Coronavirus Reads Sunday #86
¯\_(ツ)_/¯
Happy Sunday from the Hudson Valley
Well, the title pretty much sums it up. This was week two of global markets (finally) reacting to this thing and…it wasn’t pretty. Unfortunately I think we’re still on the upswing side of fear and action in the US. Stay safe out there, and happy long reads.
-NLW
LRS | 5 Themes That Defined The Week
Theme Watch List: Tron vs. Steem
To be completely honest, this is a battle that I haven’t had the time to dive fully into. The short of it is that a few weeks ago Justin Sun and Tron acquired SteemIt. Since then it has turned into a fascinating power struggle and pressure test for the very concept of decentralized, user-owned networks. If this is something that you’re interested in delving deeper into, I highly recommend this conversation with Brady Dale who has been covering it for CoinDesk and Laura Shin.
Theme 5: A Good Week For Global Crypto
It may have been a bad week for global health but it was a good week for global crypto.
First and perhaps most exciting was India. In 2018, the Reserve Bank of India banned financial institutions in the country from working with crypto exchanges. This effectively shut down the domestic blockchain industry, aside from a handful of stalwart businesses that kept fighting.
After years of appeals, this week the Indian Supreme Court overturned that decision. While the RBI is trying to appeal the decision, it is a huge win for not only that community but the rest of the crypto world.
South Korea also advanced the status of crypto in a huge way. The Korean National Assembly voted effectively to amend current financial statues to fully include crypto and blockchain. While this means more regulation, it also means that crypto businesses in that country are likely to have a much easier time getting banking and other services, and further opens the possibility to new participation from traditional market institutions.
Theme 4: Bloomberg and the Feeling of Economic Dislocation
Social media got a real treat on Friday when a 4th-grade math error made it national TV. You see, a viral tweet had perfectly illustrated the agony of wealth inequality in America, pointing out that instead of spending $500 million on advertising in a race he promptly dropped out of, Bloomberg could have given every American a million dollars directly and still come out ahead.
Now, if you’re doing quick mental math and saying “wait, wouldn’t that be more like $1.50 for each American?” you’re ahead of the NYT editorial board member, the anchor, the producer, the graphic artist, and the rest of the team that approved this clip.
Let’s hold aside for a second the absolute funeral we should hold for American math education. The thing that makes this interesting to me is how many people wanted to believe that this absurd assertion would be true. This tweet from Mike Bird really nailed it:
This point seems to be reinforced by the way the original author of the tweet doubled down when approximately everyone pointed out the real math.
Zooko Wilcox rightly pointed out that it is a feeling, and feelings can’t be fought with facts.
What’s more, there are many reasons to think that those feelings are legitimate.
Okay, so why am I spending so much time on this? In the same way that Coronavirus sets a context for a huge amount of what’s happening short term, I believe that this feeling of economic dislocation is highly relevant for understanding the why bitcoin has arisen right now. It is one pole of a larger set of responses that also includes MMT, populism and the like.
Theme 3: CoronaVegeta
Last week, much of the conversation in crypto was about how bitcoin seemed not to be acting like a safe haven - or even, frankly, particularly uncorrelated. Instead, it seemed to be tracking to broader market movements.
Well, this week, it’s like bitcoin heard us and wanted to re-establish its uncorrelated bonafides. It started when bitcoin didn’t shoot up at the beginning of the week like equities markets.
In fact, bitcoin nudged up over $9000 and barely moved all week (until a big ~4% drop yesterday). Given how much collective energy we spent last week examining the price narrative, it was a good reminder that this thing is still an emergent asset that doesn’t fit neatly into any box. If you are looking for some price-related analysis, I recommend this piece from last year by Saifedean Ammous and Soona Ahmaz: “What Happens To Bitcoin In A Crisis?”
Theme 2: The Privacy Implications Of Coronavirus
In mid February, before Coronavirus was dominating the US headlines, reports out of China were that authorities were tracking down potential virus carriers by looking at who had purchased cold medicine in the month previous.
It was a reminder of both the surveillance power of the Chinese state, as well as of the fact that times of crisis are precisely when states lever up their authority. In the US, one example is the White House pressuring airlines to give up passenger data to try to track possible infection spread.
The problem isn’t that these types of responses don’t make sense in context. It’s that they shift the poles farther from freedom and towards security in a way that is hard to come back from.
On Friday’s episode of The Breakdown, I discussed this with former lead maintainer of Monero, Riccardo Spagni (aka Fluffypony). In specific, we talked about how the contrast between the US’s blundering of Coronavirus as compared to China’s response might actually make some folks think highly of the surveillance state.
Theme 1: What Comes Next?
That’s the $64,000 question, isn’t it? We’re officially in the “everything gets canceled” phase. Sequoia has suggested battening down the hatches.
The markets, for their part, are anticipating that the Fed will have to take even more action.
Indeed, many feel that the virus is exposing more systemic problems.
And some are concerned about more disastrous consequences than just short term stock corrections.
At the same time, it’s also worth watching what happens in the next several weeks in markets of countries that were first hit but are starting to see an ebbing.
Still, in the US, it’s going to get worse before it gets better. Get your toilet paper ready.
This Week on The Breakdown podcast
Monday | The View From China: Crypto, Crisis and Digital Currencies Feat. Matthew Graham
Wednesday | Libra Plus? A New Global Digital Currency Strategy For Facebook
Thursday | Why Bitcoin Mining Might Be the New Business Model for US Power Plants
Friday | Riccardo 'Fluffypony' Spagni on How Coronavirus Could Impact Privacy
