The Struggles of Crypto

There are always negative stories and half-truths spoken when it comes to crypto. So let's review some since I was blocked from bringing such light to the surface.

I was skeptical of crypto for many years but saw the housing crash and was aware of the subprime market meltdown and the bailout which resulted. During that time, I bought bank stocks and later bought real estate near the bottom but understood there was a problem as I was completing a degree in economics. A friend had gifted me some fraction of a Bitcoin and I watched it as I continued to put money into a Roth IRA. Over time banks continued increasing their excess reserve deposits which may explain some of what's happening now.

In 2013 depositors in Cyprus lost billions when savings were confiscated to protect the island's banking system in what's known as a 'bail-in'. It reminded me of the 1933 gold confiscation in the United States. Could a 'bail-in' happen in the United States to bail out a deficit?

When Covid came there was a lot of time to spend learning. I dug in hard and for the first time, I saw some major innovations taking place in crypto that I thought could change the world of finance. Not only that but crypto provided for me when I feel the Government didn't which opened my eyes to self-sovereignty. The power of things like Clubhouse helped to spread this message and now the government is trying to challenge it in every way.

Although inflationary, innovations like staking allowed one to compound their earning.

The SEC recently fined Kraken but they failed to realize that the attack against Kraken for providing staking only forces people to self-stake and further decentralize the space which is good.

And you thought your taxes were a pain. The IRS recently settle and refunded people on their Tezos staking rewards as there was never clear guidance on staking rewards.

"Kraken and Custodia Bank CEOs say regulators ignored their warnings about scams and fraud". Again Jesse Powell may be more truthful on the matter.

The SEC also recently went after Paxos because they helped Binance with their BUSD stablecoin. CZ with Binance is the one who exposed the FTX scam which went right under the SEC's nose before FTX was hacked for around $415 million. The same FTX that was donating funds to politicians. But where did those funds come from?

Crypto is still pretty small. So let's not forget Bernie Madoff who stole around $65 billion. And quite frankly, I don't consider custodians like FTX 'real crypto' as they fall under corporate regulations and are more like stock brokerages.

When it comes to being legit, talk to Caitlin Long about the difficulties in trying to establish a legitimate crypto bank.

Even Canada has had issues with freedom of speech freezing bank accounts associated with Bitcoin addresses tied to Protests. Should a government be allowed to cut you off from your money?

Then again if you realized that deposits are no longer really yours but a loan to the bank and a liability on the books, you might have second thoughts.

Crypto is meant to be decentralized. If there is a multi-sig, DAO, or Admin keys, it's still centralized and subject to jurisdictions. For many, the goal of crypto is a separation between money and State or really private banks.

Bitcoin which uses a blockchain was originally created to allow for peer-to-peer transactions without an intermediary and to allow self-custody of one’s wealth or data while not relying on custodial services. It can also be useful in providing cross-board payments and liquidity in markets.

If people learned anything over the last year from Celsius, Voyager, or FTX, I'd hope they'd learn the importance of self-custody. But there are risks with this.

Do people realize how public a blockchain is?

Some will argue that crypto is for money laundering and this signals a lack of education. One is either mistakenly acknowledging that crypto is money or doesn’t realize that the blockchain is completely traceable thus people will be caught once entering into fiat which has been shown over and over again. Yes, it can be difficult to catch someone as people remain pseudo-anonymous but it's possible. FATF travel rules require crypto exchanges to share information. Crypto is literally a surveillance network on payments. I've been told that even privacy coins like Monero have been compromised. The blockchain is a public ledger and it's just a matter of time before someone exits into fiat, doxxes a wallet address, or touches an exchange requiring KYC. NFTs are horrible for privacy, I know this and teach people about this at a local Bitcoin MeetUp.

If someone does use mixers, those funds then get tainted and will likely be questioned for AML purposes, the FBI views almost anyone wanting privacy as a possible money launder, I've spoken to an FBI agent about this subject. Wallets can also be intentionally dusted for tracing purposes. It can be hard to say if someone is intentionally performing illegal activities without knowing all of the interconnections between wallets. Coin mixers may make it difficult to come to a concise conclusion on results but I believe AI will eventually handle this.

People such as myself watched the FTX hack in real time as funds traveled through the blockchain with tools like Debank, EthTective, and Bitquery. Yes, there are international challenges to capturing criminals which is why FATF has established the travel rule between exchanges.

The attack on stablecoins...

Most aren't even aware that the government has been working on a Central Bank Digital Currency. Few pay attention to the development of the Real-Time Payment network by The Clearing House and the coming payment revolution.

People might claim that stablecoins aren't stable but neither is the dollar as both are in flux against other currencies. Relative stability is all we really need for daily use. If you question this, maybe look at the DXY dollar index or study inflation and currency debasement. People might question Circle who issues USDC which has been audited but when have we last audited the Federal Reserve?

USDC is a dollar derivative and actually may help solve some of our financial issues as it takes dollars out of the system which goes to Circle and could then be used to buy up treasuries with the aid of BlackRock who also advises the Fed and works with Circle. Stablecoins also help give dollar access to foreigners to keep us relevant as the BRICS comes into play. One might not realize but we are slowly losing the petrodollar. If smart they’ll side with USDC which can be frozen otherwise a decentralized stablecoin will become the dominant stablecoin which they won’t be able to control.

Wait till the government has to deal with liquity.org and $LUSD which is a stablecoin issued by a decentralized protocol. This platform is an innovation to provide cheap financing against crypto assets which I’m sure will see adoption by the wealthy. I do believe that regulators will attack this stuff as banks are likely to feel threatened as they wish to continue monopolizing money. But if it gets shut down there are also Swiss platforms that provide stablecoins pegged to the Swiss Franc. They may just have to censor or internet like China.

It is true that crypto is not always safe. Forsage was one of those horrible Ponzi that funneled money up to the top.

And although they busted the people responsible, smart contracts are immutable and cannot easily be changed after being launched if truly decentralized. If the code could be changed, this would ruin the security of the blockchain. Even though they caught the perpetrator, the code lives on and cannot be removed thus did they really solve anything? How do they intend to resolve this?

Here is the location of the Forsage.io smart contract as evidence:

Ultimately what the government cares about is protecting the dollar and getting their tax revenue to keep their Ponzi going as we've been exporting our debt for years. I believe they hate competition and anything that takes away their control and puts it in the hands of the people or other nations. But like Ray Dalio, I believe change is coming.

I believe we are heading towards a digital surveillance economy. NFTs simply as a means of tracking. If they destroy the economy, it will make it easier for people to accept a switch to the CBDC (Central Bank Digital Currency) which could come through a UBI (Universal Basic Income).

This starts to go deep with the push for Proof of Stake, a global agenda, the World Economic Forum, and its partners which included FTX prior to the debacle among others in crypto like Animoca Brands. In the MetaVerse, 'one will truly own nothing and be happy' as per Klaus Schwab. In a Proof of Stake network such as Ethereum's current state, whoever controls a 51% stake can control the network which may not be hard to do when someone can just print money. "Back in November, the percentage of Ethereum blocks complying with orders from the Office of Foreign Asset Control peaked at 79% which has since dropped".

I enjoy the innovation in DeFi on Ethereum but because of this potential for capture, I prefer Bitcoin as a store of value and a hedge to our current inflationary debt system.

Bitcoin on the other hand is Proof of Work which requires additional hash or computational power which can't simply be bought. The more hash power applied, the higher the difficulty which is a security mechanism to prevent someone from easily taking over. Because energy is expensive, miners are incentivized to find efficient sources of energy to increase profits. Many parts of the United States energy grid are old and outdated. Bitcoin might provide an opportunity to over-build new infrastructure for future capacity while absorbing the excess capacity via mining which would also help pay for the infrastructure cost.

To learn more about Bitcoin, try the following.