Do you know what the Secret Service's job is?
The Secret Service is best known as the agency responsible for protecting the President. The Secret Service has two primary responsibilities: criminal investigation and presidential security. Secret Service agents are assigned both protection and investigation duties at some time during their service.
These investigations include: counterfeiting of U.S. currency (to include coins); counterfeiting of foreign currency (occurring domestically); identity crimes such as access device fraud, identity theft, false identification fraud, bank fraud and check fraud; telemarketing fraud; telecommunications fraud (cellular and ...
Imagine joining the Secret Service thinking you're going to be a "hero" protecting the president and then you get some desk job following the paper trail of some common thief (exceptional thief). I'm sure it's happened more than once or twice.
Seriously though, think of all the work-hours and resources spent on trying to make sure everyone within this financial system is following the rules. The overhead cost is massive, and that overhead cost is becoming quickly outdated.
Because not only do you have to worry about bad-acting counterfeiters, but we also have to worry about those who legitimately control the system and the law in their favor so they can exploit these things without even risking getting in trouble. Some people are above the law; they make the law.
I'm having trouble finding an old cartoon of the character biting a gold coin and bending it with their teeth, but trust me, there are several. I guess Olympians do it as well doing photoshoots? Go figure.
Counterfeiting has been a problem since the beginning of currency. I wrote a post on this recently on silver coins and I actually found out several ways this was done back in the day. The reason silver coins have ridges on the sides is so you can't shave them smooth without giving away you've desecrated the value.
https://en.wikipedia.org/wiki/Methods_of_coin_debasement
- Clipping: Shave off the sides
- Sweating: Shake/bang them around and collect silver flakes
- Plugging: Punch out the center and replace outside plating.
- Use gold plating instead of solid gold.
- Mix metals and claim solid.
And these are just strategies for counterfeiting gold/silver coins. There's so much more to it when trying to parse counterfeiting paper money, and I know hardly anything about the SWIFT banking system and how it has been gamed over time since the 1970's.
The point is that this problem has been solved, and the legacy system doesn't seem to care. Everyone makes a big deal about Bitcoin and the 21M maximum supply. That is not impressive, in fact that is not impressive at all. What is impressive is the FACT that counterfeiting Bitcoin is financially impossible, and this trait is passed on to pretty much every single crypto network.
Looking locally, take Hive and LEO for example. Two tokens that have no supply cap with relatively high inflation. Even with high inflation and no supply cap, no one in the world can counterfeit these tokens; not even the most powerful organizations on the planet. This is an extremely powerful mechanic that most are simply taking for granted.
The only way to counterfeit Bitcoin is to control network security via a 51% attack using massive hashpower. Any entity that somehow gets this much hashpower would realize it was far more profitable to simply follow the rules rather than destroying the entire network. Why ruin your own investment when you can make a mint securing the network? The system incentivizes its own existence and security financially.
In addition, even if this somehow did happen the network would find a way to pivot and eventually continue operations without having to worry about the double-spend problem. There are many solutions available on this front, including, but not limited to, switching to a new hashing algorithm or simply increasing current hashpower to defeat the attacker.
So why does no one seem to care that we've finally solved the counterfeiting problem? Because even though we've invented a system that is superior and has x1000 to potential of the current system, people are resistant to change. They'd rather things to stay the same even if they have to pay these exorbitant overhead costs because the advantage of controlling the system dwarfs that of allowing the new one to flourish.
Imagine how far along we'd be if the people in charge of the legacy economy finally realized that this was the answer and we should all just embrace it to create abundance for everyone? Not going to happen. Disruption is violent and encounters massive resistance as it bulldozes over the old antiquated systems.
Already we are seeing another barrage of attacks recently against Bitcoin in the form of "terrorist funding" and "energy wasting". It's becoming very clear that the Biden Administration is not going to be friendly when it comes to crypto.
Hell, they are even talking about unrealized capital gains taxes. Which means if a crypto goes x1000 at the end of the year at the snapshot and then crashes 99% you'll owe potentially millions of dollars to the government that does not exist.
Terrorist Funding
This is straight out of the regulation playbook. Want to attack the competition? Make the claim that terrorists, drug dealers, and pedophiles use it. Doesn't even matter what the technology is: terrorists use it therefore it is bad and needs to be shut down. End of story.
Does it matter that USD funds the most terrorism, or that the CIA is the birthmother of nearly all terrorist organizations? Nah, don't worry about little details like that. Bitcoin bad.
Money Laundering
This topic alone deserves its own post (later). Basically you will only ever here about Bitcoin used for money laundering, never tax evasion. Why? Regulators want to make Bitcoin sound more illegitimate than it really is.
Essentially, money laundering is tied to much worse illegal activity (mafia/drug stuff) than tax-evasion. The funny thing? Money laundering and tax evasion are essentially opposites of one another. To launder money one must pay taxes on illegitimate funds in order "launder" them (using a legitimate business front) so that this money can then be spent without attracting the attention of the IRS.
So to say that Bitcoin is used for money laundering is completely ridiculous. Show me how that works. Show me the tax returns. But this is exactly what the regulators claim because when people hear the phrase tax-evasion it elicits a much lesser reaction from the public.
There's also a very valid argument to be made that drug money isn't even dirty. The laws surrounding the War On Drugs are far more offensive and exploitative than drug-dealing itself. This is especially true when we look behind the curtain at how the CIA and other enforcement agencies break the rules whenever they feel like and profit from the War on Drugs.
Small time drug dealers have become millionaires from Bitcoin. Not from the drugs but from the fact that Bitcoin is exponentially doubling in value every year. That doesn't stop the government from confiscating everything and acting like that Bitcoin is then theirs to do whatever they please. These people are hypocrites on every level.
Bitcoin Wastes Energy
This one is really really picking up speed with the whole Green Initiative. Again, this is totally false, and Bitcoin actually leads the charge in green energy and allows powerplants to scale up instantly by allowing excess power that would have been wasted to instead be converted into currency at any location in the world on demand.
Do regulators care about the reality of the situation?
No, they have an agenda. Their agenda is to simply attack the competition so that they and their constituents don't lose control of the iron grip they have on society. We can see that the resistance being presented against crypto is massive and is slowing us down quite a bit, but it doesn't matter. Eventually the tipping point will be reached and all will capitulate to the new superior system.
We've already had way too much institutional adoption for Bitcoin to be banned outright. All further resistance will come from regulating the banks and exchanges in a centralized manner to control the bottlenecks. These bottleneck controls will ultimately fail miserably when crypto users can work and get paid directly in crypto. Hive and LEO are way ahead of the game on this front.
Conclusion
The 21M token supply cap pales in comparison to the fact that Bitcoin and all other cryptocurrencies can not be counterfeit. Many seem to just gloss over this obvious fact like it's not a big deal. It's a huge deal: it's the biggest killer dapp in the entire space. Counterfeiting is no longer a thing. This is huge.
As far as regulation is concerned, expect the resistance posed against crypto to intensify as it becomes a bigger and bigger threat to the establishment. What does this mean? It means at the peak of the next mega-bubble you had better acquire a whole lot of Bitcoin and fiat, because Bitcoin is the most secure and censorship resistant currency in existence, and that isn't changing anytime soon; Perhaps not even in our lifetimes. When crypto threatens the establishment, make sure to own the crypto that is most resilient to regulations. #bitcoin
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I live in a country where inflation has no limit, in less than 1 week the currency is 50% as you know Venezuela, but we can see how the dollar can circulate aqually to make purchases but many false bills circulate for the lack of knowledge of how to identify them, but I think people do not care much that this happens "for now".
All the things you say in this post are very interesting and motivate me to study more about this topic.
I think that the central entities seek to take control of these systems as bitcoin, but at the same time if everything uses digital coins could make their work easier because everything will be transparent, but what I do know is that it will be difficult to standardize or regulate the bitcoin.
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Eventually Bitcoin will eat it all including the legacy system. It’s like the financial blob all consuming. But the road won’t be a straight line since Politicians cause more problems than solve.
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The line I see is 2^x
Bitcoin doubling in value every year.
It's weird that Bitcoin is only worth $13500 at the moment.
Worth $13.5k... trading for $36k... and it could get all the way to $400k before this thing crashes into the mountain.
Rehypothecation can still be an issue with crypto and is a type of counterfeiting in a way.
So you're saying that... institutions like Grayscale and other custodians might start using their underlying Bitcoin collateral for other purposes? I find that highly likely, especially considering banks have been given the greenlight to issue stable coins.
Yep. I'd be shocked if Crypto Exchanges don't already do this and have been doing it for years.
If unauthorized I think that'd be conversion (a kind of theft) rather than counterfeiting. If authorized isn't that just money creation via credit?
Yes, but that is sort of my point. One of the main reasons crypto has value is that it has a finite supply, or at least a known rate of new emissions that can't be changed on a whim. Fiat currencies have no such truth.
That I doubt. It's not exactly a snap hiring decision.
This is very refreshing to hear. I've never been sold by the idea that money can be "tainted" by the commerce in which it's been involved.
Ditto for the "heroic" creativity of netting Al Capone for tax evasion. That's just another way of saying his guilt for other things wasn't proven.
Yeah, the entire point of Fungibility is that money can't be tainted like that.
Privacy matters.
It's about to get a whole lot worse. Obama in a fairly clandestine way put in shadowy restrictions on banking in order to target specific industries to take away their access to banking services. For example if you made hookahs, which are legal to make, you wouldn't be able to get a bank account or loan. This was called "Operation Chokepoint". For years and on various platforms all of my comments that mentioned that program were deleted. Biden wants to restart that program. They will go after gun manufacturers and likely social media or publishers who publish dissenting information.
Great point and easily glossed over. With fiat, a massive amount of effort must be expended to keep counterfeiting at bay.
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You don't have to counterfeit shitcoins, you just need a good bull market and a lot of fomo around a fad and Bob's your uncle. Nothing illegal just some imaginative marketing. Yeah they're not bitcoin but you can create a bit of confusion cough bitcoin cash cough if you really want something with bitcoin's name in it.
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The point is that those who know better can't be scammed. The scams will increase exponentially but never before has counterfeiting been as improbable as it is for crypto.
I agree but counterfeiting is fiat's problems, crypto has other problems...one of them is hive not going up in price gosh darn it !!!... sorry, lost it there for a second :)
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If there will be new laws, I'm not sure they really impact crypto. The only thing that can happen IMO is the innovation is moving to other places.
You have to be careful when buying precious metals, thas for sure. If gold and silver were ever to moon, you can be sure that Janet Yellen will go after that too!
And if that happens, you will find infinite alternatives to Bitcoin. Is like cutting the head of a hydra. It's amazing how hard is to control crypto.
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I was having these thoughts today also, but I opted for the education aspect. Big news unis now teaching crypto.
But yes, this solves alot of financial crimes. But it is easy to track Bitcoin, can they located owners of bitcoin?
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I used to work with a guy who several years before that worked for a computer sales and repair shop in my hometown. It as one of the biggest independent Apple shops in the area at the time and Apple was still just kind of on the fringe, not really mainstream yet besides education. Anyway, he was telling me a story about one of their customers who was buying these really fancy and expensive printers (for the time). He went over to the guys house and set them up and everything and didn't think much about it until one day these white vans showed up to his house and it was the Secret Service investigating this guy who had been counterfeiting. Not sure how true it was, but he told it pretty convincingly!
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Imagine joining the Secret Service thinking you're going to be a "hero" protecting the president and then you get some desk job following the paper trail of some common thief (exceptional thief). I'm sure it's happened more than once or twice.
I bet they all know that it is part of the treasury department. They only actually do counterfeiting of currency there are other agencies for financial crimes. Tax evasion would be the IRS and money laundering would likely end up with the FBI.
Yeah, that's the vibe I'm getting from the administration too. Fingers crossed though that were both wrong. Some people are saying that Yellen likes crypto. I'm not sure where they are getting that from. Either way this is a good test to find out how resilient crypto is to government red tape.
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