Thoughts and theory - the future of crypto?

I was just pondering the future, as you do, and I thought I’d share where I’m at to see if anyone wants to pick some holes in it and make me rethink.

So my thoughts go like this. Debt-based money creation is unsustainable. Unsustainable doesn’t mean irresponsible, it means it will definitely come to an end, as far as I can see anyway.

When the bubble pops and the house of cards eventually come crashing down the govt will face a hard situation and 2008 has prepared them for it. They know they will not be able to bail in or bail out next time. They are quite aware of the situation that’s coming and there’s really only one clear option to get out of it. They will have to let the bank’s fail. I’m pretty sure the banks realise this too, which is why everyone is just partying until the music stops, milking it for all it is worth while they can.

When TSHTF the govt will let the banks fail and wipe out a lot of the crazy derivative debt that is totally insurmountable. A lot of people will lose their pensions and investments, but the paternal state will swoop in and save the day with big brother’s GVT coin. They will match the balance of accounts from the failed banks who can’t honour their customers’ balance and take money creation away from private banks and put it back into the hands of the central bankers.

In my crazy-eyed speculation I see a barrier though and the reason this space is being allowed to flourish unfettered… for now. GVT coin can’t operate like a database or a traditional blockchain. They want central control, but they also want scalability and a different way to form consensus other than PoW. GVT coin will not be accepted internationally if it is just a single govt database, so they can’t get away with just calling it a blockchain, it does need to be robust and secure etc.

My hypothesis is that the wild west will end as soon as we produce some tech that allows them to realise that goal. Once we have a really well-implemented PoS and something like ‘sharding’ we will see the decentralist movement come under immediate assault from all quarters and all the major nations will try to squash out the decentralised stuff.

Does anyone else agree that we might just be the architects of our own destruction in crypto? Might we be being used and the reason projects like Eth (that are working on both sharding and PoS) are pumped to dizzying heights with crazy icos everywhere and no regulatory interference is just because theman wants them working on those problems, so he hasn’t stepped in? In fact, the string pullers might even have been encouraging others to get involved so we get there as quickly as possible?

I’m just spit-balling here and I don’t want to sound like a tinfoilhatman, but at least some of that could well be true couldn’t it? In which case, perhaps when blockchains finally solve all those issues maybe we should be selling that optimism in anticipation of them having outlived their usefulness to the powers that be?

Obviously none of this really applies to SAFE. It would be much harder to destroy a utility and network that people use (without being detectable) compared to a shared ledger for a store of value (trust/faith etc) reliant on centralised mining. In fact, you might think that if govt tried to crack down and they did kill a few big blockchains then the hoards of freedom lovers would flock to SAFE in protest.

Ok, I’ll leave it there, maybe I’ve been watching too much Game of Thrones and Billions :crazy_face: . I just wanted to see if anyone had any more interesting thoughts or could pick some holes in mine. :slight_smile:

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I don’t think the current powers that be are that smart.

and it’s not like they aren’t going after people! ?? like where did that idea come from man

@Jabba, isn’t it the other way around, the super rich own the banks and the government. So I doubt the banks will “fail” as such. Some may close their doors and the non-secured accounts lost thus relieving some of the debt balance.

I don’t see how there’s a choice. It seems that the first part of the play is really obvious and completely unavoidable doesn’t it? I’m not the first to suggest it, I’ve heard Simon Dixon saying something very similar.

Systemic risk means that if one part of the system fails it can bring the whole machine down. I don’t think the powers that be (and by that I don’t know whether I mean govt or string pullers) have much choice or can prevent that happening. Their only play seems to be managing it when it happens. The first time they decided to stop it by passing the bill to the whole of society and future generations. Now it has been pumped bigger than ever before and there is way too much money and even more debt. They can’t do the same thing again. The system has to implode eventually, it can only be a matter of time surely?

So when the inevitable happens what do you guys think will happen? A second bail out and rioting in the streets? A bail in and rioting in the streets? Or a simple switch from private banks creating the new money supply through debt, to central banks creating and controlling the supply of a new type of digital fiat?

Of course any string pullers would make sure their own wealth was more hedged into safer assets. I don’t think string pullers care much about banks failing as long as they can keep their dirty fingers in whatever pies replace them.

I’m not so sure about the ‘attacking’ blockchain’ bit after they have what they need for GVT coin. It just seems it might outlive its usefulness. I’m also not at all sure they could succeed in destroying something like bitcoin even if they did try. Perhaps it will go more how Simon Dixon sees it and bitcoin will be our savings account whilst GVT coin is what we dip in and out of with our savings protected from centralised control. I prefer that outcome of course. If cryptos do survive then I suppose central bank issued digital fiat becomes a relatively useful tool rather than shackles around our necks (as it would likely be more stable and useful for that fact alone). I think centralised mining is a big problem with PoW crypto though. I could see that being a route to its downfall some day in the not too distant future.

I’m surprised to hear that you guys don’t think it will all implode or that they aren’t ready for that after 2008.

This visualisation is way out of date now, but still interesting.

http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/

Crypto now at $100bn and derivative debt has grown to well over that $1.2 quadrillion estimate.

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Rather I think that its too simplistic and very biased towards governments of the world embracing crypto.

Another option is that the super rich will have no problems with the 95% of the population becoming poor with their savings/investments lost and “recovering” from there. This allows the super rich to own more every asset and be even richer. Call it debt writeoff

Who knows, but I think there is a number of potential paths that governments could take and the one you mentioned is a little too biased towards crypto. I’d say governments will go down another path…

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I don’t think that’s possible any more. The debt is now too large to pass on. The scale of it is just too big and the problem can’t be allowed to just get worse indefinitely because it is also escalating exponentially. Every form of fiat that has ever existed has been printed to death eventually. Debt based money also doesn’t work and is not sustainable because your create more debt than there is money to pay it off with interest constantly compounding the problem.

This is what I meant at the beginning by ‘unsustainable’. It’s not a cheeky thing they can just keep doing forever. There are genuine limits to it. If money is created at this rate and debt is consequently created even faster (principal + interest) it MUST reach an end-point. There is no way for it to continue forever or for banks to just pass the debt over now. The numbers are just too big and the problem is getting worse, so it has to be ‘changed’.

Well, just to be clear, centralised coins won’t be how we think of crypto, it’ll just be digital fiat secured by more reliable and respectable systems than a firewalled database. We already use digital fiat so really I don’t think it is the govt or the people embracing crypto, most users probably wouldn’t see any difference from their perspective. It’ll just be a more fixed supply or controlled increase kind of fiat and they’ll probably still call them $s or £s or whatever.

The fact that something cannot continue forever implies only that - not that change has to come “now”, whenever “now” is. The numbers being “too big” has not been quantified. Too big for what? “The problem is getting worse” is a bit vague. What number is rising/sinking? On what scale and approaching what during what time period?

I think the discussion is interesting and I sort of agree with @Jabba. Not that I really disagree with @whiteoutmashups or @neo either. I think @whiteoutmashups’s point about current powers not being that smart is important. Also, never attribute to malice what can be adequately explained by stupidity.

More, please! Entertain me! :wink:

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I agree. The thing with “powers” in general is they don’t have to be very smart or able to plan ahead. They can afford to adapt whatever happens. If people get tired of walled gardens and closed document standards - so what. The owners of the likes of Microsoft and Apple can reinvest in arms, opium, rice, oil, renewable energy, crypto, Linux, water - anything that happens to be profitable and stable enough at the time.

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Yes absolutely, I should really try to find some sources and data. I suppose I just presumed many of you would have watched some of the same kinds of documentaries and read the same kind of articles over the last year or two. My memory isn’t what it was and I can’t pull the figures out of the air, I will try and find some of the sources that made the picture seem clear to me later tonight when I get a few hours to trawl.

Really though, even without raw data you can see the problem clear enough. 97% of the new money created each year is done so by private banks. You walk in and ask to borrow $5k, by the magic or fractional reserve they can now create a new $5k on their balance books, which never existed before and so they have not loaned it to you, then you owe them this new money, plus the interest which will be due on it (which they did not create when they magicked the principal into existence).

This has been going on since the 70s, so the amount of debt that now exists is far greater than the amount of money. If you took all the money in the world you could not pay off all the debt. I’m sure you’re all familiar with the 8th wonder of the world, compound interest and its implications. When I say the debt is increasing exponentially that’s what I mean. It is the old chess board and doubling the grains of wheat on each square. The problem rapidly gets out of control and there comes a point at which it quickly becomes impossible to hold back the tide as the numbers suddenly become ridiculous.

I agree that we can’t know when something inevitable will happen, but in the case of debt based money and derivative debt I think we can say a rough area where it becomes an immediate threat, whether it be 2 years or 10 years from now, it becomes unfathomable for it to be 20 years… if you see what I mean.

If they were smart they would not have dug this hole in the first place. I think they are reactionary most of the time. Still, post 2008 and with all this QE it seems a bit mad to think people at the top don’t see where the train is headed and have therefore thought about what they will do when it gets there.

Ok, well I’m off to see a new ‘free school’ that’s opening next year near me. Hopefully this is the answer to my parenting dilemma with school. 3 days a week, no curriculum, no involuntary testing, complete student autonomy, no ‘teachers’ etc. /Hippyhighfive

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Singapore looks like it will be the first country with a digital currency based on block chain. How this will influence others to shift will be interesting. I feel digital currency is inevitable down the track

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I don’t think it’s about finding the data. It’s about defining what data to look for.

If “they” invested in the digging and not the hole itself, they’re all good.
One should invest in the process - not the outcome. I’m still trying to figure out how to do that in practice…

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Wow - I think I could write forever on this topic. Don’t crush my thoughts - they are a little crazy at first glance…So let me start by saying I think the world debt is out of control and that the world is in a constant financial war. For the U.S. alone I have been watching the following site http://www.usdebtclock.org/ (this is very scary if you really analyze these numbers, look at the money creation section). My current thoughts, and they change often, are the following (for U.S. only):

  • Debt is out of control especially when interest is applied and compared to wage growth
  • Dollars are not backed by gold, silver, etc…but are backed by U.S. GDP (to some degree)
  • The next bail-out will be in the form of hyper-inflation across all segments - thereby reducing overall debt value for every U.S. dollar debt holder
  • This might trigger WWIII - due to all the U.S. debt held by other countries…i.e. China

In the time of the next big war - I think people will flock to BTC as a safe haven, much like gold and silver, etc…

The best part about this is that no Gov can track or steal your BTC if stored correctly (at least I hope)

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I am becoming slightly pessimistic about the people doing anything at significant scale, that the major governments of the world find objectionable. Government was powerful in 1650. Think now how powerful they are with computers and modern weapons. If crypto grows to become too large a nuisance for them, they will scream “money laundering” at the top of their voice, and introduce laws to make it so dangerous or inconvenient to transfer between fiat and crypto, that it will be kept stunted to a non-threatening scale as normal people won’t use it.

If you are a small country that thinks it can become a crypto haven to allow people a path around their own government’s regulations, you will quickly find your banking ties severed, your citizens ostracized, and very likely, your government toppled in a sudden “civil war” where the opposition springs up out of nowhere with infinite money to buy propoganda and pay “protesters”, skilled well payed fighters, and advanced weapons. Or perhaps you’ll just be straight up invaded.

It is very convenient to print your own money, and on this point, every government is in strong unspoken agreement. None of them will willingly give up this ability. The only way it happens is with an economic collapse, where new countries spring up and since they have no “credit history”, nobody trusts their printed fiat so they are forced to back it with something real, just to have anybody accept it in trade.

It is also very convenient to tax your citizens when you determine that you dare not print enough to cover all your debts. All governments are in agreement to not allow their cattle to refuse to be harvested by running into the neighboring field. The rancher next door is not your friend. He will work with the rancher that owns you to make sure you’re punished for being a bad cow, because he wants your owner to return the favor, should his cows stray.

When crypto currencies become too much competition because too many people are fleeing to them to avoid fiat-printing induced inflation, or people are fleeing to them to avoid taxation, then they will be easily killed with nothing more than over-regulation of the exchanges that deal in fiat. If you can’t sell crypto for fiat easily, it will be marginalized.

However, governments are made up of humans. If enough of these humans have a personal stake in crypto, they are less likely to work to pass anti-crypto laws. They may even work to oppose anti-crypto laws. There is a chance that if crypto can achieve enough powerful stakeholders, it may achieve scale. The more really rich guys that are interested and personally invested in crypto (since really rich guys tend to have influence in government), the more chance it has of not being killed when it starts becoming a threat.

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An economic collapse is around the corner and government’s know it

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Yea, back in the late 80’s early 90’s our AU government was in so much debt that the treasurer went to the reserve bank to work out how to handle this. And as revealed in an ABC interview with said ex-officials, they had joked about hotting up the economy by huge government spending which then forces the reserve bank to up the interest rate to cool things down.

Now all “profits” from our reserve bank goes to the government which then means the government can then pay off their debts. Well it was meant to be a joke, but the treasurer did it. Interest rates for home loans went up to 20+% for some and 17-19% for most. Interest on other debt was much higher. Inflation soared.

The country almost hit depression status and the government paid off all the debt and the next government was able to amass 100 billion, which was equivalent to the government debt at the start. People lost homes, some lost every thing and really we are still affected 20 odd years later.

Now the nasty bit was the rich got richer since they had no debt and people owed them money, so they got a hell of a lot richer. (including that treasurer). Effectively the debt was passed from the government into the private sector and much written off and banks/rich got a lot of land and assets. The rich still imported their exotic timber goods etc and got extra from high interest on the loans they gave out.

The debt problem was solved by an arrogant treasurer implementing a plan that was meant to be a joke that nearly destroyed a nation (except the super rich). I see that this will be repeated in the future and is a sure fire way to allow the super rich to massively increase their wealth in a short amount of time.

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That is interesting stuff neo, I wasn’t aware of any of it.

I still don’t see how the buck can be passed off when it gets hundreds of trillions rather than billions, and derivatives are now in the quadrillions! But I take your point, a market can stay manipulated longer than you can stay solvent, as the saying goes.

I maintain that there comes a point where the system itself has to be reset because the numbers break the game, but I guess we’ll see… perhaps, maybe, in the next decade or two lol :confused:

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See if you can get hold of a basic text book on economics or financial markets. If you are very ideologically inclined, give Debt: The First 5000 Years by David Graber a chance.

Will the establishment squash a possible decentralized future? I think so, at least punctual, in North Korea, the Amish community or possibly China … however, there will be other places that are less controlled, that have nothing to lose. Those places will adopt the technology much faster and finally force everyone else into the decentralized paradigm as well.

Yes, it is possible to go fully decentralized, even if the powers that be oppose it. For this to work the “tech” itself, the hardware, the individual components, the power generation, the bandwith carriers etc, has to become decentralized. If individual components can be designed and manufactured by individuals, something that is slowly becoming a reality, then gradually contol will start to slip. If individual people gain the ability to create the components needed for computation, power generation and datatransmission, the means of control and oppression must become increasingly untenable. The capabilities of the individual to venture into what was once the domain of giant multinationals and government increase on a daily basis. Think about publishing, design, trade and manufacturing. If we have any chance of emerging as a free people then maybe therein lie our chances.

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