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Bitcoin Price Movements

Source: ZeroHedge, Feb 2018

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Most CryptoCurrencies Will Drop to Zero

Source: Bloomberg, Feb 2018

Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they’re replaced by a small set of future competitors, Goldman’s Steve Strongin said in a report dated Feb. 5.

“The high correlation between the different cryptocurrencies worries me,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.

he dismissed the idea of a first-mover advantage — noting that few of Internet bubble’s high fliers survived after the late 1990s.

Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors,” Strongin said. “At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”

BTC & ETH Highly Centralized

Source: MIT Technology Review, Jan 2018

a two-year-long study focused on Bitcoin and Ethereum, the world’s most popular cryptocurrency networks.

the process of verifying transactions and securing a blockchain ledger against attack, called mining, is not actually that decentralized in either system. Bitcoin and Ethereum are open blockchain systems, meaning that in principle anyone can be a miner (see “What Bitcoin Is, and Why It Matters”). But organizations have formed to pool mining resources.

  • The researchers found that the top four Bitcoin-mining operations had more than 53 percent of the system’s average mining capacity, measured on a weekly basis.
  • Mining for Ethereum was even more consolidated: three miners accounted for 61 percent of the system’s average weekly capacity.

They also found that 56 percent of Bitcoin’s “nodes,” the computers around the world running its software (not all of them engage in mining), are located in data centers, versus 28 percent for Ethereum. That might indicate that Bitcoin is more corporatized, Gün Sirer says. Overall, the group concluded that neither network “has strictly better properties than the other.”

Part of the vision sold by the technology’s biggest promoters is that it can help solve problems of financial inequality created in part by traditional, centralized institutions. If digital currency allows wealth and power to pool in the hands of a few, that’s not so revolutionary.

$10 Trillion Estimate for CryptoCurrency

Source: CNBC, Jan 2018

Cryptocurrencies and the blockchain technology underlying them could become a $10 trillion market in 15 years, RBC Capital Markets analyst Mitch Steves says.

That’s more than 13 times larger than the roughly $730 billion value of cryptocurrencies today, according to CoinMarketCap.

“By utilizing decentralized computing and opensource software, we see a multi-trillion dollar market emerging,” Steves, who also covers semiconductor stocks for RBC, said in a Wednesday report.

He told CNBC in a phone interview that his $10 trillion estimate comes from taking one-third of the roughly $30 trillion in assets held in offshore funds and gold, as investors embrace digital currencies as a new store of value.

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With its 3-dimensional Decentralization, the IdeaGraph surpasses Blockchain

Vitalik Buterin (co-founder of Ethereum) writes that there are 3 axes (dimensions) of decentralization.  

  1. Architectural (de)centralization — how many physical computers is a system made up of? How many of those computers can it tolerate breaking down at any single time?
  2. Political (de)centralization — how many individuals or organizations ultimately control the computers that the system is made up of?
  3. Logical (de)centralization— does the interface and data structures that the system presents and maintains look more like a single monolithic object, or an amorphous swarm? One simple heuristic is: if you cut the system in half, including both providers and users, will both halves continue to fully operate as independent units?

Even if an IdeaGraph is split, the post-split portions can continue to function as logically independent IdeaGraphs, thus resulting logically decentralization.   Using Buterin’s 3-axes (dimensions) of decentralization, the IdeaGraph surpasses Blockchain.  

 

Productivity Drives Growth

The press release for Robert Solow’s 1987 Nobel Prize noted:

technological development will be the motor for economic growth in the long run. In Solow’s model, if continuous technological progress can be assumed, growth in real incomes will be exclusively determined by technological progress.

Productivity isn’t everything, but, in the long run, it is almost everythingA country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”
— Paul Krugman, Professor of Economics and International Affairs Emeritus at Princeton University