Winter doesn’t last forever: why Crypto Spring is coming
As investors scramble for the exits and the “crypto has no value” doomsayers reappear, when better for reiterating the core role that crypto can play in future finance — in a Harmonic Triangle alongside CBDCs and (properly-reserved) stablecoins. The stakes are high: the smart contracts operated on cryptocurrency blockchains have the potential to be a…
The Fed just became much more expansionary
Is it real or nominal short-term interest rates that matter? Rising nominal rates matter when they cause financial stress – borrowers who can’t service debt, loans called in because collateral values have fallen, lenders facing loan losses that erode their capital, etc. Right now, that’s not happening – so it’s real rates that matter. Real…
China Embraces Ethereum
CBDC running smart contracts on Ethereum! That idea has now been proposed semi-officially in China, by Yao Qian, former head of the digital currency initiative at China’s central bank (see link below). The proposal is important both by showing how central bank thinking is advancing rapidly to embrace the idea of CBDC and cryptocurrencies operating…
We’ve got Ethereum. Why do we need banks?
When HRH Queen Elizabeth famously said during the height of the financial crisis in 2008 “If these things were so large, how come everyone missed them?”, an honest reply would have been “because banks have been around for so long that we see them as the inviolable heart of the financial system — even though…
The Harmonic Triangle: CBDC, Cryptos, Stablecoins
The Harmonic Triangle of Cryptocurrencies, Central Bank Digital Currencies (CBDCs), and Stablecoins is slowly starting to emerge as the digital future. CBDC, Cryptos and Stablecoins are complements, not rivals Far from being rivals, these three have the potential to be highly complementary. Look at what each of the three does best: – CBDC: The universal…
Valuing Cryptos: Market cap or DCF?
Yes, a DCF (Discounted Cash Flow) valuation for cryptos is possible! At least in principle. Market Cap approach: Nice and simple, but what compares with what? There’s currently a fair amount of writing around about Cryptocurrency valuations. It ranges from : the “it may be worth nothing’ school (which could be said about pretty well…
1st Dec: The most important crypto date since the launch of Bitcoin
1st Dec: The most important crypto date since the launch of Bitcoin Arguably the most important event in cryptocurrency history, since the launch of Bitcoin in 2009, is scheduled for 1st December 2020: launch of the Ethereum Beacon Chain. Earning 15% on a currency? The Beacon Chain sounds technical, but in practical terms, it means…
How to break up Google, without breaking up Alphabet
When the anti-trust case against Google was announced this week, the share price of its parent, Alphabet, went up. Suggesting that investors expect that either the case won’t stick, or that if it does, the remedy won’t be effective. And indeed, although the authorities have said that all possibilities are open, the remedies mentioned so…
Tobin’s Q, QE, Canal Barges, and Tech stocks
I’m not sure that equity market investors have fully taken on board the full implications of the policy change that Jerome Powell at the US Federal Reserve announced recently. A couple of canal barges, the narrow ones that go through the eighteenth century locks on Britain’s oldest canals, can help explain why. Canal Barges and…
Google Amazon Facebook: Ad-Boom Ends
Marketing is so central to economic life that if you suggested otherwise to anyone who’s ever run a business, they’d think you were having a bad hair day. But someone forgot to tell economists. I did two economics degrees and it was barely mentioned (OK, that was a fair few years ago). Even nowadays, the…
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