The War On Cash/Financial Privacy-Negative Interest Rates

Moderators: Elvis, DrVolin, Jeff

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Wed Sep 13, 2017 6:47 pm

Hang on to your cash. This dash to digitise payments is dangerous

September 13, 2017

Sweden leads the world in cashlessness. In doing so it also leads the world in opening its citizens up to fine-grained financial surveillance. “Cashless society” is a euphemism for a “bank payments society”, in which every transaction must be passed through a complex of banks, card companies, phone providers and payments apps.

In granting financial corporations complete control over the money system, our every economic interaction ends up logged in their databases for analysis. Sweden may end up being the first society in which every private economic action is recorded.

Cashlessness is often presented as natural “progress”. Indeed, a recent BBC article about Sweden’s digital payments fetish asks: “So how did the Nordic nation get so far ahead of the rest of us?”.As if cashlessness is a state we are all willingly racing towards.

Commentators often suggest the phenomenon is driven by “consumer demand”. It’s partially true. Ask a room of people to raise their hands if they wish to be able to use digital payment, and most will do so. But if you reframe the question as “Do you want to not have the option to use cash?” people are more hesitant. We like new options, but we don’t like having options removed.

Automobile evangelists in the early 1900s pitched cars as the transport of the future, superior to other forms, such as horse-drawn carriages. The bicycle, though, has remained stubbornly persistent, despite the car’s greater speed, distance and carrying capacity. That’s because the bicycle is more efficient in certain contexts, and requires lower maintenance. Cars have come to cause congestion, pollution, accidents and urban sprawl, and nowadays we see the simple bicycle as one solution to the problems caused by the “superior” car.

So it is with cash. The digital payments industry tries to cast cash as the horse-drawn carriage of payments; but cash is the bicycle, more flexible, resilient and convenient in certain settings, especially informal ones.

People don’t “want” cashlessness any more than they “want” a society where you’re allowed to use cars only. And once people glimpse the dark side of bank digital payments – with surveillance, massive increase in financial cybercrime, and exclusion of people who cannot access the formal banking system – they will probably want cash to remain.

There are, however, certain institutions – banks, payments companies, and governments – that really do want the death of cash. They are waging a war on cash, publicly smearing it as an outdated social evil while contrasting it against a romanticised vision of digital payments. Most ordinary people do not see cash as a “social evil”. They see it as a normal public utility. Private companies, though, see public utilities as competition. The only reason Visa ran its “cashfree and proud” campaign is because Visa loses revenue when you use cash.

Engineering public consent for cashlessness is a subtle process. People may indeed enjoy a new payments app or contactless card, but financial institutions then use that to justify the gradual removal of the cash infrastructure – such as ATMS – in order to deliberately make cash harder to use. This feeds back, making digital seem relatively more convenient, “inspiring” more people to choose it.

A similar self-fulfilling feedback loop can be seen in the European commission’s recent inquiry into implementing cash thresholds that would set limits on the size of cash transactions. Thresholds seemingly strike a compromise, hindering criminal groups, which may use large cash transactions, while having minimal impact on legitimate businesses, which use small cash transactions. Nevertheless, if you wanted to slowly create a cashless society, thresholds would be the ideal way to incrementally implement it. By gradually lowering the threshold over time, authorities slowly wean people off cash by making it increasingly harder for them to use it. It acts as a ratchet mechanism, pushing them into the arms of the digital payments industry.

Maybe I’m wrong. Maybe ordinary people in Sweden do passionately desire cashlessness, and have driven it themselves. Maybe they are not aware of the downside of digital payment, or don’t care because they have relatively high levels of trust in their government and financial institutions. But this issue goes beyond Sweden. The Indian government recently tried to force-feed cashless society to its citizens through its botched demonetisation programme, which hit the poorest Indians hardest.
Advertisement

And then there is the rapid digitisation of China’s money system. Two services, WeChat and Alipay, have gained massive ground in mobile payments. There are enormous surveillance implications to having hundreds of millions of transactions being routed through two companies that the Chinese government has access to. Payments are one of the last data frontiers. Your Facebook profile presents your public persona, but in your private payments you “put your money where your mouth is”.

States having access to your payments data opens up potential for economic censorship. Want to disrupt a major protest in a country where everyone uses two major payments providers via phone apps that give location data? Order the companies to not process payments from any phone within the protest area.

Corporations too are drooling over the potential to monitor customer payment data. They can pass it through their machine-learning systems to understand your traits and manipulate you with ever-increasing levels of subtlety.

This is the world we celebrate when we congratulate Sweden for locking itself into a cage of digital payment. Maybe we should be more circumspect.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Elvis » Wed Sep 13, 2017 9:16 pm

Corporations too are drooling over the potential to monitor customer payment data.


Not to mention the fees on every digital transaction.
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
User avatar
Elvis
 
Posts: 7413
Joined: Fri Apr 11, 2008 7:24 pm
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Thu Sep 14, 2017 3:41 am

Elvis » Wed Sep 13, 2017 2:16 pm wrote:
Corporations too are drooling over the potential to monitor customer payment data.


Not to mention the fees on every digital transaction.


Yep. It's no wonder banks are terrified of cryptocurrency. The People issuing their own money is revolutionary.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Wombaticus Rex » Thu Sep 14, 2017 8:13 am

It is news to me that banks are terrified of cryptocurrency. They're using it and they will own it. The People can be bought out at quite affordable rates. Internecine fighting between ICO campaigns will take care of the rest.

Cryptocurrency isn't a threat to system -- hell, it's not even all that encrypted. The IRS sees that shit. As BTC continues to soar, the crackdown is already getting started.

--Your Resident Finance Pessimist
User avatar
Wombaticus Rex
 
Posts: 10896
Joined: Wed Nov 08, 2006 6:33 pm
Location: Vermontistan
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Sounder » Thu Sep 14, 2017 1:50 pm

Cryptocurrencies seem like an ideal way to soak up cash, and also to keep loose money focused on something other than gold.

The quotes being commonly available is evidence enough that there is approval at a fairly high level for this novel 'store of value'.
All these things will continue as long as coercion remains a central element of our mentality.
Sounder
 
Posts: 4054
Joined: Thu Nov 09, 2006 8:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Thu Sep 14, 2017 2:26 pm

Wombaticus Rex » Thu Sep 14, 2017 1:13 am wrote:It is news to me that banks are terrified of cryptocurrency. They're using it and they will own it. The People can be bought out at quite affordable rates. Internecine fighting between ICO campaigns will take care of the rest.

Cryptocurrency isn't a threat to system -- hell, it's not even all that encrypted. The IRS sees that shit. As BTC continues to soar, the crackdown is already getting started.

--Your Resident Finance Pessimist



Cryptocurrency removes the need for banking services, so yes I'd say the banks are terrified. It lets people store/transfer money independently of banks. (Cash does the same, of course, which is why so many banks have joined the War on Cash.) Blockchain technology, generically speaking, has many applications and some banks are using it (JP Morgan for one).

If people directly minting and using their own currency outside the control of nation states or banks isn't a threat to the system, I don't know what is. Within that context, privacy is certainly a concern as BTC has never been anonymous. But there are many private coins in development for that very reason (Monero, Zcash, Zcoin, PIVX, Verge, etc.)
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Thu Sep 14, 2017 2:38 pm

Sounder » Thu Sep 14, 2017 6:50 am wrote:Cryptocurrencies seem like an ideal way to soak up cash, and also to keep loose money focused on something other than gold.

The quotes being commonly available is evidence enough that there is approval at a fairly high level for this novel 'store of value'.


Good luck transferring your gold stash across borders. China is cracking down right now because Bitcoin makes it so easy to circumvent currency controls. And people in Venezuela are using Bitcoin to survive as their national currency loses value every day. I'm not anti-gold, I just see the advantages crypto has to offer when I can store millions of dollars on a thumb drive or in the cloud, instead of lugging around a suitcase full of physical gold.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Wombaticus Rex » Thu Sep 14, 2017 6:10 pm

Freitag » Thu Sep 14, 2017 1:26 pm wrote:Cryptocurrency removes the need for banking services


I would argue that it replaces them. Would you consider that a meaningful distinction?
User avatar
Wombaticus Rex
 
Posts: 10896
Joined: Wed Nov 08, 2006 6:33 pm
Location: Vermontistan
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Thu Sep 14, 2017 6:46 pm

Wombaticus Rex » Thu Sep 14, 2017 11:10 am wrote:
Freitag » Thu Sep 14, 2017 1:26 pm wrote:Cryptocurrency removes the need for banking services


I would argue that it replaces them. Would you consider that a meaningful distinction?


I'm not sure what the quibble is here. My point is that, as a bank, a technology has been invented that makes your business model obsolete. That would definitely be listed under "Threats" on any S.W.O.T. analysis. I'm not saying banks are going to fail next week, or otherwise commenting on the magnitude or timeline of the threat, just that cryptocurrency *is* a threat.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Wombaticus Rex » Thu Sep 14, 2017 7:36 pm

I don't think that having your money stored on computers and being charged transaction fees for moving it around = "making their business model obsolete."

Seems like the same business model with less overhead, to me. As a bank, a technology has been invented that will save you money on overhead.
User avatar
Wombaticus Rex
 
Posts: 10896
Joined: Wed Nov 08, 2006 6:33 pm
Location: Vermontistan
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Thu Sep 14, 2017 7:50 pm

Wombaticus Rex » Thu Sep 14, 2017 12:36 pm wrote:I don't think that having your money stored on computers and being charged transaction fees for moving it around = "making their business model obsolete."

Seems like the same business model with less overhead, to me. As a bank, a technology has been invented that will save you money on overhead.


You forgot the part where people don't need a bank anymore to store/transfer money.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Belligerent Savant » Fri Sep 15, 2017 1:25 am

.
Yes, it is now technically possible to transact w/out a bank/"intermediary" via blockchain/decentralized crypto.

But there is also centralized cryptocurrency, such as Ripple.


According to Ripple: Ripple is for Financial Institutions; network operators and regulators play critical roles scaling and providing stability to payment systems. Ripple enhances the existing payment stack, offering real-time settlement infrastructure at the foundation."

https://ripple.com/integrate/

Given that financial institutions, network operators and especially "regulators" are part of this equation, it perhaps could not be considered decentralized, which in the context described is instead "centralized".

Ripple also states "Jurisdiction or network specific rules, governance, standards, and other critical functions are intended to be provided by existing systems and operators."

Ripple is a system for exchanging the Internet of Value (many different assets digital and physical) in which they also offer their own XRP digital "currency", whereas Bitcoin is simply another digital currency.



That's just one example, of course.

The cynical view, however, is that the Banks/govt entities can one day simply opt to render decentralized crypto illegal and/or have such 'currency' outlawed, assigning instead a yet-to-be-created Bank/Govt-backed cryptocurrency (or a variation of Ripple, for example) as the sole method of electronic transfer, rendering any remaining rogue crypto coins worthless.

We can only speculate at this point. Blockchain tech and associated decentralized cryptocurrency may one day be the harbinger of a much-needed alteration to our monetary system, or as WRex alludes, simply a veiled operation to introduce a new control method under a guise that lures in the target demo (the younger generations).

The vile beasts are still gaming the system, regardless of platform.

See here, exhibit A: Executive Banker Ahole offering up statements to rattle crypto price points, surely opening the door for an entry point:


Jamie Dimon... lashed out at cryptocurrency, calling it a "fraud" which is "worse than tulip bulbs. It won't end well", will "blow up" and "someone is going to get killed." Oh, and in conclusion, "any trader trading bitcoin" will be "fired for being stupid."

Of course, if "a trader" bought $100,000 of Bitcoin in 2010, they'd be roughly 3x richer than billionaire Jamie, but that's another story.

What is more surprising, is that bitcoin actually reacted to this angry outburst by the JPM CEO, sliding sharply, and dragging the entire cryptocurrency space with it.

Speaking to CNBC later in the day, Dimon said he’s skeptical governments will allow a currency to exist without state oversight: “Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.” And yet, despite said "killing" Bitcoin remained well above $4,000.

That said, Dimon conceded that he wouldn’t short bitcoin because there’s no telling how high it will go before it collapses, saying that it "could hit $100,000 before it drops." The best argument Dimon has heard about owning bitcoin, is that it can be useful to people in places with no other options: “If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars,” he said. “So there may be a market for that, but it’d be a limited market.”

What is also ironic is Dimon's admission that his daughter purchased some bitcoin, saying "it went up and she thinks she is a genius."

And to think the Fed didn't even have to inject $4 trillion in liquidity to make her feel that way, unlike so many stock "investors."

Shortly after Dimon's comment, the chairman and CEO of the CBOE, Ed Tilly - which plans to offer bitcoin futures soon - defended the cryptocurrency after Dimon’s remarks.

“Like it or not, people want exposure to bitcoin,” Tilly said. Believers can bet on its rise, and Dimon is welcome to take the other side, he said. “We’re happy to be the ones in the middle.”


And then there is China, Exhibit B of fear-induced desperate bids to tamp down crypto's momentum (and/or create more investment opportunity to buy during a 'dip'):


Update: Confirming the other speculation, that China would halt all cryptocurrency exchange, Yicai reports that it is not just BTC China:

CHINA MAY SHUT ALL LOCAL BITCOIN EXCHANGES BY SEPT. END: YICAI
To which the response from the Bitcoin Association of Hong Kong is: "if China restricts growth in bitcoin" it will drive business to us"

* * *

Yuan-denominated Bitcoin has crashed as much as 25% 35% in Chinese trading, plunging from 25,000 yuan to as a low of 16,000 on local exchanges BTCChina (and as low as 20,000 on OKCoin), following confirmation of last week's Caixin report that Beijing would stop cryptocurrency exchange trading. China's second largest exchange, BTC China, said that it would halt all trading on the platform beginning September 30, launching a liquidation panic.

In a statement released on Weibo, BTC China said that it would immediately stops accepting new account registrations on BTCChina Exchange. The decision was made after “carefully considering” Chinese regulatory bodies’ Sept. 4 announcement on preventing risks associated with token fundraising. A google-translated version of the statement:

China will stop all trading business on September 30th

Dear Bitcoin Chinese users: According to the September 4 issue of the "People's Bank of China Central Office of the Ministry of Industry and Information Technology Ministry of Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission on the prevention and treatment of the risk of the issuance of the currency," the spirit of the document, adhering to the protection of investment risks, the maximum protection of users

The principle of interest, Bit Coin Chinese team by careful discussion, is to make the following decision:

1. Bit currency China's digital asset trading platform today to stop the registration of new users;

2. September 30, 2017 Digital asset trading platform will stop all trading business.

Beitou China's pool (pool) and other business will not be affected, continue to normal operation.
We apologize for the inconvenience. If you have any questions, please contact support@btcchina.com.

User avatar
Belligerent Savant
 
Posts: 5216
Joined: Mon Oct 05, 2009 11:58 pm
Location: North Atlantic.
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Freitag » Fri Sep 15, 2017 11:23 pm

Belligerent Savant » Thu Sep 14, 2017 6:25 pm wrote:.

The cynical view, however, is that the Banks/govt entities can one day simply opt to render decentralized crypto illegal and/or have such 'currency' outlawed


You're right, they could, but it would be tough to enforce. That's the whole point of decentralization.

We can only speculate at this point. Blockchain tech and associated decentralized cryptocurrency may one day be the harbinger of a much-needed alteration to our monetary system, or as WRex alludes, simply a veiled operation to introduce a new control method under a guise that lures in the target demo (the younger generations).


It could also be among the most revolutionary technology ever invented. I'm still a bit sheepish for taking so long to educate myself about Bitcoin and its significance. During the market crash years, while we were all raging against banks and government bailouts, and watching movies like V for Vendetta, an anonymous programmer channeled that Zeitgeist into a peer-to-peer anti-inflationary currency that is, I'm assured by people who should know, a work of unparalleled genius. Nobody knows the pseudonymous Satoshi Nakamoto's true identity to this day. The anonymous Bitcoin inventor owns one million Bitcoins (~$4 billion USD), not one of which has ever been spent. And this was all happening as I was on RI talking about UFOs or whatever.

It's hard to believe the powers that be could turn cryptocurrency into a "control method" when it's really engineered from the ground up to be the exact opposite.

See here, exhibit A: Executive Banker Ahole offering up statements to rattle crypto price points, surely opening the door for an entry point:

[...]

Update: Confirming the other speculation, that China would halt all cryptocurrency exchange, Yicai reports that it is not just BTC China:



Yep, all that FUD caused a nice BTC dip today and I was able to bag some at a good price.
User avatar
Freitag
 
Posts: 615
Joined: Sun Jun 05, 2011 12:49 am
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Belligerent Savant » Sat Sep 16, 2017 5:00 am

.

Freitag wrote:
It's hard to believe the powers that be could turn cryptocurrency into a "control method" when it's really engineered from the ground up to be the exact opposite.


I'd like that to be true, and it may very well be.
It'll be interesting to revisit this in 5 (or perhaps even 10) years. Time is a dispassionate arbiter of truth.
User avatar
Belligerent Savant
 
Posts: 5216
Joined: Mon Oct 05, 2009 11:58 pm
Location: North Atlantic.
Blog: View Blog (0)

Re: The War On Cash/Financial Privacy-Negative Interest Rate

Postby Belligerent Savant » Mon Sep 18, 2017 1:34 pm

.

https://hackernoon.com/the-empire-strik ... d84fd2f854


The Empire Strikes Back with a Coordinated War on Crypto

On Sept 1 2017, Bitcoin roared to a new all-time high, touching the $5000 mark for the first time in history.
And then the bottom fell out.

While Twitterverse crypto enthusiasts called the sudden drop a natural correction, it quickly became clear there was nothing natural about it.
Over the course of two weeks, Bitcoin and every other crypto faced a sustained assault of relentless negative press designed to crash the price, spread fear and destroy the trust in decentralized money.

And it wasn’t random at all.
It was a coordinated attack on crypto.

To understand why you just have to know a little about the history of power in the world.

The Empire Strikes Back

David Smooke, the king of Hackernoon, called decentralized cryptocurrency “this decade’s iconic battle of government vs. business.”

But it’s more than that.

It’s not a battle between business and government. It’s a battle between the centralized empires of the world and decentralized rebel alliance of every day people, an eternal battle.

And it’s not just a battle.

It’s a war.

It’s been raging since humans first crawled out of the primordial swamp. It’s a battle of freedom versus control, power to the people versus the power of a select group of elites who’ve kept their jackboot on the face of humanity for thousands of years.

Each generation must face the fight anew. Like a pendulum that swings back and forth forever and ever, when the world goes too far in one direction it must swing back in the other.

Today, overcentralization is a disease. The pendulum only has one way to go.

But centralized empires don’t give up easily. Like Gollum clutching the dark ring, they’ll do anything to hold onto that precious power at all costs. It’s not even about what’s good or right. It’s about power for the sake of power.

At first the Dark Lords of the world don’t pay much attention to rag-tag bands of rebels. They’re scattered and disconnected. But then they sack a trade ship or take a city and suddenly the Eye of Sauron turns.

And now the Eye has turned towards cryptos.

The Dark Lord’s playbook is simple but devastatingly effective:
Co-opt, coerce, corrupt, outlaw, and kill.

And many of these were on full display the last few weeks.

Corrupt and Coerce

It started with China.

First they lashed out at ICOs, declaring them illegal fundraising.

Of course, many applauded the move. While ICOs represent a revolutionary new way to crowdsource funding, moving beyond the straight-jacket of “accredited investors” and VC money, the space was rampant with scams and questionable projects. While the crypto market initially reacted with a short drop, very quickly the trading public saw the move as positive. Bitcoin bounced right back up. They assumed China would make the freeze only temporary and provide better guidance to protect investors with sensible legislation.

But they were wrong.

It was only the opening shot in a new wave of information warfare.

Over the next few weeks, the news became a deliberate and coordinated drip of terrifying information, designed to derange the market and spread panic. Instead of the China regulatory news breaking all at once, like a normal story does, it kept dripping out in “leaks” and press releases and planted stories.
Soon a story dropped in the Wall Street Journal, citing only “unnamed sources familiar with the matter” that China planned to shutter all crypto exchanges.
Now the panic really set in. The sell-off started in earnest.

Still, many pro traders were calling for HODL, aka holding your position, and waiting for the price to correct back up. Most traders, including me, took the rational position that China would never ban exchanges because it made no sense for them to do it.

We should have known better.

Leaks don’t just happen in authoritarian regimes. The regulatory groups and circles of power meet in secret, in smoke filled rooms, behind closed doors. The people in those circles are chosen carefully for clannishness and absolute loyalty. Real leaks get people killed.
The only leaks are deliberate ones.

While the rumors swirled, the big three exchanges reacted with caution, saying they had received no official word from the People’s Bank of China (PBOC).

cnLedger @cnLedger
Replying to @cnLedger
3/ OKCoin and Huobi PR said they have not received notice from regulators and are operating normally
7:59 AM - Sep 14, 2017


But the optimism wouldn’t last.

Despite the fact that closing down crypto exchanges will only drive trading underground, rob the Chinese government of tax revenue and crater their ability to enforce KYC or “Know Your Customer” style laws, the PBOC moved swiftly to attack exchanges.

Right on schedule with the stream of negative news, the PBOC released a statement attacking the exchanges for running without a license. Now suddenly those exchanges that ran for years without issues need a made-up license to operate.

You see, Chinese law doesn’t work like western law. Although the Chinese Constitution provides legal, executive and judicial powers, they’re all subject to the whim of the Communist Party. The Party is supreme. Courts and regulatory bodies don’t need to follow any of those frameworks in deciding cases.

China runs by rule of man (rén zhì 人治), not rule of law (fǎzhì 法治).

Essentially, it means that regulators can change the rules whenever they feel like and that’s exactly what they did here. In classic rule of man style, the statement was overly broad, vague and subject to interpretation any way they saw fit, a staple of bad law making (just drop it into Google Translate to see).
Now the panic really set in as traders dumped faster and faster. Classic trader memes flowed fast and furious from top crypto Twitter accounts.

A few days later the first of the major exchanges, BTCC, announced it would suspend trading.

BTCC ✔ @YourBTCC
1/ After carefully considering the announcement published by Chinese regulators on 09/04, BTCChina Exchange will stop all trading on 09/30.
7:05 AM - Sep 14, 2017


A day later, the other two, OkCoin and Huboi, said they would meet with regulators. The day after that, they announced their own suspensions by the end of October.
All hell broke loose.

Bitcoin posted the largest one day red candle in history, as traders everywhere sold everything as fast as they could in a stampede of panic.
And if it was just China news driving the market, that wouldn’t be enough to call it a coordinated attack on crypto. The Chinese government has flirted with cracking down on Bitcoin in the past and even closed exchanges.

But this time was different.

Hot on the heels of the Chinese story, a storm of negative press flooded the interwebs.

Out of nowhere, the CEO of JP Morgan, a company known for investing in blockchain technology, called Bitcoin a “fraud” that’s “worse than tulips.”

A few days later, JP Morgan’s lead quant backed the attack calling cryptocurrencies “pyramid schemes”.

Soon after, CNBC was trotting out economist Mohamed El-Erian to say “Bitcoin should be worth half” what it was trading at, and that it would never achieve “mainstream adoption”, essentially the same argument they used against the Internet, video games, eBooks and digital cameras.

Now the price of every single crypto was circling the drain, driven down by the relentless assault of information warfare.
Innovative Chinese platforms, like NEO, took some of the biggest beatings.

But why now?

On the surface none of this makes sense.

The blockchain space has been booming. Investor money is flooding in. While there are certainly a number of useless projects out there, the space is filled with startups who will revolutionize everything from neighbors trading solar energy among themselves to supply chain management, with heavy hitters like IBM and the Apache Foundation backing the technology.

But when looked at through the lens of the eternal war between centralization and decentralization, it becomes much clearer.

Guerilla Warfare

For years cryptocurrencies have ripped along, mostly under the radar.

Early verbal assaults on coins were weak and didn’t do much to dampen enthusiasm among adherents to the crypto creed. Back in 2013, when the first attacks started, the market cap of Bitcoin was tiny, a mere spec of the global economic pie. It traded at around $10–$20. Not much for a centralized empire to worry about at all.
Those attacks were simple and straightforward, such as saying that only drug dealers and criminals used Bitcoin, usually by calling attention to Silk Road. Big government boot-licking economist Paul Krugman posted a now infamous missive in the New York Times called “Bitcoin is Evil” describing it as a weapon “intended to damage central banking and money issuing banks.”

But the attacks didn’t stick. Bitcoin’s price continued to rise, despite laughable obituaries getting written almost weekly.

In fact, the only thing that brought the mighty money badger’s rise to a grinding halt was an actual crime, the hacking of Mt. Gox, the most well known early exchange. Hackers made off with 850,000 Bitcoins, more than $450 million dollars at the time, making it one of the most audacious heists in history. Even with Bitcoin’s recent price slide, those coins are now worth upwards of $3.1 billion dollars.

That’s a lot of money.

And it was a serious blow. If exchanges can’t keep money secure, they’re unusable. That attack brought about the “crypto winter” and the prices of every major coin remained depressed for over a year.

But they’ve been on a tear ever since rising from under $300 in the aftermath of Mt Gox to $5000 at its peak this year.
New cryptocurrencies, like Ethereum, sprang onto the scene. They looked to address the shortcomings of the original crypto king, by providing Turing complete programming languages, smart contracts and more.

This year, ICOs raised more than $1.5 billion dollars, outpacing VC money as the number one way to raise cash but doing it all from small investors like Kickstarter on steroids. Projects designed to do everything from decentralized DNS, to identity management and distributed storage started making waves, promising to upend the way we do just about everything in technology.

Even the companies and governments that initially laughed at the ideas behind Bitcoin started to understand the breakthrough power of the technology behind it: the blockchain.
No longer would you need to go to one of three central companies to get a web certificate or register a domain name, you could go to a decentralized web of trust that no one group controlled.

Along the way, Chinese miners came to dominate Bitcoin. Today they make up half of the mining power on Earth. Their entrepreneurs built the fastest ASIC chips, designed to mine coins at astonishing rates, and filled up huge data centers to run them.

At the Consensus Summit this year, an industry trade show, the halls were covered with familiar logos like IBM, and Deloitte Touche and JP Morgan.
Wait, what? JP Morgan?

Aren’t those the same guys that were ripping Bitcoin a few weeks ago?

That’s right.

While CEO Jaime Dimon was pissing on Bitcoin, his office was hosting crypto venture capitalists and crypto investors in San Francisco. And his analysts were lauding the technology in their own papers calling blockchain “the real deal”:

“While the notion of blockchain may seem novel, the underlying technology is not new. It is the combination of proven, existing technologies: peer-to-peer networking, asymmetric cryptography and cryptographic hashing (see: In plain English). Bitcoin was the innovation that combined these technologies, offering the ability to transfer value, while preventing double- spend in a trustless, pseudonymous, publicly accessible system.”


Oh yeah, and at Consensus, JP Morgan announced they would integrate the anonymity technology behind Zcash, another crypocurrency, into their own blockchain technology.

“Monday, the company behind Zcash, the Zerocoin Electric Coin Company (ZECC) announces a partnership with JPMorgan Chase to add Zcash’s privacy technology to Quorum, an enterprise blockchain platform JPMorgan built on Ethereum, a network similar to bitcoin’s but focused on smart contracts.”


Wait, JP Morgan has their own blockchain too?

You bet’cha.
So what the hell is going on here?
How is it that China’s regime turned its back on a technology that its entrepreneurs dominate, while big banks like JP Morgan tout the power of the blockchain and the innovation of Bitcoin, only to try to destroy the technology that created it?

Simple.

It’s about power and control.



More at link..
User avatar
Belligerent Savant
 
Posts: 5216
Joined: Mon Oct 05, 2009 11:58 pm
Location: North Atlantic.
Blog: View Blog (0)

PreviousNext

Return to General Discussion

Who is online

Users browsing this forum: No registered users and 48 guests