CryptoAM: The Petro's Debut, Crypto Self-Regulates, and Customs on the Blockchain

Tuesday, August 21st

About three months ago, I was reading Money Stuff and though to myself, “Man, I wish there was a Money Stuff for Crypto.” I didn’t do much. The next day, I was reading Axios and thought, '“Damn, there should be an Axios for Crypto”. So I combined the two and here we are with CryptoAM.

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3 things you need to know:

One: Maduro devalues Bolivar by 95% and pegs it to the Petro. Over the weekend, Maduro chopped 5 zeros off the bolivar, and announced broad, sweeping changes to the Venezuelan financial system with the goal of tying Venezuela’s fiat currency to the controversial cryptocurrency, the Petro.

  • Inflation run amok: The nation’s central bank has devalued their fiat currency by over 95% at a time when inflation is occurring at a 100,000%+ annualized rate. Inflation, which was already predicted to reach 1,000,000% this year, will likely gain additional fuel due to this extreme devaluation and the petro peg.

  • A nation on the brink: This move does nothing to address the underlying issues present in the Venezuelan economy and is occurring at a time where the entire nation of Venezuela is on the brink of collapse. The monetary crisis has turned into a humanitarian one, as thousands upon thousands of Venezuelan citizens flee the country. Maduro’s capability to run a nation has come into question, and he recently dodged an assassination attempt, carried out by drone, earlier this month.

  • The Petro: It was claimed (with no evidence) that $735M was raised in the ICO. Theoretically, the Petro will be pegged to the price of a barrel of oil (Venezuela’s main export). There will be 100M tokens issued, for a total value of $6B. The hope is that wages, pensions, and prices will be pegged to the new crypto. According to Johns Hopkins Professor Steve Hanke "…the petro is a scam, it doesn't even trade”.

  • Real world use: One reason they’re issuing a cryptocurrency is to circumvent sanctions and allow Venezuela to deal with countries outside the traditional systems they are currently locked out of. This leads to one of the more intense questions of crypto…is it okay to enable this? While decentralization allows a way to give more power to the individual, it also allows the individual (or in this case, individual country) more freedom and leeway to commit crimes, do wrong and circumvent agreed upon rules. Is the trade-off worth it? I don’t have a great answer, but it’s something I think about often.

  • Read more…

Two: Gemini Exchange will lead meeting of US based exchanges to discuss self-regulation. A working group called the Virtual Commodity Association composed of Gemini Exchange, Bittrex, Bitstamp, and bitFlyer USA, will meet in September to discuss forming a self-regulatory organization (SRO). A SRO is a non-governmental organization that creates regulations and best practices for an industry.

  • Big Brother Approves: One of the CFTC commissioners, Brian Quintenz, published a statement of support for the SRO on the CFTC’s website.

  • Why this is important: Self-regulation has a number of benefits. Notably, in an industry as complex as DLT, the companies within the industry likely know how to regulate themselves better than most outside influencers. By riding out ahead and figuring out what regulation works best internally, companies potentially save themselves from having harmful regulation imposed on them by regulators who don’t know better. If you want to get involved, write to the SEC or your Congressman and voice your support for self regulation!

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Three: US Customs will trial blockchain tech to verify certificates of origin. The Customs and Border Protection’s Business Transformation and Innovation division has announced it will test using blockchain to verify NAFTA and CAFTA certificates of origin for goods being shipped into the United States. If the trial is successful and CBP adopts blockchain, it will make for an entirely paperless system, devoid of physical signatures and instead ensured by digital signatures.

  • COAC: The CBP is also working with the Customs Operations Advisory Committee to explore the use of blockchain to identify IP licensees and licensors. This would help verify that Company A has given permission to Company B to use it’s IP, and easily verify that the license has not expired.

    “Really what the government’s trying to do is twofold: One is to help blockchain along in a healthy manner for increasing market adoption, and the other thing is we’re trying to prepare ourselves in a proactive way to be ready for when private industry begins to really take off with this technology”

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Also in the news:

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Market Outlook:

Quick Take

We are in the exact same spot we were yesterday, trading slightly lower at the 6.42k mark. I’m looking to buy a break of 6600 or short another break of 6300.

We saw a huge amount of sell volume fail to break the lower resistance, which leads me to believe sellers are getting exhausted. Shorts are at approaching the April all-time highs, and a pop up would lead to a large short squeeze.

One thing to note (and trade on) is the August 23rd the SEC is ruling on the ProShares ETF. It’s unclear if they’re actually going to rule, as ProShares has told me personally they aren’t looking into an ETF at this moment, and that this application is just a holdover from December hype.

Either way, the SEC will either not rule, or issue a denial which would likely create a short-able opportunity. So pay attention!

Daily Chart

Fear & Greed

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

How The CEO of Coinbase Got Into Crypto

Founder and CEO of Coinbase Brian Armstrong was studying Computer Science and Econ in college when he took a year abroad in Argentina. During that time Argentina was undergoing hyperinflation, giving Brian firsthand experience of a failing financial system. Brian then went to work at AirBNB, which was working in over 190 countries, so he felt like he had “a front row seat into the difficulty of integrating with the global financial system.” In 2010, he found the Bitcoin Whitepaper.

I happened to read the Bitcoin white paper, which was written by this mysterious person who nobody knows: Satoshi Nakamoto... It definitely captured my imagination when I read it because it talked about how the whole world could have this universal currency that ran on the internet... It just grabbed me and I felt like this is the most important thing I have read in like five years.

This led him to go to very early Bitcoin meetups.

“I remember thinking 'Oh my gosh! I am too late to the game!' because there was already Bitcoin exchanges... this was the 2011 timeframe... I'd go to these meetups and the room was half [full of] brilliant computer scientist people and half completely crazy people…”

Soon after, Armstrong started to slowly build Coinbase over the weekends, dedicating every bit of free time he had to learning and researching as much as possible about Bitcoin. The rest is history.

A note: It seems to me there are three types of people in crypto. First, there are those who outright dismiss cryptocurrencies as a scam. Second, there people who become tangentially interested into crypto, and view it as a curiosity. Lastly, there are the obsessed. It starts as a remark from a friend, or a simple google search — and then you’re suddenly down the rabbit hole.

Personally, I know very few people who are in the middle ground. Either you get sucked in hardcore, or you end up drifting away. Crypto seems to be different than other passions. It’s implications are so huge, that if you’re believe in it’s future its hard to turn away.

All of the most successful people in the space I know are the ones constantly learning, debating and engaging. So cheers to obsessed, and cheers to the next Brian Armstrong — the person building the next Coinbase on their weekends.

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