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Bitcoin: Deletion by Executive Order?

Bitcoin: Deletion by Executive Order?

Dear Cryptocurrency Investors,

Let’s play a “worst case scenario” game. Why? Because it’s always good to play the “what if” game. It helps you prepare.

You see a lot of hints out there and worries. But I wanted a bit more. I wanted you to taste it, if even fictionally. Why?

Because this has happened before. I know people who lived through it. People who had to turn in their gold to the government or face criminal prosecution.

But a little background first.

Cryptocurrency is now being accused of outshining gold. It’s little wonder that in the United States bitcoin is effectively, 10 times the price of gold.

Think on that for a moment. Software – a ledger service – is now more valuable than a physical commodity.

What’s more, cryptocurrency cannot be as easily regulated as gold or silver. It’s a governmental conundrum.

In 1933, President Franklin D. Roosevelt (FDR) signed Executive Order 6102. It essentially confiscated gold from law abiding citizens because of an emergency.

The emergency? It’s debatable, but many point to one thing: to bailout the Federal Reserve. At the time, many foreign countries were cashing in dollars for American gold and well, the government was running low.

Gold prices back then were set by government at $20.67 an ounce. About a year later, the official rate of gold was raised to $35 per ounce. What that meant was that the US Dollar lost approximately 40% of its value in a year. Inflation was gifted by Uncle Sam. It may have also slowed the gold drain, since by then, foreigners had to use more fiat currency to buy the same amount of gold.

This is all history. How US citizens were ripped-off by their government. No wonder, that even today, people are nervous about their gold. But maybe they shouldn’t worry so much now.

Gold has been out-shined. The days of price manipulation by governments, is over.

Bitcoin is now the up and coming king of currencies. Perhaps it is better to say that cryptocurrency is king. Why?

Because we do not know if some new altcoin will win the day. Ethereum, IOTA, Litecoin or Monero – or some innovative altcoin may soon become the new digital gold. But there is no doubt that the digital gold rush is on.

Governments are paying much closer attention.

They see that their fiat currency is under threat by software that not only substitutes for fiat dollars, but does all sorts of other neat things too. They avoid capital controls, zip around the world in seconds, skirt banks and taxes – and hide in plain sight. Best of all, they can’t be confiscated, without permission – or so we hope. Governments have a difficult time tracking them.

The idea that blockchains cannot be cracked by quantum computers might not wash. If the government agencies utilize quantum computers to confiscate a single cryptocurrency transaction, this would no doubt have a chilling effect upon the entire cryptosphere.

Would people then stop transacting in crypto, knowing that any transaction could be redirected to a government wallet? Would that not halt crypto in its tracks? Make it worthless?

Could our governments conduct a 51% attack? A concerted effort to destroy specific crypto targets? These cryptocurrency websites often suffer such attacks and other issues.

North Korea attacks bitcoin regularly, via the exchanges. It appears that they are trying to steal cryptocurrency, however, and not destroy the targets themselves. They are a fiscally challenged despotic regime, after all.

Denial-of-service attacks recently hit the cryptocurrency exchanges Bitfinex and Bittrex.

Bitfinex shies away from American customers due to the onerous reporting regulations and the costs associated with them.

Bittrex is suspiciously locking Legacy accounts and asking for upgraded identity information from its customers. They telegraphed (reported) this process before they proceeded, but reduced customer withdrawal amounts. Shortly thereafter the total lockdown began. They have sent out emails to apologize.

One would expect a big outflow of funds when and if Bittrex releases the locks. Unless Bittrex customers have been Goxxed.

Crypto-jacking is on the rise. Are you mining crypto for others as you surf the web? You would hope not.

ICO’s may soon lose their luster. Initial Coin Offerings can be used to easily raise money, but will the developers make good on their promises? Recent US investigations might be one nail in that coffin.

And to top it all off, it appears that bitcoin has some serious problems ahead. Routing attacks are a concern. Apparently, most of bitcoin’s transactions flow through just three ISP’s. If true, how difficult would it be to slow the nodes? To make everyone lose the faith?

“…the biggest threat…”

In all this mess, many of us are ignoring the biggest threat of all, however: The Great Confiscators. The governments.

If FDR could sign an Executive Order to take all the gold from Americans, how difficult would it be for a sitting president to do the same – to steal the crypto?

If Congress, in the US, cannot agree on a bill to make Americans report their crypto-holdings, would it not be easier to whip out the presidential pen and in a matter of hours, criminalize bitcoin possession?

And that’s my thrust here. I wanted to imagine just what such an order would look like. So I looked up FDR’s great theft and perused a couple of The Donald’s recent Executive Orders and came up with this:


Presidential Executive Order Combating Terrorism, Money Laundering, Illicit Drugs and Cryptocurrency Pyramid Schemes

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the National Emergencies Act (50 U.S.C. 1601 et seq.), and in furtherance of the objectives of Proclamation 7463 of September 14, 2001 (Declaration of National Emergency by Reason of Certain Terrorist Attacks), which declared a national emergency by reason of the terrorist attacks of September 11, 2001, in New York and Pennsylvania and against the Pentagon, and the continuing and immediate threat of further attacks on the United States, and in order to provide the Secretary of Defense additional authority to manage personnel requirements in a manner consistent with the authorization provided in Executive Order 13223 of September 14, 2001 (Ordering the Ready Reserve of the Armed Forces to Active Duty and Delegating Certain Authorities to the Secretary of Defense and the Secretary of Transportation), and in order to clarify SEC. 13. Prepaid access devices, digital currencies, or other similar instruments, (a) In general. —Section 5312(a) of title 31, United States Code, it is hereby ordered as follows:

Section 1. For the purposes of this regulation, the term “hoarding” means the withdrawal and withholding cryptocurrency, cryptocurrency contracts, prepaid access devices, and digital currency, from the recognized and customary channels of trade, be they held at a digital exchanger or tumbler of digital currency or anywhere and in any form not yet known to exist. The term “person” means any individual, partnership, association or corporation.

Section 2. All persons are hereby required to deliver or transfer on or before January 1, 2018, to a Federal Reserve Bank or a branch or agency thereof or to any member bank of the Federal Reserve System all cryptocurrency holdings, cryptocurrency passwords and password seed phrases, to include hardware, software, and paper wallets, now owned or controlled by them or coming into their ownership on or before December 6, 2017, except the following:

(a) Such amount of cryptocurrency as may be required for pre-approved legitimate and customary use within and under the direct control of the regulated banking and financial industry or those government regulated companies that serve said industries, including any cryptocurrency mined/minted therein.

(b) Cryptocurrency and cryptocurrency certificates in an amount not exceeding in the aggregate of .00000001 BTC, belonging to any one person; and cryptocurrency having a recognized special value to bankers as rare and unusual altcoins.

(c) Cryptocurrency and mining, minting, or other methods of network security, earmarked or held in trust for a recognized foreign Government or foreign central bank or the Bank for International Settlements.

(d) Cryptocurrency and any derivatives thereof, licensed for other proper transactions (not involving hoarding) including cryptocurrency and said derivatives, imported for reexport or held pending action on applications for export licenses.

Section 3. Until otherwise ordered, any person becoming the owner or controller of any cryptocurrency, cryptocurrency passwords or password seed phrases, to include hardware, software, and paper wallets after December 6, 2017, shall, within three days after receipt thereof, deliver the same in the manner prescribed in Section 2; unless such cryptocurrencies are held for any of the purposes specified in paragraphs (a), (b), or (c) of Section 2; or unless such cryptocurrencies are held for purposes specified in paragraph (d) of Section 2 and the person holding it is, with respect to such cryptocurrency, a licensee or applicant for license pending action thereon.

Section 4. Upon receipt of cryptocurrency delivered to it in accordance with Sections 2 or 3, the Federal Reserve Bank or member bank will note therefor an equivalent amount of any other form of legal tender at the official rate of one US cent per one BTC or equivalent in any other altcoin.

Section 5. Member banks shall deliver all cryptocurrency owned or received by them (other than as exempted under the provisions of Section 2) to the Federal Reserve Banks of their respective districts and receive credit or payment therefor, at the going market rate, prior to the issuance of this order.

Section 6. The Secretary of the Treasury, out of the sum made available to the President, will in all proper cases pay the reasonable costs of transportation or transfer of cryptocurrency delivered to a member bank or Federal Reserve Bank in accordance with Section 2, 3, or 5 hereof, including the cost of insurance, protection, and such other incidental costs as may be necessary, upon production of satisfactory evidence of such costs. Voucher forms for this purpose may be procured from Federal Reserve Banks.

Section 7. In cases where the delivery of cryptocurrency by the owners thereof within the time set forth above will involve extraordinary hardship or difficulty, the Secretary of the Treasury may, in his discretion, extend the time within which such delivery must be made. Applications for such extensions must be made in writing under oath, addressed to the Secretary of the Treasury and filed with a Federal Reserve Bank. Each application must state the date to which the extension is desired, the amount and location of the cryptocurrency in respect of which such application is made and the facts showing extension to be necessary to avoid extraordinary hardship or difficulty.

Section 8. The Secretary of the Treasury is hereby authorized and empowered to issue such further regulations as he may deem necessary to carry out the purposes of this order and to issue licenses thereunder, through such officers or agencies as he may designate, including licenses permitting the Federal Reserve Banks and member banks of the Federal Reserve System, in return for an equivalent amount of other coin, currency or credit, to deliver, earmark or hold in trust cryptocurrency to or for persons showing the need for the same for any of the purposes specified in paragraphs (a), (c) and (d) of Section 2 of these regulations.

Section 9. Upon collection of the cryptocurrencies in question, the Secretary of the Treasury is hereby ordered to delete, by any feasible method, as verified by Federal Reserve Banks and companies on retainer for said purposes, the cryptocurrencies in their possession by not later that February 1, 2018.

Section 10. Whoever willfully violates any provision of this Executive Order or of these regulations or of any rule, regulation or license issued thereunder may be fined not more than $1,000,000, or, if a natural person, may be imprisoned for not more than twenty-five years, or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both.

This order and these regulations may be modified or revoked at any time.

THE PRESIDENT

THE WHITE HOUSE?

December 6, 2017…


Do not think for a moment that such an order is impossible today.

Be ready.

Note: Please feel free to copy my fictional executive order and distribute. Wake up some crypto-heads.

 

Sincerely,

 

Jack Shorebird

 

P.S. Do you really think that all Americans – the true patriots – gave up their gold in 1933?

 

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Where there is smoke there is Iota?

Where there is smoke there is Iota?

Updated: September 4, 2017


An open letter to Cryptocurrency fans, that is not investment advice.

Where there is smoke there is Iota?

For the crypto-enthusiast Iota is nothing new. It’s another cryptocurrency with great new tech, we are advised. Some call it the Bitcoin Killer. A new type of coin with a blockchain and a “tangle” and a new way of reaching consensus — to validate transactions.

It’ll reach a ten billion market cap in no time, some say.

Bitcointalk.org is a good place to do some research. Reddit is another, but understand that the coin’s actual website is often the best.

If the coin’s page was well thought out, clean, understandable, with a community of serious people, so much the better.  If it’s disorganized, errors are abundant or if the developer’s comments are abrasive, over the top and ridiculous, then question the coin.

And yes I know that many great minds are jerks on the outside. If so, then they’d best get a partner to smooth out the people wrinkles. That goes for broad based appeals to the general public and also getting the German government, for example, on board.

In a recent Iota video, such a process was discussed. Grants from Uncle Germany? Doesn’t make me feel good. When you obtain grants, you gather strings.

And then, after the sales pitch, citing the great tangled tech, a very detailed Reddit Page, new tests are announced. Tests? Yes, I said tests. More tests.

Why?

Well, things need fixing. But don’t worry, if you can download a large file, a new wallet, if the repository is not too busy, install it and follow basic instructions (not easily located) you will be just fine.

That’s what happened recently and has apparently happened on more than one occasion.

Why might you need to reinstall a wallet? Because of the upgrades. This happens with bitcoin as well. Everyone expects it.

They are making things better for you, of course. They are going to have the machines talk to each other and probably take over the world. Not really. It’s just to speed things up, like for paying automobile tolls in Germany. A new M2M — machine to machine — tech to speed up transactions and lower the costs of doing business.

The only consideration was if you had a web wallet, during these last tests. You need newer software. So you download, follow the instructions. You install a basic new wallet, pull over your funds from your old “seed” and get all sorted out. You get your new “seed.”

If you are a US citizen there’s another problem.

Bitfinex, the only major exchange offering Iota trading has decided that Americans are too risky. You read the Reddits. All is well they say. Others say get out of there. All, just after your wallet is upgraded.

Certainly, Iota needs more exchanges.

Iota did advance at a good clip, but after the Chinese ICO news, like all crypto’s, it’s drifting lower.

Due diligence. Researching Iota, you will find several experts who work for or with Iota.  You can listen to German youth talk about how they are now reformed gamers. Roof top talks with guys who sold game mods on the sly. Could be another Bill Gates. But not likely. I don’t think Bill was gamer as much as a thinker.

All that reading and research. Does it pay off?

All those audio broadcasts. Here’s one. You can listen to them from the Iota guy. That’s what I call him, the Iota guy.

What does it all mean?

Perhaps the Iota Reddit is the best of the worst, at times. So much chatter and occasionally a gem.

I wish Iota luck.

Sincerely,

Jack Shorebird

 

 

 

 

 

Bitcoin Billions at Risk

Bitcoin Billions at Risk

ball

If I had a tiny crystal ball, I could tell you if the 30 billion dollar bitcoin meltdown will continue. I could predict when to sell, when to buy and when to hold. But I don’t have even the tiniest of magical crystal balls — and neither does any other Bitcoin Jesus.

Bitcoin’s “potential” fork in the road is near. A few weeks, maybe sooner. Experts in the field are uncertain if bitcoin will survive in its current form — or any form. Traditional money-changers will shrug if it collapses. “We told you it was a bubble — it was funny-money.”

If bitcoin fails, billions of dollars could be forever locked away. Those who made their millions from the cryptocurrency will no doubt soldier on, creating new tech and innovating — all because bitcoin opened that door.

In the meantime, say in a few days, the large cryptocurrency exchanges might need to explain that all of their cryotocurrency accounts are okay, but they only have pre-SegWit bitcoins. Outfits like Bitfinex, Coinbase and Poloniex could freeze all bitcoin accounts until the storm blows over. Then the lawsuits would begin. If you think it won’t endanger your back-up crypto, think again. Think about saving your cryptocurrencies offline or in a wallet you completely control. Then hope. And wait. (I am.)

On the scale of things, bitcoin isn’t even a blip — when one focuses on the amount of money being flung around the world each day. It’s chump change compared to JPMorgan Chase or Barclays, but then they don’t get it do they? They don’t understand the idea behind bitcoin at all. The idea behind any cryptocurrency. If they do understand it and wish to keep their wealth, they are busily working to destroy it — or copy it. Thing is, they will always be behind. Innovators are even now working to improve fintech. In a few years the banking industry will again need to re-educate themselves or risk being heaped into the dust bin. Hundreds, if not thousands of years of traditional banking — the stuff that money is made of — is being rewritten.

At first glance, some might think that a back-up cryptocurrency is in order — another cryptocurrency to set aside, while bitcoin goes through its latest convulsions. Litecoin comes to mind. Maybe Ethereum. Perhaps instead, we should focus on the newest developments or what are called “Third Generation” crypto’s. Iota comes to mind. No doubt, the choices are difficult.

But the crypto-markets as a whole are deflating, suggesting that this isn’t over yet.

Colorful personalities such as Jeff Berwick have chimed it on the matter. Comedy seems to be the order of the day. Just another update. Don’t worry. Time to poke fun at the entire process. You can do that when you have loads of pre-halving bitcoin profits.

Berwick is apparently comfortable in the knowledge that all will be well — soon. That bitcoin is the “King of Crytocurrency” — period. At least for now. Oh, and if you do follow this “personality” you might want to check out his latest post about the Moon Landing having been faked. Great, comedy and conspiracies. Is he credible at all?

All joking aside, Bitcoin Magazine might be one of best sources of information. They delve into the specifics. Get in the weeds.

Here’s a recent article from Bitcoin Magazine that will fill you in:

Bitcoin miners at large have missed the first BIP 148 “deadline” to prevent a “split” in Bitcoin’s blockchain.

Source: Bitcoin Miners Miss the First BIP 148 “Deadline”

The article tells us that the first bitcoin deadline — when the miners should have taken action to show “solidarity” — has passed. “The miners at large” have not acted to install the recommended updates. This news helps us understand what is actually happening in the cryptosphere. Obtaining our news from CNBC, at the sound-bite level, can be annoying, if not misleading.

But the digital details may not matter to the “man on the street.” He just wants profits — stability — or a way to stick it to the real man. And that is just a side benefit, for now. Since bitcoin, for all intents and purposes is public and prying eyes are always a concern.

As a result of this apparent bitcoin “miner” inaction and other factors, the value of bitcoin is still dropping as of this posting. It is heading for the $1800 mark. The next psychological level — and you’ll hear about this soon — is the value of one ounce of gold. Once bitcoin touches that number, people will expect a reaction. Either a bounce of affirmation or the other thing. If the other thing occurs, then you will read about bubbles. About bitcoin diving to 30 dollars each, then pennies each, then you won’t hear about bitcoin any longer.

Right now, the 30 billion dollar question is, has the bitcoin community at large already signaled that Bitcoin Core is no longer in touch with the users themselves? If this is true, are we now staring at the “fork of failure?” Or are we reaffirming our trust in the backbone — the miners — of the bitcoin system?

If we follow the miners, where will they take us? Down commercial roads, where large corporations and their Nanny-State governments dictate policy? If we follow Bitcoin Core, will this latest software “patch” suffice until the next critical juncture? Still keeping the community safe from the ever growing centralization of control? It seems that we are damned either way.

What is curious about the article in Bitcoin Magazine is that if bitcoin does fork and the powers that be decide, belatedly, to go ahead and allow the updates to commence — they could reunite the blockchain. In other words, having bluffed and lost, the miners and Bitcoin Core could have a “coming to Jesus” moment after they look into their respective digital wallets and discover that they are holding worthless numbers. But they better not wait long to reunite, because every second they delay, trust is evaporating.

In the event of a temporary fork there will still be significant disruption for the users, of course. It would be like keeping two sets of books. Eventually, if the blockchain is mended, only one set of books would be accepted. And therein lies the problem. The other set of books — all of the transactions, purchases, trades and the like — would be nullified. Users could potentially lose millions. Maybe more. Again, trust would be seriously eroded.

I don’t even want to think what would happen if bitcoin permanently forks. The cascade effect would certainly push many other cryptocurrencies into an unrecoverable downward spiral. We couldn’t really say if both bitcoin blockchains would have value. In such a dual-bitcoin scenario, no doubt both bitcoins would attempt to retain the title of “bitcoin.”

And if bitcoin forks, would not every blockchain born cryptocurrency become immediately suspect? Risky.

The other side of that Crypto-Armageddon is that a new coin could be born. Meaning the old guard — Bitcoin Core — could be left behind as Bitcoin Unlimited, for example, moves on with all of the “customers.”

Eventually, blockchain tech will be replaced. All tech is updated. The question is when?

A prediction would be that bitcoin prices could be touching gold price territory within the week.

Thanks for stopping by.

 


Image: Flickr

 

 

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