What The 1% Know About Stablecoins That You Don’t

Public blockchains are more transparent than any legacy financial system ever built. Every movement of value is

built. Every movement of value is recorded on a ledger that anyone can in inspect. Chain analytics firms are

inspect. Chain analytics firms are already exceptional at assisting law enforcement with linking onchain activity to off-chain identities. In

other words, pushed in the wrong direction, crypto could become the most powerful financial surveillance architecture ever invented. All right.

So, I've got to get real with y'all for a second because as I've mentioned in the past, although I do believe that crypto and blockchain

can make the world a better place by creating more efficient, more connected and inclusive financial systems. I do

also believe that we are quietly opening the door to something very dark here.

And when I say something dark, I mean a total digital surveillance state that makes dystopian novels look cute.

So right now we're being told that crypto and stable coins are all about faster payments, cheaper crossber transactions, financial inclusion, and building a monetary system that no one

can control. And while yeah, I mean some

can control. And while yeah, I mean some of that stuff is true, it's definitely not the whole truth of what's going on here. Because the thing is is that right

here. Because the thing is is that right now we're living in a world where data is pretty much currency.

And our currency is also being turned into data. And all of this data is being

into data. And all of this data is being aggregated in one place or in a few places. And all of that data is really

places. And all of that data is really power.

So in particular, like what are these stable coin things going on and why is what's happening with stable coins so important? So a stable coin is a type of

important? So a stable coin is a type of digital asset that is designed to maintain a stable value by pegging its worth to some sort of reserve asset such

as a fiat currency like the US dollar.

It could also be a commodity like gold or a basket of assets. And so the point of this is that the stability of the asset addresses the inherent volatility

found in other forms of cryptocurrency.

So this makes stable coins more suitable for everyday transactions and use within financial services. And so there's three

financial services. And so there's three major types of stable coins. You have

custodial stable coins, algorithmic stable coins, and then cryptobacked.

Now, the ones that you hear about most often like USDC and Tether are custodial stable coins, meaning that you're trusting the issuer of that stable coin to have assets that back the stable coin

that they are giving to you. So, for

instance, uh stable coins are supposed to be backed one to one. So if you take your real dollars, right, your normal traditional dollars, and you use them to buy a stable coin, and then that stable

coin is going to be issued to you by Tether, for instance, and then Tether's going to take that dollar that you gave them, and they're going to go and buy US treasuries, right, as like the equivalent to what they could do uh to

have that cash backing your stable coin one to one. So now the major benefit to you in this situation is that you get to use the stable coin on a blockchainbased system which can make transferring money

to anywhere in the world uh almost instant and also something that you can do for very low fees. And for someone in a country outside the US, this is also a way to essentially get access to US

treasuries and the stability of the US dollar relative to other currencies like the Venezuelan peso, which for instance has lost 98% of its value versus the dollar since 2009.

So this is great, right? You've got a new financial technology that's making the payment system in global finance more efficient. But let's be honest

more efficient. But let's be honest about what's actually happening, right?

because stable coins didn't suddenly become a top US policy priority because banks wanted and needed cheaper remittances. No, this became a priority

remittances. No, this became a priority because the dollar is losing its global dominance. Okay? And the financial

dominance. Okay? And the financial system is getting ready to crumble under debt. And so these Bitcoin things and

debt. And so these Bitcoin things and this cryptocurrency poses a major threat to the US dollar. And the US government has started to realize something crucial

about all of this, which is that if the future of money is internet native, right? Then the only way to maintain the

right? Then the only way to maintain the US dollar's relevance is going to be to bring that dollar to the internet. And

in fact, it might even make sense to push these digital technologies as a way to prop up the use of the US dollar as the demand for it in the traditional

realm continues to fade. And so maybe that's why stable coin legislation and the Genius Act was fasttracked well before the broader crypto regulations

such as the Clarity Act is in place.

It's almost as if this Genius Act is giving the US dollar a chance to compete before we get the rest of the system in place. And you know so none of this was

place. And you know so none of this was really accidental. This was all

really accidental. This was all strategic, right? The idea is, you know,

strategic, right? The idea is, you know, position the US dollar stable coins as the future of internet native money and have them be backed onetoone with US treasuries, right? To prop up the

treasuries, right? To prop up the short-term debt markets and maintain the dollar as the most powerful currency in the world.

>> As President Trump has directed, uh we are going to keep the US the dominant reserve currency in the world and we will use stable coins to do that.

>> Those are the words of Treasury Secretary Scott Besson himself. And this

is a real thing by the way, right?

because stable coin issuers are the seventh largest buyers of US debt compared to other sovereign nations. But

this is still only on the surface of what's really going on here. To

understand what stable coins and internet native money mean for the world that we're moving into and the things that no one is going to tell you about all of this, we really have to look at

the history of the internet itself and the origins of this whole blockchain Bitcoin thing. Because the internet was

Bitcoin thing. Because the internet was never purely libertarian or anti-state.

Okay. The internet was born out of the cold war. And the US Department of

cold war. And the US Department of Defense funded a project called ARPANET.

And the goal of this network was resilience, not privacy. Okay? It was a network that could survive a nuclear attack. And at this point, no one was

attack. And at this point, no one was thinking about surveillance or anything like that because there was no one using this thing. And there was nothing to

this thing. And there was nothing to surveil. And then the internet went

surveil. And then the internet went commercial and things changed from there, right? The internet went from

there, right? The internet went from being this decentralized network of researchers and professors to really large companies and a few large

companies with massive servers and these gigantic databases that hold the entire world's data. And so there's obviously

world's data. And so there's obviously the information that people are opting into sharing like giving up their name and their email address when they're signing up for some service. But then

there's also the metadata like your IP address, your location and much more that we started to give up when we started using these large platforms. And then fast forward a little bit right to

2001 and things took a massive turn.

Okay? Cuz after 9/11, governments decided that they failed because they weren't able to connect the dots, right?

So the US was like the solution to things like this is to collect everything and then analyze the data later. So the key things that came after

later. So the key things that came after 911 was the USA Patriot Act, right? The

Uniting and Strengthening America by providing appropriate tools required to intercept and obstruct terrorism act.

And so once again, shout out to these Congress members for their creativity.

And this the Patriot Act vastly expanded government surveillance powers for law enforcement and intelligence agencies to quote prevent terrorism, right? And this

allowed for much easier wiretapping, data sharing, and sneak and peak searches while also increasing the scrutiny of financial transactions to combat moneyaundering. And we're coming

combat moneyaundering. And we're coming back to that later. So, banks,

telecommunications platforms, all these tech platforms, and data brokers were quietly turned into extensions of the national security state. And so, before the Patriot Act, right, companies

collected data for business purposes.

and law enforcement if they needed this data, they needed specific warrants to access it. And so data sharing was was

access it. And so data sharing was was slow and much more targeted. But now

after the Patriot Act, companies were required to retain, monitor, and hand over data as necessary. And data

collection shifted from being optional to systemic and proactive. And so the government no longer needed to collect everything itself. It basically just

everything itself. It basically just outsourced surveillance to these private companies. So you had mass metadata

companies. So you had mass metadata collection and cooperation between intelligence agencies and private companies becoming the absolute standard. So once again the US

standard. So once again the US government outsourced its surveillance capabilities to private organizations.

And then fast forward a little bit right you got the social media era. Facebook,

Google, Twitter, YouTube introduced something a little bit also unprecedented which was people also just willingly documenting their entire lives. Here I am sitting here on YouTube

lives. Here I am sitting here on YouTube talking to you guys. And so when you have this voluntary sharing of everything, these social media platforms build businesses off of harvesting this

data and other metadata by understanding every single little thing that they can about us. From how long we scroll before

about us. From how long we scroll before we take a sip of water to how often we talk to our friends or family. And this

isn't even talking about the normalization of using biometric data.

Remember when Apple introduced Touch ID and Face ID? Anyways, but before even that happened, we had Edward Snowden and he came out and revealed how all of this was actually going down, right? So, he

revealed not that surveillance existed, but how total it had become and how normalized corporate state cooperation was. And so, he showed that government

was. And so, he showed that government had direct access to tech company data and that they were doing bulk collection of data and not targeted warrants to collect data. And so, people got upset,

collect data. And so, people got upset, right? But then behavior didn't change.

right? But then behavior didn't change.

These platforms continued to grow. They

got bigger than ever. And now we're living in a whole another level of this because we've got companies like Palunteer, right, that have population level modeling that they're able to do and Andrew uh with their autonomous

defense systems and you know biometric identification data from clear view AI and this concept of digital ID which world leaders like the UK prime minister Kier Starmer are telling us will be

necessary to participate in the economy and that is why today I am announcing this government will make a new freeof charge digital ID

mandatory for the right to work by the end of this parliament.

Let me spell that out. You will not be able to work in the United Kingdom if you do not have digital ID. It's as

simple as that. And so the state no longer just observes, it models, it simulates, it preemps. And this is not sci-fi anymore. This is like real deal

sci-fi anymore. This is like real deal logistics and threat detection that is just being normalized. And so that brings us back to the one thing that has been quietly going on in the background throughout all of this, which is the

launch and adoption of blockchain technology and this little thing called Bitcoin. And to be clear, we still have

Bitcoin. And to be clear, we still have no idea who created Bitcoin. That's

still just a complete mystery. But the

most important thing to understand about Bitcoin is that it's not only some monetary system that's designed to be able to withstand a nuclear attack much like Arpanet. But it's also the perfect

like Arpanet. But it's also the perfect introduction to a world where total financial surveillance becomes the standard. And we've talked about this

standard. And we've talked about this whole thing before about the incentive structure, right? How beautiful it is

structure, right? How beautiful it is that is built into the design of Bitcoin where the earlier you are to this Bitcoin thing, the richer you become.

The system works by bribing you to adopt it. And the reward that you get from it

it. And the reward that you get from it comes at what cost though? Right? The

alternative to the dollar for other blockchains, the cheaper crossber transactions and the incorruptible system at the cost of what though? At

the cost of your privacy. All

transactions in this system are completely public and on an immutable ledger. That means there's no changing

ledger. That means there's no changing what happened in the past. And the thing is is that the rules around all of this can change. So I can create a new rule

can change. So I can create a new rule and whenever there's immutable data but the rules are changing around the laws for instance in your state then that data might be able to be used against

you outside of that system at some point. And I think that's what a lot of

point. And I think that's what a lot of people have missed. So yeah sure you have a monetary system that no government can control but they don't need to control it. They just need to be able to surveil. They just need to be able to monitor it. And so back to the

stable coins the whole thing about Bitcoin was that it was just too volatile. We needed a place where we

volatile. We needed a place where we could have stability. And what this really was was a synthetic dollar, right, that happens to just be globally adoptable and on this completely

immutable rail. And then Tether came,

immutable rail. And then Tether came, right? And the first issue was like the

right? And the first issue was like the opacity of it all. Like how do we know that they're actually uh hosting the assets that are backing the stable coin?

And then what is Tether doing with all this money they receive? Are they using it to go out and buy Bitcoin for instance? Um, and also under which

instance? Um, and also under which jurisdiction does Tether really exist?

Like whose rules do they fall under? And

anyways, then you had the Paradise Papers where Tether was actually accused of minting Tether out of thin air to buy Bitcoin and prop up the price of the market. And we were being lied to about

market. And we were being lied to about who actually owns Tether or what Tether owns and who they're aligned with. So

anyways, stable coins prove that blockchains can be used really to promote the use of and demand for the US dollar while also increasing the transparency of how the dollar is used on a global scale. Just like the

playbook for the internet itself, the US can now outsource the surveillance of this technological offering to private actors or really in this case to the blockchain itself. And so now stable

blockchain itself. And so now stable coins are a great cover up for this concept of a CBDC because everyone's shouting from the rooftops to ban CBDC's which CBDC's are just a digital form of a country's fiat money issued and backed

by the central bank whereas the stable coins are private digital money. So it's

a slightly different concept but the end result might be the same. I had

a conversation with Max over at UNFR and the question was do we want the state in control of this new form of digital money or do we want the private sector in control? And when it comes to this

in control? And when it comes to this conversation, it's really not going to make a big difference because as we've seen through history, the US government can issue the freezing and seizure of stable coins due to the same legislation that regulates the banking industry such

as the Patriot Act and other counterterrorism measures that are in place. So here we are now where the US

place. So here we are now where the US government has completely wrapped up the internet for information and now they've done the same with money. So when we look forward to what this might look like in the future, I mean, we're moving

into a world where assets are going to trade 247 and where everything can be tokenized and every transaction is going to be logged and compliance to the rules

is going to end up being programmable, right? Imagine everything that you own

right? Imagine everything that you own being on chain and then you go to sleep at night and you wake up and everything just got liquidated and there's no thing that you can do to get it back. Now,

that's on the finance side, but let's talk about from the government side, the nation state side. I mean, Canada showed us what this could look like, right? The

truckers didn't need to be arrested when they were blocking the highways. They

were financially taken out of the game.

No trial, no conviction, just access revoked. China, we see pretty similar

revoked. China, we see pretty similar stuff, right? The social credit scoring

stuff, right? The social credit scoring systems, behavior linked financial transactions, right? If you walk across

transactions, right? If you walk across the street, if you jaywalk, you might get fined. You might just get auto

get fined. You might just get auto automatically debited from your accounts. Imagine a world where you have

accounts. Imagine a world where you have money that can just expire or that is restricted or that can be redirected based upon your behaviors. Because when

money becomes software, then the rules of the system are automatically enforced. And so the big thing here is

enforced. And so the big thing here is that we're being told this is all about economics, right? Like faster payments,

economics, right? Like faster payments, lower cost, global access. And that's

the incentive. But the incentive builds the infrastructure. And the

the infrastructure. And the infrastructure enables total financial surveillance. And just like Bitcoin

surveillance. And just like Bitcoin incentivized people to adopt, you know, this immutable ledger, these stable coins are incentivizing people to adopt programmable money as if nothing even

changed because most people won't be able to tell the difference. And so this isn't about whether stable coins are useful. They are. The question is what

useful. They are. The question is what happens when the same system that you're using to move money around can also decide on its own how or whether you're allowed to use it. So listen, I'm not

saying that stable coins are evil, that blockchain is evil, that technology and AI and all this is evil. But what I am saying is that power does silently concentrate. And while you look at the

concentrate. And while you look at the government, it's really these private actors that we have to worry about. And

once financial surveillance just becomes the regular infrastructure of everything, there's not really a way to opt out of this. And that's what they're not telling you about stable coins. So

anyways, this is Keith D. And if you got anything from this or even found this entertaining, be sure to like and subscribe for more of this. Um, also,

what did I get wrong here? And what am I missing about all of this? Let me know in the comments down below. And if you haven't already, be sure to subscribe to my live show with Ben Levit. It's called

Memes and Markets. We go live every Tuesday and Thursday at 12:00 p.m.

Eastern and we're talking about topics like this and also where financial markets and economics intersect with culture. So you can find that at the

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below. And I'm serious. Go and check us out and join us live. But until next time peace.