In 2018, economist and trader Nassim Taleb presented to the world his fifth book, “Skin in the game”, from the Incerto (lat. Indefinite) series, dedicated to uncertainty and the functioning of complex systems.
The book talks about four problems, which, in fact, are one: a) the uncertainty and reliability of knowledge (practical and scientific - there is a difference between them), or, to put it crudely, the recognition of nonsense; b) symmetry in relations between people: honesty, justice, responsibility and mutual benefit; c) distribution of information during interaction; and d) rationality in complex systems and the real world. That these four themes cannot be treated in isolation is made very clear when you put your skin in the game.
Taleb is Lebanese American. In his opinion, using the example of Lebanon, one can see how citizens are losing confidence in state banking systems and therefore “bitcoin in developing countries is the best alternative to local fiat currency.”*
*I think by "Bitcoin" he meant the whole blockchain technology, not a specific coin.
“It is very good that we have cryptocurrencies. Of course, there are still quite a lot of scammers and pyramid schemes in this area, but when a government like the Lebanese one launches state pyramid schemes, then you yourself can decide what is best, ”Taleb said.
Over the past few years, we have seen a well-established trend that third world countries are increasingly becoming confident users of blockchain products. For us, this became obvious against the backdrop of the hype around NFT gaming.
According to CNBC materials in the same Lebanon, people are actively leaving for the crypt amid hyperinflation and unrest. They prefer to keep their savings in crypto in wallets on their smartphones, and not in banks.
The story of a 22-year-old Lebanese is indicative. Together with friends, including those from Syria, he started mining and achieved significant results. At the moment, he has about 400 crypto farms with 5 to 100 machines each in 42 villages around the country, powered by hydropower, solar energy and fuel. Abu Daher says he earns about $20,000 a month and typically half of that income comes from mining and the other half from machine sales and cryptocurrency trading.
True, not everything is as sweet in his life as it might seem. For Abu and friends, this business is hard work. According to him, a team of 40 people works 16 or even 19 hours a day. For example, he gave an interview for CNBC at half past two in the morning local time, claiming that he could not afford to sleep.
Lebanon and Syria are not the only countries where inflation burns almost 90% of the value of the national currency in a year. Just in case, for those readers who have not had a chance to live in a country with such a rate of price increase, I will give an interesting example from Turkey. After the presentation of the 14th iPhone worth 57 thousand lira, local residents remembered that 7 years ago they could afford a VW Golf for 55 thousand.
I will add that a couple of weeks ago it became known about the plans of the Central Bank of Turkey (TCMB) to launch the state cryptocurrency in 2023. According to TCMB representatives, the digital lira is integrated with the identification system and the FAST payment system. The development, research and testing of the CBDC will be carried out by the Central Bank in cooperation with the Ministry of Finance and the Scientific and Technical Research Institute of Turkey.
Meanwhile in South Africa, the second largest Pick'n'Pay supermarket is starting to accept BTC payments using the Lightning network.
But not only third world countries are rapidly moving to the blockchain. According to the WSJ, US 401(k) pension plans now allow workers to convert their savings into crypto!
It also became known that MoneyGram launched trading it in the US.
At the same time, this week, the US Department of Justice seized $3.36 billion in bitcoins in connection with a dark web scam - this is the largest confiscation of cryptocurrency in history! A Georgia-based hacker named James Zhong, who pleaded guilty to wire fraud nine years after stealing more than 50,000 BTC from Silk Road, was caught up in the scam. The bitcoins were found on a carrier hidden in a popcorn tin, along with more than $600,000 in cash and precious metals.
And on October 31, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler suddenly (remember this italics until the next article) congratulated the cryptocurrency community on the 14th anniversary of the Bitcoin White Paper!
Happy 14th Anniversary White Paper Satoshi Nakamoto! Let's make sure that, by the 15th anniversary, investors are properly protected.
And they will get it, no doubt 😅
The Ethereum cryptocurrency is totally verified by OFAC (U.S. Office of Foreign Assets Control).
At the beginning of the week, the number of blocks that passed “payment censorship” in the Ethereum network exceeded 73%. Network validators are forced to install add-ons that automatically validate user transactions. If there are sanctioned wallets and prohibited cryptomixers in the chain of sender or recipient addresses, the transaction is automatically rejected.
Thus, compliance with OFAC allows the US to apply economic and trade sanctions in crypto payments!
At the same time, Fed Governor Christopher Waller made it clear that:
- Congress will decide whether to launch a digital USD or not;
- the launch of the CBDC means the Fed will have to take a huge cybersecurity risk!
Meanwhile, Vitalik himself has rolled out a massive roadmap for Ethereum. According to Buterin, the updated diagram specifies the steps to implement each phase of Ethereum development and highlights the role of quantum stability for the future of the blockchain.
And it’s not for nothing that Ether’s father is so worried about this. IBM at the Quantum Summit 2022 event announced the Osprey quantum processor containing 433 qubits!
By 2025, IBM plans to create a system with more than 4,000 quantum bits. Prior to this, the company intends to develop two more processors:
- Condor for 1121 qubits in 2023;
- Flamingo for 1386 qubits in 2024.
The European Commission, in turn, unlike the United States, plans to soon propose a bill on the digital euro, said Christine Lagarde (Chairman of the European Central Bank).
By the way, the fiat Euro is again more expensive than the dollar. The currency rose on the news that inflation in the United States had dropped to 7.7% instead of the expected 8%.
In turn, the company Circle will launch its own euro "with blackjack and ladies." The stablecoin Euro Coin (EUROC) on the Solana blockchain will be presented in the first half of 2023.
It is also planned that the preliminary versions of the Saga smartphone from Solana will be sent to developers in December. This will allow decentralized applications (dApps) to be tested on the phone ahead of its release in early 2023.
True, it became hard to believe in the last two news after the middle of the week.
The SOL rate fell by more than 40%, and support for EUROC should have been added first of all by the FTX exchange 😅
I deliberately don’t include the story of the collapse of the Sam Bankman-Freed company in this digest, perhaps there will be a separate special issue next week.
I will only mention that starting from November 9, users began to actively withdraw their funds from crypto exchanges.
About $1 billion in Ether, $950 million in USDC, $400 million USDT and $195 million in BUSD were withdrawn that day!
USDT from Tether was almost 2% cheaper than USD at the moment. But there is an assumption that CZ from Binance (yes, the one who, as we remember from the last issue, wants to buy a classic bank, but decided not to buy the FTX crypto exchange ��) is still betting on Tether’s cryptodollar because in September, converted other stablecoins (except USDT) into its BUSD stablecoin. By the way, this week it reached a historical maximum in terms of trading volume and market capitalization.
TRON DAO is in a hurry to help and plans to buy USDT for 1 billion dollars in order to save the crypto industry.
Meanwhile, Justin Sun himself (whom we also talked about in the last issue) is actively pumping the token “as if not his own” of the Huobi exchange (which soared up to + 700% at the moment) and is working on a scheme with FTX to withdraw assets from the sinking exchange through the tokens of the Tron family (TRX, BTT, JST, SUN, HT). Their growth is most likely due to the fact that users rushed to buy “tron” tokens in order to save at least some of the remnants of their capital blocked on FTX.
Against the backdrop of these events, Ledger, the main manufacturer of hardware crypto wallets, faced an unexpected problem. CTO Charles Guilleme said that the company experienced an overload of server equipment.
"We've seen massive use of our platforms and have run into a few scalability issues."
But the Central Bank of the Russian Federation, on the contrary, wants to get away from the costs associated with physical items, and proposes to work out the issue of tokenization of various investment instruments.
Thus, it is proposed to create the possibility of issuing traditional financial instruments in the form of digital rights, such as non-equity securities, as well as bonds, including bonds of federal and subfederal loans, issued immediately in the form of digital assets.
The Central Bank also considers it possible to digitize the debt of third parties (issuance and transfer of DFA, certifying the rights of claims against the issuer, secured by the debt of third parties, including tokenization of loans, including claims secured by mortgages (digital securitization), tokenized precious metals and stones ( "hybrid" digital rights that allow you to receive a precious metal/stone or the equivalent value of such a precious metal/stone) and "title" NFTs.
Issues related, for example, to precious metals, and indeed to any resources, are resolved very timely. I spoke about the fact that they will be "in price" in the last issue.
Powerful growth closed last Friday, all major commodities. There are more and more signs that a beautiful and long bullish trend in this market is ahead of us.
It is also worth paying attention to such a seemingly no longer “hype” asset as platinum. This metal has been a clear outsider in recent years. But once it was even more expensive than gold and palladium.
But the other day, the price of platinum rose above the 200-day average, which is a classic bullish factor. Moreover, platinum is one of the few assets in the world that has been trading in positive territory since the beginning of the year. Yes, plus insignificant, about 4%. But this plus is worth it when everything around falls!
There are signs that a significant positive revaluation of platinum in particular and the entire precious metals sector as a whole may occur in the future. Especially judging by their growth at the beginning of the week.
A few numbers about Gold:
- The bullion and coin sector showed a very good demand of 351 tons, especially from Europe and Turkey (including individuals)
- By the end of September, the ETF's total gold holdings reached 3,548 tons ($191 billion).
It is worth noting that Russia has begun the exchange of oil products with Iran, which indicates the strengthening of ties between the two sanctioned countries. And this is a very important topic. The key point is, of course, not oil, but the fact that both countries are under a number of restrictions from Western countries.
In this regard, even more interesting news is that Russian IT companies may be allowed to pay in cryptocurrency when exporting IT solutions!
Such a proposal is contained in the roadmap to support the export of software, prepared by the association of developers of Russian software "Russoft". In order to remove or reduce restrictions “with payment in transactions with foreign customers, as well as reduce costs when making such payments”, it is necessary to work out the use of “alternative payment solutions”, including through the installation of experimental legal regimes (EPR), the document says. Also, as one of the measures to support IT exports, it is proposed to "develop mechanisms for the abolition of currency control for IT companies."
And after that, the Central Bank of the Russian Federation released a report on Decentralized Finance! I highly recommend reading it in the original. I think the most important thing from the report is that “the possibility of using central bank stablecoins (CBDC) in DeFi is being considered.” A clear hint at the imminent launch of the cryptoruble and its use in the DeFi infrastructure.
It is worth keeping in mind that since June 2022, negotiations have been actively underway to create a new supranational reserve currency. First of all, this idea is considered by the countries that are members of the BRICS bloc.
“Today, the share of settlements in the national currencies of the five countries (the leaders of the BRICS) amounted to 38%, while in 2013–2014 it was estimated at 2–3%. It is planned that in the near future it will reach 50%, and not only due to the energy sector of the economy, but also in the trade in agricultural products and consumer goods.”
I think many people are already starting to piece together the puzzle: large-scale tokenization of commodities, expansion of the legal field in the field of crypto payments, including using DeFi tools, and price nomination through a new supranational reserve currency.
Very interesting in parallel with these thoughts are the words of a representative of Deutsche Bank AG:
In the 1990s, the Fed sponsored the bailout of the LTCM hedge fund and thus saved the world's major banks and the financial system from losing many hundreds of millions of dollars. However, this marked an era of extreme risk of dishonest behavior that continues to this day. Pure capitalism, which was the catalyst for two centuries of economic growth, has been replaced by an increasingly state-led capitalism that is increasingly pulling financial institutions out of a stalemate.
But not only money, resources and goods are rapidly rushing into the digital space. The Chinese authorities have published a national plan for the development of the virtual reality industry, which provides for the supply of 25 million virtual reality devices by 2026 with a total value of more than $48 billion.
The strategy was presented in a joint statement by five departments led by the Ministry of Industry and Information Technology. They named virtual reality as a key industry for the digital economy in the fourteenth five-year plan.
The plan calls for extensive research into technologies that will enable more immersive VR. Among them: gesture tracking, gaze and facial expressions, body motion capture, high-precision understanding of the environment, 3D reconstruction, imitation of smells and touches.
Authorities are also pushing to explore the use of edge computing to render 5G content and find ways to quickly connect devices to VR headsets.
Meanwhile, HaptX has introduced a kit that allows you to feel the touch of objects in a virtual environment. But don’t think that you can say goodbye to the usual reality. One such set costs more than $5,000.
And the HaptX G1 set itself consists of a pair of gloves and a backpack. At the same time, each glove weighs 450 grams, and the backpack weighs almost 8 kilograms. All this together helps to feel touch in the VR environment. Each glove includes 135 actuators that touch the part of the hand that comes into contact with the game object. The actuators start moving with the help of compressed air supplied from the backpack.
And finally, the news that everyone has definitely already read, but without which this digest wouldn’t be complete. Palmer Lucky, founder of Oculus and developer of the Oculus Rift VR helmet, has unveiled a headset on his blog that will instantly explode if its owner dies in the game.
The VR helmet is equipped with three charges of real explosives. It is highly likely that he received it for his creation not hypothetically and even legally. Palmer is not only a well-known personality in the field of virtual reality, but also the head of a company for the production of weapons and defense devices.
Interestingly, the charges are located directly above the display, that is, opposite the front part of the brain of the helmet user, exactly in the prefrontal cortex. This zone, by the way, is responsible for rational thinking, for the ability to plan and, as they say, think with a cold head.
But with an unfavorable outcome, you will literally blow your head off and you won’t have to worry about the future!
It's interesting what Nassim Taleb thinks about this device - that's what I call Skin in the game 😅