CRC Blockchain Industry Commentary #14
Ray Dalio believes the world is heading towards a big paradigm shift. Central banks have injected an enormous amount of money into the world, pushing up asset prices across the board without having any meaningful effect on economic growth or inflation. Government deficits are substantial and rising, healthcare and pension obligations are increasingly coming due without the ability to satisfy them, and inequality gaps are widening due to asset inflation, technological advances, and lack of credit for the “have nots.” According to Dalio, as debt monetization becomes the easiest option for governments to deal with unmeetable debt obligations, the viability of the three major world reserve currencies as viable stores of wealth will be threatened. The paradigm we are in is unsustainable and can no longer be kicked down the road as is has been since 2008.
CRC Commentary: The convergence of the Bitcoin and Macro investment communities has been one of the larger stories of 2019. Bitcoin’s appeal as a potential safe haven asset and store of wealth is fundamental to institutional adoption of Bitcoin as a macro asset and if more institutional investors begin to arrive at Dalio’s view of our current macro environment we could see an uptick of interest in Bitcoin as a potential hedge to the current environment. If Dalio’s view holds true it may be time for Bitcoin to take center stage and prove its value. As the current economic cycle plays out Bitcoin may need to face its most important outstanding question to date: can Bitcoin perform well as a safe haven asset?
Source: The Block
In a document released Monday, Turkey announced its central bank plans to launch a digital currency, with trials concluded by the end of 2020. The document states, "The main objective is to establish a financial sector with a strong institutional structure that can respond to the financing needs of the real sector at a low cost, offer different financial instruments to a wide investor base through reliable institutions and support Istanbul's goal of becoming an attractive global financial center"
CRC Commentary: Turkey’s announcement comes off the back of China’s recent announcement of its digital currency, and its enthusiastic support of blockchain technology. Turkey is becoming more and more popular with its high crypto user base and crypto friendly regulators. But that's not only Turkey, furthermore, last week the Association of German banks called for a digital Euro, touting the advantages of digital money over conventional payments Many have considered Facebook’s Libra announcement as the “Netscape moment” for the industry. Since the announcement, there has been an influx of interest from leaders around the world spurring what is shaping up to be a digital currency arms race.
Source: Stellar Blog
Stellar’s foundation has burned more than 55 billion Lumen tokens as it moves away from airdrop programs. Previously the foundation had retained 68 billion Lumens earmarked for giveaways in order to grow the community. Citing a declining utility from airdrops the SDF burned 50 billion of those tokens along with 5 billion of the 17 billion previously held in its operating fund. The team laid out a new strategy that focuses on developers and building the ecosystem using the remaining XLM held by the SDF.
CRC Commentary: Supply overhang from vesting tokens or those held by treasuries can lead to high levels of dilution for investors. By burning these tokens the SDF can help reassure investors, though even with the burn the SDF still controls the majority of Lumen. Stellar’s supply dynamics are becoming more clear. Just last month the network upgraded to a new version that removed the creation of new coins, most of which went to the SDF as the largest holder of Lumens.
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