Category Archives: Economics

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Cryptic Labs Hire Two Nobel Prize Laureate Economists

Blockchain research institute Cryptic Labs has taken on two Nobel Prize economic laureates for its economic advisory board in order to improve blockchain expertise in the company.

The roles of Dr Eric S Maskin and Sir Christopher Pissarides are cited in the Cryptic Labs press release as being dedicated to providing ”insights in incentive mechanisms, game theory and macroeconomic policies, bolstering the institute’s mission to address the lack of blockchain industry expertise in both fields”.

Dr Maskin has shared that he is particularly interested in investigating the economic value blockchain technology can bring, planning to bring his specialist background in economics and mechanism design to this particular task. Sir Pissarides has said that there is still a significant lack of information regarding the technology which is preventing a ”wholesale transition” of all transaction records on to blockchain and is dedicated to making this viable in the future.

As the number of educational institutions offering blockchain-related studies continues to grow, appointments such as these set a high standard for an industry that previously lacked much real academic expertise. Individuals entering the blockchain workforce such as these two Nobel Prize Laureates not only can improve the quality of research and progression of blockchain technology but demand mainstream institutions to, at the very least, take its impact seriously.

Cryptic Labs describes its mission as “solving fundamental security problems to advance the growth of blockchain technology“, and boasts winner of the 2015 Turing Award Dr Whitfield Diffie as its chief scientist.

Blockchain companies finding their place

As the industry streamlines, more blockchain companies are being recognized for their valuable contributions.

Blockchain-related companies featured frequently throughout LinkedIn’s top 50 US startups list; centralized cryptocurrency exchange Coinbase even managed to reach third place. Investment app featuring cryptocurrency options Robinhood landed in sixth, followed by international money transfer app Ripple at number seven.

With blockchain startups popping up further down the list also, the prevalence of the industry indicates the success and growth it experienced the past several years, and recognition from LinkedIn in this way will only benefit it further.

 

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Has Yale Found the Two Most Significant Bitcoin Price Indicators?

Connecticut-based Yale University has produced another insightful Bitcoin theory, this time claiming to have found the most significant predictors for the value of Bitcoin.

The momentum effect

The momentum effect describes the usual course of the price that tends to move in the same general direction that it has been. For example, if Bitcoin has seen a significant increase of around 20% in one week, the theory suggests that historical market evidence indicates that upward trend to continue at least one more week.

In short, if you are looking to call the next movements in the market, check to see what the latest trend has been and this can be the best indicator for a cryptocurrency’s next movements.

Investor attention

Investor attention refers to the measure of hype or fear, uncertainty and despair (FUD) surrounding cryptocurrency. Significant price increases are preluded by a spike in the number of search engine increases and media attention, with Google in particular cited as a strong predictor for the forthcoming price changes. According to the research, a jump in the number of times Bitcoin is Googled can consistently predict a price increase several weeks beforehand.

Ripple and Ethereum show similar trends in line with Google searches, although with different timelines.

An increase of negative cryptocurrency searches that incorporate terms such as hacks or crime can also be an indicator for prices, this time showing that the price will soon drop.

Market sentiment

The Yale economists behind the research acknowledge in the paper that the price of cryptocurrencies cannot be predicted by the same methods of the stock market or precious metals, noting that what drives cryptocurrency prices is unique to the market itself. They outline that this is because cryptocurrency is unaffected by macroeconomic or familiar stock market factors.

Instead, the two key predictive tools of investor attention and the momentum effect are ways of gauging market sentiment. Considering that the market remains in its relative infancy, it seems logical sentiment is still such a significant force.

The research was published in a National Bureau of Economic Research working paper by Yale economists Yukun Liu and Aleh Tsyvinski.

 

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