Alt-Money: What Is This Stuff? Dave Nadig, CIO & Director of Research ETFTrends/ETFdb
February 3rd, 2020
Why Do We Need Money?
Store of Value Medium of Exchange Instrument of Policy
Buzzwords to Know Blockchain =
Settlement & Ledgering Technology
Cryptocurrency = Blockchain + Distributed Authority + Psychological commodity CBDC =
Central Bank Digital Currency, that is, a Blockchain Settled Fiat Currency
Stablecoin =
Pegged Cryptocurrency
Bank for International Settlement, Paper 101, 2019
E-Cash Pros:
Easy for consumers/retailers to adopt Can control for Fraud/Money Laundering Fantastic EM solution for the un-banked
Cons: Puts cash into a corporate escrow-like entity Proprietary & Profit Driven
Blockchain Settled Funds Pros:
Clear understanding of ownership Much faster settlement times Exchangeless “quasi-private� network
Cons:
Regulatory uncertainty
Decentralized Crypto Pros:
Largely unregulated (if that’s your thing)
Cons: Scalability They’re commodities of psychology Evolving tech / threat levels Make fraud/laundering more problematic
:
Big Issue: Scalability ~ 65,000 transactions/second Capped ~ 7 transactions/second
s: ~700 transactions/second
ns:
Second party networks (Lightning), Different protocols (XRP)
Retail Adoption: Bananas
Bitwise
Advisor Adoption: Growing
Source: The Bitwise/ETF Trends 2020 Benchmark Survey of Financial Advisor Attitudes Towards Cryptoassets. The survey was conducted in December 2019.
Advisor Adoption: Growing Fast
Source: The Bitwise/ETF Trends 2020 Benchmark Survey of Financial Advisor Attitudes Towards Cryptoassets. The survey was conducted in December 2019.
Institutions Rapidly Buying In
General Purpose CBDC Pros:
Retains value as a policy tool Potential to mimic E-Cash’s benefits Significant improvement in fraud/tax evasion
Cons: Fiat currency Nearly guaranteed surveillance
CBDC in Plain English Who holds the account? The Central Bank Who process transactions? The Central Bank Who manages/controls privacy? The Central Bank What’s left for retail/commercial banks? 21st Century Savings & Loans
Thank You dnadig@etfflows.com @DaveNadig