We Could All Have Our Own Cryptocurrency Soon

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You may know about the royals, Charles, William and Harry.

But what about Prince Leonard?

In 2017, the 91-year-old Prince decided to abdicate and past the baton to his son, Graeme.

And what does Prince Graeme rule over…?

The small principality of the Hutt River, about 500km north of Perth.

Money Morning

Source: Wikipedia
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It’s Australia’s oldest micro-nation, with rules, borders and their own currency, the Hutt River dollar.

Leonard decided to secede from Australia (legally) in 1970. Something about a stoush over wheat production quotas with the state government.

Since, the tiny province has been in an ongoing battle with the ATO.

Leonard even declared war to get the tax man off his back.

The ATO says he owes $2.65 million in taxes and penalties. Leonard says there are no taxes in the Hutt River province, just annual gifts to the local shire.

Now, it’s Graham’s turn to continue the fight…

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Facebook’s launching a crypto

Is it that crazy to think we’ll all be like Prince Leonard soon?

I don’t mean we’ll all become disgruntled farmers, or that we’ll all have blue blood coursing through our veins.

But we might all have our own currencies soon…

Harje Coin…something that only I can use, but I can also exchange it into Ryan Coin to transact with Ryan Clarkson-Ledward.

Is this the future of money?

Let’s back up a bit…

Have you heard about Facebook’s new project: GlobalCoin?

It’s likely to be the social network’s payment division. We’ve already discussed it here, but Facebook is already aggressively moving into retail, especially with Instagram.

GlobalCoin could be the payment facilitator that ties Facebook’s e-commerce ambitions together.

CoinDesk writes:

Yet more details have emerged about Facebook’s upcoming cryptocurrency, said to be called GlobalCoin, and this time they come directly from the company.

Speaking to German business magazine WirtschaftsWoche earlier this week, Laura McCracken, Facebook’s head of financial services and payment partnerships for Northern Europe, confirmed that the planned stablecoin will not be tied to any single fiat currency, but will instead be linked to a basket of currencies in order to prevent volatility.

The executive also added to recent reports that GlobalCoin would be revealed later this month, saying that a white paper for the token would be published on June 18.

This sounds a whole lot like the commodity-backed crypto idea I wrote about yesterday. Here’s a little refresher:

…why not create a digital currency, backed by commodities, which would create fewer boom/bust cycles in the financial system?

This was actually an idea that Warren’s mentor, Ben Graham, developed back in the 1930s (sans crypto).

Here’s how it could work…

When commodities prices are cheap, central banks could issue commodity-backed tokens to buy baskets of commodities. This would give producers cash, even as demand reduced.

Then, as commodity prices rose, the central bank could redeem these tokens by selling down their inventory and damping irrational exuberance.

The ultimate goal is to get money in the hands of producers, even when prices are low. And with that cash, producers can then pay suppliers, workers and continue to invest.

So instead of using AUD to buy an item on Facebook or Instagram, we all might be using GlobalCoin, which converts in and out of any currency we’d like.

And why couldn’t it be the same for you and me? Your very own currency, backed by a basket of commodities, maybe your own personal assets, or maybe even another crypto, giving it value.

That’s how I imagine it, anyway.

CoinDesk continues:

Facebook may further set up physical portals for users to purchase the cryptocurrency, as well as charging third parties as much as $10 million for the privilege of supporting the network as nodes, according to The Information.

Elsewhere, Russian news site RBC reported Thursday that head of oil firm Rosneft, Igor Sechin, told the St. Petersburg Economic Forum that Facebook’s cryptocurrency could possibly be used in oil transactions “in the near future.” Sechin, however, seemed to be talking generally about how big U.S. tech firms like Google, Apple and Facebook are making moves into the energy industry.

Back to what we once knew

Such a world isn’t far off one we all once knew.

Back in the day, money wasn’t one world currency. It was made up of a bunch of different items.

Back then, social anthropologist Jack Weatherford said:

…money was memory: I owed you some corn, you owed the priest a cow, the priest owed me some wine. In the clan, the claims on assets were a collective memory — an immutable mental blockchain.

Of course, that system didn’t scale. But the digital one we’re looking at in the crypto world just might…

Reported by What Happens Next, republished by Quartz:

Blockchain and cryptography technologies mean that literally anyone can now create money. Communities rather than individuals will become central to money creation, and these currencies will be imbued with the values of the communities that create it.

Maybe it’s too farfetched for 2019…

But Facebook’s doing it.

Maybe we’re only a hop, skip and a jump away from doing it ourselves…

Your friend,

Harje Ronngard,
Editor, Money Morning

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