Navigating Turbulent Tides on the Bitcoin Titanic
Everybody is saying it.
Crypto is dead or dying. Bitcoin is cooked. Stick in another hard fork! Blockchain is overrated and a fringe technology. The future is fiat, as all the fiat banks say.
The future is centralized credit cards, as all the credit card companies claim.
The future is internet of things (IoT), 5G, and artificial intelligence(AI) in a “singularity.” Your car will drive itself by machine learning and driving you yourself — your obsolete body and nervous system — will be an AI brain fed by Elon Musk’s Neuralink implants. They’ll be connected to the internet.
Whenever you want something, even unconsciously, Google et all will know it and give it to you, perhaps in virtual simulation. But that’s as good as real, right?
How can anyone compete with a singularity? Blockchain is mere plumbing and it gets in the way of VR, AI, and the rest of the Alphabet soup.
All Aboard the Blockchain Train
Even the pioneering Ren Zhengfei, founder-chief of Huawei, says that “blockchain is worthless,” its security trumped by quantum computing and its theoretically instant hacking of prime factors used in the prevailing cryptographic algorithms.
Yes, Chinese emperor Xi Jinping has just climbed on board, declaring blockchain a “core technology for China” in a speech to his politburo. Also swearing by blockchain is my favorite Chinese company of the month, the massive bank and bazaar Alibaba. It is supplying a transactional platform for literally hundreds of millions of entrepreneurs, a lending facility for all of them who want it, a money market vessel for anyone with an RMB (roughly 14 cents), and an Alipay wallet that along with the WeChat leader from Tencent is sucking up nearly all the cash in China. To make a payment, everyone in China now just waves a phone, usually from Huawei. BABA now swears by blockchain.
Facebook is thrashing around, trying to gain an edge with Libra. All the banks are experimenting with various forms of the concept. But virtually no one wants to use the Rube Goldberg mining apparatus pioneered by bitcoin.
And no one is doing transactions in volume. No one is pretending that bitcoin can still be the new gold. The gold in the world is currently worth about $9 trillion total, comparable to all world base money. Last I looked, Bitcoin is worth $157B and its chief rival Ethereum is worth $11B.
As my counsel on monetary matters, The Man on the Margin, Mike Kendall points out nearly all the other cryptocurrencies are merely shadows of the bitcoin Titanic, cruising the same increasingly frozen seas and dribbling on the beaches into markets caps in the low millions.
Hey, there’s no global warming for bitcoin and blockchain! Or for me at O’Hare where the temperature is zero.
Meanwhile, my Agora colleague John Forde points out that using a widely available search engine called Shodan you can break into anything that’s connected to the net.
“It’s a search engine that lets you locate connected internet of things devices, among other surprising things, all over the world. It can also track down IP’s for power plants, security cameras, all the computers on a company network, etc. If that sounds like a security nightmare, it is.”
One of the forces known to focusing on our power grid is the Iranian secret police.
“Here’s a link from a site directed toward hackers that shows you how to find ‘vulnerable targets’ from what it calls the ‘world’s most dangerous search engine…’”
All these cameras and sensors are vulnerable because they use the real time streaming protocol (RTSP, Port 554 on your operating system) to share video without passwords.
But wouldn’t it be better to acknowledge a general “scandal of security” all across the internet and develop a new security architecture?
All Signs Point to a Bright Future
Meanwhile, in the continuing “scandal of money,” the world’s central banks continue to fund the present with the future, zeroing out the returns to savers, making the world economy run backwards in time. What matters, they say, is to hike up the rate of devaluation — inflation — above 2 percent and to spur “consumer spending” which we are all taught to believe is 70 percent of the economy.
The fact is that blockchain continues to be urgently needed both as a new security architecture for the internet and a new foundation for global money.
The problem with bitcoin is that it is another expression of the scandal of money, caused by the monetarist targeting of the volume of money rather than its time-price. With a cap on the total number of bitcoin, it becomes a speculative vessel rather than a medium of exchange and store of value. People expect to get rich as it approaches its garotte of scarcity.
The problem with blockchain is not the concept but the current implementations that make the blockchain do more than it can. The blockchain is a platform for identity, addresses, and crucial ground states for the system. It is indispensable for the internet of things, 5G, and a reliable global network. But it cannot be a computer in itself without bogging down.
Around the world, from China to Israel and even Silicon Valley, blockchain is evolving in exciting new directions. A new generation of blockchain technology, transcending the flaws of the original, is on its way, targeting the scandal of money and internet security.
We will be covering this exciting development in future prophecies.
Editor, Gilder’s Daily Prophecy