Stablecoins sound boring, but they're actually the backbone of DeFi.
The decentralized stablecoins we know today like Tether, PAX and DAI
are under attack by centralized stablecoins and the soon-to-arrive central bank digital currencies.
It doesn't sound like a big deal, right?
Wrong.
Centralized stablecoins are the Trojan horse for governments to make programmable money,
subverting crypto to turn into their own centralized, discriminatory, freedomless society.
The stakes are high and you need to know what's happening behind the scenes.
Let's get it!
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My name is Ben.
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In this video, we're going to be taking a look at fiat-backed stablecoins
and the coming push for central bank digital currencies.
One of the main reasons that regulators have been cracking down on crypto so hard recently
is because banks and governments are finally starting to realize
that blockchain technology is the future.
So now they're going to do everything they can to try and control it.
Crypto was founded with the intention of disrupting traditional institutions.
This technology was designed to resist nation state level threats.
But the stakes are high,
and the people who benefit from the legacy system are not going down without a fight.
At this point, they understand that they can't stop this technology entirely,
so they're going to try to remove the parts they don't like
while heavily promoting and adopting the parts they can use to their advantage.
They will focus on the fact that this technology is digital
and that blockchain technology makes things more efficient,
but they will ignore or attack the most important features that make crypto what it is---
decentralization, privacy and being permissionless.
This is where the distinction between a cryptocurrency and a digital currency
becomes extremely important.
A cryptocurrency or crypto asset is built with these disruptive values in mind,
while digital assets just represent an upgraded version of the old system.
This is why it makes perfect sense that our friends in the old financial cartel
have decided to call themselves the Digital Currency Group
and not the Cryptocurrency Group.
They want to make you think digital assets are safer and more efficient
without the crypto features
because they're easier to regulate and easier to scale
when they are centralized.
The Fed has already started to push this narrative.
A few months back,
Federal Reserve Chair Jerome Powell suggested that a central bank digital currency
would eliminate the need for cryptocurrencies and stablecoins.
The Bank for International Settlements (BIS),
which is essentially the central bank of central banks,
has issued numerous reports over the past year
stating their support for central bank digital currencies
and repeating the same old FUD about crypto assets.
Last week, they issued a new report making recommendations
on how government should regulate stablecoins,
which focus mostly on ensuring that stablecoin issuers
had adequate reserves to back up their distribution.
Right now, it seems that China has had a head start in the CBDC race,
with the US and other countries rushing to catch up.
Many industry insiders believe that the US government and central bank
could decide to take over a private stablecoin like USDC instead of starting from scratch
and building their own.
The Wall Street Journal recently reported that the Biden administration is planning
to ask Congress to impose measures that would regulate stablecoin issuers like banks.
If this were to happen,
crypto companies that already have existing relationships with banks and regulators
will be best positioned to take advantage of this opportunity
and they will have a clear path to success
because most of their competitors will be regulated out of existence.
This type of measure was also suggested by Cynthia "Laser Eyes" Lummis,
who is usually seen as one of the industry's biggest advocates in Washington.
What we're beginning to see is politicians and regulators slowly accepting Bitcoin
as a sort of commodity like gold
while shooting their attacks onto DeFi and stablecoins,
which are more difficult for them to control
and represent more of a threat to the legacy system.
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But there are some teams in crypto that are willing to play ball with the establishment though.
Most of them are connected to, no surprise, the Digital Currency Group.
Companies like Ripple, Coinbase, USDC, Circle have been asking for regulation for years,
and they've been working to build those relationships
so they're first in line to be compliant when those regulations are laid down.
When Circle began making filings go public,
the company admitted that it was currently under investigation by the SEC
but said that they were cooperating with regulators.
As we're seeing with both Ripple and Coinbase and their interactions with the SEC,
these investigations will likely result in these companies getting the green light
to operate on a mainstream level.
How ironic.
Executives from Circle have been publicly expressing their support
for putting banking regulations on stablecoins.
Dante Disparte, Circle's Chief Strategy Officer and Head of Global Policy,
told The Wall Street Journal that Circle wants to become a bank
and that it would welcome new regulations.
This is because they're already set up for it,
and they've been preparing for it for years already.
With all this collusion happening behind the scenes,
centralized unregulated stablecoins could be a risky place
to put your money in for the long term.
And by that, I mean more than 10 years.
If you're wanting to long-term hold crypto, then USDC is probably your best bet
until better solutions arrive.
But they are on their way.
Our reliance on fiat-backed stablecoins in the crypto markets
keeps us tied to the traditional system and the monetary policies
that we were trying to escape from in the first place.
It also gives regulators an excuse to start taking away your freedoms.
Stable assets are a necessary component for DeFi and the crypto ecosystem,
but they don't need to be tied to fiat currencies.
Plans to push out DeFi make it too onerous to use isn't just to protect fiat currencies.
Governments see this as a way to exert more control over their subjects.
I mean, citizens.
CBDCs will be programmable money in the worst sense.
Bitcoin and crypto is often confused with a cashless society,
one where the government knows and sees all transactions
no matter how minute.
But it's the opposite.
Crypto is freedom.
The incoming CDBC or Fed coin is the cashless society that everyone fears.
Fed coin will be programmable in almost limitless ways.
Your Fed coin money can have an expiration date built in.
Fed coins can be programmed to only work in certain approved businesses.
Taxes, fines and fees can be deducted immediately from any citizen account.
Take first, sort out the details later.
That's their plan.
Fed coins can also be tied to a social credit system and interest rates,
criminal record and use of "unapproved" speech
or whatever the government considers "disinformation" at that time
which can impact your finances.
Tracking credit cards is one thing.
CBDCs are the all-seeing eye of the ruling class monitoring everything.
Zero privacy.
But it's not all doom and gloom.
There are a ton of projects in development that are working on different solutions.
This is a very new area of innovation,
and we haven't really seen many stablecoins in the top 100
that aren't pegged to fiat currency.
That could be changing very soon though.
Last week, Cardano announced the development of a gold-backed stablecoin.
Since gold is an asset that is relatively stable compared to crypto,
not directly under the control of central banks like fiat currencies.
There are also algorithmic stablecoins like RAI,
a fork of Maker's DAI that is backed only by Ethereum and pegged to itself.
RAI launched with a starting price of $3.14,
or 3.14 in honor of pi.
For all you nerds out there.
RAI eventually found an equilibrium at around $3,
where it is currently trading.
It does a pretty good job at maintaining stability,
but it's still highly experimental.
It's just one of the many solutions that developers are currently working on
as alternatives to fiat-backed stablecoins.
This is actually a top priority for developers in the industry.
Many teams are working to find a solution
because they all know how important stablecoins are for DeFi,
and they recognize that being tied to fiat is just too dangerous to freedom and true equality.
That's all I got.
Be blessed.
BitBoy out.