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The “Bitcoin Cash” Hit Piece

The “Bitcoin Cash” Hit Piece

(Updated November 28, 2017)


Dear Cryptocurrency Enthusiasts:

This is an open letter-blog and assessment of the Mr. John Carvalho and Roger Ver discussion.

Is this the beginning of the end of Bitcoin Cash?

It’s not every day you get to take a peek at the guys and gals – the movers and shakers – in the crypto-sphere. See them in a more human light. See them make mistakes, get angry and do dumb things.

There is no such thing as a Bitcoin Jesus or is there? Well, he is being demoted now.

If you have 45 minutes, you can watch the interview with Bitcoin Jesus, by a less than dignified fellow. It occurred on November 27, 2017.

If you prefer an interpretation, then scan the words below. I have pulled out some of the more interesting highlights.

This is my interpretation of today’s debate between John Carvalho and Bitcoin Jesus — no longer. He is now just plain old Roger Ver these days. And it really gives you a taste of crypto-current-events.

Events that are awash in…problems.

It’ll make you think twice about Bitcoin (BTC)…and Bitcoin Cash (BCH and BCC).

Ver, as many know, was an early supporter of bitcoin, but now supports Bitcoin Cash. That should tell you something. And anyone who thinks that Ver is just a money grubbing corporate type, might end up holding a worthless bag of BTC, but I hope not.

Carvalho, our alleged hero, has a YouTube site called Bitcoin Error Log. He is the CEO of Xotika.TV, which appears to be a porn site.

Carvalho has serious character issues…

You be the judge of John Carvarlo’s character, but I say the guy has near zero credibility. And like Ver advised, I also don’t care if you sell smut for a living, but it does define you. It tells the world what you really are.

(And be careful accessing the Xotika.TV site, it involves a high-risk country, according to Scamadviser.com. Scumbag issues.)

Why Ver agreed to the interview it is beyond me. Smut profiteer interviews self-made millionaire? Go figure.

The smut seller wins debate?

Carvalho of the Bitcoin Error Log (on YouTube) put Roger Ver on the spot today. It was a live debate, but more like a planned hit piece. It is hard to tell if Ver did not deserve it.

Ver was apparently speaking from a hotel room and Carvalho was in his safe-space. It looked like a setup. Carvalho obviously wanted to make Ver look bad. Please tell me if that was not the plan Mr. Carvalho.

Carvalho’s attitude was condescending and Ver seemed to hit back with straight forward answers. Polite most of the time. Until the end, where he lost his composure. (He is only human, but is that an excuse?)

Carvalho spiced his language. Cursed, laughed, derided, and made empty accusations.  Again, what do we expect from his ilk.

And it worked. I began to have doubts about Bitcoin Cash and Ver.

Unfocused debate…more like a Witch Hunt

The debate, if that is what you would like to call it, was apparently supposed to focus, at least in part, on the block-size issues with bitcoin/bitcoin cash; however, the discussion appeared more accusatory and was derailed early on.

Carvalho was the accuser. Ver was on trial, trying to respond to unsubstantiated allegations. A Drumhead Trial from afar.

For starters, as Ver tried to answer questions, there was construction noise nearby and his audio often cut out. This, I’m certain, did not help Ver be heard. At that point I would have asked to debate later. But Ver soldiered on. A mistake.

It did help Carvalho. The beating of the drum…

Carvalho asked why Ver did not like the label “Bcash” for Bitcoin Cash.

Ver stood by his guns. He and the devs like the label Bitcoin Cash, Ver said. The label “Bcash” seems condescending in Ver’s opinion. (See here for how it all started.)

Carvalho wanted to know why he couldn’t call it what he wanted to call it.

Ver tried to explain that the term “Bcash” was obviously negative, so he and others, didn’t care for it.

Pushing buttons…

Carvalho explained that he and others feel that they can label it “Bcash” because there is only one true bitcoin. That seemed to be the crux of it. Carvlaho wanted to give Bitcoin Cash a derogatory name and wouldn’t admit it.

Why not admit it? Sometimes button pushing works and when the pushee admits that, he’s lost the battle.

Ver explained that this was Bitcoin Cash, not “Bcash” and not bitcoin, but Carvalho ignored this. It’s Bcash, he stated repeatedly. A dog with a bone.

This bit of nonsense was repeated by Carvalho. Bcash. Bcash. Every chance he got.

[One might think Ver was being interviewed by a child, but that was the game, was it not, Mr. Carvalho?]

Carvalho asserted that there is only one true bitcoin. He interrupted Ver, as it was explained that Bitcoin Cash was in line with Satoshi Nakamoto’s Whitepaper. These interruptions were obviously designed to keep Ver off balance.

And this is how it went. Ver, trying to be cordial and Carvalho interrupting with “Bcash” and snide remarks. And like I said, it worked.

Carvalho indicated that said bitcoin Whitepaper was not the “bible.” That “we” (meaning the Carvalho porno-gang?) can “agree” that the original bitcoin is the one true bitcoin and the Whitepaper (the original design) is essentially not bitcoin. In other words, if bitcoin’s code changes and the devs diverge from the original vision, it’s still bitcoin original — according to Carvalho.

Certainly, this is a tenuous argument. But Carvalho wouldn’t let go.

And Ver didn’t dislodge that sentiment. It was Ver, big bad corporate man, against bitcoin, a bunch on innocent devs (earning a bit of money on the side from Blockstream and others) working hard — coding.

Carvalho’s assertions…

These repeated assertions by Carvalho seemed to say that old bitcoin is always new bitcoin, even if it’s not in line with Satoshi Nakamoto’s vision. If the devs are still there, no matter if they are new devs, if the undefined community still exists, if the repository is still there, it’s bitcoin.

Appeal to emotions. A point for Carvalho.

What Ver attempted to explain, but Carvalho refused to acknowledge, was that Bitcoin Cash was closer to Satoshi Nakamoto’s original vision than bitcoin is now. That bitcoin has diverged and is heading down the wrong path. A path with higher fees, slower service and lost transactions.

It fell flat. Ver was a copycat and it stuck.

Carvalho continued his attack.

Carvalho repeated that the repository is “bitcoin” no matter how the code is edited by the core devs or contributed to, by the undefined community.

Ver indicated that not just anyone in the community can contribute to bitcoin. [So this is a false statement, Ver implied.]

Bitcoin is NOT open to the community.

Ver cited Gavin Andresen’s revocation. Andresen is no longer allowed to contribute – meaning bitcoin is NOT open to the community.

Carvalho stated that Satoshi Nakamoto did not hand bitcoin over to Gavin Andresen in the first place. That Andresen somehow obtained control over bitcoin after he went to the CIA. [Vague accusation – never explained. FUD?]

Ver stated that Carvalho was incorrect. That, not only did Nakamoto share access to bitcoin development, but Andresen then shared it with others. These others then revoked Andresen’s access, without his consent. Andresen can no longer approve code to be included into bitcoin.

Andresen a risk?

Ver also stated that the new core devs alleged that Gavin Andresen’s bitcoin dev account had been hacked and that was the reason his access had been revoked…permanently. Oddly, this, on its face, appears very suspicious and thus far this author is not aware of any evidence that Andresen’s bitcoin Github access was ever hacked. On the other hand, concerns over Andresen’s original indications that he had found the one true Satoshi Nakamoto (Craig Wright) may have played into the issue.

Carvalho stated that the new core team, which Gavin Andresen gave permission to help develop bitcoin, had been asking him to voluntarily revoke his own access, before they locked him out, because he was no longer “contributing” to the bitcoin project. That allowing Andresen continued access was a security risk.

Carvalho also stated that Andresen contributed to his own downfall by focusing on “antagonistic” things. [In other words, Andresen did not agree with the new core team members…and was unceremoniously booted out? That appears to be the implication.]

Okay. Enough. Andresen being booted out does not make bitcoin a closed community.

Point to Carvalho.

Back on focus…

Ver then tried to have Carvalho focus on the block-size debate issues, which was apparently supposed to be the focus of the interview.

Carvalho said that Ver had originally supported the Bitcoin SegWit2x fork.

Ver replied that this was true, but after the last-minute cancellation by others he went with Bitcoin Cash – and he had indicated this would happen if SegWitx2 failed. And it failed.

The accusations continued to fly from Carvalho.

Derailed again…

Carvalho indicated that Ver recently received flak for the newest Bitcoin.com wallet (Ver owns or has interest in Bitcoin.com). That the new wallet defaulted to Bitcoin Cash.

Ver stated that this was also untrue and held up his cell phone and showed Carvalho. The screen on the phone clearly showed two wallets. One for Bitcoin and another for Bitcoin Cash.

Cell Phone Wallet - Copy

(Photo Source: YouTube)

Carvalho stated that this would confuse people and implied that the names (Bitcoin and Bitcoin Cash) were too similar. That “newcomers” might not know the difference.

And I’d have to say that Carvalho is right on this point. Ver’s cell phone shows a confusing set of choices. If you don’t know the difference between BTC and BCH, then you might become confused.

Carvalho then asserted that it was fraudulent to use the bitcoin name in Bitcoin Cash. Carvalho did not explain this accusation.

Fraudulent is something obtained, done by, or involving deception, especially criminal deception.

Ver stated that he did not think the labels were that confusing [or fraudulent].

[Side Note: If you can’t tell the difference between crypto-wallets with separate labels, you should probably not be using cryptocurrency.]

Carvalho then asserted that the Bitcoin.com wallet would confuse people, implying that the name of the website was also misleading.

Ver stated that the Bitcoin.com wallet clearly states that is supports Bitcoin Core and Bitcoin Cash.

Carvalho then changed the subject. He stated that “we’re” concerned for the “noobs” due the Ver’s marketing power. That they will be confused.

Even score here. Both have valid points.

Ver countered. He asked why Carvalho was not concerned that newcomers would pay more in transaction fees ($20.00 fees) with old bitcoin?

Carvalho ignores high old bitcoin fees.

Carvalho said he wanted to talk about fees “separately.” That he was more interested in “education.”

[In other words noobs losing money in old bitcoin was not considered educational to Carvalho.]

Ver gets a point.

Once again, Ver stated that Bitcoin Cash more closely resembled the original Bitcoin.org Whitepaper.

Carvalho asked how Ver could “…make that leap” since there was “…no mention of Bitcoin Cash,” in the Whitepaper and is not any more peer to peer, than is bitcoin. [Carvalho had indicated that bitcoin was ‘node to node’ these days.]

Ver gets another point. Carvalho’s answers are too vague.

Ver explained that the fees were lower with Bitcoin Cash — again. That nobody can stop the transactions.

“…Bitcoin Cash can be stopped…”

Carvalho stated that Bitcoin Cash can be stopped since it’s a smaller network. That the only reason that transactions are cheaper, is because nobody is “spamming” Bitcoin Cash yet.

Interesting idea.

Ver asserted that this was not true. That bitcoin is now slow and expensive due to full blocks and the user experience is suffering.

Ver is on the money. Bitcoin is very slow.

Carvalho cited bitcoin’s higher market cap, but Ver stated that bitcoin has failed. That the slow transaction speed is the tell.

Bitcoin has not yet failed.

“…the Lightning Network…”

Carvalho stated that the “Lightning Network” would increase transaction speeds.

Ver responded that the transition from Bitcoin Core the Bitcoin Core assisted by the “Lightning Network” is much more difficult than to simply switch to a better coin.

Ver asked Carvalho if he had ever completed a single Lightning Network transaction and received a negative response.

Ver gets a point. There are SegWit2x problems. It’s an unproven system.

Bitcoin is bleeding out…

Ver stated that Bitcoin used to have a near 99% market share. That it is now “bleeding” into other altcoins and stands at about 53% of market share.

Carvalho disagreed and indicated that this does not mean that bitcoin is losing ground due to its value per coin.

Nobody wins this round.

Ver said that Bitcoin Core has “intentionallydestroyed bitcoin’s usability by capping the block-size. It’s too expensive to use, less reliable; and therefore, investors are seeking out alternatives.

Block size?

Carvalho stated that Satoshi Nakamoto designed the small block-size in the first place.

Ver stated that Nakamoto was convinced by others to do this later, as a temporary measure, to stop others from “flooding” the network.

Carvalho tried to change the subject again, but Ver asked him to finish each subject before moving on.

Ver then advised that Nakamoto’s original intent was to allow the block-sizes to be as big as they needed to be, to accommodate the network.

Carvalho then stated that the bitcoin block-size was in fact limited from the beginning.

Ver did not answer this question clearly. Ver stated that the block-size (what was stored in each block) grew as time passed [until it apparently hit the actual preset limit].

Even score again. Nobody wins this point.

Why does Carvalho like old bitcoin?

Ver then asked why Carvalho liked bitcoin and he responded with the standard line. No inflation, private, decentralized, store of value etc.

Ver then indicated that Carvalho’s answers defined many altcoins in general.

Then Ver advised he was trying to replace all forms of money with a form of permission-less money and make it impossible for governments to control money and free trade.

Carvalho hit on the decentralization aspect again, but Ver stated the this is a tool of censorship resistance, not necessarily a goal in and of itself. That censorship does take place in bitcoin when your transaction is too small, and it drops from the “mempool.”

Carvalho cited blockchain rollbacks by miners with more power. This “power” centralization has effectively censored transactions.

Ver countered that the small bitcoin block-sizes incentivizes investors to use large “bitcoin” banks like Coinbase. Such a concentration of bitcoin is akin to “centralizing.” If the block-size is larger, the system is easier to use and keep in investors’ hands.

Carvalho tried to state that the altcoin exchanges are a centralization risk, but Ver reminded him that it was a matter of choice to trade on exchanges.

Mix and match. Nobody wins these points.

Untested Tech

Carvalho then advised that his company (Xotika.TV) now uses SegWit2x.

Ver implied that it is an untested tech and that there does not have to be a block-size limit anyway.

Ver wins this point.

Carvalho moves onto theory. There is “infinite demand for block-space.”

Ver disagreed. He said it depends upon the demand that the miner’s set for the block-space.

Ver’s point.

Then Carvalho played the “what if” game.

What if the blocks were infinite?

[Yet another seemingly ridiculous argument. Carvalho is not apparently grounded in economic reality, but mired in some infinite theoretical worry. At this point Carvalho becomes defensive as it has become obvious he is losing the debate.  Accusations begin to fly. Ver doesn’t actually know what he says, etc.]

Ver stated that nobody knows what the perfect block-size is.

Carvalho: not knowing then [the optimum block-size], what is the best approach? A conservative one or a risky one?

Carvalho’s lack of knowledge shows…

Ver stated that the market should decide. Then he asked Carvalho to name any other altcoin that has full blocks [like bitcoin].

Carvalho didn’t know.

Ver stated that it has never happened.

Ver wins point on technicality.

Carvalho indicated that everybody wants to use bitcoin. [Yet another wild assertion. Bad form.]

Ver related that bitcoin having full blocks and high fees – and being experimented upon – is VERY risky. That the experiments should be done on a separate altcoin, not bitcoin. [Really good point.]

Ver wins two-points.

Carvalho’s do nothing approach

Carvalho stated that “inaction” on bitcoin is “conservative.” That leaving it alone is not risky. That Ver should not paint it this way.

Ver stated that action is needed on bitcoin.

Ver wins point again.

Carvalho repeated that bitcoin had a coded-in block size limit originally, but Ver explained that this was not generally true. That the one-megabyte limit was not reached until recently, since there was no “infinite” demand for block-space. At that point any responsible core team should have fixed it. Such a failure, in the real world of business, would have resulted in an employee’s termination, according to Ver.

Ver’s explanation agains fall flat. Minus a point.

Ver stated that many well-known exchanges are busily integrating Bitcoin Cash, but if people still wished to use bitcoin, that is fine. On the other hand, if you want reliability, faster transactions, something like the way bitcoin was supposed to work, then Bitcoin Cash is the answer – and it will save you money.

This comes off as smug. You are losing the crowd here, Ver.

Carvalho asserts…again

Carvalho asserted that Bitcoin Cash was unreliable. He asked why Bitcoin Cash created more coins and raised the specter of inflation?

Ver stated that Bitcoin Cash has the same coin number as bitcoin, but for a time, many miners switched to Bitcoin Cash and they got ahead.

Point for Ver.

Carvalho then supplied a list of Bitcoin Cash complaints all at once. He continued to interrupt Ver.

Carvalho indicated that Bitcoin Cash changed their mining algorithm to make it easier to mine.

Point for Carvalho. Ver never counters.

That ASIC Boost can also be used.

Point for Carvalho. Ver ignores or forgets?

That there is almost a 1% inflation rate in Bitcoin Cash.

[This inflation assertion is disingenuous. Inflation implies a constantly growing money supply. Bitcoin Cash, like bitcoin, has an upper hard limit. Carvalho’s argument is that since Bitcoin Cash mines faster it causes temporary inflation of coins – but this does not necessarily translate into a lower coin value, which is the result of inflation in a controlled, single-source and mandated money supply. Bitcoin Cash is not “legal tender.”]

Carvalho’s inflation allegation falls flat. Minus a point.

Carvalho also alleged that “old work” can be used to obtain more Bitcoin Cash coins in some cases. No other explanation was given.

Ver does not counter. Carvalho wins point by default.

Ver claimed that given the current bitcoin environment, bitcoin will lose out to Bitcoin Cash.

Vague.

Carvalho indicated that Ver stated these things because he thinks that Bitcoin Cash is doing something new.

Ver said that Bitcoin Cash has a larger user base that litecoin, for example. That anyone can check Coinmarketcap.com to see this.

Carvalho responded that using trading volumes, where there are no fees, for example, does not give an accurate picture. But he failed to describe what did give an accurate picture.

Nobody wins a point.

Carvalho plays dirty…

Carvalho then accused Ver of over-tweeting, getting socks (sock puppets) to up-vote and downvote etc.

Carvalho loses credibility all at once. Dumps all his points. Irrational statements. No verification offered.

Ver stated that these were lies. And backs his statements up with examples.

Ver is awarded five points.

Carvalho offered zero evidence of these accusations or any others, up to this point. And yet he presses on.

Minus another point for Carvalho, who is now sinking.

Carvalho then launched into more insult-like behavior, called Bitcoin Cash, “Bcash” and Ver became irritated. He advised Carvalho to discontinue this line or he would discontinue the interview.

Since Carvalho senses he’s lost the high ground, he starts to sling.

Minus more points.

Carvalho continued to press Ver’s buttons, stating that Ver only wanted the bitcoin name to “…coopt the brand.”

Ver stated that it was essentially more legitimate than bitcoin, although the name is Bitcoin Cash. But it is the true “bitcoin.” Read his lips, Ver stated.

The discussion is off track now.

Ver began to cite the growth of Bitcoin Cash over bitcoin, pointing out that it will soon overtake bitcoin.

Bravado?

Carvalho’s belief — higher bitcoins fees are better?

Carvalho stated that the higher fees associated with bitcoin makes it more valuable. [Seriously.] That for Ver to continue to hold bitcoin at all “…makes no sense.”

Ver reminded Carvalho not to place all his eggs in one basket and that bitcoin still retains a “network effect.”

Ver creams Carvalho again.

Carvalho continued with his “Bcash” insults and Ver reminded him it’s Bitcoin Cash. Ver also indicated that he does not need to speak to “someone on the internet” who does not necessarily run a successful business.

This makes Ver look bad. Loses emotional high-ground here. Big bad Bitcoin Cash entrepreneur bad mouths porn king, just trying to make a smut-buck. We’re in the ditch now.

Carvalho asked why it mattered that Ver was a millionaire.

[Why? Because it shows a person who can run a successful business.]

Carvalho reminded Ver that bitcoin is not a business.

Ten points for Carvalho. He’s above water again.

Carvalho insisted repeatedly that he could call Bitcoin cash, “Bcash” and Ver reminded him that that label was started in a derogatory manner on the internet and that he didn’t like it.

Moot point. Does not help discussion. It just pushes Ver over the edge.

Carvalho’s last stab…

Carvalho stated that he thought only Ver, “Jihan” and Ver’s sock puppets, didn’t like the “Bcash” label.

Ver then discontinued the interview after flipping Carvalho off.

Bad form. Ver loses debate in seconds — on emotional grounds, but not substance. Makes him appear easy to enrage.

I’ll have to say, of all the interviews I’ve seen Ver do, this one was the most interesting. Showed his human side. His inabilities.

And if Ver is right, it will be an “I told you so moment” when (and if) bitcoin begins to falter. Whether Bitcoin Cash will pick up the slack, is another matter.

Do you still trust Bitcoin Cash?

Conclusion:

Carvalho’s interview only served to point out bitcoin’s weaknesses, show that Ver is human and make people realize that they might want to reconsider holding onto BTC or BCH.

On the other hand, Carvalho made some valid points, even if most of it was mud-slinging.

Put your eggs in different baskets.

Ver issued his apology here. Too late now.

Sincerely,

 

Jack Shorebird


…I am now rethinking my Bitcoin Cash holdings.

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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.

Cardano (ADA): The Golden Hand?

Cardano (ADA): The Golden Hand?

Luck is when preparation meets opportunity. The hard part is recognizing the opportunity.


The Cardano opportunity is a risk.

Life…is a risk.

The news today…the news any day…the last few crypto-days…is mixed.

From a layman’s point of view – one who has made a few good calls – I think that the next great cryptocurrency opportunity is here. The early cryptocurrencies were the introductions, the experiments and the tests.

A lot of people have made a lot of money in this space since 2009. Some of these newly minted multimillionaires have used this opportunity to push Fintech further. To create a second generation of cryptocurrencies with smart contracts and added tokens. To allow others to use their blockchains for good or ill.

From Bitcoin to Ethereum. Public blockchains that allowed innovators to dream and make their dreams into reality. The reality, the regulators, pushing back, but not yet winning.

From Bytecoin (stay away) to Monero (use at your own risk). And we must not forget the private angle. Others in this new space felt that the current governments obstructed the development of this technology as they, the Darknet users, actively created systems to hide behind a wall of code. Or give the user the choice to secure his accounts or make them public.

The principal problem with the private angle, is that we the users, do not often know who created these coins. We have no customer service. The risk, therefore, is great. To state otherwise is to be oblivious or perhaps to take that risk in hopes of a great return.

Is there a third way, however? A third generation of cryptocurrency? Not a compromise, as I have postulated before, but a “realist” coin? One that exists and uses the regulations to its benefit, rather than subjecting itself to the laws of all nations? In other words, can Cardano (ADA) use the law of nations to its advantage, while enticing a new breed of users?

We live in the real world after all. We earn and save and spend our money on real things in real stores, where real people stuff our groceries in real bags. We use fiat money, by and large, to do this. And there are many advantages to using fiat, except for micropayments across borders. Cryptocurrency handles the latter much better. But cryptocurrency has other problems.

Although, I’m no supporter of the IMF (International Monetary Fund) its current director made some interesting remarks recently.

Christine Lagarde, Managing Director at the IMF, indicated in her speech recently, “…this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya…”

What does that tell you? Aside from the fact that she said it? Is Lagarde sounding the alarm or is she helping to clear the way for the banking industry to adopt the blockchain technology? If so, what type of cryptocurrency would governments accept? After all, the governments are the banks.

In the US, the company with the cheapest product wins the government business – a lot. Yes, there are affirmative action quotas (reverse discrimination policies) to follow, but the product used, needs to be under budget – until later, when the corruption and incompetence is discovered and the whole project exceeds the projected budget, plus some.

Would PoW cryptocurrencies be used by governments? Unlimited budgets are things of the past. Yes, China and Russia can offer inexpensive power (electricity) to cryptocurrency miners, having built the power stations on the backs of their subjects (tax and spend), however, freer countries cannot often hide such corruption for long.

PoS cryptocurrencies might fit the bill, however. In fact, Ripple is fitting the bill nicely now. More and more businesses and banks are signing on. But Ripple is not really PoS, is it? It does not encourage people to save and earn interest, it only entices them the buy, hold and sell. Perhaps to use their system. It is no longer user-friendly – if it ever was. But it is a pre-mined animal for the current financial system. Centralized and existing in the regulatory environs – and earning money for its investors.

Back to Lagarde. She also said, “For now, virtual currencies…pose little or no challenge to the existing order of fiat currencies and central banks…[b]ecause they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.” (Underlining emphasis mine.)

Volatility is a given with cryptocurrencies. They are not often pegged to a basket of goods or a fiat money supply. On the other hand, they are not – in theory – able to cause inflation.

Energy. There’s the big one. Bitcoin, for example, uses as much power as hundreds of thousands of homes, certainly. And there are worries, that continued unchecked, the blockchain beast might use as much electricity as entire countries.

That is a non-starter for whole countries, if they are constrained by objectivity and budgets. So, what is better? What kind of cryptocurrency would entice the average Joe, the high-power banker and, at the same time, dissuade governments from clamping down on the process? Where whole nations could participate?

It would need to be – IMO – a cryptocurrency (or more than one) with wide acceptance, ease of use, an international governance structure, economical, secure, and transparent under certain circumstances. (By that I mean, an objective set of published rules whereby the ‘coin’ would, under the circumstances outlined, provide identity information to third parties.)  Whatever else the cryptocurrency could add, given the needs and desires of the populace, would be up to them. Smart contracts. Machine to machine payments etc.

Naturally, the acceptable cryptocurrency would require scalability. In other words, be flexible enough to increase business in an efficient fashion.

Such a cryptocurrency, could become a new world reserve cryptocurrency, if it was not subject to the whims and laws of every separate bureaucracy – used a system of governance akin to Maritime Law – as has been suggested. It can be argued that Bitcoin is like this today.

This would be, as some have called it, the third stage in the evolution of cryptocurrency. And, perhaps, a stage in the re-development of a base or reserve monetary system, decentralized at its heart and beholden to its users, not its users’ users.

Efficient, secure, regulatable, sustainable and trusted, all based upon the original concepts of peer to peer networks. With the added benefit of creating a voluntary user base to extend the network.

Let’s face it, Bitcoin would be much faster if everyone connected and kept their computer on. But why waste energy? Why download the blockchain when cryptocurrencies like Cardano offer more efficient ways of participating – and obtaining PoS rewards?

The trick will be in the regulation. And how Cardano can manage what will certainly absorb much of their nest egg, that we the user must be willing to provide.

Can Cardano outpace Ripple and become a serious international player in short order?

Read between my lines.

 


The above should not be considered investment advice. It is solely the opinion of the author. The author who had DASH when it was wet behind the ears, Ethereum when the nerds were wrecking “DAO” havoc, Bitcoin too late and Aeon, at pennies on the dollar. Now it is the time for Cardano?


 

Cardano (ADA): Is Proof-of-Stake Unproven Tech?

Cardano (ADA): Is Proof-of-Stake Unproven Tech?

Updated November 20, 2017


Dear Cryptocurrency Enthusiasts,

Trust, trust, trust — or baloney?

In each other, we trust?

Trust, but verify…especially with cryptocurrency?

It seems that we have three developments occurring simultaneously, now — in the Fintech Crypto-World.

  1. Proof-of-Work (PoW) is moving to Proof-of-Stake (PoS).
  2. Public is moving to Private or “choice.”
  3. And governments are trying to regulate.

Did I tell you something you don’t know? I hope not.

PoW. It was the most trusted way to create and maintain a person-to-person (P2P) network. But what happened? Has the crypto-space evolved?

PoW has become labor intensive, energy hogging and increasingly centralized. Bitcoin, Ethereum, Litecoin etc. Ethereum is attempting to move to a PoS system or at least use some of its protocols. Really? Again, why?

Why was the PoS protocol developed in the first place? Peercoin, Blackcoin, Cloakcoin and others. Were there long term issues? Security disadvantages? They drew less power, were faster, but they were essentially a pre-mine. But they reward those who maintain balances – and help to secure the network, right? Reward with an ever growing supply of cryptos, unless that supply is fixed — which appears to be the plan for Cardano.

What were (are) the results of PoS? Marginal success. Can a new PoS protocol reverse that trend?

Peercoin, for example, had problems with their code early on. Their primary developer is anonymous. Cloakcoin has changed hands.

What was worse, these PoS coins were more vulnerable than PoW types – less secure. So, why is Ethereum attempting to move in that direction? Aside from the official reports, I mean?

Competition from Cardano?

We know Cardano was developed – at least in part – by a former Ethereum developer, turned Ethereum Classic developer/supporter. To, me, that smells of trust. That smells of new blood — underdog — PoS+ blood type.

But the underdog is only in name. Like Ripple, Cardano has removed the curtain to reveal that it too is willing, at some level, to cooperate with regulators. They are willing — and able — to compromise. If we look to Ripple, they are succeeding.

To roll back the blockchain, as Ethereum did, to stop one criminal – okay, one “advantage taker” – smacks of centralization. (See the DAO Incident.) At that juncture, no matter how benign a dictator, Ethereum lost its way. One cannot punish the whole, to catch one mistake.

So what stain does Cardano have? As a free market supporter, the stain is called compromise? Or is it realism.

In other words, Cardano is not seemingly attempting to create a separate cryptocurrency and/or protocol, as much as it is attempting to “get along” with the regulators. It wants to identify you, at least on one level. KYC — know your customer. The smart contract-currency platform that might be too smart for its own good.

And, in my mind, Cardano, unlike Ripple, wants you to participate. Game changer?

Ethereum Classic is “righting” the wrong of Ethereum. Still, the system – the protocol – is slow. It devours resources. Energy for mining. Power hungry.

So, what is the solution?

A PoS Ethereum, with new math: Cardano?

Here’s a recent opinion from Charlie Lee about PoS.

Now, we must decide. Do we trust the PoS? The pre-mine with a large chunk of coins held back for the “company.” Do we trust corporations? They act in their own interests, right? They must make a profit to survive, certainly. How much is enough?

And they are willing to share profits if we support the system?

Many cryptocurrencies are headed by corporations today. Mining warehouses keep many coins alive – corporations regulated by their respective governments. Of course, letting governments create cryptocurrencies will be a cluster-fork, of enormous proportions. But it’s heading that way today, in many countries.

Bitcoin’s reality is that it is managed by people with differing points of view, but they must come to a consensus to move forward. Hence the slow-to-change mentality. Is it outliving its usefulness? Some will tell you it has.

It seems that the move to privacy coins, created by unknown players, is an accident waiting to happen.  We need – IMO – the human factor. The “part” in the virtual machine that is not virtual. To service the humans who use the crypto. Or do we?

Privacy coins obscure their process, as to be non-auditable (or having a choice to audit), in a way that gives many the willies. Not because we want cash-like privacy, but because we wonder who else is using the protocol and why.

So, what can we say. Cash has no feelings. It’s just cash. True. But if you have the protocol to trace the bad actor and you don’t? What does that make you? An accomplice?

The one weakness in that cash-privacy crypto, one which you might hold on your flash-drive, is the customer service angle. If the currency “forks” and you didn’t update in time, what then? Get on Reddit and start complaining? Really?

Where is the “Complaint Department?”

Grandma likes to call people, right? The old school likes warm voices, emails to real organizations, faces to names. The old school lives and saves, on trust. Is Cardano that trust? The new Savings and Loan of Fintech Crypto?

And isn’t that what it’s all about? If we strip away the layers of protocols, unload the software, and just listen – who do you trust to keep your money? I’m not talking about playing the crypto-markets, drifting from one coin to the other, riding the emotion-horse. I mean, the bare-bones of it.

It is not the machines we trust, yet. It’s the people.

Isn’t that what it boils down to?

The fact that governments want to regulate may not be the best reason to flee into the “dark” coins. They will chase any entity that threatens the fiat empire. The darkness only eggs them on.

Regulations change because of force. What is the force of millions of cryptocurrency wallets, worldwide? It is a wave. A tidal wave.

Put your ship in the deep water.

A cryptocurrency that is backed (or less regulated by whole countries), will place pressure upon the bankers of old – the money-changers of the past. Especially, when it is trusted by people everywhere.

How would the empires of old stop that?

Can they, ICANN?

I don’t know if Cardano is the answer, but maybe they are onto something.


 

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