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January 4, 2018 | Deceptions within the Bitcoin ‘Algorithm’! Similar for all the Alt Currencies!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

 

Many undiscerning cryptocurrency buffs think that these virtual currencies (like Bitcoin) are decentralized (totally) and that the distributed ledger reality (blockchain) reveals that the system is functionally sound. They further assume that our Central Authorities are excluded from manipulating and corrupting their system. This, to me, is gross deception and a misreading of real-time reality. All these cryptocurrencies are actually ‘coded’ currencies which get their substance from the underlying algorithmic code (‘if/then’ statements) which underlies the currency.

 

The underlying code within the algorithm consists of ‘if/then’ statements which any Central Authority could change to new ‘if/then’ statements at any point in time. Algorithms are merely coded instructions which create how the cryptocurrency will work in real-time (without any interference from a governing Authority). These ‘if/then’ statements, however, are human inventions which another human can change (arbitrarily). Central Authorities, who govern over us, will change these ‘if/then’ statements (the code) whenever it is to their benefit.

 

The idea that these cryptocurrencies are totally decentralized and that this distributed ledger system is inviolable, is pure ‘hogwash’. In reality, the source code which gives a cryptocurrency its operational functions can be changed at any point by a governing authority who rules over our commerce. For example: Central Bank policymakers could assume control over the algorithm and then alter the instructions/code to promote their desires. Any regulatory body could do similar. This decentralized nonsense is mostly deception within our marketplace. Think on these words ‘algorithm’ and ‘code’!

 

Following are some words from the cryptocurrency promoters: “Under Blockchain technology, centralized proprietary services are being replaced with distributed and decentralized open ones; trusted entities replaced with verifiable computation; brittle location addresses replaced with resilient content addresses; inefficient monolithic services replaced with peer-to-peer algorithmic markets. In Layman’s Terms: While Bitcoin allows an individual to send digital money or code, it is limited in its ability to create ‘If/then’ functions”. 

 

The deceptions (above) within our cryptocurrency markets are ubiquitous (and ominous) and reveal that most buyers and users of these ‘imaginary’ coins have not done their homework. All these thousands of cryptocurrencies are mere ‘images’ and ‘text’ created by an algorithm. Underlying the ‘image’ and the ‘text’ are instructions (code) which create the parameters for the virtual currency. This code works as instructed UNTIL the code is changed (the code can be changed at any time). How can this type of currency work for international TRADE?

 

In reality, cryptocurrencies (like Bitcoin, Ripple, Ethereum, etc.) are unsound units of money which can not work for international trade and commerce. Currently, they receive their ‘value’ from bouncing off some official fiat currency. They could not stand alone as an international currency as they are virtual/imaginary. Our millennials need to rethink their enthusiasm for these virtual/imaginary creations. They are worthless for international trade and this is the core function of any currency.

 

Silver and gold can work (temporarily) as viable money units for international trade. These precious metals have worked (even if imperfectly) for thousands of years. It would be much better for our millennials (those mostly pushing these cryptocurrencies) to promote our historical money units (at least for the next few years) until a new model for our economic system can be devised. Think on this concept called the algorithmic code which underlies all these cryptocurrencies! The CODE is key to how the currency functions! Enjoy! I am: https://kingdomecon.wordpress.com.

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January 4th, 2018

Posted In: Kingdom Economics

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