We’re in early days. Nine out of 10 cryptocurrencies won’t survive adolescence due to insufficient security and verification processes. With every breach like this they will lose public trust. The few that can get it right will flourish.
But what is "it" that they need to get right?
What does crypto offer (aside from anonymity -- but governments will squash that -- there's already a bill to enhance tax enforcement of it).
'They' sing it's praises as currency where anybody can send money to anybody instantly.
But I do that now with AppleCash for my unbanked grandson. i don't need no stinkin crypto for that!
“It.” Ask 10 people and get 10 different answers.
My view is that a worthy cryptocurrency will not be tied to any nation state but will be considered a trustworthy currency with which one can exchange goods and services in any country. The key benefit here is that transactions will be direct between two parties bypassing the loathsome bank and exchange rate tax.
A cryptocurrency should be secure and it is the blockchain that is the truly revolutionary component of cryptocurrencies. It will revolutionize finance in general.
Each transaction should be fully transparent to government entities so that they are not used to avoid taxes or law enforcement agencies. Not everyone will be pleased with this, but in my view it is a requirement for a long-term viable non-national currency that nation states can tolerate. And really, that’s the best you can hope for because governments see cryptocurrencies as a potential threat to their power and sovereignty.
At the same time, governments should not be able to limit exchanges on private transactions that are otherwise legal. They can observe and levy taxes where appropriate, but they should not be able to interfere. That’s a tall order I know.
A cryptocurrency can be a great hedge against inflation driven by government spending (we’re seeing a lot of that right now). If cryptocurrency‘s become dominant then at some point governments will not be able to run deficits anymore because they won’t be able to sell debt. In my view that is a very good thing.
At the same time, the U.S. gains enormous leverage over the world by operating the world's reserve currency and financial systems. It enables us to do things that no other nation can get away with -- such as sanctions, printing money and a total disregard for deficit spending.
That’s a keen observation about the US currency and its unique and hegemonic role in the international monetary system. Most people outside the financial industry are unaware of this unique advantage. It sure is unfair to everyone else but as a US citizen I suppose I shouldn’t complain. It’s PAX Americana financial style.
As you pointed out, the downside is that our Government can run deficits and do all sorts of irresponsible things no self-respecting financier would otherwise ponder.
Interesting article on CBDC. I shudder to think what the US Government would do with it, although I do have a hard time seeing how they could implement it. What would it mean to expand or contract M1 money supply of this currency? Would it increase transparency with what the Fed does or make more opaque? Would the behavior of the US Government change? Rhetorical question - don’t answer that. With Congress showing little to no restraint on spending, would a CBDC enhanced the Fed’s one lever arm of financial control or diminish it? So many questions.
Yes, many questions. Few answers.
But that's also the history of the Fed for the past dozen years: "This is uncharted territory..." has become their mantra.
Crypto seems to be little other than a Fool’s Errand.
It is not “digital gold”, it is not secure and it will not be free from the reach of governments and their regulators.
So what is to like?
Not being one to push anyone into it, there's so much, much more down the rabbit hole that even those in the industry are just starting to discover newer use cases.
If you're genuinely asking to learn, start with doing your own research on the merits of decentralized money, decentralized finance - yields far greater than those offered by traditional banks and their predatory structures, Ethereum, other turing complete smart contract platforms, NFTs of every single field you can think of from fan tokens, to art, music, customer rewards, or sports and cinema tickets which remove any possibility of scalpers abusing a system among others. The eventual move of corporate shares expressed in token ownership, play to earn games such as Axie Infinity which already command a daily trading volume equivalent to 1/10 of a 3rd world country's daily USD remittance volume, enriching the lives of tens of thousands of participants, and so forth. These are just the tip of the iceberg and the ushering in of Web3 is going to make everything far more complex and amazing. One thing for sure is that the entire cryptosphere will be unimaginably different ten years from now, much like comparing the internet of the 1990s to the 2000s.
Crypto seems to be little other than a Fool’s Errand.
It is not “digital gold”, it is not secure and it will not be free from the reach of governments and their regulators.
So what is to like?
Not being one to push anyone into it, there's so much, much more down the rabbit hole that even those in the industry are just starting to discover newer use cases.
If you're genuinely asking to learn, start with doing your own research on the merits of decentralized money, decentralized finance - yields far greater than those offered by traditional banks and their predatory structures, Ethereum, other turing complete smart contract platforms, NFTs of every single field you can think of from fan tokens, to art, music, customer rewards, or sports and cinema tickets which remove any possibility of scalpers abusing a system among others. The eventual move of corporate shares expressed in token ownership, play to earn games such as Axie Infinity which already command a daily trading volume equivalent to 1/10 of a 3rd world country's daily USD remittance volume, enriching the lives of tens of thousands of participants, and so forth. These are just the tip of the iceberg and the ushering in of Web3 is going to make everything far more complex and amazing. One thing for sure is that the entire cryptosphere will be unimaginably different ten years from now, much like comparing the internet of the 1990s to the 2000s.
Agree that cryptocurrencies are going to significantly change the way many are doing business. New unforeseen opportunities are popping up every day. The blockchain is already in the process of revolutionizing Wall Street. So many opportunities in non-financial records management as well. It’s mind blowing.
You mentioned scalpers. True, no one likes them. I certainly don’t appreciate them when trying to purchase tickets for concert or sporting events. But I should point out that scalpers, hated though they are, serve a vital purpose in our economy. This article highlights the pros and cons.
Crypto seems to be little other than a Fool’s Errand.
It is not “digital gold”, it is not secure and it will not be free from the reach of governments and their regulators.
So what is to like?
Not being one to push anyone into it, there's so much, much more down the rabbit hole that even those in the industry are just starting to discover newer use cases.
If you're genuinely asking to learn, start with doing your own research on the merits of decentralized money, decentralized finance - yields far greater than those offered by traditional banks and their predatory structures, Ethereum, other turing complete smart contract platforms, NFTs of every single field you can think of from fan tokens, to art, music, customer rewards, or sports and cinema tickets which remove any possibility of scalpers abusing a system among others. The eventual move of corporate shares expressed in token ownership, play to earn games such as Axie Infinity which already command a daily trading volume equivalent to 1/10 of a 3rd world country's daily USD remittance volume, enriching the lives of tens of thousands of participants, and so forth. These are just the tip of the iceberg and the ushering in of Web3 is going to make everything far more complex and amazing. One thing for sure is that the entire cryptosphere will be unimaginably different ten years from now, much like comparing the internet of the 1990s to the 2000s.
It's easy to tout benefits of something totally free and unencumbered of regulation and oversight. It's every child's dream!
But, with currency and so many other things, that regulation and oversight was developed to solve serious problems. Problems that will return when the regulation and oversight are removed. On the flip side, that regulation and oversight can be misused -- as it has been for the past decade. Personally, I prefer well managed sanity based on reason and logic over anarchy.
There is another aspect to crypto currencies that is seldom spoken of: ENERGY
In the spring China shuttered half of the world's crypto mining operations because they were sucking up too much of its energy -- while China is trying to get away from the coal fired power plants that powered the mining operations*.
So, those miners (or rather their machines) are looking for new homes: The U.S. has become one of those homes -- but we face the same situation as China: we too are trying to move energy production to more modern renewable sources.
Bitcoin mining is really a bit like the Fed printing money: a miner simply solves an algorithm and effectively prints another BitCoin.
So, where are these massive mining operations going to go?
It seems most logical that they'll end up in poorer nations with abundant coal supplies -- and thus make the fires, floods and storms of climate change even worse for the rest of the world. Basically: why should western U.S. pay for their mining operations with droughts and fires?
* Another reason for China shutting down miners is that they are in the process of establishing their Central Bank version of digital currency -- and communism has never embraced competition like the capitalists have.
Comments
If you're genuinely asking to learn, start with doing your own research on the merits of decentralized money, decentralized finance - yields far greater than those offered by traditional banks and their predatory structures, Ethereum, other turing complete smart contract platforms, NFTs of every single field you can think of from fan tokens, to art, music, customer rewards, or sports and cinema tickets which remove any possibility of scalpers abusing a system among others. The eventual move of corporate shares expressed in token ownership, play to earn games such as Axie Infinity which already command a daily trading volume equivalent to 1/10 of a 3rd world country's daily USD remittance volume, enriching the lives of tens of thousands of participants, and so forth. These are just the tip of the iceberg and the ushering in of Web3 is going to make everything far more complex and amazing. One thing for sure is that the entire cryptosphere will be unimaginably different ten years from now, much like comparing the internet of the 1990s to the 2000s.
Agree that cryptocurrencies are going to significantly change the way many are doing business. New unforeseen opportunities are popping up every day. The blockchain is already in the process of revolutionizing Wall Street. So many opportunities in non-financial records management as well. It’s mind blowing.
You mentioned scalpers. True, no one likes them. I certainly don’t appreciate them when trying to purchase tickets for concert or sporting events. But I should point out that scalpers, hated though they are, serve a vital purpose in our economy. This article highlights the pros and cons.
https://www.aei.org/carpe-diem/ticket-scalping-musicians-vs-economists/