Offshore X: A novel method for diversifying wealth from political regime risk
Black America’s wealthiest community was destroyed during the Tulsa massacre. Jewish peoples were stripped of their assets during the Holocaust. Indians and Asians were forcibly expelled from their businesses in Uganda. Cuban landholders lost their property rights in Cuba. Dispensary , Gaming and Adult service merchants have had their cash accounts permanently frozen.
Groups, without sufficient power, throughout history have had private wealth, they acquired thinking it was protected by a government, lost due to political black swans. They have greater exposure to these types of adverse events than the wealthy, and the least protections from them. This article presents a convenient approach for hedging this risk using the latest innovations in decentralized finance (defi). This niche banking procedure will also introduce the concept of ‘transaction-based’ interest on wealth as an attractive alternative to the traditional ‘usury-based’ interest models. All of these things can be efficiently set up with free apps available on a mobile phone. The encrypted wealth is convertible back to cash wealth in over 70+ government regimes, and the account is only accessible to the person(s) with knowledge of 15 words they keep secret in an undisclosed location. The implementation of all this will be explained and demonstrated by revealing arbitrage opportunities which presently can be exploited for profit by the reader.
Offshore accounts are bank accounts beyond the control of the political regime where one resides; they are legal, but historically have been too impractical for minority wealth holders to use as a hedge against their political regime risk.
This started to change in 2010 when a programmer under the pseudonym Satoshi Nakamoto created a groundbreaking encryption program known as Bitcoin; the underlying blockchain technology made it possible to store and move wealth securely, anonymously, and outside of the control of political regimes.
Bitcoin wealth is secured via a proof-of-work scheme that rewards computational power with transaction fees. An alternative scheme used by later cryptocurrencies is proof-of-stake; this procedure secures wealth by rewarding large wealth or ‘stakeholders’ on the network with transaction fees.
Price volatility relative to popular currencies (USD, Euro, Rand) has made cryptocurrencies less attractive as a vehicle to store fixed wealth; this problem found a solution through the invention of the Stablecoin.
Decentralized Stablecoins have many of the same properties as Bitcoin, but their value remains fixed. Stablecoins built on proof-of-stake networks can reward wealth holders with interest derived from transaction fees; this fundamentally redefines what an interest rate can mean.
Presently only one proof-of-stake network has created a decentralized Stablecoin whose value is tied to the US dollar. The platform programmatically adds/removes cryptocurrency to the smart contract backing the Stablecoin price in response to value fluctuations in the underlying cryptocurrencies that deviate too far from a fixed US dollar amount.
For the first time in history, wealth holders are able to efficiently replicate the central bank’s ability to store and secure fixed wealth, with additional features such as collecting non-usury interest and global protection of assets from political regime risk. The remaining sections of this article will be devoted to walking the reader through the general procedure for storing private wealth, as discussed, on the Waves decentralized platform.
Step 1: Create Waves account
Create an account on Waves.Exchange. Once logged in, you will see an option to save your “seed phase”; these are 15 words, associated uniquely to your account, that you should never share with anyone to ensure account integrity. Store those words someplace safe!
Step 2: Purchase Bitcoin
There are many ways to buy Bitcoin these days, but only one method will be discussed for simplicity. Download Cashapp and add cash to your account; use those funds to purchase bitcoin on the platform.
Step 3: Transfer Bitcoin to Wave.Exchange
Download the Waves.Exchange app. Transfer the bitcoins purchased on Cashapp to the bitcoin wallet on this app.
Step 4: Trade Bitcoin for USDN
The Waves platform has a decentralized trading section that can be used to exchange cryptocurrencies. Use the BTC/USDN trading pair to sell your bitcoin for USDN.
Step 5: Stake your USDN
Deposit those USDN in the Staking section of the platform.
Your funds are now secured on a decentralized network accessible by computer or mobile app anywhere in the world by anyone with an internet connection and knowledge of those 15 seed words. No one can freeze this account or stop payments to and from it. Withdrawal of this wealth to its cash equivalent can be done at any of the 7000+ bitcoin atms spread across 70+ countries.
An attractive feature is that the ‘transaction-based’ interest paid for wealth held on the platform currently has a greater than 5% spread between the ‘usury-based’ interest rates accredited investors debt service in traditional bond markets. The arbitrage opportunity is to (1) borrow wealth in traditional markets, (2) Stake borrowed wealth on the platform, (3) collect >5% spread.
The largest identifiable risk factors are an encryption hack or complete collapse in the market value of Waves; it is the opinion of the writer that the survival time of wealth on this blockchain protocol, rife with constant hostile actors and no government protections, is strong evidence that these open-source ideas are less of a security risk than centralized internet banking.
Additional note: The Federal Reserve’s benchmark target for interest rates should be negative!
