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China creates a digital currency, PayPal should be worried

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China just created its own digital currency: the digital yuan (digi-yuan). It's the first major world economy to launch an e-currency. China isn't just putting cash into a virtual bank account — it's minting cash digitally, turning legal tender into lines of code. For each digi-yuan it issues, it essentially cancels a paper yuan. Unlike a cryptocurrency, digi-yuan is a state-backed currency controlled by China's central bank (like how the US $ is backed by the US gov't and controlled by the Fed). Also, unlike crypto and cash, there's no anonymity with digi-yuan. The Chinese government knows where your yuan has been. Digi-yuan gives China not more money control but also more control over everything. For example, it is testing digi-yuan expiration dates that could encourage people to spend within a certain time frame (to support economic stimulus). China uses hundreds of millions of facial recognition cameras to surveil and fine citizens for things like jaywalking...
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The crypto mainstream-ification intensifies

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Over the past year, Bitcoin has increased ~9x in value as corporate and retail investors have poured into cryptocurrency. In January, the crypto market hit $1T in total value (mostly Bitcoin). Now, the mainstream-ification is intensifying: Venmo-owner PayPal, which has a whopping 377M active accounts, officially launched "Checkout with Crypto" in the US, allowing users to pay with crypto at online stores. And in the coming months, PayPal will expand crypto checkout to 29M merchants. Customers with PayPal digital wallets can pay in Bitcoin, Ether, Bitcoin Cash, and Litecoin. This comes after Visa also announced that it'll allow people to use the cryptocurrency USD Coin (a US dollar-backed stablecoin) to settle payments. How will it work? Paying with crypto... but not really paying with crypto. Customers' crypto holdings will be converted into fiat currencies (like US dollars) at checkout. It's kind of like selling a fraction of your BTC, then using the sale money t...
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AWS is a profit machine that Amazon should spin off

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AWS is currently the dominant cloud provider, with 32% of the cloud computing market. At the same time, Amazon is a major force in the e-commerce market, and several of its acquisitions have helped it become a significant player in other industries. Amid increased antitrust scrutiny, I expect Amazon to spin off AWS. Let me start by saying, while the threat of anti-trust action against Amazon is real, I think it will happen to Google and Facebook first. It will happen to Amazon only after those two, and that will be in a couple of years. I personally think Jeff Bezos, who’s the smartest businessperson in the world, will likely spin AWS before the danger becomes grave. When that happens, I think the most valuable company in the world will be a recently spun, independent AWS. The largest, most profitable cloud company in the world would be a stock that everyone would own. AWS is Amazon's silent (but deadly) superpower. It's a "silent server" for a huge swath of the dig...
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Microsoft vs. Sony: The console battle and the gaming war

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Last week, Sony launched PlayStation 5 (PS5) on the same day that Microsoft dropped its Xbox Series X and S. So much for not stealing each others' thunder ;) As far as the actual hardware specs go, they are pretty on-par with each other. However, the two warring companies are approaching the growing gaming industry very differently, and competition between them will be one of the most interesting stories to watch over the coming few years. Here's a run down of where the two companies are and the very different directions that they are taking: Sony Sony is following the traditional razor and blades model that has long characterized consoles: try and not lose too much money on the consoles, and make up the difference in game licenses, its online service, and in-game purchases. It’s a model that gamers are familiar with, even if it ends up being a pricey one. In short, Sony is treating the PS5 like a console, and gamers like gamers, just as they did last generation. So, when it la...
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Why the stock market is beating expectations

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  In the early stages of the pandemic, the S&P 500 index dropped a third of its value. Since then it has roared back, soaring more than 50 percent from its low in late March and setting an all-time high last week. This seems very implausible when set against the current state of the economy and the ongoing devastation caused by the pandemic. So why is the stock market rallying in the face of a pandemic and bad economic news? Several explanations are plausible. The stock market is not the economy: The stock market represents publicly traded companies only; it’s not the whole market. Most importantly, it’s always forward looking; i.e. it’s an indicator of the future earnings of those companies and how they would fare in the future. A rising stock market indicates that investors think these companies will do better in the future. On the other hand, a falling stock indicates that investors are pessimistic about the future earnings of companies. Continued income support for the ec...
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Airtags: The ultimate brand power move

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Last week, Apple hosted its first event of the year and unveiled a slate of deliciously colorful products. But the star of the show was ... what we've been hearing rumors about for a very long time. Apple finally unveiled AirTags, little Bluetooth buttons you stick on things like wallets and keys to locate them (yep, just like Tile). They start at $29 each and will be available on April 30. AirTags use Apple's U1 chip — the same one used in iPhone 12. The chip will make AirTags trackers more accurate than those from Tile, Samsung, and Sony. Also AirTags use the "Find My" network, the same one used for Find My iPhone, Friends, etc. "Find My" is a crowdsourced network of hundreds of millions of Apple devices that can help users locate their missing tech through Bluetooth connection.  Bottom line: Apple’s powerful brand is a statement – that's currently limited to Apple devices. But with AirTags, people can slap expensive Apple labels on non-Apple products....
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