Posted on 09/05/2019 7:06:07 AM PDT by blabs
If you're not familiar with the term "Bretton-Woods" and "Petrodollar", allow me to provide a brief summary.
To help fund World War II, the US ratified the Bretton-Woods agreement, essentialy creating Fiat money (tying only a small fraction of Gold to the US Dollar). Since the US controlled 2/3 of the worlds gold, it placed the US Dollar as the world reserve currency and created the ability to print money on demand (then ultimately leading to a complete severing of gold and the beginning of the endless devaluation of the US Dollar)
Bretton-Woods was terminated in 1971, and the Petrodollar was put it it's place to help alleviate stagflation. In a nutshell, world oil sales were priced in US dollars, and any country wanting to buy or sell oil on the exchanges had to swap currencies to US Dollars in order to facilitate the transaction. This created a recycling of US dollars, helping to maintain the US dollar as the world reserve currency, and creating liquidity and demand for assets.
Today, the US Dollar is losing its world reserve status, being challenged by both established and emerging economies who have their own currencies, their own oil, and their own exchanges, thereby eliminating US Dollar recycling.
Bitcoin and Ethereum are eerily similar in comparison. Bitcoin being the first out of the gate, established its value and dominance as the reserve internet currency (Bretton-Woods). Bitcoin was sound, but slow, and soon Ethereum was born (Bretton-woods was terminated), and Altcoins began to emerge mostly based on the Ethereum blockchain technology. To purchase these Altcoins (oil), you first had to buy Bitcoin/Ethereum (Petrodollars) which could then be used to purchase the Altcoins. To sell the Altcoins and cash out, you have to reverse the transaction (recycle) back to Bitcoin/Ethereum. And of course each of these transactions incur a cost, thereby inflating the value of the crypto-currencies and bringing liquidity and demand.
Each day as more blockchain economies emerge, along with their own crypto-currencies, more exchanges are being established to host and facilitate trading of these new currencies. Many exchanges now offer the ability to skip the Bretton-Woods/Petrodollar system (Bitcoin/Ethereum pairs) and allow Altcoins (oil) to be purchased directly with the currency of their choice (including other crypto-currencies), challenging the dominance of Bitcoin and Ethereum.
In it's simplest form, think of these blockchains as their own country (an ecosystem of computer networks) in which their technology can function. They are nice countries, but the problem is that not many companies/customers are moving into these countries, thereby leaving just an empty infrastructure (china's ghost cities come to mind), sucking the investor money pool dry and leaving those holding the coins trading for small margins, waiting for its value to improve. In order for these blockchain ecosystems/countries to thrive and their crypto-currency to attain (and then maintain) a value, it must have and retain customers. In essence, crypto-currency is almost like a stock share, a small stake of ownership, which may gain worth or become worthless based on the performance of the ecosystem. In order for the value of the crypt-ocurrency to increase, it must be used, and used often.
So why aren't companies eager to move into these fancy new ecosystems/countries? The reasons are numerous, but primarily it is due to three major factors: security, accuracy, and speed. Security and accuracy are still being proven. With a litany of bugs and incurred losses from hackers and human error, many companies are reluctant to stake their reputation on these systems and are taking a wait-and-see approach as the technology improves. A recent study of blockchains in South Korea (one of the largest blockchain incubators) showed that less than a quarter of any blockchain companies had any sales , which means 75% of all blockchains are empty! And then there is the speed factor. Bitcoin averages 3-5 transactions per second (TPS). Ethereum averages 10-15 TPS. Many blockchain transactions also need data feeds/links, referred to as Oracles, where performance is impacted even more. To help alleviate these bottlenecks, side-chaining and sharding technology is being implemented by other blockchain competitors. However, these alternative technologies are not without their own pitfalls, technical challenges, and security flaws.
Adoption of a blockchain technology must provide a value and a benefit to the customer. Though security and accuracy are of primary importance, do not underestimate the need for speed. Consider Visa, the credit card processor. Using its current non-blockchain technology, Visa averages over 20,000 TPS. Many other financial powerhouses and institutions average the same. As an enterprise class corporation, would you stake your reputation (your customer base) on a platform that can only deliver 1/10000 of your current speed? Many of these Altcoin blockchains were quick to stake their business models and platforms on a technology that is already outclassed and outdated, and have very few to any customers. Sure, there will always be customers that don't necessarily require high transaction speeds, and some of these current blockchains may still provide a useful service (if they survive), albeit at a significantly discounted rate as these ecosystems will claw and fight to establish and retain a customer base. And though Ethereum is attempting to launch a new version 2.0, and Bitcoin attempts to elevate itself as the native Internet currency, it may be too little too late (and does the internet really need a native currency?) The future of crypto-currency and decentralized internet requires stability and flexibility, not a financial overlord. As more business and individuals begin to accept crypto-currency, they will naturally gravitate toward accepting stablecoins that provide a store of value, a currency that does not wildly gravitate and gyrate, which is something that Bitcoin, Ethereum, and most Altcoins have yet to prove. Bitcoin has barely recovered 50% from its $20,000 peak, demonstrating that it behaves more as a share of stock than a true currency.
Lastly, the future of 5G technology and IOT (the "Internet of Things") will require speeds that neither the Bitcoin or Ethereum blockchain can provide. Consider the newest blockchain technology called Direct Acyclic Graph (DAG). DAG can achieve a speed of 300,000 TPS without the use of Oracles, side-chains, or sharding. That's 100,000 times the speed of Bitcoin (and that's just initial speeds - DAG technology is almost infinitely scalable!). As of today, there is no blockchain technology that can touch the speed and power of DAG. It's the reason why real customers such as BMW and even the US Air Force are beginning to adopt this technology. And with stablecoins that are pegged to existing fiat currencies (backed by actual governments and real countries), it becomes evident that the value of Bitcoin, Ethereum, and many other Altcoins will be based on actual earned value, not perceived or vested.
The writing is on the wall. Invest at your own peril!
A SILVER dollar has about 3/4ths of an ounce of silver in it, worth about $12.00 today.
Where did the other $11.00 (92%) go?
The government stole it fair and square.
In the future, the transactions will take place at the speed with which we can drive our oxcarts to the local Amazon.gov office to exchange our gold for staples like Aunt Michelle’s frozen pizza and Cheetos. :)
So true...been a silver bug for a long time. I LOVE silver, but it is a highly manipulated market, if not one of the biggest manipulated markets in the world. Have done fairly well with it though.
When you boil it all down, the USAs ability to knock your entire population into the Stone Age is what makes the dollar the default currency of the entire world.
Modern money has symbolic value. Its symbolic value arises from belief that something of value stands behind it. Fiat money might be a scam or popular delusion, but is a widely accepted scam, ultimately backed by “faith” in the issuing government (i.e., the taxes it can levy) and an economy that can support taxation.
Please explain how “blockchain” actually work. What is the thing of intrinsic value that stands behind it? Who creates the money, and how?
In a nutshell...Blockchain is an open ledger, a chain of transactions that is transparent (yet anonymous). Each time a transaction is completed, a block is added to the chain by a node (computer) in the blockchain ecosystem. Tokens/Coins are many times considered the currency to be able to use the ecosystem, and many blockchains reward the nodes with coins (referred to as mining). Each chain is distributed in full across all of the nodes in the ecosystem so there is always concensus and accuracy, practically eliminating any fraud/manipuation/etc. Unless 51% of the nodes are compromised at the same time, the chains are always in agreement. Value is derived by the usage of the blockchain, plus coins are initially sold to investors to fund the development of the blockchain (like stock shares). Each blockchain is different (whereas Bitcoin requires mining, some blockchains issue all or partial coins immediately without mining).
You are confusing two terms. Money is not Currency. Money has an intrinsic value such as gold and silver. Currency, such as the US dollar and really any fiat currency system, is only a REPRESENTATION of value.
The dollar is not money.
As for an explination of crypto currencies, TD Ameritrade has a good article:
https://tickertape.tdameritrade.com/trading/bitcoin-cryptocurrency-basics-101-16210
Bitcoin is in the early phase for the next bull cycle.
No matter how good you think a digital currency would be, it can never be allowed past the fringes. Banks and retail are looking at it but none of that matters when you can buy 2000 lbs. of heroine and have it mailed to your door by Fedex. They pay for murders of people, buy children for sex, and guns for people that can't pass background checks. No one knows the value changed and you made 200% profit. No one can safeguard your wallet acct. and you will lose 100% with a hacker.
The problems are numerous but the ability to tax will finish it.
Couple of "what if's", What if N. Korea decides to sell Iran a nuke for a million bitcoins? What if Iran sends bitcoins to Hezbollah with no one knowing? What if N. Korea buys oil from Russia or China using bitcoin?
We already know the cartels are moving mountains of drugs using the dark web and Bitcoin. How about crooked politicians selling secrets to the enemy?
Stopping all this is hard enough using fiat money, but at least it leaves a paper trail. IMO, if this gets big enough, the tax authorities will start to squawk. Another problem is the dollar is the reserve currency. Losing that would be catastrophic for America. Being able to print money is the reason we still have our head above water now, otherwise Argentina comes to mind. The gubmint is already talking, Democrat and Republican, about multi trillion dollar ideas and some of them will probably be enacted at some time. We can hardly pay interest right now @ 2%. As long as we can print the reserve currency, we will print our way out. Losing reserve currency status just means you print local worthless script that the world will reject.
Is DAG as secure?
True enough. But if you take Roman Empire for an example you know that the rest of the world would accept it for only so long.
“Today, the US Dollar is losing its world reserve status”
no, it’s not. the US dollar is stronger than ever due to the fact that it’s the most stable currency on the planet and foreign investors are buying it like crazy because of that ... Trump has stated that’s one of the main reasons he wants the Fed to lower interest rates ...
“Each day as more blockchain economies emerge,”
I’m not aware that ANY blockchain “economies” exist ... how about posting a list of such economies, what is traded in each “economy” and the number of transactions and the annual value and velocity of each one ... perhaps a few links to such information would back your claim ...
“The government stole it fair and square.”
If it did, it stole it from stupid people.
Also why does it need to steal it when it can print it?
And by the way, the smart people that bought silver for almost $50 an ounce in 2011 wish they had kept their “worthless” paper dollars.
“Modern money has symbolic value. Its symbolic value arises from belief that something of value stands behind it.”
the primary attribute of all useful currencies is universal believe or acceptance that they have value. Of course useful currencies have other attributes such as Portability, Indestructibility or Durability, Homogeneity, Divisibility, Malleability,Cognizability, and Stability of Value.
but “intrinsic value” is not an attribute of a useful currency, because very few thing (including gold) have intrinsic value, and the things that DO have intrinsic value, such as food, medicine, water, fuel, and energy make poor currencies and are good only for barter, which is why currencies were invented in the first place ...
when I say economies, I am referring to the blockchain ecosystem, the network in which it runs. The coins that are issued by the blockchain are its currency, and the goods traded are the blockchain services provided.
currencies do not have bull cycles
In today’s world most wealth is simply numbers on computers
this simply highlights what has been taught for millennia in the Bible
money is not real
in fact the love of money is the root of all evil
as the world progresses and more and more fraud and greed proliferate because of the electronica nature of transactions , this smart understander and worshiper of the true life the world will be able to sit back and laugh at the folly of the foolish nature of man
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.