7th May 2023 > > Central Banks & cryptos.

tl;dr

Central Banks are losing their artificially inflated status, whilst cryptos are riding to our rescue from bureaucrats and technocrats.

Market Snap (at time of writing)

Market Wrap

As the PEPE enthusiasm starts to diminish, GNSLR rallies 5x in twenty-four hours. Meme madness is not good for cryptos.

Curious Cryptos’ Commentary – Central Banks and credibility

Let us rewind to Thursday last week when Federal Reserve Chairman Jerome Powell stated:

“Conditions in [the banking] sector have broadly improved since early March and the U.S. banking system is sound and resilient. We will continue to monitor conditions in the sector."

Immediately afterwards the stock prices of several regional banks suffered double-digit declines, up to 60%.

As of Friday close, the stock prices of 100% of all US regional banks were in the red. I am informed – reliably or otherwise – that this is the first time in history such an event has occurred.

What price credibility, eh?

Curious Cryptos’ Commentary – Cryptos have no use case

Or at least, that’s what the naysayers maintain, alongside the usual complaints about drug money and financing of terrorists.

Back in the eighties I opened my first bank account, with no id. I could write cheques without using a bank card to prove the validity of that cheque. By the time I left school and went to university, my first term’s grant simply paid back a part of my unauthorised overdraft.

No-one seemed to care, least of all me.

Now there is an ever-increasing layer of bureaucracy and admin involved in interacting with the legacy financial system. And for good reasons. KYC (Know Your Customer) and AML (anti-money laundering) rules have proliferated in response to the use of fiat for - guess what - drug money and financing for terrorists. The printing of an EUR 500 note was probably an act of hubris (my currency is bigger than yours type thing) but remains to this day a godsend to those who wish to circumvent the rules and avoid taxes.

KYC and AML are vital tools within the legacy financial system for push back against illegitimate money. They are far from perfect, and there are many examples of banks failing to use these tools properly, but they are a necessary part of the financial landscape.

These tools are also desperately inefficient.

Different financial institutions interpret the rules in different ways, which is to be expected. But the regulators – covering their own backs – encourage an overly restrictive approach, and the pen-pushers in trad banks are always eagerly keen to prove their relevance to the firm, in the only way they know how.

The result is that we find ourselves providing passport information, driver license details, council tax bills, and utility statements to a plethora of organisations. Not only is this boring, time-wasting stuff, our personal information is out there in so many places ready to be harvested by the feral scammers.

For those that know me, you will not be surprised to hear that there is a solution to these problems, and those solutions reside in the blockchain.

…

Deloitte has partnered with a blockchain firm to streamline the process of KYC/AML:

https://www2.deloitte.com/ch/en/pages/press-releases/articles/deloitte-integrates-kilt-identity-blockchain-creating-new-markets-with-reusable-digital-credentials.html

Micha Bitterli, Head of Deloitte Managed Services, explains:

“By offering reusable digital credentials anchored on the KILT blockchain, Deloitte is transforming verification processes for individuals and entities. Digital credentials that are convenient, cost-effective, and secure have the potential to open new digital marketplaces, from e-commerce and DeFi to gaming. Deloitte has the technology knowledge, reach and trust to issue credentials that are globally accepted.”

The core concept here is that an individual can prove their identity one time, and one time only, and all other financial organisations can rely upon that proof.

The killer app is that once this is up and running, you can use zero-knowledge proof theory (https://en.wikipedia.org/wiki/Zero-knowledge_proof) to prove your identity without ever giving up your identity.

That is one in the eye for the scammers and is only made possible using blockchain technology.

I must remind you that cryptos have no use case according to some.

…

The CCC does not get involved with shilling coins.

But an honorary mention must go to KEY, a project that has been trying to bring blockchain ID to all of us for a long time now. The CCC treasury has a long-standing investment in this coin which has proved to be lucrative, but it does mean I am conflicted when commenting on these matters.

Just for clarity is all.

Curious Cryptos’ Commentary – Central Banks and credibility

As reported by both the BBC (mainstream thinking) and Fortune & Freedom (not a publication for the faint-hearted as it often challenges mainstream thinking) the Bank of England’s Chief economist Huw Pill had this to say:

“Somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether through higher wages or passing energy costs on to customers.

What we’re facing now is that reluctance to accept that. That pass-the-parcel game that’s going on here, that game is one that’s generating inflation, and that part of inflation can persist.”

This statement of his, assuming we can take it at face value, needs to be unpacked.

There is absolutely zero recognition that quantitative easing on a vastly increased scale at the same time as restricting supply of all goods and services (aka removing all our personal freedoms and liberties described quite accurately as lockdown) is the root cause of our current woes.

A key architect of this dangerously destructive and flippant approach to sound money management is Pill himself, not that he would ever own up to this abrogation of his duties and responsibilities to us little people.

Still, he can’t be fired, and he has a fat inflation-linked pension to look forward to, so what’s the big deal?