Contrary to the notion among many crypto enthusiasts that bitcoin is a speculative investment with major upside potential, a stakeholder in the legacy financial sector has rubbished the value attached to digital assets, describing them as mere software algorithms with no utility.
The verdict was given by the general manager of Bank for International Settlements (BIS), Agustin Carstens, before an audience in Miami on Nov. 1. The Mexican economist underscored reforms in payment systems being embarked upon by Central Banks. These reforms were, according to him, of more economic value than the attention given to digital assets such as bitcoin.
“The use of ‘currencies’ is misleading. Cryptocurrencies, such as bitcoin, ether, and tether, do not serve the core functions of money,” he stated. Lending credence to his stance, he referred to the volatility in their value (which has ironically decreased dramatically in recent weeks), adding:
“No cryptocurrency is a true unit of account or a payment instrument, and we have seen this year that they are a poor store of value. Buyers of cryptocurrencies are buying into nothing more than a software algorithm.”
The Bank for International Settlements (BIS), nicknamed the “central banks’ central bank,” is unsurprisingly not a fan of cryptocurrency. | Source: Shutterstock
While shedding light on the strengths of retail payments from a wider perspective, Carstens highlighted statistics relating to the value of card payments over a period of 16 years.
“Globally, the value of card payments reached 25% of GDP in 2016, compared with 13% in 2000, according to the Committee on Payments and Market Infrastructures. Already widespread mobile phone applications are boosting cashless payments,” he argued.
Carstens, who was the former governor of the Bank of Mexico from 2010 to 2017, also highlighted some of the efforts made by central banks in upgrading the existing payment infrastructure as superior to innovations in the nascent blockchain field.
“While this work is not as attention-grabbing as crypto-this and crypto-that, developing new hardware, software and processes to safeguard your money, strengthen financial stability and protect the economy are of immense importance,” he alleged.
At a recent interview with Swiss German newspaper Basler Zeitung, Carstens had urged crypto-curious young people to “Stop trying to create money!” He advised them instead to focus their energies on technological advancements that could make the world a better place, rather than focusing on a currency that doesn’t “fulfill any of the…purposes of money.”
More pointedly, he called bitcoin a “bubble, a Ponzi scheme and an environmental disaster” during a February speech at Goethe University’s House of Finance.
Over the past three days, the volume of major cryptocurrencies and the rest of the crypto market has increased substantially, from around $10 billion to $13 billion.
Bitcoin, in particular, has seen a large increase in volume from $3.1 billion to $4.3 billion within a week, by more than 40 percent.
Led by the positive price movement of Bitcoin and its noticeable increase in volume, the value of other major cryptocurrencies like Stellar (XLM), Cardano (ADA), and Tron (TRX) has increased by the range of 3 to 5 percent.
Ripple (XRP) surged by more than 12 percent over the last 24 hours, nearly doubling its volume from $400 million to $800 million.
Where is Market Headed
According to DonAlt, a recognized cryptocurrency trader and technical analyst, Bitcoin is currently bull-biased supported by an increase in volume over the last several days.
But, to confirm a strong short-term movement, BTC will have to break out of the $6,500 resistance level with comfort to potentially test the $6,800 resistance level, which has been broken once since August 9, in mid-September.
“[Bitcoin is] in a very clean trading range. This is what I’m currently looking at and why I don’t really see much reason to be bearish,” DonAlt said.
On Coinbase, Gemini, and Kraken, three of the most heavily regulated and strictly compliant cryptocurrency-to-fiat exchanges based in the US, BTC is still being traded at around $6,390, unable to break out of $6,400.
Hence, while the sideways market of BTC is positively affecting major cryptocurrencies and tokens, in order for BTC to initiate a rally in the same magnitude as the movements portrayed by Ethereum, Bitcoin Cash, Ripple, and Stellar this week, a clean break out of the $6,500 mark will be required.
The abrupt increase in the volume and price of major cryptocurrencies and small market cap cryptocurrencies demonstrate the willingness of investors to take high-risk, high-return trades despite uncertainty in the market.
Renewed optimism towards the market triggered by various key developments including the Bakkt Bitcoin futures market launch in December and the establishment of Fidelity’s digital asset custody services has allowed the market to engage in a minor recovery.
Exchanges Slowly Recovering
As reported by CCN on November 6, a new crypto exchange rankings report published by Blockchain Transparency Institute showed a recovery in the volume of major trading platforms. Binance achieved a daily trading volume of $1 billion, which is more than the combined trading volume of five of the top 10 cryptocurrencies in the global market combined.
Tether (USDT), a stablecoin backed by US dollars at a 1:1 ratio, has also demonstrated a surge in volume to over $2.7 billion, suggesting that the holders of USDT are selling the stablecoin to invest in major cryptocurrencies like Stellar and Cardano.
Interestingly, most of the volume of cryptocurrencies that initiated upward price movements on November 6 has come from cryptocurrency exchanges in South Korea.
Featured Image from Shutterstock. Charts from TradingView.
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Apple abruptly removed the popular crypto podcast “Off the Chain” from its podcast store. The show is hosted by Anthony “Pomp” Pompliano, the founder and managing partner of investment firm Morgan Creek Digital Assets. The sudden move has triggered widespread censorship concerns among fans.
Pompliano tweeted on Nov. 5 that Apple mysteriously took down the podcast without explanation shortly after it rocketed to No. 4 in the investing category on the US iTunes Store.
The podcast had also been distributed on Google, Spotify, Libsyn, and other platforms.
Last week we released a podcast discussing the ultimate argument for Bitcoin.
It exploded & ranked #4 in US investing category before mysteriously being taken down by @Apple.
We had no warning. We don’t know why.
They took down our podcast, but they can’t take down Bitcoin!
“We had no warning. We don’t know why,” Pompliano lamented on Twitter. “They took down our podcast, but they can’t take down Bitcoin!”
Off the Chain was censored after an episode aired on October 31 called “The Ultimate Bitcoin Argument.” By November 2, Apple had taken down the podcast with no explanation.
Bitcoin: a ‘Digital Monetary Nuclear Weapon’
The episode that apparently triggered the censorship was a conversation with bitcoin maximalist Murad Mahmudov that discussed why fiat currencies are doomed to fail, and why central banks and financial institutions should embrace bitcoin.
In the episode, Mahmudov said calling bitcoin digital gold is “an understatement,” because it’s way more revolutionary than that.
“Really what it is, is digital monetary nuclear weapons,” Mahmudov said (video below). “I believe that this will expand the economy and accelerate capitalism and free markets, and borderless commerce even more.”
Murad added: “I think that bitcoin’s volatility is great. If you zoom out and look over the last years, especially on a log chart, this volatility has been predominantly upwards…It shows people that bitcoin’s strength versus fiat currencies is strengthening.”
Pompliano told CCN that he’s troubled by the fact that he was never warned ahead of time that “Off the Chain” would be pulled and that Apple had still not responded to multiple requests seeking an explanation for the punitive action.
“I’m not sure what happened, but this has highlighted the challenges of centralized organizations,” Pompliano told CCN. “The fact that this was removed without warning is the toughest part to deal with.”
An Argument For Decentralization
When CCN asked Pompliano if he believes that Apple is censoring his podcast because it promotes bitcoin, he said he wasn’t sure, but is frustrated by the debacle.
Pompliano said the abrupt blackballing of his popular podcast makes an excellent argument for decentralization — which is the hallmark of crypto. He said it’s alarming that an individual corporation can unilaterally censor content willy-nilly.
“It is more obvious than ever that centralized organizations and products present considerable counter-party risk,” Pompliano wrote on his blog. “Regardless of the reason for Apple’s actions, an individual corporation was able to make a unilateral decision to censor content. They didn’t give us a warning or explanation.”
Facebook and Google Under Fire
Concerns over censorship have caused some in the crypto community to branch out and develop blockchain-based alternatives to social media giants Facebook, Twitter, and the Google-owned YouTube.
Minds — an open-source, blockchain-based crypto social network — recently received a $6 million investment from Overstock’s blockchain subsidiary, Medici Ventures. Minds promises strict user privacy and absolutely no censorship, as CCN has reported.
“All of our code is open-source, meaning anyone can look at it,” said Bill Ottman, the founder and CEO of Minds.
In contrast, he said Facebook selectively censors content and “shadow-bans” certain groups with no explanation, leaving users at the mercy of the social-media monopoly.
“The reality is that they (Facebook, Twitter, Google) are punishing certain pages, and we don’t know why because they won’t share their code,” Ottman said. “Censorship affects both the left and right, and Internet freedom benefits all.”
Balaji Srinivasan, a prominent venture capital investor and the chief technical officer at Coinbase, said that crypto is entering the tech mainstream.
“Sundar Pichai & Sergey Brin’s sons are both mining crypto; Facebook is doing blockchain; Square open sourced some nice cold storage code; Microsoft, Amazon, Google Cloud all have blockchain efforts; crypto is entering the tech mainstream.”
Since early 2018, unreflective of the 73 percent correction in the cryptocurrency market which saw the combined valuation of cryptocurrencies drop from $800 billion to $210 billion, the cryptocurrency market and blockchain sector have shown significant progress in terms of institutionalizing an emerging asset class, improving market structure, and strengthening the underlying technologies of cryptocurrencies.
Increasing Awareness of Blockchain
As a data processing technology, the blockchain enables the segregation and storage of data in a series of blocks in a peer-to-peer process. But, to ensure that bad actors with malicious intent are penalized accordingly for engaging in fraudulent activity, an incentive system in the form of a cryptocurrency is necessary on a blockchain network.
To better understand the necessity, structure, and decentralized nature, an increasing number of institutions, technology conglomerates, and enthusiasts have started to mine cryptocurrencies that support major blockchain networks.
Source: Shutterstock
Most recently, CCN reported that Google co-founder Sergey Brin and CEO Sundar Pichai have publicly said their sons have been mining ETH, the native cryptocurrency of the Ethereum blockchain protocol.
Pichai noted that his 11-year-old son understood the concept of Ethereum and consensus currencies better than fiat currency, possibly due to the complexity of connections and centralization involved in the creation, distribution, and operation of fiat money.
“Last week I was at dinner with my son, and I was talking about something about bitcoin and my son clarified what I was talking about was ethereum, which is slightly different. He’s 11 years old, and he told me he’s mining it. I had [to] explain to him how paper money actually works. I realized he understood ethereum better than how paper money works. I had to talk to him about the banking system, the importance of it. It was a good conversation.”
Previously, Fidelity Investments, the fourth largest asset manager in the world with more than $7 trillion assets under management, also mined Bitcoin and Ethereum to grasp the concept of mining and the necessity of cryptocurrencies.
Fast forward one year and five months, Fidelity Investments established Fidelity Digital Assets, providing custody services around the asset class to help institutional investors invest in the market.
Open-Source Revolution
Square, the $30 billion payment giant operated by Twitter CEO Jack Dorsey, has recently open-sourced its code that processes cold storage funds.
As a decentralized and peer-to-peer network, the blockchain is developed and maintained by an open-source group of developers that proposed code changes and improvements on code repositories like GitHub.
Last month, Octoverse reported that Ethereum had become the fifth fastest growing open-source project in the world alongside Microsoft Azure and Spyder.
Source: Octoverse
The rise of cryptocurrencies as a recognized asset class and blockchain technology as one of the core pillars of the fourth industrial revolution has led institutions and individuals to rethink how the global monetary system works and the way information can be processed in a peer-to-peer manner.
New York City is reportedly going to be home to Amazon’s second headquarters — or at least part of it.Yana Paskova/Getty Images
On Monday evening, The New York Times reported that Amazon was finally nearing a decision on where to place its second headquarters. After more than a year of deliberation, the e-commerce giant is reportedly nearing a deal to split HQ2 between New York City, in the Queen’s neighborhood of Long Island City, and Crystal City, Virginia.
In January, soon after Amazon realized its short list of 20 finalists for HQ2, Business Insider’s Leanna Garfield published a story on why New York City would be a horrible choice for Amazon’s second headquarters. Here is why:
In mid-January, Amazon named New York City as one of the top 20 contenders for its second headquarters, dubbed HQ2. The campus is expected to bring 50,000 high-paying jobs to the chosen North American city, and Amazon said it will invest $5 billion in HQ2’s construction.
At first glance, it sounds like a sweet deal. But if HQ2 came to New York, with its influx of tech workers, the campus could exacerbate several problems that already plague the city, including high housing prices, overpopulation, and gridlock — all things Seattle, Amazon’s home, has seen since the company arrived in the late 1990s.
A shortage of housing stock and commercial space
New York City has proposed 26 million square feet across three boroughs as possible sites for HQ2. In response, seven local community organizations signed an open letter to CEO Jeff Bezos listing several concerns, including out-of-state hiring, unaffordable housing, and gentrification.
Their worries about higher rent prices are not unfounded, according to a recent report from real estate website Apartment List. The site made a few predictions about HQ2’s potential impact on housing prices in 15 major cities based on historical home-building statistics and data from the US Census and Bureau of Labor Statistics.
According to the report, the city could see an additional annual rent increase of 0.1% to 0.2% if HQ2 comes to town. Already, the median rent surpasses $3,000 per month. Considering that the average rent in New York City increases around 3.7% annually, HQ2 could cost renter households $1,391 to $2,182 over the next decade.
An independently owned market in Sunset Park, Brooklyn, New York. Sarah Jacobs/Business Insider
In New York, it has been difficult for housing supply to keep up with a quick pace of growth over the past two decades. It’s a similar story in Seattle, where Amazon is the largest property taxpayer and private employer. Since 2000, the area has added 99,000 new jobs, with 30% of them in tech, contributing to a construction boom. Seattle is now the second-highest-paying city in tech, with an average salary of $99,400, according to the tech recruiting company Dice Holdings.
Somewhat unsurprisingly, the growth has made Seattle’s housing less affordable for some longtime residents, who have accused Amazon of perpetuating income inequality in the city. From 2005 to 2015, Seattle’s median rent went from $1,008 to $1,286, an increase nearly three times the national median.
Amazon’s presence could also potentially impact small businesses in New York. In the 2017 book “Vanishing New York,” author Griffin Hansbury wrote that the city is in a state of “hyper-gentrification,” which has culminated in the death of small businesses like mom-and-pop groceries, used book shops, and dive bars. Seattle has seen this as well, and some local businesses say Amazon’s presence makes it more expensive for them to find space.
“Some landlords aren’t even talking to us about (leasing) full floors,” Eric Blohm, a senior managing director for Savills Studley (which represents companies looking for office space in Seattle), told The Seattle Times. “They’re holding out for the full building user. Or they’ll say, ‘Get in line, you’re third in line, we’re talking with other people.'”
The subway system and roads would not be able to handle thousands more Amazon workers
Though New York City is the densest city in the US, the promise of 50,000 jobs is likely to attract even more residents. That could be bad news for the city’s struggling public transit. The city’s subways handle 5.7 million riders every weekday, and 50,000 more people could make a dent, however small.
In 2016, a New York Times investigation also found the city’s s explosive population growth over the last century has been a big contributor to the subway system’s inefficiency. The aging subway faces funding challenges, as well as an impending temporary shutdown of the L Train — a main (and majorly congested) line that travels from Manhattan to Brooklyn — to make repairs for damages incurred by Hurricane Sandy in 2012.
It’s uncertain whether the city’s subway system and roads could cope with thousands of new Amazon commuters or drivers.
In Seattle, drivers spent an average of 55 hours in traffic in 2016, placing it among the top 10 worst US cities for congestion, according to the most recent analysis by Inrix. In June 2017, Seattle’s metro system even added more buses to accommodate Amazon’s summer interns. In New York City, high-frequency, cross-town bus service is still lacking. In November, the New York City’s comptroller’s office said the bus system is “in crisis,” a reality the city would need to reckon with if HQ2 came.
Worries about the “Amazon effect” on public infrastructure
In a letter to Mayor Bill de Blasio, a coalition of community organizations asked the City of New York to hold Amazon accountable if the company expanded its footprint there. The groups argued that Amazon should invest in public infrastructure, like schools and transit, as well as small businesses if it chooses to come to New York.
“You should focus on pushing Amazon to be a better corporate citizen and improving how it treats communities and workers,” the letter said. “You should also actively work to ensure that this multibillion-dollar company, who already has a significant presence in New York, does not receive financial incentives simply for doing business here. New York communities are facing massive cuts to public goods and services, and working families are struggling to make ends meet.”
Leanna Garfield originally contributed reporting.
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