DaveTradesCrypto – The Diary of an Unmade Man – Ep2

Episode Two – ‘So what really is this crypto lark?’

 

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Want to learn what Crypto, Blockchain and Bitcoin is? Well, so did I!

I was looking forward to getting rich quick, and making multiple millions of whatever currency I wanted and it was all going to be as easy as a quick stroll in the park. I did realise I would actually need to start finding out about this alien new world and learning what certain things actually were, and what certain terms actually meant, otherwise it really was going to be a car crash! So I set about it. I book marked a day in the diary to really sit down and learn. To scroll through the wonderful world of internet searches and wikipedia explanations, and to start to unravel a terrifyingly puzzling world. I decided to start with the basics (at least I made a decent start!);

  • What is blockchain?
  • What is cryptocurrency?
  • What is Bitcoin?
  • How did Bitcoin start?
  • How does Bitcoin work?
  • What is mining?

After a bit of keyboard poking, much head scratching and confused monitor stare-downs, I decided I needed to reduce the jargon and bring it down to layman terms – I am a tradesman after all. I acquired an old fashioned pen and pad of paper from a near defunct drawer in the office and started to come up with my own answers. Basically I whittled down most of the technical jargon and make it palatable for myself to understand. I am an average consumer, let’s not forget that. I do not understand computer science, coding or anything of a real technical computing nature. But I do have an understanding of how I like to understand things, simple! And a quick note for developers; from my point of view, if you are unable to explain something to a child then how are the mainstream going to adopt something? After all, humans DO NOT like change! Not everyone can, and will be able to read and/or write code, whereas we can tap a button on a phone screen, and we do like pretty icons!

With scratchy eyeballs and squared vision I realised I’d learnt a hell of a lot, I was ready to conquer the world. Coinbase here I come…

 

…’After all, humans DO NOT like change!…’

 

Armed with my new found, kindergarten level of knowledge, I felt ready to tackle the next task; buy me some Bitcoin! Thankfully after listening to the CRYPTO 101 all week I had gained some knowledge of a place called ‘Coinbase’. This was supposedly the place to go for Bitcoin virgins; so that’s where I headed. To my surprise I was greeted by a decent looking website, and some more mysterious coins?! Ethereum? Litecoin? What are these bad boys all about?! Obviously there’s Bitcoin but there’s more choice, oh dear this could get messy! I spent a few minutes poking around and I’ll be honest it’s a not a bad website. It looks exactly like a slick, well oiled, multi million dollar website should look like. It’s appealing to the eye, it looks like someone has thought;

‘Ok, so what do new people to this crypto market want? Yeah, that’s right, some more of exactly what they are used to already in a mainstream market. A good looking website that looks like it’s easy to navigate. Let’s not change anything to scare anyone off, especially by overcomplicating things, no, let’s keep it nice and simple. After all the Joe public LOVE simple!!’ 

Boom! That right there is A-grade, numero uno. First up, foremost, make it look good and keep it simple! Honestly, I know now that guys are looking to create Web 2.0 or whatever they call it, but trust me, it is really not blockchain/computer/nuclear/quantum/physic science! Please guys, just keep it simple! 

Google; you tap the search button and away you go. Amazon; you look for what you want, and hey presto, you click it and buy it. Twitter; you type in what you’re looking for and, damn, scrolling is hard right?! Ebay, YouTube, Facebook, Instagram, Uber. They are all adopted by the masses, for one reason, they are easy to use! What happens when they change something? There’s uproar, because developers start meddling with things. Humans DO NOT like change! (remember?!) Making things overcomplicated and difficult to use is an idea/company killer. Before Google there was Yahoo, Ask Jeeves and various others but Google made it easiest and most convenient to search for something, that’s why it stuck!

Signing up to Coinbase was relatively easy, although I did have a bit of scepticism giving my details still not wholly believing in the security issues associated with crypto. I’m new and my trust levels are currently quite low until proven otherwise. I then tried adding my credit card to transfer a payment and basically choked on my brew at how much they wanted to charge me for automatically converting my Great British Pounds into Euros! I nearly gave up at that point, genuine! But I’d come too far, I was determined to see this through. I took a little trip to the good ole Youtube and found what I was after. A little workaround via an app called Revolut, I converted my GBP into Euros and transferred it across to Coinbase. The first of many, many codes found it’s way into my shiny new notebook and there I sat patiently waiting for my monies to find it’s way across cyber-space. Jeez, it took it’s time! I know patience is a virtue, but it was definitely sketchy having to wait 2 whole days for it to appear! With the money then safely in my newly established Coinbase account I headed back to Youtube and CRYPTO 101 to find out where to go next.

I did the usual GDAX set up and switch across from Coinbase, with again, a little help from Youtube (thank god for youtube, I’d barely be able to tie my own shoelaces in the morning!). GDAX however, is a different beast to Coinbase. It is 100% overwhelming to start with, and I had a near on epileptic fit the first time I sat there watching the numbers and lines moving about the screen like an army of bustling ants! I am not a trader of any kind, and I am extremely new to all this exchange lark so it really didn’t make any sense. I’d listened to CRYPTO 101 about ‘Maker and Taker’ fees – didn’t fully understand it but hey why not just give it a go. I didn’t have a clue whether anything was trading up or down that day but I did know basic rule #1; buy red, sell green! I’d worked out about the green and red lines and decided to get involved. Limit and Stop didn’t make a whole deal of sense either but I’d guessed Market was a my kind of level to start with. I’d transferred about £100 to play with, so I put that in and hey presto I’d bought me some Bitcoin. I must admit it was a good feeling, it had taken long enough to get to this point. And having some sort of ‘internet money’ made me feel like part of an exclusive community. I’d made my first move, I was officially a crypto investor. I now just had to work out how to transfer it back to relative safety and then it was all systems go, strapping on my seat belt and getting ready to ride this ship to the moon!

I’d had my first taste, I didn’t fully understand how much I had bought or what it was worth, but I was ready for some more. I transferred another few quid across and got to work filling other people’s bank accounts with my hard earned money. Slow down you fool, just slow down god dammit! I’d promised the missus only a couple of hundred quid. I’d doubled it, and it was only day 1. I was in the doghouse and I needed to get myself out. Sharpish!

 

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If you’ve enjoyed this episode, please go back and check out my others. If you’ve already done that, never fear, I am looking to write a post every week, and get something posted at the weekends.

Next up;  Episode Three – ‘Walk before you can run!

As ever, thanks for reading and happy trading folks!

 

Dave x

 

E – davetradescrypto@gmail.com

T – @DaveDustpan

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Intro to privacy coins w/ Snappy Snap of PIVX

 

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Cryptocurrencies come wrapped in many kinds of packaging: altcoins, memecoins, stablecoins… and of course everyone’s favorite: shitcoins. Among these potentially confusing categories you are likely to find mention of the privacy coin. What differentiates a privacy coin from the others… and what exactly are their purpose?

For today’s Crypto 101 interview we are given an overview of privacy coins from our guest Bryan (aka Snappy Snap) of the PIVX community. Understanding this subcategory of cryptocurrency is fortunately not that complicated — but the conversation did open a number of other questions about the future of the cryptosphere, the way people connect within it, and how the powers that be may impact it. Let’s dig in.

The essential feature of a privacy coin (and PIVX in particular), is to protect its users from sharing personal financial information. PIVX puts this aspect front and center with its name: Private, Instant, Verified Transaction. Detractors of cryptocurrency like to use Bitcoin’s past association with the Silk Road website and inaccurately paint it as private and anonymous… therefore ideal for illegal transactions.

Bitcoin, however, is most certainly not a privacy coin which provides this anonymity. As its blockchain is a transparent and very public transaction history. The amount of and time of Bitcoin transactions are easily viewable with the block explorer. Snappy also points out that Bitcoin provides no IP masking (which makes identifying a user even easier).

Privacy as it relates to cryptocurrencies is often painted as a negative thing, and only of interest to criminals or people who are involved in questionable activities. In actuality, privacy is the reason you have curtains on your windows and a door on the bathroom. However, there’s no digital curtain to pull over your Bitcoin transactions — your wallet address holds your transaction history and balance up for inspection by any who care to look. Whether that be a curious look or a malicious one is anyone’s guess.

In response to Bitcoin user’s vulnerability, small pockets of developers began to work on improving the privacy aspect of cryptocurrency. Most notably, the zerocoin protocol was developed as an extension of Bitcoin which provided temporarily pooling and then trading the currency for ‘zerocoins,’ which obscured their transaction history. As a cryptocurrency in its own right, Zcoin was developed from the zerocoin protocol and then fully launched in 2016. PIVX became the first proof-of-stake currency to adopt the zerocoin protocol in 2017 .

Since that time, PIVX developed itself as a currency (units of which are called Piv) which is focused on inexpensive and speedy transactions with an option for privacy. Using the zerocoin protocol, Piv are converted into zPiv, making the currency completely fungible. Following conversion, the wallet, sender and receiver information become completely private. Instead of a one-to-one swap, base denominations (units of 1, 5, 10, 50, 100, 500, 1000 and 5000) are used to further obfuscate the transactions. The cost of sending a zPiv transaction is only 0.01 piv per minted denomination.

 

Perhaps the most remarkable aspect of PIVX is the community which has developed around the currency. It defines itself as a digital autonomous organization (DAO) and has no central governance authority. Instead, a system of proposals are voted on regularly by the masternode operators. Developers and promoters earn their compensation in this way. Being a proof-of-stake blockchain, PIVX allows holders of the coin to participate in staking or running a masternode as well, both which net a monthly reward for helping to secure the network.

Regarding the privacy aspect of PIVX, Snappy notes that the community is aware that there is likely to be government scrutiny on the users in an attempt to tax the income. While the currency itself can be used to thwart outside efforts to audit transactions and balances, PIVX as a whole is eager to be at the forefront of digital asset projects which will help guide the discussion that will need to occur with governments to adapt to a world in which cryptoassets are destined to become an increasing piece of domestic and global economies. I personally feel that this demonstrates tremendous foresight on the part of the PIVX community.

PIVX is an interesting project which promotes the idea of community and interdependence in a way seldom seen in other cryptocurrency projects. It is at this level of community where the models we need as a whole will develop, and it very well may be that PIVX is a top contender in setting these new standards. For the adaptation for the cryptoeconomy to develop, survive and coexist with legacy models of economic participation, privacy and fungibility will be key components which demand our attention.


Check out the interview HERE

PIVX website

Autonio: An Algorithmic Cryptocurrency Trading App

Full disclosure: This post is an entry into a promotional bounty campaign for Autonio, and I am a NIO token holder at the time of this writing.

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Let’s make some money… right?

If you’re like me and new to the world of cryptocurrencies and digital assets, the prospect of profitable trading can be just as daunting as it is alluring. At the outset, it all sounds quite straightforward: identify a trend, calculate risk/reward, select some indicators and wait for the signals.

In practice, however, it is not so easy. Despite many hours of reading, taking notes and developing a plan I have made very few profitable trades, and many likely have had the same experience. The simple words of veteran traders ring true: this stuff isn’t easy.

Placing a buy order in a liquid market feels like being dropped into shark-infested waters. Illiquid markets are more like being picked off silently by snipers. Aribtrage is an anxiety-producing race from one exchange to another… with minimal upside. After various attempts to find a winning angle, the question remains: How will I ever turn a consistent trading profit?

It was the search for an answer to this question that led me to consider algorithmic trading, which is the use of a computer program to automate trade decisions. The program follows a set of user-defined settings to dictate when to place buy and sell orders. These applications are commonly referred to as trading bots or simply bots.

My search unfortunately led me to two disheartening facts: First, to use a trading bot you can either code them up yourself, or pay for someone else’s product. For the vast majority of us, this not even remotely feasible. Second, much of the commentary online mentions that using pre-existing trading bots is a shady prospect at best. The user experience is often reported to be confusing and you may not trade profitably enough to justify the hefty licensing fee.

Enter Autonio

I had just about written off the possibility of algorithmic trading entirely when I finally came across Autonio, which stood out to me due to a number of differences.

To begin with, it has own ERC20 token, NIO, which is used as “fuel” to activate Autonio (it is burned during this process). At a mere $50 per month (and a one-time $20 registration) it is substantially less expensive than other applications of its kind. As of the time of this writing, NIO is available on the Mercatox and IDEX exchanges.

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The circulating supply of NIO is 65,828,135 tokens, and up to 80% of the total will be burned. Should holders choose not to burn the NIO token, they will retain an asset which may appreciate as the supply diminishes. As a result, there are two potential ways to profit from the token.
Autonio also boasts 20 different technical indicators for users to employ in their trading. This greatly expands the repertoire of methods that a new trader is likely to master on their own. There are already dozens of available cryptoasset trading pairs, and the number of these are expected to grow significantly as the project continues.

Currently Autonio can be used with Bitfinex, Bitstamp, Bittrex, Kraken and QuadrigaCX exchanges, but a special collaboration to integrate Autonio with the closely-related BitShares and CryptoBridge DEX platforms is in development.

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How does it work?

Users connect the Autonio app to their exchange via the specific API associated with it. Once the registration fee and monthly subscription has been paid, the application is unlocked. Users are then able to proceed with back-testing any combination of the indicators they like, and can also live-test with real-time market conditions prior to trading real cryptocurrency. Developers of the program encourage trying a variety of indicators and settings to explore the most profitable combinations.

Autonio is currently available as a desktop application for IOS, Linux and Windows, with a mobile app for Android, too. Instructional YouTube videos created by the team give an overview of how to set it up and a review each of the indicators as well. An Autonio Traders Telegram chat also exists to discuss techniques, strategies and to get support.

In development

An algorithm marketplace is forthcoming which will provide indicator combinations with proven profit generating combinations (10% or better). In addition to the collaboration with BitShares and CryptoBridge, Autonio is purportedly working on developing its own exchange and may choose to launch another token (NIOEX) to provide discounts on trading fees and other privileges (details can be found here). Contests for the most profitable trading algorithms and other community-building events are slated for the near future as well.

Reputation

At the time of this writing, Autonio is undertaking a comprehensive promotional campaign to demonstrate that the project is legitimate and backed by a capable team, who have made themselves available for questions via a series of AMA threads in their official subReddit:

AMA #1 AMA #2 AMA #3 AMA #4 AMA #5

The website has been recently updated, and provides an abundance of information. A revised roadmap has also been released and it does appear that the team (who has faced a significant degree of doubt and frustration voiced by their Telegram community) has finally disclosed its members and is making progress on promises it has made.

Efforts to demonstrate the security of the tokens has been made as well. Being that the team tokens are locked in a multi-signature wallet (escrowed by James Drake of Embermine and Michael Morton of GNEISS) investors and users of the application can rest assured in the transparency of the team’s holdings. The Ethereum wallet which contains these NIO can be monitored HERE.

Public sentiment

While not yet the most relentlessly hyped project, there is quite a bit to indicate that many are excited about Autonio as well as the potential profitability of investment in NIO.

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The hype does not go without a bit of criticism, however. A couple of tweets point out potential risks… and does Autonio fit the definition of artificial intelligence, anyway?5NIO

Could there potentially be a risk of a backdoor attack?

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I personally have yet to try the application, but am curious to do so. I will leave it to someone with a more technical background to determine if Autonio fits the definition of AI as well as to assess any potential threat that installing the executable installation file on your computer may pose.

Bottom line

Autonio extolls the value of enabling emotional-free trading which is a source stress and costly mistakes for many. It brings tools and techniques used by professional traders to the average person, and in a much easier way than previous options. The token-as-fuel is a clever way to generate revenue and demand for the NIO token, and the team comes to the table with a working product versus a handful of promises.

Upcoming partnerships and community-building aspects suggest an enormous capacity to create connectivity within the cryptocurrency trading community overall. Although there are some potentially concerning aspects to the project (the credible yet vague threat that the platform could be an asset-depleting backdoor), the positives appear to far outweigh the negatives at this point. Time will tell, but on the whole the Autonio project looks well-suited to make an enormous splash on the crypto-trading scene.


Autonio Website HERE

Promotional Bounty Rules HERE

Telegram channel HERE

SubReddit HERE

YouTube HERE

Finding the Balance in a Decentralized P2P Sharing Economy

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It is said that with great power comes great responsibility, and this is abundantly the case regarding how the blockchain and cryptoeconomy will operate as it grows into a place within mainstream society. While this subset of the financial ecosystem is still in its infancy, those with an eye on its future have begun to think about how designing peer-to-peer (or sharing economy) services based in the blockchain will best serve the interests of both its participants and the network as a whole.

To explore this topic, Crypto-101 host Matthew Aaron invited Josh Fraser of Origin Protocol back to the podcast for a debate on the pros and cons of 3rd party intermediaries and whether their presence is beneficial, detrimental or negligible when it comes to blockchain-based/sharing economy applications. While Matthew remained unconvinced by Josh’s perspective that eliminating the intermediary in peer to peer transactions is a positive direction to take, the discussion does highlight that some deep consideration is warranted at this very early stage in blockchain’s evolution.

To take a step backward, let’s clarify what the sharing economy is. You may be unfamiliar with the term (sometimes more accurately described as the access economy) but you’re actually quite likely to have used a service based on this economic model. The sharing economy is centered around providing access to goods and services through an online access point and carried out by individuals offering up their own time and resources. If you’ve taken an Uber or Lyft, stayed in an AirBnB or had food delivered by BiteSquad, you’ve participated in the sharing economy.

The aforementioned entities, however, are still split between innovative and more traditional business practices in that they rely on the use of a third-party arbitrator, the value and utility of which is at the center of our debate. Matthew argues that the middleman entity has a stake in the arrangement and acts as a protector for the users’ interests. Its reputation (and by extension its profitability) dictates what kinds of behaviors are prohibited by users of their platform.

For example, Uber (who acts as a centralized authority in this instance) has banned users of its service for posting racist Tweets. Matthew argues that this is an acceptable approach, kind of a win-win for both the platform and its users.

Josh counters that perhaps the line in the sand between acceptable and unacceptable behaviors could gradually move and eventually encompass less overtly controversial ones. Free speech should be protected, he argues. Potentially, the solution could be settled in the marketplace when users decide to vote with their wallets, but currently this is bypassed by Uber taking a public stance to protect its bottom line.

So who arbitrates between users in a P2P environment that has no intermediary? While Josh doesn’t provide any specific examples, he remains confident that innovation and experience will shape decentralized mechanisms to protect users of sharing economy platforms.

Could the consensus of the community itself provide protection for both individual users (sovereignty) as well as the platform as a whole (reputation)? I disagree with Matthew that an intermediary is utterly necessary, but it would necessitate an aggregate of opinion from the users to serve the same function. How might this be accomplished?

A network’s reputation could potentially be safeguarded by consensus voting within the platform’s community. This got me thinking about how BitShares was designed (using Dan Larimer‘s delegated proof of stake) to validate the blockchain as well as to address the decision-making process of its overall structure.

A recent update by Vitalik Buterin, however, warns that the DPoS structure could easily lend itself to the corruption inherent in a plutocracy.

Social trust assumptions can work well in many contexts, but they are difficult to universalize; what is trusted in one country or one company or one political tribe may not be trusted in others. They are also difficult to quantify; how much money does it take to manipulate social media to favor some particular delegate in a vote? Social trust assumptions seem secure and controllable, in the sense that “people” are in charge, but in reality they can be manipulated by economic incentives in all sorts of ways.

(In fairness, here is Dan Larimer’s rebuttal to Vitalik)

The comparison here is imperfect, unfortunately, as DPoS governs a financial/operational network rather than an ethical decision-making one. What is being deemed above as “bad behavior,” is theft, which is a very clear and binary circumstance. To effectively address more nuanced human behaviors such as hate speech, bigotry or categorical exclusion the complexity of the mechanism must match that of the problem.

I’m also lead to the logical assumption that specific P2P, sharing economy networks could develop their own cultures and sets of norms, but whether they are benevolent or reprehensible is in the eye of the beholder. Individuals outside those systems could choose to participate with or boycott them accordingly, though… which leads us back to voting with our wallets.

My personal takeaway was that for Josh’s prediction to be fruitful, designers of Decentralized P2P platforms (DP2P?) will need to make a close examination of the power of incentives. Although Matthew and Josh could not arrive at a consensus in their debate, the discussion does raise some incredibly important questions: What do we want out of this new technology and how will we design it to balance the needs of the individual with the needs of the whole? How will those decision facilitate (or hinder) adoption? What’s the whole point of all this. WHEN MOON?

The one thing I do believe we can all agree upon, however, is that a lot of big changes are coming  — and those changes, while positive, will come at a cost. Exactly how we address and balance those costs will be make-or-break for both individual projects and the cryptoasset / blockchain economy as a whole. Whether or not a governance model can be developed to protect both individual sovereignty and the economic viability of a decentralized peer-to-peer sharing economy remains to be seen.


Big thanks to Josh for taking the time to be on the program again. Read More about the Origin Protocol project HERE

Listen to the debate on the Crypto101 podcast HERE

ICO101 — The Veris Foundation

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My wife has been studying to become a medical doctor for the last eight years. She is now at the stage where she works almost exclusively in hospitals getting hands-on experience with patients and healthcare providers. One of the most baffling things — both for her and for me — is how dated the healthcare system is when it comes to record keeping. The hospitals she has worked with — even some brand new establishments — still use pens and papers to record all medical notes. Everything is stored in binders and file cabinets. Important information is transmitted over the phone and stored in spreadsheets. At one hospital the most advanced piece of communications technology she came into contact with was a pager!

The cost of monitoring and facilitating health insurance payments in the US has risen to $59 billion, and it is climbing. Much of this cost is attributable to poor record keeping, communication errors and outdated technology being relied upon for what is called the ‘claims process’ — which is process healthcare providers like general practitioners, specialists or hospitals must go through to have a patient’s medical insurer pay for a prescribed treatment. Currently, this is a cumbersome process, laden with errors largely due to this problem of outdated record keeping.


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In the latest episode of ICO101, host Aaron Paul spoke with Chris Plance, CEO and founder of the Veris Foundation. Veris is a US-based non-profit initiative who are proposing a blockchain solution to this problem. According to their whitepaper: “The Veris Foundation solves the problem of bringing healthcare service providers, insurers, and banks together to authorize the provisioning and payment for healthcare services.”

They will attempt to do this by placing the current claims process onto the blockchain, executable by smart contracts. Chris offers the warning that the term “smart contracts” may be deceiving as they aren’t very smart, nor are they technically contracts. But they are incredibly useful. Decryptionary defines them as: “A smart contract is a promise made between two or more people and recorded in the permanent, transparent digital record known as the blockchain.”

First, the Veris Foundation will operate a governance layer via the Proof of Stake mechanism. Meaning, in order to participate in their solution, providers, payers (insurers), or financial institutions would hold “VeriStakes” and serve as disinterested third party governance over individual smart contracts as well as having the ability to create new contracts. Secondly, there are “VeriCoins” which are given as a reward for holding VeriStakes and can be used to execute smart contracts but not create new ones. This is a similar set up to the NEO blockchain whereby NEO coins are staked and their GAS tokens are rewarded.

The smart contracts involved would embody the current claims made by the healthcare providers to the payers. These typically involved many stages including eligibility, pre-authorization, claim submission, claim to process, claim payment and post-payment review. All of which takes time, money and are wide open to clerical error and miscommunication. The entire process can be shifted to the Veris network and have the process streamlined by executing the claims efficiently and economically via smart contracts.

These smart contracts would be a series of integrated contracts — responsible for different stages of the claims process — in communication with one another and would trigger each other once they have been executed. For example, in order for a payment to be finalised, the patient’s ID would need to be verified and the contract between the patient and the payer would also need to be verified etc.

Overall, the Veris Foundation is proposing a unique and sorely-needed use case of blockchain technology to an industry crying out for innovation. Some of the challenges will include familiar themes like convincing stakeholders to adopt the platform. We will have to see how a system who in 2018 relies on pens, paper, phone calls and Excel spreadsheets will react to a proposed blockchain solution to the expensive claims process. Veris might be the project to do it. The core team has over 30 years of experience in the sector and a solid proposition.

What do you think?

 


ICO101 Podcast on the Veris Foundation — https://apple.co/2pma0qQ

The Veris Foundation — http://www.verisfoundation.com

Information on the crowdsale — http://www.verisfoundation.com/presale

We Need to Talk about POWR

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Sorry, what?

Before we begin I need to make clear that what you will read below are the developing opinions of a perpetual student. I am still very much an infant in cryptoland. I am not an energy expert. I am not a market expert. If you believe my opinions to be ill-founded — by all means, educate me.

That being said, we need to talk about Power Ledger (POWR). In the latest episode of Crypto 101, Matthew interviewed Dr Jemma Green, POWR’s co-founder and Chair. Boasting the slogan “The Democratisation of Power” Power Ledger claims to be a disruptive technology project in the energy sector with the intention of building a peer-to-peer market platform for trading electricity.

POWR wants to allow those of us with solar panels  (what they call prosumers) to sell their excess power to those who do not (consumers). When I hear this it sounds awesome. Finally, we can take control of our energy production and consumption and enter into a new sharing economy within our local communities. We can trade locally, efficiently,  ethically, and without need of giant energy corporations halting innovation. This is it. This is the beginning of the democratisation of energy, right?

Well, maybe.

One of the revelations of the podcast was in Dr Green’s elaboration on how the marketplace will actually work. Here is where my head cocked and my brow furrowed a little. POWR is designed in a way that requires BOTH the prosumers and consumers to sign up with their energy provider to be ALLOWED to use the grid to conduct their trades. POWR refers to these energy providers under their unique branding of “Application Hosts.” An Application Host is any centralised power company who already controls the distribution infrastructure and power supply for the houses entering into what was promised to be — but is now looking a lot less like — a peer-to-peer relationship.

POWR is designed so that these Application Hosts sell their regular customers Sparkz — a POWR trading token. People can use these Sparkz to buy power from their neighbours who are looking to sell their surplus. Sparkz are tied to fiat currency. Green mentions in the podcast that 1 Spark = 1 of whatever the lowest denomination of a local currency, (so here in Australia that would be 1 cent). Though their website uses the example 1 Spark = 1 dollar — something worth clarifying before buying (scroll to the 11th Question under ‘technical’). Whatever the value, it will be tied to the local fiat.

So, the way that the system works is by first identifying everyday people who are concerned about energy usage and cost, who want to “democratise power” and participate in the sharing economy using blockchain technology. Then setting up a system where they can only do so with the blessing of the giant energy corporations who already own the infrastructure and dominate supply.

When this occurred to me I assumed I had to be mistaken, I must have missed some key protocol or governance layer that would keep the centralised power-houses out of this initiative. Maybe these giant companies won’t be allowed to become Application Hosts? Only smaller start-ups or local solar farms would be?

Nope.

One of POWR’s website FAQs reads “Do you envisage that a very large scale generator or retailer would become an Application Host?” POWR’s official answer:

“A large-scale retailer, yes for sure, a large-scale generator could also become an Application Host.”

Great. So we are back to negotiating with the energy companies. These are the same energy companies, who for decades, have largely resisted the science of climate change and the overwhelming consumer outcry for clean energy because trading in planet-destroying fossil fuels is far more profitable. Now we, on the cusp of a truly disruptive, innovative revolution in blockchain technology, are stood, hands wringing, heads down, stuttering and stammering, asking for THEIR permission to play with energy on the blockchain!

Really?

In the featured introduction video on their website, Green makes reference to a successful trial conducted at the National Lifestyle Villages in Busselton. In my search for any public report or information regarding this trial, I found nothing published by POWR themselves. Unless we count 3 short sentences in their whitepaper boasting it as a “huge success” — great, share this success with us! Show me why it was a success!

I can think of one reason why the trial might have been a success — by all accounts, it did not involve a centralised power company acting as the middle-man. There was no giant supplier selling Sparkz to people wanting to purchase excess solar from their neighbours. It seems (and remember I am only working from inferences here because there is just so little information about this trial) that the POWR team organised an in-house arrangement with the National Lifestyle Villages where they created a closed solar system to test the feasibility of trading excess power via blockchain technology.

If I am understanding this correctly, the success of the trial simply shows the success of trading on the blockchain — which we already know. They tested how sharing excess energy between neighbours is a good idea — which we already know. They tested how increasing the sense of ownership of everyday consumers over their power usage and generation is a good idea — again, we know.

The trial was a “success” because it was a test of a true peer-to-peer energy economy. But that doesn’t seem to be what POWR will implement in the real world.

If there was any doubt about the model POWR is proposing for the real world in their attempt to “democratise power” it was cleared up with this quote from Green:

“I have solar panels on my roof. I sign up with my electricity company to sell my surplus electricity to my neighbour. My neighbour buys Sparkz from the energy company. I sell them my electricity and I receive Sparkz. So I have $20 of Sparkz in my wallet. Then I want to get the $20, so I give the power company my Sparkz and they give me $20.”

No joke, I listened to this about 15 times, trying to un-cock my head and un-furrow my brow. Neither happened.

What Green is describing, is a more convoluted version of what is already happening between houses with solar panels and those without. Those with solar generation as part of their energy set-up, already sell their excess power back to the energy companies, who pay them what is called a “feed-in tariff.” Then the companies simply sell from their stocks of energy (of which the solar surplus is part) on to households demanding it.

So if POWR is just a more convoluted way of doing what is already being done — just with a little blockchain sprinkled on top — then the benefits must surely come down to price, right? It must be cheaper to purchase power with Sparkz than it is to just purchase power directly from an energy provider.

Nope.

Why would this be the case? The energy providers (Application Hosts) are the ones SELLING the Sparkz in the first place. POWR users are still trading in the energy company’s commodity, on their infrastructure, with their permission. Why would they add this blockchain model to their already exorbitantly-successful arrangement if it was only going to be profitable to their dependant consumers? A profit to customers is a loss to providers. It is a closed system between us and them.

The cost of Sparkz are fixed to fiat, the cost of energy won’t be different just because you’re buying it from your neighbour with Sparkz.  You bought the Sparkz from the energy company. That same energy company is allowing your neighbour to “sell” their energy.

It’s a game.

I keep thinking I must be missing something here. Is this really it? Is this the proposal?

The cost of energy consumption in my state of Queensland is anywhere up to 12c per kWh and the average feed-in tariff is around 7c per kWh. Meaning the energy company is netting approximately 5c per kWh on excess electricity generated by households with solar. Do you not think they will factor this in when we come knocking on their door asking for permission to trade our electricity locally for digital tokens among ourselves?

Another factor to consider are taxes. This will obviously differ from country to country, and Green says as much. But ultimately those selling energy on the Power Ledger will be generating an income. Green admits:

“Like any income you make in the year, you need to declare that on your tax return.”

However, in Australia, feed-in tariffs — selling energy back to the grid — is NOT taxable. So if I am selling power back to the grid without POWR, that 7c per kWh is deducted from my energy costs, tax-free, straight into my back pocket. If I were to use Sparkz instead, I would be paying tax on that sale. What is the point?

No, honestly. Am I missing the point?

Another hidden detail is the fact that surely POWR intends to make a profit from this whole setup too. Though I have not been able to find any public information on how much of a cut they will receive for each transaction. If you find this, please share!

If this all seems a bit confusing, don’t worry, POWR’s introduction video concludes with the question: ‘how do we make sure it works?’ Their answer was more or less “trust us, we are experts” — I don’t know about you but I think answers like this are pure bullshit.

If I had any doubt about where my train of thought was leading me in researching POWR and listening to the podcast, it was completely obliterated when Green was asked about how decentralised POWR truly was. Who can participate, everyone? If so, how might we judge the ethics of the use of profits made by people selling their energy? The classic cryptocurrency moral question. Green had this to say:

“You can’t get on the network unless you have an account with an electricity company… a citizen that is worthy of having an electricity account with a regulated electricity company… You can’t trade peer to peer unless your energy retailer verifies your meter and allows you to do that”

That about sums it up for me. This is not the democratisation of the power industry. This is a child asking their parents for play money so they can pretend to buy what’s in the fridge.

Do not get me wrong, I want a project whose goal is to democratise and decentralise the way we consume and pay for power to succeed. We need a project like that to succeed. But is POWR it? I understand it is a complicated space, but this doesn’t feel like our best effort at decentralising the energy market.

On the cover page of their whitepaper POWR states:

“We believe empowering individuals and communities to co-create their energy future will underpin the development of a power system that is resilient, low-cost, zero-carbon and owned by the people of the world.”

Yeah, I do too. So why aren’t we doing that?


As I mentioned, I want to be educated about this. I would love it if these impressions were misguided. If I haven’t understood the project, please tell me why below.

It’s Time to Take it Back

gambit


Full disclosure, I only entered the cryptosphere about 4 weeks ago. I wasn’t even one of those guys who had heard lots about it and done extensive research before finally deciding to buy my first stake in Bitcoin. My story was different.

I had just moved house, with my wife and dog into the rural plains of Queensland. We are both full-time students and have lived pay-check to pay-check for as long as we can remember. In the weeks leading up to the move we had ricocheted like helpless pinballs between one bullshit encounter with centralised authorities to the next. Whether service providers, financial institutions, even local governments — one after the other they held us in contempt and extorted us for our time, attention and hard-earned money.

I’m sure you’ve been there. You’ve been given some bullshit parking ticket or fine. Immediately you are no longer innocent until proven guilty. You are guilty and must prove your innocence in the most cumbersome way possible — writing and posting a physical letter and waiting for months for a response.

I had flights cancelled. flights I paid for in real money, in real time. Their compensation was to offer me a cheque for some of the cost which would be posted “in the next 6-8 weeks.”

When we vacated our rental property the real estate agent held our bond deposit over our heard like tyrannical oligarchs, demanding repaints, repairs, returfs. I had a cleaner take my money and run, without doing the job I had paid for.

It was honestly so infuriating to be at the mercy of these entities. Groups who had dominance over our lives in so many ways. We were just trying to do the right thing, help out where we could, and get on with our studies and our lives. It was at this time — in this frame of mind — that a friend introduced me to crypto. I immediately fell in love with the ethos. An economy, a movement, predicated on decentralisation. The shifting of power from the few to the many. The opportunity to own, like truly own our wealth, our value, our influence.

I was in.

I was in 5 days before “the crash” but I was in nonetheless and I have no regrets.

Though, one thing that has pissed me off since becoming part of the cryptosphere, however, is an attitude I keep bumping into. It’s held by people largely unfamiliar with blockchain technology and the potential revolution it will bring. It is an attitude that can be summed up by the phrase: “Oh, so you’re a gambling man?”

These are people who think that trading in crypto is essentially glorified gambling. They may mean well, they may simply not have taken the time to look into blockchain tech, but they confidently assume that because the market is volatile, that its unfamiliar, then it must be a bubble, a scam.

No.

You know what is a bubble? The housing industry that currently enslaves 35% of my country to crippling mortgage debt while the remaining 75% pay extortionist rents to help mitigate the cost. You know what is a scam?  The fact that the banking sector in my country is among the most profitable in the world, with their CEOs pocketing upwards of $12,000,000 while the average household salary has stagnated, cost of living and student debt has increased and the value of our dollar weakened.

Am I any more of a gambler than the guy who bets on the banks, his superannuation account, his national dollar to not screw him over? Is crypto any more volatile than my handing over $400 for a cleaner to do the simple job they advertised only to have them rob me and run?

I did not enter into crypto as a gamble. I entered as a gambit. An educated, calculated play at reclaiming some ground. Reclaiming some autonomy, some control over my fucking time, my money.

I invested in the future, I invested in the power of decentralisation. I took back control of my wealth (tiny though it may be). I am excited to grow alongside these projects.

The cryptosphere is more than a market. It is a new technological universe being birthed out of our current, stale and broken one. At times it will be uncomfortable, painful, scary — any good birth is. Just don’t call me a gambler because I’ve chosen to be there when the baby arrives.