Jump to content
Roaring_Twenties

Hedging US-China Trade Risk with Bitcoin

Recommended Posts

So this a recent case study by Grayscale and while it uses BTC in its analysis for the next financial crisis, I’d like your perspective on:

Could one could substitute XRP where BTC is used in this study and draw a like conclusion?

I think to a certain extent it could, the exception perhaps is that with the “store of value” aspect and this case study specifically, a larger contributing factor for BTC value rise is likely the flight from Chinese Renminbi (RMB) to BTC. I have no idea if that is true for XRP. That being said, I think some BTC holders will indeed likely trade into XRP once they suspect XRP is about to rise up in value greater than BTC appreciation.

Bonus question: 

Do you think liquidity will be a key contributing factor in the next global financial crisis?

Double bonus points question:

On Friday, November 8th, Liquidity is Different Now will be presented at SWELL 2019. What do you think the major points of this brief might contain? (I’m curious as I have a suspicion on what they might brief but I’m likely off)

Thanks.

Share this post


Link to post
Share on other sites
Posted (edited)

@Roaring_Twenties
Simple answer is no, to all 3 questions. Furthermore far to deep. Ask a economist or a Noble Prize winner In Economy. The have no freaking idea either.
The rest of the answers you will get are just laymen answers, just like mine, even if the will be sorrounded by far more words than my simple:
 - No.

You might even get a maybe. If you are lucky.

But if you wanna hedge the Trade Ware with Bitcoin. You might succeed.

Edited by zenkert

Share this post


Link to post
Share on other sites
Posted (edited)

You can’t go wrong with good old gold but if your looking for potential big gains then cryptos are a better choice.

Bitcoin is probably the safer choice .

This is not financial advice, just my point of view.

Edited by Capone

Share this post


Link to post
Share on other sites
Posted (edited)

There is a widespread opinion that a new asset class is needed as never before.

Bonds with negative interest rates is at its historical peak, reaching 12 trillions USD. Yes, those bonds provide good returns lately (Germany’s 30-y bonds are 25% up in 2019 alone!) while interest rates go down but will become a burden when rates can’t go lower. Generally speaking there is a huge imbalance in the bond market, a simple fact that Greece has a lower yield than the US tells you a lot. Hell, even Nokia has negative rates which conflicts with common sense. 

Where all the money from bonds with negative rates can go when the music (read, lowering rates) stops and all investors want out? Right now it’s real estate (~250 trillion USD), stocks (~80 trillion USD) and gold (~9 trillion USD).

I have my doubts about real estate and stocks and I’d say many are considering gold (and its digital reincarnation - bitcoin) as safe heavens. Will XRP take a slice of those 12 trillion? That is still to be seen. 

Food for thought - https://qz.com/1647791/12-trillion-of-negative-yielding-bonds-are-a-distress-signal/

Edited by Lamberth
Just a link

Share this post


Link to post
Share on other sites
2 hours ago, Capone said:

You can’t go wrong with good old gold but if your looking for potential big gains then cryptos are a better choice.

Bitcoin is probably the safer choice .

This is not financial advice, just my point of view.

Thanks @Capone,

I was really trying to get peoples perspective on my three questions after they read the case study.

Yes, I’ve bought precious metals as well since 01 right after the .com bust. I’m not interested so much in the safer choice as I think the biggest percentage of growth is in the rear view mirror for BTC. I’m interested in potential growth and that to me means XRP.

Share this post


Link to post
Share on other sites
22 minutes ago, Roaring_Twenties said:

Thanks @Capone,

I was really trying to get peoples perspective on my three questions after they read the case study.

Yes, I’ve bought precious metals as well since 01 right after the .com bust. I’m not interested so much in the safer choice as I think the biggest percentage of growth is in the rear view mirror for BTC. I’m interested in potential growth and that to me means XRP.

To give credibility to XRP  Ripple has to give away  ( not sell ) all those XRP’s they still own. Of course this would bring the price way down but then XRP would become totally  decentralized and could start being taken seriously.

Share this post


Link to post
Share on other sites
4 hours ago, Roaring_Twenties said:

So this a recent case study by Grayscale and while it uses BTC in its analysis for the next financial crisis, I’d like your perspective on:

Could one could substitute XRP where BTC is used in this study and draw a like conclusion?

I think to a certain extent it could, the exception perhaps is that with the “store of value” aspect and this case study specifically, a larger contributing factor for BTC value rise is likely the flight from Chinese Renminbi (RMB) to BTC. I have no idea if that is true for XRP. That being said, I think some BTC holders will indeed likely trade into XRP once they suspect XRP is about to rise up in value greater than BTC appreciation.

Bonus question: 

Do you think liquidity will be a key contributing factor in the next global financial crisis?

Double bonus points question:

On Friday, November 8th, Liquidity is Different Now will be presented at SWELL 2019. What do you think the major points of this brief might contain? (I’m curious as I have a suspicion on what they might brief but I’m likely off)

Thanks.

Is that translated from Chinese ? :)

Share this post


Link to post
Share on other sites

 I don't think xrp can be seen as a store of value as long as Ripple holds them. In reality I do not believe that xrp can be seen as a store of value as long as xrp remains undistributed. This comes to more of psychological/safety stance. In a crisis why would a person put their savings in an asset where known control exist within a single company. BTC is seen as distributed fairly by work, I'm leaving that argument there for sanity purposes.

To the individual saying give them away. I think that is a rather short sighted idea. The only way Ripple would distribute xrp in a giveaway fashion is if the network was in true jeopardy. If ripple failed I would assume that escrow release would be continued without xrp being put back into escrow. Maybe. Ripple will more than likely remain in control of the xrp and slowly release them in accordance to network growth.

Question 2: Without liquidity xrp can not be used for its intended use case on a large scale.

My belief is xrp's success is dependent on the ability of it being useful. If we will see gains it will come from xrapid and xvia.

More than likely the next financial crisis has already started. If the causes the need for countries to be independent of another nation's currency for their own stability then maybe it is a catalyst for xrp's rise to full usage.

We are speculators with little control.

Share this post


Link to post
Share on other sites
Posted (edited)
3 hours ago, peanut56 said:

 I don't think xrp can be seen as a store of value as long as Ripple holds them. In reality I do not believe that xrp can be seen as a store of value as long as xrp remains undistributed. This comes to more of psychological/safety stance. In a crisis why would a person put their savings in an asset where known control exist within a single company.

I respect your view, but the same can be said of fiat currencies. Currency wars are raging around the globe at the moment. It could be argued that the Federal Reserve has the most control over the US currency; that is, a single entity has control and one that at least began as a private entity. Look where it has led us, to a point in time where we are looking to digital assets such as XRP to help alleviate another contagion because the Fed has irresponsibly abused our money. China's communist government controls their money and have equally abused it in numerous ways, including devaluing it as well as loaning trillions to their own companies with no intention of being paid back (basically the same thing as running the printing presses). I guess it all depends upon who one sees as the adult in the room. While it may be a stretch for Ripple to be that adult long term, it may not be a stretch short term in a crisis. The crisis itself may bring about the liquidity needed. I think XRP can be a store of value just like BTC, except with the difference of having much greater technology behind it and a much broader use case. It combines the best of gold and the dollar. The gold cannot be inflated and the dollar is useful on a day to day basis. XRP is both of these with modern technology (At least it cannot be inflated from a technological standpoint. I know your point about Ripple applies here). I'm betting that in addition to having that great use case we all admire that it will also be a store of value. 

Edited by VanGogh
clarity

Share this post


Link to post
Share on other sites
Posted (edited)
1 hour ago, VanGogh said:

The gold cannot be inflated and the dollar is useful on a day to day basis. XRP is both of these with modern technology (At least it cannot be inflated from a technological standpoint. I know your point about Ripple applies here). 

Strictly speaking this is not quite true. One can modify software to create more XRP, they “just” need to agree on this with all nodes - https://www.quora.com/Can-Ripple-create-more-XRP

I prefer not to think about this option and how it might be exploited by the likes of the FED should they get their hands around the ledger. 

Edited by Lamberth

Share this post


Link to post
Share on other sites
57 minutes ago, Lamberth said:

I prefer not to think about this option and how it might be exploited by the likes of the FED should they get their hands around the ledger. 

I am unsure of how that could actually happen?  

I can’t see a majority of nodes agreeing to any change that means the FED controls the ledger.  It’s a global ledger and Ripple have decentralised enough now (and the journey continues) that unless it was a palpable good for all,  I can’t see sufficient nodes agreeing to allow centralised control.

Similarly for the ‘increased XRP supply’ idea.  

I would be interested to hear if anyone can think of a plausible scenario for that to happen (without postulating a total failure and abandonment of the ledger as a necessary precursor).

 

Share this post


Link to post
Share on other sites
Posted (edited)
32 minutes ago, Tinyaccount said:

I am unsure of how that could actually happen?  

I can’t see a majority of nodes agreeing to any change that means the FED controls the ledger.  It’s a global ledger and Ripple have decentralised enough now (and the journey continues) that unless it was a palpable good for all,  I can’t see sufficient nodes agreeing to allow centralised control.

We have seen statements like “This is a national security issue, follow our guidance or..” before, haven’t we? If such a guidance is provided to all US-based validators, they have to follow it and if non-US validators don’t agree, the ledger will fork into two with one of the ledgers having a higher supply. By no means I am saying this is a likely scenario but it could technically  happen.

Edited by Lamberth

Share this post


Link to post
Share on other sites
1 hour ago, Lamberth said:

We have seen statements like “This is a national security issue, follow our guidance or..” before, haven’t we? If such a guidance is provided to all US-based validators, they have to follow it and if non-US validators don’t agree, the ledger will fork into two with one of the ledgers having a higher supply. By no means I am saying this is a likely scenario but it could technically  happen.

Yes that could happen,  but I would suggest that the fork would be similar to others we’ve seen...  a major and a minor network resulting and the USA one would not be the dominant one.  (Assuming continued worldwide adoption)

So the true XRPLedger would continue just fine.

Share this post


Link to post
Share on other sites
2 hours ago, Tinyaccount said:

Yes that could happen,  but I would suggest that the fork would be similar to others we’ve seen...  a major and a minor network resulting and the USA one would not be the dominant one.  (Assuming continued worldwide adoption)

So the true XRPLedger would continue just fine.

We agree to disagree. It boils down to the validator stats IMO and Ripple is still leading the pack (despite being a minority) - https://xrplstats.com/validators/

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...