Recent YU alum Michael Peres is a serial tech entrepreneur, software engineer, mathematician, and radio host. Michael is currently the CEO and founder of four successful tech startups, two media organizations, and a technical science podcast called the “Michael Peres” Podcast. Michael spoke to The Observer about his latest project–CoinHype.org, which gathers valuable information on cryptocurrencies to help investors make informed decisions in this developing market, and to explain why cyprtocurrentices are changing the world.
Mindy Schwartz: A lot of people (including myself) find Bitcoin, and cryptocurrency in general, confusing. Can you explain it simply?
Michael Peres: Bitcoin is the first decentralized digital currency. That means you can send money over the internet from one person to another (i.e. peer to peer) without going through a bank, or a central point of authority (hence, decentralized). The pursuit for a digital, decentralized currency had been a dream for far too long, yet there were simply too many technical barriers to bring such an idea to life. For example, the “Double Spending” problem, where anyone can copy a digital coin and make multiple simultaneous purchases, could not be solved without presenting a central point of authority.
However this problem was solved in October 3, 2008 when Satoshi Nakamoto published his paper “Bitcoin: A Peer-to-Peer Electronic Cash System” where he presented an elegant, secure and genius framework for the first cryptocurrency, Bitcoin. A new foundation for technological innovation had been discovered, and the train of cryptocurrencies had already left the station.
MS: How do you expect cryptocurrencies like Bitcoin to impact the world?
MP: Cryptocurrencies will revolutionize the finance industry, as the internet revolutionized the tech industry by removing the power from a few and delegating to the many and creating unconstrained opportunity for growth and innovation. Some advantages that cryptocurrencies offer include: much lower fees, boundless borders (universal currency), that they can’t be withheld or regulated by governments, and there are no prerequisites or arbitrary limits to its use.
There are many economic opportunities that surround the cryptocurrency realm, all of which encompass a vast range of skills and industries. For example, you can create new digital coins, run business using cryptocurrencies, build technology using the blockchain, and trade digital coins on the market.
MS: What are some common misconceptions about cryptocurrencies?
MP: When explaining cryptocurrency, there are some important distinctions to be made: There are hundreds of cryptocurrencies, each with various applications, and Bitcoin is simply the first cryptocurrency. Also Bitcoin uses the blockchain as a public ledger to document transactions, but Bitcoin is not blockchain, and blockchain is not bitcoin.
MS: Okay so what is a blockchain?
MP: Let me illustrate with an example. When Alice sends Bob money through conventional systems, like a bank, Alice is sending money to the bank with instructions for who it should go to. Alice trusts the bank will act honestly and honor her request. Should all go correctly, the bank records this transaction and updates both Alice’s and Bob’s account balances in their centralized ledger.
The objective of a blockchain is to do exactly that, but to remove the bank, or any central authority, from the equation. The blockchain is a chain of blocks, where each block contains a list of recorded transactions, and acts as a decentralized, distributed ledger accessible to anyone, although personal data can still be password protected. The blockchain is stored on every computer that partakes in the bitcoin network. For Bitcoin, each block contains about ten minutes worth of transactions. Information stored on the ledger can’t be tampered with or backdated–not as the result of a security system, but rather as a result of an inherent and intrinsic property of its design. Furthermore the blockchain’s design makes it a lot harder to attack or take offline as there is no single point where one could attack it.
Mining is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the blockchain and claim the rewards. The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin. The reason why miners need to use complex and energy consuming methods to create blocks is because this makes it “expensive” for hackers to abuse the system and submit fake blocks and fake transactions.
MS: So how do you think blockchains will change the world?
MP: Blockchain will revolutionize many fields, making various industries obsolete. These industries include banks, Cybersecurity, Supply-chain management (less need for middle-man tasks), Insurance (a stronger form of integrity used to ensure trust), transportation services and ridesharing, cloud storage, charity (inefficiency and corruption prevention), voting (registration and identity verification), government (reduce bureaucracy, increase efficiency, security and transparency), health care, energy management, online music (via smart contracts, solving license issues, cutting out middleman contracts), real estate, and crowdfunding.
The blockchain is here to stay, and it will replace many current existing infrastructures and technologies, and play a fundamental role for many future technologies as well. Cryptocurrencies are not going anywhere, either.
MS: Your website coinhype.org is a platform for cryptocurrency traders. Can you explain that a little bit more?
MP: Cryptocurrencies are in their infancy, aggressively disrupting many well established systems which are backed by powerful individuals and institutions. Cryptocurrencies are a serious threat to many industries and the pushback can be incredible, unexpected and at times unforgiving. Such events can violently affect the human psychology of those investing in cryptocurrencies, creating a volatile change in the value of a coin. Human psychology plays such a vital role in this realm, and with that in mind a few terms have been coined (no pun intended) in reference to investment in cryptocurrency. “FOMO” (Fear Of Missing Out) is that feeling you get that drives you to buy into a coin, not take profits on a coin, or not to take profit on coins that have already gone up considerably. This fear of missing out is what causes people to buy at the top or hold during a dip after making profits. Another term is “FUD” (Fear, Uncertainty, and Doubt) FUD can cause the price of a coin to drop, not based on fundamentals or charts, but based on bad news that spreads around social media or mass media. Many times the bad news isn’t substantiated or grounded in reality, and instead ends up being something silly like a popular talking head’s opinion that Bitcoin is a bubble.
It’s imperative that those trading in this market have the necessary information to act fast and capitalize on the market’s volatility, rather than getting eaten alive by it by succumbing to things like “FOMO” or “FUD”. My system responds to this need by acting as a central store of real-time vital information needed to create successful trades. To that end, my website condenses a number of points of information in one convenient location to give investors the information they need to succeed in this market. These include:
Live Cryptocurrency Trading Streams/Chats: These streams act as hiveminds, where brilliant folks work collectively to perform technical analysis on hundreds of different cryptocurrency markets, notify everyone on important news updates and volatile price changes on coin, provide mental support and much more.
Live Twitter Alerts: Tweets from influential folks in the cryptosphere have a huge and direct impact on the market. In fact, figures like John McAfee are so influential that people programbots to carefully monitor everything he tweets. The moment he tweets about a coin, bots instantly purchase large shares of the coin in anticipation of an immediate rise in value for that coin, and they do immediately rise in value, a self-fulfilling prophecy perhaps. This is the most requested feature.
Respected Chart Feed: A feed that collects live technical analysis charts (forecasting the direction of prices through the study of past market data, primarily price and volume) from respected twitter accounts.
Live News Stream: A live stream from news updates from hundreds of websites and news channel. Specific sites are filtered through with a special algorithm to filter out news articles and videos that don’t pertain to cryptocurrencies.
World Clocks: A section with the times from locations which have a large demographic of crypto investors. Knowing when such folks wake up, sleep, and to lunch break can help identify vital trends.
Market Ticker: A horinzal ticker showing real-time cryptocurrency values of popular coins.
Various other technical trading and charting tools: Trader view charts, market overview stats, screeners, cryptowatch charts, forex heat maps.
MS: What inspired you to make this website?
MP: Like with most startups I pursue, I’m inspired to solve a problem that I’m personally experiencing. As a trader, having vital data spread out across multiple platforms as it is in the case of cryptocurrency often resulted in me discovering pertinent data once the opportunity had already passed. My website responds to this need by gathering all the relevant information so you can be informed before you make a trade.
MS: How do you see this website growing in the future?
MP: Simplicity has its merit, so adding more features might just act as noise and distract from what is important. A big part of this system’s value is derived from the content, not only the tools. A good comparison would be Facebook. If you remove the content the users put in Facebook, it becomes nothing more than a skeleton. It’s less about the tools, and more the content. I don’t think I will be adding many new features, but rather refining the algorithms and tools to collect more relevant data.
This platform was launched a month ago and is getting an impressive amount of traffic, growing daily. The more contributors this system has, and the better the system is at detecting relevant data, the better it will become.
MS: What is your advice to students looking to get involved in the cryptocurrency world? Do you think Bitcoin is a good investment?
MP: The market is a zero sum game, so every penny you earn is from someone else’s pocket. The reason why this market is currently so lucrative is precisely because of the human emotion (“FUD” and “FOMO”) which has impacted it. Many folks are making substantial profits by simply capitalizing on the inexperience and lack of education of others, which leads them to make emotional, but not always wise investment decisions.
Emotion will tell you to buy when a coin’s value is rising and sell when a coin’s value sinking. But a good trader would do the exact opposite: buy when everyone is panic selling and appreciate profit without getting greedy. That being said, many believe Bitcoin will have a tremendous value in the future, especially given its limited supply. So be patient, educate yourself, and invest wisely.
The most important tip I can give is to always focus on capital preservation, meaning preserve what you have. As obvious as it may seem, forgetting this is the downfall of many. Stick with low risk-high gain trades, be patient, and educate yourself on technical analysis because math works! There are millions of opportunities each day, never get “FOMO” and chase the market by buying into a coin that has already jumped in value, risking a buy at the very top and being at a deficit when the coins value come come back down and corrects, or catch a falling knife by buying impatiently when you see a coins value dip, risking the coins value to dip even more. Simply put, do not succumb to “FUD, “FOMO” and greed.
For those looking to educate themselves on technical analysis, read up on these indicators, tools and theories: Fibonacci retracement lines, Bollinger bands, Keltner channels, Trend/Regression/Support/Resistance lines, Elliott wave theory, Relative Strength Index (RSI), Moving average convergence divergence (MACD), Exponential Moving Average (EMA), Value Weighted Average Price (VWAP), Head and shoulder formation, Cup and handle formation, Bear/Bull traps, and Bear/Bull flags. Understanding these will get you on the path to becoming a successful trader!
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