When the tide goes out: big questions for crypto in 2019 – Gary Gensler

MIT Sloan School of Management Senior Lecturer, Senior Advisor MIT Media Lab, Gary Gensler

From CoinDesk

After this year’s wild market ride and so many failed projects, what might Satoshi Nakamoto’s innovative “Bitcoin: A Peer-to-Peer Electronic Cash System” mean for money and finance in 2019 and beyond?

Satoshi’s innovation – the use of append-only timestamped logs, secured by cryptography, amongst multiple parties, forming consensus on a shared ledger – needs to be taken seriously. The resulting blockchains of data can form widely verifiable peer-to-peer databases.

For any chance of a lasting role in the long evolution of money, though, blockchain applications and crypto assets have to deliver real economic results for users. And while bringing the crypto finance markets within public policy norms is critical, the greatest challenge remains the seriousness of commercial use cases.

A bunch of hype masquerading as fact won’t do it.

What We’ve Learned

Blockchain technology and crypto tokens provide an alternative means to move value on the Internet without relying upon a central intermediary. They promise the potential to lower verification and networking costs, ranging from censorship, privacy, reconciliation and settlement costs to the costs of jump starting and maintaining a network.

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Blockchain’s potential for environmental applications – Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal

The World Economic Forum in mid-September released a report examining how blockchain technologies could be harnessed to address serious environmental issues, better manage our shared global environment and help drive sustainable growth and value creation. The report outlined some of the world’s most-pressing environmental challenges and highlighted eight blockchain-based game changers that could lead to transformative solutions to these pressing problems.

“The majority of the world’s current environmental problems can be traced back to industrialization, particularly since the ‘great acceleration’ in global economic activity since the 1950s,” notes the report. “While this delivered impressive gains in human progress and prosperity, it has also led to unintended consequences… research from many Earth-system scientists suggests that life on land could now be entering a period of unprecedented environmental systems change.”

True, blockchain is still in its early stages of development and deployment. Its capabilities have been often oversold, as is the case with just about all promising technologies. But, as the WEF report argues, if blockchain one days lives up to its promise, it could “transform how society operates, becoming one of the most significant innovations since the creation of the internet. The opportunity to harness this innovation to help tackle environmental challenges is equally significant.”

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Why institutional investors are entering the digital asset space – Edward Woodford

MIT Sloan Master of Finance Alumnus Edward Woodford

Digital assets have garnered increasing interest from institutional investors, despite questions remaining around the regulation, security, and reliability of trading venues. Today, the largest trading venues – typically referred to as “crypto exchanges” – serve individual investors and traders, are limited to spot trading, and are often unregulated or based in foreign jurisdictions. What’s more, they often lack the technological infrastructure and depth of liquidity to execute larger orders that institutions require.

As a result, many of these institutional investors – typically those managing large amounts of money – bypass exchanges and turn to the opaque world of over-the-counter (OTC) trading, buying and selling large amounts of cryptocurrency directly with a specific counterparty. Deals are done in the dark, primarily through messaging platforms like Telegram and Skype. We estimate that the OTC market is currently around three times greater than the on-exchange volume.

However, the OTC trading has some considerable downsides compared to on-exchange trading. Participants can see a publicly disclosed order book on exchange, which does not exist OTC. With an order book, there is more transparent pricing, which allows for the best executable price within the market. In addition, contrary to an exchange where the identity of your counterparties is hidden, with OTC, an investor’s intention – to buy or sell – is revealed and thus can cause slippage in price or leakage in terms of your trading intentions.

The fact is that the lack of an acceptable institution-ready exchange is the one of the single largest barriers to crypto asset class growth, as every meaningful financial market is built on a foundation of institutional involvement.

What does the digital asset space look like today?

Today, digital asset trading is dominated by institutions, principally OTC. The type of institutions involved is changing. The early players were proprietary trading firms and family offices, who have the most latitude in their investment mandates. Digital asset hedge funds were also established with specific mandates to trade digital assets. Now, more established funds are entering the space, along with asset managers who’ve had to gain additional comfort.

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Las puertas que abre la tecnología del blockchain – Christian Catalini and Cathy Barrera

MIT Sloan Professor Christian Catalini

MIT Sloan Professor Christian Catalini

From La Nacion

Si se otorgaran premios a la terminología comercial más de moda, sin duda la cadena de bloques o blockchain sería candidata. Después de todo, es una de las tecnologías más promocionadas en Silicon Valley y más allá.

Y, sin embargo, pese a tanto revuelo, la promesa y el potencial de la cadena de bloques -tecnología en la que se basan las criptomonedas, como el bitcoin- no se comprenden del todo. Hasta la fecha, solo se hicieron unos pocos estudios sobre el tema y, según una encuesta hecha el año pasado por Deloitte, casi el 40% de los altos ejecutivos afirma tener escaso o ningún conocimiento del modo en que funciona la cadena de bloques.

En un nivel básico, la tecnología de cadena de bloques permite que una red de computadoras llegue, a intervalos regulares, a un consenso sobre el estado verdadero de un registro descentralizado. Ese registro contiene diversos tipos de datos compartidos, como registros de transacciones, atributos de transacciones, credenciales u otra información. Read More »

Join the #MITSloanExperts “The Truth Machine: The Blockchain and the Future of Everything” Twitter chat, February 28

The Truth Machine: The Blockchain and the Future of Everything, by Michael Casey and Paul Vigna

MIT Sloan’s Michael Casey and Wall Street Journal reporter Paul Vigna, authors of The Truth Machine: The Blockchain and the Future of Everything, will discuss their new book that examines applications of blockchain technology with the potential to provide new financial security, social change, and personal empowerment, during a Twitter chat on February 28th at 1 p.m. ET.

Michael Casey is a Senior Lecturer of Global Economics and Management at the MIT Sloan School of Management and Senior Advisor for the Digital Currency Imitative at MIT’s Media Lab, where he studies blockchain and its applications in the social and economic sectors. Additionally, Casey is a writer and researcher in the field of economics, finance, and digital-currency technology. Casey received his undergraduate degree from The University of Western Australia, his graduate diploma in Journalism from Curtin University of Technology and received his Master of Arts and English in 1994 from Cornell University.

Paul Vigna is a markets reporter for the Wall Street Journal, where he focuses on blockchain, bitcoin, and other cryptocurrency news. He has more than 25 years of experience in journalism and has authored three books to date. Vigna received his undergraduate degree from Fairfield University in 1990.

Casey and Vigna will discuss their work with Mark Hochstein, managing editor of CoinDesk and veteran business journalist with experience covering financial services and bitcoin innovations.

Join us on Twitter on February 28 at 1 p.m. ET, follow along using #MITSloanExperts, and potentially win a free copy of The Truth Machine: The Blockchain and the Future of Everything.