Timeo Danaos et dona ferentes (Latin for "Fear the Danaians who bring gifts")
From Virgil's poem The Aeneid.
Are cryptocurrencies a kind of "gifts" "for the benefit" of people? Funds are already being created where individuality will be lost. Who could create "cryptocurrencies" and for what?
Proverb: "Free cheese only comes in a mousetrap."
Cryptocurrency: a bit of Theory
Cryptocurrency is a type of non–governmental digital "currency", the issuer and regulator of which is a decentralized network operating in a fully automatic mode.
Cryptocurrencies have no material form and exist solely in the form of a digital code that contains information about the amount and all previous transactions with a specific exchange unit (coin).
This data is stored and updated in a distributed registry, which is formed by a network of independent nodes – computers of network participants. This network is called a blockchain.
The issue of cryptocurrencies can be carried out in two ways:
- a) Generation of new blocks in the blockchain by a decentralized network consisting of users' computers. For the generation of each block, the users involved receive a reward in the form of new coins, which is how the issue takes place. This method is used by the oldest cryptocurrencies, bitcoin and ether. Decentralized coin generation, in turn, also has its own varieties.:
- Mining is a process in which blockchain participants solve complex mathematical problems using special processors and video cards, thanks to which hashes of new blocks are formed. For forming a block and attaching it to the chain, miners receive a reward in the form of new coins, which is how they are issued.
- Minting is a process in which the calculation takes place by locking a certain amount of cryptomoney in the user's wallet (staking). The more coins there are, the higher the probability of a new block being formed by a given blockchain participant.
- b) The release of a certain number of tokens by the development team (ICO). This option is similar in mechanism to the issuance of securities by mutual funds.
For the first time, the term "cryptocurrency" began to be used after the appearance of the Bitcoin payment system, which was developed in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto (identity unknown?).
The term "cryptocurrency" became widespread after Andy Greenberg's article titled "Crypto Currency" was published in Forbes magazine on April 20, 2011.
The legal regime of cryptocurrencies varies greatly from country to country and remains uncertain. While some countries have allowed transactions with cryptocurrencies, others have banned or restricted them.
For example, in early 2014, the People's Bank of China banned transactions with bitcoins to Chinese financial institutions, but did not ban transactions with cryptocurrencies from citizens.
In Russia, cryptocurrencies as such are not subject to a ban or restrictions on possession, but they cannot be used as a means of payment, since it is illegal to buy goods in any currency except for rubles.
I have prepared a brief summary of the cryptocurrency in order to draw your attention to some of the oddities of the emergence of this digital entity and its further development.
Strangeness 1.
The first bitcoin cryptocurrency appeared anonymously and out of nowhere. Let us recall that the history of bitcoin begins at the end of 2008, when someone under the pseudonym Satoshi Nakamoto published a document entitled “Bitcoin: an electronic money system from participant to participant.”
In this document, Nakamoto described the principles of bitcoin and blockchain. He envisioned bitcoin as an open, decentralized system in which all transactions are logged in a publicly accessible journal and confirmed by the network.
The first block in the Bitcoin blockchain, known as the genesis block, was mined on January 3, 2009. In other words, the whole world has been given a "hint" that humanity already has the technical capability to build sustainable decentralized systems.
But how many people want to build something for free? Therefore, someone Satoshi Nakamoto proposed a theory of how a distributed ledger system would literally "make money."
The logic is that if the distributed registry becomes widespread, then experts will evaluate the remaining capabilities of this technology later on their own. But this is just my hypothesis, not the ultimate truth.
Strangeness 2.
Miraculously, the appearance of this "gift" coincided with the height of the global financial crisis in 2008. Recall that at that time, the US Federal Reserve used its new superweapon called the Quantitative Easing (QE) program to combat the crisis.
"Quantitative easing" is a monetary policy applied first by the US Federal Reserve and later by other central banks of leading Western countries to stimulate national economies when traditional monetary methods proved ineffective for a number of reasons.
In human language, QE means the usual issuance of unsecured dollars. The first phase of QE began in the United States in November 2008, at exactly the same time when an unknown genius gave mankind the theory of cryptocurrency.
The quantitative easing program in the United States was resumed three more times after that. Her fourth reincarnation ended only in 2022. As a result of the implementation of four QE programs, only about 9.8 trillion dollars were issued!
For comparison, the entire annual capitalization of the physical gold market is about 300 billion dollars!
At this point, a fair question should arise: where did all this "fake" money go and why didn't the dollar depreciate several times? Because almost all the dollars printed went to the financial market, inflating the value of shares of American companies, as well as to the new, miraculously created cryptocurrency sector.
Currently, the capitalization of the global cryptocurrency market, which appeared "out of nowhere" only 15 years ago, is about $ 3,45 trillion!
As mentioned in the help above, a cryptocurrency is only a digital code that has no physical properties. The whole value of the crypt lies in the ability to serve as a universal equivalent with the appropriate technical capabilities and broad trust of the exchange participants without any guarantees from government institutions.
It's hard to believe, but the global crude oil market in 2023 in monetary terms amounted to 2.1 trillion dollars! That is, the global market for goods that form the energy basis of the economy of all mankind is, in monetary terms, equal to the market for something that has no material expression and is not some kind of obviously useful service.
In other words, a certain group of comrades created, among other things, a worldwide vacuum cleaner for accumulating excess dollars produced under QE, ingeniously!
Strangeness 3.
Distributed ledger technology itself is certainly revolutionary, allowing, in principle, to move from a vertical hierarchy of society to a form based on the principle of "everyone is connected to everyone, everyone influences everyone."
At the applied level, distributed ledger technologies already serve as the basis for the development of a new digital economy.
The use of blockchain right now is proving its effectiveness in such industries as financial technology, ecology, medical technology, logistics, transport, oil and gas industry, retail, energy and much more.
In short, the cryptocurrency case is not just some clever scheme by anonymous international financiers trying to delay the date of the global financial collapse.
Of course, the creation of a tool in the global economy to absorb "extra" dollars was most likely one of the goals of the emergence of this technology, but it cannot be ruled out that this may be some kind of global financial experiment with a plan that is still unclear to us.
As a hypothesis, it can be assumed that the purpose of introducing cryptocurrencies may be to inflate a giant financial bubble to reset the global financial system and completely reformat it in the future.
From this point of view, it seems useful to create a situation in which every inhabitant of the planet would feel the injustice and inferiority of the current economic system and would not resist the new "social" restructuring of the financial system.
"For many of us, cryptocurrencies seem to be an alternative to financial freedom. This is a test that makes a profit. But it will be completely interrupted at some point," said a source familiar with the situation.
"Big changes are taking place in the world, such that people no longer have to solve financial issues on their own. These financial systems will run programs for us, monitoring our every financial move on a daily basis.
Everything will be taken into account when we buy something else, it will be modified because it will match the system, and a settlement will be made with us at the end of the year.
You won't need a tax inspector, because the system will be perfect. I don't think that in such a structure, anyone will allow virtual financial systems to exist that will allow people to have economic freedom.
I think this is some kind of testing. Therefore, they say different things about cryptocurrency. I'm not saying it's something bad. I'm just saying that at some point the testing will be over. Perhaps in a very surprising way," the same source noted.
This is where the testing of the decentralized system takes place. This includes developing procedures to restore user access to their assets.
From the current point of view, cryptocurrencies really do look like a tool for financial freedom. But ultimately, in the logic of the new world order described above, these technologies will contribute to the completion of financial independence in the form in which it exists now.
"Money is a very important thing in this world. This world and we exist in it because we earn money and spend it. But if you already have money invested in something, then you would like to know the point, address, place.
It's worth taking this into account. The place where the building is located, the institution responsible for the capital. A structure that you benefit from because you have invested your money in its financial enterprise. There must be someone responsible for the investments made, for all this…
Assets that are worth a lot should have a responsible person as a guarantee that nothing bad will happen to them. And in this case, where is some kind of structure responsible for bitcoin or another cryptocurrency located? Where is there an institution that you can contact with a complaint or for help if you suddenly lose your password?"
Let me remind you that these are just thoughts and reflections on the emergence of bitcoin and the blockchain as such.
Only you can draw conclusions!
Be healthy and please take care of yourself!
