Can governments offer a superior alternative to global digital cryptocurrencies?
The last major democracy-enhancing disruption seems to have been the smartphone, although it merely extends the existing technological infrastructures into your hand. The disruption of existing markets is not often a democracy-enhancing endeavor anymore. It seems as if the majority of new technological innovations involve software that is actually increasing wealth inequality because the incentive to create a new technological innovation is now primarily driven by wealth generation for or from the wealthy. Today’s new major software innovations are leading to gig-economies, rent-seeking, and precarious living, while existing networks that were initially set up to be democratizing are becoming pay-to-play and/or filled with targeted advertising. App stores create the illusion of massive variety and opportunity, but instead create new barriers to entry with developer fees. Tech and media conglomeration is leading to more wealth inequality, less choice, less access to information, and fewer diverse points of view. New technology companies revolve around AI, Big Data, and Analytics at the global enterprise level while midsize national company growth shrinks. Paywalls in the media and subscription services in social networks are leading to more social stratification, political discord, and less access to information. Software solutions are replacing jobs, leading to more gig-work. Automation and robotics are reducing jobs, leading to more wealth inequality and gig-work. Uber and Lyft are examples of creating precarious gig-workers. Advertising and subscriptions seem to be the only way to monetize social networks, leading them to adopt both, creating a culture of monetizing social thought and rent-seeking, further entrenching wealth inequality and encouraging more gig-work.
What are the implications of further increasing wealth inequalities and widespread gig-work? People are being left out of civic decision making processes. They’re being left out of access to information, leading to poor choices at the voting booth. People have less material choice overall in general, equating to fewer healthy nutritional choices, and reduced access to healthcare. As services switch to subscription-based monetization, people face more fees, paywalls, and subscriptions in general, ensuring that the path to poverty becomes unavoidable. Younger individuals are strapped with student loans, too. They become caught in a loop of survival, leaving no time to speak out about corruption or how the wealthy affect government as they are merely living to survive, not living to thrive. This also hampers the ability to organize, and to get support they must jump through hoops of bureaucracy. This bureaucracy is often affected by austerity measures, potential corruption, and out of touch leaders, giving young individuals a sour view and distrust of government programs that were initially intended to help them.
Meanwhile, the wealthy are making increasingly larger amounts of money from money on securities markets and rent-seeking. Celebrities, billionaires, and other large organizations are investing in cryptocurrencies, influencing a generation of young people who are now looking to cryptocurrency to gain a financial edge as their work and income prospects diminish.
What does this mean for the near-future economy, and the near-future of digital currency?
Cryptocurrencies are flourishing on social networks like Reddit and Twitter. Data analytics for targeted advertising and suggestion engines or recommendation systems found in social networks can manipulate the culture of society and affect peoples’ habits and norms by subtly nudging social posts and advertisements into their feeds. Twitter is doing this, for example, by showing recommended tweets and recommended topics as well as sponsored posts. After starting a new account, users may be offered up various new topics to follow, and they are increasingly finding out-of-place cryptocurrency tweets and ads in their brand-new feed, even if they had not expressed interest in that topic. If someone was not familiar with the symbols and terminology used they may be inclined to learn more about cryptocurrency from these sponsored posts and begin to develop what is know as “fear of missing out”, FOMO.
In many ways the old economic systems are not providing a path out of poverty or providing ways to avoid falling into poverty. People are trying the new systems of cryptocurrencies, only to unknowingly participate in increasing wealth inequality even moreso. A generation of financially hard-pressed individuals are now trying to escape destitution by gambling on securities markets and the new cryptocurrency economies. The wealthy are investing in the currencies that will make them more wealthy, making those the most popular currencies, while large banks and financial institutions are allowing and encouraging their wealthiest customers to invest in cryptocurrencies as part of securities portfolios.
These new economic systems don’t have the fail-safes and social protections that older economic systems still running today have built-in that to try: to reduce wealth inequality; to avoid depressions through stimulus; to reduce poverty with direct cash transfers; to try to help with emergencies; to provide funding for essential public services such as clean water, fixed roads, community colleges, fire services and police services; and methods to combat political and economic corruption. In fact, the new economic systems are typically anti-government and/or anti-state by intentional design with blockchain and decentralization, including being anti-establishment and thus anti-democratic. In the new economic systems there are no methods for a state to fund crucial public services like schools, neither are their funding methods to combat systemic corruption. A new type of corruption then arises in a global non-state context where national and international jurisdiction may be difficult to reach.
What does a future filled with rising wealth inequality, software automation, robotics, more gig-work (less hours, less income), massive student loan debts, economic globalization, and machine learning hold for people? What happens when new jobs are increasing wealth inequality, while incomes aren’t keeping up with how they should be rising? What happens when many people are trying to empower themselves using fun and cool sounding cryptocurrencies that they hardly know anything about or understand how they work, and how those cryptocurrencies are intended to be biased / to work against the individual’s best interest?
While there is currently not a better government alternative to these new economies, people who aren’t getting on board with the new economic systems feel a very powerful sense of “fear of missing out” and the idea of being left behind. As trust in traditional economic, political, and social institutions seem to be diminishing, eye-catching Vegas-inspired gamified apps are being created to make it incredibly easy and fun to get on board with cryptocurrencies without knowing the larger implications. Big media companies push news articles about the new emerging economy, touting revolutionary innovation in these sectors, and news aggregators like Google include cryptocurrency news outlets and ads in their feeds. Tech-hubs around the world are encouraging the use of cryptocurrencies, and big payment processors are creating easy paths to getting on board. Big financial institutions are doing this as well. Social networks like Twitter are nudging users with recommended posts and have major investments in the cryptocurrency space, and Facebook has worked for several years to create their own cryptocurrency (Diem) using blockchain.
This is creating a strong socioeconomic cultural feedback-loop all across the world. It’s creating a self-perpetuation of habitual global digital cryptocurrency usage. These new pay-to-play software investments, or “innovations”, involve an increasingly high-risk culture within global securities markets. This culture features a strong draw of sports-fan-like addictive gambling with near-instant results that are associated with negative consequences and biases such as a reluctance to bet against desired outcomes. The cult-like nature can be seen as cryptocurrency market-watchers track “Whales” — large quantities of cryptocurrency in digital wallets — and their movements through various economic markets, similar to tracking big winners in fantasy sport leagues. That culture doesn’t exactly encourage altruism; instead, it fosters apathy or indifference towards issues of increasing wealth inequality and poverty facing their fellow citizens. It is essentially a money-cult without the physical money in hand.
Can nation-states and governments offer a superior alternative to global digital cryptocurrencies and counter the downward spiraling cultural trend that is being entrenched as the new economic norm?
If governments fail to produce an updated modern digital economic system that complements the already existing systems before a generation becomes engulfed by global cryptocurrencies, governments are at risk of being blamed for all the damages of continually increasing inequality that new software and cryptocurrencies are amplifying. Worse yet, governments may become powerless to encourage the adoption of such an alternative due to the entrenched trade-enabled network effects, the decentralized nature of the cryptocurrency systems, the entrenched hardware, and the cult-like anti-government stances that support the wealthier investors already lobbying governments. Grimmer still, beyond increasing examples of corruption and ransomware attacks, some of the most popular cryptocurrencies aim to become the singular global currency and may end up creating the most violence via cartels or authoritarian despots that may enforce monetary scarcity — potentially indefinitely. The anonymity and decentralized nature of some cryptocurrencies may encourage violence to get the “vault keys” in order to gain access to vast wealth in cryptocurrency wallets, while some of these keys may be lost due to time, memory, faulty hardware, and entropy which may make the cryptocurrency scarcity far worse. Extortionists, rent-seekers, scammers, toll-access gatekeepers, organized crime syndicates (ransomware), and mafia-like modern digital tyrants will potentially operate in less democratic areas while affecting democratic institutions and democratically-regulated markets globally. They challenge the rule of law and potentially weaken democratic institutions and norms through bribery, coercion, and media manipulation with the help of cryptocurrencies.
It is irresponsible for nations to assume that they would be immune from these groups and their tactics, or that banning cryptocurrencies entirely would eradicate such groups.
Nation-states and governments simply cannot afford to be left behind and outclassed by global digital cryptocurrencies.
Democracy, national patriotism, anti-trust laws, regulation, social security and social protections, government-funded public services, human rights issues, rule of law, policing of corruption, civil resistance, and politics as they stand today… have no place in a world swamped by global digital cryptocurrencies with no superior government alternative.
Thankfully, and crucially, solutions are being drafted to create better digital currencies such as a federal central bank digital currency. This federal central bank digital currency will be built on top of and complement the existing monetary system, so all the socially empowering government programs will continue, and potential new programs and state innovations may be created. The trust in the federal dollar would feed into the trust of the federal digital currency as these systems work together.
In what ways must a federal central bank digital currency outclass the rest?
The new federal digital currency should encourage individuals to be more active and informed in civics using their smartphones with local updates relevant to them. It would need to help bolster the existing fail-safes and social protections previous generations fought for, and it would probably expand them to help restore trust in social, economic, and political institutions. The apps and new local innovation centers and partnerships with libraries should provide information on how the poverty-stricken and homeless can participate in cash transfer programs. It should also show how anyone can take advantage of social-entrepreneurship federal incentive programs and grants. It should have features built into the system to allow for direct deposits (UBI). Creators and innovators would then have a new and safe way to get paid online, and donations for individuals and non-profit organizations would then become far easier to manage without the need for tools like Paypal, Stripe, Venmo and other payment processors. The government would need to find new revenue sources to pay for public services and initiatives through new forms of payment processing taxes from online transactions, trades, exchanges, and possibly new kinds of automation and automation-software/robotics taxes to offset the fast rising gig-economy and offset increasing automation. Existing software “innovations” like Twitter, Shopify, Square, Cashapp, and others would be incentivised to use the federal system that would have lower fees and streamlined methods of interacting with the new digital currency so that rapid-adoption may take place before Facebook’s “Diem” cryptocurrency and its associated cultural-shift takes root.
While all of these applications of the federal digital currency may help tremendously, this new currency alone would not shift the ever increasing tide of wealth inequality, cultural degradation, and the mounting financial and existential problems the younger generation already face.
Besides considering removing the paralysis of student loan debts and taxing the wealthy more to reduce wealth inequality, what needs to be done is to turn disruption and innovation of existing markets back into the democracy-enhancing and empowering endeavors.
The United Nations Sustainable Development Goals (SDGs) are a great start, but what is missing from their goals is an understanding of the initial motivation to begin a new entrepreneurial venture and how that relates to innovation. Before a company can become a company and hire employees and contribute to the market cycle, there must be entrepreneurial motivation. The threat of starvation or destitution is a powerful initial motivator for some entrepreneurs, leading them to focus on what they know that can bring in an income without considering if it is good or bad for society as a whole. This may also lead to the wrong type of initial motivation and the wrong kind of entrepreneurial spirit and company culture. On the other hand, those who do not face such dire wealth-starting-points have less understanding and foresight of the longer-term consequences of their new entrepreneurial ventures. This leads to the types of “innovations” and “disruptions” seen as “safe bets” from venture firms that are becoming more frequent today.
Currently there exists a void where in its place should be two initiatives: Firstly, a financial grounding (UBI) that individuals can stand on so that avoiding the threat of destitution is no longer a primary motivator for profit-seeking entrepreneurialism. President Biden’s American Rescue Plan Act of 2021 is a great step regarding the first initiative. Secondly, social-entrepreneurship needs to be far more encouraged through federal awareness raising (public service announcements), federal provisions of financial incentives, incubation, and provisions of grants. The federal digital currency would complement this support and the two programs together would feed into each other’s success.
Bitcoin proponent Max Keiser announces the F*ck Elon Tour
Bitcoin maximalist Max Keiser has announced the F*ck Elon Tour scheduled to take place on July 8 -9 in Austin, Texas.
Earlier this month, Keiser hit the headlines during the Bitcoin Conference in Miami for several reasons. But chief among them was his antics on stage with MicroStrategy CEO Michael Saylor, in which he repeated the words, “we’re not selling,” and “f*ck Elon.”
This was in reaction to the Elon Musk energy-FUD, which many believe was responsible for Bitcoin’s 45% slump from its all-time high of $65,000.
“F*ck Elon” has now become something of a tagline for Bitcoin maximalism. But with tribalism responsible for toxicity in the cryptocurrency space, is the F*ck Elon Tour doing more harm than good?
What’s the F*ck Elon Tour about?
Despite this week’s bloodbath in the markets, as well as continuing uncertainty at the macroeconomic level, in linking tour information, Keiser confidently stated that Bitcoin can reach a new all-time high in the coming weeks.
— Max Keiser (@maxkeiser) June 22, 2021
The F*ck Elon Tour is introduced as a Bitcoin maximalist event that encourages more maximalism for the simple reason that maximalism is what “got us here.”
“We don’t need less toxicity from Bitcoin maximalists. We need MOAR!!! A LOT MOAR!!!! Toxicity and plebs got us here.”
Rather than a discussion of developments and educational content, the Tour is pitched as a party event featuring special guests. But more importantly, for Bitcoiners only with no mention of altcoins allowed, and most of all no Karens.
Ticket prices range from $50, for “Plebs” tier, to $200, for “JIMI” tier. The cheapest tiers, “Plebs,” “Buzzcocks,” and “Casbah” are already sold out.
Bitcoin maximalism accused of cultism
Keiser has always maintained a maximalist approach towards Bitcoin. But his stunts during the Bitcoin Conference have drawn fire on several fronts.
One such incident was an interview with CNBC Africa in which he launched into a tirade on political corruption. Although there is truth in what he said, it was his outburst and overzealous reaction to the questioning that drew condemnation.
“Do you know that with the Bitcoin I have I can buy any frickin senator or congressman I want? I make the laws. He who has the Bitcoin makes the laws Ran. We’re not just going to sit around and let the God damn government tell us what to do…”
However, the f*ck Elon rant is perhaps the most controversial. Social media responses to the video include comments about presenting a poor image, parallels with the cultism of Bitconnect, cringe, and so on.
There’s no doubt that Keiser is a passionate believer in Bitcoin, which shows through during his public engagements.
But at the same time, his showmanship is rubbing people the wrong way, which in turn does little to convince the undecided on the merits of the leading cryptocurrency.
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Billionaire Mark Cuban Says Bitcoin Is ‘Better Than Gold’
Billionaire investor and entrepreneur Mark Cuban has revealed on social media he believes bitcoin is better than gold as the flagship cryptocurrency is easier to trade, transfer, and convert. Both bitcoin and gold are seen by many as inflation hedges, with some calling bitcoin “gold 2.0.”
In a tweet, Cuban said that bitcoin requires no intermediaries and can be factionalized. He also referenced “William Devane type commercials” that would sell the cryptocurrency as a hedge against inflation.
Devane, who starred in the popular soap opera Knots Landing, has for the past decade been promoting the precious metal for Rosland Capital, telling potential customers that gold is the only currency he trusts.
When TD Ameritrade’s Oliver Renick replied that bitcoin’s “relationship with real interest rates is as random as it was day 1 ten years ago,” implying the cryptocurrency does not work as an inflation hedge, Cuban said he never defended it as such.
Gold is useless, pretty much across the board, but particularly as a hedge. BTC is a digital asset that is similar to gold because they both are driven exclusively by supply and demand. BTC does a better job with both.
The billionaire investor noted that right now there is more demand for the precious metal than for the flagship cryptocurrency, although he believes this will change as “BTC is easier to transact,” and will in time be “better understood and marketed.”
The gold market, Cuban predicted, will shrink as a result. Cuban, as CryptoGlobe reported, invested last month in Ethereum layer-two scaling solution Polygon (MATIC) but has not disclosed the size of his position on the cryptocurrency. The investment has been disclosed on one of his websites.
Earlier this year, billionaire investor Jeffrey Gundlach, CEO of DoubleLine Capital, revealed that while he is still a long-term dollar bear and gold bull, and that he sees bitcoin as a better bet after turning neutral on both the U.S. dollar and gold.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
Featured image via Unsplash
I’m Putting My Billion In Bitcoin, Billionaire Ricardo Salinas
Billionaire Ricardo Salinas talked with the director of Blockchain Land about his investment in Bitcoin. Salinas has said that he has 10 percent of his assets in bitcoin. Salinas is a staunch believer in bitcoin. One of the high-profile advocates of the coin with the bitcoin hashtag on his Twitter profile.
He has always been an advocate for bitcoin. He posted on his Twitter profile that paper is worthless. And the best thing to put your money in is Bitcoin. The third richest man in Mexico has revealed that he is not afraid to put his money in bitcoin.
Bitcoin Is As Solid An Investment As Gold
Ricardo Salinas still believes strongly in bitcoin despite the recent price crash.
Enumerating the benefits of bitcoin, the billionaire compares it to gold. Saying that bitcoin with all its benefits qualifies it as a modern form of gold.
Related Reading | Senator Cynthia Lummis: I’m All In On Bitcoin
He made the argument that bitcoin is easy to carry. It enjoys extreme liquidity internationally. And most of all, bitcoin supply is limited. The limited supply of the coin is why Salinas has so much faith in the coin.
Bitcoin supply is hard-capped at 21 million. No one can create more bitcoins. This means that it cannot be manipulated by the government for their gain. The coin supply can also not be manipulated by any developer.
This imposed scarcity means that bitcoin is not subject to inflation. Which is a major concern for the billionaire.
Bitcoin back in the green | Source: BTCUSD on TradingView.com
Salinas continued on to talk about inflation. He mentioned that when he first started working in 1981, a dollar was 20 pesos. Now 40 years later, a dollar is worth 20,000 pesos. Bitcoin’s limited supply is a way to avoid this. If you cannot make new coins, you cannot devalue them.
How About Altcoins?
While Ricardo Salinas is very bullish on bitcoin, he is not so much on altcoins. He attributes his reluctance with altcoins to their inflationary models. He gave Ethereum as an example.
Ethereum has an unlimited supply. This means, unlike bitcoin, an endless number of coins can be produced. Governments can create new coins when they want. An endless supply means that the value depreciates over time instead of appreciating. Due to the fact that there are so many coins in circulation.
Salinas stated that he does not believe that altcoins have the potential to outpace bitcoin. Bitcoin is a finite asset which makes it more valuable.
Related Reading | Is It Too Late To Buy Bitcoin?
Although he does have faith in some altcoins because they provide privacy.
A finite resource does not depreciate. Instead, due to its scarcity, it becomes even more valuable. This is because the number of people that want it increases, while the supply available remains the same. Hence there is a higher demand for it than there is supply.
Ricardo Salinas believes that every investor should have a part of their portfolio in bitcoin.
Featured image from Smart Liquidity Network, chart from TradingView.com
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