EconVue Spotlight: Blockchain, ICO Special Edition

We have been following FinTech for a while now, but recently stories about blockchain and cryptocurrencies have been appearing everywhere. ICO's, or Initial Coin Offerings are beginning to look like a gold rush. Beyond the hype, driven by exponential returns for the likes of Bitcoin and Ethereum, what are the constraints on further growth?

I asked Grant Hummer, who leads the 1600-member SF Ethereum Developers Meetup to elucidate. His report is attached. Key uncertainties including scalability, performance, and catastrophic system failure remain unresolved. One example: "The Ethereum network can perform 15 transactions per second. Bitcoin is hamstrung at 4 transactions per second, Visa, by contrast, can perform up to 56,000 transactions per second."

Unless breakthroughs are made, blockchain is not the next Internet. Also of note: major involvement by China. Cyptocurrencies are not affected by capital controls. We've included links to a range of articles below. 

Finally, if you're looking for a good book to read on economics this summer, I recommend MIT Professor Andrew Lo's The Adaptive Markets Hypothesis. His intriguing idea is that financial markets follow biological, not economic laws. 

STORIES IN OUR SPOTLIGHT

Blockchain

Realizing the Potential of Blockchain
World Economic Forum June 2017

A multistakeholder approach to the stewardship of blockchain and cryptocurrencies

WTF is an ICO?
Alex Wilheim 5/23/2017 TechCrunch

Think IPO, in reverse. 

Coinschedule - The best cryptocurrency ICO list. Only selected ICOs and crowdfunding projects
Coinschedule 2017

Blockchain Video Platform To Launch 30 bln Token ICO At 3 Satoshis Each
William Suberg 7/7/2017 Cointelegraph

Beyond Bitcoin: How Blockchain Is Changing Banking
Avi Salzman 7/1/2017 Barron's 

Eliminating trust in the system is what blockchain is all about, and it is going to be costly and difficult to scale. Prediction: fotunes will be lost, not made, trying to accomplish this.

U.S.

Managing U.S.-China Relations: American and Chinese Perspectives: A Report Launch
CSIS 7/6/2017 Video and Report

Diao Daming at the Chinese Academy of Social Sciences expects new emphasis by China on "sub-national" relationships in the US - at the state and city level, as high-level US-China uncertainties remain.

U.S. auto sales fall for fourth straight month in June
Nick Carey 7/3/2017 Reuters

U.S. auto sales fall for the fourth straight month in June. The average car loan is now almost 70 months, leaving many under water.

Jeb Hensarling tells bankers ending Fannie and Freddie is still the best path forward
Joseph Lawler 6/21/2017 Washington Examiner

World

I'm worried about where US-China relations is now headed on North Korea
Kevin Rudd 7/3/2017 Twitter

Former Australian PM says we've reached the tipping point. Great summary of the concatenation of recent events.

Another Lesson from Japan
Stephen Roach 6/26/2017 Project Syndicate

It's all about aggregate demand, or rather lack of it.

Koike’s camp clobbers Abe’s LDP in historic Tokyo assembly election
Tomohiro Osaki 7/2/2017 Japan Times 

Japan's governing party suffers crushing defeat in Tokyo local elections; is Abe's dominance coming to an end?

France will ban all petrol and diesel vehicles by 2040
Chloe Farand 7/6/2017 Independent

This is just one example of why oil prices are likely to trend downwards for decades, and will not reignite inflation.

ECONVUE RESEARCH

Population, Participation and Productivity: How to Think about Long-Run Economic Growth
Saul Eslake

Economist Saul Eslake's presentation to the International Conference of Commercial Economists (ICCBE) in Paris this week.

Data Round-Up: Private Jobs Trend Picking Up; Wages Lull Should Be Short-Lived
Michael Lewis

Before today, the FOMC was all-but-certain to pause at their late July meeting. That has not changed but, overall, today’s results do give hawks some more ammunition. The private payroll jobs trend is firming; hours worked are doing even better. Wages growth disappointed, again, but given still-very-low unemployment, their uptrend should resume very soon.

Chicago's FinTech Fizzle? 
Collin Canright

In terms of venture money, Chicago falls way short. Yet in terms of micro projects, Chicago and the State of Illinois are making progress, seeking to build on the city's long history of innovation in the technologies that power capital markets and financial services. 

Blockchain, Baby! 
Collin Canright

With the recent shift in FinTech news and hype moving toward artificial intelligence and machine learning, blockchain almost started to seem like last year's model. At the same time, predictions that 2017 would see real pilots are starting to come to fruition.