Who Let the Doge Out? – OZY

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Friday, May 14, 2021

“Yeah, it’s a hustle.” Elon Musk was trying to be funny, but with those words on Saturday Night Live last weekend, he temporarily sent the value of Dogecoin, the cryptocurrency he backs, tumbling. Dogecoin started life as an internet joke years ago. Today, it’s the fifth-most valuable cryptocurrency, and the joke is on those who doubted an industry that has surged since last year. Like other industries, it faces challenges. Musk this week said that Tesla, his electric vehicle company, would no longer accept bitcoin payments, causing the value of the world’s largest cryptocurrency to stumble. But the amount of time the world’s second-richest man spends thinking about the sector points to a new future for finance. Today’s Daily Dose dives deep into how cryptocurrency, long seen by many as a fad, is fast becoming a fact of life that could profoundly shape how we invest, save and spend.

Isabelle Lee, Reporter, and Charu Sudan Kasturi, Senior Editor

1. The New Gold?

For years, cryptocurrencies were synonymous with wild fluctuations. Now, for the first time, analysts at JPMorgan Chase are pitching Bitcoin as the new gold — a safe investment guaranteed to rise in value over time. BlackRock fixed income CIO Rick Rieder has suggested Bitcoin might even be better than the yellow metal. “It’s so much more functional than passing a bar of gold around,” he said in November. Morgan Creek Capital Management CEO and Chief Investment Officer Mark Yusko expects Bitcoin to quintuple in value over the next five years as the coin is increasingly adopted by experts and laypeople alike. It’s a sharp turnaround for Wall Street from 2017, when JPMorgan Chase CEO Jamie Dimon called Bitcoin a “fraud.” Warren Buffett once called it “rat poison.” But the evidence of the longevity and usability of the world’s leading digital currency has indeed changed dramatically since then. In 2020, the value of Bitcoin has grown 130%, compared to a rise of 30% for gold.

2. Big Converts

It isn’t just words from the big names of industry. They’re also acting on it. Since November, PayPal has allowed American users to buy, sell and hold the popular cryptocurrencies bitcoin, Ethereum and Litecoin. The online payment company has started letting users dish out payments to millions of vendors using their cryptocurrency holdings. Meanwhile, credit card giant Visa has opened itself up as a transaction platform for users of the Ethereum blockchain through a partnership with a startup that has raised $271 million in funding. Data-integration and software company Palantir announced that it is accepting payments of bitcoin and looking to add cryptocurrency to its balance sheet.

3. Coming-Out Party

Coinbase, the digital equivalent of your physical wallet, had an outstanding IPO in April, signaling for many investors that crypto belonged on Wall Street. But the crypto exchange platform’s stock price is sliding: It is down 22 percent from its first day on the open market. The drop comes as investors have started channeling their funds into speculative coins like Dogecoin, which the online wallet doesn’t offer. Even so, the future of crypto as a major player seems to be more secure than ever.

4. Green Future?

Musk pointed to the energy-guzzling nature of the cryptocurrency generation to explain his decision this week to stop allowing bitcoin payments for Tesla purchases. And he’s right: Cryptocurrencies are mined in giant data centers. The Bitcoin network alone consumes as much energy as all of the Netherlands. But a green revolution is afoot. Crypto mining companies are increasingly turning to natural gas, a wasted byproduct of oil drilling, to generate electricity. Gas flaring at oil wells would otherwise add to emissions. Bitcoin miners are also increasingly adopting renewable energy sources. And some are tying up with green energy firms to help the latter become more sustainable.

5. Understanding It All

OK, let’s take a step back. By now, you know cryptocurrencies are a big deal. But what are they? They’re digital currencies — so no banknotes with potential germs or viruses on them — that are secured using cryptography, so it’s hard to tamper with them. Then, they’re stored in a blockchain — a database where blocks of data are effectively chained together. Yet technology isn’t the only difference between traditional money and cryptocurrencies. There’s no central bank or regulator governing the latter — it’s a peer-to-peer financial transaction system built purely on trust.

6. Southern Storm

Growing distrust and disenchantment with traditional banks has for the past couple of years led more people across Latin America’s largest economies, including Brazil, Mexico and Colombia, to turn to fintech firms that have since become among the biggest in the world. Now, the region is emerging as the latest major hub for cryptocurrency trading. This year, Latin American companies have increasingly relied on digital currencies to carry out transactions with their Asian counterparts. It’s no surprise that this shift has coincided with a sharp decline in the values of traditional currencies in the region amid the pandemic and recession.

7. Crypto Tax Havens

Move over Mauritius, Singapore and Ireland. A new set of tiny nations is stepping forward to claim the mantle of sought-after tax havens — and not some old-school tax escapes, but crypto havens. From Malta to the Marshall Islands and Gibraltar to Bermuda, they’re opening up their economies to proactively woo cryptocurrency investors, offering them protection at a time when regulators in almost all major economies continue to view them with suspicion. Many of these small nations are also launching their own cryptocurrencies.

8. Fly Me to the Moon

Apparently, recent SNL host Elon Musk is taking the whole Reddit campaign to “take Dogecoin to the moon” literally. He plans to use the coin to finance the launch of a satellite named Doge-1, headed for the moon. It will be the first crypto coin in space, and the first meme. Meanwhile, other firms are now offering travel gift cards you can purchase using cryptocurrencies.

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1. Carpe Diem

Facebook has decided that it wants to seize the day. The cryptocurrency backed by the social media giant, formerly called Libra, will now be called Diem. It’s scheduled to launch later in 2021.

2. Buy Black

As the clamor rises to support Black businesses in the wake of last year’s racial justice protests, Guapcoin hopes to capitalize. A cryptocurrency designed to keep Black wealth within the Black community, Guapcoin is the brainchild of Atlanta’s Tavonia Evans, who’s made it her mission to spread the crypto gospel — and what it could mean for marginalized communities.

3. Crypto City

Musician Akon’s proposed new cryptocurrency, Akoin, is being trialed in Kenya before it will be implemented as the official currency for the pop star’s $6 billion futuristic urban hub, Akon City, which is being built in Senegal. The “Smack That” singer is nothing if not ambitious: If the cryptocurrency city idea works, he wants to replicate the Akon City model across Africa.

4. Rap Tap

Akon is not the only entertainer betting on cryptocurrencies as their entrepreneurial side gig. Rapper Lil Yachty is tapping into his large fan base to launch a new cryptocurrency named YachtyCoin. Here’s his model: By buying a YachtyCoin, you become a stakeholder in the cryptocurrency and get access to additional songs that other fans won’t be able to listen to — though it’s only available outside the U.S. Will it work, or will he end up getting a bad rap for the idea?

5. Moscow Mystery

As with so much else involving the elite of Russia, we know little about cryptocurrency in the nation — except that its largest lender, Sberbank, might launch a new crypto this year called Sbercoin. The company’s CEO has said that it is working with JPMorgan Chase on the new currency, but it’s unclear whether multiple sanctions that exist against Russian organizations might hamper that partnership.

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1. Red Hope?

From their inception, cryptocurrencies have largely been driven by libertarian political views. Now, a growing number of socialist thinkers, writers, politicians and governments from France to Venezuela to China are viewing digital currencies as a viable vehicle for moving society toward communism. Cryptocurrencies, socialist proponents argue, could help them organize better and could enable a future socialist society to improve government transparency, getting around the layers of bureaucracy and opacity that can hobble state-controlled projects. And in the shorter term, these digital currencies can help governments avoid Western sanctions while still receiving funds.

2. Talkin’ Bout a Revolution

More like funding a revolution, actually. Thousands of young Nigerians who took to the streets in recent months to demand an end to police brutality financed their movement using cryptocurrency. By late October, for instance, bitcoin accounted for 40% of the $387,000 collected by one of the main groups behind the protests. And this phenomenon isn’t limited to Nigeria. In Belarus, protesters demanding the resignation of authoritarian President Alexander Lukashenko are using bitcoin to avoid the scrutiny of the state on formal banking and financial systems — the same goal as the demonstrators in Nigeria. The demand for cryptocurrency has also surged during Hong Kong’s pro-democracy protests.

3. Race Reckoning

Like many other industries, the cryptocurrency sector has struggled to hold its head up high amid the racial justice protests that roiled the U.S. last year following the death of George Floyd. San Francisco-based crypto exchange Coinbase refused to support the protests at a time when most tech firms in Silicon Valley — even those that had previously said precious little about racism — had publicly stated that Black Lives Matter. We now know the deeper roots of that decision: roughly three-quarters of the company’s Black employees left Coinbase between late 2018 and early 2019 amid concerns about racism.

4. Biden Boost?

Former President Donald Trump criticized cryptocurrencies, and senior members of his administration — such as Treasury Secretary Steven Mnuchin — were also skeptics of the digital payment mechanism. But many within the cryptocurrency community expect things to take a turn for the better under President Joe Biden, whose Securities and Exchange Commission appointee Gary Gensler is a former Wall Street banker who taught blockchain technology and digital currencies at MIT. However, amid the crypto fervor, the companies behind the coins are looking to secure their legitimate place in the financial world by hiring or befriending lobbyists and other Washington leaders as the world of virtual coins faces increasing scrutiny and regulation.

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2. Helen Hai

She was born in a fourth-tier city in China as the country was reforming in the 1980s, and her life has mirrored her nation’s rapid economic rise. Hai wants to use that success story to inspire others to use digital currencies to do social good. She heads the charity arm of the world’s leading cryptocurrency exchange, Binance, and since taking over in 2018 has raised $3.2 million in bitcoins. Her next venture at Binance? A marketplace for people to buy and sell non-fungible tokens. Artists using the marketplace will get 90% of the profits from their sales, which is a pretty sweet deal if you ask us.

3. Akshay Aggarwal

He once sold condoms to pedestrians on a street corner in Palo Alto, California. Now, he’s trying to convince the world’s largest democracy to give up its reflexive apprehension toward virtual currencies. The bespectacled Aggarwal is building a fast-growing movement of Indian crypto-enthusiasts who in March succeeded in convincing the country’s Supreme Court to declare trading in cryptocurrencies legal. Now, a fresh challenge looms. The government of Prime Minister Narendra Modi is planning to introduce a law to override the top court’s verdict. Will Aggarwal succeed in stymying that effort?

Today on ‘The Carlos Watson Show’

Meet WNBA Star Chiney Ogwumike. The Los Angeles Sparks player and first Black woman to host a national radio show for ESPN joins Carlos to talk about Nigerian excellence, playing against her star sister and how COVID brought the WNBA together. Plus, she sings her best Alicia Keys for us. Don’t miss it!

watch out for the bit cons

1. Catch Her If You Can

The FBI can’t find Ruja Ignatova, the “cryptoqueen” of scams, who used glitter, gumption and greed to woo victims. From Pakistan to Palestine and Brazil to Norway, people invested almost $5 billion in OneCoin, the cryptocurrency the Bulgarian entrepreneur promised would beat Bitcoin. She addressed her audiences from the most prominent platforms possible, such as London’s SSE Arena, where she appeared onstage in 2016 in a shimmering red gown, matching lipstick and dangling diamond earrings. Then she disappeared. Neither Ignatova nor the money has been seen since.

2. Unlikely Capital

No country has been hit harder by crypto theft than Uganda, one of the world’s poorest nations. Between 2018 and 2020, 200,000 Ugandans lost an estimated total of $1 billion — 4% of the country’s GDP — to these scams. But that’s only half the story. Despite evidence of fraud, the government hasn’t banned cryptocurrency firms. Could it be because Kwame Rugunda, the son of Prime Minister Ruhakana Rugunda, is CEO of CryptoSavannah, a cryptocurrency advisory firm?

3. Chinese Pyramid

Unlike the real ones in Egypt, this pyramid was always meant to collapse. It was a classic Ponzi scheme, promising high returns that would depend on the number of people you managed to recruit to the new cryptocurrency plan. In December, a court in the eastern Chinese province of Jiangsu jailed the masterminds behind one of the country’s largest-ever cryptocurrency scams that robbed millions of people of a total of $2.25 billion.

4. Tip of the Crypto-Berg

The U.S. Department of Justice seized cryptocurrencies worth $24 million in early November as part of a joint probe with Brazil. That’s great. The problem? The actual scam was worth $200 million. The thieves had promised to invest money collected from tens of thousands of Brazilians into actual cryptocurrencies. But in reality, they put just a fraction of the cash into cryptocurrencies before making off with the rest. Looks like they didn’t have faith in the digital currency either.

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