The Wealth-Biased Exclusivity of Modern American Investing

The inaccessibility and poor performance of traditional investment vehicles have limited the wealth-building process almost entirely to those with high levels of pre-existing wealth. This exclusivity of investing (growing wealth by investing wealth) has forced all those without pre-existing wealth to attempt to grow wealth by trading time for money (example: by working a “9 to 5” job). Herein lies the hopeless and unfair state of modern economic affairs.

Traditional investing was designed to only be profitable for people with a significant amount of funds to invest. The average financial advisor requires a minimum investment of $50,000. 63% of American’s don’t have enough savings to cover a $500 emergency. Traditional financial systems primarily focus on the small percentage of the American population who can invest enough money to actually see profits.

The average annual stock market returns are quoted as being 7%. (This 7% figure is reached by taking the nominal 10% annual returns on common stocks and including the adjustment of an annual 2% loss of value due to inflation.) However, after closer examination of the data behind this 7% figure, a very different trend emerges.

“Average returns are exceedingly rare — and for a good reason. People are obviously doing something very wrong with their investment dollars.”

Barry L Ritholtz (Bloomberg) – founder and chief investment officer of Ritholtz Wealth Management

The sad truth – according to Bloomberg and investment specialist Barry Ritholtz – is that the average investor actually realizes returns of about 3.7% (See the graph below). This new number of actual returns realized by the “Average Investor” is further diminished when the annual 2% inflation factor is included which leaves the “Average Investor” with only 1.7% returns annually.

Asset Class Returns vs. The "Average Investor"

With all the foregoing information being considered, after taxes, fees, and inflation, a minimum investment of $50,000 will achieve an average of $850 of growth each year. If an average 20-year old invested $50,000 into a managed fund and saved the annual $850 dividends for retirement, that person (upon reaching 60 years of age) who have only $34,000 of accumulated dividends. If that same person also managed to save up an additional $5,000 every year toward their retirement (from the time they were 20 years old until the time they reached 60 years old) on top of their managed fund accumulations, their total amount of retirement savings would come out to $284,000. This falls significantly short of the safe and reasonable retirement savings of $850,000 recommended by Investopedia.

Unfortunately, the vast majority of people do not have $50,000 to invest at 20 years of age and are also unable to save up an additional $5,000 every year. In fact, 63% of Americans don’t even have enough savings to cover a $500 emergency. If you invest $500 without a financial advisor and the growth is also the average realized return of 1.7%, you will see an average $8.50 of growth each year.

The obvious conclusion, based on the data presented above, is simply this: Unless individuals have access to $50,000 or more, they are excluded by mainstream investing and must resign themselves to the common “paycheck to paycheck” lifestyle which inevitably ends in poverty with no retirement and no inheritance remaining for future generations.

Written by: William Thompson


The Finance Buff, The average Investor Should Use an Investment Advisor: How To Find One –

Forbes, 63% Of Americans Don’t Have Enough Savings To Cover A $500 Emergency –

The Simple Dollar, Average Stock Market Return: Where does 7% Come From? –

Bloomberg, Average Returns, Rare Than You Think –

Barry Ritholtz, Asset Class Returns vs. “The Average Investor” –

Jonas Elmerraji (Investopedia), Retirement Planning: How Much Will I Need? –

The Effects of Burning Tokens on a Cryptonomy

By now most stakeholders in blockchain and cryptocurrency have heard the term “token burning” but what does this actually mean? Tokens are not necessarily destroyed or removed from existence. Tokens that are burned are typically sent to the genesis wallet. The genesis wallet is the very first wallet that is formed when a token is created. The interesting thing about these wallets is that tokens sent there cannot be retrieved. This is why people refer to the process of sending tokens there as “burning.” Some projects even base their entire cryptonomy around this concept and call their model “proof-of-burn.”

The Effects of Burning Tokens

Burning tokens will effectively decrease the total number of tokens in circulation. If you had 1 bitcoin out of 21 million bitcoins, then you have 1/21 million of the total market supply. If, however, 2 million tokens are burned and you have held onto your 1 bitcoin, you now possess 1/19 million of the total market supply. Your “slice of the pie” has now grown. The question is, what deeper effects does this have?

One popular reason for burning tokens is to artificially create scarcity. The thought process is simple – if fewer tokens exist and the demand remains constant, then the value of the tokens must increase. While this is not entirely untrue it also is not the most effective manner of managing unsold tokens. Artificially driving up the value of tokens is seen by many people as a poor and ineffective way to operate because it lacks sustainability. If tokens are continuously removed from the ecosystem the remaining token supply will eventually dwindle to an amount that simply cannot maintain the platform. On another hand, there is also a degree of legal concern regarding this form of cryptonomy. Munchee Inc. is the best example of this to date. The SEC, when investigating Munchee, found that by burning tokens Munchee was trying to promise or guarantee investors an “expectation of obtaining a future profit.”

Alternative Uses for Unsold Tokens

Tokens that remain unsold at the end of an ICO do not have to be burned. There are other methods that are equally as good, or even better, for investors. It is certainly in the best interest of a long-term blockchain venture to avoid the burning of tokens.

One possible solution is to offer the remaining tokens for sale on the website, app, or platform developed by the company. This is a very feasible option for companies who are creating a platform where the tokens play an integral part in the user’s ability to interact with the platform.

Another alternative for this is to distribute the unsold tokens, in equal parts, to investors who purchased the tokens during the sale. For example, if 100 million tokens were created, and 50 million were sold (and 10 million left aside for the core team) then there are 40 million tokens remaining. If George bought 1 million of these tokens (2% of the tokens sold) he would receive an additional 2% of the 40 million unsold tokens ( or 800,000 tokens). This greatly benefits the investor without changing the percentage of the token supply allocated to the team, developers, etc.

While burning tokens might seem attractive in the short term by artificially creating scarcity, it is not always the most appropriate way to manage tokens. Companies should always carefully consider the design of their cryptonomy before launching their ICO.


How to Write a Whitepaper

There is no shortage of people releasing “whitepapers” for ICO’s that they are planning to launch. One of the most common questions many people ask is “Can you review my whitepaper?” The problem with this is that most people today should not be asking if someone will review their whitepaper before they first ask the question “What is a whitepaper?”

A whitepaper is, in essence, a technical description of the theory you are presenting or the product you are developing. It should explain what the product is, how it works, and what technological underpinnings it is built upon.

What many startups release today and call a whitepaper is realistically no more than a business plan or, even more likely, a pitch deck. There has been a shift towards creating a sharp graphical presentation with minimal evidence that a team can perform what they are promising. This is a dangerous practice and many investors view these kinds of “whitepapers” as a red flag.

What Belongs in a Whitepaper

A whitepaper should contain technical descriptions of what is being proposed or built. The classic example that should be reviewed by those writing their own whitepaper is Satoshi Nakamoto’s bitcoin whitepaper. See the example below of one section:

Source: Bitcoin Whitepaper

The above description of the simplified payment verification provides insight into how this process works and is accompanied by a diagram that visualizes the concept. This type of information, along with introductions to the industry and the purpose of the proposed product, is essential to writing a good whitepaper. It is also important to cite any sources used in research. This validates where the concept is derived from.

What Doesn’t Belong in a Whitepaper

Where many go wrong with whitepapers is by adding in information that does not need to be there and oftentimes excluding the pertinent information that explains their project. What a large number of ICO’s in 2017 and early 2018 released as “whitepapers” were made to function as a pitch deck. Look at this excerpt from an example Uber pitch deck:

Source: Uber Pitch Deck

This above image represents a brief industry analysis. This kind of information, along with some well-branded charts, are extremely common in whitepapers today. While it is important to provide insight into the industry and the solution you are providing, charts like these belong more in a pitch deck or broken down into more detail in business plans. Pitch decks are meant to sell others on the value of the product or service. They are not meant to replace technical descriptions.

It is important for companies that want to release a whitepaper to sit down and consider what they are building, how it is being built, what target market they are focusing on, and every other question that businesses have been asking for years. The key here is properly dividing this information into appropriate documents. Topics such as business strategies, marketing plans, executive summaries, timelines, and financial descriptions belong in well-developed business plans. The marketing discoveries made such as target market, unique selling proposition, brand/positioning strategies, and competitor analysis should be used in creating a pitch deck to present to interested individuals and organizations.

Writing a whitepaper shouldn’t be a scary process. It should, however, demand attention to detail and careful consideration of what information is present and how it is being presented. Completing a proper whitepaper is, after all, the foundation of the product you are offering.


Intro to Cryptocurrencies and Blockchain Technology (Part 4 of 4)

Practical Application

Screenshot from 2018-08-02 04-13-52
(This does not constitute investment advice.)

On-Ramping via Bitcoin

To begin using cryptocurrency, start by getting some bitcoin first. Numerous methods are available for you to acquire Bitcoin:

The Blockchain Arms Race Has Started

Just like when the internet adoption began, businesses had the opportunity to be the first to leverage the new technology. Now, businesses that do not exist on the internet won’t survive.

We are presented with another opportunity to leverage one of the latest technological advances that is taking the world by storm – blockchain. The technology is only beginning to become more mainstream and the ability to be the “first in your industry” still exists.


Screenshot from 2018-08-02 04-28-15.png

These are just a few of the companies that have started accepting Bitcoin as payment:

  • Microsoft
  • Dell
  • Sears
  • Gap
  • GameStop
  • Home Depot
  • Etsy
  • Shopify
  • Tesla

If you would like to know more about how you can plug into the world of blockchain and cryptocurrency, or if you are interested in how you can leverage blockchain technology in your industry, please contact us.


Intro to Digital Assets –

Disruptive Presentation –

Intro to Cryptocurrencies and Blockchain Technology (Part 3 of 4)

Cryptocurrency as a Digital Asset

Bitcoin vs. Other Assets

Screenshot from 2018-07-31 03-23-51

“Bitcoin, that nebulous digital currency that trades in cyberspace and is “mined” by code-cracking computers, emerged as a better bet this year than every other foreign-exchange trade, stock index, and commodity contract. The electronic coin that trades and is regulated like oil and gold surged 79 percent since the start of 2016 to $778, the highest level since early 2014, data compiled by Bloomberg show. That’s four times the gains posted by Russia’s ruble and Brazil’s real, the world’s top two hard currencies.”

~Bloomberg (Dec. 16, 2016)

Value by Design

The blockchain protocol dictates that the supply of bitcoin is limited to 21,000,000 bitcoins. In addition to this limitation of supply, the reward that is given to the miners who verify the transactions of the network is designed to decrease by one-half roughly every four years. As a result, the supply of newly created coins will dwindle over time until all 21,000,000 have been mined.

Once new bitcoins are no longer being awarded to miners, the miners will be compensated by transaction fees instead of newly created bitcoins. While the supply grows less and the demand is growing larger, the value of bitcoin can only increase. Satoshi Nakamoto engineered this feature deliberately, and as we have seen, his purpose of continued valuation has worked flawlessly.

Below is a graph which shows the chronological progression of the monetary base and inflation rate of bitcoin.

Source: Official Bitcoin Talk Forum


In 2017, the daily number of unique bitcoin addresses in use more than doubled from previous years which suggests a growing user-base. A growing user-base implies an increased demand.

While bitcoin’s price has historically seen a lot of volatile fluctuations, the overall trend is still going up. In a Forbes article written by Kashmir Hill, the price action of bitcoin was compared to the performance of other major assets during the same period.

Screenshot from 2018-07-31 03-59-27.png
Source: Forbes

Historical Price Action

Over the past eight years, the effects of high demand, capital controls (the shift toward a “cashless society”), and the increasing bitcoin scarcity (reduction in mining rewards) have driven the price of one bitcoin up by over 17 million percent.


Intro to Digital Assets –

Disruptive Presentation –

Intro to Cryptocurrencies and Blockchain Technology (Part 2 of 4)

An Introduction to Blockchain

Distributed Ledger

All digital assets are defined and governed by a protocol which acts as a peer-to-peer distributed ledger system called the blockchain. Bitcoin is considered the father of the digital asset class because bitcoin was the world’s first functioning application of the blockchain protocol.

To understand the fundamental elements of the blockchain protocol and how it operates in conjunction with Bitcoin, observe the illustration below:

Public Key Cryptography


CRYPTO – Comes from the root word “cryptography”, which is the science of codes and encryption. Therefore, just as the word suggests, cryptocurrency is a form of money built upon the modern mathematically derived systems of encryption.

Public key cryptography was invented in 1970 by James H. Ellis, a British cryptographer at the UK Government Communications Headquarters (GCHQ). It is currently estimated, that if you used a modern supercomputer and attempted to “brute force” attack this cryptography, the attempt would take roughly 0.65 billion billion years to successfully complete.

For 38 years, this form of cryptography was used almost exclusively for communication purposes until Satoshi Nakamoto invented bitcoin in 2008. Public key cryptography is the foundation of blockchain technology and because of its secure foundation, Bitcoin has never been successfully “hacked” and likely never will be.

When a user creates a new bitcoin wallet, they are given two keys.


The bitcoin wallet address. It works similar to a bank account number, although unlike a bank account number, you can share it with anyone in the world and nobody can use it to steal your funds.


Essentially, this is the “password” to your bitcoin wallet. Every time you send bitcoin from your wallet to your friend’s PUBLIC KEY (or “bitcoin address”) your private key is used to authorize the sending operation.

Screenshot from 2018-07-21 03-05-53.png

This simple process is what makes blockchain possible.

Public key cryptography is what is used (behind the scenes) to authorize every single transaction that occurs on the blockchain around the world. When you “send” bitcoin, your key is used to authorize that “sending” action and no one else in the world is able to stop you or “fake” your private key.

Screenshot from 2018-07-21 03-10-25.png

Your PRIVATE KEY grants you access to subtract from the public ledger balance of your PUBLIC KEY. After doing so, the miners verify that your key is valid and then the global ledger is updated (usually within 10-40 minutes).

Fraud Prevention

Consumer Protection

Unlike traditional digital spending methods, you are not required to disclose your identity before being allowed to use, store, or transact with bitcoin. Upon bringing up the topic of bitcoin’s privacy provisions, many people initially begin thinking about the potential enabling of illegal transactions. However, upon closer examination, there is a major benefit to the anonymity of bitcoin that is often overlooked: Consumer protection.

Payment Processing

The increased level of consumer protection used by the bitcoin network would save billions of dollars if implemented in place of the American dollar. Most credit card and debit card users are unaware of the amount of information stored on the magnetic strip on their credit card. Every single time they swipe their card to make a purchase, they share every last bit of their private payment authorization information with the merchant and the 5-7 various intermediary entities which stand between their bank account and the bank account of the merchant. During CNP (“card not present”) transactions over the phone and the internet, all information required to authorize the spending of funds is also relayed in a similar (and often less secure) manner.

Source: Wallet Hub

CNP Fraud

Hackers have come to learn about this high level of sensitive information exchange and, for quite a while now, have been cracking payment databases of countless thousands of merchant websites. Once inside, cybercriminals make off with customer data belonging to thousands of unsuspecting victims. After acquiring all of the necessary data to initiate transactions from the accounts of all the hacked merchant’s previous customers, the hackers use the data to carry out CNP fraud (“Card not present”: Transactions over the internet or by phone). Even worse, statistics show a dramatic 113% increase in an even more dangerous type of fraud called “new account fraud” in which hackers will open entirely new accounts in the name of the victims and then leverage that person’s credit score to borrow as much money as possible before making off with all of the money from that new ghost account.

EMV Chips

The recent implementation of EMV chips on credit cards has done little to reduce the level of fraud as this new shift only protects users from fraud during “card present” transactions using terminals equipped to handle an EMV transaction. All non-EMV terminal swipes and all online based purchasing remains just as vulnerable as before. See the conclusions of the report by Javelin below:

Source: Javelin Strategy & Research

The Upcoming “Cashless Society”

The gradual global shift to a “cashless society” will only further the fraud increase in the traditional centralized monetary system. The final conclusion is sobering: By simply using a debit or credit card, users put the funds of their financial accounts into the hands of every single merchant they make a purchase from which, as we have seen, presents a critical vulnerability in the traditional centralized digital payment system.

Data Breaches

The following graph from the Insurance Information Institute shows an overview of how large of a scale this kind of theft has become:

Identity Theft

A simplified breakdown of the total amount of money lost due to fraud:

Screenshot from 2018-07-22 03-27-17.png

Money stolen every minute of every day – due to identity fraud!

A report in the Wall Street Journal also highlights the total amount of money lost due to card fraud and the results are staggering:

Screenshot from 2018-07-22 03-23-25.png
Source: The Wall Street Journal

The Ultimate Solution

Rampant financial fraud is enabled by the required transmission of private authorization information. The bitcoin network requires no such transmissions to be made for users to spend and send funds. The bitcoin network is immune to fraud resulting from any such credential attacks. This inevitably results in a safer financial transaction ecosystem and a dramatically lower cost of operation. As a result, many merchants are beginning to prefer bitcoin payments over traditional payment methods.

Screenshot from 2018-07-22 03-35-32.png

Thousands of Blockchains

The simple, powerful technology of blockchain has already been applied in thousands of ways. Almost every version of a blockchain brings another “token” or cryptocurrency along with it. These digital assets are all traded on global exchange platforms much like stocks and forex. Cryptocurrency trading takes place all day (24 hours) every day of the year.

Supply Chain Solutions

The Wall Street Journal explained how the blockchain is being implemented in the commodities markets with the help of IBM.

Screenshot from 2018-07-22 04-07-46.png

Results showed involvement reduction with supply chain reduce from 3 hours to only 25 minutes and supply chain costs were reduced by 30% during the testing of this new method.

Banking the Unbanked

According to research conducted by McKinsey & Company, 2.5 billion of the world’s adults don’t use banks or microfinance institutions to save or borrow money. Unbanked people remain at an economic disadvantage because they have no way to easily conduct business on a global level (among other things). Traditional banks have yet to provide a working solution for this problem. Because of blockchain technology, the unbanked finally have a solution. Users are not required to have identification documentation in order to exchange monetary value with cryptocurrency.

Global Remittance

As the world continues to globalize through the use of the internet, more people are sending funds across borders than at any other time in the history of the world. The current monetary system requires long waiting times and often outrageously high fees in order for one to remit funds abroad. Users are moving to cryptocurrencies in an effort to circumvent all the unnecessary fees and waiting times.


Intro to Digital Assets –

Disruptive Presentation –

Intro to Cryptocurrencies and Blockchain Technology (Part 1 of 4)

An Introduction to Bitcoin

The Creation of Bitcoin

The birth of bitcoin occurred on the 31st of October, 2008 (a time period of great economic distress worldwide) when a pseudonymous creator using the name Satoshi Nakamoto published his Bitcoin Whitepaper and shared it on an obscure cryptography mailing list. This seemingly small event set into motion a worldwide financial revolution which spreads and grows exponentially stronger to this day.

satoshi nakamoto bitcoin quote

What is Bitcoin?

Bitcoin is the first example of a growing category of money known as cryptocurrency

Bitcoin is a form of digital currency that is created and held electronically. No one controls it. Unlike fiat money, bitcoins aren’t printed. Instead, bitcoin is produced when people and businesses use their computers to solve complex mathematical functions. The production of bitcoin is a process known as “mining“. Mining occurs simultaneously with transaction verifications. Violations of the math are rejected by the system, making forgery statistically impossible.

Bitcoin can be used to make electronic purchases. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally. However, bitcoin’s most important characteristic and the thing that makes it different from conventional money is that it is decentralized. No single institution controls the bitcoin network. Decentralization allows for users of bitcoin to operate outside the confines of bank holidays and fees. Bitcoin users can also transact value globally without the need for identity or residency information.

centralized versus decentralized networks

The bitcoin blockchain has had ZERO minutes of “downtime” since its launch in 2009

The entire bitcoin network runs on a global peer-to-peer distributed ledger system called a “blockchain” which can be easily accessed from any location via the internet. The transactions which take place between the users are verified and added to the global blockchain ledger by “miners” who, by contributing their computing power, earn small transaction fees and generate new bitcoins. The distributed nature of the blockchain ledger adds a level of resiliency that is unmatched in the current payment processing space.

Centralized -vs- Decentralized


The Federal Reserve calculates all their payment processing at 100 Orchard Street, East Rutherford, New Jersey. They also have backup systems that can be brought online within 60-90 minutes at the Federal Reserve Banks of Richmond and Dallas. If those three centers were compromised or destroyed then the entire monetary system of the United States would be completely nonfunctional.


The Bitcoin network cannot be so easily compromised in this way as it has a current total of 9899 mining nodes (or “processing centers”) with more being added every day by various individuals and companies around the world. In order for the Bitcoin network to be taken out by a physical attack, all of the thousands of Bitcoin nodes scattered around the world would have to be destroyed.

The bitcoin blockchain equally distributes authority to all the users of the network. The bitcoin network is not owned, issued, or governed by any central authority, but is governed by the blockchain protocol which clearly lays out the never-changing rules of the system. Users ARE the system. No human status or title will ever cause the system to treat one user more favorably than another.

cnbc quote about bitcoin

THE AGE OF CRYPTOCURRENCY – New York Times Best Seller (2015)

“At its core, cryptocurrency is not about the ups and downs of the digital currency market; it’s not even about a new unit of exchange to replace the dollar or the euro or the yen. It’s about freeing people from the tyranny of centralized trust. It speaks to the tantalizing prospect that we can take power away from the center – away from banks, governments, lawyers, and the tribal leaders of Afghanistan – and transfer it to the periphery, to We, the People.” – Paul Vigna (Markets Reported at The Wall Street Journal) and Michael Casey (Former global finance columnist at The Wall Street Journal)


Intro to Digital Assets –

Disruptive Presentation –