Unless you have been hiding under a rock, you’ve been hearing about cryptocurrency, Bitcoin and dozens of coins as being either the future of currency, or causing the biggest bubble ever.
One of the biggest criticisms of cryptocurrency is that it’s just made up money, that it’s not backed by anything.
But is that true?
What if I told you that crypto, unlike dollars or even gold and silver, has the greatest backing of all: radical transparency.
Let’s give it a Reality Check you won’t get anywhere else.
Radical transparency. In the spirit of radical transparency I should mention once again that Reality Check and Truth in Media are exclusively sponsored by Dash Digital Cash, which is of course, a cryptocurrency.
Cryptocurrencies are in the news every day, from Bitcoin’s meteoric rise in December to over $19,000 a coin, to the drop in February to below $7,000. You’ve heard everything from how crypto is the future, to crypto is a scam. The biggest bubble since the Dutch tulip bubble which burst in the year 1637. Yes, it happened. And yes, that comparison is being made in media.
One of the biggest complaints in media about crypto is that it is simply made up money. It’s not backed by anything.
Not like dollars and gold. But is that true?
The U.S. dollar came off the gold standard in 1933 and then fully abandoned it in 1971 under President Nixon.
By 1973, the U.S. had entered into agreements with Saudi Arabia to create the petrodollar. they agreed to use American dollars for paying against oil contracts.
Oh yes, oil. The “fuel of the future” is what backs the U.S. dollar?
Maybe not. Maybe it’s something completely different. Peter Thiel puts it this way:
“You will not be able to pay your taxes in bitcoin. You have to pay them in dollars. If you don’t pay them with dollars, there will be people who will show up with guns to make you pay them.”
From the Daily Reckoning: “Coercion is what holds the u.s. dollar system together. ‘tax-driven money’ is the phrase that economists use to describe the theory. it applies to all sovereign currencies.”
Though, as we have reported at TruthInMedia.com, three states are now considering state taxes to be paid in crypto.
So what about commodity-backed currency, like gold or silver? At least there is a physical asset there, right?
The use of precious metals as money goes back nearly 3000 years.
According to Ross Ashcroft’s Renegade Inc., the founder and chairman of Goldmoney “James Turk argues for a return to the gold standard because ‘only gold is outside the control of politicians’. That may be true, but it’s not outside the control of mining corporations, whose interests are unlikely to coincide with those of the wider population.”
And while gold has a fixed supply that can’t be inflated, it also hasn’t been easy to audit.
And that brings us to cryptocurrency.
With crypto, you know exactly how much is out there, where it all is, and how often it moves.
Forbes Magazine writes:
“…Vanguard founder Jack Bogle and Nobel Prize winner Professor Joseph E. Stiglitz from Columbia University. They have both attacked bitcoin saying that it’s a “bubble,” comparing it to many dotcom companies that were really shell companies offering little value and not ‘backed by anything.’ Stiglitz actually went so far to say bitcoin should be outlawed and said it doesn’t serve any useful social function.”
No useful social function? That argument is really not true.
Cryptocurrencies like Bitcoin, Dash, Ethereum, Litecoin, Ripple, Bitcoin cash, and many others are backed by blockchain technology. And blockchain creates radical transparency through antifragile decentralization.
In other words, blockchain is a secure digital ledger and a distributed database, tracking transactions anonymously and replicating them to prevent data loss. It’s nothing like the trust we instill in our current financial system, which explains its useful social function.
Joel Valenzuela from Dash Force News explains:
“The whole point of a secure public ledger for financial transactions was to remove the need for trusting an institution like a bank to not only hold your money, but also maintain an accurate copy of all transactions and not engage in financial trickery.”
Now let that sink in. The power of blockchain, upon which most crypocurrency is built, is to actually be able to securely remove the financial middleman.
The mysterious Satoshi Nakamoto, in his whitepaper, writes:
“The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the ‘tape,’ is made public, but without telling who the parties were.”
The goal of true financial privacy is to break the link between an open and auditable network and true identities of the users.
Blockchain technology is facilitating this, allowing even silver currency transactions to be stored as is done by lodecoin.
It’s the power of blockchain that creates what Valenzuela calls “trustlessness.” For instance, Dash Digital Cash does this by “trustlessly mixing funds with a few other parties so that an anonymized transaction can’t be linked back to you, all the while keeping everything publicly visible. There’s incredible value to being able to maintain privacy while keeping the main advantage of cryptocurrency: trustlessness.”
What you need to know is that word, trustlessness, is a powerful one.
So I’ll say it again… trustlessness. Valenzuela says it better than I can, so I will quote him here.
“You don’t have to trust that the network is being used in a certain way. You don’t have to trust that it’s well-distributed, and no one party (or small group of parties) controls a very small portion of the supply. You don’t have to trust any developers or administrators to tell you that the network is running fine. You can see for yourself.”