Currency Tidal Wave Part 1: Debt and Inflation
Currency Tidal Wave Part 2: The Water Analogy
AKA: crypto fixes this.
After great pains, I have somewhat explained how fractional reserve debt operates and how the economy is a lumbering beast that no one can truly control. I've explained how currency is like water and it flows in a liquid state in a very strange and uncanny manner.
Now it's time to talk about the tidal wave.
- All fiat currency is unsustainable debt.
- All banks don't actually have the money they owe back to citizens and the FED itself.
- All assets in the world can be counterfeit.
- Crypto is not debt; it is owed back to no one.
- Crypto can be created by anyone and is borderless in nature.
- Crypto can not be counterfeit (first asset ever in human history).
- Crypto has no rules but the ones the community gives it.
Most people do not realize how novel cryptocurrency is.
What are Bitcoin maximalists constantly spewing about?
- 21M BTC supply cap.
- Gold 2.0
- Printer go brrrr!
- Five Pillars:
- Open
- Public
- Borderless
- Neutral
- Censorship Resistant
But Maximalists don't talk about how Bitcoin is 'impossible' to counterfeit. (At least not very often.) This is a really big deal. It is a beacon of trust in a sea of lies.
More importantly maximalist don't seem to be talking about is how crypto IS NOT DEBT even though every single piece of fiat is debt. If you have fiat in your pocket you own the debt, meaning that someone eventually needs that debt in order to pay back their own debt. Those who hold USD become an extension of the FED: A lapdog even.
Another concept that is important to understand is this:
What happens when someone defaults on their loan? Hell, what happens when a lot of people default on their loans? Let's take the housing crisis for example. Banks gave out ridiculous loans to people who couldn't afford to pay back the debt. Property was purchased, and the owners of those properties received fiat debt in exchange for their property. This fiat then entered the economic river.
And now, a bunch of people can't pay back the loans to the bank, so what happens? The bank seizes the collateral (the houses) instead of getting paid back. They now have to sell the houses so they can pay back their debt to the fed, but they can't pay back their debt to the fed because the supply of houses has vastly increased and the value of the collateral (houses) has gone down. Now the banks are insolvent.
So what does the fed do?
Rather than force the retail banks to go insolvent and declare bankruptcy, they bail them out. Now the fed owns the banks in one form or another. That's what the fed wanted all along: to own as much as possible. That's what everyone wants. Capitalism.
What many people fail to realize is this: lol what happened to the money? The fiat currency is still IN THE ECONOMY after all these mass defaults. That's actually a good thing. After all that pain and suffering there is now fiat in the economy that isn't owed to anyone, it's just sitting in the river as pure value. That's actually a great thing.
Unfortunately, because central banking is so unsustainable, that pure value will be quickly reallocated to some other debt that needs to be paid back: but the end result is interesting. Defaulted loans allow money to stay in the economy as dwindling collateral changes ownership inside the bear market. This is a very important concept to keep in mind as we try to decipher what's going to happen when crypto goes mainstream.
With crypto, everything gets flipped on its ear.
All of the money and value we are creating here is raw money direct from the source owed back to no one. This is what is meant by "be your own central bank" (among other things). However, when most people hear this term they aren't thinking about how crypto isn't debt, they are thinking about security; How we must secure our own keys so that we own them and no one can take them from us or hack us (like a centralized exchange).
That's all well and good, but the fact that crypto isn't debt and every other piece of money on the planet is, is a huge deal that nobody seems to be talking about. Many people seem to think that crypto is going to destroy fiat (myself included), but we need to think about this more.
How is it possible that crypto could destroy fiat if fiat is a system of debt that requires collateral to print more debt? Crypto is the best collateral in the world by an exponential margin. It keeps going up in value exponentially. That is not a recipe to kill fiat; it's a recipe to empower fiat to unimaginable strength.
How is it possible that crypto could destroy fiat if crypto is open source and ANY entity can use the open source code to build value? CBDC anyone?
How is it possible that crypto could destroy fiat if the foundation of crypto is community? Fiat has the biggest community possible, and that community isn't going away anytime soon.
It becomes obvious that crypto isn't going to kill anything. Crypto is simply going to become bigger than everything, but all the "competition" is also going to gain strength from the coming tidal wave of money that is right off shore.
In the context of the water analogy: central banks are the undrinkable salt water oceans. But in the context of crypto what have we been saying this entire time??? Be YOUR OWN CENTRAL BANK. Meaning we are building an ocean out of a lake. Soon the lake will be as big as the ocean, and all the water will be drinkable. The rivers that flow from this ocean-lake are going to slam into the entire economy: breaking all the dams that the retail banks have set up.
What does that mean?
The dams are regulations. The dams are retail banks picking and choosing who gets a loan and who doesn't. None of that is relevant anymore. I can and have given myself a loan with MakerDAO. Do I now believe that MakerDAO and DAI are hammered dog shit? Yes I do, but DEFI is going to keep upgrading exponentially. All I have to do is wait (or build it myself).
What does it mean though?
Why do I need permission to get a loan if I can just give myself a loan? DAI and HBD have already shown us that we can create stable coins without actually holding any USD whatsoever. We are hijacking the system in the most aggressive way possible, and there's not a god damn thing they can do about it. By the time they even realize how big of a problem it is it will be way way way too late. Hive is already so grizzled that attacking us only makes us stronger in the long-term (just like Bitcoin).
Again, why do I need a loan if I already have hundreds of thousands, if not millions, of "dollars" in the bank? The craziest part? I don't even have to spend those "dollars". Because those dollars aren't dollars, they aren't debt: they are collateral. Meaning I can leverage that collateral into debt without even losing control of the collateral.
This is the system we are approaching, and no one seems to realize how insane it is. I don't need a bank to give me a loan. I AM the bank. This is something that many can not wrap their brains around because it is way too complicated and requires a lot of knowledge of not only how crypto works, but also how fractional reserve banking operates.
Everyone is worried about the bear market.
Bear market? What bear market? BTC crashes 35% exactly and everyone cries bear market? That's literally the exact amount you'd expect Bitcoin to dip during a healthy correction during a mega-bull market runup. Like, Christ Almighty. Grow up. Hedge your bets and balance your positions. You're bad at this. Society has bred a legion of children to be lorded over by debt-slavemasters. Break these damn chains and lets get on with it. I'm waiting.
Back to reality.
- We are living in the Age of Exponents
- Exponential data
- Exponential technology
- Exponential money
- Exponential environmental change
- Exponential extinction
- Exponential evolution.
Evolve: or DIE!
That's the only option we have. Humanity is sprinting full speed at a cliff, and if don't grow us some angel wings and fly away... we're done. Plain and simple. I accept my fate.
Wow, this is getting intense.
So lets tone it back down. The future is chaos. Step back to the present.
Bear markets happen because central banks are constantly siphoning value into their own pockets. Just look at interest rates in the 1980's. Almost 20 fucking percent? Are you shitting me? That means a retail bank had to charge more than that to turn a profit. Mindblowing. The FED essentially just didn't want anyone borrowing more at that point. They fully stifled the birth of the Internet.
Now it's basically zero because the system is 100% fucked. The central banks sucked all the value of the Internet and technology into their own pockets. They won't be so lucky with crypto, as crypto is money itself; a superior technology that sidesteps central banking given the proper infrastructure.
What happens when crypto becomes bigger than central banking? That's when things get very interesting. Once again we see that crypto is not in competition with anything; it's a permissionless system that everyone benefits from. The title of Andreas Antonopoulos' book is: The Internet of Money. Quite apt, but while he thinks that central banking is going to be 'disrupted' (it will), he doesn't seem to realize that even if 90% of banks die, 10% of them will evolve into something greater. Think Netflix vs Blockbuster vs Torrents.
Yeah, Torrents didn't win, did they?
Decentralization did not win: it simply forced the old system to evolve or die and compete in a way that they had never competed before. Why pirate movies when you can pay $5 a month to have access to content that's x1000 times better than more a more expensive cable TV? The chances that CBDC fails is low, because fiat needs collateral, and crypto makes excellent collateral. This is a disappointing revelation I've just made, but I'll probably be a billionaire by then so fuck it! Everyone wins: the Age of Exponents does not discriminate.
So how will crypto force fiat to compete?
Much in the same way that the Internet forced the entertainment industry to compete. Entertainment became free, and a small battle ensued where the legacy system tried to use the court system to stop it. This was an epic failure where the top 0.01% of offenders were put into prison. My advice? Don't be the top 0.01% that the prison industrial complex is looking at. I'm not looking forward to the day when theycallmedan becomes a trillionaire and then gets thrown into the Gulag.
Luckily the difference between pirating music and movies and pirating money itself is vast. Do you think that the person who "stole" 10,000 songs and was legally obligated to pay $10k per song in court had the money to pay for that fine. Those laws existed to stop corporations and profiteers from generating an income off other people's IP. Then the law's cannons were focus fired on people that had no money. That didn't work, did it?
So this becomes a double edged sword.
The war waged against crypto will be very interesting. There will be a lot of similarities between the war on pirating IP. But there will also be a lot of differences, and the devil is in the details.
Similarities
- Laws that were built to target institutions will be used against individuals.
- People who run a node may be under threat.
- Court fines will be very hard to collect.
- It's an uphill battle that can't be won by the legacy system.
- Only the top offenders will be prosecuted, and they will face harsh penalties because the court will want to make an example of them to incite fear in the rest of us. They will do this because they are on the backfoot and guaranteed to lose the war, but it's not going to be pretty until they pivot and accept the new paradigm.
Differences
- The targets of these lawsuits will be crypto rich and can afford insanely good legal representation.
- However, even if they lose the money will be hard to collect because it's crypto.
- Again, because the targets of these lawsuits are filthy rich they will have a financial incentive to hire lobbyists and bribe politicians to literally change the law in order to protect themselves.
- There will also be many favorable settlements where the targeted party can just pay a fine and get a slap on the wrist (talk about being your own central bank!). Think EOS and Block.One.
- The targets of these lawsuits have the resources and the infrastructure to rebuild community from the ground up and exit the current grid. Many will go into hiding when shit really hits the fan.
Synopsis.
We can see the the biggest and most glaring difference between the war on torrents and the war on crypto is the scale of it all. The stakes are exponentially higher. The war on crypto is a war over money itself; the biggest scale possible. The opposition will hit harder, but the defense will also have a much bigger shield. At the end of it all the legacy system will accept the new paradigm because the new paradigm makes them rich (even if they lose a lot of power along the way).
One final thought.
Remember in part 2 when I said the FED makes it rain, but we aren't allowed to collect the rain water? This rain then flows into the lakes where it only exists via the dam (regulations and retail banks). Well, with crypto, when it rains, we ARE allowed to collect the water. This is aptly called an airdrop, and I'm sure you're all familiar with this term.
Again, this creates a unique situation that most people can't even fathom the outcomes (no one can because the economy is too complex). When people hear "airdrop" they are just thinking, "fucking awesome: free money". But when I hear airdrop I'm thinking, "Holy shit non-debt collateral is just being gifted to people from the sky. This is something we've never seen before. How is that going to affect the economy in the long run?" The answer is: I have no idea, but it will be very interesting.
Conclusion
While everyone is QQing over a fake bear market that never happened, I am playing the long game. Crypto is creating a tidal wave of money, but more importantly that money isn't debt. This is a distinction that 99% of the population will not understand because it requires too much knowledge of how the banking sector operates. Trust me though: crypto not being debt is probably the best thing about it, and no one is talking about this absolutely critical vector.
Crypto is the best form of collateral, and society thrives on these beastly NFTs. Or should I say fractional NFTs? Better collateral means more sustainable debt. The banks are going to be forced to compete for the first time in a hundred years. How exciting! As far as "disruption" is concerned, always remember this: CONVENIENCE TRUMPS EVERYTHING. If it's not convenient then people won't use it. Welcome to mass adoption: where even CBDCs have their part to play. It is what it is.
A new exponential age is upon us. It's not going to be easy, but I prefer a difficult life over a boring one. The risk to reward ratio is this new environment is going to be a thing of legend. Hedge your bets, ladies and gentlemen. This flight is in for some chop.
Back to the real issue. Bitcoin is going to tank hard. Bitcoin is the worst blockchain. Check http://blocktivity.info/ and look how overworked the network is. Bitcoin is at max capacity, it can no longer scale up, the fees are bad, and the network is slow.
--- 2017 @edicted is not very smart.
Return from Currency Tidal Wave Part 3: The Age of Exponents to edicted's Web3 Blog
