Cryptocurrency Investment Decisions: What I own, won’t buy, and need to research

Published / by kgao

This page is out of date and won’t be updated anytime soon. For the latest assets that I own and my approach to investing, refer to the investment theses and my occasional portfolio letters. Thank you!

Here is a running list of cryptocurrencies (including digital tokens and ICOs) that I have researched and made a decision about whether to invest or not. The list will grow and change over time.

Assets I currently own:

  • Bitcoin BTC
  • Ethereum ETH
  • Dash DASH
  • Monero XMR
  • NEM XEM
  • Pepecash PEPECASH
  • Zclassic ZCL

I also own small (sub 1%) amounts of Litecoin LTC, Ethereum Classic ETC, Zcash ZEC, Decred DCR, Emercoin EMC, Counterparty XCP, Aeon AEON, Storjcoin X SJCX, Ripple XRP, and Bitshares BTS.

Assets I need to research and/or may invest in:

  • Factom FCT
  • Stratis STRAT
  • DigixDAO DGD
  • Ark ARK
  • Peercoin PPC

Assets I won’t invest in for now:

  • BlackCoin BLK
  • MaidSafe MAID
  • Antshares ANS
  • Huntercoin HUC
  • Augur REP
  • ShadowCash SDC

Notes from in-depth University of Cambridge study on the cryptocurrency ecosystem

Published / by kgao

Great report. Highly recommend reading the full PDF (116 pages but goes quick). In a nutshell:

First, the user adoption of various cryptocurrencies has really taken off, with billions in market cap and millions of wallets estimated to have been ‘active’ in 2016. Second, the cryptocurrency industry is both globalised and localised, with borderless exchange operations, as well as geographically clustered mining activities. Third, the industry is becoming more fluid, as the lines between exchanges and wallets are increasingly ‘blurred’ and a multitude of cryptocurrencies, not just bitcoin, are now supported by a growing ecosystem, fulfilling an array of functions. Fourth, issues of security and regulatory compliance are likely to remain prevalent for years to come.

Here are my notes and takeaways:

  • crypto is worth $27B = Airbnb
  • 3M to 6M active crypto wallets
  • 2K+ people working full-time in the industry
  • crypto exchanges (eg, Kraken, BitFlyer) employ the most people
  • 70% of large miners say they have “high influence” on protocol development
  • report divides industry players into #1 exchanges, #2 wallets, #3 payments, and #4 mining with growing levels of crossover
  • companies surveyed have 21 full-time employees on average (still early days)
  • “A 2016 joint report from Coinbase and ARK Invest estimates that 54% of Coinbase users use bitcoin strictly as an investment”
  • “Non-monetary use of Bitcoin has also increased. For example, the use of the OP_RETURN feature in the bitcoin scripting language (frequently used for embedding metadata in bitcoin transactions, for enabling e.g., time-stamping services and overlay networks) has increased roughly 100x since January 2015”
  • four currencies (USD, EUR, JPY and CNY) dominate trading
  • impression is that we’re still in very early days of proper security and auditing; as an investor, remember to turn on 2FA and only keep small amounts on exchanges
  • “The average business (B2B) payment has a transaction size of $1,878, whereas P2P transfers ($351) have higher average transaction sizes than consumer (C2B) payments ($210)”

3 important charts from the report

…Bitcoin dominates but Ethereum has shown impressive growth

…trading in Chinese RMB dropped precipitously after the government crackdown on margin accounts and no-fee trading

…Mining is now a multi-billion dollar industry!

April Bitcoin News Letter: The hard fork plot thickens. Bitfinex recovers fully from its $71M hack.

Published / by kgao

The newsletter continues to evolve. I try to highlight the items you can’t miss, and provide links for you to dig deeper. If you have any questions, email me or find me on Twitter.

William Mougayar and Nick Tomaino (two analysts I regularly read) are organizing a Token Summit on May 25th in New York. If I weren’t a 16 hour flight away, I’d be there. What a lineup.

Right now to be on the newsletter you need to contact me. At some point I’ll migrate to MailChimp. Also I didn’t link to the sources below because I was too lazy.

**

What you must know in Bitcoin land

For anyone who’s closely following the hard fork debate, this Reddit discussion and its linked source are must reads [Reddit discussion, Greg’s email]. If the implications are true, then it means that the magnitude and duration of the hard fork debate are mostly motivated by Bitmain’s desire to maximize its short-term profits, and not by differing views of Bitcoin’s scaling roadmap.

Bitfinex was hacked for $71M USD worth of Bitcoin in September of last year. They socialized the loss to all Bitfinex account holders and issued a custom token to represent the loss. This token represented an IOU from Bitfinex which you could hold or trade. Several days ago Bitfinex fully redeemed 100% of those tokens [source]. Which means that in the span of 8 months, Bitfinex has fully recovered from a $71M hack and paid back everyone who lost money. What a story, and a fascinating precedent for future hacks.

Meanwhile Bitcoin continues to grow. The number of active Bitcoin users doubles every 12 months [source]. And while the blocksize is reaching its limit, but not yet turning away significant transaction volume [source]. Although fees are increasing as you can see in Woobull’s chart below:

Why do the vast majority of Bitcoin investors and pundits think a hard fork is bad? Vinny Lingham explains: #1 Reduced network effects. #2 Whales dumping coins on both chains. #3 Brand confusion. #4 User and merchant confusion [source]

If you want to educate yourself on the basics of a hard fork, and what it means for investors and users, here’s a good FAQ [source]. The current implementation of Bitcoin is referred to as simply Bitcoin or Bitcoin Core. The competing / new implementation is called Bitcoin Unlimited (BU), and here’s a solid 3-part series on how BU works [source] (with a pro-Bitcoin Core bias).

Finally, a long and excellent article on Bitcoin’s evolution [source].

In investor news…

  • Another Bitcoin ETF application was denied, but Bitcoin investors have moved onto the hard fork debate [source]
  • Roughly speaking, the market thinks Bitcoin Core (the current Bitcoin implementation) is worth 90% of
  • Bitcoin’s price, and Bitcoin Unlimited (the competing version) is worth 10% [source]
  • Pantera believes bitcoin and digital assets now overbought, see below chart [source]

**

What you must know in crypto land

Zcash (ZEC) appoints AngelList founder Naval Ravikant and Matthew Green to its Board of Directors. Outside of Bitcoin, Zcash may have the most impressive collection of cryptography and software engineering talent. [source]

ICOs and appcoins and decentralized app tokens are now worth $260M [source]. To understand the general investment thesis, read these 2 essays from USV [one, two]. As an individual investor I’ve stayed away from ICOs and I recommend you to do the same. Too many scams, too much insider trading, too little verifiable transparency.

A great round-up of concerns about the altcoin Dash, the two big ones: #1 Potentially rigged mining during its launch. #2 Big holders (Masternodes) who have a lot of influence over economics and governance [source]. I more than halved my holdings after its recent price surge but 7% of my portfolio is still in Dash (see my portfolio breakdown here).

Venture money is slowing but continues to come into Bitcoin / blockchain, especially for proven products. Ledger raises $7M for its security and storage solutions [source]. Shapeshift raises $10M for its cryptocurrency exchange service [source]. I love Shapeshift.

It is very possible that services that deal solely in crypto could end up being to financial regulation what torrent sites are to anti-piracy laws… a huge pain in the ass. Like torrent sites that don’t distribute actual copyrighted content, cryptocurrency services using LN channels won’t actually control or transmit other users’ bitcoins. Many services may find themselves back in a new and undefined legal grey area. [source]

**

That’s it. Next week comes the Portfolio Letter where I share my holdings, recent trades, and brief analysis of interesting assets. Here’s the last one.

Bitcoin Portfolio Letter: Taking altcoin profits and buying back into Bitcoin

Published / by kgao

Hi everyone, here is my second Bitcoin Portfolio Letter where I share my exact crypto investment portfolio, what trades I’ve made, and which assets I’m looking at. Each week I alternate between a portfolio letter like this one and a news letter.

Thanks!

Kevin (@kgao)

Performance relative to Bitcoin price benchmark:

I’ll release March performance results in the next letter. Probably outperformed Bitcoin due to the strong run-up of Ethereum and Dash. In January Bitcoin fell 5% and my portfolio fell 2.5%. In February Bitcoin gained 24% and my portfolio gained 29%.

Trades this month

  • Sold 5% of my Bitcoin BTC holdings when the price passed $1200. Right now I’m buying a little each day, because I think it’s underpriced due to hard fork drama
  • Sold 5% of my Ethereum ETH holdings at $43
  • Sold 10% of my Dash DASH holdings at $73
  • My general philosophy is to take small profits when I’m seeing 300%+ price spikes. In the long run my goal is to be investing with the house’s money, so to speak
  • Invested 1% of portfolio into Decred DCR at $5, then sold 10% of that when it spiked to $15

What I got right and wrong since the last Portfolio letter

  • Right that Decred DCR was a good investment – was trading at $5, now trading at $12
  • Right that Shadowcash SDC was crap – was trading at $3.50, now trading at $1.50
  • Verdict still out on Augur REP – was trading at $8.50, now trading at $10
  • Wrong on Zcash ZEC – was trading at $45, now trading at $69. I still suspect the issuance rate / mining-driven inflation is too high to be a good near-term investment but may take a small position

What I’m looking at now

  • NEM / XEM – what I like: no inflation, no PoW (blockchain is secured by a PoS-like model), incentivized staking, geographic depth (the top altcoin in Japan), potential synergy with its private blockchain solution Mijin and early but promising enterprise use cases
  • Bitcoin BTC is underpriced despite HF risks and I’m buying small amounts daily. Right now Bitcoin is 63% of my portfolio and I’d like it to be 65-70%
  • The HF debate has me increasingly concerned about the long-term viability of PoW only blockchains. All this time we’ve been concerned about external 51% attacks without realizing, like all large systems, that corruption comes from within. PoS or at least hybrid PoS / PoW may be the future
  • While I still think Monero XMR will win the privacy coin war in the short-term, I’m questioning whether its price will reflect this victory. I may reduce my position
  • Published a Crypto Cheatsheet (screenshot below) which has key facts and concepts for most of the assets in my portfolio

That’s it. Thanks for reading! Hit ‘reply’ to contact me or find me on Twitter.

Crypto Investment Cheatsheet

Published / by kgao

I’m compiling a cheatsheet as a forcing function to research and remind myself of each asset’s unique characteristics. Here it is, a Google doc with comments enabled.

The coins I’ve added so far include:

  • BTC
  • ETH
  • DASH
  • XMR
  • ZEC
  • DCR
  • NEM

I will add more with time.

My areas of focus when considering a new crypto investment – and so far they are limited largely to currency coins as opposed to app coins – are:

  • Issuance rate, method, and inflation
  • Transaction types and activity
  • Blockchain funding and governance models
  • Strength of team and community

Love to hear your feedback and what coins I should add. Cheers!

What I am doing during the hard fork drama

Published / by kgao

The possibility of a hard fork is on everyone’s minds. It’s reflected in Bitcoin’s price volatility, in the altcoin run-up, and in the toxic and sometimes panicked discussions on r/btc and r/bitcoin. Many great companies and thought leaders in the space have either taken positions or discussed what they have done / are planning to do in such an event. There’s never been more to read and analyze and for a text junkie like me it’s fantastic (in a way).

What should you do with your Bitcoin portfolio right now?

The safest answer is nothing. Just hold onto your Bitcoins and do nothing until (or if) a hard fork happens. I expect the community will come to a resolution by July or August, if not sooner. The price will continue to be volatile but in the long-run (1-year plus), there is no doubt in my mind Bitcoin is the cryptocurrency leader and won’t lose its position.

If you only hold Bitcoin, I recommend diversifying into altcoins in a rough index-like approach. For example Ethereum is roughly 1/4 of Bitcoin’s market cap, so it would be good to eventually have a comparable stake in ETH. You may not want to buy that position all at once, because I think altcoins are overvalued right now. Dollar cost average and invest weekly. My own portfolio right now contains BTC, ETH, DASH, XMR, and a little DCR.

Here’s what I’ve done:

I sold ~5% of my Bitcoin stash in early March when it hit the ATH, and then bought ~1% back after the dip to $1150 brought on by the SEC’s denial of the COIN ETF. Right now the price is trading around $950. It feels low, but it could go lower. I will probably dollar cost average and steadily buy more. Sub-$1000 Bitcoin just doesn’t reflect the value in the network and community and technology. This is more stark and apparent when you compare Bitcoin to the recent price performance of altcoins like Dash and Monero and even Ethereum. But because the next few weeks, maybe months, will continue to be volatile, dollar-cost-averaging seems a better strategy than a big one-time buy.

While altcoins hold promise and are good for portfolio diversification and network innovation and potential upside, Bitcoin is still the best bet in the cryptocurrency space and the network that’s likely to win. When the hard fork drama is resolved, the price will rebound too and probably with a vengeance. Once I figure out exactly how and what I’m doing to buy back in, I’ll share in the portfolio letter that I send around.

Let me know if you have any questions!

March 21 Bitcoin News Letter: Crypto gets crazier by the day. Long email ahead. Sorry

Published / by kgao

The below is an email I send out, just bcc for now, to a small group of readers. Then post here a few days later. If you’d like to be on the list, tweet or email me and I’ll add you. At some point I’ll migrate to MailChimp. Also I didn’t link to the sources below because I was too lazy.

Crypto gets crazier by the day. I thought this email would just be a brief summary of the ETF rejection but nope. Crypto has a mind of its own and the mind is accelerating…

The SEC rejects the Winklevoss Brothers’ COIN ETF application. The top reasons given:
#1 the major bitcoin markets are largely unregulated
#2 the exchange COIN will use for ETF basket creation and redemption (Gemini Auction) is too thinly traded

While the door remains open for future approval, we won’t see a bitcoin ETF in 2017. Here’s the full SEC report. Bitmex CEO Arthur Hayes had a great write-up on the ETF’s denial. Subscribe to his newsletter here.

But people almost immediately stopped obsessing about the ETF and began obsessing about a potential hard fork where Bitcoin splits into two competing versions:
#1 Bitcoin Core (Bitcoin as we know it today), and
#2 Bitcoin Unlimited, a version that allows the blocksize limit to increase by miner consensus

If a hard fork happens, you would effectively double the number of coins you own. But each version would trade at a different price and have different features. Most people think its bad for Bitcoin given brand confusion and reduced network effects and security risk.

Roughly speaking a hard fork is like a stock split, if the newly created share were to represent a second company, and the companies are now battling each other for marketshare and mindshare. Yup…pretty weird.

Very roughly speaking, developers and exchanges support #1 Bitcoin Core and large miners and an outspoken group of users support #2 Bitcoin Unlimited. But this is a hornet’s nest and the above sentence is like snapping a photo of the nest using my iPhone from 50 meters away.

Bitfinex allows you to split your Bitcoin into tokens representing the two competing implementations and trade them. Currently Bitcoin Core is trading at 4x the price of Bitcoin Unlimited [source].

A nice visual summary of the different constituents with influence over the hard fork. From my perspective the groups with the most power seem to be, in falling order: Developers. Miners. Exchanges. Large investors. [source]

In other Bitcoin news…

The idea that Bitcoin is stale and that Ethereum will come to the rescue without stumbling on all the same milestones of growth that Bitcoin has overcome is a fiction. – Andreas Antonopoulos [source]

Bitcoin transaction fees are growing and companies are starting to pass those fees onto users. Coinbase will no longer pay off-site transaction fees for its users [source] and Bitpay raised its minimum invoice to $1 USD [source].

As an asset, Bitcoin’s price correlation with other store of value assets such as Gold, US sovereign debt, and safe haven fiat currencies is surprisingly low [source]. Continues the “Bitcoin as uncorrelated asset” storyline which started with ARK’s seminal paper [source]

Former Legg Mason investment chief Bill Miller’s evaluates bitcoin by imagining 2 long-term outcomes and assigning a probabilistic weight to each of them: Bitcoin as the new Gold, and Bitcoin as a leading payment processor [source]. Interesting to understand how an investing legend approaches a new asset like Bitcoin

Bubble expert says Bitcoin not a bubble for following reasons [source]:
#1 Not a lot of leveraged trading (eg, on margin, using derivatives)
#2 Governments not propping up prices
#3 The market of new users and potential investors is nowhere near saturated

People keep arguing Bitcoin mining wastes energy [source]. But they seem to overlook the fact that up to 99% of Bitcoin transactions already happen off-chain, both within companies and between them. For example crypto gambling sites are known to process millions of daily transactions off-chain [source]

Chris Burniske: Below $875 per coin, it doesn’t make sense for miners to deploy new machines. Below $337 per coin, miners are actively losing money [source].

China continues to slowly increase regulation and oversight of local Bitcoin exchanges, the latest salvo being the potential requirement of in-person registration for new users [source and source]. @cnLedger is a must-follow for China crypto news

In Ethereum news…

The Ethereum ecosystem continues to grow and this is starting to reflect in the price. This is even with minimal participation from China and Japan which together represent <2% of ETH trading volume [source].

Darknet market AlphaBay will accept Ethereum for payment starting in May [source], further validating ETH as a payment currency.

Ethereum is the only blockchain with a common continuum between public and private implementation environments. – William Mougayar [source]

Ethereum also went through a hard fork for entirely different reasons back in October of last year. Grayscale published an investment thesis to explain why they support the minority chain Ethereum Classic (ETC) over Ethereum (ETH). Main reasons seem to be [source]:
#1 ETC maintained its trustless nature by refusing to hard fork and return DAO investor funds
#2 ETC won’t switch to Proof of Stake until ETH can prove it works and is stable
#3 There’s a hard cap on ETC supply unlike ETH which is still unspecified

In altcoin news…

A Dash investor analyzes its decentralized funding process and finds: 90% of funds go to core team for salary and marketing. And while a vote to increase Dash’s blocksize limit was quickly passed, transaction volumes are so low that it won’t be needed for some time [source].

Early Coinbase employee Nick Tomaino thinks Monero is leading the race to be the top privacy-centric altcoin [source]. (this was written two months ago so his opinions may have changed, but it’s still interesting to read his thought process)

ICOs remain hot. From Coindesk [source]:
Perhaps most notably, almost a third (29%) of entrepreneurs without ICO fundraising experience had seriously considered raising with a token sale, and nearly all (91%) of investors who had participated in an ICO said they would consider participating in future blockchain token launches

Thoughtful analysis of the WeTrust ICO [source]. The strengths and weaknesses he identifies in WeTrust are proxies for ICOs in general. Strengths such as access to new customer segments and investor groups, and increased transparency in a company’s operations and product development. Weaknesses include regulatory uncertainty, the influx of fast / speculative money over long term investment, lack of proven go-to-market and distribution strategies.

That’s it, thanks for reading! If you actively trade crypto and need a good tool to track your performance and portfolio, try CoinTracking.info. Impressed with its ease of use and exchange integration. I have no financial relationship with them.

I send a “news letter” every other week and a portfolio letter sometimes. Some of the content is also published here. Love to hear from you and talk crypto here or on Twitter.

How to invest in cryptocurrency if you have $10K, $100K, and $1M USD

Published / by kgao

If you have $10K USD…

Use Coinbase to buy $8K of Bitcoin and $2K of Ethereum. Use the Coinbase Vault service to store your coins and turn on 2FA.

Resist the temptation to day trade. For simplicity sake, buy all at once, or you can setup a recurring weekly or monthly buy to dollar cost average.

If you have $100K USD…

Buy Bitcoin and Ethereum and one or two altcoins depending on how well you understand them. I’ve invested in the space since 2013 and right now I own 5: Bitcoin, Ether (and a negligible amount of ETC), Dash, Monero, and Decred.

If you go beyond BTC and ETH, I can only confidently recommend Monero at this moment. Crypto changes fast so that recommendation could change in a week. But since I first bought Dash around $17, the price has gone crazy and I don’t feel confident in it anymore. Decred is a flier for me.

Use a large trusted exchange like Poloniex and GDAX and Kraken to purchase your coins – ideally in a recurring buy over a number of weeks. If you want to buy all at once, consider an OTC service like itBit. I can introduce you to some OTC brokers as well, but I’d only recommend OTC if you’re an experienced financial investor.

You can invest in exchange listed products as well, like GBTC and COINXBT. The pros include convenience, tax benefits, and some additional regulatory oversight. Cons include extra fees and counterparty risk. For more, here’s my write-up on the crypto fund investing landscape.

Keep the majority of your coins in cold storage using a service like Coinbase Vault or Xapo, or a hardware wallet like Trezor and Ledger. Electrum is also a good local wallet.

If you have $1M USD…

Continue with the above, and diversify your portfolio into a few other altcoins. Perhaps Decred or Dash or Zcash. I’d stay away from ICOs and token sales unless you really know what you’re doing.

Crypto funds become an even more attractive option, especially private funds which have investor minimums. Examples include Pantera and Logos Fund.

Dollar cost average over a number of months, or find an OTC broker.

Diversify your cold storage solutions. Don’t put all your coins in one place. Check those places routinely. Always turn on 2FA and have unique site-specific passwords and if a seed is required, save it somewhere secure.

Tracking becomes important. CoinTracking is a good tool for portfolio monitoring and reporting and taxation. I’ve tried it, but am still wedded to my hacked together Google spreadsheet.

There’s a lot more you can do to optimize your crypto portfolio as you increase your time spent and financial investment. Some of the coins offer staking services to earn a return on your holdings, eg, Dash and Decred. Follow community happenings on reddit and Slack and read read read.

But don’t day trade and don’t short, unless you want to lose money. My view is that crypto will go from a $25B market cap today to $100B by 2020. Diversify your investments, watch them closely, adjust portfolio allocations to roughly match each coin’s respective market cap, and profit.

To champagne wishes and crypto dreams! 🙂

Bitcoin Portfolio Letter: -Dash -Litecoin +Bitcoin +Monero +Decred

Published / by kgao

Given how fast crypto moves, I’m switching to a weekly letter, with a caveat: I will alternate between a “portfolio letter” which shares what I’m buying and selling, and a “news letter” covering happenings in the space. Today is a “portfolio letter”.

Overall performance:

In February, the Bitcoin price increased 24%. My portfolio increased 29%, so I outperformed slightly, due to Dash’s price rocket and Ether’s rebound. In January the Bitcoin price dropped 5% and my portfolio dropped 2.5%.

Recent trades:

Sold all of my Litecoin for Bitcoin. It had consistently underperformed Bitcoin and it hit me I had no reason to continue holding. Was only a 1% position. Not a good hedge against Bitcoin due to its strong positive price correlation, and no demonstrable progress on either technology or community.

Sold 2/5 of my Dash position at prices ranging from $45 to $75. I still hold 3/5 of my original Dash position which was acquired around $17. Believe it can be a $1B market cap asset, but I took some profits because the pump happened too fast and I have real concerns about its long-term viability, foremost among them the depth of its team. At its current price of $86 I would only buy a very small position if any.

Increased my Monero position to 3% of the portfolio and believe it will be the leading privacy-first coin. I remain interested in Zcash as well, but believe its inflation rate is still too high and past price performance too anemic to justify an investment.

Bought a tiny amount of Bitcoin after the ETF denial when it had fallen to $1150, about 1% of my total Bitcoin holdings. I remain very bullish, but I also believe that on the back of the ETF denial and the ongoing hard fork risk that Bitcoin’s market dominance will drop below 75% of the total crypto market cap.

New assets I’m looking at:

Decred – I took a small position today at ~$5, about 1% of my total portfolio, and will watch it closely before investing more. They have a similar appeal to Dash: a more clearly delineated and decentralized governance model, and a self-funding block subsidy for development and marketing. Also like Dash, you can earn a return by staking your coins and I may do that.

ShadowCash – Pass for now. Despite its recent price increase, I have too many concerns about the team’s reliability, the quality of technology, lack of a rigorous 3rd party review, and the premine. When the ShadowMarket marketplace launches I’ll take a look at it. If privacy is your bugaboo, buy Monero.

Augur – Pass for now. I remain skeptical of decentralized prediction markets. If prediction markets are so useful, why haven’t centralized ones succeeded? Not sure decentralization brings enough value to suddenly make it work. At current market prices, what they raised in the crowdsale would be worth $50-60M, and the total market cap is $88M. Seems to me they *should* have plenty of runway and budget. I’d like to see some proven use cases or demonstrable growth in usage and engagement before investing.

What assets are you looking at? What should I investigate?

Random fact
Robert J. Greer, a pioneer of asset class theory, defined 3 categories of assets:

  1. Capital assets (eg, equity, bonds)
  2. Consumable transformable assets (eg, grain)
  3. Store of value assets (eg, fiat currency, gold)

Assets can belong to more than one category. For example US Treasury Bonds are a capital asset, but also a store of value given its federal backing.

“A large percentage of currency…is used precisely to hide transactions”

Published / by kgao

“There is nothing, however, in standard theories of money that requires transactions to be anonymous from tax-or law-enforcement authorities. And yet there is a significant body of evidence that a large percentage of currency in most countries, generally well over 50%, is used precisely to hide transactions.”

From Kenneth Rogoff’s “Costs and Benefits to Phasing Out Paper Currency.”