Bitcoin and the coming "structural adjustment"

Chris Dannen

By Chris Dannen

The concept of the "business cycle" is owed to Joseph Schumpeter, the early-20th-century economist who believed that adoption of new technologies spurred economic growth, as well as social turbulence. In her 2002 book, economist Carlota Perez expanded this idea by framing the adoption period as one of "structural adjustment," wherein the technology first "inrupts" (sic) and then creates a frenzy. The frenzy period sees heavy investment and adoption, such that reglatory regimes must change; this turbulence may have social consequences, but also creates periods of explosive profitability. After the inruption and frenzy comes "deployment," which Perez says is characterized by stable and prosperous development, which may be considered a golden age, but is actually less profitable than the frenzy period. Where is Bitcoin today? Reguatory adjustments reported this week suggest the frenzy may be just beginning, just as institutions get a handle on cryptocurrency custody.

News

The Big Con - Reassessing the "Great" Recession and its "Fix"
“If the banking system, not the banking players is the problem, the solution surely lies in fundamental banking reform. This paper concludes by pointing out that a reform that shifted to 100 percent, equity-financed mutual-fund banking with government-organized, real-time asset verification and disclosure could preclude financial runs and their ability to induce firing runs.”

China Lifts Bitcoin Ban; Individuals and Businesses Can Now Own Cryptocurrencies Legally
“A huge significance of this move is the seeming embracement of technological innovations by China, who have in recent times, shown aversion to innovations of the Blockchain technology. The country’s internet regulator, however, is looking to put an end to the anonymity enjoyed by the country’s Bitcoin users by forcing services to perform a necessary KYC on its users so their identities can be found out.”

The Business of Bitcoin Cold Storage
“An endowment, central bank, or pension fund making its very first allocation to bitcoin will not self-custody due to lack of cold storage expertise. Unlike individuals with an ambition for financial sovereignty, these large institutions will trust third parties, diversify their risk, and buy insurance to protect their bitcoin.“

The problem bitcoin solves
“Can government currencies and bonds collapse, or drop significantly in value, despite the ‘men with guns’ that protect them? The answer—after 100 years and more of hyperinflation, financial repression and sovereign default, which together have affected billions of people—is a resounding yes.”

France is Ready to Lead the Crypto Revolution: French Treasury Department Shares Perspective on PACTE Law, Initial Coin Offerings
“France is positioning itself as a jurisdiction of preference for initial coin offerings (ICOs) in Europe. The government is in the midst of finalizing legislation, under the PACTE Law, that will regulate ICOs. While several other European countries have moved forward with specific legislation designed to encourage the issuance of digital assets, France will be the first large EU member state to create bespoke legislation that clearly defines the process to publicly offer tokenized assets.”

Saudi Arabia Is Evaluating A Break Up Of OPEC
“Saudi Arabia’s top government-funded think tank is said to be studying the possible effects on oil markets of a breakup of OPEC, a research effort which the WSJ called ‘remarkable’ for a country that has dominated the oil cartel for nearly 60 years. The OPEC study aims to ‘assess the short/medium-term consequences of a dissolution of OPEC,’ according to an overview reviewed by The Wall Street Journal. It is intended to determine how the global oil market, and Saudi finances, would look ‘if coordination between oil producing countries disappear,’ according to the overview.”