Central Banks Will Soon Line Up For A Piece of The Bitcoin Pie

Published December 20, 2020 on Medium and Hackernoon 

The BoE´s refusal to return Venezuela´s gold shows how even governments need a truly independent, decentralized, not coercible and censorship resistant digital store of value


Ray Dalio is wrong again, bitcoin will not be banned, here´s why

Published November 13, 2020 on  Data Driven Investor and Hackernoon 

Invariably, as bitcoin spikes and defies gravity, either up or down, the attention of institutional investors, central bankers and prominent financiers is suddenly awaken. Always then, I write something to debunk the all too common flawed narrative and misunderstandings. Whether it was Warren Buffet before or Ray Dalio today, their comments simply indicate ignorance of what Bitcoin is and what it stands for (please take note of the capital B because they do not).

One would suggest investing a couple of highly entertaining and educating hours to watch these two excellent award winning movies filmed by Untitled-Inc fellow Torsten HoffmanBitcoin the end of money as we know it and Cryptopia the Film.

Now, a few days ago another famed investor, Stan Druckenmiller, has disclosed that he also holds BTC. Druckenmiller follows other prominent Wall Streeters like Bill Miller, Paul Tudor Jones, Michael Novogratz, Microstrategy´s CEO Michael Saylor and so on. Druckenmiller showed an instinctive grasp of what is driving the bitcoin price, at least in the medium-short term. He has pointed out that BTC “has a lot of attraction as a store of value to both millennials and the new West Coast money and, as you know, they have a lot of it.” He said also “if the gold bet works, the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”

Spot on. And hey, hallelujah, this brings even more awareness to cryptos, more institutional interest and we are all happier.

Rather though, among the prominent — but (Bitcoin) ignorant — investor crowd, Ray Dalio recently said something worth noting. Nothing new really — since it is mentioned from time to time — but still something worth considering and disputing once and for all.

Hey bitcoiners watch out because, according to Ray Dalio, sooner rather than later “governments will “outlaw” bitcoin and other cryptocurrencies, should they start to become “material.”

No more playing bankers without banks, fellas. No more “holding your own private swiss bank account in your pocket” fellas — to quote former US President Obama.

Ray Dalio is one of the smartest investors around so, who knows, maybe he hopes that some cheap “terrrorism” will wash some weak hands out so he can do what his mates have done before him and buy some on the cheap. But for the sake of it let´s assume that he really means what he says.

So my question to him would be: WHY then bitcoin should be banned? and HOW? and WHAT the practical effects of that ban would be? Let´s see.

Let´s first start with the WHY, because if we clarify that there is no real reason for governments to ever enforce a ban on bitcoin, then the HOW and the practical effects of such ban are just abstract thinking.

I guess Mr Dalio thinks that BTC could eventually threaten the status of national fiat currencies or even the reserve status of the US dollar. Leaving aside the issue of when BTC becomes “material” — and consequently “dangerous” for governments — BTC should first of all become a “currency” in order to threaten other currencies.

But BTC is not really a currency — or better put — it is also a currency among many other things, but only to a very, very small extent. Above all BTC will never be a currency the way the dollar or the euro are currencies. Fact is that there is no real need for BTC to become a currency. No need for bitcoin to scale adoption as a means of payment. Which, by the way, is the same mistake that bitcoin critics do when they mention bitcoin´s slow adoption path and scalability issues. The reason is that there is plenty of much better inflationary currencies out there to be used for paying the ice cream, the espresso or the daily grocery. I can call them SOLs, Store of Liabilities. CBDCs (digital Yuan, US Dollar, Euro) are coming, they are the bright future of SOLs. Stable coins and digital fiat money in the form of fintech digital payment systems (such as the Chinese Ant Group, Alipay, We Chat, etc.) are already here. All such digital currencies will be competing among themselves and against the US Dollar for reserve status. Indeed, China was the first country to issue its CBDC as a pre-emptive move to block other digital currencies from competing with the digital Yuan in their home market. They wanted to prevent local adoption of competing currencies such as private-corporate currencies like Libra or a Euro or US Dollar CBDC. Certainly they were not at all concerned about BTC.

BTC remains therefore primarily a store of value (SOV) and here´s the reason why. It does not compete directly with any digital currencies. It is not a threat to any of the major national currencies or to future CBDCs. BTC competes — to a certain extent — only with gold. And I say “only to a certain extent” because (i) it possesses some peculiar qualities which make it— especially for the younger crowd and the not wealthy — a better alternative to gold, since its portability, resistance to coercion, scarcity and lack of storage costs are superior to that of gold, and (ii) gold will still be gold despite BTC especially for institutional investors and central banks. The two can easily co-exist for a long time, but in the long term the trend will be for BTC to inevitably erode gold´s market share, as well as market share from global legacy financial services, asset management and insurance sectors.

So, let´s go back to the reason WHY governments should ban bitcoin. Frankly there are none. BTC is not a threat to the current financial system. We all know exactly what is the effect of monetary debasement. The loss of purchasing power of the US Dollar and the Euro is clearly visible to anyone who cares to look.

50 years of monetary inflation at work: how many US$ you would need to buy one ounce of Gold since 1970. The chart is not updated but we are well over US$ 1.800 at the time of writing from US$ 36,56 in 1970.


This is why investors rush to gold, silver, real estate, stocks, farmland, objects of art and of course to bitcoin. Will governments ban all of them together with bitcoin? Of course not. BTC as a store of value is no bigger threat to governments than gold, silver, or farmland are. The only difference is that bitcoin will be much harder for governments to confiscate than gold or silver are. If the scenario that Mr Dalio envisages is a general governmental clamp down on SOVs, then one should rather rush into bitcoin instead of gold exactly for its censorship resistant properties and its resilience. If you were a government would you rather tax real estates, confiscate gold bars held at easily identifiable banks and gold brokers or run around trying to figure out where people hide their strings of numbers and letters?

Now let me clarify something else quite important. When one mentions Bitcoin then (please again note the capital B), that´s not a currency, that´s not a SOV, that is programmable money. We are talking about a revolution which equals Gutenberg´s printing press. We are talking about an entirely new financial system which is parallel to and independent of the legacy financial system. Every bitcoin owner is “its own bank”. Andreas Antonopoulos once said “One could not miss the point more if thinking of Bitcoin as a currency for payments in the Western world, because Bitcoin is about everything else and everywhere else”. Indeed. Think about the millions of people who use it for remittances to their families in countries where access to banks is difficult. Think about countries where the use of BTC is booming because of hyperinflations, such as Venezuela and Argentina. There, Bitcoin is used to transfer a SOV P2P without any intermediation at virtually no cost.

Let´s see then HOW governments could practically enforce the theoretical ban on bitcoin.

A national ban would serve no purpose. If China or Venezuela could not effectively ban it, we cannot do it either. Then it has to be a globally coordinated worldwide ban. Highly unlikely.

And how can you enforce that ban? Short of shutting down all internet connections you won´t be able to enforce it. You should close all the gates between fiat currencies and cryptoexchanges. You should ban crypto-exchanges altogether. But then it is hard to imagine that in some geopolitically incoercible nation — perhaps somewhere in the eastern hemisphere — there won´t be someone setting up a crypto-exchange. And what about much less coercible decentralized P2P exchanges then?

What about black markets? There is simply no way that governments can enforce that, not even in China police state.

And even so, practically, what will be the effect of driving bitcoin underground? Its price will explode, the spreads in those countries will be huge compared to countries where it remains legal.

The true disregarded issue — which will oppose regulators on one side and cryptocurrencies and its developers on the other side — is the privacy and fungibility of cryptocurrencies. They want back-door access. This is where the fight is. Privacy coins like Monero are on the frontline of that. But also BTC is directly affected since without increased privacy also its fungibility might be compromised.

But this is a much more complex issue which deserves to be dealt with separately. I will soon look into that topic in a new article.

If we look at the reality of it — the WHY and the HOW bitcoin could be banned — it is clear that it won´t happen.

It will not be banned, just like the use of the printing presses could not be banned, despite the authorities tried to impose jail time to transgressors. Just like cars and combustion engines could not be banned, despite the authorities tried to slow down its adoption with burdensome and deterring regulations.

The cat has been out of the bag 12 years now. There´s no way of putting it back in. The technology clock cannot be turned back.


Below you will find a chronological review of my old bitcoin articles and relative price levels at the time of publication. I have gone back to 2018 when BTC price was US$ 3.100. Enjoy the +500% ride:

Nov 9, 2018 https://medium.com/@andreabianconi/the-latest-on-security-tokens-from-zurich-s-cryptosummit-5e740ac5439b I wrote “…This could possibly cause the crypto market to drop lower before it can start trading higher” — On 14 nov BTC starts dropping to its lowest of $ 3.100 since Sept 2017 — BIG BUYING OPPORTUNITY

May 24, 2019 https://medium.com/the-capital/the-fundamental-reasons-to-be-bullish-on-bitcoin-and-the-crypto-sector-2024d8bc8395 I wrote: “…and this will be inevitably reflected also in the appreciation of BTC and all correlated cryptos. This process is ongoing and it is irreversible”. BTC Price $ 7.500

Juli 25, 2019 https://medium.com/@andreabianconi/oops-ray-dalio-missed-the-biggest-of-all-paradigm-shifts-crypto-79ce826c1445 I wrote: “…Finally, if institutional investors, family offices, HNWI and UHNWI start allocating even only 1% of their portfolios to the crypto sector what will be the impact on the price of bitcoin?” BTC Price $ 9.800

August 22, 2019 https://medium.com/the-capital/follow-the-money-buy-bitcoin-and-gold-5c28703d8adf I wrote: “…But regardless of the timing, the macroeconomic fundamentals highlighted above are the most powerful catalyst that will drive the big money towards precious metals and crypto in the foreseeable future.” BTC Price $ 10.100

March 24, 2020 https://medium.com/the-capital/covid-19-and-the-effects-of-the-monetary-tsunami-on-bitcoin-and-gold-a3fb4d14e97f I wrote “…While the S&P 500 loses 3% though, BTC/USD is up 10%, and gold/USD up 3,6%. This might mean that weak hands have been shaken out, and hodlers/bulls are back in control” BTC Price $ 6.700

May 17, 2020 https://medium.com/the-capital/what-tudor-jones-bitcoin-investment-means-for-other-institutional-investors-and-for-bitcoin-f337a37eeb8d I wrote: “…Here you go, a rational bet and asymmetric returns make it possible to allocate just 1–2% of your wealth to crypto, and one day this might well become the largest portion of your wealth.” BTC Price $ 9.670

August 20, 2020 https://medium.com/@andreabianconi/bitcoin-goes-parabolic-and-its-not-the-price-c557f90a694a I wrote: “…Barred adverse technological developments or currently inconceivable problems at Bitcoin´s protocol level, the only rational question is how many times a multiple of today´s price its future price will be.” BTC Price $ 11.500.

November 13, 2020. My thoughts at the time of writing. The price is $ 16.350 and it looks like we might have a short term top here. A pullback to $ 14.000 is very possible. To $ 12.000–13.000 will be an even better opportunity to add more for next leg up.

Could blockchain have prevented the 2020 US elections´ fiasco?

Published November 10, 2020 on Medium.com and The Capital

That 2020 US Presidential elections would be tight and a nail biter was to be expected. At least by those who had a real feel for American politics and who took critically the mainstream media propaganda and the sponsored polls for a blue landslide.


But few would have expected to see such a quantity of alleged errors, miscalculations, technical glitches, irregularities or plain fraud accusations that are now surfacing. This will keep the elections in a judicial limbo for the next few weeks — despite the democrats having already officially claimed the victory — and at least until December 14 when the US Electoral College is due to meet to vote the new President.

But regardless of what the final verdict on those elections will be, one thing is certain, the US electoral system (and its democracy) need a fixing. Urgently.

What type of fixing is needed is complex to say, but the first question that comes to mind is whether the blockchain could have at least brought some transparency and certainty into these elections.

Paper ballot systems are still the norm and for a good reason, they are the safest and time tested option. I still remember the first time I voted in Italy back in the ´80s. People showed up at poll locations with their IDs. Paper ballots were tabulated by hand in a paper register by a commission of several people sitting around the same table, all working together and each supervising what the other was doing. This happened simultaneously in thousands of locations around the country. More or less it is still done the same way today. It certainly looks archaic compared to Estonia´s internet based voting system but still works beautifully and the risks for fraud are minimal. The benefits of technological improvement therefore should be carefully weighted against its risks.

Technology can certainly help in speeding up the process and in increasing electoral participation, but the risks for fraud then scale up massively.

While in the latest US elections there have been also accusations of paper ballots being illegally casted by non residents or by people already passed away, this remains a fairly easy fraud to spot with a limited capability to damage the whole process because of its reduced scale. It is rather different when technology is at work. Just imagine if the allegations that a “technical glitch” in the voting machines in one Michigan county has transferred 6000 Trump votes to Biden prove to be correct. The same software has been used in additional 47 counties only in the state of Michigan. Who knows nationwide.

This technologist joint paper published in August 2019 and co-authored by various researchers-including Chicago and Georgetown Universities - describes how the researchers have effectively hacked the most modern voting machines used in American elections.

The reluctance to increase technology uses in the electoral process is therefore understandable and fully justified. Even technologists are treading very cautiously.

But some might say: true software have bugs, back doors, data transmissions can be hacked, servers can be penetrated, but the Bitcoin protocol has been working flawlessly for more than 10 years. It is the most resilient and time tested open source technology for decentralized data/value transfer existing today. So why not use the blockchain then? After all it might well bring benefits to electoral systems.

The likely answer is yes and no.

“Although blockchains’ most prominent uses are monetary, there is no reason they cannot store other types of data — and votes would seem an excellent fit. An ideal voting system resists corruption by authorities or hackers and empowers citizens and auditors to agree on an election’s outcome. Conveniently, auditable consensus among parties who do not fully trust one another is exactly what blockchains offer”, writes the Scientific American.

Some potential advantages of blockchain voting technology could be:

  • direct verification that the vote was cast as intended and immediate detection of any tampering.
  • governments and independent parties can audit and confirm the vote results stored on the blockchain with transparency.
  • enough nodes decentralization makes it much harder or altogether impossible for malicious parties to hack the system compared to a centralized system.
  • blockchains could serve as a foundational infrastructure for casting, tracking, and counting votes

At least in theory.

But blockchains are databases and they work in a complex environment in conjunction with other technologies. For instance, in an imaginary blockchain based voting system citizens will have to be issued digital identities (like Estonia does). Then citizens would need a digital wallet to store the voting-tokens which will be then cast. Even if the blockchain remains the safest place to store the token-votes once tallied and to carry out a transparent audit of the votes, all the preceding phases are very much at risk of the most common cyberthreats, such as malwares, DoS attacks, hacking, theft of digital identities, etc. Same as with Bitcoin, the hacking happens on your computer, on your handy wallet or on your crypto exchange account, not on the blockchain. All the above without even considering additional complexities such as the basic characteristics of the blockchain to be used, which can be more or less decentralized, more or less permissioned and the type of consensus which must be reached to tally the vote on the blockchain.

Despite a number of countries such as Brazil, Denmark, South Korea, and Switzerland claim to be exploring blockchain based voting, none has yet taken bold steps in this direction. Not even Estonia, which remains the world´s most advanced country on internet voting. Estonia´s history for instance is illuminating. Its online voting system has been repeatedly challenged and criticized by technologists since its very first implementation in 2007. So far even the Estonian system does not use a blockchain and it is based on cryptographic public key infrastructure (PKI). Despite Estonia´s internet voting experience might be considered to some extent a success story, Estonia´s path cannot be blindly followed by much larger and much more strategically/geopolitically important countries, let alone by a superpower like the USA. Considering the scale of the irregularities which are alleged in this 2020 elections and the massive interests at play for the power struggle in the USA, an internet based voting system would be a “big unexpected gift”, indeed the best possible tool to enable lobbies, powerful special interest groups or foreign agents to steer any future election in the direction that best suits them. If such irregularities can still happen in a fundamentally paper based ballot system, one cannot imagine what would happen if internet voting were largely available, and not only limited to overseas military personnel as it is now.


A scary fiction story by Alex Berke goes indeed this far and greatly describes what a nightmare a future internet based voting could be in such a dystopian scenario.

Thus far only one company — named Voatz — claims to have created a blockchain based voting app. Mainly targeting overseas military and other absentee voters, Voatz has been used in federal, state, and municipal elections in West Virginia, Denver, Oregon, and Utah, as well as the 2016 Massachusetts Democratic Convention and the 2016 Utah Republican Convention. The company claims that election security and integrity are maintained through the use of a permissioned blockchain, biometrics and hardware-backed key storage modules on the user’s device.

Voatz voting app however was dissected by three MIT researchers who published a paper titled “The Ballot is Busted Before the Blockchain: A Security Analysis of Voatz…” in which a number of its dangerous vulnerabilities were exposed.

Most importantly though — in addition to the system vulnerabilities mentioned in the above paper — Voatz use of the blockchain looks more like a smart marketing operation. The blockchain used is a permissioned corporate IBM blockchain with minimal decentralization across a few corporate nodes.

Alone the choice of a private blockchain with minimal decentralization should be a big red flag for any government/public authority.

The MIT paper further adds that “In our exploration of the code, we find no indication that the app receives or validates any record that has been authenticated to, or stored in, any form of a blockchain. We further found no reference to hash chains, transparency logs, or other cryptographic proofs of inclusion. We conclude that any use of a blockchain by Voatz likely takes place purely on the backend, or in the receipt stage via the use of some other mechanism”.

Transparency has also been an issue here and the MIT researchers have complained that the company has not been cooperative. That is certainly not reassuring if the company´s “blockchain” voting app is being used for public elections. One should indeed question how Voatz was able to win the contract for the above mentioned state elections without undergoing a much more comprehensive public scrutiny of their voting app and without making their codes available open source. Clearly, handing out the electoral system to private corporations is a very bad idea, but unfortunately can be also very tempting.

Regardless of the blockchain use, some technologists point towards so called End-to-end verifiable voting systems. This means that voters must be able to (i) verify that their ballots, whether cast electronically or on paper, are properly recorded and (ii) verify that all recorded ballots are correctly tallied. There are a variety of end-to-end auditable voting systems that have been developed with the addition of cryptography, which are ready to be used as the US Vote Foundation claims.

One can advocate purposeful blockchain uses in a number of important public sectors such as digital identities, public land registries, or to fix dysfunctional privatizations and to share public natural monopolies among citizens, as a new way to manage governmental tax credits and issue a public digital currency and also to fight wealth inequality or to expose the corruptive “philanthropy” of the oligarchs.

All the above are excellent uses for blockchains in public sectors and they all bring many advantages, new solutions to existing problems and have little or no downside risk.


With electoral systems though is different. A secure voting system remains the foundation of a democracy and one cannot be careful enough before venturing in uncharted waters. One should stress two key issues here: first, that any technological application should be open source so that the best technologists can compete in testing it and prove its resilience under all circumstances; second, that any such technologies are to be developed by a bipartisan public organization with transparent public funding and never to be subcontracted to private corporations or privately funded foundations, ONG´s, Think-Tanks and the likes, which are subject to corruption by private donors.


The level of wealth inequality and its concentration in few hands has never been higher since the last wave of globalization swept the world in the 1920s. We know what then followed: the drama of the great depression, the surge of totalitarian regimes and the destruction of WWII. The corruptive power of such inordinate wealth has never been more arrogant and more belligerent.

For those who care to look, the signs are plenty to be seen: the mainstream media repeats globally, in unison, the very same narratives without dissenting voices; the social media arbitrarily censors alternative narratives and shuts down the accounts of the dissenters; tech-oligarchs hide behind their “philanthropic” foundations to foster their own private agendas, and special interest groups and lobbies buy up political consensus globally. All this has already effectively sterilized the democratic process in many parts of the once “democratic” western world, including among European member states. Corrupted politicians answer to their money-masters, not to the citizens who have elected them.

What we have left — for now — is only our vote. Voting is a duty but also an enormous gift, a right for which our fathers fought wars, endured pain and spilled blood. It is worth the small effort of walking to the nearest polling station and vote in person. It is worth the little inconvenience of having to queue up in bad weather. It is worth the tiny concentration effort, the mindful thought required before writing that name on the ballot. For once — for respect for that great gift that our fathers and grand fathers made us — we can do without that damned mobile phone.


The following material might be useful in further researching this topic:


Italy´s Covid19 stimulus: tokenization of tax credits and the new digital Lira

Published October 14, 2020 on Medium.com and Hackernoon and The Capital and Data Driven Investor and The Tokenizer.io


The day that the Italian borders were reopened after the lockdown — on June 3rd — I drove across the Brenner Pass with an overwhelming joy. I could finally rejoin my family and my old friends. I could fill again my heart and eyes with the beauty of my homeland. Since that day, I have spent most of the summer in Italy — enjoying the unique beauties of the Dolomites, Lake Garda, Tuscany, Umbria, the Marche, all the way down to the Gargano Peninsula in the Apulia region. I became fixated with the idea of coming back to live in my beloved homeland and started to look at the grants and incentives that the government was planning. The recent Law n.34 of 2020 — known as “Decreto Rilancio” — grants tax incentives for the restructuring of real estates aimed at improving both the building´s energy consumption and its structural stability. While the government’s objective is to boost both the building sector and the country’s stagnant economy, this new law conceals much more important opportunities for the country’s economy.

I am surprised that no one has yet proposed or highlighted any such opportunities. Unfortunately, the blockchain remains a topic discussed only among a restricted circle of specialists. Yet digitisation should be one of the declared priorities of the current government.

The Italian fintech company Work invoice, sized the opportunity to launch a marketplace for trading the tax credits which will be granted by the Italian government under the new law.

Good idea but obsolete format.

The critical issue here is yet again the trust: how to make sure that the credits are (i) original, (ii) unique and (iii) not spent by a seller multiple times with unaware buyers. A system based on the human audit of the credits will be subject to inevitable scams, through the fraudulent duplication of credits and/or their resale multiple times. It is also extremely expensive, because the work of the auditors must be paid handsomely. It is slow because the checks require time and it is also unnecessarily complex because of the need to have different actors involved in both the management and the supervision of the system.

I am really surprised that nobody said “let´s use the blockchain”. This is precisely why the blockchain exists. Bitcoin has ingeniously solved the double spend issue and made trust redundant.

Now the Italian Government has the rare opportunity to use the blockchain to successfully implement this project and to create important synergies which will benefit the country´s economy.

The blockchain based tax credit system proposed below can be applied in principle to any country and to any type of credits, incentives, subsidies or generally values, which are granted by governments to their citizens/businesses.


The Italian Tax Authority could issue the credit in the form of a digital token running on a public blockchain. There are various options regarding the blockchain to be used, its governance and the type of token which represents the tax credit. But the purpose of this article is not a technical analysis of this complex — but secondary — aspect. Those objecting that a State-run blockchain is redundant, are indeed right; at least insofar the State´s authority is derived from its citizens and therefore implies that the citizens trust the State´s authorities. But the blockchain becomes not only useful but necessary — also for the State — if the synergies mentioned under 4–5–6 below are to be fully exploited. Conversely, a private marketplace — such as the one currently being proposed — has little or no purpose outside of the blockchain.


The blockchain guarantees what an auditor/controller could never guarantee. That the credits are (i) original, (ii) unique and (iii) not spent multiple times. Another advantage is the resilience of the blockchain-based system to hacking, which is the scourge of any centralised platform. Robinhood brokerage was the latest victim.


Tax credits shall circulate freely. Everyone shall participate in this free market, including individuals. If only authorized legal entities will be allowed to participate in this market (as it appears now) this would create the opportunity for a cartel of speculators to buy credits from individuals at deep discount and then resell them with large profits to professional investors on the market. A market open to all would instead benefit everyone by letting the market set the appropriate discount rate.


The tax credit can be monetized. This is one step further than making the tax credit token transferable in a marketplace as proposed above. Let’s think about the possibility of using the tax credit just like a digital currency, stored in a wallet in your mobile phone and spent — even fractionally — for ordinary consumption needs. In this case the tax credit could be converted into a new currency unit, let´s call it the New Digital Lira (NLD), exchangeable 1:1 with the €uro and backed up by the credits that it represents. The NLD would lubricate the whole tax credit system and bring immediate liquidity to the real economy. In this case the marketplace mentioned under 3 above becomes also redundant. The Tax credit will circulate like money and there will be no need to sell it to third parties to cash it.


We all know that the risk of implosion of the €uro system is nowadays quite real. Therefore every prudent EU government should have a plan B to confront this event. Countries like Germany, Austria, Belgium, Luxembourg and the Baltic countries for instance, do not even need a plan B because they have never really abandoned their own currencies. Basically, the German Mark — unlike the Italian Lira which effectively ceased to exist in 2011 — does not have a “sell by date”. Any German citizen can exchange the old Marks with €uros at the Bundesbank indefinetly. Indeed, many prudent German citizens still hold wads of Marks under their beds, just in case…

This implies that in case of failure of the €uro system, the Bundesbank — unlike the Banca d´Italia — could immediately revert to the old Mark with minimal disruptions to its own economy. Rather, all those unprepared will suffer dire consequences.

The NLD — backed up by tax credits — could therefore become Italy´s much needed Plan B.

But there is more to it.

Italy´s tourism sector is big. Italy ranks first for the world Unesco sites (55), it is the 5th most visited country in the world (128 million tourists per year) and the sector generates over €ur 42 billion yearly revenues, accounting for approx 5% of Italy´s GDP.

The NLD could be effectively launched to pay for all the services in the tourism industry. It would suffice to create a national tourism portal backed by the Ministry of Tourism and by all the national operators in the sector (hotels, restaurants, museums, etc). This portal will compete with global portals such as booking, airbnb and others. Such global portals exploit almost monopolistic positions and subtract precious revenues to both local operators and customers (because of the high transactional costs) and to the government, because they avoid local taxation by skilfully channelling their revenues offshore. A National Tourism Portal can be very attractive to national operators and their customers because they would benefit from lower transaction fees and no credit card commissions with the use of the NLD. The State will also recover precious tax revenues which are currently lost to businesses located offshore which exploit this advantage and bring nothing to the country´s economy (no jobs, no revenues, no taxes).


6. Programmable Smart Money and tax evasion.

Finally, tax evasion can only be countered by using both effective tools and incentives to foster the cooperation of citizens and businesses. The blockchain is an exceptional tool to align interests and incentives between a number of actors in complex situations. Low fees and a reduced withholding tax rate for all the transactions made with the NLD will no doubt stimulate businesses and citizens to be an active part of the system and use the NLD. The NLD can be programmed to deduct the withholding tax on all transactions. The State will benefit from higher tax revenues despite the tax rates having being lowered to incentivize businesses. This will start a virtuous circle fuelled by lower tax rates for the businesses, less tax evasion and higher tax revenues for the State and lower transaction costs for both businesses and customers. This scenario is completely different from the delirious propositions — which have been lately discussed — such as taxing the use of cash or to make compulsory the use of credit cards, which things rather benefit only the banks and impose higher costs on the society. Rather, the NLD will circulate without the need of intermediaries, at little or no costs and it will benefit primarily the State and its citizens.

These are just some ideas that can contribute to restart the stagnating economy of my beloved home country in such a difficult moment. In the meantime, I long for the day in which I will return to this wonderful country to enjoy its incomparable natural and artistic beauties, the friendliness of its people and its excellent food.


#crypto #blockchain @thinkblocktank @untitled-inc #tokenization #tokens #decretorilancio


Bitcoin goes parabolic, and its not the price!

How DeFi adoption will impact on the market cap of the King of Cryptos

Published May 15, 2020 on Medium.com and Hackernoon and The Capital and Data Driven Investor and The Tokenizer.io


When discussing bitcoin with investors who are new to the crypto sector this is their recurring question “… all very interesting but ultimately what can I do with bitcoin? What can I buy with it?

True, adoption for bitcoin is somehow an issue, but it is also a poorly understood issue. Bitcoins´adoption is normally related to the growth of its addresses (?) or its use as a currency, to buy things. Either way, the mainstream debate is mainly focused on the wrong issues. Since bitcoin is primarily used as a store of value, its adoption as a store of value is not exactly compatible with the use as currency — indeed it is hoarded rather than spent.

While the adoption of bitcoin as digital-gold and as store of value is certainly the key driver at the moment — which will heavily impact on its market cap and price when it will gain even only a fraction of the gold´s market share — this still pales compared to what will be the future main driver for bitcoin adoption.

Enter DeFi, Decentralized Finance or Democratized Finance as many call it.

For those new to the word, DeFi is quite simply the replication of legacy financial services, such as lending, payments, trading, asset management, insurance etc, provided via blockchain based applications in a decentralized manner. Clearly, the introduction of new technologies does not only improve on traditional financial services, but more importantly it creates opportunities to develop entirely new services, products and markets which were before today unheard of, like DAOs (Decentralized Autonomous Organizations), the tokenization of entirely new asset classes and the creation of scarcity-driven value for new digital assets.

On January 1st there were only 1.425 BTC locked in DeFi projects globally. On August 17th, the amount of BTC committed was over 48.000. At the current price of USD 12.400 this makes well over half a billion USD. For the legacy financial sector this is peanuts, it is a drop in the ocean of a multi trillion dollar market. That´s why they do not pay attention, not yet at least.

But for the newly born DeFi sector it is a 33,8x growth in just 8 months. And it keeps accelerating. Also the total value expressed in USD of the whole DeFi sector has gone up from USD 2 billion to over USD 6 billion in just the last two months.

Technological innovation is very subtle. At the beginning it is understood solely by very few tech proficient people within restricted circles and it is very difficult to predict what kind of changes such innovations can bring into people´s lives and businesses until it gets mass adoption.

That is one of the reasons why — together with complement effects, network effects and viral product features — technology adoption is non linear.

But when it gets traction, then it literally goes parabolic. But no worries, we are not there yet this is still the beginning.

Since bitcoin represents the king monetary asset and the store of value for the whole crypto sector, its market cap goes hand in hand with the growth of DeFi applications, services and products. Bitcoin lubricates the DeFi system bringing liquidity to it and it acts as THE trusted monetary asset pledged as a collateral in many applications.

Also note that — so far — bitcoin has been mainly tokenized (i.e “wrapped” into an ERC20 Ethereum Token) for use within the Ethereum blockchain.

But what will happen when new DeFi applications will start to emerge also for the Bitcoin blockchain? Sceptics about the capability of the Bitcoin protocol to handle large transactional volumes will have to think again. Some are already working on using smart contracts on the Lightning network for trading derivatives. The difference between the use of bitcoin in DeFi applications running on Ethereum and its potential use on its own protocol is that “There’s a really big gap between DeFi, as Ethereum is trying to do it, and P2P finance,” Rubin said. “Uniswap is really great. But they tokenize their liquidity pools. … We [Bitcoiners] are talking about finding a way for people to work directly with each other.”

Essentially, Bitcoin DeFi projects aren’t using derivatives of bitcoin like WBTC, they aim to enable traders to use directly bitcoin. And the consequences, in terms of bitcoin adoption, will be huge.

So, let´s tentatively jot down some figures, just to have a rough idea of where bitcoin´s market cap might stand in a number of hypothesis:

1. let´s assume that bitcoin´s adoption as digital gold continues and it gains X% of the market cap of gold currently at USD 13 trillion, based on an estimated above ground stock of 190.000 Tonnes and the current price of USD 1.990.

2. let´s further assume that bitcoin´s adoption in DeFi applications increases and it gains X% of the market share of global legacy financial services, asset management and insurance sectors. Please note that the statistical figures taken from Investopedia are not entirely reliable. But that was the best I could quickly find without doing a thorough data search which is not the scope of this article.

As you can see from the table above, in the first hypothesis we estimate a market cap of between USD 1,3 trillion to USD 3,9 trillion depending on the market share gain over gold (10% min to 30% max). This will project a BTC price between USD 68.000 and USD 205.000.

In the second hypothesis we estimate gaining a much lower market share of the legacy financial services with DeFi applications, between 5% and 20%. BTC projected prices here vary much more as a consequence of the different market cap of each specific sector. Clearly though, DeFi adoption is not limited to just one sector, therefore they must be summed up. This is what we have done in the third hypothesis where we have summed up, conservatively, the minimum market share gains for each legacy financial sector together with the gold market. Here we project a BTC market cap of USD 4,73 trillion and a price of USD 248.000. The monetary supply of BTC is set conservatively at 19 Million considering that there is widespread consensus that between 2 to 4 millions BTC are already lost for good, hence the 19 million max supply seems reasonable.

As said, this is just an estimation and there are many more variables that should be taken into account, including the fact that bitcoin will probably have to share the benefits of DeFi adoption with other emerging cryptocurrencies in the future. But I am sure one gets the picture. One can play with the figures as much as wanted, but there is little doubt that the future market cap of bitcoin will be a multiple of todays´. Barred adverse technological developments or currently inconceivable problems at Bitcoin´s protocol level, the only rational question is how many times a multiple of today´s price its future price will be.

Hold tight interesting times ahead.


#blockchain #bianconiandrea #thinkblocktank #tokenization #tokens #cryptocurrency #bitcoin #ethereum #defi #decentralizedfinance

What Tudor Jones´bitcoin investment means for other institutional investors and for bitcoin

Bill Gates has a problem and needs the blockchain to fix it

How the trust-machine can shed a light into the philanthropic activities of the Gates Foundation

Published April 15, 2020 on Medium.com and Hackernoon and Linkedin and TheCapital


Being a philanthropist - someone who promotes human welfare or donates funds for humanitarian purposes - is not as easy as one might think. Some - despite calling themselves "philanthropists" - spend huge sums to rather advance their own political-societal ideologies in a sacred-mission to prevail over those not in agreement. This has clearly nothing to do with philanthropism and much to do with lobbying and promoting its own hidden political, geo-political and economical agendas, just like the Soros Open Society Foundations does.


Others - like Bill and Melinda Gates - sometimes operate in areas in which philanthropy and both economical and political interests dangerously converge, so much that they themselves openly talk about the success of their "investments" in philanthropy.   Although Bill Gates clearly refers to "returns on the investment" which are non-personal economical gains - likely other gains which accrue widely to the society and are also economically quantifiable - this seemingly contradictory issue clearly raises legitimate questions as to the main scopes behind the Gates´ philanthropic facade.


If one donates money to build shelter for the homeless or food banks the charitable effort is pretty straightforward.  But if one funds pharma companies with billions and, in the middle of a pandemic, advances the idea of a global vaccine which casually happens to be produced by one of his grantees, then people start to raise eyebrows and ask questions. Before you know it, one´s credibility as a philanthropist is in tatters and one becomes just another George Soros, with all due respect for Soros the legendary speculator of course.


Recently, Robert F. Kennedy Jr has publicly exposed a web of links between the Gates Foundation and numerous pharma companies, the WHO and the GAVI which at least raise some alarm bells to the watchful observer. Others, have exposed the interest behind a biometrical tattoo-vaccine which might be used as a tracking device in an Orwellian dystopian world of mass surveillance.


Now, Bill Gates has clearly a new problem: how to continue to deploy large amounts of money into critical sectors - in a tangled web of economical and political interests at play - while remaining credible as a philanthropist and avoid being fingered as another "speculator-puppet master" like George Soros?


Introduce the blockchain.

The use case of blockchains for charities is very strong. Charities have indeed suffered from a "pandemic" loss of trust by donors. Huge scandals like that of the Red Cross in Haiti - which collected half a billion from donors and built only 6 homes - have clearly hit the sector very hard.


But the Gates Foundation is not a charity. They do not raise money from third parties.  They spend their own funds. They do not need to show third party donors how their moneys are spent.


Regardless of the above though - how the Gates Foundation spends its money, with which conditionalities and which results their disbursements achieve - inevitably affects both the public perception of the foundation as an humanitarian organization and that of Bill Gates himself as a true philanthropist.


If Bill Gates wants to be respected as a philanthropist he has to take some bold steps to ensure that his image and the perception that people have of himself are as true as possible to this role. This means that the activities of his foundation must be open, transparent, accountable and beyond doubt. 


The Gates Foundation should adopt the blockchain as a trusted and transparent infrastructure/protocol in its dealings with its grantees. Because the Foundation does not need to be 100% transparent - since there are legitimate tax and financial planning reasons behind the establishment of a foundation which go beyond the scope of philanthropy and should remain private to the Gates family - the use of the blockchain can be modular and implemented only on those activities which are strictly philanthropic.


This blockchain based infrastructure/protocol can track down grants to specific grantees and oblige the same to be totally transparent in their allocation to third parties, thereby cutting down the risks of corruption. An example: when granting US$ 75 million to the Government of Nigeria or other large sums to similarly highly politicized and inherently corrupted organizations, you want to be able to show to the world that your money is well spent and does not - for instance - buys weapons or ends up in an offshore bank account of some Nigerian minister. 


Another example is the claim that a grantee of the foundation - the Pirbright Institute - holds a patent for the Coronavirus. USA Today published a fact-check on the issue to discredit the claim but even that fact check was not correct since it claimed that the Pirbright received only 2 grants from the Gates Foundation "once in November 2013 for research into diseases affecting livestock and again in June 2016 for research into a universal flu vaccine". 


Undeniably though, a quick search of the grants to Pirbright shows that from 2016 to 2019 almost US$ 20 million were granted to Pirbright for different scopes.


This shows how critical a blockchain infrastructure is to track how the funds are practically allocated and spent.  The same goes with conditionalities - such as milestones or targets - that the grantee must achieve to unlock funds and which should be tied to executable smart contracts. Cryptocurrencies and stable-coins can easily lubricate the infrastructure and allow frictionless payments at a fraction of the costs of the legacy financial network. Expensive intermediaries can also be avoided and moneys directly spent with the needing.


So now there´s no excuses, the instruments are available to show that philanthropists are true to their words. Blockchain/DLTs shall become the default technical solution for any charitable or philanthropist organization which wants to be responsible, accountable, credible and trustworthy.


Clearly those who aspire to be considered "philanthropists" - but are not - will still run their foundations in a non-transparent manner to continue pursuing their hidden agendas, but hopefully soon people will stop calling them "philantrophists". The true ones though will understand the benefits of that and will use the blockchain to show everyone their goodwill and how their funds are truly allocated.


I truly hope Bill and Melinda Gates will do that and become also a leading example and a driving force for the whole sector.


If not, the most expensive PR efforts will not debunk conspiracy claims and will not spare Bill Gates from being perceived as yet another "evil globalist" billionaire.


It´s not the virus, stupid… it´s the economic depression that will kill you

Published March 26, 2020 on Medium.com and TheCapital

The uncertainties surrounding the evolution of the Covid-19 pandemic and its impact on the global economy are gripping both the people and the markets with fear. A global recession is now the best case outcome also for JP Morgan while Goldman Sachs foresees the possibility of a second great depression. There are currently few data available. It´s too early to ascertain the damage inflicted to China´s economy, which is still struggling to restart after its economic engine province Hubei grinded to a halt after the city of Wuhan was first put into lockdown on the 23rd of January. The spreading of the virus seems now under control in China, but the economical damage still needs to be assessed.

Italy’s lock-down measures are estimated to have hit tourism and transport activity by 90%, retail by 50%, and factory output by 10% with an estimated impact of at least 10–15% of GDP and likely more.

Just a few days into the crisis the US travel industry is experiencing a 90% fall in comparison to the previous month. This seems to confirm the Italian data.

The EU´s expectation that the bloc’s GDP will shrink by around 1% this year seems by far too optimistic. Because the situation is extremely fluid and in progress in so many countries, such estimates cannot be seriously taken into account for a global forecast of the economic impact of this pandemic crisis. The lack of precedents does not help either. So I went looking for studies which took a global pandemic as a basis scenario to simulate both the economical and human lives cost of an event of such magnitude.


The World Bank pandemic simulation

There are a couple of interesting studies published by the World Bank in 2006 and 2011. Both take into account different scenarios. The first study models three scenarios: one mild based on the Hong Kong flu of 1968–9; one moderate based on the 1957 Asian flu; and a severe one benchmarked on the 1918–9 Spanish flu.

“Table 3 below shows an alternative modeling of a pandemic. It is based on a pandemic similar in terms of mortality to the Spanish flu epidemic of 1918/9. This scenario is presented with a view to better understanding the factors driving the aggregate numbers in such simulations. The first column shows the impact in terms of GDP lost in the first year of the pandemic purely from additional deaths (here roughly equal to McKibbin’s severe scenario). The second column builds in the impact on aggregate productivity resulting from the infection of some 35% of the population. Even though individuals are only temporarily unavailable from work, the impact on output here is more than twice as large as from the loss of life, because the affected population is so much larger. The third column shows the largest impact. Here individuals are assumed to change their behaviour in the face of the pandemic by (a) reducing air travel in order to avoid infection in the enclosed space of a plane, (b) avoiding travel to infected destinations, and © reducing consumption of services such as restaurant dining, tourism, mass transport, and nonessential retail shopping. The degree to which such reactions would occur is necessarily uncertain. In this scenario it was assumed that for the year as a whole air travel would decline by 20 percent and that tourism, restaurant meals, and consumption of mass transportation services would also decline by 20 percent”.

The second study analyses the global economic effects of two extremes of influenza pandemics: a high virulence-low infectiousness event and a low virulence-high infectiousness event. For the purpose of similarities with the current Covid-19 pandemic, we will look at the second event, with a high infectiousness rate and low mortality.

The findings indicate that global economic activity will be more strongly affected by event 2, i.e. a pandemic with high infection rates rather than high virulence rates, all else being equal. At the regional level, regions with a higher degree of economic integration with the world economy will be affected more strongly than less integrated regions. The EU would be, therefore, one of the most affected areas.


Comparing those two studies with the current Covid-19 pandemic

The above studies are based on assumptions and baselines which are similar but not equal to that of the Covid-19 pandemic. For instance, the first study is based on the assumption of 35% of the population being infected. Luckily, we are still far away from that scenario even if the infection rate potential for the Covid-19 can be up to 60–70% of the population. This is why early containment is vital to reduce the spreading. However, as indicated in the first study, such measures quickly hurt businesses and workers in affected areas. While the study assumes that the leisure and transportation industries would decline by an average 20% for the year, we know for sure — from the Chinese, Italian and US experiences so far — that this figure will be much higher than 20% and involves also the whole hospitality and retail sectors where turnovers fell up to 90% in the first month.

The second study analyses four sets of economical shocks: (i) a rise in demand for medical services; (ii) a decrease in hours worked per worker; (iii) deaths; and (iv) a decrease in international travel. However, it seems that it does not take into account the direct impact that the drastic containment measures — such as widespread lockdowns — will have on businesses (i.e turnover losses and bankruptcies).

Also, the pandemic scenario is that of an extremely transmissible influenza virus with global attack rates of approximately 40% (which could be potentially similar to that of Covid-19), despite the availability of an effective vaccine within months of the outbreak (which is an unknown in the current case). In that scenario, the case fatality rate is 0.5%, which is similar to the case fatality rate of the 1957 influenza pandemic. For Covid-19, unfortunately, the data available at the time of writing indicates a much higher fatality rate averaging 4,4%. In Italy, the mortality rate is much higher currently at 9,5%.

This is evidence of large discrepancies between countries in attributing the death of patients to the Covid-19 or to their pre-existing pathologies. An example is Germany — which stands out from the crowd´s average 4% mortality rate — and reports a case fatality rate of only 0,6% with well over 33.000 infected at the time of writing. The explanation can be that the most impacted age groups in Germany are far younger than in Italy. Mainly aged 20 to 50 with a much lower fatality rate than the age group 65+. At least this is the thesis in this article.

This study also assumes that the virus has an equal case fatality across ages consistent with the 2009 H1N1 pandemic, while the Covid-19 Italian data shows — like more typical seasonal influenza — that 96% of all fatalities are in the over 65 age group.

Covid-19 shows, however, a concerning high complication rate which — based on Italian data — requires the hospitalization of 40% of the infected and intensive care for 6,4% of the infected.

Variables such as the duration of the pandemic, the finding of a cure or vaccine, the duration of economic shutdowns and containment measures, and the speed of the economical recovery are impossible to forecast yet.


Human and Economic costs

Considering the differences between the baselines and assumptions of the above studies with that of the novel Covid-19 pandemic, the forecasted loss of 3% to 5% of the global GDP (i.e up to US$ 4,4 trillion) looks today like the best possible scenario.

With up to 6,5% of the global workforce losing their jobs.

The International Labour Organization in a recent report forecasts up to 24,7 million job losses and US$ 3,4 trillion of salary losses.

Just to compare, the 2008 financial crisis — which now starts to look small compared to what is day after day becoming the Covid-19 pandemic — has cost 22 million jobs. Therefore, already at this early stage, the ILO forecasts seem very conservative.

To make the point, Bank of America said that 3,5 million jobs will be lost and that´s only in the US and at a time when the virus is just starting to spread with 14.000 cases. UPDATE: Just a few days later (today 27.3.20) the US Department of Labour reports 3,3 million jobless claims while the number of infections exploded to 86.000. Shocking.

In the meantime, Goldman Sachs reports up to 95% declines in the revenues of the hardest hit US industries, thereby indirectly confirming the Italian figures.

All that without even taking into account the costs of financial disruptions in the credit and stock markets that we are currently seeing and which would require a massive monetary stimulus by central banks globally.

Just like the virus for humans, insolvencies in the real economy will soon start to spread contagion into the banking and financial sector with cascading effects which are difficult to forecast.

As far as the loss of human life is concerned, Table 2 of the first study above paints three different scenarios: a mild one with 1,4 million deaths, a moderate with up to 14 million casualties, and a severe one with up to 71 million deaths.

To put things in perspective, the 1957 Asia flu pandemic caused worldwide between 1 and 4 million casualties depending on the sources. The more infectious 1917 “Spanish” influenza pandemic caused the death of between 50 to 100 million people. Again the numbers vary wildly depending on the sources.

Therefore — considering the infectious rate of the novel Covid-19 and its complication rate which will overwhelm health care systems globally — the above estimates do not seem improbable.


Avoid a Depression at all costs

While a recession now looks increasingly like the best case scenario, a depression would be catastrophic and should be avoided all costs. Trump´s recent tweet, “the cure might become worse than the problem itself,” should be taken as a warning that the cost of a depression — not only economical but also in human losses due to poverty increase, unemployment, famine, drop in living standards and illnesses — will be superior to the deaths directly caused by the Covid-19. Even more so considering that the Covid-19 infectivity and mortality rates are disproportionately tilted towards the over 65 age group. This is not cynicism, but an objective evaluation that every government will have to do at war-like times in order to decide if the costs of saving lives now are exceeded by higher costs (both human and economical) at a later stage — see below the paragraphs “Introduce Triaging” and “Strategic Triaging with Geopolitical Implications”).

Let´s see then what a depression really means since there have not been depressions in more modern times. If we exclude the 2009 Greek depression, induced by the austerity measures imposed by the EU/Troika — which by the way 10 years later is still unresolved since Greece unemployment rate is still at 17% from a 27% peak in 2009 — the most recent depression was the 1930`s Great Depression which started with the 1929 Wall Street crash and raged globally for a decade before producing even more misery with WWII. Europe and the USA were the most affected regions.

According to Encyclopaedia BritannicaThe worldwide economic downturn known as the Great Depression began in 1929 and lasted until about 1939. It caused steep declines in output, severe unemployment, and acute deflation and led to extreme human suffering and profound changes in economic policy”.

Let´s see some of the dramatic consequences of the lost decade which morphed into WWII:

  • Up to 25% unemployment in most industrialized countries
  • For those who had a job the salaries declined by 30–40%
  • Precipitous decline in standards of living around the world
  • 50% of all US Banks failed
  • declines in industrial production of main countries from -16,2% (UK) to -46,8% (USA) with an average -33% for the 5 largest economies at the time.

“For Americans, the 1930s will always summon up images of breadlines, apple sellers on street corners, shuttered factories, rural poverty, and so-called Hoovervilles (named for President Herbert Hoover), where homeless families sought refuge in shelters cobbled together from salvaged wood, cardboard, and tin.

It was a time when thousands of teens became drifters; many marriages were postponed and engagements were interminable; birth rates declined; and children grew up quickly, often taking on adult responsibilities if not the role of comforter to their despondent parents. The Great Depression, of course, had created the perfect environment — political instability and an economically devastated and vulnerable populace — for the Nazi seizure of power and fascist empire building. Consequently, it was the spread of totalitarianism and not economic hardship that occupied the minds of Europeans in the 1930s.

The human death toll caused — directly or indirectly — by the unemployment, poverty, famine and illnesses of the Great Depression of 1929 are unknown, but because the most affected economies never really recovered before the WWII, it is not wrong to assume that also WWII casualties have been an indirect dramatic consequence of the Great Depression.

Certainly at least for Europe, while the USA was substantially spared from the WWII and could easily grow into the post war empire that it is still today. Therefore the death of 3% of the 1940 global population can be indirectly attributed to the Great Depression and that is 70–85 million people. The biggest human tragedy so far.

All this to point out that soon will come a moment in which worldwide governments will have to take a though decision and restart the economies at the cost of lives now to save likely more lives from an otherwise certain new economic depression with unimaginable consequences.


Introduce triaging

The epidemiological data released daily by the Italian Health Ministry are very useful to paint a more detailed picture of the Covid-19 attack rates.

At the time of writing we have:

  • 6,4% of the total infected needs intensive care
  • 32% of the total infected needs to be hospitalized
  • 96% of all deaths are in the age group over 65
  • 57% of all infected are in the age group over 65

With an aggressive infectious rate which is estimated to infect 60–70% of the population it is clear how the Covid-19 is a huge threat to every country´s health care system. No country can sustain that without slowing down the spreading of the virus.

Let´s look at Italy for instance. The initial outbreak was the 20th February. There are 5.029 ICU (Intensive Care Units) beds in the whole country, the large majority in the North. There are currently already 3.204 patients in ICUs with over 70.000 infected and a 9,5% mortality rate. The North has already reached full capacity 1 month into the outbreak.

Germany is the best equipped country in the world as far ICU beds are concerned with over 28.000. Only Bayern, the wealthiest region, has over 5.000 ICU beds (like the whole of Italy) and it is pledging to double that in the following months. However those beds are already running at 70% occupancy. If we apply the Italian epidemiological progression (based on the most transparent and reliable data so far) it is clear that also Germany might run out ICU beds in a couple of months.

The saddest part, triaging.

“Triaging is the sorting of and allocation of treatment to patients and especially battle and disaster victims according to a system of priorities designed to maximize the number of survivors”. Triaging is a commonsense method used by field hospitals in times of war or disaster to allocate scarce medical resources to save the most victims possible. Doctors recognize that some patients will have higher chances of survival than others due to factors such as age, general health, previous pathologies, etc. Identifying these two groups and excluding those with lower survival chances from medical care allows doctors to help those with higher chances of recovery. Medical professionals apportion finite resources to save as many victims as they can.

The above mentioned epidemiological data from Italy, coupled with the impending collapse of overwhelmed hospitals and ICU units, is already forcing Italian and Spanish doctors into triaging. With a mortality rate of 96% in the over 65% age group the doctor´s choice is pretty much obliged.


How this pandemic can morph into “strategic” triaging with geopolitical implications

We have seen above that the economical cost of this pandemic — mainly the containment measures which are effectively shutting down the global economic machine — can be massive, very likely around 5% of global GDP (US$ 4,4 trillion) to which financial bailouts, business bankruptcies, unemployment costs, etc should be added. A bloodbath for the world economies which is generating a recession in the best case scenario. So the question the governments will start to ask is: what if the contagion is not contained and a vaccine is not found in a reasonable time, for how long can governments keep the world economy shut down before this brings on a full depression 1929 style?

This question is very important because — in addition to the pandemic costs — a full depression comparable to that of 1929 will add unbearable human and economic costs as we have seen above in paragraph “Avoid a depression at all costs”.

The Prussian military theorist Carl von Clausewitz argues that the conduct of national policies must be governed by the pursuit of rational objectives based on the value of each political objective and judged by the resources and sacrifices required to achieve it. “Once the expenditure of effort exceeds the value of the political object, the object must be renounced. In other words, the value of any political aim is measured by its relative costs — the rate at which a combatant expends lives, treasure, and military resources of all types — and the time required to achieve the objective. The cost of those aims may come to exceed the value of the political object, or the value assigned the political object may fall. In either case, the original goals no longer justify the expenditure of resources. Strategists should be prepared to determine whether the enterprise is still worth its price”. If not, Clausewitz warns them to shut down the endeavour — conserving what gains they can while cutting their losses.

We have heard politicians proclaim “we are at war”.

Like at war times, our governments will have to take decisions to balance the saving of as many lives as possible with the cost of it, until such cost is bearable. If the cost becomes unbearable, countries will fall into a depression and all other costs will raise including additional deaths induced by the increase in unemployment, poverty, famine and lower standards of living.

This decision might even be forced into governments by economical/financial issues, by geopolitical issues and by the strategic-competitive power struggle between countries worldwide. Let´s make some hypothesis:


(i) China was the first country affected and it is the first one which seems to have successfully contained the spreading and is now slowly restarting its economy. At the same time the virus spreading in Europe is already taking a toll higher than in China both in terms of human lives and economical losses. This means that the EU will certainly come out of that crisis much worse than China will. This gives China a clear head start against all the other economies. The US is not poised well to contain the crisis and it has surpassed Italy as the country with the highest number of infected. It is also battered by a stock market crash and a looming financial crisis of proportions far superior to any precedent financial crisis, including that of 2008. In the current economic-geopolitical power struggle this puts China at an advantage in respect to the US and the EU and this may force the hand of governments in the choice of saving their economies at the expenses of higher cost of human lives in the over 65 age group.

In addition, since the escalation of the crisis in the US — if not contained — will adversely impact the still dominant geopolitical position of the US vs its adversaries (China, Russia and EU), the US will be forced to take action to avoid that the world equilibriums will tilt in favour of its adversaries.

A falling empire is like a wounded predator, it becomes very dangerous and it will not give up its dominant position without a last fight. Therefore it is reasonable to expect that the US will resort to any means to avoid that and a military escalation cannot be excluded. Don´t forget that the way out of the Great Depression passed through WWII.


(ii) The 20 richest OECD countries have cumulatively over US$ 78 trillion pension liabilities. The USA has approx. US$ 18 trillion unfunded pension liabilities. This is 85% of its GDP. Germany´s pension liabilities are huge at 207% of GDP therefore approx. US$ 8 trillion. Italy´s are even larger at 257% of GDP therefore approx. US$ 5.1 trillion.

As cynic and dramatic as it is, governments will ponder that this disease — which attacks at 96% the over 65 age group — may just end up easing their huge US$ 78 trillion problem.


(iii) A hard recession will be painful but it is still manageable by governments which will resort to massive fiscal and monetary stimulus to restart the economies. This is the scenario where the financial elites will gain the highest benefits and will scoop up the best investment opportunities.


(iv) The usual suspects and the financial elites — which made a fortune in the last 10 years of monetary madness after the 2008 financial crisis and which cleverly manipulated the previous crisis to their own advantage — are already salivating at this new opportunity to deploy their accumulated wealth. Developing countries are particularly vulnerable. Indebted in foreign currencies they will have to fall into the deadly “embrace” of international lenders such as the IMF or the World Bank ending up with bail-ins, expropriations and privatizations of strategic assets in favour of international creditors.


Conspiracy theories

The web is full of conspiracy theories. Like blaming the Chinese for having let the virus escape from a high security biolab in Wuhan, or blame someone else to have attacked China in occasion of the Military Games in Wuhan this fall, or blame the 5G networks which contribute to propagate the spreading. Fact is that humans always like to play with fire and sometimes they get burned.

The experimenting with weaponized viruses is nothing new. The US are doing it, the Chinese also, the Israeli idem, the Russians as well and so on. But clearly nothing can be proved at this stage. If there is a plan, a cui prodest, it might become apparent at a much later stage.

More likely this is rather a black swan event.

However — as Machiavelli and Churchill pointed out — this does not mean that special interest groups will not manipulate this crisis to gain advantages. Either economic, political or geopolitical or a mix of all them.

Most importantly, we must all be vigilant to uncover incongruent behaviours and suspicious events.

We, the public — at least those with a higher degree of education and comprehension of the world´s affairs — must keep our eyes wide open.

We must question the economical interests behind a newly found cure or vaccine. We must question and expose delays in reacting to clear emergencies by politicians. We must expose the plans of the oligarchs — such as Italy´s Benetton and Agnelli dynasties — to buy up strategic privatized assets at sale price during such a crisis. We must expose and question the connections between EU politicians/bureaucrats and their finance cronies like George Soros or organizations such as the Gates foundation. If someone reaps undue profits at the expenses of the population this must be exposed, the responsible must be indicted and tried.


Maybe this will be the opportunity for countries like Italy to hold its corrupted politicians accountable and to clean the nation inside out from the EU co-opted swamp rats and traitors who infest it. Time will tell.


The inadequacy of the EU and the incompetence of politicians

Personally, I do not see one political leader worth this name in the whole EU, in Italy or in Germany for the sake of it. They have all been sleeping at the wheel when this crisis unfolded in China. How is it possible that they did not prepare an emergency plan when the crisis started to unfold in China early in January?

I started to record the progression of the Chinese infections on an excel spreadsheet on the 13th January. Wuhan was locked down the 23rd. Immediately, I bought disinfectant, face masks and stocked up on food for my family. Everyone laughed at me. At that time there were no shortages, no inflated prices. It should have been clear to anyone reading the news what was about to happen. That was mid January.

The Italian government approved an emergency decree at the end of January but did not take any action until one month later. In this shocking video dated 27th January, the journalist asks Conte if Italy is ready for the pandemic. The answer is “Yes we are 100%”. Truth was, Italy did not have enough beds, face-masks, respirators, not even enough doctors and nurses.

Germany did the same. The EU even worse, did nothing at all.

In this crisis the EU has clearly demonstrated of being not only inadequate to the tasks but also plain detrimental. As the editorial of the Strategic Culture Foundation puts it — “it is abundantly clear that the EU has become a financially-driven cartel, not a human-centered federation of nations. An organization that cannot adequately protect the health of its public is not an organization worth defending. The EU’s declarations of democracy and solidarity are being seen for the facade that they are. That facade was always shaky. A virus is enough to tear it down”.

Italy´s former Foreign Minister Frattini adds: “Brussels is not doing enough…Italy was practically left alone… Many said it was all because…Italians do not respect the rules. Suddenly, they realized all the other countries were equally affected”.

True. While nations targeted by years of senseless Western sanctions — such as Russia, Venezuela, Cuba — together with China showed their factual solidarity and support sending supplies and medical teams to risk their lives on the field, by the way mocked by the western mainstream media which continue to fantasize about “evil” Russian interference everywhere , the German “friends” confiscated a shipment of face masks directed to Italy via a German importer, the EU Commission´s Von der Leyen sent her pathetic video message “we are all Italians”, and finally French ECB´s Lagarde — nicknamed “LaGaffe” after that — kicked Italy down by sending the yield on Italian BTPs sky high thereby making “oops” an “unintended” gift to its shark lender cronies at the expense of Italian taxpayers.

Italy is also the EU´s most vulnerable country to this downturn.

The crisis of its health care system has been originated by the EU recessive budgetary policies and the imposed cuts to the health care system perpetrated by the EU co-opted puppet governments like Monti, Letta and Renzi.




These were the very same policies that today Germany — in the moment of need — fervently asks to revoke to face the crisis. Now they say “No more schwarze-null”, because it suits them.

But for Italy and Greece it is too late now. The damages have been done and cannot be undone.Those countries were weakened by years of EU imposed social butchery, wage cuts, pension cuts and cuts to essential public services. Years of zero yield policies have impoverished its savers. Without a political leader worth that name — a true patriot — one who can act exclusively in the interest of its people, without a central bank to adopt an independent and expansionary monetary policy and without its own currency, Italy is a fat helpless prey for the international lending sharks lobbying the EU.

This crisis will be cleverly manipulated to induce the EU co-opted Conte government into digging even more into unpayable debt compounded by the ever increasing interest rate “spread” cleverly manipulated with the help of the ECB. The next step will be an extraordinary “wealth tax” to empty the coffers of the Italian banks holding over €ur 4 trillion of savings and a new round of privatizations of strategic assets.

Lobbies and special interest groups are so pervasive and entangled within the EU that it is impossible to distinguish the corruptors and the corrupted. The situation has reached such a scandalous level that a “reliable ally” of the Open Society Soros Foundation — Page 64 was placed in a key role in the Conte puppet government. Can you just pause for a moment please. Just ponder….

The current Italian Minister of Economics and Finance, Giampiero Gualtieri, who is supposed to negotiate in the best interest of the Italian people a way out of this crisis with the EU, the ECB and international investors is a “reliable ally” of the George Soros Foundation.

No wonder that the corruptors and the corrupted work hand in hand to foster the activation of the European Stability Mechanism to “save Italians”. To clarify, Italy has contributed to the ESM so far €uro 14 billion and it is obliged to contribute up to €uro 125 billion in case of need, therefore a balance of €uro 111 billion. Now the Italian government is literally begging the ESM to lend Italy €uro 25 billion for this crisis (of which 14 billion is Italy´s money anyway), at shark loan rates and under the conditionality clause, rather than asking the ECB to monetize more debt like the FED, the BoE and everyone else is doing. Italians do not need the ESM. As it has been cleverly conceived, the ESM is a rent extraction mechanism which benefit solely the financial elites which lobby Brussels and their cronies EU politicians/bureacrats.

Minister Gualtieri should be indicted and tried for Treason under art 246 of the Italian Criminal Code together with the representatives of the Soros Foundation and a number of other Italian puppets.

The latest news is that the EU Commission is ready to suspend the stability pact and its inflexible budgetary rules to allow governments to increase their debt to respond to the crisis. The EU bureaucrats are facing the precipice, and this might be the end of it. And they back off from consolidated positions to give nations a bit of leeway hoping that the storm will quickly pass before going back to the same old tactics. But this time it will not pass. The redde rationem will only be delayed. The problem remains for all EU countries without a Central Bank — a lender of last resort — in time of major crisis such as this one. The suspension of the Stability Pact and Schengen is the implicit admission that such treaties do not work. If they do not work when you need it the most then they are worthless. If the €uro and the European Union fail the “stress test” at time of crisis then there is no need for them in normal times. The EU is a parasite that enriches the fattest bureaucratic elite in Brussels at the expenses of the European citizens. The late events do not only question the whole EU construction and the €uro in the first instance, but might well be the beginning of the unravelling of it.


The cure for the globally sick economy — A monetary tsunami

As far the sick global economy is concerned, there is only one possible cure to avoid a depression. The cure might work, but only if the largest economies are kept shutdown only partially and for a very limited time. Otherwise the recession might well turn into a deadly depression.

How long can the world economies resist in that semi-paralyzed state is anyone´s guess. One month, two months?

The cure is the only one that central banks and governments worldwide can administer to the terminally ill patient: a mix of massive fiscal and monetary stimulus. Basically, more credit creation, more fiat money debasement and monetary inflation, more QE and this time also “helicopter” money for the people is coming. The digital presses are already turning wildly at the tune of more than US$ 1 trillion — and this is just the beginning. The ECB promised a new QE package worth at least €ur 750 billion. Germany promised €ur 600 billion, Bayern alone over €ur 50 billion. At least Germany can draw from accumulated current account surpluses for the last 20 years.

The FED announced “unlimited QE” . Deutsche Banks´ Oliver Harvey points out that this is clearly a very different situation from 2008. The 2008 financial crisis was a shock on the demand side which could be countered by increasing the liquidity in the system. This time however we have a supply shock which is morphing into a demand shock. Businesses are closing down not because of lack of demand but because they are forced to. All the consequences of that forced shutdown, such as bankruptcies, unemployment, spending contraction, will clearly also affect the demand but at a later stage: “if the government tries to keep spending at levels before lockdowns began, while at the same time keeping lockdowns in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.

Having acknowledged that and the fact that Deutsche Bank is net positive on gold as an inflation hedge, it is however too early to foresee (i) where this liquidity tsunami will flow and what the effects could be and (ii) whether this coming recession might mutate into a depression which might even trigger a “reset” of the current financial system. This is also something that one cannot rule out in such a fluid situation.

Indeed, the world sits on a huge pile of debt. There are no real assets anymore. Today´s financial assets are someone else´s debts and liabilities. You name it, government bonds, municipal bonds, corporate bonds, trillions of mortgages and derivatives of all kinds, the US dollar, the €uro and all fiat currencies are liabilities. What we call today money is just a liability and today´s global liabilities dwarf the world GDP by orders of magnitude.

The IMF might have to intervene and issue more SDRs to inject liquidity. Maybe a global crypto currency backed up by real assets such as gold or oil will be created? Who knows what might be the outcome if a new Bretton Woods conference is convened to save the world´s finances from the impending collapse.

However — with so many variables and uncertainties — one should focus on trying to keep things as simple as possible. Then, regardless of all the above, one can be reasonably confident of one thing. Namely that in all cases the coming monetary tsunami will trigger a huge wave of monetary inflation and fiat currency debasement.

In this scenario, in different ways, equities, gold and bitcoin will all play a key role in protecting your wealth.


How gold and bitcoin can perform in that scenario?

There was ground to be positive on gold all along, even before the beginning of the crisis. After that, even more so. When referring to gold one should only consider physical gold as an asset. All the rest is just paper gold. Futures, ETFs, unallocated accounts, etc are all liabilities, plus they have a counterparty risk. As I write, gold sits on the daily timeframe above the 200MA at US$ 1540. Better still in €ur at 1430 well above the 200MA, still painting a bullish picture despite the late drop which briefly violated the 200MA.

Gold has been also liquidated in the recent market crashes and not surprisingly. The reasons are well explained in this post by Keith Weiner of Monetary Metals and by Macrovoices in this podcast which I recommend you to listen to better understand how the complex interactions between the liquidity crisis in the eurodollar market and gold swaps/leases can affect the price of gold in the short term. More simply, in a liquidity crunch like the current one, who owns gold and has to meet margin calls on losing positions is forced to sell. Also if one does not own gold and faces liquidity problems, it can borrow the gold on the market and sell it without regard to the price in order to raise liquidity, with the advantage that the lower the price of gold goes after the sale, the cheaper will be to buy it back later to return it to the lender while pocketing any positive price difference. Those so called “gold-pukes” always happen at times where the market is the most illiquid and cause a cascading effect by triggering stop loss orders at key levels.

During the 2008 financial crisis — from the days of the Lehman collapse on September 2008 — gold dropped well over 20%. But when it became clear that the cure would be a monetary avalanche, QE “whatever it takes”, gold rallied for over 2 years appreciating from US$ 700 to the historical high of US$ 1.921 on Sept. 6, 2011.

Also this time, with the coming monetary tsunami, gold will do its dirty job well and might well set new historical highs. However lower prices — if the liquidations and the liquidity crunch persist — cannot be excluded and they will be excellent buying opportunities.

Now on to bitcoin.

Bitcoin is clearly a much more volatile and speculative asset than gold. It is therefore more correlated to risky assets. As I have expressed in various articles, it is in my opinion a great store of value but not for every occasion. It is an effective hedge against monetary debasement and offers unparalleled protection against confiscation and coercion, it is portable and it can be easily hidden.

As an example, starting on the 14th November 2018 until 14th December 2018, bitcoin crashed 50% together with equities, while gold was substantially unaffected. Before the drop, I have warned in this article of the possibility of a further drop in pricebecause many funds are deep in the red at this juncture, one can expect that they will be compelled to liquidate their assets by year end. This could possibly cause the crypto market to drop lower before it can start trading higher. Definitely something worth keeping in mind.”

The current drop from US$ 9.000 to 6.200 (-30%) was unexpected also for me, but it did not really surprise me since there are many analogies with the 2018 drop. Institutional investors — which are now much more invested in bitcoin than ever before — have been selling everything to go to cash before repositioning when it will become clearer what will happen with this crisis.

Now, day after day, it becomes apparent that the only possible response by the authorities — while all the other variables remain unknown — will be to throw enormous amount of digitally printed “money” to the markets. That´s a good enough reason for me to be very bullish also on bitcoin. It goes without saying that the above applies only if the crisis is rapidly resolved and the economic machine is restarted again and the recession is eased by monetary and fiscal measures. Rather, if we fall into a depression, you will likely need to barter what you have for food rather than relying on bitcoin or gold.

As an example, starting on the 14th November 2018 until 14th December 2018, bitcoin crashed 50% together with equities, while gold was substantially unaffected. Before the drop, I have warned in this article of the possibility of a further drop in pricebecause many funds are deep in the red at this juncture, one can expect that they will be compelled to liquidate their assets by year end. This could possibly cause the crypto market to drop lower before it can start trading higher. Definitely something worth keeping in mind.”

The current drop from US$ 9.000 to 6.200 (-30%) was unexpected also for me, but it did not really surprise me since there are many analogies with the 2018 drop. Institutional investors — which are now much more invested in bitcoin than ever before — have been selling everything to go to cash before repositioning when it will become clearer what will happen with this crisis.

Now, day after day, it becomes apparent that the only possible response by the authorities — while all the other variables remain unknown — will be to throw enormous amount of digitally printed “money” to the markets. That´s a good enough reason for me to be very bullish also on bitcoin. It goes without saying that the above applies only if the crisis is rapidly resolved and the economic machine is restarted again and the recession is eased by monetary and fiscal measures. Rather, if we fall into a depression, you will likely need to barter what you have for food rather than relying on bitcoin or gold.

If that scenario is clearly bullish for gold — despite the risks of confiscation — it is even more so for bitcoin which holds additional key features such as unlimited portability, resiliency to coercion and to confiscation and can be easily hidden. With border controls, travel bans and possibly capital controls coming, bitcoin still has unmatched advantages.



Governments will have to take soon very painful decisions. They will be forced into triaging and restarting the economies to avoid a depression with unforeseeable consequences which — as Trump put it — can be worse than the problem itself. The fact that a cure or vaccine is statistically likely to come within 6 to 12 months — thereby reducing the cost of human lives — will tilt the decision more towards restarting the economies sooner rather than later to avoid the certainty of the human, social and economical costs that a depression will bring upon humanity.

Like Boris Johnson said, we should be prepared to lose dear people in the meantime.

Our politicians are not used to taking such tough decisions that past leaders took in history at war times. But any such decision is fully justified by the fact that a nation has a primary duty to save the young generations from a certain disaster if such an event is likely to cost even more lives and misery. My father and grand father would have said so. And I say this being aware that anything else would be selfish. Since there is no historic memory of the Great Depression it is hard to imagine what this would mean for millions of people without savings nor assets, who work to pay back their mortgages, their overdrawn credit cards and leases. What happens when they will lose their jobs and incomes. What this will mean for a generation of overleveraged families in their 30s or 40s who can barely make ends meet. I truly believe this will bring far more misery. The age group 20 to 40 is only impacted by 10% of all cases. The next age group 40 to 50 by an additional 12,4% of all the infections. Both age groups together have a mortality rate of 1%. Therefore the economic machine can continue to run with limited risks, while all above 65 years of age must be quarantined for their safety and those in the middle — like myself — should take their chances. I believe this will be the most rational decision that governments will ultimately take if the containment measures fail to achieve what China has instead achieved. Be prepared for tough times ahead.


#bianconiandrea #thinkblocktank #cryptocurrency #bitcoin #gold #coronavirus #covid-19 #depression #recession

Fight wealth inequality with blockchain and tokenization

Published January 13, 2020 on Hackernoon.com and TheTokenizer.io and Medium.com and TheCapital and DataDrivenInvestor and Blockchain4innovation.it


While Bloomberg has celebrated the best decade in history for financial returns, it is not a coincidence that the wealth inequality has reached proportions not seen since the roaring´20s. And while this does not seem to concern the financial elites - who celebrated another fat end of the year - this is in reality a major concern for all the others, the 99,..%ers. This has created all sorts of distortions, not only in the economies and in financial markets but also in political systems of countries which were traditionally considered as the most democratic forms of government around the globe, such as the USA and the EU.

The massive amount of wealth concentrated in few hands tends to manipulate the markets and to corrupt political systems globally, so much that today it is impossible to see a normally functioning (i.e. not manipulated) financial market or a truly democratic form of government. This "cancer" has spread fast in the USA and throughout the EU.

The top 1 percent in the United States holds 42.5 percent of all national wealth, a far greater share than in other OECD countries. In no other industrial nation does the richest 1 percent own more than 28 percent of their country’s wealth.

And 45% of Americans have no savings at all.


The "globalization doctrine", coupled with the last 10 years of heavy Central Bank manipulations of interest rates and trillions of dollars and euros created out of thin air which have been thrown into the pockets of the cronies and speculators, have escalated a trend which has been already ongoing since the ´80s -´90s. Some also openly accuse the capitalistic system itself. Even if the capitalistic system is certainly far from perfect - and in particular "liberalism" and "laissez faire capitalism" are especially dangerous if not kept "in check" by able politicians - the real root of the problem is not the capitalistic system itself - which remains the best system possible - but rather crony capitalism and "central bank market manipulation, which goes against the very principles of capitalism". Jesse Colombo in this Forbes article, points out that the consequence is that the "situation is only temporary" and that "the asset bubbles behind the wealth bubble are going to burst and cause a severe economic crisis". This is likely the scenario that is going to happen if no other measures are taken to defuse the incumbent threat. But this is also the scenario that will generate dramatic consequences globally and year long depressions ´30s style. That needs to be avoided at all costs. The author proposes "to strike at the root by working to defuse the dangerous asset bubbles, by reining in or shutting down the Fed, and by shoring up the integrity of the U.S. dollar again by backing it with gold so that it can't be recklessly debased." This is only a partial solution to the problem.  There maybe a different and completely new approach to try which has been only recently enabled thanks to emerging technologies such as the blockchains and new social studies based on behavioural economics and game theory, the so called "token-economics".



The middle class problem

One of the chief reasons why we are stuck in a substantially zero growth environment in the western countries and specially in the EU, is that the middle class - which is the real engine of the economy - is being destroyed.  Historically, it is the middle class that creates new enterprises and new jobs which boost the real economy and generate economic growth. It is the middle class that consumes the most.

A 3,2 million collier for a dog is just another sign of peak decadence reached by western societies. The same 3,2 million spread across 1000 families would allow each family to spend additional 3.200 in the real economy for basic purchases such as food, clothing, medical services, travel, entertainment, etc. Distributed wealth is what grows the economy not peak concentration of wealth.



Certainly not the UHNWI who buys his 10th supercar or a new yacht or invests in a Picasso or speculates in the stock market or destroys a car worth hundreds of thousands just to show off how...well a sub-human idiot he is and how his inherited and undeserved wealth would be better confiscated and put to a much better use. This chart shows that the middle class wave is getting thinner by the year in the western countries and grows instead in the east.

The east is doing today what the west has done from the ´50s to the ´90s. If this wave is not inverted and if European and American middle classes are not promptly resuscitated, the western economies are doomed and we will descend into a new feudalism.

Therefore, considering that it is the middle class which is the entrepreneurial class which moves the economy, it is essential that they can have access to funds to create new enterprises.  This is the classic chicken and egg situation. Try to go to a bank and ask for a loan to expand your small business or buy some new machineries or do some other necessary investment to boost your business productivity. Despite the zero interest rates policy, banks will not lend you unless you have some collateral to guarantee repayment. This is particularly felt in southern European countries. This is the impasse that must be broken. We have to create a completely new system of incentives so that the massive wealth concentrated in the hands of the 1% percent - which sits in low yielding bank accounts and brokerage accounts - is literally forced into the real economy, into the hands of the middle class entrepreneurs which can use it to create new businesses, new jobs, pay salaries and resuscitate the stagnating western economies. Forget the bullshit "trickle down economics" made up by the financial elites.

This is the real thing, the economic shock that is needed. And it should not be a trickle at all. It has to be a massive waterfall.


But how this can be done? We would need substantially three things: (i) a state owned investment agency, (ii) a cleverly balanced mix of incentives for the wealthy to invest in the real economy and "asymmetrical" disincentives/sanctions to force them to choose the investment option rather than alternative "elusive" options which may disproportionately backfire if caught by the sanctions (iii) a blockchain/DLT based system of accounting to guarantee transparency and accountability together with digital tokens representing the government debt issued.



The Structure, the Incentives and the Disincentives

A State owned investment agency is needed. The investment agency collects funds and issues a debt instrument paying interest at a rate which is slightly higher than the rate applied by commercial banks on the liquidity held. Say that today paying an interest rate around 2-2,5% will be a very appealing proposition for wealthy citizens. Those funds are then lent into the real economy to businesses at a rate which is slightly higher (say 3% to 4%) but still far lower than the rate at which those business will normally get financings outside of the legacy banking channels.


In addition to the above financial incentives, the Government can add benefits such as:

  • a governmental back up guarantee for the repayment of the principal and interest
  • tax breaks for the wealthy investors if they decide - for instance - to roll over the instrument for an additional number of year
  • tax breaks can be offered also to small businesses and entrepreneurs who benefit from the loans by exempting them from taxation if the profits made are reinvested instead of withdrawn
  • target hoarded money stashed under the bed or in safes and even - why not - black money. Black money is challenged always in the wrong way, through sanctions rather than with incentives.  What needs to be fought and sanctioned are the reasons that allow the creation of black money in the first instance, but once black money has been created, the attempt to uncover it and to sanction it only pushes this money out of reach of the governments, usually off-shore. Be pragmatic, this is always a loss of revenue and resources for the state. Therefore the state should at least profit from that money to foster its growth by channelling black money into real businesses.  Once the black money circulates in the real economy it becomes "white", it generates profits, growth which will be ultimately taxed instead of ending up in a Luxembourg holding which then speculates in the stock market or inflates real estate prices in markets around the world. Offer an incentive to turn black money into white.

Now on to the disincentives and sanctions. While the incentives are fundamental, there must be also governmental pressure on wealthy citizens to show them that going down the "elusion" path will have possibly asymmetric negative consequences. Introduce the sanctions:

  • a wealth tax is a hot topic both in the USA and in many EU countries. It is a delicate issue that I do not want to address here.  The main concern is that any such tax should really target that 1% of super rich and not rather fall again as a burden onto the dying middle class or pensioners and their savings.  And for the purpose of the topic treated in this article a wealth tax should only (i) be used as a disincentive, i.e. to sanction those who do not choose the investment option sponsored by the government and (ii) target only "liquid" wealth sitting in bank accounts and brokerage accounts. Take Italy for instance. Arguably the most savings rich country in Europe. Italian banks sit on Euro 4,3 trillion of savings/liquid wealth. Say that for our purpose the Italian Government declares that accounts holding liquidity and financial instruments above x will be taxed at a x% rate unless at least x% of the funds are invested in the proposed government scheme. What would you rather do? Deliberately choose to try to hide/move this money or rather happily get a 2,5% yield, with a back up guarantee by the state so zero financial risk and an additional tax break for rolling over the instrument at expiration? Is it better to leave this money sitting into some Bank account at zero or negative yield and risk a bail-in if the bank goes belly up? I believe that investors will flock to this investment opportunity from all over.


The Blockchain and the Tokenization

You may object that the blockchain is not needed for such a scheme and that you do not need to tokenize this debt instrument, it can be done easily in the conventional way. True, but blockchain and the tokenization become indispensable if one looks ahead into the future and wants to achieve certain objectives which cannot be achieved with traditional instruments. For instance:

  •  it is possible to disintermediate the legacy banking channels, avoid the commissions and possibly the risk of boycotting of the investment proposed.  The banks will market to their clients only what it is in their interest to sell. They will aggressively market primarily those products which guarantee the fattest commissions and kick-backs.  Unless the State wants to pay fat commissions to the banks it is better to cut them out and spend that money in a big marketing campaign. A State owned digital bank to manage this operation is also necessary. Just like with the Investment Agency, the key word here is State owned.
  • it is possible to enable a direct p2p investment between the citizens and the State Investment Agency.
  • the blockchain brings transparency as to how many funds are received, how many bond-tokens are issued and to whom the funds are lent (the ultimate beneficiaries)
  • the tokenization allows to fractionalize the debt in smaller token-tranches.  A market for those tokens can be easily created and will allow investors to trade the token at a discount to par value if they want to exit the investment.
  • it is possible to program the token (i.e. smart contracts) to enable the automatic execution of ancillary provisions such as the roll-over of the loan to avoid taxation at expiration and the automatic deduction of the taxes due.
  • governments can use this opportunity to jump start the use of their own national crypto-currency with a gradual bottom up approach. For instance, the state owned investment agency issues debt-tokens to the investors and at the same time releases the funds to the beneficiaries in the form of a new national crypto-currency and the businesses can start using this national crypto to pay for their costs and salaries. Immediately this national crypto-currency starts circulating in the real economy without the need for aidrops to the citizens. Its adoption will be both automatic and very gradual from the bottom up.
  • the blockchain brings transparency into the real money supply of any such national crypto-currency.


The data are indisputable. Wealth inequality is the by-product of decades long crony capitalism, financialization of the economy and middle class destruction, all this enabled by pay to play lobbyism and the systematic corruption of politics by highly concentrated wealth. History tells us what consequences can we reasonably expect in similar cases. And if the politicians, the 1%-ers, the elites and their servants think that they can contain the revolts, they are wrong. Look at France, despite the almost universal and coordinated boycott by the mainstream media of the bad news coming from France - while at the same time we are inundated with news anytime a window glass is smashed in Hong Kong or in Russia - the French protests have been going on every week now for 15 months since October 2018, with deaths, amputated hands, blinded eyes and lots of innocent blood spilled on the streets. And they are not diminishing. Rather, they are escalating. Some recent ARTE TV Reports have documented the dramatic effects of disproportionate violence used by warfare armed police against protesters.


Anyway the trend is clear, and this is a wake up call for 99,..% of the citizens in the west. There is not much time left to act before western societies plunge in widespread disorder. Political courage to reverse ineffective and damaging past policies, vision for a new course and strong leadership to implement new visionary policies are badly needed at this dangerous juncture. Unfortunately, this is a very rare merchandise nowadays among the current breed of mediocre western politicians.


#blockchain #bianconiandrea #thinkblocktank #blockchain #tokenization #tokens #wealthgap #whealthinequality #nationalcryptocurrency

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