Project Fedcoin?

Discussion in 'Economics' started by Richard Stanley, Jul 2, 2017.

  1. Richard Stanley

    Richard Stanley Administrator

    http://www.caseyresearch.com/cs/project-fedcoin-presentation-google-cs

    I happened across the above presentation, an interview with Doug Casey about his theory that the Fed will logically adopt their own version of Bitcoin. This using the latter's underlying 'blockchain' encrypted transaction database and likely some form of human 'embedded' silicon wallet.

    He proposes that this will be done in parallel with the present 'dollar' as it is gradually transitioned into obscurity, beginning with the elimination of the 100 dollar bill. It will be 'justified' with a large number of reasons, ironically one being to make money laundering difficult to impossible.

    Ironic, because this may be the actual (staged) downfall of our Samson-esque President. (Read my comparison of Trump with Samson.) And note that Trump has made no noise about eliminating the 'private' bank owned Fed, in favor of such as a publicly owned central bank -- and a return to stable currency. Under the cover of bipartisan and global kaos that Trump is unleashing, the crises will make all this much easier to deploy. He will be able to employ his most loyal supporters, who would otherwise be among the most rabid against this.

    The interview is rather long, and it spends a lot of time on background as to how we got to this point. In hindsight it seems rather predictable.

    While very long (I'm not sure how so, because it gave no timer), it does offer to pick up where it left off if you need to stop it. I could pause just by clicking anywhere on the video.

    While the present Bitcoin system is opaque to outsiders, including the government and Fed, a Fed operated system would allow them to see every transaction, even controlling who can conduct transactions. This is an explicit aspect of the Book of Revelation, and the embedded wallet fits as well.
     
  2. Jerry Russell

    Jerry Russell Administrator Staff Member

    I have been predicting the demise of Bitcoin for a long time, and it just keeps chugging along to greater and greater heights. A recent article by Charles Hugh Smith at Chris Martenson's website explains the boom in terms of utility value & scarcity.

    https://www.peakprosperity.com/blog/109418/understanding-cryptocurrency-boom

    Down in the comments, there are claims that Bitcoin has high utility because transaction costs & delays are less than with USD transfers, and because Bitcoin has privacy from the US banking system for possibly problematic transfers.

    As to the first claim, my own experience is that Wells Fargo cash transfers are instantaneous and free of charge, and Paypal "gift" transfers are also free and instantaneous. So I don't understand the benefit on that level. Perhaps there's a potential for some sort of Bitcoin-based credit card to compete with Visa for merchant-transaction credit cards. But, standard credit cards provide some fraud protections as well as transaction processing services, so I don't see how it would be possible to provide an equivalent service completely free.

    To the second claim, I've always wondered if Bitcoin isn't some sort of intelligence honey pot. Although the transactions seem to be private, my understanding is that everything that happens is completely traceable if one has access to the system. So it's difficult for me to feel confident that the feds don't already have a back door. In the article linked above, there's some discussion in the comments about this, and it seems there is a move to develop new layers and wrinkles that would serve to truly protect the privacy of individual transactions.

    Which brings up another point. Bitcoin isn't alone in the crypto-currency space anymore. The number-two currency, Ethereum, has grown to the point where it's equal to Bitcoin in market cap. And I understand that there are some seven hundred competitors waiting in the wings. There may be some barriers to entry, but there's also huge incentive to overcome those barriers, and a lot of room for "innovation".

    As to whether the US needs to adopt a crypto-currency, I wonder if this could be done without making any overtly obvious changes to the existing system. That is, apart from draining paper currency from the system, leaving only checking accounts and credit cards. Within the existing system, they already have traceability of transactions, and ability to freeze accounts. This is reputedly the main risk to privacy & free markets under a cashless society.

    One advantage of Bitcoin is that the blockchain is designed to prevent infinite expansion of the money supply. Obviously the US gov't has no interest in that aspect!

    But as to security, I should certainly hope there are already systems in place. The USG has been continually updating the security features of cash greenback bills, trying to make them more difficult to counterfeit. But I don't understand how they can prevent "counterfeiting" of electronic dollars within the banking system. Conceptually, what's to prevent some renegade banking entity from creating a credit card or checking account whose balance is allowed to increase without limit, thus permitting vast spending by the beneficiaries of such an account for any purpose?

    I believe that financial institutions are supposed to maintain prudent capitalization and credit quality standards, and that failure to follow these rules would violate regulations. In the wake of the failure to prosecute any violations of those rules during the last financial crisis, our largest banks are presumably feeling that they have a certain license to bigger violations now and in the future, but at least there still are rules. So what if some renegade player just totally ignored all that, and effectively started circulating counterfeit electronic dollars? Would this action even be detected, much less prosecuted? It seems to me that electronic counterfeiting is an under-appreciated possible cause of inflation of the money supply, and I have no clue as to what systems already exist to prevent such criminal acts.

    So with the success of Bitcoin and Ethereum, now we have non-state actors able to create cash that is an acceptable or even preferable alternative to US dollars and other national currencies. According to the quantity theory of money, an increase of cash in circulation should lead to an increase of price levels. And according to Keynes, there's some inertia involved. But eventually a hyper-increase in money supply is going to lead to a hyper-explosion in price level. I find myself wondering if a proliferation of crypto-currencies is going to materially contribute to the process.

    Most posters at the Martenson forum expect that the crypto currencies are going to go a lot higher in value. Maybe so, but in the long run I agree with the one who posted this picture, with the caption "Sooo beautiful... and priceless, yes?"

    [​IMG]
     
  3. Richard Stanley

    Richard Stanley Administrator

    If the Fed was to create Fedcoin, then it would take over the equivalent role of the Bitcoin 'miner' function, correct? This way, they and they alone would control the monetary supply. They could continue to use inflation to grease the economy skids and as a hidden tax.

    If the Fed controlled the creation of Fedcoin in their closed and proprietary blockchain, then how could a renegade bank create a fraudulent account or ledger entry that can't be traced back to its origin point?
     
  4. Jerry Russell

    Jerry Russell Administrator Staff Member

    The Bitcoin 'miner' function is intended to limit the ultimate quantity of Bitcoin to a relatively small finite quantity. There are about 15 million bitcoin mined to date, and the cap is 21 million. By comparison, US M2 money supply is currently over $13 Trillion. I don't know of any reason why the Fed couldn't design a new blockchain implementation that eliminates the cap, but I don't know much about it.

    I agree that if the Fed uses a closed and proprietary blockchain, they could presumably implement security measures to detect a fraudulent account. But my question is, whether the banking system doesn't already have that capability?

    Having never attempted to hack the system to create counterfeit electronic dollars, I have no idea what I'd be up against. But considering the obvious incentives for hackers to pursue such exploits, I assume there are already security systems in place to prevent it? It seems to be such a delicate topic that I haven't ever been able to find any information on-line about this.
     
  5. Richard Stanley

    Richard Stanley Administrator

    My understanding of the current blockchain systems is that each currency unit, and fractional unit, has its own digital provenance within their respective blockchain transaction databases. This means that unlike a real coin even, each monetary unit can be traced back to its origin, and be 'accounted for', referenced back though as many linked blocks as necessary. And this presumes that one can overcome the encryption aspect. Once a blockchain 'block' reaches its transaction size limit it essentially becomes a fixed archive and the encrypted data within it is probably protected with things like CRC's and such, meaning no ability to alter the ledger records back to the origin.

    The current digitized banking system is nowhere near as sophisticated to my understanding and thus is rather open to exploits. Like one only needs to know how to hack an account, and possibly answer a few other questions depending on the amounts involved.
     
  6. Jerry Russell

    Jerry Russell Administrator Staff Member

    Unlike last time I checked, it is now easy to place a bet that Bitcoin is going down. This can be done either by going short on margin at www.bitfinex.com, or by selling futures at www.crix.io. Also options trading at www.deribit.com. The Bitcoin chart looks mighty toppish to me, this could be fun.

    [​IMG]
     
    Last edited: Jul 3, 2017
  7. Richard Stanley

    Richard Stanley Administrator

    Goldman Sachs says Bitcoin is going up by another 50%. Who do you trust Jerry?

     
  8. Jerry Russell

    Jerry Russell Administrator Staff Member

    Here's a list of 804 crypto currencies, with prices and market cap. The top 30 all have market cap above $100 Million. Today, almost everything is down by anything from 2% to 15% or more.

    https://coinmarketcap.com/currencies/views/all/
     
  9. Richard Stanley

    Richard Stanley Administrator

    According to Standpoint Research, Bitcoin is set to double to $5K.

     
  10. Jerry Russell

    Jerry Russell Administrator Staff Member

    Considering the risks of an unhedged position, and considering the current high prices of so many of the cryptocurrencies, maybe the best bet is to go into the mining business. Bitcoin requires specialized ASIC mining equipment, but some of the currencies are amenable to general-purpose cloud computing. Buy GPU power from bulk providers like Amazon, Google or IBM; or go with a specialist like NiceHash. Look at the money raining down on the happy NiceHash customer at the end.

     
  11. Richard Stanley

    Richard Stanley Administrator

    I think the subtext of the Fedcoin piece, and in line with apocalyptic thinking, is what if, under an authoritarian regime, such as Fedcoin is made the only legal cryptocurrency? This means that controls are placed on Internet navigation and that businesses are not allowed to conduct transactions using anything but Fedcoin and transitional dollars.

    As Trump says, he can get away with murder, so it will be a breeze to create a pretext to 'reveal' the mark of the beast. One needs the 'mark of the beast' physically on them in order to be in the marketplace. Hence, my additional interest in the video's discussion of (digital purse) implants and tattoos. [Added 7/10]

    Besides, Goldman Sachs has 6 former employees in the WH administration, and it is a major shareholder in the Federal Reserve.
     
    Last edited: Jul 10, 2017
  12. Jerry Russell

    Jerry Russell Administrator Staff Member

    Considering what you said about the difficulties of overtly treating people like slaves: some of these cryptocurrencies are designed like Bit Torrents, to be difficult or impossible to trace. Those ones would probably boom if they were outlawed.

    Which is not to say that they wouldn't try to make all non-traceable transactions illegal, as per the end time prophecies.
     
  13. Richard Stanley

    Richard Stanley Administrator

    Note that I have amended my prior comment for clarity.

    Goethe's statement about the delusional mindset of the falsely 'free' only implies that this is the most optimal situation for control of the masses. If a sufficient pretext is created to place draconian methods on the 'marketplace' then such changes will go over easier if the public sees that everyone is treated the same, or that it appears so, at least.

    Let's say that such Torrent-esque currencies can manage to escape detection, how would its users go about transferring such ones and zeros into liquid legal currency. It seems to be that this 'value' would mostly have to remain underground, which, of course, can in some cases still be significant. But unlike, paper dollars, which can be used to launder illicit funds, the Fedcoin blockchain makes the entire transactional history of each unit traceable.

    Also, if you are using and holding illegal cryptocurrency, then you would always have to worry whether or not the people who run the equivalent of the blockchain might be compromised.
     
  14. Richard Stanley

    Richard Stanley Administrator

  15. Richard Stanley

    Richard Stanley Administrator

    Looks like you stampeded the herd, Jerry.

    ...
    Ethereum’s price has gone from $400 right down to $151 in about a month, leading investors to panic sell. On the other hand, Bitcoin, which dominates the cryptocurrency market is down about 36 percent from its high (it’s currently trading around $1,894). Investors are finding it hard to hold onto cryptocurrencies at such a low price — especially amateur investors who bought them at a much higher price. ...

    https://venturebeat.com/2017/07/16/3-reasons-cryptocurrency-prices-are-in-free-fall/
     
  16. Jerry Russell

    Jerry Russell Administrator Staff Member

    I've just been informed that a Eugene-based company owned by Albrecht zu Hohenlohe Langenburg and his wife, the Princess Karen zu Hohenlohe Langenburg, is attempting to develop a side business selling power in the vast quantities required by Bitcoin and Ethereum mining operations. They reportedly have developed a technology involving water cavitation, plasma and nuclear interactions with the quantum vacuum, yielding very large and inexpensive quantities of clean electric power. Langenburg reportedly wants to use this vast source of power only for the purpose of doing good works, such as providing clean water and "returning planet earth to its original and most pristine state". Fearing that the power will be turned to evil, Langenburg attempts to keep his technology a deep secret. Its very existence is only revealed deep in the fine print of his web page.

    The company also sells bottled water, and they have a cool corporate coat-of-arms.

    https://www.langenburgtechnologies.com/executive-summary

    [​IMG]
     
  17. Richard Stanley

    Richard Stanley Administrator

    Maybe you can get some answers to your own questions then?
     
  18. Jerry Russell

    Jerry Russell Administrator Staff Member

    If he tells me anything, I might come here and give it away.
     
  19. Richard Stanley

    Richard Stanley Administrator

    NDA :rolleyes:
     
    Last edited: Jul 18, 2017
  20. Richard Stanley

    Richard Stanley Administrator

    The following is an excerpt is from an article discussing 4 problems with crypto-currencies and the work going on to solve them. This is generally in the efforts to expand crypto-currencies and blockchain issues beyond a peer-to-peer payment option and take them mainstream. As would any such 'Fedcoin' project, per this thread's focus.

    The site seems to be a good resource for keeping up-to-date with what's going on.
    upload_2017-8-27_12-45-46.png

    ...
    So, what's stopping people from using Bitcoin and other cryptocurrencies that offer far more advanced technology than that employed by PayPal?

    Two words: consumer protection. There is simply no such thing in crypto.

    If you want to buy something with Bitcoin, you either have to trust the merchant completely or you have to get an additional escrow agent that can mediate the transaction, making the whole process complicated and expensive.

    Nuno Correia, CEO of Utrust says his team is building a simple, yet effective solution on a platform that will feature its own consumer protection system, allowing users to shop online with the same ease they do when using eBay or PayPal.

    Cointelegraph asks Correia how the platform can help cryptocurrencies achieve mass adoption.

    He states:

    “UTRUST will bring confidence to crypto adopters. They will no longer feel that they are taking a risk when purchasing online!”

    Volatility
    Bitcoin is no stranger to volatility, the bipolar cousin of inflation. Although volatility is where traders make a living, it’s not a desired property in any currency.

    This problem ties in nicely with the consumer protection issue we just reviewed.

    Merchants and customers are the two basic components of any transaction and although there are many Bitcoiners out there ready to spend their BTC wherever they can, merchants may be reluctant to deal with the added risk.

    While the system employed in the Utrust platform allows merchants to deal with fiat only, this is not a complete solution to the volatility problem.

    However, projects like Bitshares, Waves and Tether are leveraging Blockchain technology to provide us with Blockchain-based fiat tokens like BitUSD, wUSD, and USDT, respectively.

    Security
    This isn’t a cryptocurrency-specific problem per se, but it’s still something that must be addressed urgently if cryptocurrencies are to continue on their ascent towards the mainstream stage.

    We’re not even talking about the ridiculous numbers of scams, schemes and tricks designed to take your coins online. We’re talking about exchanges.

    Exchanges have become a gateway into the cryptocurrency world, providing a convenient and affordable service.

    However, these same exchanges have become centralized fail points to an otherwise decentralized economy.

    From the infamous Mt. Gox hack, to the latest problems found in Bitfinex and BTC-e, this problem doesn’t seem to have got better with time.

    The solution lies with decentralized exchanges (DEX). Open-source projects like Bitsquare, Waves DEX and the upcoming BarterDEX by SuperNet all put control back in the user’s hand, allowing them to buy and sell cryptocurrencies without the need to trust a third-party entity, promoting security, privacy and efficiency.

    https://cointelegraph.com/news/how-...ems-and-finally-achieve-mass-adoption-opinion
     

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