Trump’s unwittingly reveals the ‘bigly’ power of bitcoin

On July 16, 2019July 16, 2019 By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

Many of you will have read Trump’s recent tweets; the ones where he proclaimed that he isn’t a “fan” of bitcoin. In the President’s opinion, bitcoin and other cryptocurrencies are not money, unlike the mighty US dollar, which he believes is the strongest currency in the world.

And while he was tweeting about bitcoin, he took the opportunity to take a swipe at Facebook’s Libra. He said “it will have little standing or dependability” and then went on a rant about banking licences, posting: ““If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National […] and International.”

This was not the end of his tweets. It seems that once Trump gets his teeth into a topic, he just can’t stop tweeting. He finished off his diatribe against cryptos by moaning about how crypto facilitates “unlawful behavior, including drug trade and other illegal activities.” Somebody obviously told him this once and it has stuck in his head, never mind the fact that most drugs in the USA are bought with US dollars, Trump’s favourite currency. And he had to tweet about how strong, dependable and reliable the dollar is as well, just to drive the point home.

Did Trump’s tweets affect crypto prices?

Interestingly, just before Trump unleashed his anti-crypto tweets, bitcoin’s price rose. However over the last few days we have seen a big price correction for bitcoin and across the leading altcoins.

But don’t think this is because of Trump. There is another way to look at it as as Michael J. Casey at Coindesk explains. He writes, “What matters is the very fact that a sitting president mentioned cryptocurrencies at all. Indeed, from a price perspective, Trump’s disparaging remarks are, on balance, positive for bitcoin.” And he adds that by Friday evening this was clear in the post-tweet price behaviour of bitcoin.

Furthermore, his argument continues along an important line: ““More importantly, the tweet marks a symbolic milestone in the gradual but ever-expanding presence that cryptocurrency occupies in the public conversation around money and policy.”

Trump reveals bitcoin’s power

What Casey is saying is that Trump has unwittingly started a battle over the future shape of global money systems. As he says, bitcoin and crypto in general has to be relevant to us the people to enjoy success. The fact that Trump has tweeted about it reveals that it is seen as a threat by governments, and that means it is relevant. Casey says, “By simply giving it the time of day, Trump revealed that people within the high levels of the U.S. power structure are noticing the challenge that cryptocurrency technology poses to it.” Yes!

The response of the massive Crypto community on Twitter showed that they didn’t take the President at all seriously. And why would anyone, when the President announced on 4th July that American soldiers took over airports from the British during the American War of Independence in 1775?

Why investors should get serious about Libra

On July 11, 2019July 11, 2019 By mehranmuslimiblogIn cryptoLeave a comment

Facebook is a media and tech giant. With two billion users worldwide, few can doubt its influence. And when it launches its Libra coin next year, its two billion-strong community will have its own currency. It is something to pause and consider. Two billion is one-quarter of world’s population, and more than half of the 3.9 billion people with Internet access.

As Jon Markman writes at Forbes, “the global payments world will never be the same.”

There are other companies operating on a similarly massive scale: Netflix, Amazon, Apple and Google all have huge communities of users.

Markman also makes another important point: “Facebook is the granddaddy of social media because it has something other platforms can’t easily acquire: all your friends and family.” Its sheer scale makes it one of the world’s most important businesses.

Take a look at Huawei’s predicament. When the blacklisted Chinese telecommunications company, lost access to its U.S. hardware vendors, its managers claimed they would manage. However, when Facebook officials said Instagram, WhatsApp, Messenger and Facebook apps would no longer come preinstalled on its phones, Huawei managers stopped production lines. That is the power of Facebook.

Mark Zuckerberg purposefully worked a strategy to achieve this dominance by acquiring 92 smaller software competitors and shuttering their operations. It has followed this route since 2007. Markman says, “Facebook earned a reputation for moving fast and breaking things — a label Zuckerberg embraced. Libra, which is set to launch to the public in the first half of 2020, shatters everything.”

A Facebook payments system effectively creates a new digital system for most of the connected world, and it transforms Facebook into a “true living, breathing ecosystem.”

Tencent in China used the same approach with WeChat that connects its billion daily users to their local bank, so there is no need for ATMs, paper money or cash registers.

How should investors approach Libra?

Libra is going to be stable by design. It should not be subject to wild price swings. Nor should it attract the legions of speculators who trade Bitcoin. Libra will be directly backed by government currencies like U.S. dollars or the euro. And to acquire digital coins, holders will need to show some form of government identification.

Furthermore, Libra will be independently managed by a Swiss non-profit called the Libra Association, overseen by a consortium of 27 companies including eBay, Uber, Mastercard, Visa, Spotify and PayPal. This ‘feeling’ that it is independent will encourage software developers to build new applications on top of the platform, making it more sustainable.

It’s also easy to see why Libra might really catch on among the under-banked, and in the developing world where many people don’t have bank accounts.

Regardless of any weaknesses, there are many reasons for investors to take Facebook’s Libra seriously.

A letter to Facebook

On July 11, 2019 By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

House lawmakers officially ask Facebook to put Libra cryptocurrency project on hold.

The US House of Representatives, the country’s lawmakers, are becoming more insistent about halting the progress of Facebook’s entry into the cryptocurrency market with its Libra token. It has sent one letter, and now another to Facebook’s executives, calling for a halt to development of the token.

Maxine Waters, a Republican congresswoman was the first to call for a moratorium on Libra while lawmakers investigated it. Now four other members of Congress have joined her in sending a letter to Mark Zuckerberg, who must by now dread the arrival of couriers. They have also sent the letter to Facebook’s COO Sheryl Sandberg and Calibra CEO David Marcus.

The letter alleges the Libra system, which was registered in Switzerland a few months ago, is intended to rival U.S. monetary policy and the dollar. It says, “This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.”

The lawmakers also claim the system could become “an under-regulated platform for illicit activity and money laundering.” They say that these concerns arise from he lack of detail in the Libra white paper.

And, to further justify their concerns, they refer to the Cambridge Alanlytica scandal in which the political consulting firm accessed Facebook user data to influence voting behaviour in the 2016 election. This has remained a bone of contention since then. Furthermore, the representatives point to the fact that Facebook removed 2.2 billion fake accounts in the first quarter of 2019, and indicate their general scepticism about cryptocurrencies, referring to the amounts stolen by hackers.

These are their key reasons for calling a halt to the Libra project and asking the Facebook executives to participate in Senate and House hearings. This didn’t go very well the last time Zuckerberg and Co were asked to testify in Washington, and they are apparently similarly reluctant this time.

According to sources none of the three that received the letter have yet responded (perhaps it got lost in the mail?) and Zuckerberg has stayed pretty quiet since he received a letter in May with questions about Libra. It does seem that David Marcus may appear at hearings about Libra on 16th and 17th July, but whether Zuckerberg and Sandberg will appear is another matter.

Of course, they are easy targets in one respect. If Congress is feeling tetchy about cryptocurrency and regulations around it, then targeting Facebook, which is already a business giant is easier for them, or perhaps makes more sense to them, than pulling in Vitalik Buterin of Ethereum.

But here’s the thing; just wait till Congress finds out they can’t send letters to Bitcoin!

The billionaires who bet on crypto

On July 5, 2019July 5, 2019 By mehranmuslimiblogIn cryptoLeave a comment

The world’s 317th richest person takes a shot at cryptocurrencies.

Henry Kravis is the 317th richest person in the world and a co-founder of Kohlberg Kravis Roberts (KKR). And now he’s dipping his toes into the cryptocurrency sector to see what might happen.

He is in good company. Other financial wizards, such as Peter Thiel, Louis Bacon and Alan Howard have also entered the digital currency fray. For example, Howard has hired an employee just to help him with his substantial cryptocurrency investments. His firm Brevan Howard Asset Management has not invested, but Howard has made personal acquisitions and Brevan Howard’s partners had invested in crypto assets with the asset management company looking to enter the ICO market as well as funding blockchain startups.

Thiel is best known as the co-founder of PayPal. He has been a bitcoin bull for some time and also invests in tech companies such as Facebook and Spotify. Louis Bacon, alongside Thiel and Howard invested in Block.One, which manages EOS, a platform that has enjoyed some spectacular profits in recent times. So, they must be feeling pleased.

Kravis has apparently invested in a former KKR employee. Ben Forman is the co-founder and CIO of ParaFi Capital based in San Francisco. He revealed that Kravis had invested in his flagship crypto fund: ““In the high-yield markets, I used to fight to outperform the index by tens of basis points. Crypto, on the other hand, due to its nascency, offers a tremendous amount of alpha to active managers.”

Forman also stated that his company currently manages $25 million and aims to reach $100 million by Q1 2020. At KKR he worked on its credit business and debts investments as well as leading the firm’s in-house blockchain and crypto research team. He said, “While I toyed with the idea of pursuing blockchain investing within KKR, it was clear to me that the firm did not provide the optimal format to do so. Instead of pursuing crypto at KKR, I wanted to build the KKR of crypto.”

Kravis, whose firm has a net income of almost $800 million, is personally worth $5.7 billion.

Increasingly it looks like the big, smart money is going over to the ‘crypto’ side!

Mehran Muslimi

Category: crypto