***Qrafty smiling the biggest smile*** WaHaHa, crypto afficionado! I am Qrafty - the crypto lovin’ honey badger 🦡 !

Welcome to Coinqraft – the daily crypto newsletter for busy but curious people who don’t have time for the crypto mayhem!🌟

🦡   Qrafty has fresh bits from the crypto jungle, so let’s dive in: 📰 🌟

1. VISA’s New Pilot For XBorder Payments On Solana

2. Tether Has $72 Billion Exposure To US Debt

3. Chase, BlackRock And Ukraine Make A New Bank

Bonus: Today you learn about payments!

Today’s Story

How a payment is settled

Hey there, sexy! Lookie here, today we are talking about what a payment is!

A payment has two elements: payment info + settlement.

The payment info is usually done via SWIFT: X from USA sends 100$ to Y in Italy. Y receives 100 EURO. So it’s -100$ in X’s bank account and +100 EURO in Y’s bank account. That’s the payment info part: digits in digital ledgers. Think of SWIFT as a WhatsApp for banks with human input. But without the emojis or stickers… no fun, just hard cold boring digits.

Human input = User error?

Yes, SWIFT is really old… school, let’s say. And has been like that since its inception in 1973, when 239 financial institutions decided to form this big cartel… Qrafty means club!

But almost all banks use it. Think of SWIFT as the OG financial social network for banks! OG FinSoc, yeah! There isn’t really anything close to it. Just SEPA is another club where a lonely banker can go, but it’s really not even remotely the same access to financial institutions worldwide.

If you are a bank and you are left out of the SWIFT system, you basically can’t communicate financially with most other banks of the world. You can… like… send a cute meme or @ them on Twitter (or X whatever), but you can’t do business with them!

So SWIFT is like a bank messaging gatekeeper?

You’re a smart one, aren’t you? Yep, it’s a big network, a club of 239 banks that got together in 1973 in Brussels and decided that the Telex was faulty and prone to errors. Telex was the previous “software“ used to communicate between banks, you see… Since then, in 40 years, this club has grown to over 11,000 banks and financial institutions! Talk about organic growth…

That’s why all banks have a… wait for it… SWIFT code! That’s why it was a big deal that 7 Russian banks have been eliminated from SWIFT by US, EU, CA and UK. These banks can’t do business in these countries anymore.

Now, what’s happening in the background is that the two banks have to settle this USD/EUR difference between themselves, to maintain the balance of their capital reserves. They also use corresponding banks to settle that capital.

What does that mean, Qrafty?

It means that USA bank doesn’t send the money directly to EURO bank. They use corresponding banks to do that.

These offer settlement, funds transfer, check clearing, wire transfers and currency exchange. It’s like an external service for small banks to access for their customers.

For their services, corresponding banks require that banks hold nostro and vostro accounts with them. This way, domestic banks have access to different markets around the world without having to open up branches themselves.

But this also means trapped capital. Nostro and vostro accounts is a fancy way of saying that banks need to keep accounts in different currencies at the corresponding banks, in order to have access to services for that pair.

So a bank might have millions stuck in currencies from pairs that are requested by their customers for cross border transactions, aside from the most liquid corridors like USD/EUR, EUR/GBP. For example, one such illiquid corridor might be JPY(Japanese yen)/MXN(Mexican peso).

There might be other intermediaries such as a clearing house, that makes sure each party honors their part or different liquidity mechanisms, but let’s not get into those.

The main idea is that banks deal with huge volumes of different currencies and have to hold different balances in each of them, which is basically stuck capital, mkay?

Qrafty… this is a lot… where does crypto come in here?

Now that you know about the friction and digital “hands“ a payment (information+settlement) passes through, this is where crypto comes in: it streamlines operations and eliminates a lot of the friction and risk along the way.

Especially for cross border transactions, the information can be passed securely on the blockchain and settlement can be done in an instant, via the use of a CBDC/stablecoin/anything that can hold a $ peg!

So here is how crypto and blockchain help with cross border transactions: instead of Bank A holding 5 different vostro/nostro accounts, they could just hold a CBDC/stablecoin and balance the accounts whenever they need. Instead of 10 currencies riddled with FX rate risk, regulations and politics, hold just one and be done! Hey, Qrafty made a rhyme!

🙃 Qrafty hopes that today’s main story brought brave badgery value to you! Now it’s time for a break, you deserve a bit of fun! 😇 👇️

Main thought forms of the day 👇️ 

1. Visa expands with Solana

It’s the perfect mechanism for VISA for their crypto offering, because they have the infrastructure already built in. They just need to test it in a blockchain based environment.

As per their statement, they already did: “It's still early days, but Visa has already settled millions of dollars of USDC over the Ethereum and Solana blockchains between our clients. We are committed to continuing to innovate around how we move money and providing our clients modern options for settlement“

VISA already started experiments via Crypto.com in 2021 to test stablecoin settlement in Australia, on the Ethereum network.

Now, VISA will be looking at Solana to expand its stablecoin settlement offering via two payment service providers, Worldcoin and Nuvei. These two companies work with a very different range of merchants offering card acceptance and this opens up the option for them to hold and settle in USDC.

What does that mean, Qrafty?

It means that these businesses can get legal exposure to crypto via USDC and VISA. This is quite a big step for the whole crypto industry. And also this will create demand for USDC, because merchants will accepts payments in USDC for their products/services. This is the beginning of something big and VISA is in the perfect spot!

2. Bybit Introduces Tradegpt

Congratulations, you’re training your enemy!

Qrafty, did you eat some funny mushrooms?

Hey, that only happened once! SO, moving on… Bybit just announced that they are launching their trading assistant, TrageGPT.

From this, Qrafty understands that they are basically building a bot that is plugged into the market (theoretically) and is supposed to give you winning trades, right?

Meanwhile, exchanges are using LLMs to train them on your trading data so that their algorithms are better tuned in trading against you. Because, in case you didn’t know, that’s what the exchange does: it takes your order (long/short) and it places the opposite order (short/long).

So… as long as these two bots belong to the same company, Qrafty is asking if there is a chance that there might be a bias in these LLMs? The tools are built by the company you are trading against? No bias most likely, right?

3. Awww… aren’t they cute?

Helping out war victims from the bottom of their hearts… JP Morgan and BlackRock are going to help the Ukrainian government to create a new recovery bank to raise hundreds of billions to rebuild Ukraine.

Qrafty asks himself… why is there a new bank needed for this? Can’t they just use existing banks and financial infrastructure?

A memory whispers that in 1672, King Charles II just waived off the goldsmiths who borrowed him a LOT of gold to sustain his really extravagant lifestyle. Like, he literally wrote a letter and stated:

This move crashed the entire industry of lending owned by goldsmiths and their confidence in lending to kings was shattered. Yeah, goldsmiths were the OG lending sharks of the time, dealing with kings and popes! They charged high rates, 20%-30$!

But karma is a beetch and 21 years later, in 1693, William II needed the dough to sustain the war effort with France. So, after being turned down by all the goldsmiths, he created “The Governor and the Company of the Bank of England” funded with the capital raised in 11 days by “1,268 members of the public from all walks of life”

Qrafty highly doubts the “all walks of life part“… it rather looks like the best performing crowdfunding campaign in history! It’s now called the Bank of England!

So maybe we can take from here the idea of national level debt and a financial private vehicle meant to receive payments from government and official state institutions and maybe even have those state bodies transact through them. Sounds interesting, huh?

4. Tether trusts US debt, unlike China

Tether is a major buyer of US Treasury bills, with an exposure of $72.5 billion globally. This puts them on the 22nd spot, ahead countries like Spain, Australia or even UAE. Kinda wow, isn’t it?

This means that Tether trusts the positive evolution of US debt. It’s also a way for them to play nice on a political level. The day of regulatory scrutiny (maybe audit?) will come for Tether, and they are making moves to make sure that the impact is as soft as possible for them.

China, on the other hand, isn’t really on the trusty side and has been dumping US debt. Which is unexpected for most, because the general consensus among analysts was that China wouldn’t sell because it would hurt their economy… as in wouldn’t cut their own leg to get out of the trap. But hey, it looks like China is selling bigtime and buying gold!

Hey hey 🙃 Qrafty hopes you are enjoying the experience here and would like to regularly get Qrafty’s letters!

If so, please click on the button below. Qrafty is really really grateful to have you here, so thank you!

Grin, because tomorrow's masterclass in chaos is just around the corner!

Qrafty’s thought of the day

Other stories of this beautiful day

UK woman loses life savings over loverboy (or lovergirl) method

Someone unfortunately lost $200,000 to an online romantic relationship scam. Unfortunately, there are people who prey on other people’s desire for love or romance in they life… and sometimes people tend to be too trustful, as they only wish to see the good in others.

It’s also astounding how someone can send this much money to a person met online… but love has mysterious ways, doesn’t it? So do fraudsters! So be careful!

VC dumps 9m worth of coins, price drops 25%

Even VC’s are rugging now, but it’s called “removing liquidity“, mkay? Nima Capital, a venture capital firm, has recently offloaded nine million $SYN tokens, leading to a 25% decrease in the token's price today.

Initially, they received these nine million $SYN tokens for providing liquidity with the Synapse protocol. So it looks like they removed the liquidity and that was it!

Goldman Sachs says 15% recession

Qrafty says, as always, don’t trust bankers! Or most analysts (including Qrafty)! Just listen, take the information, think about it and see what conclusion you come up with. Qrafty is no financial analyst, just a crypto badger. The news is that Goldman Sachs predicts that if the inflation improves, the chances of a recession go down to 15%, from a previous 20%. Bloomberg says 60%. You do the math, but this doesn’t work by adding them up and splitting them in half…

FED wants people out of jobs and homes?

The combination of high rates and close to no new homes inventory has led to a situation where the amount of new homes bought is stalling badly. There is a 45% drop in home purchases. This is bigger than 2008! In 2023, home sales are down 31%.

Mortgage to income ratio is about 40%. In August, the unemployment rate jumped from 3.5% to 3.8%.

The FED wants to see a higher unemployment rate to push down inflation. More people without jobs means more credit card delinquency and failed mortgage payments → people lose homes.

Coin Listings/Delistings - September 6, 2023

• Gate.io lists QANplatform (@QANplatform) with QANX/USDT pair at 09:00 AM (UTC).

• Bitbank lists RNDR (@rendernetwork) with RNDR/JPY pair.

• Bitkub lists Moonriver (@moonrivernw) at 1:00 PM (GMT+7).

Market Whispers

Qrafty has no idea how to start this "market whispers"… Yeah, I know, I always find ways to bla bla around Bitcoin's chart but today... every pump was sold and every dump was bought.

Even if today's range looks big on the chart due to many wick candles, up and down, it was really between 25915$ and 25560$.

Conclusion? The daily candle should close above $25,800 to give a little spark of green light in this red sea of candles.

Qrafty ends channeling his inner trader.

Today is INTERNATIONAL CHARITY DAY!

Regardless of how much you have or think you don’t have, it’s always a good idea to help those next to you. It can be a smile. Or a small form of appreciation for someone. It can be a small gift. Whatever it is, do it with love!

That’s all from Qrafty 🦡 for today! Qrafty thanks you and wishes you to live each moment as if you are listening to the music you love most!

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