Profit Potentials In Privacy Coins™ #5 – What Does A Privacy Coin Need To Succeed?

Tai Zen: What’s up, this is Tai Zen and with me in this video, I have the Honorable Grandmaster Legendary LeonFu.com, the great Oracle of Cryptocurrency. And in this video series, on the profit potentials and Privacycoin, this is a module number 5. We’re going to talk about what does a Privacycoin need in order to succeed.

Before we get started, let’s go through the quick sponsorship disclaimer, this video has been sponsored by a Privacycoin project to provide an independent third-party review of the major Privacycoin projects currently active to educate the public about the importance of financial Privacy. So we’re going to talk about what Privacycoins need to succeed.

Every Privacycoin project has to overcome common obstacles to success, they include the technology, the Privacy technology that’s being used, the marketing, how do they get people to start adopting their Privacycoin or their project or their network or their platform and how do they make decisions on how to make changes and corrections that are needed or adjustments.

And then the legal issues because unlike other Cryptocurrencies, Privacycoin deals with hiding or not hiding, but making private the information of your financial transactions. And governments and law enforcement agencies don’t necessarily like that because they want to know what it is you’re doing.

So in this video, we’ll go over each of these obstacles to consider to help you, the investor evaluates the Privacy projects if they’re worthy of investment or not. These are necessary for all Cryptocurrency projects, not just Privacycoins alone.

So the first key to success is that the technology was specifically the Privacy technology that’s being used. Do you want to talk about that?

Leon Fu: So let’s talk about technology because that’s the first thing people talk about is what is this going to do? So the first thing is the technology, it actually has to do what it says. In other words, the Privacy wins must actually maintain user’s Privacy on a technical level.

And this is not as easy as it sounds, in fact, it’s very hard. And the reason why it’s so hard is that Cryptography, which is the basis of all of these products, how they maintain your privacy, it’s already very difficult.

And I’m not just talking about Privacy here, I’m just talking about Cryptography, just the math behind how to do encryption and decryption and how to do that in a secure way that’s already very difficult and you may need that not just for Privacy, but there are many applications to that.

But then when you add in the requirements that it actually has to be private, your scope of vector expertise has to go beyond just encryption and therefore we need a very strong technical team to maintain the security guarantees, and there’s different degrees of privacy as we’ve talked about some of these coins, they don’t keep everything private, like some of them might reveal the amounts even though they hide who it came from or who it’s going to.

Some of them reveal like the dates of the transaction, so we call this metadata. So because of that, there’s always a risk that the project fails, like technically fail, it no longer does what it was intended to do.

Tai Zen: Basically what you’re saying is that the Cryptography ensures the security of the Cryptocurrency and then that’s difficult already and now you have to put on another layer math on top of this to make it private.

Leon Fu: It’s not math, it’s also things like the network and very technical things, it goes beyond just Cryptography. Going back to encryption, because this is what’s very common about privacies people think of encryption, all encryption methods eventually fail. Because as time goes on, computers get faster, academics do more research, they figured out new kinds of math to break encryption.

So SHA1, shot one, recently has been hacked and this has been hashing algorithm, Cryptographic hashing algorithm that’s been around for 20 years. Not only did the computers get faster, but a computer scientist understanding of the math behind it got better where they found a new way to do the math which 100,000 times faster than what they thought they had to do.

And that combined with the increases in computing power of broke the encryption. So what was the takeaway here, is a strong technical team is more important than whether the technology is foolproof from an investor’s perspective. It’s not that we need it to be perfect or a foolproof, we need the team, the community.

Remember we kept going back to the community and the developers are a big part of that community, they have to be strong enough to fix any errors, flaws, bugs, and they have to do it in a timely manner.

Tai Zen: They have to be able to have enough experience and knowledge and skill so that maybe they don’t recognize that floor right away, but when that does happen, they are capable of understanding and recovering and knowing how to fix this. So the key to success number 2 is marketing.

Many investors don’t realize a project marketing in business is just as important or even more important than technology. Because a lot of these developers, they’re very needy, they’re very technical, they’re engineers and they don’t see the business and all this is the technical side because they understand that and that’s theỉ main strength.

But in the real world, in the business world, the way that things grow and get adopted is that a strong marketing and strong business people have to be behind it to get people to be aware of it, to adopt it, to use it, and to spread the word about it. So many Privacycoin projects are run by highly technical people here.

They have very little sense in business, in marketing, in the user experience or in how to organize a community or build a community. So these developers are mostly technically focused because they’re the only ones with the technical background to understand the potential of blockchain technologies.

Leon Fu: And these are very important though, without them, none of this works. But we need more than just developers.

Tai Zen: So that’s just 1 piece of the puzzle. It’s like building a car, you have the engine, but if you don’t have a transmission or you don’t have any wheels that the car doesn’t go anywhere. So they’re critical.

Notice that when the Bitcoin skeptics or people who do not have combine understanding of technology, economics, and finance, it’s hard to understand Bitcoins potential or a Privacycoins potential without some understanding of all of these fields and how they relate to each other. You don’t have to be an expert in it, but you do have to have a little bit of understanding each of them.

Leon Fu: And I’d like to point out there that all the skeptical articles that have been published in the media, sometimes they’re written by experts, but they’re experts in only 1 of these 3 areas and they don’t understand the other, they don’t understand the other 2. There’s like noble prize-winning economists who say Bitcoin is a scam because he understands the economics, he knows how a computer works.

People who are experts in technology, but they don’t really understand money when they don’t understand economics. And so they’re skeptical too. So you have people that are expert, but it’s hard to understand the potential of Bitcoin if you don’t understand how these 3 relate to each other.

Tai Zen: And then there needs to be a strategy for community building. All the value of the coin comes from its community and we keep saying this over and over the developers, the users and the people that surround that project is what makes it successful.

Leon Fu: And the community I would say it’s like cylinders of an engine, each part like the developers, the users, the service providers, for the project to succeed also cylinders have to be firing.

Tai Zen: And I know we quoted Charles Hoskinson before Charles Hoskinson was the former co-founder of Ethereum, he’s currently the CEO of IOHK, it’s an input-output Hong Kong. And he says all the time that all the value of coin comes from its community, not the technology.

So that’s something that we often quote from Charles Hoskinson because, without the community, the technology by itself without any users and developers, any customers, that has no value. So if mass adoption of Privacycoin is the goal, there needs to be a focus on the user and it’s software and creates a positive user experience.

For example, we put Exodus, it’s more than just a service, it’s a blockchain asset management software that allows you to store and manage all your blockchain assets, all your Cryptocurrencies. And right now we use that as an example because it’s the undisputed, heavyweight, most user-friendly and the most beautiful wallet service as out there in the market right now.

In addition to that, there need to be relationships need to be formed with partners, with exchanges, with service providers, with investors, with academia. So if you have a currency project, Privacycoin project that has research in an academy or a college or recognized college or university, if they have recognized scientists and academic researchers working on it, that’s a good sign right there.

Also, the marketing also helps eliminate the negative image of Privacy of a coin project that needs to be addressed. Because when people think of Darkcoin, when they think of Shadow Cash, they’re not like the really positive and friendly name.

Leon Fu: That’s what we’re trying to do with these series of video, trying to dispel this negative image on this Privacy.

Tai Zen: And that’s what we were sponsored to do, so talk about governance because you always said this is a key that you always focus on.

Leon Fu: When I speak of governance, I’m speaking of governance within the project itself, how decisions are made. Because as you build a community, as a community gets larger, usually these projects start as like community efforts.

So I might start a project and I’m the guy in charge, and you just listened to me and that works to a point, on a small scale. That works to a point, if you continue to maintain that governance model, as it grows, you can’t make everyone happy, so you start alienating people.

They start off with what I call an autocratic leader, such as Satoshi Nakamoto, the founder of Bitcoin and Vitalik Buterin, the founder of Ethereum. That’s like top-down governance that you dictate down, we’re going to do this and this is my decision.

But if you keep doing that, if there’s not governance, you’re going to have trouble scaling, because 1 person can’t make the decisions on everything.

Tai Zen: Audience knows to scale means that to grow bigger and bigger and to adopt more users and you get more users.

Leon Fu: We’re seeing the result of that in the Bitcoin community such as the whole block size debate where Bitcoin network is clogged, there’s not enough room for more transactions and so the community has been struggling trying to make a decision and can’t come to a decision because the proper governance structures were not put in when Bitcoin was started and it’s kind of too late to do that now.

But the Bitcoins community is struggling with governance at this time. I think no matter which side of the debate you’re on, I think you can agree that governance now becomes a major issue that it’s grown so large that they can’t make a decision without alienating major portions.

Tai Zen: Maybe we should give an example like the governance decisions that Leon is talking about is for example, if we need to use feature A or feature B, which one do we go with? Because when you go with feature A is going to upset a certain group of people within the community, if you go with feature B is going to upset another portion of the community.

So governance means how can they come to a consensus agreement that this is a decision that we’re going to make and that’s what we’re going to go with.

Leon Fu: And so we saw the result of that last year with Ethereum, and this is my opinion that is pretty much governed by an autocratic leader or a small group of people, namely Vitalik and the Ethereum foundation.

And they made a top-down decision to fork because of the DAO, we’ve gotten into that in the previous video which last year we had done a lot of coverage on that and you can go to our previous videos from last year as we had a lot of coverage over that. But that decision alienated a large group of the therian community.

And they decided to basically say, screw you, they started this thing called Ethereum Classic and now there’s 2 Ethereum and they’re both widely traded and they’re actively communities. But it’s this governance issue, you can see what can happen if the governance goes wrong, now you have 2 versions of Ethereum.

Tai Zen: This issue with the Ethereum blockchains, this is completely different from something like Monero where they fork off CryptoNote was not for was the original one. It’s different from a coin forking off of another coin because this was unintended and this was an accidental fork, accidental birth of a new coin

Leon Fu: Ethereum Classics viewpoint is that they’re the that worked like we just kept the software. They just kept on going on the original chain, they said we didn’t make any changes, we’re doing Ethereum as it was. So they are making their moral case that they are actually the real Ethereum.

Tai Zen: Now we go into the legal case, that legal obstacle that Privacycoin has to overcome in order to succeed. So Privacycoin projects face higher legal risk than other Cryptocurrency projects.

There’s already a negative image to what Privacycoins are because they’re commonly associated with illegal drugs and they’re associated with evading taxes, which is what the hype and the bias that the mainstream media that does not understand about Cryptocurrencies would like the common folks to believe.

There are legal risks that put the project that uses in its whole community at risk and talks about the developer’s risks and talking about the risks that the user’s face.

Leon Fu: So Satoshi Nakamoto, that’s not his real name, I think that’s pretty obvious. We don’t know who he is, he’s never come out. He started Bitcoin 8 years ago now and we still don’t know who he is.

And the reason for that is because people who have done what he did before, they were eventually prosecuted and put in prison and put in prison people that like Eagles and many kinds of electronic cash, the founders of those projects eventually were put in prison and arrested by the government, by the United States.

But that’s why he never showed himself, we still don’t know who he is, he developed this and then he left. Because there’s a risk that the governments of the world may come after the developers so they need to be protected legally.

Tai Zen: They cannot go after all the users because they’re too many of them, but the developing team, they can go after them because it’s essential.

Leon Fu: It’s just only a small group of people who actually understand, that are actually technically advanced enough to work on the software. So they are the target, so they need protection. I’d say the users are at risk because let’s say Bitcoin was used to blow up something and then they traced the funding back.

Tai Zen: How about just a couple of days ago, you were on the BitcoinMeister show, and there was a gentleman there.

Leon Fu: He’s on local Bitcoins trading and I guess allegedly the police said he sold Bitcoins to what the police say was a drug dealer and I guess there was the dog sniff some drugs on the money and they now when after the confiscated his money  just because allegedly someone that the cash where that came from was used for drugs.

They never accused him of dealing drugs, they accused the money of dealing drugs. They went into arrest and claim the money they weren’t going to arrest him, they’re going to arrest his money.

Tai Zen: Because the person that bought the Bitcoins from him and gave him the cash.

Leon Fu: So that’s guilt by association, if you’re a drug dealer and I just happen to do business with you, I could be considered guilty by the government.

Tai Zen: What can really happen is if a seriously illegal activity such as terrorism is traced back to the coin, it will face the full wrath of governments and law enforcement agencies, and you don’t want to mess with that because they will always win against you. It’s just one of you against whole law enforcement agency.

But channels will be how the community will police themselves while maintaining decentralization to keep things going. So experienced law firms are going to be needed to ensure that the laws are not broken. So we have a Privacycoin project wants to succeed, have some kind of legal counsel so that it knows to operate in the right direction.

And what’s also important is choosing the correct legal jurisdictions. For example, like Switzerland, for example like Ethereum foundation, they established a foundation in Switzerland and many Cryptocurrency projects that are serious and they want to make sure they follow the law and everything. They do it in Switzerland because apparently, their lawyers are advising them to do that.

Leon Fu: So what we are saying that the purpose of the legal is to protect legally protected the coin community. The community includes developers, the developers especially because they’re exposed to the other community and any other user that may be out there.

Tai Zen: So some final thoughts about Privacycoins. You want to go ahead and share them?

Leon Fu: I wouldn’t say any of these projects are doing all of these things. I can’t say there are any of them are doing an excellent job on all of these that we’ve put out. Some are better in some areas than others and as investors that we accept that and all of these things can happen, what we are going through.

So Dash, they have a very strong business marketing plan, but I think they’ve pivoted their project away from just Privacy even though that’s where they started and they are a lot more focused on just getting people to use their currency.

Tai Zen: They’re starting to deviate away from the Privacy. There’s starting to crawl out of the Privacycoin bucket.

Leon Fu: They wanted their goal is to be much broader than that. Zcash and Monero at the moment once again, these things can change, so we’re just talking in early January 2017. They seem, at this point, more to be focused on just their technology, their core technology.

And it could be because they feel that they’re not ready yet. They’re not ready to just take it’s mainstream yet and they want to perfect their technology.

They want to spend more time focused on refining their technology before they go do what Dash did and take it mainstream. Dash believes that it is good enough, let’s go get more users.

Tai Zen: So what that means is that sometimes you might have to look at it to see, something that you might agree with that as a good technology, but from an investment perspective, you might want to wait and hold out before you put money into it simply because they’re not looking to gain users in a community yet.

Leon Fu: But you can still make money. Monero doubled the first year, then went up 5X the second year. But once the adoption happened, 30 times your money.

Tai Zen: So to summarize this video module, every Privacycoin project has to overcome common obstacles to success. We talked about it, they have to overcome the Privacy technology that’s being used, they have to overcome the marketing, how are they going to market themselves, how are they going to users, how are they going to get adapters, how did they get people to incorporate their software and their technology and their Privacycoin out there.

Governance means how to make decisions on what needs to go in or how to improve the software, so that’s what the Privacycoin has to have that in place in order for it to grow into the scale and adapt to new market conditions. And then the legal issues that have to be overcome so that they can make sure that they are following the laws of that jurisdiction and they’re following the laws of the countries orient so that their users and the developers are doing everything legally and no one is breaking the law.

In addition, being able to change and adapt to market conditions is the key to have Privacycoins success. Now we’re going to wrap up this video again with another sponsorship disclaimer, this video’s been sponsored by a Privacycoin project to provide an independent third-party review of the major Privacycoin projects currently active to educate the public about the importance of financial Privacy with the recent news from WikiLeaks about how the CIA is spying on everyone and invading everyone’s privacy.

This is some of the reasons why we were responding to do this project and we hope you enjoy it. If you have friends, family, or colleagues that are interested in learning how to create life-changing profits through Cryptocurrency investing, we invite you to share this channel in our videos with them and we look forward to seeing you in a future video.

 

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