NFT Crypto Guide 101 📚

🔹What are Non-Fungible-Tokens?
🔹What are NFTs used for?
🔹What do I expect for the NFT space in 2021?
🔹What NFTs do i hold?
🔹Where do I buy NFTs?

I will go through all of these questions.

Thread below 👇

🔹What are Non-Fungible-Tokens (NFTs)?

NFTs are crypto tokens that represent something unique. They are not mutually interchangeable.

This means that one NFT is not the same as the other.

Unlike for example Bitcoin, where each satoshi is exactly the same as the other.

These NFTs exist on the Ethereum Blockchain. Instead of ERC-20 tokens, we call these NFTs: ERC-721 or ERC-1155 tokens.

Each of these NFTs have an unique ID that seperates them.

For example, The Hashmask with ID #6718 is completely different than the Hashmask with ID #9939.

Different visually as well as the ID on the blockchain.

🔹What are NFTs used for?

NFTs are used to create verifiable digital scarcity and digital ownership.

The main applications we see today are:

🔹Digital Art
🔹Collectibles
🔹Games

1/ Fear and Bitcoin.

Whenever Bitcoin has a bull run, naysayers try to cope with missing the boat by rationalizing why it will fail through “Fear, Uncertainty, and Doubt” or what we Bitcoiners have nicknamed “FUD.”

Options used to be close to irrelevant for bitcoin's price.

Until now.

At current price levels, hedging large option notionals has a major impact on price.

Here's a quick thread on options 👇

Let's start with the meaning of delta.

Delta is the rate of change of an option's price relative to a change in the price of its underlying.

For example, the price of a 50 delta option will move 50% as much as the underlying.

For practical purposes, think of it as how much of the underlying you have:

- if long 50 delta call on 1 BTC => long 0.5 BTC
- if long 50 delta put on 1 BTC => short 0.5 BTC
- if short 50 delta call on 1 BTC => short 0.5 BTC
- if short 50 delta put on 1 BTC => long 0.5 BTC

An option where the option's strike (i.e. exercise price) is equal to current spot price is known as an at-the-money option (ATM). ATM options have a delta of 50, while deep in the money options have a delta of close to 100.

Can also think of delta as probability. A 50 delta option has a 50% chance of expiring in the money.

For a call, the higher price goes => the more in the money the call => the higher the delta.

Once delta gets close to 100, odds are ~100% the option will expire in the money.

The most effective meme I’ve found for Ethereum is “Digital Economy”

From there it’s easy to layout how Ethereum is the foundation for a variety of digital institutions (protocols) built upon the same principles of decentralization as Bitcoin.

1/

With “Bitcoin : Digital Gold :: Ethereum : Digital Economy” as the framing its then much easier to describe what a bet on ETH is.

I first explain DeFi (the new Wall Street), NFTs, Web3, and all the other mind blowing projects built on Ethereum...

...then illuminate how ETH is at the center of all it.

If BTC is like gold - an asset that people store value in but don’t use as money.

Then ETH is like money - the most liquid asset in Ethereum’s on-chain economy that is demanded for a wide range of economic uses.

If I get pressed on the semantics of “money” I explain how ETH is used as a medium of exchange, store of value, and unit of account...

...but also eventually as the ultimate source of security for the Ethereum blockchain, stretching the idea of what money is.

A lot these ideas are what we attempted to express and put numbers behind in our latest ETH 2.0

Let me indulge in a story...

Once upon a time there was a genius called Satoshi, this anonymous character laid down a block, it was called the Genius Block, but we we spell it wrong to this day.

Then along came your standard noob who believed in freedom, we know this because he went by the name NewLibertyStandard.

He created a site to buy and sell Bitcoins.

On his site, he priced Bitcoin on electricity.

The price went up, the price went down.

Then one day, he changed the pricing system.

BTC was no longer priced at the cost of mining.

He priced it by DEMAND and SUPPLY.

Geeks and legendary futurists, bought and sold the rarest commodity on the Internet for pennies.

Price teleported upwards.

Then came a Magic The Gathering gamer. He smashed together a shaky piece of software called Magic The Gathering Exchange.

It became the first widely used BTC exchange.

The whole world sent this kid money to buy BTC.

A new market had unlocked. Price teleported.

Let's fast forward 6 glorious years of price teleportation events.

Many of the story details remain unknown to me, though I see their impact on the blockchain.

But let me bring you to the year 2017 and save you lots of reading...

While my time investing in crypto and previously playing poker has gotten me used to experiencing large daily personal net worth volatility, it's never a pleasant experience

Short thread (by my standards...) with some ramblings that help me get through it 👇

1/10 Imo, some DeFi projects represent 10-1000x upside opportunities

Obviously, like all of crypto, it is extremely risky and can go to 0. That said, given the magnitude of potential outcomes, it just doesn't have to succeed that often to make it a massively +EV bet

2/10 As with all early stage tech, realising these outcomes will require 4-8 year holds

Unlike early stage tech, crypto investors will have liquidity, i.e. the possibility, and thus the temptation, to sell

This is both a blessing and a curse

3/10 A look at any of the best performing public stocks will show you that you cannot have 10-1000x upside potential without volatiliy and occasional large drawdowns

Crypto, as early stage tech, is much riskier than established public companies and thus even higher vol too

4/10 Obviously, one should take advantage of this liquidity as it allows for rebalancing. Most importantly, it also makes outcomes less binary and thus less volatile than traditional VC

However, one should not let the liquidity take advantage of us

Prepare For The Biggest Bull Run In Crypto EVER.

I made some charts explaining the long term trend of #Ethereum and how identical it is to the early #Bitcoin cycles.

It's very obvious what's happening and has been in the charts for months.

I call this pattern the, "4 Year Bowl."

New years are a time of market shifts both bullish and bearish. Each cycle goes through 4 years of this rounded accumulation pattern. After year 4 we start 1 year of parabolic rise.

When you take a look at the same principle with the last #Bitcoin cycle you get almost the exact same outcome. Only difference is Bitcoin usually tops at the first of December and not January.

The 4 Year Bowl is identical with Ethereum and Bitcoin

When you lay them side by side you get a pretty insane correlation. The fact $ETH accumulated for 2 years at that range low makes me feel as if the parabolic rise will happen faster than everyone thought.

Look how identical it is to the last $BTC cycle. Who could argue against?

S/O to @BobLoukas for teaching me how cycles work. I was one of the first members on @BitcoinLive1 and Bob was the only person I listened to. True Legend.

So... How does "4 Year Cycle Theory" work?

Measure from peak low to peak low. Each cycle equals 4 years in distance.

1/ “Bitcoin is better at being gold than gold” - SkyBridge Capital

@Scaramucci 's SkyBridge Capital released their investment thesis for their new Bitcoin Fund LP. They go a step further than other investors in why they are actively choosing bitcoin over gold

A thread 👇

2/ SkyBridge Capital’s main fund, with $9.3B AUM, had invested ~$182M in BTC. In Dec., they announced they were raising a new, separate Bitcoin only fund and already transferring ~$25M of BTC into it

3/ Today they opened to accredited investors w/ min invstmnt of at $50K. This Bitcoin LP won’t trade BUT you only pay 0.75% annual fee and no premium, the portfolio is priced by Bloomberg’s fixed rate (XBT). In contrast, GBTC trades OTC, a 2% yr fee, and a premium to BTC’s price

4/ Their website is a vast library of info. Not just their Offering Memo, pres. & investment thesis. It also includes:
- FAQ videos (Michael Saylor features and Scaramucci has cited him as a major influence)
- Readings on Bitcoin (@real_vijay The Bullish Case for Bitcoin)

5/ Towards the bottom of the page, they also take a dig at GBTC’s premium and offer to walk through a “GBTC swap” to their fund. They understand the hurdles that many traditional investors face in investing into BTC and lean into it

1. Last week, @robbietilton sold this art piece for about 17305$ on @withFND.
I saw a lot of people asking questions on CryptoArt and NFTs (Non-fungible token) to understand how it works. I'll try to explain the basic concepts on this thread ↓

2. First, you don't directly buy the art piece, you buy a token. This token is what holds the asset that you're buying, it is a unique id that is used to represent what you bought. It can hold information like the name of the asset, an URL, a description, and so on.

3. On most marketplaces, you won't have a classic signup or login form when you'll want to create an NFT or buy one. Instead, it will be asked to connect your crypto wallet.

4. Now, why bother with a crypto wallet? Couldn't we just do an app that works with dollars? This is where things get interesting: when you buy an NFT, the data is not stored on the marketplace servers.

5. When you post a picture on Instagram, it is stored on their servers. If the app is shut down, your data might be deleted. But also, Instagram could delete your content if they want to, NFTs works differently.

1/ crypto VC is going through an explosive 🧨 phase

there are big funds (>$500M AUM), a lot of small funds (<$50M AUM), and *tons* of prop firms + angels

i’ve done 15 deals in the last 3 months as an angel + small fund @CoinSharesCo VC.

observations + implications... 👇🏾

2/ the big firms need to deploy in size - $5M checks and up

a $250M fund could do a $5-10M deal every month for two years and still be under-allocated

and there aren’t enough companies raising series B / C / D rounds!!!

every deal i’ve done lately is under $50M valuation

3/ so we see firms competing to take down entire rounds.

a recent series A financing had two firms competing to take down the ENTIRE ROUND, and it eventually got upsized, a LOT.

if a company is putting up user acquisition / growth and a revenue story, it’s highly competitive

4/ most projects and co’s don’t need money tho - why would a founder take 20-40% dilution when they’re banking cash and crypto? so they do 5-10%

so the valuations go up, but available allocations go down, resulting in an even bigger squeeze on allocators who *need* to deploy

5/ add in the onslaught of non-crypto M&A that’s coming, which is culling the herd of investable unicorns

add in the wave of SPACs and direct listings taking later stage opportunities out

there just aren’t enough places to put capital in size rn

what’s a fund to do?

We're in the phase of the market where there's a lot of retail inbounds but not enough education about the Ethereum ecosystem and DeFi.

So, let's break down the basics of some of the top protocols.

First on deck: Aave (@AaveAave), an Ethereum-based money market protocol.

A 🧵

TL;DR: Aave is a protocol through which any user anywhere in the world can take decentralized loans by collateralizing their assets.

Aave also allows those will idle assets to earn a relatively safe return on capital from lenders, whose rates are determined by a curve.

1/ For years, most crypto assets had no indirect or direct utility.

Users would hold BTC, ETH, and other assets (including many ERC-20 tokens) with no expectation of a native yield or dividends.

ETH, for instance, was long just an asset for transaction fees, as was Bitcoin.

2/ If users wanted to borrow against their assets, they were relegated to centralized platforms—which were few and far between years ago.

3/ Aave, formerly ETHLend, is a protocol allowing users the ability to lend and borrow on-chain, without KYC and untransparent fees.

Users can deposit a variety of assets as collateral, then use that collateral as ammo to borrow other assets to be used in DeFi or beyond.

Unlike #ETH and #BTC $ Algo uses delegated proof of stake (DPOS) #AlgorandandFriends

Under the DPOS mechanism, the community will empower a number of users the delegates to choose the next block. This is a mechanism that is used by blockchains such as EOS etc. $Algo

There is a fixed number of delegates & these delegates can be viewed as having centralized control. In the adipose blockchain, the delegates may own a tiny fraction of the total money in the system. Yet, the whole blockchain is secure. $Algo

The Algorand consensus mechanism is called pure proof of stake. And it operates on this simple principle. It makes cheating by a minority of the money impossible and cheating by the majority stupid. $Algo

$Algo developed a mechanism so that those with small stakes cannot cheat, those that have a large stake in the network won’t cheat. It will completely devalue their holdings & make no economic sense. As long as 2/3 of the majority are honest, the protocol will work just fine. $

Crypto trading - some personal takeaways from 2020

Disclaimer: my job requires picking investments, at times with short/medium term view (days-months), many times with a long term view (years).

This is mostly a thread on reminders to myself relating mostly to the former.

Watch out for decisions based on fear & greed

Confirmation bias (ignoring contrary signals), anchoring bias (married to entry, trading PnL), sizing too big on low r/r trades, hesitating to buy cheap assets because "it's fallen/rallied too much".

/1

Minimize regret

Constantly question whether you have done all you could to maximize returns in the past month/quarter. Review all tools at your disposal (vol strats, momentum strats, fundamentals) but don't Dunning-Kruger yourself. There are no jack of all trades.

/2

You can't catch them all

Don't regret missing out on a few trades/ investments. Better to win big on 1 high conviction idea then win big on 100 small ones. Be ok with missing out but be ruthless with not learning from it.

/3

Thread:

While the entire US crypto industry (exchanges, funds, associations, PsPs, lobbyists, etc) is currently focused on fighting the AML rules proposed by FinCEN, the XRP Community has been left ALONE fighting the securities battle FOR THE BENEFIT of the whole industry.

1/

The entire US crypto industry (excluding the XRP Community) has been miserably failing to acknowledge that, until now, all the SEC has had for purposes of characterising a blockchain-based token as a security under the Securities Act of 1933 ...

2/

... is a 75 year-old judicial precedent (i.e. 1946 Howey Test), and some non-binding internal guidance. That's it. Nothing more. No clear federal regulations and no clear binding precedents.

3/

Should the SEC definitively win the Complaint filed against Ripple, it would gain a contemporary (and *binding*) judicial precedent essentially defending the posture that it is rightful to apply a 75 year-old precedent to 2020's cutting edge technology, ...

4/

... giving the SEC's enforcement division a clear path moving forward within the crypto industry.

With such precedent (which the SEC hasn't been able to obtain so far, as a result of the early settlements reached with other crypto projects), the SEC would be ...

5/

Think crypto is confusing?

You're right.

Let's make it easier.

Here's Crypto Terminology 101: 🧵

Altcoin:

Any coin that's not #Bitcoin

Ether (#ETH) is the second most popular coin overall and the most well-known Altcoin.

Ether is the native cryptocurrency on the Ethereum blockchain.

There are thousands of other altcoins, but for now, this is the one to know.

Bitcoin: (#BTC)

The first decentralized digital currency.

Launched in 2009 by an unknown person or organization known only as "Satoshi Nakamoto."

It is the most famous, and most valuable cryptocurrency.

Blockchain:

The core tech behind Bitcoin and most other cryptocurrencies.

An open, distributed, general ledger where transactions are organized into blocks which are then connected using cryptography.

Coin:

A store of digital value that lives on a blockchain.

Some blockchains, such as Bitcoin, use the same name for both the network and the coin.

Stable coins are another type of cryptocurrency which are backed by fiat currency (e.g the US dollar) or commodities such as Gold.