This week those loveable rogues in the mainstream media looked at Bitcoin’s changing image, a trillion-dollar pension fund using blockchain, and a Segwit conspiracy peddled by a certain Australian identity-thief. Without further ado, let’s dive into the newspaper pile.
Bitcoin Coming of Age
The New York Times asks if, after ten years of being the “symbol of counterculture”, Bitcoin is growing up. The question is being posed on the back of a boom in the trading done through futures contracts as opposed to actual Bitcoin trading, where cash bets are made on the price of the asset at a future time, typically a month. This, in the words of the Times, allows hedge funds and trading firms to “gain exposure to the asset while avoiding the hacks and heists that plague the industry.” They even offer the most backhanded compliment imaginable:
The crypto market, associated by many with the dark web, money laundering and the Wild West, is beginning to be discussed by financiers in the same breath as derivatives, hedging instruments and compliance.
Damned with faint praise indeed. Of course, the issue of regulation and the coming of ‘the herd’ is at odds with the central tenets of Bitcoin that were laid down when it was created, and so it is with a supreme sense of irony, though not surprise, that Wall Street wants a piece of the action. Whether an increased use of futures contracts by institutions will turn Bitcoin from Dickensian street urchin to respected gentleman is unknown at this point, but it is certainly getting it discussed in a more serious light, which can only benefit the space.
UK Gets First Blockchain-based Pension
Pensions are sexy. Well, okay, they’re not, but they’re important, and Reuters’ report that UK pension provider Legal & General has teamed up with Amazon to offer “the first blockchain system for corporate pension deals” is a big…er…deal.
The insurer, which has over a trillion dollars in assets under management, will use Amazon Web Services’ managed blockchain solution to host its “bulk annuity business” platform, saying that using blockchain and smart contracts will help them reduce the man hours required to process the paperwork involved. This is a great feather in the cap for blockchain technology and shows that companies have a real desire to use it, although according to Reuters,“…questions remain over regulation, reliability and cost.” Hopefully deals such as this can go some way to eradicating those fears.
Bitcoin’s Transaction Fees Under the Microscope
The Financial Times, unsurprisingly one of the fiercest Bitcoin critics out there, took a jab at Bitcoin transaction fees this week in a double header where they proved conclusively that Bitcoin is not suitable for microtransactions. Which it isn’t.
No one in the industry would be surprised by this. One of the two articles sets the tone fairly early, with its opening statement of “Bitcoin was supposed to make finance cheap and accessible”, which misses the point that the prime reason for its creation was to offer an alternative monetary system to those who distrusted banks, but whatever. The article goes on to discuss the limited impact of Segwit and compares Lightning Network to the banking system pre-2008 crash, at which point something begins to smell vaguely familiar. And then, they introduce the source of the conspiracy theory and the anti-Bitcoin rhetoric – one Dr Craig Wright. Sigh.
The second article featured one of their journalists trying to send Bitcoin on his phone, which he did in the most convoluted way possible and then complained about the cost of sending it – most of which had been charged by his service provider and could have been amended if he’d wished. It’s almost as if he didn’t want it to work…
In Other News…
Other crypto-related news this week included Wired having a go at Bitcoin’s climate impact (do we have to say again that mining overwhelmingly uses renewable energy sources?), the Guardian running a news story on Venezuela’s inflation crisis and refusing to mention the use of cryptocurrencies in the region, and the Daily Express shining a not so glamorous light on the new Coinbase card. See you again next week to see what our friends in the press have made of crypto and blockchain.