COVID-19 surpasses 1 million confirmed cases globally with over 350k of them being in the US. Jobless claims in the United States rose to 6.6 million last Thursday, far surpassing numbers from the 2008 Financial Crisis. Even with all things considered US Equity Markets are showing signs of life. Gold continues to hold steady, Bitcoin and Ether are up 75%+ since March lows, and Oil saw a nice ~10% move up toward the end of last week.
As the Fed continues to pump new money into the economy, Bitcoin advocates discuss how Bitcoin’s monetary policy and supply schedule can prove to resemble QH (Quantitate Hardening) instead of fiat currencies primarily undergoing QE (Quantitative Easing). Bitcoin has a hard supply cap of 21 million Bitcoin ever to be produced with each new set of coins algorithmically released every ~10 minutes in the form of a block reward. Every ~4 years (210,000 blocks) the block reward is halved in the amount of Bitcoin given to the miner who solves that block. The halving has happened twice so far in Bitcoin’s history, once in September of 2012 and again in July of 2016. The next “halving” is scheduled to happen in May of 2020. When the upcoming halving occurs miners will receive 6.125 Bitcoin per block instead of the 12.5 Bitcoin they currently receive. Quantitative Easing is Monetary Policy tool where Central Banks purchase long-term securities from the open market in order to increase the current money supply. The idea is often to spur extra economic activity by doing so. Although a spur in economic activity sounds to be a good idea, this action can also lead to a rise in real price of goods, equities, and possibly even lead to hyperinflation.
While Bitcoin continues to fight for a case as a digital global reserve currency, Ethereum continues to host a slew of new developments all happening on-chain. Over the course of 2017, a lot of hype was fueled by ICO’s (Initial Coin Offering). An ICO is sort of like an IPO (Initial Public Offering) but with much less oversight by government agencies like the CFTC/SEC. ICO’s provided a real use case for Ethereum’s native currency, Ether. If an investor wanted to participate in an ICO they often needed to purchase the tokens (“shares”) with Ether or Bitcoin. By 2018 the ICO mania lost most of its luster with the majority of tokens losing a great deal of their original value. Since then quite a bit of other financial activity has been underway on the Ethereum blockchain. Stablecoins like USDC, USDT, and DAI represent over $3 billion which can be used as a stable store of value and a useful token for trading. Since the creation of these dollar-pegged assets, global companies have been experimenting with the creation of their own stablecoins represented on-chain. At the beginning of last month, Fat Brands LLC (US restaurant ownership group) created a stablecoin-like product representing a total of $39.3 million of bond cash on Ethereum. This kind of financial ingenuity displays the much needed benefits of a publicly verifiable and transparent ledger.
New Developments
Thesis, a blockchain development team behind KEEP Network, raised $7.7 million in their latest round along with launch date of April 27th for their flagship product tBTC. tBTC has potential to increase the value of the DeFi ecosystem allowing people to essentially collateralize, lend, borrow, and swap Bitcoin like never before possible.
Maker has provided an outline as to how they plan to fully decentralized MakerDAO in part by dissolving the Maker Foundation into a “New Governance Paradigm”. Three pillars will be introduced to help usher in the more decentralized nature of the project. There will be Elected Paid Contributors and Domain Teams, Maker Improvement Proposals (MIP’s), and Vote Delegates.
Industry Opinions
Business Insider recently interviewed Vitalik Buterin on how he got into the “Bitcoin Space” and then went on to create what we know today as Ethereum.
Fred Wilson of AVC wrote about why he was quick to purchase USDC, a dollar-pegged stablecoin built on top of Ethereum, when New York made it legal to do so.
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