- Let's talk about nodes,
specifically, Strongblock,
Thor, and all of these other similar
projects that are popping up.
Are they the secret to creating passive income
and living your dream life wherever you want,
or is this a node bubble waiting to burst?
I'm an investor in both Strongblock and Thor,
and today I'm going to be sharing with you data
on why I think that these projects will not last.
And I'm also going to be sharing with you how much
I've made or lost in the process on each project.
Let's dive in.
What's up guys, my name is Kristen.
On this channel I share with you
different ways I'm making passive income online.
And today we're taking a look at this whole node situation.
It's gotten to the point where the word node is some kind
of buzzword or marketing term to try
and draw people into projects.
And I want to give my unbiased opinion
on this whole situation.
And for my friends and family that know me,
they know that I love to play devil's advocate
to try and see both sides of the situation.
A novelist, F Scott Fitzgerald, says intelligence
is measured by a person's ability to
see validity within both sides of contradicting arguments.
And this is something that I personally always
strive to try and do.
And that all that being said, despite being invested
in some of these projects,
this is not a promoted video
nor is this intended to create fud.
The only purpose of this video
is to inspire critical thinking
and conversation within the crypto community.
And to really get a grasp on why these projects
are fighting an uphill battle and probably
aren't going to succeed, it's imperative
that we understand what these projects actually do.
So, I'm going to be giving you the elevator pitch
on what Strongblock and Thor actually does.
Strongblock is the first node protocol to
reward node holders
for supporting this type of infrastructure.
And the reason why they want to incentivize
their node holders is because master nodes can be costly
and they can become out of date really quickly.
And this ensures that the blockchain railroad, so to speak,
that they're building is one of the biggest ones out there.
And this was also co-created by David Moss,
one of the co-founders of EOS as well
and that's a top ranked 50 crypto.
And the whole goal with Strongblock
is to make setting up a node as easy as possible,
and it's all done through their website.
It takes 10 strong to build a node,
and one strong is about $350.
And compared to some of the other nodes I've set up before,
this is probably one of the easiest nodes to set up.
And as of right now, they're offering nodes
on Ethereum, Matic and there are some other layer
one protocols that are in the talks as well.
Now, Thor, on the other hand,
although it does have a node-like feature,
right now it's focused more on investments.
And they have a treasury that focuses on D five projects
as well as validator nodes to produce income,
which they then distribute to investors.
So I would think of Thor right now as more
of this dividend based company that may have more
of a node component to it in the future.
Now that we have a high level of understanding
about these types of projects, let's talk
about the controversy that's surrounding these types
of nodes, which is, are they a Ponzi scheme
and are they using Ponzinomics to promote their business?
And the simple answer is, yes.
However, there are going to be some
tweaks to the definition.
So it goes without saying that all
of these types of projects, in their Discords
and on their websites, are pretty open about that
most of their funds go back to other reward holders.
And even in the Discord for some of these projects
they're pretty open about them being Ponzi schemes for now.
And that is the fact that the main and largest source
of their income right now is dependent on new investors
specifically new people, buying nodes.
According to the definition of a Ponzi scheme,
it's a form of fraud in which earlier investors
are paid from later investors.
And the definition of fraud is to intentionally
deceive someone and the founder, David Moss has
been doing live streams every week, answering all questions.
So, I don't think that there's any deception here
on his part or specifically the Strongblock foundation.
And I attended Thor's AMA as well,
and it appears that they're trying to follow
in Strongblock's footsteps.
However, they're has been talk of them
shutting down specific questions.
I went to an AMA though, and I did not witness that myself.
So, basically, they're telling us that the goal
of these projects are to migrate it
from something that has a Ponzi-like structure
into something that's more sustainable
at generating income down the road.
And there's a video that I recommend you watch after this
that I'll leave down in the description below
from a YouTuber named Gerard.
And he does a great job breaking down the data
showing the correlation between new signups,
reinvestments, as well as the selling pressure
and I definitely recommend checking that out.
Now, all of that being said,
I have some major issues with the project
and why I think that the odds are extremely small
that these types of projects end up lasting.
The first being is, is what
is the actual use case behind these projects?
If the rewards were cut, would you still invest?
And based on what I stated earlier
and the definition of each project
and how they're starting off, we wouldn't.
Now, when it comes to other crypto projects,
we invest in them because of the utility
or future utility behind that project,
which will then, in turn, drive the price upward.
And I do not think the same case is here
for Strong and Thor.
And I'm not saying that these projects won't
have any utility.
I think the question I'm asking is,
how much utility will these projects have?
Can they justify the amount
of selling pressure that's going to be on them?
So, let's look at the Strongblock website
and we can see that there are 300,000 nodes
and only 31,000 different wallet addresses
when we look at the blockchain.
And this means that each wallet address,
on average, holds about 10 nodes right now.
And, even if that average decreases, I still see an
issue of the future selling pressure of each project.
And even if all of the node holders right now,
they're holding their projects and they're not selling it,
and they just keep compounding, like the projects want us
to, people will be generating so many of those tokens
down the road that the projects will collapse.
Unless, I see really one of four things happening.
One is they slash the rewards,
and this is something that we saw
Strongblock do in April, 2021.
They allowed the amount of nodes
per wall to go from 200 to 100.
And then they also cut the amount of rewards per day
from 0.2 strong per day, to about 0.1 strong per day.
And this is something that I definitely see them doing
in the future.
Number two is the utility of the nodes
will actually counteract the selling pressure.
Number three is, if they do have some kind
of investment fund, those investments are going to
have to outweigh the selling pressure that they're paying
at people out.
Number four is, new node holders coming
in counteract the selling pressure
which is something we've seen in the past.
But, I really think the scales are
starting to tip on this one.
Now, something that we've seen other projects
do that I think do a really good job of counteracting
this whole entire problem, is what Gala Games did
by capping the amount of nodes
that they offer, as well as increasing
the price of each node as they sell.
And, the reason why this works so well is
because Gala Games has 50,000 nodes
and the nodes only sell when the
price of the token goes up.
Which price of the token usually correlates to utility,
which means that if the price isn't going up
then the ROI on that node isn't justified.
So people don't buy it, which means
that the network isn't expanding faster than it needs to.
The question is, is
does strong block really need over
300,000 nodes right now?
And you could say, well, what
if Gala Games ends up needing extra nodes?
Well, they even say
in their white paper that they have the ability to
create more if it so calls for it, because then
it would actually hurt everyone in the entire project.
But, I haven't heard any of these projects talking
about any kind of cap, and I think it would be better
if we could actually see how each node is being used.
And I'm going to get to an update that
Strongblock has here in Q2 that supposedly
will allow us to do this.
Now, being a Ponzinomic business structure
when researching for this video,
I wanted to know,
has anything like this succeeded before?
And the reason being is, is
where does the burden of proof lie?
Is it on strong blocking company to try
and prove that this type of business model works?
And this may surprise some of you,
but something that we all know that has some element
of Ponzi to it, is the stock market.
So, when it comes to stocks, there are
shares in companies that, most of the time,
are actually generating revenue.
But, how do companies that pay dividends pay
those even in down months?
And you may think that it just comes
from the actual net worth of the company.
However, most of the time it comes from new traders,
new investors entering the market,
as well as the fees attached to those.
However, when looking at these nodes,
it's still not the same as the stock analogy.
Imagine investing in Berkshire Hathaway
a dividend paying company by Warren Buffet,
and he told you that if you invested $10,000,
you would get that entire investment back by break
even in three and a half months.
And that is not sustainable and it's completely ludicrous.
And that's about the break even on most of these nodes,
and there's even new nodes coming out,
Atlas, Power, Hive, just to name a few.
And the break even on these times are even less,
and rightfully so.
The more risk that's into something,
the higher reward that's needed for the investors
to want to get into that project.
But all that being said, these projects are extremely risky.
Most businesses do not recoup their investment
until the one to two year mark.
And most real nodes that I look at have a break
even time of at least 10 months.
You look at SRX, Gala Games just to name a few
pre-search nodes.
These projects do not have a break even time
of three to four months.
Now that I've laid all of that out
how much have I made or lost in the process?
And I invested into one Thor node at about $1,700
and with this one, I'm pulling out pretty much
every other day, and I've pulled out about $600,
so I'm about 1100 bucks away from break even.
Now, when it comes to Strong,
I've invested it into two nodes
at about $14,000, including Ethereum fees.
And, I also ended up capping off another node
for another about 2,500 bucks.
So, right now I'm about $16,500 in,
and I have five nodes and I actually
have pulled out a little over $4,000.
So I have about $12,000 until break even,
which comes to be about three more months.
And then from there, I'll probably assess how
each project is doing, whether I want to keep compounding
into nodes or just withdrawing every other day.
Which leads me into some updates that are
with Strongblock, that I think could
possibly counteract some of the things that I've said.
Which is, their implementation of Strongchain
sometime this Q2.
And the white paper to this is not out yet
at the time of me filming this video,
but it does plan on adding a second token to Strong.
And per David Moss' last AMA,
there's going to be some kind of
incentivization for current investors to
migrate their Strong over to Strongchain.
And as I already mentioned, supposedly, this will allow us
to see how each node we're using is actually being used.
Now, in summary, am I telling you to not invest
in these projects?
And the answer is no to that as well.
There are some guys in my Discord
linked down below that are
absolutely killing it with these.
They just pretty much invest in the projects earlier on
and then they end up pulling out their original investment
and just keep compounding.
I do think that there's a chance that one of these pulls it
off, but there's a quote I heard that really
illustrates this entire investment strategy.
Which is, you build wealth by
taking large risks with small amounts of capital.
You maintain that wealth with small risks
with large amounts of capital.
And I do think crypto, despite there being a ton
of scams, does have a lot of
hidden gems in there as well.
And I think the founder of HAX
really illustrates it with this point he made, as well.
- But if you use the old logic
that if it's too good to be true, it's not,
you'll lose millions of dollars of opportunity.
- So you can't be completely closed off to everything,
and you have to analyze the risk to reward when looking
at these types of projects.
And to be clear,
I don't have an issue with Ponzinomics,
I don't have an issue with any of these types of projects,
the people that invest in them, the people who create them.
My problem lies with the people
in the community that are advertising
that you can retire from these types of projects
that don't have any type of utility
and saying that's okay.
Because, I just saw a video of a guy
laying out how to retire from crypto,
and it was all of these types of Ponzi-scheme type projects.
And to say these types of projects will last 18 months,
or even a year, I think is a big ask
and the odds are against them based
on the data that I just laid out.
And furthermore, it's not diversification when
you're investing in more of these types of nodes.
If Strongblock goes down,
this entire asset class is going down.
We saw this with the DAOs.
If one big DAO went down, the rest followed suit.
So, this asset class is not escaped from the same fate.
So, this video is designed to spark a conversation
and I want to know, what are your thoughts
on my analysis and your thoughts
on these node projects as a whole, let me know down below.
Thank you so much for watching,
stay safe out here.
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I'll see you next time.