The World’s First-Ever Digital Currency Is Now Live
Andy Snyder|October 22, 2020
The evolution of money is here… and it’s moving rapidly.
In a dire sign of the times, the Central Bank of the Bahamas put out a historic tweet this week.
The world’s first-ever digital currency is now live.
Luddites be damned.
This shows just how quickly things have evolved.
The new form of money has been dubbed the “Sand Dollar.” It’s pegged 1-to-1 to the American greenback.
Cellphone companies love it. You can’t use the money without a smartphone and the monthly contract that comes with it.
Bahamian officials say the new digital money will help the unbanked. But we scratch our heads and wonder whether the unbanked are unphoned too.
Really, it doesn’t matter. Because while the Bahamas has officially won the digital currency race, the wolf pack isn’t far behind.
Gaining (Scary) Speed
China just tested its new digital currency by giving the equivalent of about $30 to some 50,000 randomly selected citizens.
Most folks did exactly what we’d expect… They immediately turned the digital money into something tangible. Ninety-five percent of the funds have already been spent.
It’s great news for a global economy that’s addicted to stimulus. The folks in charge can pump things up just by tweaking some ones and zeros on our phones.
But we warn folks that the government giveth… and the government taketh.
There’s a reason Beijing knows who spent that money and where it went. And it’s not to see who could use a bit more cash.
Cash is anonymous. Digital currencies ushered in by your government are not.
Where’s Washington?
As for America and her digital endeavors… ha.
The official word is that the Fed is still thinking about going digital and carefully watching how others roll their coins out.
We don’t believe it for a second.
Nixon shocked the world when he unchained the dollar from gold in 1971 with a live prime-time TV announcement.
Fifty years later, we expect that fancy new “presidential address” feature on our smartphone to someday soon usher us into the digital world.
What a shock it will be.
“Turn in your dollars. We’ve got something better.”
Pelosi penned digital dollar laws once this year, you may recall. Congress knows the language well.
Bitcoin vs. Dollar
With that, we turn to a reader favorite… the mailbag.
What is your opinion on Square buying $50,000,000 worth of Bitcoins? Does that give more credibility to Bitcoins as a comparable to gold, as a form of hard gold? – Reader L.A.
We dove into the topic a bit on Monday. We certainly can’t blame Jack Dorsey for putting a chunk of his company’s savings into Bitcoin.
As the man behind Square and Twitter, Dorsey has certainly changed the landscape. Hiding from the ravages of the dollar isn’t a bad idea for a company that makes its money through money.
As for ties between Bitcoin and gold… yes, the two are very similar. It’s why we recently told our Manward Letter subscribers to up their allocations to both.
Gold, don’t forget, has no God-given value (sorry, gold bugs). It’s the currency of currencies because 1) it’s rare and 2) we say it is.
The dollar has only one of those traits these days. And China wants to take it away.
As long as forward-thinking folks want an alternative to sovereign fiat, Bitcoin and its cryptocurrency brethren will have goldlike appeal.
They are an alternative to the system.
That’s valuable.
Bitcoin vs. the Market
My question for you – do you think Bitcoin will pull back if the market corrects? What might cause Bitcoin to pull back? – Reader B.J.
You’re not going to like our answer. It’s honest. And therefore it’s not a good one.
A pullback in Bitcoin depends on what pulls down the market.
If a weak dollar (say, from political antics) brings down the market, Bitcoin would surge. If the market plunges on a strong dollar (perhaps from a major global recession), Bitcoin could fall right with it.
We’ve been watching the ties closely for several months. It used to be that Bitcoin (and other cryptos) were largely untethered to the market’s movements. But that has changed in recent months. The ties today are as tight as ever.
But that’s today. And that’s the thing with correlations. As soon as they’re considered fact… they change.
A True Free Lunch?
One more… and it’s a good one.
I have just renewed my subscription for two years, not more because I am very happy to pay the subscription fee again then. I have subscribed for some time already and really enjoy reading your views on the many different subjects which are or become important to us all.
I have been in two “career situations”: one as a Royal Navy Officer, which gave me the opportunity to set up the training for the maintaining engineers and technicians (Satcom etc.); then in various European scientific space satellite projects, including the Space Station (ISS) and ExoMars (sadly delayed two years launch so I have retired… at 79 years!).
I have really enjoyed reading your reports and agree with your views on just about everything. Keep it coming, and enjoy a good and healthy and happy life. If you get to the North of Italy, lunch on me! Very best wishes. – Reader R.B.
We love notes like these… and not just for the sake of our lousy ego.
As we celebrate four years at the helm of this oddball ship, we can’t help but relish the diversity of opinion and experience within our readership.
We’ve got folks from all lots in life and from all over this tiny little planet of ours.
The only thing that binds us all… is that we all know there’s always more to the story.
And the only way to get there is to think differently.
Keep the comments and questions coming. Send an email to mailbag@manwardpress.com.
