EURO THREATS NOT STOPPING CRYPTO MOVES. Last week El Salvador became a crypto world trailblazer, adopting Bitcoin as legal tender.
The International Money Fund and its central bank backers aren’t happy, to say the least. Over the weekend in The Financial Times, Fabio Panetta of the European Central Bank called Bitcoin “a dangerous animal”, and claimed a digital Euro would fend off the threat.
In a sign that the Italian economist doesn’t fully comprehend Bitcoin and was being disingenuous regarding governments, he claimed the digital Euro would better protect privacy and even allow anonymity of transactions for “really small payments”, while remaining disinterested, unlike a “private company”:
“We have no commercial interest in storing, managing or monetising the data of users.”
Bitcoin isn’t a private company.
There was also news last week that the World Bank’s charter obligates it to accept Bitcoin from El Salvador. The development agency’s 1944 Articles of Agreement stipulates the methods and principles by which it must operate with sovereign countries. The document promises to accept payments in local currencies from member nations.
The following are acceptable “forms of currency holdings” as defined in the agreement (Section 12 of Article V):
“The Bank shall accept from any member, in place of any part of the member’s currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest-bearing and payable at their par value on demand by credit to the account of the Bank in the designated depository.”
The World Bank did its best to discourage El Salvador’s move to Bitcoin, complaining about the crypto’s “environmental impacts” and supposed lack of transparency.
There is even more language in the original charter agreement that may spell pain for the World Bank, according to Forbes. If Bitcoin paid by El Salvador appreciates considerably in value within a “reasonable time”, the Bank could actually be obliged to pay back the appreciation difference:
“Whenever the par value of a member’s currency is increased, the Bank shall return to such member within a reasonable time an amount of that member’s currency equal to the increase in the value of the amount of such currency.”
The law certainly seems to be in El Salvador’s favor.
A DIFFERENT KIND OF CENTRAL AMERICAN REVOLUTION? Euro rumblings are not stopping other central and South American countries from considering their own moves to crypto. Max Keiser, former Wall Street operative and long-time advocate for Bitcoin, has been advising on south-of-the-border cryptocurrency implementations.
In a recent episode of his podcast “The Keiser Report,” he and guest Carlos Toriello Herrerias (aka “Carlino”) talked about how other Central and South American countries might benefit from moving to Bitcoin.
Carlino pointed out that the dynamic of Guatemalans leaving their homeland to provide cheap labor in the U.S., then sending remittances back via Western Union, could change via a Bitcoin revolution.
“We want to do everything we can to help Strike [mobile payments app] launch as soon as possible in Guatemala and the rest of Central America. So that people at the bottom of the pyramid are no longer financing Western Union and the likes. Our mission is to make Central America the first hyper-bitcoinized region of the world.”
Carlino pointed out that 20 percent of his country’s GDP is currently made up of remittances. And Western Union takes a hefty 9 percent for transferring those funds.
El Salvador Continues to Lead the Way
A statement by El Salvador’s President Nayib Bukele that engineers said could use volcanic thermal energy to mine Bitcoin, got Keiser’s attention. Keiser told the U.K.’s Express how El Salvador could move quickly on such a project:
“I’ve advised El Salvador to create new ‘Volcano Bonds’ backed by future bitcoin mining revenues to recapitalise their balance sheet and retire the IMF loans. I know of two banks in New York that are working on this now.
“Property prices in El Salvador are set to triple this decade as [are] several countries in the region; Argentina, Guatemala, Paraguay and others will announce shortly they are following El Salvador’s example.”
Keiser said other central banks such as the Bank of England and the Federal Reserve Bank in America are also at risk of being disintermediated as bitcoin rises to become the world’s reserve currency.”
George Kikvadze of the Global Blockchain Business Council reacted to the prospects of geothermal bitcoin mining in El Salvador by tweeting “Dear President Nayib Bukele, 95MW can generate 3 Exahashes which is around 600 bitcoin in revenue per month or $250 mln per year.”
GET BEHIND CRYPTO INNOVATIONS OR GET LEFT BEHIND, SAYS CUBAN. The U.S. could lose out big if it doesn’t proactively seek to get behind decentralized blockchain innovations, especially DeFi (Decentralized Finance), says Mark Cuban.
Cuban, widely known as owner of the Dallas Mavericks NBA team, made his fortune as an investor.
In a blog piece posted over the weekend, Cuban blamed authorities for already driving some of the most creative innovators out of the country and into the realm of DAO’s (Decentralized Autonomous Organizations).
“This is not only because of the ethos of Decentralized Autonomous Organizations (DAOS), but also because of our regulators’ ABSOLUTE STUPIDITY in forcing some of this generation’s most impactful and innovative entrepreneurs to run their enterprises in foreign countries.”
The Trends Journal has reported on the likely huge transformative power of DeFi and other blockchain technologies in “COMPETING BLOCKCHAINS OFFER OPPORTUNITIES AND RISKS” (20 April 2021) and other articles.
In Cuban’s blog post, titled “The Brilliance of Yield Farming, Liquidity Providing, and Valuing Crypto Projects,” he prophesied that in 10 to 20 years, people would look back on this period as a time when world-changing businesses were being founded:
“It’s already a certainty that De-Fi and other crypto groups will be at or near the top of the list.”
But he warned that if politicians continued to stifle innovation, much growth potential could be squandered.
Meanwhile, BitDAO, a new decentralized autonomous organization, announced it had raised $230 million in funding from numerous high-profile investors, including Peter Thiel and Alan Howard.
BitDAO aims to foster the growth of the decentralized finance (DeFi) industry by offering grants and liquidity to DeFi companies and establishing R&D centers.
In a statement, the organization said “BitDAO is putting its full support behind DeFi and will invest major financial and human resources to encourage DeFi growth.”
Venture capitalists are quickly gravitating to the DeFi industry. Reportedly, about half of all crypto sales in the first quarter of this year were for DeFi initiatives.
TIPPING POINT: AWARENESS. It’s not hard to find analysts either trashing cryptos, or predicting they’ll skyrocket over the next 6 months, or year, or five years.
But trends in public awareness do suggest that future upsides for major cryptos are highly likely. For most of their existence, only a tiny portion of the world has paid any attention, much less ventured into crypto investments or use. That’s changing fast. And that alone means the major blockchains will probably see further surges as investment and use widens.
One popular crypto analyst, Ben Armstrong, recently predicted especially good things for Ethereum on his popular crypto focused YouTube channel:
“With a plethora of DeFi options mixed with the NFT (non-fungible token) market heating up, Ethereum will climb up in value and market dominance like we’ve never seen before.
“Because of this total takeover, I can see it’s very likely that by 2025, Ethereum will hit $85,000 per ETH. The first step to that will be, of course, $25,000 ETH this year. Don’t give up on that. Ethereum won’t just be digital oil in 2025, it will be the blockchain fuel of the future.”