Most people (normies) don’t understand much about cryptocurrencies. They know less about blockchain. A lot of people, however, have heard about Bitcoin—It’s the scary internet money that popped up and made some weird nerds money but then the price dropped after a bunch of normies refinanced their house in order to hop on the train. Just the word “cryptocurrency” is scary to normies. I mean, it’s the currency used to buy drugs, guns, and hitmen on the “dark web”.
There are a lot of popular stories out there about cryptocurrencies but most are false or are missing the key facts. But facts are unneeded when scaring the population into begging the government to protect us and the economy. You should be afraid and let the “experts” stop or regulate this weird nerdy thing so it’s “safe”.
The wild price swings are real. Some of it is because there are a few new cryptocurrency offerings and bankers which are weak or frauds, as happens in any new industry. Most of it is largely driven by government action. If you look at some of the quick price drops they coincide exactly with China’s announcement that they were shutting down certain cryptocurrency activity, then South Korea announced its plans to prohibit cryptocurrency, and then the US Senate’s announcement it would hold hearings on cryptocurrencies. Each of these led to a separate quick, big fall. But then the price bounced back quite a bit when Korea reversed its plans and then again, even more, when congressional hearings gave us the news that the US has no plans to stop Bitcoin and many existing cryptocurrencies.
Ask yourself: wouldn’t the value of the US dollar fall drastically if China or South Korea declared they were outlawing it?
So it’s important to understand WHY governments are looking to prohibit, limit or heavily regulate cryptocurrency activity.
In a sense, neither dollars nor cryptocurrencies are “backed” by anything—not gold or anything tangible. Technically, dollars are backed by the United States government: it can force its citizens to give you their assets—homes, cars, food, etc. Cryptocurrencies have no such “guarantee.” But the US government can also decide to “print” unlimited amounts of dollars for whatever reason it wishes, while that can’t happen with cryptocurrencies. At any time, there is a known quantity out there of each cryptocurrency, no more and no less. The US government has a board of appointed bureaucrats which decide how many dollars to create or destroy, based on their economic views, and also based on their personal and political biases. Sadly, those views have proven to be destructive many times—very destructive.
There’s also this: no one knows exactly how many dollars are out there or where they are—literally no one knows. Bureaucrats guess how many dollars exist. With cryptocurrencies, everyone knows when every transaction happens. That’s what the “blockchain” is. It’s a record of every transaction going back to the beginning of time. And everyone who trades in the currency has that ledger (hence why it’s said to be, “decentralized”).
Blockchain eliminates middlemen but at the same time provides more security. If I trade Bitcoin with you, it’s directly you to me. Everyone knows it, as the transaction is verified and tracked—by everyone. That eliminates the need for a payment processor and commercial bank on each side, as well as a central bank (in the US: the Federal Reserve System). And it means the transaction could be instantaneous—no waiting a week for a check to clear, or a day or two for a wire transfer. But it’s also anonymous—no one asks your real identity. Everyone can see the transaction, but they don’t know who you or I am, which makes it appealing to those of us who don’t like Big Brother watching (yes, including drug dealers—who also still feel quite comfortable dealing in US cash for 99+% of their transactions). The US government has been working hard for decades trying to remove your privacy from dollar transactions—they want to watch all that you’re doing and the Supreme Court says they can—for the reason that you chose to put your money in the bank and can expect no privacy. With cryptocurrency to you can expect and you get privacy from Big Brother’s eye.
Best of all, blockchain can be used for much more than money. It could be used for shares of stock, other securities, intellectual property, real estate titles, contracts and much more. As happens too often, at any point in time multiple people say they own the same share of stock, bond or dollar because of these delays. It happens all the time, and it’s costly. Blockchain eliminates this problem and has the potential for eliminating the need for bankers, stockbrokers, real estate agents, lawyers and many other costly middlemen.
The media and pundits and politicians and big bankers have tried to sell the public on scare tactics, ideas such as the lack of established middlemen makes cryptocurrencies unsafe, the anonymity makes it a tool for terrorists or drug dealers, that the use of cryptocurrencies can bring down our economy because of the wild price swings. But the goal is not to protect you, it is to maintain their grip on power, which means maintaining the status quo.
And to preserve the status quo, men of power always wish to destroy innovation . . . and with it, destroy future prosperity.
I don’t know whether Bitcoin, blockchain or other cryptocurrencies are going to be big in the future. That’s up to the market. They’ve had their share of early problems. But I do know that our politicians shouldn’t be trying to thwart those of us trying to find a more prosperous future through innovation. Many will fail as they experiment. That’s okay. Thomas Edison failed at making a lightbulb a thousand of times. He even set a few fires along the way. That was okay, too. But we got the lightbulb.
Don’t let politicians prevent the next light bulb.
P.S. For fun, I have even set up my own cryptocurrency, Sharpecoin—a no-value coin which supporters can collect and trade. It’s only stated value is to trade for campaign merchandise or events. But its symbolic value is to demonstrate my belief in the freedom to innovate and put a stop to bureaucrats and their cronies who are looking to rob citizens with their corrupt and prosperity-killing rules and taxes.