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Crypto Research

Modern Economic Nonsense — Why Bitcoin Maximalism will fail

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The idea of a digital currency that can be used for payments is a very compelling one. Financial inclusion has become a major focus of the developing world, and many companies are trying to solve the problem through digital currencies. The most well-known is probably bitcoin, but there are several altcoins as well. However, as with any new technology, there are two primary challenges: educating people about it and convincing them to adopt it. Educating people about digital currency is not so hard these days, thanks to things like podcasts and Youtube videos. It’s convincing them to adopt it that has proven to be the harder part—and the more important one as well. If you think about it, adopting new payment systems involves a lot of hassle for very little benefit. When you compare card networks where merchants have accounts in exchange for processing transactions on their behalf, or even cash where merchants don’t need any sort of account at all, it becomes pretty clear why adoption has been slow. However, when you compare these alternatives to cryptocurrencies, which offer total anonymity and make paying by phone or the internet much easier than paying with cash, adoption may seem more attractive. We’ll explore why digital currency adoption will fail without thinking outside the box and embracing some core concepts that are often overlooked.

Why Bitcoin Maximalism will fail

There are many reasons why Bitcoin maximalism will fail. Let’s explore why some will fail, and some will succeed at adopting digital currency. For starters, Bitcoin maximalists tend to focus on the wrong reasons for why Bitcoin is popular. They point out that the price of bitcoin is high and that it’s valuable. While these are both true, they’re not very compelling reasons. What people really want is financial inclusion and convenience—they want to be able to use Bitcoin to buy a coffee without having to take their laptop or smartphone with them or use card networks that are difficult to use for the unconnected. The truth is that Bitcoin maximalists often focus on the wrong reasons. They often talk about the power of Bitcoin because it sounds more powerful and important than it really is. Also, ignoring the development of altcoins jeopardizes the future of blockchain development.

What is the alternative to Bitcoin maximalism?

There’s been a lot of talk about the need for alternative digital currencies to Bitcoin, and many people have tried to create an alternative. However, not many have succeeded. There are several that have gained significant traction, but it’s still very much a minority market. The fact is that the Bitcoin maximalists tend to focus on the wrong reasons for why people use altcoins. They often talk about the power of technology because it sounds more important than it really is. The truth is that people use altcoins because they solve problems that Bitcoin doesn’t solve but could in the future.

Bitcoin and cryptocurrency don’t have to be mutually exclusive

The biggest fallacy that bitcoin maximalists employ is that they assume bitcoin is a must-have and all other digital currencies are optional. This is simply not true. For example, one of the most successful digital currency applications by far is the use of digital money for payments for goods and services.

The benefits of thinking outside the box: unbanked and underbanked

The biggest benefit that digital currency has over traditional payments is that it solves the unbanked problem. The unbanked are people who don’t have bank accounts. For example, let’s say that Alice wants to buy Bob’s house. However, she doesn’t have the money to buy it, and she can’t get a loan from a bank. In this scenario, she’s the “unbanked”, and Bob is the “underbanked”. Cryptocurrencies can help the unbanked to have their own bank and the underbanked to have sufficient funds in their banks.

Conclusion

The concept of digital currency is a compelling one, but the reality of adoption will depend on the benefits it provides and who is using it. Unfortunately, Bitcoin maximalists often focus on the wrong reasons for why Bitcoin is popular. They often talk about the power of Bitcoin because it sounds more powerful and important than it really is. The truth is that Bitcoin maximalists often focus on the wrong reasons. They often talk about the price of Bitcoin because it sounds more important than it really is. The truth is that people really want financial inclusion and convenience—they want to be able to use Bitcoin to buy a coffee without having to take their laptop or smartphone with them.

Reminder: I am not your financial advisor. 

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Crypto Research

The Future of Machine War II

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In late 2021, I wrote an article about A.I. vs. Blockchain. I realized it was closer than I expected.

https://medium.com/@xuanling11/artificial-intelligence-vs-blockchain-the-future-of-machine-war-b685d208ba20?sk=874af90c7acbe857fa004c0ebe0d5e28

Web2 is leading a future of technological centralism. 

The way we see the world in ancient is what we saw became what we believed. Later, the enlightenment process helped humans realize what they had seen was disguised by the nature principle. Once we tested our assumption and received accurate results, we thought we had mastered the nature principles. Yet, we did not make the world better than we thought we could. 

We are living in a world in which companies know more than you than yourself. Companies can likely tell you what you should believe without letting you know. 

The secret weapon that companies like Google invented is A.I. or Artificial Intelligence. 

If A.I. can think like a person, it can easily replace you! Since companies got all your data, you freely offer them by using their free services, and they can replace you one day without you realizing it. 

Without all conspiracy theories behind what Google may or will secretly develop, A.I. reaching consciousness is … impossible.

If it does, Google has successfully made a human – dumb!

The most advanced A.I. – Tesla Autopilot Program cannot distinguish objects between humans and other moving objects during driving.  

Using technology makes people dumber than they think because it takes away your consciousness – the ability to think uniquely!

Blockchain is the future of decentralization.

We need a peer-to-peer system to regain consciousness and break the chain from Web2. 

It gives individuals the power to rethink information.

Think about today’s media; all information is filtered to offer readers without any surprise. News is data that Web2 selected specifically for you to read. 

We need a decentralized system so that you can receive unfiltered information and gives you a surprise that sparks ideas of imagination.  

Web2 is afraid of the blockchain because they are too big to fail. 

 They mimic the blockchain by creating a centralized node system – social media network. 

It is a net growing outward through a single point. Only the problem is that connection is facilitated by technology. And the biggest failure is such technology has a single point of failure problem. 

And they cannot escape the law of economics – the law of diminishing. So we will see Web2 grow slower due to the law of diminishing that they require more data with few increments of advancement through A.I. without any breakthrough because A.I. is a deterministic system that works with a lack of randomness. 

In Web2, they assumed everyone was stupid, and they offered solutions to everyone.

In Web3, everyone is good and should anticipate solving a problem together.

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Crypto Research

Financial sanction to mixers

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Have you heard about financial sanctions from the US on virtual currency? At least, I have not yet. But the US Department of Treasury has issued sanctions on two crypto services: Blender.io and Tornado Cash.

To clarify, the US sanctions on tools but not target specific entities or groups of people.

So why bother to sanction something that the government probably won’t be able to sanction in the first place?

What is a mixer?

A cryptocurrency mixer, sometimes referred to as a tumbler, is a tool for money laundering. The sole purpose of the invention is to make transactions untraceable.

How to mix?

Even crypto is pseudo-anonymous, but it is traceable through your wallet address. A mixer is a black box service to filter your traceable wallet address into the untraceable wallet address.

How to wash your money clean in the traditional way?

https://dimensiongrc.com/the-stages-of-money-laundering/

The assumption is you will not get caught at each stage, and then you place your dirty money in a bank through companies and use the funds to purchase legal goods like houses or luxury goods.

There are mature regulations and rules to stop you from putting your dirty money into banks.

Digtial money landury

https://www.eurospider.com/en/know-how/compliance/211-what-is-a-cryptocurrency-mixer

A Crypto mixer or tumbler is a service to pool dirty digital currency in their favor and redistribute it into designated wallet addresses or addresses randomly generated. 

It is a challenge to stop transactions because there is no entry point for law enforcement to stop at each stage. 

https://home.treasury.gov/news/press-releases/jy0768

Ultimate Mixer

Tornado Cash is the king of the mixer. Unfortunately, there is just no way to trace transactions anymore. It is a smart contract with zk-SNARKs (zero-knowledge proofs) that does not require revealing a wallet address during transactions and ghostly distributed funds without leaving any traces.

This tool is the ultimate weapon that the government has to shut down, or there is no way to prevent transactions.

In Conclusion

Let’s change the future – legally. 

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Crypto Research

Why there is not crypto banking exist

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We have always heard about cryptocurrencies, crypto exchange, banking, and trading platforms, but we do not really grasp the idea of crypto banking. Crypto banking is a contradicted idea. If crypto is to replace banks and give users full control of digital money, why do you put your crypto into the bank? The new research paper argued that there are risks for banks to adopt crypto, but they did it anyway.

Banks want crypto

Cryptocurrency has a rough road at the beginning and continues to experience a bumpy road ahead. The institutional investors were watching its performance. In early 2017, institutional investors had opportunities to adopt crypto, but they found out the return of the investments was less than traditional financial assets. Regulations were not a concern for some individual institutional owners, but banks were conservative at the time. As a result, some investors adopted it in early 2018 than banks did. Then suddenly, the crypto market took off in 2020, leaving many banks to regret their decision in 2017. Many banks set up their digital investment group to rush into the market and increase prices. Of course, many of their investment positions are instead of shadow positions. It is unclear how much they have been invested in and what vehicles they took to invest in cryptos.

Crypto Exchange

Crypto exchange is a bank-like platform for crypto. Banks offered a place to purchase fiat currency. Crypto exchange did the same duty as traditional banks did. Since there was a gap between the crypto and banks, the crypto exchange took responsibility and offered crypto services. The crypto exchange took off after 2020, and they left banks in the dust. Then, crypto winter came in early 2022, and banks again hesitated to enter the crypto and started denouncing crypto usage, particularly in the Defi area. But interestingly, they tried to find ways to get into crypto without being directly exposed to cryptocurrencies—hint: through hedge funds.

How much banks exposure to crypto

We do not know how much banks have been exposed to crypto. We learned that the big Wall Street players were exposed to the services of the digital asset through State Street of their $41.7 trillion assets. Some have been exposed due to Luna’s collapse and 3AC bankruptcy. But again, no specific dollar amount was provided. 

Survivors

Since the crypto winter, institutional investors have been cautious about crypto exposure. However, crypto exchanges are the winner again. They are exposed to crypto and take risks more than banks do. As a result, they likely will weather the uncertainty. Furthermore, there is no need for crypto banking to handle your crypto assets since many such services will not survive long in the crypto environment. 

Crypto is resilience

Despite its fluctuating price and unsecured assets, crypto is resilient to phase out any bad business ideas and bad actors in the economy who wants to or try to dominate the market but who transfers risks to users to believe they are the one who should take responsibility for their carelessness. Unfortunately, those business models will not survive long.

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