Bitcoin and crypto are, to money and finance, what direct democracy is to representative democracy; a threat, to politicians and those who lobby them.

That is why the political and financial ruling elites like neither. They pay lip service to democracy but when it comes down to real issues; they dislike direct democracy, which decentralises political power, and they dislike crypto because it decentralises economic and financial power, as well as pushing the decentralisation of political power.

Let us look at the facts, at what the politicians on the Right and the Left say, as well as to their policies.

After their statements, I put my comments in brackets.

Trump:

“Cryptocurrencies are a disaster waiting to happen”.

(It is obvious that if he could he could ban crypto to “prevent” a “disaster” he would. Trump can not resist spewing out what the New York financial and political clique, an his professors at the Wharton MBA school say; the only “serious financial system is the one we support and the supports us…”)

He isn’t a big fan of digital currencies because they’re hurting the dollar.

(No, Mr Trump, the dollar is hurting because the politicians like yourself keep printing money with nothing to back it up with. It is as if a person had a printing machine in the basement and prints dollars to go to Costo. Mr. Trump and Mr. Biden and Congress are in fact giving Americans dollar, just as is they printed the dollars in their basements. To say that Crypto is hurting the dollar is like saying that Toyota hurts GM because it makes better cars.)

“They certainly are something that people don’t know very much about,”

(I do not think Mr. Trump knows much either, otherwise he would not make the comments he makes.)

As for Biden and his administration, they are not as hostile as Trump but they are no friends of Crypto either. For example, the US Administration has rejected all applications to set up Exchange Traded Funds (ETFS) for the major cryptos, Bitcoin and Ethereum. Even Canada, where the establishment is no fan of direct democracy or crypto either, has approved several ETFs for Bitcoin and Ethereum.

Other US politicians, like Senator Warren, say things like:

“There are substantial difficulties with our current payment system.  Nearly 33 million Americans have been locked out of the traditional banking system. They’re forced to use check cashers and payday lenders for basic banking services. And even those with traditional checking and savings accounts find that many of the largest banks have proven to be untrustworthy, gouging customers for overdraft or other fees or, in the case of Wells Fargo, just outright cheating their customers with fake accounts and fake services for which customers paid dearly.”

(Very interesting perspective; she says the current system is not working, but instead of aiming her guns at the political and financial operators of the current system, that leaves 33 million Americans locked out of the financial system, and many more trapped in it, she attacks crypto, a new technology that could help the 33 million and everybody else, in the US and around the World.)

(Warren shows her true beliefs; she is not concerned about the people, what she is concerned about is power and control, she does not like freedom, all politicians in power like control.  She uses protection of the people as the fig leaf to hide her private true beliefs. The difference between representative democracies and dictatorships is that in representative democracies the people can replace those in control; the control changes. but the control never goes away. Warren knows she needs the big money of big money, the money of those who leave 33 million out, and have others trapped, to get elected)

(When Internet started, and even today, it had political and financial enemies, and not only in totalitarian regimes. Elected politicians like democracy only because it makes it possible for them to get elected and replace those currently in power, but once in power, they dislike democracy; they dislike the people to have any say on any specific decision.)

(Warren just reacts in the natural way elected politicians react. When something new challenges their decision-making power, they fight it. Crypto challenges their decision-making power. They know it and they dislike it. But they will never say that. They are very articulate, they know how to find cover with clever words about “protection of the weak”, “fairness”, “equality” and so on. But they hate and fear that the people have as much power as they do, and far less do they like that the people have more power, power to stop their laws and decisions.)

(Her reaction to Crypto, which means the people will have financial freedom and independence from banks and politicians, is like the reaction of Swiss elected politicians when the Swiss people decide to bring in direct democracy in 1867; Swiss politicians did not like direct democracy, either. During the Second World War, they even tried to revert to representative democracy, but the people stopped them. For all the talk about the Swiss banks, Switzerland is far friendlier to crypto than the US.)

Warren continues: “So, what are the alternatives? Digital currencies have been hyped as a solution to these problems. Early advocates claimed that cryptocurrencies would open up the financial system and deliver fast, cheap, and secure payments to anyone with an Internet connection. Others pointed out that crypto was a way to avoid the risks of dealing with the giant banks that squeezed customers dry.”

(Crypto is barely 11 years old; the most important crypto, Bitcoin, was launched in 2009. The second most important, Ethereum, was launched in 2013. All others are also very new. The services that crypto can provide are barely starting. Unfortunately, Warren does not want to give them a chance, I think I know why.)

“Cryptocurrencies have turned out to be a fourth-rate alternative to real currency. First, cryptocurrencies are a lousy way to buy and sell things. Unlike the dollar, their value fluctuates wildly depending on the whims of speculative day traders. You know, in just the last two months, the value of Dogecoin increased by more than ten-fold and then declined by nearly 60%. Now that may work for speculators and fly-by-night investors, but not for regular people who are looking for a stable source of value to get paid in and to use for day-to-day spending.”

(These are silly arguments. The people who buy crypto know what they are doing; they are not the naïve or the very old. The value of crypto only fluctuates wildly because it is just starting, it is mostly investors that are not averse to risk that buy crypto, just like the investors not averse to risk invested in Netscape, Apple, Google and all the others, and continue to invest in new ones, when they start. It is normal their value fluctuates wildly; it is in the nature of any new industry. I am sure the same happened with steam engine, cars, etc.)

“Second, crypto is a lousy investment. Unlike, say, the stock market, the crypto world currently has no consumer protection – none.  As a result, honest investors and people trying to put aside some savings are at the mercy of fraudsters.  Pump and dump schemes are outlawed in the case of ordinary stock, but they have become routine in crypto trading. One study found that the level of price manipulation in cryptocurrency is – and I quote – “unprecedented in modern markets.” ”

(This is laughable. If she is arguing current laws, and action by politicians, protect consumers, she is joking. Let us remember 2008; nobody rescued the millions homeowners who lost their homes, but the politicians rescued that big banks; is an interesting twist in consumer protection. Don’t sometimes naïve investors lose their shirts in stocks?)

She continues:

“And third, crypto has become a haven for illegal activity. Online theft, drug trafficking, ransom attacks, and other illegal activity have all been made easier with crypto.  Experts estimate that last year more than $412 million was paid to criminals in ransom through cryptocurrencies.  And unlike other payment systems that make it tougher to move money illegally, a key feature of crypto is its secrecy. So just in the past few weeks, cryptocurrencies made it possible for hackers to collect a ransom to release the Colonial pipeline hack and to free JBS, the world’s largest meat producer, from a paralyzing cyberattacks. And every hack that is successfully paid off with a cryptocurrency becomes an advertisement for more hackers to try more cyberattacks.”

(Crypto-related crime does not even come close to the dollars drugs, theft, smuggling and many other illegal stuff move around the World. If use in criminal activities is the argument to attack crypto, a much stronger case can be mounted against the US Dollar.)

“Finally, there are the environmental costs of crypto. Many cryptocurrencies are created through “proof-of-work” mining. It involves using computers to solve useless mathematical puzzles in exchange for newly minted cryptocurrency tokens. Such mining has devastating consequences for the climate. Some crypto mining is set up near coal plants, spewing out filth in return for a chance to harvest a few cryptocoins. Total energy consumption is staggering, driving up demand for energy.  If, for example, Bitcoin – just one of the cryptocurrencies – were a country, it would already be the 33rd largest energy user in the world – using more energy yearly than all of the Netherlands. ”

(She has a small case here, but small. The carbon footprint of bit coin is relatively easy to calculate; so many computers using consuming so many watts of electricity. But for paper money, trees have to be cut and transported, processed in polluting pulps and paper mills, shipped to printers and shipped again to the banks. Something similar is necessary with coins; mining, transporting, refining, etc. I doubt bitcoins have more environmental impact than paper and metal money. The pollution and contribution to global warming of crypto is minuscule compared to many other industries)

“And all those promised benefits-the currency that would be available at no cost to millions of unbanked families and that would provide a haven from the tricks and traps of big banks-well, those benefits haven’t materialized.”

(Isn’t she going too fast? Services based on crypto are barely starting. It is not logical to speak like that, unless you have already decided crypto is evil; like Trump, but in longer sentences.)

So, I leave there for you. But if we want to have political and economic freedom, we need direct democracy and crypto.

Victor Lopez

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