency could revolutionize these fragile economies, empowering citizens to better protect their wealth.

Decentralized

Cryptocurrency is built on a protocol called the blockchain which is often referred to as a “decentralized and distributed ledger.” The “decentralized” part means that no one person, entity, or central party controls it — it is controlled by the entire network and there is not a single, central point where it can be shut down. This is very different from fiat which is controlled and regulated by governments and central banks. Say goodbye to annoying “bank holidays” where everything shuts down right at the same time you’re trying to transact business. A decentralized network never closes nor is susceptible to a single point of failure. Just like the internet, it’s always open, leaving users always in control of their funds.

Because the cryptocurrency is decentralized and not controlled by a single entity, it is considered “trustless.” This means we don’t need trusted third parties to authenticate transactions for us; we don’t have to trust people we don’t know and hope they will operate in our best interest (which in many cases they do not.) The trust is built into the cryptography and into the distributed nature of the blockchain. The blockchain’s distributed or shared ledger means that many parties have copies of and access to the same information, which makes that information very difficult to fake. Before a transaction between two parties is confirmed, it must be validated by “miners” — computer nodes that solve complex algorithmic calculations. In exchange for their work, miners earn transaction fees and newly created coins.

Facilitates World Trade

Right now, international business struggles with payment systems. First, there is a myriad of exchange rates. Think of how much simpler buying and seller would be if everyone used Bitcoin or a handful of widely-accepted cryptocurrencies. Second, some countries are so laden with credit card transaction fraud that the cost to do business there is too high. As a result, those countries lose out on goods and services they might otherwise enjoy.

One of the advantages of cryptocurrency for merchants, for example, is that transactions are irreversible once confirmed by the network (the number of confirmations increases the reliability of the transaction not being reversed). This is a huge advantage over credit card transactions and fraud. Using Bitcoin or other cryptocurrencies results in more secure payments because buyers need to have money available upfront, so there’s no chance that transactions will be subsequently canceled or fraudulent. Escrow features or services enhance “trustless” trade for both buyer and seller.

Privacy and Anonymity

One of the primary reasons people are attracted to cryptocurrency is due to privacy concerns. Because it does not require banks, there isn’t a lot of KYC information one has to provide in order to hold or exchange it. Moreover, the use of crypto can be anonymous. While Bitcoin itself is not anonymous (because transactions are visible on a public blockchain), there are special privacy coins such as Dash, Zcash, and Monero that allow users to hide both their transaction and the identity associated with their accounts. Check out this article to learn more about privacy coins and how they work.

Disadvantages

Of course, there are currently many disadvantages to using cryptocurrency. The most salient is the wild price fluctuations of most coins, Bitcoin in particular. At the end of 2017, Bitcoin took a 30% loss in one week. One week! Imagine if one of your blue-chip stocks did that. But this type of swing is, unfortunately, not uncommon for cryptocurrency for the time being. The wild swings are currently caused because relatively small amounts of money can move the price a lot. It is expected that when the total value and traded amount of certain cryptocurrencies increase, more money would be required to move the price and price swings should become less extreme. In the specific case of citizens in countries with failing currencies, they don’t experience the volatility of cryptocurrencies as something negative, because the long-term trend of the value of, for example, Bitcoin has been upwards, where the value of their national fiat currency only goes downwards.

Second, cryptocurrency has not reached mass adoption. Many people are not interested in it because they can’t spend it in everyday life. Not enough merchants accept crypto yet although the number increases daily.

Oh, and if you do hold your coins, keep in mind that you are the bank. This means that you will not be able to recover your user account if you lose your private key or when they get stolen. Nor will you be able to reverse a transaction sent to the wrong wallet or recipient. You will not have your bank there to bail you out. So a lot of the advantages from cryptocurrency also comes with the disadvantages that you and you alone are fully responsible for your money!

Conclusion

Cryptocurrency holding and investing is not for the faint of heart. At least not yet. But with all of the advantages of this payment system, we are confident that the good will outweigh the bad in the future. Technology is always getting better and better. Combined with increasing adoption and use cases, crypto will be here to stay.

Disclaimer:

This article was written to the best of my knowledge with the information available to me. I do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing I write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.