Drug Dealer Just Sentenced to 25 Years Hoped to Build a Better Bitcoin Miner
Do not be afraid, Wall Street.
While stock selloff was strong this week, the S&P 500 still rose 34% from its March 23 Nadir on Friday morning. In other words, US fiscal and monetary stimulus efforts continue to favor hedge fund managers, bankers, and corporate CEOs. While the shares had a record rally, 115,000 Americans died of a pandemic that forced 38 million others to apply for unemployment benefits.
Not only is this fundamentally unfair, it also shows how our current capital market system roughly mis-allocates resources. Failed companies with poor long-term prospects - see Hertz below - are saved, while small companies and start-ups working on solutions to our economic and health problems are missing out.
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It is time to talk about an alternative capital allocation mechanism that is not distorted by the stock market. It's time to revisit ICOs.
First some level settings: The ICO boom 2016-2017 was an abomination. The initial bubble in the coin offering was full of fraud, poorly defined business plans and hype, and reminded us of why there are security regulations: to hold fundraisers with asymmetrical information and to protect investors from their misuse.
But the token boom has triggered valuable thinking outside the box. We should access it now.
Related: Money rethought: The Fed, Hertz, a Bonkers stock market and why ICOs are still important
ICOs have been touted as a means for innovators to gain access to a broader pool of finance and for retail investors to generate the return otherwise reserved for privileged insiders. Startups, it was said, could now bypass the venture capital gatekeepers who decide who will be funded and who will receive the golden handout of an IPO, while token investors could brag about 100 times the payouts from VCs.
The interruption of Silicon Valley and Wall Street paved the way for an open market for ideas, proclaimed ICO fans. Yes, there would be losses, explosions and fraud. But in a roundabout way, it would ultimately allocate resources where the economy needs them most: among innovators.
These voices were calmed down by the bubble burst in 2018. However, the current state of the US financial markets requires us to re-examine some of their arguments - if not to revive the failed ICO model, as rethinking appropriate regulatory reforms that address Wall Street model problems.
After all, the transfer of wealth from ordinary Americans outside the system to a few privileged insiders has been many times greater than anything that has happened on the token issuance markets in the past two months.
For most of the 20th century, this system served as an engine for monetizing American ingenuity and financing economic development. But over time, mainly because of the excessive political influence that Wall Street has accumulated, it has built in some perverse incentives that hinder innovation.
Part of the problem stems from our political culture. The mainstream narrative, fed by media like CNBC and political leaders like Donald Trump obsessed with Dow Industry, positions the stock market as the bell tower of the American dream. With the economic and political elites investing in the market both economically and politically, it is no wonder that COVID-19's monetary and fiscal bailouts were designed to support it.
But it is also structural.
Think about how the quarterly “winning season” sets standards. The rewards for everyone involved - Wall Street earnings forecasters, ROI-owned fund managers and executives, and the bonuses of their middle management employees - depend on exceeding the number every three months.
This is not conducive to bold bets on innovative strategies that take much longer to get pregnant. Consider the problem of "stranded assets". Most pension funds continue to hold large stakes in carbon-intensive companies such as oil and gas producers, although countless analyzes indicate that they are worthless within the longer-term retirement horizon of most of their members. It is hard to get rid of the drug of quarterly returns.
(A tangential thought experiment: Quarterly corporate reports are a by-product of centralized, isolated accounting systems, in which accountants and accountants must reconcile records and take regular financial snapshots. What would happen to Wall Street's quarterly rhythms if these reports were out of date? What if everyone? Counterparties within a specific supply chain or economic ecosystem have instead contributed to a single distributed ledger with an openly available, but privacy-protected, real-time snapshot of all transactions that are currently not possible, but blockchains and knowledge-free developers put them in the realm of imagination. )
What works and what doesn't?
To think of an alternative, think back to 2018, when token prices fell, the ICO market dried up and "Crypto Winter" started. Back then, there was actually a reasonable debate about which token-based fundraising ideas should be kept and which should be dispersed.
We should revive it.
For example, are security token offerings that require approval applications, but can integrate smart contracts that traditional stocks and bonds can't, a better way for startups to fund themselves?
STOs were hot for a short time after the ICO and then lost momentum as it was clear that the legal, compliance and technical framework were still far away. However, there seems to be renewed interest as the Polymath and Securitize issuer platforms are both making technical advances. One can imagine that the recent collaboration between Galaxy and Bakkt will also result in security token services for institutional investors.
Can we also agree what tokens are of legal utility and what are the best practices for marketing them? If, as the "Hinman Doctrine" suggests, a token can no longer be secure if its network develops into a more decentralized state, what is the right framework for token issuers to remain compliant with the supply status through this development? How can they remain compliant from the start, but achieve the desired network effects of a token-controlled decentralized system?
And how do we make it easier for retail investors to buy and sell tokens legally and securely?
The rules for accredited investors are out of date, prefer the same privileged wealthy players and inappropriately restrict public access. Meanwhile, U.S. restrictions on a variety of crypto exchanges deny ordinary Americans access to a market in which ordinary people can participate.
Regulation is inevitable and necessary. However, it should by no means serve as protective armor for a capital market system that affects our economy's ability to optimize capital allocation.
At a time when the US economy needs innovative approaches to everything, we urgently need an innovative approach to funding innovation.
A phoenix rises and falls
The performance of the Hertz share is evidence of our broken capital allocation system. Car rental filed for bankruptcy on May 24 after suffering massive losses as a result of COVID-19 travel restrictions that brought industry fleets to a halt. In response, the price of Hertz stock, which had already lost more than 85% from a two-year high at the end of February, continued to fall, falling to $ 0.56 in the penny stock area. But then something strange happened: On Thursday last week, Hertz started a three-day tear to reach $ 5.54 on Monday, a 574% gain. An increase in trading activity through accounts listed in the Robinhood retail investor app appeared to be behind the profit. When the rest of the market took on the euphoria of a stimulating recovery, bankrupt car rental suddenly attracted an influx of speculative private investors.
For many of these newcomers, the story didn't end well. On Wednesday, the New York Stock Exchange notified the company of delisting. Hertz appeals against this decision, but the announcement dropped stocks back to earth. At the close on Thursday, the price was USD 2.06.
A common response to reservations would simply say that some greedy speculators have learned a lesson and we can forget about it. But the reality is more nuanced. This kind of speculative mania is inextricably linked to the general mood of the market, which is now consumed by a logic of "do not fight the Fed" in relation to monetary policy incentives. The Hertz mini bubble was developed (indirectly) by central bankers.
The global town hall
What's your story bitcoin So far, June has been a frustrating month for Bitcoin bulls. That's not just because a number of rallies offered false hope, each stalling near the psychologically important $ 10,000 level. This is also because market performance has again disrupted the effort to define a narrative for Bitcoin as an asset. After the sale of COVID-19 in early March, which questioned Bitcoin's idea of a safe haven, Bitcoin's relatively strong recovery in relation to Fiat money supply problems was explained. Bitcoin would then be described as an antidote to the "quantitative easing" of the fiat world, since the Federal Reserve's economic stimulus efforts produced the meme "Money Printer go Brrrrr" and Bitcoin's own monetary policy was "quantitatively tightened" by the halving. But on Thursday, a day after the Fed said it was "determined to use its full range of instruments to support the US economy," Bitcoin sold strongly again. After another frustrating rally to just over $ 9,900, it fell to an intraday low of $ 9,108.47. The key was that this coincided with a strong run-off in US stocks as concerns about new COVID-19 cases increased.
So is bitcoin just a "risk asset" that moves up and down with the general risk appetite of investors? It's unclear. A more consistent story would make it easier to make an investment case for Bitcoin. But maybe the lesson is that we shouldn't be looking for a narrative. Don't try to put it in a drawer. Bitcoin is easy.
We have set the table for you ... The failure of a significant price breakout is evidence enough that the long-awaited arrival of institutional investors in the crypto markets remains unfulfilled - regardless of the optimistic comments from Paul Tudor Jones or Bloomberg on Bitcoin. However, this has not prevented the major players in the crypto industry from continuing to build services for institutions when they finally appear. Three separate companies - Genesis (a sister company of CoinDesk), BitGo and Coinbase - founded Crypto Prime Brokerages, which use deep balance sheets and market connections to offer institutional investors secure liquidity and cost-efficient order routing. Meanwhile, Galaxy and Bakkt are working together to offer specialized crypto-custody and trading services to the same types of players. In a press release, the companies described it as a "white glove service", a kind of business that combines everything with a customized service for its customers. So come on, institutions, the price is right, the butlers are waiting for you. What do you need more Jump in. The water is fine.
Take a bike tour, let yourself be doxed. Those of us who are obsessed with privacy - as Money Reimagined does from time to time - can get frustrated by an apparent lack of public concern. That's why it's important to humanize it to show the real impact of data breaches on people's lives.
Enter Peter Weinberg. Thanks to a date error in a public service announcement by the police and some overzealous users of the geo-localized cycling app Strava, a Twitter mob mistakenly identified Weinberg as the trigger for a rather ugly incident. A viral video had previously shown another man on a bicycle who spoke to two young girls who posted flyers in support of George Floyd on a trail in Bethesda, Md., Postten. When police at the Maryland National Capital Park tweeted a request for information about the disobedient cyclists, it incorrectly used June 1 as the date of the incident. This tweet has been shared 55,000 times. The tweet was later corrected to June 2. However, this tweet was only shared 2,000 times. You can put together what happened. A Strava user must review the website's data, find a similarity, link it to Weinberg's associated social media profiles, put two and two to five together, and then get it out. Weinberg's Twitter and LinkedIn news feeds were swamped with comments accusing him of being a racist and a victim of child abuse. This is certainly not what he signed up for when he agreed to provide a friendly community of passengers with information about his trips and training program.
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