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Will The Dollar Be Overtaken?
It seems like every headline you read or have read this year is all about the competition that the USD now has. First it was just crypto as a possible competing currency but you now have BRICS and also a recent move by the petrodollar (which it's still up in the air if that ones even really true).
The most recent update now is that the Saudi's have entered a China-led central bank digital currency project which is starting to pump up the USA again to look into the possibility of their own CBDC.
This actully isn't that new of news but it never got main headlines until now. This new CBDC is a system between Hong Kong, Thailand, China and the United Arab Emirates. It's mainly a way to transact between countries via a all digital CBDC.
Macro Economics
For years now the petal dollar has been the glue that's held all of the worlds trading together. Every country has commodities like wheat, oil, gas, lumber etc. It's all traded on the world stage via what is known as the Petrol dollar which is USD backed. It's how things have been done for most of our lifetimes now but that might be changing.
The big takeaway from this is that it's allowed the USA to become a world power and really be the staple of the world in terms of sending money around the world in various factors of support. It also actully gives the FED some big time control over the world and with FED rates being crazy high the rest of the world continues to feel that pinch and are now backing out of it like we have seen with China etc this year as they continue to dump treasury bonds.
The Evolution Of Money
Throughout the years various physical items have been used in order to show value of something for trade etc. For example gold coins were often used but had flaws such as being heavy, easy to steal and even the ability to fake it. We then moved into paper money which at a time was backed up by gold held in countries vaults. This paper money represented gold value and it was harder to mimic, lighter and easier to transact with. From there we moved into a semi digital age with credit cards but these credit cards where mainly loans.
You also have a vast majority of your money in banks etc but you rarely carry around paper dollars these days. These payment gateways are really just IOU's that over time get moved through "middle men" which are your banks primarily.
These banks work on fees and boy is there a lot of them! Even credit card companies charge around a 3% fee which you as the customer never see but as a business 3% of the money you bring in is normally going right out the window in credit card transaction fees. In some cases it can be even higher like with apple pay, google pay etc. The downfall of this is that banks operate very limited hours and never on the weekend much like the stock market. It's a old almost dead system which is being replaced with 24 hour trading like crypto. But you're also starting to see a lot more "after hours" trading or the ability to make trades outside of normal hours becoming a little more common place but it's still not there.
Fast forward into crypto and the major adoption that happened with them. No middle man, 24/7/365 a day trading and fast 10 minute or faster money moving. Compare that to the banking system which can take 2-3 days to clear a payment and you start to see why crypto has become so popular over the years where people are sick and tired of waiting around on slow outdated banks.
This has sparked major crypto adoption which continues to grow to this day but still get some backlash from time to time only to be over powered by the people. This is creating governments to really consider CBDC's.
This is where the new China backed CBDC's could seriously put a challenge on the old petrol dollar and offer up trading outside of the system that has been around for such a long time.
The Three Pillars Of Blockchain
There's three core parts of blockchain that every blockchain works off of. Those being...
Security
Scalability
Decentralization
A lot of what we hear about with blockchains are security and Decentralization but that often bottle necks scalability. There still to this day has not been a single blockchain that can do all of these things it's always two of them leaving one out. Think of any blockchain you want and run it through these three things. I bet there's one or two it does very well and then the third it just doesn't do at all or does horribly.
So will this new system overtake the USD? Most likely not but it for sure challenges it and will open up the USA to start investing into a CBDC or a system like it to keep its own dominance otherwise it very well could lose it.
It seems like every headline you read or have read this year is all about the competition that the USD now has. First it was just crypto as a possible competing currency but you now have BRICS and also a recent move by the petrodollar (which it's still up in the air if that ones even really true).
The most recent update now is that the Saudi's have entered a China-led central bank digital currency project which is starting to pump up the USA again to look into the possibility of their own CBDC.
This actully isn't that new of news but it never got main headlines until now. This new CBDC is a system between Hong Kong, Thailand, China and the United Arab Emirates. It's mainly a way to transact between countries via a all digital CBDC.
Macro Economics
For years now the petal dollar has been the glue that's held all of the worlds trading together. Every country has commodities like wheat, oil, gas, lumber etc. It's all traded on the world stage via what is known as the Petrol dollar which is USD backed. It's how things have been done for most of our lifetimes now but that might be changing.
The big takeaway from this is that it's allowed the USA to become a world power and really be the staple of the world in terms of sending money around the world in various factors of support. It also actully gives the FED some big time control over the world and with FED rates being crazy high the rest of the world continues to feel that pinch and are now backing out of it like we have seen with China etc this year as they continue to dump treasury bonds.
The Evolution Of Money
Throughout the years various physical items have been used in order to show value of something for trade etc. For example gold coins were often used but had flaws such as being heavy, easy to steal and even the ability to fake it. We then moved into paper money which at a time was backed up by gold held in countries vaults. This paper money represented gold value and it was harder to mimic, lighter and easier to transact with. From there we moved into a semi digital age with credit cards but these credit cards where mainly loans.
You also have a vast majority of your money in banks etc but you rarely carry around paper dollars these days. These payment gateways are really just IOU's that over time get moved through "middle men" which are your banks primarily.
These banks work on fees and boy is there a lot of them! Even credit card companies charge around a 3% fee which you as the customer never see but as a business 3% of the money you bring in is normally going right out the window in credit card transaction fees. In some cases it can be even higher like with apple pay, google pay etc. The downfall of this is that banks operate very limited hours and never on the weekend much like the stock market. It's a old almost dead system which is being replaced with 24 hour trading like crypto. But you're also starting to see a lot more "after hours" trading or the ability to make trades outside of normal hours becoming a little more common place but it's still not there.
Fast forward into crypto and the major adoption that happened with them. No middle man, 24/7/365 a day trading and fast 10 minute or faster money moving. Compare that to the banking system which can take 2-3 days to clear a payment and you start to see why crypto has become so popular over the years where people are sick and tired of waiting around on slow outdated banks.
This has sparked major crypto adoption which continues to grow to this day but still get some backlash from time to time only to be over powered by the people. This is creating governments to really consider CBDC's.
This is where the new China backed CBDC's could seriously put a challenge on the old petrol dollar and offer up trading outside of the system that has been around for such a long time.
The Three Pillars Of Blockchain
There's three core parts of blockchain that every blockchain works off of. Those being...
Security
Scalability
Decentralization
A lot of what we hear about with blockchains are security and Decentralization but that often bottle necks scalability. There still to this day has not been a single blockchain that can do all of these things it's always two of them leaving one out. Think of any blockchain you want and run it through these three things. I bet there's one or two it does very well and then the third it just doesn't do at all or does horribly.
So will this new system overtake the USD? Most likely not but it for sure challenges it and will open up the USA to start investing into a CBDC or a system like it to keep its own dominance otherwise it very well could lose it.
3 reactions
When we got the $BTC Bitcoin ETF we saw ourselves hit a rally but that really was for the most part already in play just based on pure speculation that the ETFs would be approved in the first place. What we have seen happen with Bitcoins ETF and also can be researched and looked at in terms of how it played out and apply some of those same things towards Ethereum.
With the news of the Ethereum ETF being approved we did see a small jump in price that's help pretty steady over the last few weeks.
That marker is just before the spot Ethereum ETF was approved so you can see the big jump but it's since tapered off.
So what's the explain this why has Ethereum pretty much done nothing since the ETF was approved?
The Approval Process
That comes down to you guessed it the SEC once again. Even though a ETF is approved it can take months for the ETFs to fully be approved and then launched on the open market. Also since many ETFs are being filed for the same thing in order to create a more fair playing field a batch of these will be approved and go live at the same time (now that's at least something I can get behind that the SEC does right and trust me that list is extremely short) You know the stuff the SEC is actully suppose to do.
This approval process is slated to take place during these summer months but it also seems like we wont see a full release of this until September of this year. That's nearly 3 months away and is perfect time to grab up some $ETH if you feel like the ETFs going online finally are going to cause a spike in price or not.
Clearing Houses
We can look at Bitcoins ETF process and get a good understanding here as well. While we did see a spike on BTC it didn't hold and has since fallen pretty flat holding bitcoin prices between that low 60's and high 70's mark.
This is mainly because of what we are hearing out of Fidelity. That most major firms, banks etc are waiting for clearing houses which have to get their ducks in a row first before they can really pull the trigger on this.
Instead what's happening is a primary amount of investing is actully happening by retail investors right now. Which makes sense when you step back and start to look at it all. This means all of that money tied up into 401ks can now be invested into bitcoin but I wouldn't expect a ton. If anything I think we would be lucky to see 1%-5% of all 401k money to be dumped into crypto.
The Game Plan
So right now the play is going to be watching the approval of the S-1 ETFs for Ethereum. Once we see that trigger we could see prices star to spike in anticipation of them going live very soon as well as when they do go live.
The big question for me is just what exactly is that Ethereum going to do that big institutions old. Will they be required to hold it all or can they stake some of it or put a wait period on it and stake it and earn profits from it something like you see places like Coinbase doing as they collect a fee from the staking rewards.
It's unclear at the moment but I think it's an important question to ask being that Ethereum will be the first proof of stake token to have a ETF format.
What are you thoughts?
With the news of the Ethereum ETF being approved we did see a small jump in price that's help pretty steady over the last few weeks.
That marker is just before the spot Ethereum ETF was approved so you can see the big jump but it's since tapered off.
So what's the explain this why has Ethereum pretty much done nothing since the ETF was approved?
The Approval Process
That comes down to you guessed it the SEC once again. Even though a ETF is approved it can take months for the ETFs to fully be approved and then launched on the open market. Also since many ETFs are being filed for the same thing in order to create a more fair playing field a batch of these will be approved and go live at the same time (now that's at least something I can get behind that the SEC does right and trust me that list is extremely short) You know the stuff the SEC is actully suppose to do.
This approval process is slated to take place during these summer months but it also seems like we wont see a full release of this until September of this year. That's nearly 3 months away and is perfect time to grab up some $ETH if you feel like the ETFs going online finally are going to cause a spike in price or not.
Clearing Houses
We can look at Bitcoins ETF process and get a good understanding here as well. While we did see a spike on BTC it didn't hold and has since fallen pretty flat holding bitcoin prices between that low 60's and high 70's mark.
This is mainly because of what we are hearing out of Fidelity. That most major firms, banks etc are waiting for clearing houses which have to get their ducks in a row first before they can really pull the trigger on this.
Instead what's happening is a primary amount of investing is actully happening by retail investors right now. Which makes sense when you step back and start to look at it all. This means all of that money tied up into 401ks can now be invested into bitcoin but I wouldn't expect a ton. If anything I think we would be lucky to see 1%-5% of all 401k money to be dumped into crypto.
The Game Plan
So right now the play is going to be watching the approval of the S-1 ETFs for Ethereum. Once we see that trigger we could see prices star to spike in anticipation of them going live very soon as well as when they do go live.
The big question for me is just what exactly is that Ethereum going to do that big institutions old. Will they be required to hold it all or can they stake some of it or put a wait period on it and stake it and earn profits from it something like you see places like Coinbase doing as they collect a fee from the staking rewards.
It's unclear at the moment but I think it's an important question to ask being that Ethereum will be the first proof of stake token to have a ETF format.
What are you thoughts?
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