The Current Crypto Bear Market & The Future of Blockchain – Asset Backed Token (ABT) ICOs

The current crypto bear market is due much to the network value well exceeding the number of transactions at the end of last year. The last time this happened was in late 2013 and resulted in a correction that did not find it’s low until Jan 2015. It then took until 2017 for bitcoin’s price to regain old highs around 1100. Once this happened, bitcoin skyrocketed for the remainder of 2017:

Bitcoin NVT Signal. Source: Woobull.com. (Transaction value is smoothed by 90 day moving average)

 

The current correction is the steepest correction since 2014 when bitcoin corrected -85%. Bitcoin has corrected beyond -75% four times since 2010. This is nothing unusual.

I believe bitcoin will find its major low, possibly around $5000 or perhaps as low as $2950 if it corrects as much as it did when it hit $150 in January 2015. I believe this will happen sometime later in 2019, after which, a new bull market will begin enabling bitcoin to eventually achieve 6 figures in dollars. Indeed, numerous major tailwinds are headed its way:

  1. Institutional capital is coming online with various platforms being established by major institutions such as CME and Goldman Sachs.
  2. Major governments are aligning themselves with blockchain technology.
  3. Bitcoin’s killer app is its store of value. Bitcoin’s superior network effect gives it a superior store of value, even to that of gold.
  4. 3 billion of the world’s unbanked and another 1 billion partially banked are starting to use bitcoin via mpesa/bitpesa.
  5. Rootstock enables bitcoin to emulate ethereum as it enables smart contracts on the bitcoin platform making it competitive to ethereum. Bitcoin also brings along its superior network effect and hashing power, thus should maintain its lead as the more secure network.
  6. Bitcoin’s Lightning Network which solves a variety of issues such as scalability and transaction costs.
  7. A major devaluation in fiat potentially within the next 2 years due to unprecedented levels of global debt. The US Federal Reserve will find they can no longer hike rates beyond the next few rate hikes, thus will have to reverse course. Bridgewater’s Ray Dalio, bond king Bill Gross, legendary investor Jim Rogers, and even former Fed Chair Alan Greenspan are all saying quantitative easing has flooded the financial system with some countries such as Germany and Japan sitting with negative rates, thus will not end well with a material devaluation of fiat likely.
  8. Decentralization of the financial sector.
  9. Bitcoin’s maximum mint of 21 million coins makes it deflationary as opposed to all fiat currencies which are inflationary.
  10. Tim Draper and Twitter CEO Jack Dorsey have said cryptocurrencies will overtake fiat in 5 to 10 years. Next to my $1,000,000 prediction of bitcoin by the year 2022 is Tim Draper’s prediction of bitcoin at $250,000 also by the year 2022.

As shown in the chart below and as I wrote in an earlier piece, given the exponential price rise of bitcoin, it should exceed the US M1 money supply by 2022. In other words, it will overtake the world’s reserve currency by 2022. Note, Bitcoin Money Supply = Bitcoin Market Capitalization. The steep exponential trajectory shown below is equal to the rise in price of bitcoin. While the slope of the chart below has been slowing somewhat, other factors may sustain or steepen the current slope.

Bitcoin money supply VS USD money stock. Source: Woobull.com.

 

If 2015-2016 is any guide, it may take another 1-2 years for bitcoin to regain old highs around $20,000. But given the major tailwinds at bitcoin’s back as shown above, it may reach its old highs of around $20,000 sooner than we expect. Of course, before it gets there, if its current correction repeats the correction from its peak in December 2013 to its trough in January 2015, it could see lows of $2950, or 85% from its prior peak of around $20,000.

Nevertheless, the bitcoin bear market that has so far pushed bitcoin to prices at the time of this writing to just around $7000, or -65% under peak prices achieved in December 2017, has motivated the often demonizing media to once again call into question bitcoin’s value.

As anyone familiar with this space knows, many have chanted that bitcoin/crypto has no underlying value. Even Vitalik Buterin, the creator of Ethereum, has said Ethereum is well overvalued since so many of the cryptocurrencies built on its platform have little to no value with unproven platforms, if they even have a platform. Indeed, the Initial Coin Offering (ICO) space has been rightfully scolded for ICOs being built on vapor, perhaps somewhat akin to the dot.com boom of the late 1990s, during which most dot.com companies failed due to business models bereft of substance or logic. The number of worthless business models and scam artists in the ICO space has certainly left a negative imprint. Nevertheless, blockchain remains transformational across many industries. Blockchain-based ICOs shall replace traditional venture capital as ICO capital raise is vastly more efficient and transparent than the arbitrary, intransigent, and oligopolous VC world. ICOs done right bring transparency and market forces while the cold light of day replaces the secretive elite, “behind closed doors” Venture Capitalists. Blockchain removes unnecessary middle men, thus capital raise can be done in a fraction of the time, and projects can be completed well under budget.

World’s First Asset Backed Token

As a consequence of this, the world’s first asset backed token (ABT) ICO backed by real estate is being launched. The reliability of blockchain technology enables fractional ownership via a highly efficient distribution of value while greatly enhancing liquidity in what has traditionally been a fairly illiquid market. Multiple investors will be able to own a piece of real estate, some land, an apartment, or an entire apartment complex. Blockchain provides a solid foundation where a far more efficient capital employs real banks, real attorneys, real accountants, real appraisers, and real sales agents to all work together to develop land into liveable homes and apartment complexes.

World’s Most Advanced Digital Nation

One current project has been billed by various media sources as the world’s most advanced digital nation, Estonia. Tallinn, with its stunning Hanseatic buildings, is interspersed with the world’s advanced digital start-ups. This contributes to Tallinn’s breakneck rates of growth, thus bodes well for land values with many new families in formation seeking apartment and home accommodations near the city center.

Real Estate ABT

The ICO project, HanseCoin, owns 6.6 hectares of land with space for 214 apartments and 28 houses, just 12 minutes from Tallinn’s city center, and has been fully permitted with legal approvals completed and relevant infrastructure already built. The land is thus “shovel ready” to be developed. A capital raise of 6.5 mil euros of construction equity will be conducted via an ICO which will launch in the fall of 2018.

Outside the cryptospace and blockchain hype, what remains when the fog lifts? Shovel ready land that is being transformed into residential property. Even should the cryptospace and bitcoin go to zero, or regulatory burdens were to become onerous, the foundation of our project remains intact. All investors still own their tokenized share of the land, enjoy part of the capital gain of their property, and receive their dividends.

From here, the project can be scaled up, initial for but not limited to just land development and real estate. That said, fractional ownership of real estate alone is an untapped multi-billion market. Fractional ownership enables a real estate owner to split up their home or property investment and sell off equity stakes. The real estate equity can then be freely traded until, one day, when the property is sold, the owner and equity investor can both enjoy any gain in the property’s value. But asset backed tokenization does not end with real estate. This can also be done with other hard assets.

“Using blockchains, you can securitize any asset for 1/100th the cost,” according to Multicoin Capital partner Kyle Samani. “We will undoubtedly see tokenized real estate securities in 2018,” according to Prof. Stephen McKeon of the University of Oregon. Further, tokenizing real estate could also make the space, which has been attractive to investors but difficult to trade, more liquid. An analyst at Apex Token Fund explained, “A new level of liquidity is created when tokenizing traditional assets. This liquidity makes it faster and easier to rebalance a portfolio as the market changes.”

We’re going into a new era. Buckle up!

by Dr. Chris Kacher
www.virtueofselfishinvesting.com
The Evolution Will Not Be Centralized™

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About the Author – Dr Chris Kacher Cryptotech / Nuclear physicist turned stock market wizard (KPMG audited) / Top 40 charted musician / Bestselling author

Dr Kacher is CEO of Creative Group Trading, Inc., an investment and trading vehicle for cryptocurrencies. He founded one of the first Internet-based stock advisory services in 1995 then went on to generate triple digit % returns for 6 years in a row during the 1995-2000 period before moving to cash for most of the 2000-2002 bear market. He has published numerous works including 4 books through Wiley & Sons including Bestseller “How We Made 18,000% in the Stock Market” available in five languages.

Dr Chris Kacher has appeared in major business media including CNBC, Reuters and Bloomberg and was a regular contributor to MarketWatch among others until 2012-2013 when he became involved in the blockchain.

Dr Kacher received his PhD in Nuclear Physics from University of California at Berkeley. He co-created Element 110 on the Periodic Table of Elements and “confirmed” the existence of Element 106 which his team named Seaborgium after Nobel Laureate Dr. Glenn Seaborg who discovered plutonium and supervised Dr. Kacher’s work as a doctoral student at UC Berkeley.


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