[2 min read]

Selva Freigedo

The main buzz this week has come from the listing of Coinbase on the NASDAQ stock exchange.

If you’re not familiar with Coinbase Global Inc [NASDAQ:COIN], it’s a crypto exchange. With 56 million verified users in more than 100 countries, Coinbase makes it easy to buy and store crypto. In fact, I used it a few times when I first started dabbling into crypto.  

There’s been a lot of hype about Coinbase’s listing. In its first day of trading, COIN shares opened at US$381 a share, in a valuation close to US$100 billion. And it boosted Bitcoin [BTC] to an all-time high of US$64,829.14.

Pretty crazy when you see that bitcoin, which has been declared dead 404 times and counting, was trading at around US$11,000 back in October.

But forget about the price.

Bitcoin adoption has been advancing at gigantic steps with companies like PayPal, Visa, Square, and Tesla getting involved in the space.

And Coinbase’s listing is more good news for bitcoin, aka ‘rat poison squared’.

Coinbase provides a way to get exposure to the crypto market without owning a single crypto. It opens the door for more crypto companies into mainstream finance.

But also, the listing is another step for an alternative currency outside of the system into acceptance…at a time when central banks are churning out a lot of money.

Central banks aren’t twiddling their thumbs though. Brace for more change…

Much less publicised than Coinbase were the recent spring meetings between the IMF and the World Bank.

I’ve written in these pages before that we’re likely heading for a monetary system change, along with changes in our money.

So it was interesting to hear former US Federal Reserve Chair and current Treasury Secretary Janet Yellen comparing the meetings to Bretton Woods ahead of them happening:

‘Though it was a different time, I empathize with the enormous weight they faced; the pressure to come together after a global catastrophe in building an enduring and interconnected system aimed at promoting peace and prosperity throughout the world. Our current juncture is no less significant—what we do in the coming months and years will have profound impacts on the trajectory of our country and on the global economic order.’

CBDCs will likely play an intricate part in the new global economic order.

Already 80% of central banks are exploring central bank digital currencies (CBDCs).

While Bahamas has beat every central bank to the punch by issuing the first digital currency, the Sand dollar, China has also been ramping up their steps into the digital yuan.

China has been testing the digital yuan by giving money away, and has recently added six more regions into the testing that include Shanghai and Hainan.

China could very well be the first major economy to launch its own digital currency.

Central bank digital currencies aren’t like bitcoin, they are centralised where bitcoin isn’t. They’ve been touted as a way to create inclusion and fight crime, but of course, there are other advantages…for central banks.

We have paper money and electronic money, which is basically the same as paper money but in digital form. But CBDCs are a game changer for central banks.

CBDCs give central banks more control over the money supply, including more unconventional policies like negative interest rates or bypassing intermediaries, and less privacy.

The Wall Street Journal recently ran an interesting article on the digital yuan. It mainly talked about how the digital yuan could affect the US dollar, but also on how digital currencies could be used to restrict your financial freedom and modify behaviour.

As they said:

‘China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China’s government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.’

But here’s the bit that got my attention:

‘The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.’

In an economy where inflation has been hard to come by, you can see how this could be a useful tool to increase money velocity…or restrict spending when inflation is out of control.

All this translates to less control over your money. Bitcoin, though very speculative, offers an alternative outside the system. So does gold.

The system is changing, money is changing.

Best,

Selva Freigedo,
For The Rum Rebellion

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