So it happened. The halving took place yesterday at about 18h in the afternoon. The price plummeted, then bounced, and has been pretty volatile ever since. Will the volatility continue? No-one knows.
This headline annoyed me: Mining for Bitcoins just got a lot harder, from Digital Trends.
No, it didn’t. What just got harder was making a profit on mining. The difficulty is more or less the same.
This one annoyed me as well (it must be the heat making me feel more fractious than usual): Successful Bitcoin Halving Has Minimal Impact on Network, in Fintechist.com. This article was published on the same day as the halving! So, how do they know the impact will be minimal? First, a 3% drop in price right after is not a minimal immediate impact. And, we don’t yet know what the short-term or medium-term impact will be. It’s too soon to tell.
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A Kimberley Process for Cryptocurrencies – by Tim Swanson
A fairly grand sweep of cryptocurrency trends by Tim Swanson (it’s worth reading just about anything he writes, in my opinion).
The possibility of bitcoin transaction tracking. While this may get cryptogeeks’ hackles up, it would solve many regulatory issues, and increase mainstream trust.
While most on- and off-ramping exchanges have to comply with KYC/AML regulations which require real names, this is not the case in parts of Asia. And, there is virtually no regulation of crypto- to-crypto-transactions. While the loss of privacy is a sensitive subject, the advantages of tracking ransomware hijackers, blocking Ponzi schemes, tracking money laundering, chasing thieves…
The article is long and meandering, but worthwhile and informative. And as a plus, we get an insight as to the possible trigger for the price jump over the past couple of months. No spoilers. Read the article.
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The mad rush to own the rights to the blockchain – by Elmo Keep, for Fusion
Ah, the profitability of patents. On decentralized, open-source software. Ok.
Ironically (maybe), one of the most prolific patent filers is Craig Wright, who claims to be Satoshi Nakamoto, who chose to not patent the mother of all innovations in the sector: bitcoin.
And there’s even more irony to extract:
“Whoever released bitcoin originally did so anonymously and freely for anyone else to build on and modify in any way they wanted. They decided not to profit from their invention, at least not through holding the legal rights to it; perhaps they never thought it would succeed, or perhaps they weren’t motivated by money. But now a raft of individuals and major financial corporations are racing to profit from the concept behind Satoshi Nakamoto’s virtual currency. It could translate to very real profits for whoever successfully gets there first. And if it is banks who come out on top, the irony in their profiting from a technology that was once put forth as the end of money as we know it would be very rich indeed.”
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Rethinking Bitcoin’s $10 Billion Market Cap – by Frederick Reese, for CoinDesk
An interesting take on bitcoin’s public statistics:
“While this may be a minor thing, this difficulty in profiling the size and character of the bitcoin market is telling of the challenges the digital currency has in defining itself to the broader public. In addition, it points to pitfalls bitcoin will likely have to clear in its near-future. More importantly, the discussion of how to capitalize a finite, virtual currency speaks to the debate of what the future of digital commerce may look like.”
Bitcoin is easily the most important digital currency in terms of market capitalization. But a large percentage (at some estimates around 30%) of coins are “zombies”, ie. inactive for more than a year. Many of those are permanently inactive, including Satoshi Nakamoto’s stake of over 1 million (if ever these start to move, the market could well crash). According to the author, even bitcoins that are temporarily inactive, such as personal savings and commercial reserves, are not included. This is surprising, and I wonder who decides whether a holding is inactive or not. Even if you use time last moved as a metric, wouldn’t the possibility that they become active again add volatility?
But, implying that these bitcoins are in circulation isn’t accurate, either, since they’re not, well, circulating. See? Confusing.
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In Safe Hands? The Future of Financial Services – by Gill Ringland, for Long Finance
Clicking here and clicking there this week, I stumbled across a paper published in 2011 on financial services in the future, for Long Finance. Written by Gill Ringland, it talks about the outlook for a Post-Globalized society:
“Anyone who is involved in an intelligent network will find their individual capabilities creatively subsumed into the collective. Appliances (used here to cover all types of intelligent agents), which may reach great levels of sophistication, will provide continual contextual advice, coaching and connectivity to others who are working on the same project. These same technologies, applied to civil society, will essentially eliminate crime, provide children with adventures where there is no real danger, offer endless factual and social education, stimulate innovation and largely replace conventional politics with something very different.”
The objective is to understand what the world might look like in 2050, which may sound far away, but when you realize that it’s only just over 30 years from now, and how much has changed in the past 10 years, you get a bit scared that we’re not thinking about this stuff more.
While Post-Globalization will, the author believes, apply to most of the developed world, there may be some parts of the world that do not follow this course, and the paper also looks at alternative global scenarios. The most interesting part, however, is the impact on financial services. While bitcoin and the blockchain are not explicitly mentioned, I found this prediction interesting (for a scenario in which globalization is deemed to have failed, democracy is impractical and western values are no longer aspired to):
“Monetary systems based on nation states will crash and each city state will create a new currency. The bonds and commercial papers of some of the ‘gold chip’ corporations who still enjoy ‘global’ brand, reputation and trust will occasionally be used as ‘currency’. Financial systems will be more closely tied to assets. Money will be needed for trading between city states but within the city there will be extended use of barter.”
Whether you agree with the predictions or not, you’ll find something in here that has you nodding in agreement. However, I find the separation of settings too simplistic, and circular – the author calls them “scenarios” but they are, in fact, outcomes themselves, which lead to other outcomes, true, but which are also themselves subject to many, many variables.
But, food for thought.
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Since Nick Mason from Pink Floyd was extolling the blockchain’s potential to revolutionize the music industry this week (Pink Floyd: Blockchain technology in music could be ‘truly revolutionary’ – by Ian Allison, for International Business Times), here’s a music video to give atmosphere to your Sunday evening (yes, my favourite is Comfortably Numb, got a problem with that?):