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| What you need to know today in crypto and beyond April 8, 2021 Sponsored By: If you were forwarded this newsletter and would like to receive it, sign up here.
Send feedback to daniel.kuhn@coindesk.com – we'd love to hear from you!
Today's must-reads Top Shelf STREET PLAYERS: State Street, the second-oldest bank in the U.S. and with $3.1 trillion in assets under management, may start trading crypto in the near future. The bank plans to partner with London-based Pure Digital to transpose its foreign exchange infrastructure to work for digital assets. THIEL SPIEL: Peter Thiel said bitcoin could be a “Chinese financial weapon” used to dethrone the U.S. dollar's monetary status. In a virtual roundtable with former Secretary of State Mike Pompeo, Thiel said China going long on bitcoin (as he is, too) threatens the U.S. dollar’s hegemony. IS FEI, FEY? The $1 billion Fei Protocol stablecoin project has not kept its promised dollar parity in its first week of trading. Meant to be an “algorithmic” stablecoin for decentralized finance (DeFi), Fei was overwhelmed by users at launch and has seen its rebalancing technology often make things worse. Anchorage is holding strong in the project. CARDANO VENTURES: A Cardano-backed venture fund has made its first investment in payments project COTI. The $20 million cFund is a joint venture between Cardano builder IOHK and Los Angeles-based Wave Financial to build out the application-friendly, proof-of-stake network’s ecosystem. ADA, Cardano’s native token, has climbed to become the seventh-largest crypto by market capitalization. BITCOIN GROWTH: Bitcoin’s mining hashrate is at an all-time high. Bitcoin’s steady state below $60,000 is drawing in new investors and profit-seeking businesses. “Miners are trying to get their hands on every machine possible, and even ASICs launched in 2014 are profitable,” Luxor’s Ethan Vera said. Also, the Bitcoin network will soon upgrade, with developers deciding on a date for Taproot’s activation with a “coin toss.”
– Daniel Kuhn
Overheard on CoinDesk TV Sound Bite “This is not going to be a straight-line growth story… [its] revenue depends on volatility, it depends on [fluctuating] crypto asset prices.”
– D.A. Davidson Head of Institutional Research Gil Luria on why he gave Coinbase shares a $440 price target for its upcoming public listing on CoinDesk TV's "First Mover."
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A message from CoinDesk CoinDesk’s Christine Kim and Consensys’ Ben Edgington present a weekly podcast series on the live development of Ethereum 2.0 and its potential impact on the crypto markets.
In each episode, the team discusses major news events related to Eth 2.0 from addressing skepticism to the consequences of node slashing.
Listen to "Mapping Out Eth 2.0" every Thursday on the CoinDesk Podcast Network.
What others are writing... Off-Chain Signals Kraken is considering going public through a direct listing in 2022, posted blowout Q1 (CNBC) China’s bitcoin mining is threatening its climate change targets, study says (CNBC) Ripple, CoinShares and ConsenSys have a climate solution (CoinDesk) Riot Blockchain to acquire rival Whinstone, owner of the “largest” North American BTC mine, for $651 million (The Block) Bitcoin is changing the world by … renewing the push to digitize stocks (WSJ)– D.K.
Investor Momentum to NFT Boom: CoinDesk Research's Quarterly Review Introducing CoinDesk Research's quarterly review, covering the main developments over the first three months of 2021 in Bitcoin, Ethereum, DeFi, stablecoins and – of course – NFTs.
The report presents over 100 insights on how retail investors are picking up market momentum, how Ethereum activity is not being driven by NFTs as much as one might think, how stablecoins have responded to increased activity, how DeFi is for now the realm of decentralized exchanges and more.
Download the CoinDesk Quarterly Review, First Quarter 2021.
Putting the news in perspective The Takeaway
China, the Convenient Foil
To Peter Thiel, it might be. Here’s what the tech entrepreneur said yesterday at an event hosted by the Richard Nixon Foundation (as reported by CoinDesk’s Colin Harper).
“Even though I’m a pro-crypto, pro-bitcoin maximalist person, I do wonder whether if, at this point, bitcoin should also be thought of in part as a Chinese financial weapon against the U.S. ... It threatens fiat money, but it especially threatens the dollar.”
This makes perfect sense, and no sense, simultaneously.
In the no-sense category: China doesn’t control bitcoin and would find it hard to do so, because, you know, decentralization. Although something like three-quarters of the world’s mining is in China, and theoretically Beijing could take that over, other miners could easily set up elsewhere. Bitcoin is adaptable and, so far, has remained impervious to government intervention.
If China, somehow, did manage to control bitcoin, that would probably limit its impact anyway. As Ripple’s Brad Garlinghouse said in 2018: “How do we know that China won’t intervene [in controlling bitcoin]? How many countries want to use a Chinese-controlled currency? It’s just not going to happen.”
But Thiel is right in a broader, less literal sense.
Bitcoin doesn’t look like it's replacing the dollar as a global reserve currency anytime soon. It’s becoming too valuable as a store of value to be a means of exchange. The asset has millions of holders but, as yet, few spenders.
But it has opened the door on monetary technology, with big geopolitical consequences. Because of bitcoin, we think differently about how to transfer value on the internet. Growing numbers of people understand that you don’t need a bank or middleman to do that.
China is adapting this insight about bankless finance to its very state-oriented view of the world. Its plans for a digital yuan allied to an international blockchain services network could obviate the need for companies and individuals to use any form of reserve currency and allow trade to go around the U.S. banking system. Going forward, we’re likely to hear a lot more comments like Thiel’s, even if they’re a bit confused. (There’s something strange about a bitcoiner worrying about U.S. state power, but nevermind.) China is a convenient foil, as we saw in 2019 when Facebook’s David Marcus conjured up the specter of Chinese monetary innovation to make the case for libra (since renamed and reconfigured as diem).
“The future in five years, if we don’t have a good answer, is basically China re-wiring [the rest of the world] with a digital renminbi running on their controlled blockchain,” Marcus told the U.S. Congress. The U.S. could lose the right to make sanctions on other countries and could find itself on the wrong end of them, too, he said.
As China rolls out its blockchain weapons, differences in monetary approach will become starker – privacy versus surveillance, state-run versus private enterprise, “clean” bitcoin versus “dirty” bitcoin – and we’ll see new forms of conflict between long-time rivals. The rest of us will have to choose which side we’re on.
– Ben Schiller
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