Is This Bitcoin's Fatal Flaw?

Authored by John Rubino via DollarCollapse.com,

Bitcon has been rocketing higher lately, as it gains widespread official approval and more people figure out how to use it.

As the first of its kind to emerge, bitcoin has become synonymous with “cryptocurrency”. But lately it’s been joined by a lot of others – which together now account for more than half of the cryptocurrency ecosystem:

(Forbes) – For the first time, Bitcoin’s market capitalization as a percentage of all cryptocurrencies has dropped to below 50%.

It is a symbolic turning point for the first cryptocurrency, which for a long time accounted for more than 90% of the value of all blockchain-based assets combined, particularly through a period when so-called alt-coins that were only minor tweaks to bitcoin proliferated.

Its market capitalization then comprised over 80% of all cryptocurrencies for years, a range that held true until two months ago when it dipped below 80% and not only did not recover but did a quick dive straight down.

Several factors are driving the drop from its status as the clear leader.

1. Bitcoin’s development is stalled.

A more than two-year-long saga has left progress on its network stymied. With the various factions unable to compromise and no clear method for moving beyond the impasse, the network has been stuck staring down the same question of how to expand the network to accommodate more transactions that it first faced in early 2015. Meanwhile, as no decisions get made, transaction fees have risen from about 11 cents a year ago to $1.70 now, and the time to confirm a transaction has nearly doubled to almost 20 minutes. Because the community has been unable to resolve its divisions, some of the technological advances people were excited to see on bitcoin will be adopted on other tokens, such as Litecoin, which could emerge as the payment token, while bitcoin evolves more into a digital gold, because its software will only ever release 21 million units.

2. Ethereum continues to grow.

Ethereum has, for a while, been the cryptocurrency with the second-largest market cap, but in recent months, its greater rise has further has eroded bitcoin’s dominance. While throughout 2016, its share of the market cap of all cryptocurrencies was in the single digits, it has, in the last couple months, inched closer to 20% as its price has risen from $8 in early January toward $100 in recent days.

3. New ICOs add value to the crypto space every day.

Third, a wave of new cryptocurrency launches in crowdsales called initial coin offerings has so far raised $380 million for new networks that have functions beyond just currency. For instance, a few new storage coins aim to facilitate payments between computers needing more storage space and computers with excess drive space to offer in networks like Filecoin, Sia and Storj. Meanwhile, Golem Network Tokens are used for payments between computers that need extra computing power to, say, train a machine-learning algorithm, and computers that have spare GPU and CPU cycles to offer while its owner sleeps. So many new tokens with uses different from bitcoin’s are bound enlarge the pie, but still narrow its dominance.

4. Speculation is driving up the value of all tokens.

Because the ICOs are proving to be such an easy way to crowd fund, they are also being used just as that — as an easy way to raise money — for projects for which tokens don’t even particularly make sense, as well as scams. Speculation is also running rampant as investors who don’t understand the technology or what makes a token valuable snatch up both promising as well as poorly conceived tokens. One project that raised eyebrows recently was a crowdsale of Gnosis tokens, which, because of the way the ICO was designed, left Gnosis, which is only in beta and doesn’t yet have a product to offer consumers, with a valuation of $300 million right after its ICO. Now, speculative trading has now multiplied its valuation to $1.2 billion.

5. Ripple is seeing a big spike.

While the other trends have been driving bitcoin’s share of all cryptocurrency market caps down broadly, what appears to have finally tipped bitcoin below the 50% mark is the 24% surge of XRP, the token of the Ripple network, in the last 24 hours. Since Chinese regulators began enforcing basic know-your-customer, anti-money-laundering procedures earlier this year, Japan has overtaken China as the country with the highest crypto trading volume. XRP is popular in Japan, and one writer surmises it is because of the work Ripple does in Japan, such as through its joint venture, SBI Ripple Asia, with SBI Holdings.

7. Tezos is about to launch.

Okay, so this last one might not have pushed bitcoin below the 50% threshold, but it is likely to help keep it below that threshold. Tezos may be one of the most anticipated ICOs, about to launch in June and stay open for two weeks. The code is written in OCaml, a language that has the ability to formally verify smart contracts to ensure that they execute as the creators intended them to. Tezos is also generating excitement because the software has, built into it, a mechanism for resolving issues such as the scaling debate in bitcoin. Therefore, even if bitcoin exceeds 50% market share for now, it will likely again fall under that threshold once the Tezos ICO begins.

Those increasingly common predictions of bitcoin going to $20,000 or more are premised on the fact that its algorithm limits its supply. There are many more ounces of gold, for instance, than there are bitcoins, which implies that bitcoin should ultimately trade at a (possibly substantial) multiple of gold’s price.

But if bitcoin is just one of many cryptocurrencies in circulation, it makes sense to consider their aggregate supply – and the growth rate of that supply. Which is where it gets scary.

The number of new “ICOs” now in the pipeline implies that barriers to entry in the cryptocurrency space are laughably low. Apparently anyone with relevant coding skills can create and launch another Ethereum or Litecoin.

With both demand and supply soaring, it’s possible that cryptocurrencies will go through a 1990s tech stock-style boom/crash cycle in which their usage rises but their average price falls.

This is a brand-new concept (it’s not clear, for instance, how governments will react to bitcoin being the ransomware currency of choice), which means there’s no way to predict what share of the global currency market cryptocurrencies will eventually capture or which cryptocurrencies will end up dominating. So there’s no way at the moment to trace out a base case trend for bitcoin’s future value.

But low barriers to entry do create some very obvious risks.

The Globalists Strike Back With A Major Push Toward A Cashless Society

Submitted by Michael SNyder via The Economic Collapse blog,

Their agenda may be on the rocks in the United States at the moment, but that doesn’t mean that the globalists are giving up.  In fact, a major push toward a cashless society is being made in the European Union right now.  Last May we learned that the 500 euro note is being completely eliminated, and just a few weeks ago the European Commission released a new “Action Plan” which instructs member states to explore “potential upper limits to cash payments”.  In the name of “fighting terrorism”, this “Action Plan” discusses the benefits of “prohibitions for cash payments above a specific threshold” and it says that those prohibitions should include “virtual currencies (such as BitCoin) and prepaid instruments (such as pre-paid credit cards) when they are used anonymously.”

This new document does not mention what an appropriate threshold would be for member states, but we do know that Spain already bans certain cash transactions above 2,500 euros, and Italy and France already ban cash transactions above 1,000 euros.

This is a perfect way to transition to a cashless society without creating too much of an uproar.  By setting a maximum legal level for cash transactions and slowly lowering it, in effect you can slowly but surely phase cash out without people understanding what is happening.

And there are many places in Europe where it is very difficult to even use cash at this point.  In Sweden, many banks no longer take or give out cash, and approximately 95 percent of all retail transactions are entirely cashless.  So even though Sweden has not officially banned cash, using cash is no longer practical in most situations.  In fact, many tourists are shocked to find out that they cannot even pay bus fare with cash.

So most of Europe is already moving in this direction, and now this new Action Plan is intended to accelerate the transition toward a cashless society.  The public is being told that these measures are being taken to fight money laundering and terrorism, but of course that is only a small part of the truth.  The following comes from the Anti-Media…

The European Action Plan doesn’t mention a specific dollar amount for restrictions, but as expected, their reasoning for the move is to thwart money laundering and the financing of terrorism. Border checks between countries have already been bolstered to help implement these new standards on hard assets. Although these end goals are plausible, there are other clear motivations for governments to target paper money that aren’t as noble.

In a truly cashless society, governments would be able to track where everybody is and what everybody is doing all the time.  And in order to have access to the cashless system, people would have to comply with whatever requirements governments wanted to impose on their helpless populations.  The potential for tyranny that this would create would be off the charts, but very few people seem greatly alarmed by the move toward a cashless system all over the globe.

Even in the United States there are calls for a cashless system.  For example, the former chief economist for the IMF wrote an article for the Wall Street Journal not too long ago in which he recommended the elimination of the $100 bill…

“There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism. There are substitutes for cash—cryptocurrencies, uncut diamonds, gold coins, prepaid cards—but for many kinds of criminal transactions, cash is still king. It delivers absolute anonymity, portability, liquidity and near-universal acceptance.”

Over in Asia restrictions are being put on cash as well.  Legendary investor Jim Rogers commented on what is currently happening in India during one recent podcast…

The time will come when you won’t be able to buy a cup of coffee without being traced, warns investment guru Jim Rogers. To control people, governments will increasingly seek to hunt down cash spending, he adds.

“Governments are always looking out for themselves first, and it’s the same old thing that has been going on for hundreds of years. The Indians recently did the same thing. They withdrew 86 percent of the currency in circulation, and they have now made it illegal to spend more than, I think it’s about $4,000 in any cash transaction. In France you cannot use more than, I think it’s a €1,000,” said Rogers in an interview with MacroVoices Podcast.

The reason why this is taking place all over the planet is because this is a global agenda.

The globalists ultimately plan to completely eliminate cash, and this will give them an unprecedented level of control over humanity.

One thing that many fear may someday be implemented is some form of microchip identification system.  In order to access the cashless grid, you would need your “ID chip” so that the system could positively identify you, but of course there are millions of people around the world that do not intend to get chipped under any circumstances.

In the old days, you would be labeled a “conspiracy theorist” just for suggesting that they may try to chip all of us one day, but in 2017 things have completely changed.

Just look at what is happening in Nevada.  A bill has been introduced in the state senate that would outlaw the “forced microchipping of people”…

State Sen. Becky Harris said a bill to prohibit forced microchipping of people is not as far-fetched as it might seem, because it happens in some places around the world.

Senate Bill 109 would make it a Class C felony to require someone to be implanted with a radio frequency identifier, such as microchips placed in pets.

The idea for the bill came from a constituent, the Las Vegas Republican said.

If that sounds very strange to you, then you may not know that companies all around the globe are already starting to explore this type of technology.  For instance, a company in Belgium called NewFusion has actually begun to microchip their employees…

In a move that could be lifted straight from science fiction, workers at a Belgian marketing firm are being offered the chance to have microchips implanted in their bodies.

The chips contain personal information and provide access to the company’s IT systems and headquarters, replacing existing ID cards.

The controversial devices raise questions about personal security and safety, including whether they may allow the movements of people with implants to be tracked.

Technology like this often starts off being “voluntary”, but then after enough people willingly accept it the transition to “mandatory” is not too difficult.

We live at one of the most critical moments in all of human history, and the globalists are certainly not going to lay down and die just because Donald Trump won the election.

The U.S. represents less than five percent of the population of the planet, and in most of the world the agenda of the globalists is on track and is rapidly advancing.

The globalists want a unified one world economy, a unified one world religion and a unified one world government.  The election of Donald Trump was a blow to the globalists, but it has also made them more dangerous, more ruthless and more determined than ever before.

And in case you think that using the term “globalists” is a bit strange, the truth is that even the New York Times is using it to describe the global elite and their global agenda.

We are in a life or death battle for the future of our society, and the globalists are never going to give up until they get what they want.  So now is not a time for complacency, because the very future of our country is at stake.