The virtual blockchain machine that protects against Orwellian CBDCs
Thursday 20 October 2022 at 13.18
Tokens are the oil in the virtual blockchain machine that keeps the metaverse running. As a consequence, a far more valuable internet is unlocked for everyone to use and own. Companies can create communities around their brands far more easily. Users own their data and can participate in profit sharing.
The metaverse does not have central banks. Some residents of the metaverse may choose to use CBDCs (central bank digital currencies) for convenience, but not as a store of wealth as CBDCs can easily be created by the central banks. The metaverse protects itself against the predictions made by George Orwell in his timely book 1984.
CBDCs are Orwellian
Yet, in yet another push against a completely Orwellian society, PayPal recently announced that it would remove as much as $2,500 from a user’s account if that user was deemed to be spreading lies. Of course, PayPal has become the dictatorial judge with no courts or lawyers to judge. Welcome to the dawn of CBDCs that aim to control our money. In China, if one has a bad social score, they can see the interest rate drop. Imagine watching your bank balance shrink in real time because your interest bearing account dropped below 0% because your social score dropped.
Bitcoin is the Magna Carta code
This is why crypto serving as fuel for the metaverse is so important. Basically, crypto is about freedom. Freedom is the use case. Crypto is the counterweight to government control of our money. Bitcoin is the magna carta of code. There are no constitutional rights without freedom of action. CBDCs are a deliberate attempt to revoke this freedom under the guise of convenience. The Canadian government’s response to the truckers’ protests illustrates this well.
Fiat vs. Bitcoin vs. Gold
Bitcoin is decentralized, so no government can control it. Just as we have separation of church and state, Bitcoin separates money and state. It is borderless, which has enabled millions to sell their falling local currency into bitcoin and then into dollars, especially those living under deeply corrupt governments. In fact, the number of hyperinflationary currencies in developing countries continues to grow.
Fiat currencies derive their value from the full faith and support of their respective governments. As long as society has faith in their fiat system, their currency will continue to have value. It is supported by taxpayers’ money. Unlike fiat, Bitcoin derives its value from its scarcity combined with its utility and network effect.
Having a single phone is pretty useless as it can’t make calls through it. But as soon as the number of phones increases, the value increases exponentially. Analogously, Facebook can be easily duplicated, but such a Facebook without users is worthless.
Meanwhile, Facebook, with its billions of users, is one of the most valuable companies on the planet. Therefore, with Bitcoin, network adoption is the factor that plays the leading role in adding value to it. Both the hash rate and the number of users recently hit records despite this year’s bear market. The number of Bitcoin users tends to double every 12 months, so it is estimated to be used by 25% of the planet by 2026.
Bitcoin also has value because it cannot be destroyed, printed or inflated. Unlike fiat, Bitcoin has no central bank, and its decentralized structure provides security, utility, and borderless transfer of value. This is why the price of Bitcoin keeps rising to new highs against fiat reserve currencies every few years.
In many ways, Bitcoin can also act as a store of value similar to gold, although it is far more volatile since Bitcoin is still climbing the S-curve. Nevertheless, the gains have been unprecedented, having increased by hundreds of millions of percentage points. Bitcoin worth $1 in 2010 is worth a few million dollars today even after losing more than two-thirds of its value.
That said, gold was volatile in the 1970s and can be confiscated, stolen or lost far more easily than Bitcoin. A friend of ours has eight figures of gold buried in farmland. With Bitcoin, all you need is the seed phrase and internet access. Of course, if there is little or no internet or electricity, the world is looking at a far more dire situation. In all likelihood, any internet outages are resolved by mesh networks designed to override any government blocking of the internet.
Money laundering, terrorism and tax evasion, OH MY!
Money laundering, terrorism and tax evasion have become weapons for both short-term and long-term goals of governments. In the US and EU, banks and payment processors have been pressured to close the accounts of gun shops, adult businesses, crypto businesses and other perfectly legal businesses. Although any government has the right to pass laws to make these things illegal, instead we see “deep bureaucracy” where the banks point to their regulators and say “they told us to close high risk accounts” while the regulators point to the banks and say “it has we never said, just be careful”.
The net effect is profoundly undemocratic. Your bank account is gone and you have no recourse, no due process, not even an actual law that says “you shall not have an account”. Being unbanked and having to rely on cash is more or less cut off from the modern economy. Paying bills, getting a paycheck, paying vendors, and investing in your 401k all require access to traditional payment rails.
Many central banks want to use their CBDCs to eliminate cash, allow global transaction censorship and manipulate interest rates. Below a certain negative interest rate, people will withdraw their money, but if cash is no longer accepted, people are forced to keep their money in the banks. Future dictators will also be able to censor their opponents’ spending during an election period to prevent them from running a campaign.
Every year the slow creep continues in the form of reporting requirements that become a little broader, the penalties more severe and the restrictions on cash withdrawals more stringent. Presumption of innocence is turning into presumption of guilt. I ended my banking relationship with HSBC when they wanted me to fill in a form explaining why I wanted to withdraw £2000.
Lots of tip points
The world is at a number of turning points: record debt, soaring inflation, historically low interest rates, falling markets, political upheaval and the possibility of nuclear war, among other factors. But the counterweight to an authoritarian world is blockchain which is the beating heart of Web3 which is the new beating heart of the metaverse.
You can think of the blockchain as an Excel sheet for viewing the entire transaction history. As the former chairman of NASDAQ said, all stocks will eventually be tokenized. I would add that eventually every piece of land around the world will be entered on the blockchain. It allows people to easily trace the history of the owners, sell and trade the land, borrow against the land and sell it fractionally, among other things.
DeFi makes it possible to put any real asset on the chain, including your possessions, your art, your jewelry. And it will transplant legacy banking services because of its far greater efficiency at far lower costs.
A history lesson
So despite the Fed saying we are still not in a recession, remember that in the second quarter of 2021 the Fed said that inflation was transitory, then in the third quarter they said that inflation is rising but will probably peak soon, then ii fourth quarter they removed the word “transient”.
In the first quarter of 2022, they became hawkish and said they would have to raise interest rates aggressively to curb inflation, but not to worry because the economy remains strong, so a soft landing is possible. Then in the second quarter they admitted negative growth in the first quarter, but no risk of recession. So in the third quarter they admitted that while the economy remains strong despite two quarters of declines in GDP, we still weren’t in a recession, although a recession could happen.
With such a shockingly poor track record coupled with a refusal to face reality, one wonders what further egregious misannouncements the Fed will make in the fourth quarter.
(r)evolution will not be centralized. The Metaverse has no central banks, and Web3 has no dominant centralized governance systems or big tech, big pharma, big nation states, big
(͡:B ͜ʖ ͡:B)
Dr. Chris Kacher, PhD Nuclear Physics UC Berkeley/Record KPMG Audited Financial Statements in Equities & Crypto/Best Selling Author/Top 40 Listed Musician/Blockchain Fintech Specialist. Co-founder of Virtue of selfish investmentTriQuantum Technologies and Hanse Digital Access. Dr. Kacher bought his first Bitcoin for just over $10 in Jan-2013 and contributed to early Ethereum developer meetings in London hosted by Vitalik Buterin. His measurements have called every major peak and trough in Bitcoin since 2011 within a few weeks. He was up in 2018 compared to average performing crypto hedge funds (-54%) [PwC] and is well ahead of Bitcoin and altcoins throughout the cycles as capital is forced into the best altcoins while weaker ones are sold.
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