January 07, 2016

Mike Tyson

Mike Tyson

Source: Shutterstock

What to make of this? Does it mean they”€™ve found the digital holy grail? Discovered an answer to the monetary problem? Sort of. There has been heated debate on this so-called “€œModel 0″€ of SF Econ’s that we don”€™t have space for here. In any case, the numbers in their model, changing by the second, are beyond my comprehension. Maybe a mathematically minded reader could explain their meaning?

Whatever it is, they have allegedly located a true global reference commodity”€”which is a big statement and a big achievement. That’s not the only point, however. In the words of my source: “€œEconomic non-computability is the most shameless (certainly the best financed) academic fraud since the Piltdown Man,”€ in his opinion. His thinking bodes well for a pure form of bitcoin?

Finally, to return to the quintessential question posed by the investor. Where to put your capital? “€œGold is appealing insofar as it is difficult to counterfeit; but, truth be told, it has at one time or another been debauched in all the manners through which any reference commodity can be debauched,”€ the same source told me. “€œThe Chinese are presently flooding the world with adulterated gold ingots, faked rare coins, and bogus certificates for nonexistent bullion deposits,”€ he warned; another concern about gold, on top of the market manipulation for which it (too) is frequently criticized.

To conclude this matter of currencies, it’s remarkable that”€”since the creation of the Bank of England in 1694″€”the de facto “€œglobal reference commodity”€ has been sovereign debt. And the value of this asset class derives from the ability of parliaments to collect the taxes with which to service their debt.

This regime of deficit financing is collapsing into chaos, however”€”so some economists believe”€”because sovereign debt can no longer be serviced adequately: Taxes rates are already at their maximum, and also the tax base itself continues to erode.

The culprit of the worrisome monetary system that is failing us and potentially driving us toward a fundamental transformation of money itself, as some anticipate, is none other than deficit financing and sovereign debt. We”€™ve identified the problem. As to the solution, only time will tell.

No matter, there are other big fish to fry. Next week we move from virtual to actual as we look closer at lesser-known details emerging from China’s meta-project: the construction of its intercontinental commercial “€œbelt,”€ the Silk Road II.

The price of bitcoin today, Jan. 5, 2016, is $432.38. The price of BTC one year ago, on Jan. 6, 2015, was $285.58.

[*Disclaimer: The author possesses no bitcoin as he writes. He has followed BTC’s momentum for speculation since 2009. Exiting the currency in December 2013, he has not owned BTC since. The author covers cryptocurrencies and the broader FinTech scene for titles like Forbes and the F.T. Group’s M&A newswire.]


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