How I observed the rise and fall of the new cryptocurrency in 48 hours
This currency was CryptoKitties. About essence of the game will not explain in this article, there are many instructions in the Internet. But you ask me: why is it cryptocurrency? I answer: all the necessary attributes of cryptocurrencies are present in this game:
1. big hype around it
2. increasing price of crypto asset
3. flow of real money (fiat) into the capitalization of the total amount of this assets
4. an incomprehensible but almost open-source technology for the release of new assets.
“Hey, hey, Denis!” — experienced investors say, — “This is the Ponzi scheme, a typical pyramid!” They mean these assets do not have a single attribute of money:
1. Money Is a Unit of Account
2. Money Is a Medium of Exchange
3. Money Is a Store of Value (hipster coffee houses and strange Japanese using bitcoin, does not count)
But these attributes are not present and in Bitcoin! But this does not prevent thousands of investors from not only successfully trading on their own, but also massively train crypto traders. In a growing market, as is known, such teachers, giving out random tactics of trading, basically turns out to be right. And the popularity of this activity is growing.
To join the breeders of cats, I decided on December 9 after the information that a certain game had braked transactions in the etherium blockchain. Even this factor was amazing, attracted my attention and convinced me to join the community of cryptobreeders. (By the way, I hate real cats, so appreciate the irony).
Note! Do not invest, do not finance, but join the community. This is the key term of this article, please remember, I will return to it a little later.
So, I registered a Metamask-wallet, connected my EtherWallet to it and got an account in CryptoKitties. At that moment, the hyip was on the rise, the overloaded etherium network already approved the transaction only at a price of gas $4–5.
As can be seen, statistics on the turnover of “kittyassets” in the community was very positive. I bought three cats at a low price and another got a “pairing”. My cats portfolio looked like this:
The next day, the growing transaction price made it unprofitable to mate and sell cheap cats. At the same time, in many chats and forums, the strategy of earning has already emerged. It was necessary to quickly “turn” the cats, pouring money into the youngest cats with rare “cattributes”, while it is desirable to mate spend as little gas as possible and sell newly arriving in the game at inflated prices. This meant spamming to all forums and chats, as well as constant employment. For me, this was an inappropriate strategy, I stopped all the actions, going into the strategy “take and hold”, however disadvantageous it may be.
In the meantime (in many respects because of the slowing game by the increase transaction price), the initial hype was down and the people woke up.
We buy painted cats for a few thousand dollars!!! How did it happen?
Everyone realized that they are in a classical hyip-project, which is already thousands on the Internet. For such projects, there are even special monitoring sites reaching the limit of the Ponzi pyramids.
The screenshot from the site of HYIP monitoring shows three important things.
1. Profitability is 300% per annum or more.
2. The main factor in investing in a project is a check mark Paying. That is, it still pays. At the same time, it is perfectly clear to everyone that one day all projects will stop paying.
3. In project names, the roots of the words “-coin-” “-chain-” “-bit-” often occur. This suggests that it is now profitable to call the good old pyramids fashionable clever words.
Working as a typical hyip-project, kittysex regularly brought income for the first few days. Unfortunately, Vitalik Butherin’s blockchain, is almost ready to replace the international Visa payment system, hung on cryptosex and this greatly hindered the further involvement of new users. But it is the input of new participants that supports the life of the Ponzi schemes. Stumbling on this factor, CryptoKitties began to lose momentum.
To date, cats are sold at cost and below, although the average price tends to a certain level, because investors are pained to lose their investment. Real money was trapped inside the ecosystem of assets with zero utility. If there is no infusion of new kitty-collectors, soon the price of cats will fall below the real money invested. My “catasset” package has already fallen in price by 40% in ETH. But since ETH itself again jumped up by 50% in recent days, it is possible to fix even a small profit. In this race, bull madness is still difficult to lose, as you can see.
I decided to leave my cats to stay part of the community of the first game on the blockchain protocol. The wave of fame that swept through the network will give life to many more similar projects, but the CryptoKitties was the first, and therefore special. Moreover, I expect a new wave of interest and new adepts, as developers will soon add a mobile version of the game. It is important to note that the developers have left themselves the opportunity to influence the genome of the kittens that are born, this can help spur interest in the game.
But this article is not about the CryptoKitties. This game in 48 hours simulated the idea of injecting real money into the cryptocurrencies. I believe in the stunning revolution of blockchain systems, but I have not bought and did not buy any cryptocurrency. Pumping the crypto industry with money will end very quickly and is likely to be fatal, but no one knows when. Therefore, this hyip-project gathers more and more audiences around itself. New adepts of bitcoin-revolution has no idea how everything works here and it’s very convenient, because no hardforks and billionhacks are not terrible for the price of cryptocurrencies.
But the Ponzi pyramid cannot have an infinitely large base. The system, in the event of a confidence crisis, will not close within the community of crypto-investors, but on the withdrawal services. That is, the numerous exchangers at first the growth of commissions, and then the refusal to carry out the exchange of cryptocurrencies (from little-known to better-known one by one) lock in the value of the invested money within the community. Panic overflows from one cryptocurrency to another will only increase volatility and the effect of general panic. In the end, the real value of the invested capital will be utilized by the depreciation of cryptoassets that do not have real usefulness. This applies mainly to cryptocurrencies, as an absolutely useless tool, but most of the tokens released on the wave of ICO-fever will also collapse.
But what about the blockchain? Is the revolution postponed?
Not at all. Somewhere far from the fireworks of news bitcoin-trading-sites, large companies silently develop decentralized platforms for the small groups’ consensus. That is, registers for a limited number of network participants. For example, a block for all banks of one country and their customers. Or all insurance companies and medical institutions of one country. Or for the currency of one country. Well, you understand where I’m going with this. The announcement of the release of USCoin on the distributed servers of the Federal Reserve System, maybe will launch the same panic that will end the hobbies of geeks from around the world. For immersion in the topic of small groups’ consensus, you can explore the services that Microsoft, IBM or Amazon offer.
But the total processing power of the network Bitcoin exceeds all supercomputers combined! Is this power itself an asset?
No. This power is an asset if it is needed. It is really necessary for an open, decentralized registry available throughout the world for any operations. For example for crypto-kitty-sex. But if we close the register inside a limited number of participants, we sharpen it for a certain task, then the processing power are already needed much more modest. And if you make different levels of access to information and authorization with the confirmation of identity, then the processing power will need tiny. It should also be noted that the decentralization of existing cryptocurrencies is greatly exaggerated. The point is not only that computing power is unevenly distributed around the world, the concept of mining-pool implies a certain control over the computing power of the participants in this pool. And this reduces the stability of the system.
But mankind has already learned the taste of the currency free from government power. Is not that important?
Absolutely not important. Now, cryptocurrencies has no alternative. A wide range of users do not understand the idea of a free world currency. They need a reliable and predictable fulfillment of the functions of money by this crypto currency.
Let’s imagine that the US federal cryptocurrency USCoin:
1. Take in all stores and hairdressers
2. Changes to a cash dollar of 1 to 1
3. Ready to be deposited in a bank at a reasonable interest
4. Freely convertible in all countries of the world in EUROCoin or YUANCoin.
5. USCoin stores data in a decentralized registry inside country
5. Every US citizen with a computer can become part of the mining pool of his state
6. Accessible by the password on the phone (at the same time the password will help you remember in your bank if you forgot)
7. Transaction price with it became negligible relative to the usual debit cards
At the same time in free circulation remained bitcoin, broadcast and all other altcoins (while they have lost confidence after the apocalypse), but they are again outlawed. Yes, you can buy coffee in some cafes. Well, or a pizza from a familiar programmer.
But think, what kind of cryptocurrency will your mother choose?
Therefore, the conclusion is this: you can keep bitcoin only as a card of the club of financial revolutionaries, and be involved in this undoubtedly interesting community. If you do not need it, then you are in a casino building with windows that are covered with blackout curtains. When the dawn comes, no one will notice, and when panic starts and the stampede at the exit is already too late.
