Dr. Doom’s Crypto Embrace? We’re All Just Figuring Things Out

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Nouriel “Dr. Doom “Roubini seems to be embracing cryptography, at least indirectly, after years of building a reputation as one of the most critical, skeptical, and tired observers in the industry.

Bloomberg reported on Monday that the economist, known for his bearish views, is working with a Dubai-based financial company, Atlas Capital, which is reportedly hiring Web 3 company Mysten Labs to build the “optimized dollar of united sovereign governance. ” or “USG”.

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Needless to say, this project is still mostly in “ideation” and the details will be worked out and likely to change. But the general outline is as follows: Roubini, a cryptographic architect, will help develop a “stronger dollar” backed by real assets, including the U.S. Treasury, gold and real estate investment funds.

There is more. The digital asset is meant to be resistant to inflation and a way to get a wider group of people on the ropes of high finance; perhaps, ultimately, if things unfold, it will act as a global reserve currency.

Here at CoinDesk we applaud financial innovation, people who take risks, and those who are willing to put ideas into practice. We especially recommend those who seek to solve the myriad problems of the post-industrial and ultra-financed economy.

See also: If money is talking, CBDCs should be tools for freedom | Opinion

And so, as a sign of respect, we say go, let’s see what happens, why not? If Roubini wants to address the problems, instead of finding faults, more power for him.

Careful observers may notice that the “gold-optimized dollar of united sovereign governance” looks like another project that had ambitions of global reserve status and help unattended communities: Libra! Facebook Book!

Libra, you may recall, was the first iteration of a Facebook-backed cryptographic project that wanted to “bank the unbanked.” It would have been a digital currency backed by a basket of fiat coins, treasuries and other financial instruments. (Mysten was founded by former Meta Platforms engineers – formerly Facebook -).

The project was never launched, in part because Facebook burned its reputation by selling our data and potentially destabilizing democracy. So regulators around the world have acted on our behalf to say that Facebook, with its billions of users and its position on the Internet, could not rely on a radical new attempt at currency design.

Roubini’s project is equally ambitious: to create an alternative safe-haven asset for the U.S. Treasury that also has “payment functions.” It can also offer performance, which makes it more attractive to maintain, although in a blog post, Roubini points out that the fluctuating value of USG may limit its use as a form of payment.

Roubini et al in that blog cited some risks to the dollar’s hegemony: inflation, the deterioration of the dollar, China’s growing influence, and the so-called Triffin dilemma related to the U.S. debt burden (or “double fiscal and account deficit current “).

Still, USG would not compete exactly with the dollar and could complement a central bank digital currency, Roubini suggested.

In fact, the world is changing and the economy is getting … weirder. Crypto is a source of this changing environment and also the home of many people who want to fix what is broken. Crypto is not an academy, but a source of many ideas. And many potential solutions.

The beauty of the industry is not that it seeks to have the answers, but that it is willing to experiment. Not all of this will come out, although if we keep an open mind, we can learn something.

For example, this weekend, an incredibly popular and risky algorithmic “stable currency” called the UST lost its link to the US dollar after several investments were sold and after significant amounts were withdrawn from decentralized finance liquidity funds (DeFi ). That “depegging” could have condemned UST, which relies on the opportunity to trade with another cryptocurrency, Luna, to maintain its link with the US dollar, especially since at least so far no stable currency has worked.

See also: UST Stablecoin falls below dollar for second time

The main sponsor of UST, a colleague named Do Kwon, also says he is motivated by the feeling of fixing what is wrong in the financial system and expanding the range of financial options available to people. It’s a noble quest, perhaps. You may be lying or wrong. But, if Roubini has something to go through, we’re all still figuring it out.

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