A Scenario for the Endgame: How the Global Monetary Establishment will Take Over Crypto Currencies

Bitcoin as the father of all crypto currencies is now almost a decade old and more popular than ever. Not even the mighty Chinese central government could give it more than a scratch, nor could JPMorgan or anyone else from the even mightier Wall Street.

In a recent article about possible value gains of Bitcoin, Steem Dollar and other crypto currencies I have also shown that trading cryptos is not driven by irrational instincts, but that traders and investors apply the same thinking to them as they do when it comes to classic assets.

It becomes increasingly apparent, crypto currencies - and their underlying technological concept of Blockchains - are here to stay.

Why forbidding ICOs won't change anything

In the past days and weeks, several countries made initial coin offerings illegal. Just today South Korea made an according announcement to stop ICO's because of their fraud potential, as you have surely heard of.

I believe this the danger of fraud is true and relevant. Outlawing ICOs is therefore the right measure. There are already several fraud cases and with every new one the reputation crypto currencies would be harmed severely. It is therefore not just good for the consumer protection, but also for the future of crypto currencies as a whole.

The government as I believe did the right thing, especially since it is easily possible to fund the creation of a new crypto currency in the usual way.

Their success is their greatest weakness

More problematic than ICOs and other phenomena like the horizontal inflation is the success of crypto currencies itself. Overall, the market for crypto currencies has a volume of about 150 billion US Dollar today, but given the high volatility of the market as well as the uncertainties in the global economy, the value will soon likely be even higher than that.

I therefore believe that Cryptos will have much more success in the time to come. Even if you look at crypto currencies from the perspective of Jamie Dimon who called it a hype without intrinsic value beyond the basic Blockchain concept, he admitted himself, the price for Bitcoin might go up dramatically before it comes down again. Believe Dimon or anyone else or believe them not - but soon, Bitcoins will likely be worth a lot more than now.

This will cause all alarm bells to ring in the worlds centralbanks and they will use their power to defend their monopoly on "coin offerings".

The success for cryptos will trigger the failure of the central banks

Central banks have the job to offer as much money as the economy needs to work "optimally". Whether this is possible or pursued in reality or if they do a good job in providing us with precious money is not important. The only aspct that counts is that their main tool, which is to indirectly and sometimes directly controlling the amount of money floating within the economy. In a nutshell, they act upon the idea that the the faster money switches the owner, the more people can become active on the markets of the economy and buy themselves something, while they also have to take care that too many ownership changes make the money less valuable.

If now crypto currencies turn out to be a drain for the flow of money, because they attract too much of it and the value gets stored there without that it is been spent again, then the monetary lever of the central banks can be considered broken. In this scenario it is irrelevant what the central banks do. As long as the value of the money only floats into cryptos, their policies will fail.

This is going to be the moment when they will act against cryptos and they will act decisively.

They cannot kill the idea - and they don't want to

The problem for the governments and their central banks is that they cannot kill Bitcoin. Technically it surely is possible, but already now, it would simply send to many financial shock waves through the global economy. China pulled the pluck on Bitcoin trades unilaterally (and Hong Kong is going to be more in the business than ever, as this German article about it confirms), which means, they haven't killed it off completely but only strangled it a bit as they needed it. The same goes for other countries which started regulating and legally defining Bitcoin and other crypto currencies.

They are testing and defining the terrain and I guess, China doesn't have an interest in killing of Bitcoin. If they had really done it, the capital flight would have intensified and the United States and other "enemies" of Communist China would have embraced and encouraged this capital flight. Peking had to be cautious - and so do others. Different countries have different reasons, but overall behind the curtain they all fear a massive capital drain and an economic shock if they pull the pluck too much. Right now it is already 150 billion. In half a year it could be 1.5 trillion.

And when you follow the world of global central banking (which you don't) then you do know that there are already concrete plans for a global digital currency. It is not just the Economist (or the Rothschilds and Agniellis behind it) who believe in a global digital currency by 2018, but also the economists of the IMF and other global monetary institutions.

I assume, you have heard the news about Japan creating its own official crypto coin that eventualy will replace the Yen. India has declared war on cash. Then there are discussions in Australia about it and Sweden is never far away when some progressive idea is lying on the table. Everywhere in the world and on supranational level, they actually do like the idea of crypto currencies.

When you look at history, what happens when someone does like something, but doesn't own it and feels that it might threaten his power?

Not too long in the future, the governments will force all crypto currencies to accept their regulatory authority

Right now it is too early. The market volume is too small and the applications are not in place. But as soon as they are ready and the broader population starts embracing their advantages, there is only one ingredient needed to trigger the government takeover of cryptos: A crisis supposedly caused by the crypto currency market. Ideally it will be something as I described above. A capital shortage due to the increasing price of Bitcoin rendering all central banking useless as I described it could this trigger.

Then the governments will make an irresistible offer: All crypto currencies that go under the umbrella of central banking oversight will be legalized and can be used for example as payment method for taxes. All other crypto currencies will be illegal, their value rendered zero.

It will look like as if the governments have surrendered, but there will be two catches to the deal.

Condition #1: The central banks can impose a tax on crypto currency holdings and one on transactions

These two taxes will be the replacement for interest rates as it is normal today.

1) The tax on transactions will be equal to a positive interest rate where 1% interest on fiat money equals a 0,001% transaction fee. The higher the transaction fee, the less likely someone will spend his money, which is in essense equal to what a high central bank interest rate does.

2) The tax on holdings on the other hand will be equal to negative interest rates because as it is right now reality in parts of Germany, because of the zero percent interest rates, account holders have to pay money for the right to keep their money on the bank account. This makes it a better option to just spend your money than losing it, which would work the exact same way with a tax on crypto holdings.

You see, the central banks don't mind digital currencies. They only mind that they don't control them.

Condition #2: All Blockchain transactions must be public and the account owner known to the authorities

This is something that I found strange when encountering Steemit. My wallet with the entire transaction history is visible for everyone, which is a fest for everyone who dislikes privacy (or who wants to know how others do). I am not an expert on Blockchain technology, but I guess there are ways to make the content of specific payments from and to specific accounts invisible or anonymous. With a government takeover of cryptos, that will definitively be gone.

Also gone will be the anonymity of accounts. I am sure that it will be mandatory to show your ID to even get an account in a specific crypto currency.

When you consider the implications of the absence of anonymity for payments, things sort of look much more like a global prison than true freedom from a central authority.

There will be resistance against it - but how much is it worth for you?

Revolutionaries are rarely distinguished members of society. The reason for that is that these people have too much to lose as that they are willing to risk their family, their livelihood and in too many cases their lives. Therefore revolutions usually are fought by outcasts and by individuals who don't have much to lose. That is historically the case and it is today the case as well.

Therefore the question for you is: Are you willing to lose all your Bitcoins (and other crypto coins), your share in the great novelty of Blockchain technology based innovations and god knows what else, just to fight a fight on the side of idealists who quite likely will lose a quick and decisive war against the global monetary establishment?

If you ask me, I think the fight could already be over and everyone in the crypto sphere who believes to work against the global central banking system is in fact working for it and doesn't even realize it. A useful idiot as Lenin couldn't possibly have imagined it better.

Of course this is just a scenario. What do you think, is there something about it? How do you think the inevitable clash with the central banks will play out? Let me know in the comments! Thanks!!