This Nobel-winning economist thinks "stablecoins" can reduce volatility
The idea seems intuitively unworkable, but that isn't stopping Myron Scholes, co-creator of Black-Scholes, and one of the braintrusts behind the ignominous 90s-era hedge fund Long Term Capital Management.
Technical & Updates
"To ensure low volatility, Saga will employ methods from traditional finance. Saga will use a fractional reserve method (similar to what banks use) and deposit reserves in regulated banks. Saga will be essentially pegged to the IMF’s Special Drawing Right (SDR), an international reserve asset that’s comprised of a basket dominated by the US dollar and euro."
The project has a who's-who list of advisors:
"The advisory board includes Jacob Frenkel, the former Governor of the Bank of Israel and chairman of JPMorgan Chase International; economics Nobel laureate Myron Scholes, known for creating the Black-Scholes formula, the most well-known model for pricing options and derivatives; Dan Galai, a co-developer of VIX, the leading measure of financial market volatility; and Leo Melamed, the chairman emeritus of CME Group and pioneer in financial futures."
Before we get dazzled by its all-star advisory board (cough Theranos cough), let's first review what exactly stablecoins are and why some people call it "the Holy Grail of crypto". An excellent primer on the functions and mechanisms of stablecoins can be found here: Stablecoins: designing a price-stable cryptocurrency. The vision for stablecoin sounds fantastic, but the existing stablecoins don't actually always work. Read Preston Byrne's commentary below:
"What SAGA proposes is not anything new and it’s certainly not worthy of the name “stablecoin.” It’s a subsidy scheme which amasses a huge amount of collateral up front to create a price floor for a product the subsidy scheme sells in exchange for the collateral."
In the 1990s Myron Scholes helped create a hedge fund that promised to make money with low volatility - Long Term Capital Management. Now he is helping create a virtual currency that promises to make money with low volatility -- Saga. Does history repeat? https://t.co/XyxdlRs9s7— Nathaniel Popper (@nathanielpopper) March 22, 2018
An excellent Reddit exchange on collaterized vs. uncollateralized stableCoins:
Cardano published weekly technical report. Blog
To learn more about CRS in ZK-SNARKs, read our research article The Magic Behind ZK-SNARKs: Part III of Our Review of Technical Approaches to Anonymity in Cryptocurrency.
Lightning Network now has a capacity of ~$56,000 USD.
The number of lightning channels rises by 37% in one week. It now has 2,625 open channels with a network capacity of 6.51 BTC ( ~$56,000 USD ). 🎉🙌 #bitcoin #LightningNetwork pic.twitter.com/FQPJYtB3SP— Armin van Bitcoin ⚡ (@ArminVanBitcoin) March 22, 2018
SegWit transactions capacity increase compared to Bitcoin Cash transactions.
SegWit transaction capacity increase compared to Bitcoin Cash— BitMEX Research (@BitMEXResearch) March 22, 2018
Since the launch of Bitcoin Cash in August 2017, around 6.1 million SegWit transactions have taken place, 20.1% more than the cumulative number of Bitcoin Cash transactions in the period.https://t.co/DpTYhKxLJm pic.twitter.com/EQyivTmmHC
News & Commentary
"The FSA plans to work with police to file criminal charges if Binance fails to halt its Japan operations."
*The news of Binance, the world's largest cryptocurrency exchange, is under pressure from Japanese regulators immediately sent Bitcoin price to a 3% drop.
Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.— CZ (not giving crypto away) (@cz_binance) March 22, 2018
"Until recently, the I.R.S. showed little desire to go after cryptocurrency income, since there was so little of it. But last year’s boom changed all that. The agency has formed a team of specialists to investigate cryptocurrency-related crimes, including international money laundering and tax evasion."
"Dwyer and Mortimer-Lee argue that the change in sentiment towards companies like Facebook could bring about higher taxes and greater regulation that reduces the companies’ profits and leads to a fundamental repricing of the stocks and the overall tech sector in the market."
This is a serious moment for the web’s future. But I want us to remain hopeful. The problems we see today are bugs in the system. Bugs can cause damage, but bugs are created by people, and can be fixed by people. 1/9— Tim Berners-Lee (@timberners_lee) March 22, 2018
"Data protection and privacy rights are also fundamental to users’ trust in new technologies, because they addresses the vast power imbalances between consumers and those that process their data. Without such consumer trust, innovation cannot thrive."
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