DeFi

How crypto is the Amazon of money – DL News

Published

8 months ago

5 June, 2024

How crypto is the Amazon of money – DL News

The social value promised by Defi lies in the elimination of financial intermediaries.
Don’t fall for the hype when it comes to financial innovation.

Wolfgang Münchau is a columnist for DL News. He is co-founder and director of Eurointelligence and writes a column on European affairs for the New Statesman. The opinions are his own.

As a young financial journalist in the mid-1980s, I met the late Ivan Boesky, an investor who called himself a modern arbitrageur.

He cheated on me.

Old arbitrage involved exploiting price differences between exchanges. If sterling bills of exchange were cheaper in medieval Paris than in Bruges, an investment banker would buy them in Paris and resell them in Bruges.

This would lead to price equalization. Even though everyone is in it for the money, this transaction has social value. This increased the efficiency of markets.

But that’s not what Boesky did. He implausibly claimed that he would arbitrate information – merger arbitrage as he called it.

This seemed intriguing to us, but it turned out to be a euphemism for insider trading.

A few months after we met, he was arrested. What appeared to me to be a financial innovation turned out to be old-fashioned fraud.

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He served time in prison, was banned for life from financial markets, became a government informant and stayed out of the spotlight until his death last month.

Michael Douglas’ Gordon Gekko character in the 1987 film “Wall Street” — the “greed is good” part — was based on Boesky.

What the Boesky experience taught me is that financial innovation doesn’t really exist.

“When someone claims to have created an innovation, it is usually more likely that they have found a way to hide the risks.”

This may seem like a bold statement. But think about it.

Finance is the intermediation between borrowers and lenders, between savers and investors.

You can structure credit in different ways. Or hedge the risk.

But when someone claims to have created an innovation, it’s usually more likely that they’ve found a way to hide the risks. Case in point: U.S. subprime mortgages in the 2000s, which hid bad loans in vast pools of investment-grade products.

Fundamental observation

So how does this apply to crypto, or more specifically decentralized finance?

Let’s start with the tendency of many to confuse the properties of DeFi instruments – tokens, blockchain networks, smart contracts – with the industry itself.

The social value promised by Defi lies in the elimination of financial intermediaries. This is a big deal that would justify some of the significant investment flows into the crypto industry.

What Amazon did initially for books, and then for everything else, is what crypto can do for finance.

The potential of crypto

In finance, you can estimate the current costs of the rent-seeking intermediary in terms of the margin between market interest rates and borrowing rates, or credit card interest rates.

In other words, the gap you see between central bank capital and the rate your bank gives you on deposits, or charges you on debt, is extremely wide.

This is the savings potential that crypto can offer.

This can take some of the hassle out of applying for a mortgage and can connect borrowers and lenders in a way that is not possible with the mostly static institutions of modern finance.

But be wary of claims that go beyond that. In statistics, there is a famous method called “bootstrapping” – a sampling technique that superficially appears to create data out of nothing.

You can bootstrap data, but you can’t bootstrap money, just as a central bank cannot increase the money supply beyond certain thresholds over long periods of time without creating inflation.

Bubbles can persist surprisingly long, even decades. Some people will go on a killing spree while it lasts. If it is not sustainable, it will end.

The natural barrier for DeFi is that ownership of real assets is governed by national laws. A court decision is required to claim the property of a delinquent debtor.

Unsecured loans, which are the business of banks, are difficult in a purely cryptographic world.

Wholesale financial markets already operate with high levels of efficiency and low margins.

From an economic perspective, the main promise of DeFi would lie in those parts of financial markets that suffer the most friction in the form of high transaction costs and barriers to entry.

This would be a social value, but it would still require crypto-friendly regulation.

Social value

This scenario is different from the one I’ve discussed in previous columns about crypto as a potential replacement for fiat currency. This does not require collusion of authorities.

The social value here is the freedom to carry out transactions without state control. What both have in common is the elimination of rent-seeking middlemen.

For DeFi, the middleman argument is the one that matters most. But I find it hard to imagine a world of decentralized finance that operates on a large scale outside of legal systems.

In a fiat currency system, a distinction is made between internal and external money. Domestic money is money created by banks – through loans for example.

Foreign money exists outside of the financial system, like gold. Cryptocurrency can be classified as external currency from the perspective of the non-crypto world.

In this definition, crypto is a bubble that bursts or is fueled by fiat currency that allows crypto investors to liquidate their positions.

But don’t be fooled by the hype of financial innovation. There are many Boeskys in the crypto space.

I think Amazon is the best way to think about Defi. Amazon has brutally cut out the middlemen.

But just as Amazon did not reinvent the book, cryptocurrencies will not reinvent finance.

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DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

Discover the exciting opportunities of the Rollblock (RBLK) presale today!

Website: https://presale.rollblock.io/

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Fuente

DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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