2nd October 2021 > > Visa.

tl;dr

Visa continues to develop its crypto offering.

Market Snap

Market Wrap

That 3k rally in just a few minutes yesterday afternoon took out enough leveraged shorts to put perpetual funding rates firmly back to neutral across most exchanges and most coins. Which is nice.

And that equity rally. That is the power of quantitative easing – buy the dip remains the overriding modus operandi.

Occasional Series – A TRILLION-dollar coin

This idea has been floated before, but if you are not familiar with it, then here is my summary.

A little-known law allows the US Treasury to mint a new coin made from platinum to any denomination they want, and certainly with no relationship to the value of the platinum in the coin.

The treasury can denominate the physical coin as one TRILLION dollars, hand it to the Federal Reserve, in exchange for one TRILLION dollars of debt. Once that debt is owed by the Treasury to itself, it can simply be cancelled.

And of course, there is no reason why the treasury would stop at only one coin, allowing all the US debt held by the Fed because of quantitative easing (QE) to be magically whisked away.

This idea is apparently gaining traction.

An alternative would be for the treasury to issue zero-coupon perps in exchange for dated debt, removing the need to ever pay interest or repay principal, though theoretically the debt then stays on the government balance sheet.

When we reach the limits of QE, or markets lose all confidence in the Fed’s ongoing manipulation of the long end of the yield curve, one of these two options will prove to be money printing on an even greater scale than we see today with QE.

I don’t see where this ends, except for dramatically and irreversibly growing the wealth gap between those with hard assets, and those without. Which is not a particularly progressive outcome, in my humble opinion.

This cannot be good for anyone in the long run.

Curious Cryptos’ Commentary – Visa

Visa has long been a supporter of cryptos publicly acknowledging their potential to transform the financial services industry. In a statement earlier this year, BTC was described by Visa as “digital gold” which can only be seen as a ringing endorsement.

The company has announced a new initiative dubbed the Universal Payment Channel (UPC).

UPC will be a Layer 2 solution, settling transactions off-chain for later consolidation on-chain, which will connect many different networks. Catherin Gu, Visa’s Global CBDC Product Lead, explained the concept thus:

“Think of it as a “universal adapter” among blockchains, allowing central banks, businesses, and consumers to seamlessly exchange value, no matter the form factor of the currency.”

The only downside I can see is that Catherine’s job title specifically mentions CBDCs (Central Bank Digital Currencies) which, as all regular readers know by now, are not cryptos at all. But we will let it lie for now.

Developments like this will embed usage of cryptos deep into our daily lives, making it as easy to spend cryptos as it is to use your debit or credit card since the rollout of tap and go.