From 8578886edf72602efa0baa93c2e52f1b95d71b39 Mon Sep 17 00:00:00 2001 From: sdiehl Date: Mon, 28 Mar 2022 15:43:02 +0100 Subject: [PATCH] Fix systemic risk claim --- claims/is-systemic-risk.md | 11 +++++++++++ claims/nfts-artists.md | 2 ++ claims/systemic-risk.md | 5 ----- concepts/systemic-risk.md | 13 ++++++------- guide/index.md | 4 ++-- 5 files changed, 21 insertions(+), 14 deletions(-) create mode 100644 claims/is-systemic-risk.md create mode 100644 claims/nfts-artists.md delete mode 100644 claims/systemic-risk.md diff --git a/claims/is-systemic-risk.md b/claims/is-systemic-risk.md new file mode 100644 index 0000000..ec25a16 --- /dev/null +++ b/claims/is-systemic-risk.md @@ -0,0 +1,11 @@ +# Crypto assets pose systemic risk to the larger economy + +Crypto assets do not currently pose a [systemic risk](../concepts/systemic-risk.md) to the United States economy, but may in the future if their growth is left unchecked. Allegedly the [paper wealth](paper-wealth.md) locked up into crypto tokens is allegedly only on the order of the $1 trillion which is inconsequential next to the amount of capital allocated in both the US equities and bond markets. Crypto is still a relatively tiny asset class and a sudden crash in the market, while devastating to individual retail investors, would likely not bring amount much damage to financial institutions or markets as a whole. + +Because of regulation and [risk](risk.md) aversion most banks and companies have very little exposure to the crypto market and will not put crypto assets directly on their balance sheet. This fundamentally limits the amount of damage a sudden crash in crypto assets could actually cause as most companies would simply not be within the financial "blast radius" were the market to go to zero overnight. + +In the event of a sudden crash retail investors and the public who have chosen to gamble on crypto assets would see all of their wealth disappear instantly, likely with no recourse or chance of a bailout. This would be a very socially socially corrosive event which would be financially devastating to the public and erode trust in institutions. This is real problem that crypto assets and their insane risk properties introduce. + +## References +1. Nolan, Hamilton. n.d. ‘The Ticking Bomb of Crypto Fascism’. Accessed 21 March 2022. https://inthesetimes.com/article/the-ticking-bomb-of-crypto-fascism. +1. Hanley, Brian P. 2018. ‘The False Premises and Promises of Bitcoin’. ArXiv:1312.2048 [Cs, q-Fin], July. http://arxiv.org/abs/1312.2048. \ No newline at end of file diff --git a/claims/nfts-artists.md b/claims/nfts-artists.md new file mode 100644 index 0000000..aeff1f0 --- /dev/null +++ b/claims/nfts-artists.md @@ -0,0 +1,2 @@ +# NFTs are a net good for artists +The economic structure of NFTs is almost identical to that of [multilevel marketing schemes](../concepts/mlm.md). \ No newline at end of file diff --git a/claims/systemic-risk.md b/claims/systemic-risk.md deleted file mode 100644 index 8080035..0000000 --- a/claims/systemic-risk.md +++ /dev/null @@ -1,5 +0,0 @@ -# Crypto assets pose systemic risk to the larger economy - -## References -* [@momtaz_entrepreneurial_2020] -* [@zetzsche_ico_2017] \ No newline at end of file diff --git a/concepts/systemic-risk.md b/concepts/systemic-risk.md index 2da8db4..f014e2b 100644 --- a/concepts/systemic-risk.md +++ b/concepts/systemic-risk.md @@ -1,12 +1,11 @@ -# Crypto could be a systemic risk in the future +# Systemic Risk Systemic risk is the possibility that an event in a single asset or company could trigger severe instability or collapse an entire industry or economy. Asset classes or companies are considered to be a systemic risk when they are "too big to fail". Systemic risk and was a major contributor to the subprime mortgage crisis crisis of 2008. -Crypto assets do not currently pose a systemic risk to the United States economy, but may in the future if their growth is left unchecked. Allegedly the [paper wealth](paper-wealth.md) locked up into crypto tokens is allegedly only on the order of the $1 trillion which is inconsequential next to the amount of capital allocated in both the US equities and bond markets. Crypto is still a relatively tiny asset class and a sudden crash in the market, while devastating to individual retail investors, would likely not bring amount much damage to financial institutions or markets as a whole. - -Because of regulation and [risk](risk.md) aversion most banks and companies have very little exposure to the crypto market and will not put crypto assets directly on their balance sheet. This fundamentally limits the amount of damage a sudden crash in crypto assets could actually cause as most companies would simply not be within the financial "blast radius" were the market to go to zero overnight. - -In the event of a sudden crash retail investors and the public who have chosen to gamble on crypto assets would see all of their wealth disappear instantly, likely with no recourse or chance of a bailout. This would be a very socially socially corrosive event which would be financially devastating to the public and erode trust in institutions. This is real problem that crypto assets and their insane risk properties introduce. ## References -1. Nolan, Hamilton. n.d. ‘The Ticking Bomb of Crypto Fascism’. Accessed 21 March 2022. https://inthesetimes.com/article/the-ticking-bomb-of-crypto-fascism. \ No newline at end of file +1. Braun, Benjamin, and Daniela Gabor. 2019. ‘Central Banking, Shadow Banking, and Infrastructural Power’. https://doi.org/10.31235/osf.io/nf9ms. +1. Malloy, Matthew, and David Lowe. 2021. ‘Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective’. Finance and Economics Discussion Series 2021 (020): 1–14. https://doi.org/10.17016/feds.2021.020. +1. Roche, Cullen O. 2011. ‘Understanding the Modern Monetary System’. http://ssrn.com/paper=1905625. +1. Binder, Carola. 2021. ‘Technopopulism and Central Banks’. SSRN Electronic Journal. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3823456. +1. Hanley, Brian P. 2018. ‘The False Premises and Promises of Bitcoin’. ArXiv:1312.2048 [Cs, q-Fin], July. http://arxiv.org/abs/1312.2048. \ No newline at end of file diff --git a/guide/index.md b/guide/index.md index 7341a47..692e2b9 100644 --- a/guide/index.md +++ b/guide/index.md @@ -52,7 +52,7 @@ Explore crypto and "web3" in terms of the claims made about it. These subclaims * [Are crypto assets a risk to the dollar?](../claims/threaten-dollar.md) * [What type of asset is a crypto token?](/claims/what-type-of-asset.md) * [How do we value a crypto token?](/claims/valuation-model.md) -* [Are crypto assets a systemic risk to the economy?](../claims/systemic-risk.md) +* [Are crypto assets a systemic risk to the economy?](../claims/is-systemic-risk.md) * [Is bitcoin the basis for a new gold standard?](../claims/digital-gold.md) * [Are crypto assets a bubble?](../claims/is-bubble.md) * [Are crypto assets a form of gambling?](../claims/is-gambling.md) @@ -66,7 +66,7 @@ Explore crypto and "web3" in terms of the claims made about it. These subclaims * [Are crypto assets a form of predatory inclusion?](../claims/is-predatory.md) * [Is crypto a solution for the unbanked?](/claims/crypto-unbanked.md) * [Is crypto providing faster payment rails or better remittance services?](../claims/is-better-payments.md) -* Are NFTs are good for artists? +* [Are NFTs are good for artists?](../claims/nfts-artists.md) * [What is the narrative economics of crypto assets?](../claims/narrative-economics.md) * [Are crypto assets legal?](../claims/is-legal.md) * [Are crypto tokens a negative-sum investment?](/claims/negative-sum.md)