Bitcoin price, gold, and nonsense – how not to value bitcoins

Every few days I hear the argument “If x% of the money in gold (or other asset class) moved into bitcoin, a single bitcoin should be worth $y”.  This article explains why this argument is utter nonsense.

The (flawed) reasoning is as follows: the total value of gold in circulation is estimated at US$8 trillion.  If some small fraction of the people holding gold (say, 5%) sold their gold for US Dollars (releasing $400 bn), and the USD proceeds were used to buy bitcoins, the total value of bitcoins (commonly referred to as “market capitalisation”) would increase by that amount of dollars ($400bn), and because we know the total number of bitcoins in circulation, we can derive a price per bitcoin.  Continue reading

MAS just released Corda for Central Banks… so what?

I’m absolutely thrilled to be able to write about the open sourcing of Project Ubin Phase II, a key project that our team has been working on for the past seven months with the Monetary Authority of Singapore (MAS), ten banks, and our partner Accenture.

UbinPhase2

Ubin Phase 2 report

What is Project Ubin?  It’s probably the most advanced starter kit out there for anyone wanting to explore blockchains for banking:

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Blockchains and central banks – what have we learnt?

This article was first posted on r3.com

Over the past couple of years, R3 has worked closely with a number of central banks to explore if distributed ledgers could support their policy goals, and I have had the privilege to participate in a number of these projects.

What have we learnt?  What is important?  What do central banks care about?  While I can’t speak directly for individual organisations, I have collated my own thoughts, and wanted to share these ahead of the Singapore FinTech Festival this year (13-17 Nov) when the results of Singapore’s “Project Ubin” experiments will be announced.

Update (post FinTech Festival): Read about the Open Sourcing of “Corda for Central Banks“!

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The hype around central banks, digital currencies, and blockchains

Central banks and blockchainThere has been a lot of hype around central banks, interbank payments, blockchains, and central bank digital currencies (CBDCs), but the narrative has become confusing and often misses the point.  What’s going on?  Actually two independent things are being actively explored:

  1. Decentralisation of interbank payment systems
  2. Wider access to digital central bank money (Central Bank Digital Currencies – CBDCs)

I aim to explain them both in this post.

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A gentle introduction to interbank payment systems

How do banks pay each other?  In most countries, when banks want to transfer money to each other, perhaps upon instruction from a customer, they don’t put bundles of banknotes in vans, they pay each other digitally.  How does this work?

This post is intended as a primer about payment systems and explains correspondent banking, nostros, real time gross settlement (RTGS) systems and deferred net settlement (DNS) systems.  It supports other posts where I discuss decentralisation of these systems using distributed ledgers.

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A gentle introduction to money

This post aims to explain the various common forms of money that exist today, and the words we use to describe them.

types_of_money

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Blockchains and financial inclusion

Blockchains and financial inclusion

This short post gives an overview on how blockchains could impact financial inclusion and “banking the unbanked”.  There are two parts to this:

  1. Financial inclusion: who counts as unbanked? (it’s not just poor people)
  2. How might distributed ledger (“blockchain”) technology help?

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