The Future Of Money

[Pertinacious Tom]

More back door men at DOJ
 

The Department of Justice has been busy thinking about how to deal with cryptographic technologies. This past month, DOJ has issued two major statements on privacy-preserving tech, one of them an international rallying cry to build government backdoors into secure communications and the other a "clarification" of federal policy surrounding cryptocurrency applications. Unsurprisingly, both documents view privacy-preserving technologies as impediments to DOJ operations.

The encryption statement was mostly a reiteration of long-standing government issues with secure communications, this time wrapped in the packaging of saving children from criminals. Signatories from the Anglo governments ("Five Eyes") plus India and Japan again asserted that "public safety [can] be protected without compromising privacy or cyber security." This is obviously true in the abstract, but not when the "protection" in question is a government backdoor that necessarily compromises privacy and security. No new ground was broken here.

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There is no question that criminals may choose to use cryptocurrency, and this requires new law enforcement strategies. The DOJ extols several crackdowns on criminal activities: There is Operation DisrupTor, which took down international darknet drug markets, the Welcome to Video bust of child exploitation merchants, and the dismantling of terrorist financing campaigns. It is fantastic that violent criminal enterprises have been taken down, and blockchain forensics play a large role in these law enforcement successes.

In other words, like with encryption in general, while cryptocurrency does create new challenges for law enforcement, it also offers new opportunities for creative yet constitutional investigations of clearly anti-social criminal activities.

As someone who thinks a lot about privacy and security holes with cryptocurrency, it's interesting to see outsider perspectives that assume things like bitcoin offer strong privacy by default. As a series by privacy researcher Eric Wall makes clear, perfect cryptocurrency anonymity is almost comically hard to achieve even with custom-built "privacycoins" offering stronger anti-surveillance tools. There are so many ways that users can leak identity data to powerful and motivated adversaries like the DOJ—if the blockchain doesn't get you, your IP address, wallet software, poor address hygiene, and even your sleep schedule trivially could. It's no wonder the DOJ can boast of so many crypto-seizures.

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So are there 7 Eyes now?

 

[Pertinacious Tom]

The Future of Money includes more surveillance, less privacy.

(Not that privacy is even a consideration, as it plainly isn't.)

 

[Pertinacious Tom]

Money Is Social Media
 

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Premium cardholders have great credit and perhaps deeper pockets. Merchants want their business. They want their business so much that they are willing to pay extra interchange fees to bag them. Of course, these costs are borne by someone. Effectively, other customers—including less well-off ones—foot the bill for these wealthier customers' lifestyle perks in the form of higher final prices.

Then there are the partially or wholly unbanked customers stuck with fee-laden payment cards that do nothing to help them build up credit. These people get nickel-and-dimed for the privilege of being able to pay bills online—or they eschew online payments altogether. If money is communication, cash is a vernacular.

This cohort gets doubly walloped by a currency system that is also oriented to the benefit of the elite. As the recent COVID-justified monetary policy makes clear, people who are well-off and well-connected tend to benefit first from central bank interventions. Everyone else? Record stock market highs are irrelevant when you don't even have a bank account, let alone a 401(k). The regressive effect of monetary manipulations—the way they disproportionately harm the already underprivileged—is known as the "Cantillon effect."

Power dynamics also affect who is able to get paid. Merchants themselves carry risks to financial institutions: Sketchier ones may attract more requests for payment reversals or "chargebacks" that impose higher costs on banks. So high-risk merchants—peddlers of charges that customers may later dispute, such as pornography or gambling or shoddy wares—are funneled into their own market segments.

Sometimes, payment processors decide they would rather not deal with such high-risk merchants at all. As New Money points out, the platformification of online payments has imbued services like PayPal and Patreon with great social power. Whether due to social pressure or good old-fashioned aversion to "financial risk," platforms can now unilaterally decide whether someone gets paid.

It is precisely because legacy payment methods are susceptible to such controls that bitcoin was created. Cryptocurrencies in this vein are censorship-resistant by design: No party can prevent any other from transacting on the network. Better still, they are Cantillon-resistant: Elites cannot manipulate the money supply to enhance their power.

Cryptocurrency would seem of natural interest to New Money's examination, yet it barely receives passing mention. When asked by a woman in the industry for a way to guarantee "reliable payments for sex workers," the book recommends only "cash and checks."

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Hah! Checks? Really? So if a customer writes a bad check or stops payment on a good one, a hooker is supposed to go to the cops and say, "I'm a hooker and this guy...um... stiffed me."

 

[Pertinacious Tom]

Elon Musk Makes Bitcoin Waves
 

For Elon Musk, whose hatred for short-sellers blazes hot enough to reforge Mjölnir a dozen times over, the millions in losses suffered by shorts after the Tesla CEO changed his Twitter bio to “Bitcoin” it must feel like Christmas and his birthday rolled into one. 

That one word addition caused the price of bitcoin to spike to a 10-day high of $38,020 and sparked $387 million worth of short liquidations on major exchanges including Binance, Bitfinex, BitMEX, ByBit, Deribit, FTX, HuobiDM and OKEx. 

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However, sentiment turned bullish after Musk changed his Twitter bio and tweeted: “In retrospect, it was inevitable.” The Tesla and SpaceX CEO, who has made no secret of his loathing for short-sellers, may not haven intended to have caused the liquidations, but may have popped the cork on a bottle of champagne after viewing the carnage his bio change wrought.

To document Elon’s ostensible nod to the leading cryptocurrency, F2Pool, currently the largest mining pool by hashrate, embedded the tech mogul’s latest tweet in Bitcoin block 668,197. 

As for that last line quoted, dweebs will be dweebs, gotta love 'em.

 

[Pertinacious Tom]

Freedom Money
 

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In the past few months, Belarusian activists have used bitcoin to defy the regime by sending more than 3 million dollars of unstoppable money directly to striking workers, who then convert it locally to rubles in peer-to-peer marketplaces to feed their families as they protest the country's dictatorship.

In October, a feminist coalition in Nigeria raised the equivalent of tens of thousands of dollars in bitcoin to buy gas masks and protest equipment as activist bank accounts were being turned on and off.

In Russia, the opposition politician Alexei Navalny has raised millions in bitcoin as Vladimir Putin maintains strict control over the traditional financial system. Putin can do a lot of things, but he can't freeze a bitcoin account.

In Iran and Palestine and Cuba, individuals face sanctions or embargoes because of the misdeeds of their corrupt rulers. Bitcoin gives them a lifeline for earning income or receiving remittances from abroad.

Some Venezuelans, having watched their country's currency evaporate due to hyperinflation, are converting their resources to bitcoin's digital format and then escaping. With their savings secured by a password that can be stored on a flash drive, phone, or even memorized, they've started new lives in other countries, taking advantage of a technology that refugees throughout history could only dream about.

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Maybe you don't need bitcoin. Maybe you don't understand bitcoin. Maybe PayPal, Venmo, or your bank account serves your needs just fine.

But don't write off bitcoin as simply a vehicle for financial speculation. For millions of people around the world, it's an escape hatch from tyranny—nothing less than freedom money.

No wonder authoritarians hate it so much!

 

[mikewof]

"I smoked Ethereum once, I was tripping for days."

 

[Pertinacious Tom]

E-Gold: Back to the Future?

I hope Dr. Jackson's guilty plea is overturned and am glad to see he is as determined as ever.

 

[Pertinacious Tom]

Bitcoin dives as Tesla’s Elon Musk reverses course on accepting crypto
 

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“Tesla has suspended vehicle purchase using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions. Especially coal, which has the worst emissions of any fuel,” Mr Musk, who is also the co-founder of the company, said on Twitter.

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Last month, researchers at Cambridge University estimated that the electricity consumption of the Bitcoin network is almost 120 Terrawatt-hours per year, more than the energy consumption of the UAE at 119.45 Terrawatt-hours, and on course to overtake Pakistan.

Mr Musk said he is open to other digital currencies that consume less energy than Bitcoin.

“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use less than 1 per cent of Bitcoin’s energy/transaction,” he said on Twitter.

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Hmm... He didn't know about the energy usage way back in January?

 

[mikewof]

Bitcoin dives as Tesla’s Elon Musk reverses course on accepting crypto
 

Hmm... He didn't know about the energy usage way back in January?

He had to make his money and then pump Doge. These things can take a few months.

Normy, ever heard of the Binance platform?

 

[The Q]

Tulips 1637,
South sea shares 1720,
Railway mania shares  1840s,
All shares 1929 when the public went share buying mad..
or today, Bitcoin and online share trading.
Just needs another Musk to pull out of bitcoin and they start a cascade and the value will crash..

Oh and it was just announced inflation doubled in April in the UK, huge rises in inflation are normally prior to a crash..

 

[Pertinacious Tom]

Trump calls Bitcoin a ‘scam against the dollar’ that needs to be ‘very high regulated’

Former Guy Donald Trump called Bitcoin a “scam against the dollar” and urged US regulators to take action to monitor it on Monday.

Heh. Maybe the dollar is a scam against Bitcoin.

 

[Pertinacious Tom]

Billionaire Jack Dorsey, co-founder of Twitter and Square, is extremely bullish on the future of bitcoin, the largest cryptocurrency by market value.

“Bitcoin changes absolutely everything,” Dorsey said Friday at the Bitcoin 2021 Conference. “I don’t think there is anything more important in my lifetime to work on.”

 

[Pertinacious Tom]

Paul Krugman's 10-Year History of Being Wrong About Bitcoin
 

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In addition to calling bitcoin evil, Krugman has also dismissed it as "libertarian derp" on multiple occasions. He even took pleasure in the crashing bitcoin price in early 2018. Notably, some of Krugman's negative comments toward bitcoin popped up around the absolute bottoms of two consecutive cryptocurrency bear markets. In other words, it may be a good time to buy bitcoin whenever you see Krugman taking a victory lap.

Unfortunately for Krugman, the "libertarian derp" cryptocurrency hit a new all-time high once again in 2021, 10 years after his initial criticisms of the crypto asset were first published in The New York Times. Instead of acknowledging the reasons for bitcoin's staying power, however, it appears that Krugman will continue to claim there is no utility for this technology and keep dismissing bitcoin as a cult that can survive indefinitely.

Fortunately for bitcoin, it can rebut Krugman by simply continuing to exist and thrive in the marketplace.

You'd think Trump's agreement would be enough to make Krugman question his own ideas. Nope.

 

[Mark K]

I'd get the hell away from bitcoin if I had any. It has been deemed critical to the operation model of the ransomware pirates and pretty much everybody is looking a big ol can of whoop-ass on that shit. 

 Bitcoin carries no essential function outside of criminal ops and the fable bitcoin is untraceable has been fractured. The makings of a Bambi v Godzilla scenario.   

 

[Lark]

I'd get the hell away from bitcoin if I had any. It has been deemed critical to the operation model of the ransomware pirates and pretty much everybody is looking a big ol can of whoop-ass on that shit. 

 Bitcoin carries no essential function outside of criminal ops and the fable bitcoin is untraceable has been fractured. The makings of a Bambi v Godzilla scenario.   

I was hopeful it might provide competition for the merchant service provider fees on credit card transactions, helping businesses and international ransastion fees, helping travelers.    No such luck, it’s too volatile for commerce.   As you said, aside from speculation the only purpose Bitcoin and its elk have is criminal transactions.   They potentially destroy a nation’s ability to manage its currency and control its economy.   They need to go, 

 

[Pertinacious Tom]

I'd get the hell away from bitcoin if I had any. It has been deemed critical to the operation model of the ransomware pirates and pretty much everybody is looking a big ol can of whoop-ass on that shit. 

 Bitcoin carries no essential function outside of criminal ops and the fable bitcoin is untraceable has been fractured. The makings of a Bambi v Godzilla scenario.   

The old "only criminals find it useful" argument was also recently used by the FBI in looting safe deposit boxes. The thing is, it's not true.

I was hopeful it might provide competition for the merchant service provider fees on credit card transactions, helping businesses and international ransastion fees, helping travelers.    No such luck, it’s too volatile for commerce.   As you said, aside from speculation the only purpose Bitcoin and its elk have is criminal transactions.   They potentially destroy a nation’s ability to manage its currency and control its economy.   They need to go, 

You're saying it, Mark's saying it, Trump's saying it, many people are saying it. But this thread is replete with examples of the utility of cryptocurrencies. Even the Fed sorta agrees, which is not great news.

But many people should take note of this part:

Much of the push for government-run digital money is driven by fears of those private cryptocurrencies. Sen. Brown, for example, pointed out that bitcoin "can be used for illegal activity." (In fact, cash is still the preferred method of choice for illegal transactions. According to a report by Chainalysis, illicit behavior accounts for less than 1 percent of all crypto activity.)

 

[Mark K]

The old "only criminals find it useful" argument was also recently used by the FBI in looting safe deposit boxes. The thing is, it's not true.

You're saying it, Mark's saying it, Trump's saying it, many people are saying it. But this thread is replete with examples of the utility of cryptocurrencies. Even the Fed sorta agrees, which is not great news.

But many people should take note of this part:

 Same old story, a few bad apples ruin things for everybody. 

 

[Pertinacious Tom]

 Same old story, a few bad apples ruin things for everybody. 

A few? I thought that

Bitcoin carries no essential function outside of criminal ops

So maybe there are a few good apples?

 

[Pertinacious Tom]

Bitcoin: 'A Weapon for Us To Fight Oppression'
 

When Fodé Diop was a high school senior growing up in Senegal, he was accepted to Emporia State University in Kansas to study engineering and play basketball. But before enrolling, the value of the tuition money his father had set aside was cut in half overnight because of a backroom deal spearheaded by the International Monetary Fund and the French government, which still controls the currency of more than a dozen African countries due to a treaty ratified at the end of World War II.

His experience is what led to Diop's current career as a software developer working to make bitcoin easy to use as a medium of exchange for anyone in Senegal with a smartphone.

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If the French could suddenly cut the value of our dollars in half, people might appreciate the value of a currency that doesn't have that feature.

 

[Pertinacious Tom]

Bitcoin and the U.S. Fiscal Reckoning