Reality Check: What Venezuela’s National Crypto Means for Decentralization (VIDEO)

 

By Ben Swann, Truth in Media | 

President Trump recently announced a ban on Venezuela’s new national cryptocurrency, the petro.

That’s right—Venezuela created its own national crypto, possibly to circumvent U.S. sanctions.

But could the petro do more than that, and actually catalyze government-controlled cryptos around the world?

This is a Reality Check you won’t get anywhere else.

President Trump signed an executive order March 21 banning all transactions involving digital currency issued by the Venezuelan government, after it began pre-selling its own cryptocurrency, the petro, in February.

The petro differs from other cryptos because, according to the Brookings Institute, “The price of one petro is pegged to the price of one barrel of Venezuelan oil…” and “the petro/bolivar exchange rate … includes a discount factor determined by the Venezuelan government.”

By making that distinction, the Venezuelan government is now responsible for managing multiple currency systems simultaneously, creating what Dash Force News Editor Joël Valenzuela described as “an accounting nightmare.”

But isn’t cryptocurrency supposed to make accounting for transactions easier?

Well, actually it’s not the cryptos but the tech they’re built on. A few episodes back, we discussed how cryptocurrency is backed by radical transparency due to the power of the blockchain.

Rather than being backed by radical transparency and being a “trustless system”, as Valenzuela called it, the petro is essentially “fiat crypto.”

“When you back it with something that doesn’t have transparency, you have to trust the party that is providing the assets that back the coin,” according to Valenzuela. “It ruins its original value proposition.”

So why would Venezuela create the petro in the first place?

Once a crypto is a national currency, it’s subject to many tariff barriers and, in some cases, sanctions. Which is why President Trump made the first major national decision by the U.S. to ban a cryptocurrency. But cryptos like Dash aren’t tied to a government and weren’t created to bypass sanctions.

Once the richest nation in Latin America, Venezuela had suffered wild inflation, plummeting the standard of living and causing uproar from poverty stricken citizens. Many Venezuelans facing economic hardship are putting pressure on the government to stop the bleeding.

Anything to ease their suffering in the short term will be a boon to the tyrants, according to Valenzuela. But because the petro is not truly backed by trustlessness, critics say the government crypto won’t last long. And that presents a challenge to other governments considering creating their own cryptos.

Russian President Vladimir Putin already announced his government will issue its own CryptoRuble, likely sometime in mid-2019, according to CoinTelegraph.

The CryptoRuble is supposed to be directly tied to the ruble, issued by the Russian government and could not be mined.

More governments are likely to investigate the benefits of state controlled blockchain technology.

But remember, the two major selling points of blockchain are radical transparency and decentralization, meaning no one can manipulate the supply or the transactions.

And it’s those two aspects of blockchain that governments aren’t fans of.

Recently Congressman Brad Sherman of California read a statement that called cryptocurrencies “harmful,” and appeared to accidentally admit that cryptocurrency reduces government control of our currency. He said, “It hurts the U.S. government in two ways. Our contr… …our ability to have the US dollar be the chief means of international finance is what has underpinned our ability to impose sanctions…”

So Sherman doesn’t like the lack of “contr…” that the government has over crypto.

But on the other hand, imagine if the U.S. decided to use blockchain to track how our tax dollars are spent. Remember when the Pentagon admitted earlier this year that it couldn’t account for hundreds of millions of dollars?

What could help prevent data loss like this? The blockchain.

Corporations are already testing out the tech to prevent major data breaches like what happened to Target, Home Depot, JP Morgan, Anthem and others.

John Oliver explained the power of the blockchain in a recent episode of his show “Last Week Tonight.” He said, “The blockchain… a database that is nearly impossible to hack or tamper with, and which could possibly improve security, efficiency and trust. That is why big companies like Wal-Mart, IBM and JP Morgan have all been experimenting with blockchain as a way to potentially share and secure data transactions in a reliable, easy to access way.”

So what you need to know is that the blockchain presents an opportunity for governments to create a more transparent financial system. But Venezuela isn’t really doing that with the petro.

The crypto market has and will continue to fluctuate. Some crypto will disappear, some will stick around.

The question is, who is going to control the crypto? If governments do… they will take away the freedom of crypto… but if crypto currencies remain decentralized, then we will be able to keep a radically transparent financial system for the people.

That’s Reality Check. Let’s talk about that, right now, on Twitter and Facebook.

The post Reality Check: What Venezuela’s National Crypto Means for Decentralization (VIDEO) appeared first on The Sleuth Journal.

If Bitcoin Is A Bubble...

Authored by Erik Norland via CMEGroup.com,

Our earlier articles on bitcoin discuss the crypto asset as a currency and a commodity. Both papers focused on the consequences of bitcoin’s defining feature: the asymptotic supply limit of 21 million coins. This gives it an unusual juxtaposition of demand uncertainty and supply certainty (as well as inelasticity). As a currency, it gives rise to a tension between its use as a store of value and as medium of exchange. Like commodities, it has a mining cost of production that both influences and is influenced by price. Finally, we explored bitcoin’s demand dynamics and the problems posed by rising transaction costs and their potential to trigger price crashes. This paper explores bitcoin as an equity, and more specifically as the first equity ever launched by a non-hierarchical “teal” organization, a self-driving entity with an independent force and purpose, its role in promoting blockchain and the potential consequences of bitcoin and blockchain for the economy.

While bitcoin is most commonly described as a currency, one can argue that it also has equity-like characteristics. These arguments can be both narrow and legal in nature as well as deeper and more philosophical. From a legal perspective, many governments are moving to regulate initial coin offerings (ICOs) of cryptocurrencies as they do initial public offerings (IPOs) of equity and other securities. Bitcoin’s ICO occurred in 2009 and at the time was largely overlooked by regulators. No longer. With over 1,000 additional cryptocurrencies being launched during the past two years, regulators worldwide are playing catch up, considering their response to this occurrence. 

On an economic and financial level, bitcoin also exhibits equity-like characteristics. The rewards that miners and those validating transactions on the bitcoin blockchain receive are analogous to stock grants made to employees by corporations. The stock of a company can be seen as an internal currency used to compensate and motivate employees, aligning their interests with those of the organization. To that end, the number of bitcoins in existence is comparable to the “float” of a corporation – the number of shares issued to the public. 

When bitcoin forks into a new currency, such as bitcoin cash, the move is comparable to a corporate action such as a spin out.  In a spin out, a corporation can give each of its shareholders new shares in a division of the firm that is being released to the public as separate and independent entity. In September 1996, for example, shareholders of the communications giant AT&T found themselves owning two stocks: that of AT&T services business, and that of Lucent Technologies, a phone equipment maker, of which AT&T (wisely) divested itself. Likewise, when bitcoin most recently forked, the owner of each bitcoin received one bitcoin cash, a new and separate cryptocurrency. 

While bitcoin is not by any means a traditional corporate entity with earning statements and a board of directors, it could be seen as an equity in its own ecosystem whose value derives from the size and health of that community. What is clear is that if bitcoin is equity, it represents a radically different corporate form than has ever created before.

It appears to be one of the first examples of what sociologist and organizational development specialist Frederic Laloux describes as a “teal organization”: an organization with fluid hierarchy that is adaptive and rules-based where authority is decentralized and distributed among members. That such an organizational form would arise around a distributed ledger is perhaps not surprising but it does, nevertheless, represent a radical new experiment in human organization. In his book, Reinventing Organizations, Laloux describes five organizational types: red, amber, orange, green and teal (Figure 1).  Red organizations are primitive tribal groups led by a single person. Street gangs and the mafia are modern examples. By their nature they are unstable: when the leader dies or becomes impaired, there is a fight for control and the organization can disappear or split if a new leader does not emerge. See Francis Ford Coppola’s “The Godfather” series for details. 

Figure 1: Organizational Theorist Frederic Laloux’s Five Kinds of Human Organizations

Amber organizations, the world’s first and oldest bureaucratic form, represent a radical innovation: an immutable organizational command-and-control hierarchy that survives and outlasts any member.  Organized religion, government bureaucracies and militaries are examples of amber organizations.

Most corporations are either orange or green organizations. Compared to amber organizations, orange ones feature additional agility. While they maintain strict hierarchies, they form more ad hoc project groups, have greater differentiation in expertise, and change the size, scope and form of their hierarchies in conjunction with needs. They can also merge and split apart peaceably. Green organizations take this approach further, often decentralizing decision-making to frontline employees. They tend to be somewhat flatter and management is meant to enable the success of frontline employees in a partial reversal of (or at least a more two-way version of) the usual top-down reporting lines.

Until the creation of bitcoin, teal organizations were mostly theoretical, although Wikipedia could be considered an example. What Wikipedia and bitcoin have in common is that both are essentially non-hierarchical organizations in which users make voluntary contributions to the development of the entity.  For Wikipedia, this comes in the form of writing and editing articles on millions of subjects in dozens of languages in accordance with the rules of the organization.  For bitcoin, the voluntary contributions come in the form of mining bitcoin and validating transactions. What differentiates bitcoin from Wikipedia is that the latter is a not-for-profit organization that requires periodic, voluntary monetary contributions from supporters. Bitcoin, by contrast, rewards contributors economically in a manner somewhat analogous to orange or green corporations but with much stricter, and less political, rules for who gets paid what and why. Little wonder that bitcoin and its crypto peers are described as “the internet of money.”

Bitcoin’s limit on supply to 21 million coins is also open to a useful equity analogy. This limit on the number of coins is one of the reasons why we think that bitcoin is useless as a medium of exchange and is being treated, rightly or wrongly, as a highly volatile store of value, sort of like gold on steroids. Bitcoin could become a more useful medium of exchange if it increased the cap on the total number of coins. So, why doesn’t it? Corporations have the option of issuing more shares. For example, in the early days of the Great Recession, many banks issued more shares to recapitalize themselves. The problem with issuing more shares is that it dilutes the value of the existing equity holders and usually lowers the price of a stock. As such, aside from compensating themselves and some of the employees with share options and share grants, corporate managements avoid issuing more shares like the plague. And normally, equity holders want such share grants to be limited so as not to be excessively dilutive. 

We don’t know if the bitcoin user community will one day allow for the creation of more than 21 million bitcoins.  If they do, it would improve the value of bitcoin as a medium of exchange but it would likely come at the expense of bitcoin holders’ value. As such, we are not sure why existing bitcoin holders would agree to such a change. Nor is it clear why the miners and transaction validators would agree to such a change, which would likely lower their profit margins.

Bitcoin’s Equity Bubble and The Macroeconomy

As of this writing, bitcoin has a market cap of around $280 billion.  While that’s substantial, it’s relatively small compared to the biggest corporations, which are valued north of $500 billion each. It also pales in comparison to the $75-trillion global economy. If bitcoin’s price collapsed to zero tomorrow, economic impact would be negligible.  But what would happen if bitcoin rises another 1,000%, as it has thus far in 2017? If it achieves a $3 trillion market cap and then suffers a price collapse of, say, 80-90%, as it has twice thus far in its short history, what impact will it have on the economy then? Still probably fairly minimal. U.S. equities alone are valued at $25 trillion. If U.S. equities fall 10% and wipe out $3 trillion in value, that alone would not likely cause a recession.

Let’s pursue a truly extreme and hypothetical case to illustrate our point. What if the currency rises to $1,000,000 per bitcoin? It may sound farfetched but it wouldn’t be too surprising given what has already happened to bitcoin prices (Figure 2). That would give it a market cap of around $20 trillion, depending upon how many bitcoins exist by then. If it then collapsed, it could have a negative impact upon the finances of more recent buyers, many of whom might not be financially well off and many of whom would have purchased near the top. If one assumes a -5% wealth effect for drops in asset prices – a dubious but common assumption—then if bitcoin one day lost $20 trillion in market cap, it could shave $1 trillion of consumer spending globally. That would be enough to slow the global growth rate by over 1%.  Moreover, a crypto meltdown could also one day hit investment in computer hardware like during the collapse of technology stocks between 2000 and 2002 which led to a sharp decline in business investment and tripped the U.S. economy into a recession in 2001. A combined wealth and investment effect might drive the global economy into a recession and trigger a backlash against cryptocurrencies if they rally enough in the meantime to have such an impact. Obviously, this is an extreme hypothetical. For the moment, however, we’re not the point where this is a serious concern. And, as Aristotle once commented, ‘probable impossibilities are to be preferred to improbable possibilities.’

Figure 2: Proof That Anything is Possible.

Investors who are buying bitcoin are presumably hoping to find someone else to sell the currency to at a higher price. That said, there is more to bitcoin economically than just the theory of the greater fool. As more people bid up the price, the difficulty of solving bitcoin’s cryptographic algorithms increases. This in turn is driving up investment in more powerful and faster computing technology of both a traditional integrated circuit and non-traditional variety. Indeed, solving cryptographic problems may be one of the first tests facing quantum computers.

The problem is that investors in bitcoin and its peers are mainly out to make profits and not to finance or subsidize the development of distributed ledgers nor more powerful computers. As such, if the price of crypto assets collapsed, investors may be sorely disappointed just as many were when the first generation of internet stocks collapsed between 2000 and 2002, driving the Nasdaq 100 index down over 80%. 

One possible result of the current run up in cryptocurrencies and their possible collapse is that central banks may one day decide to issue their own distributed ledger currencies. Former Fed Chairman Alan Greenspan once compared making monetary policy to driving a car guided only by a cracked rearview mirror. Even now, important policy decisions must be based upon imperfectly estimated economic numbers that are weeks or months old by the time they become available. In 2017, economic policy making is still a vestige of the 20th century. 

Blockchain technology has the potential to one day allow policy makers to issue their own cryptocurrencies that will give them real time information on inflation, nominal and real GDP. It won’t allow them to peer through the front windshield into the future but at least they can look into the rearview mirror with much greater clarity and see out the side windows of the monetary policy vehicle. This could allow them to create the amount of money and credit necessary to keep the economy growing at a smooth pace more easily than they do today. Switching off of the gold standard vastly reduced economic volatility and improved per capita economic growth (Figures 3 and 4).  Moving to blockchain-enhanced fiat currencies could further reduce economic volatility and, ironically, enable further leveraging of the already highly indebted global economy as people find ways to use capital more efficiently. More broadly, crypto-inspired investments could bring about new technologies that we cannot yet imagine.

Whether bitcoin “equity” investors are rewarded for bringing about such “improvements” is another matter. A few investors in the early days of the internet during the 1990s came away enormously wealthy. Many others lost money. The current cryptocurrency boom could end in a similar fashion. 

If Bitcoin Is a Bubble

The truth is that most of the assets that trade on exchanges have been in ‘bubbles’ at one time or another for reasons that have nothing to do with the existence of futures contracts. ‘Bubbles’ by the way are only visible in rear-view mirrors.

Silver experienced a bubble in 1980 when the Hunt brothers cornered the physical spot market. The price soared from $4 per ounce to around $50 and then collapsed. The futures market performed just fine during this period and fulfilled its function of allowing silver users to hedge risk from the price volatility. 

The same can be said of subsequent bubbles, including those in the equity market in 1987 and the Nasdaq in 2000. As the housing bubble popped, beginning in 2007, the banking system suffered severe stress but futures markets functioned with neither interruptions nor bailouts. Daily margining helped to prevent the kinds of overleverage that plagued the banking sector.

Many commodity prices also experienced bubbles during the past decade and saw their prices collapse.  Crude oil fell from $147 per barrel in the summer of 2008 to as low as $36 per barrel by early 2009.  Natural gas prices dropped from $13 per MMBtu in 2007 to as low as $2 per MMBtu by early 2015 while exhibiting bitcoin-like volatility. Metals prices also collapsed between 2011 and 2016 after huge run-ups during the previous decade. In every case, futures markets functioned well.

Figure 3: GDP Growth Per Capita Improved Under the Fiat Currency Standard.

 

Figure 4: Economic Volatility Fell with Fiat Currencies.

 

Does Bitcoin Have Inherent Value?

There are those who argue that bitcoin has no inherent value and is merely a speculative vehicle. With respect to inherent value, we largely agree. Bitcoin has no inherent value. Neither do the U.S., Australian, Canadian or New Zealand dollars, the euro, the yen, the pound, the Swiss Franc or any other government-issued currency. Yet large user networks trade in these currencies in great quantity every day and agree that they do have value in the present moment. Moreover, futures contracts have existed on these fiat currencies for four decades. If fiat currencies have no inherent worth then neither do government bonds. Both are forms of debt whose value derives from taxing authorities and whose value can be eroded by inflation. 

Gold also has little inherent worth. It barely figures into industrial processes. Most gold is hidden away in vaults and that which is not is largely worn as jewelry – pretty but not economically functional, unless conspicuous consumption really does create value. A small amount of gold winds up in people’s teeth.  The fact that gold is prized is a function of both its scarcity and a large user network that accepts that it has value. Bitcoin is no different, only more recent. And, while it can’t be worn as bling-bling, it can be exchanged for hard currency, which is accepted in jewelry stores worldwide.

Only industrial metals, agricultural goods and energy products can be said to really have any inherent worth. Yet despite the critical importance of these goods, prices are not sky-high because supplies are, for the moment, abundant. 

Lots of Pots, Lots of Kettles

While there is much truth to saying that bitcoin has no inherent worth, there are lots of glass houses in this financial neighborhood, so one should be careful about throwing stones. Cryptocurrencies, including bitcoin, are unique. That said, one can understand them better by drawing analogies to a variety of more familiar asset classes, including fiat currencies, commodities and equities.  However unique, bitcoin carries characteristics of all of these assets to which we are more accustomed. 

Bottom line:

• In addition to currency and commodity-like characteristics, bitcoin also resembles equity.


• Bitcoin can create spin offs (hard forks).


• Bitcoin miners and transaction validators are compensated with bitcoin in a manner analogous to companies granting stock to employees.


• Like Wikipedia, cryptocurrencies represent non-hierarchical “teal” organizations in which people make voluntary contributions. 


• Bitcoin is a bit like an equity on an ecosystem that surrounds the crypto asset rather than a traditional hierarchical corporate entity.


• If there is indeed a crypto bubble, it may be financing and incentivizing the creation of a new generation of powerful computers which could have widespread and unpredictable future applications.


• Investors in cryptocurrencies may or may not benefit from popularizing the blockchain and distributed ledgers.


• At the moment, bitcoin is too small to pose any threat to the stability and continued growth of the global economy but this could change if the currency rises to a much higher value and then collapses. 

 

How The Crypto Market Behaves - "It"s A Damn Cycle, Stupid"

Authored by Bruce Hunt via Hackernoon.com,

TL;DR

• Btc leads bull rally.


• Top altcoins follow behind bitcoin.


• Majority of altcoins rally behind bitcoin and top altcoins.


• Huge corrections begins.


• Btc corrects, new floor price.


• Majority of altcoins follow, new floor price as well.


• Drought for months to a year.


• Crypto space waits for “huge event” to build momentum from.


• Rinse and repeat

Photo by @bitcoin.day (unknown source). Contact me if this image belongs to you for proper attribution.

I will always be proud of buying into Bitcoin around $100, just as I will always be proud of my ability to see past the short term and hodl. Having witnessed and participate in bitcoin leading the bull rally back in 2013 to $1,000+ per bitcoin was probably the greatest bitcoin moments of my life. It was better than sex, and even better than buying the bottom.

Tweet by @Arjunbj on Twitter

I could not even describe the stage of euphoria everyone was in. You just had to be there to truly know what it was like. It was a very different experience than today’s new all time high and bull rally. I mean, this was the time when people were skeptical about Bitcoin and it was considered a fraud, anyone who touched bitcoin was a criminal. It was called internet money, or magic money. This was the time when CNBC and other major news outlet would not even cover Bitcoin unless it was about “Dread Pirate Roberts” and “Silk_Road” or other crime-related news associated with Bitcoin.

This was the time when we only had the Winklevoss Twins publicly supporting Bitcoin and involuntarily becoming the face of Bitcoin. This was the time when we didn’t have Venture Capitalists investing in it, when Wall Street didn’t trade it, when the Silicon Valley talents were too busy working on Facebook, Snapchat, Uber, Airbnb and etc to “disrupt” the world we know today.

This was the time, when the word “crypto” was short for cryptography, not fucking digital currencies!

And we didn’t have #Cryptotwitter! We had a handful of exchanges with trollboxes and IRC to orchestrate our ‘pump and dump’.

Bitcoin & blockchain have come so far:

- Only an idea 8 years ago
- $15,000+ per coin now
- Billions in market cap
- VCs investing in it
- SEC issuing statements on it
- Wall St trading it
- CNBC can"t stop covering it
- Silicon Valley talent flocking to it

The future is here.

— Pomp ???? (@APompliano) December 11, 2017

Today, we have bitcoin futures for Wall Street to play with, crypto funds making accredited investors richer, venture capitalists backing and investing in ICOs, Silicon Valley projects and talents transitioning into crypto, and we have banks exploring blockchain technology and making patents in hopes to monopolize blockchain technology for rich ivy-leagued white men only.

"Bitcoin is a bubble because people other than rich white men that went to Stanford are making 100x returns and that makes no goddamn sense."

— KP [Bitcoin $100K] (@_Kevin_Pham) December 12, 2017

Now back to my headline. I mentioned my personal experiences to let you know that I have been there, I WAS THERE, and I think I have more authority on crypto than James Altucher and Tai Lopez combined. So listen to me when I write stuff:

How I think this crypto market behaves:

1) Bitcoin leads the bull rally.

FOMO (Fear of missing out) occurs, non-stop media news coverage, notable bitcoin/crypto figures on television, traditional finance experts analyzes bitcoin’s trend, crypto twitter explodes, new mainstream investors come to stomp coinbase, coinbase loses.

2) Bitcoin reaches new all time high.

People are in stage of euphoria, more hype, more new mainstream investors pouring money into crypto, more figures being interviewed on television, and self-proclaimed bitcoin/crypto experts comes out of their shells.

3) Bitcoin’s price somewhat “stabilizes”, this time its above $14,000+.

The “I told you so” people come out. And,

Niggas put 25$ into bitcoin make 8$ profit and then get on twitter like "idk how y"all do that 9-5 shit"

— Yama (@Yamsleezy) December 1, 2017

Tweet by @Yamasleezy on Twitter

4) A handful of solid altcoins rally behind Bitcoin, $ETH & $LTC leading the altcoins this time.

FOMO continues, reaching new crypto market cap ATH (all time high). Euphoria continues.

5) Top altcoins “somewhat” stabilizes, also reaching new all time high.

The frenzy continues.

Newly minted millionaires and notable figures come out and preaches that blockchain technology and crypto is not about just money, that it is about just being part of the revolution:

6. Have fun and enjoy the greatest wealth creation event of our lifetimes and a transformative technological revolution.

— Ari Paul (@AriDavidPaul) December 10, 2017

Okay…

6) Majority of cryptocurrencies follow.

People buy the cheapest coins in hopes that they go up as well (in which they do, even the dead coins listed on small exchanges get in on the action with $100k+ volume of trading activities in 24 hours).

7) Majority of crypto including Bitcoin and top altcoins price stabilize.

People settle down, hype activities fade, crypto social media, news media shows sign of slowing down.

Millionaires and notable crypto figures come out and warn people the “dangers and risks” involved when investing in cryptocurrencies because they have nothing to say.

8) HUGE Correction starts

Bitcoins and altcoins starts trending down.

PANIC SELL!

Continues to fluctuates for weeks to months, until finding its new floor price, it is usually nowhere near its ATH.

Bitcoin’s first biggest rally was $1000+, when correction started, it went down as low as $200, and finding its new floor price at $400-$600.

9) Crypto depression

Drought for months to a year.

People start regretting not taking profits, not even 30% of their portoflio.

People back to bitching at ICOs and teams because the price is not moving up.

Just a lot of angry people in crypto when we are in the state of “depression”.

10) Back to step 1, rinse and repeat.

Photo by RyKnow on Stocktwits

 

Is This The Biggest Blockchain, Big-Data, A.I., FinTech YOLO Trade Of All Time?

Meet LongFin Corp  - an independent finance and technology company. The Company offers commodity trading, alternate risk transfer, and carry trade financing services. LongFin also provides hedging and risk management solutions to importers, exporters, and small medium business enterprises. LongFin serves customers worldwide.

As iBankCoin notes, it has all of the trimmings of wanton degeneracy on an industrial scale.

• Recent IPO: check


• Small float: check


• Shady as heck: check


• AI company: check

and the cherry on the top...

• a day after coming public, they announce the purchase of a blockchain company: check

Longfin Corp.  a leading global FinTech company, announces the acquisition of Ziddu.com, a Blockchain-empowered solutions provider that offers Microfinance Lending against Collateralized Warehouse Receipts in the form of Ziddu Coins.

Ziddu Coin is a smart contract that enables SME’s, processors, manufacturers, importers and exporters using cryptocurrencies across continents. Ziddu Coins are loosely pegged to Ethereum and Bitcoin. The importers/exporters convert offered Ziddu coins into Ethereum or Bitcoin and use the proceeds for their working capital needs. At the end of the contract, importers/exporters will realize their proceeds and pay back their funds through cryptocurrencies only. Depending upon the risk profile of the counterparty, the interest will vary from 12% to 48%.

 

“The advent of Blockchain technology has caught the imagination of the global financial services industry; blockchain is emerging as a technological revolution that is set to disrupt the financial services infrastructure. Cryptocurrencies such as Bitcoin and Ethereum will act as a global financing currency to avail credit against hard currencies of many emerging markets.” Says Venkat Meenavalli, Chairman of Longfin Corp.

And with all those buzzwords, why wouldn"t it be up 200%!!

 

"Calculating the incalculable..." -  An ironic tagline indeed!

China"s Central Bank Warns "Bitcoin Will Die" - Here"s How

On the heels of a weekend full of threats and promises from governments, bankers, and the mainstream media, Bitcoin was lambasted once again overnight, this time by The People"s Bank of China.

For a brief 6 months or so, China was the dominant region for Bitcoin in the world, but then  - as capital flows accelerated - the government and central bank began to "crackdown" on crypto, first by banning ICOs and then shutting down local exchanges. Volume disappeared...

Looking back at the crackdowns, QZ reports that Pan Gongsheng, a deputy governor of the People’s Bank of China, believes Beijing made the right decisions.

"If we had not shut down bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80% of the world’s bitcoin trading and ICO fundraising, everyone, what would happen today? Thinking of this question makes me scared."

QZ further notes that Pan went on to share a recent column by economist Éric Pichet in the French newspaper La Tribune (link in French). In it, Pichet, a professor at the Kedge Business School in France, makes a familiar argument that bitcoin is a bubble waiting to burst, just like the tulip mania in the 1600s and the Internet bubble of 2000.

He predicts that bitcoin will die of a grand theft, a hack into the blockchain technology behind the cryptocurrency (which actually is unlikely), or a collective ban by global governments.

Pan cited lines from Pichet to wrap up his talk:

As Keynes has taught us, “the market can remain irrational longer than you can remain solvent.”

 

There is only one thing left to do: Sit by the river bank and see bitcoin’s body pass by one day.

But for now, while his comments could have taken the shine of overnight trading, Bitcoin is bid again this morning...

Expect Desperate, Insane Behavior From Government In 2018 – Part 2

Authored by Mike Krieger via Liberty Blitzkrieg blog,

The financial crisis of 2008/09 was the most significant event to happen in my lifetime. That event, coupled with the deeply unethical and corrupt response to it, led to a direct delegitimization of governments and institutions worldwide. It’s precisely this self-inflicted destruction of credibility which opened up the window for the birthing of a new monetary and financial system in the wake of Bitcoin’s emergence in early 2009.

Bitcoin is a system designed to be everything the status quo isn’t. Decentralized, transparent, permissionless, with a well-defined and restricted monetary supply curve.

Given the backdrop upon which it emerged, it’s unsurprising that as more time passes, the more popular it becomes.

Humanity is desperate for a major reboot and an entirely different way of doing things. Bitcoin and other crypto assets offer exactly that opportunity in the realm of finance and money, thus capturing the imagination of millions of the most brilliant and passionate people across the world. Since the status quo stubbornly refused to reform and change the system after the financial crisis, humanity had no choice but to take charge and do it independently at the grassroots level.

One thing that’s become increasingly clear to me as I’ve added years and experiences to my life, is that governments, generally speaking, hate freedom. It’s why something as beneficial and benign as cannabis remains illegal throughout the world, and why people like Jeff Sessions still want to criminalize it even in states where the actual people living there voted to make it legal (see Part 1 of this series). While the fairytale we’re conditioned to believe tells us government exists to protect us and create an environment in which humans can thrive, the reality is quite clearly the opposite. The crooked response to the financial crisis demonstrated this in spades to anyone paying even the slightest amount of attention.

As we transition into 2018, increasing numbers of people will see government and large corporations as the unified threat they represent to the global economy and human freedom. Younger generations are particularly aware, as they’ve been thrust into a parasitic system designed to prey upon them via a lifetime of debt serfdom. The more people learn about the way the world really works, the more they’ll want to reject it and create something entirely different. This is where Bitcoin and crypto assets come into play.

As Bitcoin rose through the $10,000 mark, I noticed an explosion in panic and fear on behalf of those who want to keep the current system in place.  This is to be expected, as Bitcoin’s popularity is and should be seen as a report card on the global status quo. The financial system as it’s currently constructed is being publicly rejected with every uptick in the Bitcoin price, and with every billion dollars added to total crypto asset market capitalization. Naturally, this will make those in charge of the current predatory system, and those who have benefited most from it (oligarchs), increasingly hostile to its popularity.

There are so many recent examples of such hostility it’d be impossible to highlight them all, but I’ll provide you with a few examples so you know what I mean.

First, there was the clip of two billionaires discussing Bitcoin on Bloomberg.

These weren’t the only two billionaires who chirped in about Bitcoin last week. Financial oligarch Ken Griffin came out with the truly original line of comparing Bitcoin to tulips, something I’ve heard non-stop in the more than five years I’ve been involved in the community. Via CNBC:

Citadel’s Ken Griffin said Monday that bitcoin may be in a bubble.

 

“Bitcoin right now has many of the elements of the tulip bulb mania we saw back hundreds of years ago in Holland,” said the billionaire hedge fund manager in an exclusive interview with CNBC’s Leslie Picker.

 

Griffin, however, said he does believe the blockchain technology backing the cryptocurrency is valid.

Griffin’s estimated net worth is $8.6 billion. Makes you wonder what sort of society and economy enriched someone like this to such an extent.

Carl Ichan also chimed in. Via Coindesk:

Billionaire investor Carl Icahn has jumped on the bandwagon of financial bigwigs saying bitcoin is in a bubble

 

The business magnate and founder of Icahn Enterprises told CNBC that the cryptocurrency “seems like a bubble” and that he didn’t understand the hype around bitcoin.

 

Icahn stated:

 

“I got to tell you honestly, I don’t understand it … I just don’t get it. I just stay out of something if I don’t understand it.”

He admits he doesn’t understand it, but calls it a bubble anyway. This is surprisingly common.

Of course, there was the infamous nonsense spouted by Nobel Prize winning economist Joseph Stiglitz who appears viscerally triggered by Bitcoin, saying it has no social function and should be outlawed.

Add to the above a plethora of central banker commentary about how dangerous Bitcoin is, and you know status quo types are beginning to sweat. Which brings me to the point of this piece. With Bitcoin having succeeded beyond the wildest imagination of status quo sycophants, many will begin to clamor and beg for an official response in order to defend their sleazy government sanctioned rackets.

At this point, I could attempt to outline all the various ways the U.S. government and others could target free market crypto assets, but I’m not going to do that. The reason I’m not going to do this is because I think the cat’s already too far out of the bag for the power structure to stop this trend. The benefits to humanity generally, and younger generations specifically, will make any attempts to stop this freight train futile. Any government that tries to do so will simply shoot themselves in the foot.

We stand on the precipice of historical shifts in relative economic power.
Those regions that embrace crypto assets will thrive, those that reject them will die.

— Michael Krieger (@LibertyBlitz) December 4, 2017

Unfortunately, most governments exist to protect and defend the status quo, versus doing what’s best for the public. If government actually cared about the future, every single country would be competing aggressively right now to be the most crypto asset friendly region on earth. The human brainpower and talent voluntarily dedicating their lives to this space is extraordinary. It’s a global movement and community the likes of which has rarely, if ever, emerged on this planet.

The smartest people on earth are dedicating their lives to Bitcoin and other crypto assets.

You want to bet against that?

— Michael Krieger (@LibertyBlitz) December 1, 2017

That tweet above more or less summarizes how I see the situation. Anyone who bets against this overall space will ultimately end up historical roadkill. The emergence of Bitcoin and the crypto-asset ecosystem generally is one of the most liberating, paradigm disrupting events that’s ever manifested on this planet. Of course, entrenched interests won’t like it and will try to fight back, but they’ll be no more successful than those who wanted to ban the printing press.

Bitcoin is achieving what global central banks completely failed at. Animal spirits, a dynamic economy and revolutionary innovation.

— Michael Krieger (@LibertyBlitz) November 26, 2017

The above occurred despite governments having placed many roadblocks in the way. Imagine the innovation explosion that would be unleashed if governments decided to support this extraordinary community rather than fight it? At over $11,000 per bitcoin, a lot of money’s been made. While hodlers certainly prefer to spend fiat as opposed to bitcoin, the higher the price rises, the higher the percentage of their net worth is denominated in crypto.

If the U.S. government actually cared about dynamic economic growth as opposed to merely protecting status quo interests, it would unleash the power of this crypto asset wealth creation machine by eliminating taxes on gains. If no capital gains were owed, it’d encourage people to spend some of this newly created wealth in the economy. It’s an obvious move, but because governments are mainly about control and power, their initial reaction likely will be to go in the opposite direction.

The opportunities available right now for regions and nations willing to be openminded about Bitcoin and crypto assets generally are extraordinary. Government roadblocks and bans cannot and will not kill the spirit of this community and the ideals that motivate it. The only question is which regions/governments will put arrogance and control aside to do the right thing by their people. We’ll find out the answer to that question soon enough.

As a declining global empire, the U.S. is unfortunately prone to doing particularly stupid things in order to protect the predatory system beloved by the oligarchs in charge. On the flip-side, there are plenty of wealthy Americans and others with influence who see Bitcoin for the incredible opportunity it is, and cooler heads may prevail. The truth is nobody knows exactly how all of this will turn out.

In the short-term, we’re likely to face increased push back and we should be mentally prepared to face it. In the longer-term, the future appears exceptionally bright.

*  *  *

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Will The Blockchain Render This Multibillion-Dollar Industry Obsolete?

Blockchain technology is on the cusp of disrupting another billion-dollar industry that most Americans (particularly members of the millennial generation) rarely think about: Boring old title insurance.

Since the blockchain technology craze swept the US in 2015, technologists working to pinpoint new use-cases for the technology have been squawking about its potential to revolutionize how governments store and track ownership of land. The system used by most modern governments was developed centuries ago: In the US, property titles are public documents recorded with roughly 3,600 counties, towns and other jurisdictions. In some cases, the record is available only in writing and can be viewed only by visiting a town clerk’s office. Since the system in its present form leaves plenty of room for error, many homeowners purchase title insurance to protect against the possibility that their claim to the property is challenged – either because the records were lost of destroyed, or for any other reason.

Several countries, including Ukraine, the Republic of Georgia, Honduras and Sweden have already partnered with Bitfury and other blockchain startups to develop a blockchain-based title-registry system. As WSJ reports, some of these systems are nearly ready to be implemented.

For anybody familiar with how blockchain technology works, the utility here is obvious: Since the blockchain provides an immutable record of transactions, storing property titles on a blockchain-based system would substantially decrease the risk that a landowners’ claim is challenged. WSJ posits that title insurance could be among the industries that"s most ripe for blockchain disruption. It"s just one example of a multibillion-dollar industry that could be rendered obsolete overnight.

To help get ahead of the problem, WSJ says many title insurers are investing resources into studying and developing blockchain technology, which could allow these companies to pivot by developing and managing the systems that otherwise would’ve put them out of business.

As a precaution, many title-insurance companies are studying the use of blockchain to ensure they are “in the drivers’ seat versus being in the passenger’s seat” if these changes take place, said Steven Gottheim, senior counsel of the American Land Title Association, a trade group. “The lesson you can see in the industries that have been disrupted” is that the greatest danger is to companies that “don’t realize new technology is coming,” he said.

 

Mr. Gottheim said initial tests of the use of blockchain technology for title recording by IBM and startups like R3 CEV look promising. But he pointed out that enormous hurdles face the use of blockchain technology and businesses are in the “really early stages of trying to figure out if this is hype or reality."

Several US states are also studying the technology, hoping to develop land-title registries of their own. Unsurprisingly, sparsely populated states with vast tracts of uninhabited land are leading the charge. According to WSJ, the state that’s furthest along is Vermont. The state has already passed legislation legalizing the use of blockchain technology to store land titles for when the technology is finally ready.

Several state governments in the U.S. also are paving the way for the use of the new technology. Earlier this year, Arizona Gov. Doug Ducey signed legislation that enables local municipalities to substitute blockchain technology for the conventional method of recording property ownership and sales. “It establishes blockchain as a usable format for smart contracts,” said Patrick Ptak, a spokesman for the governor.

 

Last year, Vermont enacted a law that said that transactions recorded with blockchain technology “have the presumption of admissibility from an evidentiary perspective,” said Mr. Pieciak. It would allow people to “authenticate a blockchain real-estate transaction whether it’s over a title dispute or divorce proceeding,” he said.

 

Mr. Pieciak said the legislation is part of an effort by Vermont to encourage financial technology companies to base themselves in the state or to boost their businesses through the use of blockchain technology in a wide range of industries. “We’re looking at ways Vermont could do anything to make our regulatory environment more hospitable,” he said.

 

Mr. Pierciak said a number of questions remain, such as how mortgages would be incorporated and how title insurance world work. But technically local municipalities in Vermont now have the legal framework to switch to recording deeds using blockchain technology, although none has made that move so far.

As we’ve previously pointed out, realtors in some parts of the US are warming to the idea of settling home sales in bitcoin. Several of these transactions have already conducted, including one homeowner in Texas who purchased their home with bitcoin. These transactions are also happening outside the US: A San Francisco-based startup named Propy in September said ethereum had been used to buy an apartment in Ukraine.

Someday, real-estate transactions might be conducted in bitcoin, and stored in a blockchain-based ledger.

“I think it’s going to happen much faster than everyone anticipated,” said Alex Voloshyn, Propy’s chief technology officer.
 

"It"s Been Dismal" - Gold Coin Sales Slump As "Bugs" Bounce To Bitcoin

Gold prices are rallying, but retail gold dealers and shops are struggling to survive.

As The Wall Street Journal reports, businesses that sell gold coins and other products made from the precious metal usually thrive during years like 2017.

Gold futures have gained more than 10%, boosted by a weaker dollar and by big investors looking for a haven during recent geopolitical tensions surrounding North Korea and Iran.

But despite higher bullion prices and solid demand from not-American-central banks, American Eagle Coin sales by the US Mint in October 2017 are down 87% YoY for gold and down 73% YoY for silver...

h/t @Gloeschi

The weak demand is taking a toll on gold dealers, some of whose sales have dropped as much as 70% compared with last year, according to Jeffrey Christian, managing partner at market-research firm CPM Group.

“It’s been absolutely dismal," said Peter Thomas, senior vice president of metals at Zaner Precious Metals, a Chicago precious-metals dealer.

 

“A lot of guys have been really hurting.”

And as WSJ notes, one reason for the declining business: A number of retail buyers are turning to cryptocurrencies like bitcoin to store money during periods of stress, some analysts say.

Bitcoin has “taken some of the dedicated interest in gold away from gold,” said Mohamed El-Erian, chief economic adviser at Allianz SE, who warned at a CME Group event in September that cryptocurrencies could pose a long-term threat to the precious metal.

 

While gold buyers historically have looked to the precious metal as a place to hide during a market selloff, some suggest that virtual currencies are a new “hedge against chaos.”

 

Mr. Thomas of Zaner Precious Metals said authorized gold purchasers who buy directly from the U.S. Mint have been getting hurt, too, because of waning dealer demand.

 

“They end up having to stockpile coins,” he said.

 

“You would expect gold to be rocking at the present time, but it’s not," said Ross Norman, head of London-based gold dealer Sharps Pixley.

Furthermore, small investors appear to be getting gold exposure though ETFs with more than $8.5 billion flowing into State Street’s gold ETF, the largest gold ETF, since the end of 2015, reversing three years of net outflows and marking the biggest period for inflows since 2009, according to FactSet.

Jim Rickards (and Goldman) recently opined on the Bitcoin vs Gold debate...

From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.

There’s no natural relationship between the two (what traders call a “basis”).

The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.

Goldman Sachs has released a new research report that comes down squarely on the side of gold as a reliable store of wealth rather than bitcoin, which is untested in market turndowns.

Precious metals like gold are “neither a historic accident or a relic,” said the report.

It affirmed that gold is more durable than cryptocurrencies because cryptocurrencies are vulnerable to hacking, government regulation and infrastructure failure during a crisis.

Goldman also reminds us that gold holds its purchasing better than cryptocurrencies and has much less volatility. In dollar terms, bitcoin has had seven times the volatility of gold this year.

Since Goldman’s research department has not been notable as a friend to gold, the fact that they favor gold over bitcoin is highly revealing in more ways than one.

I don’t deny that bitcoin has made some people multimillionaires, but I also believe it’s a massive bubble right now.

I don’t own any bitcoin and I don’t recommend it. My reasons have to do with bubble dynamics, potential for fraud and the prospect of government intrusion.

So bitcoin evangelists seem to think I’m a technophobe. But I’ve read many bitcoin and blockchain technical papers. I “get it” when it comes to the technology.

I even worked with a team of experts and military commanders at U.S. Special Operations Command (USSOCOM) to find ways to interdict and disrupt ISIS’ use of cryptocurrencies to fund their terrorist activities.

I will say, however, that I believe in the power of the technology platforms on which the cryptocurrencies are based. These are usually called the “blockchain,” but a more descriptive term now in wide use is “distributed ledger technology,” or DLT.

So although I am a bitcoin skeptic, I believe there is a great future for the blockchain technology behind them.

I’m not telling anyone not to own cryptocurrencies, but you need to do your homework before you do.

*  *  *

Finally, this gentlement seems to sum up the general perspective...

“You can’t be parked in gold," said Casey Frazier, a government administrator in Woodstock, Conn., who used to hold nearly a third of his savings in gold.

He has moved some of his money into the booming stock market, and now his precious-metals allocation is down to 10%.

Gold vs. Bitcoin: Goldman Sachs Weighs In

Authored by James Rickards via The Daily Reckoning,

I write and speak a lot on gold. In contrast - and this surprises some people - bitcoin is my least favorite topic. I’m made my views known many times.

Still, interviewers love to get into the “gold versus bitcoin” debate. I continually get dragged into discussing bitcoin in interviews on TV, radio and the internet. So I discuss it whether I want to or not.

From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.

There’s no natural relationship between the two (what traders call a “basis”).

The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.

Goldman Sachs has released a new research report that comes down squarely on the side of gold as a reliable store of wealth rather than bitcoin, which is untested in market turndowns.

Precious metals like gold are “neither a historic accident or a relic,” said the report.

It affirmed that gold is more durable than cryptocurrencies because cryptocurrencies are vulnerable to hacking, government regulation and infrastructure failure during a crisis.

Goldman also reminds us that gold holds its purchasing better than cryptocurrencies and has much less volatility. In dollar terms, bitcoin has had seven times the volatility of gold this year.

Since Goldman’s research department has not been notable as a friend to gold, the fact that they favor gold over bitcoin is highly revealing in more ways than one.

I don’t deny that bitcoin has made some people multimillionaires, but I also believe it’s a massive bubble right now.

I don’t own any bitcoin and I don’t recommend it. My reasons have to do with bubble dynamics, potential for fraud and the prospect of government intrusion.

So bitcoin evangelists seem to think I’m a technophobe. But I’ve read many bitcoin and blockchain technical papers. I “get it” when it comes to the technology.

I even worked with a team of experts and military commanders at U.S. Special Operations Command (USSOCOM) to find ways to interdict and disrupt ISIS’ use of cryptocurrencies to fund their terrorist activities.

I will say, however, that I believe in the power of the technology platforms on which the cryptocurrencies are based. These are usually called the “blockchain,” but a more descriptive term now in wide use is “distributed ledger technology,” or DLT.

So although I am a bitcoin skeptic, I believe there is a great future for the blockchain technology behind them.

I’m not telling anyone not to own cryptocurrencies, but you need to do your homework before you do.

Why Is Amazon Meeting With Banking Regulators?

While the financial media has been preoccupied with the idea that the banking business is at risk of being “Amazon’d” by the blockchain, the banks themselves are worried about being “Amazon’d” by…well…Amazon…

Or at least they should be, as American Banker’s Lalita Clozel explains in a piece tracing large tech companies’ attempts to forge ties with banking regulators in anticipation of someday leveraging the vast quantities of customer data to outmuscle the banks in their own industry. Meanwhile, even the most optimistic cryptocurrency enthusiasts concede that blockchain technology continues to grapple with issues of scalability that, for now at least, will make it incredibly difficult to compete with banks.

A group of companies that includes Google, Facebook and Amazon recently formed a lobbying group to help them explore the feasibility of entering businesses like lending and loan-intermediation.

Technology giants like Google, Amazon, Facebook and Apple are showing an increasing interest in engaging with federal banking regulators, a move that underscores Silicon Valley’s growing involvement in the financial services arena. In recent years, such firms have formed a lobbying group, Financial Innovation Now, that is staking out their view on various hot-button topics. But some firms are also meeting individually with government agencies.

Furthermore, both Amazon and Square have taken meetings with the OCC.

For example, Amazon lobbyists met with the Office of the Comptroller of the Currency starting in the second quarter of 2016, and again this year to discuss “issues related to mobile payments and payment processing, financial innovation, and technology," according to publicly available lobbying disclosures.

PayPal, meanwhile, met with OCC officials in the second, third and fourth quarters of last year to discuss “mobile payment innovation” issues related to underserved customers and remittances and money transfers, according to its disclosures.

Even before this latest lobbying effort, both companies had already launched forays into small-business lending (Amazon’s SB lending businesses saw its revenue double over the past year). Apple, meanwhile, has for years been lending to customers hoping to purchase its products. But before deciding whether to expand their financial services offerings, tech companies must first understand what regulatory obstacles might exist.

“People are kicking the tires,” said Lawrence Kaplan, a bank lawyer of counsel at Paul Hastings. “People are asking questions: What does this entail? Can you get us up to speed if we want to pull the trigger?”

In the spirit of helping to shepard financial innovation, the OCC earlier this year created a national fintech charter that financial technology (and big tech) companies can use to circumvent certain restrictions, easing their transition into the financial-services business.

The charter, Clozel notes, was adopted after an aggressive lobbying campaign by large tech companies. One of the most logical applications for leveraging the vast troves of personal data routinely harvested by firms like Facebook and Amazon would be intermediation – or connecting customers with lenders for a small finder’s fee.

Large technology firms are “really interested in the intermediation piece, where you have access to all that data,” said Paul Nash, the former senior deputy comptroller and chief of staff under Comptroller Thomas Curry, who began discussing the possibility of a fintech charter early last year. “All of them are thinking about it.”

The next lobbying objective for big tech is to convince regulators to force banks to provide access to their financial data through an Application Programming Interface, or API, that would allow tech companies like Amazon to create almost instantaneous connections to banks’ transaction processing networks, allowing them to take over more consumer-facing businesses.

In summary, while many a think piece has been written about financial services companies and banks trying to become more like technology firms, the irony is that tech firms are also trying to be more like banks.

“There"s been lots of interest by financial services firms in technology companies and fintech companies,” said Kevin Petrasic, a partner at White & Case. “Some tech firms are now looking in the other direction.”

In other words, it’s only a matter of time before Amazon Prime customers will be able to make purchases on Amazon’s marketplace using an Amazon credit card.
 

Caracas Or Catalan - Nightstick Democracy At Its Finest...

Authored by Simon Black via SovereignMan.com,

The last several days in Venezuela have been absolutely mind-blowing.

Pretty much all the stories you’ve heard are true– countless people eating out of garbage cans, the appalling shortages of basic staples like food, medicine, and even soap… and the lines.

Oh boy, the lines.

The longest lines I saw, in fact, were not at grocery stores, but at banks.

Hundreds of people were queuing up, many of them to pull money out of their accounts to exchange cash on the black market.

Lines snaked through a bank’s cavernously large lobby, continued outside, wrapped around the entire building, and terminated at some point down the street.

Making a simple withdrawal can be an all-day affair.

Perhaps most surprising was how much Venezuela deteriorated since the last time I came here. And I’m concerned that it will continue to get worse… perhaps even much worse… until it gets better.

As I mentioned last week, long-term this place is a veritable gold mine. The natural resources, cheap hydropower production, port facilities, low-cost workforce, abundant factories, etc.

Venezuela is a manufacturer’s dream.

But none of those opportunities can come to pass until this government collapses and there’s a complete reset.

Undoubtedly the Venezuelan government will eventually run out of money, probably within the next two years. It’s nearly a mathematical certainty.

And when they’ll no longer be able to pay the scumbag police and military who shoot peaceful protesters in the face, it’ll be game over.

But until then they’re doing everything they can to strengthen their grip.

A few months ago the government held a sham election here, where citizens exercised their ‘democratic’ right to choose among a bunch of puppet candidates hand-selected by the government.

You can still see the billboards up across Caracas telling people to go vote between the choices given to them by the government. Freedom!

You’d think that such oppressive tactics to keep a population under control would only exist in brutal dictatorships like Venezuela or North Korea.

But then we witnessed the events in Spain over the weekend where millions of people in the Catalan region went out to vote on independence for their region.

Caracas? ... or Catalonia...

The Spanish government loves democracy so much that they sent tens of thousands of police around the region to confiscate ballots, shut down polling stations, and beat-up peaceful citizens.

This is ‘Nightstick Democracy’ at its finest.

And in a most Orwellian statement, Spanish Prime Minister Mariano Rajoy told reporters later on Sunday that “there was no referendum in Catalonia today. . .”

It was like some Jedi mind trick trying to hide the fact that more than 2 million Catalans voted for independence.

I’m reminded of that old quote, often attributed to Soviet dictator Josef Stalin, that basically says “It’s not the people who vote that counts, it’s the people who count the votes.”

(According to the memoirs of Stalin’s personal secretary, the actual quote was “I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this– who will count the votes, and how.”)

This is pretty pathetic: we are ‘free’, as long as we only vote when they give us permission and choose among the options that they provide us.

A few months ago when writing about Venezuela, I concluded that blockchain technology could fix this.

Think about it– in 2017, it’s pretty ridiculous that people have to go down to a polling station to stuff a paper ballot into a box, all of which will be counted by hand.

Blockchain technology would ensure that everyone registered has exactly one vote, and that every vote is counted once.

No more lost ballots. No more tampering. No more miscounts and recounts. No more voter fraud.

Plus, blockchain voting can be cryptologically hashed to ensure secrecy, as well as provide an easy way for ANY candidate to be nominated.

And compared to the cost of legions of human beings required to supervise and count votes, in addition to the logistical cost of printing and moving all that paper, a Blockchain vote is MUCH cheaper.

A blockchain vote would be a clear, independent, indisputable expression to the world that millions of Venezuelans reject their government… and that millions of Catalans desire independence from Spain.

This isn’t some far-fetched idea. These tools already exist, as do the means to implement them, including identity validation to ensure that every registrant is eligible to vote.

When the game is rigged, there are really only two choices available: stop playing. Or change the game.

And this is absolutely game-changing technology.

Do you have a Plan B?

China's ICO Crackdown Boosts Hong Kong's Hopes Of Becoming Blockchain Hub

China’s decision to shutter digital-currency exchanges based on the mainland, a strategy meant to extinguish the rampant fraud and abuse associated with initial coin offerings, or ICOs, is brightening Hong Kong"s hopes of asserting itself as a hub for blockchain technology.

As Bloomberg reports, while China has at least nominally embraced blockchain technology - even building a prototype digital yuan – Hong Kong’s city government has gone a step further by encouraging blockchain startups to set up shop in the city. One firm run by Johnson Leung, who has found success in finance and shipping, and now runs a blockchain startup, is focusing on applications for container ship operators.

The city’s embrace of blockchain is its latest attempt to nurture a domestic technology industry that could compliment the city’s dominance in banking and shipping. But as Bloomberg notes, betting on blockchain, a technology that has generated a ludicrous amount of hype, much of it undeserved, could be a risky proposition. Despite Hong Kong’s status as a financial hub, the city, one of the most expensive in the world for average working families, has zero “unicorns” – a term for startups valued at over $1 billion.

Skeptics say it’s a risky bet on an unproven technology - one with more than its fair share of hype and, in some cases, fraud. But a growing number of Hong Kong entrepreneurs and policy makers are convinced the online ledger system that underlies cryptocurrencies like bitcoin will eventually reshape everything from financial services to supply chains. They say the city’s laissez faire approach toward regulation, along with its expertise in finance and logistics, make it a natural hub for blockchain startups.

“I don’t see why Hong Kong can’t be a leader of blockchain technology,” said Leung, who co-founded 300cubits.tech after more than a decade in the financial industry that included stints as a research analyst at JPMorgan Chase & Co. and Jefferies Group LLC. “It’s so new that it’s not like any country has a huge advantage compared to us.”

As Bloomberg explains, the city’s government has been throwing resources at the technology, developing its own digital currency and testing different blockchain use-cases.

The city’s monetary authority is developing its own digital currency and is testing blockchains for trade finance, mortgage applications and e-check tracking. Hong Kong’s securities regulator has joined R3, a global consortium that develops blockchain technology for financial transactions, while a government-backed research institute has worked on a blockchain-based system for tracking property valuations, among other initiatives. Hong Kong Exchanges & Clearing Ltd., the city’s publicly-traded exchange monopoly, plans to start a blockchain platform for early-stage companies and their investors next year.

“Blockchain is a very high priority for us,” said Charles d’Haussy, head of fintech at InvestHK, a government economic development agency.

To be sure, the city is, like China, imposing restrictions on some of the shadier aspects of the blockchain ecosystem – namely ICOs, a new financing trend that involves selling a digital token that’s tied to a given platform or product. In theory, these tokens should get more valuable as the underlying product becomes more widely used. Some ICOs have raised millions of dollars, all without a working prototype – only a white paper that sketches out the company’s idea.

That doesn’t mean Hong Kong is giving the industry carte blanche. This month, the city’s Securities and Futures Commission told investors to be on the lookout for fraud in initial coin offerings - a form of cryptocurrency fundraising - and warned ICO issuers that they may be subject to local securities laws.

“We have to be very careful with this because on the one hand, we encourage innovation and free markets, but on the other hand, we do have to look after our small investors,” Paul Chan, Hong Kong’s financial secretary, said in a Sept. 11 interview.

Still, the city is taking a softer approach toward regulation than China, which banned ICOs this month and called for a halt in trading on domestic cryptocurrency exchanges.

In its battle to lure blockchain companies, Hong Kong is competing directly with its longtime rival, Singapore, which has also taken many steps to explore uses for blockchain technology while also encouraging the creation of a thriving startup community. As Bloomberg points out, Hong Kong doesn’t have a great track record when it comes to tech startups. Its Cyberport business incubator has been criticized as a housing development in disguise, while many local workers are reluctant to leave their steady jobs for riskier ventures because of the extremely high cost of living.

Building a sustainable blockchain hub in Hong Kong won’t be easy. Many applications for the technology, including Leung’s proposal to create digital tokens for the shipping industry, are still largely theoretical. (Leung says his tokens could be used in conjunction with so-called smart contracts to reduce the risk of default on shipping agreements.)

At the same time, competition to lure the most promising blockchain firms is fierce. Singapore, Hong Kong’s biggest regional rival, is pouring resources into its local fintech industry, as are other financial hubs including Dubai.

One official with InvestHK, the portion of the city government responsible for luring foreign investment, said that the city is keenly aware of the hype surrounding blockchain but has decided to move ahead anyway.

“There is hype, and there is the fast grab of money with ICOs in some cases,” d’Haussy said. “But what we are looking at building here in Hong Kong is an infrastructure for new businesses and existing businesses, to make sure the technology and innovations remain a key enabler for financial sector growth.”

So far at least, blockchain has been closely associated with fintech, or financial technology, which city officials believe should give Hong Kong an edge in attracting companies, given its large financial sector. Many of the city’s early startups include financially focused firms like BitMEX, a bitcoin derivatives exchange; Bitspark, a remittance platform; and Kenetic Capital, a blockchain investment firm. While Hong Kong doesn’t publish statistics on the growth of the local blockchain industry, InvestHK’s d’Haussy said anywhere from 10 to 20 companies are expected to raise funds via ICOs in the city over the next six months.

However, with the technology still largely unable to scale, the question of whether these companies will be able to survive long enough to achieve profitability before their backers throw in the towel. Not every function – especially not in the world of finance – is suitable for automation and decentralization. What works with blockchain, and what doesn’t, has yet to be thoroughly explored.

Which is, of course, one of the reasons why the industry is so interesting: The risks are large, but the payoffs, in terms of job creation and the attendant tax-revenue and growth bump, is potentially huge.