Federal Reserve boffin predicts bitcoin will be crowded out. America’s monetary authority published a brief paper suggesting that the rise of other cryptocurrencies will put tamp down the price of the oldest and best-capitalized, BTC. “While Bitcoin’s price is not likely to fall to zero, the prospect of a flood of Altcoin competing with Bitcoin in the wealth portfolios of investors is likely to place significant downward pressure on the purchasing power of all cryptocurrencies, including Bitcoin,” according to David Andolfatto and Andrew Spewak of the Federal Reserve Bank of St. Louis. It should be stated that this is more of an opinion piece than an academic paper, and there’s some question about the lead author’s ability to form an opinion. He appears to personify Harry Truman’s stereotype of academics in his discipline: “Give me a one-handed economist! All my economists say, ‘On the one hand … on the other …’”. In a recent blog post titled “Does the Fed have a symmetric inflation target?” he concludes 1,100 words later, “we do not yet have enough data to judge whether the Fed’s inflation target is symmetric.” In a soon-to-be-published academic paper, he creates an economic model to determine if orthodox economists are correct when they say banks create money, or if heterodox theories are correct in claiming they don’t. As Andolfatto indicates, “The model lends some support to both views on banking.” And in the crypto white paper itself he calls bitcoin “inherently worthless” in the first paragraph then describes its “fundamental value” in the second-last. What’s this guy’s favourite color – plaid? That said, maybe we should hear more from Spewak, who penned a very accessible discussion of how blockchain technology can be used to promote desired behavior.
KL initiates crypto regulation. Malaysia’s oversight of ICOs and cryptocurrency trading went into effect Tuesday, Bitcoin.com reports. Tokens will be regulated as securities, so exchanges and other service providers will have to apply to Kuala Lumpur’s Securities Commission for licensure. The commission is expected to coordinate regulation with Bank Negara Malaysia, the country’s monetary authority, which has made previous statements declaring crypto to not be legal tender.
While crypto cratered in ’18, exchanges flourished. Diar reports that trading volumes for digital assets surged last year, even as the price per token experienced a staggering bear market. “Retail investors may have felt the heat in 2018, as did the whole cryptocurrency industry, but exchanges have come on top closing the year with record transacting volumes,” according to the data analytics and news outlet. “And while commissions have entered a lower ticket, trade count have remained healthy.”
SBI buys crypto wallet firm. SoftBank corporate cousin SBI Holdings just invested in Swiss wallet developer Breadwinner, CoinTelegraph reports. Terms were not announced, but BRD will form part of the SBI Crypto Investment portfolio, alongside Japanese exchange VCTrade.
Totle investors bet $1M on centralizing decentralized exchanges. Arrington XRP, NEO Global Capital and Goren Holm Ventures have pooled a reported $1 million to fund Totle, which develops APIs to harmonize trading on dexes, announced the news on its blog Monday. The company says it aspires to be “the Kayak of virtual currency.”
Will the Marshalls issue the first CBDC? The Marshall Islands, a Pacific nation of 60,000 could be the first country to issue its own non-asset backed cryptocurrency, the sovereign, according to a SOV Global blog post. The archipelago, which has aspirations of being “the Cayman Islands of crypto,” according to Bitcoin.com, has retained a key advisor to Malta’s “Blockchain Island” inititative, as well as a former secretary general of the Bank for International Settlement. What makes this all the more remarkable is that the Marshalls could conceivably beat not just Malta but also Singapore and the United Arab Emirates, which reportedly have programs in place to launch central bank digital currencies. Even if the Marshalls are first through the gate with a sovereign digital asset, though, it might not technically qualify as a true CBDC. The Marshalls, lacking a central bank of their own, use U.S. dollars.
LOOKING FORWARD: An Ethereum hard fork has been delayed, according to a ChainSecurity blog post. The Constantinople upgrade appears to introduce susceptibility to re attacks in some smart contracts. Crypto enthusiasts’ fear of quantum computing might be unwarranted, at least for the immediate future. Big Blue unveiled its Q System One at CES last week, but attendees were underwhelmed, Bitcoin.com reports. It does not appear capable of breaking encryption practices to the point where it could disrupt distributed ledger technology yet.