First time poster here, though I’ve been a PP member for a while. Having worked as an electronics engineer for IBM, I embrace the basics behind Bitcoin and understand the issues associated with internet function that DaveFairtex brought up. A year ago, I put a sizable many thousands of USD into BTC, ETH, and some of the more attractive smaller tokens (LNK, NMR, RCN, etc) so I have skin in the game.
So my question is, let’s say that the Fed comes up with their FedCoin and then declares that all transactions conducted within the US on exchanges such as Coinbase, Gemini, Bittrex, etc are now limited to the only “approved” coins, namely FedCoin and a USD Tether token.
What options would I have in this scenario, assuming I can’t travel outside the US, in using my other crypto if this edict were put into place? Would I have to swap my other cryptos for FedCoin if I want to salvage what I have? Help me out here, please.
Thanks!
@JimboJim The truth is that we don’t know what happens in the scenario you painted. If the government follows historical precedent they’ll give us a grace period to get out of unapproved digital currencies. But if they want to punish those who had the temerity to get into crypto in the first place, they’d lock it right down and tell us to go cry blood.
If the only legal option is a limited set of coins, you have a choice to make about whether to be an outlaw. It’s very likely black market exchanges would emerge, just as has happened in China. The risks and costs would be reflected in the premium.
Let me point out, though, that similar scenarios can be outlined for cash, too. Or for precious metals. Basically, you are pointing out the reason to distrust government. We all live under that thumb, hoping it won’t press down on us in a way that hurts us according to how we’ve allocated our excess wealth. (One more argument for owning arable land outright.)
The only questions we can ask are questions around probabilities. I’ve heard gold bugs say the government will never again outlaw gold because they did that and in the end rescinded it. Personally, I don’t see how that provides any inoculation against a repeat of that particular virus. At least, not in absolute terms. I do agree that the probability is low, but that’s because we are not on a gold standard, haven’t been for a long time, and the Fed doesn’t see gold as a threat to dollar hegemony.
Some of those same people have said in the next breath that cryptocurrencies are subject to declarations of illegality because they’d compete with a new government-sanctioned digital dollar right at the time the government is trying to get its new digidollar up, running, and widely adopted. Could happen; who am I to say otherwise? Autocrats do autocratic things. But I note Venezuela could not make its national digidollar stick.
I do think that the window for making cryptocurrencies illegal has been ratcheting closed steadily over the last few years. The fact that Wyoming passed a comprehensive legal structure to incorporate crypto as money into its law, and to authorize a new banking charter for crypto custody in special depository banks, and that other states are looking at the Wyoming law as a prototype, and that the Federal government has also started looking at that law for guidance, and that the first bank under the new law regime has just been chartered with at least one more to be soon approved (both banks will be able to operate nationally) - all of means that the diverse cryptosphere is becoming integrated into the US domestic monetary regime.
It also matters that two large companies (Microstrategy and Square) have made big public news with their purchases of Bitcoin. In addition, we know that several hedge funds have taken large BTC positions, and we know pension and retirement funds are salivating over the prospect of earning some serious percentages for their client retirement accounts to make up for the lackluster real performance of equity funds and bond portfolios. The more we see significant corporations and (sometimes desperate) financial firms add crypto to their portfolios, the less tolerance Big Money will have for Washington DC trying to shut down the cryptosphere - and because they pay the re-election bills they get heard.
These trajectories run against the notion that the US government will try to shut down competitive money. More likely, they’ll just try to manage it. But they’ll be restricted in that regard by the appetite of the big money institutions who will insist on the ability to earn and keep some necessary percent of gains.
Is all of that, or any of it, a guarantee? Certainly not. Autocrats autocrat. But every day the government doesn’t drop the hammer on cryptos means the odds they will - or will successfully - recedes.
The other issue is enforcement. Even China has had trouble enforcing her bans. In fact, it’s schemes like coin banning and social credit-affected finance opportunities that encourage and stimulate grey and black Chinese markets for, esp, BTC. Similarly, it’s as Venezuela and Brazil faced massive devaluation of their native currencies that locals turned to crypto exchanges, sometimes illegal exchanges, to preserve their savings. In such places and times the exchange rate might soar, but it’s always a better deal than watching one’s savings melt away under the heat of 50% inflation.
So, for me: I judge the odds of an outright ban to be slim and moving further away. I think the likelihood of taxation on gain at the point of sale (whether to buy another coin, or to move into fiat) is very likely. I expect crypto to be taxed like a commodity. I also expect gains on the investment of cryptos to be taxed like any cash investment gains.
You have to make your own assessment of the probabilities of such an event and the options you’d be willing to consider if it should happen. Ditto regarding your precious metals holdings. 'Cause, who knows?
DaveF said,
Put differently - if I had 10 billion dollars per year to spend 0n my top secret project focused exclusively on crypto - do you think I might be able to advance the state of the art a bit more rapidly?They will try, but there is so much venture capital and non-secret governmental investment going on that my outlook is that we should ask the question again once we see the dawn of useful semi-scaled NISQ machines. One of the interesting dynamics now is the realization that the early QC innovators; IBM, Google, and Rigetti placed all their bets on the wrong (qubit) horse in pushing ahead with cryogenic qubits. This technology has been a good proving ground for quantum computing, but it appears to not be readily scalable - so there is a discontinuity now while alternative qubit technologies with better fundamental properties emerge. This excellent three minute video from UNSW pokes fun at cryogenic machines while talking about their Silicon qubit program; https://www.youtube.com/watch?v=UhYBANLcwqk Alternative qubit technologies are coming to the fore - Honeywell just showed that with only six ion trap qubits, they can run programs of equivalent depth to IBM's 27 (cryogenic) qubit system, and this is a testament to the improved coherence and lessened thermal noise sensitivity of the ion trap system; https://www.newscientist.com/article/2246940-honeywell-claims-it-has-built-the-most-powerful-quantum-computer-ever/ https://newsroom.ibm.com/2020-08-20-IBM-Delivers-Its-Highest-Quantum-Volume-to-Date-Expanding-the-Computational-Power-of-its-IBM-Cloud-Accessible-Quantum-Computers Again, these are toy computers compared to what we will need to do real phase 2 work. The point is we are seeing fundamental innovation at the qubit level now, and I think it will be obvious that we are off to the races soon. My personal opinion is that Ion Trap machines will likely be the first to offer useful levels of scale and performance, i.e. getting us to phase 2... but they may not get us to phase 3. Universal Quantum computing, a UK-based startup, has an outline of what a scaled ion trap system would look like; https://quantumzeitgeist.com/5-promising-quantum-computing-companies-from-the-uk-to-watch/ https://universalquantum.com/ Another space to watch is research relating to what are termed, "Majorana" qubits. Microsoft has placed their bets here, but we still don't have even a single working qubit demonstrated publicly.. but the theoretical attraction is great since it theoretically would have very long coherence times; https://physicstoday.scitation.org/doi/10.1063/PT.3.4499 Again, the gap between what we have seen published in terms of qubit research and toy computer performance, and what a government would need to break cryptography, is too immense a chasm now IMO. The large amounts of corporate venture capital flying around into QC startups helps to keep the status of progress at least a little bit more transparent. The next decade will be very interesting for those watching quantum computing.
VTGothic - Your analog with the same potential existing towards precious metals as with cryptos is an apt comparison. Your examples help me assess what kinds of risks to weigh in order to make informed decisions.
Thanks!
Jim-
Thanks for the detail - it sure does sound like there’s a fair amount of money floating around the space.
Do you have a sense as to how much?
And this may be a bit of a longer-odds thing - but if you had some partially-functioning hardware from … say … a spacecraft and you were able to closely examine it for … say … 70 years, might that speed the research process? And/or eliminate some of the dry holes?
Every now and then I’ll see something on MSM where they talk about UFO disclosures; the latest snippet involved examination of some metal fragments that have a very unusual atomic structure to them.
https://www.thewrap.com/tucker-carlson-its-outrageous-the-government-is-still-hiding-evidence-of-ufos-video/
USG has allegedly had these bits and pieces since 1947. Maybe it has been helpful in speeding the pace of US tech development.
Many people have ‘closed minds’ and seem to be asleep?
My mind was awakened after viewing the following plus other videos:
IBM SUMMIT Computer Size of football field
GOOGLE QUANTUM Computer size of refrigerator.
Digital Asset Invester @ 11.25.and 12.47 time stamps
https://www.youtube.com/watch?v=suBvVW3L2GQ
2.40 & 43.26 Timestamps
glenn beck ep 60 jeff brown google quatum computer
Executive Order 13772. Donald Trump Photo
https://entertainmentheat.com/donald-trump-and-executive-order-13772-ripple-ledger-x-and-faster-payments-taskforce/
STARLINK - No of satellites being manufactured = 120 /month.
STARLINK launches = 12 so far. Average 60 per Falcon 9 Launch. 775 so far.
12,000 to 40,000 planned?
Some satellites being de-orbitted from LEO Low Earth Orbit. Design change sunshade etc.
As a matter of fact I do have that Dave! I gathered some data manually late last year because I wanted to see what the year-over-year growth was relative to the previous years… here is the chart I put together as a result, building on a 2018 chronology of same;
I appreciate all the comments and explanations, even those that were delivered with religious fervor :-). Special thanks to davefairtex for identifying potential risks.
I’m trying to sort through the risk / reward of Bitcoin as compared to other hard assets (PMs, farm land, rental properties). The more I learn about Bitcoin and the underlying technical design decisions and limitations, the more I feel that Bitcoin is indeed closer to digital gold than I wanted to admit, but for a DIFFERENT reason than I initial thought.
Bitcoin’s implementation of a blockchain, relying on proof-of-work, was revolutionary 10 years ago, but is already very dated. There are multiple problems with it, which can be either seen as a feature or a bug.
E.g. it takes 10+ minutes to reach consensus finality, and even then it’s never 100%. You just get closer to 100%. The heavy reliance on energy is actually a feature - the network needs to be slow to validate a block - otherwise things end up in chaos. There is no way to fix it directly with Bitcoin. A second layer on top of Bitcoin will actually make Bitcoin like a digital gold reserve. Also, at the point when there will be no more new Bitcoins mined, transaction fees need to be implemented to keep the network going.
Therefore, from a purely technical perspective, there are already much better solutions. (For nerds, check out Hedera Hashgraph, a proof-of-stake based, very fast, public distributed ledger system that is asynchronous Byzantine fault tolerant, and reaches finality in seconds.)
The myriad of alt/sh!t coins show that the barrier of entry is low, but the barrier of success quite high. What makes Bitcoin strong is the existing user base, and the “faith” in the system. This can not just be usurped by better technology. Very similar to gold.
If indeed institutional investors start pouring into Bitcoin, followed by large corporations, the supply-demand equation alone will catapult Bitcoin up. But this hinges on one big decision: governments deciding to “milk” Bitcoin via taxes, rather than trying to stifle adoption. If governments were to disallow conversion from Bitcoin to fiat, it would mean no institutional investors, and no adoption by corporations. Bitcoin would remain a fringe medium of exchange / store of value. The moonshot can not be achieved in that scenario.
The quantum computing risk as outlined by Dave comes on top.
For now, I will remain overweight on gold. Gold has a track record of thousands of years. With Bitcoin, it’s too early to tell if it will be around in its current form in 20 years. SOME form of currency based on a distributed ledger system will surely be around. But betting on the earliest horse might prove premature.
[embed]https://youtu.be/5zIGGdNFH1k[/embed]
Is not energy the ultimate currency? then bitcoin would be the advertising mechanism, no?
“Cash is Trash” Ray Dalio
Raoul Pal " He and The Wealthy out of cash and into Bitcoin. Raoul even considering selling his gold to buy Bitcoin"
https://www.youtube.com/watch?v=qwHI6OC3rc8
Interesting Information:
513,542 BTC appear to be held by just 8 Companies
https://www.youtube.com/watch?v=CUSw1QXFNaQ
I have read elsewhere that many of the top Wealth and Investment Funds are invested in Grayscale. e.g. Rothschild = $1.4B
BITCOIN takes minutes to hours to mine and LOTS of electricity. = NOT GREEN
but store of value?
XRP transaction takes 3 to 5 seconds and costs cents $ = FUNCTIONALITY
Expression “Watch what they do as well as what they say”
My thinking is to DIVERSIFY into a handful of CRYPTO which appear to have purpose.
Investing in companies (Stocks) that also trade in CRYPTO may also be beneficial??
Actually, there are some interesting projects that consume way less energy, scale better, cost less when transferring monoy, and are actually more distributed than Bitcoin. Let not forget that Bitcoin was a proof-of-concept, and as such very important, and most likely to stay with us for a long time. Yes, I do have some Bitcoin in my cryptoportfolio, I’m no fool, but the majority consists of energy friendly, exiting “new” projects.
Dave
@dreinmund
Good analysis on the fundamentals of BTC and its value proposition. I trust your comment "for now I will remain overweight on gold" implies you have some exposure to BTC also? Given your grasp, that would be prudent.I’m in the process of setting up crypto accounts and cold storage wallets. I will probably stick to BTC and ETH, with some HBAR as a technology optionality on a better “blockchain”.
Just as an FYI to everyone that’s not active in the space yet - if you live in the US, and you want to buy crypto, it’s almost impossible to do it anonymously - everything I looked at has KYC requirements that will ask about some from of identity confirmation.
anonymous is not the point of bitcoin. security is. bankers and robbers have had quite enough fiat anonymity for a few centuries don’t you think. are you a banker? paradoxically, if one wants to truly possess bitcoin one must accept the responsibility of being your own banker. if not then one can have a claim on bitcoin held by an intermediary, custodial banker/exchange. Soon, all surviving banks will have the bitcoin option added to their menu of services, like USAA currently does (lucky veterans and active duty!) but then you will not have changed your relationship to money at all. or have you, moohahahaha! happy hollow-ween.
“But it’s no use now,” thought poor Alice, “to pretend to be two people! Why, there’s hardly enough of me left to make one respectable person!” —Chapter 1, Down the Rabbit-Hole
“If you don’t have the keys, you don’t have the coin” – Andreas M. Antonopoulos
Legarde ECB - Confirms Central Banks working on Digital Currencies! FINANCIAL RESET coming. Could Ripple XRP be the ‘BANKING BRIDGE’?
XRP is designed as Banking Bridge and to provide “ON Demand LIQUIDITY”
XRP is designed under ISO Standard 20022 and mentioned in IMF documents.!
https://www.youtube.com/watch?v=c7S3HPIQHfk
https://www.weforum.org/whitepapers/central-bank-digital-currency-policy-maker-toolkit
XRP looks like the Gold Standard - Banking Payments?
Stellar XLM (Very Quiet Hush Hush!)- looks like Silver Standard - Small payments?
Where does AMAZON fit in?
Starlink System - 5G Internet for ALL - Also Linking the Unbanked and Underbanked?
The 4 th Industrial Revolution?
BITCOIN as a store of Value - Prudent Diversification?
Last week Armstrong’s private blog said the ECB is ready to launch a digital currency and the ideal date was January 1, 2021. For those with lots of time on there hand, here is a link from that post:
https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf
It does appear that this is ‘for all the marbles’ (h/t Dave) and the stars have aligned to utilize a digital currency squeeze the last drop of blood from the common folk. I also get the sense that Revelation is playing out before us - no one can buy or sell unless he has the mark of the beast.
The you tube in the previous post (#55) is really good. Christine Lagarde is pure evil.
RHuk and Nate - thanks for the interesting info.
I have in the past at PP posted links from articles on a website called Philosophy of Metrics (POM), where there were many extensively and well researched articles about the SDR and XRP. The site owner appears to have taken a break from producing his often esoteric articles but what he has written in the past few years is still highly relevant, and his predictions quite accurate.
This is the link to many of the SDR-XRP related articles, for those who are interested.
Here is some of what he wrote in the 2018 article titled ‘XRP Will be the Dominant Monetary Asset of the World’:
"... I had always considered that the SDR of the International Monetary Fund would be used as the global reserve asset in place of the dollar. It is an asset which no one nation controls. But with the growth of blockchain and the crypto market, we can see that Ripple’s XRP is being engineered for this purpose. Already the Bank of England, the Federal Reserve, and the Saudi Arabian Monetary Authority have partnered with Ripple on test projects, among a host of other banks, like RBC, TD, and a 61 bank consortium in Japan. The XRP interledger will connect all other ledgers, whether fiat or crypto. The interledger will be truly decentralized and not controlled by any one nation, bank, or institution, including Ripple themselves. It is something all nations can agree upon and use, as XRP transactions take 3 seconds and cost fractions of a cent. Compare to SWIFT which is expensive and takes 5 days. Central banks will likely begin this year diversifying their foreign exchange reserve accounts with the top crypto assets. The rush for regulation is creating volatility in the first phase of the crypto market, but will allow for massive institutional money to enter during the next phase. Nothing in its digital version has failed. This will be the same with money. Fiat currencies will be replaced over time with their crypto versions. The world is truly on the edge of a fundamental change. The internationalization the yuan is just one. The developing cross-border payments function of Ripple XRP, and the emergence of the whole new industry of micropayments it will allow, will create competition and a new level of ingenuity which we can only imagine right now." ...For the crytpo keeners, I highly recommend reading this guy's stuff. I do believe that the Covid-19 crisis provided the opportunity they wanted/needed to capitalize on to roll this out. Whether by accident or design, who knows. I see massive changes coming at us hard and fast. We are being further corralled into a global system with dystopian characteristics. There is not much we can do about it except educate our selves and try to be a bit ahead of the curve to help with personal decision making. Jan
XRP is total bullshit. Is it crypto? Yes is it decentralized? No. Jeb McCaleb is still selling off his millions of XRP. Will it be the foundation for central bank digital currency? I certainly hope so. Then the bullshit will be out of the space and people interested in freedom can get on with it.
Jan said,
I see massive changes coming at us hard and fast. We are being further corralled into a global system with dystopian characteristics. There is not much we can do about it except educate our selves and try to be a bit ahead of the curve to help with personal decision making.The severity of the police state crackdown on folks who don't comply with Covid mandates in places like Australia, UK, CA, and NYC (think Hasidic community) are hard to stomach. We are in a new era of authoritarian rule. My outlook is that the outcome of the US election will determine whether this process is allowed to come to complete fruition, or not. It's really up to us in the US - I do think that we have a chance to turn this around and reverse the process. Here are the choices as I see them; 1) BLM/Marxist/Woke/Critical Race Theory vs MLK's classic anti-racism vision and meritocracy (I will be writing much more about this as we approach the US election) 2) Captured statist propaganda news vs a Free and reasonably neutral Fourth estate 3) More Neocon War mongering vs ongoing Peace initiatives 4) Dependency and Statism (socialism/communism/Marxism) vs Freedom and primacy of individual rights I am sure many folks here could add to my list - it's not exhaustive. By drawing a comparison, I am not suggesting that the US constitutional/capitalist model is perfect... there is much work to be done. And yet, the progress that we have made in terms of equality with regard to race/sexuality/ableness have all moved forward dramatically in my lifetime. We are not done but the US constitution has proved supportive of continuous progress. We need to have honest conversations about how to really address homelessness, our continuing inability to root out bad cops, and the true costs of our footprint on the environment. There's more of course, but we are not going to have these conversations if we are no longer free. If you think the NGO's of today like the UN, and the WHO, have the solutions you have not been paying attention.. these are just captured, globalist institutions intent on subverting the US Constitution. At least 100 million people died during the last century as authoritarian regimes imposed various "solutions" on their populations. If you think it can't happen again, you are being naive.