The New Libra Coin – An Unofficial Explainer

I’ve been looking at the design of the new Libra coin (LBR) in the updated Libra Whitepaper. Here’s what I think the differences are between this new “synthetic” coin and the previous iteration of the coin as described in 2019. Hope it’s helpful!

Note, this is just my attempt to explain it with the information that is available. It is probably still subject to change. If you’ve found it useful, feel free to share!

Audiobook Launch – The Basics of Bitcoins and Blockchains

Happy news! (and some insights into the mechanics of authoring and publishing a little further down the page)

I’ve just been told that the audiobook version of my book “The Basics of Bitcoins and Blockchains” is now available for preorder on Audible. It’s a great use of your Audible credits! If you’re not already on Audible, you get your first listen for free when you sign up. Click it!

This means you can upskill on bitcoin, blockchains, payments, and money when you’re out and about (ha)… Or more likely, when you’re inside, trying not to go insane, and wishing you could be out and about. What a great use of lockdown time!

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Ray Dalio on What Coronavirus Means for the Global Economy

Ray Dalio is one of the best economic thinkers alive. On 9 April 2020, TED interviewed him about what coronavirus means for the global economy. Here is my summary. Any errors, omissions, misunderstandings are mine.

Ray Dalio on What coronavirus means for the global economy

Interviewer: Corey Hajim (TED)
Interviewee: Ray Dalio, Founder of Bridgewater Associates
Released 9 April 2020

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Three currency wars, not one

This short blog post describes three different types of currency wars that seem to be happening at the moment.

The phrase “currency wars” is not new – typically is has referred to deliberate devaluation of one’s own currency to increase competitiveness of exports.  If your currency is worth less, then your goods are cheaper to foreigners, so they buy more of them, which is generally good for your country.

Yet with increased discussion and relevance of fintech, wallets, central bank digital currencies, Libra, bitcoin, etc, it seems to me that there is more going on.  I’ve identified three distinct wars (battles? fronts?) being fought:

  1. Currency devaluation to increase competitiveness
  2. Offshore e-money supremacy
  3. Public money vs private money
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How unlike cash will CBDCs be?

In this post I discuss several differences between physical cash, and what I imagine retail Central Bank Digital Currencies (CBDCs) might end up looking like. The main differences between CBDCs and cash are accessibility, anonymity, and interest.

Accessibility means “who can use it?”. Pretty much anyone can use cash.

Anonymity describes how much information about the payer and recipient’s identity is needed to make a transaction. Cash doesn’t require the payer or recipient to provide any identity information.

Interest describes how much the number goes up if you leave it sitting in its natural state without lending it to anyone. Physical cash does not have interest.

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KYC in Stablecoins

Summary: Issuers of today’s fiat-backed stablecoins (such as PAX, USDC and TUSD) need to identify (or KYC) only those users who convert between bank account money and stablecoin, not all holders.

Some people might be surprised that intermediate users of stablecoin may transact without needing to being identified by the issuers. Yet few people know that there are kill-switches built in that can hinder bad actors. This arrangement can be described as permissioned pseudonymity. Stablecoin issuers have permission by their regulators to have pseudonymous users in their network.

Permissioned pseudonymity is positive for innovation while the industry explores the most productive uses for stablecoins.

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Tokens: Shares with Benefits

This short post explores some of the additional value that tokenised assets on blockchains can add, over and above pure financial return.

The assets in question could be shares, or bonds, or other financial securities recorded as tokens on blockchains.  Some assets may not even be not regarded as financial securities, due to what they represent and what is promised to the asset holders – these have been described as “utility tokens”.

Today, people typically buy financial securities purely for their financial return.  A bond, loan, or other fixed income product, will give investors some amount of yield, usually commensurate to the amount of risk the investor is taking by providing their money.

Equity may give you slightly more than just a return: perhaps a vote at an annual shareholder meeting.  However, most people don’t care about these votes.  They just care about the share price going up, and dividends, if any.  The crypto community describes this succinctly as #NumberGoUp.

Yet increasingly, tokens are being used creatively to incentivise and delight token holders.

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State Sponsored Money – Under Pressure?

The Bank of International Settlements (BIS) is now throwing their weight behind Central Bank Digital Currencies for household use (“Retail CBDCs”). For clarity, this doesn’t necessarily mean recording fiat currency as tokens on blockchains: regular account-based technology can also be used. But it means that households could store and spend fiat money digitally outside of a bank or other private sector company.

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