Wally F

The credit default swap market is default insurance on any reference asset. It is like an insurance policy that you purchase to protect yourself if the reference asset defaults. Purchasing the insurance costs you a certain premium each year, much like an insurance premium for house insurance, fire insurance, etc. There's default insurance where you pay a certain premium that is set by the market and by the riskiness of the borrower. For example, Canada is a sovereign borrower and the insurance market for Canada is charging 37 basis points per year over a 5-year term to ensure Canada against default. This means the purchaser has to pay $37000 a year to ensure about $10 million worth of debt. The seller of the insurance collects the premium; however, they are on the hook for any payout in the event of default.

I consider myself lucky to have a healthy skepticism of authority in general, but I have also read a great variety of books that have sharpened my skeptical mind. I would recommend “The Law'' written by Frederic Bastiat. It's an approximately 60-page book and is a good simple short classic. Bastiat thoroughly decimates the social theories supporting government plunder, and it is very relevant to what we are experiencing in the US today. For example, the US government announced they would print 900 billion dollars and they will send everyone a 600-dollar check for financial aid.

Well, technology is deflationary. Technology provides so much efficiency that it creates deflation. If you look at your cellphone or just about anything technology-driven that you use, you get more for less on an exponential scale. That technology is moving into every single part of our world. So, you would expect prices to be falling as a natural by-product of that while saving our time. We should be getting more for less and have our time expanding, but it doesn't feel like that's happening.

IntoTheBlock (ITB) is the result of a macro thesis formulated by our founder and CEO Jesus Rodriguez. Jesus has a long career in technology and finance. Having been a distinguished engineer at Microsoft and later built quant systems for major hedge funds on Wall Street, he has a deep understanding of the intersection of financial markets and tech. His main thesis was (and still is) that crypto products should be intelligent-first products, that is, powered by artificial intelligence. If traditional financial markets are evolving towards AI-first products, why shouldn’t crypto, the first natively digital asset class, do the same?

All of us were born into a society that has its norms around how you express value. The final distillation of those norms is our currency. As we grow up, we're conditioned to assess the relative price of things like for example a gallon of milk, groceries, a car, a home, etc. in our native currency. We take that expression or conditioning for granted and don't think that there's anything else to it until occasionally we get a glimpse of it when we go to another country. When you spend some time there, you struggle to understand whether what you're paying for is really worth it because the value proposition isn’t intuitively clear. And, it's that uncomfortableness that offers a little glimpse into what I think is really going on. I wasn't as interested in Bitcoin because I didn't see it as relevant for me being in the United States as we have a very mature payment structure. Those problems are largely solved for us, so we don't often find a need for entering into another money network. It wasn’t until much later that I started exploring the monetary system that it became clear what the latest narrative of Bitcoin was attempting to solve for, namely the unaccountability of central banking on our collective purchasing power.

With respect to consumer price inflation, there is a question of people's demand for money. People do demand more money because they want to hoard more money when they are nervous about their prospects. Amidst a pandemic, when there's a good chance you're going to lose, it's more likely you're going to hold on to your cash because you can't be as confident about collecting a paycheck. However, if the money you are holding is losing value, people start to realize they are losing purchasing power so they will cease to want to hold it at some point. Because humans are herd animals and pay attention to what their neighbors are doing, they will replicate their neighbor’s actions. So, when the government creates massive amounts of money, and suddenly people stop hoarding that money and try to dump it at the same time, it will be a problem the government cannot clean up.

NFT, Non-Fungible Token, is a token standard. The main feature of an NFT is that it has a unique ID. If you mint an NFT, you will have a unique ID for a given set of data. You will be able to see specifically who is using the specific token, and where it is. If I sent it to you, you will also be able to track that it has been transferred. Thus, the unique ID of the NFT is why it is interesting for art and the art world. NFT’s provide provenance, meaning it makes it possible to track its history. You can see who has ever owned the art piece, when it was created, is it the real piece or not, etc. By confirming that, we can reduce the amount of forgery which is pretty prevalent in art.