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Crypto Research

When slow means better

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What is the definition of the blockchain anyway? I bet when you ask each person, they will give you their own definition of the blockchain!

However, if you want to tell your friends or family, or even stranger about what is the blockchain is few words: it is a Forever Database that people can verify anywhere at any time.

When you need to verify something, you need to spend time and slowly to ensure something is accurate. You cannot rush into finishing or it will sacrifice the quality of the work.

This is how the human brain works. However, the computer makes verification simple, fast, and error-free.

That is the different approach between Proof of Work (PoW) and Proof of Stake (PoS).

PoW relies on human judgment and purposely slows down the progress of the growth to ensure such growth is as accurate as possible.

PoS relies on the machine to eliminate human involvement as much as possible and speed up its growth as much as possible.

There are different approaches to future growth, and there is no one best approach.

PoW vs. PoS

It is simply your reference on your view of the future.

If you are a more careful person, you will choose PoW, which ensures each step is correct. Or, if you are a more risky-taking person, you will select PoS that focus on opportunity cost.

Security

Security is the core of the blockchain. If the blockchain is a forever database, you hope the database will never be hacked at any point, mainly if you run finance on top of the blockchain.

From PoW standpoint, the consensus is more resilient than PoS because 51% attack is less likely in PoW and more likely in PoS in the short term.

After the Merge, Ethereum is facing a possible 51% attack because fewer participants dominated the reorg of the Ethereum mining power.

But we are really talking about 33% attack in the Ethereum PoS since Ethereum was implemented at 33% benchmark gate to prevent further domination, which costs attackers to lose their stakes and delay in finalizing the transactions.

You then will wonder if Ethereum will become more centralized, which is what many people question and debate.

You can further read the different types of attacks in https://mirror.xyz/jmcook.eth/YqHargbVWVNRQqQpVpzrqEQ8IqwNUJDIpwRP7SS5FXs

In conclusion

Slow progress toward growth is a preferable way into the uncertainty of the future. Taking more risks may seem a solution in the short term, but the long-term environment is unpredictable.  

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Crypto Research

Crypto is a good investment or not

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Many people buy crypto to believe it is a great investment. However, it may not be the case.

I asked ChatGPT about the crypto investment and here it is:

Investing in cryptocurrency can be a good opportunity, but it also comes with high risk and volatility. It is important to thoroughly research and understand the cryptocurrency market before investing. Additionally, it is recommended to diversify your investment portfolio and not to invest more than you can afford to lose.

Here are some misconceptions:

First, crypto is not a traditional investment that requires a conventional way to invest. Instead, it is a catch-or-miss investment that you really need to time the market to make profits.

Second, you do not need to hold for too long if you need money quickly. Crypto tends to perform badly long term than average assets did.

Third, high risk only sometimes has high rewards. Many crypto with high risks may not ever provide high returns eventually and many go to zero instead.

Last, do not go FOMO because you are likely to become a bagholder.

There is not missing out and it is too late in the crypto. Rather, you should always keep an eye on the market.

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Crypto Research

Mother of all bubble

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We are heading into a bubble economy and there is one that is about to pop.

ChatGPT suggests that a financial bubble is:

A financial bubble is a situation in which the price of an asset, such as a stock or a commodity, becomes artificially inflated due to excessive speculation and investment. This can lead to a situation where the market becomes overvalued and eventually collapses, resulting in significant losses for investors. Bubbles can occur in a variety of different markets and can be caused by a number of factors, including low interest rates, economic growth, and investor sentiment.

Let’s take Tesla as an example.

Tesla CEO is Elon Musk, who purchased Twitter last year and believed the company can help Tesla to make more profits.

Does it? Or he tried to inflate Tesla instead?

If you go to Twitter, there is less opposition than a supporting voice.

Elon Musk sells Tesla cars and Tesla stocks.

People purchase cars to help pump the stock price and when stock price goes up, people want a new Tesla.

Despite all the bad reviews about the car and its questionable autopilot feature, Tesla cars sold quickly and stock goes up no question.

Is this a Ponzi scheme?

Similarly, cryptocurrency is also highly speculative.

It goes up a time to time, but people buy the narrative without further investigating how useful the crypto really is.

What if people stop buying the crypto, will that still go up?

What if the economy is so bad and the interest rate is high that people have less money to buy more crypto?

We will see how it goes.

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Crypto Research

One more thing NFT can do

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California will have a pilot program to use NFT to record car titles as an innovation of record management. 

ChatGPT stated NFT is:

NFT stands for “non-fungible token.” It is a digital asset that represents ownership of a unique item or piece of content, such as a digital art piece or collectible. NFTs are created and stored on a blockchain, which is a decentralized digital ledger. This allows for the creation and transfer of ownership of digital assets in a secure and verifiable way.

Finally, the government has realized the use of the blockchain, and it will reduce government spending while providing more accurate information to citizens.

I think blockchain has more utilities other than money. Digital money is the first step in testing society’s compatibility, but the blockchain should focus more on providing services rather than investing to people.

That blockchain service can be essential for society later rather than simply going to moon-style investments to create unsustainable pump and dump.

Such government collaboration is the first step to making blockchain a social system.

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