The other side of the (bit) coin
As Lee Camp recently noted, there is now one word which can set a room on fire with instant arguments, boasting and weeping. That word is ‘bitcoin.’
I’ve read all of the criticisms of bitcoin. It’s not safe, it’s fiat, it’s appreciated too rapidly, its value requires a buyer. It’s essentially software worth billions. It’s a ponzi scheme. It’s just like tulips. My fellow readers have refuted all these points in the comments sections of earlier essays. It is no more of a ponzi scheme than the stock market, and probably a lot less manipulated.
The first thing I want to talk about is the creation of money, which hinges upon the creation of debt. There is no longer “commodity money,” in America. It is now fiat. As such, over the past 100 years the value of a dollar has diminished to just a nickel. Now that the United States is $20 Trillion in debt, what do you expect to happen to the value of the dollar over the next 100 years?
Imagine back to the first time metal was smelted. Lead, aluminum & gold were probably the first metals available. What value did they have? At what point was it decided that gold was more valuable than the others, and why? I suspect it is gold’s longevity, the fact that it does not oxidize which makes it more desirable than the others. Is there an intrinsic functionality which makes gold more valuable than other metals? There was probably a period, early on, when gold’s value soared from near parity with the other metals to 10,000 times their value. Were people calling gold a bubble?
I see many similarities with bitcoin. In its own right, bitcoin doesn’t oxidize. It doesn’t rust. It has scarcity. I prefer to call it a “digital asset.” It derives its value from its functionality.
But in addition to bitcoin, there are now more than 3,000 ‘altcoins’ on the market. It seems ludicrous, and it is. At least half of these coins will be worth nothing someday. But before you write off the whole shebang as a bubble, you really need to understand the underlying concept behind them, which is the blockchain.
I have read Satoshi Nakamoto’s white paper, and while I got glassy eyed during the parts about probability formulas, I got the gist of it. The blockchain is an ever increasing digital record, distributed globally. It is nearly impossible to corrupt. Upon this currencies have been created. Whether or not you believe one bitcoin should be worth $10,000 is beside the point. Blockchain technology is the perfect medium for the transfer of value. The successors to bitcoin have solved its initial problems - that it’s slow, has high transaction fees, and requires too much computing power.
Wire transfers are an archaic method of value transfer, comparable to 20th century snail mail in a digital age. A SWIFT bank transfer takes hours to complete at an average cost of $30, and its progress can not be tracked. That’s why Moneygram was one of the first financial companies to get on board with cryptocurrency - there are coins which settle in seconds at a cost of a fraction of a penny. Now we’re talking about the velocity of money, where the faster a transaction settles, the sooner those funds can be used again.
Credit card processors charge retailers 3% on transactions. Paypal charges 3.9%. Crypto processors are currently charging 1% to process transactions which is a significant savings. And remember, credit card purchases take days to settle.
What we’re coming to see now is the diversification of crypto. They don’t all try to be a replacement for the dollar, some don’t even try to be “coins.” Tokens have been created for alternate uses, e.g. as a payout reward for gamers.
There now becomes a distinction between the coin, or token, and the blockchain. Ethereum is a blockchain upon which several coins have been built, notably the Ether coin. But Ethereum is much more than that. It is a framework for the creation of “smart contracts,” wherein a developer can write a contract that is self executing upon the completion of predetermined criteria. You could write a smart contract for a loan which is automatically repaid after a period of time, etc.
TRON is a blockchain proposal which hopes to create a distributed internet. Right now Mark Z owns all the photos you upload to Facebook. His company reaps all the ad revenue. But what if someone created a FB clone on the blockchain? Imagine if FB existed in a P2P distributed system, like bittorrent, where the content creators receive payment for their work, because they actually own that small piece of the website? I think it’s possible something like this could create a paradigm shift in the way the Internet operates.
Kodak recently announced it would be issuing the Kodakcoin, using the blockchain to manage digital copyrights and payments.
But most of the altcoins exist as merely a white paper proposal. They are great ideas with nothing but vaporware to back them up. I suspect these are outright scams, there will never be any software created. Yes, there will be a real crypto crash someday, but this is not it.
The entire crypto market has recently seen a huge correction (yeah, all the way to back where it was in December…), some like to call it a crash. It’s really nothing new, as the highly volatile market has seen similar “crashes” every year. Is this the beginning of the end? Not at all. It is, in fact, the end of the beginning. It is the point at which cryptocurrency is beginning to go mainstream. It’s when IBM and large banks begin to cast their lot with crypto - not as an investment, but as a medium for settlement. It is just a matter of time before Amazon chooses some lucky coin to be the de facto currency of the online giant. We have not yet begun to see the adoption of cryptocurrency, and as a matter of convenience, and cost savings, the people are demanding it.
Beyond all of this, there is something we in the U.S. tend to forget. Most of the world is bankless. They don’t own credit cards or checking accounts. They have no way to store their assets, or to transfer them. However we are living in a world where more and more people own smartphones as a way of life. Cryptocurrency is bringing them into the 21st Century. Many migrant workers send money back home, and now the fees are no longer exhorbitant.
I predict we will see a mass adoption of cryptocurrency over the next 5 years. During that time they will do everything they can to preserve the value of the dollar. When the demise of the dollar is evident, I suspect we will see a crypto reversal, preceded by an act of congress that transfers wealth into cryptocurrencies. Right now is not the height of bitcoin frenzy. That will occur when Congress allows Social Security retirement funds to go into crypto. That’s when the top will be in, for TPTB will be ready to “socialize the costs & privatize the profits.” I think at that time bitcoin will become nearly worthless - after that the dollar will crash and then crypto will reemerge as the currency of the future.
Comments
have faith...
because all money is really just faith in its value. We can plainly see the upcoming collapse of the petrodollar. I also think it is obvious that the market is artificial - using QE and now the bonus tax cuts to buy more of their own companies stock...a house of cards. I can see why people are investing in bitcoin. Keiser suggested that now bitcoin is primarily an investment, but when it hit $100,000/coin (after the dollar collapsed)it would be common as a currency. I suspect bitcoin will continue and grow.
I think (and wish I had more evidence) that the banks are over leveraged in the fracked oil fields, much like home mortgages in 2008. This is driving the insanity of more drilling, more pipelines, more fossil fuels, tariffs on solar panels.
If you have money, buying real things that make your life better is the best investment (from my view).
BTW Aluminum is one of the newer metals, although it is a common metal in the earth. They use electricity to extract the metal from the bauxite ore.
“Until justice rolls down like water and righteousness like a mighty stream.”
I have another theory
Several banks have indicated that they will not allow their customers to purchase cryptocurrencies with credit cards, citing 'volatility.' Yet none of them have a problem with people buying lottery tickets on credit. There have been rumors about some banks blocking crypto purchases with linked bank accounts. They aren't just telling us how we can go into debt, but how we can spend our money. As Citibank says, "cryptocurrencies are off the menu."
On some level I suspect the Big Banks are suffering a type of run on the banks, but instead of people withdrawing cash, they are withdrawing their digital assets - the effect is similar. Without the deposits, they can not issue loans. In this day of fractional reserve lending, where one dollar gets loaned out 6 times over, these withdrawals have the potential to really fuck with their balance sheets. I wouldn't be surprised if we start seeing them sell their loan portfolios in order to come back into compliance with their deposits. However, I know when I buy a bitcoin that money just goes to someone else who will put it in their bank, so maybe I'm way off base here. Or maybe they will put the money into bonds, and starve the beast. Who knows.
Thanks for the bit about aluminum. I was just going on melting temps to guess the first metals. I guess copper or tin would have been better examples.
F the F'n D's
Aluminum ws once more valuable than platinum
because it was so very difficult to extract enough of it to do anything with. (The tip of the Washington Monument is made of pre-electricity aluminum, did you know that?)
Applying electricity to bauxite is what allowed aluminum to become cheap and plentiful. (It's actually a great deal more complicated than that, but that's the nub of it.)
There is no justice. There can be no peace.
Did you catch this clip?
I posted it in another bitcoin discussion last week.
I thought this interview with Jeremy Gardner, 20 something year old millionaire and co-founder of Augur, about crypto-bros, ICO markets and the future of crypto was worthwhile to understand the generational gap between those who value crypto vs those who do not. It is in the last 15 mins of the show.
https://www.youtube.com/watch?v=iTVk_SeH_BU
So I started my comment in your essay here by saying it is all about faith in value. In this clip is a young person explaining why his generation has faith in crypto. That makes me think bitcoin will survive and prosper, and certainly blockchain technology has already been accepted and adopted for many purposes.
Don't get put off by the comments and keep discussing issues like this which many here don't support. A couple of years back someone put up a survey here...which revealed most of us are older. I think crypto acceptance is generational. Time will tell.
In the meantime I'm focusing on the beyond money value of my homegrown produce. All the best.
“Until justice rolls down like water and righteousness like a mighty stream.”
Hint
It was called the Bronze Age
Aluminum
Prior to the invention of the bauxite-cryolite electrolytic cell (the Hall–Héroult process, 1886) aluminum was more precious than gold. And the first human to lay eyes on metallic aluminum was Hans Christian Ørsted in 1824.
The problem with aluminum is that it really loves oxygen and the hydroxide ion containing it....
p.s.: I just learned, from its Wikipedia article, that cryolite has been reported as found on Pikes Peak!
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
Pardon My Skepticism
You say this like it's a good thing:
That may or may not be true, but I sure wouldn't want to give Wall Street Racketeers a chance to "securitize" cryptocurrency or implement exotic cryptocurrency derivatives.
Cryptocurrency fraud sure seems to be rampant:
A lengthy list:
https://www.scambitcoin.com/blacklist/
Descriptive examples:
https://www.coindesk.com/33-cases-cryptocurrency-fraud-is-on-the-rise-in...
And susceptible to the same old frauds as the stock market, including "pump and dump" and "bait and switch":
https://www.ethnews.com/cryptocurrency-fraud-and-the-anatomy-of-the-scam
I have to question this inferential leap:
Which Lambert Strether critiqued at Naked Capitalism:
www.nakedcapitalism.com/2018/01/does-bitcoin-have-a-future.html
By all means we should continue the conversation.
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
I think it's relative
To compare crypto to the stock exchange, we are in the age of the robber baron, back before there was any regulation. I knew when they started BTC futures that it would signal the beginning of institutional manipulation. But as opposed to the stock market, where a market maker stands in between activity and price and "provides liquidity" a.k.a. shorts the stock to prevent a run up, the price of bitcoin is more susceptible to supply and demand. The more Wall Street gets involved, the less potential the field has for mom and pop.
Half the scams are the result of people leaving their coins on an exchange. Recently a half billion dollars of XEM was pilfered from an exchange. However those coins can't be moved without detection, and the exchange has said it will reimburse the losses. I've seen three real actual bitcoin Ponzi schemes get shut down recently. Yeah, the world is a dangerous place and you have to be doubly careful with your digital assets. A real common scam now is to advertise an "airdrop" of more coins when you deposit coins to an address. But I don't see how any of that affects me or the coins stored in my cold wallet.
I see the paradox regarding the government's monopoly on currency. And yet part of me predicts there will someday be an end to printed currency, perhaps in 100 or 200 years. Few republics last as long as ours has, and the descending value of the dollar will be the demise of ours. I think it's almost inevitable that some day the United States will issue its own cryptocurrency at which point it will homogenize the crypto market.
F the F'n D's
A Cashless Economy
I've been following the critique of a cashless economy at Naked Capitalism. Long story short, the banks want to be able to track and charge a swipe fee for every transaction. I wouldn't mind Swipe Fees so much if they reflected the actual cost to the financial institution and value to the customer. I think 25 cents or perhaps 1% per transaction would be about right.
What do you think about a 1% transaction tax on cryptocurrency in addition to all Wall Street transactions? Maybe as FDIC type insurance to cover losses as well?
I am not impressed with the law enforcement objection to illegal black market purchases and money laundering. Crime cartels don't seem to have any problem laundering their profits through Sun Trust Bank for example. Gangsta cops are even getting in on the deal:
http://www.miamiherald.com/news/local/community/miami-dade/article249033...
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
No Fees!
I had meant to bring up the money laundering aspect of the status quo. Thanks for that.
I think a 1% swipe fee is outrageously high. Even 1% per annum is high when you view it through the lens of 10 or 20 years. The whole idea of crypto is to remove the banks from the equation, so who cares what they want. As far as FDIC insurance goes, just what are you insuring? That the coins don't get stolen? They maintain their value? We really haven't gotten into crypto-lending yet, and that is the only scenario where any type of FDIC insurance makes sense, e.g. if an exchange loans out my coins to someone who defaults and I can't access my funds anymore. I guess some day people will want to earn interest on their crypto, so it's probably inevitable.
F the F'n D's
I Was Thinking of Insuring Against Fraud
And 1% would be too high. I was thinking of small purchases for coffee and donuts or a restaurant meal if it is going to replace cash. Maybe cap it at $1 for purchases over $500.
What is the average size transaction that exchanges are charging a 1% fee on now?
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
No data
There is a paucity of data regarding bitcoin as a payment. The 1% fee I quoted is from the proposed litepay processor using litecoins. It's really too hard to guess ATM, since recent bitcoin transaction fees rose to as much as $60!! But now that SEGWIT and Lightning networks are being implemented those fees are going back down to more reasonable numbers($1.50). Most crypto people see bitcoin as a store of value, like gold, and they see coins like Litepay or Bitcoin Cash as for spending. Typically exchanging one for the other incurs a nominal fee. It's when they are transferred that more significant fees happen. But Litecoin still has very low transaction fees, which makes it better suited to transactions under $20.
This site gives some interesting data
https://bitinfocharts.com/bitcoin/
for bitcoin:
Avg. Transaction Value 5.70 BTC ($47,039 USD)
Median Transaction Value 0.117 BTC ($968.68 USD)
Avg. Transaction Fee 5.66 USD
Median Transaction Fee 3.14 USD
https://bitinfocharts.com/litecoin/
For Litecoin
Avg. Transaction Value 164.72 LTC ($24,231 USD)
Median Transaction Value 3.44 LTC ($505.41 USD)
Avg. Transaction Fee 0.26 USD
Median Transaction Fee 0.036 USD
F the F'n D's
Wow! Millions in launder drug money
and no one went to prison because of.....? That it went on for so long and no one was ever charged for anything gives a good reason to end the war on drugs and legalize them. Didn't Amsterdam do that and it's working out okay?
Well alrighty then, as long as you can have more resources what does it matter if the town was flooded with drugs? How many other places is this happening in? As usual the only person that went to prison for it were the ones who bought the drugs. Remember that our troops are defending the poppy fields in Afghanistan for the CIA. SMDH!
Which AIPAC/MIC/pharma/bank bought politician are you going to vote for? Don’t be surprised when nothing changes.
American Banks Launder Cartel Money
Sun Trust was a big player that caught my attention because I used to work for a Sun Trust wholesale mortgage lending branch in Orange County about 2003-04.
It looks like Sun Trust scrubbed their internet record clean with an "Anti-Money Laundering" policy.
HSBC and Wachovia we're other big players:
https://en.m.wikipedia.org/wiki/Wachovia
The total amount was probably in the billions.
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
Wells Fargo ate up Wachovia
like a shark eating a piranha.
There is no justice. There can be no peace.
Really SD, boggles the mind.
Protect and serve has devolved to
A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.
And speaking of Cali Kush
Surely you know that the entire marijuana industry is barred from using banks since they see it all as an illegal enterprise. We're talking about Billions of dollars, and nearly a billion dollars a year in tax revenue. All of it in cash. Which makes me wonder how they pay those taxes... they probably buy money orders. I don't think the Colorado dept of revenue could handle $200 million in cash every year. That's more than $500k per day. It must be converted before remittance. Unless the banks do an abrupt about-face on their policy, this situation could compel a state like Colorado to start accepting MJ tax revenue in bitcoins.
As you can see, there is a huge demand for cryptocurrency in this space. For dispensaries who buy on the open market, crypto has made the transactions much safer.
For the record, I'm friends with the Budtender To The Stars, a real cool guy in Denver who is host of the show Pot Talk. He doesn't know of any dispensary that accepts crypto.
F the F'n D's
The Banks want more than
a fee. They want control of your life, as does the 1%'s other arms.
If a state agency decides you are trouble, blocking or seizing your very ability to buy food and shelter is solid gone. It's that easy when there's no cash in your pocket.
Or what happens when the AI consults your medical records and refuses you the money to buy a spicy Indian dinner?
There's no end to the evil a cashless society can work on freedom.
Orwell: Where's the omelette?
Crypto vs. gold
Making a Crypto Utopia in Puerto Rico
https://www.nytimes.com/2018/02/02/technology/cryptocurrency-puerto-rico.html
Good riddance, HOPE the door slams shut behind you, ya cheap bastards.
"eternal boy playground" ding ding ding! No shit sherlock.
Robert Did Nero Exploits Barbuda
https://theintercept.com/2018/01/23/robert-de-niro-barbuda-hotel-hurrica...
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
I saw this coming a mile away
We saw what happened after the Haiti earthquake flattened it and even though billions were donated for its recovery the only parts that were rebuilt were in the rich areas. Regular Haitians are still living in tents or worse conditions. The Clintons stole the money and gave it to their friends. Hillary again looking out for women and children.
Weird. I'm replying to eyo. Had some problems replying to others that became a new comment. Hiccups?
Which AIPAC/MIC/pharma/bank bought politician are you going to vote for? Don’t be surprised when nothing changes.
Robert Did Nero! LMAO auto correct envy
that was funny! I want some of what you're having. sample
Yeah Robert Did Nero, what sad excuses for human beings Hollywood seems to churn. California churns. May all their Lord of the Flies arrive soonish, and cause lots of noise as they crash and burn rome or whatever. Extreme wealth is always corrupt, it ruins everything in my view. Everything. GD Effing Clintons are all racist in their deeds, their actions. Why did they close the Foundation again? Couldn't launder oligarch money anymore, it collapsed. They should be in prison, that's what I think. ta
I Ducking Hate Autocorrect
A real pain in the ass sometimes.
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
Whoa
Ah yeah, no.
We are going to see the demise of the petrodollar in the not so distant future, but will that mean a 100% good for cryptocurrencies? No.
Well, I've already posted my opinion on crypto, so there's no point in me saying more about it.
Bitcoin? No thanks.
I'll stay with gold silver and ammo.
Neither Russia nor China is our enemy.
Neither Iran nor Venezuela are threatening America.
Cuba is a dead horse, stop beating it.
I think you've missed the point
I'm not here hawking bitcoin as an investment. I'm documenting how it's becoming a mainstream payment vehicle.
F the F'n D's
Bitcoin is LibertAryan Porky bullshit.
Modern education is little more than toeing the line for the capitalist pigs.
Guerrilla Liberalism won't liberate the US or the world from the iron fist of capital.
BTC is just another bubble blown by the 1%
The 1% make their money through leverage and volatility, not by funding any genuinely productive activity. BTC has massive volatility, and early buyers of BTC have massive leverage.
As MeteorMan notes, fiat currency is what the government says it is. (Gold, silver, etc. are not fiat currencies.) The government oversees the current looting machinery via its running the printing presses strictly for the benefit of the big banks(QE), via allowing front running (HFT), and via obscene amounts of leverage to the 1% traders.
BTC is happening because the 1% perceive that the game is almost up for the printing press/petrodollar racket, and they want a safe haven to send their profits to before the petrodollar crash. Dog save us that the 1% might want to fix the system they broke instead of fleeing with their loot to the next extra-territorial domicile.
As is the standard practice for the 1%, who are speculators, not capitalists, they showed up early and bought BTC assets as a speculation. (That 80% of BTCs are owned by some tiny number of URLs is widely known.) They also like the ability of BTC to dodge taxes.
If thee 1% succeed in pushing enough assets into e-currency to destroy national currencies, then we will all end up in Libertarian hell. The banksters will take their cut of every electronic transaction and add the occasional haircut to their takings. The fiat e-currency will replace the fiat petrodollar. And, in the shuffle, lots of little people will be completely looted and government programs like SocSec will be vaporized.
All to the greater good of the 1%. Any little guy who thinks he will gain more from owning a couple of BTCs than he will lose from the destruction of government is a useful idiot (usually a Libertarian) for the banksters.
----
I have already written about this here. So I won't repeat myself.
A common misconception
There is a huge difference between Bitcoin addresses and bitcoin owners. Typically an exchange has one address for all its customers, and most coins are stored on the exchanges. That's a world of difference from a handful of people own the majority of bitcoins.
F the F'n D's
That's what you focus on?
No comment about the rest of the scam?
Actually
I meant to follow up on my comment to agree with most of the points made in your jubilee essay. But whereas we can be sure that Wall Street has full control over the stock market, I have doubts that TPTB have as much control over bitcoin. Remember, BTC started out as a cottage industry fueled by nerds. Then came the mega-miners which I think is too much work for Wall St. My inkling is they are trying hard to entice selling at this level because the real scam hasn't even started yet. I say this because bitcoin hasn't even scratched the surface of mass adoption. The house of cards won't come down until everyone is fully vested, which is why I think an official government policy shift will be part of the equation.
But hey, don't feel bad. I wrote an essay about how blockchain will change our lives and most people focused on how bitcoin is a scam.
F the F'n D's
Nice Try bondibox
It's difficult to grasp why cryptocurrency is more secure than cash. Of course it's also difficult to imagine the survival of Western Civilization or the human species under current conditions.
The human factor in espionage is a well known weakness. A Boeing plant that manufactured some type of classified military hardware had a sophisticated security system compromised because the night janitors were not monitored.
Bill Black's book, The Best Way To Rob A Bank Is To Own One, comes to mind. Who are the block chain gatekeepers? What control features can prevent our current PTB from buying out the gatekeepers who protect the cryptocurrency stash?
"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn
If you could stop evangelizing for a moment...
I could try to find some common ground with you.
Do you understand that "bitcoin is a scam" is a legitimate, non-falsified position held by a significant majority of people? Do you understand that "blockchain will change our lives" is a claim that resembles every bit of hucksterism ever foisted on the suckers by the con-men, and therefore is suspect on its face?
Ms. Arendt, the philosophy major, always tells me that if you accept the other person's premises, you have already lost the argument. I am simply disputing your premises. That is a legitimate debating stance. At this point, you and I are keeping it civil. By the end of the thread, you are decrying everyone's ignorance and informing them that they are merely "self centered".
Can you not see the other side of the coin (sorry, bad pun)?
I think the issue is complicated because e-currency and blockchain are two different things, but everyone in this thread is conflating them.
You admit there is no mass adoption. You talk about a government policy shift, but you do not focus on the outcome of government sponsored e-currency: fees, haircuts, denial of service, tracking of everything. If e-currency succeeds as non-state money, governments and their social services will collapse. If e-currency is hijacked into state money, we will all be slaves to the bankster/Treasury gang.
Let me try to disentangle things. Blockchain is interesting security technology, but it should not be used as a store of value. As part of the ever-growing total panopticon state, wherever blockchain is applied, it threatens our liberties with its tracking and control. Please explain how, when the NSA hoovering up literally every bit ever sent over the internet, my BTCs are secure. The NSA has massive decrypting tech, and TPTB are pouring money into quantum computing. (N.B. The crypto folks are working on algorithms that would be resistant to quantum computing attacks.) As many have said, TPTB are either going to trash e-currency or control it. All your words about freedom whistle past the graveyard of the massive base of computing power controlled by TPTB, both on Wall St and in the NSA/CIA.
Another thought on the vulnerability of e-cash: the security of so-called coin exchanges has been demonstrated to be pathetic. They are robbed, as Willie Sutton noted, because that's where the money is. If e-cash becomes viable, every crook on the planet will go after it. You think dealing with phishing and ransomware is bad now? Wait til its your life savings instead of your computer that's been bricked. The rich people, the smart people, they can afford e-security. Joe average, not so much.
Finally, there are issues on the "banker" side of e-cash. I'm not clear if you propose that BTC is the only e-cash or if you envision a free market in various e-cash vehicles. The former is too centralized and begs to be hijacked/coopted by TPTB. The latter brings us back to the days of hundreds of private banks, each issuing their own currency based on nothing more than faith in the bank. As in the days of private banks, what I will refer to as "private e-cash" can be devalued by someone robbing the small bank of its capital, which I already discussed under the various coin exchange robberies. There is also the possiblity of the "owners" of the e-bank running a scam on their customers. (You laugh, but why is the NEM currency which was hijacked in Japan refusing to zero out (not sure of the technical term) the stolen e-coins? Were they in on the robbery?) In the end, a free market in e-cash just adds more burden to the beleagured citizen, who now has to think carefully about what kind of money is safe.
I want to circle back to the distinction between blockchain and e-cash. The technology of blockchain is merely an algorithm. What matters is the code that it runs. Sort of like steel is just a metal. What matters is whether you build high-rises or howitzers. Blockchain as an accounting tool promoting transparency is a good idea. Blockchain as a store of value has all the problems I cited above and more - like the massive energy waste that claims to be "value".
In closing, all I ask is that you answer the questions minus the assumption that e-currency based on blockchain is inevitable. Inevitable was a word used by Karl Marx.
Early adopters own the market.
Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market
A few massive investors can rock it with a shrug.
By Olga Kharif .
If nuthin' else, I see
crypto as the Only way to end The Fed.
the little things you can do are more valuable than the giant things you can't! - @thanatokephaloides. On Twitter @wink1radio. (-2.1) All about building progressive media.
My broker doesn't charge for wire transfers in or out.
Neither does my bank. And they deal in US dollars, legal tender for all debts, public and private, specifically taxes, not in play money. Trying paying the IRS in bitcoin.
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
Then look at the macro picture
Foreign exchange transactions take days, and cost more than a trillion dollars annually in fees. Not to mention all the money tied up in Nostro accounts for every currency that gets exchanged.
F the F'n D's
Thanks for the discussion, all. We will be traveling
and out of the country for 5 of the next 6 months, spending a little of our meager stash on camping fees in Africa etc. Had to put our 2001 truck camper in the shop for about $3500 worth of repairs. The 1996 camper on top of the pickup is going to need a propane leak fixed when we get it out of the shop. Our 100 year old shack needs a new roof. The condo in the mountains is governed by an association whose board is now majority investors instead of owners, and deferred maintenance is becoming more and more evident. We don't have long term care insurance and probably can't get it now due to pre existings. Yep, lots of things to spend our meager pile of petrodollars if they are about to become worthless....
Guess we could all be Petrodollar Preppers soon?
Heh.
Have seen more and more people living in mobile spaces......
A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.
So how do I give
the homeless gal on the train a buck?
Thanks for your thoughts on this. I suspect the future will not be that governments adopt a crypto currency, however. They'll either legislate their own and ban/co-opt all competitors.
When I read visions of how wonderful the crypcurs (sorry, get tired of the long form) are and will be I'm always surprised at how poorly thought through how the realities of power will work. Really, ignored.
For example, find the meaningful word in this phrase: 'nearly impossible to corrupt.'
In English, in practice, what that phrase means is: "corruptible." If someone has the money and brainpower any and everything that is code, can be broken into. Or, as professional burglars say "any lock can be defeated."
Factor in, as we now know, that practically every internet-able device anyone owns has built in backdoors and what not, PLUS it goes over the completely monitored internet.
So what happens when you go to use your coin and find out all your devices are blocked, whether from certain sites or from the internet entirely? It's certainly doable as nations have done this with political issues.
Most of all, what bothers me is the deep harmony of crypcurs with the bankers widely and plainly stated goal of getting rid of cash. Which is a Fascist's dream.
Not only do you have trouble giving a little random charity someone somewhere decided you are trouble and later that day you can't buy a sick of gum. Or anything. Remembering that the NSA, in 1996, proposed almost all that was later promoted by someone completely unknown except by screen name... Well I guess there's more than one way to strip people of the ability to have unmonitorable transactions.
To my gut sense, the patter about how totally good crypcur is and will be comes across like the patter for nuclear energy did. Accidents won't happen. And surely we'll never have a solar eruption burning out the sattelites.
Orwell: Where's the omelette?
Theoretically corruptible
Sure, every lock can be broken. But to break crypto currency it would require compromising 51% of the computers holding the blockchain. I guess on some Big Brother level the NSA could be capable of such a thing. Your other scenario is more likely, that TPTB block the blockchain protocol over the internet and freeze everyone out. If that happens, we'll have riots on a scale never seen before. Most bitcoin people are among the guns and ammo crowd.
I think Ripple gives a better model of what to expect. XRP is not intended to be an asset. It is supposed to be bought at the moment it is needed, transferred within seconds, and immediately divested to avoid slippage.
I really wish my readers would focus on use cases like Kodak or Tron, where the blockchain is being used for a real purpose and the currency is just a facilitator.
F the F'n D's
The blocking will happen
and there won't be riots because it's a tiny percentage of humanity that's going to put money into internet-based currencies.
Sorry. I appreciate the appeal of seemingly outflanking Central Banks and fiat currencies and the like. But once you look at how People With Power do things, the tools that have, it shouldn't take very long to work out the future of crypto. And most importantly to my mind is you want to avoid putting other people in an even better position than banks have now, to control your access to and use of your money.
Orwell: Where's the omelette?
As took medium of exchange
we've got PayPal and dollars already.
Orwell: Where's the omelette?
Exactly
Prior to cryptocurrencies being a significant factor, we'll see the Denying Tools to Terrorist Act which will outlaw any use of any cryptocurrency except one provided through Goldman Sacs and backed by the full faith and credit of the US Government, itself backed by the military.
Power is exercised in two ways: money and military. Governments aren't going to give up their monopoly on either one. The government is fully under control of the banks, who control the money.
Nobody is going to give up power without a fight, and anybody who can fight is already corrupted.
Any cryptocurrency depends on a functioning infrastructure, and I don't expect we'll have that in even 10 years.
Nope. It's a tulip bulb craze. Profit from it while it lasts, if you can, and convert your profits to gold, take physical possession, and freaking hide it under a rock.
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Albert Bartlett
"A species that is hurtling toward extinction has no business promoting slow incremental change." -- Caitlin Johnstone
Petro dollar is backed up by the most fungible
Commodity on the planet...oil. Magically dense energy that fucking runs everything. Also back by 5000 nuclear weapons. Even if the dollar hyperinflates the TPTB would just introduce another fiat currency. Maybe even a crypto dollar while at the same time banning other cryptos. Besides crypto mining not ecologically friendly. Bitcoin and other cryptos are spectacular virtual speculative instruments and good for moving money around the dark web and the real world beset with currency controls. I wouldn't count on them if the shit hits the fan. In that case real wealth will be operative, food, water, gold,ammo, energy, mobility and health. Cryptos based on techno utopian virtual nitwittery. Reality has a way of killing you. It's only a matter of time that hackers will be eliminated by wet work black ops teams hired by corps, and spurious .gov letter agencies. We are in the blow off phase of the fiat debt monster exponential surge. Virtual assets will vaporize, crypto exchanges will immolate, and other people will kill you for food. Caveat Emptor, ready player one...
Now you're starting to piss me off
HOW MANY TIMES do I have to reiterate that this essay is NOT advocating for investment in bitcoin? I swear, I should have just titled an empty essay "bitcoin" and let everyone descend upon the comments with their preconceived opinions of digital doomsday.
Perhaps the subject matter is too difficult to grok for most people. But in case you need me to spell it out for you bitcoin could come and go, cryptocurrency could go into the dustbin (Its market cap is only as great as Microsoft), but blockchain technology is going to change the digital age. It will create exponentially more efficient banking, it will untether web content from the website owners, it will enforce digital copyrights, it will allow basic contract creation with self-executing closures.
Oh but the U.S. Government is too powerful and the dollar is going to shit so nothing matters and everything must be destroyed.
F the F'n D's
my first suggestion is that, if you want people to
calm down and think carefully about such things, you discontinue applying the definite article: "The Blockchain". it confers upon the concept a mystical status, as if there were One and Only One Blockchain, some sort of divine artifact a la the tablets of Moses.
the correct usage, regardless of the holy fervor of blockchain advocates, is to speak in plurals, of blockchains. A blockchain might or might not be useful in application this, that or the other; The blockchain doesn't exist, outside of platonic musings.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
And as for "the dollar"?
Are you as ready to correct anyone who uses the definite article "The Dollar"?
But point taken. In this day when most people are completely unaware of what a blockchain is I might be introducing unnecessary ambiguity to the conversation.
F the F'n D's
"The Dollar" is a very different term of art from
"The Blockchain". Talking about "The Blockchain" with respect to cryptocurrencies etcetera is akin to talking about "The Paper" with respect to bank notes.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
once upon a time, any old bank could issue its own
bank notes. needless to say, though that worked out well for lots of small-time bankers and for various non-banker fraudsters, it did not work out all that well for the average joe.
there are several reasons why we have regulated banking, and not all of them revolve around the interests of the 0.000001%.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
In our dystopian future
mediums of exchange (currencies) will all have returned to some connection to commodity values. The fundamental problem is that lacking a connection to that which has intrinsic value, fiat currencies rely on the perception of both value and stability. An endless parade of of debt creation, with it's inevitable bubble-pop-bubble rhythm, may mask the theft by inflation and financial enslavement of the people, but only for a short time.
The last thing this planet needs is a currency system that encourages growth. Of course, growth is at the core of capitalism, which bizarrely remains a popular system, even as it charges ahead with the hammer of more consumption and more production, as if that will solve the larger problems we face that are caused precisely by the consumption of an ever growing human population.
Returning to the Stone Age would make better sense than relying on fiat currencies and capitalism to solve our problems.
“What the herd hates most is the one who thinks differently; it is not so much the opinion itself, but the audacity of wanting to think for themselves, something that they do not know how to do.”
-Arthur Schopenhauer (1788-1860)
Another point of ignorance
Nearly every comment to this essay subscribes to the self centered notion that the world revolves around the dollar. A giant part of the crypto market is in Asia. Even if all of the dollar doomsday prognostication is correct, along with dire predictions of the U.S. Government taking draconian steps to erase this asset, the U.S. is not the world. They can disrupt the blockchains but to actually kill them off would be tantamount to an act of war. Russia, Japan, Korea and China would ally themselves against us.
F the F'n D's
Blockchain can solve problems
but crypto currencies while virtual still have real world consequences. I wouldn't count on some Russo/ Asian axis to defend them . Just today China put new restrictions, smothering Bitcoin down to 8000 a now more that 50 % drop from highs, in gangster Russia you run into the barrel of a gun , kidnapping or Putin's cut problem. Japan fiat kings and 200 percent debt to GDP fiends have QE'd over a quadrillion Yen into the world, and Korea wasn't it their exchange that got hacked for 400 million, a situation sure to aggravate the authorities ( think eye of Sauron) in charge of fixing the system. So blockchain yes cryptos still problematic, can they be separated and still prosper ?
I'm retreating to the front parlor
to dust off my abacus.
Whatever
I personally see a future where none of the existing systems of exchange will be worth a shit, whether crypto or paper, digital or coin.
It will be a bushel of apples for a baggie of corn seed. A gallon of lamp oil for three shotgun shells.
Plan on it.
Neither Russia nor China is our enemy.
Neither Iran nor Venezuela are threatening America.
Cuba is a dead horse, stop beating it.