Will Bitcoin Make It? By Ron Rimkus, CFA

Will Bitcoin Make It?

By Ron Rimkus, CFA

Posted In: Alternative Investments, Portfolio Management

Questions still surround bitcoin. After all, the digital currency experienced wild highs and outrageous lows in 2018 — its value has risen above US $19,000 and sunk below $6,000 per coin. The first question might be which version of bitcoin to focus on.

Besides bitcoin’s initial incarnation, there are the products of bitcoin’s various hard forks. Bitcoin Cash, for example, was created in August 2017, Bitcoin Gold in October 2017, and Bitcoin Private earlier this year.

Which one should you care about? All of them? None of them? Does it matter?

These hard forks mean that merchants must decide which forms of bitcoin to accept as payment and whether they need to quote their products in the different prices. What if a dozen versions of bitcoin are created? Will merchants quote prices for and accept payment in all 12?

Could bitcoin dilute itself into oblivion, with a hard fork for every Tom, Dick, and Harry with a pet interest? And how are these splits affecting the bitcoin project as a whole?

And bitcoin is just one cryptocurrency. At present, there are well over 1,000, and at least 39 digital currencies have achieved a market cap greater than $1 billion. What happens when one experiences an inflationary coup d’état in which 51% of the owners vote to expand the number of coins?

Maybe all cryptocurrencies will go to zero. Warren Buffett famously called bitcoin “a mirage.” Jamie Dimon, CEO of JPMorgan, termed it “a fraud.” Agustín Carstens, general manager of the Bank for International Settlements (BIS), described cryptocurrencies as a combination of “a bubble, a Ponzi scheme and an environmental disaster . . . neither a good means of payment, nor a good unit of account, nor are they suitable as a store of value.”

Many in the media are calling crypto a speculative bubble:

• “If Bitcoin Is a Bubble, The ‘Panic’ Stage Is Near” (MarketWatch)
• “Bitcoin’s Bubble Is Bursting. How Low Will Prices Fall?” (Forbes)
• “Bitcoin Is Worthless, Bubble May Pop Soon, Allianz Global Says” (Bloomberg)

Nevertheless, prominent advocates remain, and Morgan Stanley, Goldman Sachs, the New York Stock Exchange (NYSE), and even Dimon’s JPMorgan have all been dipping their toes or diving in to the space. Some have developed cryptocurrency trading products. Fidelity Investments recently announced the creation of a digital asset exchange for the retail market. So there seems to be some dissonance between public critique and private investments. These companies are investing in the future of bitcoin and cryptocurrencies.

Maybe a classic shakeout is required that culls most cryptocurrencies from the herd, but leaves a select few survivors that add something special to the marketplace. That’s what Michael Novagratz, formerly of Fortress Investment Group, seems to expect. He says crypto is now in a “speculative mania phase” that will end with a grand crash, one that, like the bursting of the dot-com bubble, will exact a considerable toll but help create a more mature and viable sector.

Those investors who have come to terms with cryptocurrencies and accepted them on a conceptual level must now deal with the realities of owning them. Portfolio managers and advisers have to address the practical questions for their flesh-and-blood clients. How might these investments behave in a portfolio? Do they most closely resemble currencies, hedges, or alternative assets?

And investors must contend with the existing uncertainties and risks presented by the current economy and fiat monetary system. The simultaneous convergence of opportunities and risks means that implementing a cryptocurrency strategy requires vigilant stewardship.

It is a hard puzzle to solve. But there are resources to which to turn. At the upcoming 63rd Annual Financial Analysts Seminar (FAS) in Chicago on 23–26 July 2018, George (Yiorgos) Allayannis of the Darden School of Business at the University of Virginia will examine these issues in his presentation, “Case Study: Bitcoin — Investment or Illusion?”

Of course, if you can’t make it, the pseudonymous Satoshi Nakamoto, the creator of bitcoin, may have a new book in the works. So, keep an eye out for that.

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

---

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/ KeremYuce

Tags: Alternative Investments, Bitcoin, cryptocurrencies, Fiat currency, Investment Products and Asset Classes

Wednesday, July  11, 2018

 Editions Global Edition  China Edition Africa Edition Europe Edition Asia & Pacific عربي Chinese(GB) Chinese(Big5) Français 日本語 русский Español 한국어 Deutsch Português North America 

Must-know facts about the interwoven China-U.S. economic ties

Source: Xinhua| 2018-07-05 16:05:32|Editor: ZX

BEIJING, July 5 (Xinhua) -- China-U.S. economic ties have been under the global spotlight this year after the United States initiated trade disputes and protectionist measures against its key trade partners including China.

Understanding how tightly interwoven the China-U.S. economic ties are and what huge benefits have been delivered to both sides over the past decades would help assess how much damage a trade war would do to the people of the two countries.

Here are some key facts and figures about China-U.S. economic ties:

-- In 2017, bilateral trade increased 15.2 percent year on year. China's exports to the United States grew 14.5 percent, outpaced by a 17.3 percent expansion in imports from the latter.

-- China is the largest trade partner of the United States, while the U.S. is China's second largest. Bilateral trade has surged to 583.7 billion U.S. dollars in 2017 from 2.5 billion dollars in 1979 when the two countries established diplomatic ties.

-- China receives 26 percent of U.S.-exported Boeing aircraft, 56 percent of its soy beans, 16 percent of its automobiles, 15 percent of its farm produce, and 15 percent of its integrated circuits.

-- The structure of bilateral trade is gradually improving. Over the past decade, U.S. exports to China increased about 11 percent annually on average, while China's exports to the United States only rose 6.6 percent.

-- Although China still has a trade surplus with the United States, it does not mean China benefits while the United States loses. About 40 percent of the trade surplus is actually generated by U.S. companies in China. In 2017, U.S. exports to China created some one million jobs for the United States.

-- U.S. trade with China saved each American household up to 850 U.S. dollars on average annually, or about 1.5 percent of the U.S. median household income of 56,500 dollars, in 2015.

-- According to a survey conducted by the American Chamber of Commerce in China, 64 percent of its member companies reported revenue growth in 2017, up from 58 percent in 2016 and 55 percent in 2015. Nearly 75 percent of respondents reported that they are profitable, the highest proportion in three years.

-- Statistics from the U.S. Bureau of Economic Analysis show the total sales of U.S. firms in China was about 372 billion dollars in 2015, comprising 223 billion dollars by their subsidiaries in China and 150 billion dollars through exports from America to China.

-- The United States has maintained a service trade surplus with China, which surged more than 30-fold from 2006 to 2016. Meanwhile, bilateral service trade only tripled. In 2017, U.S. service trade surplus to China reached 54.1 billion U.S. dollars.

-- Travel and tourism exports account for 61 percent of all U.S. service exports to China, according to a report compiled by the U.S. National Travel and Tourism Office. Some 2.97 million Chinese tourists traveled to the United States in 2016, spending a total of 33 billion dollars.

-- Chinese students have accounted for the highest percentage of foreign students in U.S. universities for eight straight years since the 2009-2010 academic year. A total of 350,755 Chinese students were enrolled in U.S. institutions of higher education during the 2017-2018 academic year, up 6.8 percent year on year.

Trump says Trudeau's comments are going to cost Canada 'a lot of money'

 John Melloy,CNBC 3 hours ago 

• Reactions
 
• Reblog on Tumblr
 
• Share
 
• Tweet
 
• Email

President Trump elaborates on why he appeared to be angry with Canadian Prime Minister Justin Trudeau following the G-7 meeting over the weekend.

President Donald Trump is still angry at Justin Trudeau for a perceived slight during a speech by the Canadian Prime Minister following the G-7 meeting.

Trump explained the situation Tuesday when asked about the G-7 gathering at a press conference in Singapore following his summit with North Korean leader Kim Jong Un:

"When I got out to the plane, I think that Justin probably didn't know that Air Force One has about 20 televisions. And I see the television and he's giving a news conference about how he will not be pushed around by the United States and I say push him around? We just shook hands. It was very friendly. ... No, I have a good relationship with Justin Trudeau. I really did, other than he had a news conference, that he had because he assumed I was in an airplane and I wasn't watching. He learned. That's going to cost a lot of money for the people of Canada. He learned. You can't do that. You can't do that."

The comments dashed hopes that Trump had moved on from what he believed to be was a "dishonest" action by Trudeau. The ire directed at the prime minister by Trump and his advisors had confused some trade observers since the comments seemed to be just a reiteration of what the prime minister had said previously and not a personal insult.

Trudeau said after the G-7 meeting that the aluminum and steel tariffs imposed by the U.S. on Canada on national security grounds were insulting and that "Canadians are polite, we're reasonable, but we also will not be pushed around."

Trump then tweeted Saturday evening, "PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, 'US Tariffs were kind of insulting' and he 'will not be pushed around.' Very dishonest & weak."

The president also withdrew U.S. support for a G-7 communique.

The president's staff then blasted Trudeau on Sunday with economic advisor Larry Kudlow accusing Canada of stabbing the U.S. in the back. Trade adviser Peter Navarro told Fox News, "There's a special place in hell for any foreign leader that engages in bad-faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door."

"We are being taken advantage of by virtually every one of those countries," Trump said Tuesday of the G-7.

On Canada, Trump continued:

"We have a big trade deficit with Canada. ... It's either 17 but could actually be 100 billion. You know they put out a document, I don't know if you saw it. They didn't want me to see it, but we found it. Perhaps they were trying to show the power they have. It's close to $100 billion a year loss with Canada. They don't take our farm products — many of them."

It's unclear what additional action the U.S. would take against Canada. The U.S. at the end of May imposed tariffs of 25 percent on steel imports and 10 percent on aluminum imports against Canada, Mexico and the European Union .

The U.S. and Canada are in the middle of renegotiating the North American Free Trade Agreement along with Mexico. The U.S. had a trade surplus with Canada of $8.4 billion last year, according to the Office of the United States Trade Representative . That figure adjusts to a $17.5 billion trade deficit when services are excluded, according to the USTR.

The Money Deluge (Video)

The Money Deluge

2017, 

Interest rates in Europe have consistently fallen for much of the past decade. Today, the rate is virtually nonexistent. As a result, many citizens have decided to keep their cash, gold and other valuables in safety deposit boxes. Yet, there appears to be a seemingly endless stream of cheap money flooding into the financial system, which only succeeds in propping up the wealthy while responsible investors are left out in the cold. "The Money Deluge" examines this complex financial reality that could lead to another volcanic global crisis.

This deluge of cheap money acts as a massive engine that redistributes wealth from the bottom up. Banks and states are propped up on the backs of the middle class who see little return on their investments and must contend with rapidly increasing costs. Checks and balances are tossed aside, and debts are permitted to mount among the elite while their liability is minimized. The meek regulations that remain in place are easy to circumvent. Brexit could further exacerbate this dynamic.

The real estate market is booming as the super rich continue to buy up properties as a form of investment. In London, over 40,000 homes have been purchased by large shell corporations, and many of them remain uninhabited. Meanwhile, ordinary citizens have been priced out of the housing market, and struggle to keep pace with escalating rents. Much of the working class have been forced to live far outside the city.

This economic model is almost entirely speculative, and it's driving a deeper wedge between the rich and the poor.

The filmmakers travel across Europe and speak with a series of financial experts who predict an oncoming meltdown in the global economy, young entrepreneurs who struggle to attain loans for their innovative start-ups, and seasoned investors who have been forced to reconsider what they do with their retirement funds.

The lessons from the 2008 global financial crisis have gone unheeded. When this current bubble bursts, it will likely prove catastrophic. "The Money Deluge" is an effective warning shot that speaks to the doom that could be lying in wait for us all.

Troubled Waters (Video)

Troubled Waters

In the midst of widespread pollution and the ill effects of climate change, we tend to lose sight of another factor that threatens the vitality of our oceanic ecosystem: overfishing. Troubled Waters examines the long-term economic and environmental ramifications of a rapidly dwindling fish population.

Our romanticized image of a modest working-class fishing boat sailing from a port is a fading remnant of the past. Today, corporate-owned super trawlers lurk the seas in search of their next massive marine haul. These tankers are designed to carry as much as 200 tons of fish per day. Many species are overexploited and in danger of extinction. The population of Pacific jack mackerel - a species once thought indestructible - has decreased by as much as 90%.

The largest fish have been the first victims of overfishing. Now, these species are gone, and the industry is left to pick through a smaller to medium sized inventory. This practice has fundamentally altered the food chain.

The fishing industry is a massive, multi-national operation which survives in large part on taxpayer-funded government subsidies. Demand for seafood is so great that entities like the European Union have been forced to look outside their own borders for fresh stock. They form bilateral agreements to fish in the waters of developing nations in exchange for sizeable financial donations.

Through their investigation, the filmmakers attempt to unravel a tangled weave of poor regulations, limited accountability, questionable sources of funding, and an ecosystem that hangs in the balance. These efforts are supported by a range of interview subjects including ecologists, conservation activists, and professional fishermen.

Beyond its clear and thought-provoking diagnosis of the crisis, the film also offers a number of options that can effectively curb the overexploitation of fish. These include increased restrictions on the periods of time fishing crews can operate in regulated seas, regulations on the type of equipment they employ, and the establishment of marine safe zones that deny all fishing activities until the population of certain species have a chance to regenerate.

Perhaps the most meaningful of the film's achievements is its ability to contribute to a more informed and conscientious consumer culture.

Directed by: Matthew Judge

The Bitcoin Psyop (Video)

The Bitcoin Psyop

2017, 

Do bitcoin and blockchain represent the technological innovations that will forever alter the way we conduct financial transactions or are they merely a hype-fueled sham? Amidst the cacophony of ongoing arguments between the system's harshest skeptics and most boisterous cheerleaders, it can prove challenging for a layperson to decipher truth from propaganda. The Bitcoin Psyop, a documentary short produced by The Corbett Report, peeks behind the hyperbolic techno-babble to deliver a clear-eyed view of the cryptocurrency revolution.

The most common point of confusion lies in defining what bitcoin and the blockchain actually are. In simplest terms, Bitcoin is an innovative payment network that operates without a bank or intermediary. Each transaction is logged on a digital ledger known as the blockchain. This database of a transaction is accessible by anyone on the bitcoin network, yet its creators insist this information is secured by military-grade encryption technology.

The bitcoin network represents something entirely new, and consumers have every reason to feel disoriented. Certain power figures of finance want to perpetuate that sense of bewilderment. According to the film, they frequently employ interchangeable terms and confusing lingo to keep the system's more ominous potential in the shadows. Just like with most weapons, the blockchain can be used with nefarious intent or as a tool to defend the greater good.

The network can be used to take power from the traditional banking system and place it back in the hands of the people. It can allow for the transfer of valuables and property without having to deal with needlessly intrusive regulations or invisible global borders. But it can also be used to exert greater control over the people and increased oversight of their every purchase and leave individual users vulnerable to the whims of totalitarian governments.

At this moment in time, bitcoin and blockchain stand at a crucial precipice. If we reach an understanding of the network and all its capabilities, we can begin to combat its potential for misuse. The Bitcoin Psyop provides a terrific primer on a complex topic and outlines the important role we all can play in making it a beneficial force in the world economy.

Directed by: James Corbett

Are there Other Earths? (Video)

Are there Other Earths?

2018 

The universe plays host to a surprising number of planets that appear quite similar to our own. Is it possible that humans could occupy any of these planets in the future? Remarkably, recent astronomical discoveries have pinpointed thousands of potential candidates. The engrossing documentary Are There Other Earths? examines the probable conditions on a handful of these planets and their parallels to the place we call home.

For a planet to be inhabitable by humans, it must rotate around a parent star much like our Sun, be temperate and shows signs of liquid water on its surface. Many possess a rocky landscape much like our own. Each of the planets profiled in the film meet this minimal criteria, but they still pose serious obstacles for human sustainability.

The film calls upon the efforts of several of the most revered observatories in the world, including NASA and the La Silla Observatory in Chile.

Their most recent discovery is the TRAPPIST-1 planetary system, a dwarf star around which seven planets rotate in close proximity to one another. Nearly 40 light years away, the star is significantly less luminous and massive than our own Sun, but at least three of its host exoplanets exist within a habitable zone. One of these planets - TRAPPIST-1f - is close to Earth's size and is thought to contain 20% liquid water content.

There's Ross 128b, a planet that orbits its red dwarf star once every 9.9 days as it inches ever closer to Earth. Almost 500 light years away lies Kepler 186f, a planet distinguished by a size, gravity and terrain much like Earth. In these instances and others, the conditions might exist that would allow biological processes to flourish. They may already harbor life forms of their own, which would finally resolve the question of whether we are alone in the universe.

The notion that humans can truly thrive on any of these exoplanets is more than a bit far-fetched at this stage. Each of them presents its own set of potential dangers and uncertainties. Regardless, Are there Other Earths? offers an intriguing glimpse into an alternate reality that might await humankind tens of thousands of years into the future.

Directed by: David Sky Brody

Ethereum hits new record high as price surge continues

• Oscar Williams-Grut
 

• 11h
• 7,480

• FACEBOOK
• LINKEDIN
• TWITTER
• EMAIL
• PRINT

• Ethereum cleared $1,000 for the first time on Friday.
• The digital currency cleared $1,200 for the first time in early trade on Monday to reach a new all-time high.
• It has since given up some of its gains and is up 6.8% against the dollar to $1,191 at the time of writing.

---

LONDON — Ethereum's recent surge is continuing on Monday, with the cryptocurrency close to its all-time high.

Ethereum, the second biggest cryptocurrency after bitcoin, crossed $1,000 per coin for the first time on Friday. Gains continued over the weekend and ethereum cleared $1,200 per coin in the early hours of Monday morning. It hit an all-time high of $1,261.41 at 4.40 a.m. UTC/GMT (11.40 p.m. ET).

The digital currency, which was worth just $10 at the start of 2017, has since given up some of its gains but is still trading higher on the day.

Ethereum is up 6.8% against the dollar to $1,191.96 at the time of writing (7.55 a.m. GMT/2.55 a.m. ET):Markets Insider

The immediate spur for the recent rally was a fourth quarter report on the performance of ethereum, which is a decentralized network for people to run contracts on. Transactions volume on its network doubled, according to a blog post, "surpassing 10 transactions per second for days at a time."

Ethereum's recent rally means the cryptocurrency now has a market capitalisation of $118 billion, according to data provider CoinMarketCap.com. That equates to 15% of the entire cryptocurrency market.

Elsewhere in the cryptocurrency markets, bitcoin is down 1.8% against the dollar to $15,875.17 at the time of writing and litecoin is down 2.4% to $264.19.

EXCLUSIVE FREE REPORT:
The Bitcoin 101 Report by the BI Intelligence Research Team.
Get the Report Now »

NOW WATCH: A crypto expert explains the difference between the two largest cryptocurrencies in the world: bitcoin and Ethereum

Follow Fintech Briefing and never miss an update!

Children of Abraham (Video)

Children of Abraham

2004 

Global acts of terror in our post-9/11 world have catapulted the issue of religious intolerance to the forefront. Can we ever achieve reconciliation between each religious sect, and avoid the bloodshed that arises from the most radicalized interpretations of their beliefs? Even among the most modest believers, the clashes between religious affiliations too often inspire division, conflict, and incivility. The riveting three-part documentary series Children of Abraham travels the globe to speak to various figures in the Christian, Jewish and Muslim communities and attempts to find common ground within the gospels they live by.

The film's host, a devout Catholic named Mark Dowd, attempts to construct this reconciliation by calling upon the lessons of a religious icon shared by all three faiths: the prophet Abraham. Deemed by Dowd as an "inter-faith superstar", Abraham was anointed by God as the uniting leader of all nations of the world for his unfailing faith. Conversely, Abraham's story may also point to the current scourge of violent extremism. For these terrorists, violence represents the ultimate act of devotion. From their perverted mindset, the justification for the carnage they inflict can be found in God's command that Abraham sacrifices his only son.

These concepts and many others are explored in this wide-ranging documentary. The first section traces the origins of Abraham and the ambiguous passages of religious text that allow for such discrepancies in belief. Part two opens in Jerusalem, and tours the sacred sites where all three religions often converge and fight for access. This final part of the film is perhaps it's most compelling as we're placed inside the confined walls of a state prison. There, a convicted killer outlines his reasons for targeting a Mosque.

The filmmakers do not focus solely on the differences that continue to divide persons of various faiths. It also offers inspiring portraits of those who work to foster welcoming environments of harmony and integration.

Travelling from Egypt to Bosnia to the deeply polarized Palestinian city of Hebron, Children of Abraham is a hugely ambitious exploration of age-old questions that continue to perplex and fracture large segments of our global society.