Babylon's Bankers

ANOTHER PROBLEM WITH CRYPTO-“CURRENCIES”

There's a very interesting op-ed piece by Greg Barker at UnHerd, shared by W.G., that I want to pass along, because there is something in it that leapt off the page when I read it. It's one of those very obvious things one does not think about, until someone - in this case, Mr. Barker - point it out to you. The story itself is simplicity itself: Mr. Barker is arguing that the emergence of crypto-"currencies" has not lived up to its oft-touted claim to disenfranchise the financial elites and return monetary power to ordinary people. But the reason why - and it's an obvious reason - is what is the real nugget in this article:

The crypto revolution is failing

Mr. Barker frames the argument by recalling a bit of the historical propaganda surrounding cryptos:

Wall Street, the Federal Reserve and the financial arm of Silicon Valley can’t believe their luck. The cryptocurrency movement, the very rebellion that set out to defeat their hegemony, has provided them with the necessary technology to become even more dominant.

When Bitcoin, the first ever cryptocurrency, was launched in 2008, it was hoped its “Blockchain” technology — which records transactions and cannot be hacked — would spark a digital revolution. If a transaction could be carried out securely without the need for an established bank, it would, we were promised, mark the end of corporate capitalism — and the dawn of a new era of decentralisation.

Just over a decade later, however, Blockchain has become the centre of the financial elite’s new-age banking system. Indeed, behind the scenes, they’re going all in on crypto.

Commenting on the current - and highly "unusual" - rapprochement between big crypto behemoths, Wall Street, and central banks such as the Federal Reserve, Barker is even more to the point:

Fast forward to today, and the crypto elite have mimicked Thiel’s change of direction. Rather than simply throwing in the towel and admitting the game is up, they have abandoned their cyber-libertarian roots and merged with their enemy: the financial behemoths of Wall Street, the Federal Reserve and Silicon Valley.

It’s easy to see why this would seem appealing; a number of crypto elites are already reaping the rewards of cosying up to the establishment. Jeremy Allaire’s Circle — the company behind the huge, unaudited cryptocurrency USDC — has partnered with Silicon Valley payment giants, Mastercard and Visa. Meanwhile, Brian Armstrong, the CEO of cryptocurrency exchange Coinbase, revealed in a tweet in May that he’d held meetings in D.C with high-ranking state officials, including Congresswoman Nancy Pelosi and Federal Reserve Chair Jay Powell.

All of which raises a peculiar question: Why is the Federal Reserve’s head honcho, Bitcoin’s supposed arch-enemy, collaborating in undisclosed meetings with the CEO of crypto’s main cashier? In Bitcoin Gospel, that’s heresy.

The answer lies in what I suspect are the crypto elite’s real intentions: namely, that they were never really in it for the freedoms Bitcoin could offer, but more for the untold riches it promised. Now they’ve succeeded, it’s all about wealth preservation, and in the age of bailout capitalism, becoming “too big to fail” is the ultimate protection. That is why getting in the good books of Wall Street and the Federal Reserve seems to be the top priority for crypto billionaires. If a crisis emerges, and they threaten to bring down the existing power structure’s financial order, guess what? They’re first in line for a taxpayer-funded bailout. (Boldface emphasis added)

Well, such a result was predictable for anyone paying attention to the phenomenon. Indeed, I strongly suspect there's a hidden "crypto" agenda behind such phenomena as the Texas State Bullion depository, though I hope I'm wrong. But prescient as even these observations by Barker are, they still do not approach his central argument as to why crypto-"currencies" ultimately were destined to create a new financial elite which would eventually ally with the old one.

That central argument is encapsulated his following remarks:

But in reality, the crypto rebellion has failed to liberate us, or achieve anything else its founder Satoshi Nakamoto envisioned. Rather than producing a more open, more liberating, more financially free society, the crypto movement has empowered not just another cabal of corrupt financiers, but a hidden cartel of criminalsWall Street rejects, and what U.S Senator Liz Warren has described as “shadowy super-coders”. (Boldface and underlined emphases added)

It's quite a rare thing when I find myself in agreement with Senator Elizabeth Warren about anything, so when I do, I sit up and take notice. In this instance, the Senator is correct, for by creating a system of transaction based on blockchains, the ability to transact is essentially not democratized, but rather, handed over to a technocratic class, in this case, "coders" and "programmers", which bypasses the very group that Nakamoto, blockchain's alleged creator, intended to help: "ordinary people," i.e., the truck drivers, farmers, assembly-line workers, and so on. It creates a medium of exchange restricted to those who create it and know how to run it.

And the bottom line here is, that means it is not a genuine medium of exchange since it requires specialized knowledge to be able to use it. To put it more bluntly, for many years I've been cautioning people about the dangers of markets - be they equities, securities, or commodities markets - being run by algorithmic trading for the very simple and basic reason that algorithmic trades are not, at root, reflective of basic human market activities. The same holds true here, and in spades: trading in computer blips is a far cry from going to a local farmer's market and negotiating a trade for certain types and amounts of produce in exchange for so many ounces of silver. The one creates a new middle man - the crypto-traders - and the other avoids them completely.

It strikes me also that the bankers are slitting their own throats, for the time may - and probably will - come when the bankers find they are no longer able to make monetary policy for their institutions, investors, and depositors, having handed over the business of trade and finance to a group of programming technocrats... who made have other ideas than what the boards of those banks have... Who sets the value of those corporate coupons? Not the CEOs or the  boards. It's the programmers. And if they unionize, that could spell big trouble for the "old ways of doing things"...

Regardless of whether or not that high octane speculation actually occurs, however, the bottom line here is that Mr. Barker is correct: it's merely the creation of a new elite, not the disempowerment of the old one.

See you on the flip side...

 

20 thoughts on “ANOTHER PROBLEM WITH CRYPTO-“CURRENCIES””

  1. All of the trepidation of disarming centralized money ARE REAL and VALID.
    We must have ways to send value to one another that DOESN’T INCLUDE THE MANTIDS and THEIR DISGUSTING NETWORKS. Cryptography is a tool that uses a network for ACCOUNTABILITY.

    Wouldn’t a little accountability be nice?

  2. I see the inherent problems that Joseph is talking about, no argument there. From what I understand, the beauty of cryptos vs fiat was the inability to create more on demand. That aspect alone is far superior to what we have today.

  3. Fair exchange in trade does not occur, when fat cat middleman runs off with the profit.

    Paper money, removed from gold, is upgraded to cyber money, removed from reality.

    Global empire is an upgraded mass delusion, removed from reality, into religion of money.

    Mass murder, as collective liquidation, removes man from physical reality, as payment, for a six million guilt trip, in H. G. Wells’ science fiction.

    https://dl.dropboxusercontent.com/s/qqkaqnr6ac58bb9/six-million.pdf

  4. The elites are all in on any crypto they can control. Any crypto currency that needs to go through an exchange is easy pickings for them. Compare that to the Qortal project. A true peer to peer network with no exchanges, and smart contracts. It has a coin (the qort) but it is more of a protocol. You securely chat, trade in a pure peer to peer fashion.

    That will not be one the elites will support and will try to crush but it is very much like the TOR network.

  5. Crypto ‘money’ and the ‘blockchain’ are dependent on flowing electrons, a lot of them.
    What happens when the lights go out?
    (Watch the solar weather—which, as far as we know, is not subject to manipulation)…

    1. One “Carrington Event”, please. Hold the bitcoin.
      In some ways, we’re back to the medieval age with the ‘church’ telling us what is true and what science is allowed. Bishop Don of Lemon proclaimeth that Galileo is “a MAGA hat wearing trog who will kill us all with his craziness of the earth revolving around the sun!”
      Here endeth the stupidity. Amen.

  6. Robert Barricklow

    The Crypto song[in these times] goes:
    “Nowhere To Run to baby, nowhere to hide.
    Got Nowhere To Run to, baby. Nowhere to hide.
    It’s not love I’m running from.
    It’s the heartbreak I know will come.”[WAR]

    Code is law.

    Loved your speculation of the codemakers forming a union.

    Reminds me of Robert A. Heinlein’s, The Moon Is A Harsh Mistress.
    In it, w/in the first few pages you’ll find the “Beggars Union”.
    Also on the Moon, the corporations are using slave labor – of course.

    So the key lies w/in those who issue the currency.
    But wait, no one is issuing currency.

    Code Makers are creating corporate coupons.
    Problem is, codes can be broken – especially, from w/in.
    Plus, the internet itself is as subject to electromagnetic warfare – as are humans.

    Even, if the AI’s somehow “achieve lift off”[sentience],
    they too will be under electromagnetic threats.
    The so-called “natural” Corona Mass Ejections…
    [CERN perhaps experimenting w/an unnatural event?].
    Another Big One 1859?
    Or, larger by magnitude?

    If “they” can.
    Will they?
    Why they’d have to be insane.

    Nowhere to Run To Baby…

    https://www.youtube.com/watch?v=3a3CULyv4BI

    1. There is the problem of what you will use for money if like here in Puerto Rico your electric grid is down like it was for four months. And what is going on now in the Eastern USA the gulf to the Northeast with the power grid down in several states or parts of them.

      1. Robert Barricklow

        Just the way “they” like it.
        Whose going to listen to the trodden-down slave labor anyway?
        And, you’ve better have that slave collar on!
        20th-Worst Century style…,
        above your nose.

  7. The internet, too, was sold as a tool that would democratize information, empower individuals, and usher in “the dawn of a new era of decentralization.” How’s that one working out?

    The only semi-credible scenario I’ve heard in which crypto might be liberating or decentralizing is if there were thousands of cybersecurity-savvy coders all over the country creating local cryptocurrencies. There would have to be too many to prosecute all of them; a few would be made an example of, and the rest would need the courage not to be intimidated; they’d need strong support from local communities and, ideally, local governments. What are the odds of all that? I don’t know, but I’m not betting on it.

    An analog means of exchange that can be physically passed from one individual to another — at will and in completely private transactions — is the only kind I can imagine that might be liberating or decentralizing at all.

    1. I meant to say: As a possible tool to increase freedom and decentralization, an analog means of exchange with the characteristics I described is the only kind I’d have much confidence in.

    2. >The internet, too, was sold as a tool that would democratize information, empower individuals, and usher in “the dawn of a new era of decentralization.” How’s that one working out?<

      Exactly, and while it's difficult to think through all the unfamiliarity of "cryptos" (there's thousands of them now) and how it might work out, analogizing to the history of the internet is probably a good way to go.

      At first, novelty, privacy, anonymity, new ideas and new areas of information — FREEDOM and ENLIGHTENMENT. It didn't take long for the money and power elites to figure out how to game it and use it to remove people's privacy, to use mass psychology to extend soft control through fear and diversions, to build comm databases that show networks in case of insurgencies, and with Covid-19 we're into hard control.

      Why should crypto currency be any different?

  8. Isn’t that precisely how predators and parasites work? It’s always the one willing to be the biggest bad-a** on the block until the next one comes along. In our world (regardless of using paper ledgers or programmers) the Fed is the dark shadow controlling their streets. Stay on the bright side of the road, but remember all that glitters isn’t gold (or silver).

    1. I don’t see how silver and gold have intrinsic value either. They too, are just a means of exchange.

      These things do seem to have intrinsic value:
      land, labor, energy, information, trust.

      What else?

      1. Gold & silver have industrial uses as well. They have physical properties that are needed. Even if you melted a gold bar, it’s still gold. With fiat or crypto, when the power goes out or you get HERF’d by a far away nuke, it’s likely to go away. And paper money can, of course, catch fire or get stolen.

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