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ByteFolio Update 58 | ByteTree's Crypto Leaders
ByteFolio brings together ATOMIC, ByteTrend and Token Takeaway to create ByteTree’s model portfolio, known as ByteFolio. This is a selection of crypto tokens, which are weighted according to their risk/reward characteristics. ByteFolio has a modest turnover and will not suit traders. It will appeal to investors who wish to diversify beyond bitcoin, with the aim to beat it.
ByteFolio is unchanged in BTC, itself trading in a narrow range, as it has been since mid-March. For the short term, the market appears to be waiting for a clearer steer on economic growth and central bank policy. As discussed in last week’s ATOMIC, we find ourselves in an unfamiliar environment of positive real interest rates (policy rates higher than inflation), although this will fail to resonate with anyone who has their savings on deposit in a bank, where interest rates remain derisory.
Perhaps belatedly, the debate around the uncertainties and dangers posed by the growth of Artificial Intelligence (AI) is slowly gaining traction. But even so, the conversation is mainly taking place on the fringes. Maybe people have got extinction-level-event-panic fatigue. Covid wasn’t quite the plague it was jumped up to be, while for most people, it’s hard to discern much of a biblical weather meltdown. Not much seems to have taken place on the weather front which is wildly dissimilar to the last several thousand years. Thus far, climatologists seem to be about as prescient as economists, which isn’t surprising given the extraordinary number of variables in both disciplines.
So when there’s a cry of: “Hey everyone, here comes another existential threat to life as we know it! AI is going to change everything and maybe threaten humanity!!”, the world seems to be letting out a collective yawn.
But perhaps it’s way more worrying than Covid or the climate “emergency”. For sure, it might be a wondrous invention if it can be kept in a protected environment, but if it can’t…?
We mention it this week, having listened to a podcast with Dr Jordan Peterson and a fellow called Brian Roemelle, entitled “ChatGPT and the Dawn of Computerised Hyper-Intelligence”. It’s one of those podcasts where one really needs to listen twice because it’s packed with insight and raises any number of interesting questions.
The relevance to a crypto letter is that in a world where information, and by extension moral and societal guidance, is centrally controlled, blockchain technology represents the means of maintaining privacy and preserving truth. Bitcoin, in particular, is cited as a way forward because it is genuinely decentralised. It cannot be controlled by a central entity, and thus it becomes of huge value, especially when considered not just as a form of money and store of wealth but as a messaging system.
If this is the case it becomes the most important asset anyone can own, not just a rounding error in the dark recesses of a diversified portfolio. It is a truly transformational insight.
The podcast is on Spotify and can also be found on YouTube.
Last week we showed the time difference between the validator activation and withdrawal queue lengths for staking, which can be found on rated.network. This week a graph of the number of Validators since the Shapella upgrade. Clearly, there is no shortage of enthusiasm.
Source: Staking Rewards
Following the rise in popularity of the BRC-20 token, which enables the minting and transferring of fungible tokens on the bitcoin blockchain through the Ordinals protocol, Dogecoin has released DRC-20 tokens on the Dogecoin Network. Nicknamed “Doginals”, the newly released standard has created a buzz, pushing total transactions to new daily highs.
Dogecoin is unapologetically the original “fun” people’s cryptocurrency that accidentally caused much bigger hype than intended. Launched in 2013, Dogecoin is a hard fork of a hard fork (Luckycoin) of Litecoin, which itself is a hard fork of Bitcoin. This means that the underlying architecture is based on Bitcoin, and it’s one of the few blockchains that still use Proof-of-Work (PoW) as a consensus mechanism. It also means that the DRC-20 token architecture is similar to BRC-20.
The BRC-20 token has caused quite a stir since it was launched earlier this year, and people are divided on whether it’s a good or a bad development for bitcoin. On the one hand, it adds utility to the bitcoin blockchain, but on the other hand, the limited block space is causing congestion and driving up fees.
Source: ByteTree Terminal
Instead, could DRC-20 take the mantel from BRC-20 as the primary standard for fungible token transfers on PoW blockchains? They are different but have enough similarities for it to be an intriguing thought.
As always with these things, it’s early days. One Dogecoin core developer even expressed that DRC-20 “cannot become a real ‘feature’ because it has not had enough thought given to it”. He might be right, but once something is out of the box, it’s pretty difficult to get it back in.
Ripple is introducing a platform for central bank digital currency (CBDC) development that enables central banks, governments, and financial institutions to create their own digital currencies. Through Ripple's platform, institutions will be able to manage the entire life cycle of their digital currency development process, from minting and distribution to token burning and other customisations.
XRP Scores a 2-star Score on ByteTrend in USD
Source: ByteTree Terminal
A demonstration of the platform's capabilities will be showcased through the e-HKD pilot programin collaboration with the Hong Kong Monetary Authority. Additionally, Ripple is collaborating with Fubon Bank to develop a product focused on tokenising real estate assets and equity distribution within the e-HKD pilot program. It is worth noting that the crypto community generally expresses concerns regarding the centralised nature of CBDCs.
Axie Infinity (AXS)
Following a period of silence after the Ronin Hack, which resulted in a substantial loss of $625m for the Axie Infinity ecosystem, the project has recently gained attention with its announcementof launching on the Apple App Store. On the day of the announcement (17 May), the token saw a significant increase of more than 20%, according to data from CoinMarketCap. However, the token has since retraced all of its gains.
According to CoinDesk, the app will initially target markets with high demand, particularly Latin America and Asia. This move has the potential to expose Axie Infinity to a large number of iOS gamers in those regions, facilitating the onboarding of new users.
AXS Scores a 0-star Score on ByteTrend in USD
Source: ByteTree Terminal
However, feedback from gamers suggests that Axie Infinity is often perceived as a "boring" game, with users primarily playing it for the opportunity to earn easy money. This may be a contributing factor to the diminished demand for Axie Infinity compared to its popularity in 2021 and early 2022. Nonetheless, we maintain a positive outlook on the GameFi industry as a whole, and this is a small step in the right direction.
Generative AI art algorithms, such as Midjourney and BlueWillow AI, have taken the internet by storm. This fascinating field, where artificial intelligence algorithms create captivating visuals from simple text, often utilises graphic processing units (GPU) to render high-resolution images. GPUs excel in tasks like deep learning, neural network training, and producing high-resolution images or animations, thus opening new possibilities for creating mesmerising and intricate artwork.
Render Network enters the scene as a decentralised cloud rendering marketplace that connects creators in need of rendering resources with those who have idle GPUs. By leveraging blockchain technology and an incentive-based economic model, the Render Network enables individuals to perform GPU-based rendering jobs on the network, which is monetised through fees. This innovative solution not only benefits artists and creators by providing affordable and accessible rendering resources but also promotes efficient resource utilisation in the industry.
Source: ByteTree Terminal
The sudden popularity of generative AI might be the driving factor behind Render's recent success. It has consistently outperformed BTC, earning a 5-star trend score on ByteTrend for the fifth consecutive week.
Crypto wallet provider Ledger has launched Ledger Recover, a new feature that allows users to retrieve their private keys if lost. However, this paid subscription service has sparked controversy. Users must comply with Know Your Customer (KYC) guidelines and share their identification, raising concerns about privacy and anonymity. Users value the offline and self-custody nature of cold wallets and are hesitant to share their private keys with third parties. Although Ledger denies accessing customers' private keys, users remain sceptical and are wary of trusting the company with their information, especially after a previous data breachin 2020. The controversy highlights the challenges faced by crypto companies in balancing convenience with user privacy and trust.