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Crypto has failed in all of its promises. and I hold a lot of crypto. Its going to end up just Binance and they'll only need 1 bullet to kill it.
And of course, many of the crypto businesses that have emerged over the past decade make no pretense of decentralization: centralized exchanges, wallet providers, and stablecoin issuers, for example, are all critical players in the crypto ecosystem. Many of these intermediaries are simply new (and often unregulated) equivalents of what already exists in traditional finance.
And so crypto users will always have to trust in people. These people are no less greedy or biased than anyone else—but they are largely unregulated (sometimes even unidentified), and in the absence of consumer protection regulation, the crypto industry’s claims of furthering financial inclusion take on a more troubling cast. The crypto ecosystem is certainly rife with hacks and scams that prey on users, but at a more fundamental level, the value of crypto assets is driven entirely by demand because there is no productive capacity behind them, and so founders and early investors can profit only if they can find new investors to sell to. If they rely on traditionally underserved populations to make up that market, then the most vulnerable members of society—in both developed and developing economies—could be left holding the bag.
Even if the market for crypto assets were somehow sustainable, there are many reasons to doubt that crypto could democratize finance. For example, crypto lending platforms demand significant amounts of crypto collateral before they grant loans, so they won’t help those who lack financial assets to begin with. And although stablecoins are often touted as a better payment mechanism for underserved populations, the World Economic Forum concluded that “stablecoins as currently deployed would not provide compelling new benefits for financial inclusion beyond those offered by preexisting options.”
To be clear, financial inclusion is a real and pressing problem, and there are also many other problems with traditional finance that need to be solved. Part of the reason crypto firms, venture capitalists, and lobbyists have been so successful in selling crypto is their very lucid and compelling indictment of our current financial system. The largest banks did perform terribly in the lead-up to 2008 (and some still do); lots of people are underserved by the current financial system; in the United States, in particular, payment processing is too slow.
However, these are by and large political rather than technological problems—and if the underlying political issues aren’t resolved, the new crypto intermediaries that emerge will simply perpetuate existing problems. Where technological upgrades to our current systems are indeed necessary, there are often simpler, centralized technological solutions already (as is the case with real-time payments). What is often lacking is the political will to implement those solutions.
“Blockchain turned out to be the most rapid recentralization of a decentralized technology that I’ve seen in my lifetime.” Although the Bitcoin white paper’s promise of decentralization did not deliver, the underlying complexity of the technology that tried to do so remains—which is also true of crypto writ large.
Over the spring and summer of 2022, we saw a number of other purportedly decentralized crypto players stumble and fail—and as they did so, it became abundantly clear that there were intermediaries calling the shots. A stablecoin is a type of crypto asset designed to maintain a stable value, and as the Terra stablecoin lost its peg to the dollar in May 2022, holders looked to founder Do Kwon’s Twitter feed for guidance. Before Terra failed, it received an attempted rescue package of crypto loans from a nonprofit established by Kwon. The loaned crypto was allegedly deployed to allow some of Terra’s largest holders—commonly referred to as “whales”—to redeem their Terra stablecoins at close to par value, while smaller investors lost nearly everything. In the crypto market turmoil that followed the failure of Terra, multiple episodes showed the power of founders and whales in platforms ostensibly administered by decentralized autonomous organizations. Many crypto proponents were quick to criticize the affected platforms, saying that they were never really decentralized in the first place and that only the “truly decentralized” deserved to survive. All of crypto, however, is centralized to varying degrees.
Voting rights in decentralized autonomous organizations and wealth tend toward concentration in crypto even more than in the traditional financial system. In addition, decentralized blockchain technology cannot handle large volumes of transactions very well and does not accommodate transaction reversal, so it seems inevitable that intermediaries will emerge to streamline unwieldy decentralized services for users (especially because there are profits to be made by doing so). Without mincing words, economists at the Bank for International Settlements concluded that there is a “decentralization illusion” that is “due to the inescapable need for centralized governance and the tendency of blockchain consensus mechanisms to concentrate power.”
Cryptocurrencies can’t deliver their claimed benefits, and instead pose grave risks
In the 14 years since Bitcoin emerged, proponents have made promises that crypto will revolutionize money, or payments, or finance—or all of the above. These promises remain unfulfilled and look increasingly unfulfillable—yet many policymakers have accepted them at face value, supporting crypto experimentation as a necessary step toward some vague innovative future. If this experimentation were harmless, policymakers could let it be, but the ills of crypto are significant. Given these negative impacts, policymakers must train a more critical eye both on crypto assets themselves and on their underlying databases (known as blockchains) to determine whether crypto can ever deliver on its promises. If it cannot, or is even unlikely to, deliver, there must be strong regulation to rein in the negative consequences of crypto experimentation.
Among its negative impacts, the rise of crypto has spurred ransomware attacks and consumed excessive energy. Bitcoin’s blockchain relies on a proof-of-work validation mechanism that uses about as much energy as Belgium or the Philippines; the Ethereum blockchain keeps promising to shift from proof of work to the more energy-efficient proof of stake, but this never seems to happen.
A crypto-based financial system would perpetuate, and even magnify, many of the problems of traditional finance. For example, the amount of leverage in the financial system could be multiplied through a potentially unlimited supply of tokens and coins serving as collateral for loans; rigid self-executing smart contracts could deprive the system of the flexibility and discretion so necessary in unexpected and potentially dire situations. More generally, the crypto ecosystem is extremely complex, and that complexity is likely to be a destabilizing force (both because complexity makes it hard to assess risks even when there’s plenty of data and because the more complex a system is, the more susceptible it is to “normal accidents,” when a seemingly minor trigger cascades into significant problems). So any crypto-based financial system would likely be subject to regular destabilizing booms and busts.
Crypto’s complexity arises from attempts at decentralization—by distributing power and governance in the system, there is theoretically no need for trusted intermediaries like financial institutions. That was the premise of the initial Bitcoin white paper, which offered a cryptographic solution intended to allow payments to be sent without involving any financial institution or other trusted intermediary. However, Bitcoin became centralized very quickly and now depends on a small group of software developers and mining pools to function. As internet pioneer and publisher Tim O’Reilly observed
https://www.imf.org/en/Publications/fandd/issues/2022/09/Point-of-View-the-superficial-allure-of-crypto-Hilary-Allen
Pipenburg,sorry .
And Kitco News.
Good weekend all .
Inflation is in double digits. Mathew Pitenburg.
Its well worth a read ,for the real truth.
Currently up .78% at $1677.34
What has been interesting is that the pull back on some gold miners has been on relatively lowish volumes. We shall see if USA market has any more paper gold to sell as they probably ran out of the real thing ages ago.
Inflation-
Then of course, rates increases will do the same but normally require more time especially has the fed along with all other world economies have been wrong.
Steve, non capisco….you say” at some point this will top and turn”?? Do you mean interest rates or inflation or Cey price in which case a new all time high and then turn? Sorry to be obtuse!
Steve, I suspect a battle on 84.7 line. I am not sure it will go back down as low as 75p as it will need some high sell volumes to do it. Blackrock or someone like them would have sell a few million.
It's playing out similar to last months CPI- the FED hikes range is 50, 75.100 next week- of course 75bps is now most widely favoured- traders make around this move. The big drop overall after the news showed this. Prior to this, as gasoline had dropped many thought inflation topped, and other things increased greater. I expect 75 and again the same to happen next month with a slight recovery back so long as there is no negative hints, and then a rise break through next month figures- at some point this will top and turn, I said that this would happen this year and still expect this to be the case. Should oil keep down there will be a follow through in all the other prices heavily reliant upon it.
86.2, 84.7 and 82.4
Major stock markets in Europe declined in premarket trading on Friday as investors remained worried about high inflation and central banks hiking interest rates in response, as well as the situation in Ukraine. On the data front, market watchers are awaiting final inflation figures for August from the Eurozone and the UK retail sales report.
The FTSE 100 fell 0.53% at 6:54 am CET, the DAX slid 0.82% and the CAC 40 dropped 0.84% at the same time.
The euro lost 0.05% against the dollar, going for 0.99958 at 7:00 am CET and the pound was down 0.04% compared to the greenback, selling for 1.14633 at the same time.
Baha Breaking News (BBN) / NP
Happy Friday y’al
Enjoy your weekend.
to deal with the Bonanza grade ore
therefore it doesn't look like we'll see any of it (coarse gold) attempted to be processed until early 2023 when the supplemental system is on site & tested for readiness
https://www.maelgwynafrica.com/aachen-oxidation-technology/
Hammash Misr For Gold Mines
is Hiring:
Senior Mining Engineer
For our Site base At Marsa Allam
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Underground* supervisors certificate of competency, or equivalent
Professional and very smart
Accommodation, meals and transportation allowances are provided
kindly share your CV at
https://www.linkedin.com/posts/rana-abu-hashem-026aa2107_hammashmisr-hiringimmediately-hiring-activity-6976177781613170689-3T0_?
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Also saw a post yesterday about Capital Drilling celebrating a year free of loss time/injury at the El Sid site (Nuinsco's Egypt project) - in the past El Sid was supposedly just going to process tailings - therefore something more must be happening there me thinks
It has just gone along with gold support line.
If it loses 88.8p we could end up on 86p.
some other news ... interesting
Deposits at U.S. banks fell by a record $370 billion in the second quarter, the first decline since 2018.
Deposits fell to $19.563 trillion as of June 30, down from $19.932 trillion in March, according to the Federal Deposit Insurance Corp.
The outflow in the quarter isn’t a problem for banks, which are sitting on more deposits than they want. Deposits in the banking system usually stay relatively stable, but swelled by some $5 trillion in the past two years due to pandemic stimulus. Now, a series of Federal Reserve rate increases is taking some of that money out of the system, in part by decreasing demand for loans and increasing demand for government bonds.
2013
'15
'20
-0.50
-0.25
0
0.25
0.50
0.75
1.00
1.25
$1.50
trillion
When the Fed started increasing its benchmark rate this year, banks expected—and wanted—some customers to move their money to places offering higher interest payments, such as government bonds.
As recently as April, many analysts scoffed at the idea bank deposits could decline this year. But the Fed’s pace of rate increases has been faster than expected, and the effect on deposits is more pronounced.
the gnome
Major stock indexes in Europe traded mostly higher on Thursday, as traders awaited the latest report on the Eurozone's trade balance. The positive sentiment was seemingly in line with gains recorded both in the United States and Asian markets.
The DAX rose at 0.17% at 6:52 am CET, while the CAC 40 was flat at the same time. FTSE 100 increased 0.49% simultaneously.
The euro traded 0.13% lower against the dollar, selling for 0.99680 at 7:06 am CET, while the pound lost 0.17% against the greenback, to sell for 1.15204 a minute later.
Baha Breaking News (BBN) / AY
Solar power plant commissioning - Q3 2022 (On-going)
· Capital structure review - Q3 2022
· Underground expansion study - Q3 2022
Correct Spoonington- supply side
Saw an interesting presentation the other day (will post the link if I can find it again) suggesting that this time inflation is caused more by supply side constraints rather than demand side influences.
It made a lot of sense to me & if correct means the central banks are a bit hamstrung as the interest rate hammer is not effective against supply side bottlenecks.
The likely result of this is that the central banks will continue to bring down the hammer which will result in a bit more pain which we will only get out of when the supply chains are fixed - the big question to me is just how bad are our supply chain issues, I have come across many diametrically opposed opinions on this all of which have some merit so I guess the answer is no-one has a clue :)
No worries, I thought it was an interesting link to share.
Apologies Jimbo_Jet I missed that you had already supplied the link.