The CBDC age
How the merging of traditional securities, crypto, and CBDC’s will lead to a new golden financial age.
But not for all…
In this post, I want to try and explain how CBDC’s (central bank digital currencies) and their intertwined businesses and assets, are the contrarian trade of a generation. With this explanation, I hope to shed a little light on how to value them, and how to understand them.
J D Rockefeller in the early 1900s undertook what in my opinion was a genius investing/trading decision. Oil mining in these early days was expensive and risky, many miners struck it rich, or went bust. Rockefeller identified correctly that the money so to speak was not in the mining, it was in the refining.
For context, Rockefeller would eventually grow to become the largest oil producer and refiner in the USA and was estimated to have a net worth of around $400 billion, adjusted for inflation.
Our good friend Mark Zuckerberg is estimated to have a net worth of around $150 billion for comparison today.
My point is this, CBDC’s represent an opportunity to somewhat sidestep the coming economic/wealth reset.
CBDC’s are most likely set to run on a system at best and a handful at worst. A good way to think about this is like layers of the internet. Think of the protocol layers of these technologies like you would with Apple owning the App Store, people build on top of what they have built, and in turn, apple earns fees from revenues generated in their ecosystem.
What CBDC presents, is the opportunity to own the protocol layer that will eventually support trillions in currencies, assets debt, bonds, derivatives, and property from across the globe. I see this as an opportunity to take a similar trade to what Rockefeller did in the early 1900s.
Instead of focusing all our attention on what asset or currencies will do well after this part of this economic cycle, we should look at how can we benefit from the capital transit/flight during this time.
What I am getting at, is a trade that does not rely on getting the correct answer, but rather allowing other people to move and place their wealth and benefitting from these transactions.
It seems that there is only one company that will corner the market of CBDC’s, and its name is Ripple…
No other company has as many ties to banks, central governments, the world bank SWIFT, the IMF, the WEF, the federal reserve, and the Bank of England just to name a few.
The token that powers ripple’s business is called XRP.
XRP is built upon decentralized distributed ledger technology that allows for the near-instant trading/settlement of digital assets, such as CBDC’s.
It is a token and platform that allows for applications and businesses to build on top of it.
Every transaction that takes place on the network, a small amount of XRP is burned and is deflationary.
Understanding velocities of money, we can see how by the increase of the frequency and volume of the network, the burn rate can increase and decrease, but the total supply dwindles regardless.
Unlike a certain platform, that prints tokens out of thin air, starts with E, and rhymes with the thief.
To sum up, owning just a small part of these networks, is a completely unforeseen opportunity, and something we should be discussing and investigating.
CBDC’s allow for the end of pre-funding Nostro Vostro nonsense, drastically reduced fees when transacting across borders, faster settlement times compared with SWIFT. They present a way out of the coming liquidity trap.
When all assets on earth are tokenized, items, houses, and land, the value and capital will be unlocked, like great lakes of oil that lie below ground, this digital oil will create growth we are going to need, as the current GDP is not sustainable in my opinion.
We are entering the internet of value, and what some are calling “the exponential age”.
Digital assets are a new field of economics, and every day I learn something new, people cannot price these technologies and companies yet, and this is a blessing.
We are witnessing the early stages of a new technology cycle, the last was the internet and the rise of Google, Amazon, etc.
Think of us being in 1995 with these companies.
The fourth turning speaks of the hero generation, the one I belong to, the millennials…
According to the fourth turning, this generation will be facing a crisis much like the 2007/8 market madness. I believe we are only at the beginning of this great event.
The liquidity trap, the reset, all words for the crisis that we will face. CBDC’s are programmable money and a powerful tool.
I cannot see the future, only catch glimpses, and what I see is a reshuffling of the board that is both historical, and will remain unseen for most individuals, but will usher in a new world economic order.
This will lead to an entirely new field of economics, or as I call it “Tokenomics”
Who will win this game ultimately, the millennials with their late investing, or Genz who have grown to distrust and despise the traditional financial system? or the baby boomers with their pensions tied up in the traditional financial system and property?
You best find your sea legs and hold fast, it’s gonna get choppy…
