Tag Archives: cryptosphere

Three Predictions for Cryptocurrencies in 2018: “SPACE”

What’s Next?


Many people ask where cryptocurrency is heading. I thought I’d take a moment here and delve into that. A bit of forward conjecture.

Why?

Because I can’t seem to find it all in one place. Just bits and pieces of negative and positive elements. So, I jammed a few of them in here. And it’s all my opinion, of course. Take it with a smidgen of rock salt.


Predictions:


1. The CCE’s will Official-ize and DCE’s will not matter

Centralized Cryptocurrency Exchanges (CCE’s) may not survive in their current form. The year 2018, in the United States, will test their mettle.

Why? Tax laws, crypto-friendly countries, atomic swaps, and:

Decentralized Cryptocurrency Exchanges (DCE’s).

In a recent interview by an unnamed person, as not to disparage the name of a particular CCE, it was learned that things like atomic swaps and/or functional DCE’s are years into the future. That is, according to the CEO of this particular CCE. That centralized and regulated exchanges are better suited for a servile public and institutional investors. Regulation is acceptable.

Bull. We have grown up now. Training wheels are not handcuffs.

Some CCE’s even pride themselves for their transparency. They put a face to their company. They stand upright and walk on two legs and pay their taxes as all good citizens should. Even if the monetary system is rotten to the core. Don’t you dare try to improve it.

The anti-government stance seems to worry the CCE’s. Just be nice and trade, they ask. We are all in the same sinking boat after all – the CEO says from the crow’s nest — as the waters rush in.

But let’s face it. If a CCE decides to go transparent, it has no choice. The business model they chose, for good or ill, requires that they follow and not lead, at least in the U.S. In the U.S., CCE’s must create and maintain a KYC, AML compliant trading platform or face prosecution. It’s that simple. No submarines allowed. Surface ships only, please. Even if we lose the war.

Add to this CCE mix, the recent 2018 U.S. tax law clarifications regarding cryptocurrency trading and one can speculate as to the true motives behind a certain unnamed CCE’s recent announcement that they are moving in the direction of U.S. Dollar trading – for most users. And that they are apparently seeking to offer actual securities (stocks and bonds) in the future.

Why? They are losing money – or soon will be. They need you to buy and buy now. The sooner the better. Use lots of cash. And, as the tax laws kill the cryptosphere in the U.S., the CCE’s will “evolve.” No, Mr. CCE, you will capitulate. You will spring backwards, to the safety of the fiat. And there, you will die Mr. CCE, for lack of verve and vision.

And that leads into the DCE’s. In their current incarnation, they are worthless or nearly so. Dead on arrival. You must pledge a bit of expensive bitcoin, choose a third party to settle disputes and wait forever. DCE’s are slow to improve, unprofessional, not user-friendly and untrusted.

Perhaps the new impetus will be the desire for free trade, unhindered by the regulations and onerous tax laws.

But we need something more.


2. The U.S. New Tax Laws will be Ineffective

Translation: Cryptocurrency trading is slowing down. U.S. customers especially, are not trading like they used to, because they know that each time they do so, they can no longer claim a “like-kind” exchange. In other words, the tax hit is helping to drive cryptocurrency prices lower. It is also killing the centralized exchanges – which could be a good thing.

U.S. based CCE’s must now shift into another gear if they want to stay in business. Aside from the threat of atomic swaps and DCE’s, the fact that trading will continue to slow because of tax laws, means that the CCE’s will begin to consolidate and/or offer more services.

This is already happening. It’s called survival mode. The hangover after the party. Luckily, there is still plenty of booze left, but it’s cheap booze now. Bitcoin is no longer as “top shelf” as it once was. Bitcoin Cash continues to hammer away.

These new tax laws, reduced trading and the bubble-popping amusement ride, is soaking value from the CCE’s, at hyper-speed. Where once, the cryptos flowed like champagne into the golden baths of the CCE’s, it now dribbles in as diluted, headache-inducing, sparkling wine, from the Left Coast (California).

As a result, expect CCE membership fees to emerge, large balance requirements, the wooing of institutional investors with unpublished deals, and the farming-out of the expensive retail arms to other companies, especially where labor is cheap. Expect more ads.

The net effect? The little guy will be left holding cryptocurrency he cannot trade, without first signing his life away. Should the little guy hold private coins, he will be suspect. Where will any freedom-seeking individual go?

This is why I feel that the new U.S. Tax Laws will be ineffective. They will make a show of it, force the crypto lovers underground, arrest a few, let the problem fester, and in the end, they will wake up with a new money. It is simply a matter of time. Even the dinosaurs died out.

Sophisticated traders and gamblers might hire third-party fictions to hold their crypto, but the vast majority will not be able to entertain such extravagant schemes. Tax loopholes are for the affluent.


3.The Rise of “SPACE”

If you live under a rock, you’ve never heard of a DCE. That’s fine. Maybe atomic swaps are your thing. Or even Atomic Coin, which is another altcoin. But I don’t think you’ve heard about this next idea. It’s not about another blockchain.

Spontaneous Private Atomic Cryptocurrency Exchange(s)? Or: S.P.A.C.E.

It does not yet exist.

I predict we will see the beginnings of SPACE in 2018. It will be a combination of a CCE, DCE, Atomic Swaps, and best of all, it will be anonymous and untraceable. Imagine a private-Amazon with its own Monero-like cash that spends everywhere, instantly. Making fiat superfluous. (I’m an optimist.) Where you can store your crypto in the new cloud and access it where ever SPACE is used.

Already, we are seeing hints of this. Cloakcoin. Litecoin in talks with Monero? Some countries creating their own internet, with different protocols. Sharding altcoins, like MaidSafeCoin, just to name a few.

They all seem to miss the mark however. They all must ground themselves to the given ICANN.

What if they didn’t?

What if SPACE was created as needed? You initiate a private connection to a flexible network where there are no third parties. You buy, sell or trade instantly. Your choice of payment (coin) is saved, privately. And you disconnect. There would be no fees, no records, save your own and no limits. Everything would be automatic, anonymous, user-friendly and secure. Once the developers released such a network into the wild, it would, like bitcoin, be maintained in a similar manner.

Therefore, the next big thing, at least in the Cryptosphere, will be way out there. Beyond the current internet completely. A quantum leap and a human achievement that could set the stage for the next leap forward.

That is the idea, isn’t it?

Will you be ready for SPACE?

–JGS


 

Advertisements

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?

 

Cryptocurrency Predictions From Experts?

Expertise

Is anyone really — I mean really, really, really — an expert when it comes to cryptocurrency? Even the experts don’t agree what cryptocurrency means. Is it a tool? A convenient form of functional money — like a check with drawing rights. But rights to what?

This aside, what are the latest prognostications from experts? Try these:

  • Balaji Srinivasan, CEO of 21.co
  • Peter Smith, CEO of Blockchain
  • Kathleen Breitman, CEO of Tezos

Bitcoin, the Master

Like all “experts” in this relatively new field, the implication is that bitcoin and Ethereum have staying power is common-speak. A five to ten year future window of opportunity seems to be the consensus — even given the current problems associated with bitcoin. That belief — almost a religion — is nothing new. It is going to make these experts look like digital noobs, if on July 31, 2017 or even down the road a piece,  bitcoin forks anyway. By then I’m sure they will have edited their theories.

There can be only one — or something like that…

New cryptocurrencies will come along and become successful. Some currently unheard of technology could dominate the market. Again, this seems obvious. That’s why we have a thing called progress. Can we be less obtuse here and stop pandering to noob-ville.

Rich Man, Poor Man, Fraud Man?

People will become rich and poor as new cryptocurrencies enter this space. As a result of the people who lose money due to fraudulent enterprises, more regulation seems to be in the offing.

No kidding?

In fact, Ripple may be implying that markets are heavily regulated for a reason. This is yet another eyebrow raiser. Ripple went to the dark side early in the game and is no doubt leveraging its position against the “free” cryptocurrencies as they themselves struggle to become a meaningful player in the cryptosphere. One wonders if they will soon apply for monopolistic benefits. Perhaps become one with “Fedcoin,” in the United States of America.

The Cashless Prison

Cryptocurrency must not be private? Regulation will eventually take over.

The critical component required by governments is ultimately, a cashless system whereby — allegedly — everyone can be more secure. The problem is, one has no privacy in this scenario, no right to life, liberty and, in the end, no private property — even digital property. How can one be even remotely free if every personal transaction is cataloged by the state, controlled by bureaucrats and dictated by the political wind?

Benevolent Big Brothers

Speculation in cryptocurrencies will lessen as certain altcoins become more stable. That bitcoins are not just for drugs.

Right. Got it.

This bit of speculation is a bit disingenuous. In fact, it’s just a set up. Stated to entice the under-educated. The noobs. To hint again, that appropriate rules to unmask the users of cryptocurrencies will magically enable a virtual world-utilization of cryptocurrencies, especially when new “killer apps” come online. All will be well, so long as we obey.

Conversely, it can be argued that the instability of cryptocurrencies are in part, caused by the states themselves. Take China for example. That bastion of corruption on one hand implies that bitcoin miners will be heavily regulated and on the other, they are allowed to profit. Do you hear “payoff?”

Since China purportedly manages most of the bitcoin blockchain, is it any wonder that it bitcoin is inherently unstable? And we all see what happens when bitcoin catches a cold — almost all other relevant cryptocurrencies nosedive.

In support of the move away from state controlled cryptocurrency, things like Bytecoin, Monero and Aeon were born — and many others — in an ongoing attempt to remind the minders that well, all of the people have not rolled over and played dead — just yet.

The Silly Con

Silicon Valley will become a direct competitor to Wall Street. This seems straightforward. As computer technology advances, its underlying information infrastructure will continue lubricate the wheels of finance. All of the major trading floors, worldwide are already supported by the latest Fintech. But the assumption here is much deeper. That the technology itself will make Wall Street, for all practical purposes, passé.

Imagine that for a moment. Not that all the brokers and lawyers would be replaced by smart contracts, but that the wheels of finance themselves are replaced with cryptocurrency. Where paper money, fiat currency, the Federal Reserve, are at once, relics of a bygone age.

Do you take VISA?

Competition will force the old guard — say MasterCard and Visa — to step up. In other words, if bitcoin or any cryptocurrency, can one day compete with the current regulated entities then and only then, would the need arise for the old guard to “improve.” That or be ushered out.

The only problem is, bitcoin is currently too slow to compete with the current credit based entities, except where it comes to moving large amounts of money across borders cheaply. A point that is often ignored. They don’t want to remind anyone that there are inexpensive ways to do big business.

Micro-transactions are all the rage today — supposedly — but when it comes down to the “golden” tacks, if one can move 200,000,000 dollars in ten minutes or less, across 50 borders, without taxes or banking fees, well, who needs bitcoin “micro?” We have Iota for that anyway and they are cheaper — better at the small stuff. Maybe better at all the crypto stuff.

Quantum Query

One should remember that technology is advancing. Governments worldwide are working on systems — quantum computers — which, if true, can crack cryptocurrency addresses — take your funds — in about a minute. It might therefore behoove one, if cryptocurrency seems a lucrative investment, to study the next generation of altcoins which are resistant or even immune to the quantum “state” hackers. Maybe Iota, but there are others.

This being said, if governments cannot get what they want, if they cannot control the newest generations of non-state currencies, they would need to make them irrelevant by installing a better form of money, perhaps by privatizing the banking industry altogether or by controlling the internet, radio waves, WiFi etc. At last resort, Big Brother would require draconian laws, like those in North Korea, and the dismantling of technology altogether.

Absent a total crackdown against cryptocurrency, there are other more curious ways to thwart the ever growing popularity of the expanding cryptosphere: government sponsored hacks, thefts, 51% attacks and so on.

It is interesting of late, how many cryptocurrency exchanges, wallets, etc., are being hacked. The newest one today? Veritaseum, to the tune of eight million dollars.