Currency
The emergence of China as an economic and financial powerhouse has been much quicker than often anticipated. Whether in terms of technological advances, industrial development, global trade or involvement in the capital markets, China’s rise has been rapid and highly disruptive.
There is, however, one glaring omission from this panoramic picture of strength: the internationalization of its currency, which has been far slower than earlier anticipated.
China’s expected rewriting of the world’s financial system after the 2008 global financial crisis seemingly peaked in 2015 with the International Monetary Fund’s conclusion that the yuan was comparable to the dollar, euro, yen and pound. But since then, although various measures have been implemented, such as improving foreign access to its onshore equity and debt markets, there has been a little evidence of a concerted effort to push for its broader global adoption.
This loss of momentum is very visible. According to the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the global payment processing system, just 2.2% of total international payments and an even lower 1.3% of trade financing are denominated in yuan. Not only does this compare unfavorably with China’s 12.4% share of 2020 global merchandise trade, but these proportions have not changed over the last five years. Nor has the yuan been widely adopted as a reserve currency: It accounted for just 2.1% of global allocated reserves at the end of 2020, far less than the dollar’s 55.2%.
There is, however, mounting evidence that China is gearing up for a second push to encourage greater global yuan adoption. Much attention is focused on the international potential of the planned digital yuan, or e-CNY, especially as the platform will allow its overseas usage outside the existing U.S.-dominated financial architectures. But China has also announced or proposed other substantive initiatives… CLICK for the complete article
New York (CNN Business)Investing in cryptocurrencies requires an appetite for risk and a whole new vocabulary. Here’s a beginner’s guide to the fundamentals of crypto lingo.
Bitcoin
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Buy the f****ing dip (BTFD)
Today is 4/20, the day that has become an unofficial pot-smoking holiday. For some reason Dogecoin, the not-really-a-cryptocurrency cryptocurrency, has become associated with this not-really-a-holiday holiday. At one stage this morning Dogecoin traded at 42 cents, which was probably very exciting to anyone that gets excited about stuff like this. Joe has written something in his paragraph below if you have to know more.
The crypto market has had one of its standard bouts of volatility over the last few days, but as this table from CoinMarketCap shows clearly, of the top five biggest coins, one coin really stands out.
That’s right. Doge has just been in its own universe, and honestly it’s really great to see because it’s the perfect thing to make everyone annoyed.
For the Cryptoskeptic Nocoiner, it’s just more evidence that the coin thing is a scam or a bubble or a Ponzi scheme that will eventually end in tears.
And for the people who demand that everyone take crypto really seriously, it’s an awkward embarrassment. Mike Novogratz of Galaxy Digital, for example, told Bloomberg that he’d be worried if one of his friends had invested in Dogecoin.
See all the serious stuff about decentralized finance, or stores of value, or people thirsting for an alternative to the dollar. Nobody can talk about it with a straight face when it comes to Dogecoin. I mean, sure you could probably intellectualize the whole thing by finding some quote from Yuval Noah Harari’s book Sapiens about how money has always been a shared meme blah blah blah. But really, all the crypto talking points go out the window with Doge.
There’s a lot of self congratulation in crypto. Bitcoiners who have made an extraordinary sum of money in a short period of time love to talk about how they’re taking on the Fed, or taking on the banks, or enabling some kind of peaceful revolution that will bring freedom to people all over the world. Basically Dogecoin is like Bitcoin stripped of the virtue signaling.
And to be crystal clear, Dogecoin has been a better investment than Bitcoin for its entire existence. Here’s a chart, again from CoinMarketCap, of Dogecoin priced in Bitcoin. Doge/BTC is at all-time highs. What this means — just so there’s no ambiguity — is that at every step of the way if you bought Bitcoin, you should have bought Dogecoin instead in retrospect. That’s not cherry picking or a chart crime or anything. It’s just a fact that at any time over the last seven years, buying Dogecoin was the better move than buying Bitcoin.
- Dogecoin is a cryptocurrency based on the “Doge” meme, which rose to popularity in late 2013. It started out as a joke.
- Now, defying all odds, dogecoin is worth $34 billion, and its price has risen by a whopping 300% in the last seven days.
- Dogecoin’s skyrocketing price has led to worries of a potential bubble in the cryptocurrency market.
Dogecoin started out as a joke. Now it’s a top-10 digital currency worth $34 billion.
The cryptocurrency is based on the “Doge” meme, which rose to popularity in late 2013. The meme portrays a Shiba Inu dog alongside nonsensical phrases in multicolored, Comic Sans-font text.
And now, defying all odds, dogecoin has a total market value of $34 billion, according to crypto market data site CoinGecko, adding about $19.9 billion in the last 24 hours. The digital token reached an all-time high above 28 cents Friday morning, more than doubling in price from a day ago.
‘I just became a Dogecoin millionaire’
Over the last few months, 100k+ people in China were airdropped cold hard cash… digitally.
The People’s Bank of China (PBOC) is piloting a digital version of the country’s currency (Chinese yuan) that will circulate alongside its paper and coin counterparts.
It’s similar to other digital currencies like Bitcoin or Ethereum, except for one key difference: The digital yuan is issued by the Chinese government.
Centralized vs. decentralized
The Chinese government plans to tightly control the value of the digital yuan — something the PBOC has historically done with the paper yuan — making its proposed narrow price fluctuations something of an anomaly in crypto-land.
On the flip side, the digital yuan gives the Chinese government a shiny, new spying tool, allowing the government to see transaction flows, spot tax evaders, and even experiment with expiring cash.
But it’s also about taking down the dolla…
Ever since WWII, the US dollar has been the world standard for foreign exchange trades: 88% of all trades are backed by the dollar, according to a 2019 Bank for International Settlements survey. The yuan? Only 4.3%.
That exchange domination lets the US government see how dollars move between borders and allows it to freeze individuals or organizations out of global financial products — a move known as dollar weaponization.
Now, China plans to introduce a currency with all the benefits of being digital and backed by a government that loves price fixing.
It’s a recipe some economists worry could make Uncle Sam’s cash look shabby on a global stage. Cue DigiDollars?
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(Also see this: Early Facebook investor and Palantir founder Peter Thiel believes that Bitcoin could potentially be a financial weapon wielded by China against US Dollar hegemony)
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