Why Cryptocurrencies will fail… eventually.

3년 전

Everyone here on Steemit is earning at least some small amount of cryptocurrency by posting and curating the site. I’m sure that it has occurred to many that, if successful here, a decent amount of Steem powered cryptocurrency could be “earned”.

However, before any of these “earnings” can be used two things need to happen: 1) you need to convert from Steem or SBD to some other more useable cryptocurrency, such as Bitcoin and 2) the other cryptocurrency (i.e. Bitcoin) needs to maintain its value and usability. Requirement number 1, converting from Steem to something useable, is not a problem. However, number 2 is a potentially huge problem.

I know, I know, this is heresy. “Bitcoin is here to stay and it is going to take over the world” say the believers. I say, no chance. This isn’t to suggest Bitcoin might not be around for a while longer in its current form and you might even make a profit of it. I’m just saying that it is doomed in the long run.

Why?

It is simple. The powers that be will make sure the shine comes off Bitcoin and the current owners will abandon it to die.

“Can’t be man! Bitcoin is the future!”

Nonsense. First of all, Bitcoin is a nothing-burger that is solely based on the confidence of speculators. It is just a bunch of 1s and 0s on the internet with no intrinsic value. You know it. I know it. Everyone knows it. Unlike the 1s and 0s created by national governments which are “by law” deemed to be money, Bitcoin is voluntary and attempts to go around national laws and power structures. This is what dooms it.

“But energy is used up to create Bitcoin through mining! This makes it real.”

No it doesn’t. Energy is used up by gamers as they play their games, but this doesn’t make what they do a monetary, tradeable product. Lots of things use up energy and computing power. To say this somehow magically makes Bitcoin “real” is a fallacy.

“But, Idiot, I can use my Bitcoin to buy stuff off the internet right now! I can even get a debit card to buy regular stuff.”

Yes, for the moment this is true. But that is simply because national governments didn’t bother opposing Bitcoin when it was introduced. At first, it was such a small player that national governments simply didn’t care. But, let’s not forget, the real destructive and coercive power in this world is wielded by national governments. This real power absolutely dwarfs any imaginary power that Bitcoin and its owners think they have. Bitcoin started a new game, which was smart. At first there were no opponents. This led speculators to believe that no significant opponents would ever enter the game, and that is just plain wrong.

First of all, governments demand a monopoly on coercive power and on money. This isn’t good or fair, but that is an iron-clad fact. Bitcoin is trying to break this monopoly. And, now that it has started to look like a success, the not-so-friendly eyes of governments are just now starting to direct their glassy gaze at the upstart. At some point, the hammer will fall.

We have already seen a few first jabs. The Chinese government is starting to weigh-in. JP Morgan’s Jamie Dimon has declared Bitcoin to be “a fraud”. This is only the beginning. Soon the big boys will start to play hardball.

How will this happen? It isn’t what you think. They probably won’t even bother to “ban” or “outlaw” cryptocurrency. They don’t need to. All they have to do is start kicking Bitcoin in the nuts: over and over and over and over and over again.

For those of you who have been around for more that a couple years and who have watched the way that precious metals have been throttled for decade after decade you might know what I’m talking about. You see, the earlier threat to the monopoly of governments over money was precious metals. Many logical people over the years have speculated that governments would overspend (which actually happened) and that the ever-increasing debt of the world would balloon (which actually happened) and that OBVIOUSLY gold and silver would ROCKET TO THE MOON!!! (which never happened). In a free and logical world, gold and silver SHOULD have rocketed. Unfortunately, governments decided to kick them in the nuts: over and over and over and over again. This nut-kicking of precious metals and PM investors continues to this day.

Now, not everyone abandoned gold and silver despite their hopes and dreams being shattered. This is because of the honest truth of the fact that gold and silver really are something rare, precious and real. So, the PM investors soldier-on hoping that someday something good will happen and their decades of patience will pay off. This is a possibility.

On the other hand, Bitcoin and the Cryptocurrencies are really just a bunch of valueless 1s and 0s so once the momentum and belief in the MOON SHOT is gone, everything will be gone.

“But governments can’t just sell Bitcoin to collapse the price, they have to buy it from current owners!”

So? Ever heard of AI Trading Bots? Governments have an infinite supply of their own national funny money to start stealthily building up a gigantic-sized Bitcoin position. They don’t have to do it quickly. They can just hoover up loose coins, here and there, over a couple of years until they have a mini-mountain of it. They can even mine some if they feel like it. Then, once they have their hoard ready, it begins. The trading bots will jam the price down to invoke some panic: the sell orders will flow like a river. Once the panic spreads, they’ll buy some back at a lower price. As soon as the panic stops and some hopeful “bargain shoppers” arrive, that is when the second wave will hit and flood the market. Then comes the third wave down. And so on. And so on….

During the 2008 financial crisis most junior mining stocks went down 80-95% in a short period of time. This is what happens to real companies in a panic. What will happen to a nothing-burger once the panic starts? It won’t be pretty.

“But, I will just hold on until there is a meaningful recovery!”

Sure you will. There is an old saying: “the market can remain irrational longer than you can remain solvent”. This is doubly true when national governments will be kicking you while you’re down. By investing in Bitcoin you have challenged their power. You have flipped governments the middle finger thinking that they wouldn’t do anything about it. Don’t be too surprised when you turn out to be wrong: dead wrong.

I’m not telling you this stuff because I want it to happen. I don’t. I’m telling you because national governments are bullies and they will take your lunch money. So, enjoy the golden age of cryptocurrencies while it lasts. Sooner or later, the government reapers will take it all down.

This is not investment advice. Do not buy or sell anything based upon this post. This is simply what I believe. Take it for what it’s worth.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
STEEMKR.COM IS SPONSORED BY
ADVERTISEMENT
Sort Order:  trending

Do you think 'paper' have an intrinsic value ? People value it , if not, its only just like a 'toilet paper'. Bitcoin is modern acceptance of money.

·

Hello @Suhaimi. No, I do not think paper money has "intrinsic value". Neither paper money nor cryptocurrencies have any intrinsic value.

This is not an argument about "value". It is an argument about "power". Right now, governments (who are generally speaking corrupt and abusive) have a monopoly of coercive power and a monopoly on money. They are the big kid on the block. Bitcoin wants to threaten this monopoly; therefore, governments have everything to lose. Do you think they want the tax slaves to taste freedom and actually get used to it? No way.

Since governments have printing presses and banks that can make money out of nothing, it is explicitly in their interests to sabotage Bitcoin and the other cryptocurrencies. Governments have been sabotaging precious metals NON-STOP for DECADES. They never let up. Do you actually think that they are going to let cryptocurrencies slide? Not a chance.

Will cryptocurrencies keep some momentum for another short while? Maybe. But, don't be too shocked when the assault comes. Sorry to be the bearer of bad news.

Remember this: power corrupts and absolute power corrupts absolutely. Governments have the power. If you don't believe me, just wait and see.

Understand your point but don't fully agree...the 1's and 0's that makes up bitcoin is today's gold and silver and even future currency...we the people don't believe in the long term viability of continually printed paper currencies that aren't worth the ink thats on them...and gold and silver have lost their shine...first...they aren't scarce...just controlled...secondly this is no longer the wild west where we carry around gold nuggets to buy supplies...frankly...the government can't tell me what I wish to use to barter with...welcome to the computer age...and unless governments around the world decide to shut off the electricity or take down all the cell towers...this is a currency having no borders...its the peoples' currency...

·

Greetings @bobreedo. Thanks for your response.

As far as barter goes, yes, governments can make Bitcoin illegal. Will they? Probably not. It isn't necessary. All they need to do is make it highly unattractive and the vast majority of users will walk away. If cryptocurrency speculators are handed very large financial losses, over and over, for a period of years, they will tap out.

Here is a thought experiment: would you invest $10,000 in Bitcoin today if you were pretty sure that the US Fed and Chinese Central bank were going to hit it with a full assault?

The bottom line is this: if they want, almost any central bank of any decent sized country could absolutely steamroll Bitcoin if they really felt like it. They could make it rain sell orders and the rain wouldn't stop. Given this reality, do you really believe that none of them are going to do it? Do you really think they are going to let their grip on power simply slip through their fingers?

Interesting post.

National governments/the State only has as much power as people give them. If it ever comes a time when the mechanism of redistribution becomes insolvent and inefficient at maintaining the farce of economic stability(which is happening), Society will try to correct itself by ignoring the State as much as possible. See black markets/Venezuela/other unstable economies.

I believe also there will be two, general to a degree, competing factions in the world—sovereign individuals versus slaves. Those who have no understanding or technical ability will keep relying on the old order of Statism and use "Fedcoin" or whatever new monetary instrument they push; while the more informed will be using private and anonymous currencies to circumvent any economic oppression.

There will also be regions of the world like Hong Kong that will be considerably de-regulated and even used as geographical locations for the elites and wealthy to store money. Even the people at the top will use the same means as the sovereign types.

At end of day, there doesn't need to be mass adoption especially in the short-term for their to be utility in cryptocurrency, at least at the individual level. As long a demand exists there will be a market regardless of what governments try to do.

·

Hi @superfluousman!

Your last sentence is the key. You wrote, "As long a demand exists there will be a market..."

True. That is precisely why governments will probably not "ban" cryptocurrencies. This would just turn them into a black market. On the other hand, if they can kill the "demand" then they will simultaneously kill their enemy. Killing demand is super easy: poison the well. If central banks turn their AI bots on Bitcoin with the goal of NOT making money (i.e. actively LOSING MONEY and crashing the price) then it is all over. Yes, the central bank in question will lose a few billion of their fraudulent fiat dollars in the process, but so what? They can always print more. In the process of hitting the Bitcoin market with a well-orchestrated barrage of sell orders over a period of time, all but the foolhardy would start to avoid the cryptocurrencies like the plague. Nobody likes getting a good solid kick in the nuts every day.

Interesting insight..I know many on here will disagree with you..Are you invested in any crypto?

·

Hello @marketanalysis. Thanks for the question.

No, other than my tiny little amount of free Steem I am not invested in the cryptocurrencies for the reasons I described. I was a full-time trader during the 2008 meltdown and I learned some hard lessons at that time. Back then I thought that logic and rationality actually mattered in the financial markets. It turns out that was an erroneous assumption. The reality is that virtually all of the world markets are fraudulent to the core, and that is just the way governments like them.

When I look around the cryptocurrency space there are many obvious scams and ponzi schemes. As far as the more legitimate players go, they are a very cool and even brilliant idea. In a fair and logical world cryptocurrencies would probably flourish. But, we do not live in that world.

Hard to hit back at. Great job laying out the argument.

·

Thanks @chieppa1, I appreciate it.

Unfortunately, governments have power and they will act in their own best interests. The fact that the interests of governments are in direct opposition to cryptocurrencies should not be ignored by those who are plunging head-first into the crypto space.

·
·

I plunged head first with a hard budget cap. So I'm just enjoying the ride.

·
·
·

Hopefully you'll be able to make a profit before the bloom comes off the rose. I wish you the very best.

·
·
·
·

I'll be moving more investment into the coins with a future. Right now I'm spread around looking for the short term.

·
·
·
·
·

Looking at the way things have been going over the last few days, it looks like you are in for a wild ride. Good luck!

China is showing us a lesson in government power affecting crypto's right now

·

Hey @scalerman.

What the Chinese government is doing right now is just a love tap. They are giving fair warning that their level of tolerance is running thin. Those who don't pay attention now may get a nasty surprise when the Chinese government decides to play hardball.

You are forgetting about the global aspect of economics and currency. The term 'petrodollar " represents more than paper dollars printed by the Federal Reserve. It means the full force of the United States military and all countries in trade alliances with us, largely in managing control of world oil reserves. The global economy is hinged on the dollar because of this huge international economic entanglement. That also means that when the US economy tanks because of corrupt banking practices, the world economy suffers. Yes, a lot of nut kicking, and exactly why bitcoin was developed and why bankers like JP Morgan are finally being forced to react to it. Where do I see hope? In countries with strong leadership that adopt blockchain technology and seek to disrupt dollar dependence. This will force a reaction from the US government and yes, I agree that they'll do everything that they can to usurp cryptocurrency as it stands now and seek to gain control of it. Already the biggest banks in the world are looking into blockchain technology and developing new cryptocurrencies. What I see happening is that there is not going to be room for the amount of cryptocurrencies that we see traded currently. People will look to a very small number of currencies which will be strongly supported and eventually legislated. There is already so much money in Bitcoin that governments will have to fight it either with legislation which they could only go so far with before hindering implementation of blockchain currency altogether or else gain market control of it. In which case they can only buy what Bitcoin owners sell. The market can be controlled by people's acknowledgment that their possession of Bitcoin stands for a lot more than a short term gain. The sky IS the limit for crypto if people see it as a long term investment and a way for the people to seize their own financial stability. And the most important step in uniting people of the world to back cryptocurrency for what it stands for beyond fiat trade value is dissemination of accurate educational journalism that builds hope and focus not FOMO and FUD.

·

Greetings @corpsvalues,

I believe you are correct about some things. When Bitcoin first arrived, it was a total surprise to the governments of the world. That gave Bitcoin several years to do whatever it wanted.

Today, however, the power-grubbing governments of the world and their banking cartels have probably realized that the best solution is to come up with their own version of electronic currency (minus the freedom and anonymity of course). I expect a few countries to go cashless in the next 5-10 years. 50 years from now, I would bet the majority of countries will have banished cash to the dustbin of history.

Unfortunately, this is a bad thing, since it will allow governments and banks to track every transaction everywhere. And, if you have been naughty then the government only needs to flip a switch and your access to money goes poof!

We are living in interesting times.

·
·

Don't you think crypto might be a segway into a cash-free society, which will be transparency-free and a dream-come-true for governments to track their citizens every purchase? The powers at be always find a way unfortunately. I really do hope I'm wrong, but history repeats itself...

·
·
·

Hello Eryksd,

I believe there are many governments who would love to track every transaction and get rid of cash. What you suggest is quite possible, sadly.

@swingsleuth What a wonderful and heartwarming Tale..

@swingsleuth got you a $3.45 @minnowbooster upgoat, nice!
@swingsleuth got you a $3.45 @minnowbooster upgoat, nice! (Image: pixabay.com)


Want a boost? Click here to read more!

@swingsleuth Excellent submit and very insightful. Have learnt a whole lot from it..

Errrrgh.....

"During the 2008 financial crisis most junior mining stocks went down 80-95% in a short period of time. This is what happens to real companies in a panic. What will happen to a nothing-burger once the panic starts? It won’t be pretty."

Yes most of the crypto world will tank. But BTC won't. It will run hard.

Bitcoin is a hedge against government and corruption... this is why governments, when they finally wake up will go to war against crypto!

@swingsleuth What about coins that actually have utility, and aren't stores of wealth exactly? Like steem for example, iota, or Power Ledger? Substratum, Sia, etc... I'm sure there's more, but those are some off the top of my head.

·

I wouldn't hazard a guess on individual cases. My argument is a general theme, and a reminder that governments tend to do whatever they please and do defend their turf.