Why i am not so super excited about the recent frenzy around Bitcoin and Co

 

There is no doubt in my mind that the inventor of the Blockchain and Bitcoin Cryptocurrency gifted the world with a potentially revolutionary idea.

The idea being, to take the dealing with money away from the banks and financial institutions, the Wall Street brokers and traders and short sellers etc. And develop a decentralized and fully transparent global system of money exchange and storing of money as assets.

Exchange and transaction of money without the intermediaries like banks and credit card companies taking big fees.

Transactions going thru almost immediately, just as fast as emails or text messages do.

Fully encrypted, impenetrable and safe, running decentralized on the internet.

Secured by the Blockchain, a decentralize global Ledger on the internet, that can not be fooled.

 

In essence, something like your own private bank and asset store.

 

I guess that this “anarchistic” dream brought about the birth of Cryptocurrencies. At least, this is my interpretation of the event.

This was happening back in the year 2008 AD ;  )

And Bitcoin was the name of the first crypto currency, envisioned by this “genius” inventor who called himself Satoshi Nakamoto.

 

I say “called himself”, because this mysterious person, he/she or maybe even they has never been actually seen or identified. And even after all those years since, even after Bitcoin & Co became The Big Thing that it is now, this anonymous person never took the credit for it or cashed in on the fame.

 

Pretty extraordinary story indeed :  )

I like it a lot!

 

So, why am i still not so hot about it all???

 

After all, people who believed in Cryptocurrencies – Bitcoins or Ethereum or any of their other siblings that have been springing up since then – many of those early adopters have seen their investment skyrocketing and have become millionaires / billionaires .

 

Now it has reached the point where Cryptocurrencies are not seen as a hobby anymore for Geeks and Nerds only but slowly entering the mainstream.

With Tesla, PayPal, Facebook and even big banks starting to implement it into their businesses.

And also Governments are starting to get alerted and realize that they should better regulate Cryptocurrencies in some way, and quick, before it is too late.

 

Because being on the internet, and actually off the internet, and being highly encrypted, Cryptocurrencies are operating across borders and practically beyond “The Law” and beyond the powers to be.

In theory this would mean a democratizing of power, “power to the people”.

And this should actually make a “divine anarchist” like me pretty exiting and giggly ;  )

 

But the reality of Cryptocurrency as i see it – and especially the current frenzy of everybody and their grandmother trying to also jump on the bandwagon to get rich quick – looks a little bit more complicated to me.

 

A few things about it are not really looking so very good for me.

And this might or might not just be my personal angle, i would like to share them anyway:

 

 

– ENERGY CONSUMPTION, SAFETY AND TECHNICAL GLITCHES

 

In my eyes there are a couple of issues that actually should raise some serious questions for a technical minded and somewhat critical follower of cryptocurrencies:   

 

1 – the question of the extreme fluctuation of the value of cryptocurrencies

 

The value of Bitcoin & Co changes constantly and sometimes in extreme ways. One day a bitcoin is worth US $$$ 61024,- (like right now) and the next day the same Bitcoin is worth only 58223.-.

And so on.

Thats called a erratic, volatile value of something.

That is obviously very unpractical (to say the least ;  ) if you want to use Bitcoin as a currency, as money for buying or selling something.

Lets remember that the original idea and promise has been: Bitcoin is the new money for a new and fairer kind of economy.

These days the fact is, that cryptocurrencies are actually used mostly for investment and speculation in hopes to get rich and only a very small fraction of folks are using it to buy or sell something.

In 2018 only 1.3% of Bitcoin economic transactions have been from merchants, buyers or sellers.

Of course this can change in the future and there are some projects now working on somewhat stable cryptocurrencies > Stablecoins.

 

 

2 – the question of security and safety of your money

 

One of the other promises of Cryptocurrency has been, that the blockchain on which the whole cryptocurrency system is based is highly encrypted, de-centralized and can not be hacked by bad actors.

I don’t really understand the whole thing technically, but i trust the smart guys, the cryptographers and engineers that this is true what they say about the blockchain …

But it seems that the real safety problem is not the blockchain, but the “place” where blockchain meets “the real world” – The Cryptocurrency Exchanges.

This are websites where people buy and trade their currencies or cash out, convert some Bitcoin into “real money” and transfer the cash to their credit card or bank account. 

And such Cryptocurrency Exchanges are just websites that can be hacked, and have been hacked in the past. Then your Bitcoin money is …. gone.

Has happened quite often, unfortunately.

Also there is the fact that those exchanges are just websites, there is no fancy bank building where you can just walk in and demand to talk to the manager, if something went wrong with your account.

The accountability is probably very murky at best and the support is …. spotty.
Maybe as spotty as if you try to talk to somebody in person at the PayPal website.
Try that and you’ll be endlessly frustrated ;  )

 

3 – High Cryptocurrency Transactions fees

If we are usually bitching and moaning ;  ) about the fees that our credit card companies and banks slap on every transaction

… better not look what the cryptocurrency transaction fees are !!!!!!!

The fees are often unbelievable high in comparison to bank fees. 

And on top of that, the transactions very often take a unacceptable long time (for e-commerce)

 

 

4 – Energy consumption of cryptocurrency mining

Thats the biggest hammer actually in my eyes!
I know that crypto enthusiasts or crypto investors/profiteers tend to downplay this very serious issue. Or simply choose to ignore it, probably with an eye on the growing value of their Bitcoin account.

I don’t want to argue this issue here because this discussion is very heated amongst critics and proponents of Crypto and everybody in between.

I just think in a time that the very existence of humanity is in jeopardy because the Climate Crisis Clock is already ticking one minutes to High Noon, even enthusiastic tech nerds and rich investors should think hard about the environmental costs of the energy consumption of Cryptocurrency mining and blockchain transactions.

And do everything possible to reduce the CO2 load that we humans push into the atmosphere every single day.

On a positive note here, i have read recently that there is a way to change the core technology of the blockchain that could dramatically reduce the computer power and energy needed to mine  cryptocurrencies.

Lets hope & trust that the genius programmers of the Crypto-world come up with a genius solution quick, very quick.

Because if Crypto with presently 100 million users already uses the equivalent of the energy consumption of Argentina, then you may calculate how much energy would be needed if Bitcoin & Co will become a mainstream currency used by billions?  

Uff!

 

 

 

– GREED

It is a little bit of a joke, but there is really something like a Crypto Fear & Greed Index online, that “measures” what drives investors to buy or sell their Crypto currencies over time.

Maybe I should not use the word GREED here, it sounds so stark!!! ;  ) 

By greed i mean: a selfish and excessive desire for more of something (such as money) than is needed.

Obviously, “more than what is needed” is a very relative thing.

I understand that folks like you and me have a desire to also have a bite from this chocolate cake ;  )
But i would not necessarily call this greed or a selfish and excessive desire for more.

The picture looks very different when i see millionaires investing heavily in Bitcoin, because 1 million can easily becomes 5 million there.
Or more.  

This is called speculation in order to have more and even more ….

Obviously Bitcoin & Co is a very lucrative field for speculators, investors, traders, brokers, gamblers, betters, thieves and everyone else who dreams of quick & easy wealth.

 

Poor Satoshi Nakamoto!
I guess his dream and invention of a revolutionary, fair and democratic currency system has been perverted pretty quickly.

When i look at some of the – often very young and smooth – Crypto Gurus, the “expert” talking heads on YouTube who give their daily predictions, i can hardly hold back on my anger.
More often than not they have the certain swagger, the look and feel of stereotypical Wall Street brokers,  or maybe even of Gordon Gecko himself. 

 

Disclaimer: Maybe i am also getting a little bit greedy lately ;  ) 
Because i have now already tried to set up a cryptocurrency account for myself on coinbase.com.

Unsuccessfully, i have to admit! So probably my time to be a crypto millionaire has not come yet :  )

 

 

– KARMA

 

What has Bitcoin got to do with Karma???

Not much, we may think.

After all, Bitcoin is a currency and therefore it is neutral, just an intermediary medium.

As with any other kind of currency, it is meant to make the exchange of goods and services easy and practical.

 

Way back in the Stone Age when we all used to live in caves, we had a direct way to exchange goods and services.

Maybe we called it mutual help, maybe we called it barter.

“I give you 5 stone arrowheads and you give me a Bison’s head”

“You help me building my hut and i help you hunting this menacing hyena …”

 

Something like that, straightforward but confined to the clan that we were part of.

I did you a favor and you owed me a favor in return.

I give something and then i receive something in return.

And the witnessing and the ethics of the clan made sure the favor would actually be returned in some way.

Or else …. ;  )

 

In esoteric terms this could be called:
The Karma has been canceled out in our Karmic Bank Account.

Remember, Karma is the Law of Balance and always strives to maintain an energetic equilibrium on all levels.

 

Long after that, we discovered that we could even trade with other tribes by using some agreed upon tokens, like rare seashells or precious stones or such.

And much much later on – maybe from 1000BC onwards – we invented simple stamped coins made of copper, silver or even gold.

Those tokens – primitive kind of currencies – made it possible for us to trade widely beyond the limits of our clan, tribe and even country.

 

And then even much later on came the paper money, the Rubel and the Rupies, the Colones and the Dollars and everything else.

And things became much more complicated and convoluted in terms of Karma.

Because some “clever” people figured out to that they could use currencies not only for what they have been invented for – an easy way to exchange and trade goods and services – but to make more money out of money.

The money/currency in itself became a kind of “twisted money-making game”.

And Karma started to pile up in the background.

Money was used to make more money: loan sharks, arbitrary interest rates, high bank and credit card fees, stock market betting, complicated money-broker schemes, short selling, gambling, betting, lottery playing and so on.

All of that is not “clean money”, it is tainted and burdened with Karma just as the “real dirty money” made from drug smuggling, stealing, extortion, kidnap for ransom, child pornography, Ponzi schemes etc. is.

 

And Karma needs to be balanced out on some level sooner or later.

Imagine the mess on all those Karmic Bank Accounts ……

 

Now forward to our 21. Century, the Digital Age.

Now we have Bitcoin and Co, the – potential – perfect cryptocurrency for the Digital Age.

If the smart engineers and programmers could please just quickly iron out the bugs and technical shortcomings of this revolutionary system!  ;  )

 

I said the perfect currency???

Unfortunately it is not used as a currency nowadays, mostly not.

Mostly it is and has been used as a way to store/park assets – and in this way to take the money out of the economic flow of society.

And then to wait and hope that it would grow and grow and grow and grow and multiply our investment manifold.

And it definitely did so with Bitcoin.

Without us investors needing to move a finger :  )

Without us needing to give or do something for it.

Miraculous!

Money out of thin air!

 

I have no idea what is the logic of that.

Maybe somebody could enlighten me please?

 

But i have a not-so-good-feeling about the Imbalance of Giving and Receiving that is created in this way.

 

Karma, that needs to be balanced.

 

Somehow.

Sometime.

Somewhere.

 

~~~~~

 

But beyond all i have said so far, beyond the objections and red flags, i believe that Cryptocurrencies can be the future of money and a revolutionary disruption and renewal of the financial industry as we have it now.

As long as the smart guys & girls computer scientists manage to iron out all the bugs in the system.

As long as we users use Crypto as an easy way to exchange goods and services and not to for anything else.

As long as we create positive Karma by using our Cryptocash for the good of all :  )

 

I believe in the genius vision of Satoshi Nakamoto of a decentralized democratic impenetrable global currency.

Your own bank that simply works on your smartphone from anywhere in the world.

Where you manage to find a secure wifi ;  )

As long as your battery is loaded ;  )

As long as there still is electricity around ;  )  

As long as we still need money ;  )

 

Let us continue to keep the dream alive.

 

 

 

PS: I am sure quite a lot of people will not like what i am writing here. Fortunately not so many people are reading my blog ;  )

It is my own point of view expressed here, maybe it is true and maybe i am just not informed enough about the whole Crypto-matter.

Or simply jumping to the wrong conclusions.

Clearly, for me this is a work in progress and if you wish to point out some errors in my thinking or add some interesting bits of information to my Cryptocurrency contemplation, please do so.

 

ALL constructive COMMENTS are WELCOMED.