Hey, Your Crypto Newsletter for February 17, 2021

If you are interested in cryptocurrencies, this newsletter is for you. [img] [img]( [FeedBinary Newsletter]( Sponsored Content [Bitcoin’s rise reflects America’s decline]( Credits: www.ft.com Cryptocurrencies have a place in a new world order where the dollar has less of a starring role A little over 100 years ago, there was a bubble asset that rose and fell wildly over the course of a decade. People who held it would have lost 100 per cent of their money five different times. They would have, at various points, made huge fortunes, or seen the value of their asset destroyed by hyperinflation. The asset I’m referring to is gold priced in Weimar marks. If this reminds you of bitcoin, you are not alone. In his newsletter Tree Rings, analyst Luke Gromen looked at the startling similarities in the volatility of gold in Weimar Germany and bitcoin today. His conclusion? Bitcoin isn’t so much a bubble as “the last functioning fire alarm” warning us of some very big geopolitical changes ahead. I agree. Central bankers have over the past 10 years (or the last few decades, depending on where you put the marker) quashed price discovery in markets with low interest rates and quantitative easing. Whether you see this as a welcome smoothing of the business cycle or a dysfunctional enabling of debt-ridden businesses, the upshot is that it’s now very difficult to get a sense of the health of individual companies or certainly the real economy as a whole from asset prices. The rise in popularity of highly volatile cryptocurrencies such as bitcoin could simply be seen as a speculative sign of this US Federal Reserve-enabled froth. But it might better be interpreted as an early signal of a new world order in which the US and the dollar will play a less important role. The past four years of Donald Trump’s presidency and his toxic politics have taken a toll on the world’s trust in America. That has also diminished trust in some quarters about the dollar’s stability as the global reserve currency. This feeling reached an apex during the January 6 attack on the US Capitol building. As financial policy analyst Karen Petrou put it in a recent note to clients: “There are many casualties of this quasi-coup, but the US dollar may well be among them. It’s no more immortal than any other category-killer brand.” Trump certainly devalued Brand USA. But he is also a symptom of longer-term economic problems in the US — problems which have in recent years been papered over by low rates and monetary policy, which kept asset prices high but also encouraged debt and leverage. Bitcoin’s rise reflects the belief in some parts of the investor community that the US will eventually come in some ways to resemble Weimar Germany, as post-2008 financial crisis monetary policy designed to stabilise markets gives way to post-Covid monetisation of rising US debt loads. There are, after all, only three ways out of debt — growth, austerity, or money printing. If the US government sells so much debt that the dollar starts to lose its value, then bitcoin could conceivably be a safe haven. Germany’s currency debasement didn’t end well. This underscores another aspect of the bitcoin boom. We have moved from a unipolar world in which the US was the pre-eminent political and economic power, to a post-neoliberal world where there is no longer a consensus in favour of free trade and unfettered capitalism. We will probably have two or even three poles — the US, Europe and China. China has signalled its desire to become less dependent on the US financial system, buying fewer US Treasuries and rolling out its own digital currency. In this world, it is easy to imagine that the dollar would continue to be the main reserve currency, with the renminbi and the euro gradually becoming more important stores of value. But one can also imagine that cryptocurrencies that can easily cross borders would have some advantages over fiat money issued by governments. While the migration of people and goods may become more constrained, digital trade and information flows are still growing. Crypto advocates including technology leaders such as Tesla’s Elon Musk, Facebook’s Mark Zuckerberg and Twitter’s Jack Dorsey believe that digital currencies are better suited to this more multipolar world. They are largely unregulated and thus less subject to political forces. In the same way that large technology platforms recently demonstrated their power by removing Trump from social media, bitcoin could conceivably float above any currency nationalism that might result from the new world order. Will cryptocurrency become the new gold — a hedge against a changing world? Will the Big Tech consensus prove more powerful than either the Washington consensus or the Beijing consensus? Perhaps. But it’s also possible that sovereign states will move to regulate this existential threat. In the US, Treasury Secretary Janet Yellen has already raised the issue of future cryptocurrency regulation. [Read more]( The post [Bitcoin’s rise reflects America’s decline]( appeared first on [Feed Binary](. [Read Full Story]( ------------------ [Governments will eventually defeat cryptocurrencies]( Credits: www.livemint.com If India were a parent, what kind would it be? I think it would like to accompany you on your honeymoon. So it was a bit surprising that India tolerated the Bohemian idea of cryptocurrencies for so long. But now the government plans to introduce a new piece of legislation that will outlaw Bitcoin and other cryptocurrencies. India also plans to introduce its own digital currency, thus making crypto uncool. In fact, it would not be a cryptocurrency if a government issues it. It is not only India, governments across the world have started banning them. The cryptoprophets expected this, but they underestimated the power of the state. That the state is an actualization of an ethical idea might be a lie, but a successful myth. And old successful lies are hard to dislodge. Since 2009, when Bitcoin was created, some of the brightest tech Bohemians have sold the world a lemon. That a new kind of global currency will end the monopoly of governments and central banks over money. This new currency will not exist in physical form, it will be created from nothing by a vast network of computers as they perform a vast number of computations to randomly create it. The currency will have no intrinsic value beyond the perception that it has value, and its own predetermined scarcity. The lure of a cryptocurrency is that it can make transactions between two individuals secure and possible without inefficient intermediaries like banks and rule-makers like governments. It offers complete anonymity and freedom—two things that governments, including democratic ones, dislike. In fact, governments dislike even their own currency notes, as it provides anonymity and too much freedom. So, why did some people think governments would allow cryptocurrencies to thrive, or even survive? Why would governments permit a system that could end its own relevance ? But then, who would have thought in the golden days of monarchy that all of the affluent world and most of the poor world, too, will come under the spell of a laughable idea called democracy where ordinary people elect who wields power over them? Cryptocurrency is only a type of extreme financial and emotional democracy. Even so, it is doomed in its present form. Its technology platforms, like blockchain, will become standard as governments themselves adopt them, but the cryptocurrency as we know it today will stand no chance against fiat. Fiat currency is based on trust in the authority that issues it. Bitcoin, on the other hand, is built on a fascinating misanthropic question: Given that two humans cannot and should not be trusted, how can a network of computers confirm that a transaction is fair? The way people are drawn to anonymity, you would think they do something very interesting and naughty every day, and the way they react to security, you would think some transaction vanishes from their digital ledgers every day. In reality, most people are mostly dull. Yet, there is no doubt the world is in the grip of a Bitcoin mania. And it is entirely a creation of extraordinary storytelling. It has a hero who is mysterious, brilliant, moral, austere and philosophical. His name is certainly not Satoshi Nakamoto. In the aftermath of the financial crisis of 2008, a person who went by that name created, completed or revealed an elaborate computer programme that cryptographers say is an exquisite piece of work, and he also wrote a series of essays laying out the moral reason for a new kind of money—governments and central banks were corrupt and unfit to regulate money. And he raised a philosophical question: Do we need the inconvenience of trust to transact? What if computers make a dishonest transaction so mathematically improbable that it is impossible, and also grants anonymity? He has since vanished, leaving us a revolutionary monetary system that is today worth nearly $1 trillion. Nakamoto showed that absolute anonymity was possible and not always shady. He even made it look sacrificial in a world desperate for fame. Some people believe he is too good to be a single person; that he is probably a group of people. What if Nakamoto is the Central Intelligence Agency (CIA)? Or something like that? After all, the National Security Agency of the US did ponder the idea of cryptocurrency in an academic paper years before Nakamoto published his essay on it. If I were the CIA, I would create a Bohemian cryptocurrency for every anarchist to adopt, and quietly and sit and watch what they are up to. I am not suggesting Nakamoto is a government agent, but the fact that the creator of cryptocurrency is not known defeats the very freedom Bitcoin stands for. This is why the government always wins. It has a face, however ugly. And the face reassures a majority. History is filled with wild things that were supposed to be free, but eventually got regulated by governments. The internet itself was supposed to diminish government control, as no single power can destroy it. Yet, every government has the power today to regulate it. Social media, too, was expected to transform the world, especially through photogenic rebels on Twitter and Facebook. But these platforms are now begging governments to let them be. Streaming channels were suppose to force conservative societies to accept the freedom of artistic expression, but, as evident in India, they have meekly agreed to censor themselves to massage the thin skin of a majority. [Read more]( The post [Governments will eventually defeat cryptocurrencies]( appeared first on [Feed Binary](. [Read Full Story]( ------------------ [Bitcoin breaks above $50,000 for first time ever]( Credits: www.livemint.com The world’s largest cryptocurrency reached about $50,191 in New York and is now up about 73% so far this year. Ether, a rival crypto, hit a record on Friday and is up about 140% year-to-date LONDON : Bitcoin blew through another milestone, surging past $50,000 for the first time as the blistering rally in the largest cryptocurrency continues to captivate investors worldwide. The world’s largest cryptocurrency reached about $50,191 as of 7:32 am in New York and is now up about 73% so far this year. Ether, a rival crypto, hit a record on Friday and is up about 140% year-to-date. After ending last year with a fourth-quarter surge of 170% to around $29,000, Bitcoin token jumped to $40,000 seven days later. It took just nearly six weeks to breach the latest threshold, buoyed by endorsements from the likes of Paul Tudor Jones, Stan Druckenmiller and Elon Musk. Bitcoin traded for a few cents for several years after its debut more than a decade ago. Tesla Inc.’s announcement that it added $1.5 billion in Bitcoin to its balance sheet was the most visible recent catalyst, sending the price up 16% on Feb. 8, the biggest one-day gain since the Covid-19 inspired financial markets volatility in March. Optimism grew after Mastercard Inc. and Bank of New York Mellon Corp. moved to make it easier for customers to use cryptocurrencies, while Bloomberg reported Saturday that Morgan Stanley may add Bitcoin to its list of possible bets. Sustained interest from institutions has had a positive impact on Bitcoin’s price, pushing it on an upward curve. In December of 2020, it touched an all-time high crossing $24,000 in valuation. This was a 224% increase from where it started its journey at the beginning of the year. By the beginning of 2021, BTC had jumped to a $40,000 valuation. With each passing day, we are seeing it breaking every resistance. In the second week of May 2020 bitcoin witnessed its 3rd halving occurred since its inception, thus bringing a further drop in its estimated future supply, Sumit Gupta, CEO & Co-Founder, CoinDCX said. “Whether it’s Musk, Mastercard or Morgan Stanley, the mood, music and momentum is impossible to ignore,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, one of the biggest crypto lenders. “To the annoyance of many, the Bitcoin express has left the station.” The 400% rally over the past year comes amid a backdrop of near zero borrowing rates from central banks and unprecedented stimulus from governments in the wake of the coronavirus pandemic. Bitcoin advocates have criticized the moves as money printing even though inflation remains subdued. Mastercard, in a blog post last week, singled out so-called “stablecoins,” which often peg their value to that of another asset, such as the US dollar. Mastercard has already partnered with crypto card providers such as Wirex and BitPay, but has required digital currencies to be converted into fiat before processing payments for transactions on its network. Trenchev cautioned that investors should be prepared for a wild ride after the latest milestone, pointing to last month’s 30% pullback as evidence. “Short-term volatility is very much a feature of this bull market and investors should prepare accordingly,” he said. [Read more]( The post [Bitcoin breaks above $50,000 for first time ever]( appeared first on [Feed Binary](. [Read Full Story]( ------------------ Sponsored Content [fb](  [tw]( ------------------ You received this email because you operate or create content for a website/service and based on your website it seemed like this could be important information to you and your users. Want to change how you receive these emails? [Update your preferences]( or [Unsubscribe](