Will Socialism lead to mass crypto adoption

Bitcoin was developed and launched anonymously, with no specific political manifesto attached to it. It’s likely that the creator or creators hid their identity not just to protect themselves, but to further eliminate centralizing points of weakness that could be used to divide a community. The technology is clearly focused on reducing the role of government and eliminating its control of the monetary supply as well protecting personal sovereignty and control over one’s own money.

Ten years later and the cryptocurrency is being held as a beacon of hope by libertarians and Austrian economists. Libertarians are most typically associated with cryptocurrency due to the fact that it places a high value on personal freedom and autonomy . Bitcoin has long been seen as a tool that could help disempower banks and governments and allow people to live in economic freedom (although how exactly that would work is yet to be established). For their part, Austrians love the fact that it reduces the role of government in society.

Many Bitcoin critics will say that it has yet to establish any utility or use case that, as if digital scarcity weren’t hugely important to the world already, while others say that no one is currently using it and adoption may never happen. The latter may be true, too early to tell yet, but it’s possible that a somewhat new and potentially powerful political movement in the West may be the the thing that creates mass Bitcoin adoption. The youth socialist movements currently gaining traction in countries like the United States may inadvertently  accelerate this very thing.

Politicians like Alexandra Ocasio-Cortez are championing a new socialist movement in developed nations mostly fueled by an unsatisfied and debt-ridden youth demographic. While politicians chose a short term fix in 2008 with massive bailouts and quantitative easing (printing more fiat currency) which inevitable led to more inflation and a bigger debt burden for future generations, the ideals of socialism understandably appeal to a young and naive class of citizens.

Proposals like AOC’s “Green New Deal” will become more common in the near future. While potentially well intentioned, appear to be lack foundations in economic reality and intend to be funded by “extended credit lines”, also known ass “printing more and more fiat money”, which lead to more inflation and more unrest…and on and on it goes until…well….

It’s becoming clear that the near future may be chaotic, but hopefully the world comes out of it better for it, with sound money as the basis for future economic systems

Bitcoin is Coming!

How many consumers own cryptocurrency?

How many consumers own cryptocurrency?

Lets take a look at a recent ING international survey looking to answer this very question. The question was phrases as follows: “I own some cryptocurrency”, with possible answers being “yes” or “no”. Around 1,000 respondents were surveyed in each country shown, apart from Luxembourg which only had 500 respondents.

If you didn’t know, you should now…Crypto is Coming.

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UBS Bullish on Blockchain, Bearish on Bitcoin

Well into the second half of 2018 and it’s been a white-knuckle roller coaster ride for most. With Ether shedding 44 percent of its value in just two weeks and the media speaking of a Bitcoin bubble, is it possible to lose faith in crypto but remain bullish on blockchain? Apparently; if continued corporate statements like the UBS blockchain endorsement are anything to go by. But can you really separate cryptocurrency and blockchain?

UBS Bullish on Blockchain, Bearish on Bitcoin

CEO of Swiss investment banking giant UBS, Sergio Ermotti, came out with a bold claim recently. He said that blockchain was “almost a must” for business. UBS blockchain support is nothing new, however. Neither is their stance that cryptocurrencies are risky and will probably never become mainstream currencies.

Sergio Ermotti

UBS CEO Sergio Ermotti

Yet, when it comes to blockchain, UBS changes their point of view. The bank believes that blockchain technology can help companies become more efficient and reduce their operating costs across the board, from healthcare to finance. This implies a separation between cryptocurrencies and the technology that they run on.

But is it possible to separate the two? Furthermore, since the original vision of Satoshi was to send peer-to-peer electronic payments without the need for a middleman, UBS blockchain support could be misplaced.

Disrupt or Be Disrupted

“While we are doubtful cryptocurrencies will ever become a mainstream means of exchange, the underlying technology, blockchain, is likely to have a significant impact in industries ranging from finance to manufacturing, health care, and utilities,” UBS wrote in October of 2017.

Adding that, “Just as [the] internet has transformed our lives with email, e-commerce, or smartphone apps, we believe blockchain as an infrastructure technology can power future disruptive technologies through distributive ledgers, smart contracts, tokens or identity management.”

So, what about cutting out the middleman? The centralized authority taking its fees? UBS blockchain research does acknowledge a certain level of risk, although they limit this to technological shortcomings and an uncertainty as to which application will benefit the industry most. They fail to mention whether digital currencies will threaten fiat ones, or if central authorities will be cut out of the loop.

In fact, within the financial sector, UBS predicts that blockchain technology will have irreversible and positive effects. And UBS blockchain support doesn’t stop at words. The bank is also investing in research into distributed ledgers and smart contracts in its business model.

UBS currently holds a number of blockchain patents. Yet, despite Ermotti’s bullish stance, their blockchain activities are dwarfed by other large banks and credit card companies. The list includes American Express, BBVA, Mizuho Financial Group, Goldman Sachs, BNP, and Bank of America (who’s buying up blockchain patents like they’re expecting a war). Is this a bid to disrupt or be disrupted? Or a defensive maneuver to protect themselves against blockchain innovation?

Blockchain and Bitcoin Are One and the Same

Plenty of people criticize Ermotti’s point of view, seeing it as a convenient way of taking a politically acceptable view and a safe position. Leaving the door open without scaring away existing clients. Others believe that more than just convenient, it misses the point completely. After all, blockchain and cryptocurrency are one and the same.

Consider the Bitcoin network for a moment. The way it was created requires miners to believe that the value of the Bitcoin they are rewarded will increase over time (or at least, not decrease in value). Otherwise, there is no incentive or rational reason to invest in expensive mining equipment, electricity, and time.

Bitcoin mining company, Bitmain would benefit from an IPO

Bitcoin Mining Equipment

So, for those like UBS that are skeptical on Bitcoin, but busy singing the praises of blockchain, they may not fully understand. In an interview with Malta’s Steve Tendon, a member of the country’s Blockchain Taskforce and author of Malta’s National Blockchain Strategy, he expressed his concern with viewpoints such as the UBS blockchain one.

He argued that many regulators and institutions tried to draw a distinction between blockchain and cryptocurrencies, viewing crypto as a bad thing because of its criminal associations and scams, but blockchain as a positive technology with infinite possibilities.

“There is no way you can have a smart contract platform that is as sophisticated as the one that Ethereum has implemented today (but there will be others in the future) unless you also have a cryptocurrency that is being used to “pay” for the computation. So the distinction between cryptocurrency and blockchains are really artificial: they are just two aspects of the same coin,” he said.

Final Thoughts

Ermotti and the UBS team may be making headlines with their views on the transformative technology. Calling blockchain “crucial and disruptive” is all well and good. But frowning on Bitcoin at the same time may just be missing a trick.

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EU Parliament Gives Cryptocurrency Their Support

The EU Parliament has published a new report, “Virtual currencies and central banks monetary policy: challenges ahead”, which dismisses claims from the likes of economist Robert Shiller, who has declared the death of Bitcoin on numerous occasions.

Safe, Transparent, And Fast

The report went so far as to say that “their global transaction networks are relatively safe, transparent, and fast” and that “this gives them good prospects for further development.” However, the report disagrees with those that see Bitcoin as replacing global currencies, instead saying that they “remain unlikely to challenge the dominant position of sovereign currencies and central banks, especially those in major currency areas.”

Illegal Transactions?

In particular, the report has seemingly hit out at market bears and critics that claim crypto is only used for black market and illegal trades. This is a sentiment that is used by critics of the currency to state why it holds no real value. In fact, one Australian group of academics used detection controlled estimation and network clustering and found that 44% of all Bitcoin transactions involve illegal activity.

Conversely, there is a lot of research that claims this notion to be nonsense. The Foundation for the Defense of Democracies conducted their own research and reported that less than 1% of Bitcoin is used for money laundering, which is representative of the global economy as a whole.

Changing Opinion

Of course, the anonymity of Bitcoin and cryptocurrency is such that it is impossible to accurately determine how much of it is used for illegal activities, but a lot of governments, regulatory bodies, and analysts are making u-turns on their opinion.

China, for example, was the first government to issue a blanket ban on cryptocurrencies but has recently started publishing its own ranking of the top cryptocurrencies. South Korea has stated its intent to implement a completely cashless society, utilizing cryptocurrencies as well as more traditional currency transfer systems. At the very least, this report by an official EU body shows that regulators are willing to consider the legitimacy and the case-use benefits of cryptocurrencies. They will have to, considering millennials will lead the charge in terms of cryptocurrency adoption.

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