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Bitcoin (BTC) - $19,708.95 |
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Sorry, Ether: Sound Money Doesn’t Exist and Neither Does Ultra Sound Money |
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(Victor Habbick Visions/Getty Images) Some Ethereum proponents sport a bat and speaker emoji in their name on Twitter. This means they support the idea that the Merge will make Ethereum “ultra sound money.” It’s sort of clever I guess, because bats use ultrasound to help them fly in the dark. But what does that even mean? To answer this, we first need to answer the question: What is ultra sound money? But before we can even begin thinking about ultra sound money, we need to start with just plain sound money. It is worth adding that sound money is sometimes referred to as hard money (which makes unsound money “soft”). The unsound euro and pound and (five) dollar milkshakes A proper definition of sound or hard money is admittedly nebulous. A commonly accepted definition is this: a currency that serves as a reliable and stable store of value. By extension, sound money should preserve its purchasing power. If $1 gets me a milkshake today, it should get me a milkshake (or more) tomorrow, ad infinitum. As such, unsound or soft money is exactly the opposite: a currency that does not serve as a reliable and stable store of value. The expectation of a soft money is that its value will change unpredictably and depreciate when compared with other currencies. For an example of how unsound money might behave, we could take a quick look at the euro and British pound, both of which have lost more than 15% of their value compared with the U.S. dollar over the last two years. |
Euro and pound versus the dollar (TradingView) Maybe you can see where this is going? That’s right, straight to the Dollar Milkshake Theory. This theory (which I had never known until very recently) has percolated throughout financial media over the last week or so, using a chart that looks like this: |
Currency strength over the last year (TradingView) Here’s the skinny version of the Dollar Milkshake Theory: All debt-based fiat currencies will fall in value over time, but the U.S. dollar – as the world’s reserve currency and base of most financial debt – will fall slower than all the others, and all value will accrue to the dollar. As for the “milkshake” reference the dollar is like the straw in the other country's currency milkshake, sucking up capital investment because of its reserve status. Over the last year, that theory seems to be playing out, with the dollar outpacing the Canadian dollar, Australian dollar, euro, pound and yen. With our current definition, we could say that the dollar is sound money. After all, it has appreciated against all the other major currencies. Except … Read the full article here. |
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SWIFT, the interbank messaging system that allows for cross-border payments, has partnered with Chainlink. TAKEAWAY: SWIFT is working with Chainlink, a provider of price feeds and other data to blockchains, on a cross-chain interoperability protocol (CCIP) in an initial proof-of-concept. CCIP will enable SWIFT messages to instruct on-chain token transfers, helping the interbank network to communicate across all blockchain environments. Chainlink co-founder Sergey Nazarov said on Wednesday that this will help accelerate the adoption of distributed ledger technology blockchains across capital markets. Read more here. Lightning Labs released software that lets Bitcoin developers mint and transfer assets on the blockchain. TAKEAWAY: The Lightning Network infrastructure firm released a test version of the Taro daemon, a new piece of software that will allow Bitcoin developers to create, send and receive assets on the Bitcoin blockchain. Lightning Labs wrote, “With Taro and the incredible developers community, we can build a world where users have [USD]-denominated balances and BTC-denominated balances (or other assets) in the same wallet, trivially sending value across the Lightning Network just as they do today.” Read more here. California to allow vital records like birth and marriage certificates to be issued on a blockchain. TAKEAWAY: Californians will have the option of a blockchain-based delivery of their vital records after a new law was approved establishing the technology as an integral part of state recordkeeping. The bill, introduced by California state Sen. Robert Hertzberg, represents a test of blockchain in an essential governmental function in the most populous U.S. state. “This secure and highly convenient process will allow the average person to access their vital records and shows California is still leading the way for innovation,” Hertzberg said in a statement to CoinDesk. Read more here.
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