I’ve been watching the crypto market for a long time. Naturally, being a tech person and an anarchist, Bitcoin was something that I was deeply interested in, but it wasn’t until last year that I actually started putting any money into it–and even then, only small amounts. More recently, I’m putting in literally every penny that I can afford. It’s pretty clear to me that crypto-currencies are the future, and that fiat currencies are going to be crushed. But before we get into that, let’s discuss this idea first that BTC and other cryptos are “fiat” currencies.
Fiat means “by decree,” basically. A fiat currency is one that some authority figure decrees to be the currency. This is why the USD is a fiat currency–the U.S. government has made it our currency and has, in the way that monopolies do, fought very hard to keep any competition from existing. It’s not being inflationary that makes a currency “fiat.” It’s having a government say, “This is your currency.” If the USD was abolished and the government switched to BTC, then BTC would be a “fiat currency.” In fact, a isn’t the right article to use when discussing fiat currencies; the is usually more accurate. The USD is the fiat currency.
In the past, kings and nations had to pay for wars using their gold and silver coins. War is expensive, and it has always been expensive. Historically, men who otherwise could have been doing something productive are instead paid to go out and be destructive. This obviously constitutes a net drain on wealth. You not only have people not being productive–and being paid to not be productive–but they’re also being deliberately destructive. Resources, gold, labor, man-hours… all of these things are destroyed during war, and all of them could have been used in a more capitalist sense by investing them and turning them into more wealth and resources.
Taxes were historically high upon barons and lords, who in turn taxed the shit out of their peasants to pay the king’s taxes. The peasants were not usually taxed directly by the king; the king commanded the barons, dukes, and lords to give him money, and they did so. However, the barons, dukes, and lords didn’t really do anything to earn money (neither did the king, of course), and so they had to steal it from the peasants through taxation. The king had to pay his soldiers to fight the wars, had to pay for swords and ships, and all of these other things, because an unpaid soldier is a disloyal soldier.
Soldiers are always the first people to be paid by the ruling power. We see this today in Venezuela where, despite crippling national poverty, soldiers still enforce the government’s bidding because they are still being paid, and offered extra toilet paper for their service. It becomes a matter of survival for the soldiers–everyone else is starving, but they can keep themselves and their families provided-for by continuing to serve the system that has made everyone else poor, but if they refuse to serve, then their families will starve with everyone else.
Because it was a necessity to pay soldiers and because it was impossible for any king to do everything they needed to do while also paying for a war, they instead resorted to inflation. Inflation is when the amount of currency increases while the amount of wealth it represents stays the same or decreases (typically, it decreases). Let’s use a silly example to explain it.
I give you ten M&Ms and I say “These are worth $100.” This means that each M&M is worth $10, yes? Then I say, “I’m going to make you more wealthy. Here’s twenty more M&Ms.” But you find, once you have thirty M&Ms, that they’re still only worth $100. You have more M&Ms, sure, but you still only have $100. Instead of making you richer, you have the same amount of money that you had before. This is inflation. The value of the M&M was inflated. Real life inflation is more dangerous than this, because I don’t actually give you the other twenty M&Ms. In reality, I keep them, and let you keep yours. You still have ten M&Ms, but they’re only worth $33.33 now. I didn’t make you wealthier, did I? I made you poorer.
I robbed you.
Instead of paying with pure gold coins, kings stretched their gold further by taking cheap metals like tin and plating them with gold. It was still “a gold coin,” but it was worth much, much less than a pure gold coin. Instead of having only one thousand gold coins, the king had ten thousand of these gold-plated coins. So if a soldier was paid one coin a week, then he was able to pay ten thousand soldiers that week, instead of only one thousand.
Today the United States Government does this by printing money instead of adding tin to gold coins, but it has exactly the same effect. Earlier today I watched a video of some obnoxious twats who rented dinosaur costumes to go to the White House and “protest” with signs saying that the government should fund national sciences. They may think that now, because the government’s inflation allows them to mask the true cost of this crap. But if the government had to actually steal from us tax us to pay its bills, they wouldn’t be out there asking for their taxes to be increased.
You know, people think our taxes pay for our roads, our education, our bridges, Medicare, Medicaid, and these wars… That’s so untrue. Our taxes leave a huge deficit, to the tune of about $600 billion dollars every year, and that deficit just increases, raising the National Debt ever more. Even with obscene taxation (because we are taxed far more heavily than the colonists would have stood for), the government must inflate the currency to obscene degrees by borrowing it from the private banking cartel that is the Federal Reserve Bank.
So how do crypto-currencies fit into this? Well, the U.S. government can’t inflate them. They’re decentralized, so they can’t be inflated like that. The U.S. Government can drop money into bank accounts and buy large amounts of crypto, and it’s certainly doing so, but this is pouring value into the cryptos because the USD represents value because it’s easier to exchange and is used in wage payments. If clients paid my invoices in LTC and ETH… That would be fantastic. Anyway, if they did so, then my labor would be pouring value into LTC and ETH, and every new coin would be a representation of the work that I did to earn it. As it is now, it’s a representation of how much USD I spent and, in theory, the USD is a representation of the work I did to earn it.
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The government can’t just tell Crypto Managers, “We want 35 Bitcoins to pay for something,” because there are no “Crypto Managers” they can tell it to. This is the way the Federal Reserve System works, of course–the government tells this cartel of privately owned banks that it wants money (which has Interest attached to it, naturally), and the bank coalition hands it over, because they’re assured to make money in the long-run since the government will steal from us to pay it back. This money is created out of thin air, devaluing all the existent money like the M&Ms above.
If the government wants crypto, it has to buy them. To do that, it must raise money. To do that, it must steal from us. This will work for a while, and the government will buy cryptos, but the continual increase in value that cryptos are seeing will continue to cause people to move away from the USD and into cryptos. Amazon, Wal-Mart, and Target will inevitably start taking the more popular cryptos. We saw exactly the same thing with credit and debit cards, and with personal checks. There are minimal differences, because the debit cards and the personal checks also represented wealth. When people store their wealth, they want it to still be there when they go to retrieve it. A history of it “not being there” is why we have FDIC today, and is what the movie It’s a Wonderful Life is sort of about. Think of each crypto as its own MasterCard or Visa or Discover or American Express. Right now, I’d say BTC is Visa, ETH is MasterCard, LTC is American Express, and DASH is probably Discover.
In the beginning of cards, no one took them, because not enough people had the cards for the companies to justify the expense in setting up their systems to accept them as payment. There are also legal hurdles, but let’s put those aside for the moment. As more people make money in cryptos and find that they are excellent places to store wealth, more people will store their wealth in them, and more people will carry the “cards” and motivate Target et al. to install “card processing machines.” In time (and, due to how accelerated social changes have become, I’d bet it will be within ten years), larger corporate employers will offer employees the option of being paid in crypto currencies.
This is something that cannot be stopped. Pandora’s Box is open, and the only way to pull the plug now is to shut down the entire Internet and never let it come back online. Every BTC miner has a full copy of the blockchain and could restore the network. There is no amount of cracking down that could get and destroy every single part of the crypto networks. They will try, of course. They have no choice. To survive, they must try. We’re getting to that.
There already exist completely anonymous wallets like Jaxx, which allow a person to send and receive crypto without giving up any personal identifying information. This stuff is extremely difficult (although not impossible) to track. I purchase through Coinbase and then send to one of three other wallets. If the state zoomed in on me, they could certainly figure out exactly how much money I have where, but they can’t do this for everyone, and eventually they’ll be overwhelmed solely by numbers–it’s like how torrent sites openly exist today, such as the Pirate Bay. And even if The Pirate Bay one day finally goes down, a hundred will pop up in its place.
The Internet gave us far more power than they ever anticipated, and cryptos are the next stage of that. Once we have cryptos, we can be paid, and we can make purchases, all without ever touching the USD. The USD, which steadily loses value, is a terrible investment. It takes $20 today to buy what $1 bought in 1913. Meanwhile, it takes 0.1 BTC to buy today what it took 1 BTC to buy a year ago. Cryptos have been moving in the opposite direction from the USD; while it becomes less valuable, they become more valuable. Which would you want to be paid in? Which would you rather have–a one hundred dollar bill, or 1.2 Litecoins?
To make matters even worse, they will find that it’s very, very difficult to tax. And it’s impossible to tax in large amounts. Every single person would have to be audited. Massive amounts of wealth will slip right through the IRS’s fingers. “How much crypto do you have?”
“I plead the Fifth.”
They can easily look up your social security number to find your checking and savings accounts, and to find your stocks and shares, and tax you accordingly. But how are they going to find your crypto wallets? What if you store your crypto wallet on an Onion server–on the Tor network? Anonymity within anonymity.
What will happen when Saudi Arabia says, “Sorry, man, but you have to pay us in ETH for our gas”?
It won’t matter by that point, of course. By that point, every American citizen will have started moving away from the USD. Wal-Mart and other corporations will accept it as payment, and they’ll offer to pay people in the same currency. The government’s stranglehold on our wealth will have been broken. So how will it pay $300,000 to teach hookers in the Phillipines how to use condoms? How will it pay $1.6 trillion to fight in foreign countries? The soldiers wouldn’t accept the USD as payment, and neither would the tank and missile manufacturers.
“Taxation” is the only way–inflation will have been ruled out, because they don’t control the currency and can’t inflate it.
And this is why the anonymity matters. They cannot tax what they cannot track. And if they begin kidnapping random people to extort money from them, I don’t believe even the slothen, lackadaisical Americans would put up with that. “We’re going to institute a 0.01 BTC tax to pay for a hammer for NASA to use.”
Once we have to actually be directly taxed to pay for this shit, these government schemes will evaporate. You want to End the Fed? You want to abolish the Department of Education? You want to end Medicaid and welfare? You want to stop the wars? You want to keep the government from paying ludicrous amounts of money to teach hookers how to use condoms?
It’s done with cryptos.
I don’t know if Bitcoin will be one of the holdouts in the end. It has a lot of baggage attached to it. To many people, Bitcoin is used for money laundering and for paying ransoms. It’s going to be very difficult for BTC to get out from under that shadow, even if it’s possible. And I know BTC people are celebrating as it approaches $5,000 per (and I would be, too), and I congratulate them–but their excitement is a little undue. We’re still in the very, very early phases of this. We haven’t even come close to 5% adoption rates. We’re still deep in the Early Adopter phase.
Once we get around 5%, television shows and movies will begin featuring cryptos. Popular mainstream figures and shows like Pewdewpie, Family Guy, Rick & Morty, and South Park will begin mentioning it in regular conversation. They’ll show characters making money with it, making purchases with it… Then, with the Trend Setters like them on board, we’ll reach about 15% adoption. The Trend Setters will bring in the Trend Followers, and that is when Target et al. will start accepting it at the cash registers.
Many people will enter expecting to multiply their wealth by twenty times, hundred times, and so on, but that phase of the cryptos will mostly be over, and a few primary cryptos will be in the lead, and there they will stay until the next paradigm shift. Some new crypto with some new, novel algorithm won’t sway the masses of people. They won’t be impressed by Newcoin’s shiny new algorithms, and will stay with whatever cryptos are in the lead. I think it’s going to be Ethereum, Litecoin, and something else–probably not Bitcoin, because of all its baggage (and its price). Adoption rates will slow down, as these trend followers tell everyone that the “wealth people were making” must have been greatly exaggerated, because they’re only making 1% or 2% gains. The late arrivers will finally get on board, leaving only the iconoclasts, rebels, and conservatives out of the loop, and by then the Gold Rush will officially be over. There will be no more meteoric rises from $40 to $100, or from $600 to $5000.
And there will be losses. I see a lot of people excited about LTC’s climb right now–myself among them, and I really can’t afford for it to plummet–but it did plummet earlier this year, coming in at about $15 per and dropping to less than $2 each around February. Someone who bought 100 LTC while it was $15 each and sold them when it fell to $2 each lost $1300.
I don’t like Bitcoin, to be honest. It has too much baggage, and I’m more than a little envious of the people who bought it at $10 a pop and now have tens of thousands of dollars. What can I say? I’m honest about my motives. I want to see BTC collapse because I’ll feel better about having missed that boat, and I want to see the smugness wiped from Bitcoin Champions’ faces. It’s petty, I know. But the smugness! My god, the smugness. They act like it’s impossible for BTC to rapidly collapse. And it’s not only possible, it’s extremely likely to, around the time the Trend Setters start coming in.
The dumbest thing I heard this week was someone saying that “the number of coins purchased doesn’t matter–its percentage of growth relative to the USD is all that matters.”
That’s Old Paradigm thinking. In fact, the amount of coinage is all that ultimately matters. If the USD collapses, which it ultimately will, and cryptos will be the reason why, it won’t matter one tiny freaking bit that BTC was valued much more highly, according to the USD, than ETH. 0.01 BTC may be worth $100 right now, but if you take that USD away, what do you have? You have 0.01 of a currency. And without the USD, that 0.01 of a currency is a lot less than 1.00 of another currency. Without the USD measuring these currencies relative to one another, the amount of coinage will be all that freaking matters. You could have your wealth vanish in a heartbeat if people decide that a car is worth more than 6 BTC. Without the USD there saying those 6 BTC are worth $30,000, how are you going to get anyone else to accept that your 6 BTC are an even exchange for a car?
This is why the amount of coinage matters. If you get trapped in the Old Paradigm and attempt to apply it to the New Paradigm, in the end I don’t think you’ll have any wealth left at all. Right now, the only thing keeping BTC so valuable is literally the existence of these other currencies. Erase them from the equation, and what do you have? 0.04 BTC. Well, I’ll have quite a lot more than that of ETH and LTC.
And most people intuitively understand this, even if they couldn’t elucidate it. Most people won’t be willing to drop $500 on a tenth of a Bitcoin when they could spend that same amount of money and get five Litecoins. Who would buy a tenth of a BTC instead of five LTC? Not very many people. And their reasoning is solid, even if they don’t realize it, and even if they don’t know why, exactly, they prefer “five of one thing” to “0.1 of another thing,” even if the values are theoretically equal: those values will vanish. Cryptos themselves will make sure that those values vanish, and that the only thing that will be left is “five of this coin” and “0.1 of that coin.”