The Brief for September 14, 2020

The crypto markets are on the move! Premium subscribers who followed my plan would have bought bitcoin between $9,800 and $10,100. (Altcoins, too.)

It was nice to have a week to reload. Now, we wait and see what comes next.

Read below for two articles you may find interesting. More reminders that governments will always try to assert their authority over crypto.

• The IRS offers a $625,000 bounty to anyone who can break Monero and Lightning

  • Bottom line: U.S. tax authorities want to trace “privacy coins and Layer 2 off-chain transactions.”

  • My take: Duh. But before we get to OMG they’ll take my crypto worries, keep in mind, the IRS needs a warrant to investigate anybody’s financial activities. The real worry comes from other governments that do not have such restraints on the power of the state. Once (if?) somebody develops the tech to break privacy, you can expect other governments will use it.

  • Why we care: as prices go up, we will see even more scrutiny of privacy, with CipherTrace, Chainalysis, and big exchanges helping governments keep tabs on who’s moving crypto and where that crypto is going.

• European Central Bank President: Coronavirus Has Accelerated Digital Currency Adoption

  • Bottom line: online payments have grown like crazy since COVID-19 started.

  • My take: European leaders know traditional financial technology can’t compete with blockchain. As ECB head Christine Lagarde says, “in a digital world, consumers must have the possibility to pay with sovereign money.” (Emphasis is mine.) In response, they want to launch a central bank digital currency (CBDC), and they need talking points like this to convince people to go along with it.

  • Why we care: even if CBDCs don’t use blockchain technology, most people will not care or even know the difference. As more commerce goes natively digital, it will all blend together in people’s minds and make cryptocurrency feel more real, legitimate, and inevitable.

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Relax and enjoy the ride!