I recently blogged about the future of bitcoin and other crypto, but I didn’t work out all the details of the disruption. Here I want to focus on where exactly important decisions will have to be made and where the most pressure will result in change.
Recently a number of countries have either banned bitcoin or regulated it but most have not. In each case, these nations such as Venezuela and China have done so to protect their national fiat from an equity drain into the superior currency. Andreas Antonopoulos explains the typical scenario…
Due to Gresham’s law, the equity drain eventually causes the bad money to circulate while the good money is socked away someplace safe. Bitcoin has the unique power to police the corrupt money by providing an exit from government harm.
Democracy, freedom, etc is usually given as the reason in the media for a given sect to exercise authority over everyone else. This reason masks the self interest of the players as they begin to exercise their new found power. If there was altruism in the campaign early on, reality typically sets in and power grabs begin to get nasty and selfish. Then the need for protection in these power plays works against the interests of the public good. What’s left at the end is typically self interest.
Forget the vote. Money is the controller of all things in the political world. To understand it is to measure how much money is going where. Where is money flowing and what industries are drying up?
Right now, Amazon is taking the world by storm. Once just an online bookstore, it has practically dominated the entire retail industry. Now even groceries are on the Amazon hit list. This company has made a very interesting move by registering domain names that include the keywords “bitcoin” and “ethereum” in them.
It’s no secret by now that the internet has created a revolution in the way commerce is handled. The banking and legal industries are now lagging behind by several decades and are ripe for disruption.
(Google Images - Wikimedia Commons)
More and more merchants are accepting cryptocurrencies for payment. The current accounting systems are a nightmare for crypto users and the tax authorities. Tax enforcement will become more difficult. As more money leaves the world reserve currency and flows into bitcoin and other crypto’s, the quantitative easing that has made national debt tenable will cease to function.
At some point after beginning adoption, businesses that accept crypto which at first convert immediately to USD for stability reasons will stop doing so as they realize their profits will soar just by keeping it in crypto. Businesses will have to cash out some of their crypto for national fiat to pay taxes of course, and a good portion will stay in the crypto world. This of course means that the government and the banks will have liquidity issues. That’s when more quantitative easing will commence and shortly thereafter hyper inflation will set in.
When this happens, the political power that businesses have will outstrip the political power of national governments. In fact this has already started to happen. There will come a point when a company like Amazon (or another) can broker a “coup d’etat” to stabilize the business structure between business and government and the banks. It may not be announced in such confrontational language, but a broke government will be at the mercy of corporations that own crypto.
It’s not in Amazon’s best interests to have a fractured regulatory system and of course many of us will be out of pension and social security after the credit failure of government. There may in fact be a period of chaos while the economy switches over to the new paradigm.
Government can and will try to regulate the edges of the system such as the exchanges with KYC and AML, but you can be sure that Jeff Bezos and other industry leaders like Mark Cuban, Elon Musk, etc will be reporting all of their crypto revenue while this takes place. There will likely be a financial summit somewhere around 2020 about the changes about to take place in the world. This coming year is likely to be a year of great chaos and heated exchanges as people in authority begin to panic at the loss of their power and make rash decisions which will likely send stocks/crypto tumbling.
At some point I expect a proposal for a centralized digital currency to come forward such as FedCoin or the SDR. If authorities are successful at creating an accepted mainstream replacement to bitcoin, we will have a digital panopticon for a time. If you want to understand why this will not last long, Andreas explains once again why centralized IT data structures are fatally flawed.
There are just too many people involved in bitcoin and outside of US jurisdiction to eliminate bitcoin. They may well hinder it for a time, but it will always be the money of freedom. Most authoritarians will focus on what about 330 million Americans will be doing because that’s the largest tax base. However, it’s not a problem for the rest of the world. The 5.5 billion on this planet that are either completely unbanked or underbanked are the ones who will cause the flip in the world’s reserve currency and infrastructure inversion to the banking system.
Much depends upon whether Lightning Network, Schnorr signatures come online and when. If operational before 2020, then the chances of a digital panopticon arising will be less.
Steem / Steemit is likely to play a significant role as well. In Steem's advantage is the fact that it does content reward the right way. You've probably noticed that when doing Google searches and landing on sites, that many of them ask you to white list their AD's past AD Blocker or ask you to sign up where your email ends up funding the site revenue while generating spam for you. This business model is about to come to an end.
I also constantly wonder if the Bitcoin Core developers who are funded by interests closely tied to the banking systems of the world will be manipulated. So far I haven't seen anything in the code (I've been a programmer for more than 20 years) that suggests an ability for authority to take control. But one would be naive to assume that there will be no pressure. However, it's an international community of developers and a fork could happen again as it has these past few months. One legally accepted and the other not. At the rate that moral authority has been slipping on the side of government, I find it hard to believe that it would succeed for long. I hope that enough decentralization has been built in.
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