During the year, the cost of Litecoin increased 60 times. What is this cryptocurrency?
In January 2017, the cost of Litecoin did not exceed $ 5. In December it passed for $ 300. The competent tactics of the developer and founder of the network Charlie Lee brings him good results, and at the same time, all coin holders who believed in the prospect of investment.
Litecoin bases on the same open source code as Bitcoin, but with minor changes. “This is a global decentralized payment network, which has no control from any central authorities,” the website says. Litecoin is just an additional means of payment for bitcoin. It is often called “silver” in comparison with Bitcoin as “gold.”
In 2011, Charlie Lee, a developer of the Litecoin network, decided to create a new payment facility. It would require less time to confirm transactions and which could be obtained by all system members, not just individual miners. The main difference between the two crypto-currencies is the use of different work algorithms. While the Bitcoin network uses the SHA256 hash function, Litecoin uses scrypt — function, the speed of which depends on access to large amounts of memory. Creation of ASIC-devices for scrypt-function is much more complicated and more expensive than for SHA256. Thus, scrypt complicates the simultaneous launch of several processes on the video card. Thus, Litecoin can be profitable on a conventional video card and even on a CPU, which makes the network more decentralized.
Initially, the miners were asked to generate 50 coins per block, as well as in the case of Bitcoin. However, as to maintain the rate of inflation according to the schedule of changes, each 840,000th block becomes half as much. Therefore, the total number of coins to be extracted by the miners is 84 million units. It is four times more that of the Bitcoin network.
Today, Litecoin is the fifth-largest currency regarding market capitalization: about $ 17 billion versus $ 330 billion from Bitcoin. But this does not mean that the currency is not popular. Litecoin creator Charlie Lee is quite a public person, unlike Bitcoin anonymous developer Satoshi Nakamoto, about whom nothing is known at all. This played a big role in the development of the platform and the growing number of users. People understand why Litecoin is needed and what the developers are striving for, unlike Bitcoin. Since January 2017 the cost of LTC has jumped from $ 5 to $ 270. It is more than 50 times. At the same time, by the middle of December, the price had reached a peak value of $ 340 but stayed at this level all day. Many coin holders wondered: what is going on? Here are three reasons why the cost of Litecoin grew by 333% in just a few days.
Bitcoin price growth and futures launch
The Chicago Stock Exchange launched futures trading on Bitcoin on December 10. The rise in the price of the currency began a few days before the launch and continued after. On December 18, another exchange stock – CME – plans to launch futures trading. Analysts say that the price of Litecoin is directly proportional to the behavior of Bitcoin. Thus, the value of the first currency has significantly increased over the past two weeks. They also argue that there are two possible reasons for this dependence:
- increased activity of Bitcoin-holders and the inflow of a new audience that also ramifies on Litecoin;
- increasing commissions in the Bitcoin-network due to the loads, from which Litecoin wins at the expense of a quarter of the commission fee.
“Gold Rush” and a huge flow of users
The largest currency exchange Coinbase daily receives about 100,000 new users. Its application takes the first place by the number of downloads in the App Store. And this despite the fact that the exchange operates only with three currencies: Bitcoin, Litecoin, and Ethereum. As described above, the relationship between BTC and LTC plays a big part in this: people are rushing to the exchange in the hope of getting a profit in the future.
Buyers begin to understand what Litecoin is
As more people buy other currencies on exchanges like Coinbase with the help of BTC, the low fees and the speed of transferring funds to the Litecoin affect the network. The rapid finding of blocks in the network (2.5 minutes versus 10 for Bitcoin) is one of the main factors in choosing this cryptocurrency.
At the same time, Charlie Lee, its creator, supports Litecoin in every possible way. He is always on TV programs for comments and interviews. He does not forget about social networks, actively participating in discussions on forums and on Twitter. This increases the number of LTC Holders and the overall loyalty of the audience.
The cost of Bitcoin reached $ 20,000. A year ago it cost $ 788
The cost of cryptocurrency Bitcoin for the first time reached $ 20,000. The Coinmarketcap index evidences this. The total capitalization of the cryptocurrency was $ 335 billion.
The cost of Bitcoin began to grow actively from the end of November: then one Bitcoin cost about $ 8000 on average. A year ago, the cost of Bitcoin was $ 788.
How 1000 people control 40% of the whole market and can manipulate it
The Bitcoin rate is subject to incredible volatility. During the day it can rise by 30%, and then fall by 20%. One of the problems that adds the cost of unpredictability cryptocurrency is the owners of large amounts of Bitcoin. They are often called whales. They can take a course in peak, selling even a small fraction of their fortune. Such interventions became even more probable when the value of the cryptocurrency increased 15 times since the beginning of 2017.
About 40% of all Bitcoins belong to 1000 users. At current prices, each of them may want to sell about half the state, says Aaron Brown, former managing director of AQR Capital Management, Bloomberg. Moreover, whales can coordinate transactions or report them to the circle of the elect. Many of the large owners of Bitcoin had known each other for years and believed in cryptocurrency in the early years when the majority only ridiculed it. Therefore, whales can potentially negotiate to crash or raise the market.
Regulators react very slowly to the development of the situation on the crypto-currency market, so many of the existing rules are still blurred. If traders not only raise the price but will spread rumors online, this can be considered fraud. The Bittrex exchange recently warned users that their accounts could be blocked if they conspire to manipulate the price. For other cryptocurrency, laws may be different. Depending on how the altcoins are structured, and how investors plan to make money for them, some can be regarded as real currencies, the US Securities Commission says.
The recent rise in the price of Bitcoin is difficult to explain because the cryptocurrency has no intrinsic value. Launched in 2009 thanks to the work of an anonymous engineer, this is a form of digital payment that supports an independent network of computers. Cryptographic algorithms are used to confirm transactions. The most loyal fans say that cryptocurrency can replace banks and traditional money. But it costs exactly as much as someone will pay for it. This makes her a victim of sudden shifts in price.
Some argue that the situation is no different from the one that has developed in established markets. “A good comparison could be the investment in shares of young companies. Their founders and some investors own most of the assets, “says Paul of BlockTower. Other investors are confident that whales will not merge their assets because they believe in the long-term potential of the cryptocurrency. “It’s perfectly reasonable to think that whales who own so many Bitcoins and Bitcoin cache do not want to destroy each other,” said trader Sebastian Kinsman. But when prices soar to the skies, the calculation may change.
Robert Schoelkopf, a Yale University professor, is at the head of a global attempt to build the world’s first quantum computer. Such a machine would use the ostensibly mysterious principles of quantum mechanics to solve problems that modern computers never could.
Three leaders of the tech world – Google, Intel, and IBM, – are using a method created by Mr. Schoelkopf and other physicists as they compete to build a machine that could drastically speed up everything from business intelligence systems to drug discovery.
After their study helped to stimulate the work of so many others, Mr. Schoelkopf and two other Yale professors have started their own quantum computing company, Quantum Circuits.
Their startup has $18 million in funding from the venture capital firm Sequoia Capital and others. It is one more sign that quantum computing – for a long time a far-away dream of the world’s computer scientists – is coming closer to reality.
In the last couple of years, it becomes a technology that companies can begin to commercialize. It is apparent to us and others around the world that companies know enough about this that and can build a working system.
Quantum computing systems are hard to understand because they don’t perform like the usual world we live in. But this counterintuitive performance is what allows them to execute calculations at a rate that wouldn’t be achievable on a standard computer.
Modern computers store data as “bits,” with each transistor keeping either a 1 or a 0. But credit to something called the superposition principle – performance exhibited by subatomic particles like photons and electrons. The basic particles of light – a quantum bit, or “qubit,” can store a 1 and a 0 simultaneously. This means two qubits can hold four values at once. As you increase the number of qubits, the mechanism becomes really more powerful.
Todd Holmdahl, who oversees the quantum project at Microsoft, said he envisioned a quantum computer as something that could immediately find its way through a maze. A standard computer will attempt one way and get blocked and then try another and another, but a quantum computer can try all ways together in one go.
The trouble is that storing data in a quantum system for more than a short amount of time is very hard. This short “coherence time” leads to errors in calculations. But Mr. Schoelkopf and other physicists have worked to get to the bottom of this difficulty using what are called superconducting circuits. They have built qubits from materials that show quantum properties when cooled to tremendously low temperatures.
With this technique, they have shown that they can advance coherence times by 10 factor. This is known as Schoelkopf’s Law, the canon that says the number of transistors on computer chips will double every two years. Fun fact is that Schoelkopf’s Law started as a joke, but now scientists widely use it in a lot of research papers.
Quantum computing research
These superconducting circuits have become the main area of quantum computing research across the industry. One of Mr. Schoelkopf’s former students now is leading the IBM quantum computing program. The creator of Rigetti Computing studied with Michel Devoret, one of the other Yale professors behind Quantum Circuits.
Recently, after building a team of top researchers from the University of Santa Barbara and California, Google find out it is on the edge of using this method for building a mechanism that can achieve “quantum supremacy.” It is when a quantum machine do a task that your laptop or any other machine that based on the laws of classical physics can’t do.
Also, other research areas show promise. Microsoft, for example, is making a bet on anyons, special particles. But superconducting circuits seems to be the first systems that will accomplish something.
The scientists believe that quantum machines will ultimately analyze the interactions between physical molecules. Such process isn’t possible today, that’s why it is something that could fundamentally accelerate the development of new medications. Google and others also think that these systems can drastically accelerate Data Science, Data mining, machine learning.
A quantum computer could also know how to break the data encryption and decryption algorithms that protect the most sensitive government and corporate data. With so much value, it isn’t surprising that so many companies are trying to implement this technology, including start-ups like Quantum Circuits.
The majority of influence is stacked not in favor of the smaller players because the top companies have so much more money to spend on the problem. But start-ups have their pros, even in such an expensive and complex area of research. Sometimes, we can observe large teams inside huge companies doing nothing tremendously innovative. But small teams of extraordinary people can do outstanding things.
Even though Quantum Circuits is using the same quantum method as its bigger competitors, Mr. Schoelkopf says that his company has an advantage because it is dealing with the problem in s different way. Instead of building one big quantum machine, they construct a chain of tiny machines that are (can be) networked together. It makes the process of correcting errors in quantum calculations easier, which is one of the main troubles in creating one of these complex machines.
But the thing is that each of the leading companies insists that they have an advantage and each is trumpeting its progress. But the truth is that a working machine is still years away in the future.
The promise of a huge quantum computer is extremely powerful. It will solve problems we can’t even envision right now!
When you are looking for a perfect freelance designer it can seem like Forrest Gump’s box of chocolates: You never know what you’re going to get. But the thing is that it doesn’t have to be that way. With a little research and some self-education, you can choose the perfect designer for your project.
In the process of choosing the one, you need to have a clear image of what you need. Observe the efforts of graphic designers all around you and notice a style and design that speaks to you. Research them and prepare to share it with the future employee. It can start the conversation, and during it, you can learn more about each other. You need to treat each candidate as a partner to help your business plan succeed. So, the better you communicate and understand with each other, the more effectively your project will run.
Tips for finding right designer
Here are six recommendations for choosing a perfect freelance graphic designer, before you start searching.
- Establish project needs
- Settle on budget
- Determine required skills
- Do a good research
- Understand the contract
1 Tip – Establish Project Needs
Grow a creative brief to demonstrate freelancers under consideration. The creative brief should have information that will facilitate designers understanding of the product design and whether they have the relevant skills.
If you decide to create it, we recommend to include the following:
- Your company’s info: what you do or sell, your mission and your culture
- The goal of the project
- Exact skills and qualifications that it require
- Clear project deadline
- Any probable obstacles
It’s quite easy to overlook that all freelance designers won’t have the same level of knowledge or vision of your business as you do. Sharing this information at the start will keep both of you from wasting time on a project that isn’t a perfect fit or that doesn’t fit your acceptations.
2 Tip – Settle on budget
When you are planning a new project one of the main things that you need to consider is the budget. You must settle on how much can spend on each aspect of your project. There is a standard pricing between designers, but you should find what suits your price range. Besides, many designers will discuss their prices in return and negotiate for ongoing and consistent work.
On the other hand, don’t be too greedy. You’ll get what you pay for, and you’re investing in your business. Always treat every employee in such a way. High-quality design performs well into the future as a critical marketing tool in the modern business environment.
Try to be flexible in your options for payment. Consider Paypal, a popular method for freelancers, but also there are some other payment applications.
3 Tip – Determine Required Skills
Graphic designers have many variants to select from when they are creating their designs. If your business requires a specific app, such as Visual Design and Adobe Illustrator, make sure that your candidates have a high level of skill with those tools. Get to know your candidates better: their specializations, expertise and what they deliver to your company.
Also, we recommend setting whether you will you provide stock images, or they will have to take photos to incorporate into the design. Some experienced designers already have favorite image sources. If you are lucky, some can even help you find right resources.
For logo design, make sure that your candidate can create the design in fully scalable vector format to guarantee image quality at any size and surfaces.
4 Tip – Do a good research
A vital part of finding suitable candidates is analyzing their portfolios. Use this opportunity to fullest to see their creativity and versatility.
- Development of different platforms and media
- Optimal formatting of video, web pages, and print advertising
- Use of the modern web coding protocols and the ability to test a web page across mobile devices and multiple browsers for proper display
Analyzing their portfolios can help you to find out how each designer works creatively and whether it meets your sensibilities and ideas.
Even if you have some particular design or style in mind, always be open to something edgier than usual. A new vision can compliment your ideas and brand development at all.
5 Tip – Interview
Bring together a short list of the designers that are matching your needs the most and for sure who have interest in your project. Also, we recommend interviewing in person or via any video chat so you can get a better understanding of the candidate.
Screen sharing and video chat also give you an opportunity to share sketches and images more interactively. You get a better idea of how it is to work with each candidate. It is an important consideration if you want to build a long-term partnership.
Ask them about their inspiration for different parts of their designs. Learn why they use particular techniques and color schemes. Discuss different websites, brands, artists or books that inspire their work. Their main motivations will give you an understanding of their sense of style.
Also, don’t forget to ask for references and follow through by contacting those references. You need to know if the designer you are considering hits deadlines, conducts himself or herself professionally, and is great to work with.
If you choose to ask for a small trial project, make sure to pay the designer for the effort and time. You would expect payment for any of your services or products, so never ask for free work from any creative professional.
6 Tip – Understand the Contract
If the designer has a contract, read, analyze it and make sure that you understand every part of it. If the designer doesn’t have a contract, you should prepare one yourself. It can save you from unpleasant surprises including scope creep and additional expenses. You want clearness in all your business dealings.
Ask if the budget and timeline that you propose are reasonable. Also, clear who retains ownership of the creative work.
And remember that the graphic design for your packaging, marketing and website is the first impression that your target audience gets about your company. Invest in a professional designer who delivers quality work to the highest standards.
The appearance of the sharing economy is a groundbreaking phenomenon of the modern world. It has real reasons for that. The first is that the targeted industries are often unproductive. The second reason is that over time, regulations have accreted, evolving to serve specific interests rather than protect users and service standards. It has impeded development and reduced competition. Proponents quarrel, with justification, that sharing economy competitors usually provide a better product.
With the appearance of shared economy, we need to reform current regulatory frameworks. It is obvious that substituting a new monopoly for an existing one and replacing the existing system with non-professional service providers is not the optimal response.
What is the sharing economy for workers?
The sharing economy has responded to the depressed labor market and the fragile economic environment. Workers have a hard time finding work or need a supplemental income to use these platforms to earn extra income from their assets and labor. The majority of workers in the sharing economy field would prefer traditional employment.
Technically, such worker is a “contractor” and is not “employed.” There is a huge argument for the rights and correct legal status of the sharing economy workers in some jurisdictions. Many opponents have argued that it is creating a virtual “human cloud” of “digital serfs” that leads to a global race to the bottom for benefits and wages.
The expansion of the sharing economy affects both skilled and unskilled work. Professionals, such as designers, radiologists, and engineers, from Eastern Europe, Latin America, Africa and Asia are undercutting peers in advanced economies.
The sharing economy platforms use these factors. They are betting that low prices by avoiding expensive regulations and paying providers less, will make mass markets for services once kept for the wealthy.
Top sharing economy platforms
Uber has raised more than $15bn in debt and equity, valuing the business at more than $60bn despite the fact that the business is not presently profitable. The ride-locating service has a superior assessment than usual car hires companies, such as Avis and Hertz, and public transport companies as United Continental, American Airlines, and Delta Air Lines. Also, Airbnb has a higher worth than all but the major hotel chains.
The development arc of the sharing economy always requires available service or product providers. For example, people use shared hosting offers to reduce the price. Another example is eBay grew from a marketplace where average people were selling unwanted items for cash to a huge marketing channel for specialized sellers. Also, Uber acts more like a booking agent for skilled taxi drivers and hire cars. Besides, a small number of large property owners dominate Airbnb lettings.
Pretensions of the sharing economy
It is perhaps the most sinister aspect of it. Cheerleaders frame the sharing economy in lofty utopian terms. For them, the sharing economy is not a business but a social movement that transform relationships between people. It creates trust and makes essentially more democratic communities. Customers are not just getting cheap services, but get new contacts. Providers are engaged in diverse and rich work, gaining precious flexibility and independence benefiting from a decrease in entry barriers to sources of work. But the evidence doesn’t support these point of view.
The sharing economy influences and alters public relations. Friends and neighbors have always helped each other, lending each other equipment and tools or giving a ride or share skills. The sharing economy only widens the possibilities. But it adds a monetary element to it as well. It exploits the circumstances of people and makes them not to trust each other but trust the platform, which provides income for the sharing economy firms.
The key economic backers of the sharing economy are not philanthropists. They are driven by business rather than social considerations and are Silicon Valley’s and Wall Street 1 percent, related venture capital firms and a few institutional investors. But the total amount of capital is a substantial sum.
The influence of the sharing economy
The sharing economy for sure is influencing the way how traditional businesses function. Usual automobile makers could offer a car sharing service, such as BMW’s Drive Now. Users can use a car when they need it and pay only for the usage time.
The problem is that this model is quite exploitative. The pricing structure is a boom for a depressed economy, where cheap, abundant, contract laborers are waiting for the push of a smartphone button. Full-time employees with standard benefits and compensation are unable to get along with the basic economics.
No matter what the gains from increased efficiency our economy get, it recreates a Dickensian world for a part of the people. Normal employment to different degrees protects employees from deprivation and exploitation. The sharing economy moves the danger of economic insecurity from the employer to the employee with potentially sad consequences.
Most significantly, the fundamental economic principle is false. Consumption constitutes 60 to 70 percent of activity in superior economies. The decrease of employment security and low income levels at the end of the day reduces economic activity and consumption, impoverishing most within society.
The innovation and technological basis of the sharing economy don’t mask the fact that it sends back to earlier times when uneducated, poor workers took on any work to survive. Today, a new underclass provides demand for investors of the sharing economy and the industry influencers services. It is desperate digital partial work labor, a coda to middle-class dreams.
Still some five to ten years ago, it would never occur to us that things that dust on the shelves and are used a couple of times a year can bring additional income.
Today, the market for sharing economy or the economy of joint consumption is actively gaining momentum around the world, thus breaking the traditional model.
Sharing economy is when you no longer need to buy something (a thing, a room, a car) for exclusive use, or you can simply rent it when you need it and for a small fee. For example, you want to hang a new shelf. Instead of running to the store for a drill, go to SnapGoods and take it for several hours to rent.
Sharing economy is when owners turn to online sites to capitalize an unused part of their property, and consumers rather rent what they need from private individuals than buy or rent from companies.
Initially, the sharing economy assumed an exchange between people, but, as often happens, companies learned how to use this resource for their purposes effectively. Take eBay. It turned out that most of those who sell on eBay are companies that buy goods from warehouses or resort to refurbishment.
The volume of the world market sharing economy at an average annual growth rate of 33% by 2025 could reach $ 335 billion.
The main hopes for the further development of the segment are associated with several categories of services: recruitment, rental housing, car-tracking and the search for fellow travelers. In the next ten years, the average annual growth of each of these markets will be 25% – 35%.
The Airbnb project today is considered one of the most successful start-ups in the world. The company’s value, according to the latest data, exceeds $ 25 billion.
In the US, this rental service begins to confidently restrict the traditional hotel business. In just one year 2015, Americans spent about $ 2.4 billion on rental housing with Airbnb.
How and why did the creators of the service achieve such huge popularity?
Birth of Airbnb
In the Silicon Valley, there is an implicit rule for creating a successful start-up. The project must solve the actual problem and easily scale.
Airbnb has become the ideal embodiment of this simple formula.
In late 2007, the creators of the project, John Gebbia, Nathan Blecharczyk and Brian Chesky decided to earn some money.
At that time in San Francisco was a major conference, and the guests of the city occupied all the rooms in the hotels. New visitors faced difficulties when trying to rent a house for a few days.
Chesky, Gebbia, and Blecharczyk decided to take advantage of the situation. Within a few hours, they wrote a simple Blecharczyk website AirbedAndBreakfast.com. There they posted an announcement about the delivery of housing.
The first clients of the service were three guests of San Francisco. Their developers settled in their room and, according to the name of the page, provided them with air mattresses and breakfast.
These simple services brought the project the first $ 240, at $ 80 per guest. The developers, who until that time did not dream of creating a unicorn company, realized that the idea was working.
In the summer of 2008, the project, which changed its name to Airbnb, was officially launched.
Formation of the project
Despite the fact that the idea of the project was born in just a day, the promotion of a full service required much more time.
Launching the first test page at the end of 2007, the developers successfully chose time and place. The same trick they tried to repeat in 2008.
A suitable case also turned up. In August 2008, Barack Obama was nominated for the presidency of the US. Therefore, a lot of people were to come to Denver.
On the eve of the nomination site, indeed, the user popularity — it was placed about 8 thousand ads on the delivery of housing.
Nevertheless, when the event was over, the popularity of the resource immediately fell. Developers realized that without a powerful advertising campaign they could not do. And she needed investments.
The first $ 20 thousand went to the project by the start-up incubator Y Combinator. In the same place, developers received some extremely useful tips on how to improve the service.
Embodied with all the recommendations, the project received another $ 600 thousands.
From that moment the company was able to announce itself and attract a new audience. It should be mentioned that at that time the economic crisis broke out, which hit the US citizens well enough.
Service Airbnb allowed people to rent housing, receiving additional means of subsistence. It is on this aspect that the company has made an accent in its advertising campaign, and has not lost it.
The audience of the service began to grow rapidly. In 2009, Airbnb became popular and widely known.
Reasons for success
As already mentioned, one of the reasons for the success of Airbnb is an almost flawless correspondence to the “perfect startup” formula.
Also, in 2008 the economic situation in the world played into the hands of developers. Nevertheless, these are not the only reasons for the success of this project.
Surprisingly, Airbnb project anticipated the developing trend of the economy of joint consumption. It became as one of the flagships of the sharing economy.
Of course, such a service would never become possible in the world without the widespread penetration of the Internet and the popularity of mobile applications.
Therefore, one of the important factors in the success of Airbnb is the timeliness of its appearance.
Finally, one can not but note the very responsible approach of the developers themselves to their offspring. In 2010 Brian Chesky, the company’s CEO, decided to conduct an unusual experiment.
For several months he lived exclusively in rented apartments, once a week moving from one end of San Francisco to the other.
This experience helped him to understand the users better, to find and fix a lot of minor service shortcomings.
Now the company has a separate specialized unit, which deals exclusively with improving the quality of services.
Bloomberg interviewed ten economists, banking specialists and other experts. They found out what things should be feared shortly in the economy. Among them — unstable oil prices, unsatisfactory situation in China and a possible Bitcoin bubble.
The collapse of quantum foundations
When you recollect the financial crisis, you will realize that the collapse of quantum funds (investment funds that use quantum analysis in their work, create predictive models to find out how attractive investment is) has become its harbinger. Quantum funds experienced great losses in August 2007. Exactly one year before the financial catastrophe.The founder of a similar fund – AQR Capital Management – Clifford Asness says that the second collapse of quantum funds is inevitable. Quantum strategies are popular, and popularity is what drives them to move in one direction. Be it a path to success or failure. As a result, the second collapse of such funds will happen due to the negative influence of the media.
Bill McNabb took over the leadership of Vanguard Group Inc. just after the financial crisis and helped the company increase the value of its assets by $ 3 billion. Now he is going to leave his post and says that his primary concerns are related to cybersecurity: “Our budget for cybersecurity has grown ten times over the past seven years”, says McNabb.
Kyle Bass, the founder of the asset management company Hayman Capital Management LP, which monitors the situation in China, said that the country’s leadership hides the unsatisfactory state of the banking system — for political reasons.Zhu Ning, deputy director of the National Institute for Financial Studies at Tsinghua University, raises the same question in her book China’s Guaranteed Bubble. According to him, the enormous amount of debt burdening the Chinese financial system, combined with an overheated real estate market, creates significant risks for the economy, from which the rest of the world is waiting for growth.
Stability of exchanges
If you divide the hours of the trading day by a quarter, then there is no such important segment as the last 15 minutes. It is at this point that the final prices are set, which affect the trading portfolios and pension accounts. And if stopping the work of one of the stock exchanges – due to an internal malfunction or a cyber attack – will not affect the market during the day, then any mistake in the last 15 minutes will lead to unpredictable consequences.Formally, there is a “plan B”, according to which one of the exchanges will be a backup for another in this situation. But the fact is that in such cases this plan has not been tested – and this leaves a lot of questions unanswered.According to Joanna Fields, CEO of the consulting firm Aplomb Strategies Inc, the lack of the ability to set the final price of shares may affect other types of securities, including options and OTC derivatives. “There may be a chain reaction”, says Fields.
Real estate market
Diversification is not always safe, says Jared Dillian, who previously ran the stock investment fund. “Retail investors who buy exchange investment funds or index funds think their assets are diversified”, Dillian said. But, as he said, not everyone understands, that these in these trades are involved by a lot of people. We can turn around ten years ago and see how things can go wrong.This practice does not lead to a financial crisis. But Dillian believes that this could lead to the sale of assets – a year, five or even ten years. “This situation has the potential to reach the scale of a major market collapse”, Dillian said.
Discussions on whether Bitcoin is a bubble or not continue to divide the financial world. On the one hand, billionaire Mike Novogratz spoke of the intention to earn “a bunch of money” in the Bitcoin boom. JPMorgan Chase CEO James Dimon, on the other hand, calls people who buy cryptocurrency “stupid.”But the consequences of the likely collapse of the cryptocurrency will be limited. Due to their relatively small popularity. However, this may change. The entire cryptocurrency market is relatively small – $ 300 billion. After all, this is ten times more than at the beginning of the year.The potential affirmation of the trade in Bitcoin futures means that digital assets can soon become quite popular. Co-director of Themis Trading LLC, Joseph Saluzzi, says that cryptocurrency derivatives are risky. Furthermore, they legitimize assets with prices received from unregulated exchanges subject to manipulation and fraud.According to Saluzzi, this situation in the future has every chance to look like collateralized debt obligations, which contributed to the financial crisis of 2008. “Cryptocurrency will make it attractive to be invested in”, he says.Risks related to crypto-currencies can also spread to the entire economy if the crypto credits gain popularity. And while the idea is still in its infancy, there are already startups offering dollar loans in exchange for digital assets such as Bitcoin. If these assets collapsed, the borrowers’ ability to repay the debt would also be lost.
Tad Rivelle, co-director of the Metropolitan West Total Return Bond Fund, shows the growing gap between the value of US household assets and GDP growth. This is a sign that the economy is heading for a fall. This difference is greater than the one before the bubbles that preceded the two known recessions: the dot-com crash in 2001 and the 2008 crisis. According to him, the most worry is now the policy of low and negative interest rates. Moreover, it contributes to higher prices and forces investors to take more risky decisions.
David Preiser, the member of the board of directors of the investment bank Houlihan Lokey Inc., believes that the next crisis will occur because of the loss of confidence in any region. Praiser believes that such regions can become the European Union and the euro area. He says that for a long time the Europeans worked together, but everything changed after the UK withdrew from the EU. Preiser emphasizes that when the next crisis occurs in the euro area, the confidence that the Union will rally will be much less.
Ryutaro Kono, a senior economist at the Japanese division of BNP Paribas, says that Japan’s fiscal easing. Also, it carries risks. Unless drastic measures are taken to eliminate the financial problems of the country. According to Kono, the yen could fall to 150 units per dollar – compared to about a 111 yen now. This can increase inflation from the current 0.7% to 4-5% or even higher.
According to the International Monetary Fund, Japan has the largest public debt of industrialized countries. It equals to about 240% of GDP. The possible reason for the weakening of the yen may also be the downgrade of the country’s credit rating. Kono says that because of this, it will be more difficult for creditors to borrow foreign currency. This in turn will force them to “sell the yen to buy dollars, as it was during the 1998 financial crisis” in Japan.
Sir Michael Hintze, head of CQS U.K. LLP, believes that one thing that can turn all the assumptions about global growth is another decline in oil prices. “Such a situation can provoke large-scale consequences”, says Hintze. Also, he adds that a mark of $ 35 per barrel could be a turning point. Hintze says investors will be very unhappy if they ignore this moment and its harmful consequences on the world economy.
Absence of the right to an error
Since mid-2018, only one organization, The Bank of New York Mellon, will be in charge of securities for almost $ 2 trillion. It received them from so-called repurchase transactions. It means a purchase or sale of a security with an obligation to repurchase or purchase after a certain period in advance agreed on the price. JPMorgan Chase, its long-time rival, decided to withdraw from this sphere.The Bank of New York Mellon has invested billions in upgrading and modernizing its technologies. However, some investors fear that any malfunction could damage the bond markets. “It is troubling that the market can suffer only because of one mistake. This is not an ideal situation”, says Adam Dean, Managing Director of Square 1 Investment Management Inc.
The scale of the next crisis
According to Deepak Gulati, General Director of Argentiere Capital AG, the next crisis will have more consequences than the past. While the last crisis “was about greed, the next crisis will be about the need,” he says. “Then we had about 15 investment banks trying to make a profit. Now thousands of market participants hunt for money”, Gulati notes.
Dan Fass, an investor with 59 years of experience, says he is an optimist. But even he began to notice changes in the mood of partners – he said, they became cautious, especially in Asia. “Usually, our clients decide to invest in assets in the US, but recently they are investing money elsewhere”, says Fass.
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