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In This Issue:
Are You Crypto Literate?
Bitcoin Thoughts And Analysis
Powell Speaks, Stocks Drop
Anti CBDC Language Makes Progress
The FED Fails To Disrupt Crypto
For The OGs
Binance Is Under Attack | Will It Survive?
Are You Crypto Literate?
Does this statement surprise you? "91% can't pass this basic (crypto) literacy challenge."
I noticed this claim on Crypto-Twitter and found myself scratching my head in bewilderment. I know crypto tends to be cryptic to outsiders, but are we really doing this poor of a job of educating the masses? Maybe this challenge is just ridiculously hard and is a poor representation of the concepts most of us are familiar with, but how can that be the case if it is “basic?”
Because I am competitive and need to know my score, I succumbed to temptation and visited the website that offered the challenge. My findings were not what I expected.
It turns out the quiz isn’t just a project a lazy college student put together, nor is it organized by a focus group that wants to paint us in a bad light. CryptoLiteracy.org has a pro-crypto mission, yet most of its respondents are failing. How is this possible?
Before I answer that question, here’s what really riled me up.
How are we as a community failing so significantly? While I won't claim to possess a definitive answer to this question, I do have some ideas. To provide context, let's examine a couple of example questions from the quiz.
What is a blockchain?
A digital ledger where data is stored on a network of independent computers
A digital ledger that is created and managed by a company, but is made available to the public
A government-facilitated platform for currency exchange
A type of computer created for Bitcoin mining
Select all that apply. What does it mean to “stake” cryptocurrency?
To launch a new coin with a new blockchain
To deposit your cryptocurrency in order to earn rewards
To lock cryptocurrency in order to participate in a proof-of-stake blockchain
To claim a new block on a blockchain through mining
Okay, last one.
How do blockchains make sure people don't cheat or spend the same cryptocurrency multiple times?
By requiring people to be vetted and verified before participating
They use consensus mechanisms like proof-of-work
By running each transaction through an online bank
They use public and private keys to keep out bad actors
I'll assume we're all familiar with the answers to these questions and won't dwell on them. However, if I'm being completely honest, I can't assume that everyday people have any inkling about the meaning of these questions or their answers. Consider everyone we know who owns cryptocurrency; in theory, they should be the most knowledgeable about these matters. But do they truly understand what proof-of-work entails or have even a basic grasp of staking? The answer is clearly a resounding “no.”
These questions, both those mentioned above and those in the quiz, are not inherently unfair. However, I would liken them to asking the average investor or individual about concepts like interest rates, CPI, or CDs. How many people do you know who can confidently respond to basic questions about these subjects? I would contend that, while more people may have heard of these concepts, their understanding rarely extends beyond that level.
If we are candid with ourselves, traditional financial literacy isn't significantly higher than crypto literacy, and in some areas with elevated adoption, it might even be the reverse. The perceived 'cryptic' nature of crypto isn't the issue; rather, it's the state of our education.
Literacy assessments of various kinds have consistently yielded alarming results. What percentage of the population can answer fundamental questions about their own government? How many ordinary individuals possess a basic grasp of world history? Do American citizens have knowledge of their basic Constitutional rights or the laws governing them? Where does money originate, and who wields control over it?
As we delve deeper, it becomes increasingly disconcerting to realize how little the average person truly knows. While I did score 100% on the literacy test, I don’t have the answer on how to fix this problem. Education certainly plays a major role in literacy, but accessibility and positivity also count for something too. We can’t expect everyday people to understand crypto if the tools we create aren’t easy to access and if the industry is painted in a negative light.
Mass adoption doesn’t mean anything if we don’t know or understand what we are adopting. That leaves the door open for the same educational demons that have plagued us for thousands of years to creep right back in. Education matters and it starts with those of us that are ahead of the curve. Do your part and help out those around you, not because it pads your pockets, but because you would hope someone would do the same for you. And as promised, my results are below.
Thanks to CryptoLiterary.org™ for advancing the crypto mission. Your work does not go unnoticed.
Bitcoin Thoughts And Analysis
As much as I would love to be excited, this simply looks like a mean reversion move back up to the daily 50 MA and then a rejection. It’s September, go out and touch grass and let’s see what October has coming.
Powell Speaks, Stocks Drop
Stock markets reacted negatively as the Federal Reserve signaled a more hawkish stance on interest rates than expected. While keeping its current target range, the Fed now projects fewer easing measures in 2023, and a potential rate hike within the year. Meanwhile, the Bank of England (BOE) is on the fence about its next policy move after a recent dip in UK inflation. Market analysts are divided on whether the BOE will pause its tightening cycle or opt for a final rate hike. Elsewhere, the dollar strengthened, and treasury yields went up, especially the two-year yield, which hit its highest since 2006.
Key events this week:
Eurozone consumer confidence, Thursday
Bank of England policy meeting, Thursday
US leading index, initial jobless claims, existing home sales, Thursday
China’s Bund Summit, Friday
Japan CPI, PMIs, Friday
Bank of Japan rate decision, Friday
Eurozone S&P Global Eurozone PMIs, Friday
US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1% as of 11:02 a.m. London time
S&P 500 futures fell 0.5%
Nasdaq 100 futures fell 0.7%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index fell 1.5%
The MSCI Emerging Markets Index fell 1.3%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $1.0653
The Japanese yen rose 0.1% to 148.13 per dollar
The offshore yuan was little changed at 7.3120 per dollar
The British pound fell 0.4% to $1.2290
Cryptocurrencies
Bitcoin fell 1.3% to $26,749.44
Ether fell 0.9% to $1,609.88
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.43%
Germany’s 10-year yield advanced four basis points to 2.74%
Britain’s 10-year yield advanced six basis points to 4.28%
Commodities
Brent crude fell 1% to $92.55 a barrel
Spot gold fell 0.3% to $1,924.45 an ounce
Anti CBDC Language Makes Progress
Pro-crypto legislation originating from within Capitol Hill is rare, but occasionally, it does happen. The CBDC Anti-Surveillance State Act is making strides toward real consideration now that it has passed the House Financial Services Committee and is moving to the entire House of Representatives. The contents of the bill, if you haven't already guessed, are pretty simple - “prohibit the central bank from issuing a CBDC directly to individuals and block the Fed from indirectly issuing one through an intermediary.”
Here’s what Representative Tom Emmer had to say about the bill: “In short, a central bank digital currency is government-controlled programmable money that, if not designed to emulate cash, could give the federal government the ability to surveil and restrict Americans' transactions. "This is not just alarming — it's downright un-American." Unfortunately, the bill stands a low chance of passing because of the Democrats, who are already calling it an “act of breathless stupidity.”
It’s a shame to see that there are legislators who are convinced that preventing the government from obtaining more financial authority is a setback, but take a look: "We’re at an inflection point right now, but this bill would take the U.S. out of the game.” Crypto has to unite behind legislators who genuinely have our backs, they are still few and far between.
The Fed Fails To Disrupt Crypto
The FED’s interest rate charade took place yesterday and nobody in crypto batted an eye. Crypto is maturing. Sure, it would have been a different story if the FED made a strong move, but considering the FED has telegraphed its every step, there’s nothing left for markets to react to. Maybe there will be a point in which the FED’s charade is so irrelevant, that it’s no longer included in this letter, I look forward to that day.
In other news, apparently, a soft landing is no longer the baseline expectation. They think they can avoid a recession entirely.
For The OGs
For the OG's, Hal Finney requires no introduction. However, if this name isn't familiar to you, Hal was among the initial Bitcoin adopters, dating back to the original Bitcoin mailing list that Satoshi organized with a small group of cyberpunks. In 2014, Hal passed away due to complications from ALS, leaving a significant void in the crypto community. Fortunately for us, a rare video has surfaced featuring Hal speaking at Crypto 98, a conference from 1998 that laid the technological foundation upon which Bitcoin was built. Unless you had the privilege of knowing Hal personally, the link above represents the sole known public footage of him speaking. Rest in peace, Hal Finney.
Binance Is Under Attack | Will It Survive?
Mike Alfred join me to discuss the future of Binance. Chris Inks will provide his analysis of crypto markets. Join at 9 am EST.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
Nice article Melker. That’s a shame about literacy. Keep teaching. It helps.
Got 93%. Only question i got "wrong" was the last one:
15. What gives a cryptocurrency its value?
How the crypto is distributed
The utility of the crypto
Its supply and demand
*All of the above*
I don’t know
I put supply and demand, and I maintain that is the correct answer because the distribution and utility of a crypto is what contributes to the demand. So at the end of the day it boils down to supply and demand.