Bits 26 February, 2017

for number geeks - by Emmanuelle Moureaux, via Colossal
for number geeks, totally breathtaking – by French architect Emmanuelle Moureaux, via Colossal

So I’m back from a two-week break (travelling, teaching a seminar and struggling to keep up with the day job) during which stuff happened.

The most notable is the new bitcoin all-time high – the price briefly broke through $1,200 before settling down just above $1,100. This changes things. It’s not just the bitcoin economics – mining becomes more profitable => more miners => will the politics of the scaling debate change? It’s also the perception.

After the last price surge earlier this year, the central bank of China knocked on the door of the leading bitcoin exchanges and said that they wanted to talk. Understandably, that sent tremors through the bitcoin market (leading to a price mini-crash) and ended up in a realignment of trading clout. Could the People’s Bank of China have more ideas up their sleeves, perhaps this time focusing on the miners?

And, a few friends have gotten in touch to ask me if they should buy bitcoin now. What can you say to that? If I make a recommendation and get it wrong, it’s a mark on the friendship. On the other hand, refusing to comment comes across as unhelpful. I’m going with unhelpful.

This level of interest is, of course, what bitcoin needs to bring it out of the murky shadows of radical libertarian ideas and into the mainstream. But what impact will that have on the price? More demand should push the price up. But market analysts will tell you that the time to sell any asset is when “the man on the street”* starts looking into it.

(*I hate this phrase. Why a man? Why does he have to be on the street? What street? Not all streets are equal. Anyway, if you know of a better phrase to represent “the average investor” – I also hate “average” – do please let me know.)

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The other news that got me excited is that over the past week two new live blockchain platforms were unveiled. Not trials nor proof of concepts (plenty of those going on as well). These were live.

One was Northern Trust’s blockchain service for private equity funds. It’s been working for a while, albeit with only one client, a private equity fund in Switzerland. Unlike other projects that go for high-throughput sectors, this one is aimed at a business that has relatively few transactions. Each one, however, is manually intensive and involves several counterparties, so the opportunity to streamline is tempting. (I’ll be writing more about this soon, there’s much more to look at here.)

The other was a blockchain developed by ING and Société Générale to facilitate oil trades. This isn’t finance or speculation, we’re talking about moving actual barrels of the stuff. The transaction was executed by global commodity trader Mercuria, and involved a shipment from Africa to China, three different sales and a long list of participants, all of whom fulfilled their roles directly on the platform. (My comment in the CoinDesk Weekly Newsletter which comes out later today is about this.)

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Top reads from the past week:

· An excellent response by Elaine Ou in Bloomberg to those that fret that China might ban bitcoin (a concern generally shared by those that don’t get the concept):

“Even if a government shuts down every bitcoin node in its country, a bitcoin user can still transact as long as a single node is accessible overseas.

This puts regulators in a tough spot. It’s hard to control something that exists nowhere and everywhere at the same time.”

She concludes with a suggestion to regulators everywhere:

“When regulations create barriers that prevent legitimate businesses from serving certain customers, less-legitimate businesses rise to meet the demand outside the regulatory system.

Markets can’t be regulated out of existence. The next best thing might be to let them operate in the open.”

· Sebastien Meunier wrote an article, published on CoinDesk, that pokes fun at the lack of realism and genuine understanding of what the blockchain technology can do.

· Tim Swanson coined a term that politely labels the hype surrounding blockchain projects: chainwashing. When you want to sell a service to enterprises, tell them it’s blockchain based. They’ll love it. Tim goes on to offer a useful list of questions that help to filter out the “real deal” from vendors that are selling pointless applications.

I loved this response:

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Some other great tweets:

And then there’s this thread:

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