Crypto dispatches

Yesterday I had an op-ed in the AFR:

Bitcoin investors have been on a bit of a roller coaster the last month or so. Since mid-April the price of bitcoin has dropped about $US20,000 ($25,000). You’d think that’s got to hurt, but the true believers will say “BTFD” (that’s “Buy the f—ing dip”).

The innovation that underpins bitcoin is far more interesting than the invention of a digital money. The blockchain – the decentralised ledger than keeps track of individual bitcoin and prevents double spending – industrialises trust. Trust is a valuable building block of both the economy and civil society.

At the moment, the main driver of bitcoin’s volatility seems to be Elon Musk’s tweets.

My RMIT University colleagues and I guesstimate that the trust underpinning the pre-COVID global economy was worth about $US29 trillion a year. All that trust was generated the old-fashioned way – personal relationships, organisational hierarchy, auditing and surveillance.

Many of the mechanisms and institutions that generate trust in an industrial economy can now be replaced by algorithms and smart contracts in a digital economy. The cost of producing trust has fallen, and we can expect to see a lot more of it.

Arun Sundararajan – professor of entrepreneurship at New York University – has argued “every time there was a big expansion in the world’s economic activity, it was generally induced by the creation of a new form of trust”.

The industrialisation of power led to a period of astonishing economic growth and human flourishing. It is early days, but just imagine what the industrialisation of trust could achieve.

It’s not surprising that bitcoin and many cryptocurrencies are valuable, but why are they so volatile?

At the moment, Elon Musk’s tweets seem to drive bitcoin’s volatility. Musk is what the late Joel M Stern would have labelled a “lead steer” – a person whose views and opinions are important enough to move markets.

Recently, Musk’s company, Tesla, had acquired a large stock of bitcoin and announced that it would be accepting bitcoin as payment for its vehicles. This was seen within the context of mainstream acceptance of bitcoin as a workable and viable currency. Prices went up.

Then it appeared Musk changed his mind – he indicated that bitcoin’s carbon footprint was too high for his liking and Tesla would no longer accept bitcoin as payment for its vehicles. Prices went down.

Musk has also been promoting an alternative cryptocurrency known as dogecoin. This token was literally started as a joke. Yet the joke is on everyone else – dogecoin’s market capitalisation is over $US40 billion.

Musk is almost certainly multi-tasking. He has positioned his company into the cryptoeconomy. He is probably engaging in some impact investing, as many people are concerned about bitcoin’s carbon footprint.

He is also trolling bitcoin true believers, and US regulatory authorities too.

Blockchain business models are not going away. What they need now is official recognition, and to be brought into the formal economy.

Musk is not alone in trolling the true believers. George Selgin – emeritus professor at Georgia University and now at the Cato Institute – has been engaging them too. Most of his criticisms of bitcoin maximalists are valid. It is unlikely that bitcoin will emerge as the only money being used in a global digital economy.

That is all theatre. It ignores the main game.

In the background, there are scores of start-ups – many in Australia – that are quietly working on business models that rely on industrialised trust. In the same way Uber disrupted the taxi industry, many of these start-ups will disrupt the services economy.

This will have profound implications for business. Size will no longer be a defence against competitors. In same way anyone with a nice car could become an Uber driver, anyone with a computer and internet access will be able to become an entrepreneur, a day-trader, a broker, and, in time, a bank or insurance company.

To be fair, Australian political and regulatory elites have been somewhat distracted over the past year. They have been open-minded about blockchain technology and the challenges it poses in their areas of interest. Andrew Bragg’s Senate Select committee is looking into Australia becoming a technology and financial hub. This is all good work, but time is of the essence.

Even if we are experiencing another bitcoin bear market, blockchain and blockchain business models are not going away. What they need now more than ever is official recognition, and to be brought into the formal economy. This is so they can be recognised as being legitimate businesses with need of other business services.

Ironically, the industry that will one day disrupt the banking and insurance industry is currently in need of banking and insurance services from established banking and insurance companies.

That requires legislative changes to the Australian regulatory framework. That will be hard work. In the meantime follow Elon Musk on Twitter. The fireworks are very entertaining. But remember he is actually a visionary.

This morning Andrew Bragg had a response – also in the AFR:

The opportunities are endless if handled properly. Digital identification could allow the world’s “unbanked” population to have direct access to financial services.

But one of the first problems we have to overcome in this digital space is its image.

Even respected Sky News presenter Laura Jayes reflected a common perception and put to me recently that “cryptocurrencies are just the domain of tech heads and criminals”.

There’s nothing about cryptocurrencies that makes them vulnerable to this characterisation.

Second, it’s important that we have a consumer protection framework in place.

This is the argument put forward on these pages by RMIT economist Sinclair Davidson who said: “What [blockchain business models] need now more than ever is official recognition, and to be brought into the formal economy … so they can be recognised as being legitimate businesses with need of other business services.”

This isn’t a problem of market failure, but where policy and regulation need to catch up to innovation.

Speaking of real-world impact, this very nice story appeared in the Campus Morning Mail yesterday (emphasis original):

Way before bellhops got into Bitcoin RMIT researchers were researching and developing the transformative power of the blockchain

Melbourne firm AEM launched accounting software for crypto-currency the other day and thanked the RMIT Blockchain Innovation Hub for “access to research and academics, providing internships and industry experience for students and ultimately employment for a number of students.”

This has to score points for RMIT with the National Priorities and Industry Linkage Fund (insofar as anybody is across how it works, (CMM October 2).

But there is way more to what RMIT has achieved. The Blockchain Hub demonstrates how basic research works with industry – the government’s core objective for university links with business.

RMIT economist Jason Potts, with colleagues from RMIT and Curtin U, recognised five years back how research published on a blockchain can could replace journals (CMM April 26 2016).

With Chris Berg and Sinclair Davidson (also RMIT) he scaled-up the suggestion in 2017, arguing the blockchain could go aways to reduce the role of government, now needed for “record keeping, validation and verification of transactions in property rights,” (CMM October 30 2017).

The trio pulled their big ideas together in their book, Understanding the Blockchain Economy: an introduction to institutional crypto economics (CMM September 6 2019).

The research rolls on and so does teaching and industry partnerships. Nothing crypto about the intellectual currency of this work.

Update: A former student left this comment on our LinkedIn announcement:

Congratulations RMIT University Blockchain Innovation Hub! I can still remember my Blockchain Economy class back in 2019, a room packed full of students for an 8:30am class, the best class of my Uni years! Best bunch of professors/professionals Sinclair Davidson Alastair Berg Mikayla Novak Jason Potts.

This entry was posted in Cryptoeconomics. Bookmark the permalink.

109 Responses to Crypto dispatches

  1. m0nty says:

    In the background, there are scores of start-ups – many in Australia – that are quietly working on business models that rely on industrialised trust. In the same way Uber disrupted the taxi industry, many of these start-ups will disrupt the services economy.

    Uber’s disruption consisted solely of bypassing regulation. Those who follow its lead are not innovating, just arbitraging.

    This is of a piece with cryptocurrency. It is merely an attempt to build a black market, no more. Unsurprisingly, it has a well-deserved reputation for being a haven for criminals, such as the Colonial Pipeline ransomware hackers.

    IMO it is a mistake for traditional financial institutions to legitimise cryptocurrency. But it’s not as if the casino economy was based on much that was real to begin with. Stocks keep going up and up regardless of fundamentals. Why not let the spivs run the show?

  2. Sinclair Davidson says:

    Uber is not a crypto start up.

    It was a full-frontal assault on crony capitalism.

  3. Gassius says:

    I didn’t understand a word of this.

  4. Sinclair Davidson says:

    I didn’t understand a word of this.

    Easy translation – Elon Musk is being a naughty boy. Like many naughty boys, he is very smart but makes trouble when he get bored. Blockchain good, despite what they say.

  5. m0nty says:

    Uber is not a crypto startup, but its main focus was on regulatory arbitrage, which is also true of cryptocurrency.

    Taxi licensing and related regulations are not perfect of course, but they came about due to decades of experience in the field. Uber has spent a lot of investor money on trying to prove that their drivers don’t deserve worker’s comp, employee privileges or backpay from wage theft. Taxi licences are an example of cronyism, but Uber’s answer of screwing over its workers is not good either.

  6. JC says:

    In same way anyone with a nice car could become an Uber driver, anyone with a computer and internet access will be able to become an entrepreneur, a day-trader, a broker, and, in time, a bank or insurance company.

    Banks are regulated to death to the point where it’s now near enough to impossible for someone to start up a bank. How would anyone be able to start a bank under these conditions.? The regulatory barrier is massive in both banking and insurance. If the thought is that the authorities will somehow relinquish control of the banking system, then I would like to disabuse anyone thinking this as it’s not going to happen.

    The other problem governments have created is to treat these digital currencies as part of the asset class and therefore any appreciation ranks for cap gains tax. This is a deliberate spanner in the works.

  7. JC says:

    Taxi licences are an example of cronyism, but Uber’s answer of screwing over its workers is not good either.

    This is insane thinking and the reason the Western world will become undone by the stupid left. Working with Uber is voluntary, you overfed oaf. No one has placed a gun to the head of Uber drivers and demanded they drive their cars for Uber. You ought to be cancelled from this blog for this nonsense in the same way other imbeciles ought to be too.

  8. Sinclair Davidson says:

    Uber’s answer of screwing over its workers is not good either.

    All the uber drivers I meet are very happy.

    Anyway regulatory arbitrage is a good thing.

    I’m not convinced that is the crypto story.

  9. Lee says:

    Banks are regulated to death to the point where it’s now near enough to impossible for someone to start up a bank. How would anyone be able to start a bank under these conditions.?

    About twenty years ago, I suggested to a very knowledgeable friend that someone should start up a new bank to undercut and provide real competition for the major banks.
    He told me that to do so, you would be required to deposit $100 million with the RBA as a bond.

  10. MatrixTransform says:

    the transformative power of the blockchain

    It’s true…

    I personally know 3 builder’s labourers that the block-chain has transformed into financial geniuses

  11. Gilas says:

    The Uber model has been disruptive to the taxi industry.
    Government has since corrected most of the arbitraging opportunities it created, now that model is only marginally better than the bloated, nepotistic and corrupt taxi-licencing system it competes with.

    Bitcoin is made of two parts: cryptocurrency and attendant blockchain technology.
    The blockchain is here to stay, and will only become stronger be mainstreamed, in time.

    But cryptocurrency has been, and still is, a scammer’s paradise, eg: Tether

    The cryptocurrency bit will be regulated to within an inch of its life by corrupt, greedy, controlling, powerful governments and central banks everywhere.
    China has already forbidden the pegging of Bitcoin with the Rinmimbi, others will follow.
    Anyone who believes in a fully decentralized cryptocurrency free of government control, to the extent that its regulation arbitraging will survive, has serious delusional issues.
    Confirmation bias at its finacially ruinous worst.

  12. Gilas says:

    and be mainstreamed..
    FFS

  13. m0nty says:

    Anyway regulatory arbitrage is a good thing.

    I’m not convinced that is the crypto story.

    You include in the OP the statement that you are supporting crypto because it has the potential to decrease the role of government. Beyond that, there is not much there there.

    Ironically, if you look deep into crypto you find a whole bunch of regulation as to how things should operate. It’s just that the people at the top of the power pyramid are not elected officials with accountability to the people, but private citizens with their own agendas. No wonder libertarian frat boys in Silicon Valley love it.

  14. RobK says:

    I think Uber was successful in harnessing the power of mobile phones, location services and billing etc. Good on them. The taxi industry and its regulators definitely needed a rocket put under them.
    I don’t know much about blockchain or crypto but i get the impression it’s a work in progress.

  15. Rorschach says:

    Yes – Elon is being a bit of a naughty boy. He is playing with peoples savings and investments … and he is smart enough to know that he is doing so!

    The argument that Bitcoin is energy intensive is only because of the power needed to solve the algorithms for the last 2 million of coin [max 21 million]. I understand that China is spending every erg of spare power to mine the coin, (and so is Iran DPRK and others).

    What will happen when the coin is all mined or (probably much sooner) economically not viable to be mined. All the energy requirement arguments go away. Elon must realise this.

    If he is buying the artificial dip – or worse – shorting it… then he is a very bad boy indeed.

    If this was normal fiat currency … the law would be looking at this very seriously. So … if shenanigans occur in a crypto that has no formal sanction… will he get away with it?

    And .. yes. I have said and argued multiple times that blockchain is the biggest disruptor to the brick and mortar banks. Blockchain introduces verifiable trust into transactions. And the big banks all over the place have a deficit in trust…

  16. m0nty says:

    If this was normal fiat currency … the law would be looking at this very seriously. So … if shenanigans occur in a crypto that has no formal sanction… will he get away with it?

    Yes. As did the DeFi100 crooks who absconded with US$32 million.

  17. Jock says:

    Sinc. I get the blockchain, and I get the mining bit with computers beavering away seeking to solve chain puzzles. however how is the “weal;th ” created? does a blockchain user pay on the other side? The miners are evidently creating value, but for whom on the other side?

  18. Rorschach says:

    Anyone who believes in a fully decentralized cryptocurrency free of government control, to the extent that its regulation arbitraging will survive, has serious delusional issues.

    I’m delusional. 🙂

    This is where something like Doge and its spawn like Chiba Inu and variants will come in. Again it boils down to trust. Any fiat currency is not backed by anything really. The only thing different is that some [in the modern world] pay interest.

    The risks are on the one hand that a government will print and devalue its currency – and that it loses the trust’s a store of value [and this ain’t science fiction now] and you lose your arse overnight. Or that a Bitcoin is supplanted by another medium as a store of value and the market progressively devalues it… and you lose your arse gradually.

  19. m0nty says:

    Or that a Bitcoin is supplanted by another medium as a store of value and the market progressively devalues it… and you lose your arse gradually.

    That is not the only risk. There are many that are far worse.

  20. Rorschach says:

    he mining bit with computers beavering away seeking to solve chain puzzles

    The mining actually creates a quasi liquidity for the crypto: it creates the computational power to legitimise and monitor crypto transactions, ensuring their validity. The hundreds and thousands of mining computers then become the “decentralised ledger” keeping an ongoing record of all the transactions… the bitcoin mined is the reward for being on line and making the computer available for this purpose.

  21. Rorschach says:

    That is not the only risk. There are many that are far worse.

    Like what?

    Once a crypto ve becomes established and trusted as a source of value and a medium of exchange … the risks are less than using notes, gold coin, or seashells. Each of which worked very well for a time!

    [I do note that – as opposed to gold and seashells – crypto demands electronic wallets so it (in the future) will be hostage to wind, clouds and the like. 🙂 ]

  22. m0nty says:

    Once a crypto ve becomes established and trusted as a source of value and a medium of exchange … the risks are less than using notes, gold coin, or seashells.

    Banks are controlled by governments who are answerable to the people.

    As the DeFi100 story shows, cryptocurrency is controlled by random dudes who can skip to the Caymans with all your money and you can’t do a damn thing about it.

    If you say that part of becoming established and trusted is that laws are applied to stop that sort of thing… then the only thing that makes crypto interesting (regulatory arbitrage) just got neutered.

  23. Rorschach says:

    Banks are controlled by governments who are answerable to the people.

    ROFL…

    Got a bridge to sell ya.

    Weimar; Zimbabwe; Venezuela … all the money was controlled by banks that were in turn controlled by governments supposedly answerable to the people. How did that turn out? And Soros and co daily play games that make a $32Mio scam look like pocket change in this non-physical currency world!

    An established crypto will be answerable to no one … only the ones that want to buy and sell it!

  24. JC says:

    And Soros and co daily play games

    Uncle George is 91 years old. What daily games is he playing other than with his nurse?

  25. C.L. says:

    Amazing work, Sinclair.
    I only wish I knew what the hell you’re talking about.
    Joe Blow on the other Bitcoin post has a lot of interesting, informed and crypto-defending arguments to make about Bitcoin’s energy usage. The latter I still find staggering.

  26. FlyingPigs says:

    Sinclair

    Well done to yourself and the entire RMIT Blockchain Team.

    It is that sort of research that will eventually bring blockchain technology into everyday commercial usage.

    I cannot see a future for commercial transactions without blockchain.

  27. C.L. says:

    Banks are controlled by governments who are answerable to the people.

    Only kinda-sorta these days, Mont.

  28. C.L. says:

    I second the Pig’s congratulations.
    Reminds us that Sinclair is slumming it as Cat impresario.

  29. FlyingPigs says:

    m0nty

    your Uber distraction squirrel doesn’t cut it.

    have you ever driven cabs?

    what’s the difference between a uber driver and a cab driver?

  30. Infidel Tiger says:

    If you think the US Government would ever allow Crypto currencies to become dominant you are a freaking maniac.

    Get back to me when crypto is backed by major militaries. There’s a reason the USD rules the world.

  31. JC says:

    Get back to me when crypto is backed by major militaries. There’s a reason the USD rules the world.

    Yep. Reserve currency accrues to the arseholes with the biggest guns.

  32. Rorschach says:

    Uncle George is 91 years old. What daily games is he playing other than with his nurse?

    LOL … Couldn’t think of a name of a currency manipulator! But Soros the deadshit even if dead will for ever more be a spivvy ruthless anti-western establishmentarian.

  33. Rorschach says:

    There’s a reason the USD rules the world.

    Prediction: Unless Trump & Co get control quick smart … not for long.

  34. FlyingPigs says:

    JC and IT

    but I can see the day when USD notes and treasury issue will be controlled by blockchain technology to cut out the counterfeiters.

  35. Gilas says:

    If you think the US Government would ever allow Crypto currencies to become dominant you are a freaking maniac.

    Correct, and not just with the US.
    It was the Rothschilds, who financed the Napoleonic wars, who equated power with the ability to create and control currency.
    There is no chance in Hell that any government will cede this power to individuals using BTC, Doge, Ethereum or whatever crypto-scam floats your boat.

    This side of a global, massively bloody revolt, anyway. Events in the last 12 months have put paid to any chance of that ever happening.

  36. egg_ says:

    My RMIT University colleagues and I guesstimate that the trust underpinning the pre-COVID global economy was worth about $US29 trillion a year. All that trust was generated the old-fashioned way – personal relationships, organisational hierarchy, auditing and surveillance.

    Is Bitcoin legally considered a ‘Telegraphic Transfer” of funds.

    SWIFT is, but it’s owned by the Banks.

  37. m0nty says:

    Weimar; Zimbabwe; Venezuela

    … were all more credible than cryptocurrency.

    There are real problems being cited here, but crypto doesn’t solve any of them. It just replaces government institutions with private ones, which the likes of the Doomlord love for ideological reasons. Governments can be replaced and reformed, private operators call all the shots with their own currencies.

  38. egg_ says:

    Stocks keep going up and up regardless of fundamentals. Why not let the spivs run the show?

    Remember the great Dot-com bubble of the early noughties?

    One went bankrupt, with top company executives getting a cut before creditors.

  39. Rorschach says:

    but I can see the day when USD notes and treasury issue will be controlled by blockchain technology to cut out the counterfeiters.

    The day is near when cheques and cash&coin will not be a legal form of tender. [In UnnZed the banks have unilaterally stopped accepting cheques already. The government don’t mind, and here in Oz, the government is preparing for just that!]

    See here for some moves on blockchain:

    https://www.weforum.org/platforms/shaping-the-future-of-technology-governance-blockchain-and-distributed-ledger-technologies

    The other innovation is Central Bank Digital currencies.

    https://en.wikipedia.org/wiki/Central_bank_digital_currency

    And when organisations like S.W.I.F.T., EBAY and LOTS of reserve banks start looking at this – the trend is inevitable.

    https://www.finextra.com/newsarticle/38026/swift-makes-its-case-for-place-in-cbdc-world

  40. Infidel Tiger says:

    Serious currencies don’t drop 30% because some ponzi artist sends a tweet.

  41. Infidel Tiger says:

    Cash is never going away either.

  42. RogerW says:

    Teenagers can hack into the FBI, let alone Tim on NCIS.
    I simply don’t believe that anything is un-hackable, given enough time and computer power – and, presumably, there goes your trust.

  43. Rorschach says:

    It just replaces government institutions with private ones

    Nope … as usual you don’t have clue. Who owns Bitcoin?

  44. Rorschach says:

    Serious currencies don’t drop 30% because some ponzi artist sends a tweet.

    Early days. Remember – Bitcoin was a pioneering innovation. The exact Bitcoin model may not work [given there is only 21million coins available] – but once the western fiat currencies start being eroded by inflation and state mandated devaluations … WATCH THIS SPACE.

  45. Jock says:

    Rorschach

    Thanks but it really doesnt anser the question. How is the value created? Do companies put transactions through the system that the miners line up.? If you look at a currency it is used to buy resources which are turned into widgets and sold for currency, then process starts again. Besides miners and people trading it, what is a real life example of it being used as a currency?

  46. Rorschach says:

    Cash is never going away either.

    I think its days are numbered. The banks are doing everything they can to get rid of it as are governments. The market trend is ever and ever decreasing volume in circulation. Eventually two things will kill it altogether – a) if you want to deal in cash you will be more than likely laundering proceeds of crime and people just won’t want it, and b) you’ll catch the COOF and future variants.

  47. hzhousewife says:

    So I got me a pile of bitcoin in a digital wallet and I’m in Qld tonight, and the power goes out – how do I buy my ciggies from the 7/11 at midnight?

  48. m0nty says:

    once the western fiat currencies start being eroded by inflation and state mandated devaluations … WATCH THIS SPACE.

    Cryptofreaks sound pretty much like goldbugs.

  49. Gilas says:

    but once the western fiat currencies start being eroded by inflation and state mandated devaluations …

    Only a violent, global revolution will loosen the grip of governments over their currencies.
    The chance of that happening is less than zero.
    Cryptos are only ever going to be a high-risk asset class.
    Use accordingly, and with caution.

  50. egg_ says:

    It was the Rothschilds, who financed the Napoleonic wars, who equated power with the ability to create and control currency.

    Rockefeller and Ford WW2?

  51. egg_ says:

    I reckon pizzas should be a global currency.

    Survived the great Global COVID lockdowns.

    Worth their weight in salt?

    Frozen pizzas use less energy than bitcoin?

  52. hzhousewife says:

    Satoshi nikimoto or whomever, set up the first imaginary currency and called it bitcoin. Soon, someone else will set up another one. That will be fun !

  53. Siltstone says:

    So I got me a pile of bitcoin in a digital wallet and I’m in Qld tonight, and the power goes out – how do I buy my ciggies from the 7/11 at midnight?

    Given them small gold coins, you will need them to buy a pack of Winfield.

  54. Rorschach says:

    Jock says:
    May 25, 2021 at 9:20 pm

    How is the value created

    How is value created for gold or diamonds?

    Gold prices can fluctuate as much as crypto currencies. They have little real value aside from aesthetic, but they are a trusted store of value. And it appears that the trust in gold is higher that most currencies – the flight to gold is a well known phenomenon in times of crises!

  55. Rorschach says:

    how do I buy my ciggies from the 7/11 at midnight

    Start the diesel generator and use Musk’s Starlink constellation of satelites! Tap & go.

  56. FlyingPigs says:

    how do I buy my ciggies from the 7/11 at midnight?

    anyone buying, or attempting to buy, cigarettes is definitely on asio’s right wing extremist list.

  57. MatrixTransform says:

    how do I buy my ciggies from the 7/11 at midnight?

    barter of course …

    sell yr arse

  58. egg_ says:

    It was the Rothschilds, who financed the Napoleonic wars, who equated power with the ability to create and control currency.

    Rockefeller and Ford WW2?

    Elon Musk – the great Global reset?

  59. egg_ says:

    how do I buy my ciggies from the 7/11 at midnight?

    barter of course …

    A slice of pizza.

  60. Rabbi Putin says:

    It’s a scam in the sense that one of its core traits is untrue.
    Crypto fans argue it’s finite but it’s not. There’s no limit to the amount of new coins that can be launched.

    Still would’ve liked to have bought-in at about 2012 though. Because it seems stupid hype-slaves are also in infinite supply.

  61. egg_ says:

    Next time you’re eating a pizza, spare a thought for Laszlo Hanyecz. Back in 2010, the Florida resident bought two pizzas for about US$20. The problem? He used bitcoin to pay for them — 10,000 bitcoin to be exact. Had he saved those bitcoin instead of spending them on pizza, they would be worth more than US$580 million today. It’s not all bad news. Laszlo goes down in history as the first person to use bitcoin in a commercial transaction. His toddler enjoyed the pizza, too.

    Speaking of bubbles.

  62. Dot says:

    Infidel Tiger says:
    May 25, 2021 at 9:10 pm
    Serious currencies don’t drop 30% because some ponzi artist sends a tweet.

    LOL

    The US and Australian M2 chart for September 2019.

    Our banks and currencies almost shit themselves, overnight.

  63. Dot says:

    RogerW says:
    May 25, 2021 at 9:10 pm
    Teenagers can hack into the FBI, let alone Tim on NCIS.
    I simply don’t believe that anything is un-hackable, given enough time and computer power – and, presumably, there goes your trust.

    Do you understand proof of work?

    You need 51% of nodes agreeing for each transaction and it is all documented on the blockchain.

  64. Dot says:

    Siltstone says:
    May 25, 2021 at 9:35 pm
    So I got me a pile of bitcoin in a digital wallet and I’m in Qld tonight, and the power goes out – how do I buy my ciggies from the 7/11 at midnight?

    CoinJar card
    TenX card
    Crypto dot com card

    In Japan, BTC is accepted in a lot of shops – acceptance is widespread.

  65. Dot says:

    Wait, what?

    How do you use an ATM or EFT card when the power goes out??!

  66. JC says:

    In Japan, BTC is accepted in a lot of shops – acceptance is widespread.

    Dot, I bet this though. Their payments machines are automatically hooked up so as soon as they take in BTC, the BTC is sold f0r yen (immediately).

  67. egg_ says:

    I bet this though. Their payments machines are automatically hooked up so as soon as they take in BTC, the BTC is sold f0r yen (immediately).

    +1

    Or pizza.

  68. Dot says:

    Dot, I bet this though. Their payments machines are automatically hooked up so as soon as they take in BTC, the BTC is sold f0r yen (immediately).

    Not necessarily; what’s the problem though – you could argue that 20% to 40% of each AUD in aggregate/on average is when spent in a shop, is converted to USD to satisfy our dependence on foreign markets.

  69. Dot says:

    Currencies that can’t be bought with BTC.

    Papiermark
    Argentine Peso
    Continental dollar

  70. Joe Blow says:

    It is pretty obvious from this discussion that just about no one here is really interested in change for the better. Much easier to just complain ( or vote ).

    It’s real simple. Bitcoin is the shot over the bow of the nation state and central banks. There was the time before bitcoin and now the time after bitcoin – a civilizational ‘hard fork’. Probably impossible to stop now – like a good virus, that everyone wants. Nearly every other coin just rides on the coat-tail of bitcoin and IS a scam They are your ‘crypto’. The FUD you see is simply the established elites of all types fighting back, by confusing everyone. This is how it has always been done. And just about everyone falls for it.

    Bitcoin is completely decentralised. No-one owns the bitcoin network, and it has never been hacked ( exchanges, yes). Uptime 100% since 2010. To attack it you would have to get over 51% of the hash power and stay there for a long long time. You would have to double bitcoins energy usage ( expensive!) just to keep up and the attack would be so obvious that everyone would just hard fork away leaving the attacker with an expensive own goal.

    Of course bitcoin is volatile at the moment. How could it not be? It is pure price discovery. But again, if anyone bothered to look they would see that volatility is way ( way!!) down from the early days – less than 10 years ago. The recent price drop is a case in point because most of the selling was newer buyers who chickened out. Old timers ( > 2-3 years ) mostly just yawned. Also because of the scammy casino like trading in the other ‘shitcoins’ plenty of people leverage up thinking they will make a killing only to get reked. This in turn causes further losses.

    A lot of people here sound like Luddites. Quite happy to smash ( by spreading the FUD ) a potentially world changing tech. Sad really.

  71. Joe Blow says:

    Bitcoin isn’t really a currency yet. It is more like an asset – and is mostly treated as such by the Tax Office. Perhaps Gold 2.0. You can use it like a currency but most people do it ‘because they can’ and enjoy playing with and supporting the tech. I bought a BTC backed visa debit card in 2016 and it was a bit of a hassle to set up but by the time I funded it with the 1 BTC ($1000) I’d bought I managed to put $1700 on the card – not bad!

    Transaction fees are now high enough ( you can still do it for under $1 if you check the memory pool of pending transactions and time it) that it is only used for larger amounts. Just like you wouldn’t try to buy a coffee with a tiny bit of gold.

    Bitcoin is like the TCP/IP layer of the internet. You don’t want it to change much and everything else is being built on layers above that. Strike, ION and Lightning are some of the things being built on bitcoin but it all takes time so complaining about lack of use cases is premature at best. It’s quite popular in some 3rd world countries where regular banking is difficult. Ironically it may be there where it grows the fastest as they don’t have a huge legacy banking infrastructure to block it. Much like they bypassed the whole landline phone thing and went straight to mobile.

  72. MatrixTransform says:

    won’t be long now

    soon there’ll be websites just like ‘Find Your Super’ except
    it’ll be Find Your Crypto

    and when yr dead and yr estate is divvied up, all the beneficiaries will need

    …is your cypher

    what a total crock of shit

  73. Rorschach says:

    Ironically it may be there where it grows the fastest as they don’t have a huge legacy banking infrastructure to block it. Much like they bypassed the whole landline phone thing and went straight to mobile.

    Indeed! It is there that the Starlink satellite and similar technology will thrive. Jut power is needed. (Some of the ruinables that are a scam here are well suited there…)

  74. Joe Blow says:

    MatrixTransform,

    yes self custody with absolute security is complex, but getting easier. Multisig transactions where m of n keys are required to move bitcoins makes it unlikely that your keys get lost. Most people will keep their bitcoin with institutions.

  75. Major Elvis Newton says:

    Andrew Bragg is a quisling LINO.

    Not to be trusted.

  76. RomeoWhiskey says:

    Several things can be true at once.

    Technology and theory behind blockchain and cypto currencies is very cool and interesting

    Cypto currencies themselves are (currently anyway) giant ponzi schemes with FOMO driving a Dutch Tulip style bubble.

  77. Dot says:

    BTC, ETH and ADA seem very legit to me. LTC maybe.

    Tokens can get around demonetisation.

    Brilliant stuff preserving free speech.

  78. Daily llama says:

    Like some other Cats it’s all a bit beyond me, but I’ve got 2 kids working in IT so hopefully they’ll make me rich. I like egg’s pizza currency idea, except- I’d eat the profits.
    What about mice? A current period of hyperinflation, or could Australia become the world’s default currency?

  79. Mick Gold Coast QLD says:

    Gassius says at 5:51 pm:

    “I didn’t understand a word of this.”

    Me neither – I see “blockchain” and I think of a heavy duty block and tackle rig on site. “Bitcoin” I associate with old Gold Coast dodgy developers of the ’70s who sold Logan River delta housing lots – under water housing lots – to gullible southerners. It’s dodgy, like bored rich kid Elon Musk.

    “industrialised trust”? Eh? Rolled gold bulltish, that one!

    It sounds a bit like “monetise” which I suspect is new world speak for an existing terminology that the kiddies refuse to use because it was invented by parents from last century who refuse to die and gift them their assets.

  80. JC says:

    I wonder if Milesy’s still in the ALP?

  81. JC says:

    Not necessarily; what’s the problem though – you could argue that 20% to 40% of each AUD in aggregate/on average is when spent in a shop, is converted to USD to satisfy our dependence on foreign markets.

    Dot, the Aussie dollar is stable and doesn’t require fast conversion. BTC is very volatile and one sudden jerk can cancel your profit. If those Japanese retailers aren’t doing fast conversions back to their balance sheet currency then they’re morons.

  82. JC says:

    10.03 is the wrong thread.

  83. kraka says:

    In the Courier Mail today under the title Bitcoin may not be a scam, but it sure looks like one

    IT’S NOT the easiest thing in the world to write about something that is logically inexplicable. But it’s possible to take comfort from the fact that, really, hardly anyone else understands it either.
    It’s time to talk about cryptocurrency.

    At its simplest, cryptocurrencies such as bitcoin are digital tokens which people can swap directly to make payments. It’s appealing to some as there is no central authority in the middle of the transaction such as a bank. All transactions are visible to everyone else in the chain, even if the identities of the traders are hidden.
    But on the other hand it’s not money. It’s also hard to believe it’s not a giant scam; that cryptocurrency is more a belief system, a religion, than the legitimate new form of currency its evangelical spruikers believe it to be. Like religion, cryptocurrencies rely on the faith of its adherents, rather than solid empirical evidence.
    Australia’s reserve bank may be looking after its own interests as a legacy player but it makes some reasonable points about the value or otherwise of cryptocurrencies, of which there are about 1500 in circulation.
    In particular about why cryptocurrency is not money. In short, it’s because cryptocurrencies are not broadly accepted as a means of

    payment. Then add in their volatility, which means they are not a secure store of value.
    “Unlike conventional national currencies such as Australian dollars, which get part of their value from being legislated as legal tender (the law says it must be accepted as a payment), bitcoin and other cryptocurrencies do not have any legislated or intrinsic value,’’ the RBA says.
    “Instead, the value of Bitcoin is determined by what people are willing to pay for it in the market (and, in theory, its value could fall to zero at any time).’’
    Bitcoin in itself has no intrinsic value. It produces nothing. Its value is purely speculative. It’s a form of gambling. It’s a greed-based system. A buyer believes they can sell for a higher price than they bought it for. That’s it.

  84. Rorschach says:

    from mem’s link above:

    In 2011, I predicted in a speech that gold would reach 50,000 USD per ounce in 2028, at which point the USD would cease to exist in its current form. But the calculation behind that prediction required that the central banks begin running a 10-15% inflation rate (like the 1970s, to whittle away the real value of the unsustainable debt) in 2017. It seems they are only just beginning now, in 2021. So maybe 2032 for the end of the USD.

    Property, gold and Crypto. These will be seen as inflation proof stores of value when the above becomes a reality. Inevitable.

  85. Speedbox says:

    You can be certain that if a government (some/all of them) determine that BTC may undermine their fiat money supply and their respective economies, transactions using BTC will be banned or limited (<$1,000 or similar). NOTHING will be allowed to threaten the financial well-being of government(s) and its money creation and subsequent accumulation/trade. The 'value' of a nation's financial system and its issued currency is predicated on the nation's sovereignty, risk and financial mechanisms.

    I have no doubt that blockchain technology will be part of the future of money, but that is a long way from saying that BTC (or others) will necessarily be part of the future. BTC is largely ‘tolerated’ and as nations move towards their own emoney equivalents, BTC may continue but only as an alternative form of 'investment'.

    Never underestimate the capacity of governments to legislate and regulate against any form of opposition.

  86. m0nty says:

    Several things can be true at once.

    Technology and theory behind blockchain and cypto currencies is very cool and interesting

    Cypto currencies themselves are (currently anyway) giant ponzi schemes with FOMO driving a Dutch Tulip style bubble.

    Good post.

  87. Sinclair Davidson says:

    Serious currencies don’t drop 30% because some ponzi artist sends a tweet.

    heh. We saw a 30% price drop yet not one bank had to be bailed out, no emergency stimulus package announced …

    In any event we’re seen numerous currency crashes, stock market falls, etc. over the years.

  88. Sinclair Davidson says:

    It’s real simple. Bitcoin is the shot over the bow of the nation state and central banks.

    Yes!

    For many conservatives this is a bug not a feature.

    This is awesome – the modern nation state will have to lift its game bigtime and stop treating citizens as taxpayers to be farmed.

  89. m0nty says:

    In any event we’re seen numerous currency crashes, stock market falls, etc. over the years.

    Serious question Sinc:

    If/when crypto is accepted as a trusted store of value, and there’s a massive crash, who bails out the financial institutions? Is the answer “no one”, thus we would have to accept global depressions whenever there is an economic shock like a pandemic?

  90. Joe Blow says:

    Also from mems link – Bob Moriarty is of course a gold bug and is probably annoyed that bitcoin has taken the wind out of the gold market. His analysis is very shallow, which is pretty typical for someone who just CANT BELIEVE what is happening in front of his very eyes. He’s a trader so focuses on the huge number of people who thought they would make a killing in shitcoins like doge and then get recked. He claims that ‘crypto’ isn’t scarce because there are 5000 of them. Well, yeah, what else is new?? Anyone and their dog can create a ‘crypto’ and pump it, so of course they aren’t scarce. Hell, doge hasn’t had any development for years until the recent interest.

    What he fails to mention though, is that anyone in the last 10 years who just bought some bitcoin and kept it rather than trading it has done very well, many extremely well, a few mindblowingly well. Even people who bought at the top in 2017 are way ahead. Except for the last 3 months of course.

    He also fails to realise that bitcoin is not ‘crypto’ and therefore has nothing in common with the other actually 10,000 ‘coins’. Bitcoin is a one time, path dependent discovery of absolute digital scarcity and is unique, interesting, and most likely very valuable and useful. That is why all the other junk COMPLETELY rides on the coat-tails of bitcoin. They go up AFTER bitcoin starts its bull run. They fall further when the market exuberance runs out of steam, and many just disappear, or wake up again like zombies when bitcoin gets in the news again.

    This is all pretty obvious to someone who takes quite a bit of time looking into it.

  91. Joe Blow says:

    Monty,

    If/when crypto is accepted as a trusted store of value, why would it crash?

    This is all a long way off. No institution or individual should buy bitcoin if they can’t afford to lose it. On the flip side, they can’t complain when they miss out on large gains. Most people who bought bitcoin early and still have it weren’t lucky, they started to understand the potential and it is actually difficult to go against the crowd.

    Most of the current volatility is due to people being unable or unwilling to understand it. Regulatory uncertainty doesn’t help. As more people come to understand it, they will buy some, the price will rise, volatility will decline, FUD will reduce etc.

  92. m0nty says:

    If/when crypto is accepted as a trusted store of value, why would it crash?

    If it’s A store of value, it can still crash if it loses trust relative to other sources of value. If it’s THE store of value, that becomes a lot harder (but not impossible). Even the USD is not impregnable from a run on the banks if things in the real world turn pear-shaped for some random reason.

  93. Joe Blow says:

    Sinc,

    For many conservatives this is a bug not a feature.

    This is awesome – the modern nation state will have to lift its game bigtime and stop treating citizens as taxpayers to be farmed.

    Yep, big changes ahead – probably the most disruptive decade in our lifetimes. Computation, the internet, networks and now networked value transfer will transform everything, and mostly for the better. Nation States can’t really keep up, it is all happening too fast, so decentralisation will be the norm. People here should be excited by this, but sadly not so much.

    Today it is possible for a young, moderately clever person to work almost anywhere, go jurisdiction shopping for low tax rates and a pleasant lifestyle, and carry a good chunk of their wealth literally ‘in their heads’. They can set up decentralised companies whose assets are in the cloud and thus difficult to seize. They can live an increasing part of their lives virtually and totally ignore the crap foisted on the rest of us by the powers that be. This alone will force governments to be ‘nicer’ and more efficient as this part of the labor pool is growing exponentially.

  94. Joe Blow says:

    Monty,

    If it’s A store of value, it can still crash if it loses trust relative to other sources of value.

    It would drop, yes. But crash?

    This is what is causing the volatility NOW, but as bitcoin acceptance rises volatility should fall and is falling.

  95. The Sheriff says:

    Buy Monero for true financial freedom since its transactions are totally private and can’t be tracked.

  96. m0nty says:

    It would drop, yes. But crash?

    This is what is causing the volatility NOW, but as bitcoin acceptance rises volatility should fall and is falling.

    The unknown there is whether there is a ceiling to bitcoin’s acceptance. It’s rising, but it may never reach full acceptance with the average Mo.

  97. Joe Blow says:

    The unknown there is whether there is a ceiling to bitcoin’s acceptance. It’s rising, but it may never reach full acceptance with the average Mo.

    Bitcoins trust model is based on math – quite different than what we are used to. I'm thinking that is what Sinc meant by 'industrialised trust'. The Economist once called bitcoin 'The Trust Machine'.

    I guess there are still a few people who don't accept that 2 + 2 = 4 either.

    Once people get used to the idea that some forms of trust can actually be removed from centralised authority, a lot of possibilities open up. They will start creating institutions using this model and incumbents will struggle to adapt. This is what is happening now, the old institutions are in deep water – neither left or right think much of them and they are lashing out, spreading misinformation and fear, uncertainty and doubt.

  98. Kneel says:

    “This is what is causing the volatility NOW…”

    Nah, what’s causing it now is an attempt to get people who own it to sell as the price drops, then it will bounce back and the “winners” will be the buyers. It’s the old story – the ones who make the money off of market moves aren’t ahead of the trend, they are the trend. They are the ones everyone says “Look, is buying/selling (strike out whichever is inappropriate), so should I!”. Said rich dude of course is only selling a small amount of holdings to start the down trend, then buying. Or if on the way up, buying a shitload and telling everyone how good it will be after they already got hold of it.
    An old, old trick. But plenty still fall for it. Sucker born every minute, they know it, they exploit it.

  99. Kneel says:

    Blast!
    Should have been “Look, <insert rich dude> is buying/selling

  100. Sinclair Davidson says:

    who bails out the financial institutions?

    In some crypto-visions there would be no financial institutions, there would be markets that would simply reprice.

    Financial Institutions exist to over trust problems (the blockchain industrialises trust) and asymmetric information problems (the blockchain is transparent). So there is no need for large financial institutions that politicians may decide are too big to fail (even now they actually are not) and perhaps no need for financial institutions at all.

  101. Makka says:

    I understand that China is spending every erg of spare power to mine the coin, (and so is Iran DPRK and others).

    Much of the Chinese mining of BTC is from renewable (hydro excess to network demand) or stranded energy (gas normally flared off). The green argument against BTC is a red herring.

    The unknown there is whether there is a ceiling to bitcoin’s acceptance. It’s rising, but it may never reach full acceptance with the average Mo.

    There is an ocean of demand prevented from investing in BTC now due to reg hurdles, much of which will be removed with US allowing BTC and ETH ETF’s to commence. GS, JPM, Fedelity, Citi, BNY Mellon to name a few are now offering BTC investments to their customers. I think those insiders are confident enough in the future of BTC and blockchain.

    Monty,
    If/when crypto is accepted as a trusted store of value, why would it crash?

    mOron wouldn’t know his fat arse from his elbow.

    Only a violent, global revolution will loosen the grip of governments over their currencies.

    This is rubbish. France , Germany, Italy, Netherlands all gave up their own currencies without a shot fired. In any case, BTC is readily exchanged for fiat USD. And will be for the forseeable future. So, BTC is not likely to replace the USD anytime soon, however it’s value vs the USD will be dependent on the usual suspects- supply and demand. And with BTC supply halving every ~4yrs and coins being taken out of circulation by the Billions, supply will increasingly struggle to meet demand. Especially when the BIG institutions (pension funds, bank treasuries, corp treasuries) start apportioning more of their assets to BTC. There are many cryptos, but only one BTC.

  102. Dot says:

    But the calculation behind that prediction required that the central banks begin running a 10-15% inflation rate (like the 1970s, to whittle away the real value of the unsustainable debt) in 2017.

    Dude.

    US currency (M0, base money) is running at 8% inflation per month.

  103. Tel says:

    US currency (M0, base money) is running at 8% inflation per month.

    The RBA balance sheet was sitting at $350 billion at the end of February 2021 and it hit $400 billion by the end of March 2021 which is an increase of about 14% in one month.

    Admittedly, March to April was smaller than that, but even then we are looking at serious money pumping.

  104. Primer says:

    There’s a free market in bitcoin and its associates.
    Let her rip.
    Remembering that it has all the efficacy of a PNG kina shell in the Highlands from 80 years ago.
    Libertarians love the idea.
    A debt dollar with taxation power, gold or ‘money means what I say it means’ freedom.
    And who knows, the great pile on will be if the US Fed ever does a virtual dollar auction…..
    Not impossible, a massive transfer of debt to the ether is actually possible.

  105. Dot says:

    Remembering that it has all the efficacy of a PNG kina shell in the Highlands from 80 years ago.
    Libertarians love the idea.
    A debt dollar with taxation power, gold or ‘money means what I say it means’ freedom.

    You have to be pretty stoned to understand what Alfonso is saying.

    Something like “I hate freedom, but I don’t actually have an argument as to why I should be able to steal your property…”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.