At our neighborhood Starbucks the other day, I was chatting with a friend about crypto-currencies when he mentioned that he was working with a couple of business owners who had previously worked as academic experts in IT security. For crypto-currencies, it is obvious that the most important factors are secure data transfer and confidence in the inherent worth of those one and zero bits, or Q-bits. Though these digital currencies have experienced some setbacks, I think it’s likely that they will become the norm in the future because it seems like that’s where the world is going. Perhaps I should look at their business plan.
Does this imply that we will have a distributive medium of exchange similar to the way that energy is distributed on the smart grid or that information is distributed through the Internet? Humans tend to follow successful paths, so centralization and a distributive redundancy strategy have advantages and disadvantages.
What’s the most recent, I hear you ask? Well, there are two articles I read not more than an hour after that meeting, as I was cruising through the information, I’d previously saved to write on this topic later; Marginally Useful – Bitcoin itself may fail as a currency, but the underlying technology is beginning to suggest valuable new applications,” by Paul Ford (February 18, 2014), and keep in mind that this article was written just a few days before a Bitcoin exchange was stolen.
The other article was written by Naette Byrnes the day after those findings hit the newswires on February 25, 2014 “A significant bitcoin exchange shuts down, putting the digital currency in the hot seat.” No, I’m not surprised either, and neither am you.
The second article went on to state; “Amid rumors that millions may have been stolen from the company and growing worries about the long-term prospects for the unregulated digital currency, Tokyo-based Mt. Gox, once one of the biggest exchanges for bitcoin, ceased operations on Tuesday. Swift action was taken by other bitcoin exchanges to distance themselves from Mt. Gox and claim that their doors were still open. By mid-afternoon, the currency’s value had plunged dramatically, reaching just over $500. In November, it reached a record high of $1,100.”
How do you respond to that? Does this demonstrate that those who called it a Ponzi Scheme were correct? Do they have the last laugh or is this just an expected disruption in evolution as the kinks are worked out? Take a look at this exercise in thought I did.
Let’s say there was some hanky-panky going on, let’s say someone stole the digital currency or hacked the system. Even with all the new Too Big To Fail regulations on banks and other financial institutions, digital currency currently goes unnoticed. Why would a virtual currency be valuable? If we all agree that it is worth what it represents and have faith in the currency, it is hard to say how a fancy printed piece of paper marked $20 can be worth anything. What’s the difference, surely it’s just a matter of trust?
Let’s say the FBI, regulators, or another branch of the government steps in and brings charges. If they do, how much defrauding was involved in the alleged crimes? If the law enforcement and justice departments assign a monetary value to that, they are unintentionally recognizing the existence of digital currency and agreeing that it has value. If they stay out of it, any fraud that may or may not have happened will set the whole idea back, and the media will keep eroding people’s confidence in all digital or crypto-currencies.
In light of this, the government, regulators, and enforcement personnel are in a catch-22 situation and are no longer able to ignore or downplay the trend. Is it time for regulations? Although I personally despise regulation, isn’t this how it usually begins? Once it is regulated, the idea gains credibility, but his proposal for a digital currency could also jeopardize the One World Currency initiative or even the US Dollar (Petro-Dollar) paradigm, for which there may be severe consequences. Can that level of upheaval be handled by the world economy? Keep checking back; I suppose we’ll see.
What happens next, however, will determine whether or not this new change in how we perceive money, wealth, online transactions, and how the real world will mind-meld into our future distorted reality. I just don’t see many people thinking here, but everyone should, because if we make a mistake, all of humanity could be in serious trouble. Please give this some thought and consideration.