This article will give an overview of what a Crypto Currency is, where they came from and what the crypto geeks among us expect for the future. We will briefly look at the two most important cryptos, the start of this phenomenon, the philosophy, the size and growth of the market, ICO’s (Initial Coin Offerings) and then take a final look at the most major happenings in Russia.
What is a crypto currency?
The answer is simple. We do not know yet as we are literally in the process of redefining money, banks, trading between people and groups and a new philosophy. As the Bitcoiners say, we’re putting the banks and therefore the empires out of business. The advent of crypto currencies spawned a new Modern Theory of Economics, and now we see the first conferences on Modern Monetary Theory.
Is it a store of value? Yes! Is it a currency that we can trade, or trade with? Yes! Does it lead to direct commerce? Yes. Can I buy something with it? Yes. Does it lead to new and disruptive business models? Yes! Can Governments control the currency? Oh, they can make their own of course, or they can buy some that have already been mined or made, but, theirs is as good as mine. So, we’re now on an equal basis regarding the economy. It is also neutral, i.e., yours and mine have the same value, and nobody can devalue or revalue the crypto excepting on markets freely traded. It is open; all software is open source. It is trustless, i.e., I don’t have to trust a governmental body to keep a currency trustworthy or decide what a currency is worth or collapse a currency. With crypto currencies, the trading markets make these decisions by taking part in trading in free and open markets where the software is open source, and the trading is peer to peer with a blockchain in the back keeping a continual and unchanging record or ledger of all transactions. This concept and philosophy have now taken a direction into smart contracts. (More about this in the Ethereum section.)
There is still the underlying belief that humans need cash, and that the various efforts at going cashless are supposedly an attack on humanity and freedom. In this article, A Sinister War on our Right to hold Cash, F. William Engdahl describes the current thinking around cash.
In crypto currencies, we consider this thinking now old and dated and not keeping up with technology.
Are crypto currencies an economical solution for human kind? With experience since Bitcoin became a used currency, of course, I say a cautious yes. The readers may have different comments. Consider the following:
The news is that cryptos are cash. Crypto currency wallets can now seamlessly exchange any cryptocurrency into any other one with the push of a button or turn a crypto currency back into a fiat currency via an exchange. These wallets can be used to trade on crypto currency markets; to pay anyone, to buy a coffee or even a luxury yacht. (More following in the Bitcoin section). The question then is whether we need cash and with the perspective from within the crypto currency world, I can answer the question that we need cash for this moment still, but not for much longer.
- Refer to M-Pesa in Africa whereby cell phones are now cash withdrawal machines and a goat herder in Afghanistan can buy a goat or their milk with the press of a button. Consider that by 2012, a stock of about 17 million M-Pesa accounts were registered in Kenya. By June 2016, a total of 7 million M-Pesa accounts has are now open in Tanzania by Vodacom. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in otherwise largely cash-based societies.
- Note the increase in crypto usage in Venezuela talked about in mainstream sources such as Forbes and Bloomberg. I do not want to put those links here as the rest of the information is just mainstream and suspect. Feel free to seek it out on both Forbes and Bloomberg and other mainstream media, for example, the Guardian. Here is another source explaining how Venezuela is turning to Etereum, ZCash and Bitcoin for financial survival.
- Take into account that in Japan one can now purchase anything from any supermarket or electronics store with Crypto Currencies.
- For US readers, the United States is generally accepted to be a ‘non-friendly’ jurisdiction for Cryptos, and some of the best known Crypto Currency voices say that not even crypto conferences should be arranged in the US. The SEC put a shot over the bows of new crypto business just very recently, and of course, somebody wants to regulate this all. In reality, the horse has left the stable.
Adoption is growing very rapidly, much faster than Internet adoption in the early years. From mainstream NBCnews, Middle America is crazy in love with Bitcoin.
Tongue in Cheek Comments:
- So, Bitcoin is like carrying a Swiss Bank account in your back pocket?
No! Bitcoin is like carrying your own Swiss Bank in your back pocket.
- We have to get the unbanked, banked.
No! We have to get the banked, unbanked.
(attributed to Andreas Antonopoulos). https://www.youtube.com/user/aantonop
So, how did it start?
Some cypherpunks and software developers and cryptographers and game theorists got together in the dark alleyways of the interwebs and soon after Satoshi Nakamoto was ‘born’ with this white paper defining the blockchain and how to send currency over that Blockchain. Of course, up to now, nobody knows whether Satoshi is a group, an individual or a government agency, or just a bunch of hardcore cypherpunks that decided to redefine money. Satoshi handed over Bitcoin development and for the past few years he/she/or the group has not been seen.
Initially, this question was asked:
“Why is it that government reserves for themselves the right to print money? And what can we do about it? Can we rework Money?”
What is wrong with us, the people. We have to take that right back and create our own money, our trade, and our own lives. The real idealists at the beginning set about to put central banks out of business and take money out of the hands of governments through cryptography, software and hardware engineering, disruptive technologies and building within the populace, very large network effects. This means we get together in groups, select what we want to do and have the strength of the group without losing the individual voice. This is all done with open source software, mostly unpaid developers and now the crypto currency space, hardly 8 years old, crypto currencies are defined by the Big Boys as a New Asset Class.
We have an avalanche of articles of that nature in Forbes, Bloomberg and others. I will refrain from linking to most of those.
It is estimated that 1 percent of the populace now owns some form of crypto currency and we are now on a growth curve to 3 percent. When I heard about Bitcoin some years ago, my uncomplicated philosophy was one of a small act of disobedience, a small act of resistance. I could never imagine that this small act combined with others would lead to a multi billion dollar industry, spawning new business daily and growing in value and adoption.
Let us see how successful the attempt is to create money by the people for the people. How big is the ecosystem and how fast is it growing?
The Size of the Cryptocurrency Market
The total market cap for all crypto currencies just surpassed $100 billion. The vast majority of these gains have come in just the last few months — on April 1st the total market cap was just over $27 billion — representing almost a 300 percent increase in value in just over 60 days.
A First Benchmarking study from the University of Cambridge Judge Business School says:
Cryptocurrencies such as bitcoin have been seen by some as merely a fad or insignificant, but that view is increasingly at odds with the data we are observing. As of April 2017, the combined market value of all cryptocurrencies is $27 billion, which represents a level of value creation on the order of Silicon Valley success stories like AirBnB. The advent of cryptocurrency has also sparked many new business platforms with sizable valuations of their own, along with new forms of peer-to-peer economic activity.
Next year will mark the ten-year anniversary of the publication of Satoshi The findings are both striking and thought-provoking. First, the user adoption of various cryptocurrencies has really taken off, with billions in market cap and millions of wallets estimated to have been ‘active’ in 2016. Second, the cryptocurrency industry is both globalised and localised, with borderless exchange operations, as well as geographically clustered mining activities. Third, the industry is becoming more fluid, as the lines between exchanges and wallets are increasingly ‘blurred’ and a multitude of cryptocurrencies, not just bitcoin, are now supported by a growing ecosystem, fulfilling an array of functions. Fourth, issues of security and regulatory compliance are likely to remain prevalent for years to come.
To give perspective to the number of 100 Billion, only 61 of the 196 countries listed by the International Monetary Fund have a gross domestic product (GDP) greater than $100 billion.
At the time of writing, there are now 1,079 tradable coins and tokens.
The ‘Dutch Tulip Bulb’ example that we hear so frequently is not relevant any longer as the industry as a whole has grown way beyond Tulp Bulbs.
Principles of Cryptocurrency
- Frictionless. They make borders disappear and trade frictionlessly around the globe, and, whether you live in America or Armenia, Canada or Cameroon, the process of buying, selling and trading cryptocurrencies is essentially identical.
- Decentralised: i.e., Peer to Peer – no bank, clearing house or another 3rd party in the middle of our transactions
- Fungible: We have a right to transact without a bunch of 3rd parties (banks or investors or even the SEC or even the FED) in the way. Overregulation is then out of the picture and your coin has the same value as mine.
The technology is disruptive and is now spawning hundreds of new businesses working with new technologies and changing our world. (More in the section on ICO’s).
- Open source with no closed copyright: i.e., I can examine the actual code base which makes the environment robust, nobody can interfere, and a community of real people openly do the actual development. Bitcoin and Blockchain cannot be hacked as there are so many blockchains running on so many peers. Business around it, exchanges specifically can and have been hacked.
- Trustless: I don’t have to trust a governmental force to tell me what my money is worth. I know what it is worth because the people are trading it on markets.
- Immutable: In Bitcoin alone, there will only be 21 million bitcoins mined ever. Nobody can make it more, or make it less. The currency then becomes immutable and not open to regulatory bail-ins, bail outs, haircuts, and so on. I can also go across borders without having to tell anyone anything.
- People’s initiatives: Catherine Austin Fitts says that we are beta testing the Borg’s cashless society for them. I say so what! At least I know what I am doing, and they do not yet completely exist in this sphere. So, any way you cut it, I’m a little bit ahead and would not mind owning a little of the new Russian crypto that is certainly on the horizon. The sheer wealth transfer taking place now and into the future from fiat currencies to crypto currencies is vast. And the Borg has been caught sleeping, but I must admit, China and Russia are right up there and trying to lead in the crypto space.
- Massive wealth transfer: Here you can watch Fiat Leaking into Bitcoin. As Bitcoin now represents about 50% give or take of the crypto currency market as a whole, fiatleak should redevelop to show the full picture: http://fiatleak.com/
Initially, the Bitcoiners were hard anarcho-capitalist with many of them subscribing to voluntaryism, the art of not being governed. We had mostly libertarians, free thinkers, cypherpunks, those that are deeply into cryptography and perhaps the ‘walkers of the dark web.’
With the explosion in new crypto currencies and of course those with a firm philosophical base are now in the minority. So, as in the rest of humanity, you get all kinds. We even have those who are begging for ‘government regulation’ so that they can ‘feel safe.’ It is true; you cannot write to the CEO of Bitcoin and complain if something goes wrong for you. If you take your ‘Swiss Bank’ into your back pocket, you are responsible for everything regarding the security of your currency in your bank.
Looking at Bitcoin
First, what is a Blockchain? Satoshi Nakamoto defined a blockchain as an electronic payment system based on cryptographic proof, instead of trust. It is essentially a distributed peer-to-peer ledger of transactions that are immutable and cannot be changed, hacked or messed with as it is a public ledger.
The technology by itself is revolutionary. By design, a blockchain is a decentralized technology; transactions cannot change. One does not need a 3rd party for your financial transactions. It is peer to peer technology, i.e., you and I deal directly. Hey presto, no banks, no clearing, none of the old controlling technologies. It is open for anyone to see. (Notes about Privacy later in this document.). A blockchain is not a database and does not lend itself to be a large database. It is philosophy. Anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions aspects of traditional commerce could become unnecessary. Stock market trades become almost simultaneous on the blockchain, for instance — or it could make types of record keeping, like a land registry or voting, fully public. And decentralization is already a reality.
The Bitcoiners used to say that Blockchain is the Killer Technology and Bitcoin the Killer App.
A global network of computers uses blockchain technology to manage the database that records Bitcoin transactions jointly. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
How Bitcoin works … https://www.youtube.com/watch?v=l9jOJk30eQs
An epic list of resources here http://lopp.net/bitcoin.html
Who is who in Bitcoin https://twitter.com/WeRateBitcoiner
What can you buy with Bitcoin
Anything from Amazon with a 15% discount – https://purse.io/
A new Bitcoin Bazaar – https://www.openbazaar.org/
Current news from Bitcoin:
Bitcoin hard-forked into a new chain called Bitcoin Cash on August 1, 2017 (edited typo). Bitcoin cash now trades as number 3 or 4 in the crypto currency markets. https://coinmarketcap.com/
We may have another fork later in this year. The Bitcoin community was and is divided on issues of scaling this fast growing currency, and this necessitates that those with different views fork off the software and start their own initiative.
How do I get Bitcoin
You buy it, or you work for it, or you mine it. Certain US government agents steal it.
Looking at Ethereum
Different from Bitcoin, the Ethereum blockchain has a leader. He is Vitalik Buterin, a Russian/Canadian, and is one of the brightest young minds on our planet today.
Ethereum Blockchain started only in 2015 and currently most new crypto business runs on Ethereum blockchain. That gives you an idea of the speed of development in this space. The currency is called Ether or ETH. There is also an Ethereum Classic as a result of a previous hard fork.
The Ethereum Blockchain is often presented as a Bitcoin Rival. In reality, the two crypto coins or currencies fill distinctly different niches.
What can you buy with Ethereum?
Stocks or Tokens in new crypto business in the form of Smart Contracts.
The space is slowly getting their software ready to accept Ethereum for most forms of commerce.
Current Ethereum News: Ethereum will hard fork its blockchain toward the end of September: https://themerkle.com/ethereums-metropolis-hard-fork-will-activate-at-the-end-of-september-2017/
Taking Stock of ICO’s (Initial Coin Offerings)
The growth in crypto currencies has spawned many new industries as well as industries that can benefit from Blockchain technology. The disruptiveness of the new technology is demonstrated in that the venture capital market is under severe stress and clearly going out of business as most new business on the blockchain (and more blockchains are coming) now does their first, second and third round of financing as an ICO (initial coin offering). These ICO’s are presented via Smart Contracts on mainly the Ethereum Blockchain and anyone can invest. The concept of an accredited investor (usually someone with a very high net worth) is being thrown out of the window, and you and I can invest in most any industry if we have an interest. (Russia is now messing with this principle and there are rumors of only accredited investors being allowed to trade cryptos.)
I cannot count how many ICO’s are on the go right now; in the low 1,000’s would be a good estimate. The advents of ICO’s disrupted the concept of an IPO trading on the formal stock exchanges. We now trade on our crypto exchanges, peer to peer and in a non-interventionist free market. The ICO’s are as varied as new voting systems on the blockchain, all information, birth records to driver’s licenses to school records to medical, and right through life to death records. Another example is real estate fully bought and sold by smart contract on the Blockchain, new methods of factoring invoices, large conglomerates of clean food are trading with one another and even new Blockchains and coins and tokens done with new technology bootstraps itself with an Initial Coin Offering.
It is estimated that ICO’s raised 1.3 Billion this year alone for new and disruptive business. By disruptive I mean disrupting the Status Quo, disrupting the methods and controls of government, flying currently without much governmental intervention or governmental control.
There is a vast and global disruption and wealth transfer of our current economy in the process.
An example of an ICO raising 24 million dollars in 24 hours: 0x (Zero X) is a newly developed protocol aimed at exchanges and markets. Their recent ICO raised sold 100% of the 500M tokens set aside for sale and in 24 hours and 10 minutes they had raised $24 million. After months of rigorous testing, this event was the first large scale trial of 0x protocol v1.0 live on the Ethereum mainnet, and the contracts worked as expected. We are extremely grateful to the community that has formed around 0x and the greater than 13,000 token holders that are helping us build the future of exchange. We are also proud to have accomplished this milestone having spent $0 on marketing, having engaged in zero backdoor pre-sale engagements, and while completely avoiding international ICO financing platforms.
Here is another disruptive new business. It is called Salt, and is a lending program done on smart contract that makes credit scores unnecessary. https://theamericangenius.com/business-news/salt-lending-cryptocurrency/?utm_source=twitter&utm_medium=Social&utm_campaign=AG
(Out with credit score companies that sell our data).
This resource list may give you an idea of the leaking of the fiat currencies into the crypto currencies. As noted, I tried to count the new ICO’s on the listings right now, and cannot get to a number as they are varied and a massive number and with you and I and small investors being able to invest in new initiatives, the disruption to the current fiat system of economics is becoming massive. If we are only 1 to 3% of the global population going this way, imagine what it would look like if we get to 10% or larger.
What is happening in Russia?
This headline was a little tongue in cheek on first reading, but then, with further information, perhaps it was not: Putin meets with Vitalik and becomes a Blockchain fan
A very active Russian twitter account from Nikita Zhgavoronkov, the developer of a blockchain viewer, https://blockchair.com/
In general, we are seeing 2 messages from Russia. The one is that they want to control crypto currencies, and the other is that they want to be open to crypto currencies. It is unclear at the moment what the actual stance is. What we do know is that they want to trade crypto currencies on their stock excanges but also want to develop a Russia Coin.
And then on the Russian ICO side, we have two new ICO’s that stand out in the Russian sphere. The one is called Foodcoin and the other is called Sandcoin. Foodcoin is a conglomerate of clean food producers (no gmo’s, grown organically and not organic as a marketing term), with an already working business, that is funding more and larger development through a coin offering.
Sandcoin is just so interesting and in another small act of disobedience, a small act of resistance, I bought a few coins with no banks in the middle, dealing directly with the company. We all know about the new Silk Road or OBOR. Sandcoin is a new coin offering that is funding the sand (supreme quality building sand with patches of higher quality sand for glass works) that will be used in the Moscow part of developing infrastructure to OBOR. Of course I will be disobedient and resistant and help the Sand Guys to quarry their sand because they are willing to give me a premium for a bit of investment. I don’t have to be an ‘accredited investor’, I can just be an ordinary person together with a bunch of other ordinary persons putting a little money where our mouths are.
General criticisms, questions, and comments that crypto geeks have to deal with.
Privacy: This of course is an issue as a blockchain by itself is an open ledger. Privacy is dealt with by different means by different coins. Issue is, if I have your wallet address, I can find all of your transactions and perhaps if I am a good hacker find you as well. Coins like Monero obscure the address so that it is not easily findable. Monero, or the Komodo platform promises more private transactions. The ‘older’ Bitcoiners do not use one fixed address, but a new one for every transaction for privacy reasons. Ethereum promises more of a privacy focus through a technology called zk-snarks or “Zero Knowledge Proofs” which will allow the Ethereum Blockchain to perform anonymous transactions on a higher level in the future.
Bitcoin will be hacked. Bitcoin itself cannot be hacked. What is to hack? The software is open source and the blockchain is open for anyone to look at and runs on a peer to peer system with many many nodes. What can be hacked is my Bitcoin wallet or the wallets of the businesses holding Bitcoins or crypto’s, or cell phones with crypto applications.
It is a plot from the Borg wanting us to give up our cash or Satoshi Nakamoto was a CIA plot.
I have news for you. Even if it was a CIA plot, the plot has escaped the plantation, the slaves got hold of it and they are running wild.
Crypto currency is not backed by anything.
Well, neither is the almighty dollar or any other fiat currency in our world. Crypto is backed by irrefutable cryptographic proof of existence. This is called POW (Proof of Work) or POS (Proof of Stake). Alas, the detail here is a discussion for another time.
Bitcoin is only used for drugs and crime.
This one always makes me giggle. What do you think the main purpose of the almighty dollar is?
How do central banks intend to fight crypto currencies? They are somewhat lost in the woods. Here they think that if they improve their transaction speed, the interest in cryptos will become less. They cannot compete with the money that I can send from me to you, in a couple of minutes as a low cost, and I do not need a bank, a transferring bank, permission or any 3rd party. http://www.zerohedge.com/news/2017-06-22/how-central-banks-intend-fight-cryptocurrencies
Tongue in Cheek – Speaking of scams, there’s this altcoin “Dollar” some outfit named “Federal Reserve” released – premised, no coin cap, shady as heck. It’s centrally controlled with zero transparency steer clear. Also every major “upgrade” was disappointing, to say the least. Plus the developers allocated 99.9% of the released coins to themselves and their banking buddies. Ponzi? MLM scam?
Bitcoin is in a bubble.
That is when an investor cannot explain the rise in price of Bitcoin. It seems very clever, but the supposed Bitcoin Bubble seems to disappear vs the price. People want to own this crypto asset.
With the current concerns regarding free speech and the attack on all freedoms, Kim Dotcom has a plan.
I’m going to raise so much money for whistleblower sites & transparency organizations until all dirty deep state secrets are known. Watch me
Finally, we are in a gold rush and in a state of wealth transfer. As we know in a gold rush in the wild wild west of old, scammers, hackers and dishonesty abound. If you have your own bank, you need to be able to protect that bank. Computer and cell phone security is of the utmost importance. Wallet engineering has come a long way and we now have hardware wallets that are just about unhackable physically but of course there are many social scams. This is a cryptography world and whatever crypto asset you own, has a cryptographic private key. If you have your key, safe, then you own your asset. If not, you do not own your asset.
If you enjoyed this, or if you did not, please let me know in the comments. If you like it we can do more. If not, you may be missing out on the largest transfer of wealth from fiat to other currencies that we, in the thinking community have dreamed about. If you disagree with me, kindly put your case forward. Sno’flakes will have a hard time. There is nobody to complain to and nobody can give you anything that you yourself do not deserve.