Financial, Economic and Social Mood Update (December 1, 2020)
If the stock, bond and real property markets no longer reflect reality and the value of fiat currency is rapidly diminishing to zero purchasing power, what can risk-averse people do to partake in the expanding market of digital electronic encrypted currencies (i.e. cryptocurrencies)? The simplest and lowest risk plan would be to purchase cryptocurrencies tied to 1) an existing fiat currency and 2) real physical assets. Concrete examples thereof are the DAI Dai Stablecoin (tied closely to the US Dollar) and Paxos Gold PAXG (tied only to the price of physical gold bullion stored in vaults). USDT Tether is tied specifically to the US Dollar – if you want to be tied to a different fiat currency, then you should search for it. For example, XCHF CryptoFranc is tied to the Swiss Franc, BITCNY is tied to the Chinese Yuan, BKRW Binance KRW is tied to the South Korean Won, and EBASE is tied to a combination of the Euro & Bitcoin. The next candidate, although more volatile than the previously mentioned cryptocurrencies, would have to be Bitcoin BTC (or a Bitcoin-based fund such as the Grayscale Bitcoin Investment Trust = GBTC) simply due to the fact that Bitcoin & the hundred largest cryptocurrencies comprise 98 percent of global cryptocurrency market capitalization. Currencies directly descended from Bitcoin (such as Bitcoin Cash BCH) also fit this requirement. Cryptocurrencies can be purchased, owned and stored on exchanges such as Gemini, Kraken or even PayPal. You can find the largest cryptocurrencies and the largest cryptocurrency exchanges on a site such as www.coinmarketcap.com. These exchanges tie directly to commercial bank accounts denominated in major national fiat currencies and are themselves legally registered as commercial banks.
The daily trading volume for all cryptocurrencies as of November 30, 2020 was USD $253 BILLION = USD $22 TRILLION for the 4th quarter of 2020. J.P. Morgan Chase forecasts a 3-fold price increase for Bitcoin BTC. Citibank forecasts a Bitcoin BTC price of USD $300,000 by the end of 2021. Commercial and investment banks are very late to jump on the cryptocurrency bandwagon – some high technology forecasts already have Bitcoin BTC price targets as high as USD $10 MILLION. When electronic digital encrypted currencies eventually swallow the entire global economy, this should easily reach USD NINE figures = USD $100 MILLION.
The news story which reported that the US IRS confiscated a “dormant” USD $1 BILLION cryptocurrency account related to the illegal drug trade is a virtual non-issue. This comprises a mere 0.2 percent of the USD $573 BILLION capital market. Illegal activity of any kind can and does use any medium of exchange – this activity existed long before the crypto market and it will continue to exist for as long as human beings exist.
Three (3) of the major cryptocurrencies have already been chosen by enough of the central banks of the world to ensure that they are indeed becoming part of the new “reset” financial system – these being Bitcoin, Etherium and XRP. Bitcoin is the major store of wealth – the electronic equivalent of gold bullion. Ethereum is a network protocol that allows users to create and run smart contracts over a decentralized network (a “d-app”). A smart contract contains code that runs specific operations and interacts with other smart contracts, which has to be written by a developer. Unlike Bitcoin which stores a number, Ethereum stores executable code. XRP (owned by Ripple) is a system for cross border payment. Ethereum thus removes the need for a third party to handle transactions between peers. Since the middle man is replaced by code, all kinds of costs are reduced, including time and money. XRP is a digital asset built for payments. It is the native digital asset on the XRP Ledger—an open-source, permission-less and decentralized blockchain technology that can settle transactions in 3 to 5 seconds. XRP can be sent directly without needing a central intermediary, making it a convenient instrument in bridging two different currencies quickly and efficiently.
The People’s Bank of China (Mainland China) has reported that 4 million transactions have already been completed with their new Digital Yuan (as of November 3, 2020). The number one global currency used for foreign exchange is the Euro as of October 31, 2020.
Blockchain technology (of which cryptocurrencies are a part) is the current phase of the ongoing high technology revolution. Blockchain technology includes robotics, AI (Artificial Intelligence) and autonomous driving (self-driving vehicles) among other things. New cars and trucks will become fully self-driving by 2024-2025. The jobs of taxicab drivers and truck drivers will eventually disappear. Fewer and fewer individuals will actually own private vehicles. Ridesharing services (such as Uber, Lyft and those being launched by the large automakers) will be accessed by subscription or be utilized on an as-needed basis. Private vehicle ownership will decline as older vehicles are retired & scrapped, and private vehicle ownership will likely be confined to the affluent members of society.
Automation and the blockchain will eventually have eliminated at least 1.3 BILLION jobs worldwide (500 million down and 800 million to go as of right now). The structure of human society will eventually be comprised of no fewer than 97 percent “masses” and no more than 3 percent “affluent.” The middle class will basically cease to exist.
