The Blockchain Versus The Banks – The Technological Rebellion

Acton Banks

This post will discuss wealth creation and how this is contained within financial systems and how the construct and incentive structure of this financial system through its credit and currency effects on our material standard of living and indeed our general well being as a species… I will then compare the current Central Banking system against a decentralized financial system before demonstrating how the technological rebellion of the blockchain (and currently Bitcoin specifically) can lead to the end of poverty, debt and permanently end this nightmare of warfare welfare totalitarian governments… We are on the cusp of a Golden Age…

Exchange And Wealth Creation – The Microeconomic View

As I described in my previous post on decentralizing credit and currency, we as a human species are innovators and wealth creators… We produce so that we may get paid… When producing a good or a service you create an intangible wealth, and can be in different forms… Producing a good for example would involve either creating a producer good or taking a producer good and adding to its wealth through capital goods (machines) and labour to provide a finished good, whereas providing a service would more likely be based on labour… In either case you produce a good or service in order to get paid… The intangible wealth you have created becomes tangible when you get paid after agreeing to exchange for a price, and that market price will be expressed in money or currency (physical precious metals, paper money, electronic digits)… The seller when handing you the currency is consuming a certain amount of his productivity, and it passes to you… Voluntary exchange is nothing more than the exchange of value and wealth between humans, expressed in a common medium… Now the wealth captured in the currency has transferred to you, you can consume the produce of others using that same currency… You create other entrepreneurs and human innovation when you buy the produce of others, and they will spend the currency you have paid them on other goods and services, and so on… If you produce more than you consume then you will produce a surplus or savings that will be the store of your human wealth and ingenuity, again stored in the currency… This currency can then over years or decades be converted by exchange into property (car, house, assets, personal effects)… Your retirement portfolio will consist of currency and physical assets and property, that will be passed on to your descendants upon death… Life for the individual is a combination of production and consumption and currency and property, with the assets you leave behind being the life sum of your human ingenuity and wealth creation… That is the micro view…

Currency – The Macroeconomic View

Macroeconomics is the economics of scale… When humans initially exchange voluntarily, they will exchange locally and directly, that is by barter… This can be done either through direct exchange, or a local ledger and credit and/or currency system based off of that barter, a mental barter if you will… This barter credit economy can only scale locally because it is a credit based system, i.e it is based on trust and faith and therefore can only scale as far as those you know… As exchange develops humans will find themselves in the position of exchanging with people they don’t know, and so credit cannot be accepted… You cannot trust who you do not know so to exchange with these people you will need to exchange indirectly by adopting a common physical manifestation of value… These commodity currencies can take many forms (cows, shells, nails, feathers, salt, chewing gum, tobacco, mobile phone minutes) but again these can only scale as far as their regional scarcities, these economies cannot scale nationally… For national, international and intercontinental exchange and trade you need a global medium of exchange, you need money… A central theme of my writing has been the role of Gold and Silver as global money exclusively in recorded human history, The Origin Of Money… They become money because of a few special characteristics, those of durability, portability, divisibility and an intrinsic scarcity of supply that is present over the earth in exploitable form…

By their marginal utility (utility combined with scarcity) gold and silver became money… This shift from barter (good to good) to money is a very interesting one… Individuals never have and never will (contrary to some of the delusions of hardcore individualist libertarians) exist in a vacuum, and exchange is just life… In economic exchange, humans will voluntarily adopt a common medium of exchange, and will give this medium of exchange a natural monopoly… Everyone accepts only one or two money making life a whole lot easier by society collectively engaging in a form of voluntary socialism, where everyone agrees to use something communally that is in all their interests and to all their benefit… This leads to a chain reaction of quite amazing developments such as price discovery and prices (catallactics) and can connect random production and consumption on a global scale… Money connect peoples and continents… If you think about this carefully when one or two goods in an economy take a natural monopoly in exchange, then they will be desired for all other goods, services and property, which naturally makes money deflationary… In a world of money, gold and silver become the global standard of wealth storage and will command half the wealth of global exchange, in other words the goods and services will be on one end of each exchange, and money on the other… Global wealth creation and ingenuity flowing into an intrinsically scarce and always getting scarcer money sends the value of gold and silver to the moon… Just consider a five per cent deflation per annum over the course of a century, four or five generations later gold and silver would have increased in value five hundred per cent, with purchasing power doubling every twenty years!!! As wealth accumulation and storage and transmission vessels, gold and silver are unparalleled in recorded civilization and the prerequisite of architecture, art, literature, culture, and all the rest of it… Money and currency is the macroeconomic view…

Combining Micro And Macro – The Exchange Economy And Valuations

Now that we understand the wealth creation system at the individual (micro) level, and also have a storage and transmission vessel stored in money, then it is possible to combine both and start to come up with insights and measurements and dynamics of economies and markets… To make this simple I will adopt (for a brief period) some mainstream econometric measures and mathematics and apply them to currencies and see where we get… For example a mainstream term for what I call wealth creation would be Gross Domestic Product, which simply means the total amount of human production over a period of time, like say a year… In keeping with mainstream economics I will also express this wealth creation in Fiat dollars… So let’s say we have a thousand person economy, one thousand individuals (micro) that produce goods and services in exchange, and the gross domestic product of each individual at ten thousand dollars ($10,000) per annum… The wealth creation of a thousand person economy would therefore be ten million dollars ($10,000,000), and would be exchanged stored and liquidated in a single currency (macro)… The currency makes intangible wealth tangible simply by voluntary exchange… Let’s say this currency had ten thousand units (10,000) in circulation, then every unit of that currency would be worth one thousand dollars each ($1,000)… The important point is that the currency is irrelevant and is only valuable through the gross domestic product of the individuals who exchange in it, by voluntary collectivism… If you added another year’s gross domestic product exchanged in the same ten thousand units of currency (i.e the currency supply in circulation remains unchanged for another year) then the value of those currency units will double to two thousand dollars each ($2,000), or a doubling of purchasing power in one year… These currencies are only vessels and substitutable for another, whether local commodity currencies such as salt, nails, feathers, beaver pelts, or global currencies like money (gold and silver)… We all create and invest in common mediums of exchange (currencies) for our mutually shared benefit and prosperity, that will in unhampered economic markets be inherently scarce and deflationary…

Stock And Flow Dynamics

Before we get to credit and banking I need to touch on a peculiar and interesting quirk in money and currency, that is extremely important as it applies to money, credit and currencies, that of the stock and flow… This dynamic is the same with physical gold and silver, banking and central banking credit and currency, and blockchain technology and bitcoin, and so critical to realize and understand… The stock of money or currency is the total amount of currency in existence, the tonnage of gold mined and stored above or below ground since the beginning of history, the total currency and coinage under the Central Banking system or the twenty one million unit maximum cap of the Bitcoin protocol… A lesser part of that stock of money or currency will be in active circulation and being exchanged directly for goods and services in the market economy, that is the flow… The value of the currency in circulation (as per the example above) derives solely from the flow or circulation of the currency and the flow will constantly be changing dependent on both production (saving) or consumption (spending)… Production and saving is inherently deflationary because currency units are withdrawn from circulation and saved for a rainy day, while consumption or spending is inherently inflationary as you spend and add currency into circulation… You might think gold and silver would be deflationary in all cases and economies but that is not true… The inflationary effects of money into circulation is known as the Cantillon Effect but was observed two centuries earlier by the first real Austrian Economists, the catholic theologian School of Salamanca… One of the greatest thinkers of this School was Martín de Azpilcueta, and I will include the wikipedia quote here, “The most complete and methodical developments of a Salamancan theory of value were by Martín de Azpilcueta (1493–1586) and Luis de Molina. Interested in the effect of precious metals arriving from the Americas, de Azpilcueta proved that in the countries where precious metals were scarce, prices for them were higher than in those where they were abundant. Precious metals, like any other mercantile good, gained at least some of their value from their scarcity. This scarcity theory of value was a precursor of the quantitative theory of money put forward slightly later by Jean Bodin (1530–1596)…” As it is only a fraction of the total stock of money that is in circulation (flow), then it is that fraction that gives currency its exchange value, and further reinforces the point that wealth creation and exchange value comes from all of us, and that neither gold, silver, banknotes or bitcoins have any intrinsic value outside of human subjectivity and valuation, that is Marginal Utility and the Theory of Subjective Value

Money To Credit – The Origin Of Banking

Gold and silver as money mined out of the ground are intrinsically scarce providing stability over a long period of time increasing demographics and therefore global gross domestic product, money will be inherently deflationary and will increase in value compared to other goods and services, in other words as a store of value money does its job so well that there will arise a specific industry to service money in exchange, The Origin of Banking… Banking is a credit derivative layer on top of money that is created in order to securely store valuable precious metals and to make exchange of money more efficient by substituting money with credit and currency… Banking works as both a centralized ledger (following the Medici Bank innovation of Double-Entry Bookkeeping) and runs a credit derivative layer in the form of paper currencies that is issued in exchange for precious metals… The bookkeeping ledger allows for two entries in the form of debits (deposits, savings) and credits (withdrawals, lending) issued in paper currency, with the currency being redeemable for gold and silver on demand… Paper currencies are only derivatives, more efficient substitutes to mimic the underlying precious metals that are no longer in circulation… Over time the paper currencies will be exchanged directly in voluntary exchange, and will to the extent of the local banking system supersede the underlying physical metals… Dollars, pounds, francs, marks, pesos, pesetas, are all derivatives of weights and measures of gold and silver and these paper currencies are only physical manifestations of the real underlying value and scarcity of money… As long as the banker engages in Full Reserve Banking and only issues as many paper tickets into circulation as the quantity of gold and silver he removes from circulation, then paper currencies increase the utility of money as medium of exchange and unit of account, while maintaining 100% as a store of value… Honest banking had no effect on market exchange and valuations and was an organic improvement and innovation of the last five hundred years…

Fractional Reserve Banking – Inflationary Enrichment By Debasement

There comes the time in banking when paper notes have to at least some extent superseded the exchange of the underlying gold and silver in the market… The bankers have earned the trust of the exchanging population in that these paper currencies are accepted substitutes, and it is here we have the beginnings of Fractional Reserve Banking… The Banker as the keeper of the double-entry bookkeeping ledger and sole issuer of paper currency, can print additional paper notes over and above the precious metals he has in reserve and release them into circulation… The bankers figure out pretty quickly that printing paper is a lot easier and cheaper than printing gold, and yet these people who exchange out in the market are still willing to accept your paper tickets as they trust you… An artificially inflated amount of currency is released into circulation with the banker enriching himself by exchanging his printed notes for REAL goods and services, while the rest of the public get defrauded and debased on the value of their remaining goods and services… The artificial increase in currency to enrich the bankers has some pretty nasty side effects that has a profound effect on everyone else who exchanges in that currency by disrupting the natural discounting mechanism of money… As I said spending or adding currency into circulation is inherently inflationary and so disrupts the natural relationship between saving and spending, creating an artificial consumption boom, lowering interest rates and leading to rising prices of goods and services… Printing money creates a debt or deficit and artificially brings forward demand from the future that the underlying production (savings) cannot satisfy in the long run… The extension of banking credit and debasement will eventually lead to instability effectively forcing the banker to contract credit, to stop the economy from overheating so to speak… Credit contraction leads to rising interest rates as they seek equilibrium in a world of scarcer credit which in turn leads to defaults and the triggering of a physical bank run when the exchanging population rush to the bank to redeem physical for paper… When the banker suspends redemption or when he runs out of physical to satisfy the hoards of paper waverers, is when that paper currency hyperinflates… Paper currency is only a credit derivative that relies on trust in bankers and when that trust vanishes so does the value of paper currency… Those that have physical gold in this climate of fear and distrust will hoard it while those who do not have it will work extra hard to earn it, the artificial consumption boom created by banking credit is purged with interest rates rising along with the purchasing power, as goods and services become cheaper… This market enforced deflationary event (hoarding and production) incentivizes saving and within a few months or a year those savings have increased to offset the previous inflationary period… Fractional reserve banking is a disgusting fraudulent system run by criminals, but also a localized and temporary aberration with gold and silver as the bedrock and benchmark of exchange keeping ponzi financing in check for the most part of the last five centuries of banking…

Central Banking – From Constrained Credit To Unconstrained Credit

Fractional reserve banking ultimately is constrained in its credit creation because of the monetary base, that is their reserves of gold and silver and their role in the psyche and sub-conscious of humanity as money, so bankers and as much carnage as they cause during their business cycles of enrichment, are temporary and inherently weak institutions in the economy… The bankers know this all too well (the hatred of bankers is as old as they are) and so over time a small cabal of Elitist bankers and financiers will conspire to gain control (through bribery and blackmail) of the State for the instituting of a Central Banking backstop and monopoly issuer of that Nations currency… The only way the bankers can free themselves from the chains of free market competition in money is for the State to legislate their Fiat monopoly money, backed by Legal Tender Laws, and enforced by Tax Authorities, Police and the Prison System… Gold, silver and private banking credit are superseded by the “Law” to the enrichment of a fraction of one per cent of the population at the expense of the whole of the rest of the population… An epic scam…

Fiat money (Dollars, Pounds, Euros, Yen etc) becomes the Legal currency in the form of Central Bank credit, and this becomes the base money and money supply, although fully redeemable for gold and silver… But to be clear once a central bank has control of the base money this money can then be inflated and contracted at will by the Central Bank, and crucially it is onto this Fiat money supply that the private banking system continue their criminal fractional reserve banking practices, and this takes the Business Cycle and its carnage National… Central Banking institutes fraud and meddling and boom and bust cycles, Nationally, Internationally and (with World Reserve Currency status) Globally… However while Central Bank base money is still tied to gold and silver it is somewhat constrained and so even with monopoly control of the money supply bankers are still constrained in how much credit they can pump out to enrich themselves at the expense of the rest of society… In order for complete control and command over the economy and the unconstrained credit creation for the destruction of society that they seek, they need to unchain from the scarcity of gold and silver backing… This cannot be done overnight and over the twentieth century took from 1914 and the end of Classical Gold Standard to 1971 and the Nixon Default and the end of the Bretton Woods System… From 1971 onwards gold and silver are demonetized and the world economy has operated on a pure Fiat money system, affectionately known as the Petrodollar Standard… of War, Welfare, Death and Destruction…

Since 1971 – Unconstrained Credit and The Full Blown Debt Based System

Gold and silver to be clear have intrinsic scarcity and so are the last defence of the purchasing power of currency for the exchanging economy… With the unchaining of Central Bank credit creation from this scarcity, is the rise of totalitarianism… For a completely centrally planned economy you need a lot of resources, which you now totally control through credit creation… The wealth and human ingenuity of the exchange economy is no longer captured and stored in an instrinsically scarce money, but is recycled through inflation and taxation into the Central Banking institution that is given de facto control of the economy and its wealth creation… By simply printing unlimited credit, Central Banks in conjunction with States can print into existence the Warfare and Welfare State and the captured and controlled compulsory public education system and dumbed down mainstream media media apparatus to destroy families and indoctrinate the next generations of debt and tax serfs to perpetuate this criminal ponzi scheme…

Modelling The Central Banking System

To build on the micro and macro dynamics I described earlier in the post we can attempt to model how the current technologically obsolete Central Banking system interacts with the global exchange economy it “serves”… I will again turn to Mainstream Econometrics to get an approximate valuation in today’s Fiat dollars, through Gross Domestic Product… According to mainstream economics the approximate value of human wealth and ingenuity of the world economy is $70 Trillion dollars ($70,000,000,000,000), or in other words the Gross Domestic Product of the micro economy transacting globally expressed in today’s dollars is approximately $70 Trillion… This value is exchanged through the two hundred plus Central Banks that monopolize today’s archaic decrepit National fiat currencies and their private high street banking subsidiaries, which in theory should give us a quantity for this currency… However Central Banking is an unconstrained credit creation system solely instituted for your impoverishment and your dumbing down for debt serfdom and perpetuation of this evil system, and so the quantity of this currency creation is really impossible to quantify… You could refer me to the whole vast industry of econometrics and statistics that has built up around central banking to justify its benevolence in the forms of detailed surveys and measures and charts and M0, M1, M2, M3, money statistics and all the rest of the blarney, but communism to justify its enslavement and theft will come up with all sorts of lies and misleading and fraudulent statistics to keep the CONfidence scheme going, so I won’t bother trying to quantify the currency… All I can tell you is that this $70 Trillion dollar bubble when exchanged through the secretive and unaccountable fiat currencies of sovereign Central Banks, makes you poorer… The hard work and creativity you produce and exchange into you currency makes you poorer over time… The currency you save in gets debased over time when Central Bankers desperate to pillage you even further drive interest rates to ZERO and make saving essentially a waste of time… The currency you use in exchange also loses purchasing power over time, as goods and services rise in value costing more of your hard earned productivity to consume, and so incentivizing consumption over production and saving… The value of housing, a critical component of stable family life priced in this currency blows up to such insane levels that it takes years to produce just enough for the deposit, with the rest of the debt to be paid back over the next thirty or forty years making family formation and stable family life increasingly difficult destroying the foundations of society… Using this currency impoverishes and makes your life a misery, destroys families and communities, incentivizes debt and consumption over production and saving, all to enrich a parasitic subset of the top one percent that control the printing presses and the levers of power…

Centralization And Decentralization Trends

A central theme of my writing is the centralization v decentralization trends of history, and that the trend of centralization with Central Banking as its fullest and perverse expression is at an end… The good news for the world economy is that sooner or later this centralized system of unconstrained credit will have to collapse… As we are currently seeing the increasingly unhinged and desperate central bankers are toying with even moar unconstrained credit in the form of helicopter drops and that this combined with Zero Interest Rate Policy and Negative Interest Rate Policy that is hilariously destroying banking itself, will end this system of debt slavery in a hyperinflationary collapse that will rob generations of their savings and bloated asset values, and wiping out the colossal debts of the system in the same crack up boom… In short a debt Jubilee wipes the slate clean, and we start again in what will be an acutely painful episode in the near future…

From Centralization To Decentralization

With the collapse of the centralized financial and law system will come the decentralization of the financial and legal system, extensively discussed in the overview Distributed Technology And The End of Counter-parties (Law and Banking)… While I see this decentralization playing out over the next decade I expect decentralization to start in the West whose bankrupt Governments have sold their physical gold at absurd prices to Eastern Governments and whose populations have more exposure to the internet and are generally more tech savvy, a prerequisite of the voluntary adoption of a decentralized financial system… The East (Russia, China, BRICS) I would expect to back their Fiat currencies with gold and so I would expect decentralization would take quite a bit longer in the East, although the overall trend of decentralization of the global financial system over the next decade will overpower any government decrees and violence to stop it… Decentralization of the world financial system is inevitable…

Blockchain Technology – Decentralized Asset Ledger And Credit System

As Banking and its Double-Entry Bookkeeping Ledger was a major technological invention five centuries ago and had profound implications for the monetary system of gold and silver, so the Blockchain is a major technological invention and improvement on the current credit regime… In order for money to better scale for exchange and commerce from the late medieval period onward, humans created credit ledgers and currencies by centralized means, because there was no other means… The only for way for credit to scale was as a derivative layer upon money (gold and silver) and controlled through intermediaries, in other words banks… The technological step forward with blockchain technology is that it can scale this credit system without centralized institutions, i.e banks… The blockchain like banking has a ledger for recording and tracking transactions and like banking has a currency (bitcoins) in digital form as the unit of account and transmission vessel, so the blockchain does everything that the banking system does (and a whole lot more besides), but without the banks… The accounting on the blockchain ledger is done by a decentralized pool of mining power who record and check transactions and issue the bitcoin currency or credits that are mined (digitally) into existence, and so the blockchain is completely decentralized… Because the blockchain is decentralized it is a value and discrimination free platform that is completely open source and transparent that anyone can connect to without need for licences or regulations or any other bureaucracy and taxation… Blockchain technology by eliminating Legal and Banking Systems eliminates secrecy, fraud, corruption, and enslavement and replaces it with a open transparency and a trustless network between equal peers…

For further reading on just what an astonishing piece of technology the blockchain is, I have written extensively from a number of different angles on the blockchain and specifically the Bitcoin blockchain… For how Bitcoin will work with gold and why Bitcoin is the digital gold standard on steroids, read here… For how Bitcoin kills Banking, see here… For what Bitcoin will do to eliminate wealth inequality and raise standards of living for the whole of society, see here… For the theory of credit and money that takes us from Barter to Bitcoin (and full circle right back to Barter), see here… And for the decentralized credit and currency systems of the future, see here

Blockchain Technology’s Killer App – Constrained Credit

From here onwards I will be discussing the Bitcoin blockchain, as the first, most developed and currently the only globally scaleable blockchain as we are currently seeing with world developments… Bitcoin has similarities to the Central Banking system in that after it has defaulted on gold backing the Central Banking credit system derives its value from Barter (goods, services and property exchanged in Fiat currency), as Bitcoin derives its value also from Barter… Bitcoin is a direct competitor for the exchange of goods and services in the world economy, even though it has no “backing” and no coercive Legal Tender privileges the monopoly Fiat currencies enjoy, so you might think Bitcoin is a waste of time and that it will never catch on or dethrone the banking system… But the ultimate truth is that Central Banking is an unconstrained credit system that can last only as long as the purchasing power of the currency it forces the rest of society to exchange in, and will make that society poorer to service its colossal debt and capital mis-allocation in funding the ponzi state… The ultimate truth of a parasitic centralized financial system is that unconstrained credit will eventually hyperinflate to liquidate the debt by devaluing savings, the only way to alleviate to crushing debts built up by previous generations and imposed on the unborn is to devalue current production and stored wealth… That is how every previous debt based system has imploded and vapourized, so to expect this time to be different you would need to believe the unbelievable…

Bitcoin is a ledger that derives its value from goods and services and unlike banking is not a derivative of money (gold and silver) so it competes with money for exchange value recycled through goods and services, and like money (and unlike Fiat money) is a constrained monetary system… This is a critical point that Bitcoin like gold and silver is intrinsically scarce, and does what gold and silver do on the physical plane, but does it on the digital plane… Bitcoin as a decentralized asset ledger was invented with a maximum cap of twenty one million units (21,000,000) that cannot be printed or corrupted but can only be mined (and requires a tremendous capital investment and specialist mining hardware) that has spawned the global bitcoin mining industry which is a decentralized source of computing power… It is this predictable and pre-determined constrained credit that makes blockchain technology and Bitcoin as its most successful current prodigy, the greatest man made credit instrument in human history… Bitcoin makes it clear and transparent what its maximum cap of currency is (21 million units) and also tells you how much of this currency has already been mined, currently approaching fifteen and a half bitcoins mined (15,500,000) which means that there are five and a half million bitcoins yet to be mined currently estimated to be mined by the year 2140… This intrinsic transparency and scarcity therefore allows us to model the Bitcoin economy and develop scenarios of what the future may bring…

Modelling The Bitcoin Economy

The transparency of the Bitcoin protocol makes analysis possible that could not possibly be made by secretive and fraudulent fractional reserve Central Banking system, so here we can use the micro and macro economic components to model how the Bitcoin economy will develop… For example the market cap of Bitcoin (the gross value of the economy exchanging in Bitcoin) expressed in U.S. Dollars, is approaching seven billion dollars ($7,000,000,000), when divided by the average price of a bitcoin currently around four hundred and fifty dollars ($450), means the approximate number of bitcoin credits (currency) in circulation (mined) is fifteen and a half million (15,500,000)… We are still in the currency speculation stage of Bitcoin adoption with many of the bitcoins mined into existence by the mining industry being sold into the markets through exchanges for fiat currency, which means a high degree of bitcoins in circulation… The next stage as I have described in past posts is the use of bitcoin for exchange of goods and services, when production and saving reduces this bitcoin liquidity, taking bitcoins out of circulation, leading to deflation and a rapidly increasing bitcoin value (and purchasing power of bitcoin holders)… An increasing bitcoin value will lead to increasing adoption by producers and savers looking to store their human wealth and ingenuity in a increasingly valuable store of value, taking more currency out of circulation in a virtuous cycle… An increasing value for bitcoins will also lead to increased future consumption as the only reason we produce and save is to consume at least part of it in the future and with increasing value per bitcoin meaning you will be able to consume more goods and services in the future per bitcoin, Say’s Law of exchange leads to deflation and increased standards of living for the whole of the Bitcoin economy… So just how far can this blockchain macro economy scale, and what would be the implications for the micro economy exchanging in it?

In the Central Banking model I used the global gross domestic product value of seventy trillion dollars ($70,000,000,000,000) per annum when exchanged through the worlds archaic National Fiat currencies leads to impoverishment, reduced standards of living, totalitarian warfare and welfare government, and destruction of the traditional family unit and community, in short the destruction of society… Now take this gross domestic product of the global micro economy and add it to the Bitcoin macro economy… I won’t even bother with the stock and flow dynamics of the bitcoin currency, just divide seventy trillion dollars by the maximum cap of the Bitcoin currency of twenty one million… The value of one bitcoin (expressed in today’s dollars) would be over three million dollars ($3,333,333.33)… That simply means that if everyone switched to using Bitcoin tomorrow, and you managed to produce and save one bitcoin over the course that year, you would end the year a multi millionaire!!! If you added another year of global gross domestic product of the micro economy, the market cap of Bitcoin would be one hundred and forty trillion dollars ($140,000,000,000,000) and the value of a bitcoin would have doubled to over six million dollars each ($6,666,666.66) and if you had held that one bitcoin for another year your purchasing power would have DOUBLED!!! A further years GDP would increase the Bitcoin market cap to two hundred and ten trillion dollars, with each bitcoin being worth ten million dollars each ($9,999,999.99) and your purchasing power in year three would have increased by another THIRD, and so on… This is what happens when currency is decentralized and intrinsically scarce, and why as I have said many times, Bitcoin is digital gold… The simple thought experiment above is applicable only to production and saving and doesn’t include assets, that is Real Estate, Land, Capital Goods (machines) or other assets and property… If they were also added to the Bitcoin economy (exchanged for Bitcoin) then the value of a bitcoin would be in the billions of dollars, and this stage will come after the goods and services stage and through the development of Land and Asset Registries and Smart Contract applications that would decentralize property ownership and registration, and would automatically be exchanged in the bitcoin currency… Pretty mind blowing…

Decentralization Overwhelms Centralization

The above demonstrates what bitcoin the currency can do eliminate global poverty and lift economies over the world equally out of Central Banker instigated poverty war and genocide, but the currency is the only the tip of a huge iceberg… The bitcoin currency will eliminate Central Banking and secrecy and the criminal theft of a monopoly over the money, that will in turn severely diminish the totalitarian over-reach of government… Without a money printer in chief warfare and welfare become impossible to fund and government employment and enforcement will crater to take account for this… Bitcoin as a decentralized ledger and currency also cannot be controlled or accessed at will as through the current banking system, so taxation becomes effectively impossible which cannot fund its enforcement of taxation (tax authorities, police, prison), in a virtuous loop for human liberty… Bitcoin is basically a decentralized peer to peer barter system so taxation and enforcement would have to be person to person and cannot be the blanket enforcement like that of the current financial system… With the loss of control over the currency comes the death of totalitarian government and social engineering… The Legal System which was the birth of the State as a legal “protector” of private property but perversely uses the same legal authority to plunder the private property it says it protects, will also wither over time for another application of this Blockchain Rebellion is that Bitcoin as a ledger system can also register and administrate property, property deeds and transfer through smart contracts and applications… And as Bitcoin is a decentralized ledger it can register assets without legal counter-party, registering and protecting private property without the need for government bureaucracy… The recent developments in Honduras and in the last few days Georgia in Europe of using blockchain technology for land registries are the first tantalizing glimpses of the future of decentralized property registries that will eliminate the current criminal legal system… The exchange of land and assets is taken out of the hands of the legal system and their extraction of taxes, further rendering government redundant… A picture should be building here whereas the more use the Blockchain as both property and asset registry and use its currency for the internal production and exchange of these assets, then the less relevant government becomes in everyday life… The growth of the Bitcoin economy will perfectly mirror the decline of the current system as giving to one is necessarily depriving the other… By embracing Bitcoin you embrace production and saving in a benevolent and inherently deflationary financial system and you shun the parasitic and wealth consuming impoverishment of the current financial system…

For some further illustration before concluding this post, I’ll use the example of the United Kingdom as your average mixed economy socialistic Western banana republic… According to this detailed blog, government spending as a percentage of United Kingdom gross domestic product is around forty percent, and split into the components of Education, Defence, Healthcare, Welfare, Police, Transport, Public Pensions, and Administration… If you also added the parasitic Banking System at around ten percent of U.K. GDP, then the total of Banking and Government as the combined sum of the U.K. micro through macro economy is fifty percent, or half… To translate this, the voluntary and productive sector (also sneeringly called the “Private Sector”) that is the sole creator of wealth and value has to work and produce to fund and support through theft the parasitic and coercive wealth extracting Public Sector, and the de facto nationalized Central Banking Sector… So in essence the productive private sector pay all of the taxes (on real production) to service the parasitic Public Sector that is funded out of taxation (consuming real production)… This taxation and wealth extraction system is recycled and enforced and persists through the monopoly of the money, through the Central Banking system… Now substitute Central Banks with Bitcoin, a decentralized currency that is virtually free to use costing a few pennies per transaction, and eliminate ten per cent of GDP straight off!!! The taxation and debt burden of your production would be ten percent less overnight! Eliminate government spending one component at a time as the blockchain will decentralize all government controlled components to private education, private defence, charity in lieu of welfare, private police, a privatized transport and infrastructure, no public pensions and administration by blockchain and decentralized local governance, and your tax burden is reduced to zero… Those that are employed within the Public Sector and Banking Sectors will lose their jobs and their pensions because make no mistake about it, the correcting and purging of a Century of government mis-allocation of capital and ponzi financing will be brutal and unforgiving, but these people will have the solace and the opportunity of producing goods or services in exchange for deflationary money and credit in which they can share in the increased material wealth of a voluntary and decentralized economy… In a decentralized and deflationary market, poverty will soon be eliminated as far as the Blockchain and Bitcoin can scale, in other words lifting all boats on a global scale…

Conclusion

The last five hundred years of history and of Banking in all its forms, is what I would call the Technological Revolution… The centralization of credit instruments and derivatives of money in the hands of secretive and corrupt bankers have earned them the emnity and hatred of the masses over the centuries for a reason, in that they time after time use their control and influence over the macro lifeblood of the micro economy, to corrupt the money as the one voluntary collectivized method the whole of the economy uses to exchange… With the centralization of money and credit and the rise of the monopolist state comes a parasitic brotherhood where money and Legislation are combined in the Central Banking system, and are used to enslave and impoverish… The increasing totalitarianism and the murder and death caused by Governments these last few centuries and especially the blood soaked insanity of the Twentieth Century has done its best to impoverish, disenfranchise and communize property destroying Western Civilization, but is at its last ebb… The advent and development of distributed technology and Blockchain Technology with the Bitcoin Protocol going live in 2009 is what I call the Technological Rebellion, or Counter-Revolution, in that the Blockchain rolls back Banking and State power by rendering them redundant through free market competition, its incentive structure, and time… As Progression requires centralization and force, Rebellion and Reaction requires decentralization and the distribution of power, and especially critically the power of money… Money always was and always is a voluntary collective institution that humans engage in to facilitate exchange and to store production for future consumption and is the birth of Civilization in its many guises, but it can be corrupted and be used to enslave the masses through an extracting and impoverishing design and force, as dear old Henry Kissinger coined it, “whoever controls the money controls the world”… By that necessary truth, if no-one controls the money, then no-one controls the world… Bitcoin is owned by no-one and cannot be centrally controlled by anyone, but allows anyone to invest and own its currency and use its ledger to voluntarily exchange goods, services and property, and is specifically designed as a constrained credit system that redistributes human wealth and ingenuity back to its owners, so the more that use Bitcoin the higher its market cap will go and the higher the value of its twenty one million currency units… Bitcoin ends war and poverty, parasitic and enslaving welfare traps, criminal and fraudulent banking, government enforcement goons and surveillance spooks, and very critically for the mental health of the family unit, community and therefore society as a whole, ends this pernicious and perverted social engineering agenda through education, media, political correctness and the rest of the cultural marxism and cultural hegemonic insanity that is destroying the relationships between men and women, their children, and our future… The decentralization of information that followed the first globally decentralized institution of the internet that would lead to decentralized trade and e-commerce, would eventually inevitably lead to the decentralization of credit and currency system to facilitate the future requirements of global information and property exchange… Despite its detractors Bitcoin and its anti-fragile nature keeps growing and strengthening with some big developments to come these next several months as the Central Banking system becomes increasingly unhinged in its blatant manipulation… Centralization is dead, long live decentralization…

 

“Revolution is progressivist and seeks the strengthening of the state; rebellion is reactionary and seeks its disappearance.”

“The revolutionary is a potential government official; the rebel is a reactionary in action.”
Nicolás Gómez Dávila

 

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4 thoughts on “The Blockchain Versus The Banks – The Technological Rebellion

  1. Great work, but the idea that Bitcoin will eliminate business cycles is nonsense and is not desirable. Boom and bust cycles are natural and integral to evolution. Human nature is designed to collectively go through emotional cycles which inevitably create business cycles. North Korea has been one of the most successful examples of systematically flattening the business cycle to the horrible detriment of the economy. Stability is desirable to an extent, but too much is deadly similar to the human heart rate. Organisms need stress to survive and thrive, but not so much stress that it kills the organism. An excessively erratic heartbeat is bad, but a perfectly stable heartbeat is impending doom or death.There is an optimal level of variability in all biological systems and economies. The only way to truly kill the business cycle is to kill the human spirit.Communism suppresses the human spirit and thus dulls the business cycle. There are great benefits from boom and bust cycles, but central banking can exacerbate these cycles to suboptimal extremes.

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