Is the crypto market history repeating itself?

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At the turn of the twentieth century, Jesse Livermore wrote a book titled “Reminiscences of a Stock Operator.” It’s about his life as a trader. One of the things he said back in 1900 was this:

 “When you read contemporary accounts of booms or panics the one thing that strikes you most forcibly is how little either stock speculation or stock speculators to-day differ from yesterday. The game does not change and neither does human nature.”

And he also wrote: “I used to think that people were more gullible in the l860’s and ’70’s than in the 1900’s. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.”

Doesn’t this sound familiar? It does to me. It’s pretty much what people are writing about the cryptocurrency market. It’s a bubble, it’s a Ponzi scheme, it’s another boom and bust.

But the most important point he makes is this: that the game doesn’t change and neither does human nature.

The derivatives market provides us with a good example of the sameness between what is happening in crypto now and markets of the past. A derivative is “an arrangement or product (such as a future, option, or warrant) whose value derives from and is dependent on the value of an underlying asset, such as a commodity, currency, or security.” Derivatives trading has been around since ancient Mesopotamia. For example, a tablet from 1809 BC documents a Mesopotamian merchant borrowing silver, promising to replay it with sesame seeds “according to the going rate” after six months.

The Briitish South Sea Company of 1711 led to a wave of new joint-stock companies with dubious business plans that created one of the first bubbles, alongside the Dutch tulip fever.

What emerged from this was the realisation that derivatives, and now the crypto market, need governance and regulation. Self-policing must be encouraged, and work in tandem with government-enforced rules. Bad actors must be kicked out of the market, just as they were in early days of the London Stock Exchange.

 

 

 

The human genome: a suitable case for the blockchain

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New blockchain projects are announced every day in the crypto press. They range from the practical to the fantastical, but one that caught my eye this morning, is the Shivom project that aims to “enable DNA data owners to collaborate with revolutionary change-makers in biotechnology, healthcare industry and government-ordained research institutes and contribute to an unprecedented era of medical marvels.”

What is the offer for you and me? Essentially, we can ‘donate’ our DNA for use by researchers, have a guarantee that there is securely controlled access to our DNA data and get rewarded for making the donation.

If you’ve been following the human genome story, you’ll know that since 2003, research into this element of the human makeup has been ever more intensely researched. It has already led to increased understanding of the way specific genes contribute to our health and to disease.

Shivom wants to build the world’s largest genomic hub. Participants will be rewarded for sharing their DNA with scientists and the sale of DNA testing kits to donors is another element of Shivom’s revenue stream. Cointelegraph writes: “Members of the Shivom ecosystem will have access to ‘an open marketplace for healthcare providers to add their apps and services, alongside genomic data analytics and personalised medicine.”

The most important thing with this project, in my view, is security. No DNA donor wants this most personal of data, the blueprint of who each individual is, getting into the hands of persons unknown. The Facebook-Cambridge Analytica case has already put the wind up a number of social media users, who feel betrayed that their personal data was essentially sold on without their agreement. To put it bluntly, it was stolen. But there is a significant difference between a Facebook profile and a person’s DNA.

According to Shivom, there is tight security around the DNA that will be stored on the blockchain. When data is sold to third parties, each of these must have a paired private key to access the data, with donors controlling access to their information even after it has been sold.

The scientific potential of this project is not to be underestimated. For example, the data could be used in clinical trials, or for more general drug research and development.

It is selling the OmiX token that will give holders access to the benefits of rewards for donating data, accessing genome database and acquiring DNA kits. It is working with several scientific bodies, the Indian state of Andhra Pradesh, which will give Shivom access to around 60 million people’s DNA, and India’s largest cancer care and research facility.

It’s another example of just how flexible and diverse the blockchain is; it isn’t just about cryptocurrency, it is potentially changing the direction of every aspect of the world we inhabit, and the future of humans in it.

 

 

 

Twitter, Facebook and Google under fire from Eurasia

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The social media giants’ blanket ban on crypto and blockchain related advertising hasn’t gone down well in Russia, China and South Korea. According to a report in Cointelegraph the major blockchain associations of these countries are planning to file a joint lawsuit against Google, Facebook, Twitter and Yandex, says the news agency TASS.

Facebook started the ball rolling with this back in January, although after the emergence of its role in the Cambridge Analytica scandal, Zuckerberg and Co. don’t have much moral high ground to stand on when it comes to “misleading or deceptive promotional practices,” which was its given reason for banning ICO adverts and anything related to crypto.

Google also announced a ban in March, which comes into effect in June, and Twitter confirmed its ban this week. Yet, Jack Dorsey has been talking up Bitcoin as the world’s future single currency. It’s undoubtedly confusing and smacks of something like hypocrisy.

The Eurasian organisations, which include the Russian Association of Cryptocurrency and Blockchain (RACIB), the Korea Venture Business Associations, and LCBT, a Chinese association of crypto investors, are not going to just sit back and let it happen though. The RACIB has already stated at a conference in Moscow, “the actions of these four tech companies have negatively affected the crypto market.”

Its President, said:

“We believe that this is a use of the monopoly position of these four companies, which have entered into a cartel agreement with each other in order to manipulate the market. The ban from these four organizations has led to a significant drop in the market in recent months.”

To fund the lawsuit, the organisations have created an umbrella Eurasian Association of Blockchain, and they have been asking anyone to “chip in” whatever they can.

Most significantly, Yury Pripachkin of RACIB, said the “claim will also be filed against the companies’ shareholders if they have crypto wallets.” The lawsuit will be filed in the USA, primarily because Pripachkin noted that it has states like Wyoming that are “loyal to cryptocurrency.”

This is a story to watch, because if the Eurasian Association of Blockchain is successful, and even if it isn’t, we will all have a clearer view of social media’s muddy waters around the cryptosphere.

 

 

There’s another way to look at Crypto Tokens

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Crypto tokens, and their ICOs, have taken a fair amount of bashing in the media over the past few months, but a paper published by two researchers from MIT and University of Toronto, argues that utility tokens might have a “valuable price discovery role,” according to Coindesk. It also suggests that tokens that act as ‘true commodities’, which the report authors attribute to Bitcoin and Ether, could offer the same service.

When you look at crypto tokens form this perspective, it looks like consumers could turn out to be the biggest winners, provided the tokens are correctly designed.

The paper, called, Initial Coin Offerings and the Value of Crypto Tokens by Christian Catalini (MIT) and Joshua S. Gans (University of Toronto) explores how entrepreneurs can use initial coin offerings — whereby they issue crypto tokens and commit to accept only those tokens as payment for future use of a digital platform — to fund venture start-up costs. It makes interesting reading for ICO entrepreneurs, because as the paper’s synopsis states, “the ICO mechanism allows entrepreneurs to generate buyer competition for the token, which, in turn, reveals consumer value without the entrepreneurs having to know, ex ante, consumer willingness to pay,” amongst other things.

In fact, it goes so far as to claim that in the future, tokens will “empower consumers to choose an optimal price for a service collectively.” It also looks at the benefits of tokens, including the aforementioned benefits of entrepreneurs being able to test the token fundraising model with consumers to see how it goes. This could greatly minimise risk for ICO startups and their founders.

As we have seen, regulatory bodies like the SEC have started to show more interest in ICOs and the remarkable sums of money they are capable of raising. However, Gans, told Coindesk: “”The problem the regulators have is they don’t know what the goals are. Instead the regulators are coming in saying ‘I don’t really know how the market should be working, but it smells terrible.'”

This new paper and its authors want to start a new conversation about “the right way to think about tokens so that societies could rationally consider the correct approach to managing them.”

It’s a more helpful and sane approach than the ‘just ban them’ rhetoric that is coming from some corporate entities and other organisations. It is not against regulation; that is necessary for transparency and consumer comfort. As the guys admit, they have no idea how the ‘token economy’ will play out, but they have laid the groundwork for more research and more balanced thinking. That’s a good start.