And not a creature was stirring.
Actually, that’s not true. The day before Thanksgiving is the traditional day where all the college kids come home and stuff up their parent’s toilets and go out and cause mayhem in every bar and pub across this great country.
Not that I know anything about that. I hear things.
It is Wednesday and I have kept to a sort of schedule about doing something political on hump day, mainly because politicians are humps.
Today is different. I am not going to tear apart Joe Biden or Donald Trump, easy targets. I am going to give my annual discourse on the total stupidity that is crypto currency.
If you have been half paying attention to the news you have seen a couple of very popular figures in the cryptocurrency World fall from grace. With more to come I am sure.
I will say this once and for all, Digital currencies will never truly take hold as a viable, go to means of economic commerce. These currencies will be in the high risk/high reward category for as long as I am here on God’s green earth. The only way that a true digital currency will ever be the main currency in business transactions is if the US Federal Government either creates one backed by the dollar or uses one of these blockchain created currencies that will be backed by the dollar. By the dollar you should know I mean the US Government.
Isn’t that the reason that Nokimoto Hitachi Mitsubishi Toyoda-San created this escalating math formula? To avoid being followed by the Feds? What he/she or them created was meant to avoid the prying eyes of governments around the World.
In what world do these masterminds think that will ever happen? Love or hate our government and governments around the World, the one thing most governments do well is stabilize and control their own currency. Why would any government ever want to seed that control to some opaque group of coders?
Let’s get real here. It’s a fun thing to play with when you have 500 or 1,000 dollars to basically burn in your outdoor fireplace. Maybe you can make some money, maybe you lose it all. Fine. Go to Vegas, at least you may get to see U2 at THE SPHERE.
Watching Sam Bankman-Fried being hauled off to jail and reading about how he doesn’t like it there and he wants things to make it more comfortable actually makes me sick. The guy committed a Federal crime (dozens of them) and he is going to do time with all the other white collar miscreants. The people that were fleeced should have learned a lesson, you put your trust in a nerd, who has zero concept of responsibility and adherence to the rules of law, and you will eventually get burned. An entitled little sh*t who got what he deserved.
The other player that took it on the chin but isn’t doing jail time as of yet is this guy Changpeng Zhao. Zhoa will have to pay a criminal fine of 50 million dollars and his company is on the hook for over 4 billion. His company is the biggest crypto exchange in the World and they got caught doing exactly what crypto currency was designed for, laundering money and facilitating criminal enterprises.
If you think that’s not important and they will pay the fine and have a better handle on their compliance. I say Bullsh*t to all of that. When millions of dollars can be moved globally with no ownership that anyone can see, criminals will use it. Terrorists will use it. The Iranians use it. The biggest terrorist/criminal uses it. Vlad Putin if you didn’t get my inference.
It was designed to allude the law, why is that a good thing?
That is just the beginning of why the whole cryptocurrency stands on shaky legs.
How about the fact that with no oversight, really really smart people will figure a way into either a currency exchange or the currency itself. It’s like counterfeiting without the fancy paper.
I am sorry, but some smart people developed the models and algorythyms why can’t even smarter people hack those models and create mayhem.
You are naive to think it’s not possible. They have hacked Coinbase a few times. Surprised Binance hasn’t been infiltrated. Maybe they have. It is a Chinese company after all, secrecy is their mission.
Moving passed the legality and increasing chance of something bad happening another concern of mine is the volatility.
If I wanted to trade a volatile currency I would look to the one of ‘Stans or Venezuala. Similar in movement, Bitcoin has skyrocketed this year. Why? Because there are more buyers than sellers. That is it. It is just a means to add risk. It has absolutely no value. Not sure why people risk putting money in a puff of clouds.
It is a trading instrument with absolutely no inherent value. Sure, everyone tells you tails of how much money they are making and blah blah blah. It’s the volatility that best exemplifies the risk. Risky stock trade wildly, so does this dubious asset class.
If I need to bring up an example I have, I will.
Picture this:
I accept Bitcoin for the handmade motorcycles I make. I have a bike, let’s call it Slimboy. Shining chrome, 1200 cc’s of muscle. Retails for 36,000 dollars US. I accept Bitcoin because I have two business partners that still believe SpongeBob is real. Easily hoodwinked you see. Anyway, guy comes in wants to buy the bike. One Bitcoin (trading at 36,500 as we speak). I throw in a helmet to make up the difference. Two weeks to delivery. The price of Bitcoin drops drastically, by the time he comes to pick up the bike it’s trading at 25,000 USD. The 11,500 dollar difference is not on his shoulders, it’s on mine. He gives me the agreed upon Bitcoin which is worth 11,500 dollars less. With the 25,000 dollar bitcoin I lose any profit and now I cannot buy enough parts to build my next bike. I go out of business and I see this guy riding around town on my bike that I foolishly agreed to trade away for less that it’s actual value. I go egg his house with eggs I bought with actual cash that I had to borrow.
Yes, it could go the other way but commerce in the US has never been predicated on the value of the dollar at any one point in time. Yes, we trade with foreign partners and there is always some movement in each currency but that movement is not considered volatile and there are multiple ways to offset those movement with trading FOREX.
Everyone is all aflutter because the SEC seems to have decided to undergo a major education process in leiu of Greyscale attempting to be the first investment company trying to list an ETF based on the price of Bitcoin. The idea is to have an easily tradable instrument that will mimic and hopefully mitigate some of the volatility in Bitcoin. Vanguard and Blackrock are looking to do something similar. Throw Fidelity in there as well.
What all these lemmings seem to forget is that the whole concept of Bitcoin is based on scarcity. According to legend, only 21 million Bitcoin can be mined. It’s not there yet and I think there is a distinct possibility that it may never be reached. Yes, there are only 2 million or so left to be mined but these complex mathematical equations are running into a server space limitations.
The server situation is another example of liberal hypocrisy btw. These geeks and progressives that are pushing for the adoption of Bitcoin seem to forget the environmental damage of running some of these mining facilities. Yeah the two in New York run on power that is supplied by the Hydroelectric power from Quebec but what about the 300 or so mining facilities in China. Hmm, two new coal plants a month are being added why?
They drive a Tesla but the power is generated from a fossil fuel.
Again, you want to go into a high risk asset, be my guest but please don’t lecture me on the future, as Dave Marsh once said “I have seen the future and it’s name is Cash”.
Happy Thanksgiving!!
I'm so glad You "hear things", and a new term, political humps, hilarious! And Slim Boy Cycles, your on a roll! Great column, Happy Thanksgiving, we have a lot to be Thankful for.