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Bitcoin is Dead Says the Economist

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Bitcoin has died once again in the eyes of the mainstream media, with the Economist asking “Is this the end of crypto?”

“Big personalities, incestuous loans, overnight collapses—these are the stuff of classic financial manias, from tulip fever in 17th-century Holland to the South Sea Bubble in 18th-century Britain to America’s banking crises in the early 1900s,” it says.

From the Great Depression to the Great Recession, the flaws in fiat money and its requirement to trust intermediaries, which can and will abuse that trust, keeps showing itself whether in crypto or in any other industry.

But you won’t hear any such critique in places like the Economist, although curiously enough economists are nowadays a lot more open to crypto than techies.

“When Crypto was young it was this cool… now it’s a way to scam people of their life savings,” says a coder in Hacker News.

He only joined in 2019 though, showing that dictum that the more a platform is adopted, the lower its common IQ.

Still, better than r/technology, which is actually anti-tech. You see, while economists don’t have to understand the technology to understand money, common-IQ techies of course think the little bit of code they understand is all things.

“People should be free to devote time and money to fusion power, airships, the metaverse and a host of other technologies that may never come good. Crypto is no different,” the Economist said.

Some speculate they speak for the elite and the elite understands a thing or two, especially when it comes to pretty vital nuances.

Things like clearing houses, which are none of the public’s business, but are vital to the operation of fiat.

Or things like the fact fiat tends to fail and the current fiat system – unbacked by anything with no objective anchor whatever – is only 50 years old.

Half a century, and what’s more, it is the exact same system in every single corner of the globe. There is not one country that uses a different sort of money or fiat design.

The complexities from there can only increase in analysis, but for our purpose it suffices to say that if the fiat system fails, we’ll be there. There will be a plan B, a backup, a transition tool, a global payment and currency rail.

Rather than some failure therefore like the mainstream claims with its regurgitation of old narratives, where these pages are concerned we’ve gotten both a reminder and yet more evidence of the inherent flaw in the current fiat system.

Paper money like the dollar or the euro is very fragile. It relies on blind trust, and this trust is routinely abused as well as periodically.

Some $7 trillion was printed by the Federal Reserve Banks in 2020-21. The United Kingdom has already moved to make the common man pay for it, lowering the capital gains threshold to non-existent while increasing taxes on wage slaves.

This is injustice first and foremost, inequity, because the richest who most benefited from this printing through zero percent tax free collateralized loans on their shares are made to pay none, let alone a higher proportion.

To that we add regulation too, which some claim is the panacea. Yet the key regulation in this case is prison and Sam Bankman-Fried is no where near any such jail.

The regulator can be co-opted, corrupted or biased, and in any of those instances just what the regulation say is irrelevant for they rely on men, and therefore on trust.

Not on code. Like bitcoin, which rather than dead has arguably been revitalized because the only way to avoid these fiat failures is to expand crypto native systems.

These recent events and the bear remind us that we haven’t focused sufficiently on that actual crypto expansion, although we have spent the past few years largely building the foundations and the blueprint for crypto native systems.

While centralized exchanges will continue playing a role, they will hopefully become less and less relevant especially as second layer integrations expand.

Not least because centralized exchanges were always seen as a transitionary tool. By definition they too will be disrupted if wider finance is to be upgraded on more robust foundations.

In the meantime, we have to deal with fiat and just as when crypto interacts with the physical it brings the problems of the physical world, so too when it interacts with fiat it brings the problems of the fiat world.

And FTX was as fiat as it gets with a centralized database that Bankman-Fried could manipulate as he pleased.

Not that it is new, of course. Mt Gox was a 100x bigger challenge from that flawed system. It is why we built all the defi. It is why we came up with stablecoins.

Now at least some cryptonians no longer quite need these flawed fiat based intermediaries.

That in itself is utility, or use. A new non-fiat based financial system with inbuilt clearing houses, an inbuilt payment system, account keeping, and open source dapps.

This is one area where the saying code is law does actually apply, and this is an area where a failure would be a crypto failure.

There have been hacks, and those are crypto failures. This isn’t a perfect system. But we have come up with workarounds to that hacks problem that largely seems to have addressed it in as far as there are many running dapps which have not been exploited, so exploit-free crypto code systems are possible.

We have to build a lot more of them and to scale them and we have to grow the crypto native universe because the nature of fiat indicates that sooner or later its fundamental flaw, which can’t be addressed or routed around, will make a mess.

We’d rather it doesn’t. We live in this fiat system, even if we’re cryptoing. If we could choose, we’d rather that fiat was flawless, but it is what it is and it is outdated.

The laggards at Hacker News therefore hopefully understand that as far as many cryptonians are concerned, the debate on crypto-systems has long been over.

We’re building them instead of debating, which is why in part we’ve even ignored in these pages many suggestions about regulations, even from OSCE, because we think they are irrelevant to crypto-native systems, and where they apply to the fiat part, then it is their business.

The ‘flaw’ thus perhaps being that it is difficult to believe these crypto native systems can overtake finance, because it has always been done a certain way and even to us it is difficult to imagine it can be done the crypto way.

Yet, the downfall of FTX is in many ways salvation for many cryptonians that want to see a crypto world.

It proves in its own way that crypto can’t quite be co-opted, not easily anyway. It proves that cryptonians are still very much in charge.

As such, maybe it is now time to believe that we can expand such crypto native systems with no trusted intermediaries whatever, that we can build a crypto world.

Even that we have to, and we do, because we are in the midst of a crack-up boom, and crypto is the only alternative to it.

The elite understands as much, which is why family offices are and have been accumulating.

That won’t change. The only thing that can change is that the public, which currently owns most of cryptos, will and is being fooled to give it freely for those that already have it, and for those that don’t they’re being fooled to keep out.

It’s a free choice of course, for both, but cryptonians maybe have to do a bit more to persuade the uninformed public that, cheesy as it may sound, we are breaking their chains by freeing them from abusive intermediaries like FTX or Theranos or Fed.

Rather than taking a beating like this confidence play on the public is anything new, the crypto space should realize the FTX sort is precisely why we have been building.

Not that it will necessarily change anyone’s opinion, except defi has caused a notable shift among economists, at least the ordinary sort, who see freedom in this crypto space.

Time to expand that freedom, through the very hard work of building these code systems, to the point we won’t need fiat at all and we won’t need to deal with its fundamental flaws.

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