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Tron is disrupting the world’s most valuable business — centralised big data.
“In the future, everyone will be famous for 15 minutes.”
— Andy Warhol 1968
The Death of the Artist
Imagine a world where entrepreneurial creatives make engaging, high-quality content, but they have a problem. How can they get their content in front of an audience?
The solution and business model dreamed up by the gatekeepers is a work of genius. The creatives create the content, but they have to pay a gatekeeper like Google, Facebook, or Apple, to get their content seen.
Not only that, the creatives have to abide by rules which constantly change, making them vulnerable to being temporarily closed down, restricted, or even worse, banned.
Unfortunately, this world is real, and solving the creative’s problem of getting their content seen, has created mega companies — gatekeepers, with market capitalisations collectively worth trillions of dollars.
While companies like Google provide the access channels via Youtube and search, it’s easy to forget why the gatekeepers offer their services. Blinded by the opportunity, the masses are cropping and editing images, recording video and music, and uploading quotes and inspirational messages.
Meanwhile, the gatekeepers are doing something else. They have created a machine.
In one end, the machine feeds, gorges, on dollars, billions and billions of dollars. The creative’s dollars. At the other, it creates data. Exabytes and exabytes of data.
Data that’s used to fine-tune advertising to the masses.
The gatekeepers have outsourced content generation, but instead of paying you to create the content, you pay them. It’s like you paying a bank to hold your money on deposit, while they lend it out and keep all the profit. Genius. For them. Not so much for you.
Imagine a business, where the ingredients are free, but the end product is the most valuable commodity on Earth — a commodity so valuable it is taking over global stock markets.
The Nasdaq Composite Index is made up of over 2,500 companies. In 2019, the top 100 companies by market capitalisation account for over 90% of the Nasdaq Composite’s performance — this means the ups and the downs in the Nasdaq Composite Index is 90% controlled by the performance of 100 companies.
But, it gets worse, much worse. While all the budding creatives have been busy creating content, the gatekeepers have been busy collecting data, not only the creative’s data but their audiences too.
Google, has a market capitalisation of $776 billion, Facebook, $463 billion, Apple, $803 billion, and Amazon, $789 billion. That’s a total of $2.8 trillion. What percentage would you guess $2.8 trillion is of the entire Nasdaq Composite Index? 10%? 20%? It’s over 25%.
This means that the Nasdaq Composite Index, an index of over 2,500 companies is 25% controlled by just 4 — Facebook, Apple, Google, and Amazon. And this doesn’t even include Microsoft or Netflix.
Gatekeeping is big business.
If Facebook, Apple, Google, and Amazon were a country, their combined market capitalisation is greater than the gross domestic product of the United Kingdom. This means, in 2019, four companies, whose business model is data harvesting on an industrial scale, are worth more than the entire yearly output of the world’s fifth largest economy.
This wealth has been paid for by the artist. Google, Facebook, et al., are the pick and shovel sellers — they ’re the purveyors of dried goods for the 21st-century gold rush.
“Tron is a blockchain based decentralised protocol that aims to provide a….”
This sentence just lost 95% of the audience.
Technically minded people just don’t get it. The market, the masses, who will make or break a technology, a paradigm, service, or product, just want to consume. They don’t care how it works, or why. If it solves a problem, or enhances their social status, or entertains, or all three; then, they’ll buy it. If not — next.
It started in science, then moved into technology.
It’s called the ladder of abstraction. At the bottom are concrete real things; things like butter, knife, spoon; real things you can do things with, involving the senses; you can cut a rope with a knife; you can taste the saltiness of butter, and you can eat with a spoon. These words are clear and concrete.
At the top of the ladder, are things you can’t sense, can’t eat, and can’t do things with; words that appeal to your intellect instead of your senses. What is easier to understand: “grateful invention” at the top of the ladder, or “washing machine” at the bottom? They both refer to the same thing.
But it’s in the middle of the ladder, halfway up, where the tech writers live, that causes most of the trouble.
It’s the place where schools are learning communities, bin men are sanitation engineers, and Lord of the Rings is the fantasy genre.
Phrases and statements made from the middle of the ladder are what makes understanding what’s going on especially tricky for someone new — no matter how interested they are.
As well as using abstracted language, there’s been a rise in uptalk. Uptalking isn’t gender specific, it’s not so common in the over 50’s, but rife in the millennial generation.
Uptalk is a declarative statement reframed as a question. No one knows why this style of speaking became so popular, maybe it was an unsure generation not wanting to commit to being right or wrong, but whatever the cause, uptalk has made its way into technical articles, and it’s a bit like a red car. You don’t notice them until you own one.
Abstract language and uptalk make understanding something new more difficult than it needs to be. The antidote? Use clear, concrete words and clarify everything with metaphors and similes.
Genius Plus Plus
This time instead of providing you with a free “look at me” platform, where you can show the world your interests and skills, the gatekeepers have ramped it up to the next level. What level? Genius plus.
And the next level is the smart speaker. You can turn it on using your voice, and do stuff. Convenience to you, but at what cost?
The amount of data collected by the gatekeepers is about to go parabolic. Not content with monetising the data collection from social media, the gatekeepers are now monetising your fridge.
It’s called the internet of things, and an example of a 1st generation IOT product is the Amazon Dash button — Register the button with an app, either on your smartphone or with Amazon’s smart speaker, and either, press the button to order your product or give your instruction to your smart speaker.
Amazon calls it Replenishment Services.
Household and office, beverage and grocery, health, beauty, and apparel, kids, baby, and pets, music, sports, and outdoors — over 250 buttons, both physical and virtual, you can connect to an Amazon product and order.
It gets better, as the buttons aren’t free. The physical ones you have to pay for up front, but you’ll get your payment back after your first order.
It’s sold to you as a convenient way to order the everyday things you need, but what are Amazon, Google, and Facebook doing with the data you are generating.
What they are doing is recording your behavioural patterns. Genius plus plus.
Smart speakers have “wake” words, but they are always on. Listening. The commands you give to them are stored on servers for an undisclosed amount of time and using them, the gatekeepers are constructing accurate digital profiles of your behaviour.
The first generation of smart speakers worked by only making a call to the connected object after an instruction is given by you. For example, you connect a light in your house to the smart speaker; then, when you want to turn on the light automatically, you issue a “wake” word command followed by an instruction to turn on the light. The smart speaker then connects to the light manufacturer’s server and asks for the status of the light. If the reply back from the light’s server confirms the light switch is off, the smart speaker system switches on the light.
But recently hardware manufacturers of household items have raised concerns that the next generation of smart speakers will demand the light’s status — not activated by a wake word that’s issued by you; instead, the light will continuously send status updates to the smart speaker.
This means only one thing.
The smart speaker is always on.
Genius plus plus — but, not for you — for the gatekeeper.
The TL;DR version is this: The internet unlocked value at the application layer.
The underlying protocols of the OSI network stack worked together to allow developers to create applications, at first a client-server model, like the web browser client accessing content (HTML) stored on a server; then, into cloud-based services and the dawn of the rental age.
Rental model-based services are now standard. Dropbox, Microsoft Office, and of course, not forgetting smartphone apps. Some lead with freemium plans, but the goal is to get you to subscribe. Evernote, Bear, and Ulysses are productively apps you rent.
The debate is where blockchains will unlock value in the future. At the protocol layer or at the application layer?
Where is value most likely to be found? In February 2019, the cryptocurrency markets are stirring? Is it the end of the downtrend?
That’s a question the 95% ask. The 5%, the most consistent investors and speculators, don’t try and nail the bottom of a trend, instead, they adjust their strategies depending on background conditions.
For example, if implied volatility is high, they look to sell premium instead of taking directional positions, gaining from a phenomena called a volatility crush, at other times, they take directional positions, again depending on background conditions. We’ve talked about volatility in previous articles, The 4th Dimension, Event Horizon, and Spiral.
Tron, currently ranked 8th largest cryptocurrency by market capitalisation, is valued at $1.62 billion. Tron is showing positive relative strength against the rest of the market, so, what is Tron, and what problem is it attempting to solve?
Tron is a disrupter.
Tron’s strategy is to take market share from the gatekeepers, whose market and business model is the most valuable in history. Tron is developing a content and entertainment distribution system, the goal of which is to cut the gatekeepers, like Google and Facebook, away from the arteries of data.
To do it Tron’s content distribution system uses a distributed blockchain which gives creatives access to alternative distribution channels, allowing creatives to upload and store content, freeing them from the overheads incurred using the gatekeeper’s monopoly on network traffic, and from exposure to increasingly restrictive rules, rules enforced by the gatekeepers controlling what kind of content they judge as suitable.
Tron at one level allows creatives to bypass the internet policing policies of the centralised gatekeepers and also cuts Google and Facebook’s fees and centralised control of content.
Creatives upload music, video, and websites to the Tron ecosystem, and users get access to the content using TRX (Tronix) as payment.
But this is just one part of Tron’s ambitions. It’s the small picture. The big picture is to build an ecosystem whose currency is Tronix or TRX.
Tron plans to enable businesses that plug into the Tron ecosystem to use their own cryptocurrency payment tokens, and TRX will act as the intermediary token, converting between different tokens.
The ultimate goal of Tron is to be the largest broker of digital currency — a token exchange.
Let’s say you’re a bike sharing company that’s plugged into the Tron ecosystem. You have your own coin, let’s call it BikeCoin, that your customers use to pay for access to your bike service, but they also earn BikeCoin the longer they use the bike.
Your customers can then use BikeCoin earned by using your bike service and use it at another business who is also plugged into Tron. Your BikeCoin will be translated via TRX (Tronix) into the coin of the other business or service using Tron.
If you think Tron is like Ripple’s XRP protocol which solves the problem of slow interbank payments by acting as a translation layer, guaranteeing interbank transactions between financial institutions and banks, you’d be right.
Ripple is a disruptor to the 45-year-old Swift interbank payment system. Interbank payments are an enormous market, with an estimated $135 trillion exchanged between financial institutions per year.
Tron is going after the gatekeeper market, aiming to cut companies like Google, Facebook, and Amazon, out of the traffic domination and data collection business.
To do it, Tron will need businesses to join its distributed app. If they do, the value will be unlocked.
In 2019, Tron is being talked up. The comment and quote brigade are out in force proclaiming a new beginning, Tron this, Justin Sun, that. The future of cryptocurrency might well be in distributed apps, but it’s too early to tell.
The reality of the cryptocurrency markets in early 2019 is this. Bitcoin still represents over 51% of the entire market, and Bitcoin’s previous 24-hour volume was $8.1 billion. Compare this to Tron’s volume of $158 million.
When you read articles about Tron with headlines like:
“Tron surges 31% in a day.”
“TRX to hit $12 by the end of 2019.”
“Tron is writing blockchain history.”
It’s easy to get carried away.
One of the biggest concerns over Tron’s currency, TRX, is the floating supply, listed on coinmarketcap.com as 66,682,072,191, that’s 60% larger than Ripple’s float, and is by far the largest float of any of the major coins.
The 5%, the most successful and consistent investors and speculators, don’t make decisions after reading articles that use language like may, could, or should.
The 95%, the majority, reading words like “surging” get emotionally attached to an idea, an idea sowed by someone else’s opinion.
While the articles on Tron and TRX have been getting increasingly more bullish, the 5% take notice of supply and demand.
Prices can and do spike up in the short term, but a sustained up move requires new demand entering the market, with new buyers willing to buy at higher and higher prices, while at the same time, not being absorbed by overhead levels of sell orders or supply.
Here’s what overhead supply looks like in the short term on an exchange.
And here’s what it looks like on a chart.
Of course, nobody know with 100% certainty if supply is present, and the best the 5% can do is look for the signatures of supply left behind on a chart. High volume accompanied by a selling tale represents an emotional event — and indicates a potential zone of overhead supply.
Part of the reason for the excitement over Tron is news of the number of transactions taking place using TRX.
That’s an important fundamental metric, and the same time, Tron is outperforming Bitcoin since mid-December 2018.
The 5% take a step back, ignoring the hype, and take notice of the supply and demand.
After making a low on November 25th, 2018, at around one cent, TRX rallied until January 10th, 2019, hitting three and a half cents before prices dropped back, ending the day around two and a half cents. The volume of 576% higher than average, which when compared to the associated price action of a wide range bar closing in the lower half of the range, is the signature of an emotion bar.
So far, we’ve discussed the emotion bar only after a down move and how it’s used as a tool by the 5% to adjust the probability of further down moves. But emotion bars can also happen at the end of a rally, where the selling tail represents the presence of overhead supply.
Like the emotion bar after a down move, where the 5% expect the zone of buying tail to be tested, in this case, they expect the selling tail to be tested.
In previous articles we’ve discussed, the price cycle. The price cycle is a tool used to best describe the state of a market at any given time.
While the internet is full of positive articles about Tron, the 5% step back and look at the trend, asking in which one of the four phases of the price cycle is Tron most likely in?
For all the hype about Tron, TRX is trading underneath overhead supply in a downtrend. Most articles written about cryptocurrencies quote percentage moves, but this can distort the true picture.
Yes, by the 10th January 2019, Tron had rallied 250% since the end of November, but it had done so after losing over 90% of its value from the April 2018 high, and at the January 2019 high Tron has only clawed back 25% of the overall losses.
Tron is attempting to disrupt the most valuable business model used by the gatekeepers, Google, Facebook, and Amazon, to collect your data and learn your personal behaviour patterns, but instead of getting caught up in the hype, the 5% look at the trend and analyse the supply and demand.