The Endgame for Cryptocurrency
liuliu.me
liuliu.me
Anyway, governments can't really stop people from using Bitcoin. It will eventually lead to governments losing their ability to fund themselves with inflation and violence, and they are forced to fund themselves with taxation. This way Bitcoin takes power away from governments, and the endgame will be that governments will have to adopt Bitcoin standard and use bitcoin as their reserve currency. Whoever does it first, wins.
El Salvador already did it. Feel free to move there.
Meanwhile, there's no chance Bitcoin will be that reserve currency. But then again I've been wrong about Bitcoin's trajectory for 12 years now
This makes literally no sense except from the perspective of people shilling their investment.
The future of global trade is through regional bancors which are not currencies at all. There is no need for a "reserve currency". Such a thing only made sense from the perspective of a single nation that won world war 2 and dominated the world economy at the time. From the perspective of the entire world it never made any sense.
> There could be alternative scenarios that cryptocurrencies succeed without the United States. Central operators need to grow to be powerful transnational entities that have controlling shares in commodities and other life essentials globally, potentially have their own enforcement militias to maintain such hegemony. This scenario has been explored in other anarchist’s readings extensively since the 1980s (or earlier). The problem, of course, is that such a transition of power takes time.
Powerful authoritarian governments definitely can stop people from using Bitcoin. At least right now in China, it is difficult to do BTC / CNY pair (yes, there are black markets, but the depth is limited as any black markets). There are two ways: 1. damaging the network by deep packet inspections to avoid consensus from converging. China had many successes with GFW on this. 2. jail people who do P2P exchanges (usually with anti-money laundary cover) by claiming the CNY they end-up getting are tainted (from criminal activities). There are reports on this in mainland China already.
It has almost nothing to do with anarchism, other than restricting the power of governments, and fostering collaboration instead of coercion. It'll return responsibility to governments.
There could be an anarchist shadow economy, if governments banned Bitcoin, but I'm not talking about that. It makes economic sense for governments to adopt bitcoin instead of fighting it. In democratic countries, there's no way to legislate the banning of bitcoin.
It is difficult to exchange USDT to USD? Democracy is needed for the success of blockchain? The decline of USD is in stablecoins’ best interest? The author seems to be making all these claims, but the reasoning is going way over my head.
As such, it’s par for the course for the cryptocurrency discourse which, from the early days of Bitcoin, liked to think of itself as valiant underdogs fighting the USD. Lurking behind that thinking are various conspiracy myths of who, exactly, is using that currency‘s power for what. If in doubt, just let them talk for five minutes, and see if they mention the FEE being “a private bank”.
One would have thought people notice when reality doesn’t conform to their expectations. The world’s governments never tried to stop Bitcoin, but instead, for the longest time, either ignored it or reacted with mild bemusement. Only when people started to expose themselves to fraud risks en masse did they reluctantly try to curb the worst excesses.
You know, like governments not beholden to shadowy cabals would do.
USD and Bitcoin are "slow money" or "scarce money" depending on what you want to call them. The velocity of money keeps going down or the supply doesn't go up to counteract the slow down in velocity, which is something that is incompatible with a real economy. It's especially incompatible with positive interest rates. So what happens is that people stop working.
The only difference with Bitcoin and USD is how the money is created. With USD banks grant credit (bank money). With BTC miners literally just print money out of thin air and pay themselves, but note, there is a BTC economy and 99% of it consists of printing money ahem mining. Bitcoin itself proves that creating money isn't necessarily a bad thing. However, what it gets wrong is that the flaws aren't about how money is created, it's what is done with the money after it is created. People hoard USD on bank accounts or as cash with a guaranteed risk free 0% return even when the real economy has declined. So now the dollar is competing with the real economy for capital. People abandon the real world in favor financial games. Does that sound familiar? It's the exact same thing with Bitcoin. Bitcoin's value goes up faster than the real economy can catch up, so people will accumulate Bitcoin to get those "above real economy" returns, while abandoning the real economy.
Really, the biggest difference is that the USD is legal tender. In practice people wouldn't accept such extortion from the remaining holders of USD and issue their own "fast money" with a constant velocity of money built into it. That money isn't Bitcoin. There are hundreds of regional currencies around the world.
That said, his whole premise is flawed because the independent judiciary in the US is strong and tens of millions of US citizens own crypto. A total ban IMO would be unconstitutional although certainly the relationship with the banking system could be constrained. There is political force and legal force helping keep crypto allowed in the US. We saw the power of the crypto lobby during the infra bill.
That's the point I am trying to make in this essay:
> Now, there is no willingness to regulate as long as the market is high and people make money.
If the point is not clear, I guess that's why it is poorly-written :)
There are no cryptocurrencies. There is Bitcoin and there is noise.
To decouple from USD (or USDT / USDC), you need to price things (commodities and life-essentials) with "true" cryptocurrencies, no matter it is PoS, PoW or autonomous stablecoins (as oppose to USDT / USDC, which are centrally-controlled).
The lack of imagination... There are lots of exchanges that let you buy and sell Bitcoin with fiat directly without USDT. Everyone will buy Bitcoin with USDT, then immediately sell for USD. The price of Bitcoin measured in USDT will go up and measured in USD will go down. The "peg" will be broken through this "black market" (from the perspective of the tether organization).
Whenever there is capital control, there will be "black market". The question is about depth and whether enough depth to influence the price everywhere.
The scenario you describe is a liquidation crisis for cryptocurrencies at large (everyone runs to Fiat). This certainly can happen, but needs a equivalent size of a trigger.
That’s a tall order. We don’t have that for people lol how would it happen for magic math money? It’s hard to maintain hegemony without imminent threat of violence so how could something 100% dependent on the internet somehow overcome the constant threat of state violence using the internet that the violent states regulate and control? You’ll need a crypto-military to impose the will of this global crypto hegemony.