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Cryptocurrency: Dreams in a Bottle or a Bubble?

Cryptocurrency: Dreams in a Bottle or a Bubble?

Dear Cryptocurrency and Freedom Lovers of Earth:

We are just dreamers waiting for the big bad bubble. Lean over and kiss your bitcoins goodbye.


Bubble Trouble

Cryptocurrency is a bubble.

It’s the 2.0 try-outs, since we didn’t believe them the first thousand times.

We love Ponzi, they insinuate. We probably initiate chain-emails in our sleep, insert cryptocurrency miners on your webpages, and dream of pyramid schemes…as we pay our extremely reasonable .gov taxes.

Cardano (ADA) will surely explode.

Monero (XMR) will implode.

Electroneum (ETN) will evaporate.

Ethereum (ETH) will wither smartly, and die.

Cheaters and meanies are hiding in the dark corners of those ICO-laced cryptocurrencies.

Bad people, the lot of them.

Run back to gold?

“Hey! But we love the blockchains! Just not the ‘people’ running them.

“You see, us banks and .govs – we do a much better job popping fiat bubbles. We just go around, blowing them up, making you go broke and then we do it all over again!

“And us metallic mega-hoarders, well, we can dig it too! And hopefully, one day in the far-flung future, gold will become what it once was: money. And then us mega-hoarders will win the day. We will say, on that day, if that day ever comes again that — we told you so!

“We can’t wait. It’ll happen soon, we promise!”

At least some of the gold bugs are on board the crypto-train. Guys like Mike Maloney. He’s a forward thinker, unlike others…

The lesser numismatic gods, the ones still hoping to influence President Donald Trump – to take the US back to gold – are instead bashing away at crypto. Maybe they don’t realize that they are, at the same time, bashing away at liberty itself. Not such a brilliant tactic as it is a calculated risk.

“Tell these Millennial dolts that cryptocurrency not stamped IN GOD WE TRUST and FEDERAL RESERVE NOTE is NOT money. Jeez, the humanity of it all. Tell them gold is the answer – immediately.”

Is that the general feeling you get from some of the golden metal-heads? The ones who warn of crypto-bubbles and hope for altcoin death, in situ.

And the best gold bugs? The proud Sharia Law complaint versions of them? “Oh Canada!” they sing aloud on their days off, from those frozen roof tops.

I take you now, dear reader to the halls of GoldMoney. In Canada. There, the money (no not money yet) is GOLD! Actually, the company was called Bitgold before that, but cited regulatory problems and low demand, before shutting down.

These golden folks have allowed to be posted on their website (and I’m almost certain it will be taken down like another YouTube video that fled in haste — business is war, right?) are the illustrious words of one Bubble Attacker: Alasdair Macleod. For shame. (My opinion.)

Macleod is an apparent researcher for the company in question, hence not the best disinterested party, right? A mouthpiece? Hmmm.

Then there is a far more corrupt banking industry to consider. Finance houses practicing insider trading. A Fed that feeds the US with worthless notes. Just read the headlines. Wells Fargo. JPMorgan Chase. Bank of America. Quantitative Easing. (Not an opinion. Facts.)

Need I say more? Aren’t you sick enough yet?

It’s not the banks or the .govs this time, however. It’s gold. Or more precisely, a troubled offshoot of gold bullion pushers surveying the crypto-landscape and taking careful aim.

 

Crypto Kills Fiat

To talk of cryptocurrency bubbles that will occur and describe them as a dire menace to .gov fiat is pandering to the .govs of the world. Gold money is a far worse threat to the .gov machinery and they – the bullion dealers — know it.

If people were actually allowed to use gold, silver, copper – as money – the Fed would close its doors and the Military-Industrial Behemoth would most definitely become rather irritated, if not hungry.

The .govs would need to finance themselves with real money then. No longer could they pass on the costs via inflation taxation. They would need to beg, borrow or steal the gold – again – from their subjects.

And that is always a problem, isn’t it? Gold theft?

And why can’t some companies see that? Especially ones in North America? Don’t they understand that before gold can become money again – that the entire centrally planned economic model must be dismantled? That laws must protect the people from their .gov?

It appears that Our Golden Savior of Canada is sounding that alarm, however. Or at least helping to ring a few bells to scare the cryptocurrency birds away. Darned pesky eagles just won’t die. They want to fly at any cost, even if it means creating their own crypto-fiat money in a world gone money-subservient.

It’s also a way of diverting attention – heat – from them. And a way to “sell more gold!” Soon they might begin knocking on our doors. Or you’ll see them at flea markets, not buying gold, but selling it!

Congratulations bullion traders of the Great White Socialistic North. Not that the US is that far behind either, but strike while the bubble is hot! And the bubble attack is ongoing.

But we need new material, not tired old rinse-and-repeats.

It reminds me of Chicken Little when he yelled, “the sky is falling!”

I’ll call them, those Gold Money guys and gals, Our Golden Savior. The bell ringers, who are losing investors to cryptocurrency. And who only want to make sure you and I aren’t being swindled, right?

After all, gold is money. No, it’s not. Not yet anyway.

 

The Warning

One Macleodian article on their website (and also here) talks to us about bubbles. But this does not irritate me as much as the Canadian based Sharia Law Compliant company does.

I mean, gold and precious metals are no doubt great value keepers, but dear fellas, we do not live in a golden age. I swear. I just called my bank. They said that they can arrange to store any gold I might wish to purchase; however, I can’t use it as money. (No thanks.)

You can’t spend it, your gold – in the US – like money. The IRS wants an accounting of each transaction. Just like cryptocurrency.

We live in a fiat-currency age – in the US. We are jammed in tight. Well, there is one out. It’s called cryptocurrency.

Gold is taxed as property in the US, which makes it terrible to use as money – even debit card based. I believe Peter Schiff advised this long ago, but now – he has joined them. And now…these facts seem to have drifted away. Little tax bombs ready to go off in April, when you have that “awe shucks” 1040 moment.

Don’t get me wrong, I would rather use precious metals, as money. I’d love to have a sound money system, but this fiat thing is just going to have to burn itself out first. Venezuela style. A little Greek fire, as it were.

The article in question asserts that gold is on the minds of many. Granted. Any form of sound money ought to be. If gold was money today it would be on everyone’s mind. Well, most everyone. Some actually like the fiat money system and socialist governments.

The write-up also warns, yet again, about the pure and shiny new bubble. The cryptocurrency bubble that is sure to burst – someday.

The problem is the golden .gov wall, however. We are all looking at that wall and asking ourselves the same questions.

Is there an alternative to gold, since I can’t spend it like cash?

Should I buy a few pieces of a precious metal and store it myself or should I use a gold bullion dealer in Canada? A dealer with gold all over the world in nice vaults – all on the ‘up and up’ – but far away…?

 

Crypto is NOT Money?

The primary debate against cryptocurrency, that it is not money, ought to be jettisoned.

We know this. We know it is not money.

Gold can be money, but it’s not either. It’s just gold, for now.

Cryptocurrency is more closely related to a functional currency or a service money, but it is a form of fiat currency as well. But a far superior fiat currency, for many reasons. And rather crappy, as well.

That’s what we are living with. We can use cryptocurrency, with all the associated risks or we can obey. Now do you understand?

Why did people risk their lives to come across the oceans in hopes of a better life? By comparison, this rather low-key way of transferring wealth is lame by comparison. It’s an exercise in freedom, however frail. The thing is, the .govs need to crush it in order to stop the virtual and peaceful sit-in.

 

A Bridge to Sound Money

Cryptocurrency is a bridge. It is a way back to sound money over the river of .gov fiat systems currently in place. It is the bank waiting to store the gold, so to speak. Only, the .govs stand in the way, so there is an impasse.

Who will blink?

How could crypto bridge to gold?

View it as a check or a contract.  A voluntarily enforceable one for now, but one that would easily fit in as a legally binding instrument against a rare commodity, such as a precious metal. Banks could accept cryptos in exchange for silver coins in some enlightened future. That ‘backing’ would likely stabilize cryptocurrency values.

The problem is that precious metals are currently locked out of legal tender status. The same can be said of cryptocurrency, except it has many other advantages neither fiat money or gold has – at present.

A gold bullion dealer is no less vulnerable to .gov regulations, than are most public cryptocurrencies. There are more private cryptocurrencies, however.

 

Privacy

And that brings up the idea of privacy. The love-child of cryptography and blockchain services.

Unlike the bullion company in question, where I need to give my name, address, income, photograph, ad infinitum – let them dig into my personal life – I don’t need to do that with many cryptocurrencies. Not with CryptoNote versions; and I can find ways around those exchanges now asking for my goods, as well.

The argument that the cryptocurrency companies, promote their own coin – buy in, pump it up – is a given. This is also true across the spectrum of stocks and bonds, in the restricted .gov regulated trading houses – where the brokers take their cuts and fees; and slice the pie more often than the average cryptocurrency exchange. All at the pleasure of .gov.

 

Early Adopters

Certainly, early adopters could make the most profits in a cryptocurrency economy. Ground floor opportunities have that potential, but this does not validate that a bubble is on its way. This is unlike the fiat cash flowing into the stock market and extinguishing any semblance of a P/E Ratio.

The obvious measure that bitcoin, for example, is a self-verifying property mechanism, is difficult to ignore. The limited virtual supply of bitcoin can drive its price. It’s ability to maneuver unhampered is juxtaposed with the .govs’ desire to bring it to heel. There is no P/E Ratio here. It’s absorption of one unstable fiat by a stable one.

Can that be said of our bullion buddies? Not the ones who sell us gold and silver and we stash it elsewhere, but the one in question. The one that essentially keeps our metal safely locked away where we will never see it and where any wayward .gov can grab it.

You call that safety? Try and grab my fiat crypto. Go ahead.

How did that work out for you?

It didn’t, huh?

 

The Undermine

And the fact that cryptocurrency can “undermine” capital controls is not a weakness. Money, ultimately, should be private. Taxes, ultimately, should be voluntary.

Did you not read the word “controls?” Who is doing the controlling and why? By what right?

Why must I send my cash via banks, be over-charged, wait days, when I can zip crypto to my Aunt in South America in seconds and do it much cheaper?

Hence, cryptocurrency is pro-freedom, whereas the company under scrutiny is compliant. But it must be, right? It has chosen the obedient path.

And fiat currency issued by .gov, is, of course, fiscal subservience.

If allowed to go mainstream, those cryptocurrencies that wish to comply with the long list of rules and fees, could certainly see radical value booms and busts. Obedience will have its profits.  After this alleged legal adoption, when the investment houses flood in, the public will take notice, as the assertion goes. The bubble will come as a result.

 

Pre-Bubble

So, the article in question makes the assumption that the .govs will eventually acquiesce to the public cryptocurrencies. Ones like traceable Bitcoin, Litecoin or Cardano. Then it all goes pop!

Why are the bubblers so certain? Past comparisons?

The South Sea bubble, where corruption was rampant? Government granted monopolies are not comparable to voluntarily purchased, transparent cryptocurrencies.

The Tulip Mania bubble is often cited, but the fact that much of Europe was debasing their currency at the time, is not often explored. Interesting parallels, but tulips aren’t cryptos.

Additionally, since many CryptoNote based cryptocurrencies are not designed with regulations in mind, this bubble warning only seems to apply to the public blockchains, like bitcoin and family.

According to the assumptions in the article, this future flood of bubble wealth into public cryptocurrencies will also cause prices to rise. Another dire warning.

That’s the static world view. In other words, more money into crypto equals more spending, equals less goods available, equals higher prices.

The problem is, when demand increases, in a free trade economy, the supply is often increased, and everyone wins. Prices often come down, in such economies.

This static theory of rising prices also ignores non-spenders. Some will save and not spend.

 

Choking

Yet another bubble warning is the “choke-off fable.”

Once and if .gov fiat currencies begin to falter, interest rates will be raised to entice crypto-investors away.

One problem with that scenario is rising interest rates slows the economy and could explode the debt and pop the fiat bubble all the faster.

Another? That crypto holds far more promise of profit than bank certificates.

If .gov could lure the crypto enthusiasts away from their chosen altcoins; however, what would stop them from also confiscating all the gold? After all, gold does compete with fiat currency and it makes fiat devaluation clear. An embarrassment to be certain, but one that can be easily remedied with an official announcement of fiat currency to gold conversion. It’s happened in the US before. Quite a choke I would say.

And we are only talking about the US here. There would need to be an international effort to quash crypto. Raise interest rates all over. And suffer the consequences.

A credit crisis would be the least of our problems then. Fiat currency would falter and I’d posit that cryptos, absent a move to a sound money standard (gold) by .govs — would maintain their purchasing power, so long as .gov didn’t zap the internet. Then we’d need to use stored reserves (gold/silver), eggs, canned goods and wine.

 

Conclusion:

The upside is that gold is real money, but it is not legal tender. Until then, it appears rather sluggish.

To state that private cryptocurrency is a threat to .gov fiats, that they could hasten their demise, is a bit disingenuous. Fiat currency is a threat to all of us already. If crypto hastens its demise, so be it.

The company in question is no less a threat and perhaps even more dangerous to investors, when one considers all the precious metals under their private control and the ability of any one .gov to remove said stores on a whim – or a “trumped up” national emergency.

In short, to return to a precious metal standard will require new laws in the US and elsewhere. It will require the closure of the US Federal Reserve, unless they begin to issue gold backed currency. It will then open the doors for competition between banks, with real money in their vaults. Money that should also be in your country of residence and not Dubai, Toronto, or Hong Kong.

Until then I’ll risk a crypto-bubble and pass on the debit card of gold, from the company in question. While waiting for the laws to embrace sound money, I will grow old and I hope rich, on the only form of successful liberty-currency I have ever witnessed in my lifetime: cryptocurrency.

 

Sincerely,

 

Jack Shorebird

 

P.S. Don’t let the .gov buttheads get you down. And think before you buy into Bitgold GoldMoney.


The above is my opinion. Make sure to consult your gold bullion dealer, economist, attorney, accountant and hair stylist, before you chance the Greatest Crypto Bubble of all time!

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Do You Own “S2S Compromised Cryptocurrencies?”

Do You Own “S2S Compromised Cryptocurrencies?”

It’s about peers versus subjects, is it not?

Are you a P2P or and S2S Person? That’s the gist of it, right?

P2P is what? Peer to peer, right? Person to person.

S2S is what? Subject to subject. Slave to slave, in some countries.

Pause. Think. Slave to slave = S2S?

So much is said in that P2P acronym. So much is lost in S2S. It matters.

If you are P2P, you are probably safe. But you can be safer. You can do one better.

As an S2S believer, you are in trouble. But don’t take my word for it. Ask Mr. History.

When observing the changing cryptocurrency landscape, we note capitulation and appeasement. Those who bring change; and those who want to stick to the old way of doing business. If not the old way, then bending the new way to the will of the old.

But P2P is not new. It has just been adapted to the blockchain.

S2S is the old way.

Why do we own certain cryptocurrencies, but not others? Why is the P2P idea the best thing to have hit cryptocurrency, let alone the human condition, in thousands of years?

But…there is P2P and there is private P2P, correct?

Many of the newest breeds of crypto-entrepreneurs have forgotten the words of Satoshi Nakamoto and have instead, chosen to use the blockchain technology for other reasons. And there is nothing wrong with that, save the lack of vision of such people. The automatic and almost tribal reductionism is inherent in the herd mentality.

In other words, the desire of many to belong to the herd at any cost. Spare no expense, they say. Trade your privacy and your freedom for a false sense of security.

Don’t rock the boat. Don’t go against the flow. You don’t really need or want P2P. You need S2S. We hear this so often.

So, let’s recall those words, just a few of them, purposely embedded within the Bitcoin Blockchain. “Satoshi’s Warning,” I will call it.

These words resonate today, and I submit that they will resound into the future — if we are still here. And these words will be taken more seriously in ten or twenty years, if world economies do finally collapse, and if cryptocurrencies save the day after that foreseen collapse.

The warning:

‘The Times 3 January 2009 Chancellor on brink of second bailout for banks’.

This statement gives one the clear sense that Satoshi had a problem with governments and bank bailouts. He did not agree with the current monetary system in general.

Why?

We can speculate about his motives, read his various quotes, but can we agree that he/she/they invented a well-functioning, but not private, peer-to-peer e-cash system? It seems to me that Satoshi, and I have stated this before, provided the outline – the foundation – upon which others could build.

And remember that: P2P. Let that echo over and over until it seems to lose meaning. Until the echo of it comes back after a time and reminds us what it really is. What its value really is.

P2P is that rock in the river, standing against the tide of financial tyranny. If that rock is hardened (privatized), all the better, but bitcoin’s P2P rock sits high in the rapids. It is “exposed” P2P and it is sandstone. Sandstone will not last. Even so, some want to convert bitcoin to S2S, now. They want to blast that sandstone apart.

If “exposed” P2P is the core value of the bitcoin service, how can it be improved? Satoshi warned that this P2P system was only temporary. That it probably would not last. Was he correct?

Satoshi showed the way.

Then Nicolas van Saberhagen came along and privatized the blockchain. It was the next step in the evolution of blockchains. Many other P2P models are “exposed” at some level.

Saberhagen (he/she/they) created CryptoNote and after a rocky start a new crypto pulled away from the pack: Monero (XMR).

Monero has one well known face: fluffypony (Riccardo Spagni). He came forward and I submit, took his freedom in his hands when he did so.

For all the rancor surrounding Monero and all the concerns I still have about its developers remaining behind the curtain of anonymity, I respect Mr. Spagni. And that is the point: trust. Not to mention that Monero was the first successful private crypto on earth. (Okay – that’s an assertion. Prove me wrong.)

There is another crypto that deserves mention here and I have cited it before. Aeon. “Smooth” is the developer of Aeon and works on Monero. Smooth is anonymous. This might be important in the future since Monero is slowly gaining acceptance on an international scale. Aeon would seem to be the logical partner in that effort.

And there are other private crypto’s out there, but I am only mentioning Monero and Aeon in this post as examples. Many of the other privacy based coins do not have the longevity, have changed hands, or have known developers – which is a risk.

There are arguments against the PoW (proof-of-work) based blockchains, such as Monero and Aeon, as well. Even bitcoin uses PoW, but Ethereum is apparently considering a PoS (proof-of-stake) blockchain addition or change-over. PoS is more energy efficient, certainly.

Obviously, these “proofs” will evolve over time, but getting hung-up in the debate may not be the best course of action.

In fact, allowing the salesmen, flush with crypto-cash, financed to the gills with venture capital, to present vivid images of Crypto 3.0, is a trip to S2S.

How so? These salesmen, often experts in the field of blockchain, are not experts in the field of privacy.

The war now is to destroy the very essence of bitcoin and any cryptocurrency attempting to remain private. It is an effort to undermine the best P2P out there. Usually, by means of overregulation and/or making such transactions illegal.

KYC. Know your customer. Papers please, comrade. You might be a communist-terrorist-tax-evading-immigrant. You might be a criminal. Just in case, we need to know you. Who is this we?

On the other hand, you are probably just an innocent citizensubject wanting to keep as much of your money as possible. And it is your currency, right? No, it is the State’s Currency. “But I have some XMR’s,” you answer, “not State Currency.” All the more reason to know you, comrade.

Privacy? You have no right to that; the herd tells you. What are you trying to hide? Nothing? Prove it. Show us all your currency and let us decide.

Welcome to America, land of the citizen-subjects. Hey, at least we can emigrate – so long as we have paid our taxes first. Even if you hand in your citizenship-subject papers, you must still pay your exit bills, before you may emigrate, right? And they dare call this freedom? (Hey, I’m American, but America is not a place – it was an idea – in the past.)

Is it any better in the UK, Australia, Canada, or Switzerland?

Because of government pressure, the cryptocurrency innovators are beginning to give in. Or maybe they never had the guts in the first place. They are creating what amounts to “S2S” or Subject-to-subject transactions. Weak sister versions of the almost true form. Compromised crypto’s, the lot of them.

But I’m sure they work just fine.

These new S2S innovators are the compromisers. They help support the current fiat monetary systems. The highly centralized, highly controlled, inflation pushing bureaucracies.

I labeled Cardano (ADA) as S2S compromisers. But they are not alone. Ripple (XRP) is S2S compromised as well. Even Ethereum (ETH)  advises that they will comply with governmental information requests. I’m certain there are many more S2S compromisers.

Few have the tenacity to protect privacy. Legitimate privacy. Many of the cryptocurrency exchanges bow to the might of “.gov” as well.

These S2S capitulators have good people working for them, however. They have children and dreams and I do not fault them for coloring within the lines. If they are to remain at liberty, to exercise their delimited freedoms, they must bow down. No blame can be placed upon subjects working within their enclosures.

It is odd that a fluffypony will not bow, however. It requires vision and nerve to stand, virtually alone. To back a crypto that will not comply.

The same can be said of Smooth and all the developers of both coins (Monero and Aeon). To believe that the “.govs” of the world have not discovered some of their identities, is foolish. And they know it.

And don’t give me that bull about sacrifice. These men and women working behind the curtain to privatize crypto are not doing so for free. Their trade, their gain, is profit. Their potential loss is their freedom. Is this a sacrifice or a trade? Are they, in a sense…

…mutually pledging to each other, their lives, their fortunes and their sacred honor?

Private P2P is a down payment on future value few can imagine. To buy the freedoms of their children. To refuse the current call for S2S, and see what happens.

I hope these private P2P men and women, keep at it.

Here’s the audioblog along the same lines: “The P2P Question.”

If you need to convince yourself that privacy is important, buy this: “For the New Intellectual”


 

Note: As usual, the above is only an opinion. I welcome any responses. In the meantime, do not base investment decisions upon any of it. Call your banker, broker, insurance salesman and/or financial advisor, if you must.

Bitcoin: “Attack of the Blockchain Clones”

Bitcoin: “Attack of the Blockchain Clones”

Dear Cryptocurrency Enthusiast:

Do you ever feel that some people need a good kick in the brain can?

Recently, I came upon a political night-rider imparting an alleged moral foundation. An alleged gem upon the cryptocurrency seashore. Only, it was a sharp stone.

I had discovered his name before, but until recently, never endeavored to explore the influential nature of his words. Never, do I hope he will be more than a crab upon the shore of true freedom. An insect at the beach.

But just in case…

I think now is a good time to mention him. Before your children say his name. Before you feel ignorant, and just in case he makes a name for himself. Which, he won’t.

Before all of that, you can say, “Yep, I have heard of him and Karl Marx. Do you remember the Jews that the Nazi’s killed? Great, I’m glad that the government schools still teach that. Well, anyway, same idea…”

***

His name is Amir Taaki, but he is not the real issue. It’s his personal software that is questionable — the programming in his brain.

Taaki is a coder of some repute, as well as an anarchist of vague degree. Meaning, as far as I can judge, a person who does not understand that an objective form of government is required to maintain individual freedoms. Therefore, Taaki is a liability upon the world stage. A regurgitation of the past.

Taaki is involved with bitcoin, having worked on Dark Wallet, a precursor to OpenBazaar and other projects, but that does not concern me as much as one of his potential teachers. The person or people who have coded him.

Taaki appears to “lack philosophy” as he implied when he was in Syria. What does that say about the man? It says the name of another man, actually. An American hero some might have called him. Others refer to him as a philosophical villain.

His name is Murray Bookchin. He was mentioned by Taaki, when he (Taaki) was fighting in Syria with the Kurds, against ISIS. Supposedly he had just come to lend support, but not to fight. A self-imposed duty called. He took up arms.

There is a warning here. Historians already know of its potential significance. It is not about what Lenin did to Russia in this case, but what America (via Bookchin) is doing to Syria. Invading Syria through what is called Communalism. Not communism exactly, but a shade of it, certainly.

Bookchin was an American anarchist, libertarian socialist and political theorist. He often reflected upon class struggle, was an avowed anti-capitalist, meaning that he was essentially against free and fair trade. He appears to have influenced Taaki and some factions fighting in Syria, for the greater glory, naturally. But it is not the glory these factions are after, as much — and more probably — a sort of militaristic socialism.

Anarchism, is of course, gang rule, with no objective laws, where the most ruthless criminal can rule just as easily as a moral king. One cannot conveniently redefine it, but Bookchin tried. Taaki is trying.

The US, as of yet, is not ruled by anarchist fiefdoms. We are not yet at the stage of full revolt. We are not ready to substitute one form of tyranny for a Bookchin Communalistic Paradise. Nor should Syria be led down the Bookchin road.

Bookchin’s revamping of communism is a claxon. Know that the bells have sounded. Long before Syria, Turkey, Iran and others – fell. If that will happen. If it does, and I hope it won’t, fingers will point. They will point at Bookchin.

The disease is spreading.

And please tell me that Bookchin and Blockchain are unrelated.

Bookchin wanted majority vote, but not majority rule and he tried to explain that one for years. He also wanted assembly-led enterprises. In other words, no free enterprise at all. A type of social dictatorship, but not quite of the communist model. It is often referred to as a “communalist” type of organization. Community led — scratch that — community ordered, comrade.

Looking through the Murray Bookchin filter, as some are want to do, lends lethality to the drumbeat call for decentralization. Not for the blockchains, but for humans. The only difference is that humans are not chained in the first place. We are not part of some giant cloned ledger.

There is no comparison between the technology of bitcoin and individuals.

Anarchy, as espoused by the Bookchin-ites, is not decentralization as some might ask you to believe. It is disorganization. It is decentralization of organization. Divide and conquer. Disintegration. A rapid breakdown of morally based laws (we can argue about that) in favor of range of the moment substitution. Pragmatism v. reason. Honesty v. “get it done.”

And here is the social mirror some are suggesting we hold up to the blockchain ledger. If bitcoin or better yet, if some private cryptocurrency ledger can organize an accounting method, where everyone’s currency is safe and secure, why can’t humans be like blockchain ledgers? Hold the power to self-manage? A type of self-organized dialectic.

Dear readers, we are not Blockchain Clones. We are individual people, all with different abilities and desires. Our intellectual savings differ. Our ability to mine knowledge, to produce information, to educate, are all different. We are not cryptocurrency clones. We were never social “smart contracts.” We are different. Blockchains are identical.

The ideas of cryptocurrency decentralization are not transferable to the human context. Blockchains are not anarchistic representations of social structures, but orderly algorithms without emotions or desires. They are arbitrary and robotic rules of math, editable by humans. Controlled by a few humans.

Pause here. We own the process of blockchains. Not the opposite.

If we transfer the decentralization aspect of blockchains to society, we become numbers on the social ledger. And some few “developers” will control the technology of the social blockchain. A small core group. Hence, the idea — the false flag — that blockchains are decentralized only refers to the nature of the ledger. In fact, the technology is highly centralized.

To gift humanity with the ability to transact, without the necessity of an intermediary? Without humanity? A digital promissory note to ensure that contractual transactions are completed? That is the promise, right?

Where is the human watchdog? Answer? Blank out. Who is watching the developers? All of us? Can we influence their process? Maybe. If they refuse to give us what we want? We can use Litecoin, right? We can try some of that dark net stuff — Monero.

But where are we then? Back to yet another centralized blockchain. A programmed ledger we can clone and use. We only hope the developers stay on the job. Hope they don’t act in a way that will destroy the value in our chosen coin.

This being the case, to engender trust, the math of cryptocurrency should be provable, verifiable, and secure. It should be objective and not subject to the whims of cryptocurrency developers.

This is a tall order. It requires human cooperation. It requires auditors. It needs checks and balances. Some type of transparency.

The people who control the math should have watchdogs at their heels. Inspectors, not beholden to the math-makers in any way, should have complete viewing access to the code. If something is amiss, they should report it to the public or be jailed for complicity.

It is called the “human element.” Imperfect, for sure. But why it is required? Obvious, is it not? Some humans steal. And, what does absolute “monetary” power do to humans? What does any kind of communal power do? It corrupts them.

Bitcoin can be audited. Anyone can access the code and audit the system. Anyone can trace any transaction, which, unfortunately, is unfavorable to human privacy. The other problem is, as I have mentioned, bitcoin is centrally controlled by a handful of developers.

Machines are oblivious. Algorithms have no feelings. They are not concerned about where you buy your booze, that you have a health problem or if you like romance fiction — with photos.

Maybe the auditors cannot read a name, find a home address without a court order, in some cases, but much can be inferred from the transaction records of bitcoin and clan. Much privacy is lost.

Could this have been the noob “selling point?” We are all one? Your money is mine, sayeth the dev? Bitcoin or Nirvana? Decentralization at all costs? Why Taaki might support the idea for human consumption? Developers are our new rulers?

To ensure confidentiality, bitcoins are sometimes transferred via mixers to stop the auditors in their tracks. But there are other problems.

Suffice it to say, bitcoin coders are still working on Dandelion. A way to secure transactions — to obfuscate IP addresses and so on. And there are arguments about the process as well.

Privacy is a difficult maneuver in the cryptocurrency realm. Many projects exist. Dash, Monero, CloakCoin, NavCoin, Aeon, and even ZCash. The idea is to obfuscate the transactions in such a way as to keep everything as private as possible.

The problem then becomes one of trust. How do we trust a cryptocurrency that cannot be audited in certain ways? Shall we watch the “old guard?” The bankers?

Answer? Yep. Profit from their “transition.” Why not? Profit as JP Morgan Chase adopts Zacash software. Why not?

Let’s consider a real-world comparison example. I mean, even if privacy based blockchains might fail in the wild, as it were, it does not mean that governments won’t take up the mantle of public (transparent) bitcoin.

Cash is an anathema, to highly centralized governments.

If I go to the store and use cash to buy a soda, the clerk takes my money, gives me my change and I walk away with my drink. There’s no record of me personally buying that soda, in most cases. My cash was private. I stored it in my wallet, walked into a strange store, didn’t care to know the address and exited with a cool drink.

If I’m a bad guy, I can use my cash to buy a Russian Suitcase Nuke, but it’s risky. Complicated. I can do a dead drop, place my cash in a bag and hope the suitcase is left at an agreed upon location.

As a terrorist, I could exchange cash for plastic explosives in Syria, say near the Iranian border, but I should probably have a bunch of soldiers with big Kalashnikov rifles to protect me.

If I’m a cocaine dealer, I can stand on a curb, risk being arrested or robbed and shot at any second, and accumulate cash.

How can criminals magnify cash (currency) using a private cryptocurrency, however?

Nearly instant international payments — until they are stopped.

A security nightmare, but freedom and security have been at odds for a long time. A balance most difficult to find. Betwixt and between centralization and personal security. The desire to be free and desire to be safe. Power and irrelevance. Privacy and publicity.

Cash can’t fly, but banks can — even unwittingly — assist with international criminal remittances. But why pay the bank fees and risk investigations by Interpol?

Hidden internet markets where Zcash, Bytecoin or Monero can be used to purchase stolen credit card numbers with no risk to the seller. This is a real problem. Try to buy a list of stolen identities with bitcoin or cash. Much more complicated. Increasingly more problematic as governments tighten money transmission rules, ostensibly to catch the criminals – oh, and the tax savers.

To state that private or “mixed” cryptocurrencies do not or cannot assist criminals by asserting that cash is king, is not giving the “international picture.” Sure, private cash is a double edged sword. It gives the power to individuals, but it also magnifies the powers of groups — and criminals.

The decentralization of the network is, in this sense, misleading. It is simply a method of financial attack.  It’s called overwhelming force, by swarming. The use of a decentralized force against an opponent, in a manner that emphasizes mobility, communication, unit autonomy and coordination and/or synchronization – from Wikipedia. Create an army of like ledgers, cloned nodes and depend upon the masses to keep the fires burning – keep updating their ledgers.

Alas, however, this is a hushed and feeble war.

Do you see it? It’s one ledger, with a cloned horde that can attack day and night anywhere there is a piece of tech, an internet connection and voltage. But who controls the tech-gear, internet and the electricity?

And in real war, real change, the armaments are diverse. The attack vectors erratic. The volume of force, unknown, until it is too late. Currency is one vector, but it is a main one.

Time to rouse from the daydream, crypto-noobs. For now, crypto is dependent upon the old substructure. That is where it rests. That is where it should gather its trust and strength, but not form its misplaced revolution.

This is not the anarchist core. Blockchain is not anarchy. It is not order from decentralization. It is the clone army. Hit the command center — the developers (core team) — and it folds like a cheap suit. The clones will become weak — unless someone creates another cloning machine — feeds them “updates” — debugs them regularly.

And this dreamed of moment of truth is crucial. It can be subverted. Others can subsume its power to encapsulate the population(s). We must have watchers in place. No Taaki’s should subvert the message, without a fight.

I have no desire to be a part of a crypto-horde and, await the day when this old-fashioned ledger technology is jettisoned in favor of an atomic cryptocurrency, without one. To me, that would be the Holy Grail. A true cryptocurrency. The evolution. (An idea not so well received by the Murray Bookchins of the world.)

Individualism is not reliance upon yourself. It is voluntary cooperation with others. It is the very essence of freedom. Blockchains — if transposed to governing — is slavery. What did Bookchin want? What does Taaki, and admitted drifter and squatter, want?

But I’m just a voice in the wilderness, far from the Murray Bookchins, communists, socialists, Leninists, Trotskyists and Communalists of yester-death. Many sounded the  alarm before me — about Murray Bookchin and Occupy Wall Street.

Until then, the blockchain-clones are the best thing going in finance, if only because they usurp the power of central banks in some small way.

And if the “old guard” finance houses have judged Zcash as great tech, we can profit from their interest, me thinks.

And it concerns me that more and more big guns are coming out of the closet to “protest” the bubble of bitcoin – but not Zcash? Not Bytecoin or Monero. Why now?

What else do these big guns know? Do they have insider information or do they want to quash cryptocurrency altogether via regulation?

And a final thought…

Are Satoshi Nakamoto’s original coins really sitting dormant? Would it not be masterful, if they weren’t really there?


For those of you who understood my blog yesterday and profited – bully to you. Occasionally, I get them right.

For now, Zcash.

Next week?

 

 

Bytecoin Speculation

 

bytecoin_logo_b_white_circle_large - Copy

Why is it that the Bytecoin Team seems aloof, almost disinterested in their own potential success? It does not appear that they are abandoning ship, based upon recent Github activities. Someone is updating.

And someone is adding news and blogs to the official Bytecoin.org website after many months.

Still, why the relative quiet, other than within their own forum?  That was, until its recent disappearance and reappearance.

After filling up with advertisements, and after yours truly advised them of such via their website, the Bytecoin Forum seemed to have taken a hiatus. Recently sometime around June 7, 2017, it was back up.

Now I understand the need for anonymity in today’s world. But such anonymity is a double-edged sword. Having cryptocurrency developers retain their privacy certainly keeps them safe from the overzealous government-banksters. (And yes, I’m sure there are good bankers out there — working in a bad environment.)

On the other hand, the Bytecoin Team must know that we the users get a bit antsy when we cannot “read the news” more often. Even if the news is slanted. Why? Because we can read between the lines.

In fact, Bytecoin.org, something seems amiss now that you are talking again. Has your “voice” changed?

Recently — May 17, 2017 — Bytecoin.org added a new blog entry. As usual, their blog was professional and polished or was it? Actually two entries were made. The blog and on May 19, 2017, a news piece. Both were clear, but rather brief. I’ll focus on the May 17th blog entry for now. It has a few oddities, if you read it closely.

First:

“Cryptocurrency market has been developing drastically, bringing more and more innovations to explore.”

That’s the first sentence of the blog. Who starts a sentence like that? Shouldn’t there be a “The” to start that sentence? Okay, no biggie. Let’s move on.

The blog was titled “Untraceable Tokens.” It implied that the cryptocurrency space has been innovating. That there is more to explore. Certainly this is true. Since Bytecoin came along, Monero was born and Bitcoin, as always is experiencing growing pains. And a thousand other cryptocurrencies have been born and have since faded in the no-trade zone.

A second oddity in the blog:

“…top ten token market capitalization value overgrowing $1.4 billion.”

Overgrowing? How about “exceeding” $1.4 billion. Again, this could be a “country” thing.

A third issue, that may just be me…

“…we promise to give you full detail in the upcoming posts.”

Full “detail?” Do they mean full “details?”

Say that with a Russian accent: “Comrade, sit in chair, give full detail in upcoming posts. Bytecoin is not Russian, this you must tell world. And KGB not overgrowing. It dead.”

A fourth issue:

“Further on we will keep you informed about the development process to make sure you do not miss the opportunity to be in the first line to emit your own untraceable Bytecoin based token.”

Is it just me again? “Further on?” Do they mean “from now on?”

And how about “the first in line” part? Do they mean “to be the first in line?”

I hear Russian accent, Comrade. No?

In any event, they state that Bytecoin has:

“…broken ground on developing a wallet-integrated solution that would allow anyone to create their own Bytecoin based token”

I mean, don’t we have enough tokens?

Or is this a bit of good news. An untraceable token to represent “assets” on the Bytecoin blockchain. Like Ethereum, in some respects — but more private and secure I gather. The fact that this token system will be wallet integrated is also curious.

Integrated into an easy-to-use wallet, like the one we have now or like the Ethereum system? With Ethereum there is a learning curve. I hope that Bytecoin’s innovations will be more user-friendly, however. Not a bloated giant.

The blog entry also teases us with another upcoming innovation — a new “feature.” We can only speculate here. It could be anything.

The last bit of information in the blog entry is the notification that we will be provided more information at some future date, so we can be the first to try their new token based system. Again, it is worded oddly to me.

Most of us may not need tokens, if we already have Bytecoin. Some, however, could use a token for creating in-house cryptocurrencies that are more secure and private than Bitcoin. The start-up costs might be minimal, if the backbone (Bytecoin) is already there. Also, more users would likely strengthen the backbone. As this occurs — if it occurs — Bytecoin would become more valuable. It is also possible that the tokens themselves could become more valuable than Bytecoin itself.

On the other “dirty” hand, adding tokens to the system might strain it, if the Bytecoin devs are attempting to create mammoth system. I hope they choose to make things modular, in this sense. So any bad “parts” can be replaced or rejected by users voluntarily.

We are teased further with this…

“Commencing countdown till the global ICO market revolution.”

Personally, I’d like to see a clock ticking down, but I get the picture.

Of course, ICO means “Initial Coin Offering,” but what coin or coins? Our own tokens we generate on top of the Bytecoin blockchain? Or their new tokens?

And what market? Token market(s)? Like all those tokens being added on top of the Ethereum Blockchain? Are these the “markets?” Are they talking about another market altogether?

When you think about that for a minute you have to wonder what type of organization would use a private, secure and untraceable token. Not banks. They must comply with regulations. Not investment houses, for the same reasons.

Individuals could use tokens they create, however. And yes, the bad guys too.

Suppose you live in China, for example. You’ve been trying to get your money out of the country for years, but can’t. All of your compatriots don’t trust most cryptocurrencies. They are traceable — much too public. Many of your friends know about Bytecoin, but they trust you, not some unknown system that has been ruthlessly attacked by bloggers and hacker alike. You then decide to create a token on the Bytecoin Blockchain that represents an asset. It could be gold, silver or some other property.

What is the end result of a token that cannot be traced to a sender or receiver? Monetary freedom? Gox in a box?

Don’t forget the flip-side of Bytecoin, however. Nobody is watching the fort. If your newly emitted tokens evaporate into thin air, oh well. At least with the public coins — like Ripple, Stellar Lumens or even Ethereum, you can contact a live human.

With Bytecoin? You can look at nice Bytecoin Team Memes. Hello “PACIFIC_SKYLINE,” do you really exist? How’s the water? Answer? Silence.

I do detect a note of odd grammar in this latest blog. It is as if the poster does not quite have a complete grasp of the language or is writing in a type of shortcut method. It could also be that the writer is not American — perhaps English is a second language. (I am American, but at least my grammar errors are obvious.)

And I am not an English teacher, but I argue with them regularly. They often tell me about my spelling errors on these blogs. But spelling is one thing and grammar is another. We can “hear” the subtle differences.

More ominously, maybe Bytecoin has been bought-out and the new owners are attempting to keep this fact quiet, Da?

Finally, maybe all the original “Team” is present. If that is so, please clean up your latest blog.

And talk to us.

Is Bytecoin Making a Comeback?

Bytecoin - Copy

Over a year of relative silence and now Bytecoin is making a comeback?

Many cryptocurrency enthusiasts noticed on or about May 17, 2017, when the following “blog” was posted on the Bytecoin website, the value of said currency jumped. This may have been a coincidence, however, since a lot of other cryptocurrencies also surged and then unceremoniously lost over half their gains.

Here was a recent headliner:

Untraceable Tokens

Cryptocurrency market has been developing drastically, bringing more and more innovations to explore. The Bytecoin team understands the importance of keeping a finger on…

The point was: “activity.” We finally had some. But why the delay?

Many of us had written-off Bytecoin when they stopped minding their forum. It became bloated with advertisements and there did not appear to be much activity — or easy to find information.

Others of us have read the profanity laced debates on the other forums about the alleged deeds of the bad Bytecoin developers. Was it true?

Here is the link:

 Blowing the lid off the CryptoNote/Bytecoin scam (with the exception of Monero)

Bytecoin allegedly forged the dates on their whitepaper(s) in order to make it appear as if they had completed a fair release. Meaning, to be fair, you must work hard and allow every “miner” access to your product at the same moment. (Not fair to the developers.)

Bytecoin creators may not have fairly given away their invention and instead, allegedly mined over 80% of their own coins before letting anyone in on their plans. In any event, the coin languished. Relegated to the heap of junk coins, but it never quite died. Just hung out. Waited.

Months went by. Then years of anemic trade. Few if any improvements came. Bytecoin’s Github account was boring. Then lately, after bit of a screw-up — more activity. Somehow a bit of mining software allowed someone to mine extra Bytecoins. This was fixed (allegedly), but still, Bytecoin was accused of not taking action quickly enough.

Actually, the accusations flew.

Monero supporters hinted the Bytecoin developers intentionally mined extra coins using a flaw in their system. Bytecoin supporters then retaliated. Monero supporters knew of the flaw, they said, and took advantage of it. They created more Bytecoins and used that as leverage to expose Bytecoin’s flaws. Why? To sew distrust. Make Bytecoin look bad. Turn the community against them. All of the above.

Once the dust settled, it was back to the business of smear. Monero, with all of its improvements of the CrypotNote or CryptoNight Protocol (Algorithm), against Bytecoin — which dared to rear its scammy head once again. It was the original CryptoNote against the (allegedly) new and improved CryptoNote.

The Bytecoin pre-mine allegations are still there as well.

These days, ICO’s (Initial Coin Offerings) and pre-mines are commonplace. The results are mixed. Some developers fly the coop with the cash and some actually continue to tweak their coins. Some monitor their Github accounts making changes to at least let us know that they are still around.

Monero was not pre-mined, according to their documentation. They were a community driven program, forked originally from Bytecoin and after a some early growth pains  (community internal disagreements) a certain sect ended up with the keys to the code. Today, Monero enjoys a relatively stable existence, enjoying recent valuations, even if they do not have the best “wallets” or mascots.

If Bytecoin did “pre-mine,” within the last week they may have covered their initial expenses. In other words, the pre-mine has helped to support the development of Bytecoin. Unless, like the Monero supporters claim, Bytecoin will simply dump their coins and leave everyone hanging. So far, they appear to sticking to their guns.

Bytecoin has experienced a massive resurgence on one exchange especially: Poloniex. But the trading, other than having lined the pockets of Poloniex, since they charge for the service of trading, is missing something. And that is the ability to deposit or withdraw any Bytecoins. Currently, you can only trade Bytecoins with other cryptocurrencies on Poloniex. All I have been able to verify so far is that Poloniex is performing  “maintencance.”

If Poloniex finally re-enables Bytecoin it could be seen as a vote of confidence. Perhaps we should all realize that Poloniex just wants to earn a profit, however. Keeping the customer happy and the money flowing is a no-brainer. If they think Bytecoin is too much of a distraction they could delist it.

One hopes that Poloniex is watching Bytecoin closely. Certainly they can see who owns the most of Bytecoins on their exchange. If a large player has made some attempt to dump or trade enormous amounts of Bytecoin, they should know about it.

Where will Bytecoin go from here? Your guess is a good as mine. We have a nice, easy to use software wallet.  One which has always worked for me — and apparently renewed interest in the coin itself.

Volatility is an issue now. Bytecoin, if the past is any teacher, may be cutting its teeth on the “whales” right about now. Big ups and downs. Money is certainly changing hands.

The question is, are the users getting pummeled at the expense of the anonymous developers of Bytecoin or are unrelated parties just having fun with all the investors trying to pile on?

As always, time will tell. If privacy and security gains traction, Bytecoin could be sitting pretty.

 

(Note: This author is not associated with Bytecoin.org or any of its developers.)

Bitcoin: Intrinsically Speaking

Bitcoin: Intrinsically Speaking

To be Intrinsic or not to be intrinsic. Is that the question?

No. That is “noise.” It is another attempted “nail” from our friendly coffin maker. The one who wants to copy the “block-chain” and deny your private use thereof. The reference by Ayn Rand, perhaps one of the greatest thinkers of our time, is rather concise. It deserves to be explored, even in the face of her other definitions of money.

Why? Because it helps us to understand that cryptocurrency can function as money.


Why is it important, in Fintech, to understand “functional money”?

Because many economists imply or otherwise provide tortured explanations about how cryptocurrencies have or retain an intrinsic value.

Actually, they don’t have such a value. They cannot. But this is not a problem.

Cryptocurrencies do not require an intrinsic value. They are not gold in the rough.

Should one attempt to prove such a value, one often winds up in a trap of reasoning, logical, but unwinnable arguments or the proverbial blind alley. Frustrated. But the faithful preach the gospel. Bitcoin has intrinsic value, they say.

On the other side of that coin, the intrinsic value thinkers advise that there is only one true money—or maybe several. Gold, silver and perhaps copper.

Gold can be an “unconsumed” good. A hard currency. It can be jewelry and so on. Therefore, it is the only money. But we all know that other items can function as money.

Gold is not “backed” by anything. It is simply a sought-after material for its rarity, properties and uses. The old story that gold has been money for 5000 years rings true.


What does this mean as it relates to all cryptocurrencies? Do cryptocurrencies need to be artificially rare?

No. Their number can be infinite. Again, they have no intrinsic value.


 Would cryptocurrencies devalue, if the numbers kept rising?

Not if they were “backed” by “unconsumed goods.” This would not be unlike you having an unlimited number of blank checks. So long as the one you write is “backed,” the check is good.

Blank checks in your desk at home have no face value. Excessive numbers of cryptocurrency “blank checks” are unimportant.

What is important is that the cryptocurrency, like a check, is backed by an “unconsumed good” ; that at least one or more atomic cryptocurrency unit holds title to the “unconsumed good.”

Does this mean that a cryptocurrency cannot hold the title of “functional money?”

Not necessarily. It simply means that any cryptocurrency, is not an “unconsumed good” — in the physical sense. Given this definition, cryptocurrency, with few exceptions, is not functional money, yet. But neither are dollar bills or euros. Dollars, for example, are backed by nothing.

Trust value is transitory and can dissolve quickly, even if governments make their fiat currencies official money during economic disasters, such as what is occurring in Venezuela, where the money remains dysfunctional. It will act like what it is: paper — but be worth even less.

India is another example. Making higher fiat denominations unofficial in a thinly veiled attempt to confiscate the wealth from all of its citizens.


Are cryptocurrencies “goods” in any sense of the term?

Again, does it matter?

But they have no substance.

Litecoin, as an example, is for all intents and purposes, software. Yes, the codes that represent Litecoin can be stored on paper, and paper is a commodity, but the ledger or balances are transmitted electronically.


If a cryptocurrency is not a good, then why are they considered intangible assets or goods?

The legal codes describing digitized music, by way of similarity, as an intangible good or asset, do not lend software music any real substance. These types of laws allegedly justify regulations and taxation. These laws should instead seek to clarify copyright.

But the test here is the consumed part. Let us get back to that.


Can any cryptocurrency, be consumed in the same sense that gold is consumed?

If we “use up” an item, we consume it. But, within economics, if we buy an item, we are also consuming. So yes, you can consume a cryptocurrency, in a sense.


Cryptocurrency as a service?

Some economists will differentiate between goods and services. Digitized music, for example, has no substance and is therefore classified as part service and part good.

Cryptocurrencies do not need to be goods or services. They merely need to function as a medium of exchange. And they do, to a point.


So why did Ayn Rand not simply advise that money had to actually be an “unconsumed good?”

As civilization advances, we no longer need to carry our commodities along with us. This entails risk. Gold coins in a purse attract unwanted attention. So we stored our unconsumed goods at home or in a bank, but again, there are risks involved. Burglary and confiscation, to name a few.

In any event, we used checks (functional money) to transfer title of our goods back and forth. Cryptocurrency can function as money, if it represents, holds title to or is backed by an unconsumed good. Preferably a good like gold, with a stable value.


What is the real issue?

The debate, then, is not the lack of intrinsic value of a cryptocurrency. The debate is how to accomplish and establish, voluntarily — the “backing.”


Why can’t you simply divide the number of atomic units into the total investment amount to arrive at the value of any particular cryptocurrency?

Like dollars or yen, the temporary, constantly fluctuating, value of any currency or good is also a function of supply and demand. In the cryptocurrency sphere, it is rather simple to calculate current base value using this method, and then trade when one sees that the formula indicates undervaluation or just the opposite.

Again, unlike real goods, such as apples, Bitcoin can change in “monetary” value very quickly.

In any case, the idea that monetary inflows lend cryptocurrencies intrinsic value is incorrect for a variety of reasons. These include the inherent price instabilities and potential lack of demand when the next best altcoin hits the market.


Can a cryptocurrency “back” itself?

Cryptocurrencies have many attributes, but in the scheme of ‘money’ they are quite new. A young project on the financial stage.

Untraceable or private cryptocurrencies may be best suited for cash-like use, so long as they are as secure as possible. Attributes, such as these, should increase the perceived value of the currency for now. But perception is not the “intrinsic.”

Bitcoin, on the other hand, is traceable and could decrease in value for this reason — even if it is “tweaked” to “repair” these shortcomings.

In any event, to state, at this stage of the game, that a cryptocurrency can somehow obtain an intrinsic value and all the necessary attributes of money, is unknown.


Which Cryptocurrency will Succeed?

Just which cryptocurrency is on the “Bleeding Edge?” AEON, Monero, Zcash? Will it be those that are currently backed by gold and silver? Will Bitcoin keep its position?

For all the research into Fintech, the ongoing debates about value, the idea of voluntary use and privacy, the search for security through anonymity and trust, we may be witnessing the next best cryptocurrencies to hit the markets since 2009.

But always remember: do your homework. Fintech is a work in progress. You may need to leap to the next best cryptocurrency as you watch this whole thing flower.

Perhaps it’s time to think outside of the box and beyond the blockchain. Perhaps, and until we live in a world were cryptocurrencies aren’t so heavily regulated as to make it nearly impossible to give them the title of “functional money,” we need, in addition to the current technology, something more.

But you have to ask yourself, even if Bitcoin is transparent, does that not make it stronger?

 

Thanks for reading.

 

Photo:Source

Trust-Mining

Trust-Mining

 

To Pre-Mine or not to Pre-Mine? That is the question.

Is it really?

No. It’s “Trust Mining.”

Pre-mining: To create or mine cryptocurrency in advance of public release.

One of the arguments against any cryptocurrency launch is the idea of a pre-mine. There has been a tremendous amount of discussion about the topic. But these discussions are scattered all over the net. This is an effort to place some of them in one place.

First, before we get into the weeds, we must answer the basic question…

Does a Creator of a Cryptocurrency have a Right to Pre-mine?

This is the first question many seem to overlook. They list numerous reasons against the practice, but gloss over the fact that the decision to pre-mine is the right of the creator of the cryptocurrency. Whether a software application is given away or sold, the creator — the developer — has the option to pre-mine or not to pre-mine.

Whether you agree with that statement or not is immaterial. Facts are stubborn things.

All the calls to make such a thing illegal demonstrates an underlying motive. That motive is to steal another’s idea. If you don’t like the Pre-Mine, change the channel. A developer can do anything he wants with a piece of code, absent making it reach into your bank account or similar.

Remember, cryptocurrencies are “voluntary.” You use them only if you so choose. So stop your whining.

Is it a Good Idea to Pre-Mine?

It depends if your application is open source or not and how it is updated or changed.

Ripple and Stellar are companies and therefore centralized — and Pre-Mined all of their cryptocurrencies. Both have had some reasonable success and have rights to their respective blockchains.

Ripple is integrated with the current financial world, whereas Stellar is attempting to appeal to the masses. Neither has come close to the success of Bitcoin.

Bitcoin was not Pre-Mined, but Satoshi Nakamoto did begin to mine first and then others became interested. This is not the official meaning of a Pre-Mine, however.

If Satoshi had set aside in apparent million “BTC,” before anyone knew what he was doing and then he attempted to release the application to the world, the success of Bitcoin would have been in doubt.

As it was, Satoshi launched a “cooperative” venture and asked anyone who was interested to download and begin mining. And we know the results. Whether Bitcoin will exist long term is another question.

When others began to copy the Bitcoin idea — literally or not — the idea of a Pre-Mine entered the Fintech vocabulary. It has been considered deceptive, if the launch of a cryptocurrency did not advise that a Pre-Mine existed.

If a Pre-Mine was publicized before launch, it was the decision of the people to mine or not.

The “Dump” Risk?

This is perhaps the best argument against Pre-Mining. The fact that at any moment, the creators can flood the market with their own coins — sell at a profit — and essentially crash their own coin. A few days later, they then announce a new coin and the process begins anew.

This scenario appears to diminish with time, however. It’s the early days, where pumps are in hyper mode, when a Pre-Mine Dump would be tempting.

For example, if there was a 10% Pre-Mine that would mean 10% of all the coins ever to be mined are now in someone’s wallet. No big deal right? What a minute. What if only 20% of the total coins have been mined? That would mean the Pre-Mine is currently 50% of the total. If a dump were to occur the ‘coin’ could crash, as the developers cash-in.

Those unlucky enough to be holding their ‘coin’ after a major dump of Pre-Mined coins, are in fact, fleeced. Many such comments litter the net about “Bag Holders” with “dead” coins after a big Pre-Mine dump. AuroraCoin anyone?

But if I Pre-Mine and do a Giveaway, won’t that help?

So far, the answer appears to be “no.”

Closed source coins like Stellar and open source ones like AuroraCoin have tried. Stellar has been trending lower for over a year. Again, their long term success is in doubt.

To give crypto-coins away, as effort mask the fact that you will dump in advance is also a deceptive practice.

Then there are the pure Proof-of-Work Coins. They are or can be 100% Pre-Mined. If you trust the developers fine. Sunny King of Peercoin fame may be onto something, but the old proof is in the pudding, right? Peercoin has been trending lower since the “Great Bitcoin Pump,” but so has Bitcoin.

 If the Developer does other Good Things with the Pre-Mine, won’t that Help?

Maybe.

Stellar uses the Non-Profit angle to assist the uneducated and the alleged, underbanked. If you want to pour your hard earned money down that potential black hole, be my guest. I gave at the office, thanks.

But many other cryptocurrencies use the Pre-Mine for upkeep and updates. The danger here, is that “they” are often in full control of their semi-centralized blockchains. I’m thinking about DASH here. (Not Dashcoin – DSH.)

DASH does have a voting system when proposals are made to change the ‘coin,’ and the system reflects a business-like model. DASH also, allegedly, had a Pre-Mine. And they have been in an uptrend for over six months. Pre-Mining, which DASH developers have explained as a glitch in the early works, has not yet hurt the crypto. But their innovation may have overcome the bad taste of the early coin hoarders. Again, only time will tell if the ‘coin’ has staying power.

What is a Pre-Sale?

Some cryptocurrencies Pre-Mine millions of coins and then sell them off to investors to generate revenues, before the official launch. In other words, the coins are actually released to the public, beforehand. This is not as bad as withholding sale and should not be considered a “pure” Pre-Mine.

But let us not mince words. He who controls a Pre-Mine, even a sale thereof, controls the ‘coin.’ This may be why, among other reasons, that Ethereum now has a partner (okay competitor) called Ethereum Classic. It is also instructive that the original developers of ETH turned their clock backwards to ensure that a funds were not diverted inappropriately, due to a problem with some “code” as it were. If that’s not centralization of monetary power, I don’t know what is. Certainly Janet Yellen noticed.

No Pre-Mine

If you want to have others adopt your private currency, in some meaningful way, then you need cooperation. You need miners if you are going that route. Miners that support your blockchain. Stakeholders in your system. Producers of your coin. Users of your API’s. Investors in the wonderworks. Speculators to drive everyone else mad. And all the rest.

If others feel that you have the investment advantage, your level of cooperation may be diminished. Starting everyone at the same place — at square one — seems to be relatively ‘cooperative.’ It shows that you believe in your product enough to start right alongside everyone else. To get into the fray, for better or worse, with those who you wish to adopt your plan and support your network — your blockchain.

In this sense, the developer is the artist. Everyone is invited to make a copy of his/her/their work and use it. Occasionally, the developers make improvements upon their works. Or they work as a team and use some form of voting system to approve or disapprove changes. There are many variants.

The Pre-Mine with a Side Show

Perhaps a lesser explored reason for Pre-Mining is to show the actual cryptocurrency in operation. The “red herring” idea or “selling the sizzle, not the steak.”

The cryptocurrency enthusiast is curious about all of functions built into the newly designed ‘currency,’ such as faster transaction times, blockchain savings, secret messages, private markets and the like. But when you check the website and the hacker news, you find that there was a huge Pre-Mine. That should be a warning to you — unless you truest the developers.

The Fee-Mine Concept

One way developers avoid Pre-Mining, is to code in a fee based system using the native currency. Each time you send or mine the cryptocurrency the developer receives a small portion of the proceeds, which they can then divvy out among the miners.

Trust Mining

We all know that cryptocurrency has no intrinsic value. It is not necessarily durable. All the aspects of a sound money are certainly not imbedded within. But to come as close as we can to a sound money system might be the ticket.

After all, the dollar is a mere piece of paper. The United States has what many refer to as shadow gold standard. But like a cryptocurrency, if the dollar loses its trust, say when the printing presses shove out “QE4” forever, all bets are off.

Multi-Mining:

In a sense, Ethereum and now Ethereum Classic are attempting to provide an intrinsic-like value to their cryptocurrencies. The do this by having the native “primary” coin function or fuel many other side processes, colored coins, self-executing contracts and applications. The list goes on.

But these “primary” coins only function within their own ecosystems.

In contrast, one of most stable monies and currencies of all time, gold, has uses other than its monetary use and outside of a captive blockchain.

Utility Mining:

Perhaps one of the best ways to establish a cryptocurrency is to allow it more versatility…more utility. A ‘coin” that has more than one use. Like gold has more than one use. A coin that when mined, can be used “outside” of its blockchain for other utilitarian or even decorative purposes. Off blockchain uses that will allow for private transfers as well as public receipts.

Thus far, many seem to focus upon the many blockchain uses. Perhaps it is time to look at another facet. A cryptocurrency that can function off-blockchain or not require a blockchain at all.


Photo Source: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)%5D, via Wikimedia Commons

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