So many ignorant commenters on my previous posts sounding the alarm on bitcoin's eventual failure take a laissez faire attitude about it to their own detriment. Literally, they hand over the keys to their own freedom to the same ghastly people who've been taking it for generations. I suppose those who don't fight for it don't deserve it. I'll fight the good fight.
Grinning to Your Death
Privacy coin Grin is currently facing down a 51% attack that has the potential to destroy the coin. For those that don't know, a 51% attack is when a miner or group of miners takes control of a majority of hash power. Any group that has the majority of hash power controls the network. Control of the network means the ability to literally rewrite history on an otherwise unchangeable blockchain. Because Grin is relatively small, if an attacker destroys enough nominal value within the chain, it could cause people to give up on the coin. (Very important to note that a 51% attack doesn't have to break the coding in a blockchain. It uses the coding in the chain against itself.)
There is plenty of literature out there telling us that a 51% attack isn't that bad. I mean, Ethereum Classic suffered 3 in August alone, and all that happened was the loss of a few million. That's not death.
But that's because the hackers that targeted ETC, Verge, Vertcoin and Feathercoin were just two-bit digital thugs. All they wanted was money.
What if you have an attacker that doesn't need money? What if that attacker's goal is to destroy the sovereignty of a coin — to bring it to heel?
Grayscaling Up the Ladder
The latest report on Grayscale tells us that the company bought up 2X the amount of mined bitcoin this past week. That means not only did the company grab up all of the new bitcoin, but also some of the old bitcoin from dumbasses who obviously didn't know what they were holding. The amount of bitcoin they hold now represents over $8.3 billion in value. That's about 2.3% of bitcoin's market cap in one place.
All they need is 48.7% more.
Oh wait, I forgot about Paypal, Square, Microstrategies, and all of the other companies that shills were celebrating buying up all the bitcoin. I don't care about doing the numbers on that. I'm not a quant guy (right now), and I know that somebody will eventually do the numbers. I'll be conservative and give them another 7.7% for a round 10.
Confiscation is Coming
Recall China's confiscation of some insane amount of bitcoin on the pretense that it was being used for horse pr0n or white slavery or whatever. The Chinese government is currently conducting a Hundred Flowers move on crypto, claiming to love it one minute and hate it the next. What they're doing is bringing as much of its hidden bitcoin to the forefront so it can snatch that up. Any government official worth his salt is betting on bitcoin as the next wave in global currency. Even if it doesn't happen, at the current point, it's good leverage for the future.
Anyone holding huge amounts of bitcoin stands to profit, with the market value of that profit accelerating past all other markets by exponents. If China is holding bitcoin and the US isn't and bitcoin prints a $50,000 value, China is officially the number one superpower in the world. Hands down.
Just how long do you think it will be before the broke ass, debt-saddled United States declares that holding bitcoin in its government treasury is a necessity to compete with China, which will be flush with capital after bitcoin prints a $50,000 or $100,000? Don't even get me started on $500,000. If the superbulls are right — basically, the faster bitcoin goes up, the faster confiscation comes in the US.
But the US can't confiscate bitcoin! We live in a free society!
Yeah, go back to sleep.
All of those companies under the purview of the US government — Microstrategies, Paypal, blah blah, et al. — are subject to confiscation at any point in time. You buyers of bitcoin will have nothing to say about it. You already gave up your rights to custody when you bought through Paypal or whatever — you can't move your bitcoin off of their network, and you never hold the private keys. That's not your bitcoin and it never was. That's Paypal's bitcoin or Square's bitcoin.
After the government pulls rank, it becomes the government's bitcoin. Only those smart enough to buy P2P and hold their coins in custodial wallets will retain their value. But wait — maybe not.
Combined, it seems that the bitcoin these institutions will silo may eventually pass 51%. Well, well. That's certainly enough to buy 51% of the mining power for the measly amount of coins that will be left to mine in 2030 or so. Mining won't be profitable for anyone anymore, save an institution that does not require profitability to sustain itself. Or — the government could just nationalize all mining resources. They can't be hidden like bitcoin, and crypto miners probably aren't prepared to face down the guns of the US government. Aaaaaaaand now we have enough power for a 51% attack. An attack that can rewrite history on the blockchain and make coins appear and disappear from places they were sitting nicely and quietly.
But nooooo. It costs too much MONEY to implement a 51% attack on bitcoin!
Excuse me? Did somebody say they needed a ton of free money? says Federal Reserve Chairman Jerome Powell.
We did! shouts the United States government.
Well, it's not like I've done this 12 times before, but here you go. Now you just make sure to pay that all back when you're done, ok?
Sure, Jerry. In the meantime, check out this report we made up on this thing we call Modern Monetary Theory. It's a great read. And I've got another great idea! Why don't you take the value of this bitcoin we've siloed from Paypal, Square, blah blah et al. and use your sick fractional reserve banking skills to give us even MORE money on its custodial value?
And without having to technically defeat the bitcoin network, your bitcoin, and freedom, like that, is gone. Yes, even you who thought that letting idiots buy bitcoin from Paypal was the cool capitalist shitbertarian thing to do!
And to think — it all started with us Grinning at Greyscale.