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    On The Margin

    Recession Cancelled: Crypto Summer Is Here | Weekly Round-up

    Sat Jul 15 2023
    BankingCurrencyBitcoinCryptoRegulationCentral BanksMonetary SystemsInvestingValuationsFuture of Money

    Description

    This episode explores the history of banking and currency, the role of Bitcoin and crypto in the financial world, the impact of regulation and central banks on monetary systems, investing and valuations in the current economic climate, the potential of Bitcoin and the transition to a new monetary system, and key insights and conclusions.

    Insights

    Bitcoin's Ledger and Critical Mass

    Bitcoin's ledger is permanent, immutable, and can't be changed by anyone. The winning technology isn't necessarily the best technology, but the one that gets critical mass first.

    Recessions and Venture Capital

    Recessions can be beneficial as they allow for the removal of bad companies and create opportunities for venture capital investments.

    Cautious Optimism in Disruptor Industries

    There is cautious optimism about incumbents entering disruptor industries.

    Chapters

    1. The History of Banking and Currency
    2. Bitcoin and Crypto in the Financial World
    3. Regulation, Central Banks, and Monetary Systems
    4. Investing, Valuations, and the Future of Money
    5. The Potential of Bitcoin and the Transition to a New Monetary System
    6. Insights and Conclusions
    Summary
    Transcript

    The History of Banking and Currency

    00:01 - 08:33

    • The Knights Templar invented fractional reserve banking by lending out gold they held for other knights.
    • Portugal had the most powerful navy and was the most powerful nation in the world due to their money and resources.
    • Spain took over from Portugal as the world reserve currency for about 75-80 years.
    • Queen Isabella was the first venture capitalist, taking a carried interest of 20% from Christopher Columbus' voyages.
    • Spices were incredibly valuable during this time period, with cinnamon being worth someone's life if they were indebted to another person.
    • Trade between Europe and the Americas introduced animals like horses, cows, pigs, chickens, as well as potatoes and tomatoes to the Americas.

    Bitcoin and Crypto in the Financial World

    08:03 - 15:22

    • Larry Fink, a large asset manager, stated that Bitcoin is a good place to protect assets from currency devaluation.
    • Bitcoin has been responding to news anticipation of BlackRock's filing for a spot Bitcoin ETF.
    • BlackRock's CEO Larry Fink used to be bearish on crypto but now speaks like a true believer.
    • The global banking system has been involved in corrupt practices and paid fines larger than the market cap of Bitcoin.
    • Financial institutions like BlackRock may have influenced regulators to clamp down on disruptive companies like BlockFi.

    Regulation, Central Banks, and Monetary Systems

    14:53 - 22:05

    • Larry Fink's trashing of crypto and Bitcoin before BlackRock applied for an ETF raises questions about his motives.
    • There is a sinister aspect to CBDCs (Central Bank Digital Currencies) that aims to concentrate assets in a few institutions and create a surveillance state.
    • The US has experienced significant currency devaluation intentionally under the cover of lockdowns.
    • The US has created half of all its money in just two years, which suggests intentional actions to address economic challenges faced by an empire.
    • Inflation and currency devaluation are seen as distinct concepts, with inflation being driven by demand exceeding supply while devaluation is caused by printing more money.

    Investing, Valuations, and the Future of Money

    21:36 - 28:47

    • The US economy has performed well relative to expectations, despite predictions of a recession.
    • Cryptocurrency, specifically Bitcoin, has been a good hedge against inflation due to the increase in money supply.
    • The expansion of credit and margin debt has contributed to the rise in stock prices.
    • Bitcoin's fair value is currently 50, and it may not reach three times that value like it did in the past.
    • Bitcoin could potentially take over the five trillion dollar base layer of money held by central banks around the world.

    The Potential of Bitcoin and the Transition to a New Monetary System

    28:31 - 35:59

    • The total market cap of cryptocurrencies has been increasing by a factor of 10 with each halving event.
    • If the dollar were to hyperinflate or devalue significantly, a tenfold increase in Bitcoin's value becomes more plausible.
    • Bitcoin could potentially replace the debt system money and become the base layer for digital transactions.
    • Migrating from the current debt-based monetary system to a Bitcoin-based one could lead to a million dollar coin.
    • Regulation is not bad if it serves the right reasons and doesn't slow down disruption.

    Insights and Conclusions

    35:31 - 43:01

    • Bitcoin's ledger is permanent, immutable, and can't be changed by anyone.
    • The winning technology isn't necessarily the best technology, but the one that gets critical mass first.
    • Recessions can be beneficial as they allow for the removal of bad companies and create opportunities for venture capital investments.
    • There is cautious optimism about incumbents entering disruptor industries.
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