I see a lot of posts going around about how easy it is to demolish small blockers on any reasonable technical debate. The small block crew doesn't debate technology because that's never what any of this was actually about, and something mentally slipped into place for me recently when I fully grasped the nature and implications of the divorce of the settlement and transaction layers in a broader macroeconomic and historical sense.
The fundamental promise of cryptocurrencies is a final solution to the previously impossible problem of an optimal currency. This is somewhat condensed, so allow me to unpack it.
The economy is a consensual shared mass hallucination. Everyone does what they do in order to get by within it because they see it as the best combination of what is in their abilities, coupled with what the rest of humanity that they trade with values. In order to get an accurate measure of what one should be doing at any one point in time, it necessarily follows that one needs a stable, immutable and constant unit of account to figure out the proper true value of provision of a product or service at any point in time.
Political currencies, which are commonly referred to now as "fiat currencies" and very poorly understood by the great mass of humanity which employ them, are anathema to this goal of figuring out the proper values of things, exactly because they are designed to be subject to infinite manipulation by the issuing authorities, which are politically appointed and accountable. Therefore any given government is incentivised to tamper extensively with the currency in order to provide "chicken in every pot" style benefits to their voting populace and remain in power and pay off their sponsors who so situated them.
This process necessarily distorts the market and results in things like having more bankers per capita than police, ad et al, despite bankers being fundamentally useless things. Stories must be spun about economic crises and situations which justify monetary policies which result in the desired economic distortions that keep the votes flowing in. Eventually the system fails as even the slowest of the slow realise that it's all just a shell game where everyone is pretending that everything has value when none of it actually does in the slightest.
Simply put; it's my belief that this is what's happening now. You're not seeing "a crypto bubble", you're seeing "the popping of the fiat bubble".
First point about that; old school Austrian gold standard types would about this point be nodding their heads and preparing to launch into a tirade about the necessity of resuming the gold standard so that we may have a hard mechanism to value once again. This misses the critical point that gold is necessarily by physical nature as a currency largely separated into transaction and settlement portions. This was less a weakness in a smaller economy where trade could be conducted with coins and things of this manner, but when global trades are measured in tons of the underlying extremely precious metal, it's simply unrealistic to imagine that it's going to be sloshing around the globe constantly in battleships loaded with bars.
And that leads to the core problem with a gold standard that will re-emerge later in this tirade, so keep it in mind. The divorce of the transaction layer from the settlement layer enables corrupt influence and tampering within the system in much the exact same way as the fiat system. Historically "fractional reserve" banking with a set portion of gold was a mild form of this, and reserves dwindled over time as it became politically expedient to "expand the economy and not be tied down by something as parochial as gold", and other associated ridiculous excuses to circumvent the entire purpose of the apparatus.
This has grown to epidemic portions in the present market where paper gold trade outweighs physical gold trade by a ratio of 542 to 1. Given that, obviously the paper gold trade is going to set the price of the physical gold, and the value is once again utterly divorced from any kind of stable actual reality by which prices can be said to accurately reflect value.
Second point about that, and why Bitcoin is such a failure, as well as the agenda you can very easily see within this zombie shambling about in the carcass of what was once a beautiful idea; The core treachery that has been inflicted upon the project is what? You guessed it; to divorce the settlement and transaction layers from one another, which makes it once again subject to the exact same weaknesses as gold in the modern world with its laughable 542 to 1 paper to physical transaction to settlement layer.
If I were a paranoid man. A conspiracy theorist, say. I would speculate that the hijacking of the Bitcoin project specifically that as resulted in this divorce of transaction and settlement layers, when no such divorce is required from a technical perspective whatsoever, is everything one should need to know about the forces behind the project, who really has control, and which direction it is being pushed.
But I'm not and that's all crazy talk, right? I'm sure our new Bitcoin overlords are all sweetness and light and not out to just re-implement the same currently imploding system with a fashionable new rebel label stuck upon it by any means at all, because that would just be evil.
Anyway, on to REAL cryptocurrencies, and what distinguishes them from the hijacked version of Bitcoin, and what therefore makes them such a threat to that system, as well as the old currently imploding mainstream economic system, is precisely the fact that the transactional and settlement layers are not divorced. They are exactly the same thing. You cannot tamper with any part of the system, it is a steel cable from one participant in the economy to another, with each participant being able to cryptographically verify the characteristics of the transactions which they undertake, and observe that the supply is not being tampered with in real time on a globally distributed constantly available ledger, which in turn is not subject to interference from any of the traditional forces of monetary parasitism encompassed by central banks and nation states.
It terrifies them exactly because it should, it is to nation states and central banking what Uber is to cabs, what Airbnb is to hotels, what any distributed impossible to control economy that only cares about actually accomplishing the goal for which it was created is to any sideshow which merely pretends to be the case, but is in fact some other thing like a passive income earning mechanism for taxi medallion holders, or owners of hotel chains, ad et al. Put simply, If real cryptocurrencies win, they will be out of a job permanently.
So in conclusion, no. No matter what the final value of Bitcoin is, I don't see it as valuable, or as any kind of actual competition for real cryptocurrencies. I see it as an opportunity to ride the wave and profit simply by the unjustified expansion of value as the old system undergoes collapse and tries to cram as much of its ill gotten gains into this fake shambling zombie as it possibly can, with the added bonus that they seem not to realise, or have accepted as unavoidable, that they can't stop real crypto holders from taking the gains out of the dozens of liquid channels from BTC into those real cryptocurrencies that presently exist and will only grow in value over time.
The end result in my view is that the implosion in the mainstream economy will merely echo up the chain and into the chamber of their Bitcoin golem, and all that will be left is actual cryptocurrencies, which will be "proper money" and anything less than that will be recognised for the fraud it is.
NOTE; this article was originally written in 2017 at the time of the BTC/BCH split, everything turned out exactly as I predicted so I have not edited it since them, I am simply replicating it here as part of the process of migrating over to making read.cash and noise.cash my primary content platforms as it's clear reddit is not long for this world.
