The launch of Futereum smart contracts, also known as FUTR, this week, and the subsequent impact they had on the Ethereum price is a sign that crypto is headed firmly in the direction of increasing financial innovation. Friday, the launch of FUTR by a group of investment banking professionals and former Ethereum core developers, was the catalyst for the first $1,000 price in ETH.
The FUTR impact on ETH is comparable to the effect that XRP recently had on a range of previously mediocre-trading cryptos such as TRX, which is now among the Top 10 cryptos (no one expected that, let’s face it). Essentially, both events come down to one thing: real world finance meeting crypto engineering on a brand new crptofinance terrain.
The FUTR of Crypto
The Futereum Foundation Friday published a detailed White Paper titled The FUTR of Crypto explaining FUTR, which is a utility token that is “mined” via sending ETH to a secure Futereum smart contract address where it is held. By wrapping the smart contract up in a Fibonacci mining algorithm (the process is explained in detail in the paper), FUTR allows miners to earn multiples on top of what ETH holders make when the Ether price increases.
To illustrate how this works, let’s assume that ETH does in 2018 roughly what happened with Bitcoin throughout 2017, price-wise. (Although wild, this is not an uncommon suggestion lately: in fact, a lot of analysts are calling this event right now so it seems a fair enough example to draw on.) In such a scenario, a comparable increase in the ETH price this year would mean a net gain of around 1,500% for ETH holders. While respectable, that is still far shy of XRP’s stunning 20,000%+ rise in the same year, however. The disparity reveals a lot about where the big gains come from – specifically, real financial solutions versus moderate technological adjustments in Blockchain functionality are what seem to win out the day.
With FUTR, gains like those in 2018’s Bitcoin are assimilated into those of the likes of which XRP holders are now celebrating. A present-day miner of FUTR would for example, given a similar rise in the price of Ethereum to that of Bitcoin’s last year, make approximately 25,000% in returns instead. That is a huge increase!
Right now, 1 ETH mines 114 FUTR. But if you look closely at the mining algorithm, it’s clear from the levels and how much ETH is required to mine them that it is not long before 1 ETH is going to be mining just 21 FUTR each (that’s Level 5).
Clearly, any increase in the ETH price is only going to compound returns – a $2000 ETH price gives the FUTR at Level 5 a $95 price tag versus the $9 cost it is today. Just as for Proof-of-Work mining, the higher cost translates into higher market values for FUTR. Add to that scenario the fact that smart miners end up getting back not just the ETH they paid in return for their FUTR, but even more ETH than they paid for them and the evidence suggests a Ripple-like wave forming over the horizon of the Top 10 Cryptos. You can call this wave the rising of the financial sun over the Blockchain economy.
FUTR will be listed on exchange on February 2; before that point the tokens are available for purchase only via mining the smart contract at the foundation’s website. What’s especially interesting here is that if FUTR continues to drive up the ETH price as it gets closer to listing, so will the price of FUTR increase exponentially moreso. In other words, eary-stage miners of FUTR could end up with well over 1,000% in gains before the product is even trading on an exchange!
2018 Will Be The Year of Blockchain Financial Engineering
That is classic financial engineering for you – the tweaking of product character to enhance the potential impact it has on the market, and in turn, on its own price performance. Before now, crypto traders have been confined to the same pump-and-dump methods of 2009 that brought value to Bitcoin, but that is soon about to change. Indeed, the change is already getting underway.
What’s so interesting is to see how all this financial innovation will affect the prices of various cryptos. The results are likely to vary a lot. For those crypto that are more financially and/or technologically sophisticated, such as ETH, XRP, EOS and others, 2018 is likely to be a fantastic year.
But for those crypto where pure value storage is the core functionality of the asset, such as in the case of Bitcoin, the forthcoming year is likely to be a little bit more disappointing. This is not to suggest that BTC will not rise as well; naturally, if the values of other more sophisticated cryptos shoot skywards, that will have some inflationary effect on Bitcoin’s price too. But I am certainly suggesting that value creation – as opposed to value storage – via utility is the name of the game during the next 12 months.
Already, we are starting to see some of this take effect. XRP’s ubiquitous presence is being felt all around the cryptosphere now after issuer Ripple began testing the product with Asian banks late last year. Ripple says now that it has nabbed 3 major-name customers. Then, ETH shot up over $1000 in value for the first time in history after FUTR were launched early Friday morning. A pair does not make a trend of three, but a trend in the making it certainly does in this case.
That is why it doesn’t matter the slightest whether a wallet such as Coinbase decides to list or not to list a superior crypto with a real-world use case such as XRP. XRP will rise no matter what from here on out, maybe to as much as $2 trillion in market cap. Those touting Coinbase as the arbiter of value need to be reminded here that this is not 2014 any more – the first-time retail buyers of crypto are not what are pushing the prices of digital currencies. Instead, it’s the financial product engineering of cryptos that is the all-important factor.
It is this chain-reaction of cryptofinance events impacting underlying crypto prices that is what smart traders will be on the lookout for this year now the financial markets experts have begun to turn their attention to this exciting field of innovation.