The 2020 crisis, the arms race and bitcoin: where was the world first crypto currency 10 years later

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On 31 October 2008, a month and a half after the collapse of one of the largest investment banks Lehman Brothers, which eventually became a global catastrophe, a person or group of people under the pseudonym Satoshi Nakamoto published and white paper the first in the history of decentralized payment system.

The emergence of bitcoin was the climax of years of attempts community Shirobokov to create an alternative monetary system without a single point of failure, the reversibility of transactions, and total surveillance. But even prominent chiromancer failed to see the revolution in the Bud.

The current head of the company Blockstream Dr. Adam Beck, who designed the algorithm Proof-Of-Work in the last century, ignored the letter Nakamoto, when the latter approached him with a request to evaluate the concept of bitcoin. So did the Creator of b-money, Wei Dai, though later regretted it. A veteran of the movement Shirobokov James Donald questioned the idea because of the constantly growing amount of data in the blockchain, and only Hal Finney began to actively help the development of the project, despite the fact that, at times, have lost enthusiasm.

The identity of Satoshi Nakamoto and motives of creating bitcoins still remain a mystery, they are trying to solve and outside the community. However, the fact that the hash of the Genesis block-the first cryptocurrency contains the title of the article “Chancellor on brink of second bailout for banks” from the British newspaper The Times, can attest to the fact that the global financial crisis of 2008 and policy the redemption of debt of large banks by States was one of the incentives Nakamoto. This is indirectly confirmed by the following entry on the website P2P Foundation from 11 February 2009.

“The main drawback of traditional money is that they need trust. We must trust the Central banks, although they have repeatedly betrayed that trust and devalued Fiat money. We have to trust banks to keep our money and electronic transfer, but they borrowed them, creating credit bubbles and leaving almost nothing in reserve”, — wrote Nakamoto.

One of the fundamental pillars of bitcoin was limited emission is set at the level of the Protocol. Despite the fact that due to the random errors of the developers of Bitcoin Core in 2016, the Foundation of the network was subjected to an existential threat, the cumulative number of bitcoins will never exceed 21 million.

The fact that this feature of bitcoin could become the strongest argument in his favor in the midst of a global recession have guessed the first administrator Bitcoin.org Marty Malmi. As millions of people lost their jobs and savings, something not subject to inflation, in his opinion, was to attract their attention.

In such a difficult world circumstances there is a bitcoin alternative peer-to-peer payment system. Then, the first cryptocurrency was expecting a long and exciting way, the UPS and downs, adoration and hate, the whole forming a strong community and its subsequent split [SegWit2x Cash and Bitcoin]. ForkLog tried to figure out where this path is justified if the initial hopes of early companions and the role of bitcoin in the world, which, in the opinion of many, stands again on the brink of severe crisis.

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In September a well-known critic of bitcoin and Professor of Economics at new York University’s Nouriel Roubini, also known as “Dr. Doom” who predicted the crisis of 2008, said that by 2020 will ripen all the necessary conditions for the onset of the global recession. Moreover, in his opinion, this crisis will be much tougher and longer than last time.

So, he argues, the tightening of monetary policy in the United States, trade war administration trump and the unresolved debt situation of some Eurozone members amid the bubbling U.S. stock market will have a negative impact on the global economy.

In one of his recent publications on Twitter Roubini proudly emphasized that his articles are translated into dozens of languages and published in hundreds of news resources in hundreds of countries. It is obvious that to neglect the fame and influence of the economist is not really worth it, since many listen to him as the man who predicted the crisis.

My @ProSyn opeds are translated in dozens of languages & printed in 200+ newspapers/magazines in 100+ countries reaching an audiences of 300 million readers. Take that lowlife losers scammers charlatans con men criminals trolls shills, shitcoin cesspool dwellers of crypto twitter https://t.co/S5NFlBzOtL

— Nouriel Roubini (@Nouriel) October 22, 2018

However, few people remember Roger Babson, who predicted the stock market crash in 1929. His thing was the fact that from year to year to predict the financial collapse as long as he doesn’t really happen that in the end brought him the reputation almost of a genius, when the Great depression.

Catch the Babson permanent false predictions was extremely difficult, as you Google his previous statements in the 20-ies was not possible. Now, from the world wide web it is quite difficult to remove anything at all, but the predictors from this be careful not to become.

It turned out, Roubini predicted that “the perfect storm” in the global economy will start in 2013 (CNBC), a bubble in the U.S. stock market will burst in 2016 (Business Insider), and another credit bubble inflated to 2017 (Project Syndicate). In this argument, as in the case with the forecast for 2020 is largely repeated.

In its current forecast, the economist noted that, as soon as the “perfect storm”, the countries with dominant populist movements and governments on the brink of insolvency will not be able to redeem the debts of financial institutions.

This particular policy at the time was criticized by Satoshi Nakamoto, and even drew attention to it in the Genesis block of bitcoin. The big banks have for many decades carried out the policy of consolidation, constantly absorbing smaller institutions or by merger. The top management of such giants firmly believes in one thing — when the thunder clap, the government will redeem their debts, because they are too big to crumble, and the user will be able to write yourself a fabulous prize for the fact that it does not understand how to manage the money of their organization and especially their customers. That is what happened in 2008, and Lehman Brothers was the exception because his financing was denied.

As proved at the time, analyst financial services company Oppenheimer & Co’s Meredith Whitney, the heads of the leading banks on wall street did not understand the nature of subprime mortgage bonds and lost billions of dollars because of the corruption, but because of their own stupidity. 1 Nov 2007 this woman has brought down shares of Citigroup Inc. more than 7%. Whitney did not make dozens of predictions about the coming crises, as the same Roubini, she just said that at the helm of global Finance are incompetent people in 2008, the fed rescued urgently.

So, the culture of Belousov was fixed during the recent crisis and continues to exist to this day, as big banks become even bigger, to get a bailout package from the Central banks at taxpayers ‘ expense, when burst the next crisis. In fact, the Darwinian law of survival of the fittest, which can be applied to free competition, such structures simply do not exist.

[photo: an unidentified man encourages people to buy bitcoin in a speech fed Chairman Janet Yellen before the Committee on financial services of the house of representatives in the U.S. Congress, 12 July 2017]

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But sooner or later the economy will indeed face a crisis, and to deny that would be silly. For the past ten years bitcoin was the tool that helped people in countries with stagnant economies to somehow share the value and to insure savings. First and foremost, of course, we are talking about countries with rapidly depreciating national currency, such Venezuela and Argentina.

In a short documentary video, “Bitcoins in Argentina”, published in 2013, bitcoin trader said total nationalization of business, thirty percent of inflation and hard currency restrictions. While most of the population of Argentina had been unable to open a simple Bank account and get a credit card, and in the fall of 2012, the government of the country, and all were ordered PayPal to stop domestic private transfers.

It is noteworthy that it comes from Argentina Wences Casares, founder of the bitcoin company Xapo, convinced of the effectiveness of the first cryptocurrency then-President of PayPal David Marcus, who later took a seat in the Board of Directors of the company Coinbase, and is now engaged in the development of the blockchain in Facebook.

In Venezuela, against the background of hyperinflation, the volume of trading on LocalBitcoins speaks for itself. A similar phenomenon was seen in Turkey and Iran, where due to economic turmoil and sanctions, people use the bitcoin in order to hedge against financial risks and loss of control over their savings.

It is difficult to say what role will bitcoin play in the coming crisis, however, the residents of developing economies have noted the usefulness of the first cryptocurrency in the times when you can’t trust banks and governments.

It cannot be denied that in the advanced economies, public attitudes toward bitcoin differ, but all may change when some government will announce another multi-billion dollar plan to rescue the system, stepping on the same rake.

If in 2011 the main uscaca bitcoin was the economy of the darknet marketplace the Silk Road, and most people, including today’s cryptocurrency entrepreneurs, saw in him the likeness of Ponzi scheme, now has been created around a business ecosystem that step by step fused with the traditional financial system, regardless of whether it is good or bad.

So, for 10 years, contrary to the prohibitions and ardent criticism of bitcoin went from anarchist origins and illegal digital markets before hearings in the U.S. Senate, companies of the unicorns and a powerful lobby. Today capitalization Coinbase has made an impressive $8 billion [for comparison, 30 October the capitalization of “Yandex” amounted to $9,13 billion], Chinese mining equipment manufacturers are going on an IPO, a giant investment company Fidelity Investments launches custody service for cryptocurrencies, the operator of the new York stock exchange is developing a trading platform to trade digital assets Bakkt, and Goldman Sachs invests in bitcoin startups.

Affect whether bitcoin is a possible drop in the stock market, given the institutional presence? Many analysts have repeatedly tried to trace any correlation between digital assets and securities market, although a few years ago, they would have laughed together even over the thought of it.

This year we witnessed two simultaneous drops bitcoin and stock markets (February and October), however, this does not necessarily indicate a direct connection. Some experts suggest that the withdrawals of the cryptocurrency market at the time of the shocks on the traditional can be associated with the fact that venture investors are looking for ways to cover their losses in the first place by selling the most high-risk assets, although the volatility of stock Amazon and Netflix recently and exceeded the volatility of bitcoin.

Others are convinced that traders have only one brain and one centre of decision-making, in periods of turbulence, they tend to sell all their assets, regardless of whether one with the other. However, the more conversations about a possible correlation, the greater the chances that it will become a reality, because people will make decisions not on the basis of objective information, and based on the guesses of others.

It can be assumed that the probable financial crisis will seriously damage the business and cryptocurrency, which also uses a Bank account and operates with Fiat money. In this is bitcoin a tool that will allow people to hide from the “perfect storm”, in the words of Roubini, depends largely on solutions to the problem of scale (how many users will be able to interact with the network at the same time) and UX (how it will be simple and clear for the inexperienced).

In an exclusive interview ForkLog lead developer of Bitcoin Core Jonas Shnelli stressed that, despite the distance traveled, the network is not yet ready for mass use.

“UX in bitcoin is far from ideal, it is extremely difficult for people outside golovskoy party. And I’m glad of that, because we have no Lightning, no instant payments and commissions the problem will not go away. The current level of UX gives us time to solve technological problems, after which we will focus more precisely on the user interaction, making bitcoin as accessible as Whatsapp.If all people will come to bitcoin right now, he probably will not stand. We’re not ready yet”.

Nouriel Roubini in his essay also suggested that amid the slowdown of the US economy, Donald trump will try to unleash some sort of foreign conflict or even military confrontation (in his opinion, with Iran, because North Korea has nuclear weapons) to win the election in 2020. Despite the fact that economist forecasts are coming true with the same probability with which the good old “heads/tails”, that statement sounds very ominous, considering the recent statement of the head of the White house about plans to withdrawal from the INF Treaty, which could lead to a new arms race and other political turmoil, putting pressure on financial markets and the global economy.

Also the crisis of the 2020 forecast and the holding company JPMorgan & Chase. Analysts are of the view that it will not be too protracted, however, the indexes of the U.S. stock market will drop by 20%, quotation on the energy market will collapse by 35%, and base metals — 29%.

However, to evaluate the accuracy of complex mathematical models used in JPMorgan & Chase, should go back to the previous decade and see how often the predictions come true holding trade USD/EUR from 2001 to 2010. It turns out that the average error amounted to a whopping 30 cents [source “to Understand the risks. How to choose the right course,” Gerd Gigerenzer].

However, given the frequent statements about the impending recession, including from such figures as George Soros, can be realized the scenario of “self-fulfilling prophecy” in which the crisis will hit not for objective reasons, but because everybody’s talking about it.

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Bitcoin and the blockchain technology is rapidly changing the world — from Finance to public sector. 10 years ago, Satoshi Nakamoto, probably could not imagine that his invention would be discussed at the G20 and in the White house, because chiromancy were decades in the shadows.

What will happen in another 10 years? Probably you should not act like fans to make empty predictions in a world where everything is decided by “black swans”, and should just follow the dizzying world of cryptocurrency together with ForkLog!

Nick Schteringard

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