Cryptos, crime and cannabis

Friday, 9 August 2019
Adelaide, Australia
By Bernd Struben

As your President, one would think that I would be thrilled with our very strong dollar. I am not!

Donald Trump, on Twitter overnight

You have to wonder what King Alyattes would make of Trump’s aspirations for a weaker US dollar.

Alyattes, if you’re not familiar, ruled Lydia some 2,600 years ago.

Lydia was an Iron Age kingdom, in what’s now western Turkey. And King Alyattes is credited with minting the world’s first official currency.

The coins, Investopedia tells us, were made from a naturally occurring silver-gold mixture called electrum. They were stamped with various pictures which determined their value.

You can see how this was a watershed moment for commerce.

No longer did you need to tuck two chickens under your arm before heading to market to barter for grain or wine. Though you almost certainly still had to haggle with the vendors over just how much your lion-stamped coin would get you.

This also made me wonder when money was first utilised to buy drugs.

Cannabis has been used for some 4,700 years…or more. So it would have been around when Alyattes’ first coins hit the streets of Sardis, the capital of Lydia.

Were Lydian teenagers the first to ever make a cash for drugs transaction? Or maybe it was their grandparents, seeking the medicinal benefits of the plant’s CBD.

We’ll never know. But it’s likely the first money based drug deals happened thousands of years ago.

Of course, the term ‘drug deal’ wouldn’t have carried any stigma then. The rulers of the day had more to worry about than some of their citizens getting ‘high’. You could spend your lion and snake coins as you saw fit.

More, after a look at the markets.

Markets

Trade war on…trade war off…

The US trade dispute with China continues to dominate investor sentiment. An apparent easing in tensions and moves by the People’s Bank of China to stabilise the yuan saw global markets close strongly higher.

But tomorrow (overnight our time) could again be a different story. Trump has sidelined Chinese telco giant Huawei from doing business with any US companies after China stopped importing US agricultural goods. Futures in US markets have sunk into the red.

As for yesterday (again overnight our time), the Dow Jones Industrial Average closed up 371.12 points, or 1.43%.

The S&P 500 closed up 54.11 points, or 1.88%.

And the tech sector came roaring back, with the NASDAQ closing up 2.24%.

In Europe the Euro Stoxx 50 index finished up 65.39 points, or 1.98%. Meanwhile, the FTSE 100 gained 1.21%, and Germany’s DAX closed up 195.26 points, or 1.68%.

In Asian markets Japan’s Nikkei 225 is up 152.40 points, or 0.74%. China’s CSI 300 is down 0.27%.

In Australia, the S&P/ASX 200 is up 13.75 points, or 0.21%.

West Texas Intermediate crude oil is US$52.84 per barrel. Brent crude is US$57.70 per barrel.

Turning to gold, the yellow metal is trading for US$1,504.31 (AU$2,214.17) per troy ounce. Silver is US$17.03 (AU$25.07) per troy ounce.

In the world of cryptocurrencies, one bitcoin is worth US$11,763.24.

The Aussie dollar is worth 67.94 US cents.

No bank account needed

In 600 BC you might have had the freedom to buy what you wanted with your coins.

But we know that’s not the case today.

More nations are waking up to the reality that legalising cannabis causes less harm than locking users and dealers away. Yet the global war on drugs is still running on full steam.

Cash — and increasingly cryptocurrencies — are under regulators’ microscopes as they try to disrupt the multi-billion dollar global black market.

Cryptocurrencies’ naysayers like little more than to tie bitcoin or other cryptos to criminal activities. Part of that simply reflects their desire to stamp out cryptos. But part of that is true.

From CoinDesk:

A California couple has pleaded guilty to a series of crimes related to darknet cryptocurrency deals, according to a Department of Justice filing on August 6.

Jabari and Saudia Monson are required to forfeit an undisclosed sum of bitcoin and bitcoin cash they acquired from selling illicit goods on Dream Market, a prominent anonymized marketplace.

Between July 2018 through January 2019 the couple operated vendor accounts named “Best Buy Meds,” “Trap Mart” and “House Of Dank” to distribute cocaine, cocaine base, methamphetamine, and marijuana.’

Of course, cash transactions still dwarf cryptos for illegal drug deals.

And in the US, cash transactions are about all you can use even for legal drug deals. Like medicinal marijuana.

To date 11 states plus Washington DC have legalised the recreational and medicinal use of cannabis. In 22 other states its medicinal use is legal.

Yet marijuana remains — for now — illegal on a federal level. This poses a growing problem for companies in this sector. The biggest issue stems from the fact that banks are currently not allowed to do business with cannabis growers or vendors. Leaving them literally holding bags of cash.

Now in Arizona, where medicinal cannabis is legal, a new cryptocurrency could form part of the solution…rather than the problem. The startup stablecoin, Alta, is targeting Arizona’s cannabis industry.

Also from CoinDesk:

According to Arizona’s Attorney Generals Office, startup Alta was accepted into the office’s fintech program. The seventh startup to join to date, Alta is looking to address the banking needs of a $350 million statewide industry…

In a statement, co-founder and CEO of Alta Jesse Forrest pointed out the specificity of the product due to legal considerations:

“We help solve the banking challenges facing medical marijuana companies and their vendors. ALTA uses blockchain and geofencing technology to protect clients’ digital payments and transfers. Other digital payment companies require a bank account. We provide all the financial services medical marijuana companies need without requiring a bank account.”

Alta’s stablecoin can be purchased via its platform. By purchasing ALTA coins, marijuana tainted transactions become legal sales providing an off-ramp for profits. The startup offers cash pickups in armoured vehicles with instant transfers into dollars available.

A stablecoin, as the name implies, is meant to hold a fairly steady value. Some are pegged to fiat currencies. Others to gold or other industrial metals.

Alta will be pegged to the US dollar…not to the price of a gram of marijuana.

Meaning if Trump has his way and the greenback starts to slide, you’ll need more Altas to legitimise your ‘marijuana tainted transactions’.

Whatever the eventual value of the US dollar, though, cryptos are here to stay.

Not all of them, of course. But governments, almost by definition, are there to watch over your shoulder and obstruct free market transactions. Not to mention manipulate the value of their own state issued currencies. And until that changes — don’t hold your breath — the demand for decentralised currencies is only going to grow.

It’s part of what Sam Volkering calls the ‘crypto revolution’. In fact, he wrote a book by the same name.

Sam’s Crypto Revolution provides you with a step-by-step guide to understanding cryptos. And it gives you everything you need to potentially profit from the rise digital currencies.

You can find out more — and secure your discounted copy — right here.

That’s a wrap for today. I’ll be back with you on Monday.

Cheers,
Bernd