TLDR: All About Belief
ALL ABOUT BELIEF // 30.Sep.2017 // Sag Harbor
Please see the “Crash Course” below for some resources that do a good job of demystifying the important concepts in the space. Read on for a take on market movements, chatter, and the big ideas and issues in the world that is Cryptoland. Suggestions, comments or recommendations? Please send any and all feedback on how TLDR can be improved. Thank you.
- Alex Yamashita
Week-on-Week Market Snapshot
Total Crypto Mkt Value: $130 bil to $147 bil (+13%)
Bitcoin (BTC): $3,730 to $4,230 (+15.8%)
Ether (ETH): $282.99 to 298.55 (+5.5%)
News Wrap (links below)
*Big Biz, Govt’s & Regulation: IMF ahead of curve, Novogratz, Japan, China/Korea, SEC/Switzerland
*Real World Use Cases: Venezuela/Zimbabwe, Japan Big Banks, Alibaba, Visa Scale Capacity
*Technical Developments: A Better ICO Process
We know money to be three things: a store of value, a medium of exchange, and unit of account. If crypto then is to go beyond a mere speculative instrument, and fulfill its promise in becoming true digital money, these features in our daily lives need to make real headway. For those in places where prices of state-backed, fiat currencies rarely move more than a percent a day, such mainstream crypto adoption may seem far away. Yet already in Venezuela and Zimbabwe, where trust in the state’s financial soundness is zero, crypto has already become de facto mainstream money. Easier and safer than traditional “money alternatives” (anyone feel secure walking the streets of Caracas with some gold bars?), many there are already ditching their Bolivars for Bitcoin or Ether. The obvious (and very fair) counter is that Harare and Caracas are far from global financial relevance, so who really cares… Crypto is still very much “fringe” to most of the world. But it does highlight how adoption really just stems from the ever-changing thing that is human perception. If crypto/blockchain wasn’t here to stay, TLDR finds it hard to see why “establishment” governments and corporates worldwide are throwing such serious resources towards learning how to harness crypto/blockchain to their aims [see articles below]. So whether they take the form of various “bans” on crypto (China, Korea, Singapore, etc), or official recognition/”guidelines” (e.g. Japan, U.S., Switzerland), TLDR sees these as varying paths to the same actual goal of control: “how do we [governments and corporates] oversee this thing before it has gone too far and we either no longer call the shots, or are completely irrelevant?”. TLDR finds Christine Lagarde’s warning to central banks especially insightful in describing just how this could happen.
Adoption is about what’s normal, and what’s normal is about beliefs that are ever changing [watch this clip for a stark reminder]. She who better leads that conversation will likely come out on top, and right now, governments and the large corporates are playing catch-up. Where we land is anyone’s guess, but as the modern philosophers known as Def Leppard said, “It’s all about believin’…’Cause if you believe, it makes it real…It’s all about believin’.”
“Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.” Christine Lagarde, IMF Head
“Look in the mirror and tell yourself with a straight face that five years ago, you’d think that it’d be completely normal for billions of people to send disappearing video messages of themselves with super-imposed vomiting rainbows and licking dog tongues from their mobile phones [Snapchat & Instagram]. That’s right, you can’t. So look at yourself in the mirror again and tell yourself today that widespread adoption of digital currency isn’t a very real probability.” Graham Friedman, colleague and Cryptocurrency Afficionado.
“The SEC ruling and the Chinese declaration might be better viewed as the end of the beginning — and not a moment too soon some would say…While this isn’t good news for anyone hoping to raise millions with little more than the sniff of an idea and a marketing white paper, I’d argue their loss is the wider crypto sector’s gain. Yes, the gold rush might be over — but the real business is just getting started.” David McNickel, Brave New Coin
“Mike Novogratz, the swaggering macro manager [and ex Goldman & Fortress partner] is starting a $500 million hedge fund to invest in cryptocurrencies, ICOs, and related companies… At that size, the Galaxy Digital Assets Fund would be the biggest of its kind and signal a growing acceptance of cryptocurrencies such as Bitcoin & Ether as legitimate investments.” Erik Schatzker, Bloomberg
“The central banks of Canada and Singapore both recently demonstrated prototype distributed ledger based wholesale payment systems that handle clearing and settling simultaneously via a cryptotoken. China is also performing similar tests: the People’s Bank of China has developed a digital currency that’s designed to scale to the number of transactions made every day across the country.” Mike Orcutt, MIT Technology Review
“If you look at the assets that a typical central bank holds, you will find some gold, some dollars, some euros, etc. The dollar is the world’s reserve currency not by fiat, but by consensus because people want to hold dollars. Saudi Aramco wants to write its oil contracts in dollars because it is liquid, stable, and is accepted around the world as a reserve currency. To me, the critical question around bitcoin or any of these cryptocurrencies is whether one will emerge with enough credibility among central banks to become an alternative reserve currency. Given the mathematical elegance of blockchain, and the security risks that are addressed with the P2P network platform, I think there is a real possibility that this could happen.” Former multibillion dollar private equity fund manager who shall remain unnamed
“You don’t have to use it [crypto] and it’s not going to make the legacy financial system function any worse than it already is. You didn’t have to give up Walmart to try Amazon. You don’t have to give up Wells Fargo to try Bitcoin, Ethereum, or smart contracts — and I expect that most people will want to try these things over the next few years.” Spencer Bogart, Forbes
NEWS WRAP + LINKS
TLDR: Digital payments (not currency) like Alipay, are already mainstream, and certain countries already even use crypto over fiat. Certain corporates already see digital currency as the obvious next step and are taking steps towards that. If Visa scale transaction capacity “isn’t here yet, but just a few years away”, then could mainstream crypto also not be right around the corner?
Big Biz, Govt’s & Regulation
*IMF Chief Foresees End of Banking & Triumph of Cryptocurrency
*Wall Street Establishment Moving into Crypto” Novogratz
*Japan Telecom Giant Joins Ethereum Alliance
*Japan Issues Licenses for 11 New Exchanges
*Rumblings of China Regulation by Oct 1, Korea halting ICOs for now
*More SEC Initiatives, Echoed by Switzerland
*1 in 5 Central Banks Using Blockchain Tech by 2019
TLDR: The private sector continues to come in. Meanwhile, governments may say one thing, but their actions suggest they know how revolutionary crypto/blockchain will be. Regulatory approaches fall into two camps: “ban first, figure this out, then re-institute with new rules” (China, Singapore, Korea), and “create the framework as we go along” (Japan, US, Switzerland). Christine Lagarde also continues to be refreshingly ahead of the curve and explains how and why crypto is not to be ignored.
*Teutsch & Vitalik Buterin: New Framework to Improve ICO Process
TLDR (by Graham Friedman): Proposing a smart contract which looks at all the bids and lands on the cheapest per/share cost. Smart contract then matches the cheapest total raise number and executes on that. If someone over bids (whales it) or underbids, their bid gets cut. ICOs will have to have solid footing, good product, good marketing in order to lure in initial bidders. Confidence builds with more bids as demand becomes apparent.