Category Archives: Blockchain, Crypto, Digital Assets, Tokens

Price Discovery in Digital Currencies is Maturing

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For the Bitvo Exchange | By Tristram Waye | Jan 11, 2021

price discovery in digital currencies - Price Discovery in Digital Currencies is Maturing

Crypto gives users some significant advantages.  The asset doesn't come from a government or a human being.  You get a payment rail, anonymous transfer, and a distributed peer to peer network.

And the network is secured by math.  But how do you accurately price an asset where every user is distributed and international? How do you know the price you pay is the right one?

Price discovery is a fundamental part of every secondary market on the planet. It helps to give an accurate value of any asset based on all known market information.

See:  A New Bill Proposes to Put US Crypto Exchanges Under a National Framework

Every Bitcoin holder and trader relies on price discovery for buying and selling decisions. They depend on it for measuring their performance, determining taxes, and for accurate payments. And through their trading activities, traders are also part of the process.

Price discovery helps shape the entire altcoin and token market where ETH and BTC are used for purchases, funding, lending and staking.

The elements of pricing come from an interplay of crypto financial products. One of these products is crypto derivatives.

 

Price signals from options and futures

The Bitcoin or Ether price you see on any crypto exchange represents the price for worldwide trading. It also represents an interplay between derivatives like futures, options, and stablecoin arbitrage flows.

Sophisticated traders use futures and options to add exposure to cryptocurrencies and other assets. They also use them to hedge exposure. Activity at different strike prices and contract dates send pricing signals across the market.

The pricing in these products reflects in part the interplay of hedgers and speculators.

See:  CEX.IO’s Executive Director Predicts the Future of Crypto Exchanges

Today you will hear how options volume is bullish or bearish for BTC based on the put/call ratio. The press uses futures activity to extrapolate expectations about BTC's next big move.

These reports influence readers trading the spot or cash markets on exchanges.

 

Stablecoins arbitrage out BTC price differences

Stablecoins have played an important role in the price discovery in crypto as well. In the ICO boom period through 2017, trading provided large price disparities across international markets. Dan Matuszewski described how traders used Tether to quickly arbitrage from the US to China. In 2017, the market was still young and unsophisticated.

By using stablecoins in this manner, price disparities in BTC were reduced around the globe.

Today, stablecoins are among the fastest-growing crypto products, with USDC doubling its volume in August 2020 alone. Stablecoins provide faster access around the cryptosphere, making arbitrage more efficient. This reduces price differences in the leading cryptocurrencies around the world.

On Ethereum, the platform is increasingly shaped by the various smart contract-based protocols. The explosion of stablecoins has increased traffic and fees on the platform. And the rapid expansion of DeFi and yield farming has also added significant demand shaping pricing.

 

6,000 projects provide demand for ETH and BTC

The explosion of DeFi is also part of the pricing environment. Over 6,000 token and altcoin projects typically trade pairs using BTC or ETH. This creates a demand-pull for ETH and BTC from centralized exchanges to DeFi.

See:  Intro to yield farming and the latest developments in DeFi

In DeFi, ETH and BTC are used to buy altcoins that are staked and lent to earn yields from automated market makers. Now there's several billion roaming around this space. All this staking and lending makes DeFi a growing part of the crypto price discovery mechanism.

DeFi provides a contrast to the more mature price discovery in Bitcoin. Various projects in the DeFi space like the infamous Yam goes to $150 one day and zero the next. Or the notorious SushiSwap saga where the integrity of the anonymous founder shaped pricing.

 

The influence of BTC fund flows

Funds are another source of price signaling. Fund flows indicate the expectation of some participants in the space. Greyscale's fund family is an example of a fund providing price signaling.

Demand for these funds, or movement out of them, can influence the demand and supply of the coins they trade.

Other funds, like hedge funds, help to add another pricing dimension. There are the originals like Galaxy Digital, Pantera, and Travis Kling's Ikigai. These are joined by many other investment and trading funds contributing to crypto price discovery.

See:  Central banker bulletin: COVID-19 cash concerns to drive digital currency

Crypto miners are the original contributors to the price discovery process. Mining rewards and the minting of new coins provide a constant but dwindling supply.

A change in the mining rewards like the 2020 halvening helps to shape activity around the protocol. But it is the ongoing securing of the network without human intervention that adds confidence in the system.

Confidence is an important factor in price discovery.

 

The growing dynamism of crypto price discovery

Prices aren't simply supply and demand based. They are dynamic feedback loops involving an array of financial products and signals.

Traditional markets have numerous elements that contribute to price transparency. These include interest rates, government debt, risk-free rates, equities, derivatives, and swaps. Cryptocurrency is quickly developing a similar structure.

Every new crypto product and service becomes part of the growing nervous system for pricing.

See:  Hold or Sell: How High Can Bitcoin Go in 2021?

Accurate real-time pricing internationally gives clear signals of the value of crypto assets.

Pricing helps with risk transfer from users to speculators. It helps with insurance pricing and a more accurate determination of yields. This, in turn, helps people make better, more accurate purchasing decisions.

A mature pricing mechanism brings crypto that much closer to becoming mainstream finance.

 


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Hester Peirce Says SEC Enforcement is Not the Way to Provide Crypto Clarity

Forkast | Michelle Lim | Jan 9, 2020

Hester Peirce SEC Commissioner - Hester Peirce Says SEC Enforcement is Not the Way to Provide Crypto ClarityIn her first public remarks since the SEC’s lawsuit against Ripple and exclusive interview with Forkast.News Editor-in-Chief Angie Lau, SEC commissioner and “Crypto Mom” Hester Peirce says the SEC can do better on clarity and that enforcement isn’t always the best way to provide guidance

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said the SEC could do better on clarity on regulation and that enforcement isn’t always the best way to provide guidance. Peirce made her first public remarks since the SEC’s lawsuit against Ripple in an exclusive interview with Forkast.News Editor-in-Chief Angie Lau.

In December last year, the SEC filed a lawsuit against cryptocurrency platform Ripple Labs Inc., its CEO Brad Garlinghouse and Chairman Chris Larsen for allegedly raising over US$1.3 billion through the sale of digital assets known as XRP in an unregistered securities offering. The lawsuit also said that Larsen and Garlinghouse “effected personal unregistered sales of XRP totaling approximately US$600 million.”

See:  Ripple CEO Warns SEC May Sue Over XRP Sale

“I don’t want to speak to any particular cryptocurrency, whether it’s in litigation with us or not in litigation with us. But I think everyone has to look at the facts and circumstances,” said Peirce.

Peirce declined to comment specifically on the Ripple lawsuit given the ongoing litigation, and expressed that her views were her own and not necessarily those of the SEC or her fellow commissioners.

The SEC’s enforcement action over Ripple has led to heightened concerns in the crypto industry over the lack of regulatory clarity, with Ripple’s CEO saying, “We’ve moved from lack of regulatory clarity to regulatory chaos in the U.S.” in a Twitter thread on some of the questions surrounding the SEC lawsuit.

Is XRP a security or not?

A central question has been whether XRP is a currency or security. XRP was determined to be currency by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) as a digital currency in 2015, but the SEC’s lawsuit is at odds with that definition.

On the apparent misalignment among U.S. agencies causing confusion in the industry, Peirce said that each agency had its own rulebook to follow.

“I think that’s not only a problem with respect to digital assets, it’s actually a broader problem because we have this very open-ended category called an ‘investment contract’,” said Peirce.

An investment contract is defined by the SEC under the Howey Test  as an investment of money in a common enterprise with a reasonable expectation of profits to be made through the work of others. According to Peirce, it is designed to capture anything that looks like a security and acts like a security, but might not be called a stock or a bond. “So something might be characterized as one thing by another agency, yet still be a security under our rules, and that can be frustrating for people,” said Peirce.

“That’s why I have called for more clarity, because I actually think it can be difficult to determine whether something fits within the security bucket or not, and we could do more to provide some guideposts for what that would be,” she added.

Guidance through clarity on guidelines instead of enforcement

On the direction of crypto regulations in 2021, Peirce said, “a lot is going to depend on who the chairman is under President Biden, and that will help determine the direction that the Commission goes on a lot of issues, but cryptocurrency being one of them.”

See:  The four contenders to be Joe Biden’s SEC chair

Acknowledging that “the SEC hasn’t done a fantastic job in getting out in front and setting clear lines for crypto and other countries have been much faster to do that,” Peirce highlighted that the SEC was taking steps to provide greater regulatory clarity, such as the recent call for feedback on the custody of digital asset securities by broker-dealers.

“Enforcement actions can indeed provide clarity, but it’s not the right way to do it from my perspective,” she said. “We want to provide people clear guidelines ahead of time and then they can figure out how they can do something so that it is legal.”

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NCFA Jan 2018 resize - Hester Peirce Says SEC Enforcement is Not the Way to Provide Crypto Clarity The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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UK Consultation (Mar 21, 2021): Regulatory Approach to Cryptoassets and Stablecoins

HM Treasury (UK) | Jan 7, 2021

UK regulatory approach cryptoassets and stablecoins 1 - UK Consultation (Mar 21, 2021):  Regulatory Approach to Cryptoassets and Stablecoins

Consultation description

This document represents the first stage in the government’s consultative process with industry and stakeholders on the broader regulatory approach to cryptoassets and stablecoins. It seeks views on how the UK can ensure its regulatory framework is equipped to harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability. Additionally, this document includes a call for evidence on investment and wholesale uses of cryptoassets, and the broader use of DLT in financial markets. The government invites views from a wide range of stakeholders, and particularly firms engaged in cryptoasset or DLT activities. Please submit your responses to cryptoasset.consultation@hmtreasury.gov.uk

A consultation on the government’s approach to cryptoasset regulation, with a focus on stablecoins; and call for evidence on investment and wholesale uses.

This consultation closes at

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NCFA Jan 2018 resize - UK Consultation (Mar 21, 2021):  Regulatory Approach to Cryptoassets and Stablecoins The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Hold or Sell: How High Can Bitcoin Go in 2021?

DailyForex |Artem Gramma | Dec 2020

global supply of negative bond yields - Hold or Sell:  How High Can Bitcoin Go in 2021?

After a multi-year bear market, Bitcoin was again trading near its all-time high by December 2020

From the halving cycle to global monetary stimulus in response to Covid-19, many factors have contributed to the rally. This article outlines the fundamental bullish case for Bitcoin and highlights some Bitcoin price predictions for 2021 from the experts. My personal view is that 2020 had more similarities with 2016 than 2017. I expect 2021 to mark a new breakout for Bitcoin, with the price reaching new all-time high at $50,000, following historical patterns, albeit in a more muted fashion.

The Fundamental Bullish Case

Why is Bitcoin going up? There are many reasons to be optimistic about Bitcoin now. We could talk about its network effects or censorship resistance characteristics. We can also explore the narrative that millennials exceedingly prefer to own Bitcoin relative to other assets, including gold. As millennials and Gen Z inherit nearly $78 trillion of wealth, some of it will inevitably flow into Bitcoin. However, in 2020 and looking into 2021, the digital gold story, institutional adoption and supply-demand dynamics will be the main drivers of the Bitcoin price.

See:  What the MicroStrategy Deal — and Others Like It — Means for the Future of Bitcoin and Altcoin Prices

Bitcoin as Digital Gold 

Gold has been used as a reliable store of value for centuries. Its main attraction is its scarcity as limited supply exists, and gold mining is an expensive and slow process. This puts gold in stark contrast to fiat currencies, that can be printed at will by central banks around the world.

Like gold, Bitcoin is a scarce asset. Only 21 million coins will ever be created, and close to 90% have already been mined. The current inflation of the Bitcoin network is 1.8% and will decline over time as block rewards decline further. This process is known as halving and refers to the gradual reduction of block rewards by 50% approximately every four years. As a quick reminder, block rewards are the only way new Bitcoins can be created.  Scarcity aside, Bitcoin is more portable and divisible than gold, making it a better store of wealth in the eyes of some investors. Recent comments by Deutsche BankStan Druckenmiller and Rick Rieder suggest as much. And while gold has an estimated market cap of around $9 trillion, Bitcoin is currently valued at under $350 billion.

Institutional Adoption 

There is sufficient evidence of increasing institutional interest in Bitcoin. It is driven, in part, by fears that current expansionary monetary policy pursued by central banks around the world will eventually lead to inflation. Federal Reserve, for example, has printed around 20% of all US dollars in circulation just this year. Over the next several years, accelerating institutional inflows could have a meaningful impact on the Bitcoin price potential, considering the relatively small size of the market.

See:  Steve Wozniak’s Blockchain Venture Lists Cryptocurrency Token, Reaches $950M In 13 Minutes

In 2020, Bitcoin is increasingly being used to hedge against inflation and macroeconomic risks, including by prominent Wall Street investors. Paul Tudor Jones and Bill Miller, among others, have disclosed their positions in Bitcoin and reiterated a bullish view on the asset.

The rapid growth of the Grayscale Bitcoin Trust, the first publicly quoted trust for bitcoin, is another indicator of growing institutional participation. Around 80% of Grayscale investors are institutions making it a reliable barometer of institutional sentiment. The latest update from Grayscale on December 8th, shows total asset under management (AUM) of $12.6 billion, up from around $1.2 billion at the end of 2019. AUM for the Grayscale Bitcoin Trust was at $10.4 billion up from circa $0.8 billion at the end of 2019.

Grayscale and bitcoin - Hold or Sell:  How High Can Bitcoin Go in 2021?

Another interesting development seen in 2020 was the push by some corporate treasuries to allocate a portion of their cash balances to Bitcoin. MicroStrategy's $425 million investment and Square's $50 million position are two notable examples. Earlier this month, MicroStrategy announced plans to offer $400 million of convertible bonds with net proceeds used to double down on its Bitcoin investment.

See:  Someone Just Sent $1 Billion in Bitcoin, Paid Only $3 in Fees

Due to the overwhelming demand, the bond offering was upsized to $550 million. According to the latest data, company treasuries now own around 4.2% of the total outstanding supply of Bitcoin.

Why are they investing in Bitcoin? From the corporate treasury perspective, there are few other options. Global supply of bonds with negative yields is at an all-time high, and traditional fiat currencies tend to lose their purchasing power over time due to inflation. Under these conditions, holding an excessive amount of cash on the balance sheet might be detrimental to shareholder value.

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NCFA Jan 2018 resize - Hold or Sell:  How High Can Bitcoin Go in 2021? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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KABN North America and Liquid Avatar Unveils New Challenger Banking Program for Verified Self Sovereign Identity Users

KABN | Cara Buckspan | Jan 6, 2021

KABN Challenger Banking program - KABN North America and Liquid Avatar Unveils New Challenger Banking Program for Verified Self Sovereign Identity UsersABN North America launches the KABN prepaid Visa Card to support its Liquid Avatar users and provides online banking solutions with XTM Inc.

TORONTO, ON / ACCESSWIRE / January 6, 2021 / KABN Systems NA Holdings Corp. (CSE:KABN)(OTC PINK:TRWRF)(FRA:4T51) (the "Company", "KABN North America" or "KABN NA") (www.kabnsystemsna.com), a North American Fintech solutions company specializing in empowering individuals to manage, control and generate value from their biometrically-verified Self Sovereign Identity ("SSI") through its Liquid Avatar (www.liquidavatar.com) platform, announces today that together with fintech innovator, XTM Inc. (CSE:PAID), it will launch its KABN prepaid Visa Card and digital banking platform to support its partnered challenger bank initiatives in North America.

The partner managed platform will initially include a multi-currency and KABN KASH integrated account platform, connected to the KABN Visa Card, which has the capability to add additional 3rd party currency, investment, and other financial services solutions. These services will be available through the Liquid Avatar app, which provides users with a biometrically, verified, SSI solution allowing them to manage a wide range of verifiable credentials, online site and program access, and data permissions, putting control over personal data where it belongs - in the hands of its owners.

See:  KABN North America and Loop Insights Partner to Launch AI Driven Merchant and Consumer Rewards Programs, Secured by Biometrics and Blockchain

With all of the necessary approvals and partnership agreements in place, KABN North America will begin rolling out the program in Canada throughout the first quarter of 2021 and has plans to continue its card program rollout to the U.S. and other geographic regions subject to all necessary approvals. Users can sign up for their card through the Liquid Avatar app or by visiting (www.kabncard.com)

"We're excited to launch our challenger bank program, with XTM, as our first financial services offering, to those with a verified Self Sovereign Identity," said David Lucatch, CEO KABN. "Our goal is to power Liquid Avatar users and other partner program participants to be able spend a blend of traditional and digital currencies, like cash back balances from KABN KASH, while ensuring that they manage and control their identity, data and the respective value it creates."

KABN Visa cardholders will be able to enhance their spending power wherever Visa is accepted, online and in more than 200 countries and territories worldwide. They will be automatically enrolled in KABN KASH (www.kabnkash.com), a customized consumer experience where users can earn cash back on transactions with a growing list of over 250 brand name online merchants. Cardholders will also have access, through our managed partner programs, to a customized online and mobile banking experience that allows for integration to a host of unique value-based services and offers.

"KABN's unique business model creates opportunities to convert a growing number of qualified, authenticated users into active program participants," says Marilyn Schaffer, CEO of XTM. "This is our second initiative with KABN North America, as we recently joined their healthcare consortium to introduce our other program participants to the COVID-19 verifiable identity healthcare credential."

The challenger bank and Visa card offering come at an opportune time. According to a recent report from Payments Canada, entitled Canadian Payments: Methods and Trends 2020 (https://bit.ly/3b2M0l6), there has been a surge in electronic payments, representing about 77% of all transactions with debit cards making up about 28% of total payment volumes. Further key findings included that 86% of Canadians made online purchases in 2019, accounting for over $54 billion in values, with footwear and fashion representing over 50% of online purchases; 18% made in-app purchases and 15% made purchases from gaming consoles or Internet of Things (IoT) devices. There were over 540 million online transfers accounting for over $178 billion in value.

See:  NCFA OpEd: Canada’s Open Banking Consultations: Let’s Get it Done!

The report also looked at the impact of COVID-19 which indicates initially that while Canadians were spending less overall, there was an accelerated decline in the use of cash and an expected increase in the volume and value of e-commerce and online spending as more people shop from home and more businesses are expected to pivot to e-commerce in order to meet consumer demand and reduce overall costs.

As part of its onboarding strategy for the KABN prepaid Visa cardholders, KABN North America, via its Liquid Avatar verified self-sovereign identity platform, provides state of the art, "Always On" identity verification and validation services at no charge to consumers. This allows users to create, manage and control verifiable credentials to digitally prove their identity and provide access continuously without the hassle of needing to reverify time and time again to a growing list of online service providers, healthcare initiatives, and other value-based programs. In turn, validated users are qualified for unique and customized financial services and offers including the KABN prepaid Visa card, KABN KASH and other value-based opportunities, subject to permissions and necessary approvals

KABN North America is currently exploring further opportunities to expand the KABN Card program to the United States and other geographic regions as part of the KABN Network.

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NCFA Jan 2018 resize - KABN North America and Liquid Avatar Unveils New Challenger Banking Program for Verified Self Sovereign Identity Users The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Vitalik’s 2020 Year End Thoughts from Singapore

Vitalik Buterin | Dec 28, 2020

Vitalik Buterin - Vitalik's 2020 Year End Thoughts from SingaporeI'm writing this sitting in Singapore, the city in which I've now spent nearly half a year of uninterrupted time - an unremarkable duration for many, but for myself the longest I've stayed in any one place for nearly a decade. After months of fighting what may perhaps even be humanity's first boss-level enemy since 1945, the city itself is close to normal, though the world as a whole and its 7.8 billion inhabitants, normally so close by, continue to be so far away. Many other parts of the world have done less well and suffered more, though there is now a light at the end of the tunnel, as hopefully rapid deployment of vaccines will help humanity as a whole overcome this great challenge.

2020 has been a strange year because of these events, but also others. As life "away from keyboard (AFK)" has gotten much more constrained and challenging, the internet has been supercharged, with consequences both good and bad. Politics around the world has gone in strange directions, and I am continually worried by the many political factions that are so easily abandoning their most basic principles because they seem to have decided that their (often mutually contradictory) personal causes are just too important. And yet at the same time, there are rays of hope coming from unusual corners, with new technological discoveries in transportation, medicine, artificial intelligence - and, of course, blockchains and cryptography - that could open up a new chapter for humanity finally coming to fruition.

The Changing Role of Economics

Economics has historically focused on "goods" in the form of physical objects: production of food, manufacturing of widgets, buying and selling houses, and the like. Physical objects have some particular properties: they can be transferred, destroyed, bought and sold, but not copied. If one person is using a physical object, it's usually impractical for another person to use it simultaneously. Many objects are only valuable if "consumed" outright. Making ten copies of an object requires something close to ten times the resources that it takes to make one (not quite ten times, but surprisingly close, especially at larger scales).

See:  Life after blockchain: Why Ethereum mastermind Vitalik Buterin doesn’t want to be a founder again

But on the internet, very different rules apply. Copying is cheap. I can write an article or a piece of code once, and it usually takes quite a bit of effort to write it once, but once that work is done, an unlimited number of people can download and enjoy it. Very few things are "consumable"; often products are superseded by better ones, but if that does not happen, something produced today may continue to provide value to people until the end of time.

On the internet, "public goods" take center stage. Certainly, private goods exist, particularly in the form of individuals' scarce attention and time and virtual assets that command that attention, but the average interaction is one-to-many, not one-to-one. Confounding the situation even further, the "many" rarely maps easily to our traditional structures for structuring one-to-many interactions, such as companies, cities or countries;. Instead, these public goods are typically public across a widely scattered collection of people all around the world. Many online platforms serving wide groups of people need governance, to decide on features, content moderation policies or other challenges important to their user community, though there too, the user community rarely maps cleanly to anything but itself. How is it fair for the US government to govern Twitter, when Twitter is often a platform for public debates between US politicians and representatives of its geopolitical rivals? But clearly, governance challenges exist - and so we need more creative solutions.

This is not merely of interest to "pure" online services. Though goods in the physical world - food, houses, healthcare, transportation - continue to be as important as ever, improvements in these goods depend even more than before on technology, and technological progress does happen over the internet.

But also, economics itself seems to be a less powerful tool in dealing with these issues. Out of all the challenges of 2020, how many can be understood by looking at supply and demand curves? One way to see what is going on here is by looking at the relationship between economics and politics. In the 19th century, the two were frequently viewed as being tied together, a subject called "political economy". In the 20th century, the two are more typically split apart. But in the 21st century, the lines between "private" and "public" are once again rapidly blurring. Governments are behaving more like market actors, and corporations are behaving more like governments.

See:  It’s instant – I get a message, and it’s received: Central bankers comb for crypto clues as Bahamas launches ‘Sand Dollar’

A few select quote teasers:

The researchers' eye of attention is increasingly switching focus to the challenge of governance.

We wanted digital nations, instead we got digital nationalism

People are motivated not just by earning as much money as possible in the work and extracting enjoyment from their money in their family lives; even at work we are motivated by social status, honor, altruism, reciprocity, a feeling of contribution, different social conceptions of what is good and valuable, and much more.

I have always believed is simply the fact that gold is lame, the younger generations realize that it's lame, and that $9 trillion has to go somewhere). Similarly complex forces are what will lead to blockchains and cryptocurrencies being useful.

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NCFA Jan 2018 resize - Vitalik's 2020 Year End Thoughts from Singapore The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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OCC says Federally regulated banks can use stablecoins to conduct payments and other activities

Coindesk | Nikhilesh De | Jan 4, 2021

Brian Brooks OCC - OCC says Federally regulated banks can use stablecoins to conduct payments and other activitiesThe federal banking regulator published an interpretive letter addressing whether national banks and federal savings associations could participate in independent node verification networks (INVNs, otherwise known as blockchain networks) or use stablecoins. The letter said that these financial institutions can participate as nodes on a blockchain and store or validate payments.

Any banks that do participate in an INVN must be aware of the operational, compliance or fraud risks when doing so, an OCC press release warned.

Still, the OCC said INVNs “may be more resilient than other payment networks” due to the large number of nodes needed to verify transactions, which can in turn limit tampering.

See:  Stablecoins: Experience the Stability

Kristin Smith, executive director of the Blockchain Association, said on Twitter that

“the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.”

Brian Brooks, the Acting Comptroller of the Currency, said in a statement that while other nations have built real-time payments systems, the U.S. “has relied on” the private sector to create such technologies, seemingly endorsing the use of cryptocurrencies – specifically stablecoins – as an alternative to other real-time payment systems.

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Office of the Comptroller of the Currency| Release | Jan 4, 2020

stablecoins for payments - OCC says Federally regulated banks can use stablecoins to conduct payments and other activitiesFederally Chartered Banks and Thrifts May Participate in Independent Node Verification Networks and Use Stablecoins for Payment Activities

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today published a letter clarifying national banks’ and federal savings associations’ authority to participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities and other bank-permissible functions.

“While governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies. Some of those technologies are built and managed by bank consortia and some are based on independent node verification networks such as blockchains,” said Acting Comptroller of the Currency Brian P. Brooks.

“The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way. Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”

The agency letter concludes a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. In deploying these technologies, a bank must comply with applicable law and safe, sound, and fair banking practices.

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Engaging in INVN within the federal banking system may enhance the efficiency, effectiveness, and stability of payments activities and achieve the benefits of real-time payments already enjoyed in other countries. For example, such activities may be more resilient than other payment networks because of the decentralized nature of INVNs, which allows a comparatively large number of nodes to verify transactions in a trusted manner. An INVN also limits tampering or adding inaccurate information to the database because information is only added to the network after consensus is reached among the nodes validating the information.

Banks must also be aware of potential risks when conducting INVN-related activities, including operational risks, compliance risk, and fraud. New technologies require enough technological expertise to ensure banks can manage these risks in a safe and sound manner. Banks have experience with managing such risks, which are similar to those of other electronic activities expressly permitted for banks, including providing electronic custody services, acting as a digital certification authority, and providing data processing services. Among the compliance risks, banks should guard against potential money laundering activities and terrorist financing by adapting and expanding their compliance programs to ensure compliance with the reporting and recordkeeping requirements of the Bank Secrecy Act and to address the particular risks of cryptocurrency transactions.

Banks should develop and implement new activities consistently with sound risk management practices and should align with banks’ overall business plans and strategies.

Continue to the Full Interpretive Letter (PDF) --> here

 


NCFA Jan 2018 resize - OCC says Federally regulated banks can use stablecoins to conduct payments and other activities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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