intercst
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So many major national banks around the world are buying gold that it MUST be a good idea…doc
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I have no faith in gold. I have even less faith that if it pops people will get out with profits.
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I have faith gold with behave generally as it always has. Which is to say, a crappy investment.
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BTC will probably exceed crude oil in the next run up? Possible?
That goes against my grain.
If we put up the global GDP then you’d rationalize some of BTC/ETH’s next mania.
Crude is just a fragment of the global GDP.
At the 2021 peak, crypto was a bit less than 1% of global assets (i.e., stocks, bonds, real estate, privately held businesses, etc.) Even if crypto went to zero, it would be lost in the round-off of the global economy. Individuals would be hurt for sure, but not much beyond that.
intercst
Central Banks do not buy assets as investments, so the fact they are buying gold is irrelevant to me.
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What Zeihan is saying is so clearly stated.
The interesting comparison to btc and eth is the concept of digital scarcity. While making more on the blockchains the GDP is not tied to the btc or eth. Meaning while a fiat currency is backed by the GDP the two major cryptos are looking to be managing digital values. As we do a lot more online digital values matter to all of us. Fiat currencies have failed to gain a good entry into digital content values online specifically.
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I’m not a huge fan of diversification into precious metals, but Central bank buying is certainly in the news…doc
Central Bank Gold Buying Explained | GOLD AVENUE
Gold demand falls in Q2 as central bank buying slows, WGC says | Nasdaq
Central banks become net gold buyers in June, ending three-month selling streak | Kitco News
If you google anything you will find anything in the news.
Why would gold go up in USD?
Market or market cap? There are 20 million BTC extant, so the market cap could in theory exceed $2.1 trillion.
But the actual market is a fraction of that. Most Bitcoin isn’t traded or spent. It just sits there. Bitcoin’s poor design makes it hard to trade, so I don’t see that changing.
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BTC development now includes NFTs. I am not expert in that. The structure though is not static any longer.
The other major issue is a stable sort of coin that can last. Even if stable coins come and go that facilitates more than you are giving BTC credit for.
People used to say Bitcoin or meme coins are the gateway coins for many of us… but I think it is the stablecoins that are the gateway to crypto. With Paypal launching its own stablecoin, it would definitely spur mass adoption - a theme we have been hearing since forever-ago. Anyway, between btc and gold, it would be btc for me.
Long Paypal ?
I’ve yet to read a convincing argument as to why a company like Paypal is any better off dealing in stablecoins over simply accepting US dollars.
Sure, if your country’s currency is Argentine Peso, stablecoin might be a preferred method of payment - but it is still probably be converted by Paypal to US dollars after the fact (and if you are trying to buy stablecoins with said Peso, you are still making yet another exchange subject to skim/spread).
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There are a few reasons. Crytpoheads are divided into roughly two camps. The first camp own crypto for the same reasons goldbugs own gold. They believe the dollar will collapse, hyperinflation, etc. They tend to horde crypto. The other camp are degenerate gamblers who are hoping to trade their way into riches, and that’s where the real money is in crypto. One thing that came out of the FTX collapse is that some of SBF’s colleagues couldn’t understand why he was so busy running a Ponzi when he was printing money on commissions. Now, the problem is that most crypto is hard to trade without using an exchange. The way exchanges work is you give them dirty, nasty, dollars and they give you an in-house stable coin, that you can then use to trade for the latest crypto fad. That’s great for the exchanges because they create the stable coins out of thin air. They can also pay absurd rates of interest on their stable coins, because again, the stable coins are just made up anyway. The high interest rate help attract the marks.
One problem is that this is obviously a criminal activity, and many banks don’t want to deal with the exchanges at all, so it can be hard for the marks to get their money on the exchanges. Paypal is going to ease that transition. Paypal claims its stable coin is backed 1:1 with actual dollars. Then Paypal can make money on the commissions generated by the marks speculating on crypto on Paypal’s own platform.
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It could spur mass adoption, but I wouldn’t say “definitely.” I think the odds are much, much lower. Bitcoin’s designers didn’t really understand what money is or how it works, and so it doesn’t work very well as money.
The main selling point for Bitcoin is you don’t need a trusted third party to make transactions. No banks, organizations, or governments standing between you and your money. But if you are using Paypal to trade Bitcoin, you just erased Bitcoin’s raison d’etre. If you are going to use a third-party, it is simpler, easier, faster, safer, and cheaper to use boring old dollars than it is crypto.
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But you do need a blockchain, and that blockchain is run by a large number of unknown people, making it literally a very large and unknown trusted third party.
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And that’s one of Bitcoin’s design flaws. As it takes more and more computing power to process blocks, it is inevitable that fewer and fewer entities will have enough power to continue mining. IIRC, correctly something like five companies are now responsible for most of the hash rate. And literally ripped from today’s headlines, there was yet another consolidation of major players in the industry.
Do those five companies have a common interest in speeding up the speed of block creation and lifting the 21 million cap? Yes, they do.
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That’s the thing the USD in Argentina is more important than the peso. That means a stable coin and BTC matter to the wealthy in Argentina.