• Tokens are the fuel of the Decentralised economy and Token Economics, or Tokenomics is at the core.
  

In January of 2018, ETH hit a then all-time high of over one thousand U.S. dollars and the platform became almost unusable. I know this because, in 2017 and early 2018, Blockchain Consultants LLC, a company I co-founded, along with John Crockett, was spinning up DLT architected organizations as fast as we could. We were implementing DLT workflows that functioned amazingly well. Transaction fees were inexpensive, and settlement was fast.

Then the disaster happened on November 28, 2017. The Canadian studio Axiom Zen released a blockchain game on Ethereum called CryptoKitties. Shortly after launch, there were concerns that CryptoKitties was crowding out other businesses that use the Ethereum platform. The game caused an increase in pending transactions on Ethereum, and at one point accounted for over 10% of network traffic on Ethereum.

A perfect storm ensued over the following months that almost decimated the ETH platform. The game’s popularity in December 2017 congested the Ethereum network, causing it to reach an all-time high in the number of transactions and slowing it down significantly. The game’s popularity also caused a massive inflow of speculators to the ETH platform who drove the price of ETH to a peak in January of 2018 of over one thousand US dollars. This affected transaction fees (the cost to record data on the chain) as fees went through the roof. The cost of a transaction went from 40 cents at the beginning of 2018 to well over 40 dollars in some cases toward the end of 2018.

ETH Developers began to have discussions about the viability and future of ETH. The platform just was not scalable. Yet on May 12, 2018, a CryptoKitty was sold for $140,000. Speculation and the greater fool theory had won out over sound logic.

The ETH platform became almost unusable. We learned first hand that Tokenomics is Not Economics.

Economics = You buy stock in ATT. When ATT increases sales the stock price goes up.

Tokenomics = You buy ETH. When the value of ETH goes up, the cost of a transaction goes up. With higher transaction fees, fewer organizations are willing to record transactions. The result is fewer transactions recorded. Even though the market cap increased, the useful value of the platform decreased.

Economics = Speculators begin to pump ATT stock and the price of your ATT stock goes up. So does the price to earnings ratio. ATT P/E currently hovers around 14.83 times earnings no company ever created is worth more than 6 times earnings in my estimation.

Tokenomics = Speculators begin to pump ETH prices and the price of your ETH goes up. So do transaction fees. The result is fewer transactions recorded. Even though the market cap is higher, the useful value of the platform goes down.

Tokenomics is Not Economics.

Today we are repeating the mistake. Today, ETH is once again over the one thousand dollar mark. Speculators see tremendous potential in digital currencies and they are driving the cost up. All the while reducing the fundamental value of the token they have bought.

Once again, for most normal people, the blockchain is pretty much unusable for average size transactions. Recently, sending an ERC20 token today could cost over US$60. To complete a simple UniSwap trade can run between $60 and $100 for each transaction. Unless you’re willing to pay $100-$200, you can forget about a complex smart contract interaction — it’s a financial nightmare.

This is not true with ETH priced around $200.00. At that price point, developers could begin to move forward with FinTech, MedTech, AgriTech, and many other industries that need Disintermediation to thrive in the coming decentralized economic environment.

Digital Currencies are ushering in a new paradigm and Consensus is at its core. If you haven’t spent time learning what Consensus is, it is time to do so.

Unfettered Global transactions are the promise and Disintermediation is the tool. The sooner we cumulatively begin to realize that we can not take traditional economic theory into the digital realm the better.

Change is coming and the future is decentralized.

I’m ready for it, are you?

Michael Noel CBP

#Blockchan #Tokenomics #DigitalCurrencies #Consensus #Disintermediation

Post Scriptum — Next up is the solution. Please subscribe to get updates!

Sources: https://coingeek.com/the-ridiculously-high-cost-of-gas-on-ethereum/

Post-Pandemic Banking in MENA on Feb, 10th 2021 – Accelerating FinTech markets opportunities during COVID-19 pandemic

“In MENA there are 140 Million Adults that do not have bank accounts. Of the 140 million adults who do not have bank accounts, 80% of them have a Mobil Phone” Marcelo Giugale Director, Financial Advisory and Banking The World Bank

Moderator: • Michael Noel CBP, Co-Founder and CEO, Blockchain Consultants

Panelists:

Sultan Al-Hamidi, Board Member, AlJazira Capital, Executive Vice President, Social Development Bank (SDB) salhamidi@sdb.gov.sa

Khalil Alami, CEO, Telr – khalil.alami@telr.com

Abdulrahman Al Sufiany, Chief Growth Officer & Managing Director, Fintech Galaxy Abdulrahman@fintech-galaxy.com

Codin Caragea, Chief Manager, Head of Customer Experience, Bank Muscat Codin@bankmuscat.com

#banking#fintech#ceo#financialservices#blockchain#markets#opportunities#customerexperience#development#finance#investment#venturecapital#covid#growth

It is a great pleasure to participate as a Keynote Speaker IN the  #MENA Future of Fintech event taking place on the 9th and 10th of February. 

Together with distinguished leaders, we will be Discussing #digitaltransformation, financial inclusion, and the connected opportunities in the FinTech space. 

Why is MENA important to the Distributed Ledger Ecosystem? 

“In MENA there are 140 Million Adults that do not have bank accounts. Of the 140 million adults who do not have bank accounts, 80% of them have a Mobil Phone” – Marcelo Giugale Director, The World Bank

Registrations are open now, – Attendee/Delegate login link: Please use the below link to register and get access to the whole event as an attendee.
https://virtualconnect.chkdin.com/login/58340633

The Final Agenda for MENA Future of FinTech 2021 is available for download here – A https://blockchainconsultants.io/wp-content/uploads/2021/02/MENA-FoF_2021-Brochure.pdf

#fintech #finance #bank #innovation #virtual #ecosystem #financialservices #technology #blockchain #wtf_fintech #whatthefintech #crypto #digital #future #banking #Keynote #Speaker Michael Noel CBP

“It is well-known what a middleman is: he is a man who bamboozles one party and plunders the other.”  – Benjamin Disraeli

One of the most mind blowing essays I’ve read in the past couple years was Markets Are Eating The World, by Taylor Pearson.  He posits that the structure of the economy is based on transaction costs.  

When transaction costs are high, we see large corporations and a propensity for consumers to want to own things.  When transaction costs are low, smaller firms excel and consumers prefer to rent.  [Pictured below]

Pearson says:

“Computers and aggregators reduced triangulation costs through digitization and proliferation of smart phones. They brought down transfer costs through cheaper matchmaking.The result was that in industries touched by the internet, we saw an industry structure of large aggregators and a long tail of small business which were able to use the aggregators to reach previously unreachable, niche segments of the market. There aren’t many cities where a high-end cat furniture retail store makes economic sense, [but] on Google or Amazon, it does.”

Pearson’s message relates perfectly to what we are seeing in the capital markets today.  The Robinhood and GME saga, the impossible scale of passive funds, people getting deplatformed left and right, it’s all part of the same story: the gatekeepers have gotten too big, and people want out.

Who Watches the Watchmen?

It falls into my bucket of “things are so efficient, they are not efficient.”  Robinhood, TD, Schwab, Virtu and Citadel drove down transaction costs in markets so drastically that they became FREE to your average retail trader.

That’s incredible, but there are also side effects.  There really is no such thing as a free lunch (besides diversification) and right now we’re seeing the bill come due through harmful changes in market structure.

Market gurus love to glorify active management fees getting crunched, but when you ask them about the misallocation of capital from the growth in passive investment firms like Vanguard, Blackrock, and State Street, they go radio silent.  

They can’t articulate that the inflation in financial assets from passive investment far surpasses any benefit that the retail investor ever got from closing the bid/ask spread to under a penny. 

To keep up with the performance of passive (who hold 0.1 percent cash) the retail investor would have to be 100 percent passive or take giant swings at a concentrated book of stocks.  Sound familiar?

And it’s only getting worse.

There are about five activist short-sellers left to call out fraudulent companies and one of the best, Andrew Left, just tapped out and said he’d never short again. 

One of my other favorite market phenomena is when a Cathie Wood’s Ark ETF puts $200k into a $400 million market cap company and moves the market cap by $100 million dollars.

A pinnacle of efficiency, these modern markets.

The End of the Computing Era

We are at the stage where the populace is waking up to the reality of a world dominated by mega-aggregators of scale (AMZN, FB, Vanguard, BLK). And yes, these corporations have driven down costs for consumers, but they’ve broken the system in the process.

People can sense that the system is unjust, but they don’t know where to point their fingers just yet.  The anger in the air is palpable as the group of people who society left behind becomes larger and larger. 

The centralized power of the Fed has punished savers for a decade and allowed megacorporations to tap the debt markets which are ironically subsidized by middle-class, unfunded pensions.  

There are no shortage of hot takes about what the Reddit / Robinhood / GameStop story “really means.”  Is it just another classic symptom of an overheated market? Is it just the latest misguided witch hunt against short sellers?  Is it some weird form of internet inspired nihilism designed to stick it to the elite?

One thing that I’ve learned over the years is that when enough emotion is involved, all rationality leaves the conversation.

And right now, that emotion is paving a one way road out of a system governed by centralized giants that no longer serves them.  I almost can’t believe I’m saying this, but Bitcoin might just fix this.

Here’s Pearson again describing what he calls “the blockchain era.”

“A few individuals– heads of central banks, leaders of state, corporate CEOs, and leaders of large financial entities can move markets and politics globally with even whispers of significant change. This sort of centralizing in the name of efficiency can sometimes lead to long feedback loops with potentially dramatic consequences.  [On the flip-side] Public blockchains may allow aggregation without the aggregators.” 

The Dramatic Consequences

I’m not even taking huge leaps here.  The connections are being made all over social media.  People don’t feel like ANY of the institutions that make up modern life, from their brokerages to their governments, are serving them.

And guess what? Ethereum just hit an all-time high today.  1.3 million people downloaded the Coinbase app in January, which is more than E-Trade, TD Ameritrade, Charles Schwab, Fidelity and SoFi… combined.

The longer the Fed backs the bond market and unprofitable zombie companies, the faster they seem to be expediting the movement of capital from the legacy financial world into digital assets.  

The paradox is that the best thing the centralized powers could do for themselves right now is raise rates and make the hurdle rate for investment higher. 

I doubt they have the political will to do so, but that might not be the worst thing.  People are looking for an outlet, and for now it looks like people are finding it in crypto.

– Tyler Neville, Senior Editor

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