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Money should flow like water … but should water be like money?

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This week marks a dubious milestone for the finance industry: Monday was the first day of trading for NQH20, a futures contract for water. According to CNN, this is the first futures contract for water ever offered.

The offering has obvious benefits, including giving farmers more price transparency into a crucial resource. And maybe putting a price on water will increase incentives to keep it clean. But more broadly, NQH20 is a troubling advance for the process of financialization – a process with many clear, concrete benefits, and some major, harder-to-quantify risks.

Most of the growth in the finance industry over the past thirty years has involved putting dollar signs next to new realms of human existence, such as water – or, through futures and other derivatives, on the uncertainties of time itself. Financialization is also a driver for much of the fintech world, such as the many blockchain projects that have aimed (often farcically) to make everything from diamonds to real estate ‘easier to trade’.

Water isn’t the only recent high-water mark (ahem) of the trend. Also this week, Harper’s dove into the rise of income-share agreements (ISAs), a new kind of education financing that pays for school up front in exchange for a share of a student’s future earnings. To some, ISAs are a promising new mechanism for education funding. But others are concerned that they simply reinvent indentured servitude for the 21st century (Attaching prices to human beings has been fundamental to the advance of financialization).

ISAs are also being transformed into more complex instruments, as the income streams from student repayments are chopped up and sold off to investors. That echoes our greatest object lesson in the dangers of financialization, the 2008 housing crisis, which was caused largely by the rise of collateralized debt obligations, or CDOs. In these instruments, home loans that for generations had been made and held by local banks were chopped up into vehicles containing thousands of anonymized mortgages, and set free on the open market. (A great recent explanation of all this came in banking vet Christopher Varelas’ 2019 tell-all How Money Became Dangerous.)

The most dangerous effect of transforming individual mortgages into more abstract vehicles was separating lenders from borrowers, who had for so long met face-to-face to hammer out deals. The problem was encapsulated by the classic scene in The Big Short in which Steve Carrell’s character (based on investor Steve Eisman) finds out one middle-income service worker has five home mortgages. That’s information a more traditional, pre-financialization banker would have been more likely to know, and the information gaps inherent in removing human relationships from transactions may yet prove the Achilles’ heel of the march to financialization.

There is also a more profound risk to financialization, with water as the ultimate example. Turning water or education or housing into entries on a ledger makes it possible to exchange them for one another, or for anything else, increasing market efficiency.

But that flattening can hide much larger truths: for instance, that water scarcity has been exacerbated by decades of corporate pollution, itself driven by the abstractions of the stock market. Or even the simple idea that water, as a universal necessity for human life, should be venerated as precious and managed for the common good, instead of reduced to a ticker symbol that produces fees for the banking elite.

David Z. Morris




Stripe's new Treasury service looks transformational ... Bitcoin MegaHODLER Microstrategy issues new debt to buy more Bitcoin ... Messari releases its annual Crypto Theses for 2021 ... Intel and Consilient launch new AI-driven anti-money laundering project ... Nick Magiulli shares his best finance reads of 2020 ... CoinDesk's Most Influential list includes Jesse Powell and Michael Saylor ... Steve Wozniak's new blockchain token is up 100% in days ... Mexico-based crypto exchange Bitso raises $62m.


Ant Group's massive unsecured loan volume may explain IPO halt ... Betterment CEO steps down ... Digital banks make debt traps stickier ... Crypto grows as a money-laundering tool for LatAm cartels ... New app uses psychics to pick stocks ... BTC-e crypto exchange founder gets five years for money laundering ... Ripple cofounder Jed McCaleb sells XRP into hot market.


21 million

The number of "bitcoin days destroyed" as bitcoin hit a new all-time high price last month. "Days destroyed" is an (unnecessarily) confusing term, but it basically measures the sale of bitcoin by long-time HODLers. The metric rose 162% in the three months ending in November, suggesting long-term investors were taking profits in USD, which may have contributed to halting bitcoin's bull run.


CEO Howard Lutnick stood at the head of a phalanx of Cantor staff who had come to meet White. White did not meet phalanx with phalanx. He brought the friendly, self-effacing, and easygoing disposition of a native Californian and little more. Lutnick quickly noticed White wore no tie and arrived with no retinue. And then he saw the title on his business card: General Manager. Lutnick scoffed at the idea that Coinbase would send a “general manager”—whatever that was—to waste his time. Didn’t they know who he was? 

“So I sat down with this big, sharp-elbowed financial company, trying to work a deal,” White recalls. “There must have been a dozen of them and there was just me. Then the CEO laughs at me and goes, ‘Hey, GM, are you going to make my coffee?’ I came out to New York and got my ass handed to me by old-school traders.”

The 2016 meeting of Cantor Fitzgerald CEO Howard Lutnick and Adam White, an early Coinbase employee and now CEO of Bakkt, from our own Jeff John Roberts' new book about Coinbase, Kings of Crypto. The book chronicles the rise of what is now the largest U.S. cryptocurrency exchange, including the many cultural disconnects that arise at the boundary of finance and technology. You can read more about Cantor in Fortune's excerpt of the book, and pre-order Kings of Crypto on Amazon or before its December 15 release. Congratulations, Jeff!



Robinhood's next chapter? Stealing market share from the rich - Jeff John Roberts

Why Mastercard isn't a credit card company, according to Ajay Banga - Clifton Leaf

Apple Pay limitations spark Dutch antitrust probe - David Meyer

Why Mastercard is trying to fix its gender and racial pay gaps, in public - Maria Aspan

Indiegogo founder launches alternative investment portal - Jeff John Roberts


This edition of The Ledger was curated by David Z. Morris. Contact him at

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