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HEALTH, WEALTH, AND HAPPINESS

July 6, 2022

"Wealth won't give you satisfaction; creating a good product that's well received by users is what matters most."

- Ma Huateng

New Members-Only Event: Mastering the Art of Meme-Making! Memes are the modern-day language of the Internet, the lingua franca of crypto culture. In this hands-on workshop, we'll show you how to create successful memes that drive community engagement and get results (plus how to spot them as crypto investors).

This exclusive online event is Wed July 20, at 6:30 pm ET. Paid members can click here to RSVP and get the Zoom link; we'll check membership at the door.

(If you're not a paid member, become a Blockchain Believer to get instant access to the event -- and our on-demand library of past workshops.)

Ethereum Merge Moves One Step Closer (Decrypt): Terrific explainer on what the upcoming Ethereum upgrade (a.k.a. "The Merge") is all about, and the latest news: it's one step closer.

The upgrade has now been deployed on two Ethereum testnets, Ropsten and Sepolia. There's one more testnet to go, then -- if all goes well -- The Merge will go live on the public Ethereum network.

For months we've been telling you this is a hugely significant milestone for Ethereum: it will make the leading blockchain network more energy-efficient, more cost-effective, and (we believe) more valuable.

Investor takeaway: With ETH trading at 18-month lows, this could be the bargain of a lifetime. Ask yourself: is Ethereum going away, or will it continue to grow? (The chart below may help you decide.)

We've long argued that developer activity is one of the leading indicators of a blockchain's health, since more developers lead to more products, and more products lead to more users.

With that in mind, here's a look at top blockchain ecosystems by number of developers:

(Courtesy Electric Capital)

Note that Ethereum (the blue line) has over six times the developers of bitcoin -- and it's growing much faster. No other blockchain comes close.

Investor takeaway: Ethereum has the richest developer network. It has the most applications. It has a major upgrade in the works. Prices are low; potential is high.

If you're going to make a decision, now's the time.

Voyager: Inside the Numbers

• Voyager Digital Limited is a publicly-traded company on the Toronto Stock Exchange in Canada and over-the-counter in the US, though now it faces de-listing. The shares were down over 10% this week, and trading was halted as of 8 a.m. this morning. 

• Voyager has a token called $VGX, which is traded on many other exchanges. Interestingly enough, it is only down 10% over the past 24 hours as of this writing, with a volume of $12 million over the past 24 hours. Somehow it seems the show will just go on, at least for the time being.

• Per the bankruptcy filings, Voyager states it had over 10,000 creditors and between $1-10 billion in assets as well as $1-10 billion in liabilities.

• Chapter 11 bankruptcy isn't the end of the company. But for depositors, this could mean years before getting all (or some) of your funds back. 

• In Chapter 11, the company is legally protected from its creditors coming after it. Chapter 11 is an attempt to give it time to restructure and pay at least some of its debts. Normally, companies in Chapter 11 bankruptcy continue to operate in an attempt to eventually get out of bankruptcy and return to normal once the court approves it. 

• Like Celsius, Voyager was supposed to make money off of loans while giving yield to depositors. Over 50% of its loans were to Three Arrows Capital, which reportedly owes them over $600 million. 3AC themselves filed for bankruptcy, and it does appear that they are fully bust.

So What's the Good News?

I see two silver linings here.

First off, this does not seem (at this point) to be an endless chain of contagion. Crypto companies either loaned 3AC hundreds of millions and are on the verge of insolvency or they did not. BlockFi dodged the bullet and Voyager did not. Terra Luna sold off billions in bitcoin and didn't have billions more left to sell. We most likely would have found out most of them by now. (knock on wood)

So the bleeding can only continue so much longer, as long as bitcoin doesn't fall deeper.

Second, this is bullish for one segment of the crypto industry—hardware wallets. As crypto users are becoming more aware of the whole point of bitcoin, removing the trusted third party, more of them are buying hardware wallets. 

As Rachel Wolfson reported in CoinTelegraph earlier today, Ledger has been seeing more sales, at one point up to $2 million per day in May after the public became aware of Coinbase's fine print after reporting a negative quarter. 

What gets me is that so many people weren't paying attention to the obvious facts. Companies aren't naturally evil or dishonest, but the fact is some percentage of them in any field fail. When you give them your money and they fail, they don't have your money anymore. It's the very reason why bitcoin was created.

For those who have their money on exchanges, especially those offering yield, you are exposing yourself to risk. If you are holding your own keys, you are the main one to worry about. If you choose to keep money on exchanges (and I do keep a percentage on exchanges), it is at your own risk.

If you don't know this by now, I suggest you rapidly study self-custody and the history of crypto exchange hacks and failures. 

Best of luck to Ledger, Trezor and other great companies out there educating people on how to self-custody their crypto.

Sincerely,

Alexandre Lores

Market Analyst

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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