Welcome to your Sunday digest…my breakdown of the things we’re thinking about and talking about in the Global Intelligence world.
First up this week…the crypto revolution is almost here.
For some time, I’ve been preaching that we’re on the cusp of a new era of the internet based on crypto technology. This era is called Web3.
Web1 was the first internet…the dial-up web of Ask Jeeves and AOL Online. Web2 is the current age of the internet, dominated as it is by big data firms like Google, Amazon, Facebook, et al. But now we are moving into Web3…a new decentralized era built on blockchain technology, the backbone of crypto.
Already, decentralized crypto services are starting to appear…
In just the past week, a new blockchain called DeSo launched the first decentralized on-chain end-to-end encrypted group chat. Basically, this is a network that can host chat services like WhatsApp, but in a way that is completely secure, completely decentralized, and completely unhackable.
This approach offers big advantages.
WhatsApp, as you likely know, is owned by Facebook and you have to provide personal data like your phone number to sign up. It’s the same with messaging services like Signal that claim to offer privacy. Even they require that you link your account to a phone number, which means they can’t be used in places like China that have high levels of censorship.
With a service on DeSo, however, you would not have to provide any personal information of any kind to set up and use a messaging app. And best of all, the entire network is decentralized, meaning it’s spread out across the globe. That means as long as the intended recipient has internet, nothing can stop a message reaching them, even if they’re in China or North Korea.
The corporate world knows this is the future. DeSo has already raised $200 million in funding from the likes of Coinbase.
To be clear, DeSo isn’t a messaging service. It’s the blockchain network that these services will run on. But already, an app called Diamond is planning to roll out a messaging service on DeSo within the coming weeks.
This is just the beginning.
Before long, DeSo or blockchains like it will be hosting all manner of apps, spanning social media to gaming, ecommerce, and more. Web3 is almost here.
Decentralized, unhackable services beyond the control of governments and tired, centralized corporations…this is the crypto future. Longer term, it means today’s centralized social media apps like Facebook, Twitter, WhatsApp, and others are the dinosaurs of tomorrow…there’s a very good chance they won’t exist.
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Next up…deficits.
This week, we learned that in the just-ended fiscal year, the federal budget deficit fell by half.
Good news, right?
Wrong.
The deficit declined from $2.8 trillion in fiscal year 2021 to $1.4 trillion in fiscal year 2022…meaning the government spent $1.4 trillion more than it claimed in revenues. The fall was due to the termination of certain COVID stimulus programs.
Call me crazy, but it’s pretty insane for the government to overspend by $1.4 trillion—trillion!—in a single fiscal year. This is particularly true as we’re headed for an economic slowdown, and the Federal Reserve is raising interest rates which will increase government borrowing costs.
Trillion-dollar deficits are in no way sustainable. The vocal proponents of “deficits don’t matter” and “modern monetary theory” are going to find out that their preachings over the last couple of decades were, at best, economically naïve and at worst the proximate cause of the disaster to come.
This is not going to end well…
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Finally this week, a gold treasure trove…
A few days ago, I came across a story about a British couple who discovered more than 260 ancient gold coins under their kitchen floor.
The collection was hidden inside a pot and dates back to the 17th and 18th centuries. It originally belonged to a Fernley-Maisters, a wealthy family involved in Baltic trading.
What I find especially interesting about this story is the final sale price of the collection.
The coins were predicted to fetch up to £250,000 at auction, but in the end, were sold to dozens of buyers in individual lots for a total price of £754,000. The price jump came after the collection attracted interest from as far afield as the U.S., Australia, China, and Japan. Spink & Son, the auctioneers who sold the coins, called the final sale price “absolutely extraordinary.”
To me, this story is further evidence of the growing interest in collectibles as this new inflationary era takes hold.
Collectibles have a long history of performing well in periods of high inflation, as people look to move out of cash and into hard assets. With inflation set to remain high for years to come, this pattern will play out again.
You can read about three types of collectibles I expect to do well in the October issue of our monthly Global Intelligence Letter.
That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, reach out through the contact form on the Global Intelligence website.
Enjoy the rest of your Sunday.
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