The Blockchain Gold Rush

I am excited to begin publishing this newsletter as a space to explore the onset of a new era that is upon us. We’re living in a time of unprecedented change. Blockchain technology and digital assets are rapidly transforming industries and lifestyles worldwide. With these advancements, new challenges and tremendous opportunities are emerging, making it crucial to stay informed. But trying to stay informed can feel overwhelming given the rapid pace at which this industry is moving. That’s exactly why I created The Blockchain Gold Rush newsletter.

Through this newsletter, I aim to demystify these new and complex topics so that you, as an investor, can sort through the noise to see the overarching signals. Many misconceptions surround these technologies, and addressing these misconceptions is of the utmost importance for fostering informed investment decision-making.

I firmly believe that the rise of blockchain and digital assets presents a generational investment opportunity, similar to what we witnessed in the development of the internet in the 1990s. Layer upon layer of infrastructure and supportive technology is going to be built in a similar fashion over the next decade, including both software and hardware. Because we are still so early in the evolution of these technologies, many do not fully comprehend their use case, which I aim to demystify. But the signal is clear – blockchain and digital assets are being adopted at an increasing rate, are very powerful and will reshape many industries and aspects of life as we know it. So, if you’re an investor like me, you need to increase your understanding of why blockchain technology is a game changer in our evolving digital world.

I invite you to join me on this journey as we explore these topics. The best way to be prepared is to be informed. It is my hope that through this newsletter we can meaningfully enhance our understanding of what is taking place around us so that we can best be positioned for long-term success.

Best,

Travis Kilgore, CMT, CRPC

About the author: Travis Kilgore is Managing Partner of Ethos Private Wealth, an independent Registered Investment Advisor firm that provides comprehensive wealth management services to high net worth individuals and families worldwide. He is a Chartered Market Technician, Chartered Retirement Planning Counselor and has been active in wealth management and the private capital markets since 2012.

Market Trends and Insights

State of the Market

Overall cryptocurrency market capitalization decreased slightly to $2.29 trillion this week, with Bitcoin representing 56% of total market cap.

The cryptocurrency market in 2024 has experienced significant volatility, starting strong in Q1 but losing momentum in Q2. In the first quarter, the total crypto market cap surged by 64.5%, reaching $2.9 trillion in March, driven by increased trading activity and enthusiasm around Bitcoin ETFs and the ongoing adoption of Ethereum's restaking protocols. However, Q2 saw a 14.4% decline, bringing the market cap down to $2.43 trillion due to global macroeconomic concerns and uncertainty around large Bitcoin holdings being moved by Mt. Gox and the German government. Additionally, the NFT and DeFi sectors faced declines in trading volumes, reflecting a broader market downturn. Despite these setbacks, certain narratives like meme coins and blockchain-based innovations in artificial intelligence continued to capture investor interest, indicating resilience and ongoing developments within the space.

U.S. Politicians Warming up to Crypto

Guest Contributor: James Eisenberg, CIO Interblock Capital Partners

In July, James Eisenberg and I attended the Bitcoin Conference in Nashville, TN. Below, James shares his thoughts on the event.

"The Bitcoin Conference in Nashville, TN felt like a political convention. In attendance were 9 US Senators, 4 members from Congress, and 2 presidential candidates. All were extolling the virtues of Bitcoin and the importance of US competitiveness when it comes to the crypto economy and blockchain technology. Notably, President Trump, who narrowly survived an assassination attempt just a few days prior, drew the biggest crowd cheer when he announced that he would fire Gary Gensler on day one of his next Presidency! RFK, jr. brought the 8,000 applauding attendees to their feet when he said he would establish a Bitcoin reserve on par with the US gold reserves by purchasing 4 million BTC for 25% of the worldwide total Bitcoin for the United States Strategic Reserves. VP Harris, who declined an invitation, is reportedly working with crypto insiders to establish a relationship with the digital assets community that would be in stark contrast to the hostile position of President Biden and his administration over the last 3 years (who are rumored to be readying the sale of over 200,000 BTC the US has confiscated from “criminals” in the past). The crypto lobby in Washington is significant today, encompassing tens of millions of dollars in PAC funding to support crypto friendly politicians. It was reported that Trump, who claimed he will make the US #1 in crypto in the world, raised $25M at a fundraising dinner. Given the financial strength of the old guard in crypto, and the large percentage of crypto owners in the US, it makes sense that our fearless leaders will find it in their own best interests to line up behind the industry, especially considering the new entrants of BlackRock, Fidelity, Goldman and JPMorgan. Elizabeth Warren is perhaps the poster child for anti-crypto policy, and she will now have to run against John Deaton, a crypto-supporting neophyte republican lawyer for Massachusetts senator. Normally a landslide victory for her in deep blue MA, pundits are calling for a close race.

Irrespective of who wins in November, the bi-partisan support in both houses of Congress is finally coming around to understanding that USD-based stablecoins backed by US Treasuries are good for the USD, and that advanced cryptography and next gen software platforms are the new job creators and wealth building industries in technology. Russia and China hawks have been talking about the interest that both Russia and China are showing in supporting the crypto industries, and that the US can’t fall any further behind them as a matter of national security. But we aren’t there yet, and Gary Gensler, who is rumored to be VP Harris’ pick for Treasury Secretary if she should win the White House, is still on the warpath, despite a string of high profile SEC defeats. 3.0"

About the author: James Eisenberg is the CIO of the Block One Fund, an actively managed hedge fund that invests in projects and protocols that support the blockchain infrastructure. The Block One Fund is one of only a handful of actively managed token funds that has an audited track record of over five years.

Learn more about James Eisenberg: James on LinkedIn | Interblock Capital Partners

Thanks for that fantastic insight into the Bitcoin conference James! It is nice to hear that bi-partisan support for more sound crypto industry regulation is near on the horizon!

There are videos of all the conference sessions I attended, which I have compiled in a YouTube playlist HERE

How Much Bitcoin Do Governments Possess?

All of the talk I heard at the Bitcoin conference about adding Bitcoin to the U.S.’s balance sheet got me curious as to what other governments are holding Bitcoin.

According to a research study done by the team at CoinGecko, as of July 29, 2024, governments around the world hold 2.2% of Bitcoin's total supply, or 471,380 BTC, worth $32.7 billion.

As digital asset adoption increases, we may see a growing trend among governments to include Bitcoin in their national reserves. The desire to stay competitive with major players like the USA and China is likely to drive this movement. Countries that adopt Bitcoin as part of their financial strategies may aim to diversify their reserves, enhance their geopolitical influence, and embrace the innovations of digital finance.

Nations with weaker currencies or economic challenges may particularly see Bitcoin as a hedge against inflation and a way to strengthen their financial position. In this context, Bitcoin could serve not only as a reserve asset but also as a symbol of technological advancement and modernity, appealing to a generation that increasingly values digital assets. Furthermore, as regulatory frameworks around cryptocurrencies mature, governments might find it easier to navigate the complexities of adding Bitcoin to their reserves.

These diverse approaches illustrate the multifaceted impact of cryptocurrencies on national and global economies. As digital assets continue to integrate into the global financial system, government-held cryptocurrencies will play a pivotal role in shaping the future of digital asset adoption and regulation, ensuring a balance between innovation and security in the evolving digital finance landscape.

Educational Spotlight

Blockchain Based Voting Systems = The Future of Voting?

As we approach a pivotal presidential election, the topic of voting integrity and accessibility is more relevant than ever. There have been many conversations around whether Blockchain technology could enhance the voting process and facilitate more fair elections.

Blockchain-based voting systems leverage distributed ledger technology to create an immutable and transparent record of votes. This means that once a vote is cast, it cannot be altered or deleted, significantly reducing the risk of fraud. According to a review by MDPI, these systems can provide a secure environment where voters can verify their participation without compromising their anonymity.

A noteworthy implementation of blockchain voting was demonstrated by Agora during the 2018 elections in Sierra Leone. By utilizing blockchain technology, Agora allowed voters to cast their ballots from anywhere using a mobile app. This approach not only improved voter turnout but also provided real-time, verifiable results that enhanced public confidence in the electoral process. The initiative was widely regarded as a success, highlighting the potential for blockchain to revolutionize how elections are conducted.

Blockchain voting systems represent a significant step forward in restoring faith in democratic processes, however, implementing these systems is not without its challenges. Concerns about cybersecurity, the digital divide, voter accessibility and bad actors on the networks need to be addressed to ensure a fair electoral process for all. There have been several research papers written on the potential challenges and risks associated with utilizing a blockchain based voting system.

Here are a few papers I think are worth reading:

Blockchain-Based E-Voting Systems: A Technology Review

Electronic Voting System powered by Blockchain Technology: A Study

Enhancing Security and Transparency in Online Voting through Blockchain Decentralization

Going From Bad To Worse: From Internet Voting to Blockchain Voting

Here is a list of blockchain based voting system projects that I am aware of:

1. Agora: Agora's blockchain voting system was notably used in the 2018 elections in Sierra Leone, and while it wasn't a presidential election, the success of their implementation showcases the potential for similar systems to be adopted in national elections. They are actively working to expand their technology's applications in various electoral settings, including larger-scale elections.
2. Voatz: Voatz has partnered with several states in the U.S. to provide secure voting solutions for military and overseas voters in various elections. While they haven't been explicitly deployed for presidential elections, their technology is designed to be scalable and could be utilized in future presidential elections, especially for absentee voting.
3. Follow My Vote: This platform aims to create a fully open-source voting system that can be adapted for various types of elections, including presidential elections. Their focus on transparency and security makes them a candidate for implementation in national elections.
4. Horizon State: While Horizon State has conducted various voting initiatives, they aim to support larger democratic processes, which could include presidential elections. Their technology allows for community and organizational voting, paving the way for broader applications.
5. Democracy Earth: This organization advocates for decentralized voting solutions and has developed technologies that can be applied to larger electoral processes, potentially including presidential elections.

As the demand for more secure and transparent electoral processes grows, blockchain-based voting systems stand out as a viable solution. By fostering trust and engagement among voters, these innovations have the potential to reshape the democratic landscape. While challenges remain, the upcoming elections could serve as an impetus for increased conversation around the adoption of blockchain in voting systems.

Regulatory Update

At present, the United States has no federal regulatory framework for digital assets. At the federal level, most of the focus has been amongst the SEC, CFTC, FTC, Dept of Treasury, IRS, OCC and FinCEN. Individual states have their own unique set of rules and regulations around cryptocurrency and blockchain, but in general there is a lack of uniformity across state-level digital asset regulation.

A fantastic current state of affairs was published on Aug. 7, 2024 by Sadeghi and McMahon of Jenner & Block titled A Closer Look At The Global Regulatory Environment For Cryptocurrency And Digital Assets

The article offers an in-depth analysis of the global regulatory environment for digital assets and cryptocurrencies, focusing on key jurisdictions such as the United States, European Union, United Kingdom, Switzerland, Singapore, and Dubai. It outlines the primary regulatory challenges these assets face, mainly due to their disruption of existing financial systems and the creation of new asset categories that often don’t fit within current legal frameworks. The global nature of these assets complicates compliance efforts, necessitating cross-border coordination. Above all else, the article highlights the fact that it is absolutely crucial for digital asset firms to stay updated on changing regulations given the rapid pace of technological and legal developments.

What Book I Am Reading

How to Listen When Markets Speak: Risks, Myths, and Investment Opportunities in a Radically Reshaped Economy by Lawrence McDonald

When I heard Larry had a new book out, I had to get a copy right away. Not digital, but paper. While I do enjoy a good audio book, I am still a bit of a collector when it comes to things like books and music, when there is a particular author or artist I admire. I saw online that the local Barnes & Noble had a copy in-house on-shelf and was lucky enough to find the only one available in the store.

In How to Listen When Markets Speak, former Lehman Brothers Vice President and bestselling author Lawrence McDonald delves into the art and science of interpreting market signals. This book is a practical guide for investors looking to understand and anticipate changes in market dynamics, especially in times of uncertainty and volatility. McDonald draws on his experience navigating the 2008 financial crisis to illustrate how seemingly small events—like shifts in credit markets, currency movements, or even political developments—can serve as early indicators of larger market trends.

This book is best suited for those with an intermediate knowledge of the stock market, trading and macroeconomics.?

Closing Remarks

Thank you for joining me on this inaugural edition of The Bitcoin Gold Rush! I hope you found valuable insights and perspectives to consider.

In this edition, we explored the evolving landscape of digital assets and blockchain technology, discussing the current state of the market and the growing interest among U.S. politicians in cryptocurrency. We also delved into the intriguing question of how much Bitcoin governments possess, highlighting the potential for other nations to adopt Bitcoin into their reserves to remain competitive. Finally, we examined the potential applications of blockchain technology in voting systems, considering both the benefits and challenges ahead.

The topics discussed in this edition are just the tip of the iceberg in an ocean of innovation to explore. The rise of blockchain and digital assets signals a future ripe with potential, but also presents challenges that we must collectively address. As we continue to explore these transformative trends, I encourage you to share your thoughts, questions, and experiences. Your feedback is invaluable in shaping this newsletter into a resource that truly serves our community.

Stay tuned for future editions where we will dive deeper into many more topics, feature expert commentary and provide insights that can help shape your investment stance. The blockchain gold rush is happening now! It's time to jump aboard this train. If you are interested in learning more about the investment strategies we’re implementing and projects we find interesting, please feel free to reach out to me directly.

Best regards,

Travis Kilgore, CMT, CRPC

Risks and Important Information

The opinions expressed herein are intended to provide insight or education and are not intended as individual investment advice. Ethos Private Wealth does not represent that this information is accurate and complete and should not be relied upon as such. Because crypto and digital assets are a new technological innovation with a limited history, they are a highly speculative asset. Future regulatory actions or policies may limit the ability to sell, exchange or use a crypto asset. The price of a crypto asset may be impacted by the transactions of a small number of holders of such crypto asset. Crypto assets may decline in popularity, acceptance or use, which may impact their price. The technology relating to crypto assets and blockchain is new and developing. Currently there are a limited number of publicly listed or quoted companies for which crypto assets and blockchain technology represent an attributable and significant revenue stream. Non-Fungible Tokens (“NFTs”) are an extremely new artistic and cultural phenomenon, and interest in such artwork could wane. If the demand for NFT artwork diminishes, the prices of NFT items could be negatively affected. The market for NFTs can be subject to shallow trade volume, extreme hoarding, low liquidity and high bankruptcy risk. NFTs are also subject to risks and challenges associated with intellectual property rights and fraud. The author is a paid representative of Interblock Capital Partners. This is not a solicitation for an investment of any kind into any of Interblock Capital Partners’ funds. The information in this material is for discussion purposes only and no representations or warranties are given or implied. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events, or a guarantee of future results, and is subject to further discussion, completion, and amendment. This information should not be relied upon by the reader as research or investment advice. The views and opinions expressed in this newsletter are those of the author and do not necessarily reflect the official policy or position of any other organization or individual. By reading this newsletter, you acknowledge that you are responsible for your own investment decisions and that you will not hold the author or publisher liable for any losses incurred as a result of reliance on the information provided herein. All of the information presented herein is subject to change without notice.