Market Lab Report / Dr. K's Crypto-Corner
by Dr. Chris Kacher
The Birth of the Metaverse
The term 'metaverse' is used liberally today but it came into form at the start of the PC (personal computer) revolution in early 1980s. The Apple ][+ catalyzed the movement with upper/middle class being able to afford such computers in the early 1980s. Hundreds of Bulletin Board Systems were born across the U.S. I was the sysop (system operator) of The Insane Asylum, a BBS that was featured in Businessweek as one of three BBS's in the U.S. that had the most user traffic. I was Damien the Dreaded and Redrum. My close friend Drew Munster (aka Zero Page) and I formed The Untouchables, a pirate/code breaking group that was considered #1 in terms of being able to break code then distribute (pirate) all software within 48 hours that was made for the Apple computer. Krakowicz was considered the top code breaker. I was considered the top distributor. At one point, I had all software ever made for the Apple, a collection of cracked software that consisted of over 2000 double-sided 5 1/4" floppies.
I was also invited by my friends The Wizard of Arpanet (Eric) and The Cracker (Bill Landreth) into the top hackers group, The Inner Circle. I initially agreed so am listed in the first Inner Circle, but then after careful thought due to the nature of what we were doing, politefully declined. A number of members had written for the elite TAP magazine. The hacker's mandate back then was to never destroy, just create, but the laws were just forming at the time in terms of unlawful activities, so it was best to just be an 'honorary', anonymous member.
The Cracker was using various computer systems including GTE Telemail to create communications platforms where we could text communicate and post msgs in real-time. Back then, amongst us hackers, we were able to create up to 59-way conference calls for free with anyone, play Codacas which was a popular multi-user game played on the Control Data hardware at Temple University in the early 80s, poke around Autovon which was a major part of the U.S. government’s Defense Communications System (DCS), and game/code/hack/pirate til sunup. It was a golden age that only a fraction of a percent experienced.All that said, while many argue you cant form meaningful bonds unless you physically meet or at least see what the person looks like, I and many of the others in the early 1980s are living testaments to the deeply powerful bonds that resulted from regular and numerous phone calls, BBS interaction, and gaming back then. The bonds created were enduring.
With blockchain, the metaverse graduated from high school with high honors. Mass adoption is next. While most GenZers and GenAlphas spend much time living in the metaverse across numerous gaming and social networking platforms, more people across all generations are participating. Axie Infinity revolutionized play-to-earn (P2E) where many in developing countries can earn more gaming than they can at their regular jobs.
NFTs tend to perform well when ETH is weak because gas fees drop. This enables others to trade and mint NFTs at lower gas fees.
Metaverses such as Sandbox (SAND) and Decentraland (MANA) also offer other dimensions including gaming, NFTs, and DeFi, thus their multi-billion dollar valuations are understandable. The market is anticipating the future of how fast the metaverse will grow, with these two companies being the two leaders, much as the market anticipated how big Amazon (AMZN) would become when it was soaring in price in the late 1990s despite no earnings for a next few years.
How is this possible?
For those who may struggle to understand how digital can have any value, digital gaming items can command prices as high as 6- to 7-figures in dollars due to their utility within the gaming platform in question. Similarly, digital land can command high prices because it may serve as a key location in a game, or in advertising. Image being able to advertise your company on the google.com landing page next to the google logo for 24 hours. While this is not allowed, such would command a price tag of at least an 8- or 9-figure sum.
That said, buying land in SAND is far more volatile and risky due to low levels of liquidity, hype, buggy software, empty servers, and huge opportunities for abuse. These issues will evolve as such is the nature of S-curve technology, but in the meantime, SAND tokens are far less risky than buying the digital land.As a quantamentalist that combines fundamentals and technicals as well as on- and off-chain metrics, I use chart technicals to time my entries and exits into top alts such as SAND. For now, crypto remains on a cash/sell signal, so I patiently await the next buy signal either by way of the rare and liquid cryptocurrency bucking the trend in price along with compelling fundamentals, or by an entry signal issued by BTC and/or ETH. I will keep all members of www.selfishinvesting.com informed.
In the meantime, stocks and cryptos are in firm downtrends. The NASDAQ Composite and S&P 500 are still a fair distance from the -20% 'uncle' point wherein the Fed chair steps in and cries uncle by reversing balance sheet tightening or restarting QE. Such continues to be the name of the game over the last decade. The NASDAQ Composite is about -10% from peak, and the S&P 500 is about -5% from peak. BTC and ETH along with altcoins are well off their peaks in firm downtrends with both BTC and ETH off nearly -40% at the time of this writing. Most altcoins are off quite a bit more with just a tiny handful of exceptions such as LUNA and ATOM, both which remain on the list of Crypto Picks.
Inflation in the UK jumped to its highest level in nearly 30 years in December, making a rate hike in February increasingly likely. The world's central banks are tightening because of spiking inflation. Yet the yield curve as shown by the faster rising 2-year vs. 10-year, a standard metric for yield curve inversions, is flattening. This suggests Powell will have less room to taper let alone hike rates.