Non-Market XRP can Provide Crypto-Liquidity for Substitute Reserves
De-centralized does not mean unregulated forever.
Every other week there is a news story which has something to do about regulating or banning cryptocurrencies. A few weeks back the South Korean government made a statement about the possibility of banning cryptos. As predictable, a sell-off began and Bitcoin, Ethereum, Ripple, LiteCoin, etc.., all suffered large losses.
This obvious negotiating strategy was followed up a few days later when the government clarified their position by stating that banning cryptos was impossible, but added that some form of regulation removing the anonymity of those investing in cryptos would be needed. Those regulations came into effect today and will do a lot to mainstream blockchain assets.
Timed with the commencement of the South Korean regulation comes comments from India about banning cryptos. Once again a sell-off has begun, but fear not, buy the dip. The Indians obviously learned from the Koreans and are following the same script. Blockchain technology cannot be uninvented. Expect follow up statements in a few days.
Contrary to streams of untethered comments online around the blockchain, and those coins, tokens, assets, et al, which use the technology, de-regulation does not necessarily mean de-centralized, and regulation is not necessarily a bad thing when it comes to the big moving pieces.
As the blockchain markets develop and grow over the coming years there will be both centralized and de-centralized platforms and functions. Ethereum (ETH) serves as a de-centralized crypto while Ripple (XRP) serves a centralized function. Both are attracting the attention of large investors, both private and public.
Outside of just these two coins, there are hundreds of others which are being promoted and packaged to provide some form of function or service. New concepts and needs will organically develop from this evolution of blockchain technology. Regulation, no matter what we think about it, will play a huge role in taking cryptos mainstream. Those straight edges out there who are afraid of this strange and unknown economy which is expanding in their peripheral will begin to creep out of the shadows with wealth in hand looking for new opportunities.
The anarchistic expectation that the world can function without any sort of regulation is foolish, and does not consider the inherent inner human weakness to take advantage of one another. We have discussed this human deficiency in depth on POM, but once again, keep in mind, mature and minimal regulation does not directly alter the de-centralized nature of blockchain.
Truth be told, regulation can do a lot to keep blockchain tech de-centralized, as it would reduce the amount of fraud and crime which takes place. But we do need to be careful that we don’t accept that as a blanket statement to cripple crypto with useless regulations. Fiat currency, such as the US dollar, is a much bigger factor in fraud and other crimes, such as money laundering.
In fact, official state sponsored crime, and national economic scheming, aligned with international monetary incompetence, are the biggest contributors to fiat based “crime”. Parallel centralized and de-centralized crypto economies, with some modest and functional regulation, will do a lot to eliminate the international “criminal” use of national currencies which has prevented access to wealth for at least half of the world.
These should be considered the wild west days of the blockchain. The opportunities to make fundamental change in the world and its systems of governance and socioeconomics has never been so within reach. Understanding the existing monetary system, and the imbalances which have divided the world, can better prepare us for the evolving world of blockchain and crypto assets.
After spending years researching and writing about the international monetary system, with a large proven body of accurate predictions, it is with confidence I expand this knowledge base to include blockchain and crypto. It was expected that the Special Drawing Right (SDR) of the International Monetary Fund would incrementally replace the US dollar as the primary reserve currency used to balance international trade. There could even be an evolution of the SDR to accommodate crypto characteristics, but whatever manifestation the supra-sovereign SDR may take, it will inevitably be based on blockchain technology.
International regulation will be discussed at the G20 summit in March. There is an opportunity for all concerned to address both crypto regulation, and how to remove the imbalances which were created by the large accumulation of USD in the foreign exchange reserve accounts around the world. It is possible that Ripple (XRP) has been engineered specifically for this purpose, which is why it is getting the attention of SWIFT and both domestic and international banks.
There are 100 billion XRP in existence, some of which is still being held back by Ripple. Some suggest that Ripple can tank XRP at any time by dumping the remaining coins onto the market. But why would they ever do that? It should be considered that the non-market XRP may be used to address the reserve accumulations and trade deficits, by providing institutional blockchain liquidity to the function of the SDR within the IMF debt restructuring process.
Some may argue that central banks and the IMF do not need to use Ripple’s XRP as they could simply design their own crypto. But this does not remove the same problem which has plagued the USD in its international role for the last 8 decades. The whole world needs to standardize and use a regulated crypto to accommodate the large institutional and governmental transactions. At least until the time when blockchain technology makes such institutions and governments obsolete.
Even just using the Ripple network with individual cryptos will not benefit banks and nations in the way that using one centralized crypto-asset would. This is of course diametrically opposed to those who want the whole blockchain world to remain decentralized and unregulated, but that is not a realistic expectation.
The investment strategy I have taken around cryptos has everything to do with Ripple (XRP) and Ethereum (ETH), for the structural reasons that one is centralized and the other is de-centralized. The combination of both will serve as fundamental and transformative catalysts for institutional and commercial transaction needs, whether its the human economy or an AI based smart economy.
From Canada I am using Coinsquare and QuadrigeCX to exchange CAD for ETH. Both platforms accept online direct deposit which instantly fund your account. Coinsquare holds for up to a week, but QuadrigaCX does not. Exodus has a new desktop based wallet called Eden. Eden is a Beta version for now, but after a week of use I haven’t encountered a single bug. The beauty of Eden is that it supports Ripple (XRP) which can be exchanged with Ethereum right in the wallet itself, eliminating the need for an online exchange, such as Kraken, Coinbase, etc..
Coinsquare will be offering XRP on February 28th, and it is expected that Coinbase will also support Ripple soon. But until that time, the above process with Eden is the best I have found to get XRP from within Canada. It should be equally as simple from America.
Though there has been some ups and downs for all cryptos so far this year, don’t blink, because before long both ETH and XRP will be exploding on announcements and new partnerships with big business, such as Amazon, Apple, Visa, Uber, etc.. These are just rumours until it happens, but where there's smoke there is fire, and by the time it happens it’ll be too late if you haven’t prepared and bought in when it was cheap. With the new regulations, South Koreas largest online retailer has announced a partnership with Ripple, as have banks in UAE and Dubai. Add this to the existing list of Ripple partnerships, and the future begins to come more into focus.
Everything we have learned on POM about the international monetary system, reserve accumulations, trade deficits and surpluses, optimum currency areas, cross-border capital flows, interest rates, and sovereign debt restructuring, and their geopolitical ramifications, can all now be applied to assist us in understanding the importance and true function of the emerging blockchain world. Sorry it took so me long to wrap my head around it all. But we’re still early, so expect lots of learning just ahead. - JC
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