Surprising Fed Report: Positive Outlook for Cryptocurrencies
Among the institutions you’d least expect to paint a rosy picture for decentralized cryptocurrency, the Federal Reserve might top the list. But that’s exactly what they found in a research report issued by the St. Louis Fed this month, authored by Aleksander Berentsen and Fabian Schär.
Overall, this relative crypto noob found the report to be a pretty strong primer on bitcoin & blockchain, providing a fair assessment of both strengths/utilities and shortcomings/risks. I particularly found the explainer on the mechanics of mining to be clear & concise (though I’m sure more proficient crypto-folks would find aspects overly simplistic or lacking nuance). If you’re relatively new to the space or interested in brushing up on certain aspects, I’d recommend this high-level analysis. It’s a pretty quick 16-page read.
Below are the major takeaways along with a few interesting tidbits culled from the report:
Major Takeaways
“We conclude that Bitcoin has a wide range of interesting applications and that cryptoassets are well suited to become an important asset class.”
pg. 1
pg. 2
pgs. 14-15
Caveat:
The views expressed in this article are those of the author(s) and do not necessarily reflect the views of the Federal Reserve System, the Board of Governors, or the regional Federal Reserve Banks.
Interesting Tidbits
(1) I’ve heard variations of “stone money” and “rai stones” referenced in the crypto community a few times, but never understood the context. The report cleared that up nicely:
pg. 3
(2) In further contrasting Bitcoin with Rai Stones of Yap, they touch on an aspect of crypto which I think Steemit attempts to address, namely how “reputation” can play into the ecosystem.
pg. 5
(3) It’s remarkable how quickly data on pricing-- even for a report issued Q1 2018 - can quickly seem ancient. A $7,000 BTC price point seems quaint nowadays.
pg. 7
Hope you found this helpful. If you have any thoughts, clarifications, or corrections, please let me know.
I am planning to do similar weekly posts in the spirt of this one, typically on topics where crypto, politics, and government intersect.
@zord189