Key Points of the Global Financial System and Bitcoin Network:
- Developing countries suffer from a lack of access to foreign bank accounts, currency devaluation, and financial censorship.
- Barter system with 180 different monies developed due to inability of most currencies to be sold outside of their local jurisdictions.
- The invention of the telegraph and then telephone increased the speed of commerce and transactions to nearly the speed of light.
- In 2008 and 2009, Satoshi Nakamoto proposed the Bitcoin network, a globally distributed public ledger to address the velocity mismatch between transactions and bearer asset money.
- The Bitcoin network has a finite cap of 2.1 quadrillion units that are each divisible down to eight decimal points and open protocol ledger that allows users to control a private key to transfer units.
- Stablecoins have found utility in developing countries due to currency problems, while in developed countries the technology is seen as a solution in search of a problem.
- The decade of affinity scams, pump-and-dump schemes, hype cycles, and leverage demonstrates the need for caution when evaluating crypto projects.
- Blockchain technology has enabled private entities to benefit from seigniorage and it is important to ask “Does it really need a token?” when investing in crypto projects.
- Out of 20,000+ crypto assets, only 3 have ever managed to reach a higher-high in bitcoin-denominated terms.
- Focus on the actual utility of crypto technology, storing and transmitting value, and invest in projects with a 7-10 year growth timeframe.
- US economy is indicating economic deceleration and a recession is a real possibility in 2023, requiring disinflationary growth by improving the supply side.
Read the original newsletter December 2022 Newsletter: The World’s Money Problem – Published December 18, 2022