Fairly Recently: Must- and Should-Reads, and Writings... (February 8, 2019)

This Is Nuts. When's the Crash?

The highly-estimable FT Alphaville has long had a series: This is nuts. When's the crash?. That is my reaction to learning that Hoover Institution senior fellows are now crypto...

It is not at all clear to me whether they are grifters or griftees here...

I had known about John Taylor, but had thought that was a strange one-off. And now Niall Ferguson. Is anybody even pretending to have a business model other than pup-and-dump? I think the only appropriate response is here:

Background:

Brad DeLong @delong What is going on? Help us, @ncweaver! You are our only hope! What is this... fresh hell... new devilry? https://twitter.com/BenDWalsh/status/1093932167921631232

Ben Walsh: @BenDWalsh: The blockchain company Niall Fergusson is joining really does not like inflation https://www.ampleforth.org

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Nicholas Weaver: @ncweaver: "Yet another recapitulation of Basis: an algorithmic dumb currency peg. Which means it only works up to the instant when someone figures out how to make money breaking the peg. The only part new appears to be a better story for 'Moon Lambo' at the start before stability, which was always the problem with Basis and its 100M of VC money: if it works, it’s stable, so there is no investment nor way to make money off of it. And if it doesn’t work, why dump 100M of VC money in it. This adds 'it will be stable after the Moon Lambo phase'. Bet is they will raise at least $50M from dumb VC like a16z since they have 'We’re Basis but with Moon Lambo first, and we aren’t in the US so we will just ignore the SEC' as the story, and it will implode on the launch pad if it ever gets implemented in the first place...


Jemima Kelly: The John Taylor-Backed “Stablecoin” that's Backed by, um, Stability: "Stanford economist John Taylor... once a favourite to succeed Janet Yellen as chair of the Federal Reserve... has got into crypto.... Mr Taylor told us...

...This [Basis] is a great improvement.... The stability is so important-that’s what’s so, just, beautiful, and intriguing about this currency. It will get that stability, and it’s really what we’ve been searching for forever—to have a stable, reliable medium of exchange...

It all sounds quite, well, beautiful, right? And what is it backed by, again? Mr Taylor, again:

It’s not backed by anything other than the fact this is stable.

Wow, OK. But let's look at how it actually intends to work. Because it is not backed by dollars, the way Basis plans to maintain its stability is by executing open market operations... an algorithm buys and sells what it calls 'Basis bonds'—on the blockchain of course—in response to changes in demand....

And what about making some money for Basis's investors, we ask? Mr al-Naji....

It's very important to us that we comply with regulatory requirements so I'd avoid focusing on the commercial aspects of Basis. But as a general answer, our design goal is to have participants in the system share in expansions of Basis supply when the Blockchain decides an expansion of supply is needed. You can check out the White Paper on our website for more information on this design as well...

Ah, sorry, OK, let's not focus on the commercial aspects of a currency that's received 133m in investment before it's even launched. We'll check out the white paper...


Jemima Kelly: Niall Ferguson Joins Blockchain Project Ampleforth: "Ampleforth: not just an ideal school to send your kids if you're Catholic and can afford it, but also, 'an ideal money'. More specifically (and perplexingly): 'A decentralised store of value protocol that is volatile in price and supply at launch, but is strictly better than Bitcoin at steady state because it converges on a stable unit of account.' And Niall Ferguson, the rightwing British historian and who once called himself a 'fully paid-up member of the neo-imperialist gang', has joined its advisory board.... Here's Ferguson...

...The idea of reinventing money excites me. Bitcoin, currently, is incapable of being ‘money’ that can be a means of payment. But at the same time, I am doubtful of fiat-pegged stablecoins. As someone who is deeply interested in financial innovation, I’m attracted by Ampleforth's mission to reinvent money in a way that protects individual freedom and to create a payments system that treats everyone equally...


John McAfee: @officialmcafee: "When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bircoin at $1 million by the end of 2020. I will still eat my dick if wrong...


#finance #orangehairedbaboons

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