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| New Investor Scorecard! Monero (XMR) is one of the most well-known privacy coins, but is it a smart investment? Our researchers did the homework: paid members can download the scorecard here.
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| The Digital Land Debate (Messari): One question we've been asking at Bitcoin Market Journal is whether virtual real estate (like buying property in Decentraland) is a good long-term investment.
This article from Mason Nystrom suggests that it will depend on whether the virtual land platform has a critical mass of users. The platforms that attract the most users (through killer apps, addictive games, or one-of-a-kind experiences) will end up commanding the highest virtual real estate prices.
Investor takeaway: It's probably too soon to tell which virtual real estate platforms will win over the long term (remember Second Life?). However, the article is worth a read, especially with virtual real estate prices through the (pixelated) roof. |
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"Why buy a real house when you can buy one in the Metaverse for the same price?" asks the article above, showing total sales of virtual real estate since January 2021: |
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Investor takeaway: Before buying any virtual real estate, ask yourself if the platform has a true competitive advantage -- killer apps, addictive games, or one-of-a-kind experiences -- that will attract enough users to create network effects. If not, you're buying virtual swampland. |
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| Hi Everyone,
In today's column, I dive into the rise of financial censorship and offer some crypto-themed solutions you can leverage as an individual.
Let's think about this for a moment. We all have slightly different beliefs, but most of us would agree that as humans, we all have some basic rights. These include:
— Freedom of speech. — Freedom of religious beliefs. — Freedom to move around.
But what about freedom of transaction? In today's digitally connected world, it actually undercuts many other freedoms. Think about it. Freedom of speech is great, but if you cannot purchase a smartphone or laptop, you will be hard-pressed to gain a voice.
While few would argue that watching Netflix is a human right, this too can be blocked off, and not by Netflix.
If you can't get a credit card, or a debit card and a checking account, you are barred from most transactions that we consider normal in life.
Directly or indirectly, financial censorship is on the rise. Let's dive in. |
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| Financial censorship as a weapon
This year, governments have looked to financial censorship as a weapon they can use against their opponents.
This has included censoring both other governments and individuals.
Let me be very clear. This is not a statement of support for or against any government, individual or group. I am merely highlighting a trend.
Some well known incidents have included: - The U.S. government froze $7 billion in Afghan funds once the Taliban took over.
- The U.S. government levied sanctions against Russia's government and elites.
- Ukraine declared martial law and its central bank ordered financial institutions to "suspend the issuance of electronic money" after the Russian invasion.
- Canadian Prime Minister Justin Trudeau invoked the Emergencies Act in response to truckers protesting government overreach by blockading the country's largest trade route to the U.S. and its capital in Ottawa. This included allowing banks to freeze assets being sent to the truckers and the accounts of anyone suspected of supporting the truckers without a warrant. Canada revoked the Emergencies Act and a key mandate the truckers were protesting was lifted. However, donations to the group were criminalized, so for the most part, this financial censorship was successful in accomplishing its purpose.
The examples listed above represent deliberate actions orchestrated by governments.
However, financial censorship has cropped up elsewhere, and not as a result of any intentional government intervention.
In Lebanon, an indirect sort of financial censorship has materialized. Due to the collapse of the country's local currency, and frantic actions by insolvent banks, digital services have been rendered null. In other words, domestic banking customers cannot use their debit or credit cards.
They are not able to use services such as Netflix, Disney Plus, Amazon, eBay or even Coinbase. I know because I visited there for three weeks over the holidays. |
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| Central bank digital currencies
Next, I'd like to take a moment to mention central bank digital currencies, or CBDCs. With the technology of the blockchain, central banks and governments across the world are investigating digital fiat currencies.
A total of 87 countries are exploring CBDCs, according to the Atlantic Council. The most notable has been China, whose government showcased its digital yuan during the recent Winter Olympics. The U.S. is also in this mix, with President Joe Biden's executive order calling for the continued exploration of a CBDC.
Critics of these digital fiat currencies have been very clear that they could give governments greater control over transactions, which could potentially reduce the freedom that citizens have to make them in the first place.
Analyst Jason Deane has taken a deep dive into the subject, which you can read here.
Like most things in life and economics, I would consider this a nuanced issue.
On the one hand, I am strongly against increased government involvement and censorship in our daily lives, and I certainly would not consider as acceptable anything done by an autocratic government like China.
On the other hand, I am not against developing nations in Africa and the Caribbean, which are seeking to obtain financial independence from foreign actors through a digital currency, harnessing such innovations. I think this use case may have potential.
And lastly, I realize that there are enough people and institutions in this world that would prefer safety over freedom that there is going to be a place for CBDCs, whether I like it or not.
Now let's step away from macroeconomics and geopolitics and look at what you, as an investor, can do. |
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| Investor's take
This is not investment advice, and it does not take your personal situation into account.
That being said, here are three avenues investors may be interested in exploring as cryptocurrency gains popularity in this era of financial censorship:
1. Buy and hold bitcoin
This sounds overly simple, but let me double down on this. Unlike CBDCs, bitcoin is decentralized and cannot be controlled by a government or a central bank. While individual currencies like the Russian ruble, Ukrainian hyrvnia or Lebanese lira may collapse during such geopolitical events, bitcoin has held its value long-term across the globe.
Even the act of holding bitcoin could be considered an act of non-violent protest.
2. Invest in privacy coins
While bitcoin has transparent features, there are other cryptocurrencies known as privacy coins that have enhanced privacy features.
These include Monero (XMR) and Zcash, both of which have been named the "Coin of the Day" on Lunar Crush over the past few weeks, which is not surprising considering recent events. CoinMarketCap has also described these cryptocurrencies as privacy tokens.
Litecoin and Dash also have optional privacy features.
3. Practice self-custody
Self-custody means being your own bank, so no third-party provider such as a crypto exchange or bank could freeze your funds or block your transactions. It should also be noted that self-custody is not for everyone. There won't be any customer service you can call if you lose access to your funds by making a mistake.
Self-custody could be done by getting a hardware wallet (it looks like a fancy flash drive) and using it to store own's crypto. Trezor and Ledger are two popular hardware wallets.
Sending all of you and the world my deepest hope for financial freedom!
Sincerely, |
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| Alexandre Lores Opportunity Analyst |
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This development could prove indispensable in helping the country embrace digital currencies. Further, it could make it easier for Ukraine to defend itself using cryptocurrency donations. |
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Frog and Toad are HODLers. |
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| Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.
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