Central Bank Digital Currencies Are Not Like Bitcoin or ...

Putting $400M of Bitcoin on your company balance sheet

Also posted on my blog as usual. Read it there if you can, there are footnotes and inlined plots.
A couple of months ago, MicroStrategy (MSTR) had a spare $400M of cash which it decided to shift to Bitcoin (BTC).
Today we'll discuss in excrutiating detail why this is not a good idea.
When a company has a pile of spare money it doesn't know what to do with, it'll normally do buybacks or start paying dividends. That gives the money back to the shareholders, and from an economic perspective the money can get better invested in other more promising companies. If you have a huge pile of of cash, you probably should be doing other things than leave it in a bank account to gather dust.
However, this statement from MicroStrategy CEO Michael Saylor exists to make it clear he's buying into BTC for all the wrong reasons:
“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”
Let's unpack it and jump into the economics Bitcoin:

Is Bitcoin money?

No.
Or rather BTC doesn't act as money and there's no serious future path for BTC to become a form of money. Let's go back to basics. There are 3 main economic problems money solves:
1. Medium of Exchange. Before money we had to barter, which led to the double coincidence of wants problem. When everyone accepts the same money you can buy something from someone even if they don't like the stuff you own.
As a medium of exchange, BTC is not good. There are significant transaction fees and transaction waiting times built-in to BTC and these worsen the more popular BTC get.
You can test BTC's usefulness as a medium of exchange for yourself right now: try to order a pizza or to buy a random item with BTC. How many additional hurdles do you have to go through? How many fewer options do you have than if you used a regular currency? How much overhead (time, fees) is there?
2. Unit of Account. A unit of account is what you compare the value of objects against. We denominate BTC in terms of how many USD they're worth, so BTC is a unit of account presently. We can say it's because of lack of adoption, but really it's also because the market value of BTC is so volatile.
If I buy a $1000 table today or in 2017, it's roughly a $1000 table. We can't say that a 0.4BTC table was a 0.4BTC table in 2017. We'll expand on this in the next point:
3. Store of Value. When you create economic value, you don't want to be forced to use up the value you created right away.
For instance, if I fix your washing machine and you pay me in avocados, I'd be annoyed. I'd have to consume my payment before it becomes brown, squishy and disgusting. Avocado fruit is not good money because avocadoes loses value very fast.
On the other hand, well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate. Let's look at the chart of the USD against BTC
While the dollar loses value at a predictible rate, BTC is all over the place, which is bad.
One important use money is to write loan contracts. Loans are great. They let people spend now against their future potential earnings, so they can buy houses or start businesses without first saving up for a decade. Loans are good for the economy.
If you want to sign something that says "I owe you this much for that much time" then you need to be able to roughly predict the value of the debt in at the point in time where it's due.
Otherwise you'll have a hard time pricing the risk of the loan effectively. This means that you need to charge higher interests. The risk of making a loan in BTC needs to be priced into the interest of a BTC-denominated loan, which means much higher interest rates. High interests on loans are bad, because buying houses and starting businesses are good things.

BTC has a fixed supply, so these problems are built in

Some people think that going back to a standard where our money was denominated by a stock of gold (the Gold Standard) would solve economic problems. This is nonsense.
Having control over supply of your currency is a good thing, as long as it's well run.
See here
Remember that what is desirable is low variance in the value, not the value itself. When there are wild fluctuations in value, it's hard for money to do its job well.
Since the 1970s, the USD has been a fiat money with no intrinsic value. This means we control the supply of money.
Let's look at a classic poorly drawn econ101 graph
The market price for USD is where supply meets demand. The problem with a currency based on an item whose supply is fixed is that the price will necessarily fluctuate in response to changes in demand.
Imagine, if you will, that a pandemic strikes and that the demand for currency takes a sharp drop. The US imports less, people don't buy anything anymore, etc. If you can't print money, you get deflation, which is worsens everything. On the other hand, if you can make the money printers go brrrr you can stabilize the price
Having your currency be based on a fixed supply isn't just bad because in/deflation is hard to control.
It's also a national security risk...
The story of the guy who crashed gold prices in North Africa
In the 1200s, Mansa Munsa, the emperor of the Mali, was rich and a devout Muslim and wanted everyone to know it. So he embarked on a pilgrimage to make it rain all the way to Mecca.
He in fact made it rain so hard he increased the overall supply of gold and unintentionally crashed gold prices in Cairo by 20%, wreaking an economic havoc in North Africa that lasted a decade.
This story is fun, the larger point that having your inflation be at the mercy of foreign nations is an undesirable attribute in any currency. The US likes to call some countries currency manipulators, but this problem would be serious under a gold standard.

Currencies are based on trust

Since the USD is based on nothing except the US government's word, how can we trust USD not to be mismanaged?
The answer is that you can probably trust the fed until political stooges get put in place. Currently, the US's central bank managing the USD, the Federal Reserve (the Fed for friends & family), has administrative authority. The fed can say "no" to dumb requests from the president.
People who have no idea what the fed does like to chant "audit the fed", but the fed is already one of the best audited US federal entities. The transcripts of all their meetings are out in the open. As is their balance sheet, what they plan to do and why. If the US should audit anything it's the Department of Defense which operates without any accounting at all.
It's easy to see when a central bank will go rogue: it's when political yes-men are elected to the board.
For example, before printing themselves into hyperinflation, the Venezuelan president appointed a sociologist who publicly stated “Inflation does not exist in real life” and instead is a made up capitalist lie. Note what happened mere months after his gaining control over the Venezuelan currency
This is a key policy. One paper I really like, Sargent (1984) "The end of 4 big inflations" states:
The essential measures that ended hyperinflation in each of Germany,Austria, Hungary, and Poland were, first, the creation of an independentcentral bank that was legally committed to refuse the government'sdemand or additional unsecured credit and, second, a simultaneousalteration in the fiscal policy regime.
In english: *hyperinflation stops when the central bank can say "no" to the government."
The US Fed, like other well good central banks, is run by a bunch of nerds. When it prints money, even as aggressively as it has it does so for good reasons. You can see why they started printing on March 15th as the COVID lockdowns started:
The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.
In english: We're going to keep printing and lowering rates until jobs are back and inflation is under control. If we print until the sun is blotted out, we'll print in the shade.

BTC is not gold

Gold is a good asset for doomsday-preppers. If society crashes, gold will still have value.
How do we know that?
Gold has held value throughout multiple historic catastrophes over thousands of years. It had value before and after the Bronze Age Collapse, the Fall of the Western Roman Empire and Gengis Khan being Gengis Khan.
Even if you erased humanity and started over, the new humans would still find gold to be economically valuable. When Europeans d̶i̶s̶c̶o̶v̶e̶r̶e̶d̶ c̶o̶n̶q̶u̶e̶r̶e̶d̶ g̶e̶n̶o̶c̶i̶d̶e̶d̶ went to America, they found gold to be an important item over there too. This is about equivalent to finding humans on Alpha-Centauri and learning that they think gold is a good store of value as well.
Some people are puzzled at this: we don't even use gold for much! But it has great properties:
First, gold is hard to fake and impossible to manufacture. This makes it good to ascertain payment.
Second, gold doesnt react to oxygen, so it doesn't rust or tarnish. So it keeps value over time unlike most other materials.
Last, gold is pretty. This might sound frivolous, and you may not like it, but jewelry has actual value to humans.
It's no coincidence if you look at a list of the wealthiest families, a large number of them trade in luxury goods.
To paraphrase Veblen humans have a profound desire to signal social status, for the same reason peacocks have unwieldy tails. Gold is a great way to achieve that.
On the other hand, BTC lacks all these attributes. Its value is largely based on common perception of value. There are a few fundamental drivers of demand:
Apart from these, it's hard to argue that BTC will retain value throughout some sort of economic catastrophe.

BTC is really risky

One last statement from Michael Saylor I take offense to is this:
“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold,” MicroStrategy CEO said in an interview
"BTC is less risky than holding cash or gold long term" is nonsense. We saw before that BTC is more volatile on face value, and that as long as the Fed isn't run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds.
But on top of this, BTC has Abrupt downside risks that normal currencies don't. Let's imagine a few:

Blockchain solutions are fundamentally inefficient

Blockchain was a genius idea. I still marvel at the initial white paper which is a great mix of economics and computer science.
That said, blockchain solutions make large tradeoffs in design because they assume almost no trust between parties. This leads to intentionally wasteful designs on a massive scale.
The main problem is that all transactions have to be validated by expensive computational operations and double checked by multiple parties. This means waste:
Many design problems can be mitigated by various improvements over BTC, but it remains that a simple database always works better than a blockchain if you can trust the parties to the transaction.
submitted by VodkaHaze to badeconomics [link] [comments]

A single global economy of FAIL

I had a lot of fun with Jo_Bones insane vomit yesterday, that retarded chimp is a special one for sure. He inspired me to write some satire of his delusional CSWesque rant. I list some hilarious quotes from him at the end as well from the comment chain.
The original delusional rant

If all governments could agree on any single thing at any point in time, it would be an unprecedented moment in history. A "unicorn moonshot" so to speak. If the unicorn moonshot were to manifest as every government suddenly desiring to throw their already digital currencies into complete disarray and chose a technically inferior and non-compliant product in the process, then you can bet your ass they would use BSV for their fiscal policies. At the moment, here is what came up when I googled Central Banks for the first time today. Here's what came up when I googled fractional reserves. I then googled what reconciled means, and after my eyes rolled back in to my head out of sheer inability to digest the information I was reading, I decided BSV was the blockchain to solve all of this because I personally think this thing is an awesome high-school comp sci project.

If every central bank suddenly decided to relinquish state control of their monetary policy, and instead decided that the security model of 7 amateur software developers paid by an ex-felon hiding in Antigua who controls the #11 cryptocurrency on coinmarketcap was the answer, we could have the opportunity to use a strictly worse version of our current banking software and IT infrastructure. Instant transactions between bank accounts you own? Screw that, welcome to 10 minute block times! Did you fat finger that bill payment to the wrong sender? Too bad, it's gone forever! Welcome to immutability! It's a feature not a bug!

If you extrapolate how bad this is, suddenly taxes would be lower because digital monetary transactions would come to a screeching halt. Can't pay taxes on money you don't have, right? Suck that statists! The world would benefit from one giant economy of scale even though that phrase makes no sense in this context, and in reality is another buzzword I just simply don't have the time to try to understand. I forgot to Google that one I guess. This means prices around the globe would be out of control because we'd have to revert to a primal barter system! My chicken for your box of peaches! The possibilities to fuck over literally the entire world are endless!

Additionally, there would now be a high degree of transparency to how poorly BSV scales, since blocks take hours to propagate at 1GB sizes and that would only represent the hourly transactions of a town of 10,000 people, which would inevitably lead everyone to understand what 99.99% (AKA the non-mentally retarded "subset" of the population) already know.


In the comments I decided to change potential use cases from the utter nonsense I listed above to a couple different things.
https://www.reddit.com/bsv/comments/j9u2jt/a_single_global_economy_of_scale/g8ppeq7/?utm_source=share&utm_medium=web2x&context=3
Here I am demonstrating that I know currency lives in a database today:
The point is that they centrally issue and control their own tokens on the bitcoin network. I don’t see what’s so hard to understand about this. They already issue tokens on their own network. It’s just a different database.
Here I am 7 comments later saying those databases don't allow for digital cash when I just stated they did.
Your SQL databases don’t really allow for digital cash.
Shit maybe token issuance on BSV won't work time to pivot to:
But bank transfers still take days between Europe and Asia and have high fees precisely because all the banks maintain their own networks.
Think of the possibilities guys. You totally can't do this today, right?
so they can (for example) sell a YouTube video directly to the whole world, for their native national token... on the bitcoin network.
Crap, maybe there are some good points there. At least Bitcoin can push transactions out in seconds despite having a 10 minute block time! And wait until you see the block times if anyone ever does try to send a billion tx in a second!
These hashes cost bitcoin, but you can sell billions of them per second.
What do you mean risks of minority hash rate on BSV? Nobody has ever done a 51% attack and not been arrested! THEY'LL LOSE THEIR MINING EQUIPMENT!
Except that it’s illegal to attack another chain, and it’s public, and traceable and the punishment would be your company loses all its mining equipment.
I'm running out of use cases since they're getting shot down so fast. Here's a good one. Why pay $80 a month for internet in 1 transaction, when you can pay for internet 1.7trillion times every month for every data packet you get?
And the advantage of sending 0.0011p to someone might be that they’re providing a service to you, like a data packet.
But think of all the UnIqUe AnD gReAt FeAtUrEs on BSV. Really cutting edge stuff that SQL Server doesn't have due to being obsolete in the 90s, like the ability to append only instead of modify data elements! Also, watch the blockchain desync if you ever tried 1billion tx/sec!
The network scales to handle billions of TX/sec and the ledger is append only so it matches the criteria for keeping accurate records and/or updating them as needs be.
Time to pivot again since I'm being dismantled at every turn. What haven't I mentioned yet?
you haven’t solved the issue of the US dollar being the worlds default currency on which global trade relies.
Here is me doing my best Craig Wright technobabble nonsense impression. I know this is technically English but the words being strung together make no sense!
Once again you’ve really missed the point of all this. A data commodity that comes about through consensus of the network on ‘what value is’ contains a fraction of every part of the global economy.
Time to revert to some Craig Wright technobabble bullshit again:
Those in charge of producing dollars ultimately have an unfair advantage over those who don’t and they can game the system.
That’s a peer to peer internet model where producers get paid directly by consumers for the data they consume and miners get paid according to how fast and how efficiently and how accurately they can deliver the data.

Have I mentioned the fact I don't understand that blockchains are literally distributed databases?
Finally, you can send any kind of data in a bitcoin transaction. Not just fiat currencies issued by a government but audio, video, text, a webpage, etc.
And finally:
It’s very smart. Unlike you.
My transformation is complete.
submitted by pointedpointything to bsv [link] [comments]

Minimum Viable Issuance - Why Ethereum’s lack of a hard cap on ETH issuance is a good thing.

This post will explain how the argument used by the average Bitcoin maximalist, thinking that they have found Ethereum’s achilles heel when talking about issuance is actually highlighting one of Ethereum’s strong points and one of the main threats to the longevity of the Bitcoin network.
So first let’s answer the question which I know many people have about Ethereum:

What is Ethereum’s ETH issuance schedule?

Ethereum has an issuance policy of Minimum Viable Issuance. So what does this mean exactly? It means that the issuance of ETH will be as low as possible while also maintaining a sufficient budget to pay miners (and soon to be stakers) to keep the network secure. For example, if ETH issuance was halved, miners would drop off the network and stop mining as it is no longer profitable for them to mine. As a result, the network would be less secure as it would cost less money for an attacker to control 51% of the hash power and attack the network. This means that the Ethereum community plans to change ETH issuance as time goes on to maintain a reasonable security budget which will keep the network secure but will also keep inflation in check. We have done this twice in the past with EIP-649 and EIP-1234 which reduced block rewards from 5 ETH per block to 3 ETH and from 3 ETH to 2 ETH respectively. I previously made a graph of ETH issuance over time here: https://redd.it/it8ce7
So while Ethereum doesn’t have a strictly defined issuance schedule, the community will reject any proposals which either put the security of the network at risk such as the recent EIP-2878, or we will reject proposals which will lead to excessive network security and therefore an unnecessarily high inflation rate (or we will accept proposals which reduce issuance after price rises and therefore the security budget rises). This means that when Bitcoiners accuse the Ethereum Foundation of being no better than a central bank because they can “print more Ether”, this is completely untrue. Any proposals made by the EF which would increase issuance unnecessarily would be rejected by the community in the same way that a proposal to increase the supply of Bitcoin from 21 million to 22 million would be rejected. There is a social contract around both Bitcoin’s and Ethereum’s issuance schedules. Any networks or proposals which break the social contracts of 21 million Bitcoins and minimal viable issuance of Ether would be a breach of these contracts and the new proposed network would be labeled by the community as illegitimate and the original network would live on.

So why is minimum viable issuance better than a hard cap?

Minimum viable issuance is better than a hard cap because it puts the most important part of the network first - the security. MVI ensures that the Ethereum network will always have a security budget which keeps the cost of a 51% attack impractically high. Bitcoin on the other hand, halves its security budget every 4 years until eventually only the transaction fees pay for network security. This means that every 4 years, the amount of money paying for network security halves until eventually, the value of attacking the network becomes greater than the security budget and someone performs a 51% attack (technically the security budget only halves if terms of BTC not in dollars. However, even if the price of Bitcoin more than doubles in the time that the security budget halves, the ratio of security budget to value secured on the network still halves, doubling the financial viability of performing a network attack). The strategy to pay for the security budget once Bitcoin issuance stops is for transaction fees to secure the network since transaction fees are paid to miners. Not only does this have its own security problems which I won’t detail here, but unless Bitcoin scales on layer 1 (layer 2 scaling solutions have their own security mechanisms separate from L1), then fees would have to cost well in the thousands of dollars to secure a trillion dollar market cap Bitcoin that is secured by nothing but fees. If Bitcoin maximalists want a 10 trillion or 100 trillion dollar market cap then expect fees to go up another 10 or 100 times from there.
Ethereum on the other hand, will be able to keep its network secure with approximately 1-2% annual issuance being paid to stakers under ETH 2.0. This is because not all of the network will be staking, so if 33 million of the approximately 110 million Ether in existence stakes under ETH 2.0, then paying this 33 million Ether 6% a year (a very decent yield!) would cost just under 2 million ETH per year which would equate to less than 2% annual ETH inflation. This is also before considering EIP-1559 which will burn a portion of transaction fees which will counter the effect of this inflation and potentially even make ETH deflationary if the sum of all burned transaction fees are greater than the annual inflation. Also, under ETH 2.0, an attacker performing a 51% attack would get his funds slashed (they would lose their funds) if they attack the network, meaning that they can only perform a 51% attack once. However, in Bitcoin, anyone who controls 51% of the mining hash power could perform multiple 51% attacks without losing everything like they could in ETH 2.0.
So in conclusion, while Ethereum doesn’t have the guaranteed anti-inflation security of a hard cap, it does have the guarantee of always paying it’s miners (or stakers under ETH 2.0) enough to keep the network secure. In contrast, while Bitcoin’s social contract may guarantee a hard cap of 21 million, it cannot simultaneously guarantee network security in the long run. Eventually, its users will have to decide if they want a secure network with more than 21 million coins or a tax to pay for security or an insecure network with super high fees and a hard cap of 21 million Bitcoin.
Disclaimer: The details I covered around 51% attacks and network security are simplified. I am not an expert in this field and things are a lot more nuanced than I laid out in my simplifications above.
submitted by Tricky_Troll to ethfinance [link] [comments]

Minimum Viable Issuance - Why Ethereum’s lack of a hard cap on ETH issuance is a good thing.

This post will explain how the argument used by the average Bitcoin maximalist, thinking that they have found Ethereum’s achilles heel when talking about issuance is actually highlighting one of Ethereum’s strong points and one of the main threats to the longevity of the Bitcoin network.
So first let’s answer the question which I know many people have about Ethereum:

What is Ethereum’s ETH issuance schedule?

Ethereum has an issuance policy of Minimum Viable Issuance. So what does this mean exactly? It means that the issuance of ETH will be as low as possible while also maintaining a sufficient budget to pay miners (and soon to be stakers) to keep the network secure. For example, if ETH issuance was halved, miners would drop off the network and stop mining as it is no longer profitable for them to mine. As a result, the network would be less secure as it would cost less money for an attacker to control 51% of the hash power and attack the network. This means that the Ethereum community plans to change ETH issuance as time goes on to maintain a reasonable security budget which will keep the network secure but will also keep inflation in check. We have done this twice in the past with EIP-649 and EIP-1234 which reduced block rewards from 5 ETH per block to 3 ETH and from 3 ETH to 2 ETH respectively. I previously made a graph of ETH issuance over time here: https://redd.it/it8ce7
So while Ethereum doesn’t have a strictly defined issuance schedule, the community will reject any proposals which either put the security of the network at risk such as the recent EIP-2878, or we will reject proposals which will lead to excessive network security and therefore an unnecessarily high inflation rate (or we will accept proposals which reduce issuance after price rises and therefore the security budget rises). This means that when Bitcoiners accuse the Ethereum Foundation of being no better than a central bank because they can “print more Ether”, this is completely untrue. Any proposals made by the EF which would increase issuance unnecessarily would be rejected by the community in the same way that a proposal to increase the supply of Bitcoin from 21 million to 22 million would be rejected. There is a social contract around both Bitcoin’s and Ethereum’s issuance schedules. Any networks or proposals which break the social contracts of 21 million Bitcoins and minimal viable issuance of Ether would be a breach of these contracts and the new proposed network would be labeled by the community as illegitimate and the original network would live on.

So why is minimum viable issuance better than a hard cap?

Minimum viable issuance is better than a hard cap because it puts the most important part of the network first - the security. MVI ensures that the Ethereum network will always have a security budget which keeps the cost of a 51% attack impractically high. Bitcoin on the other hand, halves its security budget every 4 years until eventually only the transaction fees pay for network security. This means that every 4 years, the amount of money paying for network security halves until eventually, the value of attacking the network becomes greater than the security budget and someone performs a 51% attack (technically the security budget only halves if terms of BTC not in dollars. However, even if the price of Bitcoin more than doubles in the time that the security budget halves, the ratio of security budget to value secured on the network still halves, doubling the financial viability of performing a network attack). The strategy to pay for the security budget once Bitcoin issuance stops is for transaction fees to secure the network since transaction fees are paid to miners. Not only does this have its own security problems which I won’t detail here, but unless Bitcoin scales on layer 1 (layer 2 scaling solutions have their own security mechanisms separate from L1), then fees would have to cost well in the thousands of dollars to secure a trillion dollar market cap Bitcoin that is secured by nothing but fees. If Bitcoin maximalists want a 10 trillion or 100 trillion dollar market cap then expect fees to go up another 10 or 100 times from there.
Ethereum on the other hand, will be able to keep its network secure with approximately 1-2% annual issuance being paid to stakers under ETH 2.0. This is because not all of the network will be staking, so if 33 million of the approximately 110 million Ether in existence stakes under ETH 2.0, then paying this 33 million Ether 6% a year (a very decent yield!) would cost just under 2 million ETH per year which would equate to less than 2% annual ETH inflation. This is also before considering EIP-1559 which will burn a portion of transaction fees which will counter the effect of this inflation and potentially even make ETH deflationary if the sum of all burned transaction fees are greater than the annual inflation. Also, under ETH 2.0, an attacker performing a 51% attack would get his funds slashed (they would lose their funds) if they attack the network, meaning that they can only perform a 51% attack once. However, in Bitcoin, anyone who controls 51% of the mining hash power could perform multiple 51% attacks without losing everything like they could in ETH 2.0.
So in conclusion, while Ethereum doesn’t have the guaranteed anti-inflation security of a hard cap, it does have the guarantee of always paying it’s miners (or stakers under ETH 2.0) enough to keep the network secure. In contrast, while Bitcoin’s social contract may guarantee a hard cap of 21 million, it cannot simultaneously guarantee network security in the long run. Eventually, its users will have to decide if they want a secure network with more than 21 million coins or a tax to pay for security or an insecure network with super high fees and a hard cap of 21 million Bitcoin.
Disclaimer: The details I covered around 51% attacks and network security are simplified. I am not an expert in this field and things are a lot more nuanced than I laid out in my simplifications above.
submitted by Tricky_Troll to ethtrader [link] [comments]

Eth 2.0 vs Polkadot and other musings by a fundamental investor

Spent about two hours on this post and I decided it would help the community if I made it more visible. Comment was made as a response to this
I’m trying to avoid falling into a maximalist mindset over time. This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech.
Can someone help me see the downsides of diversifying into DOTs?
I know Polkadot is more centralized, VC backed, and generally against our ethos here. On chain governance might introduce some unknown risks. What else am I missing?
I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
Response:
What else am I missing?
The upsides.
Most of the guys responding to you here are full Eth maxis who drank the Parity is bad koolaid. They are married to their investment and basically emotional / tribal in an area where you should have a cool head. Sure, you might get more upvotes on Reddit if you do and say what the crowd wants, but do you want upvotes and fleeting validation or do you want returns on your investment? Do you want to be these guys or do you want to be the shareholder making bank off of those guys?
Disclaimer: I'm both an Eth whale and a Dot whale, and have been in crypto for close to a decade now. I originally bought ether sub $10 after researching it for at least a thousand hours. Rode to $1500 and down to $60. Iron hands - my intent has always been to reconsider my Eth position after proof of stake is out. I invested in the 2017 Dot public sale with the plan of flipping profits back to Eth but keeping Dots looks like the right short and long term play now. I am not a trader, I just take a deep tech dive every couple of years and invest in fundamentals.
Now as for your concerns:
I know Polkadot is more centralized
The sad truth is that the market doesn't really care about this. At all. There is no real statistic to show at what point a coin is "decentralized" or "too centralized". For example, bitcoin has been completely taken over by Chinese mining farms for about five years now. Last I checked, they control above 85% of the hashing power, they just spread it among different mining pools to make it look decentralized. They have had the ability to fake or block transactions for all this time but it has never been in their best interest to do so: messing with bitcoin in that way would crash its price, therefore their bitcoin holdings, their mining equipment, and their company stock (some of them worth billions) would evaporate. So they won't do it due to economics, but not because they can't.
That is the major point I want to get across; originally Bitcoin couldn't be messed with because it was decentralized, but now Bitcoin is centralized but it's still not messed with due to economics. It is basically ChinaCoin at this point, but the market doesn't care, and it still enjoys over 50% of the total crypto market cap.
So how does this relate to Polkadot? Well fortunately most chains - Ethereum included - are working towards proof of stake. This is obviously better for the environment, but it also has a massive benefit for token holders. If a hostile party wanted to take over a proof of stake chain they'd have to buy up a massive share of the network. The moment they force through a malicious transaction a proof of stake blockchain has the option to fork them off. It would be messy for a few days, but by the end of the week the hostile party would have a large amount of now worthless tokens, and the proof of stake community would have moved on to a version of the blockchain where the hostile party's tokens have been slashed to zero. So not only does the market not care about centralization (Bitcoin example), but proof of stake makes token holders even safer.
That being said, Polkadot's "centralization" is not that far off to Ethereum. The Web3 foundation kept 30% of the Dots while the Ethereum Foundation kept 17%. There are whales in Polkadot but Ethereum has them too - 40% of all genesis Ether went to 100 wallets, and many suspect that the original Ethereum ICO was sybiled to make it look more popular and decentralized than it really was. But you don't really care about that do you? Neither do I. Whales are a fact of life.
VC backed
VCs are part of the crypto game now. There is no way to get rid of them, and there is no real reason why you should want to get rid of them. They put their capital at risk (same as you and me) and seek returns on their investment (same as you and me). They are both in Polkadot and Ethereum, and have been for years now. I have no issue with them as long as they don't play around with insider information, but that is another topic. To be honest, I would be worried if VCs did not endorse chains I'm researching, but maybe that's because my investing style isn't chasing hype and buying SUSHI style tokens from anonymous (at the time) developers. That's just playing hot potato. But hey, some people are good at that.
As to the amount of wallets that participated in the Polkadot ICO: a little known fact is that more individual wallets participated in Polkadot's ICO than Ethereum's, even though Polkadot never marketed their ICO rounds due to regulatory reasons.
generally against our ethos here
Kool aid.
Some guy that works(ed?) at Parity (who employs what, 200+ people?) correctly said that Ethereum is losing its tech lead and that offended the Ethereum hivemind. Oh no. So controversial. I'm so personally hurt by that.
Some guy that has been working for free on Ethereum basically forever correctly said that Polkadot is taking the blockchain tech crown. Do we A) Reflect on why he said that? or B) Rally the mob to chase him off?
"I did not quit social media, I quit Ethereum. I did not go dark, I just left the community. I am no longer coordinating hard forks, building testnets, or contributing otherwise. I did not work on Polkadot, I never did, I worked on Ethereum. I did not hate Ethereum, I loved it."
Also Parity locked their funds (and about 500+ other wallets not owned by them) and proposed a solution to recover them. When the community voted no they backed off and did not fork the chain, even if they had the influence to do so. For some reason this subreddit hates them for that, even if Parity did the 100% moral thing to do. Remember, 500+ other teams or people had their funds locked, so Parity was morally bound to try its best to recover them.
Its just lame drama to be honest. Nothing to do with ethos, everything to do with emotional tribalism.
Now for the missing upsides (I'll also respond to random fragments scattered in the thread):
This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech.
A good quick intro to Eth's tech vs Polkadot's tech can be found on this thread, especially this reply. That thread is basically mandatory reading if you care about your investment.
Eth 2.0's features will not really kick in for end users until about 2023. That means every dapp (except DeFI, where the fees make sense due to returns and is leading the fee market) who built on Eth's layer 1 are dead for three years. Remember the trading card games... Gods Unchained? How many players do you think are going to buy and sell cards when the transaction fee is worth more than the cards? All that development is now practically worthless until it can migrate to its own shard. This story repeats for hundreds of other dapp teams who's projects are now priced out for three years. So now they either have to migrate to a one of the many unpopulated L2 options (which have their own list of problems and risks, but that's another topic) or they look for another platform, preferably one interoperable with Ethereum. Hence Polkadot's massive growth in developer activity. If you check out https://polkaproject.com/ you'll see 205 projects listed at the time of this post. About a week ago they had 202 listed. That means about one team migrated from another tech stack to build on Polkadot every two days, and trust me, many more will come in when parachains are finally activated, and it will be a complete no brainer when Polkadot 2.0 is released.
Another huge upside for Polkadot is the Initial Parachain Offerings. Polkadot's version of ICOs. The biggest difference is that you can vote for parachains using your Dots to bind them to the relay chain, and you get some of the parachain's tokens in exchange. After a certain amount of time you get your Dots back. The tokenomics here are impressive: Dots are locked (reduced supply) instead of sold (sell pressure) and you still earn your staking rewards. There's no risk of scammers running away with your Ether and the governance mechanism allows for the community to defund incompetent devs who did not deliver what was promised.
Wouldn’t an ETH shard on Polkadot gain a bunch of scaling benefits that we won’t see natively for a couple years?
Yes. That is correct. Both Edgeware and Moonbeam are EVM compatible. And if the original dapp teams don't migrate their projects someone else will fork them, exactly like SUSHI did to Uniswap, and how Acala is doing to MakerDao.
Although realistically Ethereum has a 5 yr headstart and devs haven't slowed down at all
Ethereum had a five year head start but it turns out that Polkadot has a three year tech lead.
Just because it's "EVM Compatible" doesn't mean you can just plug Ethereum into Polkadot or vica versa, it just means they both understand Ethereum bytecode and you can potentially copy/paste contracts from Ethereum to Polkadot, but you'd still need to add a "bridge" between the 2 chains, so it adds additional complexity and extra steps compared to using any of the existing L2 scaling solutions
That only applies of you are thinking from an Eth maximalist perspective. But if you think from Polkadot's side, why would you need to use the bridge back to Ethereum at all? Everything will be seamless, cheaper, and quicker once the ecosystem starts to flourish.
I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
They are competitors. Both have their strategies, and both have their strengths (tech vs time on the market) but they are clearly competing in my eyes. Which is a good thing, Apple and Samsung competing in the cell phone market just leads to more innovation for consumers. You can still invest in both if you like.
Edit - link to post and the rest of the conversation: https://www.reddit.com/ethfinance/comments/iooew6/daily_general_discussion_september_8_2020/g4h5yyq/
Edit 2 - one day later PolkaProject count is 210. Devs are getting the hint :)
submitted by redditsucks_goruqqus to polkadot_market [link] [comments]

Bob The Magic Custodian



Summary: Everyone knows that when you give your assets to someone else, they always keep them safe. If this is true for individuals, it is certainly true for businesses.
Custodians always tell the truth and manage funds properly. They won't have any interest in taking the assets as an exchange operator would. Auditors tell the truth and can't be misled. That's because organizations that are regulated are incapable of lying and don't make mistakes.

First, some background. Here is a summary of how custodians make us more secure:

Previously, we might give Alice our crypto assets to hold. There were risks:

But "no worries", Alice has a custodian named Bob. Bob is dressed in a nice suit. He knows some politicians. And he drives a Porsche. "So you have nothing to worry about!". And look at all the benefits we get:
See - all problems are solved! All we have to worry about now is:
It's pretty simple. Before we had to trust Alice. Now we only have to trust Alice, Bob, and all the ways in which they communicate. Just think of how much more secure we are!

"On top of that", Bob assures us, "we're using a special wallet structure". Bob shows Alice a diagram. "We've broken the balance up and store it in lots of smaller wallets. That way", he assures her, "a thief can't take it all at once". And he points to a historic case where a large sum was taken "because it was stored in a single wallet... how stupid".
"Very early on, we used to have all the crypto in one wallet", he said, "and then one Christmas a hacker came and took it all. We call him the Grinch. Now we individually wrap each crypto and stick it under a binary search tree. The Grinch has never been back since."

"As well", Bob continues, "even if someone were to get in, we've got insurance. It covers all thefts and even coercion, collusion, and misplaced keys - only subject to the policy terms and conditions." And with that, he pulls out a phone-book sized contract and slams it on the desk with a thud. "Yep", he continues, "we're paying top dollar for one of the best policies in the country!"
"Can I read it?' Alice asks. "Sure," Bob says, "just as soon as our legal team is done with it. They're almost through the first chapter." He pauses, then continues. "And can you believe that sales guy Mike? He has the same year Porsche as me. I mean, what are the odds?"

"Do you use multi-sig?", Alice asks. "Absolutely!" Bob replies. "All our engineers are fully trained in multi-sig. Whenever we want to set up a new wallet, we generate 2 separate keys in an air-gapped process and store them in this proprietary system here. Look, it even requires the biometric signature from one of our team members to initiate any withdrawal." He demonstrates by pressing his thumb into the display. "We use a third-party cloud validation API to match the thumbprint and authorize each withdrawal. The keys are also backed up daily to an off-site third-party."
"Wow that's really impressive," Alice says, "but what if we need access for a withdrawal outside of office hours?" "Well that's no issue", Bob says, "just send us an email, call, or text message and we always have someone on staff to help out. Just another part of our strong commitment to all our customers!"

"What about Proof of Reserve?", Alice asks. "Of course", Bob replies, "though rather than publish any blockchain addresses or signed transaction, for privacy we just do a SHA256 refactoring of the inverse hash modulus for each UTXO nonce and combine the smart contract coefficient consensus in our hyperledger lightning node. But it's really simple to use." He pushes a button and a large green checkmark appears on a screen. "See - the algorithm ran through and reserves are proven."
"Wow", Alice says, "you really know your stuff! And that is easy to use! What about fiat balances?" "Yeah, we have an auditor too", Bob replies, "Been using him for a long time so we have quite a strong relationship going! We have special books we give him every year and he's very efficient! Checks the fiat, crypto, and everything all at once!"

"We used to have a nice offline multi-sig setup we've been using without issue for the past 5 years, but I think we'll move all our funds over to your facility," Alice says. "Awesome", Bob replies, "Thanks so much! This is perfect timing too - my Porsche got a dent on it this morning. We have the paperwork right over here." "Great!", Alice replies.
And with that, Alice gets out her pen and Bob gets the contract. "Don't worry", he says, "you can take your crypto-assets back anytime you like - just subject to our cancellation policy. Our annual management fees are also super low and we don't adjust them often".

How many holes have to exist for your funds to get stolen?
Just one.

Why are we taking a powerful offline multi-sig setup, widely used globally in hundreds of different/lacking regulatory environments with 0 breaches to date, and circumventing it by a demonstrably weak third party layer? And paying a great expense to do so?
If you go through the list of breaches in the past 2 years to highly credible organizations, you go through the list of major corporate frauds (only the ones we know about), you go through the list of all the times platforms have lost funds, you go through the list of times and ways that people have lost their crypto from identity theft, hot wallet exploits, extortion, etc... and then you go through this custodian with a fine-tooth comb and truly believe they have value to add far beyond what you could, sticking your funds in a wallet (or set of wallets) they control exclusively is the absolute worst possible way to take advantage of that security.

The best way to add security for crypto-assets is to make a stronger multi-sig. With one custodian, what you are doing is giving them your cryptocurrency and hoping they're honest, competent, and flawlessly secure. It's no different than storing it on a really secure exchange. Maybe the insurance will cover you. Didn't work for Bitpay in 2015. Didn't work for Yapizon in 2017. Insurance has never paid a claim in the entire history of cryptocurrency. But maybe you'll get lucky. Maybe your exact scenario will buck the trend and be what they're willing to cover. After the large deductible and hopefully without a long and expensive court battle.

And you want to advertise this increase in risk, the lapse of judgement, an accident waiting to happen, as though it's some kind of benefit to customers ("Free institutional-grade storage for your digital assets.")? And then some people are writing to the OSC that custodians should be mandatory for all funds on every exchange platform? That this somehow will make Canadians as a whole more secure or better protected compared with standard air-gapped multi-sig? On what planet?

Most of the problems in Canada stemmed from one thing - a lack of transparency. If Canadians had known what a joke Quadriga was - it wouldn't have grown to lose $400m from hard-working Canadians from coast to coast to coast. And Gerald Cotten would be in jail, not wherever he is now (at best, rotting peacefully). EZ-BTC and mister Dave Smilie would have been a tiny little scam to his friends, not a multi-million dollar fraud. Einstein would have got their act together or been shut down BEFORE losing millions and millions more in people's funds generously donated to criminals. MapleChange wouldn't have even been a thing. And maybe we'd know a little more about CoinTradeNewNote - like how much was lost in there. Almost all of the major losses with cryptocurrency exchanges involve deception with unbacked funds.
So it's great to see transparency reports from BitBuy and ShakePay where someone independently verified the backing. The only thing we don't have is:
It's not complicated to validate cryptocurrency assets. They need to exist, they need to be spendable, and they need to cover the total balances. There are plenty of credible people and firms across the country that have the capacity to reasonably perform this validation. Having more frequent checks by different, independent, parties who publish transparent reports is far more valuable than an annual check by a single "more credible/official" party who does the exact same basic checks and may or may not publish anything. Here's an example set of requirements that could be mandated:
There are ways to structure audits such that neither crypto assets nor customer information are ever put at risk, and both can still be properly validated and publicly verifiable. There are also ways to structure audits such that they are completely reasonable for small platforms and don't inhibit innovation in any way. By making the process as reasonable as possible, we can completely eliminate any reason/excuse that an honest platform would have for not being audited. That is arguable far more important than any incremental improvement we might get from mandating "the best of the best" accountants. Right now we have nothing mandated and tons of Canadians using offshore exchanges with no oversight whatsoever.

Transparency does not prove crypto assets are safe. CoinTradeNewNote, Flexcoin ($600k), and Canadian Bitcoins ($100k) are examples where crypto-assets were breached from platforms in Canada. All of them were online wallets and used no multi-sig as far as any records show. This is consistent with what we see globally - air-gapped multi-sig wallets have an impeccable record, while other schemes tend to suffer breach after breach. We don't actually know how much CoinTrader lost because there was no visibility. Rather than publishing details of what happened, the co-founder of CoinTrader silently moved on to found another platform - the "most trusted way to buy and sell crypto" - a site that has no information whatsoever (that I could find) on the storage practices and a FAQ advising that “[t]rading cryptocurrency is completely safe” and that having your own wallet is “entirely up to you! You can certainly keep cryptocurrency, or fiat, or both, on the app.” Doesn't sound like much was learned here, which is really sad to see.
It's not that complicated or unreasonable to set up a proper hardware wallet. Multi-sig can be learned in a single course. Something the equivalent complexity of a driver's license test could prevent all the cold storage exploits we've seen to date - even globally. Platform operators have a key advantage in detecting and preventing fraud - they know their customers far better than any custodian ever would. The best job that custodians can do is to find high integrity individuals and train them to form even better wallet signatories. Rather than mandating that all platforms expose themselves to arbitrary third party risks, regulations should center around ensuring that all signatories are background-checked, properly trained, and using proper procedures. We also need to make sure that signatories are empowered with rights and responsibilities to reject and report fraud. They need to know that they can safely challenge and delay a transaction - even if it turns out they made a mistake. We need to have an environment where mistakes are brought to the surface and dealt with. Not one where firms and people feel the need to hide what happened. In addition to a knowledge-based test, an auditor can privately interview each signatory to make sure they're not in coercive situations, and we should make sure they can freely and anonymously report any issues without threat of retaliation.
A proper multi-sig has each signature held by a separate person and is governed by policies and mutual decisions instead of a hierarchy. It includes at least one redundant signature. For best results, 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7.

History has demonstrated over and over again the risk of hot wallets even to highly credible organizations. Nonetheless, many platforms have hot wallets for convenience. While such losses are generally compensated by platforms without issue (for example Poloniex, Bitstamp, Bitfinex, Gatecoin, Coincheck, Bithumb, Zaif, CoinBene, Binance, Bitrue, Bitpoint, Upbit, VinDAX, and now KuCoin), the public tends to focus more on cases that didn't end well. Regardless of what systems are employed, there is always some level of risk. For that reason, most members of the public would prefer to see third party insurance.
Rather than trying to convince third party profit-seekers to provide comprehensive insurance and then relying on an expensive and slow legal system to enforce against whatever legal loopholes they manage to find each and every time something goes wrong, insurance could be run through multiple exchange operators and regulators, with the shared interest of having a reputable industry, keeping costs down, and taking care of Canadians. For example, a 4 of 7 multi-sig insurance fund held between 5 independent exchange operators and 2 regulatory bodies. All Canadian exchanges could pay premiums at a set rate based on their needed coverage, with a higher price paid for hot wallet coverage (anything not an air-gapped multi-sig cold wallet). Such a model would be much cheaper to manage, offer better coverage, and be much more reliable to payout when needed. The kind of coverage you could have under this model is unheard of. You could even create something like the CDIC to protect Canadians who get their trading accounts hacked if they can sufficiently prove the loss is legitimate. In cases of fraud, gross negligence, or insolvency, the fund can be used to pay affected users directly (utilizing the last transparent balance report in the worst case), something which private insurance would never touch. While it's recommended to have official policies for coverage, a model where members vote would fully cover edge cases. (Could be similar to the Supreme Court where justices vote based on case law.)
Such a model could fully protect all Canadians across all platforms. You can have a fiat coverage governed by legal agreements, and crypto-asset coverage governed by both multi-sig and legal agreements. It could be practical, affordable, and inclusive.

Now, we are at a crossroads. We can happily give up our freedom, our innovation, and our money. We can pay hefty expenses to auditors, lawyers, and regulators year after year (and make no mistake - this cost will grow to many millions or even billions as the industry grows - and it will be borne by all Canadians on every platform because platforms are not going to eat up these costs at a loss). We can make it nearly impossible for any new platform to enter the marketplace, forcing Canadians to use the same stagnant platforms year after year. We can centralize and consolidate the entire industry into 2 or 3 big players and have everyone else fail (possibly to heavy losses of users of those platforms). And when a flawed security model doesn't work and gets breached, we can make it even more complicated with even more people in suits making big money doing the job that blockchain was supposed to do in the first place. We can build a system which is so intertwined and dependent on big government, traditional finance, and central bankers that it's future depends entirely on that of the fiat system, of fractional banking, and of government bail-outs. If we choose this path, as history has shown us over and over again, we can not go back, save for revolution. Our children and grandchildren will still be paying the consequences of what we decided today.
Or, we can find solutions that work. We can maintain an open and innovative environment while making the adjustments we need to make to fully protect Canadian investors and cryptocurrency users, giving easy and affordable access to cryptocurrency for all Canadians on the platform of their choice, and creating an environment in which entrepreneurs and problem solvers can bring those solutions forward easily. None of the above precludes innovation in any way, or adds any unreasonable cost - and these three policies would demonstrably eliminate or resolve all 109 historic cases as studied here - that's every single case researched so far going back to 2011. It includes every loss that was studied so far not just in Canada but globally as well.
Unfortunately, finding answers is the least challenging part. Far more challenging is to get platform operators and regulators to agree on anything. My last post got no response whatsoever, and while the OSC has told me they're happy for industry feedback, I believe my opinion alone is fairly meaningless. This takes the whole community working together to solve. So please let me know your thoughts. Please take the time to upvote and share this with people. Please - let's get this solved and not leave it up to other people to do.

Facts/background/sources (skip if you like):



Thoughts?
submitted by azoundria2 to QuadrigaInitiative [link] [comments]

RESEARCH REPORT ABOUT ARYACOIN

RESEARCH REPORT ABOUT ARYACOIN
Author: Gamals Ahmed, CoinEx Business Ambassador

https://preview.redd.it/a7jv4azk86u51.jpg?width=1600&format=pjpg&auto=webp&s=e4a4dbb5afacd5747076beaa59e6343b805c3392

ABSTRACT

Aryacoin is a new cryptocurrency, which allows for decentralized, peer to peer transactions of electronic cash. It is like Bitcoin and Litecoin, but the trading of the coin occurs on sales platforms that have no restriction to use. Further, it was created with the goal of addressing the double spend issues of Bitcoin and does so using a timestamp server to verify transactions. It works by taking the hash of a block of items to be timestamped and widely publishing the hash. The timestamp proves that the data must have existed at the time in order to get the hash. Each timestamp then includes the previous timestamp in its hash, forming a chain.
The Aryacoin team is continuously developing new use cases for the coin, including exchanges where users can exchange the coins without any fees or restrictions, and offline options where the coins can be bought and sold for cash. The coins can also be used on the company’s other platform, mrdigicoin.io. Along with the coin, there is a digital wallet that can be created and controlled by the user entirely, with no control being retained by the Aryacoin team.

1.INTRODUCTION

The concept of Blockchain first came to fame in October 2008, as part of a proposal for Bitcoin, with the aim to create P2P money without banks. Bitcoin introduced a novel solution to the age-old human problem of trust. The underlying blockchain technology allows us to trust the outputs of the system without trusting any actor within it. People and institutions who do not know or trust each other, reside in different countries, are subject to different jurisdictions, and who have no legally binding agreements with each other, can now interact over the Internet without the need for trusted third parties like banks, Internet platforms, or other types of clearing institutions.
When bitcoin was launched it was revolutionary allowing people to transfer money to anytime and anywhere with very low transaction fees . It was decentralized and their is no third party involved in the transaction , only the sender and receiver were involved.
This paper provide a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions.The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes. Bitcoin was made so that it would not be controlled or regulated but now exchanges and governments are regulating bitcoin and other cryptocurrencies at every step. Aryacoin was developed to overcome these restrictions on a free currency.
Aryacoin is a new age cryptocurrency, which withholds the original principle on which the concept of cryptocurrency was established. Combining the best in blockchain technology since the time of its creation, Aryacoin strives to deliver the highest trading and mining standards for its community.

1.1 OVERVIEW ABOUT ARYACOIN

Aryacoin is a new age cryptocurrency, which withholds the original principle on which the concept of cryptocurrency was established. Combining the best in blockchain technology since the time of its creation, Aryacoin strives to deliver the highest trading and mining standards for its community.
Aryacoin is a blockchain based project that allows users to access their wallet on the web and mobile browsers, using their login details.
Aryacoin can be mined; it also can be exchanged by other digital currencies in several world-famous exchanges such as Hitbtc, CoinEx, P2pb2b, WhiteBit, Changelly and is also listed in reputable wallets such as Coinomi and Guarda.
Aryacoin is a coin, which can be used by anyone looking to use cryptocurrency which allows them to keep their privacy even when buying/selling the coin along with while using the coin during transactions. Proof of work and cryptographic hashes allows transactions to verified.
Stable Fee Per AYA is a unique feature of Aryacoin, so by increasing the amount or volume of the transaction, there is no change in the fee within the network, which means that the fee for sending an amount less than 1 AYA is equal to several hundred million AYA. Another unique feature of Aryacoin is the undetectability of transactions in Explorer, such as the DASH and Monero, of course, this operation is unique to Aryacoin.
Using Aryacoin digital currency, like other currencies, international transactions can be done very quickly and there are no limitations in this area as the creators claim.
Aryacoin aims to allow users to access the Aryacoin wallet via the web and mobile browsers using their login details.
Aryacoin is a peer-to-peer electronic cash system that enables users to send and receive payments directly from one party to another, and allow them to transfer funds across borders with no restriction or third party involvement. The blockchain-based system embraces the digital signature, which prevents double spending and low transfer fees, which enables users to transfer huge amounts with very low fees. The proof-of-work consensus mechanism allows each transaction to be verified and confirmed, while anonymity enables users to use the coin anywhere at any time.
According to the website of the operation, each wallet is divided into 2 or more AYA wallet addresses for each transaction, and depending on the volume of the transaction block, the origin, and destination of transactions in the network can not be traced and displayed to the public.
In fact, each wallet in Aryacoin consists of a total of several wallets. The number of these wallets increases per transaction to increase both security and privacy. Aryacoin also uses the dPoW protocol. In the dPoW protocol, a second layer is added to the network to verify transactions, which makes “51% attack” impossible even with more than half of the network hash, and blocks whose Blockchain uses this second layer of security never run the risk of 51% attacks.
AYA has been listed on a number of crypto exchanges, unlike other main cryptocurrencies, it cannot be directly purchased with fiats money. However, You can still easily buy this coin by
first buying Bitcoin from any large exchanges and then transfer to the exchange that offers to trade this coin.

1.1.1 ARYACOIN HISTORY

Aryacoin (AYA) is a new cryptocurrency, which has been created by a group of Iranian developers, is an altcoin which allows for decentralised, peer to peer transactions of electronic cash without any fees whatsoever. Along with the coin, there is a digital wallet that can be created and managed by the user entirely, with no control being retained by the Aryacoin team.
Aryacoin’s founder, Kiumars Parsa, has been a fan of alternative currencies and particularly Bitcoin.
We see people from all around the world using Blockchain technology and the great benefits that came with it and it then that I decided to solve this puzzle for find a way of bringing the last missing piece to the jigsaw. The idea for Aryacoin was born.” Parsa said.
Parsa and his team of Iranian ex-pats not only persevered but expedited the project and just a year later, in the summer of 2019, the first version of Aryacoin was released. In 2020, Aryacoin is the first and only Iranian coin listed on CMC.
Parsa goes on to state that it is now the strength of the community that has invested in the coin that will ultimately drive its success, alongside its robust technology and appealing 0% network fees.
We have thousands of voices behind Aryacoin. People for the people make this coin. It is a massive shout out for democracy. This had made us base the whole team strategy on the benefits for both our users and our traders.
One key example is that the network fee on AYA Blockchain is 0%. Yes, absolutely nothing, which which differentiates us from other networks. What also differentiates us from other coins is that we have AYAPAY which is the first cryptocurrency Gateway in the world which does not save funds on third party storage with all funds being forwarded directly to any wallet address that the Gateway owner requests”.
So for the first time ever, and unlike other gateways, incoming funds will be saved on the users account with submitted withdrawal requests then made on the Gateway host website. In AYAPAY which has also been developed by the Aryacoin team, all funds without extra fees or extra costs will directly forwarded to users wallets. We have named this technology as CloudWithdrawal.
We are continuously challenging ourselves as it is a crowded marketplace. We are striving to have a safer Blockchain against 51% attacks, faster confirmations speeds of transactions, cheaper network fee, growing the market by cooperation with Top tier Exchangers.

1.1.2 ARYACOIN’S MAIN GOAL

Aryacoin’s main goal is to educate people and give them the freedom to use cryptocurrency in any way they want. Aryacoin empowers the users to transfer, pay, trade cryptocurrency from any country around the globe.
Platforms that have been created by Aryacoin Team, as well as those that will go live in future, operate on the same principle and exclude absolutely no one.

1.1.3 PROBLEM ARYACOIN SEEKS TO SOLVE

Aryacoin aims to provide a long-term solution to the problem of double spending, which is still common in the crypto market. The developers of the system have created a peer-to-peer distributed timestamp server that generates computational proof of the transactions as they occur.
Besides, the system remains secure provided honest nodes control more CPU power than any cooperating group of attacker nodes. While Bitcoin was designed not to be regulated or controlled, many exchanges and governments have put regulatory measures on the pioneer cryptocurrency at every step. Aryacoin aims to overcome these restrictions as a free digital currency.

1.1.4 BENEFITS OF USING ARYACOIN

Aryacoin solution offers the following benefits:
  • Real-time update: whether you’re going on a holiday or a business trip, no problem. You can access your coins all over the world.
  • Instant operations: Aryacoin makes it quite easy for you to use your digital wallet and perform various operations with it.
  • Safe and secure: all your data is stored encrypted and can only be decrypted with your private key, seed, or password.
  • Strong security: The system has no control over your wallet. You are 100% in charge of your wallet and funds.

1.1.5 ARYACOIN FEATURES

1. Anonymity
The coin provides decent level of anonymity for all its users. The users can send their transactions to any of the public nodes to be broadcasted , the transaction sent to the nodes should be signed by the private key of the sender address . This allows the users to use the coin anywhere any time , sending transactions directly to the node allows users from any place and country .
2. Real Life Usage
aryacoin’s team is continuously developing new and innovative ways to use the coins , they are currently developing exchanges where the users can exchange the coins without any fees and any restrictions . They also are currently developing other innovative technologies, which would allow users to spend our coins everywhere and anywhere.
3. Offline Exchanges
They are also working with different offline vendors which would enable them to buy and sell the coins directly to our users on a fixed/variable price this would allow easy buy/sell directly using cash . This would allow the coins to be accessible to users without any restrictions which most of the online exchanges have, also increase the value and number of users along with new ways to spend the coin. This would increase anonymity level of the
coin. In addition, introduce new users into the cryptomarket and technology. Creating a revolution, which educates people about crypto and introduce them to the crypto world, which introduces a completely new group of people into crypto and a move towards a Decentralized future!
4. Transactions
When it comes to transactions, Aryacoin embraces a chain of digital signatures, where each owner simply transfers the coin to the next person by digitally signing a hash of the previous transaction and the public key of the next owner. The recipient can then verify the signatures to confirm the chain of ownership. Importantly, Aryacoin comes with a trusted central authority that checks every transaction for double spending.
5. Business Partner with Simplex
Aryacoin is the first and only Iranian digital currency that managed to obtain a trading license in other countries.
In collaboration with the foundation and financial giant Simplex, a major cryptocurrency company that has large companies such as Binance, P2P, Changelly, etc. Aryacoin has been licensed to enter the world’s major exchanges, as well as the possibility of purchasing AYA through Credit Cards, which will begin in the second half of 2020.
Also, the possibility of purchasing Aryacoin through Visa and MasterCard credit cards will be activated simultaneously inside the Aryacoin site. plus, in less than a year, AYA will be placed next to big names such as CoinCapMarket, Coinomi, P2P, Coinpayments and many other world-class brands today.

1.1.6 WHY CHOOSE ARYACOIN?

If you want to use a cryptocurrency that allows you to keep your privacy online even when buying and selling the coins, the Aryacoin team claims that AYA is the way to go. Aryacoin is putting in the work: with more ways to buy and sell, and fixing the issues that were present in the original Bitcoin, plus pushing the boundaries with innovative solutions in cryptocurrencies. You can get started using Aryacoin (AYA) payments simply by having a CoinPayments account!

1.1.7 ARYANA CENTRALIZED EXCHANGE

Aryana, the first Iranian exchange is a unique platform with the following features:
  • The first real international Persian exchange that obtains international licenses and is listed in CoinMarketCap.
  • The first Iranian exchange that has been cooperating with a legal and European exchange for 3 years.
  • The possibility of trading in Tomans (available currency in Iran) at the user’s desired price and getting rid of the transaction prices imposed by domestic sites inside Iran.
  • There is an internal fee payment plan by Iranian domestic banks for depositing and withdrawing Tomans for Aryacoin holders in Aryana Exchange.
  • The number that you see on the monitor and in your account will be equal to the number that is transferred to your bank account without a difference of one Rial.
  • The last but not least, noting the fact that there is a trading in Tomans possibility in Aryana exchange.
Aryana Exchange is using the most powerful, fastest, and most expensive server in the world, Google Cloud Platform (GCP), which is currently the highest quality server for an Iranian site, so that professional traders do not lag behind the market even for a second.
The feature of Smart Trading Robots is one of the most powerful features for digital currency traders. Digital cryptocurrency traders are well aware of how much they will benefit from smart trading robots. In the Aryana exchange, it is possible to connect exchange user accounts to intelligent trading bots and trade even when they are offline.
The injection of $ 1 million a day in liquidity by the WhiteBite exchange to maintain and support the price of Tether and eliminate the Tether fluctuations with Bitcoin instabilities used by profiteers to become a matter of course.

1.1.8 HOW DOES ARYACOIN WORK?

Aryacoin (AYA) tries to ensure a high level of security and privacy. The team has made sure to eliminate any trading restrictions for the network users: no verification is required to carry out transactions on AYA, making the project truly anonymous, decentralized, and giving it a real use in day-to-day life. The Delayed-Proof-of-Work (dPoW) algorithm makes the Aryacoin blockchain immune to any attempts of a 51% attack. AYA defines a coin as a chain of digital signatures — each owner transfers the coin to the next owner by digitally signing the hash of the previous transaction and the public key of the next owner, and the receiver verifies the signatures and the chain of ownership.

2. ARYACOIN TECHNOLOGY

2.1 PROOF-OF-WORK

They use a proof-of-work system similar to Adam Back’s Hashcash to implement a distributed timestamp server on a peer-to-peer basis, rather than newspaper or Usenet publications. The proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the hash begins with a number of zero bits. The average work required is exponential in the number of zero bits required and can be verified by executing a single hash.
For their timestamp network, they implement the proof-of-work by incrementing a nonce in the block until a value is found that gives the block’s hash the required zero bits. Once the CPU effort has been expended to make it satisfy the proof-of-work, the block cannot be changed without redoing the work. As later blocks are chained after it, the work to change the block would include redoing all the blocks after it.
The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If honest nodes control a majority of CPU power, the honest chain will grow the fastest and outpace any competing chains. To modify a past
block, an attacker would have to redo the proof-of-work of the block and all blocks after it, then catch up with, and surpass the work of the honest nodes.

2.2 NETWORK

The steps to run the network are as follows:
  • New transactions are broadcast to all nodes.
  • Each node collects new transactions into a block.
  • Each node works on finding a difficult proof-of-work for its block.
  • When a node finds a proof-of-work, it broadcasts the block to all nodes.
  • Nodes accept the block only if all transactions in it are valid and not already spent.
This is a very simple system that makes the network fast and scalable, while also providing a decent level of anonymity for all users. Users can send their transactions to any of the public nodes to be broadcast, and the private key of the sender’s address should sign any transaction sent to the nodes. This way, all transaction info remains strictly confidential. It also allows users to send transactions directly to the node from any place at any time and allows the transferring of huge amounts with very low fees.

2.3 AYAPAY PAYMENT SERVICES GATEWAY:

According to creators Aryacoin, the development team has succeeded in inventing a new blockchain technology for the first time in the world, which is undoubtedly a big step and great news for all digital currency enthusiasts around the world.
This new technology has been implemented on the Aryacoin AYAPAY platform and was unveiled on October 2. AYAPAY payment platform is the only payment gateway in the world that does not save money in users’ accounts and transfers incoming coins directly to any wallet address requested by the gateway owner without any additional transaction or fee.
In other similar systems or even systems such as PayPal, money is stored in the user account.

2.4 CONSENSUS ALGORITHM IN ARYACOIN

The devs introduced the Delayed-Proof-of-Work (dPoW) algorithm, which represents a hybrid consensus method that allows one blockchain to take advantage of the security provided by the hashing power of another blockchain. The AYA blockchain works on dPoW and can use such consensus methods as Proof-of-Work (PoW) or Proof-of-Stake (PoS) and join to any desired PoW blockchain. The main purpose of this is to allow the blockchain to continue operating without notary nodes on the basis of its original consensus method. In this situation, additional security will no longer be provided through the attached blockchain, but this is not a particularly significant problem. dPoW can improve the security level and reduce energy consumption for any blockchain.

2.5 DOUBLE-SPEND PROBLEM AND SOLUTION

One of the main problems in the blockchain world is that a receiver is unable to verify whether or not one of the senders did not double-spend. Aryacoin provides the solution, and has established a trusted central authority, or mint, that checks every transaction for double-spending. Only the mint can issue a new coin and all the coins issued directly from the mint are trusted and cannot be double-spent. However, such a system cannot therefore
be fully decentralized because it depends on the company running the mint, similar to a bank. Aryacoin implements a scheme where the receiver knows that the previous owners did not sign any earlier transactions. The mint is aware of all transactions including which of them arrived first. The developers used an interesting solution called the Timestamp Server, which works by taking a hash of a block of items to be ‘timestamped’ and publishing the hash. Each timestamp includes the previous timestamp in its hash, forming a chain. To modify a block, an attacker would have to redo the proof-of-work of all previous blocks, then catch up with, and surpass the work of the honest nodes. This is almost impossible, and makes the network processes more secure. The proof-of-work difficulty varies according to circumstances. Such an approach ensures reliability and high throughput.

3. ARYACOIN ROADMAP

April 2019: The launch of Aryacoin; AYA ICO, resulting in over 30BTC collected
December 2019: The launch of AYA Pay
April 2020: The successful Hamedan Hardfork, supported by all AYA exchanges, aimed at integrating the dPoW algorithm, improving the security of the AYA blockchain.
June 2020: Aryana Exchange goes live, opening more trading opportunities globally
July 2020: The enabling of our Coin Exchanger
November 2020: The implementation of Smart Contracts into the Aryacoin Ecosystem
Q1 2021: Alef B goes live (more details coming soon)

4. THE NUCYBER NETWORK COMMUNITY & SOCIAL

Website: https://aryacoin.io/
Explorer: https://explorer.aryacoin.io/
Github: https://github.com/Aryacoin/Aryacoin
Twitter: 1.1k followers https://twitter.com/AryacoinAYA
Reddit: 442 members https://github.com/nucypher
Instagram: 3.8k followers https://www.instagram.com/mrdigicoin/ Telegram: 5.9k subscribers https://t.me/AYA_Global

5. SUMMARY

Aryacoin (AYA) is a new age cryptocurrency that combines the best of the blockchain technology and strives to deliver high trading and mining standards, enabling users to make peer-to-peer decentralized transactions of electronic cash. Aryacoin is part of an ecosystem that includes payment gateway Ayapay and the Ayabank. AYA has a partnership with the Microsoft Azure cloud platform, which provides the ability to develop applications and store data on servers located in distributed data centers. The network fee for the AYA Blockchain is 0%. In Ayapay service, which has been developed by the Aryacoin team, all funds without extra fees or costs are directly forwarded to users’ wallets with technology called CloudWithdrawal. The devs team is introducing new use cases including exchanges where users will exchange AYA without any restrictions. You can buy AYA on an exchange of your choice, create an Aryacoin wallet, and store it in Guarda.

6. REFERENCES

1) https://coincodex.com/crypto/aryacoin/
2) https://www.icosandstos.com/coin/Aryacoin%20AYA/YuXO60UPF3
3) https://www.publish0x.com/iran-and-cryptocurrency/a-brief-introduction-of-aryacoin-first-ever-iranian-cryptocu-xoldlom
4) https://techround.co.uk/cryptocurrency/aryacoin-the-digital-currency-created-by-iranians/
5) https://bitcoinexchangeguide.com/aryacoin/
6) https://blog.coinpayments.net/coin-spotlight/aryacoin
7) https://guarda.com/aryacoin-wallet
submitted by CoinEx_Institution to Coinex [link] [comments]

A criticism of the article "Six monetarist errors: why emission won't feed inflation"

(be gentle, it's my first RI attempt, :P; I hope I can make justice to the subject, this is my layman understanding of many macro subjects which may be flawed...I hope you can illuminate me if I have fallen short of a good RI)
Introduction
So, today a heterodox leaning Argentinian newspaper, Ambito Financiero, published an article criticizing monetarism called "Six monetarist errors: why emission won't feed inflation". I find it doesn't properly address monetarism, confuses it with other "economic schools" for whatever the term is worth today and it may be misleading, so I was inspired to write a refutation and share it with all of you.
In some ways criticizing monetarism is more of a historical discussion given the mainstream has changed since then. Stuff like New Keynesian models are the bleeding edge, not Milton Friedman style monetarism. It's more of a symptom that Argentinian political culture is kind of stuck in the 70s on economics that this things keep being discussed.
Before getting to the meat of the argument, it's good to have in mind some common definitions about money supply measures (specifically, MB, M1 and M2). These definitions apply to US but one can find analogous stuff for other countries.
Argentina, for the lack of access to credit given its economic mismanagement and a government income decrease because of the recession, is monetizing deficits way more than before (like half of the budget, apparently, it's money financed) yet we have seen some disinflation (worth mentioning there are widespread price freezes since a few months ago). The author reasons that monetary phenomena cannot explain inflation properly and that other explanations are needed and condemns monetarism. Here are the six points he makes:
1.Is it a mechanical rule?
This way, we can ask by symmetry: if a certainty exists that when emission increases, inflation increases, the reverse should happen when emission becomes negative, obtaining negative inflation. Nonetheless, we know this happens: prices have an easier time increasing and a lot of rigidity decreasing. So the identity between emission and inflation is not like that, deflation almost never exists and the price movement rhythm cannot be controlled remotely only with money quantity. There is no mechanical relationship between one thing and the other.
First, the low hanging fruit: deflation is not that uncommon, for those of you that live in US and Europe it should be obvious given the difficulties central banks had to achieve their targets, but even Argentina has seen deflation during its depression 20 years ago.
Second, we have to be careful with what we mean by emission. A statement of quantity theory of money (extracted from "Money Growth and Inflation: How Long is the Long-Run?") would say:
Inflation occurs when the average level of prices increases. Individual price increases in and of themselves do not equal inflation, but an overall pattern of price increases does. The price level observed in the economy is that which leads the quantity of money supplied to equal the quantity of money demanded. The quantity of money supplied is largely controlled by the [central bank]. When the supply of money increases or decreases, the price level must adjust to equate the quantity of money demanded throughout the economy with the quantity of money supplied. The quantity of money demanded depends not only on the price level but also on the level of real income, as measured by real gross domestic product (GDP), and a variety of other factors including the level of interest rates and technological advances such as the invention of automated teller machines. Money demand is widely thought to increase roughly proportionally with the price level and with real income. That is, if prices go up by 10 percent, or if real income increases by 10 percent, empirical evidence suggests people want to hold 10 percent more money. When the money supply grows faster than the money demand associated with rising real incomes and other factors, the price level must rise to equate supply and demand. That is, inflation occurs. This situation is often referred to as too many dollars chasing too few goods. Note that this theory does not predict that any money-supply growth will lead to inflation—only that part of money supply growth that exceeds the increase in money demand associated with rising real GDP (holding the other factors constant).
So it's not mere emission, but money supply growing faster than money demand which we should consider. So negative emission is not necessary condition for deflation in this theory.
It's worth mentioning that the relationship with prices is observed for a broad measure of money (M2) and after a lag. From the same source of this excerpt one can observe in Fig. 3a the correlation between inflation and money growth for US becomes stronger the longer data is averaged. Price rigidities don't have to change this long term relationship per se.
But what about causality and Argentina? This neat paper shows regressions in two historical periods: 1976-1989 and 1991-2001. The same relationship between M2 and inflation is observed, stronger in the first, highly inflationary period and weaker in the second, more stable, period. The regressions a 1-1 relationship in the high inflation period but deviates a bit in the low inflation period (yet the relationship is still there). Granger causality, as interpreted in the paper, shows prices caused money growth in the high inflation period (arguably because spending was monetized) while the reverse was true for the more stable period.
So one can argue that there is a mechanical relationship, albeit one that is more complicated than simple QTOM theory. The relationship is complicated too for low inflation economies, it gets more relevant the higher inflation is.
Another point the author makes is that liquidity trap is often ignored. I'll ignore the fact that you need specific conditions for the liquidity trap to be relevant to Argentina and address the point. Worth noting that while market monetarists (not exactly old fashioned monetarists) prefer alternative explanations for monetary policy with very low interest rates, this phenomena has a good monetary basis, as explained by Krugman in his famous japanese liquidity trap paper and his NYT blog (See this and this for some relevant articles). The simplified version is that while inflation may follow M2 growth with all the qualifiers needed, central banks may find difficulties targeting inflation when interest rates are low and agents are used to credible inflation targets. Central banks can change MB, not M2 and in normal times is good enough, but at those times M2 is out of control and "credibly irresponsible" policies are needed to return to normal (a more detailed explanation can be found in that paper I just linked, go for it if you are still curious).
It's not like monetary policy is not good, it's that central banks have to do very unconventional stuff to achieve in a low interest rate environment. It's still an open problem but given symmetric inflation targeting policies are becoming more popular I'm optimistic.
2 - Has inflation one or many causes?
In Argentina we know that the main determinant of inflation is dollar price increases. On that, economic concentration of key markets, utility price adjustments, fuel prices, distributive struggles, external commodity values, expectatives, productive disequilibrium, world interest rates, the economic cycle, stationality and external sector restrictions act on it too.
Let's see a simple example: during Macri's government since mid 2017 to 2019 emission was practically null, but when in 2018 the dollar value doubled, inflation doubled too (it went from 24% to 48% in 2018) and it went up again a year later. We see here that the empirical validity of monetarist theory was absent.
For the first paragraph, one could try to run econometric tests for all those variables, at least from my layman perspective. But given that it doesn't pass the smell test (has any country used that in its favor ignoring monetary policy? Also, I have shown there is at least some evidence for the money-price relationship before), I'll try to address what happened in Macri's government and if monetarism (or at least some reasonable extension of it) cannot account for it.
For a complete description of macroeconomic policy on that period, Sturzenegger account is a good one (even if a bit unreliable given he was the central banker for that government and he is considered to have been a failure). The short version is that central banks uses bonds to manage monetary policy and absorb money; given the history of defaults for the country, the Argentinian Central Bank (BCRA) uses its own peso denominated bonds instead of using treasury bonds. At that time period, the BCRA still financed the treasury but the amount got reduced. Also, it emitted pesos to buy dollar reserves, then sterilized them, maybe risking credibility further.
Near the end of 2017 it was evident the government had limited appetite for budget cuts, it had kind of abandoned its inflation target regime and the classic problem of fiscal dominance emerged, as it's shown in the classic "Unpleasant monetarist arithmetic" paper by Wallace and Sargent. Monetary policy gets less effective when the real value of bonds falls, and raising interest rates may be counterproductive in that environment. Rational expectations are needed to complement QTOM.
So, given that Argentina promised to go nowhere with reform, it was expected that money financing would increase at some point in the future and BCRA bonds were dumped in 2018 and 2019 as their value was perceived to have decreased, and so peso demand decreased. It's not that the dollar value increased and inflation followed, but instead that peso demand fell suddenly!
The IMF deal asked for MB growth to be null or almost null but that doesn't say a lot about M2 (which it's the relevant variable here). Without credible policies, the peso demand keeps falling because bonds are dumped even more (see 2019 for a hilariously brutal example of that).
It's not emission per se, but rather that it doesn't adjust properly to peso demand (which is falling). That doesn't mean increasing interest rates is enough to achieve it, following Wallace and Sargent model.
This is less a strict proof that a monetary phenomenon is involved and more stating that the author hasn't shown any problem with that, there are reasonable models for this situation. It doesn't look like an clear empirical failure to me yet.
3 - Of what we are talking about when we talk about emission?
The author mentions many money measures (M0, M1, M2) but it doesn't address it meaningfully as I tried to do above. It feels more like a rhetorical device because there is no point here except "this stuff exists".
Also, it's worth pointing that there are actual criticisms to make to Friedman on those grounds. He failed to forecast US inflation at some points when he switched to M1 instead of using M2, although he later reverted that. Monetarism kind of "failed" there (it also "failed" in the sense that modern central banks don't use money, but instead interest rates as their main tool; "failed" because despite being outdated, it was influential to modern central banking). This is often brought to this kind of discussions like if economics hasn't moved beyond that. For an account of Friedman thoughts on monetary policies and his failures, see this.
4 - Why do many countries print and inflation doesn't increase there?
There is a mention about the japanese situation in the 90s (the liquidity trap) which I have addressed.
The author mentions that many countries "printed" like crazy during the pandemic, and he says:
Monetarism apologists answer, when confronted with those grave empirical problems that happen in "serious countries", that the population "trusts" their monetary authorities, even increasing the money demand in those place despite the emission. Curious, though, it's an appeal to "trust" implying that the relationship between emission and inflation is not objective, but subjective and cultural: an appreciation that abandons mechanicism and the basic certainty of monetarism, because evaluations and diagnostics, many times ideologic, contextual or historical intervene..
That's just a restatement of applying rational expectations to central bank operations. I don't see a problem with that. Rational expectations is not magic, it's an assessment of future earnings by economic actors. Humans may not 100% rational but central banking somehow works on many countries. You cannot just say that people are ideologues and let it at that. What's your model?
Worth noting the author shills for bitcoin a bit in this section, for more cringe.
5 - Are we talking of a physical science or a social science?
Again, a vague mention of rational expectations ("populists and pro market politicians could do the same policies with different results because of how agents respond ideologically and expectatives") without handling the subject meaningfully. It criticizes universal macroeconomic rules that apply everywhere (this is often used to dismiss evidence from other countries uncritically more than as a meaningful point).
6 - How limits work?
The last question to monetarism allows to recognize it something: effectively we can think on a type of vinculation between emission and inflation in extreme conditions. That means, with no monetary rule, no government has the need of taxes but instead can emit and spend all it needs without consequence. We know it's not like that: no government can print infinitely without undesirable effects.
Ok, good disclaimer, but given what he wrote before, what's the mechanism which causes money printing to be inflationary at some point? It was rejected before but now it seems that it exists. What was even the point of the article?
Now, the problem is thinking monetarism on its extremes: without emission we have inflation sometimes, on others we have no inflation with emission, we know that if we have negative emission that doesn't guarantees us negative inflation, but that if emission is radically uncontrolled there will economic effects.
As I wrote above, that's not what monetarism (even on it's simpler form) says, nor a consequence of it. You can see some deviations in low inflation environment but it's not really Argentina's current situation.
Let's add other problems: the elastic question between money and prices is not evident. Neither is time lags in which can work or be neutral. So the question is the limit cases for monetarism which has some reason but some difficulty in explaining them: by which and it what moments rules work and in which it doesn't.
I find the time lag thing to be a red herring. You can observe empirically and not having a proper short/middle run model doesn't invalidate QTOM in the long run. While it may be that increasing interest rates or freezing MB is not effective, that's less a problem of the theory and more a problem of policy implementation.
Conclusion:
I find that the article doesn't truly get monetarism to begin with (see the points it makes about emission and money demand), neither how it's implemented in practice, nor seems to be aware of more modern theories that, while put money on the background, don't necessarily invalidate it (rational expectation ideas, and eventually New Keynesian stuff which addresses stuff like liquidity traps properly).
There are proper criticisms to be made to Friedman old ideas but he still was a relevant man in his time and the economic community has moved on to new, better theories that have some debt to it. I feel most economic discussion about monetarism in Argentina is a strawman of mainstream economics or an attack on Austrians more than genuine points ("monetarism" is used as a shorthand for those who think inflation is a monetary phenomenon more than referring to Friedman and his disciples per se).
submitted by Neronoah to badeconomics [link] [comments]

LOEx Market Research Report on October 14: BTC continues to rebound after fine-tuning

LOEx Market Research Report on October 14: BTC continues to rebound after fine-tuning
[Today's Hot Tips]
1. [Asset management giant, Stone Ridge, has invested $115 million in BTC]
According to Forbes on October 13, the asset management giant, Stone Ridge, recently confirmed that it has made a major BTC acquisition through the New York Digital Investment Group (NYDIG). The fund is 10,000 BTC, which is approximately $115 million.
2. [G7 reached an agreement on digital currency]
According to JIN10, Taro Aso, the Minister of Finance of Japan, said that the financial leaders of the G7 Group discussed the new crown virus response measures and digital currency through a conference call. Significantly, the G7 Group reached an agreement on digital currency. At the same time, he also said that if there is not enough preparation, the stablecoin project should not start. The digital coins of central bank require transparency and the rule of law.
3. 【ETH 2.0】
ConsenSys researcher, Ben Edgington, stated that the creation of the ETH 2.0 beacon chain is expected to be realized within six weeks.
[Today's market analysis]
Bitcoin (BTC)BTC has risen slightly since the early hours of the morning, reaching a maximum of 11459.15 USDT at around 5:50, and it is now near 11440 USDT. Mainstream currencies have been mixed during the day. BTC is currently trading at 11430.50 USDT in LOEx, an increase of 0.39% in 24h.
BTC continued to rise after fine-tuning yesterday. The follow-up price will continue to attack and challenge the front-line pressure of 12450. It will be a high probability, and it is also in the state of the triangle breaking through and oscillating upward, so the daily line is still in an upward trend. However, it should be noted that there is a CME gap in the 11000-11100 range below, and the current price has risen and fallen. The daily line is in the state of pinning the negative line. After the slight increase, the negative line has not been recovered. In the short term, there is still the possibility of falling and covering. The support area of the 60-day moving average that has been broken upwards and has not been stepped back is also at this position. So we need to be cautious when chasing more. We can hold coins along the 5-day line in the short-term. Once the position is broken, downward covering will be a high probability. However, the decline is an opportunity for the trend to buy low and increase positions, and it is expected to continue to attack the 12000-12450 pressure zone after the subsequent consolidation and accumulation.
In the rising cycle, it is impossible to do it overnight, or it is impossible to rise unilaterally. It will be tossed back and forth. Everyone believes that the bull market is coming. Maybe the market will have unexpected tossing conditions?
Operation suggestions:
Support level: the first support level is 11200 points, the second support level is 11000 integers;
Resistance level: the first resistance level is 11500 points, the second resistance level is 12000 points.
LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 2 million community members in 24 hours.
https://preview.redd.it/q56318xcx0t51.png?width=669&format=png&auto=webp&s=f61bf18fa6d7574329487d98670f423103bf56de
submitted by LOEXCHANGE to loex [link] [comments]

Pentagon Documents Reveal The U.S. Has Planned For A Bitcoin Rebellion

https://www.forbes.com/sites/billybambrough/2020/06/10/pentagon-documents-reveal-the-us-has-planned-for-a-bitcoin-rebellion/
Pentagon Documents Reveal The U.S. Has Planned For A Bitcoin Rebellion
I write about how bitcoin, crypto and blockchain can change the world.
Bitcoin has struggled to find support in the U.S. government, with president Donald Trump, along with Treasury secretary Steven Mnuchin, leading the criticism.
Now, it’s been revealed the U.S. Department of Defense has wargamed scenarios involving a Generation Z rebellion that uses bitcoin to undermine and evade “the establishment.”
In the Pentagon war game, young people born between the mid-1990s and early 2010s use cyber attacks to steal money and convert it to bitcoin, documents published by investigative news site The Intercept revealed.
Called the 2018 Joint Land, Air and Sea Strategic Special Program (JLASS), the war game is set in 2025 and is “intended to reflect a plausible depiction of major trends and influences in the world regions.”
The scenario, which echoes recent protests in the U.S. and around the world against racial injustice, involves some members of Gen Z, who see themselves “as agents for social change” and believe the “system is rigged” against them, begin a “global cyber campaign to expose injustice and corruption and to support causes it deem[s] beneficial.”
The group, called Zbellion, encourages cyber attacks against organizations that support “the establishment,” funnelling stolen cash into bitcoin to make “small, below the threshold donations” to “worthy recipients” and Zbellion members.
The program, which also reportedly wargamed scenarios involving Islamist militants and anti-capitalist extremists, was conducted by students and faculty from the U.S. military’s war colleges, the training ground for prospective generals and admirals.
THE INTERCEPT / THE DEPARTMENT OF DEFENSE
Bitcoin has increasingly been adopted by Wall Street and the world’s biggest financial institutions since its 2017 price explosion but remains a tool to fight government control.
The Pentagon war game documents have been revealed after Florida Republican Representative Matt Gaetz called for the government to “freeze” the money of demonstrators after country-wide protests over the killing of George Floyd turned violent this month.
“One of the most important tools in the authoritarian toolkit is the ability to freeze the funding of legitimate political dissent,” Nathaniel Whittemore, a bitcoin and cryptocurrency consultant and strategist, said previously.
“By separating the infrastructure of money from the infrastructure of state power, bitcoin makes it that much harder for this type of politically motivated confiscation.”
Bitcoin has seen a surge of interest in recent months due to the coronavirus pandemic and never-before-seen levels of government borrowing.
“In the wake of unprecedented central bank action around the Covid-19 crisis, it seemed like the most relevant narrative of bitcoin in 2020 was as a hedge against inflation,” Whittemore said.
“It appears, however, that its capacity for censorship resistance might be just as relevant.”
submitted by osteo-path to Bitcoin [link] [comments]

Is Cryptocurrency Really The Future?

Is Cryptocurrency Really The Future?
Over the past decade, cryptocurrency has become a breaker of old approaches in monetary policy, finance, economics, and e-commerce. The speed at which the crypto industry is growing today is very impressive. The global cryptocurrency market volume is predicted to reach $1,758 million by 2027 with a compound annual growth rate of 11.2%.
by StealthEX
More and more people are getting faced with the digital currency so the questions on the future of cryptocurrencies are becoming especially relevant today. So what is the future of cryptocurrency? In this article, we’ll try to figure this out.
Predicting the crypto world’s future is impossible without knowing the current situation on the cryptocurrencies market.

What trends can we observe today?

• Nowadays the crypto market is in its formation stage. We can see an increase in the number of areas where blockchain technology is getting involved. The COVID19 and panic that it caused in the markets are also accelerating cryptocurrency adoption.
• Any cryptocurrencies rate is rigidly tied to the situation in the crypto market.
• Bitcoin and Ethereum are the biggest influencers in the cryptocurrency market.
• Investors are paying attention to the crypto projects that are aimed to create platforms for launching decentralized applications (dApps).
• Significant growth of decentralized finance (DeFi).
• Decentralized Internet (Web 3.0) is actively increasing and creating the basis for the Internet of Things development.
The growth of digital currencies around the world allows making some predictions about the future of crypto market. Let’s look ahead to the future and try to forecast the prospective trends in the crypto world development.

Bitcoin’s reign will not end

The first thing that worries many crypto holders is “What will happen to Bitcoin”?
The ups and downs of Bitcoin’s rate, rumors about the next hard fork, legalization in some countries, and prohibition in others — all these kinds of news makes people guess what will come up with the most popular coin. Experts have different opinions from a complete drop in price to the status of the only currency in the world.
Most experts are leaning towards that Bitcoin will maintain its current positions and even strengthen them. For example, John McAfee, businessman and computer programmer, says:
“You can’t stop things like Bitcoin. It’s like trying to stop gunpowder.”
He also made a bet that if Bitcoin will not cost $500,000 by the end of December 2020 he will eat his own…well, you know.
James Altucher, American hedge-fund manager, author, podcaster and entrepreneur, is not sure that BTC price will reach 1 000 000 USD:
“Will it be a million dollars in 2020? Maybe. Will it be 2021? 2022? Who knows.”
He also predicted that:
“At least one country’s currency is likely to fail soon — likely Argentina or Venezuela. This will lead to mass adoption of Bitcoin among that populace. That will in turn lead to Bitcoin rising by more than $50,000 when it happens.”
And just a few days after this forecast, the Venezuelan President announced that they are planning to release national crypto called El Petro. Right now a lot of countries like China, Tunisia, Senegal, Sweden, Singapore, Uruguay, Thailand, Turkey, and Iran are also working on the creation of national cryptocurrency.
So what will happen to Bitcoin? No one knows. The only thing in which many experts agree is that Bitcoin will stay as a “gold standard” in the crypto world for a long time.

Cryptocurrencies will be mainstream

“Cryptocurrencies is a fashionable investment and a sign of belonging to the special community” — this idea is actively promoted by various sports organizations, popular performers, public figures that release their own altcoins.
According to CoinMarketCap, there are already more than six thousand cryptocurrencies, and their total capitalization is $353 billion. A couple of years ago, the digital currency was almost unknown to anyone except geek developers and crypto enthusiasts. However, things are changing: prospects for businesses, rising prices, and strong community support will step by step make cryptocurrencies mainstream around the world.

Market volatility will not disappear

Cryptocurrencies are unstable by their nature, and their volatility is one of the reasons why someone becomes a millionaire and the others lose fortunes.
The strong volatility of crypto is caused by the fact that they are still at an early stage of development. Cryptocurrencies have huge growth potential if they can enter the mass market.
But every news about cryptocurrencies either hints at the possibility of markets going down or rising up. The volatility in the cryptocurrency markets will continue to be felt as the news affects the market, and it is only at the stage of rapid development.

The future of trading — decentralized exchanges

In the near future, we will see a prime of decentralized exchanges. Many believe that DEXes is not yet ready for mass adoption. But there are factors for a favorable development of events.
First of all, centralized exchanges don’t fit the purpose of cryptocurrencies cause the key advantage of digital coins is decentralization. In decentralized exchanges, transactions can be made directly between users (peer-to-peer) without the need for a trusted intermediary, which means there are no transaction fees for users.
On top of this, decentralized exchanges are much more secure against hackers as there no single point of failure like in centralized exchanges. Everyone knows the cases with Mt.Gox, Bitfinex, Coincheck when people lost millions and millions. The need for more security will lead users to decentralized exchanges.

The rise of crypto loans

“Cryptocurrency is convenient to take on credit” — not long ago this idea seemed like a wild ride since the digital currency has high volatility. But today the popularity of lending in digital currencies is increasing and here are the main reasons:
• Low-interest rates.
• Increase in the number of traders and investors for whom receiving funds immediately in cryptocurrencies is convenient.
• A simplified system of requirements for borrowers, those who hadn’t been approved for bank loans could easily receive digital money.
Nowadays, the entire crypto loaning industry is estimated at $4.7 billion and the number of crypto loan platforms will continue growing.

Regulators gonna regulate

In the early days of cryptocurrencies history, traditional financial institutions sharply criticized crypto enthusiasts. The crypto market, however, has proven that it is sturdy against these kinds of attacks. Nowadays traditional institutions’ opinion regarding cryptocurrency is changing. In the future, stakeholders can have an increase in the flow of funds from Wall Street to cryptocurrencies.
There is no doubt that this will require more transparency and regulation in the crypto market. Today government and regulatory agencies around the world, including the U.S. Securities and Exchange Commission, Federal Bureau of Investigation, United States Department of Homeland Security, and the Financial Crimes Enforcement Network (and this is only within the US borders) are giving more and more attention to cryptocurrencies. The regulation of the crypto in different states is realizing in diverse ways: in some countries, it is legally recognized as a means of payment, in others its use is prohibited.
The G20 summit participants, following the discussions on cryptocurrencies, came to the conclusion that a complete prohibition of crypto will not solve anything as nowadays the digital currency plays a significant role in the economy. And if the digital currency cannot be prohibited, it must be regulated:
“Technological innovations can deliver significant benefits to the financial system and the broader economy. While crypto-assets do not pose a threat to global financial stability at this point, we are closely monitoring developments and remain vigilant to existing and emerging risks.”
As we can see the world is changing very quickly. The speed with which cryptocurrencies are integrating into the global financial system is a clear indicator that traditional financial institutions can no longer have a monopoly on the management of financial flows.
The year 2020 is the start of a new decade for the cryptocurrency industry. The next ten years will bring us key changes in traditional finance when blockchain and cryptocurrencies will become a daily thing in most countries of the world.
What are your thoughts on the future of cryptocurrencies? Tell us your ideas in the comments below.
And remember if you need to exchange your coins StealthEX is here for you. We provide a selection of more than 250 coins and constantly updating the list so that our customers will find a suitable option. Our service does not require registration and allows you to remain anonymous. Why don’t you check it out? Just go to StealthEX and follow these easy steps:
✔ Choose the pair and the amount for your exchange. For example BTC to ETH.
✔ Press the “Start exchange” button.
✔ Provide the recipient address to which the coins will be transferred.
✔ Move your cryptocurrency for the exchange.
✔ Receive your coins.
Follow us on Medium, Twitter, Facebook, and Reddit to get StealthEX.io updates and the latest news about the crypto world. For all requests message us via [email protected].
The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Original article was posted on https://stealthex.io/blog/2020/09/15/is-cryptocurrency-really-the-future/
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10-04 05:44 - 'Why DeFi will give birth to killer applications in the banking industry?' (self.Bitcoin) by /u/SMOEY removed from /r/Bitcoin within 14-24min

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The financial system is on the verge of collapse, and there are no superheroes who can turn the tide in the real world. Therefore, we must learn how to rely on our own hands to protect the money we have earned. Currently, the best way is to store funds outside the traditional financial system. Decentralized finance, or DeFi for short, may become a killer application in the banking industry.
What exactly is DeFi?
This is an ecosystem of financial applications built on the blockchain (especially Ethereum), which can operate independently without the intervention of third parties or intermediaries. In 2020, the DeFi economy has grown by US$4 billion and is currently one of the fastest growing sectors in the financial sector.
The main problem with DeFi
Currently the only truly decentralized financial application is Bitcoin. Anyone with access to the Internet can store and transfer funds in a decentralized manner. But DeFi has made a further commitment: to introduce decentralization into the mainstream public view. This will provide a global and open alternative to all financial services including savings, loans, investment and insurance. Next, we will introduce three DeFi use cases that are sufficient to disrupt the traditional banking industry:
1. Stablecoins
Stablecoin is the first DeFi use case to achieve a blowout development. The idea of ​​”a cryptocurrency free from the long-term instability of Bitcoin” is very attractive to many people. On the one hand, it has price stability similar to the US dollar or the euro; on the other hand, it also has the speed and convenience of cryptocurrency. The stablecoin perfectly combines the advantages of the two. Currently, about 80% of encrypted transactions are conducted through Tether stablecoin. At the same time, other companies, such as USDC, TruUSD, Dai or PAX, have also experienced explosive growth in the past year. Therefore, the stable currency market definitely deserves our continued attention and expectation. After all, most bank customers are tired of inefficient and expensive services and increasing government supervision.
2. Decentralized Exchanges
Decentralized exchange (DEX) is one of the most breakthrough innovations derived from DeFi. In recent years, the number of DEX has also shown explosive growth. According to data from Dune Analytics, monthly transaction volume in 2020 has grown to nearly $12 billion. So, what is DEX? The essence of DEX is a cryptocurrency platform, users’ assets can be traded without going through an exchange. Therefore, the risk of being stolen and attacked by hackers can be greatly reduced. Currently, the most popular DEX platforms are Curve, Balancer, 0x, Dydx, Kyber, Bancor, IDEX, Oasis and Gnosis Protocol. But in fact, the ultimate reason for attracting people to join DEX is the growing and more complex “know your-client process (KYC)” demand. It stripped the anonymity of customers and caused financial exclusion of more than 2.4 billion people. They are like cancer, engulfing the entire banking system alive.
3. Borrowing and Lending Applications
To say the most compelling development in the DeFi field, one has to mention decentralized lending platforms. The DeFi lending platform can provide loans to users or companies without any intermediaries. Anyone can deposit their available assets into the shared loan pool, and those who want to borrow can withdraw assets from the pool. Currently, the most popular DeFi loan platforms are Compound, Maker, Aave and dYdX. At the same time, companies such as Blockfi, Celsius, CRED, Nexo and Crypto.com also provide annual interest rates of up to 10%. The lending platform enhances the flexibility of banking business and removes strict threshold restrictions on the location, identity, and assets of customers. This use case is expected to lead DeFi into the mainstream market.
4. Insurance
The form of DeFi insurance is still relatively conservative. It mainly acts as a safety net in the DeFi ecosystem. Users no longer need traditional banks or institutions to ensure the safety of their deposits. Although decentralized insurance is not popular in the entire DeFi community at present, it is likely to disrupt the entire insurance industry in the future. If you want to learn about insurance products other than traditional insurance companies, you can check out Nexus Mutual, Opyn, Etherisc and CDx.
Next, where are we going?
DeFi is an interesting idea with trillions of dollars in potential. If we compare DeFi with the traditional financial system, it is not difficult to find the fatal attraction in DeFi. As you can see, some DeFi projects have replaced part of the business in the centralized encryption economy, and it will not be long before it will begin to replace the traditional banking and insurance industries. Now, the financial system needs to be repaired-to make it more transparent, open and efficient. Otherwise, if we don’t properly wrap up this broken financial system, 20 years later, we will eventually pay for our stupidity at this moment.
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Why DeFi will give birth to killer applications in the banking industry?
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Author: SMOEY
1: tr**ple.net*ork/2020***441*.*tml 2: t*u**le.net*ork/2020*00**11*html]^*1
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