☕ CBDCs: Crypto’s Evil Twin 😈 🔥
🪙 Are CBDCs a global crypto solution, or an international problem?
There’s a Cherokee legend that says every person has two wolves inside them, a good wolf and an evil wolf, locked in constant battle over your soul.
Which one wins? The one you feed.
The concept of evil twins has been around for as long as humans have had an oral tradition.
These days, you’re far more likely to see an evil twin in a telenovela or soap opera than staring back at you from the mirror.
But does crypto have a dark doppelgänger in the form of CBDCs?
Though, like swapping places with your twin for some sitcom-style hijinks, could CBDCs have a utility that we’re overlooking?
☕️ Raft Hacked
The defi platform Raft suffered an exploit on November 10, costing Raft $3.3 million in Ethereum.
Update: Further minting of R has been paused.
Existing users are still able to repay their positions and receive their collateral.
— Raft (@raft_fi)
Nov 10, 2023
In the ensuing chaos, Raft’s R stablecoin depegged from its $1 price point.
The hacker, bizarrely, sent most of the Ethereum to a burn address, and the wallet associated with the attacker ended up with 14 ETH after they were done moving the money around… which is less than the 18 ETH the hacker started with.
1. hacker pulled 18 ETH from tornado cash
2. hacked a total of 1,577 ETH
3. burned 1,570 ETH and sent remaining 7 ETH to themselves
4. After fees, they're left with 14 ETH
So total profit after fees is -4 ETH
mf might go to jail to LOSE 4 ETH
— 0xngmi (@0xngmi)
Nov 10, 2023
Let’s hope that Raft can recover from this attack and go on to join the great rafts of history, such as the life rafts on the Titanic that braved the icy waters of the North Atlantic, or Huck Finn’s raft, which defeated racism.
☕️ Efficient Market Hypothesis
Researchers at the International Hellenic University and Democritus University of Thrace in Greece have determined that employing an efficient market hypothesis (EMH) in crypto trading may be far more effective than simply hodling, according to a recent study published in the journal SSRN.
“We manage to generate models whose forecasts give investors the ability to record higher profits than the ones they would have if they followed the well-known buy and hold strategy,” reads the study.
Based on the researchers' simulated trading experiments in which they used EMH and prioritized undervalued assets, EMH outperformed hodling by 300%.
It’s a tough call, because hodling is fun, simple, and has a typo in it. EMH, on the other hand, uses a hypothesis… which sounds like it’s for dorks.
☕️ Musk the Movie
Darren Aronofsky, the director of “The Whale”, “Black Swan”, and “Requiem for a Dream” will be handling the Elon Musk biopic.
The film is still very much hush-hush, but Aronofsky will be adapting Walter Isaacson’s biography, “Elon Musk”.
The Musk biopic will be produced by A24, which won a bidding war for the project.
Elon seems pretty jazzed about the development, taking to X to share his enthusiasm.
Glad Darren is doing it. He is one of the best.
— Elon Musk (@elonmusk)
Nov 10, 2023
No word yet on the title, or who will play the titular role, but we feel weirdly certain it will be Brendan Fraser in several hundred pounds of prosthetics.
A little pullback is healthy
Our #SHIB chart is still organically moving up 🚀🚀🚀
Spend time with family , cook , clean or take an opportunity to load on this chart 👇 #SHIBARMYSTRONG #SHIBARMY
— Lola (@CryptoLollla)
Nov 12, 2023
Hey, Shiba heads (& memecoin lovers), is it too late to get on the meme train?
Spilling the Beans
CBDCs: Crypto’s Evil Twin 😈 🔥
More than just a store of value or a new decentralized financial system, crypto is a promise.
When Bitcoin entered the scene in 2008, it offered a new and beautiful future, one where financial power was in the hands of the little guy.
But adoption has progressed like any other massive, societal change: In increments.
And one of those stepping stones to widespread crypto acceptance is the CBDC.
Central Bank Digital Currency (CBDC) represents the grudging acceptance of big government and financial institutions toward digital assets.
It’s hard to miss that “Central” is the first word in CBDC, which generates some reasonable doubt that these coins have anything to do with crypto’s mission of decentralization.
If we’re being generous, one might consider CBDCs a stepping stone for governmental and institutional crypto adoption. CBDCs are the water wings for countries not ready to take the full plunge.
Government-regulated CBDCs are about as sexy as the Bank of America app and only a little less decentralized than Venmo.
And of course, some individuals believe CBDCs are fundamentally evil.
CBDC implementation could represent increased government surveillance, an overall reduction in credit, and a sweeping threat to financial privacy.
Governor Ron DeSantis, for example, led Florida to become the first state to ban CBDCs.
“The government and large credit card companies should not have the power to shut off access to your hard-earned money because they disagree with your politics,” stated DeSantis in a blog post on Florida’s official governor website. “Biden’s Central Bank Digital Currency aims to increase government control over people’s finances, and we will not allow it. In Florida, we value personal freedom and won’t allow self-interested elites to chip away at our liberty.”
But regardless of where you or Florida stand on CBDCs, we are discovering that this once seemingly useless experiment actually has some fascinating utility.
The one area in which CBDCs truly stand to make a difference is in the simplification of cross-border payments.
For centuries, mankind has struggled with cross-border payments and the constant headache of exchange rates and managing trade between separate economies.
Until 1973, when we sort of solved that problem by establishing The Society for Worldwide Interbank Financial Telecommunication (Swift), a Belgian cooperative dedicated to forging connections between international banks.
If you’ve received an international wire transfer in the past several decades, you’ve almost certainly encountered a Swift code.
But now it appears that CBDCs might be putting Swift out of a job.
There are many, many CBDC cross-border payment projects to choose from. But there’s one in particular that’s grabbing our attention, and that’s mBridge.
mBridge has connected the central banks of 23 different countries.
mBridge was originally established in 2001 to connect banks in Hong Kong, China, Thailand, and the United Arab Emirates.
Though mBridge has only grown since then, and even includes the Federal Reserve Bank of New York and Goldman Sachs.
mBridge has been building its globe-spanning network for years and intends to go live at some point in mid-2024.
mBridge is certainly a promising new solution, but it may have a hard time dislodging Swift as the go-to provider for cross-border payments, as Swift currently has more than 11,000 participating banks in over 200 countries.
But despite which cross-border payment provider reigns supreme, mBridge proves that CBDC has potential beyond its role as a half-crypto tool for government interference.
No, CBDCs will never replace crypto, but there is a path where CBDCs carve a niche of their own.
So, are CBDCs crypto’s evil twin? Not exactly. If anything CBDCs are crypto’s well-meaning, but misguided, little corporate brother.
Depegging: This occurs when a stablecoin loses its set or “pegged” value, which is usually a 1:1 ratio with a fiat currency such as the U.S. dollar, euro, or Japan’s yen.
The Last Sip
The Last Sip: No, fat suit Brendan Fraser will not play Elon Musk in the upcoming biopic. They should be brave and cast Kathy Bates, but it will be Rami Malek and we’ll all just have to deal with that.
Coffee & Crypto Team
That's all for today! If this email got you hooked on our unhinged crypto takes, be sure to get a full dose on Twitter @GetCoffeeCrypto.
If you find yourself smiling at any of our dumb jokes, or even *learning* something - make sure to share this newsletter with your friends!
If you get 5 friends to sign up - or even enemies, we don't care - we'll send you our Bitcoin Bootcamp eBook! This thing is packed with info and is the ultimate guide to the world’s ultimate currency.
Just hit the Click to Share button in the section below to get started!
What did you think of today's newsletter?
It's ok, you won't hurt our feelings.
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.