Crypto: the issue of planetary adoption

In his recent article Why Everyone Missed the Most Mind-Blowing Feature of Cryptocurrency, Daniel Jeffries makes the point that the true power of crypto-currency technologies lies in its ability to disintermediate the issuance and distribution of money i.e. to replace the 400 year old banking cartel that runs the world, and the attendant violence that keeps it in power

He correctly points out that money flows from the top, down through controlled channels that limit the amount of power any individual is allowed to have, and cleverly identifies that whilst crypto(-currencies) have done very well with issuance (the “printing” of money, in his parlance), they’ve done less well with adoption (distribution)

It’s true. Buying bitcoin is and has been, since inception, a path for the persistent and clever, but most importantly, for those fortunate enough to possess the requisite resources

I agree with Daniel that crypto will only bear fruit as a function of world-wide adoption and, as I argued in my article BTC Ad Astra, this adoption is less likely to happen as a function of the transnational value of crypto, than it is from its investment (store of value) quality, simply because from a comparative perspective, the average man can reach the conclusion of his need for participation more readily by viewing the price on a screen, than by observing advantages in the spending efficiency of the currency

At present there is a great deal of thinking devoted to the issue of adoption, including models where money is literally given away. Of course, no one can say for sure what will work and what won’t — there are no guidelines and we are walking in undiscovered country — but in thinking more deeply about how money is distributed we necessarily arrive at the corporate structure

If we’re going to change the world, we have to start with the corporation

Unlike what is widely believed in certain circles, corporations are not evil. They have become evil as a function of the perversion of their mechanisms, but the basic premise of the corporation is still valid and useful: that a man who provides value to the world and captures that value (money), can redeploy it in the service of others (investment), facilitating growth, discovery and the betterment of society (economic activity) — in exchange for a reward (dividends)

As I’ve recounted elsewhere, investors no longer even know what dividends are, and CEOs collect as much of the profit as they can (and particularly in the US, that is quite a lot) at the expense of shareholders, employees and customers. The management of modern corporations consists of manufacturing substandard products, lobbying governments so they can manipulate markets, cooking the books and generally bamboozling the public to keep sales high — all with the single aim of amassing as much value into the hands of the few (management), at the expense of the many (shareholders)

So the modern corporation is a funnel by which the ruling élite controls how much of the value produced by men is actually kept by them, and the rule of thumb is to allow as little as possible of the power to trickle down, even to the point of starvation. In other words, corporations are a tool of enslavement

Unfortunately, changing this behavior, as much as has been tried, is not within the realm of possibility, simply because those structures have amassed sufficient power to retain their status quo

So if corporations are to become part of the solution, perhaps they need to be tricked into doing so. It’s not difficult to imagine how, given that they are completely driven by profit motives

The Ubiquicoin project, for example, is contemplating such a path by mimicking the mechanisms of the vast hawala networks that currently operate throughout the Middle East, North Africa and the Indian sub-continent. These systems are used to transmit money internationally at lower costs than their Western counterparts: SWIFT and the Visa network. By putting these mechanisms on the blockchain and tapping into existing markets, Ubiquicoin could bootstrap operations and create a vast opportunity for the deployment of crypto internationally. Corporations would flock to the coin by virtue of the savings offered, but due to the project’s approach in creating a currency stable with respect to fiat, they could also potentially come to rely on the coin as a reserve currency — reserves are, after all, primarily used as temporary caches in the management of cash-flow. As their dependence on the coin increases for transacting with vendors, it is conceivable that eventually the coin also becomes useful for paying management, and finally, employees

But old habits die hard

So we need to start fresh

The Aragon Network is due to go live by year’s end. The product, currently in alpha, is already very user-friendly and comprehensive in terms of features, the most immediate consequence of its use which will be the creation of (hopefully) a tidal wave of decentralized autonomous organisations (DAOs)

A DAO is, in essence, a corporation, but without the trappings of corruption i.e. without law, litigation, judges, jurisdictions et cetera. It is a corporation whose bylaws are embedded in the heart of a cold, perfectly logical and totally inhuman machine that enforces the proper and just distribution of value

From the perspective of commerce, a DAO can compete head to head with any corporation, but with the great advantage of neither having to answer to tax authorities, nor having to retain lawyers, accountants, HR personnel, or any of the panoply of parasites that currently drain corporate profit. Most importantly, they run without executive management and the attendant “sweetheart deals”, golden parachutes and exorbitant bonuses — thus preventing the funnel effect

In other words, a DAO is the perfect instrument to distribute crypto-currencies i.e. it is through commerce and economic activity (via investment) that we find the path to the planetary adoption of crypto

Like ownership in bitcoin, participation in a DAO is open i.e. anyone on the planet regardless of income level, faith, political inclination or jurisdiction can become a token holder without requiring permission. A child in Jakarta can buy tokens the same as an investment banker in New York because the DAO serves everyone equally

To circle back to Daniel, if the bus driver weren’t chained behind the wheel, he might write that great American novel he always dreamed of. If his income weren’t crippled with overbearing taxation, if he weren’t forced by tyrannical governments to have his investments managed by Wall Street funds happy to take fees but remain otherwise unaccountable to him, if his cost of living weren’t as high as it is owing to the corruption of the system, he might have that chance

And if the coming wave of DAOs has any chance of surviving, that dear bus driver we’ve come to love may have the chance of taking his hard-earned pennies, making an investement and actually benefitting from it, like it was always meant to be
 

erick calder

What can Bitcoin learn from Gold's survival as a stored value instrument?

bitcoin-gold-emc2-blog

he greatest heist of the century was pulled off by central bankers when they managed to conflate the price of futures contracts on gold with the price of physical bullion

in the public eye, the “spot” price on gold is what the metal is worth, however, futures contracts are manufactured out of thin air and are rarely delivered, instead getting settled for cash

the net effect has been one which many refer to as the gold suppression scheme i.e. that by being able to create supply on demand, central bankers have maintained precious metals prices artificially low, in essence practically eliminating public interest in it

bitcoin could thus learn this valuable lesson and ensure that its audience understands clearly that the value of the coin is in holding it. buying interest in derivatives like ETFs is not the same and should not be regarded as the same

so long as stakeholders keep their coins in their possession, borrowing them (as is done by brokerage houses with stocks) to allow short positions will remain marginal and the ability of any powerful player to suppress bitcoin prices minimal

thanks for the chance to answer your excellent question

Eric Calder

What is under-hyped in cryptocurrencies right now?

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Under-hyped is different from undervalued so I’m not sure that Greg Matthews’ answer quite addresses your question

with the large number of currencies in existence it’s difficult to keep up with what’s hot and what’s not but the best thing is to research and understand the activity level behind a currency and ask question. such as:

  • does the coin have an active development team?
  • what use cases does it serve?
  • how is the team marketing the coin?
  • what apps are being developed to use it?
  • is it listed on an exchange such that the public can purchase it easily?

the answers to such questions give you a perspective on whether there is potential behind the coin and allow you to compare hype against market valuations

a good example is a little-known coin called Einsteinium (EMC2). it was created a few years ago and all but died. in recent memory it has regained the market’s interest as developers and miners have begun lining up to get involved. the community is actively pursuing a number of interesting use cases and in my opinion there’s very little press about it, something that will change

currently pricing is hovering at around 3,000 satoshi/coin with a market cap of about $15M USD, but the coin could easily double or triple. only time will tell, of course, but given the Einsteinium Foundation’s agenda for growth and their active involvement with the energy sector, a super-wallet (in development) and various channels currently under exploration to provide a public on-ramp for the currency, it’s easy to see big gains coming in the mid-term

additionally, due to a technical issue where one of the exchanges (currently traded on Bittrex and Poloniex) discovered a double-spend (no one lost money but the issue had to do with under-capacity of hashpower on the network, which is being addressed as a high priority), the price at this point makes it a good buying opportunity

 

Eric Calder

The ICO: an expression of Koyaanisqatsi

einsteinium-article

the Status project raised $270M this morning in under 3 hours, concurrent to Civic’s, which completed its ICO for a total of $64M in a heavily oversubscribed offering

as with the Bancor ICO of just a few days ago, which raised $150M, the process generated great congestion on the Ethereum network and left many would-be participants out in the cold

in the context of the US national debt, or of market valuations for companies like Apple or Google, these sums are tiny, but if we consider that the purveyors of these funds are not institutions but individuals, not the great occidental pools of money collected over decades from the non-thinking public, but the hard-earned capital from little peoples across the world thinking hard about the potential of these projects, we start to discern something novel in this withering period of world history

unlike the IPOs of earlier days, these currency issuance events are not the product of lawyers, months of costly due diligence, SEC filings and government accreditations for participants; in fact, often there aren’t even legally formed companies for ICOs — the groups involved instead choosing to operate as github projects i.e. loose coalitions of developers living in different continents who have never met face-to-face and contribute to the project without compensation or clear leadership

gone are the Private Placement Memorandums (PPMs), Ivy League educated CEOs, prestigious underwriters like Goldman Sachs, auditors, and panoply of parasites we’ve all grown accustomed to. gone is the ludicrous notion of investing in intellectual property, in institutions and reputations

what we’re investing in now — often conveyed via little more than a whitepaper — is disruption. we’re investing in the unknown, in anything with the potential to change the status quo, and in the faith that anyone who would build a thing on their own time and contribute it anonymously to the world must do it out of altruism instead of greed

the posterchild for the nascent zeitgeist is, of course, Satoshi Nakamoto. whoever he is, we owe him a unpayable debt of gratitude, not only for the gift of Bitcoin, but also for bright-lining the leitmotif of the open source community: that something truly valuable must belong to those it serves, that ideas aren’t property, and that if we work together we can change the world

the Hopi tribes of North America use the word Koyaanisqatsi to mean “a life out of balance” — a state of affairs that demands a change in the state of affairs

and there is little question that on a planetary level we are awakening to the consciousness that our present way of life is unsustainable. for those that never heard of crypto-currencies, expression for change comes in the form of President Trump’s election and Brexit, the Scottish secession movement, or the many occupy/resistance initiatives out there

for those of us who understand the vision behind “crypto” and the enormity of the change it represents, there are ICOs


Eric Calder

What would happen if a country converted all of its currency to Bitcoins?

The short answer: it would make its citizens instantly wealthy beyond imagination.

Adopting bitcoin as a national currency would mean exchanging all of that nation’s currency for BTC, a process that, no matter how small the nation, would represent a colossal demand for the crypto-currency.

Additionally, as most nations today use the US dollar as a reserve currency, such a move would also represent the dumping of greenbacks, which would cause an equally massive downward pressure on USD.

Together, the USD/BTC cross would see complete collapse, dealing the already moribund dollar a mortal blow that would force all other nations to divest themselves of it, lest they be left with no value in reserves at all.

In selecting a new reserve currency, no nation could, of course, steer clear from the unavoidable political choice of picking the fastest appreciating, most secure and well proven currency the world has ever seen: bitcoin.

At that point, the average exchange rate at which the posited first nation managed to bitcoinise will pale in comparison to the rates other nations will pay in their frenzy to keep whatever wealth they have collected and said nation’s citizenry will have acquired a benefit which I needn’t expound on here.

As a final note I would add that having adopted bitcoin as a global currency would in one quick blow eradicate most of humanity’s suffering: no more hunger, no more war, no more illness, no more poverty. for these are all creatures of our degenerate monetary system, which in our age we have haplessly come to believe a necessary yoke, but which bitcoin will prove wrong.

That said, I have little doubt that no sooner is there talk of any such move by a nation, than will the US dispatch a “diplomatic” detachment to quash any such thinking, for no dollar dumping can ever be allowed (another topic I need not expound upon for the already abundant precedent to draw from).

Erick Calder

convert bitcoin

Who missed Bitcoin and wants to start over again?

Wo miseed bitcoin - EMC2 Blog Image

no one has missed bitcoin. it’s still there and if you want to buy it, you can. that some may have missed the rise in price over the last X months, sure, but that is not reason to miss the rise in price over the coming Y months and years

anyone looking at bitcoin at USD 1,600 today thinking it’s gone as far as it’s going to go fails to understand the staggering social change it represents, the minute impact it’s had so far, and thus the amazing potential that remains to materialise

another way of saying this is: you can always say to yourself you “missed” bitcoin. I thought so when it was $200/coin and there will be people that think so when it sells for $20,000/coin. but no matter at which point, they’ll still be wrong. there’s a point at which measuring bitcoin in terms of US dollars or Euro is no longer significant and if you didn’t get in by that time, you’ll have just squandered whatever wealth you have that you could have put into BTC

erick calder

Of bubbles and metaphors

Bubbles and metaphors EMC2 Blog

With the prices of crypto-currencies quickly rising out of everyone’s reach, one of the more common questions being asked is: “Are we in a bubble?”

What this metaphor is really asking for is a risk assessment regarding price stability and the likelihood that our potential investment may see a price collapse that leaves us somewhat poorer and less hopeful about the future

to discuss the subject in a language less informal than that of bursting bubbles, let’s define the condition in question as an over-exertion of the market. markets have buyers and sellers, the numbers of which wax and wane, and as the ratio of these two classes of participants changes, it causes prices to rise and fall, like the tides. generally, as demand for a commodity rises, it stretches the supply causing price hikes and and attendant enthusiasm from those long the position (those who own the commodity). at some point prices are sufficiently high (a point of over-exertion) that demand starts to loosen and prices fall, finding the other end of the pendulum, only to rise again

however, to assess whether market is over-exerted one cannot merely look at the price of an asset e.g. a single share of Berkshire Hathaway is quoted presently at $249,610 yet no one would point to it and claim it’s ready to burst. similarly, a rapid rise in the price of an asset is also not sufficient to classify a market as being in a bubble — consider that Monster (the beverage) saw a 11,731% gain since it’s IPO (as of Aug. 2016) but has found stability, and was thus never a bubble

a “bubble” therefore is a condition of instability. anyone looking at Monster’s scandalous ascent may have concluded it would soon burst, but they would have been wrong. the asset did not collapse in price, nor will it do so at this point

to answer the question of price stability we must turn to the fundamentals of the particular market, in this case, the nature of crypto-currencies, their structure and potential

the single, most important fact to comprehend about Bitcoin, Ethereum, Dash or any of the nearly 2,000 “alt-coins” in existence today is that their supply is limited i.e. the amount of currency available for purchase is finite

this differs substantially from sovereign currencies (those issued by governments, like the Euro or US dollar) whose aggregate monetary supply (i.e. the total number of dollars in existence) is a factor of credit. the signifcance of the previous statement can be expressed as two characteristics of these currencies: 1) nobody, not even the Federal Reserve (who issues US dollars) knows how many dollars exist, and 2) anyone can create a dollar

whilst the last statement may seem shocking to most, consider that any person who deposits $100 in a bank account, through the magic of fractional banking, has just manufactured roughly $1,000 or that the credit cards in your pocket represent a promise to pay which is monetised by banks into actual dollars — as are mortgages, promissory notes, bonds, or any other promise to pay

crypto-currencies are thus a new breed of animal and, of principal interest, one designed to maintain (or increase) the value of the holder, that is to say, they are deflationary. to any reasonable human being, a comparison between these two types of currency yields the simple conclusion that keeping the fruits of one’s labour in fiat represents financial ruin vis-à-vis the potential for a comfortable retirement, a chance to live it up for once, and an inheritance for our children

a secondary fact of consequence to contemplate, in answering the question of the bubble, is that crypto currencies provide a degree of service not currently available by sovereign currencies e.g. security, concealment, ease of transmission and control

security is of paramount importance where wealth is concerned. we work hard for our pennies and therefore keeping them safe from the many hands that would take them by force is a consideration as old as money itself. by its very nature, crypto-currencies defy theft, confiscation, taxation (another form of theft) or devaluation

additionally, as human beings we have an innate sense of what’s “our own business” — the notion that what we do is our affair and no one else’s. in today’s modern world our privacy is tresspassed upon in every way by greedy and controlling governments and corporations that do not serve our interests, and whilst crypto cannot protect one from cameras and NSA snooping, it can protect our identity and the particulars of our transactions

of course, it is also possible to compare crypto-currencies with sovereign money in terms of their transmission capabilities. send money to your parents, it’s 3 banking days; if they live abroad, it’s 10 days or more. and there are fees (everyone takes a cut of your money). and there are limits, and regulations, and snags and misunderstandings, and questions about “our” business. with crypto, on the other hand, a transmissions takes a fraction of a second and is effected for any amount. no rules, no questions asked

and finally, crypto we control. we like control, because we can trust ourselves. across time we have learnt that any time we trust someone else we become vulnerable, and that others put their own interests ahead of ours. do you trust your bank? your government? have you seen what these institutions do? to you? to others? with crypto you have only to ask yourself: do you trust yourself with your own money?

in summary, from a service perspective, crypto currencies are also clearly superiour to fiat, and this creates ancillary demand for that type of asset

as a final third factor in the analysis of fundamentals, consider that each currency offering represents thousands of man-hours of effort. these currencies represent solutions to difficult problems arrived at by brilliant minds whose sole aim is to make life better for everyone

what problems and solutions? take one currency as an example: Ethereum. This is a platform born of the recognition that whilst bitcoin is a state machine capable of managing transitions of a numerical value, that transitions of all kinds can be managed by a blockchain i.e. ethereum is a generalisation of bitcoin that allows others to build distributed applications to solve real-world problems. the market for ether thus comprises not only people and organisations, but also applications i.e. ETH serves as the fuel that runs applications within the world computer that is ethereum

or take Dash, an incarnation of a DAO (a decentralised, autonomous organisation). a DAO is like a company but is not incorporated in any jurisdiction (has no legal existence), has no board of directors, no CEO and no staff, only shareholders. to paraphrase, there is no old-boys network of directors to fleece shareholders, compensating their CEOs with outrageous salaries, bonuses, and golden parachutes. no fancy jets or million-dollar birthday parties at the expense of dividends. DAO investors use their tokens to finance projects, the proceeds of which then compensate shareholders directly, without the panoply of parasites traditional of corporations. is there value in this new modality of business? does Dash not represent a more democratic, fair and desirable way for capital and labour to meet? you bet it does

and as we continue down the long list alt-coins, each one of them represents a different set of aims and choices: coins for raising charity funds, coins where the economic model consists of manufacturing liquidity just-in-time and value can’t be stored (i.e. wealth accumulation is impossible), coins issued to pay for specific services, such as with Storj

so given the analysis above, perhaps we can now answer the question of whether at present the crypto markets are in a bubble

what maketh a price is the balance of supply and demand. in the case of crypto, supply is fixed but demand is clearly buoyed by an increasing awareness of a planetary magnitude, by an entusiasm for the discovery, innovation and potential these represent, to change the world we live in, by the growing recognition that our institutions have failed us, but that we have an alternative

there will be price corrections. it is natural of any market, but the party’s just getting started. how much higher can prices reach? where will these markets find balance, stability?

the answers are here: https://medium.com/@ekkis/btc-ad-astra-67b45f2310d2

erick calder

BTC Ad Astra

BTC Ad Astra - EMC2 Blog Image

I run a bitcoin ticker on my Mac to keep me apprised of the ever-changing price of bitcoin on a second-by-second basis. Today it reads $1,591 — the value of a single coin on the Kraken exchange (on Coinbase it’s $1,633 (arbitrage anyone?)), as you can see in the picture above

With a market capitalisation of $26B (see CoinMarketCap), however, BTC remains Liliputian vis-à-vis the sums invested in other asset classes. If compared to gold (market cap: $8.48T) bitcoin represents a tiny 0.3%, and gold itself is considered a tiny market with relation to equities ($69T), debt ($230T) or derivatives ($1,200T) — not to even mention the gargantuan f/x markets

The consensus for establishing market cap is that the last trade’s price forms one of two factors in the calculation, total supply being the second. Regardless of whether that makes sense (in my view just because one coin is valued at a given level doesn’t imply all coins are — try selling all the coins in existence and see what happens to price), bitcoin is unique in one respect: the constraint of its supply. In fact, the same argument could be (and generally is) made of gold but in practice the price of gold does not represent physical gold (which is constrained in supply) but that of the nearest futures contract (which is not). This matters because with a finite supply, increased demand can only be satisfied via a rise in price

As I watch bitcoin’s nearly vertical progression, I cannot help but wonder: where is the threshold at which the computation on the street transforms from ”the price of bitcoin is rising, I should get in” to ”the price of dollars is collapsing, I should get out”? The difference being that whilst the former represents merely an act of speculation, the latter signifies an exodus of capital from the banking system as a protectionary measure from financial ruin

Where is the threshold? where is that point at which a sane human being can only ignore bitcoin at their own peril? does the computation change at $5,000/coin? what about at $50K or $1M? because at some point it becomes patently and excruciatingly obvious that not liquidating all of one’s positions, retirement accounts — basically one’s entire net worth — and placing the lot of it in bitcoin is tantamount to financial ruin

And when that conclusion is reached, what happens to the world we live in? a world without central banking and the ruinous path the ruling élite has chosen for the 99% of us by way of its monetary controls?

My guess is that the élite is finished. They are unable to place their wealth in bitcoin without causing the very demise of the financial system they currently control, and they are equally unable to prevent the 99% of us from doing so — the final outcome of which is that we are about to witness the greatest transfer of wealth in the history of humanity, with the corollary that as their fiat currencies devalue to nothing, the 99% become rich, creating the hyper-wealth imagined in certain academic circles

As a person becomes rich, he is able to make more decisions, to exert his will on the course of events in the world he inhabits. His decisions are, of course, to his own benefit, but by having a greater number of decision makers in the pool, better decisions can be reached i.e. individual greed is evened out to produce the benefit of the commons, which is of course, the lesson bitcoin teaches and that is already embedded in the proof-of-work solution to the Byzantine Generals’ problem that Satoshi Nakamoto (whoever he is, thank you for this breathtaking gift to the world) solved

Our societies have been a great experiment, primarily one of representative democracies as the ensuing organisational structure after the monarchy. As such their apogee has passed and is slowly yielding to other more egalitarian forms of democracy, closer to the Platonic vision of Classical Greece where the nation state fades away to make room for meritocracies

Already we are witnessing the construction of distributed autonomous organisations, prediction markets and other forms of decentralised decision-making and collective knowledge structures, the predecessors of mechanisms that will reshape our civilisation in this 21st century anno domini

To conclude, bitcoin is a harbinger. If you have ears, what you’ll hear are the tidings of our finis mundi — the end of the world as we know it. Not the TEOTWAWKI of the survivalist preppers, who stock food and ammunition in expectation of a Mad Max scenario, but quite the opposite, the end of oppression by the few, the liberation of the human mind to solve the problems already within reach, that the élite prohibits

erick calder