Nouriel Roubini Attacks Blockchain in Latest Rant

Professor Nouriel Roubini Goes After ‘Blockchain’ In Latest Rant

Blockchain

NYU economics professor Nouriel Roubini, commonly known as Dr. Doom in mainstream financial media circles, is a long-established Bitcoin and cryptocurrency skeptic. In his latest rant he focuses on blockchain technology and the people promoting it.

Also Read: Research: Corporations Fail to Deliver on Blockchain Hype, Scalability a Top Concern

Greedy White Men

Professor Nouriel Roubini Goes After ‘Blockchain’ In Latest RantRoubini, who recently testified before the U.S. Senate Banking Committee about blockchain, had a few angles of attack against the promoters of distributed ledger technology (DLT) in his latest article, The Big Blockchain Lie. Noting that blockchain has been heralded as a potential solution for everything from famine to cancer, he called it the most over-hyped technology in human history.

The professor explains that, “in practice, blockchain is nothing more than a glorified spreadsheet.” However, he also claims it has been able to create an “economic hell.” This is because Roubini categories developers and entrepreneurs as “a few self-serving white men pretending to be messiahs for the world’s impoverished, marginalized, and unbanked masses.” As for the supposed ideology behind them, he states: ”Blockchain is not about decentralization and democracy; it is about greed.”

Excel Spreadsheet With a Misleading Name

Professor Nouriel Roubini Goes After ‘Blockchain’ In Latest RantBesides ad hominem attacks, which Roubini has previously been fiercely criticized for, the economist actually makes some valid points about why so-called corporate blockchains touted by big banks, governments and other established powers are not decentralized. Such institutions would never want to have the transparency it would bring, or, as he explains it, “There is no institution under the sun that would put its balance sheet or register of transactions, trades, and interactions with clients and suppliers on public decentralized peer-to-peer permissionless ledgers.”

Moreover, he notes that in cases where so-called enterprise DLT solutions are actually being used by established organizations, they have nothing to do with blockchain. He explains that these are private, centralized, recorded on just a few controlled ledgers, require permission for access, and are based on trusted authorities. As for all the DLT trials constantly being spoken about in the press, Roubini says that whenever blockchain has been piloted in a traditional setting, “it has either been thrown in the trash bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a database with a misleading name.”

Does Roubini make any valid arguments in dismissing blockchain technology? Share your thoughts in the comments section below.


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Fidelity Just Removed ‘Huge Obstacle’ to Investing in Cryptocurrencies

Here is why the cryptocurrency space was largely “impressed” by Fidelity Investments announcing it will offer its 27 million customers a way to store and trade digital currencies. 


Fidelity Unveils ‘Fidelity Digital Assets’

Currently, Fidelity manages $7.2 trillion dollars, making it the fourth largest asset manager in the world. It is the leader in the United States when it comes to 401(k) retirement savings plans, and is one of the largest 403(b) retirement plan providers for not-for-profit institutions.

Abigail Johnson, Fidelity Investments CEO

Fidelity has indeed kept a close eye on the Bitcoin space over the past years. Bitcoinist reported that the firm was one of the first to add Bitcoin price 00 to its website over a year ago. It then started looking to hire crypto-fund managers. In September, CEO Abigail Johnson revealed that crypto products were underway.

Johnson didn’t disappoint. Fidelity Investments has just unveiled an entire company called Fidelity Digital Assets to focus strictly on cryptocurrency investment. One of the first crypto custody clients has been revealed to be none other than Mike Novogratz’s Galaxy Digital fund.

Paying Homage to Bitcoin Pioneers

What’s more, the cryptocurrency space was also impressed by Fidelity’s knowledge of Bitcoin’s beginnings, paying tribute to Bitcoin’s pioneers in its announcement Monday, in which it referred to cryptocurrencies as “the evolution of digital cash.”

“Impressed to see Fidelity, a financial institution of worldwide renown, appropriately pay homage to the foundational work by David Chaum, Adam Back, Wei Dai, Nick Szabo, and Hal Finney,” said Bitcoin economist, Tuur Demeester. “Shows maturity and serious commitment to the Bitcoin project.”

Nic Carter

“How’s that for infrastructure?” commentator Nic Carter rhetorically asked, pointing out that the Bitcoin network is by far the most mature crypto-asset today – so much that even incumbent banks are now entering the fray.

“…Fidelity is doing it right: a nod to the cypherpunks and predecessors to Bitcoin,” he noted.

“Abby is my favorite CEO in banking,” added Abra CEO Bill Barhydt on Twitter, praising the executive for not being afraid to be one of the first people to try Bitcoin hands-on as early as 2015.

She was mining bitcoin before other ceo’s knew what bitcoin was.

‘Removes a Huge Obstacle’

With 27 million customers, Fidelity is by no means small fish. In fact, Shapeshift CEO, Erik Voorhees, points out that there won’t be a whole bitcoin for each brokerage customer as there is less than 21 million bitcoin in existence.

“It would be impossible for every Fidelity brokerage customer to own even one Bitcoin,” he wrote. “This is why Bitcoins are worth thousands of dollars, while a dollar is only worth one dollar (and only until next year when it’s worth 97 cents). Save wisely.”
Hunter Horsley, CEO of Bitwise Asset Management, meanwhile shared his thoughts with Bitcoinist, calling this an important moment in history for this “new asset class.” He explained:

For many institutional investors, a trusted custodian like Fidelity entering the space removes a huge obstacle to investing in cryptoassets. I think we’ll look back on 2018, and particularly this moment, as the time that crypto became cemented as a new asset class.

Bruce Elliott, President of ICOx Innovations, noted that these new custodial products from ICE’s Bakkt and now Fidelity will add legitimacy to crypto markets and introduce “seasoned investors” to cryptocurrency. He explained:

Nasdaq and Fidelity are two of the most well respected brands in markets and financial services. This is a signal that financial markets and regulators are gaining clarity and comfort on the outlook for trading cryptocurrencies.

Meanwhile, others like Ben Waters, Head of Digital at IOST, remains cautiously optimistic while warning about retrofitting centralized points of failure into decentralized networks.

“Institutions like Fidelity and Nasdaq entering the space can be a good thing for crypto, as long as the exploitative financial systems (e.g. fractional reserve banking, commingling, etc.) are not piggybacked into the crypto space,” he said. “Historically, the legacy financial system has been used to exploit the general public — making the rich get richer and creating centralized points of failure.”

Akbar Thobhani

Akbar Thobhani, CEO of SFOX, a crypto prime dealer that just raised $22M to build an institutional crypto asset management platform, added:

Nasdaq and Fidelity’s recent announcements prove that cryptocurrency will not be going anywhere anytime soon…Fidelity Digital Asset Services’ focus on cryptocurrency custody and trading services for enterprise clients showcases the commitment and interest they’re seeing from their clients, but we’ll really hit a turning point when Fidelity offers cryptocurrency to their retail and 401K customers.

Meanwhile, Andy Bromberg, president of CoinList sees this as just the latest vote of confidence in digital assets.

“We expect these moves to further increase the confidence of regulators and help drive the law forward,” he added.

Finally, Rahul Sood, CEO of Unikrn, a leading voice in applied crypto at the merger of blockchain, esports, and wagering, thinks that traditional finance as a whole will follow to experience a boom similar to that of the Internet and e-business.

“Crypto is going to break the status quo in fintech, including securities. Fidelity and Nasdaq will not be alone. Soon, asset managers will look at blockchain the way banking looks at the Internet: do or die.”

What are your thoughts on Fidelity entering the crypto space? Share your thoughts below!


Images courtesy of Shutterstock, Twitter

Spread between BTC/USD and BTC/USDT Crosses $300

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The imbalanced peg between the US Dollar and Tether LLC’s USDT has resulted in a $300-spread in Bitcoin price.

At the press time, the aggregated Bitcoin-to-dollar exchange rate on non-Tether exchanges is approximately 6430-fiat. Meanwhile, on Tether exchanges like BitFinex, the same forex rate is above 6700-fiat. The strange trading activity, which started surfacing on Monday, has seen traders getting their money out of USDT however possible.

The exchanges that offer USDT liquidity, including BitFinex and Binance, therefore experienced a massive drop in USDT value against its quote currencies, which is mainly Bitcoin, USD, and Ethereum.

BTC/USD value on Coinbase GDAX

Simultaneously, the exchanges that didn’t feature USDT experienced their Bitcoin rates driven by increased arbitrage activity. Traders purchased the digital currency at a lower price, transferred it to the wallets of Tether-enabled crypto exchanges, and later shorted their holdings either for other stablecoins, the USDT itself, or the dollar.

The USDT decline itself surfaced owing to growing community mistrust of Tether after its prime exchange BitFinex dropped Noble Coin as its banking partner, eventually becoming insolvent, according to reports. The exchange, however, refuted the rumors and said its withdrawals were working fine.

USDT FUD

Meanwhile, the community continues to believe that Tether does not have an adequate amount of dollars to back its USDT supply, about which BitFinex, Tether’s partner exchange, is already aware. And while USDT is one of the highest volumed cryptocurrencies, the exchange couldn’t handle the capital flight towards Bitcoin, resulting in its stark drop and Bitcoin’s steep rise.

BTC/USD up over $300 on BitFinex

BitFinex in its latest statement clarified that traders on its platform trade Bitcoins against the dollar, not USDT.

“USDT on Bitfinex is used as a transport layer, used if a trader wishes to deposit or withdraw in e.g. Omni USDT or Ethereum USDT. Until the trader specifically chooses to transport their fiat in Tether-denominated USD, all their fiat holdings on Bitfinex will be held in the form of fiat USD.”

Believing what BitFinex stated, traders were genuinely moving their fiat holdings into Bitcoin on its trading platform, buying the digital currency at a prime value. Hence, the Bitcoin-to-dollar exchange rate went up enormously.

Community Demanding Audit

The spread between Tether and non-Tether exchange is expected to stay as the confusion mounts. The community has asked Tether, LLC and BitFinex both to have their balance sheets audited and end the FUD once for all. The question is now whether traders are exchanging their digital assets for real fiat funds or for a currency that may or may not be artificially pegged to the dollar.

Tether and BitFinex haven’t confirmed whether they would go through an independent audit or not.

Featured Image from Shutterstock. Charts from TradingView.

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