The Future of Money: The 3 New Ideas You Need to Know this Week (Issue 30 - 14 February 2021)

Dear Friends, 

Welcome back to my weekly newsletter where I share some of the major developments on the future of money that you need to know about!

Make sure to subscribe (and join the 23,000+ others who have done so) to receive your Future of Money newsletter in your inbox every weekend! 

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Here we go!

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1. What is Dogecoin?

The cryptocurrency Dogecoin has skyrocketed in popularity in recent weeks, with Google searches on the topic spiking late last month.

Source: Google Trends

But what actually is Dogecoin?

Dogecoin was launched in 2013 by IBM software engineer Billy Markus and Jackson Palmer, a marketer at Adobe, with the duo seeking to create a new cryptocurrency that was instant, fun and free from traditional banking. 

Ironically, the initial thought behind Dogecoin was that it was a joke, a reaction to the overwhelming number of altcoins that were popping up on the market.

In an interview with Vice, Markus admits as much, saying Dogecoin was conceived “without much thought.” 

After a while, though, the pair felt that their new venture could potentially reach a broader range of people than Bitcoin, all while steering clear of some of the other pitfalls and controversies that plagued so much of the early wave of ICOs.

Even if you’re not that familiar with Dogecoin, you would undoubtedly recognize the iconic token, with Dogecoin featuring the face of the Shiba Inu dog from the widely shared and iconic "Doge" meme as its logo. 

The meme originated on the cultishly popular turn of the millenium comedy website Homestar Runner, with one of the characters misspelling “dog” as “doge.”

Over the years, the joke took on a new life, popping up on Reddit and Tumblr before transforming into its own blog.

And whilst Dogecoin has many of the features of other cryptocurrencies like Bitcoin (e.g. decentralised, peer-to peer), there are some notable differences, as well. 

First, whilst the initial goal was to have a fixed supply of 100 billion DOGE, the founders scrapped that plan in 2014 to change it to 5 billion new DOGE coins being mined each year.

This is different from other cryptocurrencies like Bitcoin, where there will only be a fixed supply of 21 million Bitcoin ever.

Second, the Dogecoin consensus mechanism is more similar to that of Litecoin than of Bitcoin, using a proof of work mechanism but with scrypt technology that basically makes it impossible to mine with the traditional Bitcoin SHA-256 mining machines.

Also, Dogecoin's block time is 1 minute, as opposed to Litecoin's 2.5 minutes or Bitcoin’s 10 minutes.

 The third most prominent difference between the two coins comes down to utility.

For instance, whilst other cryptocurrencies have more traditional uses as either a store of value or as a means of payment, Dogecoin was primarily designed as a tipping system in which users can quickly use Dogecoin to tip anyone around the world for good content or good service, in any amount they choose. 

And the final difference between DOGE and BTC is apparent when you look at their respective communities.

Although there is no inherent value in Dogecoin when you look at it from traditional metrics (e.g. total supply, usage), there is a very strong and vocal Dogecoin community, based mainly on Reddit, with many believing that that is what gives Dogecoin its edge. 

In recent years, for example, the community has raised funds for projects like sending a team to the Olympics and building a well in Africa.

They even sponsored a Dogecoin logo on an official NASCAR! 

Recently, a big pump took place when celebrities and business tycoons started getting invoked, from Snoop Dogg to Gene Simmons.

But no one has been a more vocal advocate of Dogecoin than Elon Musk, repeatedly tweeting about it and sending the price of the coin through the roof, all while providing the Internet with some soon to be classic memes, as well.

Thanks to all of this recent interest and activity, Dogecoin now has a market cap of over $10 billion, with year to date returns of over 1400%!

Just goes to show you that some assets cannot be measured by traditional metrics!

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Tweet of the Week

2. Over 13% of UK Citizens Have Crypto

Just how many people in the UK ( a population of 68 million) own Bitcoin or other cryptocurrencies? 

Well, Crypto platform Gemini, one of the largest crypto exchanges in the world, just conducted a survey, and the results are quite interesting.

• More and more women in the UK are investing in crypto, with women now comprising over 40% of UK crypto investors.
• Over 90% of current and previous crypto investors had a household income under 100,000 pounds (or slightly over US$137,000.) This shows that crypto is becoming more accessible and is no longer strictly the domain of the wealthy.
• The youth are leading the way. Over 60% of crypto investors are under the age of 34, with more disposable income and a higher appetite and tolerance for risk than older age groups. 

• The average crypto investor had previously invested in other emerging tech products, with the survey showing that over half of all investors had dabbled in emerging tech like smart applications, home security systems, and other smart home technology. 
• Nearly 48% of the surveyed crypto investors are more likely to increase their crypto holdings over the next year, compared to one-third of overall respondents.

 These finds are wildly different from those of only two years ago, when Gemini found that only 6% of the same population had invested in crypto.

Further, these findings challenge the widespread and long-standing notion that your typical crypto investors are young, single males.

Rather, as the survey shows, crypto holders in the UK tend to be married, middle-aged men and women.

Money Quote of the Week

“I'd like to live as a poor man with lots of money.”

Pablo Picasso

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Looking for an energetic speaker for your next corporate event or conference?

What about a keynote on "The Future of Money" or "The Latest Global Crypto Trends"?

Examples of available keynote topics and videos available on my website: www.henriarslanian.com

 Simply contact me at [email protected] for more details.

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3. Tesla’s Bitcoin Announcement: Who Is Next?

As if we didn’t get enough of Elon Musk earlier in this newsletter, another really big announcement came up this week, with Tesla announcing that they had bought over $1.5 billion in Bitcoin, or the equivalent of 8% of their cash reserves. 

Unsurprisingly, the announcement led to a surge in crypto markets, with Bitcoin surging past its previous all time high.

Source: Coinstats

In its SEC filing, Tesla writes:

"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.

As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.

Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term.

Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”

This is nothing short of a major development. Although other large companies had started to include Bitcoin as part of their treasury, Tesla is by far the most well known and public of them all.

Source: Fortune

This news could have a number of repercussions. 

First is that it may move the conversation from “why” to “why not” for many other large corporations with lots of cash on their balance sheet. 

Over the last couple of weeks and months, we have to assume that many CFOs and corporate treasurers have explored the topic of Bitcoin.

But it's very likely that many of them had cold feet and thought it was still too much on the fringes. 

 The news from Tesla may now change the conversation. 

We should not be surprised to see the topic of Bitcoin as part of a company’s treasury come up at many of the board meetings and shareholders meetings that will take place over the next couple of weeks and months. 

The second thing to consider is that this news from Tesla eliminates career risk. 

A lot of CFOs and corporate treasurers may not have batted an eye when they looked at some of the other companies that had already bought Bitcoin as part of their treasury, viewing these announcements as not mainstream enough.

When they saw MicroStrategy, which bought over $600 million of Bitcoin, put it on their balance sheet, many said that that was an exceptional case. 

Even companies like MassMutual, an insurance company that is 170 years old, bought over $100 million of Bitcoin. Critics said that it was a small amount, that it was more of a PR stunt than anything else. 

But the fact that a company like Tesla is doing this really changes the conversation and eliminates the career risk for any CFO or corporate treasurers looking at jumping into the space. 

 The same thing has been going on with hedge funds. When the likes of Paul Tudor Jones or Guggenheim, for example, embraced Bitcoin, we saw many other hedge funds jump in. 

Likewise with banks. When the likes of JP Morgan, Standard Chartered, DBS and others announced their crypto plans, many others followed.

So we should not be surprised to see the same thing happen here.

The big question now is which large company will be next? 

Analysts at RBC recently wrote that Apple could be a good candidate.

With over $190 billion in cash holdings, a “small” purchase of $5 billion in Bitcoin is only the equivalent of 20 to 25 days of their cash flow. 

The RBC analysts believe that Apple can be a good candidate, as there could be much upside to add crypto to their Apple wallet.

Others have been speculating that Twitter could be next. Twitter’s CEO Jack Dorsey has been a long term advocate of Bitcoin, and the Twiter CFO publicly acknowledged this week that the company was exploring buying Bitcoin as part of their treasury. 

Definitely an area to follow!

My Crypto Capsule This Week

My Upcoming (Virtual!) Speaking Engagements

18 February - LIFE (Bitcoin & Beyond)

23 February - Emerging Payments Asia (Digital Currencies)

25 February - Hubbis (Digital Assets: Now Too Important To Ignore for Asset Managers?)

1 March - UBS (The Future of Money)

18 March - Blockchain Africa Conference (Latest Global Institutional Crypto Trends)

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See you all next week!! 

Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with.

Who is Henri?

Passionate and focused on the future of finance and money, Henri Arslanian is the PwC Global Crypto Leader, the former Chairman of the FinTech Association of Hong Kong and an Adjunct Professor at the University of Hong Kong, where he teaches the first FinTech university course in Asia.

Henri advises many of the world’s leading crypto exchanges, investors, financial institutions and tech firms on their FinTech and crypto initiatives as well numerous governments, regulators and central banks on Fintech and crypto regulatory and policy matters.

 With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author and is regularly featured in global media, including Bloomberg, CNBC, CNN, the Wall Street Journal and the Financial Times.

Henri was named by LinkedIn as one of the global Top Voices in Economy & Finance and is the host of the FinTechCapsules? and CryptoCapsules? social media series.

Henri was recently named by Onalytica as the #1 most influential individual on Finance globally on LinkedIn out of 50k+ individuals working at the top professional services and management consulting firms in the world. 

Chambers Global also named Henri the “highest profile FinTech consultant in Hong Kong” and Asian Private Banker awarded him the “FinTech Changemaker of the Year” award.

Henri’s latest book, The Future of Finance: The Impact of FinTech, AI and Crypto on Financial Services, published by Palgrave Macmillan, was ranked as one of Amazon’s global top 10 best-sellers in financial services and was recognized as one of the “Best FinTech Books of All Time” by Bookauthority.

Before joining PwC, Henri was with a FinTech start-up and previously spent many years with UBS Investment Bank in Hong Kong. Henri started his career as a financial markets and funds lawyer in Canada and Hong Kong.

You can learn more about Henri on his website (www.henriarslanian.com) and you can reach him at [email protected]