Bits and stuff: June 17, 2018 – bitcoin, banks and bubbles (the real ones)

Earlier this week I was in Dublin, moderating at MoneyConf. Here’s one of my panels (via MoneyConf’s Facebook page), on cryptocurrency exchanges, with Adam White of Coinbase, Marcus Swanpoel of Luno, Nejc Kodric of Bitstamp, and Charlene Chen of BitPesa.

The best part of the event? Catching up with friends and acquaintances, and the wonderful people I got to know (you know who you are).

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Remember all those articles that gleefully pointed out that the bitcoin price was manipulated? One thing is for sure: in statistics, things are never as simple as they at first appear to be.

Aaron Brown in Bloomberg dove into the accusatory paper, and points out that their conclusions are not, well, conclusive. The data is tenuous and the evidence relatively scant. While there may have been manipulation, we can’t assume that it accounts for all (or even most) price movements. And while it is dangerous to make assumptions on which systemic decisions may be based, we do need to continue to dig further, and use the information gleaned as a guide to where to dig next.

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Check out this and 12 more jaw-dropping photos of winged creatures, on National Geographic. They make time stand still.

image by Bret Charman, via National Geographic
image by Bret Charman, via National Geographic

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Bloomberg’s Matt Levine writes about the statement that William Hinman, director of the SEC, made at an event this week, in which he dismissed the notion that ether could be considered a security. Perhaps it was in the beginning, he says, but it isn’t any more.

“There have been reports that the SEC is skeptical of the idea that crypto startups could sell tokens packaged in security wrappers in limited offerings solely to accredited investors, with the promise that those tokens will eventually be unwrapped and usable by everyone. Hinman’s speech suggests that the SEC has gotten over that skepticism.”

Note the word “suggests”. We don’t know for sure. And the subject is still damn complicated. Is ethereum “decentralized”? One could even make the argument that bitcoin is run by a “handful” – does that make it decentralized? What about Ripple’s XRP?

The statement was greeted with glee and astonishment from the opposing factions on Twitter – CoinDesk gave a good summary of the different interpretations.

And some are even rubbing their hands at the increasingly likely prospect of ether futures on a regulated exchange.

My concern is that we are all assuming that Hinman was speaking for the SEC – even though the print version of his remarks carries the disclaimer: “This speech expresses the author’s views and does not necessarily reflect those of the Commission.” Maybe that’s a standard disclaimer that doesn’t mean much. Or maybe it’s a significant detail that was omitted in the spoken version?

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Unrelated, the best part of the previously mentioned Matt Levine newsletter of the 15th was a bit further down, in a section talking about presidential pardons:

“What a sad lot of moral nullities these people are.”

A memorable sentence if ever I saw one.

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There were some surprising announcements from the finance sector this past week. Surprising because they are talking about imminent launches of production-ready blockchains doing useful things.

In South Korea, a national consortium of banks will roll out in July a blockchain system for managing identity.

Suning Bank in China is testing a blockchain platform that will allow several banks to share a database of account holders with bad credit scores. No release date was specified, but it sounds as if launch is relatively imminent.

While not exactly finance, here’s an interesting real-world test: Switzerland’s crypto city of Zug is trialling a voting system based on uPort’s blockchain, in which residents can participate in an online poll which, in beautiful circularity, asks them about the blockchain voting system (and other local matters). It’s not a huge test, and results will not be binding (it’s just a survey), but it is public.

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This was a satisfying takedown of economists pretending they understand crypto and therefore know better than everybody else (because economists are known for their systemic awareness and accuracy, right????).

“At a high level, the flaw in their positions is: ‘I know finance, crypto is finance, so I know crypto.'”

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Bubbles, bubbles and more bubbles: a captivating video of Melody Yang and her art. “A language that anybody understands.”

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