Moon of Alabama Brecht quote
June 09, 2021

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

Comments
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The impending demise of Bitcoin, Ethereum and all other cryptocurrencies has been predicted since years. Throughout these years, the fears and doubts have been the same. Yet cryptocurrencies refuse to die. I don't know the future, so one day the negative prediction might actually be true. I just don't get why it should happen this year, since fundamentally nothing changed for the worse? Actually decentralized finance is evolving and some major players are adopting cryptocurrencies, so fundamentals are stronger than before, I think.

Posted by: Martin | Jun 10 2021 10:09 utc | 101

Some Italian dude just sold an invisible sculpture for $18,000...an interesting exercise in fungibility that highlights certain absurdities in our monetary based economy, i.e. exchanging something with no intrinsic value for literally nothing. Makes sense, no?

Posted by: john | Jun 10 2021 10:50 utc | 102

@ Hoyeru | Jun 9 2021 18:22 utc | 5

"if Bitcoin's blockchain is so secure, how come millions of people have had their bitcoins stolen? "

There was a flaw in the wallet which stores their bitcoin (or other cryptocurrency), or they did something stupid. Using paper money as an example, the security on a note which prevents its forgery does not stop it getting stolen. The block chain is very hard to forge so everyone agrees on the transactions which have been made. So everyone can see that at some point you had the coins, if they were stolen or given away then becomes the question.

Distributed ledgers and smart contracts are a really good idea. It will take time for them to find their proper use. Bitcoin and other cryptocurrencies are properly overpriced, especially as bitcoin is rather slow.

Posted by: Mighty Druken | Jun 10 2021 10:58 utc | 103

Yes, and music lovers will never stop buying CD's...

Posted by: LarryP | Jun 10 2021 11:04 utc | 104

@ Antibody

Yes, and crypto currecys are not currencys, the are ponzis like most 'containers of walue', based on litteraly nothing. I think Hudson said it best: the are not fictitious capital (like say stocks), they are fictitious fictitious capital.

Posted by: Jörgen Hassler | Jun 10 2021 12:00 utc | 105

Bitcoin Climbs As Global Banking Regulators Give Crypto Mixed Blessing


Basel Committee on Banking Supervision, the world's most powerful regulator of banking standards and rules, has decided how banks hoping to hold cryptocurrency on their balance sheets will need to treat it in what is being interpreted as the market as a major 'win' for digital-currency adoption.

https://www.zerohedge.com/crypto/bitcoin-climbs-global-banking-regulators-give-crypto-mixed-blessing

Posted by: librul | Jun 10 2021 12:06 utc | 106

LOL. This is probably the worst article by this great writer in this great website. Terrible call. Bitcoin is about to go on a good run next few months. Maybe crypto is not your theme man :)

Posted by: ElComandante | Jun 10 2021 12:13 utc | 107

Infantile take on a complex topic. And using an infantile blog like Naked Capitalism as a source does nothing to add to your credibility. Low quality all around.

Posted by: DoubtEverything | Jun 10 2021 12:18 utc | 108

@103 was some mixed good news for crypto
but here is some mixed bad news.

This article says that the US guvment has it in for crypto. The recent "Russia Russia Russia ransomware attacks"
were actually the work of the US guvment and designed to disparage crypto and, conveniently, just in time for the Biden-Putin hookup, Russia.


Meanwhile here comes yet another hearing led by that crusader for governmental uber-regulation of everything, Liz Warren, who will demand even more crackdown on bitcoin because - you see - none of this would have happened if bitcoin did not exist.

https://www.zerohedge.com/markets/here-we-go-again-jbs-paid-russian-hackers-11-million-bitcoin-resolve-ransomware-attack

Posted by: librul | Jun 10 2021 12:24 utc | 109

Bitcoin and similar crypto currencies are PRIVATE and financial speculative instruments for a financialized pyramid scheme. ...
Digital Yuan is a SOVEREIGN money. The prospect of private cryptocurrencies replacing government-backed money, NIL. ...
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.
Posted by: Max | Jun 9 2021 19:34 utc | 24

The private/sovereign distinction is correct up to a point, but is not sufficient. You are correct that the digital Yuan is sovereign; it is also a genuine asset backed by gold and oil, and therefore has real and verifiable stored value.

But what of the proposal by the American Chairman of the Bank of England Carney to issue a digital cryptocurrency to replace the US dollar as a world reserve currency? Both the Federal Reserve and the Bank of England are private, therefore not sovereign, but in principle the elites could isse a similar digital cryptocurrency that is in state hands, and maintain secret control over it through back doors (therefore, not genuinely sovereign, but nevertheless superficially appears to be sovereign) - in practice I doubt that would be much different from a digital cryptocurrency openly in private hands.

The elites know that the western economic system is on the verge of crashing, they know the collapse cannot be stopped, so what do they decide to do? They want to issue a cryptocurrency that - like, almost certainly, bitcoin - they have backdoors to, and force people to use it as a replacement for real money including cash. Then they have the ultimate control over dissent, because the availability of money to dissenters can be switched off remotely without warning, by those controlling the backdoors. The money can be inflated or deflated at will, and new currency can be secretly minted and siphoned off at will, with no public records. When the system finally crashes, those controlling the backdoors can control all assets in the empire, and shift their ownership to their own hands, leaving the entire middle class penniless. The working class, meanwhile, are nothing but serfs, who live or die at the whim of the elites. The ultimate scam of all time.


The private/sovereign distinction therefore has to be refined: private cryptocurrencies with no intrinsic stored value (such as bitcoin, or the new world reserve currency proposed by Carney) vs. sovereign cryptocurrencies with both intrinsic stored value and be independently and publicly verifiable such as the Chinese digital Yuan.

Posted by: BM | Jun 10 2021 12:24 utc | 110

@106 hookup meetup

Posted by: librul | Jun 10 2021 12:26 utc | 111

I forgot to comment on the "that they have no stake in" part, above, as such. Obviously, if Carney et al introduce a digital currency through the Bank of England, Federal Reserve, and similar privately owned central banks, then they do a priori have a stake in it, and that currency is private not sovereign.

One other important point that I don't think has been addressed so far in the discussion is that if - as there is good reason to suspect they will do - the CIA and/or the Federal Reserve and/or Soros/Gates or their like start manipulating the market for bitcoin, they can crash at will entire national economies that are foolish enough to place too much reliance on bitcoin. El Salvadore beware! That cannot be done with the digital Yuan, because the digital Yuan has intrinsic and verifiable stored value as gold/oil.

Posted by: BM | Jun 10 2021 12:42 utc | 112

And Bitcoin is not a Ponzi. A Ponzi is when its creator or beneficiary claim it will create wealth for the users. This is not the case w Bitcoin. Its creator never said this would be a wealth creator. Just a payment system to circunvent the banks. Which it is.

The trick is you dont ever convert it to dollar,etc. You can buy things now with bitcoin. There will be total 21 million coins ever. This will have a value in the future. Just because people like to own rare things. The worst thing that happened to bitcoin is it going mainstream. Because thats where people corrupted its main use.

Posted by: ELcomandante | Jun 10 2021 12:44 utc | 113

As Hyman Minsky famously said " anybody can create money. The problem is to get others to accept it as money."
And when people stop accepting it that when the SHTF

Before the 2008 meltdown private investors poured $6 trillion into funding US residential mortgages. Those mortgages were given to borrowers who were mostly not required to document any income or assets, or put any money down, and who had bad credit scores, and could not afford to make monthly mortgage payments and therefore were extended more credit to meet the monthly payments. These mortgages were not funded by banks or govt programs - They were funded by private investors just like the private investors that are now pouring money into bitcoins and the reason for making both types of investment is exactly the same.

Here is another quote from Minsky:

"The theoretical literature - as well as the orthodox critiques of monetarisms - never models banking. Standards of theoretical purity can be so lofty that F. H. Hahn can publish a book on Money and Inflation in which the word bank or banker never really appear.
If we recognize, with Keynes, that money is created in transactions in which banks add to their liabilities, - which are money, by acquiring assets by which borrowers promise to pay money to the banks in the future, so that the creation of money is the first step in a process that has later steps in which money is to be destroyed, and that the money creation and destruction process centers around the profit (income) expectations of bankers and borrowers, then the very foundation of any economic theory which treats money as exogenous and which assumes a fundamental in principal neutrality to money is undermined. This is so because once a debt structure denominated in money exists the absolute level of prices, wages and profits matter, for the ability to fulfill contracts entered upon in the past and the current expectations that contracts entered upon today will be fulfilled depend upon what has happened and is expected to happen to money prices."


Posted by: jinn | Jun 10 2021 13:29 utc | 114

And Bitcoin is not a Ponzi. A Ponzi is when its creator or beneficiary claim it will create wealth for the users. This is not the case w Bitcoin.

HA HA HA. Well lots of people are saying "it will create wealth for the users". Just because you don't really know who the creator is or what his motives were doesn't make it not a Ponzi scheme.

Posted by: jinn | Jun 10 2021 13:33 utc | 115

The only crypto currencies being targeted are ones which are outside the control of national governments. Russia and China are experimenting with digital currencies already. They are simply attacking the free market competition. The problem I have with them is that when the internet goes down as the EMP hits, nothing digital will work. Crypto currencies are difficult to tax. They can only be taxed at the point of conversion into real cash. Taxes cannot be paid in bitcoin (yet) and governments will want you to use their own crypto (not yet possible). I think that B has come to the wrong conclusion.

Posted by: coo | Jun 10 2021 13:53 utc | 116

"Before the 2008 meltdown private investors poured $6 trillion into funding US residential mortgages. Those mortgages were given to borrowers who were mostly not required to document any income or assets, or put any money down, and who had bad credit scores, ..."

Posted by: jinn | Jun 10 2021 13:29 utc | 111

For brevity, I presume, jinn simplified the situation. The funds poured into mortgages were creating using modern alchemy. One must first admit that bulk of owners of the real estate had OK credit scores etc. But a minority did not, because the powers in charge, I guess Treasury Department and Federal Reserve, decided to relax the rules to prolong the period of economic growth. Mortgages are usually (in USA) issued by banks, then banks create pools of mortgages and sell shares of the ownership of the pool. Those share give income from monthly mortgage payments and have few types of risk. One risk is that a real estate owner pays early because interest rates dropped (or he/she got more cash). Another is that he/she defaults. As you see, the ideal pool consists of owners who are neither too well off nor too financially troubled. Now you have a piece of paper with a nominal value of, say 1000 dollars, giving you yearly, say, 50 dollars, promising it for 15 or 30 years, subject of those risk. Combination of income stream and the risks results in a price of 900 dollar.

But here comes a financial alchemist and says: of the 50 dollars give me 5 each year, and I will compensate you for the losses if risks will become true. Now the price rises to 980 dollars, in part because the risk-free paper can be purchased by retirement funds and other guardians of folks savings that are obliged to avoid heavy risks. This is alchemical part: 900 rises to 980. Alchemist is compensated and lives well (millions of "gifted" pieces of paper).

Then comes the crisis, and the shiny gilt on those papers vanishes: the alchemists says they do not have the money to pay. In effect, they were collecting cash in exchange for illusions.

Posted by: Piotr Berman | Jun 10 2021 14:08 utc | 117

It seems professor Wolff agrees with my take on the American system (see "Space Odities" on loopholes as being the soul of American Law):

Wealthiest Americans aren’t paying tax because they run the system – Professor Wolff to Boom Bust

Also, related to this topic (not in the way most of you think):

China says ‘extraordinary’ coronavirus stimulus policies from US, Europe have ramped up global inflation risks

Posted by: vk | Jun 10 2021 14:26 utc | 118

"Well lots of people are saying "it will create wealth for the users"."

If people are stupid enough to drop their savings becase of "lots of people" then thats their stupidity. Still does not make it a Ponzi. Is wallstreetbets a Ponzi? Id say no. Remember Ponzi was named after Charles Ponzi a con man who promised his users a huge return on their investment. In my opinion somebody has to officially promise a huge return on their own scheme directly to users for it to be a Ponzi.

Posted by: elcomandante | Jun 10 2021 14:31 utc | 119

Posted by: jinn | Jun 10 2021 13:33 utc | 115

" Well lots of people are saying "it will create wealth for the users". "

Seems to me that there are a lot more people saying it is a scam or a ponzi and will crash to zero.

Posted by: arby | Jun 10 2021 14:44 utc | 120

I just cannot get over the fact that you are not really buying anything, what do you have for your investment. Random numbers that require an internet infrastructure to use?

Never had the term "vapor"-ware been more appropriate. Crypto is merely another form of fiat; it is currency because someone says so, and how can anything so volatile and subject to the whims of Elon Musk and whatever he smoked the night before can cause the value to drop on a word, be a store of value?

I know one thing for certain, after the SHTF I am not going to be able to trade the vaporous BTC for a chicken or a barrel of diesel, but I know damn well my 1964 silver quarters will be accepted by that farmer in Palatka.

Imagine needing to charge your Tesla to escape the wildfires in Northern California with no power or cell service and all you have are BTC's. Look forward to a long walk.

Posted by: AxelP | Jun 10 2021 14:45 utc | 121

I am not a specialist; maybe that is why I am impressed by this alternative to block-chain that does
NOT require seemingly senseless, energy-intensive proof-of-work. A crypto-currency is only a by-product.

Please, Will well-informed posters in this discussion thread ell me what is wrong with hederal hashgraph?

...this would be so much appreciated; what arguments against bitcoin are relevant against this upstart?

In advance thanks and thanks to our host for posing a question with strikingly contrasting points of view.

Posted by: Maria Dominguez | Jun 10 2021 14:48 utc | 122

Crpto can be used for good and bad just like any other technology. When I was a kid the bad guys on TV shows always asked "for small unmarked USD bills." B has never been so out of his element. Stick to geopolitics, at which you excel.

Here is an example of how the EU banks solve liquidity problems:
Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

https://www.google.ca/url?sa=t&source=web&rct=j&url=https://amp.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims&ved=2ahUKEwj_2fTIqI3xAhVwM1kFHdyqCO8QFjAAegQIBhAC&usg=AOvVaw1tX8iyFDAtnyrT3ufwt5Ig&ampcf=1">https://amp.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims&ved=2ahUKEwj_2fTIqI3xAhVwM1kFHdyqCO8QFjAAegQIBhAC&usg=AOvVaw1tX8iyFDAtnyrT3ufwt5Ig&ampcf=1">https://www.google.ca/url?sa=t&source=web&rct=j&url=https://amp.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims&ved=2ahUKEwj_2fTIqI3xAhVwM1kFHdyqCO8QFjAAegQIBhAC&usg=AOvVaw1tX8iyFDAtnyrT3ufwt5Ig&ampcf=1

Posted by: Osa Kim | Jun 10 2021 15:00 utc | 123

horrible erratum sorry

Please, Will well-informed posters in this discussion thread tell me what is wrong with hedera hashgraph?

Posted by: Maria Dominguez | Jun 10 2021 15:00 utc | 124

* errata

Posted by: Maria Dominguez | Jun 10 2021 15:02 utc | 125

Not an expert either but the technical issue is “double spend” and “failed confirmation”. There has to be a means to disqualify fraudulent transactions(attempts to spend the same coin twice” and a means to reliably confirm valid transactions. At small scale the federal hash graph works but it means that a government body has to approve every transaction. The “proof of work” distributes this task and so makes the whole bitcoin system scalable.
A federal graph increases power to government. It means that a federal agency has to approve every transaction. That impossible with enormous resources but it destroys the anonymous property that actual cash (dollar bills in your pocket) provides.

Posted by: DoubtEverything | Jun 10 2021 15:07 utc | 126

Posted by: Piotr Berman | Jun 10 2021 14:08 utc | 114


One must first admit that bulk of owners of the real estate had OK credit scores etc.
______________________________________________
Yeah so what? the bulk of home owners buy a house and live in it for decades - that is not the type of loan being funded by the $6 trillion of which I speak.

The majority of the borrowers that were responsible for driving up home prices sky high did not have good credit scores. It doesn't take very many borrowers if they are buying multiple houses and getting rid of them just as fast as they can. The whole ides of the scam was that these mortgages were designed to have a very short life span so that they could cash in on rising prices. The money that was being made was cashing in on the yearly price increases while at the same time fueling those price increases. Of the $6 trillion more than 60% were payed off when the crash came. Those were profitable It is the 40% that remained that were disaster for investors.
_______________________________________________________
I guess Treasury Department and Federal Reserve, decided to relax the rules to prolong the period of economic growth.

_________________________________________________
You guess wrong there has been no changes in the regulation of private pass-thru securities since they were first created in the mid 80's. Investors can still fund loans of that nature today but choose not to. Instead these investors today fund payday loans or subprime auto loans or oil fracking or bitcoins, etc.
_________________________________________________________________
the ideal pool consists of owners who are neither too well off nor too financially troubled.

_______________________________________________________________

You are talking about conventional loans. The $6 trillion worth of mortgages funded by private investors did not fund conventional loans.
Here is an article from 2006 by a a cheerleader for the private label securities that were responsible for funding most of the $6 trillion:
https://www.robertstoweengland.com/writer/19-the-rise-of-a-private-label


_______________________________________________

Posted by: jinn | Jun 10 2021 15:13 utc | 127

@ elcomandante | Jun 10 2021 14:31 utc | 119

"Is wallstreetbets a Ponzi?" Well, does wall street "promis [...] users a huge return on their investment"? Will most lose out when the "market" crashes?

Two ponzis, of which BtC id the sillier version.

Posted by: Jörgen Hassler | Jun 10 2021 15:17 utc | 128

I think it is a bit too soon to say anything on bitcoin as some countries are working to legalize it.
"El Salvador became the first country in the world to adopt bitcoin as legal tender after Congress on Wednesday approved President Nayib Bukele’s proposal to embrace the cryptocurrency, a move that delighted the currency’s supporters."

Posted by: J_369 | Jun 10 2021 15:27 utc | 129

b,
Overall I am in agreement with the points in your article.
There are several major misconceptions, however.
1) cryptocurrencies are not “currency”. I have said for years that they are really nerd art. If people are willing to pay $50k+ for a photograph of a male genitalia organ smeared in poop and wrapped in barbed wire, why not pay $37k for a virtual but unique digital token?
Focusing on the early crypto libertarian hype is wrong and even the crypto people have largely stopped pushing them as currency.
2) mining and China. The use and abuse of cheap electricity prices was extreme in Inner Mongolia but it is a worldwide phenomenon. Washington state, Iceland, parts of Russian, etc all host major crypto mining operations for the same reason as China. China’s crackdown had nothing to do with cryptocurrency per se as it had to do with Inner Mongolia being the only province that failed to meet its national leve energy intensity reduction mandates. Nor does China prohibit the owning or usage of crypto: what they have removed is the link between RMB and crypto because the real early use of crypto was to evade currency control regs in China and South Korea.
In any case, even a total cessation of mining in China won’t stop crypto mining anywhere else. It is 100% clear that all of the net gains in renewable energy production, worldwide, for the past 10+ years has been offset by crypto mining.
I have stated many times that I personally suspect a US agency such as No Such for the creation of bitcoin; the ability to funnel payments to spies, defectors, traitors etc is greatly facilitated by crypto and its usage by criminals and tax evaders is a bonus much as the child porno people really benefitted from Tor in the early days. In case you didn’t know, Tor was created by US Naval Intelligence and the other traffic helped greatly to conceal ONI spy reporting activity.
3) Tracking on the blockchain.
The capability to track crypto owners is way overblown. Yes, Chainanalysis works reasonably well for a large crypto sink like Darkforce or Silk Road. But actual accuracy is terrible plus these tools rely on crypto exchanges providing wallet ownership and activity data in exchange for accessing the systemic info. The means used by criminals in drugs etc is multiple orders of magnitude more complex and these methods *will* propagate into crypto, it is only a matter of time. Wallets are infinite - and usage can be completely automated such that the actual ownership (note: not usage, ownership) is extremely difficult to trace and potentially untraceable if the owner wishes to keep moving it around outside of major exchanges. It is just that the cyber criminals are infants in crime unlike their peers but they will learn.
4) Whither crypto from here?
From my view: crypto is here to stay. Most of it will wither away because there is no use case for any of it. Smart contracts combine the worst of both worlds: law and software. How anyone thinks that ends well is beyond me.
However, literally tens to hundreds of billions of dollars have been put into crypto by people that matter: hedge funds, high net wealth people and family offices and corrupt politicians - even disregarding the Intel agency bit.
There will be more regulation but the combination of crypto to cash and telco is plenty to curtail the biggest criminal outfits.
Singapore is a good example: they limit crypto to HNW people.
Net net: the top few crypto will stick around - the rest will continue to be penny stock scam buckets.
Last note: there is zero correlation between anything and inflation. Please stop trying to show (lack of) correlation between inflation and anything else. This entire scheme is from economists’ lies about economics being a science; inflation is always a political phenomenon, not a natural law or physics of any kind.

Posted by: c1ue | Jun 10 2021 15:58 utc | 130

@Passer by #3
I think you would be surprised to know just how much of the world is connected by phone already.
Digital currencies have nothing to do with crypto - you can have the former without the latter.
In fact, I would posit that a consensus blockchain crypto is fundamentally limited in everyday use due to expense - while a permissioned blockchain (i.e. owned by one entity) is vulnerable to the exact same shenanigans as currencies.

Posted by: c1ue | Jun 10 2021 16:00 utc | 131

@Osa Kim #19
There is very little that you can do with a blockchain that can't be done with an excel spreadsheet or Snowflake equivalent.
If it is a permissioned blockchain - i.e. owned by a single entity - it might as well be just the spreadsheet and give up the massive energy waste.

Posted by: c1ue | Jun 10 2021 16:02 utc | 132

@Max #24
Actual living people live inside a sovereign nation.
The notion that you can go totally private is nonsense. Private people have to still use public roads, airports, grocery stores, health care, law enforcement, judicial systems, passports, etc etc.
The more libertarian morons think crypto liberates them from the real world - the worse it is for crypto. Grow up.
Furthermore, it is actually not difficult to crack down on crypto. All you need is telco control: ISPs and cell providers. No internet, no crypto. The control of the crypto to real world currency is only a baby step.
Block all crypto miner, crypto exchange and app access and see how far crypto gets...

Posted by: c1ue | Jun 10 2021 16:06 utc | 133

does wall street "promis [...] users a huge return on their investment"?
________________________________________________________

It doesn't matter what advertising slogan is used or if there is any advertising at all. The essence of a Ponzi scheme is that early investors can be paid off with the proceeds from later investors. As long as there is more money flowing in than there is flowing out the Ponzi investment goes up.

Posted by: jinn | Jun 10 2021 16:07 utc | 134

i say this in the most non-abrahamic way possible: amen - from your words to god's ears.

the people who are big on these "currencies" tend to be materialist, "transhuman/posthuman" types who also think we'll all be living in hard drives a few years from now. you know the "geniuses": the types who want to nuke mars to make it "livable" and pretend to be humanity's saviour while celebrating lithium coups and dead peasants. yeah that type of "genius". that breed of dumb slimy fuck.

the same "brilliant thinking" that didn't realize bitcoin uses more electricity than egypt and that wild fluctuations in the coin market (90% of the time based on lizard brain nonsense) could theoretically make a certain "genius" car (which runs on electricity from fossil fuels most of the time) sell for the price of an xbox. that depends on whether it's priced purely in bitcoin (stupid) or in a "whatever amount of coin equals $100K" (pointless and redundant).

there might be widespread use of digital "currency" in the future but they'll be made, monitored and controlled by central banks just like fiat. until then maybe we can use the nuclear reactions we make on mars to power the crypto mining. maybe it can be "mars money". or maybe the robber barons of our era will grow up and quit reading cheap sci-fi novels written in the 1970s. the former fantasy sounds more likely, to be honest.

i've been using decentralized, "peer to peer" programs since the late 1990s. there have got to be simpler and more efficient ways to transfer monetary credits that can also be secure.

(also funny how your critique of the supposed "anonymity" of crypto applies almost word for word to tor exit nodes, by the way).

Posted by: the pair | Jun 10 2021 16:07 utc | 135

@Deltaeus #32
There is very little you can do on blockchain that can't work fine on a spreadsheet or ledger.
The one use case I saw which made sense was: In Australia, they have a "positive credit reporting" scheme. This means "good" things you do on credit are reported - vs. the "negative" credit scheme in the US.
However, the problem with positive credit is that there is so much more data than negative such that it basically tells everything about the people in question. If you're a bank fighting for the same customers, this is a major problem.
So to report first is to give information about your customers to your competitors. A permissioned blockchain setup was created such that a bank could only access other bank's reporting data if they reported their own.
This system can still be gamed by at least the actors are all known, with known motivations and traceability such that it *could* work.
That is literally the only use case I've seen which blockchain makes sense. The rest of it is nonsense: tracking of produce and goods? Ledger. Real estate? Ledger.
In fact, most uses cases are bad with blockchain. Mistakes happen - having a distributed consensus blockchain means you can't fix them, while a permissioned blockchain just gives all power to the owner - the exact same situation as with a ledger.
Currency is *not* a killer use case for crypto - currency = law.

Posted by: c1ue | Jun 10 2021 16:13 utc | 136

@Tobin Paz (54) "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."

And what will happen to the newly gained wealth of the struggling masses when (not if) the price of Bitcoin collapses? By and large, BTC is not useful for ordinary transactions and must be converted to a sovereign currency for those purposes. It is not even comparable to shares of corporate stock, which are at least backed by an entity that engages in real business activities. Bitcoin's purpose is to serve as a vehicle for speculation and also for conducting illegal activities, including tax evasion. All the technobabble in the world cannot change that simple fact.

Posted by: Rob | Jun 10 2021 16:15 utc | 137

@arby #40
Kim Dotcom is full of crap.
Any actual bitcoin transaction takes hours to days to complete. The speed is a function of how much you are willing to pay to have miners "verify" the transaction.
A typical transaction is considered "done" when 6 or more miners verify it. And the cost is non-trivial - it was $10-15 when bitcoin was $50K-ish and is $5.51 right now. You can see bitcoin transaction pricing here
That's just to transfer the bitcoin.
Now to convert the bitcoin to cash: US exchanges have very limited connections to the outside world. Conversion to cash on an exchange is fast but to actually use the money - you generally have to wire transfer it out which takes days.

Posted by: c1ue | Jun 10 2021 16:17 utc | 138

@Anonymous #69
Infinite.
Unless most of the mining computers in the entire world are destroyed, the blockchain data is there. Even then, there are a lot of secondary data repositories for blockchain data.
But if the entire internet disappears for any significant length of time - we as a civilization are already doomed and most of use are already dead. So what then?

Posted by: c1ue | Jun 10 2021 16:20 utc | 139

Two words: Human Hubris [see reference to Lewis Mumford below]

Two more words: Peak Electricity [not doing so good in Gaza or in Yemen]

And the last [of my] two words: Global Debt [people are becoming more poor (resource scarcity)]

Want to know the future? Read Lewis Mumford's THE MYTH OF THE MACHINE (two books: Technics and Civilization; The Pentagon of Power). <- THIS is our true history, the path that humans have been on and are likely to continue to be on. News flash: POWER relies on technology to subjugate us- and, eventually, we become unnecessary, replaced by machines (the overlords will continue to seek the messiah, via religious prophesies or space travel- either way it's escapism, escapism from the natural world).

And by flipping the [electrical] switch people can be essentially turned off. Plugged into the Matrix and want to bypass it? Good luck on that! Governments will make it illegal for any trade whose transactions cannot be traced. Any legal business that cannot trace transactions will be put out of business if they cannot comply. We will be conditioned to rat on anyone who uses (or attempts to use) crypto currencies that are not authorized by the State.

Posted by: Seer | Jun 10 2021 16:21 utc | 140

@Hoarsewhisperer #72
As I understand it - although I didn't personally look - 200+ bitcoins were given in a single transaction to Navalny. At the time of transfer, it was worth $10M+.
Hardly pocket change except to an intel agency or the BBG.

Posted by: c1ue | Jun 10 2021 16:22 utc | 141

@KYLE #82
You are wrong and misunderstand how cyber criminal gangs work.
First of all, Darkforce is a Ransomware As A Service (RAAS) setup. This means Darkforce provides the encryption software, the decryption keys and handles payment and customer service in the middle. For this, they take from 5% to 20% of the ransom (lower percentage for higher ransoms).
So while in theory they could use a new wallet for every ransom attack - in practice the cyber criminals never had to worry about it, and Darkforce had a single wallet that received funds.
Secondly, when you're taking in and payout out large sums of bitcoins constantly - you need liquidity. Cold storage is slow and frequent use endangers the anonymity and security of it.
Darkforce likely also paid for secondary services: the customer service people, the programmers, etc for which it also needs a central liquid bitcoin account.
Yes, with software you can coordinate a large liquidity across hundreds or thousands of wallets - and this will certainly happen going forward.
It just hasn't been necessary yet.
Lastly, Darkforce is likely distributed. Who holds the cold storage? Do cyber criminals trust each other such that they'll let their anonymous crypto theft proceeds reside with one of them?
I think not, although I don't know for sure.

Posted by: c1ue | Jun 10 2021 16:28 utc | 142

@ BM (110 & 112)

Good points... thanks. “The private/sovereign distinction is correct up to a point, but is not sufficient.” Agree. Also agree, “the private/sovereign distinction has to be refined.” ‘Sovereign,’ can be further qualified by a condition that it serves the common good. However, in neoliberalism, the state does not serve the collective, it only keeps the collective in check. The purpose of the neoliberal State is to control the collective from which it draws its power so as to benefit the true Rulers. The collective serves the neoliberal State, not the other way around.

Sovereign money, has additional qualifiers. It is created to serve the populace, common good and for nation’s wellbeing. Also, there is transparency and accountability, which will give it value. In a democracy it calls for the monetary authority to be democratically elected and there is democratic oversight. It being backed by commodities is not that important. Digital Yuan satisfy only a few of these requirements. However, Digital Yuan is overall positive and will enable China to extend its currency’s global reach and prevent speculative attacks. It can be used without the Internet, between two phones. It seems like two wallets interact, passing the money tokens to complete the transactions, which are settled when they’re connected to the Internet. A good innovative functionality.

CREDIT is a key functionality of any monetary system and currently most of money is created as credit/debt. Isn’t this functionality missing in Bitcoin? A good society will enable productive credit and discourage speculative credit and consumption credit. In the present system the latter credits are encouraged and the former is in scarcity. Banks will be happy to qualify these cryptos as an assets, so they can collateralize them to issue loans and create a financial bubble.

Here is a good debate on Bitcoin and Cryptos. Who wins & why?

On the “proposal by the American Chairman of the Bank of England Carney to issue a digital cryptocurrency to replace the US dollar as a world reserve currency?... superficially appears to be sovereign) - in practice I doubt that would be much different from a digital cryptocurrency openly in private hands.” Agree. It will further ENSLAVE Americans and create a TOTALITARIAN system.

The present monetary system is “the ultimate scam of all time.”

The US$ is the quasi-official currency in some countries, such as Afghanistan... Some countries such as Argentina made a mistake of pegging their currency to the US$ and harmed their economies. It will be interesting to see if El Salvador congress moves forward with the proposal.

The Syndicate through its lackeys will work to extend its power and control over any currency. Money is power and control. The challenge for humanity is to ensure that doesn’t happen and money serves humanity’s well-being. This is the war of the 21st Century.

“It must be recognised that the breakdown of our present economic system is due to the failure of our political and financial leadership to intelligently deal with the money problem.” Most of our society’s problems are the result of the failure of our money system to properly function. Marriner Eccles, the 7th Chairman of the Board of Governors of the Federal Reserve, made this profound statement in his testimony to the Senate Committee on the Investigation of Economic Problems in 1933.

Here is an interesting debate on this topic: “Central Banks can print prosperity.”

Here is an interesting discussion at a Central Banker’s blog:

@ c1ue (132), neoliberals only need government-police to enforce their contracts. They’re lost. Maybe the cryptos are intelligence agencies projects to capture dollars from the illegal world. 70% of the US$ bills are outside the U$A. It is good that some nations have banned cryptos.

Posted by: Max | Jun 10 2021 16:30 utc | 143

@Smith #98
Only noobs and idiots try to use GPUs to mine crypto. They have gone ASIC years ago. The GPU shortages are not due to crypto - they're due to people buying new computers because of COVID and also due to decreased production capacity from the makers after their crypto crash in 2018.

Posted by: c1ue | Jun 10 2021 16:32 utc | 144

@Hoyeru #5
Blockchain IS NOT secure. All blockchain is, is immutable.
Cryptos can be trivially stolen: the majority of people access via PC or cell phone.
PCs are infected constantly by virus attacks or, increasingly, straight out network penetrations (i.e. hacks).
Phones: $500=$1000 to a cell phone store manager who makes maybe $30K a year can get you most anyone's phone number. From there, password recovery via text is trivial.
And the immutability of blockchain means you can't reverse a stolen bitcoin even if you know who stole it and where it is residing now - unless you get a law enforcement prosecution and order to an exchange. If there's no exchange involved, you're SOL.

Posted by: c1ue | Jun 10 2021 16:35 utc | 145

@ELcomandante #113
If there is one thing you should never do - it is pay for anything with bitcoin.
If you think it will go up - this is stupid.
If you're hiding your income or are a cyber criminal - this is stupid.
And long term - the transaction fees are going to be an issue. Yes, lightning network blah blah but ultimately someone always has to pay.
The reality is that bitcoin is just as fiat right now as any fiat currency - the entire processing network is paid from invented bitcoins. Mining ups to date have been far faster than anyone has forecast, so the time when there are no more free bitcoins to give to miners is coming much faster than anyone things.
At which point it will be interesting.

Posted by: c1ue | Jun 10 2021 16:38 utc | 146

@AxelP #121
If TSHTF - why wouldn't some gang with a gun take your silver?
Mad Max planning is fun, but the vast majority of people who do it are totally clueless as to how it really will go down.
Mad Max = Somalia. Go there and see just how successful holding PMs is.

Posted by: c1ue | Jun 10 2021 16:40 utc | 147

Posted by: c1ue | Jun 10 2021 16:17 utc | 137

"Kim Dotcom is full of crap.
Any actual bitcoin transaction takes hours to days to complete. "

I know almost nothing about crypto but I think Kim Dotcom is a smart cookie when it comes to this kind of stuff.

He did not say to use bitcoin for transactions but bitcoin cash (BCH) which he says is extremely fast and very cheap.

He said that this is more like BTC was originally for. Fast and cheap transactions which is not possible with bitcoin.

Posted by: arby | Jun 10 2021 16:46 utc | 148

"Bitcoin Cash" is still slow relative to centralized payment processors. "Fast and cheap" compared to Bitcoin Classic, but not compared to MasterCard.

Where MasterCard has a downside is its traceability. That's not good for things like buying drugs over the internet or evading sanctions regimes. So we've found a niche use for p2p money transfers, like we did for p2p file sharing: the movement of illicit materials. The fact that some people use BitTorrent for legitimate purposes does not change the fact that BitTorrent's primary purpose, today and always, has been illicit file sharing. Same for Bitcoin and other cryptocurrencies. Only cryptocurrencies add new problems to the mix: the incredible inefficiency of proof-of-work algorithms (which, yes, I know proof-of-stake is a thing, but we are talking about Bitcoin here) which necessitates an irrational use of our finite energy dowry, as well as the possibility of speculating on the future exchange price of Bitcoin and fiat money via unregulated financial institutions - the cryptocurrency exchanges.

Posted by: fnord | Jun 10 2021 17:24 utc | 149

...crypto depends on insane amounts of electricity...The whole thing is simply not viable. - Posted by: vk | Jun 9 2021 21:37 utc | 51
Worse, there are alternatives. Most are flawed (ie federated sucks) but not all. Not all coins use proof of work but this is not my area. I am mainly interested in blockchain, not currency.
I can't think of a more wasteful technology to be adopted at scale.

Posted by: David G Horsman | Jun 10 2021 18:27 utc | 150

You obviously don't understand the intricacies of crypto.

Posted by: Wu Han | Jun 10 2021 21:31 utc | 151

wow, hysterical stuff, moonie, reminded me why i have not visited this, um, place, whatever, for a L-O-N-G time, 'cause you are a fucktard who KNOWS whereof he speaks, ALL EVIDENCE TO THE CONTRARY... smh...
of course, besides getting all kinds of fundamental facts wrong, you are missing the WHOLE POINT of blockchain tech, which is NOT the cryptocurrency connected to it, But the decentralized power it can give to the people at large and eliminate ALL KINDS of gatekeepers... geezus you are a fucktard... thanks for reminding me why i don't pay attention to blowhards like you...

Posted by: art guerrilla | Jun 10 2021 22:52 utc | 152

@ c1ue

Yeah, well my fren, a shitton of noobs exist.

But now with China banning cryptomining, we might see a flood of GPU, and I'm fine with that.

Posted by: Smith | Jun 11 2021 1:01 utc | 153

jinn @ 134:

"The essence of a Ponzi scheme is that early investors can be paid off with the proceeds from later investors. As long as there is more money flowing in than there is flowing out the Ponzi investment goes up."

vs

The essence of a stock "market" is that early investors can be paid off with the proceeds from later investors. As long as there is more money flowing in than there is flowing out the stock investment goes up.

Notice the difference? No you don't, because there is none.

In the stock cycle the rich get in first, then the poor(er) come along. Those are the ones that lose in the end. The stock "market" is an elaborate ponzi, run by and rigged for the one percent.

Posted by: Jörgen Hassler | Jun 11 2021 6:07 utc | 154

c1ue -

You strike me as a typical Sillycone Valley tech guy who cut his teeth in the early 90s, maybe late 80s. I don't care.

You're totally wrong - as is b - on crypto.

https://markets.businessinsider.com/news/stocks/will-the-u-s--second-oldest-bank-state-street-start-trading-crypto-9998852?op=1

Sorry, but it's not going away nor is it going to zero. I wish b let me respond to as many posts as he allows you to, because if so, this thread would be at 400 comments. Unfortunately, for some reason whatever server or IP address (or email or even user name) is getting filtered like 90% of the time. So it's like Monty Python here. I'm the knight with the continuing flesh wounds who has his microphone (and sword wielding arm) cut off and you just keep posting without any seeming filters or limits.

Cold storage for crypto is EXACTLY what one must do if they want to air-gap their private key from the likes of the FBI and I'm getting the picture that you have no understanding of any blockchain (BTC is eons behind the times with their POW methodology) that is currently becoming a governmentally accepted and approved method of tracking all things from actual monetary transactions (even with BTC - I've bought stuff with it - are you saying some government including Uncle Scam can come take the material concrete product I've received from me? - and I have owned it for more than 5 years now. Same with Cardano Ada, XRP, ETH etc.

You're just wrong. Also to the means by which the FBI busted the Colonial hackers. Give me a detailed technical rundown of how the thieves wouldn't have been able to make off with all crypto due to the inherent flaws (or just built in features/bugs) of the system. Say they ignored a payment server and say they immediately put their coins into a hardware wallet and weren't within the USA's jurisdiction. Like Iran or Russia to name a few regular "hostile foreign powers", ya know? Tell us all how teh FBI STILL could have seized the coins back and how that's indicative of an inherent weakness (others concerned with "law" enforcement would say strength of that particular crypto's ecosystem - read the CNBC article).

This is all so silly. The most hilarious part is how this anti-cryto sentiment has captured not only bizarre quasi-libertarian free market government-aided capitalists like yourself, but also vk and uncle tungsten who have irrational takes on the subject ranging from hardcore textbook marxist to Zen Dali Lama nonsense views on anything, yet strangely favoring government backed fiat currency that isn't backed by jack shit. I'm perplexed and it's not because I'm looking at something wrong.

Posted by: Tom_Q_Collins | Jun 11 2021 6:32 utc | 155

Interesting the conspicuous lack of precious metal chat. Ru and China seem to be authorizing the purchase of pms while simultaneously ditching U.S. Treasuries. But what do I know? Just that I would rather hold silver than Uncle Sambo funny-money. But by all means, don't mind me.

Oh and C1ue with the America becoming Somalia schtick. There are a lot of red-blooded Americans with guns. They also don't appreciate the fed too much. I doubt roving packs of silver mauraders on the horizon but I do see the death of the greenback's reserve status. It is very prudent for this reason to diversify your wealth savings.

Posted by: NemesisCalling | Jun 11 2021 6:39 utc | 156

If anyone truly thinks that decentralized crypto is dead, then stop focusing on BTC and look at so-called altcoins like Cardano/Ada and how it's being adopted by developing countries for multiple functions. FFS get over it - it's a new world and the only true forecasts of doom rely on a worldwide Internet shutdown - AND - the ability of EVERY government to completely freeze any transactions in digital OR (also digital) cryptocurrency. Siiiiiiiiiiiiiiiiiiiiiigh.

Posted by: Tom_Q_Collins | Jun 11 2021 6:40 utc | 157

fools don't understand what a currency is, it's accepted everywhere; bitcoin isn't, it's "speculative" a gamble, it's Exactly what you hate about Wall St, all hype with no substance. Idiots keep falling for Wall St scams like Bitcoin and Libertarian economics; want to empower the Fed, cut income taxes and follow libertarian principles; or didn't you notice that none of the libertarians actually work in free markets, but finance?

Further, bitcoin can never be a currency as it's value is so volatile, I have $50, I have $75, I have $35. It's useless for pricing as the figure would be so volatile it would cost a fortune to follow and exchange. Banks are playing games about fractions of the movement you're seeing in bitcoin. Idiot delusional adolescent children

Posted by: scottindallas | Jun 11 2021 7:31 utc | 158

Crypto can go up and down more that 15% by a single tweet from one eccentric billionaire, and you call that an alternative currency? Moreover like VK said only China have the infrastructure to support crypto mining and if crypto is the future, then we are all doomed just because some people like to play pretend with their 'digital' money.

Also damn b, you post drawing out these delusional cryptobros out of the closet.

note: Just becase someone is being cryptosceptic that doesn't mean they support fiat currency. Especially in this blog where the death of US Dollar is always a hot topic.

Posted by: Hangar | Jun 11 2021 10:32 utc | 159

Posted by: Jörgen Hassler | Jun 11 2021 6:07 utc | 155

The essence of a stock "market" is that early investors can be paid off with the proceeds from later investors. As long as there is more money flowing in than there is flowing out the stock investment goes up.
________________________________________________________

Yes, that is correct, the valuation of stocks is pretty much a classic Ponzi scheme. When money is flowing into the market stocks go up and when money is flowing out they go down. However stocks also usually pay dividends which makes it not quite as pure a Ponzi scheme as bitcoin

Posted by: jinn | Jun 11 2021 11:01 utc | 160

Jinn @ 161

Agreed. My basic training was as a trading economist. I was supposed to go on to work at a bank, but when I was finished (1991) the banks crashed in Sweden, so luckily I got out of it. May be I didn't point out the difference because I took it for granted: The individual stock night not be a ponzi, I've owned stock purely for dividend, the only way to sell it was back to the issuer, and they would pay you what you paid them. But the stock "market" allways was and allways will be a ponzi.

Posted by: Jörgen Hassler | Jun 11 2021 12:24 utc | 161

Many interesting comments.

The theme of (the old) ZeroHedge:
"On a long enough time-line, the survival rate of everything is zero."
Which I think is self-apparent with regard to secular matters.

To which I think they should add:
"In the mean-time, there is money to be made."

I see the claims of how much energy the bitcoin scheme uses, but I also observe that transaction fees are very low. Which suggests to me that the scheme is very efficient.

Bitcoin, like stonks, have no value, but the infrastructure on which they are based generates a lot of cash flow - making a good number of people very wealthy.

It seems to be that the way modern finance works is to support and promote something til the public buys into it, then the thing acquires a life of its own and even becomes systemically important.

The central banks and various countries are busily (if that applies to government/bureaucracy) preparing roll-out of their own digital currency - I believe China already has. This will aid centralised control and monitoring. I wonder if perhaps they will absorb the renegade currency's when ready. I believe there are wealthy and influential people holding Bitcoin. It is said that there are holders of very large amounts (from early days) including miners - they can move the price and are somewhat trapped.

Posted by: jared | Jun 11 2021 13:10 utc | 162

The exchanges charge transaction fee for conversion of crypto to cash which is not negligible - something like 0.5% of transaction I believe.
But crypto to crypto transactions (e.g. bitcoin to dash) are with neglible fee.
As I understand it, having used it only a little - there are exchanges for coversion to cash (coinbase) and exchanges for for crypto transaction (poloniex). The cash exchanges are somewhat slow and may even hold-up a transaction for verification. But transfers from one account to another are fairly rapid - initial transaction is fairly instance (shows-up in wallet) and verification usually less than 20 minutes (then coins are available for use).

Posted by: jared | Jun 11 2021 13:44 utc | 163

So, do you support USD . . . the ultimate fiat currency? A current national debt of $28 Trillion. Forbes predicting the debt to rise to $89 Trillion by 2029. A debt to GDP ratio of 127%. Printing paper money 24/7. You have a plastic credit or debit card and that gives you a sense of security? Okay to each their own. Time will reveal what crashes first BTC or USD

Posted by: Lisa | Jun 11 2021 15:04 utc | 164

Lisa @ 165:

The dollar is a problem, the BtC is not a solution, since it's (here we go again) NOT a currency.

Posted by: Jörgen Hassler | Jun 11 2021 15:44 utc | 165

By the way barflies, El Salvador doesn't have a currency -- they use USD. BtC night not be worse, if it was stable.

Posted by: Jörgen Hassler | Jun 11 2021 15:52 utc | 166

Bitcoin anonymity is a complex issue. Unless you do everything right (i.e. your operational security is top-notch), you should assume that your Bitcoin transfers are not anonymous.

Bitcoin mining takes a lot of power, with diminishing returns. Apart from the mining there's also maintaining the ledger. That is, some nodes must do some math to verify every transaction. They are paid (in Bitcoin) for this. For that reason Bitcoin transfers have very high commission, relatively. You can't make micropayments in Bitcoin - the commission you'll pay to do the transfer will overshadow the amount that you pay to the recipient. And that consumes electricity as well.

The nodes that maintain the ledger are finite. Most people don't run these nodes, they use existing nodes instead. That's a weak point.

Bitcoin exists as a consensus among ledger-keeping nodes. If you can take over 51% of all the nodes (and you can, since there's a finite number of such nodes), you can dictate your own reality of who owns what.

Bitcoin is practically impossible to tax. For this very reason it never ever had a future - no sane government would allow it.

In short, Bitcoin is not a good currency. If you want currency, use the real one. If you want anonymity, pay cash. Or, alternatively, there are projects for anonymous crypto-payment systems. Unlike Bitcoin, they have asymmetric anonymity (the payer can stay anonymous, the recipient cannot - i.e. you can tax this easily), they are denominated in normal currency, they are issued by organizations (kind of like banks; in practice banks WILL be the ones who issue these) that can (and should) be audited, and require roughly as much infrastructure as the credit card payment system (i.e. some, but not that much).

Posted by: User | Jun 11 2021 15:55 utc | 167

From what I can theorize, crypto was created to forestall the threat of a return to sound money - i.e. precious metals. Iow, in a globalist system, with the greenback being the reserve currency, crypto has ascended just at a point historically where "the end of history" is showing MAJOR chinks in the armor. The return of nationalism will coincide with the fall of the anglo-zionist global arrangement. Crypto, from what I can gather, will not be the preferred fall back of the other two major players on the world stage, Ru and China. In its place, silver and gold will shoot to the stratosphere as the greenback falters and crypto-holders will discover the awful truth that it is not globally desirable. Why? Because Ru and China are buying pms currently.

Now let's do math...

If the purchase choices of major players on the world stage indicate demand of specific commodities, it does not compute that crypto, not being one of these, will retain value.

It's all connected, if you can see it. But we can surmise that crypto has in its essence the swan song of the greenback. Spend your uncle sambo money now, if you are smart. Buy value.

Posted by: NemesisCalling | Jun 11 2021 17:17 utc | 168

@b on June 9, 2021 at 18:00 UTC, seems you are not up to speed about the whole tether and other stable coins setup, do a bit of research it's one of the largest scams of this era, also research the energy usage of mining cryptos, it's one of those things that drives home that govs and other powerful organizations don't care about the environment or using less energy

Posted by: Jouven | Jun 11 2021 18:44 utc | 169

@Tom_Q_Collins #156
My experience comes from investigating and arresting cyber criminals, dealing with cyber criminal gangs on ransomware, etc etc.
So thank you, your understanding of who I am is wrong as is your understanding of what crypto really is used for and what it is.
I also note that I have never said it was going to zero - I specifically noted that, at this point, the major cryptos - top 10 or most likely less - are going to be around due to the large amount of institutional and HNW money that has gone into it.
However, the crypto faithful's nonsense about crypto=currency, crypto=freedom, etc is utterly ludicrous.

Posted by: c1ue | Jun 11 2021 19:46 utc | 170

@NemesisCalling #157
If you've ever been in Somalia, or a Brazilian favela or comparable 3rd world shithole - you would understand that the path to that state is extremely long.
We are getting closer but that's like jumping up and saying you're closer to the moon.
On the other hand, Brazilianization is very possible

Posted by: c1ue | Jun 11 2021 19:48 utc | 171

@jared #163
The transaction fees are not low from an absolute basis - and furthermore they're where they are at now because all of the decentralized setups are fiat issuing crypto to miners.
For example: the bitcoin block award right now is 6.25 BTC = $20,000+
Yes, a given machine is not very likely to get a given block but the reward is so enormous that it still evens out to be a good ROI if you have a decently powerful setup. And I don't mean a GPU-based one: the major miners don't just have hundreds and thousands of machines, but they certainly extract at least some systemic benefit by ensuring none of their machines guess the same number at the same time - a benefit which the small miner is never going to have.
Major miners thus have not just the structural advantage above with non-overlapping guesses, but they also are situated to minimize energy costs, minimize regulatory oversight and taxes, minimize hardware costs by buying in volume etc.
The net effect is that a miner's ASIC is likely multiple orders of magnitude more effective than a generic Western compu-nerd mining on a home rig.
None of these setups is going to last forever at which point it will be interesting to see just how much a transaction actually costs.

Posted by: c1ue | Jun 11 2021 19:56 utc | 172

@NemesisCalling #169
Don't fall for the "assumptive close" that crypto people try to pawn off.
Crypto is not a limited commodity - there are 4500+ different cryptos and anyone can create a new one anytime. Nor is there any use case of serious volume to date besides evading capital export controls and cyber crime.
Nonetheless, any given thing does not require literal use or value to be considered valuable.
As I've said repeatedly: crypto is nerd art. If people think it is valuable, it is. And the tens to hundreds of billions that have gone into crypto are a literal expression of the thought that crypto (at least some) has value.
Of course, in reality, some cryptos are more equal than others. Less than 100 of the 4500 cryptos mean anything. What Lone Skum and others did for Dogecoin is a great example of something that is 100% illegal for a stock but is "unregulated" for crypto.
I met a laid off IT guy who drank the Kool aid and bought $1000 worth of Dogecoin relatively early. It went up 600X at peak but is now down 50%+ from this peak.
Will he sell in time? From my talking with him, it seems unlikely. Dogecoin is literally junk: it isn't even limited in use and is a pure meme crypto jacked up by the above. The only good news is that - barring the big crash that eventually will come in the overall equity markets - the decline is probably going to be fairly slow. He'll have plenty of opportunities to pull at least something out.
Then again, this guy literally hit the jackpot and is closer to doing the lottery winner slide than transitioning to a permanent higher level of financial security.
I wish him well, but I won't hold my breath.

Posted by: c1ue | Jun 11 2021 20:04 utc | 173

Final note: in my every other month dinners with Harris Kupperman - he sold out of Bitcoin 4 weeks before the inflection point change.
He was totally right on that just as he was totally right on the increase to start with.
What was interesting was that he told me that his peers were moving out of Bitcoin due to fears that Chainanalysis would be used to track bitcoin activity.
I told him that this is far more hype than reality. The above tools work primarily because they have a setup where exchanges that want to access Chainanalysis data have to give up their customer's wallet IDs. For a major bitcoin sink like Silk Road or Darkside - this works fairly well albeit not well enough that LE is willing to rely solely on these tools for criminal prosecution.
For an individual who isn't in the major exchanges? The tools are worthless.
Keep in mind that there is literally no limit to how many crypto wallets any one person or org has. If you have software, you could literally spread out everything into hundreds and thousands of wallets at which point the tracing becomes extremely difficult.
Similarly, lack of activity makes tracing crypto tough.
In any case, the hedgie libertarians apparently believe Monero is more safe and are using that; unfortunately Monero is even less useful in the real world than bitcoin and legitimately can be attacked as crimino-genic.
The creation of Monero spawned a slew of cloud and personal computer hijacking to mine it, for example.

Posted by: c1ue | Jun 11 2021 20:12 utc | 174

Computer Labor does not equal Value, not anymore than human labor equals value. "mining" gold makes sense because you have to do it. Mining bitcoin is just a goofy marxist way of attempting to impart a value in another new assbackwards way.

I'm pro-competing currency, pro-crypto pro-blockchain, pro encryption ect. I just don't see the point of supporting a goofy half baked Marxist/Ricardo/Smith approach to creating it's "value" and as we see, it's value is now 100% speculation and completely divorced from the computer labor. It's all about speculation, which shouldn't come as a surprise, considering it's central flaw.

Labor Does NOT Equal value, it doesn't matter if it's human or computer, value is determined by the market and because of this the entire idea of wasting computer labor is flawed and was bound to fail.

Nobody gives two shits how many hours you take to dig up your coins, labor does not equal value.

Posted by: Brad Smith | Jun 11 2021 20:21 utc | 175

@174 c1ue

But you sidestep my point. At some point, and SOONER rather than later, the greenback will lose reserve status. There is great evidence of this taking place right now. Every country that has demured from the greenback faces verbal threats and clandestine subterfuge from the empire. This is how desperate the game has become.

Your friend who has made a ton in crypto. Whoopty-fucking-doo. He got lucky. But luck runs out. Crypto may be worth a ton of greenbacks now, but your greenback will someday very near be approaching valuelessness. The proverbial wheel barrow full of money for a loaf of bread for which you stand in line for hours for.

I say to you again, pms are a great hedge and store of value, with silver being tops. Every other stinking commodity since the 70s has skyrocketed to something like at least 20x the price of then. Every commodity BUT silver. Silver is a lynchpin. The banksters know it, the FED knows it, and the U.S. gov't knows it. They are currently tamping the the shit out of it as the meme buying spree from r/wallstreetsilver continues apace.

You hardly hear anything on PMs right now in the news, because you don't want to spook the plebs. But in a moment's time, silver will be in the news and Biden will be giving a press conference bringing out the big guns, threatening all these meme stock and silver buyers, and...AND THIS IS IMPORTANT...Biden will blame Russia.

And from all the morons whose 401 k is trashed, he will have their support in starting some shit with Putin.

This is how wars start and how the path to nationalism must go through a flailing and homicidal empire.

Read it and weep.

Posted by: NemesisCalling | Jun 11 2021 20:29 utc | 176

End of crypto? I don't know.
IMF targets El Salvador after making Bitcoin legal tender

End of US dollar? Probably.
Cuba’s Central Bank Suspends Deposits in US Dollars

HAVANA (Sputnik) - Cuban banking and financial institutions will not accept cash deposits in US dollars from 21 June due to US sanctions, the Central Bank of Cuba (BCC) said.

Posted by: Norwegian | Jun 11 2021 20:43 utc | 177

Posted by: Brad Smith | Jun 11 2021 20:21 utc | 176

Rarity is also a fact that gives something value.
EG; the Mona Lisa-- Probably painted in a few hours by one man.

Posted by: arby | Jun 11 2021 21:10 utc | 178

Most bitcoin is purchased with other cryptos like Tether. Tether is supposed to be tied to the USD one to one but their are versions of Tether in which that is very suspect.

The space is rapidly evolving and confidence in governments is rapidly shrinking. That makes for growth in the alternative to government systems.

The "whales" and speculators are playing it for all its worth and cashing into USD, Euros, other crytos and other currencies.

If the internet goes down the whole society would degrade to a degree. The internet is used heavily across all industries financial and otherwise.

If people want to trade widgets and make money let them. Who the F cares. Do it or don't do it. I choose to do it, make dollars and pay my taxes to the Empire. When the Marxists take over my taxes will go to them.

Posted by: circumspect | Jun 11 2021 21:20 utc | 179

Vaya Con Crypto – When the Levee Breaks

"Doomscroll through Bitcoin Twitter and you’ll see most everyone turn into some version of Flounder."

Posted by: arby | Jun 11 2021 21:32 utc | 180

You can add to your list the fact that the BTC blockchain contains kiddie porn. The transaction record has space for additional information for that transaction. The space is normally used to indicate the reason for the transfer, but has been used to upload kiddie pron as well. So.... If you have a BTC wallet on your computer, it will have a copy of the BTC blockchain, and thus some kiddie porn. And, yes, the FBI knows exactly where those pics are.

Posted by: Kalbo | Jun 11 2021 22:10 utc | 181

There is also the 51% rule. Transactions are confirmed by other miners. Having control of the hashrate or 51% gives one the ability to double spend BTC and to empty any wallet. BTC exists on the blockchain, not in your wallet. Your wallet is just a bankbook, not a safe.

China has control of 65% of the blockchain right now. They could conceivably steal every BTC from every wallet. Since this would then ruin all trust in BTC, and the value would drop back to 1 cent, they have not done this as of yet. When China invades Taiwan, they will steal all the BTC from the Genesis wallet and other high value wallets inorder to destroy BTC.

Posted by: Kalbo | Jun 11 2021 22:16 utc | 182

Kalbo,
I know very little about bitcoin and the blockchain but what you posted sounds like absolute rubbish.

Posted by: arby | Jun 12 2021 0:01 utc | 183

Another article to add to the bitcoin obituaries page xd

Posted by: Lol | Jun 12 2021 9:06 utc | 184

The primary reason for the creation of bitcoin was to take pressure off the price of gold - hence the terminology "mine", "mint", "coins", which otherwise make no sense at all. The secondary reason was to facilitate organised crime, which is a very big part of banks revenues. As *money* it has absolutely no merit whatever, and it is the stupidest joke human ingenuity can devise, for multiple reasons (incredibly slow and expensive transactions being the most obvious). As a pyramid scam it is brilliant and the bankers have got rich rich rich on the back of it! But yes, it is time to fade it out now.

Posted by: Tim | Jun 13 2021 18:33 utc | 185

I love it! Fight all you want about it, some will make a lot of money quickly, and get out, and get out while the gittin' is good! A mid strong solar flare, and it could be over for months, if not years. I'll keep sitting on my silver, never buying it for an investment, but to sit on just in case the almighty dollar takes it's last big shit, and your crypto won't be worth the fried circuit it once lived in. Is the system shielded, partially at best, and if there's no electricity or internet to sack up yer change, well.......................

Posted by: Chuck Rogers | Jun 13 2021 19:21 utc | 186

As a rough guess I would say the nays outnumber the yays by a considerable margin in this comment section.
The majority are usually wrong.

Posted by: arby | Jun 13 2021 21:00 utc | 187

arby | Jun 13 2021 21:00 utc | 188

I gotta agree, one argument which I find kinda odd is that people think that bitcoin won't work if the internet crashes. while that might be true we will have much larger problems then because your credit card won't work any more either. nor will that ATM. The banks will probably close as well as they won't be able to make any transfers.

at that point the only currency you might have is ammo.....maybe cigarettes.

I do wonder why there are so many haters. how does this negatively affect them. Musk has what I consider a very clever idea where he proposes to use his Powerwalls to do the hard work of verifying transactions aka mining. Of course this will benefit him in the short term but there is nothing stopping others from marrying ASICs to battery storage.

we shall see, the buggy whip manufacturers also had compelling arguments against the automobile.

Posted by: da | Jun 14 2021 9:08 utc | 188

sorry, hit enter accidentally, the above comment is mine

Posted by: dan of steele | Jun 14 2021 9:09 utc | 189

@NemesisCalling #177
The greenback losing reserve status - I agree.
However, the timing matters.
The timing is largely a function of both having a viable alternative and a driving event.
The driving event is the US printing, but the viable alternative does not exist.
Crypto is not the alternative. Nobody transacting oil or goods wants their payments varying by 5% to 10% on a weekly basis.
More importantly - while I laugh out loud at the more idiotic economists' comments about the US being forced to have deficits because of the dollar reserve status, it is true that the reserve holder serves as the worldwide liquidity source.
There are only a handful of countries that have economies large enough to be able to do this: the EU, Japan and China.
The EU doesn't want and won't ever be a reserve currency. The Germans want to be able to control the value of the currency they accumulate surpluses with, and the EU also has no military to back up its sovereignty.
Japan has an even worse printing problem albeit entirely internal. In many ways, the US' actions are because of Japan having been able to print to over 200% GDP with no problems. More importantly, Japan will never stomach the idea of giving control of huge amounts of JPY to foreigners.
China is the only alternative but it has an internal wealth control problem. Unlike the US where the wealthy control the government - in China (and Russia) the government controls the wealthy. They control them largely through internal regulation/repression and currency export controls. The one thing the new reserve currency cannot have is currency export controls from the parent country.
As I've noted before - one alternative is for China to create an external only crypto RMB. China could control the link between physical RMB and crypto RMB - which would serve to keep the currency export control option.
However it works, and even if a magical other party comes into play - the process will take years.
It takes a long time for oil exporting/buying countries to switch much less the millions of companies and people in trade.
It also takes a long time to physically switch over: Central banks need to accumulate reserves of the new reserve currency or else risk massive fluctuations of the exchange rate.
Crypto is not the answer for reserve currency - and I do see the end of the fiat miner crypto issuance for bitcoin as a potential extinction event. Specifically - what happens to the size of the mining pool once people aren't being given tens of thousands of dollars for a successful mining? I am certain the pool shrinks dramatically, at which point every wallet in the world is at risk from a 51% attack.
So in summary: I agree with your rationale but the timing and the successor matters.
I don't agree with either your view on the timing or on the successor.

Posted by: c1ue | Jun 16 2021 15:07 utc | 190

@circumspect #180
Wrong. Totally wrong.
Much speculation in crypto is done via tether but that is a function of exchanges.
But people pay actual cash for bitcoin as well as via credit cards.

Posted by: c1ue | Jun 16 2021 15:09 utc | 191

@Tim #186
Wrong.
Nobody ever mentioned crypto/bitcoin as replacing gold until basically last year.
The early talk was always about "democratizing finance" and libertarian nonsense about freedom currency.
It was only when that nonsense became transparently crap that a new meme was needed; voila! Bitcoin as store of value.
The term mining exists because the process pulls crypto/bitcoin from air (actually electricity and silicon) much like mines pull commodities from the ground with oil.

Posted by: c1ue | Jun 16 2021 15:11 utc | 192

@da #189
Powerwalls for cryptomining is such nonsense as in only possible to believe.
Among the problems:
1) They don't have the compute power
2) They're supposed to store power, not suck it up
3) Powerwalls are already super expensive - how much will they be with a gigantic ASIC stuck on?

This is just Lone Skum trolling his products as usual.
If there's a more stupid scheme to make individual or grid level energy storage/resilience than Powerwall, I don't know what it is.

Posted by: c1ue | Jun 16 2021 15:16 utc | 193

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