How the Media and Authority are feeding you crypto and blockchain bullshit!
The best thing to do when you don’t know what you are talking about is to keep your mouth shut. But how do you do that when you are the media? Well then you simply go ahead and misrepresent things either intentionally or better still by being ignorant toward facts because hey “ignorance is bliss, right?”
Here are the facts:
The Finance Minister of India said absolutely nothing new in his budget speech. The FM simply reiterated what the Supreme Court has been saying for a while. Bitcoin was NEVER legal tender in India. The government’s position hasn’t changed. The “free and open press” is engaging in FUD.
That’s one of the fundamental reasons why the Internet exists. You can find out on your own where the truth lies. You can access scholarly posts by industry experts, download books and READ your way out of FUD. Welcome to 2018. Nobody needs the Economic Times to acquire accurate information about economics. The Internet exists. And while fake news is a real thing, most of us have a sufficiently developed parietal lobe we can make use of.
Here’s the problem with ordinary media reports that write bitcoin obituaries – they fail to tell you that cryptocurrencies are decentralized, borderless, and more often than not censorship-resistant. Therefore, the concept of a national institution or authority like a finance ministry or a central bank “banning” or “shutting down” cryptocurrency is only as effective as using chewing gum to build a house in a hurricane prone region. In simpler words – it is entirely ineffective and devoid of common sense.
The government is still working on a regulatory framework around cryptocurrencies. And of course the government will work on curbing the use of cryptocurrencies in illegitimate activities just as it works to curb the use of the national currency in illegitimate activities. Apart from the simple fact of reporting this news, why is this moot point being hyped as if this is a dramatic new development? Ordinary reporting. That’s why.
The future of “centralised Blockchain adoption”:
As for the supposedly insightful idea that the government is going to adopt Blockchain technology to bring about some revolutionary new ideas to finance and infrastructure, allow me, a self-proclaimed “evangelical blockchainist”, to enlighten you.
This so-called“Blockchain adoption” phase that the Indian government is now promising to explore is not new in the crypto world. The question is what can we expect the government to use Blockchain for? Let me make an educated guess.
I think the Indian government, as plenty of other governments around the world, will want the central bank to issue India’s own national cryptocurrency. While this is still speculation the fact that the Finance Minister himself felt it necessary to point out that the government will explore Blockchain is a strong indication of things to come.
If the government really is thinking about introducing a national cryptocurrency then perhaps it needs to re-evaluate its think tank because for anyone who understands cryptocurrencies that is clearly not sound thinking.
It’s not that Authority cannot issue its own cryptocurrency. Of course it could. So could Tom, Dick, Harry, and Sally. However, that would be unbelievably naive on Authority’s part. What makes a cryptocurrency a cryptocurrency is that it is decentralised (no central issuing authority like a central bank). It is based on economic models of game theory where market competition is a feature, not a bug. It is permissionless and borderless by design so trying to restrict it within national borders is folly.
I can go on about why national cryptocurrencies will not work but for now I would like to simply claim that a national cryptocurrency in India, and in most other countries if not all, is bound to fail. You can come back here and tell me about it after the government and banks are done with their experiments.
What else will the government do for Blockchain adoption? There are plenty of use cases for Blockchains but if you understand Blockchains then you know that the only truly scalable and desirable Blockchains are open and decentralised Blockchains. You know, like the bitcoin Blockchain.
Kettle meet pot:
“Bitcoin is bad.. Blockchain is the real deal” are arguments that stem from ill-informed technological opinions on cryptocurrencies.
The bitcoin Blockchain is quite literally the mother of all Blockchains. You can argue about all the potential great Blockchains being built today and even offer compelling arguments for directed acyclic graphs (DAGs) that are in principle better than Blockchain technology itself for a variety of reasons but science and technology work on math and evidence, not on faith and promise. Proof of concept is better than a proven concept, only on paper.
In terms of security the bitcoin network is incomparable to any payment network or digital currency infrastructure ever created.
The bitcoin network is the single most peer-reviewed and time tested network in human history. Every day for the last 8–9 years hackers, both ethical and unethical, have tried their level bests and come up short against the bitcoin network.
Most people are still unaware that the security in a cryptocurrency network, like bitcoin, improves with increasing adoption. The more people use bitcoin the more secure it becomes. That is the opposite of what happens with traditional financial institutions which become increasingly vulnerable and put their customers and users at risk as their userbase increases. I will just leave one word here for your perusal — Equifax.
So if governments and central banks around the world think that issuing their own cryptocurrency is a good idea then they are in for a surprise.
The government will introduce some sort of a regulatory framework around cryptocurrencies, as it should, but it will fail to update this framework in time, which will lead to confusion and more unintended FUD. That’s because governments do not move at the pace of rapid technological innovation. Governments are slow and steady. Mostly just slow.
The crypto space on the other hand experiences extraordinary price fluctuations in hours and sometimes in minutes. That is not good but for an industry still in its infancy that should be expected and all investors and traders in crypto worldwide should understand that risk mitigation is up to them. When you become your own bank then you become entirely responsible for your money and your investments.
Crypto also experiences extraordinary developments in technology on a monthly basis. And sometimes on a weekly basis. All regulations will need to be revised to keep up with the pace of crypto innovation. And I just don’t see any governments capable of keeping pace.
If cryptocurrencies cannot be stopped, cannot be censored, cannot be properly regulated then how will Authority react to them?
Authority will experience 5 stages of crypto grief – Denial, Anger, Bargaining, Depression, Acceptance. India is currently somewhere between Anger and Bargaining. Acceptance will come one day. Try as they might, Authority will not prevail.
Wait for it!
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