Saga has a bold vision for the future of global commerce, and it has created a tool that may allow people everywhere to trade directly with each other.
Unlike stablecoins, which rely on a single currency to maintain their value or tokens like Bitcoin which float freely, Saga has a novel solution. The token that Saga has created maintains its value via a tie to the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs), which will be explained in greater detail below.
The team at Saga is also top-notch. The Israeli-based company has former central bankers on its team, as well as a Nobel laureate in economics.
In some ways, the Saga project is working to create a stateless stablecoin that can be used in the same way that a person would use a Bitcoin. The choice to tie the value of the Saga token (SGA) to the SDR is a good way to prevent the problems that Libra presents while sidestepping the issues involved with a token like Bitcoin.
Saga Has a Solid Idea
Bitcoin was a truly revolutionary idea.
While Bitcoin has been wildly successful, it isn’t really the same thing as currency, at least in the way that we are used to thinking about currencies. The biggest issue for Bitcoin as a currency is that its value swings around violently. This is a real problem from a trade settlement perspective, as volatility makes hedging more expensive.
The stablecoin solution is also not ideal, as it puts a single central bank in control of the currency. It isn’t a direct tie, as the stablecoin will likely be managed by a third-party, but any asset that is tied to a fiat currency will rely on the central bank that manages that currency to maintain its value.
Saga chose to use the IMF’s SDR as the base for its token. The system that Saga designed will not allow large moves in the value of its token vis a vis the SDR’s value, and unless there is some major volatility in the world’s largest fiat currencies, Saga’s token will be relatively stable.
What Are SDRs?
Special Drawing Rights aren’t a new idea. The IMF created them many decades ago, but they are rarely talked about outside of economic circles. SDRs are just a basket of the world’s biggest currencies, such as US Dollars, Euros, and Chinese Yuan.
According to Ido Man, who is the founder of the Saga Foundation:
“It (SDRs) achieves the purpose of not being reliant on a single currency or a single state (while) rendering accessible the usage of a hedging currency not only to central banks, but to the public.”
How it Works
When Saga launched its token on December 10th of this year, the value of one SGA token was worth the value of one tokenized SDR. Saga holds reserves in a variety of currencies, including cryptos, which are used to enforce the SDR peg.
There is no motivation for the SGA token to either rise or fall in value relative to the value of the SDR, as it is designed to be a stable store of value.
According to Man:
“If anyone wants to speculate, SGA is probably not the proper vehicle…If the market cap grew by $1 billion overnight, the price of SGA wouldn’t even double.”
Of course, the fact that the company is telling speculators to move on from the beginning will probably also dissuade people from trying to bid up or sell down SGA, which will likely help to reinforce its status as a digital reserve asset.
Why SGA is Relevant Today
There is no shortage of reasons why the SGA token may become a popular way for people to trade, and hedge fiat currency risk. The world is teetering on the edge of a recession, and some smaller economies, like Hong Kong, are already in a technical recession.
The modern take on economic management usually involves a lot of newly created money being spent into a low-interest rate economy, which means that some form of a rise in asset values is inevitable.
The big spend after 2008 manifested in record high equities and record low-interest rates (as much as ¼ of global investment grade debt has negative yields), and the broad economy still hasn’t recovered. More money creation is almost inevitable at this point, which makes
When governments start pushing central banks for more stimulus, the result is generally a lower currency value, which could make stablecoins less attractive as time goes on. A tie to the SDR makes these moves less worrisome, as one currency in the basket will benefit from a fall in the other.
Could SGA Become a Reserve Asset?
One issue that Saga may be anticipating is the political issues that tend to arise when an economy falters. South Africa has used currency control to attempt to maintain the value of its national currency, the Rand, and we may see this happen to larger currencies as central banks and governments look for ways to prop-up the value of their fiat currencies.
Capital controls in a regional economy aren’t going to destabilize the global financial system, but they could cause major problems if they were used by a nation like the United States to protect the US dollar. In addition to big moves in the FOREX market, global trade would be undoubtedly be impacted.
One of the most important things that currency does is enable trade. Saga’s SGA token allows investors large and small to hold a reserve asset that can be used across borders for trade, even if the economic landscape of a nation is in flux. Unlike a stablecoin, SGA is unlikely to be influenced by geopolitics, at least by the same amount that a national currency would be.
An Experienced Team
Saga has attracted some of the brightest minds in economics and technology to its project. The core group at Saga has experience across a range of industries and is well suited to make the SGA token a success.
Here is the core team at Saga (information from the company):
Ido Sadeh Man, Founder & Chairman of the Board: Mr. Sadeh Man spent the last decade leading product and technology organisations, including Odysii (sold to Gilbarco Veeder-Root, NYSE: FTV), and at Mobli where he was COO.
Keren Orian Nadel, Managing Director: With over 15 years’ worth of experience in strategy, product, marketing, operations and P&L management, Keren has held global senior management positions in both corporates environments (Microsoft, Haaretz Media) as well as startups. Keren holds a BA in Political Science and an MA in Public Policy from Tel-Aviv University.
Barry Topf, Chief Economist: Mr Topf joined Saga after a 33-year career at the Bank of Israel, where he served as one of the founding members of the Monetary Policy Committee and as Senior Advisor to the Governor, Stanley Fischer. He also held positions of Head of Market Operations, Head of the Foreign Currency Department, and Chief Investment Officer. In his capacity as an IMF Consultant, Mr. Topf has advised over 25 countries on economic policy.
Roy Eshkol, CTO & Blockchain Architect: Roy joined Saga with a wealth of knowledge and experience in technologies and infrastructures. With a passion for methodical information technology specifications, Roy leads Saga’s architecture design and development. Roy holds an M.Sc in Management Sciences in Management of Technology and Information Systems from Tel Aviv University.
Ron Sabo, PhD, Chief Scientist: With a PhD in experimental condensed matter physics from Weizmann Institute of Science, Ron leads Saga’s Research department. A Clore Scholar, he also lectures at the international program in Electrical & Electronics Engineering at Tel Aviv University.
Saga also has a number of advisers who are equally qualified in their respective fields, and will probably be a great help to the project. All their information is available here.
Saga is Creating New Assets
Cryptos were a huge shift away from existing asset classes, but with the SGA token, Saga has taken blockchain technology and made it into a viable trade and reserve asset.
In the future, the price of decentralized tokens may calm down, but for the moment, SGA is a bridge to a world where people can trade freely with blockchain technology, and not worry about price volatility. If you want to learn more about the project and token, just follow this link.
Healthy Correction or Reason To Panic? Price Analysis & Overview
Bitcoin has fabulous times since entering the new decade. However, when we see such a parabolic move to the upside, we can expect volatile moves to the other side, as well.
Just yesterday, we mentioned Bitcoin price reaching its first major test – the 200-days moving average line (marked light green on the following chart). Many analysts see this tough resistance as the barrier between Bear and Bull markets.
Today, Bitcoin surpassed the crucial moving average line (roughly around $9060). However, shortly after recording a daily high (and year to date) at $9188 (Bitstamp), we received a MEGA dump.
Besides, on the 4-hour chart, we can clearly see Bitcoin reaching the top area of the marked ascending channel.
Bitcoin lost over $700, plunging to the $8400 old resistance level. As of writing these lines, Bitcoin had recovered a bit, trading above the $8600 resistance level.
Market Cap Evaporated $13 Billion In Minutes
So far, there is no reason to panic, in my opinion. It’s OK not to overcome the significant MA-200 at the first chance.
Another thing to keep in mind is the CME Futures’ Friday low at $8720. This means that as of now, there will be a positive price gap.
Following the drop, the total market cap had reached $250 billion at the top before losing over $13 billion in less than 60 minutes.
Total Market Cap: $237.5 billion
Bitcoin Market Cap: $157.5 billion
BTC Dominance Index: 66.4%
*Data by CoinGecko
Key Levels To Watch & Next Targets
– Support/Resistance levels: Bitcoin is now trying to keep above the $8600 resistance turned support level. If the
Further below lies the $8000 area, along with the 100-days moving average line (marked by white). This also contains the bottom trend-line of the ascending channel.
From above, $8730 will be the first level of resistance Bitcoin will face (38.2% Fib level). The next major resistance is $8900, along with the Golden Fib of %61.8.
Further above is $9000, along with the most significant resistance at the current price area – the 200-days moving average line.
– The RSI Indicator: The RSI that was hovering at its highest levels since June had plunged together with the price. It will be interesting to see if the RSI can hold the mini-ascending trend-line.
A bearish sign might be coming on behalf of the Stochastic RSI oscillator, as it made a bearish cross-over and about to enter the neutral territory, which can ignite a further correction.
– Trading volume: We need to keep in mind that the vast move is taking place during the weekend when it’s easier to shift the markets.
BTC/USD BitStamp 4-Hour Chart
BTC/USD BitStamp 1-Day Chart
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Cryptocurrencies’ legitimization shouldn’t be restricted by AML risk: Perianne Boring
2019 saw regulators around the world paying serious attention to cryptocurrencies and its regulation. Even though many countries are still skeptical about digital assets, some have embraced crypto, along with blockchain. Even the U.S. has long been dealing with cryptocurrencies and its regulations and according to Perianne Boring, President of the Chamber of Digital Commerce, 2020 has already been a “remarkable year” in crypto-time.
The president of the blockchain trade association, a guest on the latest edition of the Off the Chain podcast with Anthony Pompliano, noted that the association has been working with agencies like the U.S. Securities and Exchange Commission by filling them in about cryptocurrencies and the understanding gap that exists, along with FinCen. According to Boring, crypto’s growth has accelerated over time, so it would be better for the government to “help shape that process than for it to be shaped around you.”
Shifting focus to Washington D.C, Boring
“If that is what you are really concerned about, you should be so excited about Bitcoin because it is a radically transparent system and if your job is to follow the money, we have actually given you the best tool, ever possible to do that. So that kind of pushback is really weird.”
With AML and terrorism financing being the main and genuine concern, she said that tracking money could be the “big step up” for law enforcement agencies as the ledger can be viewed publically by anyone. Boring added that “AML as a risk for cryptocurrencies is not a legitimate reason to not embrace this technology.” However, there are tools available to address this concern and will require law enforcement agencies to learn them, she went on to state.
Davos Needs to Wake Up to the Ills of Centralization
This is part of a series of op-eds previewing the World Economic Forum in Davos, Switzerland. CoinDesk will be on the ground in Davos from Jan. 20–24 chronicling all things crypto at the annual gathering of the world’s economic and political elite. Follow along by subscribing to our pop-up newsletter, CoinDesk Confidential: Davos.
Michael J. Casey is the chief content officer of CoinDesk. The opinions here are his own.
As the world’s most influential and self-entitled gather in Davos, Switzerland, for next week’s World Economic Forum, a predictable set of problems are on their minds: climate change, political polarization, trade tensions and cyber-attacks top their list of worries, according to the WEF’s just-released Global Risks Survey.
Those are weighty issues. But if we look at them through the decentralization mindset encouraged by cryptocurrencies and blockchain technology, it’s hard not to conclude that elephants in rooms are being overlooked. It’s with those issues, the ones not being talked about, where the real important stuff lies.
The disintermediating, fragmenting and decentralizing impact of the internet has made the 21st century’s political and economic structure profoundly different from the previous one. But the Baby Boomers who run our governments and companies still tend to apply 20th century assumptions about centralized money and power. They fail to see how our outdated political and economic institutions are out of touch with this new reality, and how that explains society’s ever-waning trust in them. It’s a myopia that also means they often fail to recognize, much less understand, the alternative decentralized models quietly emerging from the developers building cryptocurrency, blockchain and digital identity technologies.
So, as I head to Davos with my CoinDesk colleagues for a week of reporting and speaking engagements, I want to contemplate some of the issues “Davos Man” might be missing.
It’s worth remembering the people for whom these issues most matter are not those cocktail-sipping elites but regular Joes and Joans. This year may well mark the most divisive U.S. election in decades. If our bickering leaders aren’t focused on these big themes, where does that leave us in four years’ time? We need these issues on the ballot.
China’s digital yuan
China is expected to launch a digital currency sometime this year. The question not being asked enough is: As this project grows – and likely many others from other countries and companies – what will it mean for the dollar-centric global economy and its multitudinous stakeholders?
How will digital fiat currencies impact global trade and capital flows? Do they pose a competitive threat to the dollar and, by extension, to U.S. economic power? What would such a transformation mean for how the international community tackles the big-ticket issues Davos elites worry about: petrodollar investments in carbon-rich assets, for example, or global trade tensions?
The digital yuan might seem like a superficial change, akin to a more advanced banknote or a state-run version of a mobile banking or payments app. But while China’s centrally managed approach to digital-currency technology is in some respects the antithesis of the decentralized model behind bitcoin, it is nonetheless a radical change.
Two things matter: One, a digital fiat currency will circulate without banks managing the flow and, two, it is programmable, which makes it much more powerful than analog currency. Marc Andreessen says “software is eating the world.” Money-as-software might just devour it.
A digital currency will enable the Chinese government to directly manage and monitor its users’ spending patterns. Putting aside the terrifying surveillance prospects behind this “panopticon” vision, this information-gathering power will greatly aid China in its international aspirations. Its economic response machine will be run by a far superior data-analytics system than anything employed by any other country.
A “programmable” yuan will provide the missing payment component that hundreds of Chinese blockchain and smart-contract projects need. It will enable autonomous machines, micropayment infrastructure management systems, smart cities and other ideas the West will struggle to keep up with.
As I’ve argued elsewhere, currency programmability, when interoperable with other countries’ fiat digital currencies, could also enable Chinese companies and their foreign partners to do a direct runaround of the dollar-based trade system.
Currently, the yuan occupies an immaterial amount of cross-border trade and reserve asset holdings. But as this technology poses alternatives to the dollar and if China aggressively inserts its version into investment projects in Africa, for example, or into its 65-country Belt and Road Initiative, its international usage could grow rapidly.
Recently, a Harvard-MIT simulation
Some people, including former U.S. Commodity Futures Trading Commission Chairman Chris Giancarlo, have recognized this threat to U.S. economic leadership. But Chinese digital currency dominance does not appear to be on many leaders’ radars – it’s certainly not featuring in the Democratic primary presidential debates.
So, come on, Davos, let’s talk about it.
To be fair, privacy in the internet age, defined as the threat to our online personal data, will probably get a decent examination at Davos 2020.
The Cambridge Analytica story, Edward Snowden’s unveiling of the NSA’s citizen-snooping system and the growing awareness that Silicon Valley behemoths such as Google are managing our lives, has put this issue front and center. It deserves to be.
The problem is the structural factors behind this dangerous surveillance capitalism system are poorly understood.
Most political reactions to the drumbeat of stories about data abuse by Facebook and Google amount to leaders tut-tutting at these companies, occasionally fining them and demanding they just stop being bad. Few realize that, essentially, they can’t stop being bad. These centralized entities, with their closed, non-interoperable “walled gardens” of data, have built their entire business models – and therefore their shareholders’ profit expectations – on surreptitiously and systematically extracting information about human lives.
The other problem is the ad-hoc efforts to change these businesses’ behavior clashes with other demands placed upon them.
Witness the contradiction in lawmakers’ critiques of the Facebook-founded Libra digital currency project. On the one hand, they demanded it protect users’ privacy but on the other they demanded it maintain all the monitoring necessary to prevent money laundering. Or look at how Facebook’s critics simultaneously demand its social media platform remove disturbing hate-speech content and that it also cease arbitrarily censoring and “de-platforming” users. Without understanding the problem, people can’t see how holding both of these positions is untenable.
There are two approaches to this issue: a political one, such as an antitrust order to constrain the internet giants, or a technological one, in which social media platforms move to a decentralized structure of user control (one potentially where zero-knowledge proofs or other advanced forms of encryption enable verification without revealing identities).
Let’s discuss these options, Davos.
You thought fake news was a problem. You ain’t seen nothing yet.
As Arif Khan writes in this pre-Davos opener for CoinDesk, fake news is going on steroids.
With people such as Jordan Peele using clever stunts to highlight the problem, “deepfakes” – in which image manipulation technology is making it increasingly difficult for people to detect reality-altering changes to a digital video or image – are starting to get people’s attention.
Yet, the full extent of how much society depends on the glue of trustworthy information is greatly underappreciated. The foundation of our democracy, of our legal system, of our business relationships and of everything else in between is at stake when the truth cannot be verified.
How do we get ahead of this when artificial intelligence is progressing so rapidly and when information is no longer delivered to us through central filters?
A solution will require a combination of tools like AI detection software, watermarking and blockchain-based tracking of digital media provenance.
It also requires stakeholders at technology companies, media organizations and government bodies to jointly establish standards for those technologies so we can all agree on how we’ll re-establish the integrity of the information we rely on.
This is an urgent problem, one tailor-made for a mountain-town gathering of money and power.
Let’s look outside the bubble. Let’s become inquisitive. Let’s abandon rigid, outdated ways of thinking. Let’s say goodbye to know-it-all Davos Man, because clearly he doesn’t.