Crypto Clarity #3
Every Tuesday I bring you the latest news and resources from the world of Crypto. My goal is to provide updates on the space, while making it accessible to everyone, regardless of experience level.
Many people are interested in cryptocurrency, specifically Bitcoin, because of the accessibility and network standard. People all around the world now have access to the same currency backed by their own strength, and the network runs 24/7 - 365.
However, our financial system is built on real assets and trust (“banks are evil”, but you don’t really worry about them losing all of your money) and those standards are hard to mimic. So while crypto has been trying to “decentralize” finance, many of the participants (retail and VC investors) have entered in a centralized manner, exposing themselves to unassumed risks.
Banks do a great job of providing cash when needed, and there’s a mutual agreement with the government that, if needed, the government can provide liquidity to the bank's customers. Most crypto exchanges and financial products have issued a native token to act similarly, but people LOVE using the network token as collateral for backing assets, which can cause issues when your assets aren’t real assets.
Sending money across borders with minimal friction is a massive economic value add for the greater population and a logical step forward as physical cash becomes more obsolete with each passing day.
Benefits of a Decentralized Network
Accessibility: There are more opportunities for individuals who historically lack the ability to participate in an action. For cryptocurrency, it's finance. For manufacturing, it's whoever values what’s being manufactured.
Network Impact / Security: The more locations there are, the less likely all locations get impacted by the same issue.
Transparency and Traceability: Decentralized networks bring along an open-source ledger of all transactions happening on the network. These transactions are immutable, time stamped and can be traced back to the origin from any point.
Maybe 2023 is calling for more decentralized solutions outside of the traditional cryptocurrency model, just something to think about.
“In 2023, We’ll be laser-focused on using crypto tech to create practical products, build trust and solve problems for people” - Michael Miebach (Mastercard CEO)
Weekly Price Performance:
Top Stories:
Mastercard Partners with Polygon to Launch Web3 Musician Accelerator Program (CoinTelegraph)
Polygon continues to land major brand partnerships
The Winklevoss Twins and Gemini Seek Answers from DCG:
The biggest ongoing story in crypto currently, with lots of unanswered questions and things to be cautious of. Here is a breakdown of the situation:
Mt. Gox Bitcoin Distribution Pushed Back Two Months:
Here is some context on the Mt. Gox situation: https://www.investopedia.com/terms/m/mt-gox.asp
According to Court Documents, FTX Spent $7M on Food and $15M on Luxury Bahamian Hotels in Just 9 Months: (Business Insider)
Adding to the laundry list of misused customer funds
Wyre, Crypto Payments Platform Previously Worth $1.5B, Shuts Down: (Blockworks)
Another one bites the dust…
Coinbase Settles With U.S Regulators for $100M Over Compliance Violations: (Blockworks)
Thread / Read(s) of the Week:
Amazing and plain English breakdown of one of the projects in the space that I have watched for years and think very highly of. Definitely worth the read.
Note: This is not a buy recommendation - there are many other considerations when buying a token in addition to simply market fit and use case (will be providing a tokenomics breakdown in the near future)
Visual of the Week:
This Week Ahead:
Fed Chair Powell is Speaking Today (1/10)
CPI Thursday (Measures Inflation) (1/12)
ETH Shanghai Upgrade Planned for March: This is the next of the upgrades for the ETH network, and will bring along the ability to withdraw staking + rewards
Final Thoughts:
It has been a very strong start to the year for the crypto markets - but there are reasons to remain cautious. Never go all in or over leverage.
Be aware of:
The January Effect: Crypto historically has performed very well in the month of January
Potential Future Contagion: Collapses and forced selling may not be over
Tax Loss Harvesting Over: Many people sold for a loss at the end of last year to offset taxes. They may have rebought in after the New Year
There is currently no “Wash-Sale Rule” in crypto
Macro Environment: Inflation / Recession / Global concerns will likely dictate prices over innovation and adoption (for now)
2023 Comparisons to 2022: Optimism that 2023 simply couldn’t be worse than last year.