cryptocurrency portfolio | Blog

Origins

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Cryptocurrencies help networks of computers and their human owners organize themselves in pursuit of large scale initiatives without having to rely on a central authority to coordinate the network’s actions. Cryptocurrencies are used to reward the behavior their network wishes to incentivize.

Many projects have launched attempting to solve both old and new problems. We have invested in some of these believing that they will succeed and that the cryptocurrency which powers them will go up in value.

As cryptocurrency prices fluctuated we were unhappy with the tools available to track the constantly changing value of our investments. We decided to build Cryptograf to automatically track the value of our cryptocurrency portfolio.

The First Cryptocurrency

In 2008, the anonymous inventor Satoshi Nakamoto released the Bitcoin white paper, and soon after, the first implementation of the Bitcoin protocol.

Bitcoin showed how computers, sharing transaction data with each other, could reach agreement about the validity and the correct ordering of those transactions without having to rely on a central authority.

This mundane-sounding achievement meant that for the first time, a digital, decentralized currency was possible without the approval of banks or nation states. Until decentralized bitcoin, all prior centralized attempts were shut down.

Bitcoin is very difficult to shut down because anyone, anytime can join the Bitcoin network and participate in validating and securing transactions by continuously running the Bitcoin software. Running this software is referred to as Bitcoin mining. Mining rewards participants by writing new bitcoin into the record of transactions, recording them in a cryptographically secure database called the blockchain. With no single point of failure, and no central authority to influence, Bitcoin promises an immutable, uncensorable money available to anyone in the world.

The Rise of Altcoins

The idea of decentralized consensus and rewarding network participants in that networks’ native coin provides a new model for organizing large scale human endeavors. Over two thousand experiments have been launched to test what can be accomplished using this newly-invented paradigm.

The biggest cryptocurrency after Bitcoin is Ethereum. Ethereum generalized from the idea of a shared ledger of transactions to a shared computing environment executing unstoppable pieces of code called smart contracts. By writing smart contracts on the Ethereum platform developers can launch their own coins which run on top of the Ethereum blockchain or build decentralized applications which cannot be prevented from running.

While Ethereum generalizes, other networks optimize for a specific use case: Litecoin for day to day payments, Iota for sharing data and resources among Internet-of-Things devices, Steemit for incentivizing content creation and curation, and many more examples.

A Parallel Financial System

Ethereum’s ability to host other cryptocurrencies, named tokens, on top of its blockchain, lowered the threshold for launching one. Many cryptocurrency projects are building products with built-in tokens hosted on the Ethereum platform.

Tokens were offered to investors to crowdsource the financing of the project with promises of token price appreciation if the project was a success. This Initial-Coin-Offering model proved so successful that many product teams around the world shunned the traditional approach of raising venture capital and instead turned to cryptocurrency investors directly.
Many pointed out that the new method of financing was very similar to the familiar practice of issuing securities representing equity in a company. In this case though ownership was recorded and enforced not on a centrally regulated stock exchange, but on the blockchain. Bigger and bigger companies are exploring this route, each launching a token to represent the value their network provides.

Price and Investment

The success of cryptocurrency networks can be measured by the price of their native coin. The more useful a network becomes the more adoption its currency will experience, leading to higher demand and higher prices measured in US dollars. At any given moment the dollar price of any particular cryptocurrency emerges through markets implemented on cryptocurrency exchanges all over the world where, 24 hours a day, investors can buy and sell coins for dollars.

It was on such exchanges that we began by investing in various cryptocurrencies and the causes their networks championed. It was not always a user-friendly experience. Each exchange makes available a different set of cryptocurrencies and prices are famously volatile so it is difficult to keep track of the value of your investment. Often times we would find ourselves opening chrome console and typing up math equations to try and keep track of our portfolios’ value. Eventually we upgraded to excel sheets, which we would have to repeatedly update with the latest prices.

This experience was the catalyst for our decision to build Cryptograf. We wanted a simple tool to track the price of the coins we owned and to keep track of the fluctuating value of our entire cryptocurrency portfolio, without having to manually look up prices at the exchanges where we traded.

Building

Our goal for the first version was to have a simple and beautiful way to track price and portfolio. Many of the options we looked at would force you to manually enter your trades to track profit and loss, but this is super cumbersome if you have any kind of trading history. We just wanted to get started quickly, enter the coins we owned, and start tracking.

Profit and loss can be calculated after we finish integrating with exchanges so you can import trades automatically from wherever they’re trading. Besides exchange integrations we are planning many features, including pricing investments in Bitcoin, as well as incognito mode so you can share your portfolios without having to reveal your balance.

Ultimately, the goal of Cryptograf is to become an on-ramp for people interested in investing in cryptocurrency with research and education built into the app as well as into the content we release (like this blog post). Many are investing in these brand new technologies without really understanding what they are or how they work. We want to make sure you can make better decisions about where to invest your money and to understand how your investments will impact the world.

Conclusion

Money is a measuring tool and cryptocurrencies measure the value of the utility that their host networks provide. When we invest in a cryptocurrency what we’re saying is that we think the work that its network is doing is valuable to us, and we believe that it will be valuable to others. If we are correct, we will be rewarded for understanding that value early and for providing the finances to manifest it through our investment.

To make decisions about which cryptocurrency to invest in we have to understand the work that it is doing and why it is important. With cryptocurrency projects spanning fields such as finance, computing, supply chain management, etc. it becomes important to learn about and to understand these subjects, along with this entirely new paradigm for funding, organizing, and incentivizing.

Gaining understanding in a brand new field is a difficult task, and Cryptograf’s mission will be to monitor your current and potential investments while helping you learn about them in an easy to digest, concise format. All so you can make informed decisions and invest in the cryptocurrencies and networks which are doing work that you believe in.

by @metamitya

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