While US inflation data is still moving stocks, crypto markets are going haywire…
Things kicked off with PayPal’s announcement that it will be launching its own stablecoin. A sign that the payments processor is likely trying to secure its future before becoming obsolete.
After all, mass adoption of any form of cryptocurrency would likely render PayPal obsolete.
It’s the exact kind of ‘middleman’ that Bitcoin [BTC] was designed to rid us of.
So, following the old saying, it seems PayPal is eager to join the crypto revolution knowing they’re unlikely to be able to beat it. A telling move, considering the relative size and strength of PayPal currently.
They aren’t the only ones though…
Yesterday, Russia’s central bank announced it will test its new CBDC in the coming months. The digital ruble will be available in 11 different cities at first as the Russian Government tests its capabilities.
The timing certainly makes sense given the situation Russia currently finds itself in. Because not only will it give more control to the powers that be over people’s money, but it may also provide new means to evade potential trade sanctions.
Either way, it will be fascinating to see how a dictator uses this new financial tool.
And finally, the US SEC is set to announce a decision on bitcoin ETFs sometime tonight…a decision that could quite literally open the floodgates for new investor interest in crypto.
Now, let me tell you why this is all troubling news for crypto believers like me…
Layers of control
OK, OK, I admit, I’m being a bit melodramatic here.
The reality is that seeing more big institutions and governments work within the crypto space can be good. It proves the technology clearly deserves some level of recognition as a potential threat to traditional finance.
The real issue is their intent.
PayPal’s plan, for example, is a great way to get more people used to the concept of a stablecoin. It will likely lead to a lot more adoption of crypto basics. But at the same time, it will all be controlled by the central authority of PayPal.
As our resident crypto expert, Ryan Dinse, explains:
‘Well, as I’ve said before, I don’t think the plan was ever to kill crypto. It was mainly to pave the way for their chosen banks to take over the field.
‘PayPal coming in now — presumably with the covert blessing of some powerful people in Washington — fits in with that theory.
‘It’s the same with BlackRock.
‘An ETF brings Bitcoin into the traditional financial arena more, and regulators feel more comfortable with that.’
What we’re seeing is this new blend between decentralised technology (crypto) and centralised business models (PayPal). For any true crypto believer, this can only result in a distortion of the real goal.
The point of bitcoin and many of its peers is to empower the individual.
It gives you total control over your own money and wealth.
For better or worse.
PayPal and its stablecoin instead want to operate somewhere in the middle. They’ll give you more control over your money, sure, but not total control. After all, that’s how they make their profits.
And it’s the same thing for CBDCs, ETFs, and whatever other mainstream financial instruments they intend to bastardise crypto with. It certainly reaches more people, but it often comes at the cost of giving up some control.
The good and the bad for crypto
Clearly, the takeaway from all of this is not to get swept up in the mass media mess.
I wouldn’t be rushing to get a hold of PayPal’s stablecoin, or their stock, or a bitcoin ETF for that matter.
Instead, see these developments for what they really are…
The last-ditch efforts of traditional finance to try and retain relevancy.
All this hype and all these developments should show you more than ever that crypto is here to stay. And as much as institutions and governments will try to manipulate it, you should stick to the real thing.
They can’t kill crypto, but they can certainly try and control it.
Which is why when you invest in it, you should go straight to the source.
Buy your own coin, your own tokes, your own keys. Because if it’s ever handled or managed by someone else, it isn’t really yours.
As this standoff between new and old continues to unfold over the coming years, expect more of this too. We’ll see bigger and bolder moves into the crypto space, each of which will no doubt bring more and more users.
But unless you’re directly investing in bitcoin, Ethereum [ETH], or other crypto tokens, it’s not a smart decision.
Make sure you understand that as we enter the next big crypto bull market…
Editor, Money Morning
PS: Speaking of new currencies, rumour has it that later this month, some of the most powerful countries in the world will announce a new, gold-backed currency. Of course, no one knows if these rumours are correct. But the very fact they’re being taken seriously at all shows just how fractured the dollar-based financial system is becoming. More on this next week…