The End Of Crypto Currencies
The hype about crypto currencies is coming to an end.
I have always been distrustful of crypto currencies like Bitcoin and Ether. They made no sense to me. The person who invented the scheme stayed anonymous. The concept foresaw a limited number of total coins with new ones becoming exponentially harder to generate or 'mine'. This would continuously require exponentially more energy. At the core of crypto currencies is the blockchain, a public ledger which holds a record of every transaction. The 'mining' is needed to verify the blockchain ledger. This concept thus had always limits in its design which at some point would make a further expansion impossible.
While people who use Bitcoins can hide behind anonymous wallets which hold their coins any transfer from and to real money would need de-anonymization at some point of exchange. These entry and exits points from and to normal currencies were another major weakness of the whole scheme. Another one was the obvious usefulness of Bitcoins for spies, criminals and tax evaders. Sooner or later authorities would clamp down on them. That is why Yves Smith of Naked Capitalism had christened crypto currencies "prosecution futures".
Crypto currencies are not money. One can not pay ones taxes with them.
In the first years most Bitcoins were acquired to buy drugs or child porn on the darknet. There was then little police activity against those markets. But over time the officials got smarter. When they caught a child porn dealer they could use his wallet address and the public ledger to find everyone who had ever paid for the 'service'. Some of the exchanges, which also have bank-like functions, turned out to be run by criminals. They went bust and the people who had parked their bitcoins at that 'bank' lost their money.
Other exchanges, like Coinbase, went 'official' and even became listed at stock exchanges. But they soon had to agree to turn customer records over to the Justice Department for possible tax evasion and other investigations.
Some claim that crypto currencies are a good investment or inflation hedge. But their value can be manipulated which makes them extremely volatile.
via Heisenberg Report - bigger>
There have been offers to donate to Moon or Alabama in crypto currencies. I never accepted any. It was not worth the potential risk of getting caught up in this or that criminal investigation.
2021 will probably be the year in which Bitcoin finally dies.
The U.S. regime change agent in Russia, Alexey Navalny, received a significant amount of money through Bitcoin 'donations'. That 'foreign money' was quoted as one reason to shut his organization down. Regulation of cryptorcurrencies in Russia is strict. Over the last months China has also started to crack down on everything crypto. Some Chinese geeks used cheap subsidized electricity to 'mine' new Bitcoins. That has now been prohibited:
China’s Qinghai province has announced a new ban on virtual currency mining operations, a government document announced Wednesday.It follows other provinces, including Xinjiang and Inner Mongolia as part of a broader crackdown on the energy-intensive crypto sector in the country.
Chinese crypto miners were doing a large part of the blockchain verification work. That will now become more troublesome.
Kidnapping for ransom had become rare in 'western' societies as the police had learned to catch the culprits when they came to fetch the money. Getting the money is indeed the most difficult part of any ransom operation. With the availability and wider use of Bitcoin, ransom-ware operations, blackmail by hostile encryption of computer drives, became so easy that some criminals offered them as a service.
The recent Colonial pipeline attack put a new light on that:
"Attacks on critical US infrastructure facilitated by cryptocurrencies will not go unnoticed by the US government and other countries. I would argue that the regulatory threat to cryptocurrencies has increased exponentially."Critics of bitcoin and other cryptocurrencies have long argued that they facilitate crime thanks to their anonymous and decentralized nature, which means they are very hard to trace and link to individuals.
Treasury Secretary Janet Yellen said in January that she was concerned about cryptocurrencies for this reason. "I think many are used - at least in a transaction sense - mainly for illicit financing," she told lawmakers during her confirmation hearing.
Gary Gensler, the Chair of the Securities and Exchange Commission markets regulator, has made similar criticisms in the past.
"Beyond use on the darknet, there are those around the globe who seek to use these new technologies to thwart government oversight of money laundering, tax evasion, terrorism financing, or evading sanctions regimes," he told Congress in 2018.
In the case of Colonial the FBI managed to retrieve a part of the ransom money the company had paid. This shows that there are ways and means to bust the use of bitcoins for criminal purposes. The Internal Revenue Service is also asking Congress for new authorities to go after crypto users.
With regulators and police all over the world cracking down on the usage of Bitcoin and other crypto currencies these have lost a main purpose of their existence. Using them will become stigmatized. Owning some will be seen as suspicious.
It is time for them to wither away.
Posted by b on June 9, 2021 at 18:00 UTC | Permalink
next page »You said cryptos are vulnerable to manipulation. And so, what makes it so different than the current stock markets? Make no mistake about it, the current crackdown has nothing to do with tax evasion or underground dealings, despite what governments has been spouting. The tax men just want their cut, period. As soon as cryptos come under their umbrella of regulations, everything will be back to normal.
Posted by: Andrew Ho | Jun 9 2021 18:12 utc | 2
My counter view is that a significant part of the world population lacks internet, not to mention elementary IT education, as well as low incomes, and as more and more people (billions) with growing incomes join the internet, this will prop up crypto currencies in to the future.
That is, there is a lot of untapped potential in the digitalisation of non-western regions of the world.
Posted by: Passer by | Jun 9 2021 18:21 utc | 3
was the article deliberately written to invoke a lot of responses in the comment section? inb4 a massive "you know nothing about crypto currencies" comments.
This will be a fun comment section.
Posted by: Hoyeru | Jun 9 2021 18:21 utc | 4
it's true, though. if Bitcoin's blockchain is so secure, how come millions of people have had their bitcoins stolen?
Posted by: Hoyeru | Jun 9 2021 18:22 utc | 5
Crypto – it was the best of times and it was the worst. You are going to get strong feelings on both ends.
I learned how to program crypto with Python: it is not that difficult. Doing so eliminates all the mystery. Not programming it yourself, you are always at the mercy of “experts”. Bitcoin has some really neat technology. But as B points out: it is a political issue.
Just some rant: The mining of Bitcoin is just not true. They put a “mining” label on “proof of work” which is used in a distributed ledger. You just try to get a bunch of zeros on a hash to show that you did work. It is really stupid and there is zero real work being done. But to get some Bitcoins transferred to you, you need to be the first to perform the task, and if you did everything right, then your block will be accepted. For your service, you are rewarded with coin. (Sorry for the techno babble)
But in any case, the technology is solid and it can solve a variety of problems. I just do not think that the BIS or central banks in general, will want competition.
Posted by: meshpal | Jun 9 2021 18:35 utc | 6
Every crypto bull run has had a mid-cycle correction where all the euphoria is wiped out, to reload for the second leg up. I was wondering what would be the best call for peak bitcoin FUD at the bottom of the correction, and you may very well have provided it! Every cycle has its "authorities cracking down" scares, "someone stole my bitcoin" (the exchanges have become a lot more secure since then) etc., and now we have added the Elon repeated lunacy and now MOA! Thankyou for this trading signal, see you in a few months when one of us will look very silly.
Posted by: Roger | Jun 9 2021 18:35 utc | 7
Without a sober analysis of the reasons someone decided to create a decentralized crypto like BTC, renders your argument for it's demise seem infantile, uneducated and narrow minded.
Posted by: Jezabeel | Jun 9 2021 18:39 utc | 8
great topic b... thanks for bringing it up... "Sooner or later authorities would clamp down on them." was al capone working with the authorities until he wasn't?? are the lead banks - goldman sachs, jpm and etc working with the authorities still, or have they usurped the authorities ability to do anything?? is the fox guarding the chicken coup?? that is what it looks like to me... so, yeah 'the authorities' don't like the competition... i get that.. but i doubt anyone is going to get rid of the city of london and all the offshore banking and tax havens that were set up with full authority from the same authorities we are going to now rely on to go after all the criminals using bitcoin...
i tend to see it like @ 2 andrew ho... once they conform, there will be no problem taking money from al capone or whoever it is as the case may be... i think bitcoin has a bit more life left in it, but i see the problems with it too - no transparency and no revelation of who is owning or controlling what - sort of like our present form of governance until the federal reserve, or bank of canada, as the case may be... the foxes are still overseeing the hen house...
Posted by: james | Jun 9 2021 18:44 utc | 9
@ Lozion | Jun 9 2021 18:11 utc | 1:
I think you missed the "El Salvador" part of the report.
Posted by: corvo | Jun 9 2021 18:49 utc | 11
Michael Hudson described crypto currencies as similar to Andy Warhol paintings. Essentially garbage that some people are prepared to put astronomical value on.
Posted by: calzone | Jun 9 2021 18:50 utc | 12
Seems the 'war against crypto' began when BTC hit a one trillion dollar evaluation. Many of these 'coins/tokens' are capitalized in the multi-billions. That's a bit more than 'chump change' flown from investments in the 'markets'. Wars have been waged for a lot less.
But what is probably more irksome than diminished investments in traditional vehicles, is the decentralized, crypto (hidden/secret), independent nature of the WORLD VIEW of those who've tried to break free from the fake system of debt-financed fiat currency.
I suspect, like Russian Intelligence is always two-steps ahead of the 'west', the crypto-creators are steps ahead of the grifters who've built civilization upon usury and vainglory.
Posted by: gottlieb | Jun 9 2021 19:07 utc | 13
I was surprised that Bitcoin was touted hard as "The Future Money" when it exhibits properties that are - as b rightly says - rather undesirable for money. In addition to some of the points already mentioned: constant deflation because of limited supply combined with non-infinite divisibility; verification whether your transaction came through takes long because of very low transaction speeds (on the order of ~7 transactions per second; much too low for, say, a grocery store, let alone the whole world...)
And people like Musk can raise and crash its value on demand thru tweets, making lots o' non-BTC money in the process and earning praise for their speculation skills.
But we got the word "Blockchain": one of the brightest stars on buzzword heaven today.
Posted by: pachinko | Jun 9 2021 19:12 utc | 14
I don't own any crypto or digital currencies. Wish I did.
Now, the argument that crypto currencies should be banned/regulated because of criminal use is not valid. By far, the US dollar is used in more criminal activity by orders of magnitude. So, ban the USD first if that is the logic.
Theoretically, there really should be some type of anonymous international currency that cannot be seized, controlled, or sanctioned by ANY government. Especially the United States. I am not sure if any crypto currency can do that yet.
Even though I am a citizen of the US and involved in no criminal activity, the US government believes that I DO NOT have the right to financial privacy and I must ask their permission to own, transfer or trade large amounts of money inside or outside US jurisdictions. "Know your customer" and FATCA regulations come to mind. Simply owning cash, without proving the source, is now de facto illegal and it can all be easily seized through "civil asset forfeiture" laws.
However, I DO have the right to financial privacy and anonymous crypto currencies would allow me to exercise my rights free from confiscatory government interference.
There is nothing wrong with that.
Posted by: Mar man | Jun 9 2021 19:13 utc | 15
Cryptocurrency is libertarian fantasy. It rests on the fictional ideas that individuals in markets can handle commodity exchange without the state and a Central Bank, that money is just a neutral means of exchange, and that free markets tend to equilibrium prices and the rational allocation of resources. Libertarians believe erroneously that any political infringement on markets, currencies, money supply and interest rates cause market distortions and material imbalances. It's a dogmatic, hypothetical, market fundamentalist religion.
Posted by: Prof | Jun 9 2021 19:15 utc | 16
The main reason cryptocurrencies will flourish is the corrupt banking system and some goverments. The trouble and expense that common people go through to manage their money is incredible. All this Colonial caper is just BS to intimidate the public. I wonder how they got the privaty key of those 12 million in coins. Pure BS.
Posted by: Viktor K | Jun 9 2021 19:15 utc | 17
@Andrew Ho
"You said cryptos are vulnerable to manipulation. And so, what makes it so different than the current stock markets?"
It isn't different. But the entire point of crypto, which basically everyone seems to have forgotten, is that they were supposed to be currencies, not investment assets. Almost no one is even pretending to treat them like that anymore. Now it's all "to the moon!".
So, the dream of digital money without banks, that's well and truly dead. Which then only leaves crypto as a virtual stock to invest actual money into. But crypto does absolutely nothing. It isn't based on anything useful, it doesn't represent anything other than a bunch of wasted energy and trashed video cards (and now hard drives, with the somehow even more moronic new flavors of coin). Crypto isn't a real investment asset, it's just a ponzi scheme. The prices go up because new dumb money keeps getting in on the scam.
In the end a few early adopters will cash in their wins at the banks (you know, those evil banks this was supposed to be a rebellion against), and 99% of the idiots will bought into this tripe will come out with nothing.
Posted by: Ben | Jun 9 2021 19:19 utc | 18
Blockchain in Oil & GasExplore use cases and perspectives
Blockchain is outgrowing its adolescent cryptocurrency identity of distributed consensus ledgers to become smart contracts facilitators. Beyond creating efficiencies by removing the legal and financial intermediary in a contractual agreement, blockchain assumes the role of trusted gatekeeper and transparency purveyor. In the emerging “trust economy” in which a company’s assets and reputation are becoming both increasingly valuable and vulnerable, the following use cases illustrate blockchain’s potential in the oil & gas industry to empower and protect.
Posted by: Osa Kim | Jun 9 2021 19:22 utc | 19
https://www2.deloitte.com/us/en/pages/consulting/articles/blockchain-digital-oil-and-gas.html
Posted by: OsaKim | Jun 9 2021 19:26 utc | 20
@ Mar man | Jun 9 2021 19:13 utc | 15:
Now, the argument that crypto currencies should be banned/regulated because of criminal use is not valid. By far, the US dollar is used in more criminal activity by orders of magnitude. So, ban the USD first if that is the logic.
This hints at why governments have been so keen on eliminating paper currency and coinage. Doing so would render impossible any transaction that can't be taxed at the source, like yard sales, to say nothing of illegal activities like buying hookers or blow. Of course, people with Hunter Biden's connections will always find a way around that.
As far as white-collar crime is concerned, I haven't seen much evidence that governments are worried about that, to the extent that they aren't active participants in it.
Posted by: corvo | Jun 9 2021 19:31 utc | 21
Mar man @15--
You wrote:
"Even though I am a citizen of the US and involved in no criminal activity..."
Are you sure about that? Do you pay federal income taxes including FICA? If so, then you help finance all the illegal activities of the Outlaw US Empire including its extensive terroristic activities which are a felony to aide. Yes, that's a very sad fact and one almost impossible to avoid.
Imagine the planet one day spending most of its energy on computer cycles. Last I checked datacenters alone were using 50GW, so there is time for that. I wonder what the total usage is calculating bitcoins.
Posted by: Tuyzentfloot | Jun 9 2021 19:32 utc | 23
Do you want to live a private plantation or sovereign nation?
Bitcoin and similar crypto currencies are PRIVATE and financial speculative instruments for a financialized pyramid scheme. Its value is defined by the next buyer and it is a bet. Nothing more. Nothing less.
Digital Yuan is a SOVEREIGN money. The prospect of private cryptocurrencies replacing government-backed money, NIL. What does the constitution say about, who creates money in the nation?
When an individual is using sovereign money they’re living in a sovereign nation. When an individual is using private money they’re living in a PRIVATE PLANTATION.
The existing private banking system is controlled by the Global Financial Syndicate. They appoint the central bank chairperson in the U$A, UK, EU,... This Syndicate calling the shots these days, would start a war before allowing private digital currencies to dominate that they have no stake in.
What are the key common characteristics of the individual appointed to the Fed Chairpersons & U$A’s Secretary of the Treasury? How about in the UK and EU for similar positions? Who controls you and your world?
Posted by: Max | Jun 9 2021 19:34 utc | 24
There was nothing novel or indicative of any systemic weakness in the Bitcoin blockchain in what the FBI did.
How the FBI likely seized bitcoin Until the FBI is more transparent with its methods, it’s not possible to know exactly how federal investigators managed to retrieve the private key in question. But there are a few possible scenarios.DarkSide, the cyber criminal gang that targeted Colonial, reportedly used a payment server to collect the funds. A centralized platform like this is relatively easy for the FBI to track.
“Following the money remains one of the most basic, yet powerful, tools we have,” said Deputy Attorney General Lisa O. Monaco in a statement on Monday.
“Because these transnational, organized criminal groups are facilitating these payments in cryptocurrency, and because of the transparency and traceability that cryptocurrency provides, you can actually more effectively follow the money and potentially mitigate and arrest illicit activity within this ecosystem, than you can with traditional finance and fiat currencies and payments,” explained Jesse Spiro, Global Head of Policy for Chainalysis, a company that provides blockchain forensic and investigative services to private sector companies, including crypto exchanges.
When a ransomware-related payment is made, Chainalysis is actually able to produce and generate what Spiro characterizes as “unprecedented intelligence and information in relation to the supply chain.”
Chainalysis was not able to speak to any specifics on the Colonial investigation.
Once the FBI had that wallet in hand, it’s extremely unlikely they broke something called the “Elliptic Curve Digital Signature Algorithm,” which is how the digital currency ensures that bitcoin can only be spent by the rightful owner.
“In fact, that is so far-fetched, as to be impossible,” said Nic Carter, founding partner at Castle Island Ventures.
What’s much more likely, according to Carter, is that they were able to access a server where the hackers stored private key information. That points not to any fundamental flaw in bitcoin’s security, but rather a case of bad IT hygiene for a criminal organization.
Just take the 2014 hack of Mt. Gox, once the leading bitcoin exchange. It was the first high-profile hack in cryptocurrency history. The exchange filed for bankruptcy and lost 750,000 of its users’ bitcoins, plus 100,000 of its own.
“Bitcoin itself functioned perfectly, but what functioned imperfectly was their system of storing your private keys,” explained Carter.
This is why some cyber criminals take their coins offline to cold storage, in order to insulate nefariously earned tokens from the government and law enforcement.
“If you want to store your coins truly outside of the reach of the state, you can just hold those private keys directly. That’s the equivalent of burying a bar of gold in your backyard,” said Carter.
Note to cybercriminals and anyone holding cryptocurrency in an exchange (or wallet) where the USA has jurisdiction: Keep them in "cold storage" on a hardware wallet and don't use a payment server to collect ransom. QED
Posted by: _K_C_ | Jun 9 2021 19:41 utc | 25
> "I have always been distrustful of crypto currencies like Bitcoin and Ether. They made no sense to me."
i know what you mean. I'm the same with lasers and the internal combustion engine.
Posted by: mijj | Jun 9 2021 19:41 utc | 26
Bitcoin is taxable and an open ponzi. The last ones to sell lose. No real world value is baked in.
--
How commentators before me pointed out: Why would an open free market's development and effects on socieyu be magically "reasonable" or "good" for anyone involved at all? This is mere faith. It is alchemistic and unrealistic "stuff in, good out" thinking.
Posted by: Peter Kanzler | Jun 9 2021 19:45 utc | 27
@ Passer 3
My counter view is that a significant part of the world population lacks internet, not to mention elementary IT education, as well as low incomes, and as more and more people (billions) with growing incomes join the internet, this will prop up crypto currencies in to the future.
That is, there is a lot of untapped potential in the digitalisation of non-western regions of the world.
You are confusing cryptocurrency with digital currency. They are not the same thing. A currency, e.g. China’s digital RMB, can be digital but not crypto.
All cryptocurrencies are digital but not all digital currencies are crypto.
Posted by: Antibody | Jun 9 2021 19:50 utc | 28
@corvo #21
Yes, limiting certain types of criminal activity has never really been a focus for the US. All federal, state and local US law enforcement violate more rights and steal more money than all the other criminals combined.
@karlof1 #22
Yes, I have financed the US government through taxes. It was certainly against my will and I plan to leave the US. I will then renounce citizenship as soon as feasible to escape/defect from this criminal regime. I really want nothing to do with the US and all of the brainwashed/brain dead people here.
Posted by: Mar man | Jun 9 2021 19:50 utc | 29
"Posted by: Roger | Jun 9 2021 18:35 utc | 7"
LOL, that was my exact thoughts when I read b's piece.
Posted by: arby | Jun 9 2021 20:00 utc | 30
b is uncannily spot on the issues and provides reasonable evidence on controversial topics. In my opinion bitcoin is not his forte. Along with energy and money, bitcoin is one of the least understood subjects of modern civilization. At it’s core it’s the technological implementation of pure anarchism... rules without rulers.
Permissionless, decentralized, uncensorable, and stateless, it is a platform that can be used by anybody just about anywhere. Most of the misinformation and FUD against bitcoin is easy to dismiss. I would recommend listening to Andreas Antonopoulos
Most importantly, people on the left side of the political spectrum need to realize it’s potential as an empire killer.
Posted by: Tobin Paz | Jun 9 2021 20:05 utc | 31
Someone said "Bitcoin combines everything people don't know about technology with everything people don't know about money"
It seems to me that arguments for cryptocurrency are typically emotional, aspirational, theoretical.
The arguments I've heard against cryptocurrency are typically factual and practical.
But I'd love to see some hard-nosed, practical pro views elucidated, views that tackle head on the criticisms and don't dismiss them but deal with them fairly so we can all understand better.
Posted by: Deltaeus | Jun 9 2021 20:07 utc | 32
@Max | Jun 9 2021 19:34 utc | 24:
What does the constitution say about, who creates money in the nation?
Well, we do have an end run around the Constitution on that one. The Constitution gives Congress the power "[t]o coin Money [and] regulate the Value thereof," and to the extent that the US Treasury creates debt, it creates money, I suppose. But it certainly does nothing to regulate the value of money, except as a largely accidental byproduct of issuing ever more debt -- and issuance of paper currency, of course, has been handed over to an essentially private bank. But we still have gummint-issued coins, yay . . . which we're not allowed to melt down for their scrap metal value when -- oopsie! -- that exceeds the nominal monetary value of the coin.
Posted by: corvo | Jun 9 2021 20:11 utc | 33
Posted by: Antibody | Jun 9 2021 19:50 utc | 27
>>You are confusing cryptocurrency with digital currency.
No, you confused my comment. Digitalisation - by that i mean plugging more people and their money into the internet, supports the growth of crypto currencies.
Posted by: Passer by | Jun 9 2021 20:23 utc | 34
Mar man @28--
Thanks for your honest reply! Unfortunately, my age and responsibilities don't allow me to take the action you've vowed. I hope you're able to accomplish your endeavor!
@Deltaeus 31
Providing banking services to the unbanked, especially in the Global South, and replacing the debt based monetary system that requires perpetual growth are pretty good arguments for bitcoin.
Posted by: Tobin Paz | Jun 9 2021 20:28 utc | 36
Good riddance. May all the crypto shit die a quick and painful death. And may all the suckers who put money in them lose it entirely.
Posted by: Clueless Joe | Jun 9 2021 20:28 utc | 37
>>Providing banking services to the unbanked, especially in the Global South
Yup, this is what i'm saying too.
El Salvador becomes first country to adopt bitcoin as legal tender
Posted by: Passer by | Jun 9 2021 20:36 utc | 38
Re: colonial pipeline, it’s important to note that the ransomed are hack was not on operations systems but colonial’s payment system. The hack didn’t shut down the pipeline, colonial did because they couldn’t get paid. My tech/crypto friends point out that it’s difficult to obscure the path of BTC but that the fbi wouldn’t have gotten it if they had held the BTC on their own infrastructure not connected to the internet. Based on the statement from the group that they weren’t targeting operations infrastructure that they decided to leave it out in plain sight (or they were relatively incompetent).
It’s like the headlines saying the FBI broke an encrypted communication system but in reality the FBI built an encrypted communication system with a back door and people used it.
Posted by: Lex | Jun 9 2021 20:42 utc | 39
"Posted by: pachinko | Jun 9 2021 19:12 utc | 14"
" (on the order of ~7 transactions per second; much too low for, say, a grocery store, let alone the whole world...)"
Kim Dotcom says that is why one would use bitcoin as a store of value and bitcoin cash ( which was a fork of bitcoin)for transactions. According to him bitcoin cash transactions are insanely fast and very very cheap.
Posted by: arby | Jun 9 2021 20:48 utc | 40
Looking forward to hearing your opinion on this in 10 years. It will be very interesting to watch how it withers away as you say. Here is a good place to do some real research on Bitcoin as you seem lacking in knowledge on the subject: https://learn.saylor.org/course/view.php?id=468
Posted by: Dan | Jun 9 2021 20:52 utc | 41
"some of the exchanges, which also have bank-like functions, turned out to be run by criminals."
Like the Wall Street criminal cartel of banks. You can be sure that Wall Street would do all in its power to either destroy or swallow the new game.
Posted by: uncle tungsten | Jun 9 2021 20:52 utc | 42
@ corvo | Jun 9 2021 20:11 utc | 32
Good points... The Congress doesn’t follow the constitution but wants Americans to follow it. Where are the DAs, Supreme Court, Justice Department, law enforcement, state governments...? Looking the other way? No INTEGRITY?
The financial system in the U$A was built on thievery. The banksters create debt from promissory notes, this is what creates the majority of money into circulation through the form of credit. In summation, majority of money is created by private banks and the U$A is a private plantation (Animal Farm) and a suzerain state, not a sovereign nation.
Thrice after its independence, the U$A administrations & Congress have enabled the looting and enslavement of its own American people through its financial system.
First, through the First Bank of the United States, whose charter was not renewed in 1811. Why?
Second, through the Second Bank of the United States, whose charter to renew was vetoed by Andrew Jackson in 1832.
Thirdly, through the establishment of the Federal Reserve Bank in 1913. Why didn’t they call it Third Bank of the United States?
Wow! American administrations have been working to cheat & steal from Americans and world.
Why the world wants to use the PRIVATE MONEY as the world reserve currency?
Do you want to live in a private plantation or sovereign nation?
Posted by: Max | Jun 9 2021 20:53 utc | 43
To Max. The Constitution uses the archaic term coin which was taken literally when the then secret 1913 Banking Act was created. It stole then right to create US 'currency' and gave it to banks, the creators of the Act. The only way banks can create currency is to create debt. A nonsensical, self serving scheme. The government can still create coins and has led to forward thinkers like Ellen Brown (Web Of Debt) to suggest the government create large denomination coins to get out from under the bank created debt trap.
Posted by: Carol Davidek | Jun 9 2021 20:54 utc | 44
Humans live in a group. We're a herd animal. A herd has a hierarchy. Money is what our society uses to denote our place in the hierarchy.
Posted by: passerby | Jun 9 2021 20:56 utc | 45
Like the Iron Gustav regarding cars once upon time you miss the implications of that kind of technology is bringing to current and future societies. Your knowledge seems to rely too much on fancy and msm headlines focussing on greed and gain so that the true matter of it is diffused to you. Btw: Euro, Dollar a.s.o isnt money either, its currency. Schuster bleib bei Deinen Leisten. Cheers
Posted by: Bart Schuster | Jun 9 2021 21:01 utc | 46
@ Carol Davidek (#43), thanks. I am familiar with our history, Ellen Brown’s work, Public Banking, .... This needs to be called the GREATEST FRAUD in the history of humanity.
How is it that most nations (UK, EU, Japan...) have a similar monetary system? These suzerainties are controlled by the same SYNDICATE.
Why the production of money by banks?
Why do many not question the fact, that the nation’s money supply being in the hands of private coterie is effectively prima facie evidence that the administration is already under the thumb of the private Money Power?
Why should a small private clans of people (Money Power) profit by renting humanity its money supply?
How long will humanity continue to be ENSLAVED?
There is no sovereignty without monetary sovereignty and there is no democracy without democratic oversight of the monetary system. The U$A is a PRIVATE Plantation.
Posted by: Max | Jun 9 2021 21:08 utc | 47
This column will surely now take its place alongside the Paul Krugman column of the 90s wherein he proclaimed that the internet was just another type of fax machine.
Dude
Cash is the ultimate means of illegal activity. Smearing bitcoin is just ignorant. Who cares? Go look at pictures of pallets of dollars in Mexican cartel safe houses and then try to tell me bitcoin is bad because bad people use it for purposes you don't approve of.
The last stray is quoting Yves Smith for anything. She's been totally out of touch for 4 years now. Just like Paul Krugman.. You've joined the pantheon of the clueless.
Good luck.
Posted by: restless94110 | Jun 9 2021 21:14 utc | 48
Your analysis is wrong. I'm no fan of Crytocurrencies but they are here to stay and grow. The authoritarian mindset is being replaced in the next 2 generations, and with it, the authority of central banks.
Posted by: Abbas Naderi | Jun 9 2021 21:23 utc | 49
Tobin Paz | Jun 9 2021 20:05 utc | 30
"Most importantly, people on the left side of the political spectrum need to realize it’s potential as an empire killer."
This is so funny. The masses or working class and poor in the world numbering billions can't afford .01% of a bit coin. It will never be a currency and will never be used for anything other than selfish investment purposes. Everyone I know who is buying bitcoin has never had a leftist thought in their consumer heads. Not that they are bad people, just not interested in any kind of political revolution. Libertarian Americans, with their obsession for individual rights were among the loudest initial proponents of Bitcoin online and they are neither leftist nor revolutionary.
I agree with the ponzi scheme analysis.
If it quacks and looks like a duck........
If we apply the same logical scrutiny to the Bitcoin Story as we do to all western propaganda it's easy to see that it reads like a hollywood script including the anonymous creation myth and the "raid" on the Silk Road by the FBI and subsequent "confiscation" of Bitcoin $$$. Anyone else make the connection between Silk Road and the CIA drug smuggling revelations? Also its inevitable development into a commodity tells us everything we need to know about who made it and why.
I hope my friends get out before the crash, but like the housing bubble in my country it just keeps on inflating so who knows when it will be? Ordinary people making money from the market is one of the ways they keep the working class stupid and quiet.
Posted by: K | Jun 9 2021 21:34 utc | 50
Reposting:
On top of that, crypto depends on insane amounts of electricity and computing power to exist - such infrastructure only exist (ironically), in China.
The whole thing is simply not viable.
https://abcnews.go.com/International/wireStory/el-salvador-makes-bitcoin-legal-tender-78172303
Crypto Currency is here to stay.. It is growing leaps and bounds, it will in my opinion take down the nation state system..one step at a time. One of the best way to assure democracy in the world is to make sure everyone understands this system and can use it safely.
Several problems in design remain but transaction anonymity is morphing. It is but a matter of time before the private banks and nation state regulated banks and the nation state authorities lose their grip of global human behavior; because in its final form, there will be no way to track and tax the resources and incomes of the governed.
Currently using crypto exchanges is like mining gold in the wild west. Everyone is looking for a way to corrupt the system.. when all of the corruptions are discovered, the crypto will be the mode for digital currencies.
Posted by: snake | Jun 9 2021 21:42 utc | 52
if anyone knows what value is, it is Elon. and the market. that's why Tesla is worth more than Toyota. and maybe why Elon's opting for Mars. on the other hand, criminals who've gone legit say crypto enables crime. but it can't be any worse than the dollar. or yen. or gold. or...sweet texas crude.
but what about the blockchain? ledgers being open to the participants in a transaction? would that change how Citibank screws over people? can the blockchain eliminate XX% of white collar jobs, like lawyers? financiers raking in the billions in the US "healthcare system"?
people who have so much that they gamble on questions of value should not be deciding the value of anything in this world. they should go hungry on the streets and have any USPD torment them for a while. see how their not paid taxes really work. notice the street sweepers running 24/7/365, sweeping up behind the motorized smoke stacks everywhere.
Posted by: rjb1.5 | Jun 9 2021 21:45 utc | 53
K @30
This is so funny. The masses or working class and poor in the world numbering billions can't afford .01% of a bit coin.
One BTC is 100 million satoshis, you are thinking too big. Ironically many of the masses outside of the west have gained wealth since they found value in it, especially in
countries terrorized by economic imperialism.
It will never be a currency and will never be used for anything other than selfish investment purposes.
I did provide a link
Libertarian Americans, with their obsession for individual rights were among the loudest initial proponents of Bitcoin online and they are neither leftist nor revolutionary.
That is unfortunate since in my opinion bitcoin is egalitarian and revolutionary. I think it played out this way because the left is financially illiterate.
Posted by: Tobin Paz | Jun 9 2021 21:56 utc | 54
i've spent the coronavirus lockdown very near the gov't buildings of a state in the Pacific NW. assuming that any of these jobs are necessary, especially Dept of Commerce, for how long has it been unnecessary for thousands of state employees to spend hours and hours a week commuting to work? twenty years? they haven't been showing up at the office for 15 months now and the world didn't end. (the free time gained thru not commuting is considered an economic loss to the system. an empty parking lot is a sin. an unjammed highway is a crime worthy of Mao.)
capitalism is efficient at social control. efficiency is beneficial for the owners. that's what efficiency means. b may be correct about bitcoin but any real efficiency thru innovation will meet with nothing but resistance. b/c efficiency disrupts control. certain things, like bailouts, happen at warp speed. light bulbs in public places can go change themselves.
Posted by: rjb1.5 | Jun 9 2021 22:05 utc | 55
@7 Hi Roger. You sound like a player. As you may have noticed most people here are celebrating the death of capitalism. I'm not so sure myself. Never owned Bitcoin because the volatility scared me. But the way it's getting beat up lately has me thinking. Triple low and well off its peak but it's still hasn't totally collapsed. Lots of Reddit types buying dips. There's still money to be made. What would you say is a good entry point?
Posted by: dh | Jun 9 2021 22:08 utc | 56
Cryptos are a fantasy about a kind of money that isn't issued or vouched for by an authority. It's a fantasy because money is defined by the quiet and oblique participation of a third party who guarantees the value, historically signified by the theological image stamped upon it. In the case of cryptos the fantasy is that this third party has been eliminated. But it hasn't: the head of the Queen or the signature of the issuer, or the physical presence of an alchemical preciousness (bullion coin), has simply been replaced by the blockchain ledger (not mention the internet, and electricity itself! or else society, ethics, exchange relations...) without which the privacy and verification vanishes. In an attempt to escape money's theological origin (which is really value's ultimate location in the invisible world of the gods) cryptos have simply swapped one form of reification for another. It remains, like any other currency, dependent on an infrastructure and a system shared by a community of users (the stamp on the coin traditionally referred to that community, e.g. ΑΘΕ on Athenian owls). Cryptos' delusion is that can be universally accepted and guarantees value in itself. But there is always somewhere in the world where it is worth nothing. From the point of view of the anthropology of human exchange the motives behind it are not at all new, but in fact are very archaic.
ps: VK is conspicuously silent on this topic...
Posted by: Patroklos | Jun 9 2021 22:13 utc | 57
oh wait. VK posted as I was writing... Marxist minds thinking alike perhaps.
Posted by: Patroklos | Jun 9 2021 22:14 utc | 58
I always had the same thought. Seems that transparency and accountability being really and actually instituted in our monetary systems would be much healthier, and in the long run, more beneficial for the monetary system itself and those who participate in its use. 'Bitcoin' and such are, even at first glance, obviously not geared in that direction, to say the least.
Tobin Paz 30
I don't think you disagree with b.
Your reasons that BC is great are the same as his reasons that it will likely be shut down!
Posted by: Keith McClary | Jun 9 2021 22:21 utc | 60
I think decentralized currencies like Bitcoin can be held as a hedge against inflation. Unless the central banks can drive it to zero, I think they'll fail.
Posted by: Antiwar7 | Jun 9 2021 22:26 utc | 61
OsaKim | Jun 9 2021 19:26 utc | 20
"all wealth is created," said some old guy. i was wondering when someone would bring up trading energy, oil esp, in crypto. it's a barrel of a gun keeping a barrel of oil traded in the dollar.
Posted by: rjb1.5 | Jun 9 2021 22:29 utc | 62
National currencies in the west are printed by fiat and in ever-increasing quantities, nullifying the very connection between money and labor that defines it in the first place. As long as this condition persists, cryptocurrencies will be attractive as inflation hedges, if nothing more. An effective hedge is an attractive asset to many market participants and as such crypto will continue to accumulate value, exposure, and adherents at all levels of society so long as the rabid debasement of so-called sovereign currencies continues. Because of the reckless leverage and associated tail risk in fiat currency-denominated assets, said debasement cannot be reversed without the destruction of the entire western financial edifice.
Further, crypto markets currently function as a sink of excess liquidity in the overall system, preventing further runaway inflation in risk and hard assets. This is actually tolerated and welcomed by monetary authorities as it allows them to extend and pretend a little longer before the inevitable exponential hyperinflation, already in process mind you, is recognized by the public at large.
Powerful private financial institutions are aware of this situation and are positioned/hedged appropriately. Said institutions wield significant power in the corporate/financial anarchy that is the United States and their predictable greed is one of the pillars of the system.
The environmental FUD around mining has contributed to the recent cooling of the markets but eliminating Chinese miners (as seems to be the CCP’s decision) who use coal power as opposed to the renewables used by the rest of the miners (a perfect use of the marginal, unused production of renewables btw) will remove that.
Short of the invention of money itself the world has never seen such a coordinated revolution in how value is stored and exchanged. Rumors of its impending demise are numerous but mistaken.
Posted by: AHB | Jun 9 2021 23:03 utc | 63
When somehow the internet is crippled, blocked, or shut down, bitcoin won’t be worth much. It has no military to shore it up, keep populations in line. It is more “imaginary” than money, if that’s possible.
Posted by: Geoff | Jun 9 2021 23:14 utc | 64
The CIA war against Scientists is in high gear
The narrative today is that the scientiffic community covered up evidence in order to protect China from having to disclose that they let it escape from Wuhan Virology Inst. The story being passed around like salt is from 'Petrovsky https://medicalxpress.com/news/2020-05-covid-mystery.html'
The argument is that Covid19 protein is more efficient at infecting humans than any of the animals the tested. My question to any of you is this, is this, how is this surprising ? ? ? Once a virus mutates to infect humans, do they typically remain just as deadly to the original host species?
(counting to 10, well maybe 100, before I respond to the greatly diminished American Conservative)
Posted by: Christian J. Chuba | Jun 9 2021 23:25 utc | 65
I am a long-time reader. Will knowledgeable contributors to this estimable blog comment on Hedera Hashgraph?
Posted by: Maria Dominguez | Jun 9 2021 23:32 utc | 66
Ben @ 18 said:
Crypto isn't a real investment asset, it's just a ponzi scheme. The prices go up because new dumb money keeps getting in on the scam.
___________________________________
yup
As long as there are more people who want to buy than people who want to sell the price will go up. When more people want to sell it goes down.
Posted by: jinn | Jun 9 2021 23:32 utc | 67
@AHB #62
"Short of the invention of money itself the world has never seen such a coordinated revolution in how value is stored and exchanged."
The key phrase here is "Short of the invention of money itself". I'm not convinced cryptos are anything more than an extension of this. Money has always been virtual because it can only ever substitute for value; in other words, money signifies value even if those who use it fetishize it (i.e., they believe that gold, for example, has intrinsic value). Since money is always a referent, one place removed, from value, one can then understand why Plato refuses money in his ideal city, and in turn why Aristotle analysed it very accurately in the Politics and Nichomachean Ethics as the hypostasis of human agreements about the commensurability of things. Aristotle rightly identified money as a political and ethical phenomenon not a natural one. The dream that we have suddenly discovered an independently neutral form of 'natural' value is patent rubbish.
I therefore want to know what this "coordinated revolution in how value is stored and exchanged" actually consists of. What makes it truly different from other monetary revolutions like invisible credit in a double-entry ledger, or paper fiat currency, or the fetishization of bullion, or the Fed Reserve, etc. I'm not disagreeing in general, but I want you to explain what's really revolutionary here.
What seems missing from this whole analysis is a proper philosophical consideration of what 'value' actually is. Only then can we reflect on what's new about what cryptos are doing in relation to value.
Posted by: Patroklos | Jun 9 2021 23:36 utc | 68
What is the minimum duration of internet outage that causes all bitcoins to melt in supersafe vaults?
Without internet, bitcoins are useless.
Posted by: Anonymous | Jun 9 2021 23:43 utc | 69
Posted by: Anonymous | Jun 9 2021 23:43 utc | 68
Without a functioning society and an ethics of human exchange all money is useless. If Tom Hanks had discovered gold on his island in Castaway he would chewed on it for all of 5 seconds before he realised it was not helpful. I was particularly impressed by the way the series Walking Dead rightly made any kind of money an instant casualty of the zombie apocalypse. You need a division of labour reaching a critical mass before this takes place, hence Mike Hudson's interest in the Bronze age of the Near East.
Posted by: Patroklos | Jun 9 2021 23:50 utc | 70
@ Posted by: AHB | Jun 9 2021 23:03 utc | 62
Cryptocurrency is not money. Yes, it is a financial asset, but you cannot use it as unit of accountancy. Indeed (and ironically) the only way a Bitcoin holder can know how much value he/she stored in his/her Bitcoin wallet and how much it is worth at a given point in time is by using USDs to measure it.
It's not up to debate. Cryptocurrency is not - and never will be (because it is literally impossible, not because of some conspiracy) - money.
And then there's the discussion crypto is a useful reserve of value (on par with gold). Just look at their volatility and you will know it isn't a viable storage of value.
This extract from b's article raises the possibility of an 'interesting' potential conflict of interest...
"The U.S. regime change agent in Russia, Alexey Navalny, received a significant amount of money through Bitcoin 'donations'. That 'foreign money' was quoted as one reason to shut his organization down. Regulation of cryptocurrencies in Russia is strict."
It'd be funny if it turns out that the CIA and/or the sleazy Poms have been using Bitcoin to fund Navalny's pratfalls, wouldn't it?
Posted by: Hoarsewhisperer | Jun 9 2021 23:55 utc | 72
"Money has always been virtual because it can only ever substitute for value..."
Obviously, "value" is an abstraction that assumes that there exists exchange of "valuables" that is removed from personal relationships, like friendship, kinship, liege/vassal etc. Unfortunately, I never understood or use crypto-money, so if b is correct, I will loose my chance forever. Like the chance to learn a language of Amazonian natives that went extinct AND unrecorded.
Posted by: Piotr Berman | Jun 10 2021 0:08 utc | 73
RE: K | Jun 9 2021 21:34 utc | 49
This seems to me to be the very height of ignorance and misdirection:
"The masses or working class and poor in the world numbering billions can't afford .01% of a bit coin."
You imply that one must have/purchase/accept a whole bitcoin to participate. You really do not have a clue, do you?
FACT:
There is no practical limit to the digital divisability of cryptocurrencies...
Posted by: Doesitreallymatter | Jun 10 2021 0:19 utc | 74
Hi,
I think most cryptos, perhaps even bitcoin, will become worthless. However, some ALT coins have utility, XRP for cross border transfers, Vechain for data provenance and product history, Stella for the unbanked (with smart phones) and a few others will survive. It is utility that is important -- solving important technical problems. These utility coins are making a huge effort to fit in to the existing financial paradigm but do things a lot more efficiently. This in turn means higher profits for the banks and a better service.
Posted by: cj | Jun 10 2021 0:38 utc | 75
@rjb1.5
the old guy and you omitted the MOST important part of that sentence:
"All wealth is created using slave labor and/or exploitation"
That old guy was really dishonest. Dont parrot lies.
Posted by: Hoyeru | Jun 10 2021 1:00 utc | 76
what is the value of your time? people whose lives are accustomed to a good night's sleep, do you know the value of such? no, you don't.
Posted by: rjb1.5 | Jun 10 2021 1:03 utc | 77
The complete disconnected mindlessness of these virtual stores of "digital" currency are a comedy that's fundamentally based in an ongoing environmental tragedy. Fuck anything of this kind of pseudo-value that can only exist by demanding ever increasing amounts of electrical energy - regardless of how it's generated. The planet could be nearing a semi-smouldering lump of waste and these cryto-crazyies would still utilize every last ounce of it's remaining energy to "mine" just one more "coin".
And what most of these "crypto" defending greed-heads really only care about is own their personal profits and/or gains.
To complete hell with all your endless empty platitudes and uber-phony anti-capitalist, anti-establishment screeds of these climate-wreaking jypto-currencies being a viable, long-term "alternative" to the "mans" dominance in global finance. You just represent the new breed (and growing) of this inevitably clueless, and parasitically useless usury class.
Posted by: time2wakeupnow | Jun 10 2021 1:08 utc | 78
Hoyeru | Jun 10 2021 1:00 utc | 75
sorry. Pancha Sanzo, Silenus-like upon his ass, misses a few things, what w/the jumble and tumble and all.
Posted by: rjb1.5 | Jun 10 2021 1:15 utc | 79
Calzone 12
"Michael Hudson described crypto currencies as similar to Andy Warhol paintings. Essentially garbage that some people are prepared to put astronomical value on."
The version I heard is a little more descriptive "Cryptos are like Andy Warhol paintings, the only real value is that someone might pay you more for it than you paid."
Posted by: schmoe | Jun 10 2021 2:32 utc | 80
@75 Hoyeru. "All wealth is created using slave labor and/or exploitation". Textbook definition of capitalism and therefore a pyramidal ponzi scheme..
Posted by: Lozion | Jun 10 2021 3:09 utc | 81
Was unable to post last night using my normal proxy server...maybe it was blacklisted or something.
I disagree with b's take on the Colonial ransom recovery. The FBI exploited common poorly guarded password type vulnerabilities. That they were able to coerce/subpoena one of the parties involved tells me that it was an American citizen and that the crypto exchange was registered with American authorities.
FBI exploited sloppy password storage to access wallet information
Disclaimer: I don't believe anything the FBI says without some sort of corroborating evidence, but an additional wrinkle to the scenario if it played out like they're hinting, is that there were no "Russians" involved. No US court has jurisdiction over any Russian national or server in Russia.
How the FBI likely seized bitcoin Until the FBI is more transparent with its methods, it’s not possible to know exactly how federal investigators managed to retrieve the private key in question. But there are a few possible scenarios.DarkSide, the cyber criminal gang that targeted Colonial, reportedly used a payment server to collect the funds. A centralized platform like this is relatively easy for the FBI to track.
“Following the money remains one of the most basic, yet powerful, tools we have,” said Deputy Attorney General Lisa O. Monaco in a statement on Monday.
“Because these transnational, organized criminal groups are facilitating these payments in cryptocurrency, and because of the transparency and traceability that cryptocurrency provides, you can actually more effectively follow the money and potentially mitigate and arrest illicit activity within this ecosystem, than you can with traditional finance and fiat currencies and payments,” explained Jesse Spiro, Global Head of Policy for Chainalysis, a company that provides blockchain forensic and investigative services to private sector companies, including crypto exchanges.
When a ransomware-related payment is made, Chainalysis is actually able to produce and generate what Spiro characterizes as “unprecedented intelligence and information in relation to the supply chain.”
Chainalysis was not able to speak to any specifics on the Colonial investigation.
Once the FBI had that wallet in hand, it’s extremely unlikely they broke something called the “Elliptic Curve Digital Signature Algorithm,” which is how the digital currency ensures that bitcoin can only be spent by the rightful owner.
“In fact, that is so far-fetched, as to be impossible,” said Nic Carter, founding partner at Castle Island Ventures.
What’s much more likely, according to Carter, is that they were able to access a server where the hackers stored private key information. That points not to any fundamental flaw in bitcoin’s security, but rather a case of bad IT hygiene for a criminal organization.
Just take the 2014 hack of Mt. Gox, once the leading bitcoin exchange. It was the first high-profile hack in cryptocurrency history. The exchange filed for bankruptcy and lost 750,000 of its users’ bitcoins, plus 100,000 of its own.
“Bitcoin itself functioned perfectly, but what functioned imperfectly was their system of storing your private keys,” explained Carter.
This is why some cyber criminals take their coins offline to cold storage, in order to insulate nefariously earned tokens from the government and law enforcement.
“If you want to store your coins truly outside of the reach of the state, you can just hold those private keys directly. That’s the equivalent of burying a bar of gold in your backyard,” said Carter.
Hence, if you're a crypto-criminal don't use payment servers, don't use crypto exchanges that have agreements with or that are in the jurisdiction of the USA and keep your 'coins' in a hardware wallet, i.e., cold storage.
Also, this isn't the death knell for crypto (despite my own dislike of the BTC POW methodology compared to POS). Some are seeing this as proof that crypto can and will integrate within the international legal system because some criminal activity associated with blockchains can in fact be policed.
Setting a good precedent One former chairman of the U.S. Commodity Futures Trading Commission thinks the FBI breaking into the crypto wallet of a cyber criminal actually sets a good precedent for acceptance of cryptocurrency.“It proves that the bitcoin blockchain is not hostile ground for law enforcement,” said Chris Giancarlo. “It proves that it is not a perfect tool for criminal activity.”
Mati Greenspan, portfolio manager and Quantum Economics founder, agrees that the breach bodes well for bitcoin.
″Many market participants, myself included, were expecting President Joe Biden to use crypto as a scapegoat for the hack and to come out with crushing reforms,” said Greenspan. “Instead, they were clued in to what we already knew: That it is easier for authorities to catch criminals who use crypto than anything else.”
Carter also appeared unfazed. “We’ve seen these kinds of seizures before, and I’m sure we’ll continue to.”
Despite the common stereotype, there’s no data to indicate that criminals disproportionately use cryptocurrencies like bitcoin. In fact, Chainalysis estimates that less than 1% of cryptos are used for illicit purposes.
-KYLE (normally post as _K_C_ or K_C_ depending on how fat my fingers are for the device I'm using at the time)
Posted by: KYLE | Jun 10 2021 3:26 utc | 82
Boomer alert!
Back in the day, I'm sure paper instead of gold or silver currency sounded preposterous.
You don't even know about privacy coins like XMR
Posted by: BoomerDestroyer | Jun 10 2021 3:35 utc | 83
I never understood the concept of cryptocurrencies* and I am now glad I never bothered.
*My phone - made in late 2020 - doesn't even recognise the word.
Posted by: Biswapriya Purkayast | Jun 10 2021 3:38 utc | 84
B I think you're dead wrong. Crypto isn't going to die in 2021 or in the long term, rather the ecosystem is just getting started with mass adoption. Some folks are using crypto as a hedge against inflation, many are in it just for speculation, and some are true believers in the projects they support and in it for the long term.
I suspect your article is coming from a place of ignorance as if you had taken some time to research what some of the major cryptocurrency projects are trying to achieve then perhaps your view would be different. As an example, take a look at Cardano. There are many projects that are or are seeking to solve real world problems, many will fail but some will succeed and the world will be a better place because of it.
What I can agree with is some of the sentiment around BitCoin. It doesn't really have a use case IMO, although 'maximalists' view BTC as a store of value which I personally think is tenuous at best. Some of the maximalist personalities advocating BTC do make the space look quite cultish. As for the trope that crypto is used in criminal enterprises, as others have pointed out - and fiat currency isn't??
Decentralised finance will underpin banking of the 'un-banked' in developing nations. Another example upon many is the ability of expatriate workers sending remittances with minimal cost and almost no delays. Crypto will facilitate access to finance for those who would otherwise never have the same opportunities with the legacy financial system.
The FUD against the crypto space in general is due to crypto begging to threaten the legacy financial system.
Posted by: AnoNZ | Jun 10 2021 4:12 utc | 85
When I first learned of Bitcoin - fairly early I think, but time flies - I was excited because I wanted a strong currency to live my life in.
Bitcoin had the one, crucial characteristic required of sound money - its quantity was known. Its quantity was predetermined to be limited, finite, and known. This is the supreme quality of money if, like me, you say that money is a measure, used to measure values of things and to be an intermediary for their exchange.
For money to be a store of value, it simply needs to remain stable itself as the measure that it is - nothing else is needed. And if it works well as a medium of exchange, that's either because its quantity is not changing, or because any changes are notorious, well known.
So Bitcoin right now serves only as a commodity, and as such it works just fine - have at it, all you market traders.
But if it reaches its full capitalization, and the full amount has been created (or an effective approximation - I'm not technical enough to know if some could be left unmined) - when it becomes a finite resource, then it could achieve a stable buy/sell value.
Then it could serve as money, or perhaps the backing for money - perhaps in the form of the Bitcoin Cash that arby cites upthread.
~~
To have a money that measures value accurately, the units have to be defined in some stable way, in the same way that the centimeter derives from a scientific measure of an existing physical property.
We end up with 21 million BTC in the world. And maybe they've hit a million USD each BTC by then - maybe much higher, maybe much lower. It doesn't matter because we then have a finite quantity - similar to gold and silver that has a relatively known scarcity and a relatively low newly mined addition to the stock such that its scarcity is not appreciably altered.
So maybe then we have sub-units backed by the BTC. That's a money, if the sub-units are redeemable in BTC, and if they're accepted to buy and sell things. Doesn't matter if the government takes it as tax - if it does, that currency just became damn near sovereign, and if it doesn't, odds are good that government will eventually outlaw its usage.
Governments of and by the people are the final determinants of what is legal tender. That's not to say you can't have one hell of a black market going on, if governments set unreasonable conditions.
Bitcoin was almost a money when it was dirt cheap, but it had no great manifestation in the world. Now, on its way to its limit of quantity, it's only a commodity. When it hits full and stable existence, it might be usable as money, and it might come to be used as money. But it's a crap-shoot of history whether this happens or not, whether it gets held in stable reserves, and whether users adopt it as a currency.
~~
There's nothing intrinsic in Bitcoin (except its quantity). There's nothing intrinsic in ANY money - except its quantity.
In fact, I would suggest that you don't really want an intrinsic value in money - what you want is the guarantee of its quantity, or the certified knowledge of its change in quantity. It's only the known scarcity of gold and silver that make them useful to measure the true quantity of the money that they redeem. When the money is stable, it's as good as gold (unless you want jewelry).
Money has to act as a measure of value, across time. That's all.
Anyone interested in the qualities required of money, and the US Constitution created by people who knew intimately and existentially what money is, might care to read Pieces of Eight by Edwin Vieira, Jr. To me it's the seminal work.
And apparently it's now a free download, although it's lost the original title it had when I discovered it as a mind-blowing book, and goes simply by what was then the subtitle:
The Monetary Powers and Disabilities of the U.S. Constitution - Edwin Vieira, Jr
Posted by: Grieved | Jun 10 2021 4:57 utc | 86
Intriguing round of commentary!! I especially appreciate the thoughts:
1. BC is now more an investment than means of transaction. As such it'll survive.
2. BC is not private as every transaction is transparent in the blockchain record. Therefore Gov's, criminals, and power elites cannot use it. As such BC will not thrive
3.BC is currently tolerated as it has soaked up a trillion of floating funds that otherwise would destabilize the system. As such BC has a limited life.
4.BC is a diversion, like pandemics etc. As such BC will survive
5.BC is a revolution- see #4
6.BC is a potential investment. When I see bank analysts and hedge funds turn positive on a trend, stock or idea, I sell out. Any time I violate that rule, I deeply regret it. Hedge funds moved into BC 4 months ago. As such BC will survive but will not thrive.
7. The creators of Etherium held back a million coins. BC did the same, but not as many. Pump a narrative and let the people fund the ponzi managers of the black arts. Sorta like the creators of ISIS. Set it up and let a bunch of idealists bleed to achieve another groups imperial goals.
As such BC may well survive and for brief moments thrive as long as the players with the hidden coin can milk it to their own ends
Posted by: les7 | Jun 10 2021 5:05 utc | 87
@84 - more...
I'd like to add for the record that I regard Bitcoin as a stunningly brilliant invention. It took mathematics and guaranteed a limited quantity of its units.
For thousands of years, small people have been cheated, and big people have become rich, because the money of their time changed its quantity, and thus its value relative to things, such that prices changed. And for all that time, the study of inflation has been a war of the revelation of truth (by the small people) against the obscuration of lies (by the big people).
Satoshi laid down the keel of his vessel in mathematics, and said, tamper with that, bitch.
It was, and is brilliant.
Posted by: Grieved | Jun 10 2021 5:20 utc | 88
@schmoe 79
"The version I heard is a little more descriptive "Cryptos are like Andy Warhol paintings, the only real value is that someone might pay you more for it than you paid."
Yes, that was his quote. I was amused Hudson made the incidental art history point that Warhol was a talentless phoney - perhaps the first of the modern art-grifters whose only gift was endless self promotion, since followed by similar fraudsters like Tracy Emin and Damien Hirst, who became vastly wealthy by peddling dog crap. How much would Emins 'unmade bed' masterpiece be worth in Bitcoin?
Posted by: calzone | Jun 10 2021 5:27 utc | 89
@86 - I can't quit yet...
People are not bidding on Bitcoin. People are bidding on scarcity. The scarcity is known, and is up for sale.
The end days have not yet come, and the resultant price cannot yet be established. If Bitcoin's quantity were not guaranteed, this would be a mere bubble, a foolish Ponzi. But the quantity is known, and cannot be changed.
For better or worse, for value or none, we are watching the entry of scarcity itself into the market, and seeing how supply and demand actually works.
~~
It's baroque in its plot devices (and we're certainly learning the value of electricity), but it's a priceless story unfolding.
Posted by: Grieved | Jun 10 2021 5:37 utc | 90
@ Grieved | Jun 10 2021 4:57 utc | 84 who wrote
"
Money has to act as a measure of value, across time. That's all.
"
My take is that there are two components to that measure of value that provide two different requirements of money
1. Medium of exchange
2. Store of value
I am going to go out a futuristic limb here and posit that the Digital Chinese Yuan with the limited time frame of existence could meet the Medium of exchange requirement in a multi-polar world where nations curriencies were fluctuating against each other so the limit on the time frame would limit exchange fluctuation risk.
The store of value requirement is where Grieved's statement is deficient in the sense of time frame and value compared to what, which commenter chu teh demands and I agree, include to a large degree food, air, water, things necessary for survival, precious metals, etc.
Historically the store of value was precious metals and until 1971 the Reserve Currency of the world was backed by a certain amount of gold.
In the future it makes sense to me to have an internationally defined and constantly evolving store of value "money" (electronic/solid) that is related to the breadbasket of the food, etc from above as well as the fluctuating currencies of the various nations.
One comment I would make to some who have waded into this fray is that electricity and the internet don't just come from the air and assumptions about their ongoing existence to support your delusions of anarchy and end of empire are a bit under developed......and further to the delusion of only digital money.....the electricity would stop the minute a stupid decision like that is ever made and then where are we?....As a system design/developer I learned to always have a manual mode fall back for core manufacturing/business processes (aka MEDIUM OF EXCHANGE).
Block chain technology has valid applications of the permissionless kind for contracts and permissioned for things like the China Digital Yuan.
Crypto currencies, as I have called them before, are tuilipbits in honor of the tulip mania of the 1600 and will cause much financial loss to speculators. I am not a fan of the current global private finance system of the West and want it to be replaced by totally sovereign types of money and financial agreements....why do we have "sovereign" governments owing money to private people and organizations?
Posted by: psychohistorian | Jun 10 2021 5:48 utc | 91
Thanks b, it is very good article.
Gill Deleuze, the French philosopher, in his book "Mille Platau" (English translation: A thousand plataus), has discussed extensively and showed surprisingly, that "Money derived not from exchange, the commodity, or demand of commerce, but from taxation." ( pp 442-444 and other sections).
If we accept Deleuze argument, then cryptocurrency lacks some fundamental property of money. It can not function as a normal money. It can not flow as a money. When it reaches its boundary limits( as Burnarhd showed in this article, today) will not resonate and flow, but it will swings and oscillates dangerously. It may not die totally, but becomes a criminals and outlaws and underground tools.
Posted by: arata | Jun 10 2021 6:20 utc | 92
This is a big nothingburger. Who believes the FBI? They took advantage of their jurisdiction and coerced an American citizen within it to provide his/her wallet. Period. The notion that they actually hacked a private key is mathematically impossible. Plus the colonial hack just strengthens crypto's possibilities. So silly to call it an instrument of speculation or a Ponzi scheme. That's all any money or valued asset is now. LMFAO.
Duh. Don't use a payment server, don't use US jurisdiction crypto exchanges and keep your money in a private, cold storage, hardware wallet.
Posted by: Tom_Q_Collins | Jun 10 2021 6:34 utc | 93
The other thing this does is prove without a doubt that it wasn't f*ckin' Russians doing this ransomware hack.
That and if 'b' or his hosting service keeps banning me - I've been using the same name for years and it continually gets silenced - then what motivation do I have to donate 'REAL' fiat currency?! I mean I enjoy the sitreps and Boeing investigations as well as the debunking of NATO/US/UK lies, but if I'm going to keep getting shadow (or actual) banned, then why would I give money? I say 'b' should move to Substack. He could get rich.
Posted by: Tom_Q_Collins | Jun 10 2021 6:38 utc | 94
I'm not so sure. Don't you say it yourself, spies need it.
IMHO that's like with the Tor network (a.k.a. "Darknet"). The NSA, FBI and law enforcement agencies world wide have an interest to shut it down. The CIA and the US state department created it in the first place!
Entrance and exit points can be identified. So their numbers have to be increased (by allowing illegal traffic) to such a degree that identifying the specific CIA users becomes very unlikely.
Posted by: m | Jun 10 2021 6:46 utc | 95
I think many may be missing the point with bc. More than an investment it is a store of value. It is an easy medium to transfer money around the world, instantly without fees, and without being forced into relying on financial institutions. The sent bitcoin can be converted to any currency, if need be. Being outside the control of those institutions is its big crime, and that is unacceptable to those interests, who have begun a smear campaign. Dredging up and magnifying stories about criminals using it while ignoring 99% criminals use Dollars and other fiat currency.It appears the Colonial Pipeline thieves lacked the most basic financial knowledge and intellect, leaving the ransom unwashed in an online wallet, on a US server, making it easy to seize than stealing candy from a baby.
The end of the whole scam:
"Australians lost $26.7 million in nearly 2,000 different Bitcoin scams last year – but bank transfers remained more popular method of financial fraud, the Australian Competition and Consumer Commission says.
The ACCC’s 98-page annual report, “Targeting Scams”, says that scams reported to Scamwatch were up 23 per cent last year, although the ACCC had feared it would be even higher given the unprecedented events of the year.
Bank transfers were the most common payment method used in scams reported to ACCC’s Scamwatch, with $97 million lost in over 8,000 different scams."
Posted by: Paul | Jun 10 2021 7:42 utc | 97
My local GPU retailer just contacts me for a 3070Ti at around 1320 USD.
Shit was SO cash.
Finally I can enjoy gaming at 2K 144Hz.
Thanks but no thanks crypto.
Posted by: Smith | Jun 10 2021 7:45 utc | 98
The Silk Road's alleged founder was prosecuted and jailed, but drugs are still bought and sold online. The dark web certainly wasn't shut down by any government. There are fads and trends sure, but nothing borne out of new tech ever disappears.. MySpace failed but was replaced by Facebook etc... but Social Media was there to stay.
There will always be some role for crypto and digital currency. Bitcoin being the first and largest, will likely survive imo, and if not, maybe it will be replaced by the next '100% untraceable' crypto, or one legally integrated with SWIFT ubiquitous crypto. Not everyone has bought crypto to commit crime or evade taxes, many major banks and investment firms have taken the 'if you can't beat em join em' approach too..
The extent to which it will be legal and have practical use will affect its value. So far, criminals aside, i'd say it seems to have attracted 2 categories: speculators and investors looking for diversification in storage of capital. I doubt criminals make up the majority of crypto's market cap. Unless every Gov't bans crypto, then it still has both value and buyers. If anything, it's the crazy volatility and risk associated that keeps many mainstream investors away, though they are offset by plenty of speculators, either way, it serves a purpose for both.
Posted by: Et Tu | Jun 10 2021 8:56 utc | 99
@ Et Tu
Eh, it will be popular in DarkNet, I mean, MORE popular.
Posted by: Smith | Jun 10 2021 9:21 utc | 100
The comments to this entry are closed.
Wither away?
https://www.theguardian.com/world/2021/jun/09/el-salvador-bitcoin-legal-tender-congress?CMP=oth_b-aplnews_d-1
Posted by: Lozion | Jun 9 2021 18:11 utc | 1