Encryption of the crisis in the world the truth

Editor’s note: This article from the blue fox notes (ID:lanhubiji), the medium.com, the author: Meltem Demirors translation: Leo, authorized reprint by Odaily daily planet.

 Encryption of the crisis in the world the truth

Block chain industry in the doldrums, after a rapid rise, ushered in the bleak winter. Even so, there are still a number of people in the industry adhere to, in an attempt to understand the industry at the same time, continue to look for opportunities.

2018 years in the field of encryption for each person, is a challenging year. This includes the assets of the issuer of encryption (selling token project), and exchange platform operators (for token trading and speculation possible investors (people), people buy tokens).

As for lawyers, accountants, PR companies and other service providers, which is surprising for a year, they get millions of dollars from the public to raise funds to help people understand what is happening, as well as how to deal with.

This is what kind of a year!

However, the recent price trend has made new progress, in fact, since January 10, 2018, we have been in a steady decline, then reached a peak value; and now, in November 2018, BCH bifurcation marks a turning point, some investors decided to give up the encryption of assets, as they say, “said the for the game”.

This paper will introduce:

  • To understand the psychology of investors

  • Encryption investment market in crisis

  • To surrender

  • Look for value (“smart” money flows to the place)

  • Where are we going

Fasten the safety belt, it would be an interesting journey!

To understand the psychology of investors

In order to understand now, we must understand the past. In order to understand how O is using 1 C white paper successfully raised billions of dollars in hindsight, some funny, but let us start from the understanding of the psychology of investors.

Is the core of investors seeking to maximize returns and minimize risk. Bitcoin has just celebrated its 10th anniversary anniversary of the white paper released. Bitcoin live one day, the function and the use of bitcoin is more sustained growth in one day, and as an asset, it will reduce the risk of some. This logic is used in other assets and new governance model is attractive, but it is stupid.

Recent history tells us, proven, centralized governance model and the long history of the network tend to produce more value, the reason is the confidence of investors or may lower the risk of ideas.

In addition, well-known investors give two “legalization”:

  • 1) crypto currencies such as bitcoin

  • 2) encryption of assets, to raise funds through their 1 C O and STO, reduced the risk of thinking.

The reward points, from the perspective of capital opportunity cost, 1 C O in a period of time looks very sexy.

Consider the average return of assets category rate, and the pressure VC and PE high risk investment, it is easy to see why encryption assets on the part of investors risk preference, is a reasonable bet. Investors may choose a few percent of assets, in order to get the opportunity to return to 10 times.

I believe that many VC, hedge funds and family fund investors are in the psychological mode of operation . (Translation: individual investors are not so?)

 Encryption of the crisis in the world the truth

Encryption investment market in crisis

If you do not talk about the financial returns, we cannot talk about encryption assets investment. Everybody gets excited in, and worried about the price can not be a good measure of value and growth before, let’s be honest with yourself.

Now, the market measure of “best instrumental value” is the price. The head block chain project three highest market value, BTC, XRP and Ethernet square, occupy the market share of 3/4. They are in the lowest distance market highs this year has declined by more than 72%.

 Encryption of the crisis in the world the truth

Data from November 15, 2018

Then look at the middle position of assets encryption project, follow the overall trend of decline, has dropped by 60%, actually better than ETH and XRP. To consider several factors:

  • Many investment funds are long-term bets on these agreements, such as “bitcoin 2” or “2 Fang ether”

  • Many of these projects is growing up in the market value of the project under the shadow; and less dramatic, more communication and market foundation; loyal stakeholders, some by airdrop or 1 C O recruitment; and really pay attention and use unique and specific cases

  • Please forgive me, encryption gods, because I said may not be conducive to you. But… These items actually benefited from the “center” approach to coordinate activities and information. The foundation, such as to raise the public’s spiritual leader, consistent brand and information etc.

 Encryption of the crisis in the world the truth

Data from the 2018 15 day

Finally, there are a number of projects are small capitalization, which so far this year dropped by about 75%-98%. Despite continuing coverage and increasing exchanges, but there is still a lot of complex feelings. For these assets, prices have soared, but when Q1 started to decline, never up. The team in crisis mode challenges the leader change, team size reduction, and tax and face regulatory product etc.. Some projects simply put token into equity, service guarantees or securities.


 Encryption of the crisis in the world the truth

Data from 2018 15

Many people would say that the price is not a good measure of “growth” index. So, let’s look at some of the other indicators. More than 80% of the encryption project:

  • 30 days of trading volume of less than $10 million

  • Submit Github quarterly from two digits to single digits

  • Within 24 hours of only a few hundred active.

(statistics from onChainFX)

The activity will not lie. Death spiral outside 250 asset value of 250 or less and a lot of assets, has been caught in a vicious.

To surrender

Encryption does not exist in the asset bubble. Hold the encryption assets of investors also hold other assets. Although we are willing to believe that “you just need to encrypt the assets” – but we still live in dollar denominated world.

The global macroeconomic environment has great influence on encryption of assets.

Let the encryption concept become attractive assets, such as solving center of giant companies, political instability, trade war, from globalization and other issues, which makes the encryption assets become powerful, but these concepts are other assets and market forces to create fear and doubt. Investors fear in the environment, their response is deleveraging, or reduce the risk. (here is the nest, an egg.)

We begin to see the global investment community on the verge of trouble. Blackrock is the world’s largest Asset Management Co, with $6 trillion and 400 billion in assets under management, for the first time in three years in the first quarter experienced a net outflow of assets.

The general stock market volatility. Investors are getting what they need in the traditional market adrenaline impulse.

However, many investors have been exposed to encryption investment, we can see that these investors began to brake: 1) no longer inject new funds to the world is no longer the current encryption 2) encryption assets assets remain in the field.

Encryption world inflows basically stopped. The 1 C O funds raised are out of date, and may be subject to law enforcement, and even the new protocol is also difficult to raise funds for aspiring.

More importantly, some assets in the encryption market investors with funds have to leave. Investors spend most of the time to wait for another 2018 years a “bull market” — or wait for the recent adjustment of price changes beyond the portfolio for raising prices, selling to achieve.

Last week, the token issuer and investors have started to prepare for the 2018 at the end of the table, both sides are called this game, bear the loss, and from their own conscience to lift a heavy burden.

In the issuer, many encryption project to raise funds, some through an initial public offering to raise tokens, began to face enormous challenges, in order to maintain the relevance and create realistic goals. When this happens you will lack real financial function, unfortunately, “encryption project finance” is still unclear, on the whole is not clear. Just look at the balance sheet, this is a feature of many financial capital encryption company.

 Encryption of the crisis in the world the truth

I can’t say to want to use 1 C O to raise funds for the company. Look at the equity financing and the financing cost is indeed in the token, not diluted equity and without any legal obligations, the implementation of company capital more attractive.

Investors (not all, but many billions of dollars in capital LP) signed a legal agreement in fuzzy and doubtful and structure, which is contrary to the laws of the universe.

In fact, there is a period of any investment experience people understand, ultimately, must balance the books. When the company assets, there is a real responsibility, finally, the other shoe will fall. It may seem that:

 Encryption of the crisis in the world the truth

We can see that happening, because companies need to sell tokens to obtain financing in order to pay the bills, funding legal bills, potential refund; and community responsibility, take time and energy spent on members of tokens holders and other ecological system on.

In terms of investors, supported by those aspiring, people expect their holdings of assets can rise tokens.

I love the investors. They are the key parts of the ecosystem, because new ideas need landing funds, and the encryption world has a lot of thoughtful investors. But investors are trustees. They will not sit in the office. They are not only supported by new ideas, they must make money to ensure survival. Investors are not users, they are speculators.

 Encryption of the crisis in the world the truth

You will sell all tokens to financial speculators to make sure that the tokens have no good way to actual utility.

Some fund speculators attempt to mixed / user models, including CoinFund, which is called “network participation”. Now, does not believe that these models will work as expected.

Before talking about “Tezos experiment”, through the token model to sell the governance rights, this is a landslide. Encryption project still small game, participants are very harmonious. With the development of encryption market, there will be new investors.

These are not so friendly. Once the money really appear and these vultures found how to play the game, we will see more cold-blooded investors use any potential weakness in these systems to maximize profits.

For all of these investors hold the token, most people accepted the first token issue, have their own balance sheet, as the best market entry costs; the market needs to digest billions of dollars of tokens. Whenever possible, the project will postpone the listing. As long as it can avoid the effect on the value of the investment portfolio, the fund will try to press the “cost” or “paper value” to hold these assets.

There will be some funds closed in 2019. Because life is very challenging in 2+20. When you AUM down 50%, and see no 20, cannot squeeze juice. (Translation: where 2+20 refers to the 2%, the management fee income composition 20%. That is to say, if the currency price fell, 20% almost no income, relying on the 2% management fees, investment managers cannot survive.)

The following is the encryption of the world crisis the next 12-24 months view:

 Encryption of the crisis in the world the truth Then, the project can do what?

They will have to sell assets and hoarding cash, as if it be inopportune or inappropriate;

Investors may do what?

The sale of their assets, take the hit, release the mental and emotional energy, focus on creating returns for their investors

With these two, we will surrender. Give up or stop, stop asking.

Accept is the final stage of grief.

Create value place

I know, I was very depressed. But that is not all doom and frustration.

In the crazy and the era of rapid growth, such as the 90s rap video set champagne fly, capital is not always in a logical way distribution. After all, we are human, we repeatedly set the trap of psychology.

Although I have no experience of the Internet bubble, but CNN in a 2000 article basically can replace today’s encryption foam.

 Encryption of the crisis in the world the truth

The change between the industry and the market will not happen overnight. Here are appropriate, and began to fail. We believe that the value does not always go to the place.

Although the scene in 2000 are likely to make people believe that the network had died, but the long history tells us that this is not true. The first generation, evolution, many of them are dead, the birth of new industries. The industry now occupy the dominant position in the global market, such as Facebook, apple, Amazon, Google, Netflix, the total market value of these companies reached 3.5 trillion. There are individual companies have nearly a trillion dollar market.

Encryption of assets and technology is to create value chain blocks. This is a clear positive statement.

The real question is, where we are and how to capture this value. The investors are trying to improve this assumption, to find as investors, how to obtain the value and profit. In 2017 and 2018 at the beginning of the year, many investors have accepted the idea of capturing value in the protocol layer. The recent decline in the value of assets, investors began to question this argument.

This is my place to create value prediction:

  • L encryption in assets, especially a mature Governance Network

  • The new company l to build infrastructure and services in

  • L in a publicly traded company in existing or emerging companies

  • The exposure of item L in the fund and the Asset Management Co in

For assets, investors will not buy direct encryption of assets in the next period of time. They will come in contact with and manage encryption assets through the existing strategy, these strategies can be understood, you can easily manage the existing architecture. This includes products through passive contact, exchange traded through the long-term “encryption fund” passive contact, or by a well-known and respected portfolio asset management operation of the fund and take the initiative to contact people.

For the service encrypted asset class Private Companies, the value of this kind of companies is speculation focused on achieving encryption of assets. Here are some notable theme:

More valuable is a company created outside of the United States, and almost did not get the support of investors in Silicon Valley. For example, BitMEX has a few external investors, nor from the traditional risk investors to raise funds.

Emerging companies and flexible operations can quickly create value. Compared with 1 C O, the company assets and more than most encryption protocol value, and also to raise funds to build business. As of April 11 2018 19, only 3 agreements worth more than 60 billion dollars. These companies are cash rich, through new products, the acquisition of talent, users and intellectual property rights, in order to realize the organic and inorganic growth.

 Encryption of the crisis in the world the truth

For listed companies, I will not detail. Because there has been a lot of discussion. I focus on the traditional financial institutions, they will:

1) to create a new source of income;

2) play “innovation” Theater

3) to create enterprise value.

Square is probably the most simple case. Last fall, Square launched the $cash app encryption transactions, revenue growth, the share price has more than doubled. Although the Square in the commercial payment area has built a huge business value, but it entered the field of encryption makes its stock supporters excited.

Many companies outside the financial services market has also been rewarded, because they seem to be part of the encryption ecosystem. And don’t say their statement whether there are advantages. Even if the fall in asset prices in the market, it can be predicted that this trend will continue. The enterprise has the annual planning cycle, they are not so easy to quickly change to startups.

Finally, the field of encryption of the fund and the Asset Management Co while facing pressure, but considering their long time range, in the market cycle survival ability, they have good performance in history. We expected that this trend will continue, especially for those with rich experience, people with large scale of capital management, they can manage financial and distribution strategy, in order to long investment prospects at the same time, the use of short-term price change.

Therefore, although with the market to digest new information and thus re enacted its views on the encryption of assets, value may be transferred from the asset itself, but in the service system of the company in the encryption ecological groups, their value is still growing.

Where are we to the long journey toward “utility”.

Now we are in the dark, far away from home. This sentence I want to share the following words I most love:

“I’m not afraid. Fear is the mind killer. Fear is caused completely disappeared little death. I will face my fears. I’ll allow it through me. When it’s over, I will turn the inner eye to see its path. What place did not disappear fear. I’m still only.”

It is easy to see today’s encryption market away from it — in a crisis — clearly. In my opinion, this is a huge mistake. Bitcoin, block chain encryption assets and behind them, has reached a critical size.

Bitcoin has never been understood and unknown into ridicule, hatred, worship, world famous point. Block chain or being touted as the world over is to solve all problems or be despised as a ready-made panacea, only beautify the excel table.

Public opinion is the polarization of the development and evolution of this concept and to this technology. The encryption community has caused all the attention, whether it is positive or negative.

Look at the people in this industry, continue to invest time, energy and money to promote the development of the ecological system of the tens of thousands of people encryption. Through writing, research, construction, development, or just simply holds encryption assets.

Return to the macro theme in today’s world, with the wider use of theme can affect some form of thinking and using.

The world not only relates to encryption technology, but also relates to the social and economic. It is the core of the new governance model. They are defective, not mature, but it is very important and valuable.

The protocol layer of the project, the company and investors will need to dig deep to find the true direction. They need to work together to achieve long-term value creation. If the next five years or with last year similar, can the expected value will continue to network and application from the center of the main business flow to the center of the less.

Everyone is working hard, but need time. Any growth is rarely uniform or linear. Although today’s value capture feels like the evolution of the capital market, but the encryption will continue to experiment and innovation to promote the development of the world, and will eventually transfer value from the center of the system and structure to the “less system center”.

 Encryption of the crisis in the world the truth

We cannot be sure what will happen when the transfer, but we believe that this is an inevitable trend. The future is very promising, but there are a lot of work to do.

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