Bitcoin, Money and Value

By Wayne Brown


 

In the course of my online discussions, I have been tempted to provide a treatment of Bitcoin and related subjects (Modern Monetary Theory, "Fiat" money), etc. But, on examination, I seem to have already written enough on the subject. Check here.

I have changed my opinion that crypto is a "zero-sum" game. The reason is that some players are happy to lose money, which changes the whole picture.

There are major players who are glad to lose money in this market. If you are a criminal enterprise or a terrorist organization wanting to launder millions of dollars, a "loss" of 10% is totally acceptable. Crypto is, in other words, a godsend for organized crime. Among other reasons, these are one reason that governments of the world will soon consign all this crypto-crap to the trash bin overnight. I note that crypto-nerds regard this as impossible with almost religious fanaticism, nor are they willing to even discuss the fact that "winners" in this marketplace are financing terrorism and organized crime.

Like all laundering schemes, crypto has its challenges. At the end of the laundering pipeline, "real" money emerges, with all the challenges of accounting for its source. In fact, since governments can hack the blockchain, crypto may not be as good a choice for long.

Bitcoin is an interesting case. As of writing, the total amount of Bitcoin out there is close to $1 trillion Canadian. Bitcoin is the preferred method of payment for ransomware criminals, an industry that, according to some, has cost the world $20 billion by the end of 2021. It is fair to guess that the upward pressure on bitcoin price is fueled by the "demand" for Bitcoin from ransomware victims. Coincidentally, the current "circulating supply" of Bitcoin is about $20 Billion.

Any coordinated attack on the ransomware industry would obviously involve killing off Bitcoin. I have no sympathy for those whose speculative Bitcoin fortunes would vanish as a result of such a campaign. These speculators are basically betting on the success of a crime that touches victims from the little old ladies losing their family photos to hospitals trying to treat the sick.

---------- PS ------

Crypto fans believe that Crypto is the future. To put this in perspective. The existing "money" system is fabulously successful and useful. Whatever you may think of, say, Bitcoin, it is not useful as a currency.

The foreign exchange or forex market is the largest financial market in the world – larger even than the stock market, with a daily volume of $6.6 trillion, according to the 2019 Triennial Central Bank Survey of FX and OTC derivatives markets.

To compare, crypto trades about 600 billion per day. That sounds impressive but it's a tiny fraction of "real" transactions. It's simply a measure of the size of crypto-crime activity boosted by speculation.


------ PPS -----


Basic reference about Bitcoin - 2 books by Saifdean Ammous


Commentary on Bitcoin (basic text) and Fiat Currency (deep dive) from the point of view of "Austrian Economics".


Bitcoin Standard

Fiat Standard


There are many fundamental criticisms of "Fiat" that are not obvious. For example, reconciliation is slow and inefficient. (Elon Musk).


Another (Ammous) is that inflation is built into fiat. The banks are effectively "mining" fiat.


Comments

Post a Comment

Popular posts from this blog

Facebook and Bing - A Killer Combination

By Wayne Brown
Image
 This is a partial list of groups I belong to that focus on Generative AI art: Facebook creates community. I use BING as a kind of Generative AI university: BING U.  I prefer the role of student, so my job is to find good teachers. Think of me as the guy who shows you around the campus and knows his way around, but he's a student himself. Microsoft BING is free and very powerful. It's an excellent way to learn Generative AI and a standard tool that everyone in my imaginary school has. The way to find a teacher is to see their work in a Facebook group. Then, save the picture that caught your eye in a Word document (or document editor of your choice). For example ... Joe McIntosh What we have found here is not only the prompt for the picture but a teacher who shares the prompts for all his pictures. Look for artists who work primarily with BING. Don't get distracted by other platforms or techniques. Learn to do one thing well before shopping for better tools. The best Facebo
Read more

A Process ...

By Wayne Brown
Image
She will be 105 in September. She struggles to recognize her four children, let alone her countless grandchildren. Today, she said, "Nobody told me how to die." She has always wanted to die in her own home, an oversized place that has always had room for an endless parade of visitors. She has always been very "social." Although she struggles to remember the old friends dropping by, she chats happily "on automatic." There are a lot of relatives. She was raised on a farm near North Battleford, Saskatchewan, where her Russian parents raised 16 children. I asked "AI" - specifically Claude 3 Sonnet , to describe this situation in a short essay. I have taken the liberty of letting Grammarly , my AI writing assistant, make a few corrections to Sonnet's purple prose. This is the slightly edited version: She sits in  the twilight of her extraordinary life, a living embodiment of resilience and grace. At 105 years old, her eyes, dimmed by time, still h
Read more

Warp Speed Generative AI

By Wayne Brown
Image
Jump to Warp Speed Warp 2 Warp 3 Warp 4 "Warp Speed"  Illustration of " Language is a Virus " Laurie Anderson Completed in the time it takes to perform the song For a very long time, I have tried to master information processing tools and "wire" them together into a "machine" that suits my purpose. "Warp Speed Generative AI" combines several powerful families of AI tools to turn an idea into one or more pictures. Along the way, we get an explanation of the original idea, references and a detailed explanation of the style. I call it "Warp speed" because AI seems to give me whiplash as it takes my idea and runs with it. I just hang on and enjoy the ride. "Warp Speed" is a response to the current obsession with prompts: how to write them, when to share them, how to monetize them, what books to read, what courses to take and so forth. AI can write pretty good prompts. "Prompt Engineering" is an endangered speci
Read more