The problem with cryptocurrencies is that they are called “Cryptocurrencies”

Crypto means hidden or secret which needs to be deciphered. I will come to currency later.

Now all Governments hate secrecy, they need complete access of who is dealing with what.

Why? So they know where the money flow is and can keep a tab on transactions and then later tax them and run the country with the money.

Instead of Banning they need to make sure they have a track of the movement. Which is not possible in Crypto assets as it is part of a Global chain, but since they have control when someone buys Govt can simply apply an Upfront Duty, just like Crypto Trading Tax – just like it does NOW in Mutual Funds. Banning is not the solution.

Now coming to “Currency”. Bitcoin, Ethereum or any ICOs are not actually currencies, they just function like one because they allow that seamless transaction capabilities which can be done in a matter of few seconds, anywhere across the world.

If you call it a currency you are going to make the Government unhappy and Investors unhappy as they want currencies to be stable and controlled using supply and demand which is under the control of few Officers sitting at the Central Banks who have fiduciary responsibility.

It is like telling your father -> “You don’t know what it is to be a father!” Meh!

So the word at best is Digital Token or Digital Asset! 

VALUING A CRYPTO-CURRENCY

Think of an actual Asset, such as Gold. What is the value of it? And why?

The linkage of gold backing money supply has been discontinued Long Back, So now it is more driven by Gold Mining Costs and the Supply of this amazing “Metal”. As the cost of mining goes down the cost of Gold will also go down.

This is exactly what happened in Aluminum, power costs were so high and have fallen over the last 100 years and thus the prices of Aluminum have fallen over last 100 years relatively.

Now coming to Bitcoins or Crypto. As more people transact, it becomes more difficult to produce new coins and it requires high amount of compute power. You can consider the value of Bitcoin as an Index to measure the overall Compute Power of the world’s best computers.

Now – that did not seem to be too complex right. Because creating new coins requires solving a puzzle which is done by machines, that’s it. As we will have Quantum computers (avg processing speeds will be 100x of todays) chances are that cost of Crypto will go down then.

Now in today’s world – or the generations to come most of them really don’t care about how much Gold is owned by any individual or the use of it. They are DEFINITLY concerned about the Compute Power and Digital Capabilities of the future.

BUT ITS A CRYPTO PARTY OUT THERE!

Now you would think – well the above makes sense but there are 8906 crypto currencies, is that even legit? 

Well yes there are 8906 Currencies – feels odd right! I am sure most of you would not be even knowing that there are so many crypto currencies.

Now just fast forward 50 years in the future – can you imagine the world which has self-sustained communities growing their own crop, producing their own power, and having a self-sustainable ecosystem, within a smaller group of likeminded individuals.

I am sure that was easy to visualize given that most have lived a similar life in the peak of the lockdowns during pandemic, even if for a short period.

Each communities can have their own currency – if you want to be a part of it –transact in it, if you want to switch communities – you need to convert the currency.

Countries can have their own Real Currency on Blockchain which can be the common currency for conversion – this makes it absolutely seamless and inclusive.

Voila - with this the Government now becomes the enabler for Digital Currencies vs being an ardent opposition, they can collect taxes through Digital Currencies and Tax collection becomes instant vs the dated process of Year End Filings.

Yes it is going to put an end to years of monetary and fiscal theory and that is what is confusing the policy decision makers. However, the acceptability of the Blockchain is more likely to be 15 years from now as the then Policy Makers would have learned about the economics of supply and demand of these assets. If you understand that money is just shifting of power from one person to another and nothing else - this very well can happen in Crypto Currencies as well.

So basically Blockchain, or Digital Asset or the abused word “Crypto Currency” is actually the founding stone for the OPPOSITE OF GLOBALISATION – you can refer to it as HYPER LOCALIZATION. This move has already started and in the next 50 years we will see this change faster than we expect.

Which side are you on? For or Against Crypto? 

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