NO ALTERNATIVE: Nations Turn to Crypto as RESERVE CURRENCY!
Governments all over the world rely on reserve assets. These are comprised of their own denomination, as well as foreign currency, bonds, gold, ports, national parks and municipalities. The reason for this diversification is in order to shore-up their banks and provide a hedge against economic risk.
Powerful nations have relied on these assets for centuries, with the most common reserve asset being the U.S. dollar in the past 75 years. I am an avid economic historian, which helps when you want to keep a balance on things and make sure to hold things in proportion.
In 1944, the Bretton Woods system was originated. This is the main cause of our present day dollar hegemony. In 1971, the federal government defaulted in this system and birthed a fiat monetary system in its place.
Since then, inflation has decimated the value of the dollar. Given America’s ballooning debt and extravagant spending habits, other countries, specifically those that hold Treasury bonds and have loaned Washington trillions, don’t trust the greenback anymore to withstand the ravages of further devaluation.
The innovation that will change many current structures to the core is the advent of blockchain technology, as cryptocurrency is providing an inflation-resistant alternative to the dollar and to fiat currencies in general.
In light of this, central banks are considering crypto as an anchor – a trustless currency in a time when currencies can’t be counted on.
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Countries like China, Japan, Russia, India, Turkey, and Iran have been rapidly dumping the U.S. dollar and Treasuries. Some of these nations seek to mitigate the impact of American sanctions or of the trade war. All of them are pressing for a better alternative to the declining dollar.
It’s the perfect time for them to turn to crypto, the most secure and advanced of all currency forms today.
The crypto industry presses forward with new and exciting developments, despite unbelievable setbacks and challenges that are posed to it.
Case in point: while some have noted the delay of the long-awaited Bakkt digital assets trading platform, this delay doesn’t seem to bother Bakkt’s owner, which has even gone ahead and made a headline-grabbing acquisition.
Intercontinental Exchange Inc. (ICE), which owns the upcoming Bakkt platform as well as the New York Stock Exchange, recently announced their acquisition of assets in futures commission merchant Rosenthal Collins Group. The acquisition is part of the company’s plans to enhance risk management, comply with regulatory requirements, and deliver a trusted Fintech ecosystem for digital assets.
Clearly, the delay of the Bakkt’s launch, which was scheduled for January 24, originally, will not stop ICE from moving forward and from cryptocurrency to expand its reach and its adoption in 2019.
Microsoft, Starbucks, Fortress Investment Group, and now with the Rosenthal Collins acquisition are all partners of Bakkt. This is not the sort of project that gets shelved.
Everyone knows that the delay isn’t ICE’s fault, either. The Commodity Futures Trading Commission (CFTC) is tied up and is temporarily unable to provide Bakkt’s approval in a timely manner, because America has a dysfunctional government that is partially shut down.
Moreover, ICE, as the owner of the New York Stock Exchange, has enormous clout in the world of finance. Without a doubt, ICE is heavily lobbying the CFTC to secure Bakkt’s approval and will continue to do so – it’s only a matter of time before they get what they want.
Once Bakkt launches, it won’t be much longer before the Securities and Exchange Commission (SEC) approves a Bitcoin ETF, which will have an explosive effect on Bitcoin’s trading volume as well as its price.
With an ICE-backed, globally recognized cryptocurrency trading platform and large-scale participation from massive institutional investors, the pressure on the SEC to approve an ETF will be unbearable.
Central banks are well aware of these developments, and they’re warming-up to the crypto movement in 2019 like never before. They’re seeing the inevitable happening right now: a global shift from fiat to crypto as the global blockchain revolution proves that it’s unstoppable.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.