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Trouble Looming for Bitcoin, ethereum and monero? 'We are about to see massive disruptions': IMF chief . Is Digi Money a Scam or Here to Stay?

POSTED BY: JAYNEZTOWN
UPDATED: Sunday, November 12, 2017 19:14
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Tuesday, October 17, 2017 4:34 PM

JAYNEZTOWN

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Wednesday, October 18, 2017 9:30 PM

SIGNYM

I believe in solving problems, not sharing them.


There's the "blockchain technology" which acts like a distributed ledger, and then there are cryptocurrencies which are applications of blockchain, and then there is Bitcoin which is a specific cryptocurrency.

I think the blockchain technology is here to stay, but there are a lot of problems with the idea of crytpocurrencies. The upside to cryptocurrencies are that they are decentralized; but the downsides to cryptocurrencies is that they suffer the same flaws as ANY fiat currency, and in some ways are worse because they're completely electronic. So if the power goes out, or the sun burps at us, you're hosed.

What people claim are upsides to crytpocurrencies aren't really as solid as you might think.

For example, one original claim about Bitcoin is that it has to be "mined", and that there is an upper built-in fixed limit to the number of coins created, so technically it could not be inflated like bank-issued currencies. However, altho BITCOIN can't be reproduced, there's no restriction on the number of OTHER cryptocurrencies created, such as Litecoin, Auroracoin, Ethereum, Vertcoin etc. So there's no REAL protection from inflation by crypto. So as a "store of wealth", crytpocurrencies aren't all that robust.

Another presumed advantage of cryptos is that it is "private". Well, leave it to the spook agencies to figure out how to figure out the blockchain record of transactions, which are recorded at every step of the way.

A third presumed advantage is the ease of moving crytpocurrencies between exchanges for a very low fee, without the mediation of banks. The problem with being able to RELIABLY use crytpocurrencies to purchase stuff is that its value is rocketing up and down. It's impossible to "price" anything in crytpocurrency.

A fourth presumed advantage is the ability to bypass banks. But sooner or later, banks will ALSO issue their own cryptocurrencies, so ... what then?

As mentioned, cryptocurrencies, like fiat currency, have nothing to back them up, so there's no "there" there in terms of value. Security is an issue: I recall people storing their Bitcoin in Mount Gox, only to have it somehow stolen. And it suffers the same problem as regular currencies: Despite its decentralization, there's nothing to prevent people from "hoarding" or speculating on cryptos, so in terms of wealth equalization it's a bust.

*****

I think the blockchain technology is here to stay. It offers HUGE advantages in terms of recording transactions. But what I believe will happen is that there will be MANY applications of blockchain: nations (like Iceland and Russia) have already created national cryptos issued by central banks, and there will be many more crytpos created by banks, individuals, nations, and consortia. The "value" of each cryptocurrency will be decided on a number of factors, such as ease of use, stability of value, "backing" etc. MANY will fall by the wayside. Ultimately, I think there will be at least one gold-backed cryptocurrency if not more, and many national cryptocurrencies, and quite possibly one international-bank (IMF)-backed crytpocurrency, which may be backed by SDRs (special drawing rights). I honestly don't know if Bitcoin or the other "retail" cryptocurrencies will survive.



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Pity would be no more,
If we did not MAKE men poor - William Blake

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Friday, October 20, 2017 8:55 PM

SIGNYM

I believe in solving problems, not sharing them.


Speak of the devil!

Quote:

The Next Generation Of Currency Wars: Private Vs State-backed Crypto

Recently Russia announced that it will be unleashing a CryptoRuble, just a week after Vladimir Putin strongly criticized Bitcoin and other private cryptocurrencies. When announcing the move, Minister of Communications Nikolay Nikiforov acknowledged that it was in part inspired by the aim of getting ahead of other governments:

I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after two months our neighbors in the EurAsEC will.

In doing so, Russia is following the lead of another country that too has become hostile to private crypto, China. Last July the People’s Bank of China became the first central bank to announce it had developed a crypto-prototype that it plans to offer alongside the traditional renminbi.

That the first forays into state-backed cryptocurrency comes from two countries with a history of restricting a free and open internet is not surprising. While Bitcoin originated as a way to opt out of government control of money supply, increasingly governments see the underlying technology as a way to increase their control of the economy.

As Xiong Yue explained:

" For example, if the government plans to subsidize certain farms, say some corn farms, to support this sector of agriculture, they can directly add a certain amount of money to the wallets of some farms, for instance 100 million dollars and program this money to be sent to certain fertilizer merchants at a certain time, and that each can only spend maximum of 10 million dollars per year, and in this way, they can make sure that the farmers won’t squander the windfalls, and that this money won’t flow to other sectors, for instance, the stock market or real estate market. Even though this kind of monetary policy is bound to fail,

I don't think so
Quote:

from the perspective of government officials, CBDC provides them a better tool. For them, with the help of the CBDC, they can plan and manage the economy better."


Not to be left behind, the IMF – who some analysts, such as Jim Rickards, believe is prepared to step up to replace the US dollar as the next global reserve currency – recently opened the door to issuing their own cryptocurrency in the future. While some crypto-advocates have naively celebrated recent comments by Christine Lagarde on the future potential of digital currency, such praise simply reflects the increasing awareness of technocrats that the finance is changing and they must be prepared for it. Considering central banks around the world have continued to advance their war on cash, it is not surprising to see Lagarde and others come adapt to the concept so quickly.

Exchange Regulation
The usefulness of state-controlled crypto is why we should expect increased scrutiny and regulation on private cryptocurrency exchanges.

It's been reported that the Chinese government, which shutdown private crypto-exchanges in September, is looking into reopening exchanges with increased regulation. Russia, too, is working on exchange regulation, rather than an outright ban. This apparent change in direction may be the consequence of China’s exchange ban resulting in an increased use of peer-to-peer platforms in the face of the government crackdown.

For the same reason that government prefers regulated bank accounts to cash and safes, state officials may recognize the benefit to propping up licensed exchanges. Already we have seen numerous cryptoexchanges be willing to collect and hand-over sensitive customer information in exchange for government-issued licenses. Much like banks, these exchanges are increasingly being enlisted as tax collectors for government.

Calm Before the Storm?
While this loss of privacy may outrage Bitcoin’s initial supporters, it’s understandable why many current holders may be perfectly happy with these developments. After all, while much of Bitcoin’s initial appeal was its usefulness in black markets, a major reason for its astronomical rise in value is its increasing appeal among average customers who were never all that concerned with financial services regulation. Not only has it helped its appeal as an investment, but also its daily use. Japan, for example, saw a major surge in retailers accepting Bitcoin once a firm regulatory framework was implemented.

It is worth wondering whether this harmony between government and consumers will continue, however, once state-controlled crypto truly ramps up.

After all, we’ve already seen government rely upon traditional boogeymen of terrorists, drug dealers, and other criminals as justification for their increased control. The increasing use of Bitcoin by hackers and extortionists provides a modern-day twist to these age-old scare tactics. Is it all that difficult to foresee a scenario where governments attempt to freeze all regulated exchanges in the aftermath of some terrorist attack or other scenario? Or go one step further, and legally mandate replacing a privately-held asset for a government-issued currency?

The example of China demonstrates the inherently decentralized nature of Bitcoin will likely always ensure a degree of functionality beyond the reach of government. At the same time however, the increased popular appeal of crypto-currency also means increasing reliance on third-party services, and fewer individuals securing their investments in private wallets. Since the most popular – and thus most lucrative – exchanges and other services have an inherent incentive to maintain a good relationship with legal authorities, it is easy to see how this easily plays to the benefit of government officials.

Already within the industry debate is raging between those who prioritize “efficiency” and mainstream appeal – even at the expense of crypto's decentralized-origins. Luckily, Bitcoin’s original Austro-libertarian ethos means that we are likely to see major industry influence pushing back on state-control.

A Preemptive Strike for Monetary Freedom
In the meantime, this is yet another reason why what little political capital libertarians on monetary policy have should not be wasted pursuing moderate reforms such as forcing the Fed to embrace rules-based monetary policy. There is no hope to ever transform the Federal Reserve into a useful – or even non-harmful – institution. That hope does exist, however, in crypto.

As future monetary policy is soon to become a major topic of conversation as President Trump rolls out his Federal Reserve nominations, it would be a major loss for the cause to not see Senator Rand Paul and other Fed-sceptics use the opportunity to push discussion about the need for competition in currencies. Further, the recent surge in states that have legalized the use of gold and silver for the payment of debt means there has never been a stronger political case for the elimination of legal tender laws and the taxes imposed on alternative currencies like Ron Paul proposed when in Congress. Such a move now could help set the stage for America being a true safe haven for private crypto in the future.

Doing so may give the cryptocurrency industry the freedom to give us a fighting chance to truly end the Fed, and their clones around the world.


http://www.zerohedge.com/news/2017-10-20/next-generation-currency-wars
-private-vs-state-backed-crypto


In the meantime, what I wanted to include in my previous post was that Bitcoin value is likely to bounce around quite a bit. You can make a lot of money on it, but don't buy it with the idea that you're going to passively stick it in a vault and wait for the wealth to roll in. You need to be on top of that value EVERY DAY, because you might hit an air pocket like you wouldn't believe!


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Pity would be no more,
If we did not MAKE men poor - William Blake

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Sunday, November 12, 2017 7:14 PM

SIGNYM

I believe in solving problems, not sharing them.


Crypto Chaos Explained - Bitcoin Crashes As 'Cash' Tops Ether For First Time

Bitcoin collapsed overnight, trading as low as $5555 - down 30% from its highs - before bouncing back above $6000, as Bitcoin Cash soared to as high as $2450 (4 times its price on Friday), overtaking Ethereum briefly as the second largest market cap cryptocurrency.

http://www.zerohedge.com/news/2017-11-12/crypto-chaos-explained-bitcoi
n-crashes-cash-tops-ether-first-time


This is part of that shakeout that I think will be taking place for the next 2-4 years. If you pick the winner, good on you!

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

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