Nic Carter: Bitcoin's currency experiment

Foreword: The author of this article believes that Bitcoin is a currency experiment that has a major impact on the country and society. What impact does Bitcoin have? I believe everyone has their own opinions. The narrative style of the article has a clear bias, and it is not necessarily correct. Everything has two sides, and everyone needs to judge it by themselves. Approved or not recognized, right or wrong, may wish to take a look.

The liberals are completely wrong. They tried to weaken the influence of the state by participating in the democratic process. This has always been a hopeless, Sisyphus-like mission. Like Tolkien's Ungoliant, the state is unrestrained and hunger, and their most active voters continue to encourage them to get more votes in exchange for more rights. In short, the liberals swelled, just like this slow-moving gelatinous chunk, no matter what you throw into it, the country (the ballot) will increase. (Blue Fox Notes HQ Note: Ungoliant, the character of the British writer John Ronald Tolkien JRR Tolkien's epic fantasy "The Elf Diamond" is an evil Giant spider.)

But Bitcoin supporters reject this claim: they understand that the only way to win is to not participate. Moreover, they kicked the board and swayed as if they had won. Bitcoin supporters have chosen to abandon the rules of participation and establish an unrestricted monetary system.

In the end, they expect a system of unrestricted commercial, unproven reserve banking (unlike the social loss chaos that we currently have difficulty understanding), freeing depositors from inflation brought about by the state and narrowing the national currency instruments. Role and impact.

This is an emerging asset class that has risen from $100 million to $200 billion in 10 years. There is no venture capital support, no IPO, no corporate entity, no founders, and no pure open source organization to maintain. In the United States, Ross Ulbricht was sentenced by the United States to two life imprisonments without parole, plus 40 years in prison, for creating a free market for Bitcoin.

(Positiveness of Bitcoin, Green: Allowed; Orange: There are some restrictions; Pink: Controversial; Red: Hostile.)

Bitcoin is completely indifferent to the shackles of the financial system. The current system, in its form of expansion and greed, requires not only your material obedience, but also a large amount of endless metadata and analysis. Your assets are not your own; they are scrutinized and every step of the process needs to be approved. Even if you hold assets that are slightly more than mainstream, you may be forfeited without recourse.

Encrypted currency tilts toward the country

When 16th-century Protestants began to question the indulgence of the indulgence and the power of the pope, a group of ragged nerds and cyberpunk fans began to question: Is inflation really necessary? In a free market economy, should the central bank really have the power to set the price of money arbitrarily? Should depositors really be forced to trust banks (and ultimately taxpayers) to redeem and redeem their deposits? What exactly does the entry in the bank database mean?

Rare bitcoin physical form image

The real cryptocurrency, as an alternative to the monetary system, poses a real threat to the current system. For them, Bitcoin is absolutely awkward and offensive, so that it is hardly worth pondering. Bitcoin challenges the most important privilege: financing through inflation and coinage.

So far, cryptocurrencies, mainly bitcoin, have begun to affect central bank policies. Combine a free money market with the Internet distribution track and you will get a viral effect. The following are several aspects of the impact of cryptocurrencies on the state.

First, as Gina Pieters (2016) pointed out, the existence of the bitcoin mobile market poses a threat to countries that rely on capital controls to maintain a managed exchange rate.

Bitcoin has caused problems for Argentina and similar countries; it has made it easier to circumvent capital controls. As stated by Pieters and Vivanco (2016), government regulation of the globally accessible bitcoin market is often unsuccessful. As shown in Pieters (2016) and Figure 4, the bitcoin exchange rate often reflects the market exchange rate rather than the official exchange rate. If the capital flows involved in Bitcoin are large enough, all countries will have unrestricted international capital markets.

Bitcoin is a highly liquid currency that trades on a global scale. As discussed by Dr. Pieters in another paper, bitcoin has a real impact on currency manipulation. Even if the government announces the exchange rate, bitcoin transactions remain. Can be used to calculate the "street price" of the local currency. Bitcoin is quickly becoming a universal metric.

An example is: In Venezuela, it is illegal to publish information about the “street value” of Bolivar (Venezuela's legal tender) because the government maintains strict control over its currency. In Venezuela, DolarToday (actually operating in Miami) is the most popular exchange rate tracking website that uses LocalBitcoins transactions to obtain the market price of the implied dollar-denominated Bolivar Soberano (a type of cigar).


Not surprisingly, the world's most dynamic p2p bitcoin market is often seen in countries with capital controls, high sovereign currency inflation, or government volatility. According to a LocalBitcoins data from Matt Ahlborg, Bitcoin has the largest per capita transaction volume in Russia, Venezuela, Colombia, Nigeria, Kenya and Peru.

Some people say that currency competition is like defeating a bear market; you only need to beat the friend you run the slowest; the dollar may not be threatened by bitcoin, but the world's dozens of currencies with the highest inflation rate will definitely be threatened.

If one thinks that bitcoin is just a kind of junk: this often reflects whether a person is aware of the vicious effects of inflation and an unreliable banking system. Those who oppose the highest voices of Bitcoin will only reveal their ignorance and British centralism. (Blue Fox Notes HQ Note: Anglocentrism, British centralism, refers to England-centered (especially historical influence, cultural influence), the word has a derogatory color, Anglo originally refers to the British ancestors "Anglo" , after the general refers to the British, England)

In fact, Raskin, Saleh, and Yermack confirmed in the analysis of the currency crisis in Turkey and Argentina that cryptocurrency has the most direct applicability in areas outside the developed world.

At first glance, Nakamoto's vision has not been realized. It has only become a new choice, and most people have not chosen to use it. However, when you look closely at developing countries, the situation is a bit different. […] [Turkey and Argentina] was the first currency crisis since the birth of Bitcoin, so they are examples of the impact of digital currencies on unstable sovereign currencies. The inferences based on these examples are likely to show that Nakamoto's vision has been achieved. Although private digital currencies do not replace the US dollar, their existence may have counter-factual effects because their existence is a constraint on fiscal policy and regulatory policy.

Specifically, Raskin, Saleh, and Yermack found it not surprising that “citizens benefit from private digital currencies,” especially through a new diversified option that “creates welfare gains for citizens.”

The key thing is that the author also found

[T] Private digital currency, which constrains monetary policy by creating a way to replace local fiat money. This effect on monetary policy can reduce inflation and bring higher returns on investment, which in turn will promote more local investment.

As stated in Economics 101, by introducing competitors to break monopolies (the government is actually a local monopolist in the money market), the market will be more fair to consumers. In the face of no other choice, citizens were forced to save in local currency and tolerate inflation.

Now that there is an effective export, citizens can choose to withdraw from the local monetary system, which will bring huge losses to the central bank (selling local currency will increase the speed of money circulation and increase inflation). Therefore, the existence of Bitcoin actually brings monetary restrictions to the central bank, otherwise the central bank may pursue a devastating level of depreciation.

Not for the coward

Reshaping the monetary system is actually an extremely unpleasant task due to the high risk. It requires irrational enthusiasm and a commitment and commitment to a strong vision for the future. Due to the arduous nature of this task and its threat to the survival of the country, only the most determined people are likely to undertake this task. The biggest mistake of those who believe in the altcoin is not the wrong car, but not enough faith. They sell a dream that they don’t really believe.

The boring tone permeates from the top of the pyramid to the entire organizational structure. As a result, the difference began to emerge: the “community” of the “deepwater” holders urged each other to buy more when the cryptocurrency depreciated, while the flexible investor group embraced the volatility and maintained the belief. On the surface, Bitcoin and many clone projects using blockchain technology are similar.

The main difference is the soul. This is not to say that other projects are immoral, or that they have chosen a set of relatively poor values, but that they are completely nihilistic. These projects, in their eyes, surface progress and innovation are more important than the establishment of long-term, non-state mechanisms.

Of course, the motivation to chase profits has driven many people to turn to Bitcoin. However, deeper, more primitive things have also driven Bitcoin supporters to build a parallel, reliable financial system that is functional, open, independent of the government or who does not need to be responsible. Of course, this motivation does not only drive Bitcoin supporters to act.

For those possible alternatives, this is not the case. For the founders of emerging cryptocurrencies, their success is to quit. Pre-sale tokens; markups; sales of tokens in the secondary market. The reason for launching a new blockchain is simple; among all existing products, the currency has the largest TAM (Total Available Market) and is owned by issuing new currencies and retaining some of the promised shares. small portion. But wealth does not always motivate people, especially when it comes at the expense of potential supporters. Pre-sales can't win the dogmatic, firm support of millions of supporters.

As Tareb said: Don't tell me what you think, show me your portfolio. BlockOne is the best example. BlockOne is the creator of EOS, the future blockchain 2.0, but why did it divest its own funds and choose to hold 140,000 BTCs on its balance sheet?

The only important question

After ten years of experimentation, misallocated capital, and arrogance, we have learned valuable lessons from value added. The technical experiments of scientists and engineers are full of persistent taste:

"If we can create a more efficient, higher-performance database structure or an algorithm that resists sybil attacks, we can create the cryptocurrency that will ultimately win." Surprisingly, this idea is still prevalent today. But this is a hopeless flaw. To build a new monetary system from scratch, the most important thing is not the technical implementation details, but to provide a convincing answer to the following questions:

· What gives you the right to create a new currency and have a major impact on its fate?

· Why did you choose to reject all alternatives and propose to adopt your own alternative?

· Where does your authority come from?

· How do you embody fairness and equal opportunity when allocating this new fund?

· How can you ensure that the system is free from corruption when the Fed is easily becoming a political prisoner?

Bitcoin has clear and clear answers to all of these issues. But its imitators don't, they don't just have no reasonable answers, and their creators don't even know that these are issues to consider.

We now know that practical tokens are chimeras. This does not require the discovery of genius, but the practice in reality has begun. The world of practical tokens is similar to a frictional forex trading, without the need for interstate travel like today, but from one store to the next. Practical tokens are actually a bleak retrogression, and now they are much better because they have been rejected by reality. The only cryptocurrencies worth creating are those that target money; and this necessarily needs to be tilted towards the country.

But to confront the country, it requires tens of millions of billions of diehards to believe in a stable set of values ​​and is willing to invest capital to support it. The clever encryption field of the original faction and the repair of the new Byzantine fault-tolerant algorithm cannot inspire and win the hearts of the people.

There must be some core values ​​that are able to surpass all others. Most monetary pluralists in the industry defend their positions with clichés such as "supporting innovation." But this is illogical; if they reject incumbents like Bitcoin and advocate alternative projects, they will also face opposition from left-wing encryption progressives.

"Why choose x as blockchain 2.0? Why not p, q, or r?" This question is very convincing. If you choose the values ​​of the project, there is no deep and clear representation. Except for sunk costs, there is no need to defend the so-called progressive alternative chain. Progressives will also become reactionaries if necessary.

Values ​​make Bitcoin unique

So what are the values ​​that Bitcoin supporters cherish? Bitcoinism is an emerging political and economic philosophy that combines Austrian economics, liberalism, emphasis on strong property rights, contractualism, and personal self-reliance. Some liberals are disgusted with social contract theory and consider it to be mandatory (because a person does not actually sign a political contract at birth or adulthood).

This is not the case with Bitcoin. No one is required to do anything by default: it provides a fairly clear contract for potential users. You have the right, but not the obligation, to participate in the world's most transparent, auditable, unobtrusive, well-defined monetary system.

Others I think Bitcoin's vital values ​​include: cheap verification (so that anyone can participate), full auditability (and therefore no unexpected inflation), and fairness of distribution (regardless of identity, everyone pays for their BTC) "Full market price", whether on the exchange or through mining), backward compatibility (soft forks take precedence over hard forks), and of course an open set of verifiers to prevent verifier collusion, resulting in Inevitable review. Ask a question about your favorite bitcoin alternative: What is the value of the incentive program? If they exist, you will notice that they are usually weakened; innovation is more important than consistency.

As a result, Bitcoin supporters are in stark contrast to opportunists, who believe that success is their withdrawal from token projects. For Bitcoin supporters, success is the day until the day when you don't need to quit.

Their recognized end-time philosophy predicts that they will be able to participate in the closed-loop economy of Bitcoin and free themselves from the changes in the legacy financial system. They don't want to exit the financial market, at least in terms of venture capital. Instead, they are eager to establish a system based on monetary standards that does not arbitrarily depreciate because it does not have any form of monetary discretion.

They are serious about implementing these basic systems. Not only is it necessary to maintain a predetermined supply schedule, but it is fundamental to property rights agreements and institutions, and changes will cause the old system to cease to exist. Limited supply is not a feature of Bitcoin; however, the supply cap is Bitcoin. It is crucial in the sense, just as the consent of the ruler is an integral part of the US Constitution.

Who else is a better example than Nakamoto? Nakamoto was the last hero to sacrifice – he spent some time building Bitcoin from scratch, releasing the code, running the project briefly, and then leaving permanently. When no one was willing to support the network at first, he dug out some bitcoin for necessity, and no one ever touched it. This almost painful effort is like Prometheus.

If they do, if they don't

Suppose the major countries negotiate to ban Bitcoin together, which will only turn Bitcoin into a black market commodity. But this is not enough to destroy it. It is naive and ridiculous to believe that the ban will reduce the circulation of Bitcoin. It will only literally strengthen the reason for the existence of Bitcoin: to prevent the country from all kinds of capricious and whim. A country is so clearly threatened by a financial commodity that will show the world its paranoia and control, showing its true parasitism.

Ironically, the state's attitude toward Bitcoin and the bitcoin-driven private funds are the satisfaction of the demand for technical Austrian economics and its own reforms. This requires stopping the currency devaluation, stopping the easing of the unequal monetary system, stopping the intervention of the economic cycle (which will only make the economic cycle more serious), stopping attempts to set prices for the time value of money, and stopping Financial institutions serve as weapons of war.

In the short term, all this seems unlikely to change. The new Keynesian theory, known as the "modern monetary theory," is a kind of aggression that generates pleasure. According to the theory, the country can seem to buy an unlimited amount of any available goods, but the consequences are terrible.

Bernie; Elizabeth Warren; Ocasio Cortez; Jeremy Corbyn. In developing countries, Kirchnerism regained control of Argentina, and with the re-establishment of collectivism, all financial assets were spirally tilted toward zero value. Venezuela, okay, Venezuela. In the UK, the Labour Party accepted an astonishing expropriation policy and advocated non-free measures such as large-scale forced divestment.

It can be said that the free market and strong property rights, which are the cornerstones of the capitalist economy, are being globally impacted, and this is unlikely to be reversed. The lower classes of the world are becoming weaker and weaker. They are eager to intervene. If this means reducing inequality, they will tolerate the severe poverty.

Our monetary institution has given up any apparent rationality. Our era has brought us an interesting and heartbreaking scene in which the President of the United States has publicly confronted the Federal Reserve Chairman on the issue of currency prices.

The key is: in order to re-elect, we will squeeze more energy out of our fully financialized economy. This is the price the Fed has achieved so-called non-political. Hedge funds are showing amazing paperclip maximization effects, spending millions of dollars on machine learning algorithms to predict interest rate movements by observing the eyebrows of monetary policymakers as they read documents. This money is really good.

Do you control: a financial machine that never stops

Negative interest rates are now generally accepted in almost all central banks in developed countries. The International Monetary Fund has publicly speculated on how to implement a greater degree of negative interest rates, including mandatory cash depreciation. Whether you believe that depositors have the right to a positive return, but when you propose to confiscate their savings deposits, they will certainly be furious.

If the policy effect is achieved through any negative interest rate, when will the central bank stop and give the depositors a breathing space? In unrestricted areas, it seems unlikely that there will be any signs of restrictions on monetary policy.

Depositors may not be panicked by the -1% interest rate because banks provide a useful service. But they may start complaining at the -3% interest rate and start to doubt what their currency hegemons are doing. At the -5% rate, they will invest heavily in gold and become curious about Bitcoin.

Because many people don't realize the power of the system, let's summarize the history of Bitcoin's first decade:

· Payment transaction fees totaled $1 billion

· Miners provide cybersecurity services with a total of $14 billion

· The average cost of all Bitcoin holders is up to $100 billion

· The market value of all circulating bitcoins is approximately $190 billion

· Bitcoin network transaction volume is about 2 trillion US dollars

· The Bitcoin network currently has an estimated power of 80EH/s (ie 8 * 1019 hashes). These calculations cost about $19.8 million a day on highly specialized equipment.

Anyway, you might laugh at Bitcoin. But Bitcoin will be around you when you need it. You may not need it now, but you don't necessarily need it forever. If we fall into a more chaotic world, maybe one day you will feel comforted, because the world's highest guaranteed wealth protection system is waiting patiently for you.

Until then, it will continue to go on.

Author: Nic Carter

Translation: "HQ" of the "Blue Fox Notes" community