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Stablecoins: The Latest Buzzword in the Crypto World

Stablecoins are currencies that, like Bitcoin, exist on the blockchain and offer some of the advantages that the blockchain provides. But unlike Bitcoins, they are not issued in limited amounts.

Here’s how Stellar, a platform designed to tokenize fiat currencies, explains it:

In general, digital currencies have a high degree of volatility. Their prices can fluctuate dramatically, making them difficult for most people to adopt. Not knowing what the value of your tokens will be tomorrow can feel very uncomfortable…. Stablecoin is a digital currency that is linked to an underlying asset such as a national currency or a precious metal such as gold…. Since they are pegged to a more stable asset such as the US dollar, stablecoins were created to manage price swings often seen in Bitcoin and other cryptocurrencies.

There is a big difference between stablecoins that are linked to gold (or other precious metals) and stablecoins that are linked to the US dollar (or other national currencies).

The value of a stablecoin linked to gold would rise and fall like the US dollar did when the dollar was tied to the value of gold. In other words, stablecoins tied to precious metals would offer one of the major advantages that Bitcoin offers: They would be resistant to artificial inflation caused by the issuance of more US government debt.

But stablecoins that are tied to the US dollar are an entirely different kettle of fish. The value of those stablecoins will have the same vulnerability to inflation as dollars do. Their values would always stay even with dollar values. They would always be easily convertible to dollars. They would be, in effect, precursors to what I predict is coming next: a digital version of the US dollar.

The money that Amazon, Apple, and Google will be printing in the future will be just another form of stablecoins – digital currencies that are tied to the US dollar.

And like stablecoins, because of this link, none of them will have any intrinsic value whatsoever. They will merely be replica dollars with the same vulnerability to inflation, but they will be perceived by cryptocurrency enthusiasts as something more and better.

This delusion has already taken place with one stablecoin. Tether, the leading stablecoin, has a value of $60 billion.

From a long-term perspective, paying a premium now for a digital dollar is insane. But that doesn’t mean one can’t speculate on the insanity. Despite my view that Bitcoin and similar true limited-in-issue cryptocurrencies will one day be outlawed, I am 100% sure that there are lots of opportunities for profitable speculation in the meantime.

In fact, I have already personally profited from the cryptocurrency mania. Some while ago – just for the fun of being in the market – I bought a small amount of Bitcoin, Ethereum, and Litecoin. My profit to date is more than 600%.

And, yes, I sometimes think, “Why didn’t I buy more?”

But then I tell myself, “It’s because you’re a pragmatist, which means you are a dabbler and, when necessary, a hypocrite.”

Speculate if you like with digital currencies. But don’t bet on Bitcoin long term.

Click here and here to read two good short articles on stablecoins.

Sad and Happy Fake News in the Real Art World

Allen Midgette, the man pictured below, died on June 16 at his home in Woodstock, NY.

Yes, he looks a lot like Andy Warhol, who died in 1987, 34 years ago. That’s not a coincidence.

In 1967, either because he was too busy, too fatigued, or (more likely) because he thought it would be a novel form of performance art, Andy Warhol recruited Mr. Midgette to impersonate him in a series of lectures on pop art that he (Warhol) was scheduled to deliver.

When asked questions by the audience, Midgette would answer them by saying the first thing that popped into his head. “I knew Andy well enough to know I didn’t have to worry about talking too much, because he didn’t,” Mr. Midgette said. “And I knew I could deal with people much more easily than he could, because I did.”

Warhol thought he did a great job. “He was better than I am,” the artist said. “He was what the people expected. They liked him better than they would have me.”

From the NYT:

Allen Joseph Midgett – he added an E to the family name later – was born on Feb. 2, 1939, in Camden, NJ. His father, Jarvis Midgett, was a ship captain with the Army Corps of Engineers and later a harbor master in North Carolina, and his mother, Dorothy (Jones) Midgett, was a homemaker.

He lived in Italy for a time and acted in several movies there, including Bernardo Bertolucci’s “The Grim Reaper” (1962, the director’s first feature) and “Before the Revolution” (1964). By 1965 he was back in New York and working at Arthur, the Manhattan discothèque, which is where, that year, he met Warhol, who had seen him in “Before the Revolution” and invited him to make films with him. Mr. Midgette became part of the scene at the Factory, Warhol’s studio, although he told Chronogram that he had not been as immersed in it as some of Warhol’s superstars.

Mr. Midgette also appeared in Warhol films, including “The Nude Restaurant” (1967) and “Lonesome Cowboys” (1968). And he continued to don the Warhol disguise occasionally, even playing Warhol in a 1991 Italian movie, “Suffocating Heat.” His acting career, though, was limited. In his later years he made artworks of various kinds.

In other fake art news…

A copy of Leonardo da Vinci’s “Mona Lisa” – known as the Hekking Mona Lisa – which was painted in the 17th century and marketed by art dealer Raymond Hekking, was sold at Christie’s on June 18 for $3.45 million. That was about 10 times its estimated value.

And here’s one more…

I just read this in Bill Bonner’s Diary:

“‘Modern’ or ‘contemporary’ art always seemed like a hustle,” Bill wrote. “Now, however, an Italian artist has taken the hustle to a new level…. His work is invisible.” Then he quoted this from the New York Post:

Salvatore Garau sold his piece, entitled “Io Sono” (I am), to an unidentified buyer last month.

Italian auction house Art-Rite organized the sale of the “immaterial” statue in May with a beginning estimated value coming in between $7,000 and $11,000. [It sold for $18,000.]

“The vacuum is nothing more than a space full of energy, and even if we empty it and there is nothing left, according to the Heisenberg uncertainty principle, that ‘nothing’ has a weight,” the Sardinian-born artist explained…. “Therefore, it has energy that is condensed and transformed into particles, that is, into us.”