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Is This How The Dollar Gets Replaced?
Submitted by Chris via CapitalistExploits.at,
I’m sitting here at my desk, laptop open, 7 browser tabs open, a half dozen documents open, emails popping in every few minutes, Skype messages coming in, and bunch of PDF reports open for review. A smartphone collects calls and texts coming in, and next to this is a Kindle with 3 books I’m reading at the moment. That’s just the technology.
Then I have a fly buzzing around, annoying the dog sitting at my feet. And as I look outside the window, a jasmine bush in full flower attracts bees collecting nectar from it.
Taking it all in it struck me why we are wired for narrow-minded thinking. Why the majority misses some of the biggest changes that have taken place. Changes that have taken place right under our noses.
You see, in order to make sense of everything around us our brain has to simplify it. Thousands of auditory, tactile and visual inputs every minute bombard us. In order to survive we have to narrow down and focus on what’s important. It’s a human trait which ensures survival and it’s been around ever since our grubby-looking ancestors were to be found running from lions in the savannah.
Our brain has to quickly categorize, file, and trash information. It sure is an efficient search and retrieval system. But in its search for efficiency the brain looks at a particular piece of information, goes and rummages around in the back and retrieves anything similar as a reference point.
The more instances of our brain coming up with such reference points, the greater our reinforcement of that particular item or topic. If we’re staring at a strange round-shaped object trying to figure out what it is, our brain searches diligently for information on round shaped objects – baseball, cricket ball, tennis ball… you get the picture. It then attempts to match those retrieved pieces of data with what we’re looking at.
The default in our brain is therefore to something which already exists, or something which looks like something which already exists. It is far easier for our brain to compute this and takes far less work.
Remember the brain is an absolute energy hog, consuming a quarter of your body’s energy even while it accounts for barely 2% of your body weight and it therefore is constantly attempting to conserve energy.
This explains why drastic, revolutionary, disruptive answers to existing problems very rarely come from existing channels or are identified by those who are embedded in the particular sector experiencing the problem.
To prove my point consider that Uber wasn’t conceived of by a taxi driver. Paypal wasn’t birthed by a banker. Airbnb wasn’t the product of hoteliers, and Instagram wasn’t the brainchild of a photographer. All have disrupted industries in their own right and yet none look remotely like the industry which they disrupt.
What Does All This Have to Do With the Dollar and Currencies?
Ask nearly anybody what will replace the mighty greenback and you’ll get a mishmash of politically inspired views. The Chinese renminbi, gold, or an SDR currency are all popular. I’m sure you’ve heard the arguments before.
I submit to you that the future of currency will be none of the above. It will not be a centralized currency. In fact, it may not be one currency at all. It will not be coercive, and it will be transacted on the blockchain and will be market driven.
The dollar will be replaced by asset transfers sitting on the blockchain protocol. This is the world’s largest distributed computing project on Earth. It’s a global payment platform which doesn’t require any centralized authority for its functionality, and it’s as close to incorruptible as anything the world’s ever seen, including Mother Theresa.
New technology is often misunderstood. Anything new and different is initially going to be misunderstood. Well-meaning critics dismiss it together with self-interested critics whose profit stream is connected in some way.
This is true of Bitcoin and its underlying architecture – the blockchain.
Ask yourself why today we use fiat currency and I think there are essentially two main reasons:
- We trust it long enough to hold it for periods of time, and
- The alternatives aren’t as liquid.
What happens when alternatives start rearing their heads and they don’t require trust. Note: I said DON’T require trust not that are trustworthy. There is a difference. Certain fiat currencies have been trustworthy for brief periods of time but the blockchain provides a trustless system. That solves the first reason why fiat currencies are used.
What happens when you add liquidity to alternatives?
The answer is that market forces take hold and the consumer makes the decision to transact based on what’s best for him. Couple that with frictionless transactions and liquidity can explode faster than Uber grabbing market share of the taxi industry.
I’ve not even mentioned the fact that you can stand in the Sahara desert and transfer an asset to Hong Kong on your smart phone for free, in seconds, and far more securely than any transaction you’ve ever conducted. I’ve not mentioned that the functions of authentication, validation, escrow and delivery are handled seamlessly and for close to zero cost.
I’ve not mentioned that the blockchain is asset agnostic. What this means, and this is important for the dollar, is that if you wish you can trade your 1965 Ford Mustang on the blockchain; and you should, because quite frankly, old cars are horrible, noisy, uncomfortable and bring down the neighborhood. I know, I’ve got a neighbour who stores a gazillion of these horrible things.
Why is this important for the dollar?
In case it isn’t obvious. A world where money is decentralized means a world where nothing you’ve ever seen before will become the new norm and the new norm is unlikely to include a scrap of paper issued by a bankrupt government.
I very much look forward to it.
“We want a whole sequence of companies: digital title, digital media assets, digital stocks and bonds, digital crowdfunding, digital insurance. If you have online trust like the blockchain provides, you can reinvent field after field after field.” – Marc Andreeson
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I usually don't comment on bitcoin matters. But, I'm pretty shocked at the volume of misconceptions and ignorant comments about the technology.
The majority of comments sound like the punditry of 1994 and 1995 exclaiming that there was no use for email. Nobody would shop online. There was no way Sears, Macys, and Kmart would ever put their products online and cannibalize their brick and mortar stores. ahem. Newspapers were forever. tcp/ip was inferior to Novell. Inferior to Banyan. There is now way it would get a foothold what with Compuserve, Delphi, and Genie providing everything an online geek would ever need.
The potential disruption of bitcoin is pretty grand. Personally, you would have to be a fool to bet against it. For those of you who keep droning on about what are you going to do with your bitcoin if you "lose your power" or the government "takes down the Internet": Get real. If we lose power or lose the Internet your entire world will be turned upside down - whether or not you have 500 lbs. of silver, a MasterCard, or bitcoin. You will be spending 90% of your awake time trying to find food and water.
We have fantastic new technologies, products, contracts, and services that will be offered in the near future. All of this will be lubricated via crypto currencies...without third party intervention. It *will be successful because in each locale/economy/nation/state bitcoin will work in unison with the local government currency.
"All of this will be lubricated via crypto currencies...without third party intervention."
Really...? On what basis do your assumptions regarding non-interference by governmental/regulatory/spy agencies, rest...?
Regardless of whether they 'work in unison' does not address the issue of interference in the name of 'national security' as an example, or the current operative catch-all, 'terrorism'.
Lastly, I for one, do not consider my concerns to be 'ignorant', nor misconceived. The considerations of privacy and concern of regulatory overreach stand on their own, and unless you have an antidote for the natural proclivity of governmental agencies to desire control over anything & everything, bitcoin offers nothing but an alternative method of transacting. Of course, my position assumes that you even care about the aforementioned concerns. Many people are indifferent to them, as long as they have food to eat an entertainment to enjoy.
I look forward to your response and anticipate its inadequacy. Consuelo is correct about government intervention. If you search the page for my earlier post, I made a similar point about taxation. Same issue, different underlying reason.
If there is a back-door (and there must be), you have nothing.
The only way out of this issue is to revolutionize the entire governmental system with techniques similar to those used by digital money systems. If there's a hole anywhere, it will be exploited (corrupted.) This is possible, but a lot more than a digital money system is necessary.
potential disruption
you would have to be a fool to bet against it
Didn't you forget to mention the other 10,000 technologies (rough estimate) which have the same potential?
Crap, I am still trying to wrap my head around how we can possible live on a heliocentric ball planet.?
https://www.youtube.com/watch?v=ZLC6JNC5u3s
Central Banks To Issue Digital Currencies? - Paul-Martin Foss
http://thenewsdoctors.com/?p=566523
Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain
http://www.wired.com/2015/12/big-tech-joins-big-banks-to-create-alternative-to-bitcoins-blockchain/
http://fortune.com/2015/12/17/ibm-blockchain-for-business/
Linux Foundation Unites Industry Leaders to Advance Blockchain Technology http://www.linuxfoundation.org/news-media/announcements/2015/12/linux-foundation-unites-industry-leaders-advance-blockchain
How can Bitcoin, Bitgold or blockchain technology guarantee scarcity. That's the strength of gold. It's guaranteed scarce and therefore genuine throughout the ages.
High tech executable program files are no substitute for a scarce metal despite it being heavy and cumbersome. It worked in 1885 fine and it can work again just as well. Efficient and easy payment systems are not as critical to world trade as honesty and trust that gold provides.
bitcoin and bitgold have nothing to do with each other except for the word "bit" in the title.
bitgold is based on physical gold, it is audited and insured, read the faq if you have questions about it.
bitcoin is limited to 21 million, it is mathematically impossible to have more than 21m, read the source code which is freely available if you have any doubts.
If I have 10 ounces of gold in a safe in my house, another $5,000 USD also in the safe and $8,000 in Bitcoin or other blockchain currency in my online account and the power goes out, which of the above do I really have and not have?
"which of the above do I really have and not have?"
10 oz gold ... you have it
your safe ... you have it
your house ... you don't have it (property taxes)
$5k USD ... ok, you have it, but you should understand that you're trafficking in counterfeit currencey
$8k in bitcoin in an online account ... wtf, you're keeping it in an online account? you're a fool if you are doing that and are likely to lose it
power ... hopefully you had the sense to get backup batteries and/or generator, solar panels, wind turbines
More fantasy nonsense, either an LSD user or a gold peddler, hard to distinguish between these two.
The dollar will not be replaced, just the form.
People have trouble understanding that blockchain is the digital era equivalent of double-entry accounting. It is currency agnostic -- it's not just bitcoins you can use with it, you could use with dollar-denominated accounts as well.
Just pay attention to that Andreessen quote.
Is it so difficult to report on something like this?
http://www.veteranstoday.com/2014/07/30/the-coming-return-of-the-real-us...
http://www.veteranstoday.com/2012/05/11/the-intel-cowboys/
http://www.veteranstoday.com/2014/12/20/very-very-bad-things/
I mean this news is only about a year and a half old now. It hasn't filtered to the rest of the so-called alt-media? (forget the MSM)
We can't discuss this like good adults? What is everyone afraid of? I guess one tried true method to suppress potentially good news is to simply ignore it?
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (Read Me First)
I too think transfer of ownership via blockchain technology sounds good. However, that doesn't solve the main issue. Which is?
Well, turns out an old cliche gets to the point, namely, "possession is 90% of ownership", or something like that.
Do understand. I don't literally believe or accept the notion that "possession" and "ownership" are the same, or 90% the same, or 10% the same, or even 1% the same. But that's not the point the cliche was coined to point at either.
The point is this. If you "own" something, but don't have it in your own possession, you cannot enjoy the benefit of ownership.
This becomes more obvious in paper asset non-markets as time passes. And when mass bail-ins happen, it will become quite obvious and very painful to most people who think they actually "owned" something that was in possession of someone else (especially any fictitious entity AKA corporation or government).
-----
And so, to return to the issue of "transfer of ownership" with a blockchain technology. Well, it certainly is easier, cheaper and more anonymous to transfer ownership to something valuable this way than conventional ways.
But this does nothing about the key issue. Who actually has possession of whatever good or goodie you supposedly own? No matter how ownership was transferred, if you don't actually have the good or goodie you "own" in your own possession... well... the whole "transfer of ownership" aspect doesn't seem very important.
How the possession part "goes wrong" is mostly irrelevant. Perhaps you don't know (and can't find out) where the item you own is located. Perhaps you can't find anyone to ship the item to you, or the cost is high, or the insurance is high. Perhaps the item is fragile or goes stale, which makes taking possession problematic. Perhaps the individual or fictitious entity that has the item you own will refuse to turn it over, or say they can't find it. I could write 1000 more sentences that start with "perhaps".
Incidentally, this issue is also why so many advocates of precious metals strongly advise owners of precious metals to "take delivery of your goods, hide them, secure them, make sure you keep them safe from others".
So the bottom line for me is this. I'm much more concerned with keeping what I own in my hands than finding cheap ways to transfer ownership. After all, I quite like to enjoy what I own... otherwise, why would I want to own goods and goodies in the first place?
Right - the blockchain part of Bitcoin (which is the more sophisticated and innovative part) can address "those other 10%", namely functions that have traditionally been performed by notaries public, title registers, central depositories, etc. It basically secures a chronologically ordered record of signed documents. The other part of Bitcoin, which is not so new technologically, addresses the possession and control of information. As in old cryptosystems such as PGP, every user can (and should) generate and store their own keypair (a private key plus its corresponding public key) locally, privately, and not through a third party. The keypair is like an identity. You can refer to an identity (its public key), but you can't pretend to be an identity that you don't have. Only the person holding the identity (its private key) can sign things, proving that they came from the same person.
So the really interesting use case for a blockchain comes when the asset recorded has similar properties to the blockchain itself: 1. it is based on information; and 2. it does not refer to any person or entity (a counterparty, an authority, etc).
The currency unit 'bitcoin' refers to the blockchain in a way similar to how a share certificate refers to the company that issued it. But unlike a company, the specific people, jurisdictions, etc. behind the blockchain are completely irrelevant - only the proof of work, and the resultant security and utility is what is relevant. And (simplifying a little) each creation or transfer of bitcoins on the blockchain refers to a public key, and through that to a piece of secret information that only the owner has (the private key).
Possession of the private key, along with the blockchain record, actually amounts to possession of those bitcoins. These things give you full practical control over those bitcoins. If all copies of the private key get destroyed, the bitcoins are, for all intents and purposes, destroyed. If all copies of the blockchain get destroyed, all bitcoins are destroyed.
Ownership is a legal concept - so it is outside of Bitcoin's realm (at least for now, until applications that record and deal with ownership of various assets on the blockchain get implemented and adopted more widely). These applications that will deal with those "10% of the law", (the expression is "Possession is 9/10ths of the law") and thus create additional demand for bitcoins, are only an added bonus on top of the utility of bitcoins.
The FUNDAMENTAL human experience is, we don't decide nor determine anything.
We don't decide what is money.
However, we can describe its basic features such as its being a medium of exchange, a unit of account and a store of value.
A collection of scumbags, ranging from Americans to Freegolders, have said that this isn't so. That, for instance, money is not and should not be a store of value.
Your problem is what I wrote above at the beginning of this note.
You, just like I, decide shit.
You may think that this is not so, due to your hubris and the fact that this state of affairs has held for half a century or so, and still does.
The vast majority of the human race, yes, practically ALL of humanity, assume and believe that fiat currency issued out of thin air by the bankers, is money.
You may think that reality consists of what people believe it is.
But, your very own basic human experience is PROOF that this is not so. You only have to ask yourself, When was the last time was it that I decided to decide whatever it is that I think I decided? Your problem is that you actually know the answer. And the answer is NEVER.
So, true, this state of affairs of fiat money and 7 billion idiots who think that they are masters of their destiny [including the mythical 0.01 percent of humanity] can continue indefinitely, assuming that the natural resources available are enough to satisfy the bulk of humanity.
However, you don't DECIDE that whether you are the 0.001 percent or part of the 99 percent.
Just like you don't decide what the flavor of sugar is nor what to think about what you are reading presently, none of you will determine the actual outcome of what will transpire eventually.
You are all less than what comes out of my rear end yet you think you are God.
You see, this world (Imperfection) is the very proof that there is no God (Perfection). How can Perfection create Imperfection?
Hence, what I said above ain't no hyperbole.
P.S. Bitcoin = another fiat (worthless) currency created and controlled by other people for their own benefit.
Bitcoin is two loser nerds holding signs outside of MtGox "Where is our money?". Poof...and it's gone.
The bright Computer Science ppl created the mighty computer
(but could not figure out the Y2K problem, Hah ha , so stupid)
Similarly the blockchain is now more than 10 gigabytes in only 8 years
if the whole world starts using it, it will grow exponentially
and can go to petabuyes or exabytes ,
then you will need only supercomputers to crunch all that
I believe, it may collapse when it will take many minutes (or hours) to update every transaction.
I hope u guys understand the physical limits.
Imagine billions of ppl doing billions of transactions every day.