The Emerging Crypto Establishment

Economics, Geopolitical, Premium POM76 Comments

New American-Sino Monetary and Geopolitical Relations

JC Collins

The empty streets, homes, and commercial spaces of China’s ghost cities are starting to come alive. The vast building of empty cities by Chinese civil and cultural planners over an almost two decade span was considered by most in the West to be an example of overbuilding in a closed economy, an economy which was decades away from functional levels of maturation. Few considered the possibility that China was engineering one of the greatest socioeconomic plans in human history.

Long-term POM readers will remember that this was one of the core themes in the early years of the site. China’s rural population has always been a problematic issue for the policymakers in Beijing. Throughout its history Chinese farmers have repeatedly overthrown their Sino rulers through violent revolution. The benefits of a massive lower class which supports the alternative need for a viable and content middle class.

The plan built around the construction of the ghost cities was that those urban centres would be populated by 100’s of millions of the rural population. Such a massive domestic migration of citizens does not happen over night. But it has started, and the plan is dependent upon another incremental strategy which China has been working on for decades.

The internationalization of the Chinese renminbi has been another topic which we have been discussing since the beginning of POM. China’s currency is most often referenced as the yuan, which is in fact the unit of measurement. The name of the currency is renminbi. The best way to understand the two names is by considering the names used for the British currency, which is also referenced by its unit of measurement, being the pound. The name of the actual currency is sterling, or more commonly used “pounds sterling”.

Chinese monetary authorities have been developing pathways for the internationalization of the renminbi. These have mainly been built around the off-shore renminbi, and less so with the on-shore renminbi. The off-shore provides China a buffer between its domestic markets and potential manipulation from foreign markets. Though China is now slowly beginning to open its domestic capital markets to foreign investment, but only strategically and incrementally so.

At some point in the future the off-shore and on-shore versions of renminbi will be consolidated and the Chinese capital markets will be fully opened to large foreign capital in-flows.

An increase in use of renminbi in the international monetary system and world financial markets will allow China to shift its economy from the existing trade exporting model to a trade services model. One is the manufacturing and exporting of cheap goods which is possible because of the low valuation of the renminbi. The other is the expansion of financial services and products which are denominated in renminbi, such as the recent yuan denominated crude benchmark.

The increasing internationalization of the renminbi, which has picked up pace over the last year, will contribute to the development of a domestic economy structured around consumerism, which in turn creates the need for a vibrant middle class. Whether the developing middle class and consumerism is a direct result of the internationalization of the renminbi, or the growing middle class created the need for enhanced currency internationalization, will have to debated decades from now, when the totality of the plan and all facts have been realized.

The position I have maintained is that Beijing will always be under threat from a large rural population, and as such, the need to internationalize the currency and build a middle class is prominent in all decision making. The internationalization of the renminbi has less to do with replacing the dominance of the USD and more to do with ensuring a stable political environment in China. A stable China aligns with the needs of the international banking interests and the fading Anglo-American establishment.

Chaos in China will not benefit anyone, and all have a vested interest in seeing China succeed with its socioeconomic planning.

The other aspect of renminbi internationalization is its expanded use as a reserve currency. The accumulation of USD in the foreign exchange reserve accounts of central banks around the world has reached epic levels. The first step to correcting this systemic imbalance is the diversification of these foreign exchange reserves. But the ultimate objective would be to eliminate the need for foreign exchange reserves altogether.

It has been my position for years that a reserve diversification away from USD dominance would procede the full reduction and elimination of reserves, with the understanding that China has zero interest in replacing the large accumulation of USD with the large accumulation of RMB.

China has been extremely careful in not allowing its domestic capital and financial markets to be exposed to foreign influence which has been structured around the USD. While it maintained a trading band exchange arrangement with the dollar, the People’s Bank of China was well aware of the threat which existed around total dollar dependence. Though it holds the largest foreign amount of USD denominated debt, the dollar has not been introduced into China’s domestic economy.

Outside of the Special Drawing Right (SDR) of the International Monetary Fund, there has been no supra-sovereign asset which could replace the functional international role of the USD. This has changed with the development and growth of the crypto asset market.

Ripple CEO Brad Garlinghouse recently made a comment during a question and answer session about its digital asset XRP providing the opportunity for connectivity between some isolated domestic capital and financial markets and the larger international markets. Understanding everything we reviewed above can do a lot to bring us a deeper understanding of Garlinghouse’s comments.

Consider that XRP serves as a bridge asset between all fiat currencies and crypto assets. Now consider that China has been expressing interest in XRP and the products provided by Ripple. Products such as xCurrent, and more specifically xRapid, which uses the crypto XRP in its bridge asset function, can facilitate the exchange between fiat currencies, such as the USD and RMB, without the influence of one over the other.

Both the Federal Reserve and the People’s Bank of China have been in communication with Ripple. This should not be considered a coincidence, nor should it be thought that these communications have taken place in isolation and separated from one another. There is a much bigger plan unfolding in the coming months which will allow China to utilize XRP and xRapid to open its domestic markets to foreign capital without the risk of influence from American policymakers, or exposure to USD volatility.

Whether Garlinghouse was referring to China or not will have to be a follow up question. But what is being implemented is likely a new American-Sino Establishment built around the expansion of the crypto market. The Franco-Anglo Establishment was built around the international transition from the franc to the pound. Next came the Anglo-American Establishment which was built around the international transition from pound to dollar. Now comes the American-Sino Establishment, which will be built around the transition from fiat reserves to frictionless crypto asset transactions around the world.

This new establishment will be the first of its kind which isn’t focused on moving and maintaining wealth associated with the spread and debasement of one nations domestic currency. It will be focused on geopolitics as an extension of economic competition and bringing resources to market. Removing the corruption associated with the abuse of domestic currencies from this process will be a first in world history.

Trump has done a lot towards this future by removing the deep state control over North Korea. The ending of the Korean War after seven decades is a monumental achievement which needed to happen in order for other pieces to be positioned. A resolution between Taiwan and mainland China is next in line. These are the geopolitical representations of the monetary transformation taking place just under the surface.

The blockchain services offered by Ripple and the adoption of its XRP crypto asset are much more developed than is widely known or acknowledged. America, as the world’s largest debtor nation, and China as the worlds largest creditor nation, both maintaining the largest trade deficit and trade surplus respectively, will have to agree on the structural framework for a new monetary architecture, or ecosystem. With Ripple providing that decentralized and frictionless service, both nations are on the verge of transforming the world’s monetary and financial realities.

The social credit blockchain grid is descending on China’s ghost cities as the test run for the societies of tomorrow. Transforming 300 million rural pheasants into a vibrant middle class is no small feat. But with worldwide liquidity about to expand on top of the crypto ecosystems, and the seamless movement of value around the world, with no mind to borders, while nations maintain their own unique sovereignty, we can begin to glimpse the first signs of a much bigger future than any of us could have imagined. – JC

This article is copyrighted by POM Media©2017. As Premium content permission is not given to be copied and re-posted.

JC Collins can be contacted at

76 Comments on “The Emerging Crypto Establishment”

  1. Hi JC, Great post! First of all sorry for my bad english, I’m from Madrid, Spain.

    I’d like two ask you two questions:

    1. Why do you Think Ripple will ‘win’ over Stellar?

    2. What are your thoughts about Ethereum?

    Reguards from Spain!

    1. Thanks Spain.

      First question, because XRP and Ripples products are being embraced by central banks, commercial banks, and many other payment services. Stellar is no where near that level of implementation.

      Second, I like Ethereum, but will probably like Ripples Codius better.

      1. I thought they abandoned that a while back. It would be nice to see Ripple utilize that. It’s almost as if they will be a one size fits all. I see now why you said XRP will be the one to rule them all. Amazing…or genius.

      2. “…what if the SEC/CFTC deems ETH a security and XRP not a security? I think this is possible for two reasons.

        1. ETH having had conducted an ICO
        2. ETH developers can technically manipulate the price of ETH, in that they can tweak the reward schedule for mining activities which would influence supply and ultimately price.

        To take it a step further, I ask the question if ETH is a security, then what does that mean for all ERC-20 tokens, maybe they are deemed securities by virtue of being built on the ETH block chain, maybe not.

        IF this were to unfold I could see a few things playing out in XRP’s favor.

        1. ETH (and possibly all ERC-20 tokens) lose their USD pairing.
        2. ICOs and existing ERC-20 tokens would need a new home and maybe Codius / XRP blockchain is that home?
        3. CoinBase would be forced to reconsider their support of ERC-20 tokens.
        Just a theory, but I think real potential exists here, and if this should unfold I see a huge up side for XRP.”

  2. Can anyone recommend an easy way to buy XRP/Ripple currency? Tried unsuccessfully for the last two months and I wouldn’t consider myself ignorant…please help

    1. I struggled with this myself, being less adept at the crypto technology than other readers, I’m sure. Several posts ago JC and others discussed this very question and offered a few different platform alternatives. Among those, I found relatively straightforward, and after completing their requirements for a U.S. citizen I was able to make a wire transfer and conduct a trade. The folks at Kraken actually helped me out via email. I’m sure others will have different suggestions, this was just my personal experience. Good luck and remember to only speculate with money you can afford to lose AND if you ever sell any position at a profit, there are very real-world tax implications. Steady as she goes.

    2. Hi everybody , Hi Nereemiko

      I don’t know where you live , USA ? Europa ? Somewhere else ?
      I just know two great places where it’s easy to buy XRP , and there are located in Europe . The first one is in Austria , and I ‘m not sure but I think you can buy with $ or Euro :

      The other place is located in Netherlands , where probably you can use $ or Euro :

      There’s a lot of websites where you can buy XRP , but I stick with those two as I feel safe and secure when I do any transaction in the crypto market .

      Hope it can help !

    3. Hello Nereemiko, the easiest way I know of right now is through an app called Uphold. There is a setback of not being able to export them to a hard wallet. But there is also trending tech in it also. Like paying someone right from the app via email, exporting fiat currency to your bank account, transferring value between fiat, precious metal and crypto. They are working on a wallet export method right now.

      Another method is to purchase ETH through Coinbase and then sending that ETH to Exodus Eden and then exchanging those ETH within the Exodus Eden wallet to XRP. Coinbase is fairly easy to use but its losing its luster pretty quick. The Exodus Eden app is really nice though.

      Both methods require a sign up process and verification.

      I keep crypto for investment on a hard wallet and some in Uphold for tinkering with or sending to folks. I think paying for goods will eventually be like this…paying right from the phone via barcode or something like Apple Pay, Samsung Pay, Google Pay and such.

      You can check the comment section here for links and further explanation.

      1. Just a tip on Exodus exchange: I found out (the hard way) that using the handy in-app exchange feature does not give very good exchange rates. It is far better to use the Shapeshift website directly.
        Overall the Exodus app is awesome but they are less than transparent about the exchange fees/commission.
        So, to add yet another option for XRP purchase:
        1. Get a wallet which supports XRP (Exodus Eden is one example)
        2. Buy some bitcoin, ether, or whatever
        3. Set up an exchange transaction on the Shapeshift site and send those bitcoin/ether to it
        4. Shapeshift performs the exchange and sends the XRP to your wallet.

  3. JC,
    Great article. Nice to see you tie all of your previous thoughts/predictions about the re-engineering of the international monetary system into the present and future regarding Ripple and it’s potential. Certainly, I see the value of Ripple as a replacement to the SWIFT system. And, quite frankly, potentially any other business application where transferring of value needs to occur quickly and affordably. So, potentially I can see businesses holding XRPs in their accounts to facilitate their need for fast and affordable transfers of value? Yes/No? But, In order for xRapid to become the network and framework for moving value from point A to B, don’t you think regulation and stabilization of the crypto markets have to occur first? And, more importantly, don’t you think regulation would be good for Ripple in the long-run if your thesis is correct? To me, there are too many coins being mined for specific, proprietary applications where Ripple could be used instead and regulation will cull the herd? As always, I would appreciate any thoughts or feedback you might have.

  4. These two paragraphs jumped out at me when I was reading an article…

    The company said XRP’s growing volume was partly “driven by the extension of more than $16 million in new XRP loans from XRP II, LLC to market makers,” adding that “A significant pain point for digital asset liquidity providers is the need to purchase or borrow assets in order to provide both bids and offers.”

    These developments support the view that XRP is ideally suited to become a liquidity pool in addition to its role as a unit of transaction or investment asset.

  5. “The social credit blockchain grid is descending on China’s ghost cities as the test run for the societies of tomorrow.”

    This is quite scary. The society of tomorrow aka total conformity and forced acceptance of everything the government says or does? A new massive witch hunt when people get to improve their score by reporting political mishaps of friends, family and strangers?

  6. Dear JC:

    You state that “Trump has done a lot towards this future by removing the deep state control over North Korea”.

    It’s a monumental achievement and is fair to recognize him, undoubtedly.

    I want to point out as well the clear converging role that played Pope Francis with the same objective.

    – It is worth remembering his apostolic journey to the Republic of Korea on the occasion of the “6th Asian Youth Day” from August 13 to 18, 2014 =>
    – Especially, the prayer for reconciliation in the Korean family during the mass in Cathedral of Myeong-dong (Seoul) on Monday, 18 August 2014 =>
    – That prayer was renewed last wednesday at the General Audience in Rome with an appeal to the parties of the Inter-Korean Summit to become “artisans” of peace =>

    As you say, JC, there are many forces pushing under the surface and also in the light of day for the monetary transformation taking place.

    PS: Maybe it’ll be a good time to remember that Ripple started as an open software project =>
    And also to reread a Spanish translation of “Why Ripple ?” from a RippleWiki’s page dated Jun 17, 2011 =>

        1. With all that is going on I often ask myself. Why am I wasting my time exploring the power struggle between the Vatican and the SMOM? When I should be spending it buying XRP, I got the money now, and the encouragement to realize it is the small investors like me that will give the XRP the confidence it needs to forward.

          I really don’t have a dog in the fight, my faith lays way outside the ring these high hats bite each other in.

          Following the Double headed eagle string of thought proposed on the POM it seems to me that the great bird has been winged with light shot, with this latest move. The German lang has been been wounded. The heat is upon the Von.

          We will have to see about the see.

          Then last time the SMON took such a hit it was from the outside by a Frenchman, a Nepoleon. Was it done this time by another Frenchman from the inside, a Lifette? Jean Lifette has only been The “Prelate” a couple of three years. I thought better of him.

          Oh well, I’m sure this isn’t the first shot the grand old bird has taken.

      1. Dear Pieter:

        I always try to remember that Pope Francis comes from the South.
        And also that he’s very consistent with this origin.

        Imho that’s why the North Atlantic and Western European region elites consider him an outsider or intruder, in a very similar way to what happens with President Trump.

        It seems to me that this Pope is more oriented to the age of Aquarius than to the age of Pisces, to say it in Wayne’s perspective =>
        Maybe Francis’ pectoral cross image and design can help me explain the sense of my prospect =>

        Despite some not fully informed viewpoints, Pope Francis deeds and teachings have many elements convergent with the policies carried out by President Trump.

        Of course, there is a long way to go in the future.

        Cordial greetings

        1. Dear Rogelio,

          I must disagree with your following statement:

          “…Pope Francis deeds and teachings have many elements convergent with the policies carried out by President Trump.”

          Pope Francis is a Globalist and President is anything but. I am not certain where you get your information my friend, but I think you are either confused with your facts or you are besotted with the Pope Francis! In any case, I may wrong which I am always grateful if you could convince me that Pope Francis is a Nationalist. Wihs you a good Sunday.

          1. Dear Carpe Diem:

            Excuse my delay to answer.

            I believe that I’m no more confused nor captivated by Pope Francis than you are by Shahanshah Mohammad Reza Pahlavi.
            Reading your comments it seemed to me that you appreciate Reza Pahlavi role along modern Persian history and you’re proud of him.
            We, South American people, appreciate Pope Francis in a serene similar way.

            I wonder…
            Which nation is the object of President Trump’s Nationalism ?
            His own nation, USA, with no doubts.
            Which nation is the object of Pope Francis Nationalism ?
            His own nation, Argentina; and in a wider sense whole South America, no doubts.

            So, “the objects” are not the same but this doesn’t mean divergence, on the contrary.

            National identities have a very high value for Pope Francis and for P. Trump (also for us).
            The value of national identities can’t be asserted nor exercised neither evolve “ad infinitum” against other’s national identity: anyone that loves his nation can comprehend -sooner or later- that the others also be loving their own nations.
            That’s why Pope Francis mission as universal pontiff of Catholics is compatible with Nationalism and doesn´t mean Globalism.
            That’s why President Trump Nationalism is also compatible with his status as universal statesman; he not merely lives inside a domestic bubble and this doesn’t mean Globalism.
            I’m surprised by the insistence of some people who aren’t Catholics and in many cases they even aren’t Christians, launching attacks to Pope Francis aiming to disqualify him.
            These hawkish attacks appear much alike those that the ‘old establishment’ launches daily against President Trump, don’t them ?
            Why ?
            Is it due to religious reasons ?

            It’s obvious that the religious reasons can’t be understood isolated from the historical context.

            I came to the conclusion that the key is the origin: the Pope who comes from South.
            The problem is not Pope Francis himself: “We, Southern Peoples, are the problem and the context”.

            What do you know about Southern Peoples ?

            Do they have history ?
            Do they have culture ?
            Do they have future ?
            Are they merely shadows?
            Do they even exist ?
            Do they have rights to put the man on Peter’s chair?
            The current monetary system is enslaving and killing Southern Peoples.
            We do need to re-engineer our currencies.
            We do need a new monetary system.
            We believe that also Francis will help us to achieve.

            Though I hope I’d explained my prospect a little better, I’m not trying to convince you: this is a friendly conversation.

            Kind regards
            PS: I think, Carpe Diem, that it could be useful to reread Francis’s words when -two years ago- he visited a joint session of USA Congress. Maybe we’ll find there new elements to focus the discussion =>

          2. Thank you Dear Rogelio,

            It is always a pleasure to exchange with you, my friend.

            I appreciate your observation on my interest and appreciation to our late King, Mohamad Reza Shah Pahlavi who is now deceased for 40 years. He is dead but I still admire him, in the same way, the Jesus Christ is not alive but you (and me) still admire him!

            In any case, I am not sure how a Nationalist leader’s role has anything to do with a religious leader, such as Pope Francis or any other religious leader! My objection was to your comparing President Trump with the Pope. I am not certain why you are not seeing the differences, but we shall discover.

            A Nationalist leader has the interest of only one nation under his leadership whilst he may respect the autonomy and national interests of other nations. A religious leader, on the other hand, does neither have the responsibility nor the people for the task of protection of one country or people from foreign enemies. In the case of Pope Francis, he is supposed to take care of the spiritual needs of the people that may reside in many lands and nations. As such, the Papal position is not responsible for the education, feeding and making jobs or defending a nation. Yet, he can intervene and act as a peacemaker in case of a war. The papal position is a combination of a head of a state as well a religious head. In other words, the Pope is a King as well as head of the Church. Therefore the meaning of Secularism holds no meaning and in fact against the principles and religious dogmas that he operates under. The Pope is, therefore, a globalist and not a Nationalist.

            I am not sure why you tried to defend that the Pope for something that he is not i.e. a Nationalist. The fact of the matter he may be a Nationalist as an Argentinian but not as the Pope, simply because he is supposed to hold unbiased views as he has millions of people who see him as their King. There is a similar case with the heads of globalist organizations such as the UN who must remain unbiased towards their own country of origin

            Also, I am somewhat unsure however as to what you stated about the Pope being a “Southerner” and he comes from Argentina. You seem to be putting entire South America in one box and assuming that the people are all one big happy nation. I know this is not the case! I used to hear and read about that region, nations and as far as I recall there are at least two major languages (Spanish and Portuguese) and possibly hundreds of indigenous tongues and dialects. Surely, not all these people are Catholic and somehow, your boxing the entire continent somehow makes the Pope as some kind of administrator and governor of these people! The Pope is for Catholics and that’s all fine, I have no problem with that.

            I have never had the chance to visit any of these great nations of S. America but as far as I know, each of these has had their own growing pains and issues to resolve, mainly post-colonialism and Soviet infiltration during the cold war era, Iran had an exact problem. I also appreciate that Argentina is now dealing with a 25 percent inflation and 40 percent Interest Rate! I also recall the bank run many years ago and the Falkland war. However, what I am not certain about is how you are suggesting that the Pope can resolve such problems such as banking etc! I think that is a hope and I sincerely hope you get what you ask for, but I personally would not bet on that as the huge continent is very complex and if anything it needs nationalist leaders with local knowledge and love of the land they represent. It would be a great dream if the Pope clicks his holy fingers and the Argentinian Interest rates to drop to 2 percent but that’s never going to happen. There is more hope in Cryptos doing such herculean task though! 🙂

            As far as I know, he is a Religious Leader that was chosen under very unusual circumstances to be the new Pope whilst there is a living Pope! This has not happened in a few hundred years. I also know he is no ordinary Pope, he is a Jesuit, a Military/Intel religious warrior. As such, I find it hard to accept the comparison you are making of the Pope and President Trump. Trump is a Christian and he does not preach and his followers are his followers because he is helping rebuild America.

            I also read the Pope’s speech at the Congress which was the first in US history. His hatred of Trump since 2015 was extremely obvious and I never forget when said: “building a wall is Anti-Christian”. Many people commented that the Pope should bring the walls of his Vatican castle down first. Again, I have nothing against the Pope personally but reading his speech made me realize he is a Populaist leader who appeals to the poor and needy! That sounds very Socialist to me.

            In his speech, there was no mention of the founding father of the United States, George Washington which is shocking for a world leader to make a speech and omit the person who literally made that nation from scratch!!

            This following sentence made me ask the question: “How many Muslim refugees or for that matter, Vatican has actually absorbed?”…The Vatican is a huge sumptuous palace and very big and taking a couple of hundred bearded Muslim men will not disrupt the homogeneity of the city-state, or will it?!

            “Our world is facing a refugee crisis of a magnitude not seen since the Second World War.”

            The Pope ( and George Soros) propose that the US, Germany, UK, France and the whole of Europe should take Muslim immigrants. I think the Pope should start with the Vatican first…

            Wish you a great evening.

  7. I stretched back and I hiccupped
    And looked back on my busy day
    The social credit blockchain grid ????
    God, there’s got to be another way

    Roger Daltrey

  8. Nice piece JC thanks for such an informative essay. Do we have any further inclination of the Crown Beast influence within China?

    Along with American-Sino exchanges of goods/services and China’s One Belt One Road project for exchanging goods/services, the developing ASEAN region seems another great fit for XRP. It would allow those countries to exchange goods/services and would be very beneficial for folks not able to get to a bank. China has a lot of RMB loaned out around the world, could countries utilize XRP in the repayment process or is that another sort of deal?

  9. “Future Crypto Exchange by SBI Holdings will Use Ripple (XRP) as its Primary Currency”

    “Asian Conglomerate Tencent Set To Inject Huge Sum into Ripple”
    “Sources have confirmed that Tencent will offer the quoted sum of 2 billion dollars and transform them into XRP coins over the period of upcoming 12 months.”

  10. JC,
    I can’t connect the dots to your theory that XRP will become the supra-sovereign currency for the global economy. How does it go from a network that will move money/value fast and affordably to a currency that will be the single standard of value/wealth for the world?
    Thanks in advance for your reply.

    1. RJZ, think outside of the box. XRP will be more than just a reserve currency. You may be conflating two separate parts of the Ripple and XRP dynamic. Ripple has developed the interledger network (Internet of Value) which is in essence the XRP blockchain ledger. The payment services offered by Ripple, such as xRapid, xCurrent, xVia, and soon to be released xPool, can run separate from XRP, but work best with XRP. The digital asset XRP is autonomous from those services. Meaning it doesn’t require Ripple to exist.

      There may be varying standards of value, or wealth, because no nation or bank will have to accumulate large amounts of one nations currency in their foreign exchange reserve accounts in order to participate in the global economy. XRP will be used as the method of exchange for all currencies and digital assets. With the stock exchanges starting to show interest, XRP may also be used as the means of transacting those assets. Some people and institutions will choose to hold XRP, but no one will be forced to in order to interact in the ecosystem.

      It’s a thing of beauty really. The demand for XRP will be huge. Does this help?

  11. JC,
    You’re the man! Thanks for the reply. Greatly appreciated! Yes, it does help. And, agreed. XRapid with XRPs is a thing of beauty. Great benefit for fast and affordable exchange of value. The dots I’m still trying to connect is this. The world runs on debt/credit. Especially sovereign debt. How does the system correct itself after 80 years of USD dominance, US hegemony and US debt? I just don’t see how freeing-up liquidity through XRapid/XRPs will solve this problem? Or, are they even connected?
    If you can shed some additional light on this for me, I would appreciate it!

    1. There’s somewhat of a connection. The US debt has been expanded in a large part because of the international demand and use of the dollar. The practice of fractional banking and fiat currencies has caused the debt explosion. Crypto assets are something much different from fiat currencies. Fiat currencies are always in a state of devaluation through inflation because they exist through a process of debt creation. Cryptos are not created through debt but increase in value the more fiat currency is invested in them. The best way I’ve found to visualize this dynamic is to imagine all debt being siphoned off into the crypto market as it expands. The velocity, valuation, and amount of fiat currency in circulation will decrease proportional to the increase in the expansion of the crypto sphere. It’s really quite brilliant when you set back and consider the full chess board.

      1. Thank you JC,

        This was the best summary for me to get my head around the relationship between the Crypto world and the Fiat money. In fact, I have saved your excellent explanation of how these two vastly different currency interrelate to one another for review again. Whilst reading, I pictured of a balloon that blows naturally with more air going in, increasing in value (Cryptos), and one with the opposite effect with more air going in (Fiat) with the contents devaluing!). Hope I got that right!

        It seems, that banks are lending money that they may not physically have in the current system and this is how the inflation of the debt system has occurred. Even worse, the debts have been bundled up and sold wholesale to banks and corporations. The current system is so toxic as well as explosive.

        With my very limited understanding of the concept of the Fiat and Fractional reserve system employed by the banks, how does the idea of Lending will operate in an all-Crypto world?

        Are we looking at a radically different methodology for providing loans to people in a Crypto world? If so, do you have any idea of how it may operate?

        Grateful for your thoughts JC,

        1. That’s a bigger question. The answer will depend on the larger transformation within our society. Could there be enough value and liquidity for everyone to just purchase things according to their own personal means without the need for loans and debt creation? Maybe. People will always want more than they can have, so there will likely still be demand for crypto denominated loans. What these loans are, such as the structure and payments methodology, will evolve into something which may not be visible right now. Blockchain and individual tokens, which I presented as fiction in a previous post, could be engineered to accommodate the need for crypto debt. Maybe every persons own unique token starts at a baseline value. The token appreciation or depreciation will be determined by each individuals habits and lifestyle. But this is just me guessing and imaging how this future system could work. The one thing I do feel very certain about, is that governments and banks will be getting out of the money creation business. Value will be created though its association, and correlation, with real world production. That is the big potential and dream of blockchain and crypto.

          1. Thank you JC,

            If Cryptos will achieve this alone, we may witness a new age perhaps, as all wars and frictions may have stemmed from the control and creation of money.

            “The one thing I do feel very certain about, is that governments and banks will be getting out of the money creation business”

            Human ingenuity if freed from the control cattle grid of debt will be stunning. I hope and pray…

            Thanks again JC, for the great and highly informative posting and excellent replies.

          2. That makes a lot of sense JC. It would answer the peoples call for a moneyless future. When born we could be given a token preloaded with a value which would rise or fall based on one’s actions. This would satisfy that experiment that the Swiss shied away from for fear people would become lazy and provide a value incentive to be good productive people. It could also potentially eliminate the governmental retirement and pension programs even because people would carry the token and its value throughout their lifetime.

            One thing for sure, we will most likely be different people by the time this is fully incorporated so to think of it in today’s terms seems to confuse the heck out of us. The unknown is unknown until it’s finally known, and even then by default of “thinking we know” we really don’t know at all. Quite the paradox but sure is fun to play with.

  12. JC,
    OK. Got the US debt creation due to the role of the USD. And get the devaluation/loss of purchasing power of fiat currencies due to debt creation and inflation. And get the increased value of crypto assets due to the amount of money invested in them. Don’t get the debt being siphoned off into the crypto market as it expands and fiat currencies in circulation decreasing proportional to the crypto sphere? Won’t liquidity decrease under that scenario? Not seeing the full chess board yet…

    1. Liquidity will increase dramatically, especially after trillions of dollars are released from Swift accounts and foreign exchange reserves. This freed liquidity will poor into crypto assets. Being that crypto assets are not created through a debt mechanism, the debt associated with fiat will begin to decrease and have less of an impact on the financial systems. Granted, if you own a loan, you will still own a loan. We are referring to the point of origin of value which exists today. That point of origin is debt. It will take years, and maybe even decades to bleed all the debt out of the system. There will always be a healthy level of debt on the personal level, but there should never be systemic sovereign debt which can erode the international financial and monetary markets. Don’t think of crypto as currency. Don’t think of it as securities. Don’t think of it as bonds. Crypto is something new which will ultimately become something which is the evolution of all of those things.

  13. It is all a bit confusing.

    “It was the best of times, it was the worst of times, it was age of wisdom, it was an age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, It was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—In short, the period was so much like the present period, that some of it’s noisiest authorities insisted on it’s being received, for good or for evil, in the superlative degree of comparison only.”
    Dickens, A Tale of Two Cities


  14. JC,
    Got the liquidity release out of reserves. Money moving around quicker, cheaper. All good for freeing monies and aiding global growth and lending. So, how does Ripple and other digital currencies achieve intrinsic value? Or do theyt? Will digital coins simply be like gold and silver coins/bullion and gain their value that way? Just trying to understand it all before I invest. And hopefully, these questions will help others understand better as well.
    Thanks for your replies. Greatly appreciated!!

    1. Maybe when people begin to understand the utility of Ripples products and the XRP asset by extension, they will demand to possess it. Demand creates a rise in value.

      Looking at it from a different angle even if it stays at 1 USD in today’s value of the USD, as the USD decreases in value XRP should stay where it is which would then make it more valuable based from a future devalued USD standpoint.

      Dang that’s confusing. But when we think of it taking about 5 or 6 RMB to purchase one XRP today and the USD will most likely devalue to at least an equivalent to the RMB wouldn’t it take 5 or 6 future devalued USD to purchase one XRP? Thus we would have gained value wouldn’t we?

      Today I purchase one XRP for one USD. A few years down the road I sell that one XRP and put 5 or 6 USD in my pocket. Am I completely deranged or is this a possibility?

      1. Well Dane, I’m afraid you are indeed deranged 😉 if in a few years you exchange 1 XRP for only 6 dollars!! For it will be worth orders of magnitude more. But obviously you know that, as elucidated in your vision below.

        Not sure whether you caught this news a few weeks back:

        It is one of the first real world use cases, which is usable by the general public. And Santander is the largest EU bank.

        1. Thanks for seeing the humor redjon. I wish I had the skills to create a phone app that could utilize Ripples xVia API and pay with any crypto asset from its respective wallet into whatever fiat was needed to pay at the register with the phone through the NFC chip. Of course we would be exercising XRP’s lightning fast exchange speed and the Interledger protocol native to the XRP asset to exchange and pay in real time at the cash register accepting whatever fiat they accept. This would really take off with the growing amount of people traveling around the world. I disagree with the article stating “Apple interledger” because I believe and I may be mistaken but to my knowledge Ripple’s XRP is the only interledger thus far. In fact its this interledger protocol which allows XRP to solely be able to exchange into any asset the planet knows.

          Currently if I wanted to utilize a crypto app, currently I’m using Uphold, I would have to do something like the following.

          1. Move a crypto into USD within Uphold.
          2. Export the amount of USD needed to my bank account.
          3. Pay with my debit card.

          I think Apple would benefit tremendously by utilizing Ripple’s xVia API in conjunction with Ripple’s xRapid (XRP asset) in their Apple Pay applications. This would collectively make one payment protocol for them to utilize globally which from a business perspective would streamline that section of their business by consolidating multiple regional unilateral processes into one global multilateral process. 🙂

          The future of Ripple is simply amazing!

          1. Hi Dane, crypto debit cards are coming, if not already here. There was supposed to be a litecoin card by now but that project fell through. There are plenty of others working on this. Wirex is an app which seems similar to Uphold, although no XRP support currently. I think they are about to launch physical debit cards in some countries. If Gavriel is still around perhaps he can confirm this and the differences with Uphold.
            However, debit cards seem like an intermediate step – as you say, mobile crypto payments are the real goal. Apple, Tencent and Alibaba will all implement this I’m sure, just a matter of patiently awaiting the development.

  15. “Amazon AWS now offers Blockchain and Ethereum is a Winner”

    “Don’t listen to the blockchain anti-evangelists, they do not know of what they speak. The truth is there has never been so much blockchain adoption among enterprise and new related startups mostly related to cryptocurrencies.”

    “Amazon wants to make it easier for developers to create projects based on the blockchain technology underlying bitcoin and other cryptocurrencies, with “blockchain templates”.”

    “Introducing the AWS blockchain template for Ethereum and Hyperledger Fabric”

    This one required the use of chrome’s translator.

    But to exchange or trade with other cryptocurrencies or fiat they will use Ripples products because it makes business sense. Faster and cheaper with no nostro or vostro accounts needed…

  16. “Bank of England hires Huw van Steenis in top adviser [blockchain] role”

    “Blockchain, the technology behind cryptoassets such as Bitcoin, allows for encrypted information to be transferred within a closed network.”

    “It is also known as distributive ledger technology (DLT) and has an increasingly wide range of potential applications in the financial sector. Mr van Steenis is understood to be an expert in this field.”

  17. This is the magic I see in Ripples XRP product. Please excuse the rough edges, the vision is just bursting to get out so I’m just throwing it out on paper…lol, keyboard.

    Roll back the clocks to the beginnings of mans bartering days. If I needed something I would trade something of value that I produced for what I needed from what someone else produced. This worked until such a time that the people providing what I needed no longer needed what I produced.
    Coin came to be as a universal unit of barter/trade because this currency typically would never be over stocked and rejected for trade. Then we grew beyond what our region could provide so we reached out across regional borders for trade (international trade) but this presented the problem of different regions currencies having different values and this gave birth to the money changers who exchanged currencies for exuberant fees.

    As todays global world recedes back into regional protectionism we provide the opportunity for money changers to capitalize on the exchange process. Introduce a new universal unit of exchange called XRP. XRP is the only current unit of account that is completely universal regardless of anyones currency because it has the ability to pair with any unit of value we have. No other unit of account can do that.

    I believe that this is the reason so much resistance and negativity is being spread around about XRP. But XRP is not going away so little by little the world is beginning to see XRP’s value as they begin to understand its utility and internet of value. Once the majority understands this the tidal wave and tsunami will take over and the momentum will drive people to XRP which will create the demand that will push the value of XRP up.

    This is what I envision. Only we can make it happen by placing confidence into it because that’s all that puts value in any unit of account really. Peoples confidence. Gold is just a hunk of some sort of metal but people put confidence in it which gives it value. The USD is just a piece of paper whos value is based on the confidence people put behind it. So I believe that cryptocurrencies will be or are no different. Thus when folks understand the universal utility of XRP confidence will build and as confidence builds the value will rise.

    Unfortunately most will never see the true value of Ripples XRP product which is how it frees the world of the money changers. My confidence is in Ripples XRP.

  18. “Trump praises China’s Xi as U.S. team arrives for trade talks”

    “U.S.-based trade experts said they expected Beijing to offer Trump’s team a package of policy changes that may include some previously announced moves, such as a phase-out of joint venture requirements for some sectors, autos tariff reductions and increased purchases of U.S. goods.”

  19. Explained brilliantly Dane,

    I agree with the way you Ser the emergence of XRP. What is not clear to me is regarding the universality of xrp in terms of how each national currency is equated to how many XRP. Let’s say Iranian Rial which currently stands at 60000 trials to a USD which based on many factors relating to the economic performance of Iran. So it is USD that is the gold standard I’m assuming to be the universal token. Am I correct in saying that it will be XRP that will replace USD? If so, how will that be measured against any national currency such as Rial?

    1. I wouldn’t think of it as replacing the USD per say. The world was already moving towards a suprasoverein unit of account like the SDR or the Bancor proposed in the Brettonwood meetings back in the 1940’s. This suprasoverein unit of account would have been comprised or backed by a basket of regional or country currencies not just one. So to say it would replace just one of those currencies in that basket would be misleading. The USD is on its way to losing its singular world reserve responsibilities and will share that responsibility with the basket of currencies that will comprise the new suprasoverien unit of account whatever it may be. The XRP seems to be the best choice for the world right now and is the only one to be able to exchange with any other through its interledger protocol.

      Here are a few charts pairing XRP with different assets.

      Then here are a couple charts pertaining with IRR/XRP.

      Hope this helps.

  20. WOW…
    Thank you so much Dane,

    Not only you answered my question but you actually made me understand exactly (I hope!) how the mechanism will work for inter-currency exchanges between different currencies. So in effect, XRP is the actual unit of exchange and this will remove any other currencies such as USD to be used as both domestic and international trade currency. In its place, XRP with its Blockchain tech. will be the platform where nations and people do their money exchange. This is just beautiful…

    In fact, the XRP chart helped me immensely in appreciating the scale and possibilities of this system. It seems, there has been already a real and solid foundation for XRP to be used as the platform of choice for international exchange. This is very impressive indeed and really far more than I expected. The dynamic variation of national Currency to XRP is really great but I am not sure how they have been devised. Looking at the USD to XRP, I can see, the USD price of XRP to have been used which makes sense but for other nations, the XRP price is not based on the respective economic metrics like balances of trades and the national wealth etc. So, perhaps there may be objections of countries on the XRP value of their currency – just guessing!

    This was more than I expected my friend and thank you for making me understand. I really appreciate your time in explaining it.

    If I may be a nuisance and ask another question! How does this relate to the actual unit price of XRP once this system starts to operate as the real deal? I am asking this from a very selfish perspective as I am in XRP and hope it will be $100 each (at least!) 🙂 So your answer better be good LOL 🙂

    1. LOL! Truthfully I’m not really sure how it relates to its unit price Carpe Diem but maybe everything else is relating to it…It seems that whatever county or regional currency one lives in they relate that to the XRP as it applies to them at home. Thus to me it seems XRP is above all of them (fiat currencies). Within the crypto world though I’m not quite sure. So far I keep wanting to see Bitcoin like gold in the existing system but I also think I’m misleading myself because that’s a thought based on the existing system and we are venturing outside of that box into the unknown. We are on the precipice or fringes of the Mandelbrot fractal my friend.

      I hope it reaches $1,000 each but I should mention I don’t put much value in hope. I’ve mathematically convinced myself it can reach $100 based on the worlds level of needed liquidity and the amount of XRP existing, but there is no way that I can think of to calculate the tsunami of confidence when people get excited about XRP. That overwhelming demand could spike the value for at least a short time.

      Outside of confidence driving the value up and the cypto market cap increasing it is unknown to me at this time. It seems to be important for XRP value to remain stable over time for banks or institutional level players to invest confidence. To me the Ripples XRP escrow accounts seem to allow the XRP to breath. As it releases XRP into the system and then takes excess from the system and puts it into escrow at the back end of the…escrow chain of accounts for future releases it seems to breath. This gives it life and also would seem to help maintain a more stable value that can increase at a steady rate over time.

      What I’m doing currently is purchasing XRP to hold for longer periods with a hope that I may never have to liquidate them while also playing the market with other more volatile cryptocurrencies. I move into and out of them in an effort to increase capital. It’s not really a day trading cycle but more like a week to six week trade cycle. I’m utilizing the knowledge I’m learning about reading the charts for this experiment and so far over two weeks I’ve gained $12 from an initial $150 investment. It seems to satisfy the excitement of getting into this new market while also teaching me so much about it. The methodology I’m using is to watch the 50, 100 and 200 Moving averages in conjunction with the daily rise and fall of value against the Relative Strength Indicator (RSI) and Stochastic RSI together. The Stochastic RSI indicates the momentum trend and the RSI indicates whether a coin is overbought or underbought. Putting all that together allows me to make a fairly informed or reasoned choice of when to move into and out of a particular coin. The hardest part is keeping emotion out of it, not listening to the hype and only moving based on the charts and a predetermined goal. Greed is a nasty animal that loves emotion and hype so keeping it in check is a continual exercise. I think I’ll continue to play with small increments like this until I reach $500 then I’ll probably cash out or more likely exchange into XRP for the long hold…oops HODL, lol. Then start again with $150. Either way I’m hooked 🙂

      1. Hi Dane and Thank You,

        You are wise, smart and logical and reading your comments is wonderful and it radiates a clarity of your esoteric mind. I now also understand how the XRP price is maintained or should I say “manipulated” by the XRP people. Clearly, it seems, the manipulation is necessary to welcome international participants by showing there is very low volatility in XRP price, which is needed if XRP becomes the standard international exchange platform. This indicates that whoever is behind XRP has a strategic vision for this crypto and very much in the long-term game. This is also perhaps why ALL currencies are manipulated and cryptos are no exception!

        This is a great strategy and a reasonable hope and I am hoping and following the same idea:

        “…purchasing XRP to hold for longer periods with a hope that I may never have to liquidate them while also playing the market with other more volatile cryptocurrencies.”

        It is the first time in my life that I am actively buying and participating in buying currency (Cryptocurrency!) and through this process, I am becoming aware of what complex system and a world we are living in.

        Many cheers and thank you again for spending your valuable time to explain your well-informed ideas.

        1. Your very welcome Carpe Diem. I enjoy helping. My time is no more valuable than yours or anyone else’s pal. Thanks for asking the questions.

  21. This all ties in nicely with the coming Age of Aquarius.

    ‘Astrological ages are based on changes in the heavens, known as The Precession of Equinoxes. This cycle, which lasts roughly 26,000 years, means the zodiac sign visible at dawn on the first day of spring changes about every 2,000 years.
    During the Piscean Age, which is swiftly coming to an end, life was based on the pyramid. Every structure, from families to religions and governments, had a single being, person or deity on top, to whom all those below deferred.
    Everyone knew their place. While this provided stability, its rigidity severely restricted individual freedom and limited responsibility.
    Now we’re entering the Aquarian Age, although astrologers disagree about the exact start date. They do agree, however, that the Age of Aquarius is about flattening the pyramid and individuals assuming more power.
    Of all the signs, Aquarius is the most free-thinking. The Piscean Age was dominated by a Christian patriarchal system. The new age is all about making room for a more egalitarian world.
    Aquarius is heavily associated with information and technology, and so the way we’re seeing social media facilitating revolution is very much of this era.’

    1. It also ties in with the concept of the Technological Singularity. A brief period of extreme transformation, beyond which is is impossible* to predict what the world will become.
      This idea is usually based on the rapid rise of machine intelligence (by which I mean AI, and/or augmented human intelligence: the use of computer power to directly boost human intelligence above its natural levels). But one can easily foresee blockchain tech feeding into this as well.
      Futurist Ray Kurzweil (now working for Google) predicts this will occur around 2045.

      * JC made a good stab though, with his recent sci-fi vignette! Loved it!

  22. For some reason this particular post really resonates with me. Between it’s insights and all the comments that have followed a rich tapestry is woven.

    I still cannot make out all the different pictorels in the whole cloth but I’m diggin’ on the weave.

  23. I hesitate to leave this post without a song. Besides I want to take this opportunity to attempt my new found skills (thanks to Dane) linking things. And it is such a cool song by an extraordinary artist, from what some say was a golden age for music. Fill your heart with song.

    For your listening pleasure I present you Louis B. Armstrong reading the news. Perhaps all politics are local.

    Louis Armstrong I Guess I’ll Get The Papers (And Go Home)

    POM’s own DJ

  24. Yakety yak, carry on still for all the bull—- going on, like high pressure salesmen in a a boiler room, not a person on the site will address the question I’ve been proposing for a couple of post now.

    Why did XRP go from somewhere around $3.50 to $.50 in the last 4/5 months??



    1. Because the whole crypto market did. It does it every year. Everything is subjectively anchored to Bitcoin. For now. That will change this year.

      1. Hello JC,

        Can you please elaborate as to what you mean by “Everything is subjectively anchored to Bitcoin.”

        In what way other cryptos are anchored to BTC? Knowing this would be very helpful as I have been seeing an almost identical pattern in price fluctuations and to the timing of a drop or hype of the major Cryptos. I have suspected that perhaps the prices were manipulated by the same entity! …I sincerely hope not!

        Thank you,

        1. As Bitcoin moves so does the whole crypto market. That is accepted. Though no official or institutional anchor/peg exists. It’s all subjective speculation.

        2. Hi Carpe Diem, I could be wrong but I don’t see it as manipulation. It is more like the market has two modes – risk on or risk off. This is similar to the way the stock market behaves during periods of volatility. Bitcoin, being the dominant crypto asset (for now) is the “bellwether”. So generally all the altcoins are highly correlated to the price of BTC. It is still an immature market and it’s expected that the correlation should gradually reduce over time.
          I find it is more useful to look at crypto charts not denominated in USD but in either BTC or ETH. For example, check

          1. Hi Redjon,

            Thank you for elaborating on the price rise and falls and your thoughts. Complex systems have behaviour and this is fueled further by our collective attention to their every move!

            Your explanations help me to see why there are almost synchronized peaks and troughs in the Cryptos I hold and the BTC connection. We may give this a Joke German term, “gefingerpoken”, instead of “manipulation” if you like 🙂

            I am seeing lots of red candles in all cryptos today (less in XRP!) so I hope it’s not a bad news and people just cashing out! Thanks for the link by the way.

          2. “I am seeing lots of red candles in all cryptos today”

            Shhh…..Carpe Diem…I’m circling overhead and waiting for a good deal to BUY, BUY and BUY! lol. 🙂

            It’s nice to see XRP’s separation though;)

  25. Hey JC do you think the SEC will come to a decision tomorrow or push it down the road a bit? I’m thinking this dip in the crypto market today is due to fear of that meeting. What do you think?

    “SEC, CFTC Are Examining Whether Ethereum Should be Regulated As a Security”

    “Regulators, including the CFTC and the SEC are due to meet on the 7 May to discuss the matter further.”

    1. I think Ethereum will be solid. ERC20 based privacy coins will get hammered at some point. Tomorrow will be humdrum. Ethereum doesn’t pay dividends, so it’s not a security. At least in my simple head.

  26. “I’m circling overhead and waiting for a good deal to BUY, BUY and BUY! lol. 🙂”

    Please do drop hints from up above 🙂

    If XRP ever gets to a 100 a piece I will break all those pesky red candles 🙂

  27. Hey JC aren’t these the brothers you mentioned as being on the rise while facebook was on the decline?

    “Winklevoss IP, the company owned by Gemini founders Cameron and Tyler Winklevoss, has been awarded with a patent claim that aims to settle exchange traded products (ETPs) holding cryptocurrencies.”

    “The company outlined a system that can execute transactions for ETPs holding cryptocurrencies “such as bitcoins … ripple, dogecoins … ether” as well as BBQCoin, among others, according to patent published by the U.S. Patent and Trademark Office on Tuesday. The company first filed the application in December of last year.”

    “The patent reward is notable as it provides a glimpse into the Winklevoss brothers’ continuing efforts to push forward the trading of cryptocurrency-related ETFs after having met hurdles from U.S. regulators.”

  28. Hey everybody. I’m new here, but in case no one has mentioned yet, Uphold is, by far, the easiest way to buy XRP. They also have implemented the ability to export your XRP to an outside wallet (I recommend the Ledger Nano S).

    You can keep some of your XRP on their platform for active trading between XRP, BTC, USD, Gold and Silver and transfer your longterm holdings to your wallet. Good luck, everyone. And thank you, JC, for your insightful writing!

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