This Saturday is hot with Elon Musk, Tether and a leprechaun!

Wahaha, lovely people!

Welcome to Coinqraft, the crypto newsletter for smart people who want to know all about crypto and Bitcoin, but don’t have the time or desire to deal with crypto bros and Twitter degens in obscure Telegram channels!

Fortunately I, 🦡 Qrafty the Honey Badger, venture into the wild world of crypto, bringing back precise news, updates, and unique market perspectives daily. Weeeeeelll maybe not on Sunday, as it's the official day for talking to houseplants. They appreciate your attention!

Let's dive in! 🚀🐾

This beautiful Saturday main piece 👇️

Elon Musk says that X will never issue a token. Duh! Ofc not! But what if it’s donated? 😁 Curios? 🦡 👇️ 

Here’s the problem with most coins: they’re securities and don’t pass the Howey Test. That’s one of the hard truths nobody’s talks loudly about in crypto. Every industry has its skeletons. 

What’s the Howey Test? Easy, 4 questions:

(1) an investment of money

(2) in a common enterprise

(3) with the expectation of profit

(4) to be derived from the efforts of others

It’s like in that saying: if it looks like one, acts like one, talks like one… then it definitely is one! Truth is, even with all the mental gymnastics employed to explain away how coins aren’t securities, the hard truth is that about 99% of them kinda are. The rest of 1% have very good narratives on the relation between the coin and the (current) company so it’s a grey area. The only truly decentralized coin is Bitcoin (well… is and was in a way, but that’s a whole ‘nother discussion).

So if Mr. Elon Musk would issue a coin via the X vehicle, it would instantly be a security of X. But if… let’s say if a certain doggy coin and its infrastructure would be donated to Mr. Musk, who would in turn donate it X (or just donate it to X directly), it would be a marriage made in… well, crypto heaven! That’s not a security!

Why isn’t it a security, Qrafty?

Because the coin’s existence doesn’t depend directly (and never has) on X or Mr. Musk. DoggyCoin existed before them, X or Mr. Musk didn’t issue it. Because it is liquid on a lot of exchanges and has a liquidity infrastructure quite well developed before being adopted (see what I did there?) by X, DoggyCoin becomes like oil and big oil producers. Oil isn’t a security of OPEC, nor of Saudi Arabia or Aramco. Just that they built a business (lol) on top of it.

Just because X or Elon Musk has a lot of it, doesn’t mean that he owns it. Just look at Vanguard + State Street + Black Rock who are the largest owner in 88% of top 500 companies in the US. Yes, you read that right. Here’s in a different way: these 3 firms literally own 440 out of the top 500 companies in the US. That doesn’t mean they are the owners of $USD. They just own most of it, that’s all, innit?

There is the same case between X and DoggyCoin if that happens, which makes DoggyCoin suddenly a lot more attractive because if you own it, you suddenly have value coming from a different angle for the coin.

Why would this be useful for X, Qrafty?

Because Qrafty is thinking in terms of the X super app. A super app is actually a service encompassing different types of digital goods/digital services usually not compatible in a single place. Like paying your mortgage, church donation and the girl from the lemonade stand from the same app; it’s not about what you pay with (doge, usd, euro, usdt) it’s where you do it, what digital infrastructure are you using that connects everything.

More importantly, virtually no transaction fees from the processor, since all the heavy lifting is done inside the blockchain withing the X payments ecosystem built on top of said blockchain.

Only the offboarding ramps (banks or card processors) employ fees; aka when people convert their doggycoin to USD or EUR or any other coin. All the transactions in the DoggyCoin ecosystem are made on its blockchain, hence transaction fees are negligible compared to card processing fees or bank fees.

What does Qrafty mean by this?

Let’s say that you have 2000 DoggyCoin in your account. Today, You sub to a creator you like, you buy an NFT, you order some toothpaste and your order a pizza. You do that inside X only with DoggyCoin. If you were using USD and a credit card, each of these transactions would mean $$$ for the banks or the card processing platform.

On the DoggyCoin blockchain, those fees are really really low and actually help the ecosystem; it’s value that is taken back into the ecosystem, not extracted out of it. You still have a lot of DoggyCoin left, you’re not going to change that into $. And this whole ecosystem adds value to DoggyCoin itself.

Since things are moving smoothly, more people join the X platform, not just for the now forgotten bird, but for all the things they can do there, including earning money. Obviously, as the ecosystem grows and things continue to run smoothly this means added value in the system, which puts upside pressure on the DoggyCoin, increasing its price. Add to this the fact that other investors have caught glimpse of that and want to join the action, which further adds upward momentum to the DoggyCoin.

So what happens next, Qrafty?

All this leads to a massive bull run for the DoggyCoin which ends with a blow off top and a short lasted drop in value to about 50%, then a recovery to about 75%-80% and it will stabilize there for a while. As more people join the platform and contribute to developing the ecosystem, DoggyCoin will resume its growth and reach unimagined peaks.

Why would it stabilize and not crash into the abyss of forgetfulness, Qrafty?

Because this little funny coin is actually backed by a real ecosystem which creates demand for it. Over time, all those service providers and businesses joining and doing real, serious business on the platform created trust. Trust is the fundamental elusive energy that binds society, making it the big dysfunctional family that we all love and cherish.

And those people still used the platform throughout the crash panic and used DoggyCoin. Some had paper hands and sold driven by fear, but had to buy back because they need DoggyCoin for their everyday needs. But most stuck with it and went on like nothing happened.

While having a coffee 6 months later, a couple of friends laughed so hard at the attempt by some more traditional interests to crash the DoggyCoin, that one of them farted.

And that, my esteemed reader, is the beautiful story of DoggyCoin and how it became known by the world!

🙃 Before we get to the main news of today, here’s something fun and/or stupid, just to throw some water on our hot brains! You get it… right? We’ve been thinking a lot because we’re smart and all and our brains got hot… and water cools them… right? We’re smart, ok?! 👇️ 

👆️ This is the exact framework through which you should be viewing ALL new (and old) crypto projects and “companies”, with a very few minor exceptions.

A good giggle… priceless. For everything else there’s… laughing hysterically.

Here are the main events of the day

1. Judge throws out class action lawsuit against Tether and Bitfinex before it even started

The case itself is a bit of a comedy and it was weak as hell to begin with. But the impact of a news title reading: “Tether class actioned” is waaay stronger. It looks more like a bluff by the plaintiffs to settle and get money from Tether. And Tether called the bluff and won.

Why is this important, Qrafty?

It’s important because Tether is basically the backbone of the whole crypto environment, from trading to NFT’s to exchanges and wallet. It’s the digital financial materialization of the electric current passing through miners solving complex algos to generate Bitcoin, which is mostly sold in the market for USDT.

Tether is the Federal Reserve of crypto. And USDT is the digital version of the USD. 1 USDT = 1 USDT and life is good.

How’s that possible?

Tether is the issuer of USDT. They created it and the crypto ecosystem adopted it. Tether claims that their total issued amount of USDT is backed by an equal amount of actual greensies, you know, actual United States Dolllaaazzzzzz $$$. And you know, those are backed by a lot more than gold so yeah… can’t beat that pikachu!

So getting back to stupid, Matthew Anderson and Shawn Dolifka, sued Tether and Bitfinex because these people read somewhere (in the NY AG statement, actually) that the USDT that Tether issued weren’t fully backed in the above mentioned reserves, all the time. Meaning there might have been times when Tether didn’t have all the USD to back all the USDT in existence that they issued.

Qrafty wants to remind you that in traditional finance, the system banks use is called fractional reserve banking. This means that banks need to have only 10% of the capital they loan, available for withdrawal. So for $1000 “issued”, your bank needs $100 to be compliant (it varies from country to country and economic conditions, but usually it’s under 20-30%).

And these two people requested that Tether has 100% equivalency in USD. Qrafty hopes this make it more clear now.

So the judge took a look at their complaint and had to take it seriously, ofc. So, naturally… the judge asked:

Judge, reading the complaint with his face lost in the papers: “What proof do you got? How were you damaged financially?”

Plaintiffs: “We don’t really have any proof, we read that somewhere that Tether doesn’t have their coins backed all the time. Sooo… it’s like… how we felt like… you know, we felt sorry and like really bad for the potential investors that could have like you know… been harmed… And we didn’t actually lose any money… but we did start a class action lawsuit. So please trust our words that we were truly sad pandas and were really hurt emotionally by knowing that Tether might not have 100% of backing all the time, mkay? We were really hurt pandas… please punish Tether!”

The Judge, slowly raising her perfect eyebrows at the same time with her head from the papers, ran the reply once again in her mind, to be sure that what she heard was real. Slowly straightening her back, but keeping a dead eye look on the two humans sitting a bit further away from her, she paused calmly. Her look was slightly wtf, with a touch of amusement and a whiff of “this sh* real?“. In a silence so deep that you could hear your hair grow, the judge took a deep breath and declared:

Judge: “Oh, you're a bundle of wild hilarity, but your insight is like a unicorn in disguise – mythical and elusive. Keep shining in your whimsical world! 🦄 Case dismissed!”

That’s how Qrafty imagined it happening. And in a move of brilliance, a couple of days before the court hearing, Tether issued a report made by a third party where is demonstrated that it has excess reserves totaling $3.3 billions. Well that settled it quick.

And that, my friend, is how a stupid trial was dismissed by a level headed judge. Case closed. Bazinga! 💥 

2. After BofA, JP Morgan no longer expects a recession in the US. Yay?

After Bank of America changed their opinion and improved its forecast for the US economy, Mr. Dimon seems to have jumped out of the doom camp of the recession flames and economic woes and into the glamping of the soft landing possible, but recession also possible… camp.

The fact that suits are changing statements doesn’t bother Qrafty at all, as the game of money is a game of propaganda and emotions. What Qrafty noticed is that this happened quite close to the downgrading of the USA by Fitch. 

Coincidence? Of course… there’s no such thing!

It’s almost as if something was going on behind the scenes, some kind of negotiation that went wrong; someone didn’t get it and became more miffed than a cat without catnip! And wham!… “We no more friends, me no like you!!!”

And, you know… a friend in need is a friend indeed. So suddenly the economy is looking better, the rain clouds have dissipated, let’s send some more money to Ukraine and there’s the increased possibility of a soft landing, yaaaaaay!!!!

But the jobs report wasn’t really cute, inflation is still rampant and hopefully things haven’t slowed down during the summer. Qrafty is saying hopefully because we still need to see the full extent of the rate hikes manifested in the economy and Qrafty thinks that hasn’t happened yet. But if all passed Qrafty would be a very very happy badger!

3. The next ETF’s in line to be postponed/rejected are…

Qrafty doesn’t want to be mean… but Qrafty had its heart broken so many times that it cannot stand gathering the pieces of his hopes one more time… so Qrafty bought popcorn! 🍿 It’s also true that the first two are re-files and only BlackRock is proposed (and accepted?) for the first time.

Qrafty thinks there’s a very high chance that the next two ETF’s are either postponed or rejected. But Qrafty paid attention… and this is where the popcorn comes in handy… and noticed a juicy name on that list: Black Rock.

So who’s Black Rock, Qrafty?

Weeeeelll… let’s just talk a bit about a beautiful, happy family, named the Rocks. Powerful name, right? Rock! Depends on you to decide if its the stone or the music…

So this one big happy family papa is named Mr. Black. So he is Mr. BlackRock , the head of the family. His life partner, Van Guard, a more exotic and with a rather fierce royalty ring to it, wouldn’t you agree? These two have a child named Street State.

So BlackRock and VanGuard are top passive fund asset management fund no. 1 and number 2 in the world, and on the third place is their love child, Street State. It’s all one big love since BlackRock owns Street State and Vanguard is the largest shareholder in BlackRock. Beautiful family, isn’t it? Oh, among those 440 companies of the top 500 companies in US, they own majority in some that you might now, like Apple… Chase Bank or Pfizer. Small world, huh? 😎 😈

It’s cool that the planet is round and it spins, so that you don’t get dizzy, right?

Oh one more thing: these lovely 3 firms manage combined assets equivalent with more than three quarters of the US economy. There are only two economies in the world who surpass these 3 firms: the USA and China.

And you know what? There isn’t a bigger economy to compare it with… that’s it. The US is the biggest! And these 3 firms basically could run the finances of a country on their own and it seems like they’re doing a helluva job!

Such a job, that Bloomberg calls them the fourth branch of the government and the Government called them in twice in the past 2 recessions.

Now, the same BlackRock is filing for an ETF. Oh, brace yourself for BlackRock's bitcoin ETF filing – a mere cosmic comedy! They could ask the universe for permission, but wait, they already own it! It's like telling your pet goldfish you're going out for groceries; it's not asking permission, just keeping them in the loop. BlackRock, the ultimate cosmic landlord, drops a friendly note: "Hey world, we're dipping our toes into bitcoin, okay? Cheers!" And everyone nods, knowing resistance is futile when the financial giants play. It's a hilarious game of "We inform, you comply!" 🚀🐋💼 

4. Chinese police investigating Huobi and some Tron employees connected to Huobi.

So… who’s shorting 100x leverage, peeps? Yeah, it’s not really fun and games all the time and people’s lives are endangered. 🙂 Qrafty wanted to highlight this article because Huobi is one of the biggest exchanges in the world.

And it’s always interesting to see how China deals with different companies that become quite strong and wealthy, especially the likes of Alibaba, Tencent, Baidu… Has Huobi reached that level where it needs to be broken into multiple entities so not to threaten the Party?

Isn’t it funny how it’s like some countries decided to crash on crypto pretty much at the same time? Like they allowed the field to become big enough on purpose and release the regulatory dogs on these companies who operated in a regulatory void up until recently. Qrafty just wonders… that’s all.

NO PAPER HANDS ON MOON!

Some other crypto news at a glance!

👉️ I am smarter than all of you! Hacker returns funds to CRV.

👉️ Coinbase has no plans of leaving the US… duh! Where’s he gonna go? Serious?

👉️ WorldCoin had a bug before launch

How 99% in crypto understand staking. It’s close though…

In the quirky land of CryptoTopia, a mischievous leprechaun named Finn had a pot of shiny coins. Instead of hoarding them like a typical leprechaun, Finn had an epiphany: "Why not let these coins make baby coins while I nap?"

So, he devised a magical plan called "staking" where he put his coins to work, like little coin-matchmakers! He sat back, sipping green tea, as his coins mated and multiplied. Soon, Finn's pot overflowed with baby coins, and he chuckled, "Talk about a pot of gold on autopilot!"

All his fellow leprechauns were awestruck, wondering how Finn got so rich while they chased rainbows. Finn just shrugged and winked, "Staking, my friends! It's the laziest path to fortune – like having a personal coin nursery while I live the leprechaun dream!" 🍀💰😴

Trader Whispers

📉🥱 Ever seen a market so boring it could put a stoned sloth to shame? 🦥 Since Friday, it's been trading in a $100 range, and let's just say it's embracing the snooze life like a toddler after a sugar rush. 🍬😴

But fear not, fellow traders! We're here, holding tight, ready to tickle it awake with some serious action soon, since the Bollinger bands are starting to squeeze tighter than a penguin trying to fit into skinny jeans! 🐧👖😂

 🚀💥 Until then, we'll just sit back, watch its adorable slumber, and dream of unicorns dancing on trading charts. 🦄

That’s it for today! Qrafty wishes you to live each moment as if you are listening to the music you love most! Wahaha!