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Crypto Research

Modern Economic Nonsense — Banks are seeking shelter in cryptocurrencies

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Cryptocurrencies have grown in popularity over the past few years. With this rise, so has the use of these digital assets by major retail financial institutions and investment firms to store value or trade. And it isn’t just small credit unions that are getting involved either. Big name institutions such as Citibank and J.P. Morgan Chase have announced plans to offer their own cryptocurrency services offerings to customers, which gives us a better look at how cryptocurrencies might become more accepted in the future. Cryptocurrencies are generally seen as a faster and more secure way to store value than traditional bank accounts or government-backed fiat currency. The main appeal is anonymity – your money is stored in an online wallet which cannot be accessed by anyone other than you without permission from the company itself, so they can’t be used for criminal activity or tax evasion like traditional banking services can be. But because of this anonymity, it also means there is no regulation on cryptocurrencies similar to that imposed on banks and other financial institutions by governments around the world for security and anti-money laundering (AML) purposes. Until now, most cryptos have been relatively niche but with growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services – including lower transaction fees and greater levels of protection against fraud and theft than regular bank accounts.

Why is Banks’ interest in Cryptocurrencies growing?

Cryptocurrencies are becoming more and more popular, and now major banks are getting involved. Cryptocurrency adoption is still very new, with only a few institutions offering bank-like services for this new form of money. But with the growing interest and utility of blockchains and cryptocurrencies, it’s likely we will see more and more financial institutions offering this type of service. One of the biggest reasons banks are interested in cryptocurrencies is to increase their customer base and attract new customers. Many banks are seeing a decline in customers due to increased competition from online and mobile banking services and more people are now looking for a better way to store value and manage their finances. Digital assets such as cryptocurrencies may provide a solution and banks are now looking to embrace them as part of their overall financial services offerings.

Citibank to offer cryptocurrency exchange and custody service

Citibank has announced plans to offer a cryptocurrency exchange service as well as custody and clearing services for legally compliant investors. This will allow customers to buy and sell bitcoin, ethereum and other digital assets like stocks, commodities and other investment vehicles. It’s not the first time that Citibank has been in the cryptocurrency game. The company received a BitLicense from the New York Department of Financial Services in January 2017, but the company discontinued its Bitcoin product that same month citing “market conditions and customer preferences.” Citibank customers will be able to open an account with the company and use this account to access the new service. Customers will then be able to link their existing bank account to the new service with the help of a Citicoin-enabled application.

Banks launches CBDC, the first licensed cryptocurrency product near future

Banks are set to launch a new security token product in collaboration with blockchain startup Digital Asset or on their own. The product, called CBDC, is a security token that will be used to provide a variety of financial services including custody, settlement and trading. Unlike many companies that launch blockchain products without much thought as to how they will actually operate, CBDC is designed to connect to the existing financial services infrastructure of Banks. The platform is designed to be compliant with regulations such as the Bank Secrecy Act (BSA). These regulations require financial institutions to report suspicious activities as well as deposit and withdrawal limits for customers. Because Banks know better, the weaker fiat currency becomes, the more likely the fragile the infrastructure will be harder to prevent the dollar from losing its domination in the coming years.

Conclusion

In general, cryptocurrencies are becoming more and more popular and are used for payments and trading. However, only a few financial institutions offer cryptocurrencies as a service. Major banks such as Citibank and J.P. Morgan Chase will announce plans to offer their own cryptocurrency services. With growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks in order to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services.

Reminder: I am not your financial advisor. 

Buy me a coffee here if you want to support my writings.

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Crypto Research

Crypto is a good investment or not

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Many people buy crypto to believe it is a great investment. However, it may not be the case.

I asked ChatGPT about the crypto investment and here it is:

Investing in cryptocurrency can be a good opportunity, but it also comes with high risk and volatility. It is important to thoroughly research and understand the cryptocurrency market before investing. Additionally, it is recommended to diversify your investment portfolio and not to invest more than you can afford to lose.

Here are some misconceptions:

First, crypto is not a traditional investment that requires a conventional way to invest. Instead, it is a catch-or-miss investment that you really need to time the market to make profits.

Second, you do not need to hold for too long if you need money quickly. Crypto tends to perform badly long term than average assets did.

Third, high risk only sometimes has high rewards. Many crypto with high risks may not ever provide high returns eventually and many go to zero instead.

Last, do not go FOMO because you are likely to become a bagholder.

There is not missing out and it is too late in the crypto. Rather, you should always keep an eye on the market.

Photo by Jon Tyson on Unsplash

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Crypto Research

Mother of all bubble

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We are heading into a bubble economy and there is one that is about to pop.

ChatGPT suggests that a financial bubble is:

A financial bubble is a situation in which the price of an asset, such as a stock or a commodity, becomes artificially inflated due to excessive speculation and investment. This can lead to a situation where the market becomes overvalued and eventually collapses, resulting in significant losses for investors. Bubbles can occur in a variety of different markets and can be caused by a number of factors, including low interest rates, economic growth, and investor sentiment.

Let’s take Tesla as an example.

Tesla CEO is Elon Musk, who purchased Twitter last year and believed the company can help Tesla to make more profits.

Does it? Or he tried to inflate Tesla instead?

If you go to Twitter, there is less opposition than a supporting voice.

Elon Musk sells Tesla cars and Tesla stocks.

People purchase cars to help pump the stock price and when stock price goes up, people want a new Tesla.

Despite all the bad reviews about the car and its questionable autopilot feature, Tesla cars sold quickly and stock goes up no question.

Is this a Ponzi scheme?

Similarly, cryptocurrency is also highly speculative.

It goes up a time to time, but people buy the narrative without further investigating how useful the crypto really is.

What if people stop buying the crypto, will that still go up?

What if the economy is so bad and the interest rate is high that people have less money to buy more crypto?

We will see how it goes.

Photo by Pawel Czerwinski on Unsplash

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Crypto Research

One more thing NFT can do

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California will have a pilot program to use NFT to record car titles as an innovation of record management. 

ChatGPT stated NFT is:

NFT stands for “non-fungible token.” It is a digital asset that represents ownership of a unique item or piece of content, such as a digital art piece or collectible. NFTs are created and stored on a blockchain, which is a decentralized digital ledger. This allows for the creation and transfer of ownership of digital assets in a secure and verifiable way.

Finally, the government has realized the use of the blockchain, and it will reduce government spending while providing more accurate information to citizens.

I think blockchain has more utilities other than money. Digital money is the first step in testing society’s compatibility, but the blockchain should focus more on providing services rather than investing to people.

That blockchain service can be essential for society later rather than simply going to moon-style investments to create unsustainable pump and dump.

Such government collaboration is the first step to making blockchain a social system.

Photo by Coinhako on Unsplash

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