Russia will issue its own CryptoRuble (and free essay: How CryptoCurrencies Work)

[Morbid]

thanks. i mostly agree with the article. though there are other anonymous coins out there that are quite effective at hiding tracks of transactions. imho its just a matter of time when two opposite environments would operate independently from eachother, there could be centralised "legal" crypto system & a fully functional "illegal" crypto system. same thing that happened to napster, edonkey, kazza, torrents, vpns, proxies & more recently the dark web.

[ThePythonicCow]

Posted by Morbid (here)
... & a fully functional "illegal" crypto system. same thing that happened to napster, edonkey, kazza, torrents, vpns, proxies & more recently the dark web.

Yes - some activity can be hidden from the officials, but not reliably, and usually only if it's small enough activity to not be worth a more focused intelligence effort.

[indigopete]

Posted by Paul (here)
The new “shell game” is to replace one illusion…the fiat currency…with another illusion, the “bitcoin.”…The gullible masses are playing right into their hands. The problem with Cryptocurrency is not just in the fact that it is backed by nothing (a fool’s errand before it has been started), but there is no privacy.

This is either one of the most ill-informed, superficially researched, terminology conflating, 2nd rate items of commentary ever written about cryptocurrencies, or it’s simply out and out malevolent disinfo.

For a start, any monetary media that's "backed" has no inherent value of its own by definition. It only serves as a proxy for a 3rd asset. So if we are going to create a new monetary token that's independent of the banking system, can be freely traded and has its own intrinsic value then is HAS to be unbacked. (Just as gold, silver, diamonds, pearls and platinum are).

Bitcoin has intrinsic value. (It isn't backed by anything so its value comes from itself), so that comment about 'fools errands' is deceptive nonsense.

Secondly, the author of that article would do well to re-apprais their definition of 'cash'. A 'cashless society' is not one that has replaced paper with electronic money, because cash isn't defined by the medium which conveys it. You can have cash in electronic form and credit in paper form for that matter. Bitcoin is most definitely CASH by any definition you care to conjure up and Crypto Rubbles are most definitely CREDIT (or debt-backed money) by the same measures.

[ThePythonicCow]

.
Will cryptocurrencies replace national currencies? Yes (in some ways) and no (in general).

National currencies (including the regional Euro currency) appear in several roles in the world's economic and financial markets and reserves.

One has to examine the various roles that national currencies, starting presently with the US Dollar, play in the world, and ask the question as to how cryptocurrencies might participate in each of those roles.

In rough summary, I see cryptocurrencies as "hot money", like cash (fancy printing on paper). Cash is useful for retail transactions, and a suitcase of cash can bribe a politician or pay for a kilo of heroin or some AK-47's. Bitcoin is being pushed as a substitute for cash, as it works across borders and as it runs on top of the Internet, where the deep state can more thoroughly monitor and control activity, world-wide. Such an instrument is essential for a world-wide retail market. The "new world order" requires a world-wide infrastructure, and that includes world-wide retail markets.

But currencies, led this last half century by the US Dollar, have other roles, besides retail payments.

Currencies are used to pay for trade in wholesale volume, for such items as

• energy (gas, oil, coal, ...),
• minerals (copper, iron, aluminium, rare earths, ..),
• agriculture (rice, soy, wheat, ...), and
• finished goods (cars, machinery, electronics, medicine, ...)

Currencies are required to pay debt and taxes. Many nations, including recently the European PIIGS (Portugal, Ireland, Italy, Greece and Spain) nations and some South American nations (including Venezuela) are going bankrupt because they owe more Euro or Dollar denominated debt than they are able to earn in trade payments.

Savings, reserves, and other promises or expectations of future value are denominated in currencies. These include such forms as stocks, bonds, pension plans, insurance plans and social benefits. Some of those holding such reserves are very large, including such central banks as the US Federal Reserve, the European Central Bank, the Bank of Japan or the People's Bank of China.

Units of money, such as dollars, rubles, yuan, yen or euros, are the "monetary unit of measure" in which accounting books are maintained, to track everything from a child's allowance (how much remains unspent) to tracking (or criminally obfuscating) the income, expenses, assets and debts of Exxon Mobile, the US Dept of Defense or Crooked Hillary's Clinton Foundation. All such accounting is done using some particular monetary unit as the common measure of "value".

In short, as introductory essays on money like to say:

Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.

===

Now, to some degree, more or less any form of money can be used in more or less any of these ways. I have a bottle of cheap whiskey, a pack of cigarettes and a silver coin stashed away, in case they might be useful trade items in hard times in the future. These are "stores of value" and potential "units of trade". Value, trade and accounting is done in many units.

The question I would ask is what forms of money have been, are, and will be the dominant forms.

In past times, gold and silver coin and national paper currencies have been, at various times and places, dominant forms of money.

In the 1800's and early 1900's, the British Pound was the most widely used and recognized currency.

In present times, for the last half century, the US Dollar has been and continues to be "King Dollar."

Central banks, national treasuries and the very wealthy continue to also hold (or pretend to hold, as in the case of the US and its likely empty Fort Knox) gold as a major store of wealth.

Notice that the dominant currency unit has tracked the dominant nation in recent centuries (or longer.)

===

It's becoming apparent to most everyone in the world, outside of some politicans and officials in Washington, DC and outside of the American couch potato, drugged out of their minds, that the Sun is setting on King Dollar.

So ... what will be next, and what role will cryptocurrencies play in the coming new world monetary order ?

===

These things I hold to be more or less self evident:

• The dominant power center is moving from the US to China.
• Hong Kong (a coastal Chinese city) will become a more important financial hub than New York.
• A fabric (or "web") of national currencies, including the Chinese renminbi, will dominate the world's monetary system.
• The Chinese and Russian central and national banks already have the world's largest gold stash; they just haven't told us yet.
• China will lead more through trade, commerce, and financial arrangements.
• However Chinese and Russian militaries will also become dominant.
• We will see stunning changes in physics, astronomy, energy, propulsion, communications, computation, materials and manufacturing.
• We will see major mineral mining and colonization, across the solar system.

Notice the history of Hong Kong ... it is becoming a key financial center for China, and it was a British Crown Colony from 1841 to 1997. It is, I presume, a manifestation of the same elite families that lorded over London and New York, but with "Chinese characteristics."

I do not expect however that the new world monetary system will be a replay of the eras of the Pound or the Dollar. The Chinese yuan will not become the new world reserve currency. As economists like to point out by referring to the Triffin Dilemma, having any one nation's currency also serve as the world's dominant trading and reserve currency creates a problem. Those two roles, of (1) a nation's currency and (2) the world's dominant reserve currency, are conflicting roles.

As Investopedia explains in their Triffin Dilemma article:

By "agreeing" to have its currency used as a reserve currency, a country pins its hands behind its back. In order to keep the global economy chugging along, it may have to inject large amounts of currency into circulation, driving up inflation at home.

Yale Professor Robert Triffin explained this dilemma to the US Congress in 1959. I doubt that many of those congressmen understood Mr. Triffin, but I expect that important Chinese leaders and planners understand this well, and hence that the Chinese do not want and will not accept their currency becoming the next world's primary currency in which most trade, reserves, and debt are denominated.

Rather the Chinese prefer, from what little I can tell, to "lead from the middle" of a web of interconnected commercial, financial, economic and infrastructure interests. Thus one term that they use for themselves, the "Middle Kingdom," fits in a perhaps unintended way. This is not to deny that the Chinese government, like any major government, is willing to apply whatever lethal force they deem necessary.

Nations will remain ... people much prefer to route for their city or national football or soccer team than they do for The Fédération Internationale de Football Association (FIFA). The Greeks look to Athens, and the French to Paris. Neither looks to Brussels for the leadership that inspires them.

But as computer software (such as I know well) and other technology development, news, entertainment, research, academic studies, social media and so much else has moved to the web, so will our core financial infrastructure. The initial moves, as usual, end up doing "the same old thing", just "using new fangled tools." But then these new fangled tools end up fundamentally transforming what gets done and how it is done.

===

So, before we get further lost in my "big picture" speculations, where do cryptocurrencies fit into this?

Cryptocurrencies have roles, but in my view one must have a basic understanding of the larger framework within which they will fit. That's why I just spent so many words above on "big picture" speculations.

Given that, here's what I see:

I still see nations, national currencies, banks, and credit-based money.

I see SWIFT replaced with distributed ledger technology (DLT). SWIFT is the current means that is used to transfer large sums between banks world wide. It's due for a major technology upgrade enabling swifter, more secure, transfers. Us ordinary people don't use SWIFT and won't notice.

I see the current variety of services for transferring money to other countries, such as wiring money between bank accounts, Western Union, Moneygram, Paypal, Xoom, Amazon Payments, Google Wallet, etc receiving stiff competition from blockchain based services, or perhaps adapting blockchain technology themselves. However the movement of national currencies into, and back out of, such money transfer services will continue to be, as it is now, heavily controlled. I would not be allowed to send a quarter of a million dollars of hard cash to Александр Иванов (Alexandr Ivanov) in Moscow, whoever that is, even if I had that cash in the trunk of my car. More likely, in many districts in the US, the police would confiscate that money and never return it, even if they could find no basis for charging me with any crime. All institutions that accept cash are increasingly coming under various "Know Your Customer" (KYC) regulations, requiring them to report to the government any large cash deposits, including reporting details of the identify of the person making the deposit, and including refusing to accept "suspiciously large" deposits of uncertain source.

I see nations increasingly replacing medium size paper cash currency notes with cryptocurrency forms of their national currency.

I see money coming into the governments (taxes, fees, etc) and out of the government (purchases, social benefits, ...) increasingly using this cryptocurrency form of their national currency.

I see the markets for stocks, bonds, and derivatives increasingly adapting cryptocurrency technology for their trading platforms.

I see people, especially younger people, increasingly expecting to pay for routine purchases using their smart phone, and increasingly less likely to carry cash (paper notes.)

===

All these measures will change the fabric of money flow world-wide, just as the Internet has changed the fabric of information (and disinformation) flow. National borders will become increasingly porous, world-wide financial regulations will become increasingly uniform, and world-wide surveillance and control of financial traffic will become increasingly ubiquitous.

Nations will lose some of their control over their own financial and monetary markets to those global institutions setting these world wide regulations. As has Amazon and Alibaba with retail shopping, and Google with search and information sharing, so will other upcoming global corporations take on surprisingly strong roles in building and operating this world-wide financial infrastructure.

I do not see cryptocurrencies as the key to freeing humanity from thousands of years of financial oppression by the elite. Rather I see cryptocurrencies as one key step in creating a new world order.

[Morbid]

more aware economists claim now that any state that uses its own printing press to act as an international reserve currency is doomed long term. as far as im aware chinese leadership knows that & they would rather not allow yuan become it. though with crypto its different. i hope it wont be bitcoin but perhaps they'll come up with some sort of sdr blockchain tech to be used between banking cartel only.. like a crypto reserve coin to be over national crypto coins. time will tell. if so, then bitcoin will have its place just like gold have today with other less valuable metals traded just like altcoins.

[indigopete]

Posted by Paul (here)
I do not see cryptocurrencies as the key to freeing humanity from thousands of years of financial oppression by the elite. Rather I see cryptocurrencies as one key step in creating a new world order.

IMO that’s because you appear to under-appreciate the huge distinction between a monetary unit defined on the blockchain and one simply transported by it. (As alluded to by the quotes below).

Posted by Paul (here)
.I see nations increasingly replacing medium size paper cash currency notes with cryptocurrency forms of their national currency.

I see money coming into the governments (taxes, fees, etc) and out of the government (purchases, social benefits, ...) increasingly using this cryptocurrency form of their national currency.

I see the markets for stocks, bonds, and derivatives increasingly adapting cryptocurrency technology for their trading platforms.

What exactly is the point of a government using blockchain technology to manifest a national currency ? What advantage to they gain ?

If you analyse it, the answer is almost none. Blockchain technology is cumbersome, slow, energy inefficient, requires thousands of network nodes just to support the security etc. If the monetary unit acquires its value from being backed by centrally issued debt then you’re far better off with bunch of SQL servers to move it around.

Nor are blockchain-based national currencies any competition for cryptocurrencies because, again, the distinction isn’t in the technology, it’s in the monetary definition and source of issuance. Issuing a national currency on a blockchain doesn’t change its nature. It’s equally prone to collapse with hyper inflation, equally exposed to political priorities and equally dependent on central banks for its existence. It’s just a whole lot slower and more cumbersome (on a blockchain) than it is in an SQL server. That applies whether you’re talking about the clearing system or Amazon’s shopping cart.

[ThePythonicCow]

Posted by indigopete (here)

Posted by Paul (here)
I do not see cryptocurrencies as the key to freeing humanity from thousands of years of financial oppression by the elite. Rather I see cryptocurrencies as one key step in creating a new world order.

IMO that’s because you appear to under-appreciate the huge distinction between a monetary unit defined on the blockchain and one simply transported by it. (As alluded to by the quotes below).

I believe that I am well aware that current cryptocurrency enthusiasts find Bitcoin and other alt-coins to be a ground breaking new form of monetary unit. I am forecasting that they will be sadly disallusioned.

My forecasts of cryptocurrency variants of national currents are hardly forecasts ... that's what Russia is actually stating it plans to do, as documented in the opening post of this thread. I expect other nations to do this as well.

Just as the Internet itself, as well as other tools in past times, such as firearms in past centuries, were thought to be potential tools of liberation from oppression, but turned out to be more effective tools of the oppressors, similarly I am predicting that the Bitcoin enthusiasts are wrong, and that cryptocurrencies will also be molded into a tool of oppression.

Posted by indigopete (here)
What exactly is the point of a government using blockchain technology to manifest a national currency ? What advantage to they gain ?

If you analyse it, the answer is almost none. Blockchain technology is cumbersome, slow, energy inefficient, requires thousands of network nodes just to support the security etc. If the monetary unit acquires its value from being backed by centrally issued debt then you’re far better off with bunch of SQL servers to move it around.

Yes, blockchain tech is too slow for such uses.

If you had read more of my earlier comments on this thread, you would have seen that I am not predicting widespread, national, use of blockchain technology. I describe in some detail (in my earlier example on this thread of my purchasing a cup of coffee at a Starbucks in Moscow for 100 ruble) just how I envision such a transaction would happen. It does use cryptocurrency, but it does not imply any use of blockchain technology on what I call the "big Russian computer" in that example.

As to what advantage cryptocurrency provides a nation state, and more importantly in my estimation, what advantage cryptocurrencies provide our global overlords, that too I have commented on above. It allows for radically increased surveillance and control of essentially all financial or monetary transactions on the planet.

Posted by indigopete (here)
Nor are blockchain-based national currencies any competition for cryptocurrencies because, again, the distinction isn’t in the technology, it’s in the monetary definition and source of issuance. Issuing a national currency on a blockchain doesn’t change its nature. It’s equally prone to collapse with hyper inflation, equally exposed to political priorities and equally dependent on central banks for its existence. It’s just a whole lot slower and more cumbersome (on a blockchain) than it is in an SQL server. That applies whether you’re talking about the clearing system or Amazon’s shopping cart.

I agree that national currencies don't provide the nice properties of the envisioned widespread usage of cryptocurrencies, and to repeat what I just said, I agree that blockchain technology would be a poor choice for any implementation of a national currency.

But I believe you're confusing several points, and trying to reach the conclusion that issuance of money by individuals through their mining or other such distributed contributions is radically better than issuance of debt-money by central banks.

That's why that will not happen .

The grip that central banks, their banksters and their overlords have on human civilization and the importance of a debt-money based financial system to that control ensures, in my expectation, that Bitcoin and any other such alt-coin will be either destroyed or integrated into the existing monetary framework.

Please don't confuse the bitcoin hype with my efforts to describe the real situation we find ourselves in.

Yes - I am taking a position quite different than the position taken by Bitcoin enthusiasts.

I claim that I do so not out of a misunderstanding of what Bitcoin enthusiasts are saying, but rather out of a better understanding of what has been for millenia, is currently, and will continue to be, going on with our civilization's monetary system.

Efforts to disagree with my (unusual) perspective that simply repeat as gospel variations of the current Bitcoin/blockchain/cryptocurrency story whenever it seems that I don't understand that story will just add confusion to this thread. Please don't do that. I don't like confusion, especially on threads that demand more than the usual amount of clear headed thinking from readers.

Please realize that just because I don't repeat the Bitcoin/blockchain/cryptocurrency gospel "correctly" doesn't mean that I don't understand it well enough yet. Rather I don't repeat it because I think it is a fantasy story line, out of touch with our past, present or future.

[ThePythonicCow]

Posted by Morbid (here)
if so, then bitcoin will have its place just like gold have today with other less valuable metals traded just like altcoins.

During the 1988 United States vice-presidential debate, Democratic vice-presidential candidate Senator Lloyd Bentsen said to Republican vice-presidential candidate Senator Dan Quayle "Senator, you're no Jack Kennedy".

I say now, as someone who has traded in both gold and bitcoin for years and who has long been a student of our civilization's economics and history, as well as a master craftsman in the sorts of software technology required by cryptocurrencies: "Bitcoin, you're no gold."

I am as certain as I can be that central banks, national treasuries and the uber-wealthy will never take up holding cryptocurrencies in lieu of holding gold, as a form of storage of wealth that is always easily convertible to whatever be the coin of the realm. Cryptocurrencies lack the durability, stability and long standing historical basis of gold and they could not gain that in a thousand years.

Cryptocurrencies will be (are being, as I write) morphed into another tool of mass suppression.

[Callista]

This is the best thing really:

[Callista]

I mean : "Don't put your eggs in one basket"

ie, if you have any savings, spread them out over metals, bitcoin and whatever else...

[ThePythonicCow]

.
Here's more from China, Russia's partner in the crime of replacing the American Hegemony: Rival cities HK, Singapore join forces for fintech, posted yesterday by Bloomberg on the Hong Kong site "China Daily".

The article explains how Hong Kong is working with Singapore to build the infrastructure "to digitize and share trade documents, automate processes and reduce risks and fraud" through the development of new platforms using "distributed-ledger technology".

There's that "distributed-ledger technology", a key technology behind Bitcoin and existing alt-coins. Distributed-ledger technology will see wide spread usage in major financial technology (fintech) systems in the coming years, replacing central compute servers, each held private by a particular corporation.

This will dramatically improve the speed, efficiency and robustness of handling transfers between financial institutions.

Singapore and Hong Kong are turning out to be the new "financial capitals" of the world, replacing New York.

Both Singapore and Hong Kong were conquered by the British in the 1800's. The British form of law and finance now have deep roots in the financial and political institutions of both these coastal cities. Singapore was an isolated island at the southern end of the Malaysian peninsula, and Hong Kong was an island of no great significance on the coast of China. When the British Navy ruled the waves, they were able to take over both these islands and develop them into their modern states, a sort of British rule with Chinese characteristics.

Now the financial access of London, New York and Chicago (home of the Chicago Mercantile Exchange) is shifting ... to London, Singapore, and Hong Kong. The uber-wealthy, such as the Rothschilds of banking and the Rockefellers of resources (oil, etc) are shifting their base "eastward", from the Anglo-American empire, to the Eurasian powers of China and Russia.

===

So ... what does this mean for cryptocurrencies?

The current well known cryptocurrencies, beginning with Bitcoin, are in my estimation the product of an American intelligence operation, intended to provide them some leverage in the coming shift to distributed ledger technologies well adapted to a world wide web, and to provide opportunities to surveil, to control and to spread confusion.

Notice that China and Russia are working to suppress Bitcoin and related alt-coins, while at the same time working to develop such technology on platforms that they can trust and control. Meanwhile China has been providing great amounts of very cheap electricity to Bitcoin miners, enabling China to gain a dominant position over Bitcoin, rather as China also did over the US Treasury Market with the trillions of dollars of Treasuries that it has accumulated. Meanwhile also China and Russia are developing their own cryptocurrency implementations of their national currencies, the yuan and ruble (see the opening post of this thread for the announcement of the Russian CryptoRuble.)

China and Russia are not against this new "financial technology" (distributed ledgers and such). They are against implementations of this technology that are controlled by their enemy, the American Imperial State.

[ThePythonicCow]

Posted by Paul (here)
.Meanwhile also China and Russia are developing their own cryptocurrency implementations of their national currencies, the yuan and ruble (see the opening post of this thread for the announcement of the Russian CryptoRuble.)

Add Japan to the list of nations working on tokenizing their national currencies as cryptocurrencies.

A month ago, The Nikkei Asian Review posted this article J Coin: Japanese banks' virtual currency without the volatility:

==========

Dozens of Japanese banks are uniting behind a new digital currency they call J Coin, looking to fend off global e-payment players and amass a treasure-trove of consumer data.

The consortium includes megabank Mizuho Financial Group and Japan Post Bank, as well as numerous regional banks. Together, they have established a company to handle J Coin. And although the name might bring to mind that other much-hyped virtual currency, this one would be free of bitcoin's famous volatility.

J Coin would be no more erratic than the yen, since its value would mirror the Japanese currency.

The banks intend to use the new currency to offer electronic payments, plus other services like commission-free remittances. They hope to counter the growing e-payments services of international tech giants like Alibaba Group Holding and Apple. There is a possibility Japan's other big banks could join the group, creating a massive coalition.

J Coin is expected to be up and running by 2020.

Big data, big prize

The banks foresee a system under which yen could be withdrawn from a bank account and converted to J Coin with a smartphone app. The digital currency could then be used for payments at convenience stores, restaurants and any other participating businesses.

Besides e-payments, direct money transfers are seen as another key feature. Individuals and companies would both be able to shift funds between bank accounts. No commissions would be charged on remittances between individuals, and overseas transfers would be cheaper.

Mizuho earlier this month met with Japan Post Bank, 70 regional banks -- including the Bank of Yokohama, Shizuoka Bank and the Bank of Fukuoka -- and major retailers to prepare for the launch. Japan's Financial Services Agency is open to the idea, and the banks will soon begin hammering out the details.

The big prize is the huge amount of data that would be collected.

The J Coin management company would accumulate users' shopping and remittance records, along with other related information. This data would be shared -- anonymously -- among the banks and sponsor companies, allowing them to enhance their marketing and pricing strategies.

==========

Once again, I am seeing trusted national or regional cryptocurrencies, originally marked to the equivalent the main national or regional currency, dominating the cryptocurrency space, achieving wide spread adoption, gaining the upper hand legally and with existing banks and large corporations , and enabling "improved" surveillance (see the above phraes "Big Data, Big Prize") of the populace.

Existing early cryptocurrency variants, including Bitcoin, will be (in my estimation) increasingly isolated, rather like the "Dark Web" is now. Exchanging cryptocurrencies within the "walled garden" of such cryptocurrencies will continue, as I explained in this post, but it will become increasingly difficult (varying by nation) to move money (value) between these "renegade" cryptocurrencies and "legal tender" - the authorized national and regional currencies, whether in digital cryptocurrency form or in more traditional cash or bank deposit form.