Category Archives: bc articles

How Futures Trading Changed Bitcoin Prices – published by Federal Reserve Bank of San Francisco

Researchers Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak, and Patrick Shultz posted on Federal Reserve Bank of San Francisco an economic letter relating Bitcoin price peak and collapse at the time of CME futures debut.

As any attempt to explain price movements, this implies in a very selective analysis of historical data and forces in play.  And nailing a single influence from having more available short selling instrument is likely oversimplistic.  However, article does point to a general effect from trading behaviour – as could be ‘buy the rumors sells the news’ – that may give an insight for next similar events.

“…The peak price coincided with the introduction of bitcoin futures trading on the Chicago Mercantile Exchange. The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. Rather, it is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset…”Continue reading→

Collaborative AI ?

May 2nd, 2019.  Five hundred years ago today, Leonardo da Vinci died.  Some say he was the last man to master frontier knowledge in all scientific fields. 

The AI arms race appears destined to follow an unavoidable concentration pattern.  Almost as the natural consequence of the fact that corporations leading the AI development embed the winner-takes-all economy we live in.  It is hard to avoid top companies hoarding AI scientists.  Not to mention the prize at the end of the rainbow – singularity – that would potentially be the ultimate step when the first in closes the gates for others.  One AI to rule them all, so goes the omen.

For the last few hundred years, scientific progress has been a key drive for productivity and economic value creation.  And this very science – built by Newton, Bayes, Godel, Turing, Bohr, to name a few – is the giant shoulder AI stands on.  If we look back, despite the glorious contribution those geniuses individually made, the nature of the scientific progress in unquestionable a collaborative one.

Not that all science is to be replaced by AI, of course.  For the time being, at least.  Some science is, though.  Additionally, a big part of scientific production now relies back on AI.  It is hard to imagine theoretical physics, chemistry, or genetics nowadays without AI.   This feedback loop would place scientific production into an analogous winner takes all path.  Competition, not collaboration, would be the way to go.

Now: is it so?  Let me dare to propose not:Continue reading→

Is Bitcoin halal or haram?

Working paper by Mr. Muhammad Abu Bakar – Mufti certified by the Jamia Darul-Uloom in Karachi, Pakistan under the supervision of Respected Sheikh Mufti Taqi Usmani – proposes s critic cut on Shariah status of bitcoin.

Interesting paper including exposure on history of money. development of Bitcoin, blockchain, Islamic property definitions and practices, and Bictoin in light of previous Fatwas.

Skipping to conclusions of the working paper:

  • Blockchain is evolving, so should Shariah opinions as scholars do their own research
  • Blockchain may act as a ledger recording value and cash transfers.
  • Depending of jurisdiction and legal status, Bitcoin could be seen as permissible.
  • Store of value, welath and data integrity arguably permissible.  Buying  cryptocurrency for investment purposes is not advisable.
  • Beware of ponzi schemes.

‘An Equilibrium Valuation of Bitcoin and Decentralized Network Assets’ by Emiliano S. Pagnotta and Andrea Buraschi

An Equilibrium Valuation of Bitcoin and Decentralized Network Assets

March 21, 2018
Emiliano S. Pagnotta∗and Andrea Buraschi

Great analysis of Bitcoin especially attempted modeling price impacts of censorship resistance, mining costs, network sizes, reward and incentive structure.  Their approach of price equilibrium and the decentralized network economy should be considered in future price models.

“We address the valuation of bitcoins and other blockchain tokens in a new type of production economy: a decentralized financial network (DN). An identifying property of these assets is that contributors to the DN trust (miners) receive units of the same asset used by consumers of DN services. Therefore, the overall production (hashrate) and the bitcoin price are jointly determined. We characterize the demand for bitcoins and the supply of hashrate and show that the equilibrium price is obtained by solving a fixed-point  problem and study its determinants.  Price-hashrate “spirals” amplify demand and supply shocks…”

Read full paper

IMF’s Lagarde advocacy for a level playing field

IMF’s Managing Director Christine Lagarde post “An Even-handed Approach to Crypto-Assets” brings an optimistic view of the potential good side of crypto.  This balances against previous darker post “Addressing the Dark Side of the Crypto World“.

Comparing posts we can see the concerns of crypto usage for money laundering, terrorism funding and criminal activities and how it relates to some key features of cryptocurrencies: decentralization, data integrity, transaction security, digital democratic access.

In broad, Lagarde highlights the role a broad collaboration environment (eg IMF according to her) can help development:

“Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto-assets that survive could have a significant impact on how we save, invest and pay our bills. That is why policymakers should keep an open mind and work toward ­­an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit….Continue reading→

Bitcoin Standard?

Frances Coppola provided an extensive, harsh, critical review of the hyped “The Bitcoin Standard: The Decentralized Alternative to Central Banking” by Saifedean Ammous.

Not that maximalists would change their mind after appointed issues of the book.  All historical perspective is always selective, of course.  And asserting causation to millenia old economic developments might be an useful intellectual tool.

Moreover, Ammous’s book gives us an interesting account of current Bitcoin economic environment, and such is granted by Coppola.

But Coppola’s critique show how one must be careful before any attempt to decree a necessary outcome from historical fact-picking tale.

Civil rights to autonomous artificial systems

In an open letter to the European Commission a group of ‘Political Leaders, AI/robotics researchers and industry leaders, Physical and Mental Health specialists, Law and Ethics experts gathered to’ voice their concern about negative consequences of legal status to robots.

This echoes the concept that granted corporations personhood legal status, and the long debate over its convenience, how this notion spread and became usual in modern law.

The paragraph 59 f  from report cited in the letter is by its turn based on the recommendations to the Commission on Civil Law Rules on Robotics that can give a thorough view on the grounds of what moved the Committee on Legal Affairs to propose it.

Coinbase fixes smart contract vulnerability

Coinbase solved a glitch that if exploited could allow undue balance credit of ETH accounts.

Researchers at VI Company found the security flaw and communicated with Coinbase.

As reported, before fixing the problem was that “By using a smart contract to distribute ether over a set of wallets you can manipulate the account balance of your Coinbase account. If 1 of the internal transactions in the smart contract fails all transactions before that will be reversed. But on Coinbase these transactions will not be reversed, meaning someone could add as much ether to their balance as they want. When you look up the Coinbase wallet address after this transaction you will see that it is empty, but checking your Coinbase wallet will show your funds.“

Metcalfe’s & Bitcoin Prices – by Jamil Civitarese

“Does Metcalfe’s Law Explain Bitcoin Prices? A Time Series
Analysis – Jamil Civitarese∗

”  Metcalfe’s Law argues the value of a network is proportional to the square of its users. Bitcoin and other cryptocurrencies can be modeled as such: if Metcalfe’s Law is true, then it is possible to forecast prices using the size of the network. I test this assertion by a cointegration test between price and an adjusted number of wallets’ connections. It is stated that the series do not cointegrate, rejecting the Metcalfe’s Law. (…)Continue reading→

Not-for-profit Projects Hub

Using Ethereum smart contracts to leverage community service projects

The problem

Working on local projects for community and nonprofit organizations one usually tumbles in an chicken-and-egg situation.  Often enough community support seems at reach and probes show that community members would back the project financially if only it was effectively happening.  Despite governmental incentives is not unusual, the initial setup of an organization present costs.  From registration to basic structure some projects rely on volunteers who can’t financially fund projects themselves.  And raising funds in a start-up nonprofit is particularly tricky since unviable projects not only fail to deliver service but also would not be able to refund early donors.  Moreover, projects that are not yet in production usually don’t have legal determination status, jeopardizing tax benefits to donors.

Continue reading→

Bitcoin Price Manipulation in Mt. Gox

When we think MT. Gox is buried in the past, it comes back haunting us.  At least we can always learn from it’s debacle.

In this paper researchers from Tela Aviv University and University of Tulsa conclude that the suspicious trading activity caused the unprecedented spike in the USD-BTC exchange rate in late 2013.Continue reading→

Leveraging Blockchain For The Real Estate Industry – by Jeannette Lim and Melanie Lim

“Establishing A Chain Of Title: Leveraging Blockchain For The Real Estate Industry

by Jeannette Lim and Melanie Lim

(…). Uncertainty in property ownership globally may be responsible for the loss of up to US$9.3 trillion in value. (…) Land registries powered by blockchain technology may possibly bring this lost value into the mainstream economy(…).

Furthermore, (…) the application of “smart contract” technology on a blockchain platform to automatically transfer land ownership upon certain conditions being met, could substantially enhance its real estate sector. (…)Continue reading→

How to claim your DNS domain on ENS – by Nick Johnson

“How to claim your DNS domain on ENS – by Nick Johnson

 […] Forthcoming support for claiming DNS domains on the Ethereum Name Service (ENS). This will make it possible to import nearly any internet domain name into ENS, and interact with it just as you would a .eth domain. Soon, you will be able to tell people “you can pay me ether at myname.com”.

Right now, this is only deployed for one internet TLD — .xyz — on the Ethereum Ropsten test network. Support on the Ethereum mainnet, and on more internet TLDs, is coming soon. Once everything is in place, we expect to be able to support the vast majority of internet TLDs — about 96% of them.

Since this is a brand new feature, the process right now is manual and a bit involved. Claiming your ENS domain is a four step process:

  1. Set up DNSSEC signing for your domain.
  2. Add a TXT record specifying your Ethereum address to your DNS domain.
  3. Prove the contents of this TXT record to the DNSSEC oracle.
  4. Call the DNS Registrar for .xyz to claim ownership of your domain in ENS.

We’ll walk through these in order….

read full post

Inter-chain mediators – by Jeremy Epstein

A new layer of blockchain tech is emerging: inter-chain mediators

In the beginning was Bitcoin, the only blockchain we thought we’d need. Then Ethereum came along and launched us into a multi-blockchain world. Since then we’ve seen many new blockchains emerge with their various different protocols, financed by their various different tokens.

One of the the key doctrines of this era was Joel Monegro’s seminal “fat protocols” post, in which he explained that value creation in a protocol world happens in a very different way than in the Internet world. Specifically, in the Internet world, the protocols (think TCP/IP and HTTP) were conduits and not holders of value; it was the applications built on top of them that held the value. In the blockchain world, he argued, it’s the protocols that hold the value.Continue reading→

Is Quantum Computing an Existential Threat to Blockchain Technology? – By Nathana Sharma 

By 
Amid steep gains in value and wild headlines, it’s easy to forget cryptocurrencies and blockchain aren’t yet mainstream. Even so, fans of the technology believe blockchain has too much potential not to have a major sustained impact in the future.

But as is usually the case when pondering what’s ahead, nothing is certain.

When considering existential threats to blockchain and cryptocurrencies, people generally focus on increased regulation. And this makes sense. In the medium term, greater regulation may stand in the way of cryptocurrencies and wider mainstream adoption. However, there might be a bigger threat further out on the horizon.

Much of blockchain’s allure arises from its security benefits. The tech allows a ledger of transactions to be distributed between a large network of computers. No single user can break into and change the ledger. This makes it both public and secure.

Continue reading→