Bitcoin had a fair launch. Anyone who knew about Bitcoin and had access to a PC could mine from day 1. Over time, mining became more difficult but people could easily buy BTC on various exchanges or from other people who had Bitcoin. You didn't have to be a member of a privileged class to get into Bitcoin at the ground floor. submitted by
Ethereum had a fair launch. Unlike Bitcoin, the project was far too ambitious for the people who conceived of it to pay for its development out of pocket. So they held an open crowd funding to pay for development. Anyone who heard about Ethereum could participate in the crowdsale, priced at about 30 cents/ETH. After the chain launched, anyone with a modern graphics card could also mine Ether and put some away.
Some founders on the team didn't care for that funding model for Ethereum. They wanted Ethereum to be funded by insiders and VCs and held private for a long time. Some even left the project, or were encouraged to leave, over the difference in vision between an open community non-profit project, and a VC-held and VC-controlled for-profit organization.
And of course both Bitcoin and Ethereum are open-source projects with licenses that encourage the ability to copy, rework, and reuse the project code.
These days there are lots of Ethereum "killers", ETH 2.0 "killers" and ETH competitors launching and planned for launch. For the most part, they do not adhere to the Bitcoin or the Ethereum open participation models. Some are closed-source, copyrighted projects. Almost all were and are funded by VCs and the wealthy via SAFTs, often through secret deals where price and amount of tokens are not disclosed. The public is generally not allowed to participate until the tokens get marked up 5x, 10x or 100x before an exchange listing. So you will end up with the vast majority of tokens owned by a very few, already very wealthy people.
But a radically unjust token distribution isn't all that these new "Ethereum Killers" have. No, they also are, almost to the last, designed around plutocratic governance. That is, if you are one of VCs, the insiders and wealthy allowed to buy in early before the marking up to retail, you will have orders of magnitude more tokens and therefore you will have orders of magnitude more control over future changes to blockchain rules than the hoi polloi. Some even see this kind of governance as a feature and a good thing. I disagree emphatically!
Ethereum was an open, community-supported launch organized by a non-profit entity. It is today an open and community-participatory project. There are no fees to attach your application to Ethereum, other than gas costs. The blockchain is permissionless, no plutocracy can "vote you off the island". Ethereum is not run by rich VCs and "accredited investors" who got in on the ground floor when you couldn't.
I do hope that Ethereum wins out. I think there is an enormous difference between an open community project and almost all of the competitors who launched after. I do not want the future of humanity's financial internet to be based on plutocratic control by the fabulously wealthy. How would that be one bit better than the existing financial system?
If making these observations, if hoping that Ethereum becomes the global financial commons, instead of a pluto-chain taking over, makes me a narrow-minded Ethereum maximalist, so be it.
Merry Xmas !
I am coming back to you with a follow up post, as I have helped many people cash out this year and I have streamlined the process. After my original post
, I received many requests to be more specific and provide more details. I thought that after the amazing rally we have been attending over the last few months, and the volatility of the last few days, it would be interesting to revisit more extensively.
The attitude of banks around crypto is changing slowly, but it is still a tough stance. For the first partial cash out I operated around a year ago for a client, it took me months to find a bank. They wouldn’t want to even consider the case and we had to knock at each and every door. Despite all my contacts it was very difficult back in the days. This has changed now, and banks have started to open their doors, but there is a process, a set of best practices and codes one has to follow.
I often get requests from crypto guys who are very privacy-oriented, and it takes me months to have them understand that I am bound by Swiss law on banking secrecy, and I am their ally in this onboarding process. It’s funny how I have to convince people that banks are legit, while on the other side, banks ask me to show that crypto millionaires are legit. I have a solid background in both banking and in crypto so I manage to make the bridge, but yeah sometimes it is tough to reconcile the two worlds. I am a crypto enthusiast myself and I can say that after years of work in the banking industry I have grown disillusioned towards banks as well, like many of you. Still an account in a Private bank is convenient and powerful. So let’s get started.
- A. What is required to open an account in a Private bank when you made your fortune through crypto.
There are two different aspects to your onboarding in a Swiss Private bank, compliance-wise.
*The origin of your crypto wealth
*Your background (residence, citizenship and probity)
These two aspects must be documented in-depth. How to document your crypto wealth.
Each new crypto millionaire has a different story. I may detail a few fun stories later in this post, but at the end of the day, most of crypto rich I have met can be categorized within the following profiles: the miner, the early adopter, the trader, the corporate entity, the black market, the libertarian/OTC buyer. The real question is how you prove your wealth is legit. 1. Context around the original amount/investment
Generally speaking, your first crypto purchase may not be documented. But the context around this acquisition can be. I have had many cases where the original amount was bought through Mtgox, and no proof of purchase could be provided, nor could be documented any Mtgox claim. That’s perfectly fine. At some point Mtgox amounted 70% of the bitcoin transactions globally, and people who bought there and managed to withdraw and keep hold of their bitcoins do not have any Mtgox claim. This is absolutely fine. However, if you can show me the record of a wire from your bank to Tisbane (Mtgox's parent company) it's a great way to start.
Otherwise, what I am trying to document here is the following: I need context. If you made your first purchase by saving from summer jobs, show me a payroll. Even if it was USD 2k. If you acquired your first bitcoins from mining, show me the bills of your mining equipment from 2012 or if it was through a pool mine, give me your slushpool account ref for instance. If you were given bitcoin against a service you charged, show me an invoice. 2. Tracking your wealth until today and making sense of it.
What I have been doing over the last few months was basically educating compliance officers. Thanks God, the blockchain is a global digital ledger! I have been telling my auditors and compliance officers they have the best tool at their disposal to lead a proper investigation. Whether you like it or not, your wealth can be tracked, from address to address. You may have thought all along this was a bad feature, but I am telling you, if you want to cash out, in the context of Private Banking onboarding, tracking your wealth through the block explorer is a boon. We can see the inflows, outflows. We can see the age behind an address. An early adopter who bought 1000 BTC in 2010, and let his bitcoin behind one address and held thus far is legit, whether or not he has a proof of purchase to show. That’s just common sense. My job is to explain that to the banks in a language they understand.
Let’s have a look at a few examples and how to document the few profiles I mentioned earlier. The trader.
I love traders. These are easy cases. I have a ton of respect for them. Being a trader myself in investment banks for a decade earlier in my career has taught me that controlling one’s emotions and having the discipline to impose oneself some proper risk management system is really really hard. Further, being able to avoid the exchange bankruptcy and hacks throughout crypto history is outstanding. It shows real survival instinct, or just plain blissed ignorance. In any cases traders at exchange are easy cases to corroborate since their whole track record is potentially available. Some traders I have met have automated their trading and have shown me more than 500k trades done over the span of 4 years. Obviously in this kind of scenario I don’t show everything to the bank to avoid information overload, and prefer to do some snacking here and there. My strategy is to show the early trades, the most profitable ones, explain the trading strategy and (partially expose) the situation as of now with id pages of the exchanges and current balance. Many traders have become insensitive to the risk of parking their crypto at exchange as they want to be able to trade or to grasp an occasion any minute, so they generally do not secure a substantial portion on the blockchain which tends to make me very nervous. The early adopter.
Provided that he has not mixed his coin, the early adopter or “hodler” is not a difficult case either. Who cares how you bought your first 10k btc if you bought them below 3$ ? Even if you do not have a purchase proof, I would generally manage to find ways. We just have to corroborate the original 30’000 USD investment in this case. I mainly focus on three things here:
*proof of early adoption I have managed to educate some banks on a few evidences specifically related to crypto markets. For instance with me, an old bitcointalk account can serve as a proof of early adoption. Even an old reddit post from a few years ago where you say how much you despise this Ripple premined scam can prove to be a treasure readily available to show you were early.
*story telling Compliance officers like to know when, why and how. They are human being looking for simple answers to simple questions and they don’t want like to be played fool. Telling the truth, even without a proof can do wonders, and even though bluffing might still work because banks don’t fully understand bitcoin yet, it is a risky strategy that is less and less likely to pay off as they are getting more sophisticated by the day.
*micro transaction from an old address you control This is the killer feature. Send a $20 worth transaction from an old address to my company wallet and to one of my partner bank’s wallet and you are all set ! This is gold and considered a very solid piece of evidence. You can also do a microtransaction to your own wallet, but banks generally prefer transfer to their own wallet. Patience with them please. they are still learning.
*signature message Why do a micro transaction when you can sign a message and avoid potentially tainting your coins ?
*ICO millionaire Some clients made their wealth participating in ETH crowdsale or IOTA ICO. They were very easy to deal with obviously and the account opening was very smooth since we could evidence the GENESIS TxHash flow. The miner
Not so easy to proof the wealth is legit in that case. Most early miners never took screenshot of the blocks on bitcoin core, nor did they note down the block number of each block they mined. Until the the Slashdot article from August 2010 anyone could mine on his laptop, let his computer run overnight and wake up to a freshly minted block containing 50 bitcoins back in the days. Not many people were structured enough to store and secure these coins, avoid malwares while syncing the blockchain continuously, let alone document the mined blocks in the process. What was 50 BTC worth really for the early miners ? dust of dollars, games and magic cards… Even miners post 2010 are generally difficult to deal with in terms of compliance onboarding. Many pool mining are long dead. Deepbit is down for instance and the founders are MIA. So my strategy to proof mining activity is as follow:
*Focusing on IT background whenever possible. An IT background does help a lot to bring some substance to the fact you had the technical ability to operate a mining rig.
*Showing mining equipment receipts. If you mined on your own you must have bought the hardware to do so. For instance mining equipment receipts from butterfly lab from 2012-2013 could help document your case. Similarly, high electricity bill from your household on a consistent basis back in the day could help. I have already unlocked a tricky case in the past with such documents when the bank was doubtful.
*Wallet.dat files with block mining transactions from 2011 thereafter This obviously is a fantastic piece of evidence for both you and me if you have an old wallet and if you control an address that received original mined blocks, (even if the wallet is now empty). I will make sure compliance officers understand what it means, and as for the early adopter, you can prove your control over these wallet through a microtransaction. With these kind of addresses, I can show on the block explorer the mined block rewards hitting at regular time interval, and I can even spot when difficulty level increased or when halvening process happened.
*Poolmining account. Here again I have educated my partner bank to understand that a slush account opened in 2013 or an OnionTip presence was enough to corroborate mining activity. The block explorer then helps me to do the bridge with your current wallet.
*Describing your set up and putting it in context In the history of mining we had CPU, GPU, FPG and ASICs mining. I will describe your technical set up and explain why and how your set up was competitive at that time. The corporate entity
Remember 2012 when we were all convinced bitcoin would take over the world, and soon everyone would pay his coffee in bitcoin? How naïve we were to think transaction fees would remain low forever. I don’t blame bitcoin cash supporters; I once shared this dream as well. Remember when we thought global adoption was right around the corner and some brick and mortar would soon accept bitcoin transaction as a common mean of payment? Well, some shop actually did accept payment and held. I had a few cases as such of shops holders, who made it to the multi million mark holding and had invoices or receipts to proof the transactions. If you are organized enough to keep a record for these trades and are willing to cooperate for the documentation, you are making your life easy. The digital advertising business is also a big market for the bitcoin industry, and affiliates partner compensated in btc are common. It is good to show an invoice, it is better to show a contract. If you do not have a contract (which is common since all advertising deals are about ticking a check box on the website to accept terms and conditions), there are ways around that. If you are in that case, pm me. The black market
Sorry guys, I can’t do much for you officially. Not that I am judging you. I am a libertarian myself. It’s just already very difficult to onboard legit btc adopters, so the black market is a market I cannot afford to consider. My company is regulated so KYC and compliance are key for me if I want to stay in business. Behind each case I push forward I am risking the credibility and reputation I have built over the years. So I am sorry guys I am not risking it to make an extra buck. Your best hope is that crypto will eventually take over the world and you won’t need to cash out anyway. Or go find a Lithuanian bank that is light on compliance and cooperative. The OTC buyer and the libertarian.
Generally a very difficult case. If you bought your stack during your journey in Japan 5 years ago to a guy you never met again; or if you accumulated on https://localbitcoins.com/
and kept no record or lost your account, it is going to be difficult. Not impossible but difficult. We will try to build a case with everything else we have, and I may be able to onboard you. However I am risking a lot here so I need to be 100% confident you are legit, before I defend you. Come & see me in Geneva, and we will talk. I will run forensic services like elliptic
, or scorechain
on an extract of your wallet. If this scan does not raise too many red flags, then maybe we can work together ! If you mixed your coins all along your crypto history, and shredded your seeds because you were paranoid, or if you made your wealth mining professionally monero over the last 3 years but never opened an account at an exchange. ¯_(ツ)_/¯ I am not a magician and don’t get me wrong, I love monero, it’s not the point. Cashing out ICOs
Private companies or foundations who have ran an ICO generally have a very hard time opening a bank account. The few banks that accept such projects would generally look at 4 criteria:
*Seriousness of the project Extensive study of the whitepaper to limit the reputation risk
*AML of the onboarding process ICOs 1.0 have no chance basically if a background check of the investors has not been conducted
*Structure of the moral entity List of signatories, certificate of incumbency, work contract, premises...
*Fiscal conformity Did the company informed the authorities and seek a fiscal ruling.
- B. The tax issue I am not a tax specialist, but I can say that this year I have seen it all. Again I am not judging. You made $100m hodling, and still wouldn’t pay your taxes ? Your decision.I personally advise everyone to pay their taxes, but also to be generous, to give to charities. I mean you eventually made it. Good for you. What about you contribute to make the world a better place now? I will stop patronizing you. It’s just my 2cts, and it’s your money.
For the record, I am not into the tax avoidance business, so people come to me with a set up and I see if I can make it work within the legal framework imposed to me.
First, stop thinking Switzerland is a “offshore heaven” Swiss banks have made deals with many governments for the exchange of fiscal information. If you are a French citizen, resident in France and want to open an account in a Private Bank in Switzerland to cash out your bitcoins, you will get slaughtered (>60%). There are ways around that, and I could refer you to good tax specialists for fiscal optimization, but I cannot organize it myself. It would be illegal for me. Swiss private banks makes it easy for you to keep a good your relation with your retail bank and continue paying your bills without headaches. They are integrated to SEPA, provide ebanking and credit cards.
For information, these are the kind of set up some of my clients came up with. It’s all legal; obviously I do not onboard clients that are not tax compliant. Further disclaimer: I did not contribute myself to these set up. Do not ask me to organize it for you. I won’t. EU tricks Swiss lump sum taxation
Foreign nationals resident in Switzerland can be taxed on a lump-sum basis if they are not gainfully employed in our country. Under the lump-sum tax regime, foreign nationals taking residence in Switzerland may choose to pay an expense-based tax instead of ordinary income and wealth tax. Attractive cantons for the lump sum taxation are Zug, Vaud, Valais, Grisons, Lucerne and Berne. To make it short, you will be paying somewhere between 200 and 400k a year and all expenses will be deductible.
Switzerland has adopted a very friendly attitude towards crypto currency in general. There is a whole crypto valley in Zug now. 30% of ICOs are operated in Switzerland. The reason is that Switzerland has thrived for centuries on banking secrecy, and today with FATCA and exchange of fiscal info with EU, banking secrecy is dead. Regulators in Switzerland have understood that digital ledger technologies were a way to roll over this competitive advantage for the generations to come. Switzerland does not tax capital gains on crypto profits. The Finma has a very pragmatic approach. They have issued guidance
- updated guidelines here
. They let the business get organized and operate their analysis on a case per case basis. Only after getting a deep understanding of the market will they issue a global fintech license in 2019. This approach is much more realistic than legislations which try to regulate everything beforehand. Italy new tax exemption.
It’s a brand new fiscal exemption. Go to Aoste, get residency and you could be taxed a 100k/year for 10years. Yes, really
What’s crazy in Europe is the lack of fiscal harmonization. Even if no one in Brussels dares admit it, every other country is doing fiscal dumping. Portugal is such a country and has proved very friendly fiscally speaking. I personally have a hard time trusting Europe. I have witnessed what happened in Greece over the last few years. Some of our ultra high net worth clients got stuck with capital controls. I mean no way you got out of crypto to have your funds confiscated at the next financial crisis! Anyway. FYI Malta
Generally speaking, if you get a residence somewhere you have to live there for a certain period of time. Being stuck in Italy is no big deal with Schengen Agreement, but in Malta it is a different story. In Malta, the ordinary residence scheme is more attractive than the HNWI residence scheme. Being an individual, you can hold a residence permit under this scheme and pay zero income tax in Malta in a completely legal way. Monaco
Not suitable for French citizens, but for other Ultra High Net worth individual, Monaco is worth considering. You need an account at a local bank as a proof of fortune, and this account generally has to be seeded with at least EUR500k. You also need a proof of residence. I do mean UHNI because if you don’t cash out minimum 30m it’s not interesting. Everything is expensive in Monaco. Real Estate is EUR 50k per square meter. A breakfast at Monte Carlo Bay hotel is 70 EUR. Monaco is sunny but sometimes it feels like a golden jail. Do you really want that for your kids? Dubaï
- Set up a company in Dubaï, get your resident card.
- Spend one day every 6 month there
- Be tax free
Some Private banks in Geneva do have the license to manage the assets of US persons and U.S citizens. However, do not think it is a way to avoid paying taxes in the US. Opening an account at an authorized Swiss Private banks is literally the same tax-wise as opening an account at Fidelity or at Bank of America in the US. The only difference is that you will avoid all the horror stories. Horror stories are all real by the way. In Switzerland, if you build a decent case and answer all the questions and corroborate your case in depth, you will manage to convince compliance officers beforehand. When the money eventually hits your account, it is actually available and not frozen.
The IRS and FATCA require to file FBAR if an offshore account is open. However FBAR is a reporting requirement and does not have taxes related to holding an account outside the US. The taxes would be the same if the account was in the US. However penalties for non compliance with FBAR are very large. The tax liability management is actually performed through the management of the assets ( for exemple by maximizing long term capital gains and minimizing short term gains).
The case for Porto Rico
. Full disclaimer here. I am not encouraging this. Have not collaborated on such tax avoidance schemes. if you are interested I strongly encourage you to seek a tax advisor and get a legal opinion. I am not responsible for anything written below. I am not going to say much because I am so afraid of uncle Sam that I prefer to humbly pass the hot potato to pwc
From here all it takes is a good advisor and some creativity to be tax free on your crypto wealth if you are a US person apparently. Please, please please don’t ask me more. And read the disclaimer again. Trust tricks
Generally speaking I do not accept fringe fiscal situation because it puts me in a difficult situation to the banks I work with, and it is already difficult enough to defend a legit crypto case. Trust might be a way to optimize your fiscal situation. Belize. Bahamas. Seychelles. Panama, You name it. At the end of the day, what matters for Swiss Banks are the beneficial owner and the settlor. Get a legal opinion, get it done, and when you eventually knock at a private bank’s door, don’t say it was for fiscal avoidance you stupid ! You will get the door smashed upon you. Be smarter. It will work. My advice is just to have it done by a great tax specialist lawyer, even if it costs you some money, as the entity itself needs to be structured in a professional way. Remember that with trust you are dispossessing yourself off your wealth. Not something to be taken lightly. “Anonymous” cash out.
Right. I think I am not going into this topic, neither expose the ways to get it done. Pm me for details. I already feel a bit uncomfortable with all the info I have provided. I am just going to mention many people fear that crypto exchange might become reporting entities soon, and rightly so. This might happen anyday. You have been warned. FYI, this only works for non-US and large cash out. The difference between traders an investors.
Danmark, Holland and Germany all make a huge difference if you are a passive investor or if you are a trader. ICO is considered investing for instance and is not taxed, while trading might be considered as income and charged aggressively. I would try my best to protect you and put a focus on your investor profile whenever possible, so you don't have to pay 52% tax if you do not have to :D
Full cash out or partial cash out?
- C. The cash out itself So you have accumulated patiently a good amount of wealth. For some of us who have been involved in crypto since 2010, it took years. Remember when BTC was stuck at 200$ for months? I personally feel like it was yesterday. There is no way you screw up your wealth by cashing out in a hurry or with low security standards. Here is how the cash out takes should place.
People who have been sitting on crypto for long have grown an emotional and irrational link with their coins. They come to me and say, look, I have 50m in crypto but I would like to cash out 500k only. So first let me tell you that as a wealth manager my advice to you is to take some off the table. Doing a partial cash out is absolutely fine. The market is bullish. We are witnessing a redistribution of wealth at a global scale. Bitcoin is the real #occupywallstreet, and every one will discuss crypto at Xmas eve which will make the market even more supportive beginning 2018, especially with all hedge funds entering the scene. If you want to stay exposed to bitcoin and altcoins, and believe these techs will change the world, it’s just natural you want to keep some coins. In the meantime, if you have lived off pizzas over the last years, and have the means to now buy yourself an nice house and have an account at a private bank, then f***ing do it mate ! Buy physical gold with this account, buy real estate, have some cash at hands. Even though US dollar is worthless to your eyes, it’s good and convenient to have some. Also remember your wife deserves it ! And if you have no wife yet and you are socially awkward like the rest of us, then maybe cashing out partially will help your situation ;) What the Private Banks expect.
Joke aside, it is important you understand something. If you come around in Zurich to open a bank account and partially cash out, just don’t expect Private Banks will make an exception for you if you are small. You can’t ask them to facilitate your cash out, buy a 1m apartment with the proceeds of the sale, and not leave anything on your current account. It won’t work. Sadly, under 5m you are considered small in private banking. The bank is ok to let you open an account, provided that your kyc and compliance file are validated, but they will also want you to become a client and leave some money there to invest. This might me despicable, but I am just explaining you their rules. If you want to cash out, you should sell enough to be comfortable and have some left. Also expect the account opening to last at least 3-4 week if everything goes well. You can't just open an account overnight. The cash out logistics.
Cashing out 1m USD a day in bitcoin or more is not so hard.
Let me just tell you this: Even if you get a Tier 4 account with Kraken and ask Alejandro there to raise your limit over $100k per day, Even if you have a bitfinex account and you are willing to expose your wealth there, Even if you have managed to pass all the crazy due diligence at Bitstamp,
The amount should be fractioned to avoid risking your full wealth on exchange and getting slaughtered on the price by trading big quantities. Cashing out involves significant risks at all time. There is a security risk of compromising your keys, a counterparty risk, a fat finger risk. Let it be done by professionals. It is worth every single penny.
Most importantly, there is a major difference between trading on an exchange and trading OTC. Even though it’s not publicly disclosed some exchange like Kraken do have OTC desks. Trading on an exchange for a large amount will weight on the prices. Bitcoin is a thin market. In my opinion over 30% of the coins are lost in translation forever. Selling $10m on an exchange in a day can weight on the prices more than you’d think. And if you trade on a exchange, everything is shown on record, and you might wipe out the prices because on exchanges like bitstamp or kraken ultimately your counterparties are retail investors and the market depth is not huge. It is a bit better on Bitfinex. It is way better to trade OTC. Accessing the institutional OTC market is not easy, and that is also the reason why you should ask a regulated financial intermediary if we are talking about huge amounts.
Last point, always chose EUR as opposed to USD. EU correspondent banks won’t generally block institutional amounts. However we had the cases of USD funds frozen or delayed by weeks.
Most well-known OTC desks are Cumberlandmining
(ask for Lucas), Genesis
(ask for Martin), Bitcoin Suisse AG
(ask for Niklas), circletrade
, or Altcoinomy
(ask for Olivier)
Very very large whales can also set up escrow accounts for massive block trades. This world, where blocks over 30k BTC are exchanged between 2 parties would deserve a reddit thread of its own. Crazyness all around. Your options: DIY or going through a regulated financial intermediary.
Execution trading is a job in itself. You have to be patient, be careful not to wipe out the order book and place limit orders, monitor the market intraday for spikes or opportunities. At big levels, for a large cash out that may take weeks, these kind of details will save you hundred thousands of dollars. I understand crypto holders are suspicious and may prefer to do it by themselves, but there are regulated entities who now offer the services. Besides, being a crypto millionaire is not a guarantee you will get institutional daily withdrawal limits at exchange. You might, but it will take you another round of KYC with them, and surprisingly this round might be even more aggressive that the ones at Private banks since exchange have gone under intense scrutiny by regulators lately.
The fees for cashing out through a regulated financial intermediary to help you with your cash out should be around 1-2% flat on the nominal, not more. And for this price you should get the full package: execution/monitoring of the trades AND onboarding in a private bank. If you are asked more, you are being abused.
Of course, you also have the option to do it yourself. It is a way more tedious and risky process. Compliance with the exchange, compliance with the private bank, trading BTC/fiat, monitoring the transfers…You will save some money but it will take you some time and stress. Further, if you approach a private bank directly, it will trigger a series of red flag to the banks. As I said in my previous post, they call a direct approach a “walk-in”. They will be more suspicious than if you were introduced by someone and won’t hesitate to show you high fees and load your portfolio with in-house products that earn more money to the banks than to you. Remember also most banks still do not understand crypto so you will have a lot of explanations to provide and you will have to start form scratch with them! The paradox of crypto millionaires
Most of my clients who made their wealth through crypto all took massive amount of risks to end up where they are. However, most of them want their bank account to be managed with a low volatility fixed income capital preservation risk profile. This is a paradox I have a hard time to explain and I think it is mainly due to the fact that most are distrustful towards banks and financial markets in general. Many clients who have sold their crypto also have a cash-out blues in the first few months. This is a classic situation. The emotions involved in hodling for so long, the relief that everything has eventually gone well, the life-changing dynamics, the difficulties to find a new motivation in life…All these elements may trigger a post cash-out depression. It is another paradox of the crypto rich who has every card in his hand to be happy, but often feel a bit sad and lonely. Sometimes, even though it’s not my job, I had to do some psychological support. A lot of clients have also become my friends, because we have the same age and went through the same “ordeal”. First world problem I know… Remember, cashing out is not the end. It’s actually the beginning. Don’t look back, don’t regret. Cash out partially, because it does not make sense to cash out in full, regret it and want back in. relax. The race to cash out crypto billionaire and the concept of late exiter.
The Winklevoss brothers are obviously the first of a series. There will be crypto billionaires. Many of them. At a certain level you can have a whole family office working for you to manage your assets and take care of your needs . However, let me tell you it’s is not because you made it so big that you should think you are a genius and know everything better than anyone. You should hire professionals to help you. Managing assets require some education around the investment vehicles and risk management strategies. Sorry guys but with all the respect I have for wallstreebet
, AMD and YOLO stock picking, some discipline is necessary. The investors who have made money through crypto are generally early adopters. However I have started to see another profile popping up. They are not early adopters. They are late exiters. It is another way but just as efficient. Last week I met the first crypto millionaire I know who first bough bitcoin over 1000$. 55k invested at the beginning of this year. Late adopter & late exiter is a route that can lead to the million. Last remarks.
I know banks, bankers, and FIAT currencies are so last century. I know some of you despise them and would like to have them burn to the ground. With compliance officers taking over the business, I would like to start the fire myself sometimes. I hope this extensive guide has helped some of you. I am around if you need more details. I love my job despite all my frustration towards the banking industry because it makes me meet interesting people on a daily basis. I am a crypto enthusiast myself, and I do think this tech is here to stay and will change the world. Banks will have to adapt big time. Things have started to change already; they understand the threat is real. I can feel the generational gap in Geneva, with all these old bankers who don’t get what’s going on. They glaze at the bitcoin chart on CNBC in disbelief and they start to get it. This bitcoin thing is not a joke. Deep inside, as an early adopter who also intends to be a late exiter, as a libertarian myself, it makes me smile with satisfaction.
Cheers. @swisspb on telegram
So I've been in crypto for a few years now and Tezos has particularly caught my attention.
I thought it could be interesting to share my views on why I think Tezos will be highly successful, while hightlighting a few weaknesses that may get in the way of that success. Could be a good way to share views and opinions.
So, you all know trade-offs are to be made when you design a blockchain protocol. You either prioritize scaling over decentralization or decentralization over scaling, at least on the blockchain layer.
Scaling has been a hot topic in the last few years, which led some projects to heavily focus on that, either Bitcoin with SegWit LN and other solutions in the making, Ethereum with sharding and plasma, or new blockchains protocols like EOS. Now, LN or plasma doesn't affect censorship resistance or security because they are layer 2 solutions, but for layer 1 scaling solutions the trade-off is huge because the protocol gets much more centralized and much less censorship resistant, making it a poor store of value.
That said, I think blockchains are a viable option for your product if and only if you need censorship resistance through decentralization. If not, then use another kind of database that's going to be much more efficient.
Which is why, from what i've learn, the number one thing blockchains are good at is: Censorship resistant incentive models
In my opinion, this is the true value of blockchain tech. It doesn't get better than that. If you create a network of value that is designed to gain value overtime and put it out their in the wild, people are
going to join in, because you can build better models that whats available in the traditionnal world, and everyone can have access to them with a simple internet connection. On Bitcoin's value proposition
Let's be honest, as of today Bitcoin fails to be a mean of payment. Adoption is not good even tho you have a few merchants accepting it (who will in general convert it immidiately to fiat). LN might solve that, I don't know, but it doesn't matter so much. Why ? because Bitcoin's true value doesn't come from using it as a mean of payment, it comes from it's scarcity.
On the Store-of-value narative Bitcoin is strong as fuck. There's only going to be 21 million coins in existence, period. And it's going to live forever because it's uncensorable. Best scarce asset that I can think of. By the way 2020 is a pivotal point, with february halving we're gonna go from 4% inflation on Bitcoin to 2%, matching USD inflation rate. From 2020 and on, Bitcoin's inflation rate is never
going to be more than fiat's inflation rate. That value proposition alone is a valid reason to buy and hold Bitcoin. This is what will make the price go up and bring liquidity and stability, and only then Bitcoin will be able to gain adoption as a mean of payment.
Back to Tezos. On Tezos' incentive model
So far I fail to see any point of failure in Tezos' model in terms of incentives, I feel like everything has been covered:
On Tezos' security mindset
- Liquid proof-of-stake is super smooth to used. It's so easy, within 3 clicks you are part of the reward system (when I say 3 I mean 3, create delegation address, select delegate, send funds to that address). Today you make more than 10% annual return on your XTZs just by holding the thing on your Ledger Nano S. It's going to go down to 6-7% eventually but that value proposition is a no brainer. As long as your participate you don't get diluted by the system. So building a mining operation is basically replaced by 3 clicks. If security model works that's just a killer feature, allowing fair distribution of inflation.
- Smart contracts are basically free if you hold XTZ because you are collecting the fees.
- Hold more than 1 roll ? Your incentive is to run your own node because you won't rely on a baking service and will get the full reward, which in turns help decentralization and thus increases censorship resistance.
- You're trying to cheat the network ? Others have an incentive to point at you to get their hand on part of your security deposit.
- Wanna be rich ? go and learn Ocaml, make proposition for protocol amendments, add your invoice. If your proposition is implemented no more money issues. - Parenthese, this is important, and this is one of the main reasons why I think censorship resistant networks of value will play an important role in the future. If you're well incentivized to build on them, tons of people around the world would rather do that then get whatever 9-5 job that's not going to get them out of poverty. There is a big misconception in my mind that is oftenly made, which is that we're gonna help the third world with blockchain tech. We're not gonna help them, they're gonna help themselves through it. And once they realise how well they can help themselves by building on global networks of value, the pace of innovation in the field will explode. They're hungry. -
- We'll see how on-chain governance allows for easy modification of the protocole, but I like the fact that if a propostion is obviously good for the protocol it can be implemented rather easily. This also allows for great flexibility and evolutions on Tezos' incentive model and value proposition in the future.
When you value store-of-value over transaction throughtput, you value security over anything else. This is why Bitcoin has 10 minute blocks and this is why Bitcoin's blocksize is -still- 1.8MB (with segwit).
For store-of-value and good incentive models the focus should be on security and not on throughtput. And I'm super glad Tezos is taking that direction.
To be honest, when you have a look at ethereum's traffic most of it comes from low value adding projects. Most interesting project on Ethereum just don't need high troughput, at least for now. So this gives Tezos time to focus and better out security before implementing solid layer 2 solutions.
Personnally, I don't feel the real value proposition of Tezos is on smart-contract feature but rather on the incentive model and store of value narative (inflation doesn't matter if all it takes not to get diluted is 3 clicks), and as such it doesn't matter to me that they chose programming languages that are a bit more difficult to learn for the average programmer as long as they give Tezos an advantage in term of security and robustness (Ocaml, Michelson) (back to incentives they will learn them anyway if they can make more money off of them).
That being said, it is awesome to think that Tezos has even more to offer through smart-contracts features, but this is just the cherry on the cake that will bring more people to the project in my mind. On the negatives
I think TF and DLS allocated too much XTZ to themselves. When we look back at the history of altcoins, the most successful alts were the one that had fair distribution. It started as early as 2011 with projects like Tenebrix who allocated a big amount of the supply to themselves, they died quick. People just don't like that, it's a turn off. I understand TF and DLS will use that money to better out the protocole, but 5% each would have been well enough and I think valuation would have been better off, which would have make their 5% stake more valuable in the long run. Also, they raised a significant amount of money and DLS will get 8.5% of that money. Even with 2% each they would have had tons of money to deal with and it would have been better for decentralization.
But well I also understand they wanted to keep some degree of control on amendment proposals.
I gotta say I would have liked to see a better distribution of wealth, but oh well it's not worst than other DLT projects.
As for KYC ermhh, I'm not sure what to think about it to be honest. I'm sure it was a tough decision and I'm confident there is a very good reason behing that choice. Maybe a good move for the long run, probably not for the short run, but who cares about short.
That said I am confident Tezos' value proposition is unique in the space today and will thrive in the long run.
Disclaimer: I own some XTZ ;)
Hello there. I am a comedian. My act entails me to pretend to be a self-proclaimed financial expert who can lead you to riches via by paying for his seminajoining my nutritional supplement sales force/learning my bitcoin investing techniques. I won't say my name or link to my act out of respect for the rules. I just discovered this forum. I have no idea how I haven't visited yet. submitted by
I've been a hobbyist in comedy for over a decade. I also professionally used to write about finance and econ and etc. I've long been interested in con men and scams and the like. About four years ago, I conceived of this new act and decided to run with it. This was largely done after rereading "Rich Dad Poor Dad" for the first time in a few years and really being grossed out by what I read. And, wouldn't you know it, a little bit after that a Rich Dad Seminar was coming to a crappy chain hotel ballroom the next week just a few minutes from my house. This as the first of many of these types of seminars that I went to as sort of a weird method acting thing to study how the seminars operated and the types of people who lead them.
The most MLM one I went to was this really weird bitcoin thing. It was held at a Bonefish Grille near where I live. There was the promise of a free appetizer (Bang Bang Shrimp, specifically). I went and sat down with this middle aged white guy. We started talking. He asked me if I was interested in investing in bitcoin. I told him "no." I didn't tell him why I was there, but said I was curious about learning about any investment opportunity. This guy was an insurance broker with a college degree. He said he was always looking for some more opportunities and had done some "direct sales" things like some sort of vacation club on the side. He was really afraid missing out on bitcoin. I asked him why he hadn't just bought bitcoin and instead was at this event. He did not really have an answer. He then told me after to give him my thoughts whether or not I thought the thing was a scam.
The two people leading the event were a husband and wife. The husband claimed his face was used when he was a baby on a can of Gerber's baby food. He also said he worked for the local radio news station doing traffic updates for years. However, he got really sick after he contracted lyme disease after walking his dog in the woods. This drained the savings of he and his wife (who said she was a teacher at a local school). All of this was just sort of dubious to start with. There's no way to prove you were a baby model. I have no recollection of this man doing traffic updates on this station (which I listen to frequently). Why didn't he have health insurance through his job? Or what about through his wife since public school teachers have pretty good insurance a lot of times?
But that was their whole "rags-to-riches" angle. EVERY single one of these seminars is led by a spokesperson overcoming some type of odds. They then said they knew they needed to take the bull by the horns to get a hold of their financial independence and wanted their friends ("both old and new!") to learn those techniques, too. And this came via a unique bitcoin investment scheme.
It worked like this. For 50 euros (yes, euros, not US$) you would buy into a "virtual box." This virtual box would accrue interest somehow. And after a certain amount of time (I can't remember what, something like 90 days) then this "virtual box" would then allow you to buy bitcoin. OR it could roll over and your box could expand and allow you to get even more bitcoin down the line. The company was also registered in Dubai. There could not possibly be more red flags.
And then came the best part. The couple said your box would "automatically grow" if you could recruit your friends and families to also invest, and you could get your box to grow further if they could get others to join. I am not even kidding when I state that as part of the power point presentation they essentially drew a pyramid to show how it worked.
The guy I was with asked me what I think. I pointed out that they literally drew a pyramid as part of the business plan. And that you had to for some reason use euros to hand over to a company registered in Dubai. And, also, why not just buy bitcoin? He said he thought of all of that too but thought it sounded like a good opportunity. He gave me his card and I e-mailed him a week later. He ended up actually buying into this thing.
I also sneaked into an Herbalife event. I was actually at a different seminar at the same hotel and heard all of this crazy noise in a nearby room. I went to go see what it was and it was some sort of celebration for top selling Herbalife people in my state. I walked in casually as a wedding band was playing a Killers song and just tried to blend in. But some goony security type guard blocked my path and asked me who I was. (Everyone else was wearing nametags.) I said I was at a different event at the hotel but saw this and it looked like fun and wanted to know what it was about. Someone else then explained it was for Herbalife and I pretended I didn't know what that was. (I watched the documentary on it the week before and had known about it before that already.) The person speaking to me gave me the basics and his card and wanted me to join his "exercise squad" the next weekend.
I have been to two Rich Dad seminars and two Than Merril "Flip This House" seminars. They're all the same thing. The hosts wear a wireless headset microphone. They have some sob story. They were all before the election claiming they were close friends with Donald Trump. (That got toned down after his candidacy heated up and he became controversial. My area also is heavily Democrat, so not a good bragging point.) The audience members were filled with a lot of recent immigrants (Eastern Europeans) or people who, after speaking with them for a few, were struggling to make ends meet and wanted to do better financially and probably read Rich Dad but didn't know the basics of how to save.
The first Rich Dad seminar was hosted by this guy from Oklahoma who was about 60. He claimed to have been some hotshot real estate investor. And he namedropped some celebrities he claimed to have mentored over the years. One was former NBA player Antoine Walker, who literally was the person the 30 for 30 "Broke" was inspired by due to his financial mismanagement. This guy claimed he was able to write off taxes for a recent trip he took to Spain (since he was looking at investment properties) and etc. He also pointed to a woman in the crowd at one point and asked what her credit score was. Before she could answer, he responded by saying "I know your credit score is bad just by looking at you. It's so bad, in fact, that I bet it's coming alive and it's waiting next to that guy's piece of shit car and it's going to kill you."
Also at this event was a second speaker who was hawking some sort of stock picking software. He was Canadian. In his sob story, he mentioned how he had lost his job and "at one point, I literally looked my son in the eye and told him I could no longer provide for him and I was a failure of a father." He said this with tears in his eyes and I am almost completely certain that this was, in fact, an honest statement. He also ranted about mutual funds and their "hidden fees" and said this software would help you pick what stocks to buy by giving you information about different categories (I'm guessing stuff like P/E ratio) and if enough were "green lights" then it was a good buy. Just a truly gross thing to hawk to people new to investing.
I was also kicked out of one event. This was for some sort of direct marketing e-mail thing that made zero sense whatsoever. I went with a friend of mine. About 30 minutes or so into the speech, the host said "if you're interested, just head to the back of the room to my colleague and sign up and we'll get you started." After a few seconds, this woman sitting in the front row meekly got up, looked around, and headed back. This opened up the floodgates. Almost everyone in the room followed her soon after. It was pretty clear to me that she was a plant -- sitting in the front row let everyone see her move forward and put on the pressure. My friend and I eventually went back. The "contract" to sign was some mimeographed piece of paper that would charge you $400 to go to the next level of seminars. The company was based in Malaysia. I had a notepad with me to take notes and I tried to keep the mimeograph hidden as you weren't allowed to take it out of the room. (They claim at all of these that any information is protected under copyright law so you can't record it or bring anything home, which is not how copyright law works.) The guy leading the seminar saw that I had the mimeograph and demanded that I return it to the dude in the back. I said I would but instead turned to the door. A different guy blocked the door and ordered me to hand over the mimeograph. I for some reason did and then the host said "I hate it when people try to act slick" before he told me to leave.
These events are a really insane subculture. I love going to them in terms of the bizarre world of the seminar professional. I feel really bad for the people who actually do go and end up handing over money. I sometimes afterwards will hang out and see people in the parking lot and tell them it's a scam and explain why. I hope they believe me. I wish I could tell everyone. But just doing a parody act of all of these things I hope can help put a light on the horrors of the MLM world to some degree.
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