Interbank market news scan. Foreign exchange and crypto rates as of 12:00pm; Crypto’s lack of narrative ties it to fiat …

Commentary: Without a stronger narrative, crypto remains tied to fiat …

Everyone is a “retail trader” in currency. You trade time for currency. You trade currency for currency. You trade commodities for currency. Is there a message behind the king’s currency?

Yes, there is. The king’s currency represents the prevailing political and legal narrative: the king’s government protects your rights. His government ensures equality and protects your property. The King protects your freedom of speech and maintains your roads, bridges, and other infrastructure. The King guarantees functioning markets that provides goods and services.

For these protections you exchange your time and physical and mental energy. You accept the king’s currency as compensation and return a part of it to the king in the form of taxes and fees. It is the price you pay to trade in his realm.

This is the narrative that cryptocurrency competes against. Unlike fiat currencies, cryptocurrencies do not act as a derivative of an underlying resource. Their decentralized nature including having no centralized authority or dominance of a physical space compounds cryptocurrency’s inability to act as a derivative. Holding an alternative currency does not translate into an exchange for a centralized issuer for a promise to protect your rights or property or to protect infrastructure. The protection of these rights are left up to the individual holding cryptocurrency.

The irony is that the owner of a cryptocurrency has to trade her crypto for a fiat currency that, at a minimum, offers the delusion of a lower cost way obtaining these rights.

Libertarians would argue that like any currency, crypto’s value is a result of trust in the currency to meet the economic and political expectations of the holder. I agree. But that trust has to be backed up by tangibles if cryptocurrency is to be a hedge against inflation as many of its proponents claim.

Until the trust issue is firmed up by a supporting interconnected system of markets that provide goods and services, crypto’s narrative will remain on the losing end when debating the fiat’s narrative.

Alton Drew

5 September 2022

News Scan

BRICS, United States, Nigeria. On 2 September 2022, Vice-President Kamala Harris welcomed Nigeria’s vice-president, Yemi Osinbajo, to the White House prior to bi-lateral talks between the two nations. Mrs Harris emphasized the partnership between the two nations in fighting terrorism, addressing climate change, and resolving food insecurity.

Neither leader mentioned in their remarks the potential of Nigeria formally joining the BRICS economic and political bloc. BRICS includes Brazil, Russia, India, China, and South Africa and represents forty percent of the world’s population. The bloc’s potential impact on world trade and the dollar’s status as the premiere reserve currency increased after the US imposed sanctions on Russia including advocating the removal from the SWIFT financial communications system. See https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/02/remarks-by-vice-president-harris-and-vice-president-osinbajo-of-nigeria-before-bilateral-meeting/. See also https://sputniknews.com/20220718/nigeria-may-join-brics-in-future-ambassador-in-moscow-says-1097411151.html

Foreign exchange and crypto rates of interest as of 12:02 pm

Currency Pair Broker’s Bid Broker’s Ask Bid on and change since 7 August 2022

USD/BTC 0.0001 0.0001 0.0000 (+0.0001)

USD/ETH 0.0006 0.0006 0.0006 (no change)

USD/BRL 5.1694 5.1725 5.1632 (+0.0062)

RUB/BRL 0.0857 0.0859 0.0853 (+0.0004)

USD/INR 79.5780 79.8280 79.2290 (+0.3490)

RUB/INR 1.3195 1.3252 1.3083 (+0.0112)

USD/CNY 6.8989 6.9011 6.7612 (+0.1377)

RUB/CNY 0.1144 0.1146 0.1117 (+0.0027)

USD/ZAR 17.2680 17.3215 16.7588 (+0.5092)

RUB/ZAR 0.2863 0.2875 0.2767 (+0.0096)

USD/NGN 422.9200 423.9200 417.0700 (+5.8500)

RUB/NGN 7.0125 7.0373 6.8869 (+0.1256)

Source: OANDA

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