There’s still much to come in terms of crypto news 2019. Yet there have already been several significant developments in the global crypto markets just seven weeks into Q1.
- In a historic first, two of the largest economies in South America settled a trade agreement in Bitcoin.
- A new browser extension called Tippin allows users to send small BTC tips to users on Twitter via the lightning network.
- Japanese e-commerce giant Rakuten has created a new payment app that supports crypto.
- JPMorgan announces plans to launch JPM Coin in a hypocritical move, yet validating the value proposition to the masses.
- U.S. pension funds invest in Bitcoin for the first time, which could kick off a new era of institutional inflows.
The most important of these, in my opinion, is the fact that Paraguay and Argentina conducted trade using only Bitcoin.
Argentina and Paraguay Settle Trade in Bitcoin
Argentina and Paraguay represent the third and eleventh largest economies, respectively, in South America. And in a historic first, the Latin nations have used Bitcoin to exchange goods with one another.
On February 15th, Cointelegraph noted that:
In a reported first for both countries, Paraguay has bought pesticides and fumigation products worth $7,100 from Argentina, using cryptocurrency to settle the deal. The purchase was paid for in BTC and then converted into Argentine peso to settle accounts with the exporter of the agricultural chemicals.
The Argentina/Paraguay Bitcoin transaction is part of a larger trend toward de-dollarization sweeping the globe.
But never before have two significant nation-states settled trade in Bitcoin.
The biggest reason why I label this as the most significant crypto news of 2019 so far is what it implies for the future.
Strategic Bitcoin Reserves: The Future of Monetary Policy?
If nation-states use Bitcoin for international trade, they will eventually start acquiring strategic reserves of BTC, as many nations now hold USD reserves. It’s not hard to see how this would lead to huge increases in the BTC price against major fiat currencies.
It’s even possible that central banks could begin stockpiling Bitcoin at some point.
Max Keiser has stated on the record multiple times that he believes this scenario to be on the immediate horizon. Central banks are alreadybuying gold in quantities not seen in almost half a century. Will they turn to Bitcoin once there is no gold left to buy?
International trade is not the only way that crypto news 2019 is shaping up to be positive for Bitcoin’s medium of exchange function.
Tippin Extension for Chrome Allows Lightning Network Tips
Bitcoin has faced heavy criticism since going mainstream, particularly for its feasibility as a medium of exchange. Due to slow confirmation times and high transaction fees, many have said that Bitcoin can never scale for industrial use.
The Lightning network aims to change that by allowing off-chain transactions. While lightning is still in beta, some implementations of it are already being put into use.
When “liking” your favorite tweet isn’t enough, you can now send small bitcoin transactions.
Announced Saturday, the beta app Tippin has released a new Chrome Extension available to Google browser users. Over Twitter, app users can send bitcoin payments via the Lightning Network, considered a way to make bitcoin transactions feasible at a large scale for the first time.
Tippin may or may not achieve widespread use. But it’s not about the app itself so much as what it represents: a real opportunity for BTC to be used for micropayments on a massive scale.
Japanese E-Commerce Company Supports Crypto Payments
Rakuten is often referred to as “Japan’s Amazon.”
The e-commerce giant recently announced plans to revise its corporate structure. Within the new structure, a payments subsidiary called Rakuten Payment will include the “Everybody’s Bitcoin” crypto exchange in addition to the company’s prepaid card service, Rakuten Edy.
Japanese e-commerce firm Rakuten announced that a major update of its Rakuten Pay mobile app will be released on March 18, according to the firm’s 2018 earnings release, published on Feb. 12. The app’s new structure appears to indicate that it will support cryptocurrency payments in addition to fiat.
According to the company’s presentation material for the fourth quarter and the full year of 2018, the new version of the app will feature “all payment solutions embedded into one platform.”
While the recent earnings release by Rakuten does not come right out and say that the company will support crypto payments, the new version of its payment app will incorporate Edy and support QR code payments.
When taken together with the fact that the report states “all payment solutions” will be available on the platform, it’s not hard to put two and two together.
This is huge news for the mass adoption of crypto and should be supportive of prices going forward. Crypto users can increasingly use their coins to purchase real goods and services, meaning there’s no need to sell for fiat.
JP Morgan Announces They Will Launch JPM Coin
JP Morgan CEO, Jamie Dimon, was an early critic of Bitcoin. He called it a ‘fraud’ and a ‘scam’, later saying that people that buy it are stupid. Evidence later came out that he was buying Bitcoin for clients when prices were dipping in the wake of his comments.
And now, in a massively hypocritical move, JP Morgan is rolling out the first US bank-backed cryptocurrency to transform the payments business. Engineers at JP Morgan have created the “JPM Coin,” a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. Each JPM Coin is redeemable for a single U.S. dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins.
There are three main use cases for the JPM Coin. First is international payments for large corporate clients, which now typically happens using wire transfers between financial institutions on decades-old networks like Swift. The second is for securities transactions, after JP Morgan tested debt issuance on the blockchain. The third is for huge corporations that use J.P Morgan’s treasury services business to replace the dollars they hold in subsidiaries across the world.
JP Morgan has said the blockchain technology holds promise. Their new coin will increase the speed of settlements. But they apparently fail to see how a private, permissioned and centralized digital currency defeats many of the key benefits of cryptocurrency. In addition, it is dollar backed and there are no limits to the amount of dollars that can be created. So, it is infinitely inflatable and unlikely to hold value over time.
Eventually, JPM Coin could even lose redeemability in the dollar and have no backing other than trust in JP Morgan. This tends to be the pattern, as banks get greedy and want a currency they can create and control without limits.
Long Bitcoin, Short the Bankers.
U.S. Pension Funds Invest in Bitcoin for the First Time
Morgan Creek Digital has scored what it says is probably the first investment in the crypto asset universe from a U.S. pension fund. This could open the doors to a rush of new institutional investments into cryptocurrency.
Two pension plans in Virginia are anchor investors in a new $40 million venture-capital fund. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano, who declined to provide further details.
Pompliano said his new fund is structured like a traditional venture capital fund that will invest in the equity of companies in the blockchain industry. The fund will also hold a small percentage of its assets in cryptocurrencies such as Bitcoin.
Crypto News 2019 is Just Getting Started
Crypto News in 2019 should continue to be exciting, to say the least. Just today, Elon Musk, CEO of Tesla, officially went public with his belief that cryptocurrency offers an improved alternative to conventional money. He said he believes bitcoin’s structure “is quite brilliant,” adding:
“It [cryptocurrency] bypasses currency controls. … Paper money is going away. And crypto is a far better way to transfer values than a piece of paper, that’s for sure.”
As usual, prices are the main focus of many. And while prices do appear to be picking up so far this year, it will be a while before we can say this recovery has legs. We are looking for Bitcoin to break definitively above $4,000 and then take out prior resistance in the $4,200 to $4,300 range to confirm the next bull cycle is underway.
But the most important crypto news in 2019 goes beyond mere market capitalization.
International trade settlements, institutional investing, online tipping, and e-commerce purchases are all things that skeptics said crypto could never be used for. Even though the list of Bitcoin obituaries keeps growing and Bitcoin has already been declared dead 8 times this year, the crypto ecosystem has never been more vibrant.
Cryptocurrency markets and precious metal markets alike have very bullish trends developing so far in 2019. Subscribe to the GSB newsletter for regular insight into how best to profit from these trends.
Article written by Brian Nibley, with comments from Jason Hamlin.