🧘‍♂️Price Up 520%. Why?

Market Meditations | September 16, 2021

Here’s Our Theory…

Dear Meditators

Lots of rumours and noise in CT today. Let’s straighten a few things out.

Today’s meditations: 

  • ✨ Overview of Algorand. What is it? Why is it pumping? 

  • ? Bitcoin Basics. So… Do you actually understand what a ledger is? 

  • ? NFT Insider Trading. The truth about what happened on OpenSea. 

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Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool. 

?A Long Time Ago In An AlgoRand Far, Far Away..

Algrorand ($ALGO) has pumped 520% vs. the 1 year and just recently, we heard news that SkyBridge has raised $100 million for an Algorand Fund! So, what is $ALGO and what’s the big deal? 

What is it?

  • $ALGO is the native token of the Algorand platform. 

  • Algorand is a Layer 1 solution; a term used to describe the underlying main blockchain architecture. Layer 2, on the other hand, is an overlaying network that lies on top of the underlying blockchain.

  • The platform leverages pure proof-of-stake for its consensus algorithm, which seems to be benefitting from widespread utilization.

  • The blockchain platform is designed to finalise transactions almost instantly and provide high throughput. 

What’s driving the rally?

The rally is either attributed to the general rise in value of Layer 1 solutions, the specific merits of the Algrorand network, or a bit of both!

1️⃣ General Rally in Layer 1 Solutions 

Layer 1 blockchains are maturing and creating real life use cases. Many of them (Solana, Cosmos etc) have benefited from an increase in price in recent months. Not to mention that investors continue to look for the next big ‘Ethereum Killer’ to rotate into. Specifically, platforms that can challenge Ethereum’s fees and speed.

2️⃣ Specific Merits of the Algorand Network 

Algorand is no stranger to major crypto publications, having boasted a number of partnerships and breaking headlines, as reported by Forbes

  • Late last month, financial infrastructure provider Koibanx announced that it had made an agreement with El Salvador. Under this agreement, Alogrand helped enable the creation of Chivo, El Salvador’s native bitcoin wallet, by serving as the official blockchain provider. 

  • Società Italiana degli Autori ed Editori’s (SIAE) decided to launch millions of NFTs on the Algorand blockchain.

  • The Marshall Islands elected to power the first [national] digital currency on Algorand rails.

  • Stablecoin majors like Circle are also developing solutions on the chain.

There has also been a lot of excitement regarding Algo’s planned shift towards decentralisation.

  • The platform has a planned shift to a decentralised model scheduled for October 1.

  • Members of the Algorand network approved this in a community governance referendum. 

  • Under this new system, token holders who stake their Algo for 3 months will have the ability to use the Algorand Ecosystem Resource Pool (which has 3.2 billion Algo) as they see fit. 

? What does it all mean?

At the moment, there is certainly a search for Ethereum alternatives. Indeed, Ethereum alternatives have also started to show that they move together. Solana’s recent technical glitch seemed to have negatively impacted not only $SOL but other alternatives like $ALGO and $DOT. Perhaps then, there is a case to be made that there is a theme whereby Layer 1 solutions experience ebbs and flows together. That being said, projects like Algo that are subject to positive partnerships and developments that their community enjoy are more likely to stand out. So we can understand Ethereum alternatives as a category and look to individual alternatives on their individual merits. 

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? Do You Understand Bitcoin?

What money problem does Bitcoin solve?

  1. Double Spend Problem

  2. Triple Spend Problem

  3. Spending Double Problem

? Inside Scoop on Insider Trading 

An OpenSea executive was recently accused of insider trading. It is important to note that insider trading amongst NFTs is technically not illegal since there is not much regulation or precedent for these digital assets. While OpenSea is a reputable platform, it is important to remain vigilant to suspicious activities

  • Nate Chastain serves as OpenSea’s head of product and allegedly used burner wallets to purchase NFTs

  • According to 8BTCnews, they reported that Chastain earned roughly 18.875 ETH from his insider trading. 

  • One recent example is his recent NFT purchase, “Spectrum Of A Ramenfication Theory,” which he bought for .25 ETH and sold it for 1.5 ETH a couple of hours later

While technically not illegal, these actions are frowned upon and are not a good look for a company. OpenSea released a public statement that said, “This is incredibly disappointing. We want to be clear that this behavior does not represent our values as a team. We are taking this very seriously and are conducting an immediate and thorough review of this incident.” 

OpenSea made clear that while these actions are not illegal, employees are not allowed to buy or sell collections that have been featured on OpenSea. Though Chastain’s future involvement with OpenSea remains unknown, one should be aware that these activities happen in many sectors. With blockchain transactions being public to everyone, though, insider trading is likely to be scooped up sooner rather than later.

1. Double Spend Problem

Bitcoin was the first digital currency and paved the way for all to follow it. However, there was one problem that it had to solve first, how to stop scammers from creating fake or duplicate Bitcoin. To explain this best lets simplify it down:

  • Let’s say that there are only 9 BTC in existence and only 3 people using it Abraham, Bella and Charlie who each have 3 BTC each. 

  • Each person has a list of who has each bitcoin. 

  • This list is called a ledger and each person’s would look as follows:

Let’s say Abraham wants to transfer 2 BTC to Charlie, and Charlie to transfer 1 BTC to Bella. Their ledgers should looks like this: 

If all ledgers are identical the transaction will go through. However, let’s say Charlie gets a bit greedy and decides he doesn’t want to send Bella that 1 BTC even though that is what was previously agreed. Then their ledgers would look like this:

Now Charlie’s ledger doesn’t match Bella’s and Abraham’s so the transaction will be voided. And this is how Bitcoin stops counterfeits being made.  

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??‍♂️✍️ Stories in this newsletter were written by Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.

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