Sunday, 13th November, 2016
| Question everything
TL;DR Let’s take a look at the past few days and reflect on wrong assumptions and surprise upsets. And we don’t mean Trump. (Read more in THE TAKEAWAY below.)
TOP 5 STORIES ON COINDESK Unusual alliances. The biggest of big incumbents (the DTCC) is working with blockchain startups rather than against them, to develop and trial alternative settlement technologies. The settlement behemoth brings its size and experience with regulation and risk management to the table; the startups bring the technology and a willingness to open-source. Read more.
Get on board. Deloitte is expected to open-source its Smart Identity platform. Based on ethereum, it offers users an opportunity to control and verify official identity, with both humanitarian and business implications. A broad range of participants and a collaborative approach should make it more likely that an interoperable solution can be found. Read more.
Here we go. Overstock has set in motion the first rights issue for a blockchain-native security. Its Blockchain Series A Preferred shares, available to current holders of common stock, will begin trading exclusively on the TØ alternative blockchain exchange this December. Could this herald a new era of company financing? Read more.
Hyperledger + China. The blockchain collaboration is setting the stage for greater integration of its Chinese participants (and faster growth in the region), with a proposed technical working group. The aim is to overcome language and culture differences, and to foster a stronger relationship between the founding members and newer participants in Asia. Read more.
A different impact. A conference in Argentina focused on the blockchain’s potential benefits beyond finance and how it can solve social imbalances. Most of the areas entrepreneurs have direct experience with economic instability, which gives them an unusual perspective when it comes to the technology’s possibilities. Read more. More Blockchain News →
QUOTE OF THE WEEK "If you had understood in 1995 the opportunities and threats [the internet] would ultimately present to your company or industry, what would you have done differently—to become the disrupter rather than the disrupted?" – Ginni Rometty, "How Blockchain Will Change Your Life", WSJ |
THE TAKEAWAY
After Brexit, we should have been more prepared for a result that upended what the polls had been saying. Trump’s surprise win reminds us what we seem to have forgotten: that we need to spend more time questioning our assumptions.
So, let’s take a look at the past few days and reflect on another deeply held assumption and possible unlikely victory.
I'm talking about bitcoin, the technology and the asset.
While bitcoin's price behaviour this week occupied headlines around the world, it’s not the recent movement that is noteworthy here – November 9th’s bump of 4% was less than Brexit’s bounce of over 20%. This time around, though, the media was watching.
Since bitcoin’s price increases in times of political shock, it must be a ‘safe haven’. At least that’s what the media seems to assume: just do a search for “bitcoin” together with “safe haven” and you’ll see the vast number of articles making the connection.
That assumption is understandable, but wrong.
There is nothing “safe” about bitcoin as an investment. It has no lower limit (other than 0). Its market value is not stable. It does not provide a reliable yield. Many continue to predict its disappearance, and even industry insiders fret over its possible implosion due to governance issues and scalability limitations.
So why, then, does the price go up in times of uncertainty?
Ironically, what positions bitcoin as a hedge is the very reason it came into existence: as an antidote to centralized financial control. Even for those who don’t understand how it works, bitcoin represents an alternative. When the current system looks to be in danger, in moments of acute shock and uncertainty, the market instinctively seeks a substitute.
So, in times of trouble, investors and traders flock to an asset that, on the surface, has no inherent value other than its underlying philosophy. It provides no income; it can’t be made into jewellery; you can’t even build a hut on it. The functionality is useful, but there are alternatives, and hardly anyone today believes that it will replace fiat currencies any time soon. Its appeal mainly lies in its reason for being.
Is bitcoin becoming accepted by the established financial system because of its rejection of it?
You have to admit, that sounds pretty far-fetched. And yet it seems to be happening.
If this trend continues, we will see the emergence of bitcoin as a valid asset class. But not because it is a ‘safe haven’ – it isn’t. It is an ‘appealing alternative’. Media focus on price movements is helping to attract the attention of investors searching for hedges, and a concept created to work outside the establishment could end up part of its portfolios.
Talk about an unlikely victory.
– Noelle
More background:
| | | |
OTHERS ARE TALKING ABOUT...
The mainstream press published a flurry of articles on bitcoin’s bounce after the election, most of which missed the point (see THE TAKEAWAY above).
There were, however, a few interesting thought pieces: TechCrunch reflected on bitcoin’s increasing role as a hedge against geopolitical risk; Wired took us on a stroll through the blockchain innovation landscape; and the Wall Street Journal ran an article with an annoying click-bait title but some good comments on governance.
Fast Company carried a piece on how the blockchain will disrupt future elections by changing not only how we vote and govern, but also how we view identity. And Fortune asked us to vote on whether digital currencies will still be here in five years or not. I would say that the result is a foregone conclusion, but I’ve learnt my lesson on that.
UPCOMING EVENTS
SECTOR REPORTS
WHAT WE’VE BEEN UP TO It’s almost here: the release of our Q3 State of the Blockchain.
We have been feverishly collating the statistics, interviewing the participants and crafting our signature charts for weeks now. Finally, we’re nearing the finishing touches.
Expect announcements next week.
Did you like this? *Share it.*
Feedback? Let us know.
Got a tip? Send it in. | | | | | Share this email |     | | |
0 Comments