Tag: blockchain technology

Chicago: The Next FinTech Cryptocurrency Powerhouse

Rafael Augusto | @ancient_scrolls

During a FinTech meeting held in Chicago on March 18th, Mayor Ralph Emmanuel made it very clear that he wants his “Windy City” to pioneer the ongoing worldwide crypto revolution.

Continue reading “Chicago: The Next FinTech Cryptocurrency Powerhouse”

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How the United States Can Increase Market Freedom

By Max Bibeau | United States

The American Dream, as outlined by the Founding Fathers in the Declaration of Independence, has long been the shining beacon of hope for citizens and foreigners alike, offering a chance to be successful on an even playing field. Unfortunately, that beacon has been dimming in recent decades, leading the World Economic Forum to bluntly mourn that the American Dream is broken.

As class mobility continues to fall and the economic gap between rich and poor only seems to expand, many Americans are starting to give up hope in American capitalism. This has led to mass calls for change among the general populace, with everyone desperately looking for solutions. Some, such as Vermont Senator and 2016 presidential candidate Bernie Sanders, propose that it is time to look towards “democratic socialism” in the United States. Others, such as Speaker of the House Paul Ryan, seem to be denying the problem completely, still claiming that “the circumstances of your birth do not determine the outcome of your life.”

As much as we might wish for Paul Ryan’s statement to be true, the facts stand against him. Since we are in grave need of a solution, and one does not appear to be coming anytime soon, we must ask how America can improve competition in modern capitalism. Luckily, it is not too late for capitalism to be saved and for America to recover, but the country needs to act fast. While there are many potential solutions, there are three primary ones which will specifically target major problems in the US economy. In order to address current problems in the economy, the United States should target inefficiencies in regulatory organizations like the FDA, foster blockchain development around the country, and crack down on state preference policies.

FDA Inefficiency

The problem of skyrocketing drug prices was first brought to the forefront of American politics in 2015 when the infamous Martin Shkreli increased prices on a lifesaving drug by over 4000%, from $18 a pill to $750 a pill, making the cost of treatment virtually impossible to cover. Unfortunately, this is not an isolated case, as the Center for American Progress describes how American pharmaceutical prices have “continued to skyrocket” in recent years, with manufacturers of Medicare-covered drugs raising prices 12% per year on average. Another study shockingly found that over the past 14 months, 20 different prescription drugs had their prices increased by 200% or more.

Price increases, especially of these unprecedented proportions, are a clear indicator of a lack of competition within the pharmaceutical industry, as confirmed by a Government Accountability Office study. To counteract price increases, the United States must directly tackle the sources of the problem: inefficiency and over-regulation, which leads to monopolistic markets. All of the prescription drugs that saw drastic price increases have one thing in common: they have little to no competition making the same substances. This is because of how unreasonably difficult and expensive it is to get a new drug approved for manufacturing by the FDA.

The Journal of Health quantifies just how expensive the process can be, totaling it at over $1.395 billion in out-of-pocket costs. That number skyrockets up to $2.870 billion when post-approval research and development costs are factored in. These astronomically high development costs make it extremely difficult for anybody looking to create a new drug to even get their business off the ground. High startup costs are one of the top reasons that new companies and drugs never find success, as it’s virtually impossible for new companies, even with perfect scientific viability, to raise nearly $3 billion in investments just to allow their drug to be widely sold.

Because of complex regulations and red tape encircling the pharmaceutical industry, it’s no surprise that the market is nearly devoid of competition. By removing excessive regulation on the industry and streamlining the FDA, new drugs could be approved faster and cheaper. This would dramatically lower startup costs for new businesses trying to develop drugs and would promote increased competition throughout the entire industry, making life-saving substances much more affordable.

Blockchain Growth and Development

The blockchain, developed and made popular by cryptocurrencies like Bitcoin, is currently a buzzword in American Congress. Politicians are scrambling to implement the budding technology into their cities and states, and have even formed the Congressional Blockchain Caucus to craft policy surrounding it. Luckily, the potential benefits of the blockchain, especially when it comes to increasing competition, cannot be overstated. To quickly summarize a complex technology, the blockchain is a completely digital, decentralized ledger of information, constantly being confirmed and updated by computers around the world. This has plenty of business applications.

Specifically, since the National Bureau of Economic Research contends that the blockchain removes almost all need for trust in a transaction, small businesses will no longer have to compete with larger businesses when it comes to reputability. Trust, especially when it comes to internet retail, is one of the largest problems that businesses face, preventing up to 30% of internet users from utilizing online retail at all.

However, as the blockchain expands and becomes more widely used, retailers, especially small, newer businesses, will be granted the same level of trust as established companies. The Pew Research Center has found that many consumers soon “expect to see improved technology emerge that will allow people to have confidence in the organizations and individuals with whom they interact online,” specifically through the blockchain. Once the blockchain and cryptocurrency have become mainstream, the issue of trust will be eliminated from the equation, promoting widespread competition in online retail by allowing small retailers with no reputation to provide legitimate competition to retail giants.

While many are afraid to buy from anywhere other than Amazon due to the threat of scams, the blockchain will almost completely mitigate that problem, giving startups a chance, and opening up the online retail industry to everyone. To promote this, the government should focus on effectively regulating and investing in blockchain companies. These regulations would allow them to thrive and innovate in the near future, while still protecting the safety of consumers.

Ending State Preference Policies

While it is commonly agreed upon by economists that international protectionism damages all parties involved, what is criminally under-discussed when it comes to increasing domestic competition is state-by-state protectionism, more commonly known as preference policies. These policies are outlined by the Mercatus Center, which describes that preference policies, often enacted by state or local governments, give a significant advantage to companies residing in-state when bidding on government projects.

When a state government wishes to have a project completed, whether it be building military bases or providing a government building with computers, they allow companies to bid on the project. In theory, this practice would reduce costs as much as possible, as competition drives prices lower. Unfortunately, as the Mercatus Center furthers, even if an out-of-state company bids with a significantly cheaper offer, the more expensive in-state company will still almost always get the job. Aside from drastically raising the costs of government projects on taxpayers, in-state preference policies are almost identical to international protectionist policies, and have almost identical impacts, especially when it comes to decreasing competition.

Essentially, these programs enable companies to raise their prices due to the lack of competition from other states. Similar to international protectionism, these policies are put in place with the goal of stimulating domestic growth. However, this growth often comes at the cost of cheap prices and quality services. While it may appear that this would only discourage competition when it comes to government services, that is not quite true. Because most of these state and local policies are very strict, they only give preference to companies that have a state/local business license, pay all state/local taxes, and hire only state/local employees.

Since these policies are so rigid, and only apply to exclusively state or local businesses, it often discourages companies, especially those which rely on government business to remain profitable, from expanding outside of state borders, given that they know this will likely cost them their government business. This has much more broad impacts, affecting competition around the entire nation.

An Increase in Market Freedom

The United States, viewed as a pioneer of capitalism around the world, has found itself entrapped by red tape and ineffective policies, all of which are hindering one of the key benefits of capitalism: competition. However, while the United States does have some dire problems, they can be addressed.

First, the country needs to crack down on inefficient and ineffective regulations, specifically in the pharmaceutical industry. Second, the US should encourage and foster blockchain development by establishing fair regulations that don’t stifle the technology. Finally, the unfair problem of in-state preference policies must be addressed. While hope may be in short supply for capitalists in the United States, some common sense changes to economic policy would allow the beacon of the American Dream to shine brightly once again. 


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Cryptocurrency Is Alive and Better Than Ever

By Max Bibeau | United States

With the prices of cryptocurrencies continuing to plummet across the board, some have been quick to assume that the “crypto wave” has passed and that its time in the spotlight is over. Some articles even go so far as to claim that the Bitcoin bubble has popped and that the technology may not recover for some time, if ever.

These claims could not be farther from the truth.

What Drives Markets?

To understand why cryptocurrency’s price is so far down in the first place, we must first understand that the prices of all cryptocurrencies are driven by FOMO (Fear Of Missing Out) and FUD (Fear, Uncertainty, and Doubt). Through the second half of 2017, crypto experienced a surge of FOMO, with Bitcoin being in the headlines day after day with incredible price jumps. FOMO breeds more FOMO – until it doesn’t. A series of events occurring in a very short time in January of 2018 broke the FOMO and entered the market into a period of FUD. A combination of a regular dip in the market, the exposure of Bitconnect as a scam, FUD surrounding crypto being banned in countries such as China and India, and a series of highly publicized cryptocurrency thefts drove price dips, increasing FUD even more.

Price Is Irrelevant To Developers

Now that we understand how exactly we got to this point, we can explore why crypto is not dead. The key thing to remember is that price doesn’t affect developers. Sure, many of them hold a significant amount of their own cryptocurrency, and the crash has affected their personal holdings – but very few, if any developers are solely reliant on cryptocurrency, and can be supported by grants, jobs, donations, or other factors.

Since developers work independently of price, innovation has continued at breakneck speed, even though the market appears to have crashed. Almost every single major cryptocurrency continues to develop and grow, some of them at an even faster pace than during the FOMO.

Bitcoin

Bitcoin has finally started to deliver on its long-awaited lightning network, expanding the technology and resolving some major bugs that caused problems on the new network. The technology is continually being developed, with hundreds of developers working on Bitcoin regularly.

Fees are also down drastically from their peak last year, due in part to fewer transactions occurring, but also in part to the lightning network paired with other developments in the technology’s efficiency. Bitcoin Core has also been successfully able to solve the famed coffee example, with the lightning network being utilized commercially in a Swiss cafe just a few days ago.

Ethereum

Ethereum, while it may seem quiet, has been booming. The whole point of Ethereum is to support decentralized applications, or dapps, and it has been extremely successful in recent months. Thousands of new Ethereum dapps have been put on the blockchain since 2017, and more are being added daily.

After the unprecedented success of the dapp game “CryptoKitties,” which led to users paying up to $100,000 for a single digital cat, countless other games and dapps have sprouted up in recent months. New games, such as Etheremon, are attracting hundreds of users daily and can be played for free. While no huge breakthroughs have been seen in Ethereum recently, there’s no doubt that its blockchain is becoming more and more filled out with dapps, ranging from gambling to gaming.

Stellar

Stellar, often seen as Ripple’s primary competitor, has seen radically increased adoption, specifically among banks. The coin’s list of partners is also continually growing, including big names like IBM. The two have committed to environmental efforts, by using a blockchain solution to create a carbon credit program.

While Stellar may not be seeing strides as great as some other cryptocurrencies I’ve discussed, it’s slowly but surely becoming more and more influential in financial markets, and is increasing its credibility through a plethora of partnerships and improvements.

VeChain

Arguably the most well-maintained on this list, VeChain has undergone an entire rebrand, transitioning from VeChain (VEN) to VeChain Thor (VET). VeChain also added a token to be paired with their main coin called THOR. The token is obtained by simply holding VeChain, similar to how one can obtain GAS from holding NEO.

Along with their new token, VeChain has launched a new wallet in the form of an iOS/Android app that can be downloaded on the app store. With a simple UI and automatic flow of THOR for holding VET in the app, the wallet is one of the most user-friendly programs out there. The VeChain team has clearly been busy with a new wallet and token, not to mention their new partnerships with big names like BMW.

Crypto Lives

Clearly, after examining only four of the top cryptocurrencies on the market, we can see that while prices have fallen dramatically, the technology behind cryptocurrency surely lives on. Developer teams are still working hard to improve their technologies, and partnerships between mainstream companies and cryptocurrencies are becoming more and more common.

Nobody can fully predict when the market will rise again – it will undoubtedly take a series of important and “good news” events to break out of the current FUD in the market – but the technology is there, even if the prices remain low. While crypto is largely out of the mainstream media due to the loss of FOMO, that hasn’t stopped innovation and partnerships from occurring throughout the entire market.

Cryptocurrency has been out of the spotlight for months now, and it may be a long time yet before the FOMO catches back on. However, when the FOMO returns, the technology will be ready and waiting.

 


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Congress Loves Cryptocurrency

By Mason Mohon | @mohonofficial

Crypto FOMO hits everyone every once and a while. It hit me when Bitcoin Cash was added to coinbase (I didn’t buy, thank god), and it just hit the United States Congress.

The 2018 Joint Economic Report holds a tasty bit and a sliver of hope for those looking to expand the crypto empire everywhere (skip to page 202).

It compares the buzz of the blockchain to that of the internet in the 90’s. The geekiness of it, the new platform promulgated by the early adopters, and the space for an entrepreneurial spirit let this ring phenomenally true.

It goes on to describe how blockchain and Bitcoin work, paying accurate homage the tech.

The report even acknowledges one of the most profound potentials:

Its initial application as a payment medium prompted questions about whether it might replace national currencies and challenge the U.S. dollar

This realization is enough to throw up hands in victory! The United States government acknowledges the potential. Yet, it doubles down on the fact that it is still iffy:

Former Federal Reserve Chair Janet Yellen considered Bitcoin a “highly speculative asset” that is not considered legal tender. Bitcoin itself has technical and economic limitations that hinder its use as a medium of exchange. Transaction processing time and fees on the Bitcoin network keep increasing and render Bitcoin uneconomical for common purchases.

Sure, Bitcoin has some issues as a currency. That is what free-market competition is for. Put your trust in the market, choose wisely as a consumer, and you will soon learn what currency is right for your needs.

On the potential death of fiat:

Some critics of currencies controlled by government fiat welcome cryptocurrencies because their supply is preprogrammed and perceived as unchangeable.For example, only 21 million bitcoins will ever be issued and the last fraction of a bitcoin will be issued in approximately 2140.

On Initial Coin Offerings:

An ICO allows developers to raise funds for a project by issuing tokens to use on that project. For example, if a group of economists wants to exchange papers, research, analysis, and review or editing services, developers would create an online platform to allow each person to have an account for 209 conducting these activities.

And on smart contracts as a new arbitration method:

While smart contracts might sound new, the concept is rooted in basic contract law. Usually the judicial system adjudicates contractual disputes and enforces terms, but it is also common to have another arbitration method, especially for international transactions. With smart contracts, a program enforces the contract built into the code.

The revolutionary power of blockchain is not going to be held back, and even the government knows it.

Blockchain technology offers a decentralized, secure, and efficient way to store almost any form of data across multiple platforms. Developers, companies, and governments recognize the potential and have already starting to implement blockchains for many different uses. For instance, health care providers, patients, and policymakers continue searching for portable and secure ways to store medical records digitally.

The report goes on to touch on Coinbase and MtGox, realizing a few setbacks in the history of cryptocurrency. It discusses taxing crypto as compared to taxing currencies versus taxing property:

Bitcoin’s rise introduced an ever-growing question about how these assets should be taxed. For example, dollar fluctuations are not taxed. If a person held cash for a number of years and the purchasing power went up relative to other currencies, the appreciation would not be considered taxable if the dollar is later exchanged for foreign currency. However, the tax code treats foreign currency as property rather than currency.

There are various regulatory questions it poses because we are dealing with a new ecosystem. After the conclusion, it urges policymakers to become aware of the blockchain when acting, and for regulators and entrepreneurs to work hand-in-hand and get the most out of this creation.

The government may be turning in a favorable direction, which is a good sign, seeing as that many cryptocurrencies are building back up from a long-lasting dip.


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Another Bank Goes After Bitcoin

By Mason Mohon | UNITED STATES

Markus Mueller, global head of the Chief Investment Office at Deutsche Asset Management has warned against getting involved in the world of cryptocurrency.

In an interview with Bloomberg, the prominent banker warned that there is a massive risk when it comes to investing in Bitcoin. He said that it should be “only for investors who invest speculatively.”

He also made the statement that it is in the developmental stages, but he sees potential as long as regulation comes along, along with some sort of system of liability and documentation comes along. While he is right that it is the early stages, he seems to be missing the point.

Cryptocurrency, which started with Bitcoin in 2009, is about decentralizing the process of exchange. It means we do not have to trust whoever is on the other side of a trade or any third party. Rather, we only must trust the system.

So while we do have a long way to go, Mueller seems to be trapped in the old way of thinking – that the world needs some sort of central authority. This is probably because he is a member of the banking world, and while he may not notice it, his world is threatened by the crypto world.

It is no wonder that these financial experts constantly warn against Bitcoin and its lot. It says there is no need for them, and that change is coming. Mueller is not the first, and he will not be the last.

Nothing can stop a technology as revolutionary as Blockchain. It is only a matter of time before it is adopted worldwide.