Bitcoin can’t resolve trade deficits: The problematic nature of Digital Dollars and Crypto-Currencies – December 30, 2020

So we’ve entered into a phase in human development, in which the obvious is being ignored and a monster has been created primarily because of the ‘success’ of Fiat Money. So Bitcoin is a derivative of a derivative of a derivative, in fact, I’m being generous when I leave out the number of times Bitcoin is derived from a productive process.

I do a lot of charity work, even in Venezuala in which as an example Paypal is still being used. If people aren’t aware Bitcoin is now available on Paypal, now the Venezuelan bolívar but it’s very hard to value the Venezuelan bolívar because Venezuela doesn’t do much of any trade, their government for the most part does whatever it can to manipulate its currency bt it never works because from a TRADE perspective Venezuala offers the world nothing but oil and because of their government, their oil market is in shambles.

Now, as bad as Venezuala is, I also like to point out the charity work I do in Nicaragua, in Nicaragua they use U.S dollars, they don’t even pretend that the Cordoba has much of any value in Nicaragua, it’s not that these countries can’t value their fiat currencies, it’s that they have HUGE trade deficits, even in their poverty states, their governments consume more than they produce, I say this because Bitcoins which at least for now appear to valued next to U.S dollars would be inefficient for trade there.

The grid in many of these third world countries is intermittent and Bitcoin is a grid intensive medium of exchange. Digital Dollars similar to bitcoin make sense if all governments have the exact same laws regulations and standard of living, but a digital dollar or a crypto-currency at best requires a smartphone, and one of the main problems I have, when I do my charity work, are damaged smartphones, data plans, and wifi.

There’s a process to create a smartphone that bitcoins or digital dollars can’t account for, digital money requires something tangible to measure its value. Gold and silver have to go through a mining and refining process to be used as a form of barter. Gold is not a digital mining process or a central bank adding zeros to a balance sheet, it’s a physical process, I like to even point out lab-created diamonds, which is something I pay very close too because in a free market, lab-created diamonds which are so well done that the mined diamonds have to use the force of government to prevent price deflation, but it even lab-grown diamonds still can’t be valued at zero, because it’ an expensive process that goes into making them.

The difference between a lab-grown diamond and bitcoin however is the end result, there is something physical there that no-longer requires grid or central bank support. I am of the belief that lab-grown silver and Gold would exist if either of the metals reached a value that made it economically viable to do it.

But the key thing to remember about the possibility of lab-grown Gold is that the end result would be something physical, no longer dependent on the grid or the central banks. Bitcoin hoards cyber-space it’s created and will eternally remain in cyber-space, now we as humans don’t even know if our current grid model will be viable in the future, in fact, blockchain might be under-threat via new and better technologies.

Central banks are under threat now, primarily because they’ve backed themselves into a corner that forces them to print money. Bitcoin has seized this flaw and created an opportunity, but Bitcoins are still valued next to the dollar, whereas Diamonds and Gold are regulated to stay connected to the U.S dollar.

There would have been Gold, Silver, and Platinum-based money if governments worldwide didn’t ban them. I’ve been around long enough to remember eGold. We all know why another version of eGold hasn’t emerged, in fact, blockchain with precious metals would be a beauty had it not been for the regulators, but what would separate Gold-blockchain from bitcoins is that viable PHYSICAL notes could be printed, because the gold would be real and therefore could potentially be printed in the form of a note from a home printer.

Entities all over the world would be eager to jump on board for a Gold-backed blockchain monetary system because it wouldn’t be dependent on cyber-space and therefore would have intrinsic value, now sure countries with strong grids, would benefit from transacting digitally, but the third world could also benefit by printing gold-crypto, after all, Western Unions as an example are everywhere and there is a cost to living in a developed nation that the third world doesn’t have to pay.

This is, of course, one of the ways, that trade deficit in a legitimate economy get resolved, money goes to where it’s needed most. The greed objective spreads its tentacles because of the returns, it’s the government that prevents the market from extinguishing poverty, however, Bitcoins and digital dollars are both derived from fiat dollars which are derived from bartering.

Bitcoins and digital dollars aren’t bartering, they’re derived from bartering, plus they’re grid and political heavy. As I pointed out, U.S dollars are distributed in Nicaragua, via retail banks and financial institutions, people in the third world often need cash because their grids aren’t always reliable.

In Zimbabwe, their central bank via the government of course has banned Bitcoin, now it’s not to say that bitcoins aren’t traded, but it creates problems with trade. It’s not derived from anything, it’s not pinned to anything intrinsic. Everyone knows that if the dollar system crashes, the EASIEST solution is to pin currencies back to the Gold standard.

The option not to pin currencies to gold or even oil is a digital dollar, but if the world goes this direction, trade deficits will become very problematic. As I like to point out there’s a lot of current manipulation going on with fiat dollars, imagine if this happened on a blockchain or central bank ledger? Bye, bye American pie!

Bitcoin wouldn’t make the system any better either, the blockchain is transparent, the fiat system is based on ignorance. People need minds like Jeff Snider to even grasp the complexities of the Federal Reserve System, now imagine if the Federal Reserve system was transparent? How long would it take before people fully grasp how unsustainable the trade deficits are?

A digital dollar would mean there’s no risk of abandoning the USD, which would push real prices in USD up, because now everyone would be able to see transparently where the money is heading. Money is settled based on barter ability, physical U.S dollar notes are still hoarded and cherished as are Bitcoins and other cryptos the problem is Bitcoins outside of fiat can’t resolve trade-deficits because they’re derivative trading instruments, valued next to corrupt government money.

Now, am I saying that Bitcoin doesn’t have any value? Absolutely not, but I’d argue a lot of other digital assets offer a lot more value than Bitcoin, even Amazon has a physical location, real estate, etc. If Bitcoin is able to elude regulators, what do you think is likely to happen in the long term? I’d argue even Amazon in its current state could resolve trade deficits, Amazon solves a lot of problems, it already offers gift cards, after bitcoin does all of the hard work do people genuinely think the existing infrastructures are just going to jump on board the Bitcoin standard?

Amazon could create an environmentally friendly crypto-currency, once Bitcoin does all of the heavy liftings that’s when people will see the greed motive get unlocked. When left alone the market is an untamable beast, just tell the market the rules, and the market will innovate to Infinitum.

But transparency which is what digital dollars are all about, the way I see it would expose central banks to pressures that would distort prices even worse than they’re being distorted right now. As I’ve observed in third world nations, once prices get distorted not only does barter increase but so does novelty, bitcoin is a novelty, but if it’s not attainable other forms of a medium of exchange will manifest, humans are complex and inherently find ways to resolve trade deficits.

Because digital dollars and Bitcoins are valued next to corrupt government money, I find it hard to see any value in them if the current financial infrastructure we currently ‘enjoy’ dissolves, which means digital and crypto financial mediums can not resolve trade deficits!

Interesting times ahead!