Article Snippet: "...let's not forget that VISA is a "for profit corporation", not a charity. It wouldn't be doing any of this without expecting to make money - LOTS OF MONEY."

(JaiChai) - Musings on Big VISA's "Grand Entrance" into the Crypto Space and the Seduction of Sexy Vampires

Make no mistake, VISA's crypto transactions will not be 100% crypto.

They'll still require continuous crypto-to-fiat flips before final settlement.

But this time, instead of the consumer doing it beforehand, Crypto.com and VISA will handle the mechanics in the background via fiat and USDC.

Any time a fiat-to-crypto-fiat cycle occurs, more complexity is added to an already byzantine financial process.

Financial Roulette on a Global Scale

The global Forex market attests to the highly dynamic nature of fiat.

But that's nothing compared to the extreme volatility of cryptocurrencies.

Predicting either one's future value is impossible; the subject of many Masters' thesis and Doctoral papers, and is the main reason why we have markets in the first place.

The monumental task of trying to predict the value of fiat and cryptocurrency relative to each other and then the total value when combined in a transaction is the job of financial, mathematical, economic and market experts. But the truth is this:

Without the aid of a Time Machine or Magic Crystal Ball, predicting the future value of anything is impossible.

Pause and let that sink in for a moment.

In fact, even the "Globally Recognized Experts" - aka political appointees or self-proclaimed gurus that may or may not possess any pertinent financial and economic education or even an iota of real world market experience - can truly hope for is to be "a little right", instead of "completely wrong"!

Back to our story: Big VISA and Crypto

To be sure, VISA's actions give crypto exposure to a large segment of the world's population that probably would've ignored it otherwise. And the "benefits of VISA + crypto" is being plastered all over the media.

But let's not forget that VISA is a "for profit corporation", not a charity. It wouldn't be doing any of this without expecting to make money - LOTS OF MONEY.

So, how does VISA plan to deliver on its promise of faster and cheaper transactions?

By initially taking on the payment risk (fronting the fiat before final confirmation on the Ethereum blockchain) and bundling transactions, VISA expects to drastically cut transaction times and lower gas fees.

How much faster and cheaper? That's anyone's guess right now.

VISA's optimization strategy is not new.

Many vendors have been doing this in one way or another for years - but never at this grand scale.

Eventually, they predict that they will build a dynamic fronting pool (an internal USDC VISA Treasury) to cover all their fiat-crypto -fiat activities and facilitate crypto transactions that are equal to or faster than current fiat-only transactions.

Multinational behemoths like VISA are not known for their agility; maneuvering the business landscape like 18 Wheelers, not Lambos.

But if any large corporation can successfully pull off this crypto play with the fewest hiccups possible, it would be a Deep-Pocketed company like Big VISA.

More importantly …

The effect of Freely Printed Fiat on the Net Total Value of the Crypto Space

IMHO, the value added to the Crypto Space by fiat will be transient at best.

Why do I say that?

Because I believe that fiat's stay in the space is just a means to an end - that "end" being the end of Crypto sovereignty by surreptitiously siphoning value from the Crypto Space.

Unless the value added to the Crypto Space resides permanently, there are only three mathematical outcomes to its net total value:

1. Temporary Gain.

2. Neutral - no change, as long as the inflow and outflow of fiat value remains balanced.

3. PERMANENT loss.

It's that third outcome that troubles me the most.

Do you see the future dystopia?

Imagine this.

First, it's a steady and stealthy decline of the net total value of the Crypto Space as the fiat printing presses outpace the little-to-no inflationary cryptocurrency landscape.

After years of serene, seemingly benign cohabitation, the weak and vulnerable Crypto Space is brutally attacked, enslaved or destroyed by a vastly superior fiat army.

On the surface, the significant uptick of fiat-to-crypto traffic and institutional investors appears to be hyper-positive, a major step toward crypto mass adoption.

It conjures up visions of a fast-approaching crypto utopia.

And the mental image is both hypnotic and addictive. It's so beautiful that it can easily seduce the majority of crypto enthusiasts - no matter how long they've been in the Crypto Space or how strongly they held their anarchist or libertarian beliefs beforehand.

But if the added value to the Crypto Space is only temporary, we just might be inviting the Sexy Vampires of Central Banking into our own Crypto House.

Can you say, "Exploitive Middleman - 1, Decentralization - zero!?"

Before you know it, the net total value of the Crypto Space will slowly and silently be bled dry.

Submitted for you to ponder during some quiet time.

May you and yours be well and love life today.

In lak'ech, JaiChai

This is YOUR TORUM INVITATION!

JaiChai 4-1-2021. Simultaneous multi-site submissions posted. All rights reserved.