Centralized Exchanges (CEX), Decentralized Exchanges (DEX) : fiat to crypto, crypto to crypto

Cryptocurrencies such as Bitcoin and Ethereum is money, all in the digital form from the start. It is an alternative to fiat money, such as the U.S. Dollar. Fiat money is issued by a government, and is backed by the issuing government. But for those who need money in a currency that is NOT tied to a government, cryptocurrencies offer an alternative. You can buy things, save crypto, transfer crypto - just like you can with fiat money.

Currently to have cryptocurrencies such as Bitcoin or Ether, you need to either 1) have mining hardware and earn crypto doing work 2) buy crypto using fiat money.  The latter is done through a centralized exchange (CEX). 

A quick look at the two types of crypt exchanges:

• Centralized Exchanges (CEX) : Robinhood, crypto.com, Biance, FTX, Kraken. Centralized because a third party middleman is involved. Which defeats the "decentralization" edict of using crypto and blockchain.

 

• Decentralized Exchanges (DEX) : UniSwap, SushiSwap. Decentralized because no third party middleman is involved. Transactions are purely peer-to-peer. But to facilitate transactions so that they happen immediately, market makers provide liquidity. Read more here.
  

 

 

Carbon Emissions, Ozone, Green House Effect, Global Warming - In One Pic

The earth is bombarded with harmful UV rays from space. 

The ozone (O3) layer, found high up in the stratosphere, protects the earth from the space UV rays. 

The green house gasses (which contains ozone), found down low in the troposphere, retains heat on earth to keep it nice and warm.

But too much trapped heat, known as the green house effect, causes global warming.  The trap heat is caused by carbon CO2 emissions, such as pollution from cars.

Separately, ozone depletion,  is the lack of ozone that happens over the the Antarctica. The depletion is caused by human made chemicals, such as CFC, eating away the ozone.

 

To reduce green house effect, which will reduce global warming, carbon emissions must be reduced.

SWIFT - the CENTRALIZED payment rail used by global banks

Russia is amassing troops on its border with Ukraine. There is fear that Russia might invade Ukraine. Some countries want to find a way to dissuade Russia from potentially invading Ukraine.

One way to dissuade Russia from potentially invading Ukraine is via financial means.  The plan is to "kick" Russia out of the SWIFT. What is SWIFT? SWIFT is a payment network that connects global financial institutions, such as banks across the globe. Meaning if Russia is not on the SWIFT global payment network, money outside of Russia cannot flow into Russia.

SWIFT is an example of a CENTRALIZED network. Meaning that SWIFT the entity control how money flows around the globe. It is governed by a board of 25 members, mostly from the prosperous nations and populous nations. Depending on your point of view, centralized is either good or bad. In this case for Russia, this is bad. This situation calls for the need of a DECENTRALIZED network - where no board members can assert influence on its network members.  This is where blockchain enters.  BLOCKCHAIN can provide the technology for this. The consensus mechanism in a blockchain determine how the network is used. The consensus algorithm is predetermined up front, where machines vote - instead of humans or nations.

 

 

The answer to a centralized network is to create alternatives to it. Russia created "SPFS", an alternative messaging and payment system to SWIFT. Currently SPFS supports payment transference WITHIN Russia.  China also created its own version of SWIFT called "Cross-border Interbank Payment System"  CIPS. All this to hopefully replace SWIFT so that payment can flow into Russia and China respectively. The value of a network is who is on it. If Russia has its own SPFS, and China has its own CIPS, one might argue that they should have joined together and created a true alternative to SWIFT. Maybe "DSNM" Decentralized SWIFT with No Meddling.

Interestingly, cryptocurrency such as Bitcoin, can be an alternative payment method, instead of using SWIFT. Maybe Ripple XRP?

Google : At The Center of the Metaverse - Live Longer, Better, More Fulfilled

Google strategy for Metaverse  - the super data lake that can feed the Metaverse to make our lives longer, better, and more fulfilled.

 

 

Input : Google collects information on its users. Hard information. Soft information. External information.

 

Output : monetize for ads (bad), help users (good), allow users to contribute, build the Metaverse

 Google strategy

Financial Services - Capital Markets - A Basic Guide on how Blockchain/DLT fits

Capital markets in the financial services industry, per Congressional Research Services, is an place where businesses that need money (aka capital) for a long term can find sources of money from investors. The agreement between those who provide the money and the business that needs to money is called a security. Typically the security is either a debt (loan that is repaid at the end, with interest), bond (loan with periodic payments), or equity (stock). 

 

To see the connection between those with money, businesses that need money (capital), and the medium that allows this to happen, here is a simple chicken scratch.

 

People with Money : in the upper left corner, individuals earn money, have extra money that they can save or invest.

Companies that need Capital : in the upper right corner, businesses have several ways to acquire capital (money), via bond, equity, loans.

Capital market : in the middle where those with money (investors) can provide money to companies that need money (capital)

Capital markets infrastructure has played a critical role in global finance. For the past decades, it has silently been providing the transaction backbone for both capital and financial markets. But it is also antiquated – where a single transaction must traverse siloed system via messaging passing that is currently subject to errors, delays, and cost. Distributed ledger technology (DLT) can help to fix that, by providing a significant paradigm shift in the conception of financial market infrastructure as it can enable instant, authorized access to capital market actors “on a need-to-know basis” regarding several types of data, including asset reference data, asset ownership data and owner identity data. Current financial market infrastructure use cases that can benefit from DLT include: corporate actions, clearing and settlement, collateral management, and bond issuance. The DLT solution must also be enterprise grade to meet the rigors of regulators and compliance – including security, privacy, resilience.

Vaccination : a proxy battle between 1) public good and 2) personal freedom?

My neighbors live right next door to me. They are a hoot to live next to. I am always invited to their parties, where they serve fantastic home made food. But this comes at an indirect cost to the public good. Here is how:

1) Saturday 7:30AM : they start a huge fire BBQ in their backyard in preparation to roast a pig for the party. The smoke enters and exits via the open windows in my bedroom upstairs. I leave the windows open because I love the fresh morning air.

2) Saturday 11:30PM : they exercise their personal freedom to enjoy music, played loudly in their backyard. Not only is my household bothered, the sound radiates for nearly the entire block. My other neighbors want to call the police, but hard to when you just was attending that same party.

In these cases, the public good, as defined by a reasonable person,  seems to be "diminished" - smoky air, loud music - because a family chooses to exercise their personal freedom do as they deem fit.

Extrapolating from this, COVID vaccination might be a battle in a similar vain : a personal choice NOT to be be injected by this untested mRNA experiment - versus the public good that vaccination will stop the spread and make you less sick. Are the two cases - 1) neighbor wants to BBQ and blast music vs 2) a person refuses vaccination - the same?  (Note : I am 50-50 on this, so there is no bias here).

To put some thinking around this, I propose a simple framework. 

Definition of public good, responsibilities, and expected : roughly stealing from wikipedia, public good is "shared benefit for all". An example of public good is clean streets. So as an individual,  1) expectations as a public good consumer : clean streets  2) what am I expected (responsibilities) to do to uphold the public good  : don't litter 3) do laws enforce public good.

Definition of harm to the public good: I define this as anything person/thing/law that diminishes the benefits of public good. So if clean streets is a public good, someone littering is harming the public good.

Definition of personal freedom: I am entitled to enjoy my God given life, and no public good shall  mess with that!

Overlap causes conflict: This is the root of the problem - personal freedom of one (I want to play loud music) intersects with public good good another ( I expect peace and quiet from any loud music - especially rap/grunge rock/classical music).

A framework to resolve conflict: maybe it should be to determine 1) who every came first gets to set the rules - "hey I was here first" 2) majority rules 3) an elected central committee decides.