Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Crypto

<h2>The Ethereum Blockchain: First Mover That Transformed the Blockchain</h2>
The Ethereum blockchain was launched in 2015 and is built on the decentralised and distributed architecture present in Bitcoin. Ethereum uses smart contracts which can be interconnected to interact with each other and hence create an operational platform.
The significance of the Ethereum platform is that it allows users to build applications running on the blockchain, similar to software running on a computer. Through running smart contracts on Ethereum Virtual Machine (EVM), mass consumption of decentralised apps is made possible.
Given that Ethereum is a decentralised network, clients will have the benefit of control over their data, with no central governing authority. Ethereum is a permission-free, public blockchain platform whereby all transactions recorded on it are visible and accessible by everyone. The blockchain uses a Proof of Work (PoW) consensus mechanism according to which all nodes need to agree on a ledger to access the entries recorded in the network.
The key benefit of Ethereum when compared with other blockchains is that it has a large network which has been tested through years of operation and billions of trading value. For instance, in the early part of 2020, the total value of cryptocurrencies invested in Ethereum smart contracts exceeded US$ 10bn.
However, on the other hand, due to this growing popularity, Ethereum transaction (gas) fees reached a record US$ 23 per transaction in February 2021. Previously, for most of 2020, gas fees were around US$ 2. Although gas fees hit a high of US$ 61.74 in May 2021, transaction fees had declined to reasonable levels in the subsequent month of June 2021 at an average of around US$ 2.15. However, the decline in gas prices is indicative of the decline in demand for Ethereum (the cryptocurrency).
<div style="text-align: center;" class="content-caption">Ethereum Average Transaction Fee</div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/956/original/image_2596682691627536245896.png?1627536246" class="editor-image img-responsive" data-smartkarma-image-id="220956"></figure>
<div style="text-align: left;" class="content-caption">Source: ycharts</div>
Another key issue is that the growing demand has caused slower processing times whereby processing times are much slower than those of newer blockchains.
Ethereum’s open-ended and open-source nature has led to the creation of numerous dApps on the blockchain. In this report, we will be discussing some dApps which run on the Ethereum blockchain and how each of these have responded to the issues of high transaction fees and slow processing times on the blockchain.
These dApps and the sidechains that have evolved to support greater functionality for them create interesting new possibilities which we believe are currently underappreciated. In particular, we believe investor attention is too focused on what blockchains can currently enable rather than the overall direction in which blockchain technology is evolving. This is because despite the massive media attention on crypto and blockchain, the technology itself remains at the early stages of its development and deployment and thus many of the critical limitations it faces could be solved in time. It is thus more pertinent, we feel, to examine what some of these early dApps are trying to accomplish and some of the future possibilities that they hint at.

The Ethereum Blockchain: First Mover That Transformed the Blockchain
The Ethereum blockchain was launched in 2015 and is built on the decentralised and distributed architecture present in Bitcoin. Ethereum uses smart contracts which can be interconnected to interact with each other and hence create an operational platform.
The significance of the Ethereum platform is that it allows users to build applications running on the blockchain, similar to software running on a computer. Through running smart contracts on Ethereum Virtual Machine (EVM), mass consumption of decentralised apps is made possible.
Given that Ethereum is a decentralised network, clients will have the benefit of control over their data, with no central governing authority. Ethereum is a permission-free, public blockchain platform whereby all transactions recorded on it are visible and accessible by everyone. The blockchain uses a Proof of Work (PoW) consensus mechanism according to which all nodes need to agree on a ledger to access the entries recorded in the network.
The key benefit of Ethereum when compared with other blockchains is that it has a large network which has been tested through years of operation and billions of trading value. For instance, in the early part of 2020, the total value of cryptocurrencies invested in Ethereum smart contracts exceeded US$ 10bn.
However, on the other hand, due to this growing popularity, Ethereum transaction (gas) fees reached a record US$ 23 per transaction in February 2021. Previously, for most of 2020, gas fees were around US$ 2. Although gas fees hit a high of US$ 61.74 in May 2021, transaction fees had declined to reasonable levels in the subsequent month of June 2021 at an average of around US$ 2.15. However, the decline in gas prices is indicative of the decline in demand for Ethereum (the cryptocurrency).
Ethereum Average Transaction Fee

Source: ycharts
Another key issue is that the growing demand has caused slower processing times whereby processing times are much slower than those of newer blockchains.
Ethereum’s open-ended and open-source nature has led to the creation of numerous dApps on the blockchain. In this report, we will be discussing some dApps which run on the Ethereum blockchain and how each of these have responded to the issues of high transaction fees and slow processing times on the blockchain.
These dApps and the sidechains that have evolved to support greater functionality for them create interesting new possibilities which we believe are currently underappreciated. In particular, we believe investor attention is too focused on what blockchains can currently enable rather than the overall direction in which blockchain technology is evolving. This is because despite the massive media attention on crypto and blockchain, the technology itself remains at the early stages of its development and deployment and thus many of the critical limitations it faces could be solved in time. It is thus more pertinent, we feel, to examine what some of these early dApps are trying to accomplish and some of the future possibilities that they hint at.

The Potential of DApps to Disrupt Ownership Rights for Digital Assets and Content

Founder, Shrimpy

Michael McCarty

Founder

Shrimpy

Shrimpy develops the most advanced APIs for crypto exchange management, trade execution, and real-time data collection.

Develops the Most Advanced APIs

Welcome to the 17th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry. Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.

Welcome to the 17th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry. Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.

Amid a Sharp Fall the Crypto Sector Expands as Coinbase and Huobi Join New Markets

Welcome to the 14th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry. Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.

Welcome to the 14th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry. Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.

2021 Is Back on Track for Being the Year of CBDCs

Alpha-Centric ESG Research

Kyle Rudden

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in <a href="https://www.smartkarma.com/insights/bitcoin-on-balance-sheets-indirect-crypto-exposure-considerations-for-crypto-leery-esg-investors" target="_blank" data-smartkarma-citation="insights:52207" rel="noopener">Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors</a>. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates <a href="https://www.smartkarma.com/entities/bitcoin-usd" target="_blank" data-smartkarma-citation="entities:25895:1" rel="noopener">Bitcoin (XBT)</a>'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates Bitcoin (XBT)'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

This Insight is about a trainwreck, the head-on collision of two megatrends in investing: ESG, and cryptocurrencies. "Trainwreck," because the raging cryptocurrency/ESG debate has spiraled out of control and made absolute lunatics out of everyone, environmentalists and crypto-zealots alike.Cryptocurrency's environmental impact is not a recent epiphany. Back in 2009, Hal Finney (creator of Bitcoin's proof-of-work system, and even rumored to be the elusive Satoshi Nakamoto) tweeted, "Thinking about how to reduce CO2 emissions from widespread Bitcoin implementation."Prescient, but it didn't elicit a reaction because in 2009 few investors had even heard of Bitcoin and ESG. In 2021, however, Elon Musk's words are able to spark a firestorm because Bitcoin and ESG are now deeply ingrained in the collective investor psyche, and the zeitgeist.And Elon Musk's words sure did spark a firestorm.With this report, I hope to provide what is entirely absent in that firestorm – i.e., a comprehensive, rational, and balanced view of the multifaceted cryptocurrency/ESG relationships. Environmental, Social, and Governance. Including some issues that no one is talking about, but should be.

This Insight is about a trainwreck, the head-on collision of two megatrends in investing: ESG, and cryptocurrencies. "Trainwreck," because the raging cryptocurrency/ESG debate has spiraled out of control and made absolute lunatics out of everyone, environmentalists and crypto-zealots alike.Cryptocurrency's environmental impact is not a recent epiphany. Back in 2009, Hal Finney (creator of Bitcoin's proof-of-work system, and even rumored to be the elusive Satoshi Nakamoto) tweeted, "Thinking about how to reduce CO2 emissions from widespread Bitcoin implementation."Prescient, but it didn't elicit a reaction because in 2009 few investors had even heard of Bitcoin and ESG. In 2021, however, Elon Musk's words are able to spark a firestorm because Bitcoin and ESG are now deeply ingrained in the collective investor psyche, and the zeitgeist.And Elon Musk's words sure did spark a firestorm.With this report, I hope to provide what is entirely absent in that firestorm – i.e., a comprehensive, rational, and balanced view of the multifaceted cryptocurrency/ESG relationships. Environmental, Social, and Governance. Including some issues that no one is talking about, but should be.

ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans

United States

Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called "ether", which can be transferred between accounts and used to compensate participant nodes for computations performed. "Gas", an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network.

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The Potential of DApps to Disrupt Ownership Rights for Digital Assets and Content

dApps represent the potential for a breakthrough use case of blockchain in everyday life by transforming the nature of digital asset and media...

Mio Kato

Amid a Sharp Fall the Crypto Sector Expands as Coinbase and Huobi Join New Markets

Welcome to the 17th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the...

Michael McCarty

2021 Is Back on Track for Being the Year of CBDCs

Welcome to the 14th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the...

Michael McCarty

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

Bitcoin holdings by issuers and investors is driving crypto custody demand. Big banks are stepping. A big opportunity, but some ESG investors might...

Kyle Rudden

ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans

Elon sparked a firestorm over Bitcoin's climate impacts. Problem is, it's all "greenwashing" by crypto-zealots or "brownwashing" by...

Kyle Rudden

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