Initially, I was really enjoying the fresh perspective of a tech investor and admiring her willingness to take the risks she does. However, at one point, Annette states that Bitcoin and other similar cryptocurrencies are just additional “commodities, like wheat or gas” to speculate on. I most emphatically disagree.
Bitcoin and similar “coin concept” cryptocurrencies are definitely speculative but they are not commodities. They are a new form of fraud, the effects of which are hidden theft from the general public, the same as undetected counterfeiting.
Something for Nothing
Human beings need wheat and gas and clean water and a whole lot of other real physical commodities to survive and prosper in the real world where our physical bodies live. Bitcoin and its imitators are nothing like physical commodities such as food, clothing, shelter and fuel. Every “gain in value” of a cryptocurrency is created by nothing more substantial than the clear desire to gain real world purchasing power WITHOUT producing anything of value in the real world.
The real world has limits to what can be produced. Cryptocurrencies do not. By creating new purchasing power without producing anything of value, Bitcoin and similar “coin concept” cryptocurrencies are, by design, parasites – sucking real wealth from the people who create that real wealth, such as food, clothing, shelter and fuel.
If this were the printing of counterfeit $100 bills with a printing press,we would understand that it is a form of theft by fraud. We would understand that dilution of the medium of exchange with counterfeit $100 bills would, if left unchecked, result in the severe devaluation of the legal currency and thus the money holdings of everyone else.
But “mining” Bitcoins with computers, making Bitcoins a “speculative commodity” and a “technological breakthrough” blinds most of us to the fact that it is fundamentally the same thing as counterfeit money, unearned claims on real wealth.
Bitcoin started at 1/3 of a cent. It went to $20,000 based on greed and hype and the new hype is now $250,000. All of this “value” is created by nothing more than the perceptions of those who want something for nothing. Imagine the new hype being as successful as the previous hype. Twenty-one million Bitcoins at $250,000 each is $5.25 TRILLION of real purchasing power given in exchange for nothing. That would be the largest theft in history.
Accomplices in Fraud
Self-styled crypto-revolutionaries like to brag that governments can’t shut down Bitcoin or any other “liberating” cryptocurrency because the distributed ledger technology is global, permanent and out of governmental reach. But, as I explained in my comments on Miguel Ordonez’s presentation, it is acceptance for value that actually makes anything “money”. For instance, I could print a million dollars in counterfeit $100 bills. They only become “money” for me if I can spend them on real things which requires someone else to accept them as “money”.
Knowingly accepting and spending counterfeit money makes the acceptor an accomplice in fraud. To shut down coin model cryptocurrencies, governments need to pass legislation declaring them to be frauds. This would make anyone accepting coin model cryptocurrencies for value an accomplice in fraud.
Lacking such decisive action, we all stand to have our pockets picked until eternity by the creation and acceptance for value of an unlimited number of worthless “coin model” crypto-fraud currencies. For politicians, economists and bankers who should know better and have a professional duty to the public, failure to outlaw these scams constitutes incompetence, dereliction of duty, and, once properly informed, accessory to fraud.
Fortunately, so far, cryptocurrencies are only a drop in the bucket of global money actually being spent. Many have collapsed as the pump-and-dump scams they clearly were and most surviving cryptocurrency is being held like money under the mattress waiting for the next big run-up, so it has yet to actually become “money” (accepted for something of real value).
Blockchain is a technology that could be put to nobler use than reproducing the speculative frenzy of Tulip Mania – but without any tulips.
Circular Conservation Economy
Monetary innovators should be working on making our money system suitable for the real world emergency we find ourselves in; our behaviour is destroying the planet. What we really need is a circular conservation economy that enables drastically reduced resource extraction while ameliorating the necessary reduction in consumption by more equal sharing. This circular conservation economy must be mathematically stable in growth or shrinkage and it must be fair to all in order to be accepted.
The current system meets none of these criteria and requires fundamental change. The alternative may well be extinction.
What if the only feasible solution can’t possibly give investors ten times their investment within ten years as Annette says she requires? What if it couldn’t return a profit at all? What if we were being called upon to give the solution away free worldwide as fast as we can, just as we would throw out life preservers to drowning people?
Well, first we would need to know what the solution is – which requires knowing what the problem is.
Annette asks a fundamental question: “What is currency”?
The broadest definition is: anything used as a medium of exchange.
Basically there are, and always have been, two opposite concepts for media of exchange:
1. the scarcity model in which the value of the medium of exchange is volatile because its value is created by its own scarcity relative to demand;
2. The abundance model in which the value of the medium of exchange is determined by prices – what its Issuer, the initial spender, will trade in real goods and/or services to get it back.
I propose that the reader take a look at the links below for some fresh financial tech ideas well beyond the very finite thought boundaries evident at this conference.
In my animated movie, “Money as Debt II – Promises Unleashed” (2009), I predicted the invention of “digital coins” as I called them. Unlike Bitcoin and its imitators, my concept of digital coins was as intelligent tokens redeemable for specific real things. This is the abundance model. http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/MAD2.htm
Money as Debt III – Evolution Beyond Money (2011) is about the re-invention of the abundance model using modern tech. The accompanying business model is fleshed out in considerable detail. The whole movie takes 2 1/2 hours. My website elaborates on the same proposal in written form. http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/MAD3.htm
The only economist to examine my proposal with an open mind had this to say: “…the obvious solution is not merely to foster the use of transferable product-specific vouchers as stores of value but to make them company-specific and include expiry dates on them. Businesses that issue them could then be confident about the level of sales they can achieve before the end of the expiry period. This is where we go, roughly speaking, if we follow the ingenious Digital Coin proposal of Paul Grignon, a Canadian film maker whose excellent animated documentary Money as Debt deserves to be screened to all students of economics.”
“…I find Grignon’s Digital Coin proposal especially well thought out. The time for this self-issued credit system to be implemented seems ripe both because of the failure of the existing bank-credit system and because we now have the technology to make it work.” http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/solution3.htm
Initially, I was really enjoying the fresh perspective of a tech investor and admiring her willingness to take the risks she does. However, at one point, Annette states that Bitcoin and other similar cryptocurrencies are just additional “commodities, like wheat or gas” to speculate on. I most emphatically disagree.
Bitcoin and similar “coin concept” cryptocurrencies are definitely speculative but they are not commodities. They are a new form of fraud, the effects of which are hidden theft from the general public, the same as undetected counterfeiting.
Something for Nothing
Human beings need wheat and gas and clean water and a whole lot of other real physical commodities to survive and prosper in the real world where our physical bodies live. Bitcoin and its imitators are nothing like physical commodities such as food, clothing, shelter and fuel. Every “gain in value” of a cryptocurrency is created by nothing more substantial than the clear desire to gain real world purchasing power WITHOUT producing anything of value in the real world.
The real world has limits to what can be produced. Cryptocurrencies do not. By creating new purchasing power without producing anything of value, Bitcoin and similar “coin concept” cryptocurrencies are, by design, parasites – sucking real wealth from the people who create that real wealth, such as food, clothing, shelter and fuel.
If this were the printing of counterfeit $100 bills with a printing press,we would understand that it is a form of theft by fraud. We would understand that dilution of the medium of exchange with counterfeit $100 bills would, if left unchecked, result in the severe devaluation of the legal currency and thus the money holdings of everyone else.
But “mining” Bitcoins with computers, making Bitcoins a “speculative commodity” and a “technological breakthrough” blinds most of us to the fact that it is fundamentally the same thing as counterfeit money, unearned claims on real wealth.
Bitcoin started at 1/3 of a cent. It went to $20,000 based on greed and hype and the new hype is now $250,000. All of this “value” is created by nothing more than the perceptions of those who want something for nothing. Imagine the new hype being as successful as the previous hype. Twenty-one million Bitcoins at $250,000 each is $5.25 TRILLION of real purchasing power given in exchange for nothing. That would be the largest theft in history.
Accomplices in Fraud
Self-styled crypto-revolutionaries like to brag that governments can’t shut down Bitcoin or any other “liberating” cryptocurrency because the distributed ledger technology is global, permanent and out of governmental reach. But, as I explained in my comments on Miguel Ordonez’s presentation, it is acceptance for value that actually makes anything “money”. For instance, I could print a million dollars in counterfeit $100 bills. They only become “money” for me if I can spend them on real things which requires someone else to accept them as “money”.
Knowingly accepting and spending counterfeit money makes the acceptor an accomplice in fraud. To shut down coin model cryptocurrencies, governments need to pass legislation declaring them to be frauds. This would make anyone accepting coin model cryptocurrencies for value an accomplice in fraud.
Lacking such decisive action, we all stand to have our pockets picked until eternity by the creation and acceptance for value of an unlimited number of worthless “coin model” crypto-fraud currencies. For politicians, economists and bankers who should know better and have a professional duty to the public, failure to outlaw these scams constitutes incompetence, dereliction of duty, and, once properly informed, accessory to fraud.
Fortunately, so far, cryptocurrencies are only a drop in the bucket of global money actually being spent. Many have collapsed as the pump-and-dump scams they clearly were and most surviving cryptocurrency is being held like money under the mattress waiting for the next big run-up, so it has yet to actually become “money” (accepted for something of real value).
Blockchain is a technology that could be put to nobler use than reproducing the speculative frenzy of Tulip Mania – but without any tulips.
Circular Conservation Economy
Monetary innovators should be working on making our money system suitable for the real world emergency we find ourselves in; our behaviour is destroying the planet. What we really need is a circular conservation economy that enables drastically reduced resource extraction while ameliorating the necessary reduction in consumption by more equal sharing. This circular conservation economy must be mathematically stable in growth or shrinkage and it must be fair to all in order to be accepted.
The current system meets none of these criteria and requires fundamental change. The alternative may well be extinction.
What if the only feasible solution can’t possibly give investors ten times their investment within ten years as Annette says she requires? What if it couldn’t return a profit at all? What if we were being called upon to give the solution away free worldwide as fast as we can, just as we would throw out life preservers to drowning people?
Well, first we would need to know what the solution is – which requires knowing what the problem is.
Annette asks a fundamental question: “What is currency”?
The broadest definition is: anything used as a medium of exchange.
Basically there are, and always have been, two opposite concepts for media of exchange:
1. the scarcity model in which the value of the medium of exchange is volatile because its value is created by its own scarcity relative to demand;
2. The abundance model in which the value of the medium of exchange is determined by prices – what its Issuer, the initial spender, will trade in real goods and/or services to get it back.
I propose that the reader take a look at the links below for some fresh financial tech ideas well beyond the very finite thought boundaries evident at this conference.
In my animated movie, “Money as Debt II – Promises Unleashed” (2009), I predicted the invention of “digital coins” as I called them. Unlike Bitcoin and its imitators, my concept of digital coins was as intelligent tokens redeemable for specific real things. This is the abundance model.
http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/MAD2.htm
Money as Debt III – Evolution Beyond Money (2011) is about the re-invention of the abundance model using modern tech. The accompanying business model is fleshed out in considerable detail. The whole movie takes 2 1/2 hours. My website elaborates on the same proposal in written form.
http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/MAD3.htm
For a 7:36 minute introduction to the basic idea and how it was used in medieval times, click here:
http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/essence.htm
The only economist to examine my proposal with an open mind had this to say: “…the obvious solution is not merely to foster the use of transferable product-specific vouchers as stores of value but to make them company-specific and include expiry dates on them. Businesses that issue them could then be confident about the level of sales they can achieve before the end of the expiry period. This is where we go, roughly speaking, if we follow the ingenious Digital Coin proposal of Paul Grignon, a Canadian film maker whose excellent animated documentary Money as Debt deserves to be screened to all students of economics.”
“…I find Grignon’s Digital Coin proposal especially well thought out. The time for this self-issued credit system to be implemented seems ripe both because of the failure of the existing bank-credit system and because we now have the technology to make it work.”
http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/solution3.htm