Inflation Hits 7%
PayPal Coin: New World Currency?
PayPal has stepped into the stablecoin arena. In September we learnt that Curv, a PayPal subsidiary focused on digital asset security, was working on stablecoins, but more information has just come to light — hidden code in the company’s iPhone app (revealed to Bloomberg) showed a “PayPal Coin” that would be backed by USD. A PayPal spokesperson later confirmed the news, saying that this code was added during a recent hackathon that allowed participants to explore the company’s blockchain, crypto and currencies division.
Jose Fernandez da Ponte, senior vice president of crypto and digital currencies at PayPal said:
“We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators.”
PayPal’s original vision back in the day was to create a “new world currency”. Former PayPal COO David Sacks told CNBC back in 2017:
“… we believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money.”
PayPal co-founder and fmr CEO Peter Thiel was quoted in The PayPal Wars as having said in a 1999 speech, two weeks after PayPal’s product launch:
“Many of these countries’ governments play fast and loose with their currencies. … They use inflation and sometimes wholesale currency devaluations … to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars. Eventually PayPal will be able to change this. … PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means”.
Unfortunately this dream was never to become a reality, and like every other centralized company that tries to create a competitor to the USD, regulation hampered the plan. Eventually PayPal was acquired by eBay, and they were relegated to being a payments intermediary.
But then bitcoin came about, with the promise of helping billions of people across the world.
Sacks recognized:
“[Bitcoin] is fulfilling PayPal’s original vision to create ‘the new world currency.’”
PayPal officially entered the crypto markets in 2020 by giving users the ability to buy and sell certain cryptocurrencies within the PayPal wallet. Moving into stablecoins, though, may well prove to bring back those regulatory headaches of their early years. Stablecoins are under increased scrutiny all over the world, largely because centralized stablecoins are inherently controllable so that’s where regulators are focusing their efforts. Bitcoin succeeded because there was no central company to shut down.
Given how many people have already successfully entered the stablecoin space, PayPal might have more success creating their currency this time around. We’ll leave the title of “new world currency” to bitcoin, though.
First Jack, Now Moxie
Moxie Marlinspike has announced his resignation as CEO of Signal, after almost 10 years at the helm. His explanation for leaving his position echoed that of Jack Dorsey leaving his post as Twitter CEO last month almost to the T (check out our article).
“It has always been my goal for Signal to grow and sustain beyond my involvement. … Signal is now an amazing group of 30 people: a mix of wonderful engineers, super talented designers, gifted and unflappable support staff, and a very accomplished and committed leadership team.
…
It’s difficult to overstate how important Signal is to me, but I now feel very comfortable replacing myself as CEO based on the team we have, and also believe that it is an important step for expanding on Signal’s success.”
Moxie said he intends to remain on the board of Signal, and he identified fellow Signal Board member, Brain Acton, as interim CEO until a suitable replacement can be found. Their search is active and now open to the public:
“I’ve been talking with candidates over the last few months, but want to open up the search with this announcement in order to help find the best person for the next decade of Signal. Please get in touch if that might be you!”
Moxie is an OG cypherpunk who has made an incredible contribution to privacy. Signal Protocol encryption was started by him, and is now used in closed-source implementations by WhatsApp, Skype, and Facebook Messenger. In 2011 journalist Andy Greenberg said that Moxie was responsible for some of the most noteworthy inventions in applied cryptography in recent history. We will be diving into Signal’s history, the story of Brian Acton (interim CEO), and Moxie’s contributions in our next video! Stay tuned!
The Inflation Balloon Keeps Getting Bigger
The latest Consumer Price Index (CPI) report from the US Labor Department dropped this week: December inflation reached 7%, a near 40-year high not seen since 1982.
This came as no surprise to anyone who uses USD, and has seen recent hikes in food prices, energy prices, literally all prices…
Economists have been predicting this climb for the last several months. Peter C. Earle, from the American Institute for Economic Research, said:
“The trend in prices is still headed north. … At this point, part of the ongoing policy debate will likely shift to whether the Fed waited, or is waiting, too long to react to rising prices.”
Fresh off his re-appointment and confirmation hearing, Fed Chairman Jerome Powell said on Tuesday that inflation continues to be much higher than the Fed’s target and that that “is telling us that the economy no longer needs or wants the very highly accommodative policies that we’ve had in place”.
So the Fed is finally realizing “the economy no longer wants them to inflate away the value of their savings to oblivion”. Well done to them.
Bitcoin’s price rose 3.1% over the 24 hour period after Powell’s comments, and rose 1.1% immediately after the CPI numbers were released. It’s only a small hike up from the down-trend we have been seeing for nearly two months now across crypto markets, but reflects the general consensus that cash is probably the worst place you should be keeping your money right now.
Alana Benson, investing expert at NerdWallet says:
“Inflation is just one more reason why it’s important to have a well-diversified portfolio. If your investments are spread across different asset classes, geographies and industries it can help protect you from risk”.
Executive vice chairman of investment holding company Helios Fairfax Partners, Michael Wilkerson, also recommended keeping it simple:
“In the meantime, Bitcoin and Ethereum provide the most liquid ways to invest in crypto which may yet prove to be the most efficient inflation hedge in this environment”.
It’s uncertain whether the Fed will be able to reign in the current inflation trend, but the tactics they’ll be using to attempt it are sure to create some kind of credit crunch. Hold on tight, this might be a rough ride.
We dive into inflation numbers on this week’s CryptoBeat Live show
Return of the Doge-Father
Dogecoin is now an accepted payment in the Tesla Online Shop: Users can purchase anything from a water bottle to a cyberquad (“for the kids”). Needless to say, the Doge tribe are ecstatic to see the world’s 11th largest cryptocurrency reaching the milestone of being called “an officially accepted currency”.
The price for DOGE jumped 11% immediately following the announcement. Elon Musk, ever the influencer, is making good on the statement he made last month when he tweeted:
“Tesla will make some merch buyable with Doge & see how it goes”.
The decision to wade back into the crypto pond with Dogecoin, after Tesla’s swing and miss attempt to accept Bitcoin, is an interesting move. We’re delighted to see companies embrace crypto in everyday transactions, and this definitely won’t be the last of such announcements. Many are pointing out, though, that if Elon were serious about accepting crypto for everyday, small-scale purchases, he would choose one that has much cheaper transaction fees (Doge fees are currently as $0.25!).
But that’s the thing about Elon — he enjoys having fun, and delights in this cryptocurrency because of its memes. Elon has said time and again that he just “thinks it's funny”.
At the time of this writing, Doge was trading at $0.18.
Tom Emmer Takes a Stand
Rep. Tom Emmer (MN–R) introduced legislation this week that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) for use by individuals. In a press release this week he stated, “to maintain the dollar’s status as the world’s reserve currency in a digital age, it is important that the United States lead with a posture that prioritizes innovation and does not aim to compete with the private sector”. His stance stems from the real threat that a government-controlled CBDC issued directly to the public would open up financial surveillance for millions.
He recommended that if we are to pursue a CBDC, then it needs to allow for the privacy protections that cash transactions still provide.
Emmer’s laudable twitter thread:
“As other countries, like China, develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the United States’ digital currency policy protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.
CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users, and track their transactions indefinitely.
Not only does this CBDC model raise “single point of failure” issues, leaving Americans’ financial information vulnerable to attack, but it could be used as a surveillance tool that Americans should never be forced to tolerate from their own government.
Requiring users to open an account at the Fed to access a United States CBDC would put the Fed on an insidious path akin to China’s digital authoritarianism.
Any CBDC implemented by the Fed must be open, permissionless, and private. This means that any digital dollar must be accessible to all, transact on a blockchain that is transparent to all, and maintain the privacy elements of cash.
In order to maintain the dollar’s status as the world’s reserve currency in a digital age, it is important that the United States lead with a posture that prioritizes innovation and does not aim to compete with the private sector.
Simply put, we must prioritize blockchain technology with American characteristics, rather than mimic China’s digital authoritarianism out of fear.”
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.