Money — the magical power it has over people is almost universal. But whether we earn it, spend it or save it, we hardly ever think about the following questions: What is money? Why does it exist? What will money look like in the future? And why should we think too much about it? Our money works. Day in, day out, we use it without much effort. So what’s the problem?
As August Friedrich von Hayek pointed out, we humans constantly use things we don’t know anything about. For example, you don’t need to know anything about internal combustion engines in order to drive a car. It’s no different with money. We don’t have to think deeply about money in order to use it successfully. This very fact is what makes us such a successful species and indicates how well our market and knowledge society functions.
Given recent developments, more and more people have started pondering the state of today’s money. This is indicative of the fact that strange things are happening in the realm of money.
What the general public is being told right now is that money can be created ad infinitum. With the coronavirus popping the so-called “Everything Bubble,” central banks have been interfering heavily by providing vast amounts of money — in all the different flavors that money or money-like substitutes exist in today’s financial world. On top of that, governments have set up stimulus packages in the trillions of dollars, exceeding anything the world has ever seen by far.
In the wake of the enormous money tsunami unleashed onto economies and societies, people have begun (rightfully) to start asking the question: What has become of money? Is money even worth anything any longer?
A Battle of Devaluation
Others, among them many bitcoiners, are asking the question: How has money gotten to this point? In order to answer this question one has to go back to 1971, when the dollar, as the last national currency, was cut off from gold. Perhaps surprisingly, government currencies did not crash to zero at that time; rather they moved to a system of free exchange rates.
Whereas the yellow precious metal had previously served as an anchor of value and price, henceforth a battle of national currencies was unleashed. This battle turned out to be quite costly. The different exchange rates of individual currency pairs led to an increase in currency risks. The latter increased transaction costs for international trade, which continue to weigh heavily on global trade to this day, representing a globally inefficient barter system on a national currency level.
Merchants, companies and politicians reacted to this situation. Within the political sphere, the U.S. dollar developed into the global unit of account for oil and other commodities due to U.S. hegemony being the strongest economic power around the globe. To this day, the U.S. dollar continues to function as an international reserve currency. In this way, the greenback facilitates global trade, but due to its importance it also let the U.S. exploit what is called its “privilège exorbitant.” The sheer dominance of the dollar and the advantages for U.S. markets are impressive.
Financialization of the World
The entrepreneurial response has been to financialize the world and create derivatives and more and more hedge funds. The former are financial products whose primary objective is the contractual hedging of risks over time and space. The latter, hedge funds, are entities that trade in these financial products in the form of actively managed investment funds. It is, therefore, hardly surprising today that hedging transactions to minimize exchange rate risks account for a considerable proportion of total financial transactions.
Government currencies beget ever greater financialization. It’s the entrepreneurs’ reaction to them. So the ever-increasing number of derivatives used today is ultimately a consequence of the costly effects of this diversity of national currencies. Anyone wishing to send money across national borders today pays hefty fees. The reason: the reality of different currency areas requires the involvement of banking and financial institutions. Countless banks, partner banks and financial service providers from different countries are involved and want their “fair” share. So, ultimately, our current international monetary order resembles a global barter trade based on numerous fiat monies. Legacy systems and regulatory requirements make their efficient and rapid transfer difficult.
The various fintech companies of today are therefore also actors in the entrepreneurial reaction to this state of affairs. The most popular and successful among them are those who want to remove artificial barriers in international payment transactions resulting from this global barter. Upstart companies such as TransferWise or Revolut are making possible those things that banks have barely managed to do. Sending and receiving national currencies is not only becoming faster but also cheaper.
Bitcoin: The Ultimate Reaction
The entrepreneurial reaction in the form of financializing the world has its drawbacks though. It might help investors, entrepreneurs and corporations to deal with the hassle of government currencies, but the system at large is being inflated and becomes ever more fragile. Ironically, this is also the reason why we see central banks floating the markets now. They are reacting toward something that has itself been a reaction to central bank national currencies in the first place. The problem is a closed loop that creates an ever greater problem.
In 2009, a new player entered the stage: bitcoin. In a sense, the crypto asset is the final reaction that aims to break this closed loop of national currencies and financialization. Born at the height of the financial crisis, Bitcoin represents the antithesis to the existing financial order. It is an attempt to wrest money as a force influencing the economy, politics and society from the hands of centrally planned God players.
Money again should be scarce and decentralized in order to tame the endless appetite of politicians, functionaries and economic giants. In the eyes of its supporters, Bitcoin is a counter-reaction to the shameful misuse of fiat money. Whether fiat money is supported by the state and issued by private banks or even corporations, the problem remains the same: It remains in centralized hands and users cannot keep self-sovereign control of it.
Digital payment solutions that promise to turn current money into “fiat money 2.0” are merely putting “lipstick on a pig,” according to the argument of Bitcoin aficionados. This would not solve the fundamental problem of monetary socialism that is ailing our current monetary system. Money is still tied to intermediaries and every payment made is recorded in a central database controlled by a third party. Transactions can be censored at any time.
A Real Alternative
For this reason, a distinction must be made between digital currencies and cryptocurrencies. The latter can be exclusively controlled by individuals using cryptographic methods. So-called cryptographic values can thus be held and used directly by their owners and without intermediaries, similar to bearer instruments or material objects. Instead of being managed by an intermediary, cryptographic values are based on a blockchain. This is a distributed database that nobody has sole control over. A blockchain is ultimately a computer protocol, based on programming code. From a technical point of view, this turns the crypto assets into pure information and mathematics.
Consequently, Bitcoin stands for an alternative way of thinking about financial systems. Today, our financial system is a conglomerate of abstract constructs such as contracts, promises and balance sheets. This bears witness to the fact that our economy has been becoming ever more abstract. Money is no exception. The great philosopher and sociologist Georg Simmel already noted this tendency toward ever greater abstraction in his work “The Philosophy of Money.”
There exists a hierarchy of money in today’s financial system: money in the narrower sense, which is also known as base money; and money in a broader, more abstract sense in the form of bank deposits, shadow banking IOUs, credit cards or mobile payment options. This development toward more abstract forms of money is driven by the financialization of the past decades, which has led to a stronger fusion of the economic and financial worlds.
This amalgamate requires a financial alchemy that is now based on three basic building blocks: institutions (technology), incentives and human participation. In the existing financial system, the human element predominates. Contracts and promises are framed by institutions, but they are executed and enforced by human hands.
An uneducated observer might regard Bitcoin as only the latest iteration in this constant evolution toward more abstraction. And although bitcoin truly is an abstract form of money, it is not a mere extension of this hierarchy of money in a seemingly endless game of financialization. It is a new form of base money for a new form of network or institution powered by what is today generally called an open, neutral, borderless, censorship-resistant public blockchain.
As a new form of base money, bitcoin will see financialization occur and with it, ever greater abstraction happening on top of the bitcoin base money. Interestingly enough though, on its most fundamental layer, the Bitcoin protocol reduces the human element to an unprecedented extent and gives technology and incentives more weight.
Incentives to keep the human element in check and technology are becoming more important due to mathematics, cryptography and computer science. A financial alchemy as we know it today, but one based on Bitcoin, is likely to depend less on the human element and more on computers, formulas and code in order to control, execute and enforce it. It’s the hope of bitcoiners that this sort of financial alchemy will be better in an objective sense than what we have today.
The Endgame Is Upon Us
So let’s come back to the question asked in the beginning. What has become of money? Quo vadis, financial system? It seems obvious that our current financial system can only go down this one path: Ever more money is needed to keep it alive. Helicopter money is imminent in the U.S., another chapter in the tragic but inevitable trajectory of money.
The ultimate chapter will finally be the adoption of what is referred to today as “modern monetary theory” or MMT. This theory, which ironically is not “modern” at all, holds that the state does not need creditors because it can create funds in its own currency at will. As a monetary sovereign, the state is, therefore, not dependent on borrowing on the market in the form of government bonds. It would much rather create the money itself via the central bank incorporated into it.
MMT has been growing in popularity, probably because more and more people seem to intuitively feel the inevitable endgame. Other reasons are also more pragmatic: MMT is a blank check for all kinds of political projects such as “jobs,” “education” or “climate protection.” Fewer and fewer people are able to resist financial resources for political “necessities” — after all, the ultimate aim is to enrich society.
Another argument at the heart of MMT is that of justice. Today, bankers and other financial actors seek to enrich themselves in the process of financing of the state, so the argument goes. A few people get richer and richer at the expense of the masses. The fact that MMT wants to end the whole financial circus around interest rates and government bonds by depriving commercial banks of the opportunity to create money is thus met with approval, especially from the political left. The entrepreneurial reaction of financialization will not be made possible anymore; the state will take over all on its own.
Debating whether MMT will be more just than today’s system really doesn’t make any sense, in the end. Once money has lost all its meaning, there’s no point in debating any justice because there won’t be any left. Money will truly be worthless; people will only use it under a state of coercion.
In the wake of this coronavirus crisis, the great triumvirate of our day and age — governments, central banks and banks — has set out to achieve the following: “Fiat iustitia et pereat mundus” or “Let justice be done, though the world perish.” The problem, however, is that in fiat money, there is really no iustitia left. Without justice, there is only pereat mundus…
So, as an antithesis to endless growth and the meaningless of money, Bitcoin stands firm: Its network is limited to 21 million bitcoin units only. There will never be more bitcoin. That is the message of it all, and in a world in which “relatively scarce” money in the form of state fiat currencies will soon only be suitable for lame jokes, such a message is more important than ever.
So if Bitcoin didn’t exist, it would have to be invented: As a psychological elixir of life, so to speak, it will give comfort and confidence to many more people in the light of the crazy money interventions of our times. What would we do without Bitcoin?
This is an op ed contribution by Pascal Hügli. Views expressed are his own and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.
Kraken Daily Market Report for May 08 2021
- Total spot trading volume at $2.86 billion, 9% higher than the 30-day average of $2.63 billion.
- Total futures notional at $797.5 million.
- The top five traded coins were, respectively, Ethereum, Bitcoin, Dogecoin, Tether and Ethereum Classic.
- Strong returns from Gnosis (+14%) and Ethereum (+12%).
|May 08, 2021
$2.86B traded across all markets today
Crypto, EUR, USD, JPY, CAD, GBP, CHF, AUD
#####################. Trading Volume by Asset. ##########################################
Trading Volume by Asset
The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.
Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (May 08 2021)
Figure 2: Mid-size trading assets: (measured in USD) (May 08 2021)
Figure 3: Smallest trading assets: (measured in USD) (May 08 2021)
###########. Daily Returns. #################################################
Daily Returns %
Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (May 08 2021)
###########. Disclaimer #################################################
The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.
Legendary Pelé NFT Set to Drop on Ethernity May 8
[Press Release – Los Angeles, California, 8th May, 2021]
Iconic Brazilian footballer Pelé will be immortalized in NFT form on May 8.
The legendary striker, named FIFA World Player of the Century, is getting the tokenized treatment with the release of a licensed aNFT – authenticated non-fungible token – exclusively on the Ethernity Chain at 12pm EST.
The digital presentation includes “THE KING OF FOOTBALL,” an immersive video tracing the player’s humble origins on the streets of Brazil to a packed stadium witnessing his brilliance. The eponymous “Pelé” aNFT, meanwhile, is represented by a hyper-realistic digital bronze bust of the star in his heyday.
As part of the Pelé aNFT collection, Ethernity will be releasing multi-pack trading cards that make a nod to the player’s Panini trading cards of the past.
Ethernity’s special digital trading cards include “Gilded Bicycle Pelé,” which showcases the player executing his signature bicycle kick. The limited edition cards will be part of the Ethernity Cards and Packs Collection launching this summer, 2021.
90% of aNFT sales will go to The Pelé Foundation, a charitable organization that strives to empower young people facing poverty around the world.
Ethernity’s recent Muhammad Ali aNFT auction, which raised over $550,000, also resulted in a significant donation being made to the Muhammad Ali Foundation.
Ethernity is exploring applications for non-fungible tokens (NFTs) within the context of art and philanthropy. It provides a way for celebrities and public figures to endorse digital artwork created by renowned artists. Anyone can purchase each limited edition artwork, with a portion of the proceeds going to charitable causes that the celebrity supports. Ethernity was founded by early Bitcoin investor and NFT innovator Nick Rose Ntertsas.
Learn more: http://ethernity.io/
Crypto Banter Will Give Away Over $500K To 10 Eligible Community Members
[Press Release – Cape Town, South Africa, 8th May, 2021]
Banter Bags is a unique project in the cryptocurrency world that aims to give back to its community. What initially started as a $10,000 community giveaway is now worth over $500.000. Ten eligible community members will be chosen randomly to receive their share of the spoils once the Crypto Banter Youtube channel surpasses 250,00 subscribers.
The Banter Bags Giveaway is an event created by Ran Neuner, host of CNBC Crypto Trader and founder of Crypto Banter on Youtube. The initial objective was to reward active participation in the community and generate more engagement with the daily streams but as the investments started to grow it became a mechanism to really change some community member lives.
Speaking of pre-market allocations, the Crypto banter team initially put $10,000 in a public Ethereum address. That money was then invested into allocations, with more investments occurring daily to diversify the portfolio further. Several key investments have noted spectacular returns, including Shopx, Aioz, Refineable and Occam. All of these pre-market allocations have gone up in value by a factor of 100 or more.
As the total value of the Banter Bags now exceeds $500,000, a golden opportunity is created for the community. Once the Youtube channel surpasses 250,000 subscribers, ten community members will earn a Banter Bag with the corresponding spoils. The only requirement to be eligible is to subscribe to Crypto Banter on YouTube and follow the Twitter account. Community members can amplify their chances by following @cryptomanran and @sheldon_sniper on Twitter, by liking/commenting on tweets, and engaging with the two daily streams.
The Crypto Banter team adds:
“It started off as a fun idea of giving $10000 to our community, and as we started to invest, we realized that the community loved the idea of investments in pre-market allocations that we previously off-limits for the average investor. With this in mind, we went all in using our influence to reward our community. It was supposed to be a cool $10,000 giveaway to reward the community, and it has landed up becoming an opportunity to change lives. The channel has exploded since we launched this initiative. We’re up by over 100% on every metric, we gained over 100k subscribers and got over 5m views in the last 28 days. More than that, our community has engaged more. They love the idea that we are giving back to them and that we may at any point change another life.”
Five winners have been randomly selected so far, all of which have an amazing story to share. One of the winners, who goes by the name of Irfan, lost his job and was struggling financially. With a pregnant wife expected to give birth in two months, being announced the winner of a Banter Bag triggered a life-changing event for Irfan. Anyone can go through a similar experience once the remaining Bags are given away to community members.
We also announced that one of the bags will be given to a charity and we are currently looking for a viable option.
About Crypto Banter
CRYPTO BANTER was founded by CNBC CRYPTO TRADER host Ran Neuner and is a LIVE STREAMING CRYPTO STATION. We bring you live streaming coverage of the global Crypto markets and give you a chance to call in, break the news, and banter with our guests and hosts. CRYPTO BANTER was created to bring the banter from Crypto Twitter and Telegram to a moderated, curated AV streaming medium. Think of its as a mix of CNBC, JOE ROGAN, and Talk radio for Crypto!
Follow Crypto Banter on YouTube
Follow Crypto Banter on Twitter
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