Tag Archives: Bitcoin

Can Governments Stop Bitcoin? by Alex Gladstein

Governments probably can’t stop Bitcoin, and some of them may not want to. From Alex Gladstein at quillette.com:

Since its creation more than 12 years ago, Bitcoin is undefeated. Its price has leaped from $5 to $50 to $500 to $5,000 to now past $50,000. The number of global users has eclipsed 100 million. The system’s network security, number of developers, and new applications are at all-time highs. Dozens of companies including Tesla and Square have started to add Bitcoin to their corporate treasuries.

This worldwide success doesn’t mean that people haven’t tried to stop Bitcoin. The digital money project has in fact survived a variety of attacks which in some cases threatened its existence. There are two main vectors: network attacks on the software and hardware infrastructure, and legal attacks on Bitcoin users. Before we explore them and consider why they failed, let’s start at the beginning.

In January 2009, a mysterious coder going by the name of Satoshi Nakamoto launched Bitcoin, an open-source financial network with big ambitions: to replace central banking with a decentralized, peer-to-peer system with no rulers. It would use a programmable, highly-fungible token that could be spent like electronic cash or saved like digital gold. It would be distributed around the world through a set-in-stone money printing schedule to a subset of users who would compete to secure the network with energy and in return, get freshly minted Bitcoin.

Initially, most were understandably skeptical, and very few paid attention. There had been attempts at creating “ecash” before, and all had failed. No one had been able to figure out how to create a decentralized, incorruptible mint, or how to grow a system that couldn’t be stopped by governments.

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Some clear thinking on $50,000+ Bitcoin, by Simon Black

An attempt at an objective analysis of Bitcoin, which evokes strong emotions, even hysteria, from both its detractors and its proponents. From Simon Black at sovereignman.com:

There are famous stories that come out of the Great Depression in which very astute financiers sold all of their stocks just before the big crash of 1929.

Joseph Kennedy famously dumped his portfolio after receiving stock tips from a shoeshine boy. And Bernard Baruch, one of the wealthiest financiers on Wall Street, said after the crash,

Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me [stock] tips. . .”

Now, these comments make it seem like taxi drivers and shoeshine boys don’t have financial sense. And that’s wrong.

Someone’s profession and their level of financial sophistication don’t necessarily go hand in hand; there are plenty of astute janitors, and plenty of idiot fund managers.

But I did think about Baruch’s remarks recently when an Uber driver started talking to me about cryptocurrency.

Again, his opinions are just as valid as anyone else’s. But what I found remarkable is that the only thing he knew about his portfolio was how much he’s ‘up’.

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Does Elon Musk’s Igniting Bitcoin Take Us to the Moon? by Tom Luongo

It’s time for the younger generation to step up and kick the oldsters off the stage they’ve occupied for far too long. From Tom Luongo at tomluongo.me:

I’m not Elon Musk’s biggest fan. At best, I see him as equal parts huckster and visionary.

But I won’t lie, as a long-time advocate for Bitcoin both in theory and practice, I welcomed his announcement that Tesla Corp. has a $1.5 billion position in granddaddy of cryptocurrencies.

That’s, of course, assuming that Elon isn’t the world’s biggest troll, which is a non-zero probability in my opinion.

This announcement, on the heels of Musk’s open support of the Redittor Rebellion against Wall Street via Game Stop and Dogecoin, may be the moment where we say this was the turning point.

Because Musk sits at the center of the Venn diagram of today’s cultural dynamics.

He’s an entrepreneur building electric sports cars and commercializing space flight. Tesla and SpaceX, regardless of what you think about them as companies, are aspirational ideas of the highest order.

As libertarians we’ve long decried the public space program as wasteful and inefficient. NASA has stood in the way of private space exploration for decades. And because of NASA’s typical bureaucratic defense of its fiefdom, space exploration slowed to a halt for the past two generations.

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ECB Head Christine Lagarde Calls For Global Regulation of “Reprehensible” Bitcoin, by Paul Joseph Watson

Central bankers hate alternative, private mediums of exchange. Don’t take Bitcoin and other cryptocurrencies freedom from regulation for granted. From Paul Joseph Watson at summit.news:

“Bitcoin has conducted some funny business.”

Getty Images News

Head of the European Central Bank Christine Lagarde has called for global regulations on Bitcoin, labeling the cryptocurrency “reprehensible.”

Lagarde made the comments during a Reuters Next conference earlier today, during which she asserted that Bitcoin was not a currency.

“When you look at the most recent developments upward, and now the recent downward trend … for those who have assumed that it might turn into a currency, terribly sorry but this is an asset and it is a highly speculative asset,” she said.

The former head of the IMF, who was previously found guilty of financial negligence by a French court over a €403 million arbitration deal in favor of businessman Bernard Tapie, went on to accuse Bitcoin of being heavily embroiled in criminal activity.

“(Bitcoin) has conducted some funny business and some interesting and totally reprehensible money laundering activity,” said Lagarde.

The ECB head went on to call for Bitcoin to be regulated by financial authorities.

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Gold versus Bitcoin & Death of Money, by Egon von Greyerz

If you’re looking at alternatives for present state-backed mediums of exchange, cryptocurrencies are sexier but gold has quite a track record. From Egon von Greyerz at goldswitzerland.com:

2021 is likely to be a year of awakening. This is when the world will start to realise that the $280 trillion global debt has no value and will never be paid back.

But even worse than that, of the $280t a staggering $200t has been created in the last 20 years.

Let’s say that it took 2,000 years to go from zero to $80t in 2000. It doesn’t really matter where we start counting since most of the $80t debt was created after Nixon closed the gold window in 1971.

AS DEBT IMPLODES SO WILL ASSET PRICES

Looking at the other side of the balance sheet, there will be an even bigger shock for investors and property owners as debt implodes. Because asset valuations are a function of the debt. And if debt implodes, which is inevitable, so will asset prices.

This is why prices of stocks, bonds and property will implode by more than 95% in real terms (gold) as I outlined in my article last week.

So it took just under 2000 years for global debt to grow from zero to around $5 trillion in 1971. Thereafter it took 29 years to year 2000 to grow by $75t to $80t. That was the exponential phase.

And now we are in the explosive phase with debt growing by over $200t in 20 years.

Anyone who can’t see what is happening is either blind or hasn’t studied history.

+$5t   – 1,971 years  – Year 0 to 1971
+$75t  –    29 years  – Year 1971 to 2000
+$200t  –  20 years – Year 2000 – 2020

We saw exponential debt expansion 1971 to 2000. Since then the growth has been explosive.

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Market Friday: Will Government Allow Bitcoin to go Wall St.? by Tom Luongo

As an alternative to state-issued mediums of exchange, cryptocurrencies can be expected to provoke the hostility of governments. From Tom Luongo at tomluongo.me:

The big worry among the bitcoin perma-bears is the threat of government ‘making it illegal.’

The latest bogeyman on this front is none other than U.S. Treasury Secretary Steve Mnuchin. Rumors float that he’s considering outlawing ‘self-custody wallets,’ in effect confiscating the private keys of everyone’s cryptos.

In a Twitter-thread, the chief executive [of Coinbase Brian Armstrong] said that his firm “heard rumors” about the US Treasury Secretary Steven Mnuchin’s plans to introduce fresh rules for “self-custody wallets” by the end of his term.

The open nature of cryptocurrencies allows anyone to create a private wallet by downloading third-party software on their computers/smartphones or through hardware devices that store digital assets. These types of self-custodial solutions come cheaper than traditional financial services — and they ensure privacy.

Those rumors are apparently valid since Mnuchin received a letter from four Congressmen imploring him not to do such a monumentally stupid thing.

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Market Friday: Iran, Bitcoin and The Sanctions That Won’t Be, by Tom Luongo

Iran may be on to something. From Tom Luongo at tomluongo.me:

Amidst all the posturing, fretting and craziness leading up to the election on Tuesday the thing that jumped out of my Twitter feed was this 2 minute video from PressTV.

Watch it. I’ll wait.

… Done? Good.

Let’s get started.

This came from Press TV, the Iranian equivalent of the BBC but without so much British Marxism. So, it’s as official as official gets.

Iran will use bitcoin as part of its import settlement system. It will export bitcoins and import things barred to it from the U.S.

Do you really think this policy will stop here?

The video reminds us that Iran has been building this case for the use of bitcoin to evade U.S. sanctions for years. This is a strategic move, not a fly-by-night operation like Venezuela’s Petro.

They could have gone the China or European Union route, push for a Central Bank Digital Currency completely controlled by the government.

You know, the worst possible arrangement, a cryptocurrency run by central bankers, i.e. Ripple.

But that would gain them nothing. Who would use a digital rial when no one wants the current rial?

Instead Iran embraced bitcoin because it had no other choice. The rial has been effectively destroyed by U.S. sanctions and the country is starving for a currency which accretes value to the user rather than steals it.

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Market Friday: Bitcoin, The Great Reset and Systemic Failure

When it comes to governments, there’s no stopping a truly terrible idea, like state-issued cryptocurrencies. From Tom Luongo at tomluongo.me:

It’s been a whirlwind week in the cryptocurrency world. There have been a rash of news items all pointing towards the same thing — attempts to rein in alternatives to the future of central bank digital currencies (CBDC) that are quickly creeping up over the horizon.

It started with the CFTC’s indictment of the owners of crypto-exchange BitMex after more than a year of investigation last week.

Even if its founders are not convicted, this might still spell the end of the embattled BitMEX. In tandem with the criminal indictments, the CFTC also launched a civil action against the BitMEX network of companies and its founders.

The formal counts on which the CFTC seeks relief are:

1. Executing futures transactions without registering with the CFTC
2. Offering illegal off-exchange commodity options
3. Failure to register as a futures commission merchant
4. Failure to register as a designated contract market/swap execution facility
5. Failure to supervise in relation to its lack of KYC and AML procedures and failing to ensure that its partners and employees lawfully handled BitMEX accounts
6. Failure to implement KYC and AML procedures as required under the CEA

That put a lid on a nascent rally in Bitcoin which was beginning to challenge $11,000. The net result was a $500 move down and killing any potential short-term bullish momentum. It should have seen a breakdown below support at $9800 (orange line, see chart) but that didn’t happen.

Since then Bitcoin has been bouncing around between $10,400 and $10,900 without any real direction, continuing to coil and consolidate.

But despite the violent intra-day reaction Bitcoin weathered that news item well, with last week’s volatility dropping off to next to nothing.

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The Gamification of Bitcoin, by J.P. Koning

Heretical as it may be to suggest, Bitcoin may never be much more than a glorified pass line bet. From J.P. Koning at aier.org:

Eleven years ago, Satoshi Nakamoto announced the bitcoin whitepaper to the world. Coinbase, a large cryptocurrency exchange, recently celebrated this milestone with a retrospective.

I’m going to remix Coinbase’s narrative to tell a different account of bitcoin’s last 11-years.

The thing that fooled us all for a while, myself included, is that we all thought bitcoin was solving a monetary or payments problem. It was labelled a coin, after all, and coins fall within the realm of monetary economics. To further complicate matters, Satoshi told his story using phrases like “electronic cash system” and “non-reversible transactions”. Perhaps we deserve to be forgiven for not seeing bitcoin’s underlying nature. After all, tearing down the existing monetary system and building a new one was a fresh and exciting narrative.

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Set Money Free, by John Stossel

Money completely free of government is the only money that has a chance of being honest money. From John Stossel at townhall.com:

Set Money Free

Source: AP Photo/Susan Walsh

House members summoned Facebook’s Mark Zuckerberg to Washington, D.C., and grilled him — harshly — about his plan to create a new currency, Libra.

“Why should we trust you?!” asked Congressman Mike Doyle.

I liked it when Zuckerberg said, “I actually don’t know if Libra’s going to work, but I believe that it’s important to try new things.”

He was right. That’s very important.

The Libra would make it easier to transfer money anywhere in the world. It also promises stability. Its value would be based on a basket of currencies from different countries, which would protect Libra owners from inflation in any one country.

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