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Blockchains will disrupt economies of scale

Published

11 months ago

23 May, 2024

Blockchains will disrupt economies of scale

The ability to achieve economies of scale underlies much of the world’s modern wealth. At Ford Motor’s original plant in Detroit, the company gradually managed to increase the time it took to assemble a Model T from 12 hours to 93 minutes. The process of endless methodical improvement included everything from speeding up production to offering few or no options (“any color you want, as long as it’s black”) to finding a version of black paint that would dry faster than the other.

I believe we are at the beginning of a new cycle of disruption, fueled by public blockchains and the tokenization of industrial processes, as well as many other digital processes that change the economics of doing business.

Blockchains use the standardization that comes with tokenization, and the flexibility afforded by smart contracts, to drive efficiency without companies needing traditional economies of scale to keep costs down. The results will be extremely disruptive to industries, geographies and supply chains.

Now, ladder isn’t the only game in town. There are also diseconomies of scale. Government legislation regularly imposes stricter rules and targets on larger companies. Larger companies develop bureaucracy. The same systems that allow companies to operate consistently globally also eliminate local discretion.

In 1944 the CIA published a top-secret manual (since declassified) on how to do this sabotage the enemy. It contained useful guidance such as “do things only through the appropriate channels” and “negotiate over the precise wording of communications.” This is, unfortunately, timeless advice on how to succeed in many large offices.

Quite simply: bigger is not infinitely better. There is a range of scales to define what is “optimal”: large enough to benefit from economies, but not so large that it is strangled by bureaucracy. The lower limit of this range is known as “minimum economic scale” and is important because the smaller it is, the more businesses and competition can be supported in a market.

Traditionally, these numbers have been large, and the larger the scale of investment required, the more difficult it is for companies to enter and remain competitive. Some industries are still oriented towards the ever-increasing investment and capacity needed to reach significant scale. Today, building a new state-of-the-art semiconductor plant is so expensive – estimated at up to $30 billion – that only a few companies remain in the industry where there once were dozens.

Directly related to the shortage of cutting-edge semiconductor manufacturing capabilities is the shortage of chips used to train advanced AI models. Many of these orders are $1 billion and above; the cost per AI model is estimated at over $50 million for the most advanced ones.

Although technological changes are pushing some industries to consolidate because entities must become increasingly larger in size to remain competitive; others are tipped in the opposite direction. 3D printing is slowly transforming manufacturing while significantly reducing scale. Traditionally, metal stamping presses can produce a large number of parts quickly and cheaply, but the fixed cost is high and they can only produce one part at a time.

3D printers, on the other hand, can make a wide range of parts. Each printer can be slow, but you can simply add more. Research I conducted at IBM has shown that 3D printers can reduce scale requirements in some industries by up to 90%.

A similar story is happening in the IT industry. Web eCommerce has enabled even the smallest businesses to sell worldwide. API-enabled services allow you to integrate everything from credit card payments to shipping and tracking services.

So far, API-based web services have done a great job of simplifying relatively standardized systems and services. The next big change will come from blockchains which will enable much more complex and customizable integrations between companies using tokenization and smart contracts.

Systems integration – connecting businesses so they can work in tandem – is quickly becoming the key to maturing businesses and growing them. No company makes or produces everything alone. Instead, almost every business is a coordination game in which companies add their most unique and useful value to a long chain of partners.

Coordinating all these partners is very challenging. For example, if you have a supply restriction for a critical component, there is no point in ordering additional components as they will simply sit unused in the warehouse. Unfortunately, few supply chains can master this complex process. Companies routinely try to advertise and sell products that they cannot supply due to internal coordination problems.

The more closely companies are linked to each other digitally, the better this coordination process works. Representing all products as digital tokens, allowing visibility across multiple stops in a supply chain, would be transformational for most companies. The world’s largest companies already implement a version of this type of deep coordination with a blend of customized systems and human management. While every large company tries to create their own collaboration hubs, smaller companies find them expensive and difficult to maintain.

Blockchains will transform this dynamic because, instead of having to integrate into many different proprietary systems, companies can create standardized models of their products as digital tokens and then integrate them into one place: a public blockchain, like Ethereum. With the addition of privacy technology on Ethereum, companies can manage which partners see their information and prevent competitors or intermediaries from exploiting their data.

In every industry, where minimum scale decreases, markets can support more competitors. In research I conducted at IBM, we found that as 3D printing matures, it is possible to enable scale reductions of up to 90% in some manufacturing sectors. That means up to 10 times more companies can be competitive in the same space.

Imagine increasing by a factor of 10 the number of companies that can be sustainable across a range of industries using blockchain software. This would put an end to these markets.

When the minimum economic scale is high, you find yourself in a market with few products and very standardized products. When the minimum scale itself gets much smaller, you start to see huge variety. In these cases, local products adapted to local needs begin to prevail over global options. Even in these environments, small businesses perform better than larger ones, given their flexibility and proximity to the customer.

The most optimistic outcome is a return to a time when small businesses provided local services. That era now seems like a distant past, and the replacement of the small businesses of the past by the large corporations of today has not been harmful. This has been part of what has resulted in a huge improvement in everyone’s standard of living thanks to the resulting efficiencies.

With blockchain and other technologies reducing minimum economic scale, we could get the best of both worlds: locally enriched economies, extremely competitive markets, and all running at high operational efficiency.

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News

Ether Drops Further After ETF Launch

Published

9 months ago

23 July, 2024

Blocksight Staff

Bitcoin Surpasses $66,000 Thanks to Strong ETF Flows

Key points

Spot ether ETFs began trading in the U.S. today, with the funds initially having more than $10 billion in collective assets under management.
Analysts expect the launch of spot ether ETFs to have a net negative impact on the underlying price of ether in the near term, due to expected outflows from the pre-existing Grayscale Ethereum Trust.
Spot Bitcoin ETFs continue to see strong inflows, with BlackRock’s IBIT alone seeing more than $500 million in inflows on Monday.
Franklin Templeton, a spot ETF issuer on bitcoin and ether, has invested in a project that intends to bring Ethereum technology to Bitcoin.

Nine-point ether exchange-traded funds (ETFs)) started trading on the stock market on Tuesday, but all the optimism ahead of their approval did not translate into gains for the cryptocurrency markets.

Ether (ETH), the native cryptocurrency of the Ethereum blockchain, dropped less than 1% around the $3,400 level as of 1:30 PM ET, while Bitcoin (BTC) fell more than 2% to around $66,000.

Ether ETFs’ Debut Isn’t as Flashy as Bitcoin ETFs’

Spot ether ETFs began trading at just over $10 billion assets under management (AUM)), according to Bloomberg Intelligence analyst James Seyffart, most of that money is in the current Grayscale Ethereum Trust (ETHE) which has now been converted into an ETF.

“In the long term, Grayscale will simultaneously have the highest and lowest fees in the market. The asset manager’s decision to keep its ETHE fee at 2.5% could lead to outflows from the fund,” Kaiko Research said in a note on Monday.

Outflows from ETHE, if they occur, would be similar to those faced by Grayscale’s Bitcoin Trust (GBTC) after spot bitcoin ETFs began trading in January of this year, most likely due to high fees for the two original funds. Grayscale’s existing fund charges 2.5% fees, while a new “mini” ether ETF will charge 0.15% and commissions for other ETFs are set at 0.25% or less.

Such outflows could impact the price of ether and market sentiment.

“There could be a pullback shortly after the launch of Ethereum spot ETFs, i.e. outflows from Grayscale Ether Trust could dampen market sentiment in the short term,” Jupiter Zheng, a partner at Hashkey Capital’s liquid fund, told The Block.

But Grayscale remains optimistic.

“Compared to the splashy debut of spot bitcoin ETPs in January, the launch of ethereum ETPs has been relatively muted,” said Zach Pandl, Grayscale’s head of research, adding that investors may be “undervaluing” ether ETFs that are “coming to the U.S. market in tandem with a shift in U.S. cryptocurrency policy and the adoption of tokenization by major financial institutions.”

Bitcoin ETF Inflows Continue to Rise

As for bitcoin, there is clearly no lack of demand for spot ETFs, such as BlackRock’s iShares Bitcoin Trust (IBITS) recorded its sixth-largest day of inflows in its short history on Monday, at $526.7 million, according to data from Farside Investors. Daily inflows for the overall spot bitcoin ETF market also hit their highest level since June 5.

In particular, asset manager Franklin Templeton, which has issued both bitcoin and ether ETFs, appears to have decided to cover its back when it comes to Ethereum by investing in Bitlayer, a way to implement Ethereum technology on a second-layer Bitcoin network, according to CoinDesk.

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Spot Ether ETFs Start Trading Today: Here’s What You Need to Know

Published

9 months ago

23 July, 2024

Blocksight Staff

Spot Ether ETFs Start Trading Today: Here's What You Need to Know

Key points

Spot ether ETFs will begin trading on U.S. exchanges on Tuesday. Nine ETFs will trade on Cboe BZX, Nasdaq and NYSE Arca.
Ether ETFs offer investors exposure to the price of their underlying assets.
Commissions on these new ETFs generally range from 0.15% to 0.25%.
These ETFs do not provide exposure to Ethereum staking.

The U.S. Securities and Exchange Commission (SEC) has officially approved nine ether spots (ETH)exchange-traded funds (ETFs) for trading on U.S. exchanges. Trading for these new cryptocurrency investment vehicles begins today. Here’s everything you need to know.

What new ether ETFs are starting to trade today?

Spot ether ETFs starting trading today can be found at Quotation, NYSE Arkand Cboe BZX. Here’s a breakdown of each ETF you can find on these three exchanges, along with the fund tickers:

Cboe BZX will list the Invesco Galaxy Ethereum ETF (QETH), the 21Shares Core Ethereum ETF (CETH), the Fidelity Ethereum Fund (FETH), the Franklin Ethereum ETF (EZET) and the VanEck Ethereum ETF (ETHV).

Nasdaq will have the iShares Ethereum Trust ETF (ETHA) created by BlackRock, which also operates the largest spot bitcoin ETF under the ticker IBIT.

NYSE Arca will list the Bitwise Ethereum ETF (ETHW) and the Grayscale Ethereum Trust (ETHE). The Grayscale Ethereum Mini Trust (ETH), which will begin trading on the same exchange.

How does an ether ETF work?

Spot ether ETFs are intended to offer exposure to the price of ether held by the funds. Ether is the underlying cryptocurrency of the Ethereal network, the second largest crypto network by market capitalization.

ETF buyers are buying shares of funds that hold ether on behalf of their shareholders. Different spot ether ETFs use different data sources when it comes to setting the price of ether. Grayscale Ethereum Trust, for example, uses the CoinDesk Ether Price Index.

None of the ETFs launching today include pointed etherwhich represents a potential opportunity cost associated with choosing an ETF over other options such as self-custody or a traditional cryptocurrency exchange.

Ether staking currently has an annual return of 3.32%, according to the Compass Staking Yield Reference Index Ethereum. However, it is possible that the SEC will eventually approve Ether staking held by ETFs.

How can I trade Ether ETFs?

ETFs can simplify the trading process for investors. In the case of cryptocurrencies, instead of taking full custody of the ether and taking care of your own private keysSpot ether ETFs allow investors to purchase the cryptocurrency underlying the Ethereum network through traditional brokerage accounts.

Today, not all brokers may offer their clients spot ETFs on cryptocurrencies.

What are the fees for ether ETFs?

The fees associated with each individual spot ether ETF were previously revealed In the S-1 OR S-3 (depending on the specific ETF) deposit associated with the offerings. These fees are 0.25% or less for all but one.

The Grayscale Ethereum Trust, which converts to an ETF, has a fee of 2.5%. The Grayscale Mini Ethereum Trust has the lowest fee at 0.15%. These fees are charged on an annual basis for the provider’s management of the fund and are in line with what was previously seen with spot bitcoin ETFs.

Brokers may also charge their own fees for cryptocurrency trading.

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News

Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Published

9 months ago

23 July, 2024

Blocksight Staff

Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Market odds and memecoins related to US Vice President Kamala Harris have soared as the latest round of donations tied to the Democratic campaign raised $81 million in 24 hours, bolstering sentiment among some traders.

The odds of Harris being declared the Democratic nominee have risen further to 90% on cryptocurrency betting app Polymarket, up from 80% on Monday and setting a new high.

Previously, in early July, bettors were only betting on 8%, but that changed on Saturday when incumbent President Joe Biden announced he would no longer run in the November election. Biden then approved Harris as a candidate.

Polymarket traders placed $28.6 million in bets in favor of Harris, the data showsThe second favorite is Michelle Obama.

Somewhere else, Memecoin KAMA based on Solanaa political meme token modeled after Harris, has jumped 62% to set a new all-time high of 2 cents at a market cap of $27 million. The token is up a whopping 4,000% from its June 18 low of $0.00061, buoyed primarily by the possibility of Harris becoming president.

As such, Harris has yet to publicly comment on cryptocurrencies or her strategy for the growing market. On the other hand, Republican candidate Donald Trump has expressed support for the cryptocurrency market and is expected to appear at the Bitcoin 2024 conference on Saturday.

However, some expect Harris or the Democratic Party to mention the sector in the coming weeks, which could impact price action.

“While he has not yet received the official nomination, there is consensus that last night’s development is in line with current Democratic strategy,” cryptocurrency trading firm Wintermute said in a Monday note emailed to CoinDesk. “Keep an eye on Democrats’ comments on this issue in the coming days.

“The prevailing assumption is that Harris will win the nomination and any deviation from this expectation could cause market volatility,” the firm added.

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Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

Published

9 months ago

23 July, 2024

Blocksight Staff

Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

The cryptocurrency market has seen a lot of growth and imagination lately, with new ventures popping up regularly. A critical pattern in this space is the rise of crypto pre-sales, which give backers the opportunity to get involved with promising projects early on. Artemis is a standout option for crypto investors looking to expand their portfolios amid the many pre-sales currently underway.

Cryptocurrency presales, commonly referred to as initial coin offerings (ICOs), allow blockchain ventures to raise capital by offering their local tokens to early backers before they become available on open exchanges. Investors can take advantage of these presales by purchasing tokens at a lower price. If the project is successful and the token’s value increases, investors stand to receive significant returns.

>>> Explore the best cryptocurrency pre-sales to buy now <<

The Ultimate List of the Top 5 Cryptocurrency Pre-Sales to Invest In

Artemis: The aim of Artemis (ARTMS) will become the cryptocurrency equivalent of eBay or Amazon. The upcoming Phase 4 will see the launch of the Artemis Framework, which will serve as a stage for digital money exchanges where buyers, sellers, specialized organizations and those seeking administration can participate in coherent exchanges.
DAG Block: uses Directed Acyclic Graph technology to increase blockchain scalability.
99bitcoin: operates as a crypto learning platform
WienerAI uses AI-powered trading bots for precise market analysis.
eTukTuk focuses on environmentally sustainable transportation options, such as electric vehicle charging infrastructure.

We have determined that Artemis is the best new cryptocurrency presale for investment after conducting extensive research. It presents itself as the unrivaled cryptocurrency presale choice currently open.

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Top 5 Crypto Pre-Sales and Best Cryptocurrencies for Investment Today

Artemis (ARTMS) is attempting to establish itself as the cryptocurrency version of eBay or Amazon. The Artemis Crypto System, which will act as a platform for cryptocurrency transactions, will be launched in Phase 4. Buyers, sellers, service providers, and requesters will all benefit from seamless trading with this system. Customers will be able to purchase things, such as mobile phones using digital money, as well as sell products such as involved bicycles and get paid in cryptocurrency. Additionally, crypto money can be used to pay for administrations such as clinical consultations, legitimate care, and freelance work. Artemis Coin will act as the main currency of the ecosystem, with Bitcoin and other well-known cryptocurrencies from various blockchain networks backing it.

Artemis Coin has increased in price from 0.00055 to 0.00101 from 0.00094. Artemis may be attractive to individuals looking to recoup losses in Bitcoin, as predicted by cryptocurrency analysts. At this point, it seems to present an interesting presale opportunity.

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The world of digital currency pre-sales is an exciting and exciting opportunity that could open the door to game-changing blockchain projects. Projects in this article, like Artemis Coin, offer the opportunity to shape the future of various industries and the potential for significant returns as the industry develops.

However, it is imperative to approach these investments with caution, thorough research, portfolio diversification, and awareness of the risks. You can explore the digital currency pre-sale scene with greater certainty and increase your chances of identifying and profiting from the most promising venture opportunities by following the advice and methods in this article.

>>> Join the best cryptocurrency pre-sale to invest in now <<

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