Bitcoin’s Odd Nobel Nod And Blockchain’s Big Bank Bet

One of these is not like the other.

Bitcoin has always been a bit of an outsider, but it now seems that it’s trying to find its way into the mainstream conversation. And in particular, via one very coveted award: the Nobel Prize in Economic Sciences.

That peculiar nomination came from UCLA economics professor, who this week shared why he had nominated bitcoin’s anonymous creator, Satoshi Nakamoto, for the 2016 award. And he even wrote a lengthy op-ed in The Huffington Post explaining why Nakamoto — despite no one really knowing who he is — is the best fit for the award.

“I then started thinking whose ideas are likely to have a disruptive influence in the twenty-first century. The name of the inventor of bitcoin suddenly jumped up in my consciousness, and I have not been able to get it out of my mind since then: Satoshi Nakamoto,” Professor Bhagwan Chowdhry wrote.

He goes on to say that he “can barely think of another innovation in economic[s] and finance in the last several decades whose influence surpasses the welfare increases that will be engendered by Satoshi Nakamoto’s brilliant, path-breaking invention.”

And even though Nakamoto’s identity is not known, Chowdhry claims that it can be verified. But Chowdhry explained in his letter that he will accept the award on behalf of the inventor if he wins the award.

How thoughtful of him.

Nakamoto’s identity is likely a pseudonym for bitcoin’s true creator, and he has been mysteriously out of the spotlight for the past few years.

Sure, bitcoin and the blockchain technology has started getting the financial community buzzing about its potential. Well, blockchain, at least. Everyone is trying to keep bitcoin swept under the rug of the conversations. But having an anonymous person — who may or may not be able to be verified — be nominated for a Nobel Prize?

Seems almost as odd as some of the bitcoin stories we write.

Just to put the nomination into context, we’ve gathered up some winners over the past few years to show just what type of economists have brought home the honors.

  • The 2015 award went to Angus Deaton, a professor of economics and international affairs at Princeton University. He was chosen, according to the committee, “for his analysis of consumption, poverty and welfare.” His work has helped transform the fields of microeconomics, macroeconomics, and development economics through his linking of detailed individual choices and aggregate outcomes.
  • The 2014 award went to Jean Tirole, the chairman for the Toulouse School Of Economics, “for his analysis of market power and regulation.” MPD Chairman David Evans, who has known and worked with Professor Tirole for many years, remarked: “Tirole has made extremely important contributions to many areas of economics. His work on two-sided markets— or multi-sided platforms — has really revolutionized how economics analyzes many important businesses and has shown that many traditional results in economics don’t apply to businesses as diverse as shopping malls, payment cards, software platforms, and advertising-supported media. His work has had an enormous influence on business strategy, antitrust and regulation, as well as economics.”
  • The 2013 award went to three men: Eugene F. Fama (University of Chicago), Lars Peter Hansen (University of Chicago) and Robert J. Shiller (Yale) “for their empirical analysis of asset prices.” The selection committee explained that “the Laureates have laid the foundation for the current understanding of asset prices” used in being able to predict stocks and bond prices over a period of years.
  • The 2012 award went to Alvin E. Roth (Harvard) and Lloyd S. Shapley (UCLA) “for the theory of stable allocations and the practice of market design.” They were awarded for their “outstanding example of economic engineering.”
  • The 2011 award went to: Thomas J. Sargent (NYU) and Christopher A. Sims (Princeton) “for their empirical research on cause and effect in the macroeconomy.” The scholars “developed methods for answering these and many of other questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments.”

And then there’s Satoshi Nakamoto.

What do we know about Nakamoto? He (or she … or groups of people), invented bitcoin and published a paper about it in 2008. For years, Nakamoto worked with people, allegedly, but never made an identity known. Nakamoto was last heard of in the spring of 2011 and was said to have “moved onto other things.”

In his letter, Chowdhry also explains why he believes “Nakamoto’s contribution [will] change the way we think about money” and the role banks play in moving money around the world. He also rattles off a list of why bitcoin is “nothing short of revolutionary.”

Sure, there could be a case made for bitcoin. But without an actual owner attached to it, how can that person be awarded the Nobel Prize? Revolutionary or not, no one knows who actually created bitcoin.

The New Yorker even tried to uncover Nakamoto’s identity and suggested Michael Clear, a graduate cryptography student at Dublin’s Trinity College, was the real man behind bitcoin. But Clear came out to publicly deny being bitcoin’s inventor in 2013. Others have been questioned since, and in February 2014, Newsweek claimed that Dorian Nakamoto was the creator — and he also denied the claims.

So that’s a summary of Nakamoto, who was thrown into the Nobel Prize mix this week. An anonymous creator of a volatile digital currency that doesn’t want to be known or found.

One of them certainly isn’t like the others.

 Bitcoin Tracker Week 99

Man Promotes Bitcoin, Gets Bitcoin Stolen

And he gets it stolen right off his back.

Tal Newhart, a Chicago-based business strategy and recruitment specialist, wanted to test out the security of bitcoin. So he did a little experiment.

He put bitcoin account information on the back of his shirt on a QR code. He then had another person wear a similar shirt. One shirt said: “Bitcoin Research. Please Donate! Ask Me Why!” and the other one had “SHA-256,” which is the encryption algorithm for bitcoin accounts.

Guess what? He had bitcoins stolen from that account in just five minutes.

Those who understood what the code meant could scan the code to gain access. What the test showed is that bitcoin passwords are just as vulnerable as regular passwords — and also that people are starting to catch onto bitcoin. Clearly, someone on the street was able to recognize the opportunity.

Will Banks Be Using Blockchain By Next Year?

Blockchain’s ability to disrupt the financial world may be coming sooner rather than later.

At least that’s the case if a report from TABB Research comes to fruition. New research from the firm suggests that blockchain adoption by capital markets is no longer a hypothetical. Instead, it’s a matter of when it will happen — which could be in the next 12-24 months.

Shagun Bali, the TABB research analyst who wrote the report, said that the blockchain is a highly scalable, secure technology that can change how electronic transactions in capital markets are tracked, cleared and settled.

“The blockchain landscape and evolving ecosystem present a unique opportunity and a fundamental foundational element for additional innovation in financial markets,” Bali said. “However, further due diligence for defining industry standards with regards to settlement, counterpart and other transactional risks involved are critical. As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead.”

Microsoft Shows More Love For Blockchain

Microsoft just got serious about blockchain technology.

The company announced this week that it has launched a cloud-based blockchain platform with ConsenSys, a startup based out of Brooklyn in New York City. The platform is designed to provide a method for financial institutions to test out the blockchain.

In this particular instance, Microsoft and ConsenSys have partnered on the service that will be known as Ethereum Blockchain as a Service (EBaaS). The service will be on Microsoft Azure so Enterprise clients/developers can test working with cloud-based blockchain technologies.

“The Enterprise Partner Group at Microsoft is on the front lines with some of our largest customers. Everyone, particularly financial services, is interested in blockchain technology. While a platform like bitcoin has many great uses specifically as a cryptocurrency, Ethereum provides the flexibility and extensibility many of our customers were looking for. With the Frontier Release last summer, Ethereum is real and has a vibrant community of developers, enthusiasts and businesses participating,” Marley Gray, Microsoft’s Director of Technology Strategy For U.S. Financial Services, wrote in a blog post.

Is Bitcoin’s Price Back Or Busting? (And Does That Really Matter?)

That’s the million dollar question.

Bitcoin’s price over the past few weeks has toppled $500, and then dipped below $300. Midday yesterday (Nov. 12), bitcoin’s price was $326. For bitcoin — at least from a price comparison for most of the year — that’s not looking so bad.

As a Wired article points out in its headline — “Everyone Says Bitcoin Is Back. But It Never Really Left” — there’s always a lot of attention on bitcoin’s price fluctuation, but one CEO says that shouldn’t be the case. Brian Armstrong, CEO of Coinbase, told Wired that bitcoin’s brice shouldn’t be the only judge of its character.

“Sometimes, I feel like running a bitcoin company must be like running a public company,” he said in the interview. “Everyone is so focused on the price, and that causes short-term thinking.”

Sure, there’s some in bitcoin who may think they can make a quick buck, but that’s not what Armstrong is going after. He’s attempting to pitch that the focus of bitcoin should be on what it can do for financial services. And that’s where bitcoin conversations has been focused.

“The Internet of money,” or “the open payment network” — that’s what the focus should be, he points out.

Still, its wavering price makes it hard to ignore its volatile reputation.