Bitcoins/Litecoins/Virtual Currencies

Flobee said:

Treasury's response to Biden EO on crypto got leaked allegedly. Looks like its gunna be "We're studying it" essentially. Price popped when this got posted/deleted.

Statement by Secretary of the Treasury Janet L. Yellen on President Biden's Executive Order on Digital Assets

WASHINGTON - U.S. Secretary of the Treasury Janet L. Yellen released the following statement on President Biden's executive order on digital assets. "President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will...

web.archive.org

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"We're studying it" has been the policy for a while now.

If that Crypto.com news you posted is true, it should be driving down the market. Every other time there's been a margin call we've seen a substantial dip in the market.

Arden said:

"We're studying it" has been the policy for a while now.

If that Crypto.com news you posted is true, it should be driving down the market. Every other time there's been a margin call we've seen a substantial dip in the market.

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Agreed. Crypto.com news could also be regulation related as I believe they are an EU based company. Price popped literally the same time as that EO leak happened so I assumed they were related. We'll probably know more tomorrow once he actually announces whatever he's got planned.

Seems like a nothingburger. Maybe slightly bullish as the future positive impact of the industry is acknowledged. Market seems happy with it. We'll see what gov views as the "potential risks" to consumers though.


EDIT: Also at this point it should surprise nobody, but further guidance toward pursuing CBDCs. The fight for sovereignty of your use of the US currency is looming.

Simon Dixon, who I trust more than most in this space, has a more nuanced take on this EO. I'll summarize below but I highly suggest giving the video a listen. He's a weird dude but he knows his stuff and he is right much more often than he is wrong.


Tried to take some notes since video is an hour long. Did my best to make it legible but he does meander quite a bit.

Tmac said:

Thanks for the notes.

Is this guy a doomer?

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Nah, just a former UK banker that discovered BTC early. He tried to open a fully backed (no fractional reserve) bank in like 2010, got rebuffed by regulators. Spoke at the first Bitcoin conference. Been a vocal opponent to modern banking system since he left in 2006 and advocate for banking/monetary reform. Wrote the first book that referenced Bitcoin in 2012.

I learned a lot about how the financial system works from listening to him ramble on his Youtube channel. Dude has been beating the same drum for 10+ years.

His Youtube channel is a goldmine if you've got the time/patience:

Flobee said:

Simon Dixon, who I trust more than most in this space, has a more nuanced take on this EO. I'll summarize below but I highly suggest giving the video a listen. He's a weird dude but he knows his stuff and he is right much more often than he is wrong.


Tried to take some notes since video is an hour long. Did my best to make it legible but he does meander quite a bit.

Spoiler

• EO will be used to make Stablecoins into CBDCs (compete w/ Fedcoin). Will be used for automated tax collection, surveillance, and monetary policy (think individualized interest rates)
• DeFi and most crypto's will be classified as securities (SEC jurisdiction). To "protect" investors
• Bitcoin (maybe ETH) will be treated as commodities (CFTC jurisdiction).
• Alternative to above is the creation of new regulatory body/asset class Virtual Asset Service Providers (VASPs)
• US won't ban crypto/Bitcoin.
  
  
• Timing for this EO as related to RU/UK conflict - not a coincidence
• RU gold/oil reserve sanctions causing price increase will help RU long term, hurt most normal people
• RU $13b gold can only be sold to China at this point - China may buy to strengthen their CBDC - seat at 'Bretton Woods 3' upcoming monetary renegotiation
  • Gold to GDP ratio will determine if you get a seat at negotiations
• Bitcoin policy for countries that don't have gold reserves could give them a seat at the table
• China will reverse Bitcoin mining ban
  
  
• Russia will likely become an insulated economy - North Korea
• China holds a lot of gold (more than reported) competing with IMF. Holds $4.3 trillion in US Treasuries. US lever
  • IMF supplies USD debt-based loans to nation states, creating dependence on IMF/USD in third world countries, crippling them financially.
• US working to ensure USD stays relevant. Painting themselves as supporting BTC to ensure that data+coins stay in US during BTC/USD transactions.
• IMF will release CBDC
  • Fiat and commodity backed
  • US, Germany, China, Russia(if they can keep their gold) will negotiate significant role
  • Germany (via Euro)
  • UK will lose seat (Brexit)
• USD debased 90% since Bretton Woods (US world reserve)
• Bitcoin adoption countries will compete against IMF CBDC countries
  • Japan - Making moves(quietly) to be significant in BTC industry - longest standing supporters - multi-generational approach
  • RU + Ukraine were in a good position before the war.
  • South Korea
  • India - Don't trust banks Gold being converted to Bitcoin as generational wealth changes
  • El Salvador - BTC legal tender, highest risk/reward
    • Double digit growth MoM since adoption
      
• Results - Global CBDCs will be used to de-leverage global economy
  • Tool to move to socialist/communist systems using fiscal/monetary tools
  • CBDCs will not be debt based system
  • Privacy/freedom nightmare
  • Competes with Bitcoin standard
  • Gold will continue to be preserver of wealth
• Bitcoin is speculative store-of-value
• All crypto will be regulated. Decentralization will be attacked and largely controlled.
  • AML, sanctions, tax collection

• Simon speculates:
  • China buys Russian gold
    • political suicide or genius, depends on how things play out
    • Will cause war to spill out to NATO - WW3
  • Trump is political player again in 2024
    • Bring China back into focus
    • Antagonizes China - China is the "enemy" at this point
      • Trump defending US interests
      • Results in peace w/ Russia + change of focus
  • Inflation will continue to grow
    • War/Pandemics will continue to be excuse for money printing
    • Sanctions will continue to destroy wealth exacerbating issues
  • Global IMF CBDC will likely fail
    • Individual countries will scramble to create their own CBDCs
  • CBDC is a war on the banks
    • debt free money, does have upsides, solves some problems causes many more
    • AI controlled monetary policy
    • automated tax collection
    • automated sanctions
    • automated interest rates
    • embedded KYC
    • 'perfect' surveillance money
    • Fedcoin will eventually win - becomes world CBDC after significant competition
  • US military based foreign policy replaced by Chinese based "environmental crisis" - ESG based
  • Trump is blamed for fall of US empire
    • 'egoic' tribalism
    • US remains powerful due to Fedcoin proliferation
  • Bitcoin monetary policy gives individuals and businesses the ability to escape sovereign financial system manipulation.
    • Politically neutral
    • Tool for countries to say no to IMF debt etc
  • Next crisis is - Wealth inequality crisis
    • Need to learn to protect wealth in preparation for what is coming.
    • We live in the most exciting and interesting times in financial history

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Quite a lot of, uh, speculation there...

Arden said:

Quite a lot of, uh, speculation there...

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Some of it sure. I think most people are missing a lot of context that makes some of the things he says a lot less outrageous than they may appear though. That is the problem with trying to explain these systems, they are very complicated and you need to understand them to see how things are being directed. You don't move something like the world monetary system very quickly so if you know what you're looking at you can see the direction things are being steered pretty early.

If you assumed all political actions are aimed at manipulating the future of the monetary system in todays climate you wouldn't be far from the truth in my view. Its all about the monetary reset

Flobee said:

Some of it sure. I think most people are missing a lot of context that makes some of the things he says a lot less outrageous than they may appear though. That is the problem with trying to explain these systems, they are very complicated and you need to understand them to see how things are being directed. You don't move something like the world monetary system very quickly so if you know what you're looking at you can see the direction things are being steered pretty early.

If you assumed all political actions are aimed at manipulating the future of the monetary system in todays climate you wouldn't be far from the truth in my view. Its all about the monetary reset

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Well, your notes don't include any kind of timeline (didn't watch the video, so I'm not sure if that does), but I guess if you stretch out all of the things you mentioned on a timeline of about 50 or 60 years, it begins to seem at least a little more viable.

Then again, I suspect that the global landscape will look so wildly different in just 20 years, that any type of detailed prognostication now won't hold much water.

Not saying it's not interesting speculation (and I'm sure *some* of it will happen), but it just seems like near-future dystopian crypto fan fic to me, sprinkled with conspiracy theories and a healthy side of doom saying. But wtf do I know /shrug.

Aaron said:

I haven't been in here for a while, so forgive me if this has already been talked about, but why are cryptos tanking? Back a year or so ago I bought Bitcoin and Etherium because I was half expecting Russia to be sanctioned in one way or another, and that if they did end up being cut off from SWIFT then either case crypto would skyrocket as people would use that to circumvent sanctions. But the opposite has happened. Anyone care to point out the flaw in my reasoning and why this failed to happen?

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Neither BTC nor ETH were designed to be anonymous or untraceable, and that makes them ineffective as a way to circumvent sanctions. Russia has definitely tried to use them to avoid sanctions but it has (for the most part) failed miserably.

But again, neither BTC nor ETH were designed for this purpose.

I'm still fairly convinced the "Russia sanctions experiment" will be very bullish for crypto in the long term (for lots of reasons) but it clearly isn't going to do much to alleviate short-term pain for Russia

Aaron said:

I haven't been in here for a while, so forgive me if this has already been talked about, but why are cryptos tanking? Back a year or so ago I bought Bitcoin and Etherium because I was half expecting Russia to be sanctioned in one way or another, and that if they did end up being cut off from SWIFT then either case crypto would skyrocket as people would use that to circumvent sanctions. But the opposite has happened. Anyone care to point out the flaw in my reasoning and why this failed to happen?

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I think if you zoom out for a longer time horizon you're going to see exactly what you expect. Short term however its going to be correlated with everything else during selloffs. Crypto used properly can and will allow the avoidance of sanctions, but it isn't trivial. If you're Russian and you own Bitcoin you're much better off in the medium/long term than if you just owned Rubles or USD in a bank somewhere. At least you actually own your Bitcoin and somebody will want to buy it from you or trade goods/services for it.

Sanctions work on exchanges, but they'll struggle to work on the BTC itself. Ethereum... well Vitalik isn't exactly neutral on the RU/Ukraine stuff so who knows. Thats the issue with centralized systems, somebody controls the levers.

Blockchain is wonderful technology which has a lot of promise. But the Russian war is too early for it. It’s clunky and difficult to use for actual transactions (Bitcoin or ether), some alts are much better but really quite tiny in terms of merchant adoption or even general acceptance. UK outlawing Bitcoin ATMs didn’t help. EO which could be interpreted as - we will study crypto only to make our own national digital currency - also not as helpful as first glance. Crypto right now is a speculative asset, not a viable currency or medium of exchange. And it seems to be much easier to track than first thought, as evidence by a number of high profile recoveries (such as the $3.6 billion from the couple in NY).

Crypto is in tee ball and the Russian war is a major league game. It’s not ready

MrSpitz said:

Crypto is in tee ball and the Russian war is a major league game. It’s not ready

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No argument here, its not 100% ready. Ready or not though, its going to become increasingly relevant as world events play out. I do believe that even in its current state, presuming no further development, Bitcoin still solves a lot of problems that nothing else can solve. Simply being able to flee a country like Russia and maintain a material amount of your wealth has never existed before for example.

I have some confidence that the pressure to innovate and develop solutions to privacy/scalability/censorship issues is going to accelerate development. Instead of devs trying to foresee potential future issues, they're going to be faced with real world problems that require solutions in the short term. It isn't a guarantee, but I tend to think that this is going to catalyze development in this direction.

In other news Jack Dorsey's Block is releasing more information on their hardware wallet. I don't fully love the direction they're going as I think it has some security issues that will cause some problems, but I do see it as a BIG jump in the right direction in regards to making custodianship of keys easier for the average user. Enabling easy access to multi-sig wallets to the masses is a big deal.

EU Proof of Work ban just got voted down.


Amusingly this was released just hours before the vote

Discussion around the current turmoil surrounding USD reserve currency status, strengthening on Chinese/Russian position financially, likely strengthening of 'neutral' reserve assets (Gold, Bitcoin). This is mostly about the macro-economic environment but has implications on Bitcoin (and is on a Bitcoin podcast). Really worth your time to get a relatively compact (1 hour) view on current financial market conditions and how things seem to be swinging.

EDIT: around 56:00 Luke talks about China's power/water problem and how Bitcoin adoption by the west would capitalize on that weakness. There are a number of game-theoretical reasons that the west would be well served to move toward a Bitcoin standard once the USD standard ends, but I'd not considered this one. Follows this up by how US energy can force hard money adoption through Bitcoin mining, and speculative attack on USD via borrowing, buying BTC (squeezing) then selling to pay off debt. Force correction of US balance sheet. Interesting stuff

ShakyJake thought you might find this interesting


Source is a podcast called "Darknet Diaries" apparently.