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| The biggest crypto news and ideas of the day Nov. 19, 2021 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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–Daniel Kuhn
Today’s must-reads Top Shelf AT AUCTION: Macy’s Thanksgiving Day Parade will see 9,500 parade-themed non-fungible tokens (NFTs) launch on the internet as the iconic holiday balloons float down Sixth Avenue in Manhattan. The department store is working with the Sweet NFT marketplace on Polygon. Meanwhile, a pair of paintings from contemporary artist Banksy sold for a combined 3,093 ETH in an auction at Sotheby’s on Thursday night – marking the first time the auction house has denominated a sale in crypto. At that same event, a group known as ConstitutionDAO was outbid in their attempt to crowdsource ownership of an original copy of the U.S. Constitution. BLOCKCHAIN DISRUPTS: Blockchain technology has evolved enough to meet the critical demands of at “least certain segments in the banking and financial markets,” including mortgage-backed securities and student loans, according to a research note by the Royal Bank of Canada (RBC). It’s a disruptive force, the note says. Meanwhile, Oversea-Chinese Banking Corporation (OCBC Bank) may launch a crypto exchange. Though not everyone is jazzed on crypto: Former U.S. Secretary of State and Democratic presidential candidate Hillary Clinton called on nations to keep a tab on crypto’s rise at the Bloomberg New Economy Forum in Singapore, while Norway is mulling a crypto mining ban. GOING PUBLIC? Binance US will be closing a pre-IPO funding round in the next one to two months, parent company CEO Changpeng “CZ” Zhao said at the Bloomberg event in Singapore. Without going into specifics, CZ said the U.S. exchange is targeting “a couple hundred million” in the round and again noted Binance could go public in the coming years – though it first has to settle on a country for its home base. FRAUD ALLEGATIONS: Chinese officials are warning citizens to stay vigilant of cases of fraud involving the digital yuan, showing how security issues remain for the experimental currency being piloted. Reported cases have involved malicious apps, telecom scams and bogus opportunities to invest in a central bank digital currency (CBDC) exchange. Separately, Moshe Hogeg, the Israeli crypto mogul behind the blockchain smartphone startup Sirin Labs and a host of other crypto startups, was reportedly arrested on Thursday on fraud and assault charges. CAN WE DECENTRALIZE? Decentralized finance platform Acala won the first Polkadot parachain slot at auction over Ethereum compatibility layer Moonbeam. Polkadot is essentially a series of independent, parallel blockchains with their own rules that can communicate with one another and pool security guarantees. Polkadot creator (and Ethereum co-founder) Gavin Wood said this model shakes off Ethereum and Bitcoin’s “economic enslavement” of users to miners. The opening batch of five Polkadot parachains will all go live on Dec. 17. Separately, the resurrection of the Hic et Nunc, an NFT market on Tezos that crashed last week, proves some of the tenets of decentralization.
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Overheard on CoinDesk TV... Sound Bites "How could we bring someone into the shoes of the founding fathers ... and have those kinds of debates in an immersive world at the signing of the Constitution?"
–Metaversal CEO Yossi Hasson, a member of ConstitutionDAO, the upstart organization that raised $49 million to try (and failed) to buy a copy of the U.S. Constitution at auction, on “First Mover.”
What others are writing... Off-Chain Signals WoW gold farmer Steve Bannon shilled dumb Chinese crypto before arrest (Protos) Mastercard EVP Jess Turner on becoming a 'crypto first' company (The Block) The IRS says crypto accounted for 93% of criminal investigations in its annual report Why Neeraj Is Wrong About My Bored Ape (Decrypt – op-ed) EOS Community Wants to “Delete” Block.one’s Tokens Worth $196M (Crypto Briefing) The Bored Apes take Manhattan (Input)
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Putting the news in perspective The Takeaway Turkey Makes the Case for Bitcoin as Erdogan Runs the Autocrat's Inflation PlaybookHi, it's Chief Insights Columnist David Z. Morris. Bitcoin trading volumes are rising in Turkey as the increasingly authoritarian government there goes diligently about the work of setting its currency, the lira, on fire. Turkish President Recep Tayyip Erdogan, who has retained power since 2003, has to all appearances lost his mind: With inflation sitting at around 20%, Erdogan yesterday lowered Turkey’s key interest rate to 18% from 19% (no, not a typo), instead of raising them to tighten the money supply.
Currency markets responded decisively to the expected move, with the lira losing 10% of its value against the U.S. dollar since Monday. Some Turkish citizens decided to take their business elsewhere: BTCTurk, one of a handful of local exchanges offering lira/BTC trades, has seen a noticeable uptick in volume, according to public data. That interest comes despite the recent collapse of two other Turkish exchanges, one in an apparent exit scam.
Erdogan’s government banned crypto for payments in April, but owning crypto is legal in Turkey – at least for now. Sadly, the logic of the current situation may push Erdogan to tighten further, as any open lira/BTC trade could put further downward pressure on the lira by enabling capital flight. Erdogan has reportedly claimed that lowering interest rates – which makes money cheaper and more plentiful – will somehow curb inflation. But his reasoning is opaque. He recently referred to interest as the “devil,” perhaps an oblique appeal to Islamic morality in the face of economic reality. “It’s just crazy, there’s zero justification for this move as there’s been zero justification for the rate cuts we’ve seen so far this year,” an asset manager told the Wall Street Journal. “Erdogan is running monetary policy on his own.” It’s not hard to infer Erdogan’s actual motive for (more or less) letting the money printer go brrr: Keeping rates lower is one of only a handful of tools he has for shoring up Turkey’s economy. Turkey has seen short-term hits to its economy thanks to regional instability and COVID-19, which has devastated tourism. The longer-term picture is even more shocking: Since 2013, Turkey’s GDP has plummeted from more than US$950 billion to $720 billion, partly thanks to instability after a failed coup against Erdogan in 2016. Erdogan’s attempts to ramp things back up have been deeply unorthodox for years, particularly relying on unsustainable levels of debt throughout the economy.
And Erdogan no longer has an independent economic council to push back, after firing a series of central bank governors who wouldn’t get in line. That makes the current wave of instability all the more dangerous for lira holders. Erdogan’s Turkey is fast becoming a case study of bitcoin’s potential benefits for residents of countries with fragile currencies, or authoritarian leaders likely to pursue short-term political gain through inflationary policies. Luckily, Turkey is closely tied to Europe, and Turks currently have at least some access to dollars and euros to protect their wealth. In many other similarly troubled regions, that luxury is hard to come by, leaving bitcoin the only option.
–David Z. Morris
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