Across most indicators,  the United States cryptocurrency sector may not exist at scale in years. I mean, I just think the organized governments are converging on this thing. While the coins are showing resilience, looking at where BTC is trading, the high voltage assault seems unprecedented. With Binance out of Canada, the question is which country is next: “One of the largest crypto exchanges in the world, Binance, has exited Canada amid tough regulatory rules. The company cited increasing regulatory tensions as the primary reason behind its exit. Binance via a tweet disclosed that the new guidance concerning stablecoins and investor limits provided to crypto exchanges has made the Canadian market untenable.”

Yet, provided the US does not enter into a severe recession, nothing will happen. But if it does, crypto would be part of the collateral damage.  

I am concerned because the Russian sanction experiments have shown that sanctions do affect both the sanctioned and the person delivering the sanctions. The gravity of global inflation was partly exacerbated by those sanctions.  If China does try to take over Taiwan by force (pray against it), the world economy will experience severe recession and stock markets will be ravaged. How do you sanction China? Or what happens when China sanctions you?

Those permutations are the reasons people are looking for alternative ways to store wealth because geopolitics is distorting national currencies at scale. This is partly why some people believe in Bitcoin! If the US sanctions China, the US dollar will get a hit, just as if China sanctions the US. Forget what will happen to the yuan: massive depreciation! 

So, where is the value-storing refuge? Hodlers will say BTC and its cousins, and are not giving up, to hold them. Yes, the tension in geopolitics, created by governments,  is  one of the reasons many are believing! A huge #irony!

For many true crypto believers, digital currencies were never simply financial instruments — they were a way of life. Writing in Bloomberg, Christopher Beam looks at how blockchain devotees have reacted to the long crypto winter, which has shattered the value of many coins. Only a few crypto fans have had their fervor chilled. Many believe a bounce back is just around the corner, others see a conspiracy to drag down a world-changing technology, while some just miss the sense of community they experienced in buzzing crypto chatrooms that now sit empty. (LinkedIn News)

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Comment 1: Undoubtedly, geopolitical tensions threaten financial stability through a financial channel, however, they are exactly what they sound like and these tensions can stem from several factors such as power, trade, military activity, climate change or a significant event like Brexit.

On the one hand, many investors see Bitcoin as the best store of value because it has best aspects of both gold and digital currencies: its widely accepted, liquid, scarce, divisible and portable. The only thing that it is lacking is durability over time and on the other hand, a store of value in cryptocurrency must however be exchangeable with something else (like gold or dollars). In other words, a store of value should be worth the same or more over time.

Comment 2: I’m always leery of cryptocurrency exchanges: too many have gone belly-up. When was the last time you heard of a stock exchange fail?

I have been an opponent of Bitcoin but the more I think about it it is unique and may actually be a reasonable method to defend against currency debasement (inflation).

Bitcoin is limited in volume. The maximum supply of Bitcoin is set at 21 million coins, and this limit is hardcoded into the Bitcoin protocol. This means that once 21 million bitcoins have been mined, no more bitcoins can be created.

As of May 2023, the total number of bitcoins in circulation is around 19 million, and the rate at which new bitcoins are created is gradually decreasing over time. This is because the Bitcoin protocol uses a process called “halving” to reduce the amount of new bitcoins that are created as time goes on. Roughly every four years, the reward for mining new bitcoins is cut in half, which slows down the rate at which new bitcoins are added to the total supply.

The final halving event is expected to occur in the year 2140, at which point the maximum supply of 21 million bitcoins will have been reached, and no new bitcoins will be created. After that point potentially becoming very valuable.

But not all cryptocurrencies are created equal, and none like Bitcoin. That is the underlying problem with “cryptocurrencies” not “Bitcoin”.

My Response: “I’m always leery of cryptocurrency exchanges: too many have gone belly-up.” – I have argued in the past that Bitcoin and all coins are centralized because at the end, exchanges bring all together, and if the government cannot reach the decentralized coins, it can via exchanges handle everything, Real investments in BTC and others happen via legal exchanges. Interestingly, those exchanges need bank accounts which means they will need to be registered to operate. As that happens, governments will put them in line.

When I came to the United States many years ago, I used any change available as a student to subscribe to The Economist, Fortune, Businessweek (now Bloomberg Businessweek), Forbes and Harvard Business Review. I did not read newspapers; I read only magazines which provided insights and perspectives on business, economy and geopolitics. Engineering work for the week, learning business was for the weekend.

The Economist was special. However, over time, it evolved, losing, for me, what made it GREAT – unbiased, nuanced and insightful examinations of issues. For the new Economist, the world must be seen from the lens of the West; any deviation is a rebellion. I canceled.

When I saw that it said that Turkey’s leader must go for this weekend’s election, I felt bad. Its standards keep shifting. Like I told a Swiss friend, if Switzerland should join the Western world 100% against Russia and China, the world may be in a state where there is no mediator, and if that becomes the case, we’re finished in this world. Yes, we still need a respectable country that can say “Hey, the collective West, Russia, China, come together and talk over these issues”.

Imagine a world without Turkey as Russia and Ukraine battle. Simply, what you may hate about Turkey is the reason it is vital to the world in this war; a mediator that can get two warring parties together even for marginal issues like shipping grains! Turkey may not align 100% with London; London should appreciate that because through Turkey, London can reach its enemies!

Who becomes the president of Turkey is irrelevant to me. But the standard to anoint “bad” and “good” should not be changing. The people of Turkey should decide who should go or stay, and not some guys in London!

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Comment 1: Traditional business publications like the Economist should provide an object evaluation of business needs, outcomes, and affects without providing an opinionated commentary on either side. Showing their bias alienates a section of their readership and just as you proved it reduces subscription readrship. So overall a bad move on their part.

Beyond the Economist I’m getting annoyed by the partisan/nationalistic(fascist?) narrative and commentary happening around the globe. The broader global reality is almost everyone purchases goods from China, America, and Europe, many times made from products sourced in Africa, South America, and perhaps Canada. Enough with this decisiveness…..please!

My Response: You may wonder how many bad things happened pre-internet when there was no other way to know because some institutions controlled the news. The world is fractured. Russia fired some missiles today in Ukraine. In the Western world, journalists are showing the aftermath of destroyed homes; in RT, you see industrial warehouses. So, CNN will say homes were attacked; Russia is saying it destroyed warehouses.  Certainly, there is no way to know who is telling the truth. But the web gives you access to the other side. If not, you can just take whatever CNN says as the home run.

Comment 2: he world is moving towards a dangerous place where both extremes are becoming stronger and the middle ground is becoming thinner.

We need a world where the middle ground is bigger and not thinner. I believe that most people in the world are in the middle, but the louder extremes on both sides are pushing us to the brink.