Simon Black, a usually astute advisor offering internationalisation advice (mainly to his USA audience) makes more observations on BITcoin and Ether and in the process shows those of us who actually understand the nature of money what’s wrong. Viewing money as a commodity, when it’s not – it is only ever truly a measurement.
Simon needs to read my book Mistakes of the Monetary Reformers. I’ve said it repeatedly from its outset . . . BITcoin = Tulips. Period. Add in Ether as well, now that he’s started talking about that one too.
Let’s dive into Simon’s wisdom then:
June 23, 2017
This morning I had the pleasure of spending an hour of my life tracking down a missing wire transfer that had been sent to a large, multinational bank more than two weeks ago.
I’m sure you’ve been there, being passed around various departments like the village bicycle, each time having to re-explain the entire situation to someone brand new.
Finally someone found the missing funds, and the person told me me they would release the money later today. But that it would still take 3-5 business days for the funds to hit the recipient’s account.
This is infuriating. It’s 2017. Seriously. It’s not like they have to load a pallet full of cash onto a cargo ship and float it across the ocean.
Banking is completely digital now, and transfers should be instantaneous. At most it shouldn’t take longer than a few hours.
They say that time is money! More time, more money! Crazy, I know but that’s what interest does – twist reality.
As we hung up the phone I thought, “I can [he means “can’t”] wait for cryptofinance to put you guys out of business.”
It’s true. There’s going to come a day when financial technology eradicates the entire banking system and renders it as obsolete as blacksmiths pounding on horseshoes.
No Simon – this will never happen. Let me explain why . . .
The core of the banking system is controlled. It is a system established for and manipulated by TPTB. When you control things the first thing you do is ensure that your control is secure, for lack of control means eventually loss of control. The people who have control of the money systems use it to buy the loyalty of the people with political power who legislate that very control to remain. Yes there will be cosmetic changes to how we do things – like online as opposed to a physical bank but the core system will always remain structurally the same until it implodes globally.
Now you are right that technology has affected every other aspect of life and business but this is bar one – finance, and it is for the reason I have just explained. Cryptofinance will NOT put TPTB out of business. Cryptofinance can and will be used BY TPTB. It will be, if it is not already controlled BY TPTB. BITcoins can be bought and sold, therefore it is entirely possible that BITcoins are already being manipulated for profit by TPTB. Can anyone prove that BITcoin is not a creation OF TPTB? No.
Sending money overseas through the banking system can take several days and cost $20, $50, even $200 or more.
And while cryptocurrency transfers over the blockchain are taking longer today than they used it, transactions are still settled in a few hours, sometimes just a few minutes.
Transfer costs across the blockchain have increased as well. But you’re still talking about a dollar or less.
Compared to the conventional banking system, transferring funds via the blockchain is much more efficient.
The same goes with savings; it’s possible to deposit money directly within the blockchain instead of the banking system. No more fees, no more hassles.
Yes, the Blockchain is a technology that can be used as an alternative, alongside and potentially replacing some aspects of the monetary system but the technology per se doesn’t change the fundamental point that the global financial system is fully controlled.
And as long as you take the proper safeguards (just as you would take safeguards to protect your online bank account), holding funds in the blockchain is perfectly safe.
Nonsense, if Simon is talking about BITcoin or BITcoin clones. It was perfectly safe to hold funds in tulips too at one stage! Now the same rules apply to USD or Yen or Euros too – safety and holding funds do not go together.
But… it’s not all rainbows and buttercups in the world of cryptofinance. This is a nascent concept, and plenty of unresolved challenges remain.
For starters– complexity.
Bitcoin has clearly become more user-friendly in its eight years of existence, and the other cryptocurrencies and blockchains will certainly follow that trend.
But if you look at Ethereum, right now the world’s second biggest blockchain platform, you need to be a HIGHLY experienced software developer in order to create one of its ‘smart contracts’.
This is a peripheral issue. The backing of the currency is the critical thing, not ease of use. Ease of use relates to takeup not the nature of the core currency. Governments legislate the use of [say] the USD for taxation which ensures widespread takeup of Legal Tender. It is only easier to use cash by way of [say] the USD because everybody uses it – they HAVE to. If governments legislated gumboots as a currency required to pay taxes, then no matter how complex it was to manufacture them, keep them and use them, the people would. This is a peripheral issue.
Then there’s the issue of volatility… which may be the single biggest impediment to cryptocurrency adoption.
Again, look at the Ether token that runs on the Ethereum blockchain; on January 1st of this year the Ether price was less than $10. Today it’s nearly $350.
That’s a 35x jump in just over six months.
It’s hard to find another asset with that sort of performance. Ever.
Even John Law’s doomed Mississippi Company stock in the 1700s only increased 20x in a year.
In fact, Ether has outperformed the 17th century Dutch tulip bubble, the 18th century South Sea Bubble, and the 20th century dot-com bubble.
With cryptocurrency, the swings are violent in both directions. It’s NOTHING for Bitcoin or Ether to move up/down 10% in a single week. That level of volatility is almost expected now.
Again, this is a problem– volatility is a major hurdle to adoption.
Simon is like a man with his pants on fire, screaming, “Fire, fire, fire!” and then pointing at somebody else. The volatility that he reports here is proof positive that there is tulip mania based on hot air! The expectation of volatility is the very thing that drives human behaviour to move in the wrong direction, viewing the currency as a commodity, something that has value in and of itself. It (money or a currency) is viewed like a potato, that is grown and then dug up. This is insane.
Cryptocurrencies (BITcoin or Ether or any of them) not only cause us to believe that their “something” has real value when it is only perceived value (all based on the bigger sucker theory, that some bigger sucker will come along and pay more for it) but they cause us to totally miss the point, that a currency is a measurement system. Nothing more. Nothing less.
There is no volatility in a litre, although the volatility in the price of milk can go up or down as it goes from fresh, creamy and drinkable to rancid or cheese.
There is no volatility in a kilogram, although the volatility in the price of a kg of iron, lead or silver can go up or down as it is used or needed in different circumstances.
The only reason that there is volatility in a unit of currency is that it isn’t real money (a measurement), it is a derivative of the real money, where there is an associated [hidden] debt to it. We are deliberately deceived into believing that money is a commodity (thus in limited supply) when it is not. It is only ever a measurement, literally and technically a record of a half completed transaction.
This is the core message of my book Mistakes of the Monetary Reformers.
As an example, big retailers (like Wal Mart) have razor-thin profit margins of less than 3%.
So if Wal Mart were to accept Bitcoin, it’s entirely possible that the Bitcoin price could drop more than 3% before Wal Mart converts the Bitcoin to US dollars… meaning Wal Mart would either lose money or pass the excess cost onto the consumer.
Either way, someone’s paying for the volatility.
Long-term, these challenges are likely going to be solved. Cryptocurrency has only been around for a few years– it needs more time.
Wrong. The fundamentals of money will not change over time. A litre in 100 years will still be a litre. A kilogram of salt will still weigh the same as a kilogram of butter, steel, iron or lead in 100 years. A BITcoin will always be nothing but a digital [something] that only has as much value as the suckers of the day believe it will.
I look at something like the Swiss franc, which is 167 years old and used by roughly 8.5 million people within a very tiny geography.
The total market size of the Swiss franc is about $1 trillion based on the central bank’s most recent statement of M3 money supply.
By contrast, the combined market size of Ether and Bitcoin (the two largest cryptocurrencies), is about $75 billion.
Yet their user bases already exceed 15 million with absolutely no geographic limitations. And they’re growing every day.
So what? The USD is worthless on paper, backed by Uncle Sam’s word which is somewhere between 99% and 100% BS . . . so?
Usage or no usage does not change the fundamentals.
The Swiss franc, of course, has minimal volatility and zero complexity.
This is why economists don’t agree – they can never agree because it’s like arguing which colour is bigger. Colours don’t have a size! Likewise with digital bits and bytes – they cannot have a value unless somebody misconstrues reality, and then of course you have perceived value, volatility and so on.
So it stands to reason that when these remaining challenges for cryptocurrency are solved, their supply/demand fundamentals could support prices that are far higher than today’s.
The first assumption is rubbish. Simon is a fool to worship the cryptocurrency thing. Unless he takes his blinkers off, in a hundred years he will still be making excuses and trying to work out why the cryptocurrencies of the day keep inflating and booming and busting all over the place. It’s because they are not real money. They are just tulips.
But not yet. There’s still plenty of uncertainty, and a ton of work to do.
Yes, trying to educate financial fools like Simon Black (or whatever his real name is) to understand the reality of what money actually is . . . and he of all people, a real thought leader in the industry, out there making things happen for others, should grapple with the basics related to money, ASAP.
For now try to ignore the hype… and the spiraling prices.
What a snakeoil salesman he is with this nonsense. “It doesn’t work for everyone I know, you know, but here, it is SURE to work for you . . . take a bottle of this magic oil today and all your problems will . . . ” You know the rest!
Don’t feel like you’re going to ‘miss out’ if you don’t buy crypto today.
And another tulip bulb and another one . . .
A lot of people thought the same thing in the late 90s, that they didn’t want to miss the chance to make money in tech stocks.
Bear in mind the market crashed in 2000, and some of the top performing tech companies like Google and Facebook didn’t IPO until years later.
That’s right Simon . . . the market crashed didn’t it? And SOME people made a killing, riding the market at the right time. Cool for them, but where did that value come from? Ah yes, that’s right, the 99% who lost all. Hmmmm!
Right now the most important thing to do is UNDERSTAND cryptocurrency– how it works, the possibilities and challenges, applications and risks.
Finally I can agree. We need to understand things. What we need to understand FIRST is that any cryptocurrency is not real currency nor money. It is simply something generated by a formula that people perceive to have increasing value. People perceive its value to go up and down (naturally) as market forces influence it’s perceived value. I’ve yet to see any market that is not manipulated by TPTB. Gold goes up then down. Later on we find out that the 1% bought at the right time and then sold at the right time – for them! This is a fully manipulated commodity. Same thing with interest rates, forex, all commodity markets I can think of and this includes Lotto – all stacked against the 99%.
Then having understood that BITcoin = tulips, we should be understanding what real money is – simply a record of a half-completed transaction. Period.
The same rule applies with any investment– don’t buy anything unless you really understand it, whether it’s a stock, bond, apartment building, or cryptocurrency.
And here we have the nub of the whole thing revealed in the man’s own words. BITcoin is an investment! Forget currency Simon. For you it is an investment. You can’t have it both ways. Make up your mind!
The right education can open the door to new, lucrative investment opportunities. And it can make the difference between a great decision and a terrible one.
So don’t worry about the bitcoin and ether prices right now. There will be more opportunity to make money in crypto.
Instead, focus on the best investment you can possibly make: the one you make in yourself and your own education.
Yes. By reading my book Mistakes of the Monetary Reformers.
I like Simon’s writing. It is witty, has great case studies and he is an astute and successful man in many ways but he, like most, have more to learn about the true nature of money. Simon is right that there is change in the winds, but it will not come the way he wants, thinks, and predicts. Cryptocurrencies will neither cause nor influence the coming changes. This change will come from collapse and necessity. Remember that while TPTB doesn’t have total control over all world events (but oh, how they would like this!) they DO have control of the financial systems and most of the political systems. They are currently mopping up the last remaining independent ones now by force and deception as we speak. Business of course is all firmly tucked in under the financial systems label.
The global financial/political structure based on the charging of interest will collapse, rendering TPTB powerless as greed (at its pinnacle best exemplified by the charging of compounding interest) has no internal restraining force and thus no throttle. This inevitable end is not only a mathematical certainty; it is not only predicted in scripture, it is perfectly logical. The history of mankind is recorded in biblical light as one of human excesses attempting to leverage the Creator’s plans and purposes, yet failing. As technology has developed, particularly communications technology, mankind has had the power to build human systems internationally, thus the same forces that God records He diffused in the Tower of Babel are having their way internationally again – this time without His intervention.
The way that God deals with this is to let them have their way, and self destruction occurs, rendering the people powerless and in open need of wisdom. As the spirit of God works (in a Christian sense this is the Holy Spirit; in a New Age thinking this is more of a global consciousness change) He allows things to go wrong so that as a result, the people learn, turn to Him and get things right. This coming crash will be more akin to an implosion where evil culminates in the inevitable. Literally the forces of darkness currently using democracy and usury to control are exposed.
This event alone, predicted by many belief systems including now many secular economists, will bring about the removal of the currency financial systems that required Simon Black to invest an hour of his time into chasing down his missing international payment, and then probably another hour or more of his precious time (and a couple of mine now too) into writing about it.
The people will work it all out Simon and the 1% crooks (actually a minute percentage of 1%) will be held to account, of that you can be assured, but it won’t be for quite a long time and it certainly won’t be as a result of your beloved cryptocurrencies, sorry to burst your bubble on that one.