Fed Scissor Can Change
May inflation in the US rose to 8.6 percent year-on-year, beating forecasts.
The general expectation of the markets was that it would average 8.3 percent.
Thus, inflation in the USA tested its highest level since 1981.
The general expectation in global markets is that the Fed will be more aggressive in interest rate hikes and rhetoric.
The Fed's next three meetings are expected to raise interest rates by 50 basis points each.
But I don't think so!
Consumer confidence in the US fell to a record low.
In June, it decreased to 50.2 with a monthly decrease of 8.2 points.
When inflation figures were high, US President Joe Biden had to make a new statement.
“While it is good to see critical core inflation moderate, it is not falling as sharply and rapidly as we should see,” Biden said in a written statement.
On the other hand, the United Nations (UN) warned that the world is on the verge of the most serious food, energy and economic crisis ever due to the Ukraine war.
What did they not say?
“We turned a blind eye to the burden of inflation, it was clear that this would be the case in the case of an operation, but we had to find a victim, and the common enemy could be none other than Putin. As the Fed, we were late, by printing excessive money, we went to the fire with a shovel, and as a system, we got locked up.” This is the reality.
Did you ever pay attention?
US inflation, which was announced above expectations, is a dollar index that rose from 103 to 104.26 after the data were released.
Ounce gold, which started to rise at the same time as the dollar index and completed the week at $ 1,871 level.
While one of them should have been in reverse correlation, both finished the week with a 1 percent premium.
The Fed continues to raise interest rates, but appears to be unsuccessful.
They have been knowingly and willingly suppressing commodities such as gold and silver for a year.
While all commodities are more than a hundred percent premium, they do not allow gold and silver to excel.
And all investors, companies see and know this.
Despite the high US inflation data on Friday, if the dollar index, gold and silver are competing at the same time, there is a WAR here.
IF A LION, DEED, HYRA AND ZEBRA RUN JOIN SIDE, IT MEANS FIRE IN THE FOREST.
This fire could burn the Fed the hardest.
Because the one who prints the most money is the one who suffers the most.
This loss could also cause the Fed to switch scissors.
After this change of scissors, keep the gold and silver if you can…
Let's Not Call Bitcoin Money
Cryptocurrencies are now called cryptoassets. I also use this definition. I think it's more inclusive. Because not all 1000s of 'coins' or 'tokens' have a money function. Many cryptoassets work like stocks rather than money.
However, as far as I can see, the intention of those who started the trend of saying 'cryptocurrency' instead of 'cryptocurrency' is not to be inclusive like me. Blockchain-hating actors of the central system are trying to popularize this statement to reduce interest and even trust in projects created on the blockchain.
They say, “Cryptos are not money, and Bitcoin is not at all.” The most important pillars are the state and monetary bond. According to these friends, if there is no state, there is no money. Bitcoin is not money either, as it is not approved by the states and is not used in payments.
However, history does not say so. The first city-states were established in Sumer around 3000 BC. However, money-like assets such as seashells were used thousands of years ago in tribal societies that did not know what the state was. For example, the indigenous tribes of Central and Southern California began using certain special snail shells as ornaments and money from 7000 BC. The shells of a snail named Monetaria Moneta, which were also unearthed in the Maldives, were used as money in countless tribes that did not have a state and a civilization as we know it, in Asia, Africa and the Pacific Islands for thousands of years. In the western Pacific, on Yap Island and its surrounding islands, tribal societies formed coins called Rai from large stones, although they did not have a state.
In fact, it is not necessary to go back thousands of years to see that money is not necessarily linked to the state. We have a solid example before our eyes: Gold.
Gold does not need government approval to be valuable. Gold is valuable to almost all people all over the world and is also used as money when appropriate. Those who say that we should not call Bitcoin money, of course, do not want to accept gold as money. I advise them to talk to Ukrainians fleeing the Russian offensive, or to asylum seekers trying to salvage the savings they have built over the years of the Syrian Civil War. While trying to cross the border, they can find hundreds of stories of paying with Gold when they needed it most, with their own and their families' lives in danger. Come on, prove to these oppressed people that gold is not money. If there was no gold money, all of the central banks responsible for money production would not have gold in their vaults.
Gold and Bitcoin are coins with similar properties. They are decentralized. Bitcoin or Gold does not have a CEO, headquarters, etc. If gold or Bitcoin prices drop, there is no authority to turn to. However, the dollar has both a CEO and a headquarters: the Fed is the headquarters of the dollar, and the Fed President is its CEO. If the dollar falls too low or rises too much, people knock on the Fed chairman's door. They ask him to do something. Gold and Bitcoin are limited in number in the world, they do not need government approval to prove their worth. Whereas, the dollar is unlimited and needs government approval to be of value.
At this stage, economists, academics, and especially some bureaucrats, who advocate centralized structures, panic. They think that if Bitcoin is accepted as money, it will destroy the national currency of the state and even the state itself. There can be no such thing as an empty fear. Is gold destroying national currencies? On the contrary, central banks put plenty of gold in their reserves in order to make their national currencies stronger.
The same is true for Bitcoin. Bitcoin is a currency that works on the world's most secure computer network thanks to blockchain technology and is accepted by hundreds of millions of economic actors globally. Can't be shut down, hacked and records can't be changed. In addition, Bitcoin is constantly gaining great value in the long run due to the future potential of Blockchain technology and limited production.
Telling all this, these incompetent theorists, who are ignorant of the history of money and generally have never done any real business in the market in their lives, are in a state of delirium: "The state will not relinquish the right to seigniorage and the privilege of printing unlimited money," they shout.
Again, history refutes itself. Skilled state people and central bankers, who have not cut themselves off from life and reality, handed over these so-called 'rights' when the time came. Rather than trying to manage everything themselves, smart managers have enabled the market to solve economic problems, especially by using decentralized limited money.
So Bitcoin and blockchain can be used perfectly not to destroy the state or national currency, as feared, but to make it much stronger.
Those who say that we should not call Bitcoin money all over the world do not care about people, states or national currencies. Their only concern is to maintain their dominant role in the central system. For this, they do not hesitate to apply cruelty if necessary.
Those who say let's not call Bitcoin money, let's not call it cost of living, let's call it a routine price increase, let's not call it a raise, let's call it an update, etc. are in the same mind as those who say...
Russia to Take Control of Bitcoin Mining
Faced with the sanctions of many states after the invasion of Ukraine, Russia was turning to crypto-friendly policies. While Russia is seriously discussing the use of cryptocurrencies in international payments, the country is working to control Bitcoin (BTC) mining activities.
**Russia to Limit Bitcoin Mining Activities**
Russia has recently been known for its policies close to cryptocurrencies and Blockchain. While cryptocurrencies were recently defined as an asset by the court in the country, the use of crypto money in international payments is also welcomed in the country.
Bitcoin mining activities in the country are also carried out in a gray zone. While Bitcoin mining activities in the country consume 2 percent of the total electricity consumption, this is more than the electricity used in agriculture in the country. As the electricity consumption of Bitcoin mining in Russia continues to increase, it is planned to take control of Bitcoin mining in the country.
Russian Prime Minister Mikhail Mizustin, who recently made a statement about cryptocurrencies, said, “The government and the central bank are working on the adoption of cryptocurrencies.” had used the words. According to Vasily Shpak, Deputy Minister of Industry and Trade of Russia, Bitcoin mining is not included in the scope of industrial activity in the country. The fact that Bitcoin mining is currently in limbo in the country increases Bitcoin mining activities in the country, which in turn increases electricity consumption. Russia's Bitcoin mining regulation is expected to become clear in the coming days.
Final Act on the UST Case
In this week's article, we try to do a 'post-mortem' after what happened to UST and Luna.
In our article last week, we touched on the story of UST, starting with stable currencies, and finally emphasized the importance of decentralization. In this article, we will discuss what lessons we can learn about the future of DeFi by looking at what has happened in the past week.
**Where we were?**
At the time of preparing our previous article, the Terra system was struggling at 80 cents in an effort to anchor its stable coin, the UST, to one US dollar. After that, the UST quickly went down to 10 cents in a very short time. However, the Terra system's currency, LUNA, has lost 99.99% of its value, falling to such atomic values that we can no longer count the zeros after the decimal point.
After this sad end, many people who have invested in this system for a long time, and who have recently bought, thinking that it is a way out of the rapid decline, have experienced serious losses. I have to say that I am personally very sorry about this.
**What conclusions can we draw from what happened?**
Although it will not make up for the losses, I believe that the crypto world can come out of this crisis stronger if some lessons are learned from the experiences. Let's take a quick look at what these lessons might be:
DeFi is an emerging field, theory and practice may not fit together.
It is always talked about that DeFi is a risky area, and it is frequently included in our articles. Please do not assume that the author is adding these warnings to 'ensure himself'. In a burgeoning field like DeFi, no matter how much scenario work you do about experimental projects, practical life can throw up completely different obstacles in front of you.
Delphi Digital, one of the most respected names in the DeFi field, explained very clearly where the mistake was made about Terra, which is a nice project in theory, in the self-criticism it published recently:
They found the thesis of the Terra ecosystem, which they met in early 2021, to be a relatively scalable blockchain integrated into algorithmic stable currencies, focused on real-world adaptation, and very interesting. Afterwards, they thought that the high interest offered by the loan protocol Anchor, which started operating on Terra in March, was perfectly compatible with the thesis of broad adoption of the IHR. Since the returns in DeFi were usually around 100% at that time, the 20% interest given by Anchor seemed quite reasonable to them.
Pretty logical in theory. Let's see what happened next: While the yields in DeFi fell rapidly in early 2022, the maintenance of this rate by Anchor caused a serious fundraising on Terra. The deficit resulting from the high interest given was initially covered by Anchor reserves, but later on this was not possible.
The fragility caused by rapid growth can become fatal, especially during bad market periods. To prevent this, the measure taken by Terra was 'let's throw BTC into the reserves'. This measure, which seems quite reasonable on paper, turned out to be not as good as it seemed, by lowering the price of BTC even more when used during bad times in the market.
**Degrees of risk are important**
Another common situation is the 'perception of relative risk'. What do we mean by that? There is a segment that knows that DeFi world products are risky and this segment diversifies its portfolio accordingly. In doing so, it invests some of its money in high-return-high-risk products, while investing the rest in less risky products.
In classical finance, these so-called less risky or risk-free products are seen in the form of government bonds or cash holdings as we know it. Some actors of the DeFi world also considered UST as a 'risk-free' currency, as its name is pegged to the US Dollar. It has been bitterly experienced in recent events that the goose's foot is not like that.
**Fanaticism has a place and a time**
Every idea or project needs a fanatical community, especially at the beginning. Fans keep the project alive despite its shortcomings and lapses, and help it stand up when the project falls through before it matures.
On the other hand, the same fanaticism can become toxic as the project matures. Similar movements have been seen recently in the Terra system community as well. Community members (especially founder Do Kwon) had become so aggressive that they accused criticism of the system as stupid.
Ignoring the criticisms made prevents the risks of the projects from being fully understood. If the necessary discussions were made and these risks were discussed, perhaps public awareness would increase and pressure would be created on the project owners to make the necessary improvements.
**Transparency is essential to DeFi**
It would be useful to remind you again of an issue we mentioned in our previous article: One of the basic principles in the establishment of DeFi is transparency.
Why is transparency so important? In decentralized systems, there is no control mechanism. Even the founding teams of many products on the market are not clear. Then how can we trust these products? Thanks to transparency.
What kind of transparency is this? All of the software codes of the products are open. Recording all transactions on the blockchain. Initiatives that gradually decentralize as they grow must have a roadmap that they make public. The strategic decisions that will guide the initiative are taken by the community through public voting. It is only thanks to these substances that DeFi can be trusted.
In the recent UST/Terra accident, we have seen that this basic principle of DeFi has been moved away. In particular, the fate of billions of dollars of BTC, which the system set aside to protect itself, was unknown for a long time. If this money were traded on the blockchain, we could all easily track how it was used. The Terra team transferred the money to central exchanges instead of such a move. Exactly 10 days after the events started on May 7, he made a statement on May 16 and announced that he had sold 80,000 BTC in the safe. This is an unforgivable mistake for DeFi. There couldn't have been a faster way to lose trust.
**It's a road accident**
Recently, I have been hearing comments from many people in my close circle saying, "This incident hurt DeFi a lot." Personally, I have an opinion contrary to the general atmosphere on this issue.
Of course, what happened is the biggest crisis ever experienced during the growth of DeFi. Likewise, it should acknowledge that this crisis will delay the adoption of DeFi by the broad segments.
Nevertheless, what happened was a good example in terms of showing us what can happen when DeFi deviates from its basic principles. The rapid rise in UST caused other stable currencies to enter the market, such as USDD, brought by controversial characters like Justin Sun. If this happened a few months later, we would most likely see the UST and the billions of dollars invested in USDD or other stablecoins vanish. From this point of view, it can also be thought of as 'profit from loss' (and admittedly, this is a very optimistic point of view).
**Conclusion**
Although this is the biggest crisis DeFi has ever experienced, which resulted in the UST losing the US dollar anchor and the Luna falling to zero, it is possible that aftershocks will continue. Has the DeFi world learned the necessary lessons from this? Will it go into a more transparent, more open to criticism, maybe more cautious growth from now on? My view is that major protocols draw the necessary lessons. There will definitely be crises like this in the future. Our hope is that small investors can get through this type of crisis as undamaged as possible. We will see it all together.
Fiat Actually Collapsed
The $20 Billion Luna ecosystem and its coin UST, whose value should be 'fixed' to $1, exploded. Cryptocurrency has experienced huge declines. These events will take their place in the history of cryptoassets as 'Black Thursday'. Finally, today Luna has been traded on major exchanges.
The enemies of Bitcoin and cryptocurrencies, who took advantage of the situation, immediately started negative propaganda. What the heck, this is crypto. Decentralization was bad or a lie. Bitcoin is not a cure for inflation. Cryptos are down.
Behind this opportunistic propaganda, bureaucrats and bankers are at the top; Below them are the classical economists and members of the central media. In fact, if you know what Luna really is, you'll understand how empty the fuss is.
Luna's stablecoin UST was ranked 3rd after the other largest stablecoins USDT and USDC. These etc fixed cryptoassets are actually systems based on central trust that do classical central banking on the blockchain. In other words, it is the opposite of decentralized Bitcoin.
Classical Central Banks produce reserve money in two models:
1-In the first model, the central bank keeps various assets, especially gold, in its portfolio and produces and puts into the system only the reserve money equal to the value of these assets. This is how all central banks of the world worked before 1914. The more gold they had in their vault, the more reserve currency they could produce. Today, USDT and USDC work in this model in the crypto world. Of course, crypto central banks based on this asset hold more dollars.
2- In the second model, the central bank produces currency only in return for debt, without any underlying assets. This is the model that the USA started to implement after the US broke the bond of gold with the dollar in 1971. In this model, the US Treasury issues Debt Securities (bonds). The central bank gives it to the Fed. The Fed generates the $ (USD) we know in exchange. The more the USD is used, the lower the interest rates, and the bonds constantly gain value. In order to guarantee the use of USD, the USA has stipulated the use of $ in oil trading in the world. Today, all central banks also use this model.
Here, the Luna ecosystem brought a copy of this model to the crypto world. Luna was a free, unlimited currency with nothing behind it. It was almost like Luna was a kind of bond. 1 UST could always be exchanged for $1 Luna and vice versa. So in exchange for Luna, which acts like bonds, UST, which imitates the USD, was in circulation. The more USTs in circulation, the higher the value of Luna. Just as the value of US treasury bills increases as the USD is used up. Of course, the Luna ecosystem also created a usage area for its own IHR, just like the USA's requirement that "oil trade will be made in USD". UST holders were given 20% annual interest. Considering that the USD interest rate has only recently been increased to 0.75% in classical markets, and it has been in the 0-0.25% band for many years, this was a tremendously high rate.
Thus, the continuous demand for UST increased and Luna became valuable. At one time, Luna's market cap exceeded $40 billion. However, the embargoes placed on Russia in the classical markets gradually put some funds that trade in commodities into a very difficult situation. Selling pressure increased in the classical markets after the war. Commodity traders are also very interested in Bitcoin, which is seen as a digital commodity. Thus, sales in cryptoassets also increased.
As UST Sales accelerated and the 20% return became unaffordable, Luna executives decided to return to Model 1 this time around. They tried to buy cryptocurrencies and Bitcoin etc. assets they created out of nothing, and to create a reserve for the USTs they issued.
However, after the Fed's decisions on May 4, the funds, which had difficulties in the classical markets, went into shock. They started selling whatever stocks they had, tech stocks, bonds and crypto everything to meet obligations elsewhere. The great slump began when this selling wave hit the already fragile UST. Panic selling ensued when the value of UST failed to hold $1. As USTs were sold, more and more Lunas were released, and the value of 1 Luna circulating at $100 eventually fell to zero…
As you can see, it is an unlimited semi-centralized coin generation model that crashes in Luna. However, the Bitcoin model is completely decentralized. Luna had a manager: Do Kwon. There is no center or manager in Bitcoin. Luna and UST are assets that can be produced without cost and unlimited, just like US Bonds and USD. However, the electricity cost of producing a Bitcoin today varies between $ 20-25 thousand. And of course, unlike USD and UST, Bitcoin is a limited currency.
Let's warn the enemies of cryptocurrencies, who are happy that Luna has crashed today: Similar to the collapse of Luna, the USA and the Fed may be in trouble in the coming years! How Does?
Luna didn't have a real business model to make her so valuable. The USA also has huge budget and foreign trade deficits today. In other words, the USA is not a net producer country. Take out the strength of the dollar, some of its economic values are even worse than Turkey. For example, the Government Debt/One-year production (GNP) ratio is 42% in Turkey and 137% in the USA. Moreover, just like exiting the UST on Luna, the world is abandoning the USD as a tool to hold reserves. According to IMF data, the share of the dollar in the foreign exchange reserves of the world central banks was 71% in 1999, while this rate decreased to 59% in 2021.
In addition, oil trade with $, which is the usage area of the USD, is gradually decreasing. Saddam and Gaddafi who tried to break this rule before were severely punished. However, today Russia has started to sell its oil and natural gas in rubles despite the embargoes. In 2018, China issued Yuan-denominated oil futures contracts as a competitor to the USD and guaranteed the Yuan's gold equivalent. Russia tried to return to the gold standard for a week. China is negotiating oil trade in Yuan with Saudi Arabia. Despite US threats, the Saudis did not give up on these talks.
In the last 14 years, the USA produced 8 times the 1 trillion USD reserve money it produced in 200 years until 2008. Now the US and world markets have become addicted to this reserve currency, which is constantly produced unlimitedly. With each new recession or crisis, more reserve USD has to be produced than before. Real inflation in the USA is in the 16-17% band. If the Fed tightens too much to keep inflation down, US and world markets will collapse. After a while, it will start to produce reserve USD again. As real production declines in the market, the constant emergence of more USD and other unlimited reserve coins may accelerate sales of USD at some point in history, as Lunaists eventually start selling UST. Thus, the USA, whose deficits increase even more, starts to produce excessive bonds. Just like when UST is sold, billions and then trillions of Lunas are produced. Thus, the value of U.S. treasury bonds plummets, and ultimately the $700 trillion global bond market collapses with the derivatives. Whatever the collapse of Luna did to crypto, the bursting of the bond bubble will do the world's economies a thousand worse.
Who do you think would survive in such a scenario? Natural and digital fully decentralized limited coins of course. Namely: Gold, Silver and Bitcoin…
And look what the legendary investor Bill Miller, who managed to get more returns from SP500 every year in a row between 1999-2005 and bought Bitcoin since the 200-300 $ band, said exactly what he said today:
“I hold Bitcoin as insurance against financial disaster”
Final decision!
Increasing inflation in the world continues to impoverish the people of the world.
While purchasing power is rapidly decreasing, poverty continues to arise.
Now, who's got what?
Some people have 5 percent inflation, some 8 percent, some 70 percent.
To see the real status of inflation figures, you need to follow the increase in house prices.
You know these days are not a surprise.
Because from last year, I would like to remind you that I have warned that there will be rapid increases in housing prices along with inflation in 2022-2023.
Those who follow the real economy took these warnings into account and prepared for these days in advance.
Everyone had accepted a high inflation and prepared their down payments to meet the need for shelter, when the 0.99 interest bomb shook the market again.
Ads took flight within minutes.
Well, what could be natural for crisis opportunists to step in in the face of such emptiness?
As a result, two possibilities became stronger with each passing day.
You are either rich or poor.
You either add wealth to your wealth or you have to emigrate.
Unfortunately, there is no middle ground.
Do you think this happened because of surprise developments?
I think no.
The project of evacuating city centers around the world, reducing purchasing power and starting the entry into the famine economy are all projects.
Those who feel the inflation to their bones today should be ready for the hyperinflation process tomorrow.
The important thing here is that the people protect themselves.
Because everyone in the world is alone from now on.
You're going to buy a house, but you say, "It's so swollen, let it fall a little, do you want to buy it?
If you expect a decrease in a sector that costs money in foreign currency, in a country that receives immigration, in a system where inflation will continue to increase, in a system where interest rates will increase even more, wait.
But take into account the current situation of those who are waiting.
After the rise in vehicle prices, were the rise in oil prices, the supply problem of parts, the chip crisis, the exorbitant increases in insurance and automobile insurance prices a surprise?
It's all part of the plan.
The house you bought 500 thousand dollars 1 year ago is 1 million today, right?
I mean, everyone became a millionaire.
So how did you read the difference when you updated the insurance companies' value to $1 million for the policy?
Who are the insurance companies in the world?
Today, there will be serious increases in the production of 1+1 and 1+0 houses in the face of necessity.
Tomorrow, our children will live with 10-20 years lease contracts, and their children will live in capsule houses.
It may sound funny when you read this today, you'll see soon.
Will those who have to live in 1+1 and 1+0 houses today be able to accept guests for a yacht tomorrow?
The social project that has been isolated and cut off is not in vain.
What about privacy?
How will the privacy of families be in 1+1 or 1+0 houses?
Is it a faithless society project as well?
Those who use a loan of 1 million dollars today will pay 14 thousand 780 dollars in installments for 10 years.
Is a cashless society project real?
Isn't the shaking operation that they started suddenly in the financial markets a robbery?
Who don't they want?
Traditionalist, long-term, physicist.
Isn't the situation of those playing in the virtual environment deplorable?
Don't those who lose their wealth within minutes commit suicide, don't they lose their psychology, don't they lose the sweat they saved for the future?
Protect your assets, do not rob yourself.
Do not put oil in the hands of those who add wealth to their wealth.
They want you to be dependent on the system, to become a slave, don't you understand?
The system highlights policies based on borrowing people.
Why don't you set yourself a savings-based policy?
Do you think the system was shaped to earn you money?
No, he's shaped to take what he's got.
When you read these, don't waste your time looking for the error here and there.
The global financial system has made a joint decision.
I think he's thinking about himself, focus on his job and his future.
There is no despair.
The life of the one whose sustenance ends is over.
We look at the struggle part, the logic part.
Everyone will live with their decisions.
There is no room for sentimentality and criticism in the transition process.
There is only you and your decisions.
Now shape your future based on the past.
The system has changed.
Make your decision today!
What Happened to Me… The Story of UST
In this article, I will try to tell the story of the stable currency UST, which came out of the Terra network last weekend.
The stable coin UST, which was issued by the Terra blockchain, which is trying to specialize in payment systems, lost its anchor to the US dollar due to the attacks at the end of last week. Let's first look at the concept of what is stable money, and then look for an answer to what was the main problem in UST.
**What are stable coins? USDT, USDC, DAI… What's the difference?**
Stable money means money that is anchored to a certain nominal value. What we call fiat money, is the money issued by the central banks. As a matter of fact, almost all of the stable money market consists of the US Dollar.
Stable currencies are important because they provide the liquidity that the decentralized world needs. They also function as a safe haven for investors to park their money in the volatile world of basic cryptocurrencies such as BTC and ETH. On the other hand, they provide a good income door in return for this liquidity they make use of.
The biggest group among stable currencies are those that have a real money behind them, led by USDT, USDC and BUSD. What does that mean? Paxos, which mediates the printing of BUSD, deposits that many dollars in banks in the USA for every BUSD it prints. USDC similarly keeps most of its money in cash in the bank (there is also a small portion of US bonds). The situation of USDT is mixed. They hold corporate bonds in exchange for the coins printed, so 100% there is no money in the bank. Let's keep in mind that all of these coins are centralized structures.
In addition to this group, there are also cryptocurrencies, not fiat money, behind this group, which is led by DAI. In DAI, run by a decentralized structure called MakerDAO, behind every coin printed there is an amount of cryptocurrencies far more than the value of DAI.
UST, which is the subject of our article, follows a different path than the two groups above. Let's take a look at it now:
**What about UST?**
UST is an algorithmic stablecoin. What does that mean? It doesn't have a fiat currency behind it or any more cryptocurrency than minted like DAI. Instead, there is LUNA, the core coin of the one-on-one Terra ecosystem.
Briefly, the system works as follows: Whoever wants to receive UST sends his LUNA. Is a LUNA worth 100 dollars sent, in return 100 UST is printed and the received LUNA is also burned. Want to exchange your UST the day after tomorrow? A $100 LUNA is printed and the UST you sent is burned.
**Why is UST needed?**
There are so many stable currencies in the market. Also, is UST necessary? Because Terra is a blockchain specialized in payments, it needs a currency that is liquid and flexible according to the needs of its system. If USDC wanted to use a currency like USDT, it would have to make a payment for it. For UST, there is no need to make such a payment. If there is demand, LUNA can print it. What if people accept this system and use UST? But why would people use it?
In theory, if you believe the Terra system will grow and become widespread in the future, you can adopt UST to use applications built on it. However, this was not the case initially. We entered the egg chicken spiral. So what to do? It should expand the use of UST with the timely incentive system implemented by DeFi.
The Terra system used a mouthwatering incentive to popularize the use of UST. With a loan application called the Anchor protocol, it started to give a full 20% interest on USTs deposited into the system. We are talking about a world where dollar interest rates are close to 0 in the USA. 20% interest is incredible!
As a matter of fact, the desired came true, and in about 18 months since its first establishment, the total of IHRs in the market has reached 18 billion USD.
**What happened recently?**
UST actually survived a great disaster before it came to this day. In May 2021, its value dropped to $0.96 for a while, but then recovered.
This expansion of the UST has also benefited LUNA in a sense. People had to give LUNA to get UST with 20% interest expectation. This has created a serious demand for LUNA. On the other hand, the LUNA's supply was decreasing as the given LUNAs were burned. As a result of all this, the value of LUNA rose from $1 to $112 at the beginning of April.
Well, it's a spiral. It goes well upwards; what if it's reversed? If people one day lose their trust in UST and give their money back, they will be given a LUNA in return, and they will sell their LUNA on the market and the LUNA price will drop.
Here, the founders of Terra applied a method that central banks have used for centuries to break this cycle. Central banks keep ammunition in their warehouses to defend the value of their currency. These are usually other countries' currencies and mostly gold. What's gold in the crypto world? BTC of course. Terra, too, announced that he will receive $10 billion worth of BTC to hold in the UST treasury. In the meantime, he bought a BTC worth approximately 3 billion USD and put it in the safe.
It seems that this move was not enough. In the crypto market, which experienced a decline after the FED's statements last week, there were serious UST sales towards the end of the week. After this, UST lost its anchor to the US Dollar. (You are reading the details of the event in the news. We do not go into the details in order not to prolong the article, but those who wish can follow what happened from the updated link). At the time of this writing, its value was still around US$0.80.
**The point is trust**
It should be said that stable currencies are the cornerstone of decentralized finance. For this reason, the trust it will give to the users is very, very important. The investor already takes enough risk with the expectation of a certain return in the applications he uses. While doing this, he thinks that the stable money he owns will return to him as the same amount of value the day after tomorrow.
In currencies such as BUSD and USDC, this trust comes with the motto "Look, there is money in the bank behind the printed token". USDT has its shortcomings in this sense, but with the advantage of being the first, it has become the defacto currency of centralized exchanges. There is a lot of collateral behind your DAI pattern (which makes it a bit risky, of course, especially in case of spikes), as the collateral is cryptocurrency.
**UST is at a different point as an algorithmic currency.**
First of all, it is worth noting that algorithmic stablecoins are still experimental. Many legacy applications (like Basis) have not been successful. Although Ampleforth is still around US$ 1, it could not reach wide audiences with a market value of around US$ 100 million.
The success of these currencies in the long run depends on their acceptance by the broad masses. To be used in payments, applications must accept this money. Therefore, first of all, the use of Terra system should increase or UST should be opened to other blockchains (we know that Terra has agreements with Avalanche and Evmos on usage). You can increase the printing of UST by paying high interest, but if people take this money and invest it in interest, it does not mean that it is used.
In the short term, for the success we mentioned above to come, there must be full confidence in LUNA. Printing money with high interest rates is not a sustainable method. You will make annual interest payments of $3.6 billion for the $18 billion in the Anchor protocol. You will effectively counter this by pressing LUNA.
Trying to grow with hormones with high interest rates in the short term is a very risky move. On top of that, the lack of transparency of the measures taken by Terra against the attacks on the UST further damaged the trust. Terra's response to the massive withdrawal of UST from the market was to give about 1.5 billion USD to large trading groups, which we call the OTC desk, and tell them to 'protect the UST'. It is not clear exactly how this money was used (OTC desks spend on centralized exchanges, not on the blockchain, so it cannot be tracked). Where there is no transparency, rumor and fear begin. This is one reason why it happened.
**Conclusion**
The main path that players of decentralized systems should follow should be decentralization. Initially it may be permissible for the founding team to be centralized during the growth phase, but this must change in the long run. Decentralization requires that the decision mechanisms be transparent and that all transactions of the system can be followed on the blockchain. In this sense, the founding team of UST is both a central team and the measures they take are not transparent. Making some of your money in BTC does not make you decentralized. Let's see if the team can regain trust and bring UST back to the $1 level. It looks pretty tough.
Black Box of Blockchain
In this article, we will take a closer look at Proof of Stake models from consensus algorithms. The past, present and future of PoS are extremely important. So why? Because many of the concepts we discussed, such as NFT, Metaverse, and Web3, rely on blockchain technology. The value of this technology comes from consensus algorithms. Among the consensus algorithms, the models in which the aforementioned new concepts can be realized seem to take place on PoS, not on PoW, due to the scalability problem. That's why it's important to understand PoS.
Let's first take a brief look at why we need consensus algorithms. Next, let's focus on the PoS models behind today's blockchain technologies.
Central and Decentralized Systems
In any centralized system, a central administrator has the power to add and update records in the database, just as a state that holds census information is a database that holds important information about its citizens. Here, the feeling of trust is exercised by a central authority that is solely responsible for keeping the actual records.
In decentralized systems, on the contrary, there are mechanisms that operate as self-regulating systems and operate without a single authority. It may include the contributions of a large number of participants working on the verification of transactions occurring on the blockchain and block generation. But of course this is not as easy in practice as it is in theory. Because in the ever-changing status of the blockchain, there can be a lot of malicious attacks. Therefore, everyone needs an efficient, real-time, functional, reliable and secure mechanism to ensure that all transactions in these ledgers are genuine and that all participants agree on a consensus. This is where consensus algorithms come into play.
As you know, our full acquaintance with the concept of blockchain goes back to the Bitcoin whitepaper. Although the phrase "blockhain" is not directly mentioned in this document, it takes its place in the history of blockchain technology with the phrase "chain of blocks". As is known, the consensus algorithm mentioned in this document was the Proof of Work algorithm, known as proof of labor.
**Proof of Work**
Proof of Work is the consensus mechanism used by Bitcoin and subsequently applied to the likes of Ethereum, Litecoin, and Dogecoin. PoW involves doing thousands of calculations per second to find the solution to a hard-to-solve but easy-to-verify math problem. The Proof of Work system encourages miners by rewarding them with coins for each new block found.
Although it has been a very fair and secure consensus mechanism, alternative approaches to PoW have been studied since it could not adequately respond to some needs that have emerged over the years. The most important of these needs are low energy use and increasing the number of transactions per second. Since Bitcoin's high energy use is also the parameter that ensures its security, a direct solution has not been implemented in this regard. Similarly, no permanent solution has been found to increase the number of transactions per second. Let's note that these mentioned issues do not indicate that Bitcoin is a worthless technology than others. Just as today's grocery shopping with gold will not make it worthless, Bitcoin has taken its place in the history of technology and finance as a store of value. However, just as paper money is needed other than gold, some blockchain technologies other than Bitcoin are needed. A significant part of these technologies use PoS models known as proof of stake instead of proof of labor.
**Proof of Stake**
Proof of Stake (PoS) is a consensus algorithm developed as a lower-cost, low-energy alternative to the PoW algorithm. The aforementioned advantages of Proof of Stake include allocating the responsibility of maintaining the blockchain ledger to a participating node in proportion to the number of digital asset tokens a person owns. The model states that if a person is holding that digital asset, they will not want to harm the system by fraudulently, but will strive to increase the security of the system. Proof of Stake is divided into some sub-headings in itself. This is the part we will focus on in this article. In fact, it is these consensus algorithms that are competing in the background of cryptocurrencies and visible blockchain technologies.
**Proof of Stake (DPoS)**
The first disadvantage of the Proof of Stake model is that many people want to stake their assets without downloading the full node of the network. The asset owner says: “Yes, I want to increase the security of the network, but I can't get the whole node to download and run it all the time, is there an alternative?” This is where some models, such as DPoS, come into play. DPoS generally works through an electoral system where a fixed number of validators are authorized to secure the network. As an asset owner, you can vote on who will approve transactions on the network, with voting power determined by the size of your stake. Verifiers with the most votes become delegates, confirm transactions and collect prizes for it. That is, you become a partner with your own assets to a full node run by a person. It is used in protocols such as DPoS, Lisk, Tron, Steem, Bitshares, EOS. Although this method consumes less energy, it is criticized in one way because of the high probability of centralization.
**Liquid Proof of Stake (LPoS)**
Authorization in LPoS is optional. Token holders can transfer their verification rights to other asset holders without oversight, meaning that the assets will remain in the wallets of the issuers. Additionally, only the verifier is penalized in case of security failure. LPoS also offers voting rights, except that as an asset owner, you can vote directly on protocol changes, not just who secures the network as in DPoS. LPoS was first introduced by the Tezos blockchain. LPoS in Tezos has proven to be successful and a decentralized model has also been achieved. At the time of writing, the Tezos network had a 75% stake and 107k agents, according to TZStats data.
**Conclusion**
Considering the technological, financial and human resources power of blockchain technologies today, we can think that many Proof of Stake algorithms will emerge in the future. Although both PoW and PoS models have their own advantages, it is not difficult to predict that PoS will be in the field in the intense transfers that will be created by the idea of transforming the Internet called Web3 to a new format. Of course, it will be extremely valuable for the Turkish IT ecosystem to work on its own PoS models, to create PoS validator pools for existing models, and to provide digital literacy trainings to users who will transfer their assets to representatives.
Flash Predictions for Ethereum!
While the ups and downs in the cryptocurrency market continue, many investors' eyes are on Ethereum. What are the expected levels for ETH by the end of 2022? Many experts continue to make predictions about Ethereum. What awaits Ethereum (ETH) investors towards the end of 2022? Let's take a look at the year-end expectations for Ethereum.
What Level Will ETH 2022 Be At By The End Of The Year?
According to Finder.com's latest "Ethereum Price Forecasts Report"; Ethereum (ETH) will reach $7,609 towards the end of 2022. That's about 102 percent higher than its price at the beginning of 2022. However, ETH is expected to end the year at $6,500.
Besides, Fred Schebesta, the founder of Finder, predicts that ETH will peak at $ 7,000. In addition, a person who is in the Ethereum 2022 year-end evaluation is Brighton University senior lecturer Paul Levy. Levy thinks that ETH can go up to $ 9,000. However, he also states that he will finish the year around $8,000.
Permission's chief product officer, Vanessa Harris, also thinks that the switch to PoS will lead to a significant drop in the price of ETH. She says ETH will be worth just $100 by 2030. Additionally, according to PricePrediction's Ethereum forecast for 2022, the price could average as low as $3,811 before climbing to $5,483 in 2023.
Finally, let's take a look at the latest situation of Ethereum (ETH) at the time of writing the news. According to Ethereum CoinGecko data; Let's say that it is trading at $ 2,929.65. Positioning just behind the leading Bitcoin in terms of market value, the value of ETH has increased by 3.1 in the last 24 hours and by 1.2 in the last 7 days. Finally, let's also mention that ETH has a market cap of $352,876,192,504.
How Fed's Rate Decision Affects Commodities and Cryptocurrencies
The Federal Reserve (Fed) will announce its interest rate decision on Wednesday evening.
This decision is closely followed by global markets.
I predict that the Fed, which increased interest rates by 25 basis points in March, will increase interest rates by 50 basis points at its May meeting.
In his previous speech, Fed Chairman Jerome Powell gave the message that interest rates could be increased by 50 basis points at the May meeting.
We will learn the decision together on Wednesday, May 4th at 21:00.
I think the Fed's 50 basis point rate hike in the past week has been priced in by the markets.
The rise of the dollar index to the level of 103.69, the decline of the EUR/USD parity to 1.0490, Bitcoin to $38.160, an ounce of gold to $1.875, and an ounce of silver to $22.68 gave me this message.
However, there are also those who think that the markets are not pricing the Fed's decision.
They, too, prefer to wait for the declines experienced in the past week, not seeing a buying opportunity.
Let's see what the Fed will give to whom?
In the week we left behind, I gave the message that there is a finale for the declines in gold, silver, parities and Bitcoin.
As you know, I have often stated that I would make gradual purchases 4 times in April, that I would not leave the purchase to May, and that I would go into waiting mode for new peaks in May-July.
These prices, which have depreciated excessively against the dollar, are the bottom levels in my opinion.
May-June-July are my waiting months.
If there are surprise withdrawals, I will use all my means and make an effort to add.
So, how should investors decide after the Fed?
1- If the Fed raises interest rates by 75 basis points, Fed Chairman Powell makes a statement in the hawkish tone;
Strong sales in global stock markets, sharp rises in dollar assets, decreases in commodities and cryptocurrencies continue.
In the USA, there is an increasing inflation and an increasing interest rate.
Interest means stoppage of investments and stagnation.
High interest rates and valuable dollars do not work for the USA either.
But an aggressive move can make things more complicated.
2- If the Fed raises interest rates by 50 basis points, Fed Chairman Powell makes a statement in dove tones;
Global stock markets recover, dollar assets decline, commodities and cryptocurrencies rise, markets relax.
Pricing and markets should normalize with the pre-purchased decision.
As the dollar gained excessive value in the short term, its counterparts also depreciated excessively.
Central banks will continue to increase interest rates, but they planned to do this in a controlled manner without scaring the markets.
That's why my prediction is in favor of option 2.
In other words, it is more plausible that the Fed will raise interest rates by 50 basis points, and Powell's dovish tone (optimistic) statements.
On the other hand, considering the current global economic conditions, geopolitical risks and uncertainties, I would like to state that I consider the May-July period quite risky.
Will Switzerland Buy Bitcoin?
Swiss National Bank (SNB) President Thomas Jordan said yesterday that there is no technical problem, they can buy Bitcoin whenever they want. The statement created excitement in the crypto markets. However, Jordan continued in his speech that Bitcoin did not meet the reserve currency requirements, so they did not consider adding the largest cryptocurrency to their balance sheet.
If you ask me, Bitcoin does not have some of the reserve money features. First of all, Bitcoin price is extremely volatile. For example, according to a study by 'etoro', Bitcoin showed an average daily change of 2.67% between January 2018 and June 2019. In the same period, while Bitcoin climbed up to 16% in one day, it fell to 18% on the downside. In this way, it is difficult to use a currency that changes excessively in a short time as a means of payment in international trade.
But can't we still use Bitcoin as a long-term store of value? Or do central banks, especially the SNB, only keep international reserve currencies on their balance sheets?
Compared to its own economy, Switzerland is the country that prints unlimited money without being tied to anything in the world. The ratio of the money minted by the SNB to the annual production of Switzerland is 139.7%! This rate is 40% in the USA, despite the fact that it has printed 8 times the central bank money it produced in 200 years until 2008, in the last 14 years. 70% in the European Union, and 135% in Japan, which is closest to Switzerland.
The USA, Europe and Japan transfer these wildly printed coins to the banking sector through various mechanisms; banks are pumping this money from the air to the real estate sector and classical stock markets. So what does Switzerland, which prints the most money, do with these trillions created out of nothing? SNB does not deal with make-up at all, it goes directly and buys technology shares from the American Stock Exchange with these self-generated coins! According to the most recently published data for the end of the first quarter of 2022, 25% of SNB's balance sheet consists of stocks. In other words, the investment made by SNB in the stock markets with the money produced from the air is around $252 billion!
Nasdaq shares, in which SNB has made the biggest investment, increased by 15.5% in the last month; In the last 1 year, it has lost 11.6% in value. On the other hand, in the last 5 years, Nasdaq has earned SNB 98.6%. But what would happen if SNB invested in Bitcoin at the same time? Bank 17.9% in 1 month; In 1 year, it would lose 27.9%. But in 5 years, SNB's Bitcoin gain would be 2993%!!
If the SNB is only concerned with price stability, why is it investing so heavily in highly volatile Nasdaq stocks? For example, Amazon has dropped 14% just yesterday and 24% in the last month. Tesla 19% in 1 month; decreased by 28% in six months. Or Netflix yesterday 4.6%; It lost 49% in 1 month and 72% in the last 6 months.
So the Swiss National Bank's opposition to Bitcoin is not due to price stability. SNB executives see no harm in 'printing' their $100 billion from the air into the much more volatile Nasdaq shares. The SNB does not look for the 'international reserve money' condition that it puts forward when it comes to Bitcoin, in stocks. The fact that Bitcoin is not preferred is not because it brings less profit. Even if we leave other crypto assets aside in the last 5 years, the return of Bitcoin alone has tripled the Nasdaq earnings!
Switzerland is the heart of the classical unlimited money printing system. The country with the most unlimited money printing. It shamelessly tries to keep the US stock markets afloat with unlimited money that does not rely on anything it prints. Now, if the SNB were to buy Bitcoin with limited money as its basic philosophy, wouldn't they ask: "Why did you buy it?" Answer: “It gains value because it is limited.” Then won't everyone say: "What is this diet, what is this pickled cabbage? Why are you constantly printing unlimited money until the morning?”
This is the real reason why SNB stays away from Bitcoin guys!
It is natural that big central banks have not yet come close to Bitcoin, as they can still deceive the world with the unlimited money they produce.
Bitcoin (BTC) Drops Over? Important Support and Resistance
While showing signs of recovery, Bitcoin (BTC), which has accelerated its declines in recent days, draws attention with its upward movements yesterday and today.
Bitcoin (BTC) gained an upward momentum again with the strength it gathered from the support in the $38,450-39,120 region, which I mentioned in my previous reviews. At the time of this writing, it is priced at $ 39,600, while testing the EMA50 indicator on the 4-hour charts. While there is some selling reaction on the EMA50, it can retest the $40,400-40,700 region if the $39,750 level is broken.
If it is rejected again via EMA50, support in the $38,450-39,120 region for Bitcoin (BTC) will be even more critical. In case of a return to this region, if it cannot find buyers, it can continue the downtrend until the support at $37,100. The possibility that a return to these levels will coincide with the results of the FED meeting also increases its importance.
According to the results of the FED meeting, which will take place next week, it is highly likely that the market will determine its direction. A positive atmosphere may occur in the event of a 50-point rate increase. In case of interest rate hikes over 50 points, the downward trend in terms of Bitcoin (BTC) and cryptocurrencies may continue.
Fed Is On The Radar Of The Markets
The Fed entered the markets' radar, replacing the Russia-Ukraine operation.
Markets are pricing in that the Fed will raise interest rates by 50 basis points at its May 3-4 meeting.
Support for this expectation came from the Chairman of the Federal Reserve, Jerome Powell.
Powell announced that a 50 basis point increase will be "on the table" at the Fed's meeting on May 3-4.
European Central Bank (ECB) President Christine Lagarde stated that there is a strong possibility that the asset purchase program will be terminated at the beginning of the third quarter of the year and that interest rates will be increased before the end of the year.
Central banks accepted the inflation problem.
It is stated that the struggle will not be easy, intervention should be made, and if they fail, the famine economy and stagflation process may come into play along with food inflation.
What was real and not surprising?
Abundant liquidity = Inflation
Plenty of free money = hyperinflation
Central banks, which have been competing to lower interest rates for 2 years, are now racing to increase interest rates.
Will they be able to tidy up? It sure won't be easy!
The sales in the global stock markets are the harbinger of this.
The statements made by the IMF are also not encouraging.
International Monetary Fund (IMF) President Kristalina Georgieva said that the Russia-Ukraine conflict weakened the economic expectations of the whole country, and high inflation was a clear threat to the global economy.
While risks and interests are increasing, the dollar and dollar yields are gaining value, while everything is losing value.
Then the investor should also keep those investment instruments that have lost excessive value or continue to be suppressed on their radar.
While the dollar index (DXY) has risen to the level of 101 and declined to the level of 1.08 in EUR/USD and 1.2837 in GBP/USD, the opportunity in parities should also be on its radar.
We Entered a New Money Order in the World
After Russia's entry into Ukraine on February 24, 2022, we entered a new world system as a result of a series of events triggered by the financial sanctions imposed on Russia by the USA and Western countries. In this week's article, I will share with you some of the views of an analyst named Zoltan Pozsar, who has written two of the most talked about reports (Ref:1 and 2) in recent weeks regarding this new order. Then, by examining the unexpected consequences of the financial sanctions, I will explain how Russia can turn this situation into an advantage both for its own people and for the peoples of some countries in the region, including our indirectly affected country. Of course, what I will tell you will be a combination of the ideas of myself and my dear friends in my close circle, as always.
Pozsar, who previously worked at the NY Fed, later served as a consultant to the US Treasury and now works as a strategist at the bank called Credit Suisse, has published a research report titled "Bretton Woods III". (Ref:2) I reproduce the first sentences of this report here:
“We are witnessing the birth of a new world monetary order, Bretton Woods III, that will focus on commodity-based currencies in the East and will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.
A crisis is developing. A commodity (commodities) crisis. Commodity is collateral and collateral is money. So this crisis is about the growing attraction of outside money to inside money. Bretton Woods II was built on domestic money and its foundations collapsed a week ago when the G7 nations seized Russia's foreign exchange reserves.
Throughout the article, Zoltan briefly says this: The G7 countries, namely the West, shot themselves in the foot with the financial sanctions they started to apply against Russia. After that, the most important move was made against the fact that the dollar continued to be the reserve currency in the world, and this was done by Western countries under the leadership of the USA. Because last week, Russia told the Europeans the goods they bought, their food (wheat), the fuel they would burn (oil and gas), the fuel they would burn (oil and gas), the money they bought with almost free money (this is what Zoltan calls the inside money in the above paragraph), based on our faith in the power of the American state. announced that it will now sell the energy and minerals it will use for only rubles. In the second report, Pozsar highlighted an important point by saying "You can print money, but you cannot print gas, oil and wheat".
Maybe the Europeans have not realized it yet, but if Putin does not step back from this move, Zoltan wrote his reports with the assumption that Russia will not make any concessions from now on, he says, in summary, we will enter a new financial system based on commodities from now on. In this new system, if Russia makes the necessary and right moves, the ruble will first become a regional reserve currency and then a global reserve currency.
**Could the ruble be a reserve currency?**
Until this past March, Russia was the world's 11th largest economy, and despite having a strong army and arms industry, it actually lived like a Saudi Arabian of 142 million people. With the income it earned from gas, oil and coal sales, it was able to offer its people a more luxurious life than it should have, like a rich Arab country. During the years of Putin, Russia built state-owned Rostek, Roskozmos, Rosneft, etc. It took on the appearance of a giant country of civil servants paying salaries to millions of people working under companies such as.
In other words, Russia with Putin is in a much better situation than Western states, both with its gold wealth that it has accumulated over the years, and with its rich hydrocarbon deposits and mines within the country's borders. It has a solid foundation, which does not survive with virtual money like European states.
While it was thought that the country, which has come to this day with these facts, has no solution against the intense financial sanctions it is paying for the Ukraine attack, it has started to be understood that this is not the case.
Now the ruble has two options:
1. To become a reserve currency based on the gold asset in the treasury of the Russian state and to support being a solid currency with the physical gold behind it.
2. To become a regional and eventually a global reserve currency by being indexed to the hydrocarbon fuels it produces and to commodities such as wheat and fertilizer.
He showed the sentence that the Central Bank of Russia recently declared that he was already considering the first of these: "I will give a gram of gold to the banks that bring 5000 rubles." This bank killed two birds with one stone by pegging a gram of gold, which is trading at 62 dollars in international markets, to 5000 rubles. It not only fixed the ruble/gold parity, but also set a lower limit for the possibility of the ruble falling. This lower limit became 5000/62 = 80.6 rubles. In the day immediately following this movement, the price of the ruble against the dollar decreased from 100 to around 82-83 rubles. The effect of this move in the medium and long term may also be interesting, because if the 1935 dollar ounce price (by Western speculators) on the London and New York gold exchanges (LBMA and COMEX) is to be brought down virtually, they will have to manipulate the ruble, which this time. They don't have any mechanism for that. On the other hand, if the ruble will appreciate in value after that, then its reflection on the gold price will reveal the fact that the speculators have established, namely the immoral relationship between physical gold and paper gold (if there is such a relationship).
The indexing of the ruble to gold is the subject of another article, because the issue of making a gold-indexed global reserve currency, whether this currency can be the ruble or not, is an important issue that needs to be thoroughly studied and discussed, and it is beyond me. I deliberately want to deal with the second issue, namely how to make a commodity-indexed regional currency and how the ruble can play a role in this field. What I will write on this subject can be read together with my articles on "asset-backed tokens", that is, commodity-indexed tokens, and if it is done like this, what I am saying here will be understood better.
New Horizons in Cryptography and Hardware
This week, I should have told you how the Russian sanctions disrupted the world financial systems and how a completely different structure started to be constructed, as in the previous weeks. This is because this subject is not a development that can only be covered with 2-3 articles. Even if I write for pages, there are events that are so important that they do not end, and no one has grasped them yet. Worst of all, it is the Russians themselves who understand these developments the slowest! But I wanted to take a break from this issue for two weeks and look at the events from a wider perspective and shed light on an issue that will be on our agenda from 2023. In the meantime, I've been following the developments in the world, maybe more new events will be added to the financial disruptions that have already surpassed the result of the Russia-Ukraine war in the coming weeks, and I will return to that side and continue to write about these newly formed financial systems.
I am devoting this week's article to another development that will start to become very important by the middle of next year, if not in the coming months, and will change the entire technology ecosystem. Blockchain technology is being pulled into a much wider area than it is currently in: The world of asset-backed tokens (commodity-indexed tokens) will quickly begin to enter our agenda.
Today, however, this new token, which has the potential of 10-15 times the size of the universe of cryptocurrencies, which can not exceed the value of 2 trillion dollars today, with its impact and size, as well as the commodity-indexed tokens that will replace the torn old financial system. I will put my finger on a technological development that concerns the infrastructure of the field. First of all, I would like to explain the categories of tokens in the world in two simple ways for those who do not know or do not fully understand.
This world is a very simple world from a technical point of view, I would even say extremely simple. But if you look at it from the other side, that is, from the perspective of financial and physical assets in the world, things seem too complicated. The reason for this complex perception is that while the classical world of assets developed step by step over the centuries before the blockchain, legal institutions that operate separately and independently from each other defined the universe of assets in very different ways and in a structure that makes it difficult to perceive them as simple. However, after the coexistence of blockchain and internet, that is, as a result of the revolution that we call Web3, all the assets owned by humans have now become identifiable as very simple programs. Until now, only three program templates are enough to define all asset classes. Let's see if we need a fourth program class. It doesn't seem necessary for now.
Banks, payment systems, stock exchanges, land registry offices, chambers of commerce, records of all shares of public and non-public companies, all automobile records, all insurance and reinsurance records, all financialization and capitalization systems, all but all with only three program templates can be expressed today.
To these we will soon need to include the goods that flow through the entire supply chain, food, consumer goods, commodities such as wheat and oil. All this flow will soon be migrated onto the blockchain by the end of 2023 at the latest. Of course, I am not saying that all commodities in the entire world will be moved to the blockchain; I'm just stating that it would suffice to pass at least one instance of each asset to blockchains.
Cryptocurrencies Are Said To Be Very Valuable In The Future
We are one of the countries with the highest demand for cryptocurrencies. These coins came to the fore with rapid increases. He became famous with the name Bitcoin. All together, everyone was talking about these record-breaking coins. Legends spread as if it would triple in a month, and the sooner you log into the system, the more likely you are to get rich. It quickly lost value after a while. Now there are bitcoin experts everywhere, on social media, even in network systems. I looked at someone's profile. A friend of ours, who has just graduated from university and declared his expertise, is even doing macroeconomic analysis. Being an economist is not that easy. You need to read a lot and analyze very well. You also know that giving investment advice is actually a crime. With the words of these expert friends, there may even be people who sell their houses. This is very dangerous.
This aspect of the matter is different, but my personal opinion on cryptocurrencies is that cryptocurrencies, which have a very logical starting point, have a serious problem. It is not recognized by the states. In fact, this is a very natural result, because cryptocurrencies were created to overthrow the dominance of states over currencies. Come on, changes don't happen quickly.
It is defined by some as the Ponzi scheme, while others call it the invention of the century. People are confused too. This is very normal, this is the first time the world is encountering such a system. It's a software-based system, and it's hard to understand the premise that it's going up and down in price. On the other hand, we understood that with the pandemic period, digital currencies will develop faster than expected. I think the worst part is that he calls this money a way to get rich. Any investment tool, whether it is based or not, cannot make a person rich in a short time. If only ten people out of tens of thousands of people in the market have made a good return by chance, this turns into a thousand stories by word of mouth. There is a perception that everyone who enters this system will become rich one day. The most important purpose of cryptocurrencies, especially Bitcoin, is to remove a financial intermediary. However, people have never understood or did not want to understand this purpose.
My message to the individual investor is actually… If you have decided to enter the crypto money system, you should risk losing almost the entire amount you invested. On the other hand, you can also get huge returns. Now the rest is up to your risk appetite. Despite all this, cryptocurrencies will be in our lives in the future whether we want it or not, and then we will understand its real benefits.
The Art of Making Money
We struggle for years to make money.
However, those who do not follow some rules, act with their emotions, and cannot make the right moves will see that their efforts have not been rewarded after years.
Because he did not change his way of making money, he continued to look at things as straight logic.
The problem starts with not being able to see the blessing of having a valuable grace such as mind and time, not realizing that there is a free wealth that cannot be bought with money.
We see that those who use their time well and make smart investments ultimately win.
Regardless of your capital, you can grow your business and reach your goals with a smart management.
What you invest your hard earned money in is very important.
For example, do you invest in assets or liabilities?
Those who invest most of their money in assets that yield them earn income and save.
So, on the one hand, you'll have income like rental income, which makes your savings the golden chicken.
If you have risky choices, your priority should be to feed the chicken, not cut it.
But most people's first job is to start off by butchering the goose that lays the golden egg, which is a very wrong move.
When it fails, it's also the chicken that lays the golden egg.
If you want to be rich, the priority should be to provide money as much as possible, by investing in assets.
So what are actives?
Assets are anything that puts money in your pocket.
Passive is the one that takes money out of your pocket.
Anything that will generate a small return on a regular basis is your assets.
If your priority is not money, you are on the right track if you are studying to learn the job.
If you have studied for years just to make money, you will only earn money, if you have good money management knowledge, you can turn the information into cash faster and become rich faster.
Just as they evaluate your knowledge in numbers in schools, they will evaluate your experience in your business life by what they pay for (money).
Although accessibility has increased with the development of technology, we observe that financial literacy is still at a low level.
We know this from the community of people who lose their savings every year, which is the opposite corner.
The way of money, savings or wealth is not really wanted to be taught.
Those who make an effort to learn can manage this process in a healthy way.
Because the system is not built for you to earn, but for your spending.
The system is built on making money with your money, not for you to win.
Individuals advise their children to study, to have a profession, to throw a cover somewhere.
They take into account the salaries that will be prioritized in their career choice.
Dreams of managing wealth, being the boss of your own business, or being an employer are not dreamed of, steps are not taken.
Fixed income brings with it fixed debt.
When getting a salary, it makes more sense to me to save money first and then borrow money.
Increasing the amount with the right investment choices and paying more upfront reduces the risk of borrowing and brings the habit of saving.
In this case, your savings assets become your borrowing liabilities.
People often delay taking action or taking action.
That's why giving automatic instructions to the bank to save money (converting an amount into an investment in salary) is a useful practice.
Crypto, Gold or Silver?
In my previous articles, I explained the relationship between gold and cryptocurrencies as follows;
“If gold gains value, cryptocurrencies lose value, if cryptocurrencies gain value, gold loses value”
It acts inversely proportional.
That is, those who sell gold get crypto, those who sell crypto buy gold.
We saw the last example on Friday.
Bitcoin closed the week at $39,548, declining by -5.91%, while an ounce of gold finished the week at $1,967 with an increase of +1.57%.
Commodities love a war environment.
Investment instruments such as gold and silver shine in times of increased inflation and geopolitical risks.
Everyone knows this.
But the question is:
“Is there a real war or a manipulation market right now?”
For 90 percent, the answer to this question is "WAR".
My answer is "MANIPULATION".
How Does?
How could the ounce price of gold fall from 1,860 to 1,823 on the day the US inflation data was announced as 7.5 percent?
Shouldn't he normally break above 1,900?
When the inflation figure was announced, the probability of the Fed's interest rate hike by 50 basis points increased to 93 percent, but how did the probability of the Fed increasing interest rates by 50 basis points decrease to 33 percent today and 25 basis points of interest rate hikes were priced in?
While the dollar index was at 95.85 in the face of the possibility of the Fed's interest rate hike by 50 basis points, how did the dollar index rise to 98.93 in the face of the possibility of the Fed's interest rate hike by 25 basis points?
How can an ounce of gold not break the $2,000 level upwards while the inflation figures and war broke out in the world?
Oil company Shell announced that it has purchased crude oil from Russia at a discount of $ 28.50 per barrel.
Shell, which received this discount, announced the decision of Russia to withdraw from projects in the country on February 28 after the attack on Ukraine.
What kind of sanction or withdrawal decision is this?
How do NATO, the USA and Europe tolerate the blatant killing of civilians there, despite their frequent statements that they will not go to war with Russia?
We can put dozens of questions like this on the table.
If there is a war or manipulation (and there is) someone will win and someone will lose!
There are winners and losers.
The losers have always been the people.
The winner is those who prepare the counter behind the scenes.
As innocent people die in the world, the winners will be the capital owners.
Isn't it obvious how prices were manipulated on the 11th day?
Under normal circumstances, shouldn't there be at least $2,300 an ounce?
They are also pressing it for the short term.
The same suppression as they were suppressed with the "Temporary inflation discourse lie" last year.
If they pull $1,880 or lower again, then it will be revealed that they are manipulating.
In this process, the Fed got what it wanted by increasing the dollar index to 98.93.
If he had increased interest rates by 50 basis points, it would only have risen this much.
Parities, stock markets, commodities got their share from this process.
Inflation is increasing in all countries, they are playing the war game. An ounce of gold rose from 1,823 to 1,974.
So the cost of this is an increase of $151?
I have one more point.
As of 2020, we see together how the world has been shaped.
Unfree people, a community of people living in fear and panic, a time period with no future, an uncertain life and the world economy.
Mass migrations in natural disasters, coups, climate change and wars.
People running to banks with fear and panic.
An effort to create a familyless, cashless, genderless society in need of the system.
The financial pillar of this is the divisions that keep people away from physical savings.
So, cryptocurrencies.
In the morning when the Russia-Ukraine operation started, everyone lined up in front of ATMs and banks.
Russia, on the other hand, imposed restrictions on the money movements of the society with its capital control.
The system gave the following message to people and states: “Own as much land as you want, live in the most beautiful villas, use the most luxurious vehicles. When order breaks down, you're nothing if you don't have cash. You need a system. That system is digital and it is money that no one can interfere with and that you cannot carry with you as a burden. It's called CRYPTO MONEY. System states also need this system. The situation is clear after the sanctions imposed on Russia. They left no alternative.
Commodities such as gold and silver are real money.
Gold and silver will continue to increase in value as usual.
In fact, there will be such a rise after this manipulation that most people will not be able to take it physically.
Most people won't earn that much.
My annual forecast is that there is no turbulence at the level of $2,150 per ounce, 1.450 lira under grams, $40 per ounce of silver, and 20 liras in silver.
But the manipulation must pass.
They will shine the stars of crypto first.
First, they will collect the crypto coins from the bottom.
First, they will collect the parities from the bottom.
They need to sell gold and silver high today to collect them.
“Those who did not believe the temporary inflation lie and did not sell their gold won” last year.
This year “The one who collects the bottom pairs and cryptocurrencies that sees war manipulation wins”
And those who invest in Russian energy companies.
These days are forgotten after 2 weeks.
Again, I remind you what happens with games played on gold, silver, crypto money and parities.
Today you are going to invest in something, trade the one that has gained the most value with the one that has lost the most.
Do this with parity.
You are smart people.
You have four types of assets in your basket and you trade with parity.
You are on the right track.
You have a nice way.
The Dark Side of the Crypto World and AirDrop Hell
We all know that the development process of the crypto-assets world is not a weaned white spoon. We cannot deny that the process of gaining value of Bitcoin occurred with its discovery and adoption by Silk Road, an online crime network. We do not even have the knowledge of who produced hundreds of Bitcoin derivatives or for what purpose. We witness how dangerous a structure like Dogecoin turns into a dangerous tool in the hands of someone like Elon Musk.
We cannot ignore the fact that most of the ICOs that have mushroomed since 2016 have nothing to do with the projects they promised, and their sole purpose is to make money from the gold rush frenzy. The situation is not much different in the NFTs we are currently going through. What's going on in the dark corridors of the DeFi world, which has just begun to sprout and is at least four times larger than the ICO wave even with its current structure? However, this is not enough to wage a war against all cryptocurrencies, nor to denigrate blockchain technology, of course. On the contrary, there is a certain amount of negativity in every innovation and process. The Internet was established for everyone to access information under equal conditions and in a democratic way, and today it has turned into a tool where giant technology companies, whose numbers do not exceed the fingers of both hands, almost dominate people's lives and can direct societies.
The purpose of this article is to show you the dark side of the crypto world, rather than bringing a philosophical discussion to the struggle of good and evil.
Generally, when it comes to frauds and hacking related to crypto assets, things like stealing private keys of wallets, hacking exchanges or closing the shop and disappearing with all assets come to mind. E-mails on behalf of various projects, experiments such as the fact that you have plenty of bitcoin assets but you have to pay the 3 thousand dollar tax upfront to get it turned into funny experiments for those who know a little about these worlds. But there is much more to it than that.
There are various dark agencies and groups that emerged during the ICO period, which has been on the rise since 2016, and still exist. Their sole purpose is to seize people's investments and silence their dreams in the marketing frenzy created by creating a magnificent atmosphere for projects that have no real features.
It is not easy to work with a team like the one I mentioned, because if they do not own a job, it is very costly to get the services they provide. Prices start from 5 to 6 digits on a dollar basis and not only with these numbers, but also with the shares received from the projects.
So what do they do and how do they do it?
First of all, various channels related to crypto assets are very popular in this ecosystem. Telegram and Reddit are among them. Various forums and news sites follow these channels. A sine qua non of a project is a popular website. After the social media accounts and Telegram groups connected to this site are created, the process begins. The first news, the first interviews are starting to be published on the websites with questionable reputation, and if the budgets are good, news and interviews appear on the crypto news sites that have raised the bar a little bit.
As the environment heats up, investors start buying with the fear of missing out on opportunity (FOMO). This is exactly the moment when financial leverage is activated, and the prices start to rise rapidly with the fake demands created for the coins or tokens of the projects. 5x-10x-30x. There is a right moment of departure for the dark agency and project team. In the frenzy of market enthusiasm, pockets are filled by selling whatever is in the palm of hand, and all team and PR activities disappear in a flash. As soon as the flow of information about the project is interrupted, it starts to be understood that something is wrong, but as in every classical investor psychology, it is already too late until the investor who is in love with the project understands the stake.
Browse around on CoinMarketCap or CoinGecko and look at the price charts of the projects, I'm sure you'll find hundreds of them.
Young (Bitcoin) & Old (Gold) Conflict Waste of Time
Hello Everyone, I am a new member of this platform and I am very happy to be here. On this page, I will try to share my articles about markets and crypto when I can. I hope it will be useful for you and me. I'm starting my article about Bitcoin and Gold by saying good reading to everyone.
One has a story of 5,000 years, the other has a story of 13 years.
One is gold, the other is Bitcoin.
While gold has turned into a traditional and accepted life, bitcoin is living with adolescent rebellion but continues to grow.
What they have in common is that they are both investment vehicles.
The era is the era of technology, and time passes very quickly. Time and money become worthless every day.
Until you learn something, the system updates itself and starts teaching the next step.
When this is the case, the nerves of the society are getting very tense.
The effort to keep up with the new order on the one hand, the decrease in purchasing power in the face of inflation on the one hand, and the increase in risks on the other hand spoiled the taste of life.
When it comes to money, differences of opinion between generations are inevitable.
While parents praise their children for investing in traditional investment instruments such as gold, silver, foreign currency or real estate, young people prefer to invest in cryptocurrencies more.
Traditional investors prefer to touch it physically, put it in their pockets, and use it whenever they wish.
Modern investors, on the other hand, prefer to transact with the password method, which does not physically load, is not connected to central banks.
The common feature of both is that they are limited in number or in quantity.
When the asset decreases and demand increases, the value appreciation of that asset always continues.
Both are independent from any central bank.
They are assets that cannot be printed and manipulated, such as banknotes.
When we look at the result, both continue to increase in value on an annual basis.
The days when central banks will issue their digital currencies and we will use digital currencies in daily life are very close.
Digital euro, digital dollar, digital yuan etc…
It is unnecessary for the old and young to be stubborn when the process is progressing so fast.
The preferences of these two instrument investors are the same, only the age groups of the investors are different.
The young investor who sells gold gets BTC in return, and the one who sells BTC gets gold.
The traditionalist buys physical gold and does not sell it unless he needs it.
While the financial system in the world is changing, purchasing power is decreasing, and we are going to the hyperinflation process, we need to think about the system, not the investors.
In order to avoid wasting time, it is necessary to explain the crypto money market to people in a plain language.
We must continue the struggle to explain many issues such as technology, logic, advantages and disadvantages.
Woe to us if we fall into the trap of those who post flower and insect photos in their profile pictures or share rockets or planes on social media.
I had a pullback prediction to the $43-44k range. It recovered from the $44,200 level and stopped at $46,183.
The real target is $50,000.
However, when this level is tested, it is necessary to comment again according to the conditions of that day.
$43k below, $50,000 above.
I think there is no problem in this band range.
It is necessary to reinterpret those that go out of this band gap.
In the ounce price of gold, the range of 1,880-1,980 dollars remains valid.
April is the month of FINAL!
In April, I predict that we will see the last buying zones in exchange rates, gram prices of gold and silver.
I would especially like to state that I see April as the final month, and that the storm will begin in May.
Whatever you need or invest in, the decision should be APRIL!
Kind regards..
@MyCrypto
