Nobody Understands Cryptocurrency, And That's Ok

[Zenaan Harkness]

On Tue, Oct 17, 2017 at 10:45:54AM +1100, Zenaan Harkness wrote:
> On Tue, Oct 17, 2017 at 10:12:10AM +1100, Zenaan Harkness wrote:
> > On Mon, Oct 16, 2017 at 03:20:56PM -0500, \0xDynamite wrote:
> > > I think Bitcoin does not understand bitcoin.
> > 
> > > UNDERSTAND THIS:
> > > 
> > > Expressing your opinion is the ultimate unit of work in the virtual
> > > world.  Distribute bitcoins on this basis.  That devalues them, yes,
> > > but then you don't have to expend 100kW of energy to produce them,
> > > maybe call them nanobits.
> > > 
> > > Then allow them to be traded freely as a neutral currency for the net.
> > > After this gets established, ONLY THEN can you really set a EXCHANGE
> > > RATE for bitcoin with physical dolllars -- because you've tied and
> > > anchored it to REAL WORLD VALUES.
> > 
> > Nice in theory, but no, any Cabal coin can be tied to physical stuff
> > no problems, thus creating an actual Cabal-controlled (± thus
> > manipulated) value for their particular central coin.
> 
> Putin intends to launch, public statement “if you can't beat ’em, join
> ’em”:
> 
> 
> Crypto-Rouble: Russia to launch first state sanctioned cryptocurrency
> in the world
> http://theduran.com/russia-launch-first-state-sanctioned-cryptocurrency-world/


Putin's Crypto-Rules Unveiled, Your Move D.C.
http://russia-insider.com/en/putins-crypto-rules-unveiled-your-move-dc/ri21356
Tom Luongo
  I’ve said many times that Vladimir Putin is a law and order kinda
  guy.  From the moment he finished his meeting with Ethereum
  designer, Vitalik Buterin, back in March there has been a lot of
  conflicting stories coming out of Russia with respect to
  cryptocurrencies.

  Over the weekend Putin finally made his full intentions for the
  technology known.  Last week it was announced that Russia would be
  issuing a Crypto-Ruble, which would allow cryptocurrencies like
  Bitcoin to circulate side-by-side with the Ruble.

  In my initial discussion
  https://tomluongo.me/2017/10/16/russias-crypto-ruble-changed-capital/
  of the Crypto-Ruble it looked to me like
  they would trade without a capital gains bias in the Russian
  marketplace.  That doesn’t look like the case at this point.
  Though nothing has been set in stone, according to follow on
  statements by Deputy Finance Minister Nikolay Nikiforov
  https://techcrunch.com/2017/10/15/russia-may-soon-issue-its-own-official-blockchain-based-currency-the-cryptoruble/
  .


 ∙ Putin’s Five Words of Warning

  Now, with the five latest orders from Putin, the crypto-world in
  Russia is to have a full-fledged legal framework for people to
  operate within
  https://motherboard.vice.com/en_us/article/7x4vad/putin-cryptocurrency-russia-mining-regulations-ico-bitcoin-ethereum
  .  The high points of the orders are:

   1. Miners will have to register with the state to pay taxes on
      gains.

   2. Cryptocurrencies will be fit into the existing legal framework
      of the Russian financial system

   3. ICOs – Initial Coin Offerings — will get rules handed down by
      the Legislative branch and the Bank of Russia

   4. A sandbox environment will be established to test new
      technologies with the Bank of Russia before being deployed.

   5. A framework will be put in place for a regional cross-border
      payment system with the rest of the Eurasian Economic Union
      (EAEU) Members — Kazakhstan, Armenia, Kyrgyzstan an Belarus.

  Okay, so what?  The big thing here is that Putin is acutely aware
  of how cryptocurrencies and blockchain technology can springboard
  Russia’s ability to more efficiently handle capital.  He rightly
  sees the opportunity for the hundreds of billions that have flowed
  into the crypto-space to find their way into Russia and be welcomed
  there to do real work in the legal economy.

  Yeah, monetary anarchists like me bristle at this legal stuff and
  taxes being applied to cryptos. Putin will find out just how hard
  it is to extract all of the taxes he is looking to collect but that
  is a bigger question for another day.

  What’s important here is that cryptos will become part of every day
  life of people in those countries.  It will leverage the existing
  legal framework of Russia for putting the physical economy on the
  blockchain while also enhancing it at the same time.

  Sure, eventually Ethereum’s smart contracts can replace all the
  physical contracts we currently manage and store and fight over.
  But, there are a lot of steps between getting from where we are to
  there.

  There’s still not much there there, to quote Gertrude Stein.


 ∙ Cryptos + Legality = Trust

  In this respect existing law is an asset not a burden.  So,
  embracing cryptos to assist in strengthening contract dispute
  resolution and chain of custody for an emerging market like Russia
  and the frontiers of the EAEU is an enormous step forward.

  Ask any savvy investor or financial professional about Russia or
  any frontier market and they say, “It’s not the return on my
  capital I’m worried about, it’s the return of it.”

  In other words, the big advantage the U.S., the U.K. and Europe
  have over a lot of the world is the legal framework to ensure that
  your business can’t be summarily seized or that you have some
  avenue to get your money back if it’s stolen.

  There is real legal risk to investing in these places.  Russia
  still carries that stigma and will for a long time.  So will China.
  And if you look carefully you’ll see that they are working
  diligently to raise their profile on this front.

  No one does business with someone you don’t trust.  This is the
  essence of commerce and society itself.  This is why Putin feels so
  strongly about building legal frameworks, even if they wind up
  being the wrong ones.  Rules create the potential for trust.

  What’s the biggest worry everyone has about cryptos?  Trust.
  Thieves be everywhere; looking to steal your private keys and make
  the quick score.  It doesn’t matter if its a hacker running some
  malware or some shady dude’s latest ICO.


 ∙ Rethinking Forex

  Of all the stuff in these orders, the EAEU angle is the most
  interesting in the long-view.  Russia will export these rules
  across the EAEU and standardize the use of cryptos in these
  countries, helping to facilitate cross borders capital flows
  without the any of the local central banks having to worry about
  currency building up.

  In one short burst of words, Putin just lessened the risk of being
  wiped out by aggressive monetary policy from the Federal Reserve.
  Think it through, it’s staring you in the face.

  Think of it like this.  I have a business in Moscow with clients in
  Astana. They can pay me in bitcoins which I can exchange for rubles
  when I need to or use to pay my suppliers in Minsk.  My client
  never has to go to his Kazakh bank and exchange Tenge for Rubles
  (yes, I know the Kazakh currency name off the top of my head).  I
  never have to go to my bank and exchange Rubles for Belorussian
  Rubles.


  Bitcoin and other cryptos can be taken as payments, made a part of
  my business’s accounting and all of that and the Bank of Russia
  only has to deal with regulating the flow of rubles throughout the
  domestic economy.  It becomes more immune to external attack like
  late 2014.

  Putin is both defending the ruble for internal Russian use while at
  the same time making it easy for capital to move across borders
  without it affecting domestic monetary policy.

  Forex recycling needs are dramatically lowered because the central
  bank no longer has to deal with the build up of foreign currency
  reserves which have to be maintained and invested. Those reserves
  are now floating around in crypto-space waiting to cross whatever
  border they need to next.

  Some may flow into the Ruble, some may flow into crypto-loans,
  housing, etc.  But, the central bank is alleviated of managing huge
  piles of money because the economy no longer depends on the supply
  of their currency.

  Putin gets this.  If he doesn’t then someone in Russia’s government
  does.  He may have to lower the capital gains tax eventually, but
  at this point 13% is cheap versus his nearest competitors, so
  that’s not a concern.


  What this does is begins the process of accepting cryptos into the
  legal economy and moving Russia way up the charts of where capital
  is treated best.

  And we all know where capital flows, right?