The U.S. is facing a pivotal moment as the White House pressures the Federal Reserve to cut interest rates to boost a lagging economy – a move that will inevitably increase inflation. Since 2008, $12 trillion has been injected into the U.S. economy through quantitative easing. It’s a staggering amount of money in such a short period of time. Inflation is a slow and quiet killer; much like a frog that’s slowly boiled to death, people adapt to inflation – until they can’t.
But the table is set much differently now than it was in 2008. The increase in cryptocurrency of all kinds, including the recent launch of Facebook’s Libra and a 200% rise in Bitcoin this year alone, supports the weight of cryptocurrency’s role in the global economy, especially as it affects inflation. As the founder of an international alternative assets firm, I believe that more corporate giants will follow Facebook with their own exclusive coin offerings; in 10 to 20 years, a company without its own token may be analogous to a company without a website today.
Whenever the market is artificially propped up with a large influx of currency, there inevitably comes a breaking point when enough of that currency begins to circulate in the environment. We saw the beginning of this process during the “Crypto Boom” of 2017, when the initiation of an entirely new kind of currency made many people millionaires overnight. This is a form of inflation.
When banks insert $10 trillion into the economy, that inflation has to surface eventually. As more of the Crypto Boom billions circulate in the environment, and as less of the $10 trillion influx is hidden in banks and on Wall Street, cryptocurrency has the potential to rapidly accelerate the consequences of inflation by forcing new currency into existence.
However, past this initial inflation, cryptocurrency offers an opportunity to stabilize the global economy because, much like gold, there is a finite amount of it to be mined. Furthermore, it’s the first investment that anyone in the world can purchase at any time, as long as they have access to the internet. For example, if you’re living in Argentina, you can’t just buy U.S. dollars whenever you want. You need a broker. And while the New York Stock Exchange closes, cryptocurrency never does. It’s a 24/7 investment.
Ultimately, the consequences of inflation won’t be nearly as devastating as the alternative – deflation. Inflation, at least, gives us a leg to stand on to stay in the game long enough to devise a better strategy. Much like one person can acquire a credit card and continue to live despite mounting debt, the global economy can utilize inflation as a way to extend the time frame we have to figure out a better solution.
I believe that solution is cryptocurrency. Within the next 10 to 20 years, our monetary system will likely reach a point of inflation that’s so massive it will mandate some type of monetary reform. The potential collapse of the Euro or the U.S. dollar may even necessitate the development of national cryptocurrencies, the prelude to which we may be currently witnessing, with the introduction of corporate cryptocurrencies like Libra.
Coupled with blockchain technology, national cryptocurrencies could increase transparency around government spending and make it difficult for dark money to infiltrate political campaign financing, illegal drug trade, and criminal activity. A cryptocurrency-based monetary shift would also be aligned with the exponential growth of technology and the cultural impetus to digitize as many facets of day-to-day life as possible. It’s not hard to imagine a day in the near future when people move through the world without carrying wallets or even mobile phones – at least not in their current iteration. I’m optimistic that cryptocurrency would naturally fall into that space.
Libra’s presence on Weibo grows; China senses competition for Alipay and WeChat
Libra, Facebook’s much-talked about cryptocurrency, has not only gotten the United States riled up, but has also breached its shores to disrupt the Chinese market. A recent analysis of Weibo, China’s alternative to Twitter, has revealed that Libra was the second most searched entity on the social media platform.
To be exact, the term ‘Libra will compete with Alipay and WeChat’ was trending on China’s social media space in the wake of the debates going on in the U.S. Congress over the week. Some cryptocurrency enthusiasts had their doubts about the search parameters with @guymp, an e-commerce researcher, tweeting,
1.) Libra is extremely unlikely to be allowed to operate in China
2.) Alipay/WeChatPay user account are *by design* almost completely nonexistent outside of China.”
Several countries have started talking about the Mark Zuckerberg-led cryptocurrency and China’s interest in the asset has only managed to pull more people into the digital asset industry. Some proponents of the space have also speculated that China is simultaneously working on their own crypto-project to rival that of Facebook and Bitcoin. Anthony Pompliano, CEO of Morgan Creek Digital Capital, had recently stated,
“China is accelerating those plans in response to Libra. They are very worried about Libra being very US-dominated or regulated by the U.S., they feel like the digital currency would give the US an advantage over China. So China is going to push forward and accelerate to build a central bank regulated digital currency.”
Libra’s worldwide reach is not just based on speculation, but rather on hard research. A recent TIE report had touched on Libra’s dominance in the Twitterverse, which included search hits in the U.S. and the United Kingdom. TIE reported that tweets about Libra accounted for 43.8 percent of all crypto-related tweets in the United States, out of which 54.8 percent were negative.
The UK however, had a different outlook towards Facebook’s cryptocurrency, with a majority of the sample space claiming that Libra would be good for the community.
WATCH: Lukka CEO Believes in a Future Full of Corporate Tokens
Jake Benson is a long-time industry entrepreneur and the CEO and Founder of Lukka, a comprehensive tool for calculating capital gains taxes for cryptocurrency. In this clip he and CoinDesk Editor Pete Rizzo talk about a future where corporate tokens aren’t a “surprise.”
“It’s not a surprise to me that inevitably corporations they’re going after creating their own tokens but for Facebook to be one of the first big ones is is pretty much a surprise,” he said.
“If this project is going to be successful I think they absolutely have to satisfy minimum requirements,” he said. “But I would also believe that the onus is on them to sort of demonstrate that there’s additional level of controls and transparency that might be benefits of cryptocurrency that maybe weren’t even possible before.”
Benson expects to see a “more compliant” future… as long as the social media giant can avoid the problem of privacy invasion associated with the platform.
You can read our complete Libra coverage here and watch our CoinDesk LIVE interviews here.
Facebook’s Libra is not a cryptocurrency, claims CoinShares’ Meltem Demirors
The largest cryptocurrency in the world, Bitcoin [BTC], saw a drastic fall in its price on July 16, as U.S. legislators sharpened their arguments against crypto and its viability. Bitcoin noted a fall of 12% in its price and was being traded at $9,591, at press time.
However, providing support to the coin was Meltem Demirors, CSO of CoinShares, who opined about the difference between Bitcoin and Libra, and how imitators of currency should be seen for facts. Demirors said,
“I urge to view Bitcoin as open pubic networks that enable innovation and growth, and to treat Libra and its future imitators, and there will be many, in the context of the facts- private efforts led by corporations holding billions of dollars of public’s money. “
In an interview with CNBC, the CSO clarified that the question is not about Libra being dangerous. The question is, what is Libra? It is trying to be a cryptocurrency, but the facts are that Libra holds assets including US dollars and government securities and is essentially, holding public’s funds.
Demirors elaborated on the same in her statement to the House of Representatives,
“We’re seeing a wave of interesting cryptocurrencies and countless imitators which borrow some features but are decidedly not cryptocurrencies. Libra is not a cryptocurrency. “
Cryptocurrencies are here to stay and this has been said time and time again. However, with skepticism playing its part, the need for Libra to be regulated has been marked as urgent. Even though Bitcoin is not regulated since it is a technology, the businesses built on top of it are.
Even though there remains a fair bit of uncertainty about the United States’ regulatory stance, for now, lawmakers are very aware that regulatory clarity is tantamount, with a number of efforts underway. The Token Taxonomy Act is one such step, and would exclude cryptocurrencies from being classified as securities.
Demirors added that it might be too early to say whether any regulations will be applied on crypto, but there could be a formation of two committees; One, that would focus on the issue of cryptocurrencies and two, a subcommittee that focuses on the issue of Libra. The CSO concluded that she was cautiously optimistic about growing clarity in crypto-regulations, with Demirors claiming that the debate created much-needed political momentum.