Commentary

Make mine crypto

cryptocurrency

TheMole
Written by TheMole

By Dave Avran

LATELY money games and Cryptocurrency have been dominating Malaysian news, particularly with several prominent arrests made.

So what exactly are they?

If you search online, you’ll probably end up more confused reading things such as Bitcoin is a cryptocurrency on the blockchain supported by a peer-to-peer network, completely oblivious to the fact that cryptocurrency and blockchains aren’t part of a normal dialogue relegating the explanations to being worthless.

The appeal of money games and Cryptocurrency is enormous. Money is involved in roughly 50% of all transactions. Having a regulated currency (currency issued by our government’s central bank) entails the government to regulate at least 50% of our transactions.

Most of us will work eight hours a day for something which the government decides the value of. Our purchasing power, our ability to obtain goods and services, is controlled by the government. An individual can work for a full eight hours, but what that individual can purchase with that labour is entirely decided by the government.

Cryptocurrency is the idea that money is no longer real, combined with the recognition that our government is eager to relinquish its control and go back to the gold standard. It’s a digital currency, so we can electronically set up an account to hold our money. Each of us can have a unique identifying address, which is the coins wallet – which tells you how many coins you have.

The highly popular Bitcoin community for example, has recorded each of the wallets and transactions on a basic accounting ledger.

Now, suppose you want to pay someone for work they’ve done for you, and you transfer one Bitcoin to their account; the Bitcoin community keeps a ledger of this and adjusts the balances of the appropriate wallets. The transactions are then ordered into blocks and appended to the ledgers. The blocks are time stamped and form a chain of transaction history – hence the term blockchain.

The blockchain data – the list of transactions and accounts – is stored on multiple computers all across the world. This way, if one computer is hacked and the information altered to artificially inflate the balance of the hacker’s account, the account will be checked against the network of computers and will be immediately recognised as a fraud.

The advantage of participating in the blockchain is that, when new Bitcoins are distributed they are distributed to the network, so those who lend their computers to the network receive Bitcoins for doing so.

This network is usurping the power of central banks, which control our currency. With Cryptocurrency, they no longer have the power to erode our purchasing power.

The difference in purchasing price enables banks to earn record profits. By increasing the money supply – the number of dollars in an economy – they devalue the existing dollars, making us poorer. However, banks can lend out the additional money for loans, mortgages, or lines of credit and profit from it.

This impoverishment of the average individual that profits the banks is facilitated by the government.

Individuals, who worked their entire lives, find their retirement income in their senior years within striking distance of the poverty line, because the 2017 dollar purchases far less than the dollars that went into their retirement savings and investments.

Take the example of Venezuela, once the richest country in Latin America. It holds the world’s largest supply of crude oil — once deemed an endless gusher of cash. The country turned toward socialism in 1999 and elected Hugo Chavez president. He championed populism, cut ties with the United States and cozied up to China and Russia, both of which loaned Venezuela billions.

Chavez’s government far overspent on welfare programmes, and fixed prices for everything. It declared farmlands state property and then abandoned them, and instead made the nation dependent on selling its oil abroad. Today Venezuela’s economy is spiralling towards collapse and a humanitarian crisis has plunged hordes into needless sickness and starvation.

So a Venezuelan who invested in Bitcoin, a currency their government couldn’t control, now finds that the cryptocurrency is literally the difference between life and death in his ability to purchase food; compared to his neighbour who cannot, due to their sole reliance on the government-controlled currency.

Though still in its infancy, and highly speculative, cryptocurrency offers intrigue, and the hope of emancipating ourselves from central banking in a very real way.

 

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TheMole

TheMole