Once a month, we take a deep dive into all things cryptocurrency. On this episode of A Wiser Retirement Podcast, Casey Smith and Robert Swarthout talk about crypto performance at the end of 2021 and start of 2022, inflation, CBDCs, a US Dollar crypto, and regulation. There was a great deal of volatility during January 2022 in the cryptocurrency market. Will there be a US Dollar Crypto?
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Crypto Market Update
2022 began with a lot of volatility in the cryptocurrency market. Bitcoin had an approximate 45% drop from its peak in November 2021 at $69,000. Since that period of time, the total market cap is down around 35% as well.
Digital Dollar: CBDCs
There have been several countries over the past year and a half that have announced they are doing trials for a CBDC (Central Bank Digital Currency). A CBDC on some form of a blockchain allows the non-banks to come into the financial world at a cheaper rate than they would otherwise. China is one country that has rolled out a CBDC. CBDCs can be designed a number of different ways. China's CBDC is designed to have a lot of surveillance built into it, meaning your receipt data is shared with that CBDC.
Executive Order for Cryptocurrency Regulation
Cryptocurrency is so global, that if regulation laws are put in place in the US, those laws will only regulate transactions on US soil for citizens and businesses.
Inflation
In the US, we have dealt with inflation for over the past year. The supply chain has been disrupted, which is causing a number of issues that affect almost everyone. BlackRock has predicted that inflation will continue to stay around 7% till the end of 2022, then we will see it taper off as supply chain issues get fixed.
Measuring Cryptocurrency
Market caps are a not a good way to measure cryptocurrency, because they are a relic of traditional finance. New metrics will have to come along to measure these things, and track how well they solve problems or how much volume is going through the system.