Fintech

Bitcoin’s defects will hasten its demise in 2015

26 Dec 2014

The leading crypto-currency’s economies of scale in mining and its transaction system’s vulnerability to subversion by a dominant miner make it unsound. As seignorage declines it will become cost-uncompetitive for transactions. Flaws may cause its price to lose further altitude.

China’s central bank tames unruly internet finance

12 May 2014

Authorities are reining in the banking ambitions of the country’s web giants. News of potential curbs on online payments and funds has alarmed investors. But by providing some much-needed order in web finance, China’s central bank seems to be endorsing rather than killing it.

Official attention will make or break bitcoin

31 Mar 2014

Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.

U.S. financial reform is still on to-do list

25 Mar 2014

The Dodd-Frank law brought broad new rules for Wall Street. Lawmakers are now focused on mortgage finance. That’s a valid priority, but if it weren’t for Washington’s logjam they could tackle far more, including money markets, mechanisms for bank failure and virtual currencies.

When denials can be as instructive as the truth

7 Mar 2014

Goldman’s elevator annotator failed for a denial of identity. Bitcoin’s fingered father rejects founding the crypto-currency. From this shadowy world, such confusion is expected. Not so among systemically important insurers, where Pimco’s “Bond King” Bill Gross reigns supreme.

Review: Why all you know about money is wrong

7 Mar 2014

Felix Martin says that money isn’t a commodity, but a system of credits. This insight allows his book to rewrite monetary history in an eye-opening way. It also suggests that the way economists approach finance and recessions is hopelessly wrong.

Who bails out bitcoin depositors?

25 Feb 2014

The pseudo-currency’s main exchange has disappeared from cyberspace, leaving customers at least temporarily bereft. Bitcoin’s supposed attraction is being government-free. When things go awry, users learn why conventional finance has expensive regulation and political backstops.

Edward Hadas: Bitcoin repeats gold-standard errors

22 Jan 2014

The popularity of the pseudo-currency is a sign of economic amnesia. If bitcoin - with limited supply and without government support - were the only currency, it would suffer from the problems of the old hard-money system. The result would be unnecessary panics and crises.

Edward Hadas: An early obituary for bitcoin

8 Jan 2014

Bitcoin mania is not over yet. But the pseudo-currency’s recent volatility is probably the start of its collapse. A retrospective would teach a lot about speculative fever, financial ignorance and the ease with which entrepreneurial time and energy can be wasted.

Bitcoin mania heads into the end game

18 Dec 2013

The electronic pseudo-currency had a good run. Ideologues, speculators and scammers enjoyed it while it lasted. Now Chinese authorities are determined on a strict clamp down, maybe an outright ban. Common sense prevails. Bitcoin’s price is down 50 pct. It will fall much more.

China anti-bitcoin ruling will shake believers

5 Dec 2013

Beijing won’t allow currency competition. The central bank has barred financial institutions from trading the pseudo-money, while reining in anonymous users. Bitcoin can still be traded, but the authorities are wary. The virtual asset has just lost a lot of its speculative appeal.

Edward Hadas: Bitcoin is a step back not forward

27 Nov 2013

The web currency delights right-wing, anti-government economists. But private-sector money is a fantasy. Currencies need political authority; money matters are naturally the state’s responsibility. Bitcoin’s appeal has a lot to do with governments being bad monetary managers.

Bitcoin attention may flip its investor base

20 Nov 2013

U.S. congressional hearings confer a certain sort of legitimacy on the shadowy but high-flying virtual currency. Ardent inflationista and libertarian bitcoin backers won’t much like the arrival of rules and regulations. They could, however, inadvertently attract the masses.

Bitcoin ETF signals time to make market in cash

2 Jul 2013

A virtual currency fund IPO means there will now be an index tracker for almost everything. Except that financial engineers have ignored the most important asset class of all. No more. Say hello to the Breakingviews Dollar Trust. It makes holding cash as easy as trading a stock.

Bitcoins need more than fear and love to thrive

25 Mar 2013

The value of the digital currency beloved by inflationistas and libertarians has shot up more than 60 pct in a week thanks to the Cyprus-infused panic over deposit insurance. But it currently has too many drawbacks: utility, not emotion, will determine whether Bitcoins catch on.