Čvn 12

‘Ultra-Bull Case’ for Bitcoin Driven By Central Banks – Anthony Pompliano

Anthony ‘Pomp’ Pompliano of Morgan Creek Digital believes Bitcoin is about to experience an epoch-defining next 18 months.


‘A Perfect Storm for Bitcoin’

Speaking to Bloxlive TV earlier in June, Pompliano said the next 18 months will be crucial for Bitcoin. The Morgan Creek Digital co-founder believes the plethora of developments with potentially global economic impacts will contribute to upscaling Bitcoin’s role in the global financial system.

Pomp drew a line linking trade tensions between the U.S. and China, dovish central bank policies and the 2020 Bitcoin halving as important drivers that will have a positive impact on BTC price.

According to Pompliano:

Over the next 12 to 18 months, we are going get a perfect storm for bitcoin. There are a number of events that are going to happen at the same time. Central banks will be forced into some interest rate cuts, maybe some QE. These events [will] ultimately drive Bitcoin into an ultra-bull case.

Already, several market analysts warn that the current global economic trajectory is one tending towards another financial crisis. Bitcoin appears to be in prime position to ride this tumultuous economic wave, offering, as Bitcoinist called it in an op-ed late last year, “a non-political alternative to the money printing pyramid.”

Era Defining Moment for BTC

Monetary policymakers around the world from the Federal Reserve in the U.S. to the Bank of Japan (BOJ), and the European Central Bank (ECB) are all adopting dovish policies.

There are reports of adopting rate cuts or even zero-interest-rate policy (ZIRP), not to mention the seemingly permanent quantitative easing used to paper over the cracks of a deteriorating market.

Bitcoin emerged after the 2008 financial crisis and the next year-and-a-half could potentially form its defining crucible. This ‘digital gold’ is already providing a suitable shelter for investors against the coming financial storm. Ironically, it is the banks themselves that could further solidify its status as the prime driver in the separation of money and state.

federal reserve system

If the separation of church and state opened the way for religious and political freedom, Bitcoin proponents argue that a politically-neutral, opt-in monetary system could do the same for economic freedom. In other words, it can do to money what the internet did for information.

Bitcoin in many ways has the ability to ‘scale trust’ in society by completely removing it from the equation. This will be particularly important when it comes to transferring and storing value compared to the ‘full faith and credit’ fiat money that has been holding the global financial system hostage.

Bitcoin will hopefully be a fully realized store of value when, not if, the credit bubble inevitably bursts.

What is your bitcoin price prediction for the year ending 2020? Let us know in the comments below.


Images via Shutterstock, Twitter @Jessicaw_tv

The Rundown

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Dub 17

Argentina Central Bank’s Inability to Stop Inflation is Forcing People to Bitcoin

As Argentina’s inflation rate skyrockets to its highest level since 1992, people are increasingly turning to Bitcoin as an alternative.


Inflation in Argentina Surpasses 54 Percent

Argentina’s central bank already tightened monetary policy three times in the last month, and inflation is still accelerating at a rate of nearly 55 percent. Bloomberg notes:

The inflation rate rose to almost 55 percent in March, with consumer prices rising 4.7 percent in the month, exceeding all of the forecasts in a Bloomberg survey of analysts.

The unstable economic environment is driving many traders and investors to focus on Bitcoin. Thus, the volumes of Bitcoin traded in Argentina are reaching all-time highs, the latest data from LocalBitcoins/coin.dance shows.

Argentina’s economy suffers from chronic inflation to such an extent that no monetary measure seems to work. According to the Financial Times,

Argentina is trapped in a vicious circle. Demand of just a few million dollars in an illiquid market can weaken the peso, as has been the case since early March. Exchange rate depreciation leads quickly to increases in inflation, portfolio dollarization, and higher interest rates — now the central bank’s only means of defending the currency.

‘Replace Argentinean Pesos with Bitcoin’

The fact that Bitcoin is inflation-resistant makes it particularly attractive in this environment.
Consequently, many see Bitcoin as a potential alternative. They are advocating, even to the government, greater integration of the cryptocurrency into Argentina’s economy.

Bitcoin has already become integrated into many business activities. For instance, in 37 cities, public transportation users are indirectly using Bitcoin to pay for their rides, while Bitcoin ATMs are becoming more conspicuous in Buenos Aires.

Most relevant, President Mauricio Macri’s administration has already shown interest in Bitcoin and, its underlying technology, blockchain. For example, in March 2019, the government announced a partnership with Binance Labs, the blockchain technology incubator of Bitcoin exchange giant Binance. At the announcement, the government promised to match 1:1 Binance investment.

Moreover, in March 2019, serial investor and Bitcoin proponent Tim Draper recommended that President Macri attract foreign investors by dramatically transforming the country’s economy and replace the Argentinean peso with Bitcoin.

Draper even made a bet with Argentina’s president on the price of Bitcoin,

[I]f the peso is valued more than Bitcoin, I double the investment I am making in the country; and if Bitcoin acquires more value than the peso… that would be a perfect solution because there is no confidence in the currency.

How do you think the integration of Bitcoin into Argentina’s economy could help to minimize inflation? Let us know in the comments below.


Images via LocalBitcoins/coin.dance, Shutterstock

The Rundown

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Led 08

BIS Reports 70% of Central Banks Are Studying Cryptocurrencies

A new report published by the Bank of International Settlements (BIS) shows that the majority of central banks are studying central bank digital currencies (CBDC). However, most of them are unlikely to issue any type of digital currency in the near future. 


CBDC ‘Unlikely’ in The Short Term

BIS published the results of a new survey on central banks studying the technology behind Bitcoin and cryptocurrencies. A total of 63 banks have responded. They represent jurisdictions, which cover about 80 percent of the population of the world and more than 90 percent of its entire economic output.

The intention of the survey was to find out whether central banks currently are developing their own central bank digital currencies (CBDC) and how likely they are to issue them.

Of the 63 banks, 70 percent said that they are either currently working or will soon be engaged in work on CBDC.

However, this includes conducting conceptual research on the matter, sharing studies and views of developing a “common understanding of this new field of study.” According to the report, half of the respondents have moved to a more “hands-on” proof-of-concept activities in order to test new technologies.

The report reveals that 85 percent of the central banks are unlikely or very unlikely to issue any type of CBDC in the short term (1-3 years).

Back and Forth

In September, Bitcoinist reported that the European Central Bank (ECB) has no intentions of issuing a central bank digital currency.

ECB

It’s also arguable whether a central bank issued digital currency will even fit the mold of decentralized cryptocurrencies. In December, a couple of researches at the St. Louis Fed, outlined that:

Once you add a central bank and remove the “permissionless” network—with nodes that can leave and join as they wish, there isn’t much left to the cryptocurrency you started with.

Nevertheless, some central banks remain open to the idea of CBDC. The BIS report outlines that the Central Bank of Uruguay has completed a pilot programme on a general purpose CBDC.

At the same time, the governor of UK’s central bank Mark Carney has previously said that the Bank of England is open to the idea of a central bank issued digital currency.

What do you think of CBDCs? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

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Kvě 06

Zimbabwe Banks Lack Cash Reserves To Honor Customer Withdrawals

Source: bitcoin

Bitcoinist_Zimbabwe

The country of Zimbabwe is not associated with financial stability by any means, yet things have taken a turn for the worse. Now that cash supplies are nearly non-existent, banks have to turn customers away. An excellent breeding ground for Bitcoin adoption, or will a different solution save the country?

Also read: Industry Report: Dr. Satoshi, BitPay Launches Bitcoin Debit Card

Zimbabwe Runs Out Cash

Even though various countries around the world are contemplating to go cashless in the future, running out of cash is not what most of them have envisioned. Unfortunately for Zimbabwe, that is exactly what happened. Not that this is a complete surprise, mind you, as the country has been using various foreign currencies since the collapse of their own fiat currency in 2009.

Especially the US Dollar has been a focal point for Zimbabwe, but due to their slump in global commodity prices and lower exports, not enough funds is coming in. As a result, local banks have started to turn away customers looking to withdraw cash, simply because they have no reserves to meet the demand.

For the time being, the central bank is looking to print bond notes, which would be tied to the US Dollar value kept in the country’s reserves. Moreover, withdrawals will be limited to US$1,000 per day, and people are advised to use either Euros or South African rand. That latter is not a viable option either, though, considering the rand lost 20% of its value compared to the US Dollar in the past twelve months.

This goes to show that central banks cannot continue to create money out of thin air to solve their financial problems. Yet that is exactly what the Zimbabwe central bank is doing, as they issue a brand new currency to temporarily alleviate some of the financial pressure. At the same time, they limit how much of it can be used by consumers on a daily basis, though, which will not help stabilize the economy in the long run.

Bitcoin could resolve these financial issues as well, although there is no guarantee consumers and enterprises see the value of this cryptocurrency just yet. Solving a financial crisis does not happen overnight, but Bitcoin is ready to be embraced by Zimbabwe if they want to offer consumers a financial ecosystem that is not bogged down by central bank dominance.

What are your thoughts on the situation in Zimbabwe? Let us know in the comments below!

Source: CNN Money

Images courtesy of Shutterstock, Wikipedia

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Zimbabwe Banks Lack Cash Reserves To Honor Customer Withdrawals

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Úno 15

PBOC Governor Speaks About Digital Currencies

Source: bitcoin

PBOC Governor Speaks About Digital Currencies

The People’s Bank of China (PBOC) Governor Zhou Xiaochuan was just recently interviewed and had quite a bit to say concerning digital currency. The central bank official spoke of capital outflow, Bitcoin, and centralized digital yuan. Xiaochuan expressed a lot of knowledge on the subject, and he says the PBOC has been researching digital currency for quite some time now. Xiaochuan states in the written transcript:

Also read: Jamie Dimon: Bitcoin Doomed While Blockchain Is for Real

“The PBOC has studied digital currencies for a long time. History shows that currency has evolved abreast of technological advances and development of economic activities.— From the central bank’s perspective, a digital currency should be designed in a way that can best protect people’s privacy, but we also need to pay attention to social security and social order. We need to keep some necessary investigative instruments readily available to deal with criminal activities. A balance needs to be struck between protecting privacy and cracking down on illegal activities. Different preferences between these two motives will lead to different technological orientations for digital currency.” — Zhou Xiaochuan, PBOC Governor

PBOC Governor’s Opinions of Digital Currency 

The governor of the bank, Xiaochuan gave strong opinions regarding the subject of permissionless and permissioned digital currencies. He believes the central bank adds a framework of security, social order, and regulatory policy. All of which the central banker feels would be a better architecture for digital currencies. Xiaochuan states, “We think, therefore, as a legal tender, digital currency must be issued by the central bank. The issuance, circulation and transaction of digital currency will follow the same management principles of traditional currency.” However when it comes to the creation of a centralized digital yuan, the governor says they have no roadmap. He believes it’s going to take some time to issue a technology and for it to gain some adoption. Cash will coexist with virtual money for quite some time Xiaochuan says, but the cost associated with cash will rise.

“For instance, banks do not charge any fees for counting large amounts of coins now, but in the future they may charge their clients for the service. With the transaction costs of paper money rising, people will be motivated to opt more for digital money. But digital currency and cash will coexist for a long time.” — Zhou Xiaochuan, PBOC Governor

The PBOC representative then goes into the subjects of monetary policy with cryptocurrencies and the 51% attack topic with Bitcoin. He believes that the beginning stages of regulatory improvements will take time with digital currency adoption and one issued by the central bank will significantly improve. Xiaochuan explains, “The security and efficiency of issuing and withdrawing digital currency will be significantly improved in the end.” With problems like the 51% attack, Xiaochuan says that’s a Bitcoin problem and would have a hard time happening in a centralized atmosphere. The governor considers the theory a “hotly debated” topic and a digital currency created by the PBOC would differ immediately from its inception.

“As for the hotly debated “51-percent attack,” it is more about bitcoins. Bitcoins do not involve a central bank. For a digital currency controlled by the central bank, a combination of technological measures, institutional design as well as laws and regulations will be applied to ensure the security of its operation system. This differs from bitcoins at the very start.” — Zhou Xiaochuan, PBOC Governor

The interview revealed that the PBOC and the executives working there have a great understanding of what’s happening in the cryptocurrency and blockchain world. Central banks are very aware of the disruption of the current money system as we speak, including the vast number of smaller legacy institutions operating under them. Time will tell what the PBOC will do with the creation of a digital yuan. Will it be a cryptocurrency like Bitcoin? Probably not. 

What do you think of the People Bank of China Governor’s statements? Let us know in the comments below.


Images courtesy of Shutterstock, Pixbay, and Wiki commons

 

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PBOC Governor Speaks About Digital Currencies

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