Salvadoran Ambassador to US: Bitcoin Challenges Your Authority

The biggest crypto news and ideas of the day

Nov. 26, 2021

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Welcome to a special day-after-Thanksgiving edition of The Node. We hope you all had a very happy Thanksgiving holiday.

Today, we're featuring some of the best pieces from around CoinDesk this week, including topical essays and recommended reads. And as always, CoinDesk has the latest crypto prices, stories and news. We'll be back Monday with our regularly scheduled Node programming.

Questions? Feedback? We'd love to hear from you! Simply reply to this email.

–Daniel Kuhn

Today's must-reads

Top Shelf

Instead of the usual news roundup, today seems like a day to dig into some think pieces.

ARE NFTs SECURITIES? Merav Ozair, a fintech professor at Rutgers Business School, wrote about an emergent issue in securities law: how to treat non-fungible tokens (NFTs). Although many NFTs are closer to commodities, there are many projects that look like ways to profit from the shared labor of others – or, in short, securities. Ozair goes over a few instances where the line is blurred. Here's one:

"Suppose you create a partnership or a co-op to facilitate the management of the painting among its many owners. As a group you may need to decide what to do with the painting – where to place it? How to secure it? Sell or keep? In such a case each member (i.e., 'fractioned owner of the painting') will have voting rights on how to govern and manage the painting. Voting rights, such as in the case of a membership in a co-op, does not constitute as a security. It is still an asset, granted owned by many (i.e., a group of people), but not a security."

'CRYPTO-STATES' V. CORPORATIONS: After Facebook, now Meta, announced it was going all in on "the metaverse," people in crypto began drawing up battle plans (correctly, I think). "It's Facebook's Meta versus open DAOs," Kelsie Nabben, a PhD Candidate and researcher at RMIT University's Centre for Automated Decision-Making & Society, wrote in a recent CoinDesk op-ed, referring to decentralized autonomous organizations (DAOs). Nabben covers one issue often overlooked in the software-focused crypto industry: how hardware and supply chains change business incentives. This is a longer piece but worth it.

AMERICA'S DECLINE: In a CoinDesk TV appearance El Salvador's ambassador to the U.S., Milena Mayorga, made quite brazen claims about the Central American nation's embrace of bitcoin and what it means for geopolitics. Not only is Salvadoran President Bukele betting on a weakening United States, but he seems to be planning for other countries to follow his lead. "[The U.S. is] afraid and concerned because a lot of countries are looking at us, and they will follow our leadership," Mayorga said on Wednesday. Watch the clip, too.

BITCOIN CITY, BABY: I also wrote about El Salvador and the changing political scene in something that's closer to fiction than a column. You may have read this on Tuesday, but I'm strangely proud of it. It's satire – hopefully it scratches someone's itch. I don't know how El Salvador's "Bitcoin City" will play out, but it's going to be weird.

–Daniel

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What others are writing...

Off-Chain Signals

A very nice read by Sander Lutz over at Decrypt on Digitalax's fashion scene in the metaverse
Gemini Raises $400 Million To Build A Metaverse Outside Facebook's Walled Garden (Forbes)
Bitcoin mining is important for greening the economy. A sober look by Ellie Rennie at RMIT Blockchain Innovation Hub (blog)
I keep returning to this essay by Lana Swartz, "Bitcoin As A Meme And A Future." It's about the power of belief and shaping reality, which sounds "out there" but is really worth reading (NOEMA)

–D.K.

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Putting the news in perspective

The Takeaway

America, Let's Try Optimism This Thanksgiving

David Z. Morris, here. You're reading this on Friday, but I'm writing it on Wednesday because of the Thanksgiving holiday. So I suppose it makes sense to think about the future, and about America. Many Americans seem to have lost that urge, despite economic signs showing things are turning a major corner. One of the reasons crypto is winning so big right now is that it offers an escape from a society that in many ways can seem like it's traveling a long, dark tunnel to nowhere.

Whether crypto represents a real alternative or not, of course, remains to be seen. But with political tensions, COVID-19, looming climate catastrophe and apparently contagious social-media brainworms, America is in the midst of a period of extreme cultural pessimism, alongside what many are describing as a mental health crisis. Tragically, this has been particularly concentrated among children, but it's also obviously hitting adults. I'm personally fixated on the rise of violent incidents on airplanes, amongst the most clearly terrifying places to lose your mind.

More specifically, survey data shows surges in anxiety and depression (unfortunately, better medical data seems hard to come by). Individual anxiety and depression are such pernicious little bastards because they trap you in a loop of cursing yourself for inaction while also being terrified of taking the wrong action. That's a fairly decent analog for the broader paralysis, malaise, and fear that have taken over our cultural discourse as a whole.

Unlike a lot of individual cases, America's collective mental health crisis has some serious real-world justifications. But on at least one front there's a strange disconnect: The U.S. economy is absolutely burning up the charts. I saw this first hand recently when I trekked out to Jamaica, Queens, to renew my driver's license at the excellent Motor Vehicles department there. It's a working-class neighborhood on the far eastern outskirts of New York City, and I was amazed by the crowds, the number of people in the streets and the boxes of new goods piled on the sidewalks. People were just out there shopping their tails off.

The numbers back up the anecdote. JPMorgan this week revised its fourth-quarter GDP growth estimate to 7%, per CNBC's Carl Quintanilla, which is so good you're tempted to use bad words. Goldman Sachs' estimate is 6%. Meanwhile, wages are rising, unemployment is at 4%. It's all looking really good.

And these growth numbers, by the way, are adjusted for inflation (credit to Fabian Stolzenburg on Twitter for this point). U.S. nominal (non-inflation adjusted) growth for 2021 could wind up at over 10%, which is the kind of growth you'd expect from a country that just got its first power plant – scratch that, its first light bulb – and not the world's biggest and most advanced economy.

Yet, you're much more likely to hear people doomsaying about inflation. That's a reasonable anxiety! But it seems, perhaps thanks to fearmongering by some politically motivated pundits, many Americans are totally unaware of the connection between this increasingly face-ripping economy and recent inflation increases. The two are almost always entwined: Inflation is a product of too many dollars chasing too few goods. So it's what happens when people are spending a lot of money instead of, say, saving it.

Of course, that doesn't apply if you're Argentina or Venezuela or Turkey and you have some actual kook just spinning up the money printer. There is absolutely such a thing as bad inflation. But mixing up what's happening in Turkey with what's happening in the U.S. is a drastic category error.

At its best, inflation is a measure of optimism. You know when else it was high? In 1942, U.S. annual inflation was 10.2%. In 1946, it was 8.5%. In 1947, it was 14.4%. You know what those spikes represented? Sending our soldiers across the pond to save millions of people from a delusional little cokehead named Hitler, then buying the boys steaks and Chevrolets to celebrate (and also sending the white ones to college. Irony!). We spent the money, did the thing, then basked in the fruit of our labors. And it all seems to have pretty much worked out.

We haven't quite kicked COVID's ass as thoroughly as we kicked Hitler's. We've fallen short on unity and self-sacrifice this time around – though looking around the world, it's not clear at this point there was any real way to stop the spread of COVID-19. What we could do, and did with admirable foresight and determination, was keep the economy's pipes from freezing while it was on lockdown. We prevented massive amounts of misery and kept things ready to roar when the time was right.

And boy, we're roaring now. So do yourself a favor and indulge in some optimism, Americans, on the economy if nothing else. Happy holidays. You deserve it.

–David Z. Morris

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