Tag Archives: bitcoin

Is Bitcoin Becoming Too Entrenched To Fail?

 In the analysis of things, there’s always this pseudo-intellectual tendency of subscribing to the seemingly ‘objective’ or safe bet. Ironically, this tendency is precisely what makes it difficult for people to perceive things objectively. To the pseudo-skeptic who is not skeptical of his own skepticism, Bitcoin is obviously ‘in a bubble’ and ‘it will be stopped by governments and banks’. This isn’t an objective perspective, it’s an appeal to the establishment’s power and capacity to crush any innovation that usurps its authority.

If we’re speaking objectively, the expected volatility will decrease over time and the legal framework around cryptocurrency suggests that governments and banks actually aren’t trying to prevent its use, at least not to the extent commonly implied. Instead, what we’re seeing is simply caution but positive reception to potential innovation.

Shifting Tides 

When Jamie Dimon, CEO of JPMorgan, said that Bitcoin is a fraud, he wasn’t met with applause. Instead, he was systematically attacked and overwhelmed with disagreement, even from the mainstream media.

New York Times: What Jamie Dimon Is Missing About Bitcoin
Forbes: Jamie Dimon, Here’s Why You’re Wrong About Bitcoin
Bloomberg: What Jamie Dimon Got Wrong About Bitcoin and Tulips
The Guardian: Don’t Let The Bankers Fool You: Bitcoin Here To Stay
CNBC: Why JPMorgan CEO Jamie Dimon Is Wrong About Bitcoin

Dimon was scrutinized by various sectors, from Zerohedge pointing out that JPMorgan’s ‘Bitcoin-alternative patent was rejected 175 times, his former head of global macro at JPMorgan telling him to “STFU”, media outlets reporting on JPMorgan handling Bitcoin-related trade, Dimon facing a market abuse claim over ‘False, Misleading’ Bitcoin comments, the CEO of Morgan Stanley refuting Dimon, saying it’s ‘not just a fade’, an analyst ‘firing shots’ at JPMorgan and Dimon for calling Bitcoin a fraud, etc…

What I’m getting at is simple. If Bitcoin is becoming entrenched enough to be systematically defended, it’s going to survive and it’s going to succeed. The more interdependent relationships, the more entrenchment into the lives of individuals and nations, the better. On that front, there are countless examples of Bitcoin and cryptocurrency becoming increasingly entrenched.

Escaping Failing Fiat 

 There’s a global shift into cryptocurrency, especially among countries with failing currencies. Specifically, Venezuela, Colombia, Argentina, UK, Belarus, Ukraine, Brazil, Germany, Egypt, and Russia, are all utilizing Bitcoin. In fact, in Venezuela, we could be seeing the first ‘Bitcoinization’ of a sovereign nation.

Legal Framework

The majority of countries allow the use of cryptocurrency, besides Bangladesh, Bolivia, Kyrgyzstan, and Ecuador. These bans aren’t exactly effective, either. In Ecuador, for example, use has growth despite illegality.

Use of cryptocurrency is legal and-or unregulated in Nigeria, South Africa, Zimbabwe, Canada, United States, Brazil, Mexico, Nicaragua, Argentina, Chile, Colombia, Cyprus, Saudi Arabia, Israel, Jordan, Lebanon, India, Pakistan, Hong Kong, Japan, South Korea, Taiwan, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Croatia, Czech Republic, Germany, Poland, Romania, Slovakia, Slovenia, Switzerland, Denmark, Estonia, Finland, Iceland, Norway, Russia, Sweden, Bosnia , Bulgaria, Greece, Italy, Malta, Portugal, Spain, Turkey, Belgium, France, Ireland, Luxembourg, Netherlands, United Kingdom, Australia, China, Lithuania, and New Zealand.

This idea that governments and banks will launch a systemic crackdown on cryptocurrency has no basis in objective reality, nor is it even remotely feasible. In fact, it’s actually absurd to believe such a thing because no technical legal consensus of that nature would ever manifest in reality across various nations systematically.

Most countries have already addressed the matter and just want to assure that it’s legally defined and properly regulated. Despite this, any regulatory motion is regularly viewed as the beginning of the big ‘crackdown’, even though most of it is to dismantle the ICO scams, which are a completely legitimate concern. It’s a possibility regulatory bodies eventually move against Bitcoin to an extent but even then, this won’t be the end of Bitcoin and it will not be regulated out of existence.  In the worst case scenario, Bitcoin suffers some significant losses due to other innovations and-or regulations but survives as a reserve cryptocurrency. Bitcoin’s status as a reserve is unlikely to go challenged for quite some time but even when that challenges comes, it will survive.

Mining

Mining has gone from the activity of enthusiasts to that of giant enterprise.

Recently, Abigail Johnson, CEO of Fidelity Investments, one of the world’s largest investing firms, said the company is actively mining cryptocurrencies.

In Japan, Tokyo’s GMO Internet Group is spending millions to develop mining operations. In short, these type of developments are happening all over the place.

In terms of state-level mining, various nations are already actively mining or developing the operations to. In fact, it’s being referred to as the ‘mining race’.

In Russia, an aide of Vladimir Putin is seeking $100 million to rival the former? mining dominance of China and in Leningrad, the governor is inviting miners to create an industrial park for cryptocurrency mining. Furthermore, powers generators in Russia are selling excess capacity to miners.

In Sweden, a Miami-based computing company is developing a major data center in Sweden to mine cryptocurrency. Smaller jurisdictions are developing mining operations, too, such as the Republic of Transnistria.

In North Korea, they are mining Bitcoin and targeting South Korean Bitcoin exchanges as a method to bypass sanctions. For good or bad, mining has even become relevant in a geopolitical context, so it’s actually becoming bigger than corporate enterprise.

Of course, I also want to address China. According to a trusted source, China has not banned mining and probably won’t. Regardless, the mining sector is growing fast and becoming a legitimate enterprise. If one nation decides to ban mining or exchanges, others nations will simply pick up its slack. That has already been proven with the recent developments in China and how Japan quickly obtained market dominance.

Culture 

The culture of cryptocurrency is absolutely dominating and the networking effect is propelling it forward faster than anyone could have imagined just a few years ago.

You’re actively seeing celebrities like Floyd Mayweather, KISS front-man Gene Simmons, Paris Hilton, Jamie Foxx, The Game, DJ Khaled, and more regularly promoting ICOs and cryptocurrency, in general. This isn’t necessarily good in terms of ICOs, as Andreas Antonopoulos points out, but in general terms of promotion of cryptocurrency, it’s a great thing.

In corporate, marketing culture, “Bitcoin” is the market’s favorite buzzword according to Bloomberg and Bitcoin Long is the most crowded trade, according to Bank of America.

Everywhere you look, cryptocurrency is becoming more and more recognized and understood. It takes time for cultural shifts of this nature to manifest into action, though. In time, we’ll begin to see greater shifts into cryptocurrency. If this seems unlikely, remind yourself that years ago, the current state of things seemed too seamless and improbable. Personally, I never expected things to go from such a niche phenomenon to where it is today. We can’t underestimate these things.

Other Developments 

I wanted to compile a big list of positive developments but every day, a new story, a new crucial development, was being covered. I decided to just give up on the list since it felt impossible to keep track of and just created a sample of recent developments instead.

White House Doubles Down On Commitment To Blockchain )

( US Bank Regulator Opens Door To National License For Bitcoin Firms )

( U.S. Lawmakers Drafting Bill To Protect Cryptocurrencies From Government Interference )

( W3C, Microsoft, Google, Facebook, Apple, and Mozilla Working On Browser API For Cryptocurrencies. )

( Japan Issues Licenses To 11 Bitcoin Exchanges )

( IMF’s Lagarde: Bitcoin “Might Give Existing Currencies A Run For Their Money” )

( Two ETF Submitted For SEC Approval )

( Gold Companies, Even Former Nay Sayers, Are Beginning To Embrace Cryptocurrency. Likewise, As Are Some Jewelry Companies. Some Gold Companies Want To Use The Blockchain For Gold Trading / Verification )

( BRICS Considering Cryptocurrency As Alternative To National Currencies )

( Japan Is Pushing Bitcoin Into Retail Use )

( Putin Is Interested In Ethereum )

( In Chiasso, Switzerland, you can pay taxes in Bitcoin )

( Miami real estate will embrace Bitcoin )

( Five Leading Russian Universities Offer Cryptocurrency Courses )

( You’ll Soon Be Able To Pay Rent In Dubai’s City Walk With Bitcoin )

Clarification 

Obviously, this article could appear as mere confirmation bias. It’s not. In the crypto-world, everyone’s always aware of resistance and regulatory struggles.

Despite projections of a dramatic crackdown, in which the whole ‘bubble’ bursts, there actually hasn’t been that much resistance and the upper echelon of governance and banking doesn’t seem hostile to the overall development of these things. In fact, most governments and banks are experimenting with blockchain technology and only seem cautious about decentralized currencies but not hostile to them. Even in such a scenario, there isn’t much governments and banks can do to stop it.

A major part of this misconception about the willingness of governments and banks to accept cryptocurrency has stemmed from China. A big portion of FUD regarding China was fabricated intentionally and perpetuated by people’s own ignorance of the Chinese government and how it operates. While it’s possible a few governments will behave similarly, it’s incredibly unlikely that most will. In Japan and the U.S., for example, you can expect a more measured and positive approach that will ultimately be beneficial.

In my perspective, the actual threat to Bitcoin is the acceptance of another cryptocurrency for widespread use, not regulatory actions taken against it. Even then, Bitcoin could still succeed as a store of value.

The Dark Ages of Banking & The Crypto Reformation

 In ancient times, the intermediary of control was the proper understanding of astronomy for prosperous agriculture and consequently, the perceived divinity of individuals with a connection to the ‘heavens’. This slowly transformed into an intermediary of mythology and subsequently, the type of dogmatic religious centralization that destroyed the Serapeum and Library of Alexandria.

Eventually, religious dogma began to fail and monetary machinations began to substitute its central authority. The debasement of precious metals, which greatly contributed to the fall of Rome, is an example of these type of machinations and the danger of their centralization.

 Business Insider

 

The Age of Reason freed us from the central authority of the church but the banking system was already patiently waiting to become the be-all-end-all of intermediary control. The banking system became more centralized over time, and eventually, most currencies were no longer backed by precious metals. To be fair, there are major issues with gold-backed currencies and that’s why Ben Bernanke wasn’t necessarily wrong when he said gold isn’t money when Ron Paul infamously asked. Ron Paul isn’t wrong either, the printing of money out of ‘thin air’ is a problem. We need something of more substance but with easy circulation, valueless fiat will not suffice as currency in the long-run. In short, it’s the modern form of debasements of metals, except it’s all digital.

( Recently, Ron Paul said Bitcoin could contribute to the destruction of the U.S. dollar supposing the FED causes a panic, prompting people to seek alternatives to the dollar such as Bitcoin. Paul has also commented on Bernanke’s positive outlook on cryptocurrency as money rather than gold. Ben Bernanke will be a keynote speaker at the upcoming cryptocurrency Ripple event. )

The banking system is the ultimate centralization of power for the currency of any given nation is the necessary intermediary of manifestation and under the banking system, that fiat currency is not subject to protocol nor restricted from commodity-backing. Fiat currency can be inflated or deflated at any time. Banks dictate the value of your dollar, your purchasing power, wealth, and prosperity or lack thereof. A stable cryptocurrency, which is definitely within the realm of possibility, is the solution to that problem. Bitcoin could fail to fill that role due to scaling or regulatory issues but the concept and its economic system are sound.

The Central Bank of Finland has researched the Bitcoin infrastructure, the authors of the paper have dubbed Bitcoin’s economic system ‘revolutionary’, and stated the following:

“Bitcoin is a monopoly run by a protocol, not by a managing organization. Familiar monopolies are run by managing organizations with discretion to determine and then change prices, offerings and rules. Monopolies are often regulated to prevent or at least mitigate their abuse of power.”

“Bitcoin cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts”

BIS ( Bank for International Settlements ) has also released a paper, this one is regarding the creation of Central bank cryptocurrencies. It argues in favor of their creation, citing various use cases. This is one of many papers,  one of many entities researching cryptocurrency and blockchain potential. In fact, some are actually releasing good open source variations but most are focused on privatized and centralized developments. Overall, we see a ton of research and development accumulating and yet, nothing that’s discrediting the decentralized cryptocurrencies that are already available to us today. There is no reason to assume nor any evidence to suggest the Bitcoin Core Team, for example, won’t continue to make progress.

History Repeats Itself 

 In 1440, the ‘Gutenberg’ printing press was invented. It rapidly spread across two hundred cities, eventually spreading further, printing an estimated 150–200 million volumes in the 16th century. The printing press lead to an era of mass communication, altering the structure of society. Since the printing press outpaced the capacity for individual persecution, new and revolutionary ideas crossed borders, upset religious authority, created reformation, and broke the literacy monopoly of the elite, allowing the middle class to learn and prosper. If it were not for the printing press, perhaps no Renaissance, Reformation, Age of Reason, and Scientific revolution would have occurred to lay out our modern knowledge-based economy.

The age of banking and its economic authority are staring down the barrel of reformation and like the church, it’s attempting a counter-reformation. Instead of accepting and supporting decentralized cryptocurrencies, which would free the individual from the grips of fiat intermediaries of control, big banks want to create their own centralized and privatized cryptocurrencies to maintain the status quo. Of course, some of these banking entities are seeking genuine improvement but most are only offering resistance where there should be none, clinging to their power and control as the great intermediary.

Prediction

Blockchain technology will reshape the financial system just as the last Global Trends report indicates.

 “New financial technologies — including digital currencies, applications of “blockchain” technology for transactions, and AI and big data for predictive analytics — will reshape financial services.” ( pg. 15 ) Global Trends — Paradox of Progress, National Intelligence Council, under auspices of the Office of the Director of National Intelligence

The banks that don’t introduce cryptocurrencies will become dated and fail in the long-run. The ones that do probably won’t be able to before the decentralized cryptocurrency ecosystem takes root and renders it mostly irrelevant, although some will likely succeed in the interim.

There won’t be a major consensus among banks. Various banks will implement differing cryptocurrencies, some will group together and others won’t. Some banks will succeed, many could fail, and the ones that do succeed will make major alterations to their structure and business role in the long-run to remain relevant.

Decentralized cryptocurrencies will outpace central authority no differently than the printing press outpaced the individual capacity of the central authorities of the church to persecute supposed heretics. The Dark Ages of Banking will end, the Crypto Reformation will begin. From there, we’ll shift into a new age, a new Renaissance in financial terms. This is a long-term projection of what could transpire. In the mean time what we’ll see is a battle between state-backed crypto in contrast to decentralized crypto.  Even this compromise has a lot of potential for the reworking of the financial system, in which people are more empowered to make beneficial changes. In reality, this all boils down to the people and what they allow to happen. If people are passive and allow the same monetary machinations of old to succeed over the sound economic systems and innovations available, then it rests on their shoulders. Ideally, the people push for this new wave of innovation, allowing it to thrive and succeed.

Iconic: Federal Reserve Employee Used FED Computer To Mine Bitcoin

It’s incredibly iconic that an employee of the Federal Reserve, of all places, was caught mining Bitcoin with their own property.

“A former Federal Reserve employee was sentenced Friday to 12 months probation and a $5,000 fine after pleading guilty in October to installing unauthorized software on a computer server at the U.S. central bank.

Nicholas Berthaume, who as a communications analyst had access to computer servers at the Fed’s Board of Governors in Washington, installed software that connected to an online bitcoin network in order to earn units of the digital currency, according to a statement Monday from the central bank’s Office of Inspector General.

Berthaume also “modified certain security safeguards so that he could remotely access the server from home,” the statement said. When confronted, he tried to cover up his actions by deleting the software; eventually he was fired and admitted guilt, the office said. His actions didn’t result in the loss of any Fed information, and the board has enhanced security since the incident, the internal watchdog said.

Rebecca LeGrand, a lawyer who represented Berthaume, did not immediately return a request for comment.

Bitcoin is a software protocol for issuing and moving money across the Internet. New bitcoins are earned, or “mined,” by people who lend computing power to the networks that tally and certify transactions made using currency.” – Bloomberg

National Intelligence Council Report: Positive Outlook On Cryptocurrency

The National Intelligence Council releases a global trends report every four years following the U.S. presidential election. This post-election report, Global Trends: Paradox of Progress, reflects a positive outlook on cryptocurrency.

Of many concerns the report discusses, ranging from terrorism to ‘gray-zone’ warfare, cryptocurrencies are not one of them. Instead, it acknowledges that “New financial technologies— including digital currencies, applications of “blockchain” technology for transactions, and AI and big data for predictive analytics—will reshape financial services“. ( Global Trends: Paradox of Progress, pg. 15 )

The technological forecast and geopolitical conditions implied by global trends indicate that it’s a good time to invest in cryptocurrency and gold.

Cons

Global trends indicate rising tensions within and between countries, weak economic growth, shrinking workforces, increased competition for good jobs globally, potential reductions of open trade, the increase of terrorism and disruptive groups, an increase of gray-zone warfare, clean drinking water shortages, etc.

Pros

Individuals will be more empowered with new technologies, the world will be even more interconnected and have greater access to information, governments will be forced to be more transparent, biological enhancements will improve and prolong human life and challenge what it means to be human, reduction of monopolized and centralized institutions will free individuals, groups and individuals will be able to bypass traditional systems to create changes faster, many governments, including the U.S., will become more decentralized, and economies will become more diversified.

Bitcoin Hits $1,000 January 1st 2017

The projections of Bitcoin hitting 1,000 by late 2016 to early 2017 were spot on. Bitcoin hit 1,000 today, January 1st, 2017. This time, it’s different, though. The overall stability of Bitcoin has increased by a very substantial margin and will continue to increase with time.

The price of Bitcoin is still subject to volatility until it completes the S-curve of adoption but the future of Bitcoin is looking very promising. This is another great milestone for Bitcoin.