Quantstamp - Blockchain services and the value of Partners in ICOs

(this, to all effects, is fiction, not advice).
Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to analyse the Quantstamp ICO. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case.
- A while ago, we discussed the value of utility tokens and I have seen a recent pre-sale of an utility backed token: Quantstamp. Is this a worthy opportunity?
- In terms of technology, there is a clear need for auditing the smart contracts.
- What is "a smart contract"?
- It is a software program that is held and executed in the blockchain. It is transparent and trustless in its execution.
- Why do they need auditing?
- In the blockchain "the code is law", if you setup a Smart Contract and behaves in an unexpected way or has weaknesses the results can be catastrophic. The most well know examples are the "DAO fork" of Ethereum and, recently, the Parity Wallet multisig bugs.
- So, these bugs can potentially cause millions in loses?
- They can and they do. Even Buterin, the father or Ethereum, has mentioned that it is critical to the ecosystem to have simpler and safer smart contracts.
- So, if I audit an Smart contract it will be error free?
- No! There may still be bugs!
- I see... so it is just trying your best not to have them.
- Correct, and that leads us to Quanstamp. This company offers and automated testing service for smart contracts. 
- But a robot cannot catch bugs, that is for humans!
- Oh, no... there are many software testing techniques and some of them are in fact highly automated. They need to be, as sometimes there are million of combinations to try.
- And also, an automated test can incorporate progressive developments to implement "best practices".
- Best Practices?
- Yep, it is just making sure that you learn from mistakes and do things in the best possible way. It is a bit more complex than that, but just think of it as avoiding mistakes that others made.
- So the company analyses bugs and develops automated tests to catch them.
- That is right.
- And is this project solid?
- It could be just vapourware, and frankly, I do not have the time to go into the code.
- That question leads me to discuss the importance of institutional backup and solid partners. Quantstamp very credible team and just got accepted into the Y Combinator. Also has the backup of at least 6 companies in the sector.
- What is Y Combinator?
- It is an start-up accelerator, one of the bests in the world.
- But that does not mean that is going to succeed. Many companies that were on Y Combinator failed.
- Oh, for sure, but they stand a much higher chance of success, but that is not my point today.
- Then, why is it important to have all that backup?
- Because it is very unlikely to be an scam. Large institutional partners take the time to do the due diligence, so the trust level is much higher.
- So... this token is going to the moon?
- That, I don't know, but its got a rocket and fuel.

ICOs to stay away from... Metronome, Pundi X, Stack, WaBi...

To all effects, consider this fiction writing. By no means is financial advise, endorsement of products nor anything remotely close to that.

Today Ms Inquisite Brown,  Mr. Negative Red and Neutral Black meet to discuss a few incoming ICOs....

- The first one is Metronome. Intends to be a new multichain crypto with a low inflation ratio. However, it is a RC20, Ethereum compatible token and the founders leave to the comunity any further development. No funds provided to it.
- I have read the white paper. As I understand the economics behind it, is a clumsy scheme to give 20% of whatever you invest to the founders with no return. The token is basically backed by the ether that buyers put into it minus 20% for the founders.
- Nothing left to ask.

- What about Pundi-X?
- The underliying technology is not ready and will not be until Ethereum goes PoS. 
- Why is that?
- Ethereum token processing speed is not ready to commit transactions with that volumen in a few seconds, which is what most people would expect when paying for a cofee or a pair of boots. Not to mention the hours delays that could happen on a saturated network.
 - Correction: After this conversation Pundi has integrated the NEM protocol and now it is functional.

- Oh, but it seems that the Stack project and the STK token are just addressing that problem.
- Exactly, they are addressing the problem, but have no solution at the moment nor any Minumum Viable Product nor code, ... Vaporware at a expensive price. Probably Ethereum PoS will short the problem far before them.

- Let´s change the markets... what about WaBi?
- They sell what will possibly become the fidelity points of products that potentially will use an electronic anti-tampering device.
- Is the device good?
- Probably, the problem being that they are selling a token whose value is not related directly to the sales of the device but to an undefined loyalty program: it lacks any real value and may never have it. I would not go there.

103 - Ecosystems and Cryptocurrencies

Today, Mr Philosopher Black, Mrs Newby Blue and Mr Sceptic red meet in the Pub and start talking about "Ecosystems"...

- Ecosystem, that sounds to me like frogs eating flies and squirrels gathering nuts.

- Yeh, well that´s kind of my idea of cryptocurrencies anyway.

- It kind of makes sense to call ecosystem to what normally would be the stakeholders. You see, cryptocurrency, like Bitcoin, do need a "habitat" to survive and thrieve.

- You mean, they need computers to live in?

- Not exactly. They definetly need infrastructure, such as networks, computers, etc. But, do you remember waht we spoke about here regarding what is value in criptocurrencies?

- Yeah, well it did not make any sense... you are giving value to things that do not have it! Bitcoin is tulip-mania.

- I guess we could say the same about printed paper: nothing but colored stamps. For the moment, I would like to know more about ecosystems.

- Well.. as I was saying, there are a few things that provide value to any criptocurrency, and that is linked to the concept of value. First of all, is the trust of the users. There are many types of uses and all of them provide value.

- Oh, anyway, most people are just speculators...

- Even speculating is a value. Some currencies are a vehicle to invest. Lately, ethereum and the ERC20 tokens allow easy investmenting for the masses.

- And many scams!

- Surely, that too. But you see, these people, entrepeneurs and investors are part of the ecosystem. They provide value to everyone by using the cryptocurrency.

- Oh, yep, I think I can see your point there, just like normal money is used to invest.

- Correct. Also, you have the exchanges. Having the support of large exchanges, or at least one, makes a lot of difference. The easier it is to trade, the greater the network effect we spoke about in the value of cryptocurrencies. Also, they are very powerfull actors when forks occur, but that is a different story.

-  Oh, I have seen the exchanges list almos anything nowdays... just look at Etherdelta and the ERC20s. It just does not make sense to have so many tokens listed!

- Mmm... it does make sense, just as it makes sense to list millions of items in eBay or Amazon. But anyway, there are many other actors in the ecosystem, such as the miners.

- Everybody is talking about mining and how people go crazy about it.

- Is just a waste of time I heard, to much work for little profit.

- We should speak about mining some day, but regarding the ecosystem, the miners play a significant role when deciding where a criptocurrency is going to go when updating and deciding which chain are they are participating in. Have you seen the typical windows service packs and updates?

- For sure, and also the Android Apps upgrades. Sometimes they are good and sometimes bad.

- Well, in the cryptocurrency space the software upgrades can be quite controversial, because they inevitably favour some people and damage others. Miners support the version (they call it fork) that is best for their interest.

- I think that miners do nothing I should be removed from the ecosystem.

- At the end of the day, you need to have a distributed network, that is the essecence of a public ledger technology, and , for that, you will need to provide an incentive for the nodes and the validators. They are rewarded in several ways that we could talk about some other time, like Proof of Work, Proof of Stake, Proof of Importance,...

- And who else is there?

- We still have to list the users of the currency, the development teams and, in some cases, the hardware manufacturers.

- This seems like a jungle where everybody runs arround in circles without knowing where all this is going.

- Oh, it is quite the opposite. The ecosystem is highly "political" in the sense that there are  new initiatives continously and all the actors try to act in their best interest. Typically, the users want ease of use and security. Investor want high returns. Hardware manufacturers want to jump into the business, but some of them are unsure as of using their powerfull brands in projects that they do not control nor understand fully.

- Well, this is leading us nowhere...

- The conclusion is that when you consider how "good" is a Cryptocurrency you need to evaluate what actors are influencing it and how. Right now Bitcoin is heavily influenced by large miners, wereas Ethereum has a strong development team and leaders influence.

- But, is this not an endless fight?

- You see, that is precisely why this is an ecosystem. Not everyone in there agrees nor wants the same thing, but surely they all depend on each other to make bitcoin and other currencies strong.

Bitconomics 102 - Where is the value AKA "We have been here before"

Value is something difficult to see. When  Mrs Newby Blue, Mr Sceptic Red and Mr OldEntrepeneur Brown meet the conversation jumps from "grandpa´s tales" to a late friday pub night brawl .Using a women character as a new-by is random, no intention behind. Also, if you are not British replace pub with any other meeting place.

- I am telling you, Bitcoin and all the Alts are just nothing, a cheap piece of software that are going nowhere!

- Well maybe, I have aready spoken with Mr Philosopher Black here and I am still doubtfull about all this thing. 

- Oh... you see this white beird I have, well, I was here when there was no internet at all and I have seen a few things before the Cryptocurrencies boom.

- But this is surely different... everyone says is revolutionary.

- All? Nah.. just a bunch of carpetbadgers and cybercriminals!

- The problem is that, once more, we are in a territory where we do not yet know what is value and what is not.

- How is that? Value is always something clear.

- Oh, no no my young friend... I still remember when nobody could really put a price on Yahoo, Altavista and others.

- Alta-what??

- A thousand years ago, in the 90´s, there were more that one search engine out there. They all had funny names like Altavista, Terra and Yahoo. This was a bit after the formation of the oceans and right before Google and when there was no e-commerce.

- Wooow, no ecommerce, really??

- And... listen because this is true as isnumeric("abc")=FALSE... listen I say, TELEPHONES DID NOT HAVE INTERNET AT ALL.

- Ooooohhhh

- Yeah yeah, very interesting, but what does it have to do with Cryptocurrencies??

- Well, back in those days, nobody could put a price on those search engines, nor for that matter, to any of the web pages. And that was because they almost had no income and nobody knew which one would win the race nor how would they ever make money. It still happens nowdays with UBER and others.

- I see.. so .. how did they solve that problem?

- Several things were tried.. for example valuing the pages for the number of pageviews, since that would eventually be used for advertising, then only by unique visitors, then by engangement,... Many of this metrics are still used nowdays.

- But none of those are alive today right? So they were bluffs.

- Well that is a different story really, but my point is that WE STILL HAVEN´T FOUND THE WAY OF VALUATING CRYPTOCURRENCIES.

- That is because they have NO VALUE. It is impossible that something is 25% more in value in just a week or vice-versa.

- Hold on... so why can´t we agree on a price for these?

- For starters, the ownership is unclear. Many of them have consensus governance. Also, we still do not know what will survive the test of time. As I told you Astalavista was the Bitcoin of its time, but the Google guys invented a far superior system that ate them alive.

- So playing cryptos is just for fools... they will all dissapear eventually...

- I would rather say that we still don´t know which ones will survive, because a consensus on what is value and waht is not is starting to become more clear. Also, the users are forming communities that will lead the future developments.

- So, the cryptocurrencies of the future are not here yet?

-  We don´t know, but it is going to be interesting times again.