Thread by @UtilityFTW

🪙🪙🪙🚨🚨🚨🚨🚨🚨🪙🪙🪙

❌ Peg #XRP to Gold - Not Possible ❌
✅ Peg #Gold to XRP - Possible ✅

Sounds crazy? Here is how it can be done...

🧵

I've expressed before that XRP's value cannot be tied to any particular asset/commodity. A decentralized digital currencies value is determined by the forces of supply and demand. However, what follows is a theoretical and speculative scenario, yet still plausible.

2/18

First of all, what got me into this train of thought was an article from late last year. Go ahead and read it to grasp some similarities in what I will explain. Essentially its a forced revaluation of gold driven by market oil prices.

3/18

kitco.com/news/2022-12-0…

Furthermore, it is possible to revalue a commodity if one has control over its price. This can be observed by examining how the US government revalued gold in 1934 by raising its price from $20.67 per troy ounce to $35 per troy ounce.

4/18
en.wikipedia.org/wiki/Gold_Rese…

The US was able to establish the gold standard because it had control over its currency which held significant influence in the global financial system as the reserve currency. By setting $35 USD to an oz of gold, the US government was able to create the global standard.

5/18

⚠️KEY POINT⚠️ The US could not directly dictate the price of gold during the 1934 revaluation, but their power and control over the US dollar as the world's reserve currency gave them de facto control over the price of gold.

6/18

Let's shift the focus to the dynamics of control in a different scenario. Rather than discussing the US government's control over its currency, let's examine who has control over the world's gold, right now.

7/18

madisontrust.com/information-ce…

Its evident that CB's hold control over the world's gold reserves. Although some sources claim that the US holds the largest amount of gold reserves, there is speculation that the publicly disclosed figures may not accurately reflect the true amount of gold reserves.

8/18

Just as the US had control over the USD reserve, and as a result, de facto control over the price of gold, Central Banks have control over the gold and, hypothetically, de facto control over the amount of any asset they are willing to sell in exchange for their gold.

9/18

Hopefully you see where i am going.

Many people believe that the world is on the verge of an unprecedented financial crisis. The USD, as the reserve currency, is facing destructive internal forces caused by its massive debt load, as well as destructive external forces.

10/18

There may be a future where the USD is no longer a safe or viable option to serve as a bridge currency for global financial cross-border transactions. There may soon be a need for a neutral option, and stability will be the most crucial factor.

11/18

Here is where XRP can come to the rescue as a neutral, fast, green and decentralized solution. They cannot peg a decentralized currency to Gold. But they can peg gold to a decentralized currency...

12/18

One hypothetical scenario is that the Central Banks, who control the global Gold market, could agree to sell gold for a fixed amount of XRP.

Example: 1oz of Gold could be exchanged for 5000 XRP.

With their power over Gold, they would have de facto control over XRP price.

13/18

In such a scenario, gold would still hold its relative value to sovereign currencies. However, once the announcement is made, the arbitrage opportunity would cause the value of 5000 XRP to rise up to the current market price of gold per ounce.

14/18

Its important to note again that stability of the global bridge currency is crucial. Currently, XRP's price is highly volatile due the speculative nature of the market. What exchange rate for 1 oz of gold would be needed to counteract this volatility and ensure stability?

15/18

I don't know the answer to that question, but it's a fascinating thought experiment. One factor that would impact the exchange rate is the available supply of XRP relative to the demand for its use in cross-border transactions.

16/18

The thought experiment gets even more entertaining when factoring in how there is discussion of a hypothetical revaluation of gold to cover the global debt load.

17/18

silverbullion.com.sg/Articles/Detai…

Anyhow, that's enough crazy talk, right?

The Central Banks probably won't peg Gold to #XRP. What am I even saying? What an absurd thought.

The government said the economy is healthy and the USD is strong! Nothing to worry about! Forget I even mentioned these things.

18/18

@threadreaderapp unroll