The Weekend Read: Mar 13

1. Bitcoin’s positive news cycle

It was party time for bitcoin this week. The company formerly known as 21e6 announced a $116m funding round, topping the recent bitcoin record of $75 from Coinbase. The same day, DA Holdings announced that former JP Morgan global head of commodities Blythe Masters will be their CEO. And later Goldman Sachs released a report explaining how cryptocurrencies could be part of a “megatrend” that fundamentally changes the global payments industry. All of this feel good news helped BTC test the important 300/310 resistance level.

2. (de) Central Banking (cont.)

A “sources say” report from Reuters dishes on a proposal from IBM to build out infrastructure for FedCoin-like digital currency:

Unlike bitcoin, where the network is decentralized and there is no overseer, the proposed digital currency system would be controlled by central banks, the source said. “These coins will be part of the money supply,” the source said. “It’s the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain.”

3. Three Reasons Why Bitcoin Won’t Be the New Internet

In a similar vein to the above central bank story, Sidney Zhang does an excellent job of arguing what blockchains could do, or perhaps better said what they shouldn’t do. These points echo quite a few of the thoughts often put forward by Richard Brown. They also capture the spirit of the constant internal debate at R3 about the role and value of trust and the costs associated with the trust-minimization inherent in bitcoin:

The benefit of blockchain technologies is not to replace the central parties. Instead, it should be to make an industry far more competitive. [snip] The future is not going to be one without centralized, trusted parties. To remove trust is expensive. It requires a lot of costly trade-offs. Trust is also something that we can establish in the real world. Unlike the world of drug dealers.

bitcoin spectrum


4. and finally…

A somewhat oddball article from Fusion on the “young stars of bitcoin.” By far the best part (even better than the inexplicable body painting) is the mention of Vitalik Buterin’s t shirt, which reads: “You read my t-shirt. That’s enough social interaction for one day.” Classic. He even tries to decentralize his human interactions…



The Weekend Read: Jan 23

1. Quick recap of The North American Bitcoin Conference Miami
I had the pleasure to discuss all things decentralized in the lovely confines of Miami Beach this past weekend. The conference had a bit of everything: a rare attendee dressed in full suit and tie (but accented with multiple face tattoos), a Robot-Bitcoin Jesus sighting and a beleaguered CEO rolling with a personal security contingent. The rhetoric against fractional reserve banking got a bit tiring to listen to after a while, but there were lots of interesting people to meet and a few great presentations. Below are three to highlight:


2. Susan Athey hosts forum on bitcoin at Davos

The deans and doyennes of the “thought leader” set will get some education today on bitcoin from Prof. Athey. She gives a preview of the session with this post: 5 ways digital currencies will change the world


3. Article speed round: It’s all about the blockchain, the blockchain, the blockchain (no bitcoin)

So the clock has just begun on Bitcoin’s acceptance more broadly. Crash or no crash, we should expect a significant increase in the level of institutional adoption this year. Specifically, a large number of companies will put together groups focused on what Bitcoin means to them — and as early as next year we’ll start to hear people ask “What’s your Bitcoin strategy?” in much the same way people asked “What’s your social media strategy?”



4. The Economist explains: How bitcoin mining works

Clever though it is, the system has weaknesses. One is rapid consolidation…As the bitcoin price continues to fall, consolidation could become more of a problem: some miners are giving up because the rewards of mining no longer cover the costs. Some worry that mining will become concentrated in a few countries where electricity is cheap, such as China, allowing a hostile government to seize control of bitcoin. Others predict that mining will end up as a monopoly—the exact opposite of the decentralised system that Mr Nakamoto set out to create.


5. R3 Advisor Tim Swanson delves into bitcoin transaction data

Tim has posted two fascinating articles. The most recent is a deep dive into the supposed growth of bitcoin transaction volume. And this shorter post on payment processors lays out very clearly the need for wider bitcoin adoption to relieve price pressure:

The current supply pressure on a daily basis: aside from a couple firms such as BitFury (which according to some sources has around a ~$180 total cost of production), miners as a whole end up having to sell the majority of coins each day (~2,000 – 3,000+ coins) and as a whole, merchants process about 5,000 – 6,000 coins a day.  So this means 10,000 coins x 365 days or 3,650,000 coins.  Thus, to maintain a $300 price with that sell pressure the market needs to have ~$1 billion a year in capital come into this space.  And to maintain a $1,200 price with the same merchant/miner behavior the market would need to have ~$4.4 billion.


6. Bill Gates on connecting the world

Q: Are you excited about the potential of Bitcoin in systems like these as a way to keep fees low and have the system work robustly in the global sense?

A: There’s a lot that Bitcoin or Ripple and variants can do to make moving money between countries easier and getting fees down pretty dramatically. But Bitcoin won’t be the dominant system. When you talk about a domestic economy, [you must have] the idea of attributed transactions, where if you sent it to the wrong person you can actually get the transaction reversed. [And a traditional system] doesn’t have this huge fluctuation where the value of your account is going up and down by a factor of two. We need things that draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.


7. White Paper of the Week

Codius from Ripple Labs. Smart Oracles: A Simple, Powerful Approach to Smart Contracts

Fairly accessible white paper that positions Codius as the McDLT of smart contract proposals: trying to keep the on-blockchain ON and the off-blockchain OFF.


…and finally, for something completely different…



An amazing profile on the true honky-tonk hustler who has been keeping the beat and the peace for Willie Nelson for decades:

As Willie explained to an associate who’d wondered why he kept an a—– like Paul on the payroll, especially when he couldn’t keep time as a drummer: “He’s saved my life.” More than once. Besides, as the singer Delbert McClinton has observed, “Everyone in this business needs an a——.”