Coming every Sunday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
PayPal to offer crypto payments starting in 2021
When rumors started circulating in June that PayPal was planning to launch a crypto service, the fintech giant was tight-lipped.
But this week, PayPal was ready to show its hand, confirming that it will allow its 346 million active accounts to buy and sell cryptocurrencies.
It isn’t an exaggeration to say that this is a huge deal for the mainstream adoption of digital assets. This will introduce large numbers of everyday consumers to crypto for the first time.
Initially, PayPal will support Bitcoin, Ether, Bitcoin Cash and Litecoin. U.S. account owners are going to get this new functionality first, with “select international markets” to follow later.
No fees are going to be charged for conversions until the end of this year. However, merchants won’t be able to support crypto transactions until the first half of 2021.
Announcing the news, PayPal CEO Dan Schulman said digital currencies offer “clear advantages” when it comes to financial inclusion, payment speeds and enabling governments to distribute funds to citizens quickly.
Bitcoin blasts through $13,000 following PayPal’s entrance into crypto
Unsurprisingly, PayPal’s big news served as dynamite for Bitcoin. The world’s biggest cryptocurrency smashed through $13,000 on Wednesday, gaining more than $1,000. That’s only the third time that BTC has hit this level since its record high in 2017.
All of this helps strengthen Bitcoin’s position. Even before the announcement, BTC had enjoyed a sustained period in five-figure territory after spending most of the past three months trading above $10,000.
Mati Greenspan, the founder of Quantum Economics, said the PayPal link was undeniable: “There’s no doubt in my mind that this bit of news is almost solely responsible for today’s extended gains.”
other cryptocurrencies that PayPal’s going to support also enjoyed chunky gains on Wednesday. ETH was up 8%, BCH surged 9%, and LTC rose by a whopping 15%.
And it wasn’t just the crypto industry that was going wild. In the aftermath of the news, PYPL’s share price hit a record high. Unfortunately, the uptick wasn’t enough to prevent Bitcoin’s market cap from overtaking PayPal’s on Thursday.
PayPal rumored to be eyeing acquisition of crypto custodian BitGo
Inevitably, attention now turns to what PayPal’s offering will look like, whether crypto exchanges need to be worried, and the company’s plans for the future.
We’re starting to get an idea of what to expect. PayPal has partnered with Paxos to deliver the service, and it has obtained a conditional cryptocurrency license from the New York State Department of Financial Services.
On Friday, reports from Bloomberg suggested that PayPal is looking to acquire a crypto asset custody firm, adding that the fintech giant is currently in talks with BitGo, which helps investors store digital assets securely.
However, that report added: “Talks could still fall apart and PayPal could opt to buy other targets.”
Meltem Demirors, the chief security officer of the crypto asset manager CoinShares, has predicted that PayPal will seek to launch a stablecoin “in the next six to 12 months.” This would be a sting in the tail for Facebook, given how PayPal left its embattled Libra project.
Not everyone in the crypto industry is thrilled about PayPal’s recent news
Yes, there has been enthusiasm over PayPal’s plans, with the analyst Willy Woo suggesting that the service could easily treble Bitcoin’s user base. But not everyone is cracking open the champagne.
People who buy crypto on PayPal won’t be able to withdraw it to a wallet off the platform, prompting critics to say it’s another case of “not your keys, not your coins.”
SatoshiLabs, the team behind the Trezor hardware wallet, wrote: “If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.”
It is also concerned about how PayPal’s clout in electronic payments “will be interpreted as expertise in crypto.”
Given how Satoshi Nakamoto’s vision was to decentralize finance and remove middlemen, some crypto purists will also be horrified at PayPal wading into the space.
But there are other practicalities to worry about — and one of them is tax. Every sale of cryptocurrency becomes a taxable event, especially if it’s sold for more than it was bought for. It’s very possible that the implications of this could be lost on crypto noobs.
And in other news…
Of course, there was plenty of other news in the crypto and blockchain sector this week.
The Chicago Mercantile Exchange quietly overtook BitMEX to become the world’s second-biggest futures market — buoyed by rising institutional demand. All this came as the crypto fund manager Grayscale Investments increased its assets under management by $1 billion in the space of a week.
Data from Messari showed that daily transaction volumes on the Ethereum network are twice those of Bitcoin — putting the blockchain on track to process $1 trillion this year. And in news that’ll make exasperated DeFi users breathe a sigh of relief, a ConsenSys developer predicted that the Ethereum 2.0 beacon chain genesis will happen in the next six to eight weeks.
Speaking of DeFi, the funds locked in protocols surged by $1 billion as analysts predicted we could see a bull run following on from the U.S. election. Meanwhile, the U.S. acting comptroller of the currency predicted that DeFi could render the financial services offered by banks obsolete — just like email disrupted the postal service.
Winners and Losers
At the end of the week, Bitcoin is at $12,994.86, Ether at $409.13 and XRP at $0.25. The total market cap is at $395,014,912,585.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Quant (47.26%), Reserve Rights (40.41%) and Ocean Protocol (33.23%). The top three altcoin losers of the week are Crypto.com Coin (18.81%), ABBC Coin (17.74%) and HedgeTrade (16.31%).
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Most Memorable Quotations
“There goes wBTC. The majority of wrapped Bitcoin is custodied by BitGo. PayPal is not a good actor in this space. Position accordingly.”
“If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.”
“Crypto is about financial freedom. It’s modern money that anyone anywhere can truly control. While we’re excited to see a new audience gain access, a non-custodial approach limits opportunity to self-custody your crypto or transact freely.”
Peter Smith, Blockchain.com CEO
“This is definitely a bullish sign for Bitcoin and other cryptocurrencies. Crypto is all about trust, and PayPal has a very high level of trust with its users […] If the UI/UX of the service is done right, we will see millions of new users join each month.”
Alex Mashinsky, Celsius CEO
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
Dan Schulman, PayPal CEO
Prediction of the Week
Bitcoin price rise to $500,000 is inevitable, Winklevoss twins say
Unsurprisingly, the Winklevoss twins were brimming with enthusiasm in the wake of PayPal’s announcement.
Tyler Winklevoss tweeted: “PayPal is an important bridge between the mainland and the island of crypto. The diaspora from legacy finance is happening and this is the kind of infrastructure that will help make that happen. Soon there will b a flippening and crypto will b the mainland & fiat the island.”
This week, the twins doubled down on their prediction that Bitcoin will eventually hit $500,000, telling podcast host Peter McCormack that it’s a matter of when, not if.
“I would sort of contend that $500,000 Bitcoin is actually pretty conservative and the game hasn’t even really started,” Cameron noted.
FUD of the Week
First ransomware attack in 2020 election hits voting infrastructure in Georgia
A ransomware attack targeting the government systems of Georgia’s Hall County impacted key voting infrastructure, it has been revealed.
“Critical systems” within its networks were affected, and CNN says the incident may be the first ransomware attack in the 2020 election.
Officials said the county’s voter signature database and voting precinct map were heavily impacted by the hack but stressed that the voting process for citizens is unaffected.
Brett Callow, from the cybersecurity firm Emsisoft, told Cointelegraph: “There is a very real risk that they may shake voter confidence in the integrity of the vote, especially as confidence may already be quite low.”
OKEx’s lips remain sealed on its sudden crypto withdrawal freeze
There’s still no sign of OKEx’s cryptocurrency withdrawals returning to normal — nine days after they were suddenly suspended.
The ongoing suspension has been puzzling to many, but the exchange’s representatives maintain that the move was solely because one of the company’s private key holders has been cooperating with a Chinese public security bureau.
OKEx CEO Jay Hao has told Cointelegraph that the company is determined to reinstate withdrawals as soon as possible, adding: “We wholeheartedly apologize for this.”
Some users are starting to warn that their patience is wearing thin, expressing frustration at the lack of transparency surrounding what’s going on.
One tweeted: “Where is your CEO Jay Hao? He has to interact and give updated info frequently. When something happens with Binance, CZ tweets every hour.”
And another wrote: “It’s a bit weird one of the biggest exchanges in the world isn’t letting us withdraw money for so long.”
Filecoin creator denies strike allegations
The creator of the blockchain-based data storage platform Filecoin has dismissed allegations that miners of its token have gone on strike as “nonsense.”
Refuting the claims, Juan Benet claimed on Twitter: “What is happening is that miners are growing slower than before launch. This is in great part because the network is no longer subsidizing their pledge and fee costs — fees cost real money now, and miners need to match growth rate to token flow.”
It had been reported that five of the largest Filecoin miners turned off thousands of rigs to protest the blockchain’s economic model, which means that miners are required to stake FIL as collateral when producing a block. The problem is that many miners are apparently coming up short in the number of tokens needed.
Best Cointelegraph Features
Regulation will keep PayPal’s new crypto services from looking anything like crypto
Cointelegraph’s Kollen Post says that, for now, PayPal’s crypto payments are more about satisfying regulators than providing users with crypto capabilities.
How to build a crypto mining rig in 2020 to earn Bitcoin and Ether
Mining with home rigs is back, so Elena Perez takes a look at what those interested need to know to put together their own rig at home.
Frozen out? Bitcoin price correlation to other assets still undefined
Fidelity’s report claiming Bitcoin is a non-correlated asset has sparked discussion, but as Benjamin Pirus reports, not all agree with the assessment.
Privacy coins no more? CipherTrace files patents for tracing Monero transactions
Crypto analytics firm CipherTrace announced on Friday that it had filed two patents for technology capable of tracing transactions for privacy coin Monero.
In a Nov. 20 blog from CipherTrace, the firm stated that the patents would include forensic tools to explore Monero (XMR) transaction flows to assist in financial investigations, statistical and probabilistic methods for scoring transactions and clustering likely wallet owners, as well as visualization tools and ways to track stolen or illegally used XMR.
“CipherTrace’s Monero tracing capabilities will allow [Virtual Asset Service Providers] to identify when inbound XMR may have criminal origins, allowing them to adequately risk rate customer transactions per any required regulations,” the blog stated. “[Our] goal is to enable the detection of criminal users, therefore increasing the safety and sustainability of privacy coins like Monero in the future.”
While Bitcoin (BTC) is still the preferred medium of exchange for many darknet market users, there has been increasing acceptance for privacy coins like XMR. Law enforcement agencies have not yet determined a reliable way to trace Monero, and firms like CipherTrace have an opportunity — the company has reportedly been working on a means to trace XMR transactions since early 2019.
CipherTrace CEO Dave Jevans told Cointelegraph in August that the firm developed the first tool for tracking Monero transactions. Such a tool could potentially support investigations of crimes and reduce incidents of money laundering.
The company has stated it developed these Monero-tracing tools as part of a project with the U.S. Department of Homeland Security, but the latter isn’t the only government agency looking for a way to identify XMR wallets, transaction dates and times. In September, the Internal Revenue Service announced it would give a bounty of up to $625,000 to anyone who can break Monero.
Capabilities for CipherTrace’s tracing tools have not yet been confirmed. One Monero Outreach representative told Cointelegraph in October that they would be “highly suspicious of any claims that corporations can trace Monero transactions” and any firm that did so would be unlikely to “trace the wallets or amounts for any transaction.”
The price of Monero is $123.37 at the time of publication, having fallen 3.6% in the last 24 hours.
The IRS offers a $625,000 bounty to anyone who can break Monero and Lightning
The United States Internal Revenue Service has offered a bounty of up to $625,000 to anyone who can break purportedly untraceable privacy coins such as Monero (XMR) as well as trace transactions on Bitcoin’s (BTC) Lightning Network.
The official proposal, published last week, says the IRS will accept submissions in the form of working prototypes until Sept. 16. If accepted, applicants will receive an initial payment of $500,000.
This grant will allow applicants to develop their prototype into a working concept over the next eight months. Once the pilot test is completed and approved by the government, a further $125,000 grant will be awarded.
“IRS-CI is seeking a solution with one or more contractors to provide innovative solutions for tracing and attribution of privacy coins, such as expert tools, data, source code, algorithms, and software development services.”
The announcement defines the initiative’s primary objectives as helping IRS Criminal Investigation, or CI, special agents to trace transactions — including identifying wallets, transaction dates and times — and amounts transferred. The agency hopes to use the tools to predict the future transactions of flagged addresses. The final products must also provide CI full control, with the ability to further develop or modify them so that the organization does not have to rely on any external vendors.
Monero is one of the virtual currencies preferred among criminal organizations over more traceable crypto assets like Bitcoin. The IRS noted that XMR is being used for all future ransom demands and transactions by ransomware group Sodinokibi due to its “privacy concerns.”
Related News: CipherTrace claims to track Monero transactions
Demand for privacy coins among criminal syndicates has grown as authorities have increased their crypto forensics capabilities and employ the skills of private contractors such as Chainalysis. In recent years, Chainalysis has assisted law enforcement in tracking Bitcoin and other cryptocurrency transactions to successfully fight child abuse, money laundering and terrorist financing. Last month, Chainalysis was integral in the takedown of three terrorist organizations.
Privacy coins are a key strategy to help criminals obfuscate their transactions, with the IRS stating:
“Currently, there are limited investigative resources for tracing transactions involving privacy cryptocurrency coins such as Monero or other off-chain transactions that provide privacy to illicit actors.”
Blockchain analytics firm CipherTrace claims to have a new tool that can trace Monero transactions, although its capabilities are yet to be confirmed. The company announced that the tool, which took more than a year to develop, will be used by the U.S. Department of Homeland Security. CipherTrace chief financial analyst John Jeffries said the tool can track stolen Monero used for illegal transactions back to the source, such as in ransomware cases.
WTF happened in 1971 (and why the f**k it matters so much right now) – Cointelegraph Magazine
If you’ve ventured on to Crypto Twitter this year, you may have seen a tweet from the meme account WTF Happened in 1971?
Created in March, the account posts numerous times a week to its fast growing fanbase of 10,500 followers. A typical post features a graph that shows how inequality has grown in recent years, inflation has skyrocketed and how ordinary people are being priced out of houses and stocks due to low wage growth. Somewhere on the chart there will be a little arrow pointing at 1971, which highlights when the rot set in.
And it invariably poses a question like: “WTF happened to wages in 1971?” Or, on a chart showing ever-widening political polarization: “WTF happened in 1971 that led to such a divergence in political thought?”
Its followers notice similar phenomena and contribute to the meme by tagging them in. This week someone reposted a New York Post article showing a decline in the happiness of lower socio-economic status white adults since the early 1970s, asking: “Gee I wonder #wtfhappenedin1971???’
So what did happen in 1971?
The WTF Happened in 1971 website suggests that all of these disparate effects are connected to President Richard Nixon calling time on the Bretton Woods financial system which tied the value of the world’s reserve currency — the U.S. dollar — to gold.
The ‘gold standard’ as it is known, underpinned global finance from 1944, when the World War II Allied Nations, including the U.S., Canada, Western European nations, Australia and Japan, negotiated the rules of the international monetary system with fixed exchange rates between currencies. This took place at a hotel in Bretton Woods, New Hampshire. At the time the U.S. controlled two thirds of the world’s gold and insisted the system was based on gold and the US dollar.
The system meant that in theory you could redeem $35 USD for one ounce of gold – although in actual fact it was illegal for US citizens to hold gold between 1933 and 1974 after the government ran into trouble backing the currency during the Great Depression. Foreign governments could trade dollars for gold at that rate however. The government again ran into trouble backing the currency with gold in the late 1960s, after printing too much money to pay for things like the Vietnam war and various welfare programs, which was the rationale for Nixon killing the system on August 15, 1971.
Yeah, but it was a good thing
The effects of this are contested to say the least. The International Monetary Fund (IMF) for example suggests that fears at the time that the move away from gold would bring the era of rapid growth to an end were misplaced. “In fact, the transition to floating exchange rates was relatively smooth, and it was certainly timely: flexible exchange rates made it easier for economies to adjust to more expensive oil, when the price suddenly started going up in October 1973. Floating rates have facilitated adjustments to external shocks ever since.”
For many traditional Keynesian economists leaving the gold standard behind has provided governments with the flexibility to use activist monetary and fiscal policies to respond to, or prevent, economic crises. For example, without the Federal Reserves ‘unlimited’ quantitative easing program (money printing) this year, the economy may have fallen into such a deep hole the U.S. may never have clambered out of it. And Greece’s inability to inflate itself out of its sovereign debt crisis in the years after the global financial crisis was part of the reason it had to embrace crippling austerity measures. Surveys of mainstream economists suggest that 9 out of 10 think returning to the gold standard would be a disaster.
No, leaving the gold standard was a disaster
But WTF 1971 tells a different story. It showcases various graphs highlighting that from 1971 onwards productivity increased while wages flatlined; GDP surged but the share going to workers plummeted; and house prices went through the roof leading to Americans’ ‘savings’ becoming inextricably tied to home values. It suggests that around the world episodes of hyperinflation increased, currencies crashed more frequently and there was a spike in the number of banking crises. The personal savings rate fell off a cliff, the incarceration rate went up by a factor of five, divorce rates shot up and the number of people in their late 20’s living with their parents increased exponentially.
Most horrifyingly of all, the number of lawyers quadrupled.
The site and Twitter account was founded by former 3D graphics designer Ben Prentice and Bitcoin podcaster Heavily Armed Clown — also known as Collin from The Bitcoin Echo Chamber. Both live on the east coast of the U.S., and met when Prentice pitched himself as a guest on Collin’s podcast.
Prentice discovered Bitcoin in 2017 and fell deep into the Austrian economics rabbit hole. That’s a strand of heterodox economics beloved by goldbugs that suggests Keynesian economists have got it all wrong, fiat is worthless paper and gold is the answer. Although hugely influential among Bitcoiners, Austrian economics is shunned by mainstream economists and frequently criticized for lacking scientific rigor and not relying enough on mathematical models and macroeconomic analysis.
“Austrian economics is really just trying to dispel the logical fallacies inherent in Keynesian logic, starting at first principles and then building you way up from there,” says Prentice. However the pair have one major difference to the Austrians in that they believe Bitcoin is the answer that gold never was, he continues:
Our belief is that gold itself failed as a money. And that’s hard for the Austrians to get because they’ve been advocating for gold for so long. But the reason gold failed as money is because we had to come up with paper in the first place to scale it and we know how many problems come with paper.
Collin says he was trading penny stocks, alternating between pump and dumps and a value investing strategy “which isn’t really a real thing” when he stumbled across Presidential candidate Ron Paul’s End the Fed while researching the underlying causes of the 2008 Global Financial Crisis. This led to the work of famed Austrian economists Ludwig von Mises and Murray Rothbard — who coined the term anarcho capitalism.
“That’s where we found commonality,” says Collin. “And it was between our economic discussions talking about history, talking about money, talking about human action, that we came upon a lot of inflection points in the data, which happened around 1971.”
The first few graphs for the site were taken from the Wikipedia entry on Bretton Woods, and they kept seeing more and more charts that suggested the same thing.
“We started collecting those and other ones,” says Prentice. “We started arguing with economists on Twitter and eventually, I think it was Collin’s idea, he was like: ‘Well, we’ll just throw these up on a website and just ask WTF Happened?’ and the rest is history.”
So far in 2020, the site has had around 400,000 visitors, and is growing its audience month on month.
Collin says they’ve considered their arguments carefully.
“We spend the vast majority of every day especially Ben and I just in private, discussing these things back and forth and sending, you know, trying to poke holes in our ideas.”
Rising inequality the result
The most obvious effect of moving away from the gold standard, was the ability for governments to print as much money as their hearts desired. As Collin puts it:
The temptation to print money is the greatest temptation in the whole world.
To illustrate how this harms individuals, Prentice uses the analogy of a pie as representing the economy, with the slices representing the money in circulation. “As we’re printing more money, all we’re doing is taking existing slices and making them smaller and smaller and smaller,” he explains. “Each unit is now worth less. Nothing new has been created. You still have the same pie, but now your slice of the pie is much smaller than it was before.”
Collin says that this results in people trying to store their wealth in other ways, which has resulted in runaway asset price inflation since 1971.
“When money is debased, and it loses its value over time, people store their wealth in assets,” he says. “That’s why it’s common financial wisdom, to diversify your assets, to invest in stocks to invest in bonds to invest in gold, buy a house. The more assets you own, the better off you’ll be in the long run, because all of those assets are going to increase in price because of inflation.”
The net effect is a massive increase in economic inequality because the wealthier you are, the larger the percentage of wealth you can afford to hold in illiquid, volatile assets. Working Joes however — the median household net worth in America is $97,300 — need to devote most of their dollars to rent and food and insurance, and have a larger share of capital in depreciating assets like cars.
“This system is very, very much tilted towards the wealthy,” says Prentice. “A very wealthy person would hold 80 to 90% of their wealth in business interests and equities, right, and those inflate. This is the money of the wealthy, but the access to those assets is almost nil for the poorest.”
This would be less of a problem if wages had kept up with inflation. While average hourly wages in the US have roughly increased in line with CPI, that’s just one way to measure inflation. One of the most telling charts on the site shows that the number of working hours to buy a single unit of the S&P 500 has increased to an all time high of 126 hours today, up from an average of 30.9 hours since 1860.
Depending on how deep down the rabbit hole you want to go, there are ramifications everywhere.
Collin explains there’s an economic calculation that can be performed normally whereby as capital is accumulated in bank savings accounts, interest rates come down. “Then people are more likely to borrow money and go out and try and engage in new productive ventures,” he says. “Creating new money and artificially suppressing the central bank interest rate is distorting that economic calculation.”
He says our crazy financial system is the reason hugely profitable companies like Apple still borrow billions of dollars to buy back their own stock.
“Why would they borrow money which they then have to use to pay interest in order to buy back their own stuff? The answer is the replacement cost of assets is higher than the replacement cost of capital.”
Like the famous chapter of Freakonomics that linked the Roe vs Wade Supreme Court decision on access to abortion in the 1970’s to the decrease in crime two decades later, they’re also not discounting some less intuitive ramifications.
“We believe that a lot of second, third, fourth and fifth order effects happen as ripple effects that happen outwards of monetary policy,” explains Collin.
When we look at things like obesity, right, and you say that is not related to the end of the gold standard. Are you sure? Because people have to eat a whole lot more subsidized food than they did 60 years ago and in America, the number one subsidized crops are sugar and corn.
They now believe the system has become so distorted, it’s no longer genuine capitalism. Collin points to the 52% of young adults who are now forced to live at home with their parents instead of building their own wealth, buying a house and starting their own families. “You can’t afford to do any of those things and you just look at the system that exists and you say: this is broken, right? You’ve always believed in capitalism, but now you’re seeing this system that they’ve called capitalism is broken. But Ben and I posit that this is not capitalism, this is something completely different. This is social monetarism.”
Although there are some pretty obvious drivers of the 100 days of protests and riots in America following the death of George Floyd, rising inequality has played a big role, says Prentice.
“I absolutely think so. I think that people get out in the streets when things aren’t going well. People are frustrated, because they don’t feel like this system is working at all, and that they work their whole lives at crappy jobs.”
But maybe they’re wrong
Collin and Prentice sound pretty convincing, but economics is a frustratingly complex area and even the world’s best economists are frequently way off. In December 2007 the Wall Street Journal asked 51 economists to predict what would happen in 2008. Not a single economist predicted a recession, much less the dramatic events of the Global Financial Crisis, even though the subprime mortgage crisis had begun five months earlier.
Even though the charts on the site show a strong correlation between the end of the gold standard and a variety of different things, that doesn’t prove it caused the issue. Correlation isn’t causation: For example the number of films Nicolas Cage appeared in between 1999 and 2009 strongly correlates with the number of people who drowned by falling into a pool during the same period. The increase in per capita cheese consumption between 2000 and 2009 almost perfectly matches the number of people who died by becoming tangled in their bedsheets.
Collin concedes that some of the charts may simply show a correlation.
“We get a lot of people who think that we’re attributing things to the end of Bretton Woods that we shouldn’t be,” says Collin. “And maybe in a little way, sometimes we do, because to be completely honest, the website is a meme. We embrace that. We love that. That’s what’s made it so popular and anytime we find any chart that has an unusual inflection point in 1971, you better believe it’s going on there,” he says.
Prentice adds: “We just put a bunch of data on a website and asked a question, right? So we’ve tried to not like explain all those charts on the website. We just want it to exist and let people answer their own questions and let them debate among themselves.”
And of course other things happened in 1971: Disney World opened, the Monkees broke up. Could these things help explain why that year changed everything?
“The one that we see the most is that someone says ‘I was born that year. This was all my fault’,” says Collin.
A more serious attempt to explain the major economic changes the charts show, is to attribute them to the wave of deregulation that swept over advanced economies in the 1970’s and 1980’s. Prentice says that he’d wrestled with this because from his libertarian, anarcho-capitalist influenced world view, everything should have become so much better.
“Why did everything get worse after deregulation?” he asks.
This is a great question to ask. (It’s) because the money system is so broken — it’s not capitalism. This is not what we’re advocating for. You took monetary socialism and then you took the reins off of it.
“So yeah, everything got way worse and the inequality got way worse. From that lens I think it’s much clearer to see why deregulation actually exacerbated everything.”
And while we’re trying to poke holes in the theory, a bunch of stuff has also got way better since 1971. Life expectancy in the U.S. is up 10%, infant survival rates have increased 71%, the food supply per person is up 21%. Globally, things have improved out of sight: in the early 1970’s half the world’s population lived in extreme poverty, now only 10% do. The number of illiterate people has dropped by more than 50%, while the number of people worldwide who live in a democracy grew from 32% to almost 56%
Prentice believes technological progress is the reason these some things have improved.
“We can afford more cool gadgets to increase our productivity, even something like as simple as the washing machine,” he says. “We used to spend hours a day washing our clothes and hanging them up and drying them. Now I don’t even think about it. Technology improves things like crops, right? Look at all the agricultural gear that we use now, these giant harvesters and all these things that allow us to get our food cheaper. In general, I believe all of the things you just listed are due to deflationary pressure inside an inflationary system.”
So essentially he’s saying that all of the things that got better, would have performed even better if they hadn’t been hampered by the end of the Bretton Woods system.
Prentice says the pair are well aware their ideas are outside of conventional economic thinking, but say that’s because they’ve attempted to approach things from first principles and “expose the errors that other economists make.”
“We’ve seen their arguments, and we constantly question ourselves,” he says. “It’s like at the end of Marty Bent’s podcasts, he’s constantly saying ‘Are we crazy?’ We ask ourselves that all the time. I don’t have any hubris that I am a smarter economist than anybody else. But I do know that I work from logic and first principles, and I do wish to benefit everybody in the world.”
Since June they’ve also been expounding on their ideas in a newsletter, which is up to issue 68 already and hits inboxes every couple of days.
“We started the newsletter to give these little economic tidbits and explain little bits of monetary history because we believe that Bitcoin is inevitable and it is the best money that has ever existed,” says Prentice.
Collin says it may one day prove to be the first draft of a book on the topic.
“If our audience continues to grow, and we continue to get a good reception, we’re building up a library of content that may one day be edited into a book,” he says. “An ebook with a more cohesive analysis of monetary history and the emergence of a new paradigm, which is Bitcoin — which will change the world because it is here and it can’t be stopped.”
Experts say institutions drove Bitcoin’s rise to $19K and alt season is coming
Bitcoin must now reclaim these price levels to resume its rally to $20K
BTC Will Not Correct Forever
Experts say institutions drove Bitcoin’s rise to $19K and alt season is coming
Bitcoin must now reclaim these price levels to resume its rally to $20K
BTC Will Not Correct Forever
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