Crypto-currency: Failed Ayn-Rand Utopia, terrorist financial support, Ponzi scheme

[dneal]

welch - your opening position was that bitcoin in El Salvador "flopped", with a wikipedia article as a reference.

Clearly it hasn't, if they're still using it.

My reference is the president of the country. He has a chart too.

https://twitter.com/nayibbukele/stat...53743668572498

Screen Shot 2023-12-10 at 1.55.21 PM.png

[welch]

Oh, dneal...I don't accept the word of the guy who installed Bitcoin (BTC) as legal currency, not when he says that his idea for a new currency is in the black. Not against:

(1) the calculation of CoinDesk, the crypto-industry's fan forum, and when that coincides with

(2) the report on Market Place.

And, note that even BTC supporters in El Salvador say that Salvadorans will need education to accept BTC. President Bukele has proposed a law that will force Bitcoin Education into the school curriculum. Otherwise, it appears that few people want BTC to replace the USD as their daily currency. Note the difference between making BTC legal tender or investing -- speculating -- in BTC.

Furthermore, Market Place reported that the Salvadoran treasury department says that about 1% of remittance payments come by crypto currency. Coin Desk reports that as 1.12%, from the same official source. Not yet a success.

The IMF warns that El Salvador is making risky investments when it puts money into BTC. Coin Desk made their estimated based on Bukele's claim that he would buy one BTC each day, and that he would have begun in 2021. BTC has trended downward, says Coin Desk, but, happily, it is not trading at prices as bad as it has. Go ahead: compare the volatility in US bonds to the volatility of BTC. That's one reason why the USD is the global currency.

For comparison, GE stock was about $75 a share early in 2021. It closed yesterday at about $120. It has increased steadily, rather than fluctuated. If Bukele had invested the price of one BTC each day in GE, El Salvador would certainly have gained money. Even better, it could use that money, accounted in USD, to buy products in other countries. He cannot do that with BTC. (According to Market Place, he cannot buy a cup of coffee in some coffee shops in San Salvador. Bukele's law, or proclamation, lacks an enforcement mechanism.)

[dneal]

The Jim Cramers of the investment world have their various opinions on what crypto will and won’t do.

What they could have invested in is irrelevant.

Has bitcoin flopped, or not? If it has, why are they still using it?

[Pendragon]

This stuff is crazy to me.

So, that's two-for-two: the two largest exchange systems based on criminal fraud and other crimes.

Alrighty.

The largest will get voted out of office next November.

[welch]

The Jim Cramers of the investment world have their various opinions on what crypto will and won’t do.

What they could have invested in is irrelevant.

Has bitcoin flopped, or not? If it has, why are they still using it?

El Salvador is still trying to use Bitcoin because Bukele is stubborn. He has ordered all schools to teach BTC, assuming that eventually his crypto dream might come true. Meanwhile, CoinDesk reports that Bukele has told El Salvador to issue a billion dollars worth of Bitcoin bonds.

We know that any crypto currency is unstable, so how can it be a country's currency?

And the point about GE stock compared to Bukele's speculation in BTC? Bukele is cheering because he has not lost as much money on BTC as he had. GE is an example of what was a dependable investment, a "widows and orphans" stock. It is painful, since I worked for a division of GE when my namesake was Chairman, so I collected GE stock in the company's equivalent of a 401K. Under Jeff Immelt, GE tore itself down with silly investments that Immelt made. Even with that -- and after Immelt was fired -- GE stock has nearly doubled in the time Bukele has been playing around with El Salvador's money in BitCoin.

Crypto has not worked as a currency, and it is a dangerous investment as speculation.

[welch]

Yet annother crypto-currency scam revealed, sued by the SEC, and goes under. "Safemoon" seems to have operated like FTX, but the SEC (AKA, "Big Government Regulators") spotted it before it grew to Sam Bankman-Fried size fraud.

December 14, 2023

SafeMoon files for bankruptcy

https://web3isgoinggreat.com/


The company behind the SafeMoon cryptocurrency scam has filed for Chapter 7 bankruptcy. Screenshots circulated on Twitter of a letter to employees citing "a number of operational and financial challenges", likely referring to — oh, I don't know — maybe the whole criminal indictment against SafeMoon's founders and executives and simultaneous civil lawsuit from the SEC.
Although SafeMoon claimed to have created a token that would "safely go to the moon", executives allegedly siphoned millions of dollars of investor funds to spend on personal expenses including luxury cars and real estate.

In the bankruptcy filing, SafeMoon has claimed to have 50–99 creditors, between $10 and $50 million in estimated assets, and $100,000 to $500,000 in estimated liabilities.

Chapter 7 Voluntary Petition, filed in the US Bankruptcy Court, D. Utah [archive]

[dneal]

Bitcoin at a high. Maybe it crashes. Who knows though, any currency can crash. Weimar Reichsmark, Turkish Lira, Argentinian Peso, etc...

GIZM7m0WsAAF3BC.jpeg

[welch]

(1) Crypto-currency was supposed to become a currency. Instead, it became an investment instrument. People cannot use as currency something that bounces around in value.

(2) People have invested in crypto in hopes that it will increase in price so they can sell it on, but not because it has a something underneath it that they might want. In a futures exchange, like the Chicago Mercantile Exchange, when people speculate they are speculating on a material something, like gold or wheat or hog bellies. The unit is a contract to buy that something at a price. At the end, the owner of the contract expects to take delivery on hat real something. At the New York Stock Exchange, people bid for shares of stock in a company. In crypto, there is no something -- just a long, long number. That make crypto more like a Ponzi scheme.

[dneal]

People invest in and trade currencies just like any commodity. Bitcoin is no exception, nor is it remarkable other than it's a non tangible, digital thing. I check my bank balance online, pay for things digitally, and it's not a big deal. My dollars are digital for all intents and purposes.

I'm going to invest in big round stones.

[dneal]

Pondering those stones on the island where the Yap live, currency is an agreed labor coupon.

Even at the hunter-gatherer level, humans must expend labor to survive. Building shelter, making fire, finding food. Maslow's hierarchy and all that. We started trading game for berries, chickens for wheat, cheese for blacksmithing, and so forth as human technology evolved.

We couldn't keep carrying around all those chickens, and a diverse market of needs and goods is created. It gets complicated. There's a lot of diversity of achievement humans now have time for if one can spend all their time designing rockets and electric cars instead of stalking mammoths. So for whatever our labor is, the hunter-gatherer/farming/blacksmithing/coding labor we expend, we acknowledge bits of paper or something to represent it. Now our barter system is efficient.

Whether it's bits of paper, or bits of a metal, or large round stones, and now encrypted digits - we need a way to account for the labor coupons we trade for goods.

The banks exist to store our coupons, make a percent profit for the service, loan money at interest and now exchange encrypted digits.

The problem is that they've gotten too big, and they easily buy political influence. The only party reference in this case is "uniparty". Career politicians of all denominations which get elected and take their cut. Each "crisis" gets bailed out on the taxpayer's dime.

They're taking your labor coupons. Your actual work in the world, in a technological barter system of encrypted digits. The time and effort it took to raise a chicken, or sit behind a computer and check 1040's to make sure they're getting their cut.

Bitcoin operates outside that control. For now...

[Alren1941]

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[welch]

(1) Crypto is too volatile to be a currency. Think about going to the store with 100 units of a crypto currency, figured at +/- 10%.

(2) Volatility makes crypto an appealing investment. Put $100 real USD into crypto and maybe it will be worth $200 in six months. Yippee! Then try to figure out the fundamentals of your investment. Revenues? Profitability? Longer-term competition? When there is nothing under an investment, how do you calculate?

If Bitcoin (TN) increases in price, it merely sets off scammers and vultures eager to sell you their pile of "coins", as in a market that lives by finding a more gullibile fool who will be next to jump into the crypto pool.

https://cointelegraph.com/news/bitco...alary-payments

or, continuing: https://www.web3isgoinggreat.com/

[dneal]

Go to the store with a Krugerrand and see if they accept it, or a bunch of .999% 1/100th oz bar (worth about $30-32).

Does the spot price for gold change daily or hourly? Why is one particular metal the one we assigned value to (before we left the gold standard).

You're not really making a point with currency/convenience. There are places where Bitcoin is accepted. They have Bitcoin ATMs that spit out dollars (or other local currency) for convenient small transactions.

Can't do that with gold, so it's worse. Right?

Dollars, euros, Pounds, Pesos, Yen and Yuan are all Yap stones. A symbol, some paper, a number. They're not backed by anything, anymore than Crypto is. They're volatile too - especially when you print $35T of them.

[welch]

Go to the store with a Krugerrand and see if they accept it, or a bunch of .999% 1/100th oz bar (worth about $30-32).

Does the spot price for gold change daily or hourly? Why is one particular metal the one we assigned value to (before we left the gold standard).

You're not really making a point with currency/convenience. There are places where Bitcoin is accepted. They have Bitcoin ATMs that spit out dollars (or other local currency) for convenient small transactions.

Can't do that with gold, so it's worse. Right?

Dollars, euros, Pounds, Pesos, Yen and Yuan are all Yap stones. A symbol, some paper, a number. They're not backed by anything, anymore than Crypto is. They're volatile too - especially when you print $35T of them.

- The spot price of gold changes every morning at the London Fixing. (Yes, I designed and led the GE team that built a system for JP Morgan's London depository...I followed gold for about a decade, and check every now and again). No, the price of gold does not change all that much.

- That's the point. Crypto-fans advertise crypto because it promises fast growth. "Get rich quick". Tom Brady says "Fortune favors the bold!". And SBF says "Give me your money". That is not a currency.

- While the USD changes, the Fed and the Treasury Department control the money supply so that my dollar is worth the same dollar between yesterday and today. What makes you think that a get-rich-quick investment instrument could ever be stable enough to be a currency? No, the USD does not "crash". That's why it is the world's basic currency. And why does the USD not crash like the DM after WW1? The US is a stable country.

- So that's it: crypto "currencies" cannot be both an unstable get-rich-quick investment and, at the same time, be stable enough that I can buy groceries, or that a grocery store will accept it.

- And your Salvadoran example makes no sense. The Salvadoran president can take his own or his countries money and invest a little in BTC. He cannot pay bills with it. Any company doing business in El Salvador wants to be paid in US dollars, since dollars can be used to make payments anywhere else the company does business.

- That's why there is an international banking system, and that's how it works. Go back to the framing of the US Constitution. One reason that the Framers were called together: merchants in Rhode Island refused to accept payment from Rhode Island farmers in Rhode Island dollars, because the Rhode Island merchants had to pay British exporters for goods that the Rhode Island merchants imported. The English merchants in, say, Bristol would not accept Rhode Island dollars, and complained to their member of Parliament.

- The only other arguments from the Ayn Rand "theoreticians":

(1) Crypto has a secret payment system outside the banking system, so people can move money without "snooping" regulators in governments tracking the movements. All that would have been fine for Osama bin Laden's terror financing, but is this a feature or a bug? How do you think the FBI, the Justice Department, and the Treasury Department knew, and quickly, that Al Qaeda had organized the hijackers? It took money to keep the hijackers training, and investigators looked at their bank accounts, and then traced their money back to Bin Laden's people in Saudi Arabia.

(2) Crypto's original fans said it would provide something like a universal hard currency so that no country could use anyhing like Keynesianism to stop a recession. Is this good?

[dneal]

You quoted my post and managed to avoid everything in it, other than the rhetorical question about gold pricing changing.

You complained that Bitcoin is volatile. I agree. So is every other currency - to include the USD.

You asserted that Bitcoin isn't accepted retail. That's false in an online environment, and you failed to address the fact that gold isn't accepted retail either. Again, can you buy groceries directly with gold?

You paint all crypto advocates as celebrities shilling "get rich quick". That's cherry picking. People do that for all sorts of things. There are many who shill for gold. So what?

You tout that the USD is the world's currency, and that it hasn't crashed yet, but ignore printing $30T which devalues the dollar other countries hold. You also ignore that countries are looking to leave the Dollar as a "world currency".

I didn't make a Salvadoran example. I pointed out that some countries (like El Salvador) invest in it. You say no one will accept it, but later note that it has a payment system outside the banking system. Which is it? Will no one accept it? or is there a payment system?

All systems (to include international banking systems) are subject to change.

Curious that for Rhode Island dollars not being accepted is listed nowhere in the Declaration or Constitution. You're touting an historical triviality as a fundamental reason.

Crypto seems to be your financial Trump. Something you don't like, have lots of rhetoric and vitriol for, but can't seem to substantiate with anything more convincing than "But Tom Brady said you'll get rich quick". Ayn Rand is a metaphorical "Russia, Russia, Russia".

I don't do crypto. I simply find it interesting, and your arguments unconvincing.

[dneal]

On a different tangent, here's President Obama in 2015:

We cannot dictate the foreign, economic and energy policies of every major power in the world.
In order to even try to do that, we would have to sanction, for example, some of the world's largest banks.
We'd have to cut off countries like China from the American financial system.
And since they happen to be major purchasers of our debt, such actions could trigger severe disruptions in our own economy - and, by the way, raise questions internationally about the dollar's role as the world's reserve currency.

And today we see BRICS. From Wikipedia (which I think is a relatively neutral party on this topic).

BRICS is an intergovernmental organization comprising Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.

The founding countries of Brazil, Russia, India, and China held the first summit in Yekaterinburg in 2009, with South Africa joining the bloc a year later. Egypt, Ethiopia, Iran and the United Arab Emirates joined the organization on 1 January 2024.

Combined, the BRICS members encompass about 30% of the world's land surface and 45% of the global population.

Brazil, Russia, India, and China are among the world's ten largest countries by population, area, and gross domestic product (GDP) nominal and by purchasing power parity. All five initial member states are members of the G20, with a combined nominal GDP of US$28 trillion (about 27% of the gross world product), a total GDP (PPP) of around US$57 trillion (33% of global GDP PPP), and an estimated US$4.5 trillion in combined foreign reserves (as of 2018).

The BRICS countries are considered the foremost geopolitical rival to the G7 bloc of leading advanced economies, implementing competing initiatives such as the New Development Bank, the BRICS Contingent Reserve Arrangement, the BRICS pay, the BRICS Joint Statistical Publication and the BRICS basket reserve currency.

Some of the countries are a bit snicker-worthy, but the economies of China and India feeding the developing world, fueled by Russia and the Emirates (and maybe Iran)?

That's as much or more potential than the EU's attempted assault on the Dollar. I understand your point of view regarding its dominance and stability and sympathize with it greatly. British Pounds once held that role. So did Roman Denari or Greek Drachmas.

The dollar is on top simply because of American exponential economic dominance, but also because we use our overwhelming power to keep sea lanes and such open - facilitating global trade. That of course is of great cost, but great benefit to our economic engine. So the world uses the dollar. A piece of paper or a promise, since it's not backed by yellow rocks anymore. It is a sort of tax we impose on the globe, but also people's faith in a piece of paper.

A piece of paper.

What's the difference between that, or a Yap stone, or a digital token? It only has value because people agree that it does.

[Brilliant Bill]

I don't know the first thing about this subject, but I saw an interview with Loretta Napoleoni, author of a new book, Techno-Capitalism: The Rise of the New Robber Barons and the Fight for the Common Good. She suggested that except for bitcoin, the cryptocurrency world is mostly fantasy. She seems to think bitcoin is viable. The most illuminating thing she said was about the USD. She said the U.S. Treasury basically flipped a switch to make the 2008-09 financial disaster disappear. I look at the nearly $100 billion just approved for wars abroad as just another flipped switch.

[karmachanic]

except for bitcoin, the cryptocurrency world is mostly fantasy.

Yeah, well. Ever hold a bitcoin in your hand? Investing in intangibles is for ..... never mind. But I have some fairy dust, if you're interested.

[welch]

Probably time to think more about crypto. Molly White, who operates "Web 3,0 is Going Great) says that the crypto industry is pouring large amounts into both parties during the election; that industry has bought expensive lobbyists to work over Congress. They want to cut away any regulation.

[dneal]

Balaji Srinivasan is an out of the box thinker with regard to crypto economies and fiat currencies.

He talks about 'virtual societies', in the sense that they don't have geographical boundaries of the typical nation-state.