On the Radar: Bitcoin Gold, Flik, Kucoin, Zencash & Upcoming Forks
By: Drew Boswell
Tags: Economy, Zencash, Bitcoin Gold, Bitcoin, Altcoins

Originally written by fund manager and founder Yann Quelenn. Chainfund Reports are communicated to investors prior to publication on Medium.

The Chainfund Report 30/10/2017

29.10.2017 Share Prices — Extreme: $102.92, Dynamic: $92.62

Since last week, the cryptocurrency market has been trading sideways. Inflows towards altcoins have slowed down. We feel that the market is waiting for the B2X fork that will happen mid-November.

Concerning our investments, there have been great opportunities so far and we try to look at the big picture. We are constantly trying to buy on dips for long-term projects that we hold. Please note that the overall market capitalization of the whole crypto market is around $170 billion. When we compare this to the overall stock market size of $70 trillion, this definitely leaves some room for further upside. However, even if the blockchain technology will not disrupt all companies, I strongly believe that we invest in tomorrow’s big names.

Now, let’s answer to questions that you may wonder.

How did we deal with Bitcoin Gold?

At the time of the snapshot that happened earlier last week, the 24th of October, we have decided not to sell our altcoins to buy BTC. Indeed at the snapshot time, the altcoins increased drastically and returns were much superior to what Bitcoin Gold could have provided to us. In other words, returns in altcoins have been largely above 10% while Bitcoin gold provided a return of 10% ONLY for people that managed to sell at the moment BTG started to trade. Consequently, we believe it was a wise move, especially since BTG has very rapidly declined.

Yet, we are now waiting to claim our Bitcoin Gold. For that we need the official Bitcoin Gold wallet to be released. This should be within the next few days. We are then very likely going to keep the Bitcoin Gold received for a few months as it is clear that the idea behind it may be interesting (live adjustment of the block difficulty for miners, and no need of strong graphical card to get mining rewards). We consider that it is worth waiting to see how markets will react to this new altcoin. The potential is there.

What happened to FLiK?

As I was writing last week, concerns over the project have risen to a climax. There was the token burn (520 million of the token were expected to be burned and 80 million now remains) that drove the price very high until two days before the burn. It finally ended up that a burn did not exactly happen but more a lock-out of tokens in another ETH wallet. We do not know at this stage if the Executive Team of the project has control over the private key of this account. As a result, the FLiK team needs to reassure markets about that.

In addition, market is also concerned about possible technical issues regarding the future platform. Indeed, it may take time to load a movie on a blockchain platform. On the good news side, one project has been funded. Nonetheless, at this market cap we think that the project is undervalued and we believe some hype will likely occur again. Any positive news on the technical side may definitely shoot up the token price. Our position remains small and we do not plan to add more at the moment. We will keep our exposure around 4% of the Extreme fund and as new fund is coming in this exposure will likely decline. At this price and market cap, the upside potential can be crazy over a 3-to-6-month timeframe.

Dynamic Portfolio: KuCoin, a good investment?

We have bought this week the KuCoin token (KCS) for the Dynamic Portfolio. It is the token of an exchange that started recently and that is already doing a daily volume of more than $1 million. Bittrex for example is doing $350 million a day. The advantage of owning the coin is significant. Every day at noon, for each KCS token holders and according the quantity of KCS owned, the exchange is providing 50% of their profit for any coins tradable on the KuCoin website. This means that we will get more WTC for example as time goes by. The final goal of the KuCoin project is to create a decentralized exchange and their business model is very innovative. It reminds us about Binance when it started. The potential for a great increase in the token price is there.

What is the new coming fork and how are we going to deal with it?

B2X or SegWit2X is the next Bitcoin event and is getting closer. The goal of this algorithm implementation is to double Bitcoin’s block weight. For the time being it seems than this change in the Bitcoin structure will not be adopted by everyone. And then the Bitcoin blockchain will very likely be forked. The question now is which of the original chain will be considered as the real Bitcoin. For now, most exchanges are telling that the original chain will be the “BTC” and that the new chain will be “B2X”.

The SegWit2X protocol has a replay protection inserted which prevent hackers to change previous transactions. We will transfer most of our Bitcoin to a single exchange that will support B2X in order to avoid any difficulties that we are facing with Bitcoin Gold (wallet not ready at the fork time).

Extreme fund: ZenCash what is it?

We have decided to insert this coin in our Extreme portfolio for its very high potential. This is a privacy coin that will compete against Monero, Dash. The size of the privacy coin market is over $4 billion while it was below $200 million last year. We believe that the demand will keep surging next year.

ZenCash includes the former CEO of Ethereum as advisor. This is a VERYstrong point as any of those person can actually work for whoever they want. ZenCash offers unique capabilities such as end-to-end encryption and domain fronting. End-to-end encryption means that it is not possible by any stretch to link transactions to users’ identities. Domain Fronting is the fact that the wallet can overcome any internet barriers (China, Russia) by pretending to be authorized. It is the only coin so far to offer this feature. Needless to say that the demand for that kind of functionalities should increase soon.

Future of the cryptocurrency market?

Finally, let’s have a word on the real economy and how we link that with the cryptocurrency market. Mario Draghi, the ECB (European Central Bank) President has declared that the European institution will continue its ultra-loose monetary policy for next year by adding €270 billion in the real economy until September. That is purely massive after the €720 billion this year. One could easily imagine all we can do with this money (rebuilding infrastructure, schools and so on). The truth is that this money only serves to keep the economy alive and avoid any banking collapse.

Countries’ debt are way too massive to be sustainable. This is why I feel optimistic about the future of cryptocurrencies. Despite massive injection of fresh cash, European growth for example remains somewhat sluggish. On top of that 1 euro of growth likely costs easily €2 or €3. I personally believe that a massive debt crisis is ahead of us and cryptocurrencies will very likely grab a lot of money inflows very soon.

Talk to you next week!

Yann Quelenn