July 05, 2024 | Read Online

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"In for a penny, in for a pound."

USD, oil, bitcoin and baseball cards

Happy holiday weekend dear friends,

I write to you from the airport lounge in Seattle, WA. Byron is out of office today and has yet again foolishly trusted me to impart wisdom worthy of your readership. As always, I'll do my best.

I'm in the Seattle lounge because I recently spent a few days in Calgary, Alberta and then the Pacific Northwest. It was gorgeous, I loved it, I recommend it and yes, given the choice, I would rather run into a bear than a human man on the trail.

The point of traveling is to get away and decompress, but I think we can all agree that's not really how crypto works. Often on my travels, separating from work doesn't make me stop thinking about it…but it does yield an opportunity to think about it differently.

On this particular trip, I had struck up a conversation with a campground neighbor when he asked what I did for a living. When I told him that I was condemned to the hell that is the forefront of technology innovation, he then asked the question that I most frequently get: "This might be a stupid question, but is crypto more like a currency or more like an equity?"

It's not a stupid question.

Typically, I give my boilerplate oversimplified response that would have you readers sending all-caps responses to my DMs but is suitable for someone that asks but doesn't really care. Something like…crypto has rails and supply and demand tendencies like a currency, but with a spicier business structure that makes it more like a speculative Series A investment than just your everyday commodity. Blah, blah, you get it.

But on this occasion, I had just spent a few days doing constant mental math to determine how much everything actually cost because it was denoted in Canadian dollars, and so I paused.

Why isn't money just as complicated as any other investment vehicle? Just because utility requirements dictate that it makes the most sense to have all of your liquid fiat in your hometown currency doesn't mean you have to, and it doesn't make it any less of a choice that you're making.

Every single day I choose to have all of my non-invested fiat currency in US dollars, and every single day the value of my dollars change, not unlike my bitcoin wallet.

The US government prints money with reckless abandon; the value goes down. Higher interest rates work to counterbalance that, fighting inflation with the proposition that dollars are more difficult to borrow, and the value goes up.

A new factor in the market that I think is fascinating is that the success of USDC via Circle makes the value of my dollars go up. Maybe this is just our nation's birthday inspiring unbridled patriotism, but the USD is the world's currency. Now, it's the world's accessible currency and the effects of that are kind of a thrilling proposition.

(I drafted that patriotism line before the debate…consider my patriotism well and truly bridled.)

So direct manipulation changes the value of my money, but what else? How about Big Chicken making the price of eggs go up. Low supply of housing artificially inflating home values. Geopolitics affecting the price of oil.

That's the dollar relative to its own supply, the dollar relative to domestic cost of living…what about the dollar relative to other currencies?

The dollar is really heckin' strong right now. Which means not only did I buy too much in Canada with my 30% off discount, but it's cheaper for US companies to purchase goods abroad, which should in theory make things in the US more affordable.

All of that is to say, while holding US dollars in your bank account is certainly not a risky proposition, it would be equally incorrect to presume that the value is static. Holding US dollars is a proclamation of belief that the value will (though remaining in the short-term inherently volatile) steadily increase over time.

The success of Circle in South American countries confirms this point. Because it is the absence of their ability to make such proclamations for their own currency that drives them to USDC to fill the void.

I live in the US and I use US dollars as my currency and I'm complaining because I know too many things about things. Big deal.

But the global FX market actually is kind of a big deal. In fact, it's the biggest deal of any of the things you can trade globally.

In 2023, daily trading volumes were denoted in quadrillions. That's quadrillions with a "q." That leaves equities in the dust at a sad and pathetic trillions with a "t" and crypto a cutie patootie at billions with a "b."

Now, a lot of that trading volume is international companies netting out different entity positions to support their daily operations, which doesn't really further my point that currencies are investments the same as everything else. But it is relevant, because it speaks to the velocity by which the relative value of any currency can change on supply and demand principles alone.

And there is a lot of volume in trading currencies as an investment. It is someone's full-time job to take large positions in currency portfolios with the mandate that they make big returns. They wear a vest and loafers and they sit right next to the equities guy.

And because it's global and because it's currency, it's changing 24 hours a day, seven days a week…sound familiar?

I'm not really suggesting that you diversify your fiat currency portfolio (not that I would ever give investment advice). But I wanted company here on the brain pretzel island I created for myself when I realized that the value of every single thing in the entire world is stated in USD. Everything down to the baseball card collection in my parent's garage.

Isn't it kind of crazy that the value of USD itself is a fickle commodity the same as oil, or bitcoin or baseball cards?

With that, friends, here's to hoping the digits in your bank account stay as consistent as the digits on your hands this Fourth of July weekend.

— Alex Gray

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elvis @omarsar0

This is one of the coolest ideas for scaling synthetic data that I've come across.

Proposes 1 billion diverse personas to facilitate the creation of diverse synthetic data for different scenarios.

It's easy to generate synthetic data but hard to scale up its diversity which is… x.com/i/web/status/1…

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Eric Balchunas @EricBalchunas

The top 10 biggest stocks in the S&P 500 contributed to 77% of the index's total return in H1. That is the second highest ever reading of that number. Only time its been higher was in (gulp) 2007... via @Todd_Sohn

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Imran Khan @lmrankhan

Speculation is the only gateway to mass adoption

Most are fading memecoins and speculative products, because it deviates from the original purpose of crypto. Satoshi built Bitcoin as an alternative to the current regime of controlled monetary policy, aiming to provide a… x.com/i/web/status/1…

5:27 AM • Jul 2, 2024

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