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Cryptocurrencies aren't money? | 15 minutes with Kanga #49

Cryptocurrencies aren't money? | 15 minutes with Kanga #49

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Sławek Zawadzki: Welcome everybody, today’s date is 15 June 2021. Name day celebrated by Abraham and Lotar. 20 degrees Celsius in Gdańsk, mostly cloudy. BTC block number 687649. Price of KNG is 3.52 oPLN, price KESH – 651.05 KNG, which means KESH is worth 2291 PLN. Kanga is valued at over 57 million zloty. This is ‘15 minutes with Kanga no 49’, led by Sławek Zawadzki and Łukasz Żeligowski.

Łukasz, what’s the best thing about Switzerland?

Łukasz Żeligowski: I don’t know.

[SZ] I don’t know either, but the flag is a big plus. [laughter]

Dear listeners, before we start for real, let us know in the comments if you can see and hear us, it’s really important. Łukasz, what is happening right now in the world of bitcoin and ethereum?

[ŁŻ]: Oh, a lot. We had a pretty nice increase recently. It could be caused by some purchases done by MicroStrategy, but I’ll get back to that. Right now we can see we have a lot of ‘bull’s’ news’. Price increased pretty rapidly. Over 40 000. ‘Diviners’ talk about the level of 44 000 as something relevant. ‘If we reach 44 000, we broke a trend. There will be a hossa again, and our nearest goals (51 000) can be reached in a very short time. Maybe when we meet again, next week’. Of course, we can also meet pessimists. I have no idea where these people come from. Some say, there are no pessimists, only well informed optimists. The people who know- they tend to see decreases. They talk about support at a level of 36 000 USD. If it gets broken, the price will drop to 34 000 USD, maybe even 30 000 USD. Time will tell if it’s true.

If you’d rather hear about decrease, according to some people, ETH will drop below 2 200, and then quickly reach 2 000, so later on a drop below 1 700 is extremely possible. We will see. Interesting days are ahead.

[SZ]: Okay, are you able to say where do the optimists come from? Did they just appear, or is it a result of some actions?

[ŁŻ]: I think we mentioned a week ago that we can observe a fight between bulls and institutions. By ‘bulls’ I mean ‘big players with big wallets’. Big institutions are said to be trying to lower the price in order to make a purchase- because they’re convinced an increase will come. And here we can go back to MicroStrategy.

MicroStrategy is a company that owns BTC worth  almost 4 mld USD. What is very interesting, because that’s over 92 000 BTC. So what’s the average? What profit does it generate? About 1,5 mld, because they were buying at the price of 245 000 USD. No wonder they are going to emit more shares.

It’s possible that fund shares will be bought. They got the permission to sell shares at the worth of 1 mld USD. They supposedly sold almost half of that- almost 500 mln USD worth. 498 mln USD to be precise.No wonder their shares are bought, if they have results so good.

I think it was the CEO of MicroStrategy that said that bitcoin does not hand out dividends. No salary. The only profit is from buying cheap and selling for more. They count on the increasing price of bitcoin and do not hide the fact that they will start selling, when bitcoin reaches expected value..

[SZ]: That seems to be an optimistic scenario. And what about ethereum? The fees have dropped. Pretty rapidly, which is important for investors and all ethereum holders. Do the guts tell you, why is that? I think I might have an idea, but…

[ŁŻ] I’ll let you talk, I don’t wanna jump in with crazy news.

[SZ] So it turns out the number of Polygon transactions is bigger than Binance Smart Chain ones. Polygon, the second layer of ethereum, makes ethereum “lighter” from the number of transactions. Polygon took the weight, but ethereum is still needed, because otherwise Polygon wouldn’t be able to work as a second layer.

So it turns out that Polygon is the solution to all of the problems ethereum had.

And that’s why the fees dropped. Everything points to that. And Matik,the main Polygon currency, has also noted a dynamic growth over the last couple of months. It looks really interesting. We’d like to remind you that Kanga was the second or the third centralised exchange in the world that recognized the trend and has integrated with Polygon.

[ŁŻ] Yes, we were the second exchange in the world, we were pretty close to being the first one, but that’s true, we were second. Kanga is the trendsetter of nations, in this particular instance- exchanges. We will see when other exchanges will join in.

Matik and Polygon turned out to be the bull’s eye. Everyone who invested in Matik 4 months ago certainly is in a very good mood today. Feeling pretty great to- many holiday possibilities to choose from.

[SZ] Exactly. So, Łukasz, let’s take a moment to talk about what’s going on in the Netherlands.

Because a pretty interesting debate is going on. There are followers and opponents of cryptocurrency. One of the consoulers- I’ve even written his name down- the man called Pieter Hasekamp (not sure if I have read that right). He’s a Dutchman, a high ranked official, a counselor at the beauro of legal financial government analysis of some sort. He wrote an extensive essay, in which he claims the Netherlands should take decisive action and eliminate bitcoin from the Dutch land. He suggested mining prohibition, closing all cryptocurrency businesses, because bitcoin is “bad money”. Not only do criminals use it, but also it lacks the characteristics of good money.

[ŁŻ]  In contrast to the euro, which is very good money. Certain, solid, having a good foundation.

[SZ] See, this is where the financial minister of the Netherlands commented- Hoekster, who said, bitcoin can not be prohibited. The only thing that can be done is to regulate. Then the counselor said that the regulations are not enough. Regulations give the cryptocurrencies a legitimisation of some sort, showing they are good and can be functioning. And this is the subject I wanted to talk with you about. The question is, if bitcoin, or any other cryptocurrency, is real money? Are they a proper means of payment? Remember, we had a debate once, I remember that well, at Warsaw Stock Exchange on 6.12.2018 we were asked, on what interest rate the bitcoin loans are given.

[ŁŻ] Yes, I remember that, and I also remember our very good response. We said: whatever the market will allow. So, whatever someone agrees to.

[SZ] That’s right, but I remember they kept on asking. Those economists, they repeated ‘No, no, what is the interest rate?’ And I understood one thing then: we don’t get them, and they don’t get us. We talk about interest rates in the context of official, central interest rates and that’s where the question came from. Bitcoin doesn’t have a central bank, none of the cryptocurrencies do. And we can see the misunderstanding. The question is, how it should look like. In your opinion, will cryptocurrencies replace money?

[ŁŻ] I’ll put it that way:  we have a free market for garden furniture, a free market for apartments, and a free market for cars. Obviously, restricted with some kind of regulations. But there are countries where there is a free market for different goods. But one market isn’t free. One that everyone seems to be missing. We don’t have a free market for money! Money is regulated with mentioned interest rates. It could be said that it’s the most important market, because it’s related to all the other markets. We have a free car market and what- if we don’t have a free market of money to pay for the cars? We have a free garden furniture market and what- if we don’t have a free market of money to pay for these furniture? Free money market doesn’t exist, not from ‘76, when, for the first time, american dollar resigned from gold parity, from being secured with gold. Since then we have a 100% regulated market, that depends on central banks. The economists forgot that 50 years ago it was impossible to talk about fixed interest rates. Central banks are not that old of an invention. It’s not something that has existed since forever. It’s something that was created in the XX century. And it became so obvious, that it’s even hard to imagine a world without central banks. It’s beyond their cognitive skills.

[SZ] Now I’d like to mention a very interesting comment by Andres El Dorado, greetings to him and all other commenters. Andres wrote ‘bad money drives out good, it’s economy basics’. He mentioned Gresham’s law, or the Gresham–Copernicus law. Not everyone knows that Copernicus also formulated a version of the quantity theory of money. Bad money drives out good money. The analyst mentions that a certain deviation occurs. People would rather pay with classic currencies, and would rather store cryptocurrencies.

[ŁŻ] Bad money drives out good.

[SZ] Yeah, but in this particular case Gresham’s law doesn’t seem to be working.

[ŁŻ] But Gershman’s law is about bad money drives out good. That if we have money in our pocket and we need to pay, we will be willing to pay with the bad money and keep the good to ourselves. And we will store it.

[SZ] That’s really interesting that Hasekamp, this analyst, points out the deviation of some sort. In my opinion, and I see yours as well, it’s a counterargument for his thesis.

[ŁŻ] So even he doesn’t get it.

[SZ]  No, he… you know. We have classical physics and big physics, quantum physics, and high speeds. They work a little bit differently, so probably, economists from all over the world will try to prove that the cryptocurrency economy is a little different from the classical economy. Different laws. Which is interesting. Why? I think we are witnessing something that we’ve been talking about for a long time in 15 minutes with Kanga, the ongoing big war. In Thailand…let me make sure, if it’s really Thailand…. yes. One of aisain countries. Thailand prohibits listing NFT cryptocurrencies. Meme cryptocurrencies, like dogecoin. Fanmade cryptocurrencies. The amount of cryptocurrency in motion in Thailand is very, very limited. That’s happening right now. And not only that, there will be additional restrictions introduced. Cryptocurrency investor on thai ground is someone who earns quite a lot of money. If you earn less, you can’t invest.

[ŁŻ] Let me include a short commentary: the rich will be even richer and it’s impossible for others to earn money. In the way of thinking for tokenization or other financial instruments, which has appeared in the world of cryptocurrencies. They are available for everybody. It doesn’t matter if I have 10 USD or 10 mln USD. I can have the exact same profit. Sure, the amount might differ, but I will enjoy the very same interest rate. For instance, Kanga PoS based on crypto-zloty. We constantly have interest rates 100 times bigger than bank deposits. The rich and the poor have the exact same interest rate. If you want, deposit your 100 PLN at crypto-zloty PoS and earn 20% APY. No problem.

[SZ]: Exactly. And that means, I think, that there can be three reasons for the regulations. We are talking about right now. Regulations restricting cryptocurrency activity. Or not fully understanding the subject. Or the will to protect your own best interest. Banks and governments sometimes lose too. Or deliberate negative actions that aim at making other people’s lives difficult. I can’t see the fourth possibility, really.  Obviously, I am not impartial. But every one of these motivations is negative.
Let me just add one last piece of information- in Argentina, which has been struggling for years, just like Venezuela, 8 cryptocurrency companies (no names) were accused of money remittances and will face criminal charges. In my opinion, Argentinians were saving themselves from a crisis, accepting cryptocurrencies as means of payment.

[ŁŻ] Everyday payment.

[SZ] Yes, everyday payments. Inflation in Argentina is so big, that, for instance, it was prohibited for 30 days to send meat abroad. Because Argentinian meat is good. Foreign buyers bring the risk of hyperinflation. So there was a decision made: for 30 days meat cannot be sold abroad. And poor entrepreneurs must suffer, because some clerk can not accept that he failed.

[ŁŻ] Yeah, he made some wrong choices and now there are consequences. This is an example of incorrect actions that lead to not recognizing what the reason and result are. And our officials very often confuse reason and result, and fight with consequences of their previously made choices. So, the fight with issues not existing in any other system. That’s unfortunate…

[SZ] That’s how it is. Let me bring up just one more persona before we end: Robert Mugabe. Leader of Zimbabwe for many years, dictator, a man that had many bad deeds on his conscience. When Zimbabwe was struggling with hyperinflation, he had an ‘ingenious’ idea. He wanted to execute anyone who would increase their prices. And I think he even did that. But it didn’t work. As you can see, even ideas like that are not working.
But before we go, let’s remember the novelties of Kanga.

New PoS has appeared: PoS Airdance. PoS PayBTC has appeared, or will appear very soon. And Greater Poland Voivodeship stopped being a blank space on the map of Poland in terms of cryptocurrency exchange offices. Piła, Września and many other cities have appeared on a map and are working. Which is, obviously, very good news.

[ŁŻ] The net of Kanga exchange offices is evolving. We have a few other offices that we will soon be working with. But that’s not the end of good news from Kanga. We don’t want to make this episode too long, but follow our social media, our Telegram, to be in the loop of all the Kanga novelties. A lot will be going on!

[SZ] And to end with, a comment by Mariusza Fultyna, ‘Gentlemans, what’s that background?’ That’s not Gdańsk, that’s a different city, but about that we will keep you posted. Łukasz, thank you very much.

[ŁŻ] Thank you, Sławek.

[SZ] Dear watcher, please rate this episode on a scale from 1 to 6, tell us if you liked it. And we will see you all next week. All the best!

For a video version of the cryptocurrency news episode, click here.