Welcome back to the second instalment of our Weekly Financial News Digest series. These instalments aim to pick up on the past week’s key financial news with a special emphasis on bitcoin. As always links to the sources are provided for readers who would like a more in depth look at the covered events.
This week’s digest has a particular emphasis on the looming currency crisis as this may well bring about the next big development in the bitcoin price index. Please check out the previous edition of the Weekly Financial News Digest in case you missed it. Before we get going however I would encourage you to click this must watch talk by Andreas M Antonopolous at Wired Money.
Us government grants $3 million to research cryptocurrencies
In another promising sign for cryptocurrencies, the US government has awarded $3 million dollars to researchers from Cornell, Maryland and UC Berkeley. The funding is aimed to define a “rigorous scientific foundation” for bitcoin and other cryptocurrencies.
Specifically, the researchers are tasked with addressing smart contracts and other challenges of cryptocurrencies, with a particular emphasis on stability, anonymity and security.
In order to overcome these hurdles, the award winners will have to blend cryptography, game theory, programming languages, and system security techniques. Principal investigator Elaine Shi said:
“We believe that our research can help establish cryptocurrency as a prominent research area, and make a big impact in shaping the future of financial transactions and e-commerce.”
Expanding Currency Crisis
Early warning signs suggest that a strong dollar foreshadows another emerging market currency crisis. Fear abounds amid the Brazilian Real hitting a 12-year low on Monday, and Southeast Asian currencies reaching their lowest points since the financial crisis in the late 1990s.
Adding to these fears, Mexico and South Africa’s exchange rates are at their lowest levels ever compared to the dollar.
For Latin American countries like Mexico, the resurgent US dollar awakens memories of the early 1890s, when the North American currency helped trigger the Latin American Debt crisis. The world is a lot more integrated today than it was in the 1980s and 1990s, meaning that regional currency volatility has to be seen in an interconnected global context.
The reasons for the current currency crisis are a strong dollar, weakening prices of commodities and the Federal Reserve reportedly increasing interest rates in September.
Bitcoin-Friendly Payment Processor Gets Huge Valuation
Six months after a funding round of $70 million, payment processor Stripe has been valued at a staggering $5 billion. Founded in 2011, the San Francisco-based startup processes billions of dollars a year for global businesses, and has helped pioneer bitcoin integration for online merchants.
The company focuses on mobile payments, a rapidly growing segment of the payments industry. Forrester Research, an independent technology and market research company, estimates that US citizens will spend as much as $90 billion through mobile devices in 2017.
Stripe takes 2.9% in commission from most transactions, comparing favourably to the 3% taken by Visa. Despite this seemingly small difference, 0.1% can amount to a fortune over a lifetime.
China’s stock market plunges
China is seeing its years of stellar growth come to an unruly halt, as growth fell to its lowest level since 2009. With many suspecting Beijing of dabbling with the numbers already, the 8.5% slump in stock prices on Monday has been taken to signify a dramatic change in direction for the chinese economy.
With the world more interconnected than ever, China’s dragging performance may spread to healthier economies. “We need all the growth we can get. A slowdown in China wouldn’t help,” said Ameriprise Financial’s chief strategist.
Mike Tyson takes a bite at bitcoin
Former heavyweight champion Mike Tyson is getting ready to enter the bitcoin space. Tyson, whose fastest knockout in the ring was 30 seconds, claims that his new bitcoin ATM can convert cash into bitcoin in even less time than that.
Gold’s problems have only just begun
Claude Erb, a prominent gold forecaster has predicted that the precious yellow metal might drop as far as $350 an ounce. This would represent an ignominious decline, similar to the one experienced by bitcoin in 2013.
Unlike the cryptocurrency however, gold has less use cases for real world utility, leading some to believe that bitcoin will soon overtake the precious metal in terms of value.
Erb’s estimations are substantially lower than the those of other experts in the space. Having co-authored an influential research paper which predicted the fall of gold three years prior to most other researchers, Erb’s estimation of gold as an overpriced inflation hedge carries significant weight.
Major layoffs as the price of Oil plummets
Shell has announced that it will cut 6,500 jobs in 2015 in an effort to slash costs. The netherlands-based oil giant will not be alone however, as Centrica will also shed 6,000 jobs.
These layoffs reflect the turbulent times in the oil industry with a barrel of oil now trading for as little as $49 a barrel.
The key factors behind this steep decline is the record OPEC output coupled with the prospect of increased oil exports from Iran, as western sanctions are lifted.
You’re All Set On Financial News!
Thanks for reading the second edition of the Weekly Financial News Digest. For any neglected topics, financial news stories, or suggestions, please message me @grundy_10. If you have any other questions, would like to find out more about Bitcoin, or want to take out a loan, please visit Bitbond.com
Fun read of the week: Boozy Brit Buys £300 worth of Pizza in Bitcoin Blunder http://bit.ly/1MBUCwN
Must watch of the week: Andrea Antonopolous speaking at Wired Money