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DOES A MEDIUM OF EXCHANGE ENTAIL PROOF OF WORK? MARK CARNEY PROPOSES SHC - PRE-MINED CENTRALISED BLOCKCHAIN!

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DOES A MEDIUM OF EXCHANGE ENTAIL PROOF OF WORK? MARK CARNEY PROPOSES SHC - PRE-MINED CENTRALISED BLOCKCHAIN!

Sun, 11/17/2019 - 17:30
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Medium of Exchange - Proof Of Work - Wampum

A foreword. Money in order to work, require proof of work. The above is an example of Wampum, a primitive medium of exchange that served as a primitive currency until gold took over. What proof of work means, is that energy had been expended to create a valuable object. This object can be material and newly digital. Welcome in the age of Bitcoin, the way Satoshi Nakamoto envisioned.

Synthetic Hegemonic Currency - The Medium of Exchange?

The first part of the article is written by Richard Smith, PhD CEO & Founder, TradeSmith who discusses views of Mark Carney, the foremost banker and Governor of the Bank of England, an email I came across, and throughout this article, I will counteract some of the views. The reason I chose to openly respond to this email, is that I find it a perfect combination of views from banker's perspective and a demonstration of how a trader perceives them. Headings were added to section the content of the email.

The second part of the article clarifies once and for all that a PhD title don't mean...la da da da. New Medium of Exchange, Satoshi Nakamoto at your service, tighten your seat belt you are in for a hell of a ride!

 

A Word Of Wisdom

In both investing and life, there is a danger of “missing the forest for the trees.” In focusing on the trees, which represent the minor details of a situation, it is easy to miss the big picture.

 

Medium of Exchange - BTC Bartcoin
In Satoshi's horror, this is not what he visualised in his great vision. BTC Bartcoin as the medium of exchange!

 

Bitcoin Price Growth Projections

Take the price fluctuations of Bitcoin, for example. It is easy to fixate on the fact that Bitcoin has been bouncing around. In a range between $10K and $11K, with occasional thrusts above or below.

But it is more worthwhile to note that, the more time that Bitcoin spends in the $10,000 range or above, the more a five-figure price of Bitcoin settles into “the new normal.

Eventually, a six-figure price of Bitcoin $100K and above — could one day start to feel normal. And this isn’t happening in a vacuum. It is very much being driven by events.

 

Bitcoin Recognition And Mass Adoption

With each passing day, more Wall Street research analysts are recognising Bitcoin as a proxy for gold, a haven against fiat currency debasement, and a potential liquidity source when stock markets decline.

There is also more in the news each week, if not each passing day, about the growing mountain of negative interest rate debt of $16 trillion and counting, and the fear that central banks are “running out of bullets,” meaning the world’s central bankers have thrown everything, but the kitchen sink at the sluggish growth problem and nothing has really worked.

And then, last Friday, Bank of England Gov. Mark Carney took things to a whole new level.

In a speech at the US Federal Reserve’s annual symposium in Jackson Hole, Wyo., Carney suggested a Libra-like digital currency should replace the dollar as the world’s reserve currency.

 

SHC - Synthetic Hegemonic Currency

Specifically, in his policy speech, Mark Carney suggested adopting an “SHC,” which stands for “synthetic hegemonic currency.”

What Mark Carney meant by SHC is a kind of new Medium of Exchange, a regulated stable coin — run by the central banks, rather than a private corporation like Facebook — that contains an algorithmic basket of currency components.

That is why the SHC suggestion was dubbed “Libra-like” by the financial press. It would have a public governance structure, rather than a private one — but the technology would be similar to the multi-currency stable-coin that the Libra Association proposed.

This is a massive development, not just for the cryptocurrency space, but for the US dollar and the entire global financial system.

First, the suggestion of replacing the dollar is enormous because of the person who suggested it. The Bank of England plays its role as one of the most important central banks in the world. It is not in the top three, but it is definitely in the top five. That makes Mark Carney one of the most influential central bankers on earth.

If a politician or an entrepreneur or even a US congressman had suggested a digital currency replacement for the US dollar, it would not be news. For the head of the BoE to suggest it is news indeed.

Second, the development is massive because of the storied history between the Bank of England and the US Federal Reserve.

 

Bretton Woods foreign exchange system

Britain played a significant role in helping set up the original Bretton Woods foreign exchange system in the mid-1940s. The Bretton Woods negotiations were mostly in the hands of two policy architects: Harry Dexter White on America’s side, and the famous economist John Maynard Keynes on Britain’s side.

With the original Bretton Woods, the goal on the American side was to cement the US dollar’s status as the de-facto world reserve currency.

The goal on Britain’s side, in contrast, was to stop this from happening lest America grows too overpowering and to preserve some measure of Britain’s historic clout (which had faded away due to enormous war debts).

America won the policy debate, mainly because the United States had most of the world’s gold reserves and Europe was in tatters at the time. As a result of this, the dollar became the world’s reserve currency.

What is interesting, though, is the failed policy idea that John Maynard Keynes had proposed.

Instead of a single currency, like the US dollar, Keynes wanted the world to adopt something he called the “Bancor,” which was mainly a fixed-ratio currency basket.

What Keynes proposed for the original Bretton Woods solution, in other words, was very much like a stable-coin. The Bancor idea was “Libra-like” more than 70 years ahead of its time.

And now, in 2019, BoE Governor Mark Carney has proposed a new type of stable-coin, one that is genuinely rooted in cryptocurrency, to replace the US dollar.

 

Bretton Woods 2.0 foreign exchange system

Mark Carney, in other words, has suggested a “Bretton Woods 2.0” without using that exact term — a return to Keynes’ original idea, but this time enabled by cryptocurrency technology.

We could also dub it a “Crypto Bretton Woods,” because this new, improved version of the Bretton Woods regime would be built on a platform of digital currency. And the underlying technology and seamless transaction capabilities available in 2019 are a big reason this idea could work, whereas a currency basket may have been too unworkable logistically in the mid-1940s.

Here is the bottom line: Via Carney’s speech at Jackson Hole, which is a kind of holy place for the world’s most powerful central bankers, the US dollar has now been challenged by cryptocurrency at the highest and most influential of levels. That genie will never go back in the bottle.

With each passing day, the world is recognising that maintaining a system with the US dollar at its centre is not long-term sustainable. The sometimes large and violent price movements in the dollar, both higher and lower, can be wildly destructive to countries that are forced to trade in dollars or to borrow in dollars and hold reserves in dollars but have no control over the dollar’s strength or volatility.

As destabilising events like trade wars and geopolitical conflicts become more common, this reality will only become more painful. And as the United States abandons its longtime role as “policeman to the world” — a position America accepted after the first Bretton Woods — it is becoming more and more evident the system will have to change.

Again, it is huge that Mark Carney sees this — and is willing to say it out loud.

“In longer term, we need to change the game,” Carney told his fellow central bank heads. “When change comes, it shouldn’t be to swap one currency hegemon for another.”

 

Trader's sales pitch

Cryptocurrency is here to stay, we can see it is already integrating itself into the heart of the global financial system, from the top down. Bitcoin should only get stronger as this realisation sinks in.

...above email discontinued for irrelevance to this article

Has Mark Carney Considered His Options Carefully? And has Richard Smith?

Mark Carney Proposes A Centralised Medium Of Exchange

 

Mark Carney may be presumed the most progressive banker, realising the need for a solution is imminent, and also options are available. However, based on his proposal of centralised cryptocurrency, we must ask, has he considered all options carefully? And how sound is the understanding of Richard Smith?

 

BTC As The Solution? A Legacy Bubble Correctly Discounted!

Slow Transaction Speed

From the above email written by Richard Smith, it can be extrapolated that Richard Smith, with all due respect, does not understand why Mark Carney does not propose Bitcoin as the solution. Notably, he also refers to BTC as Bitcoin. The main issue with BTC is, it is an outdated tech that has not evolved for years, and you can know this by sheer of understanding it’s transaction speed which remains at 7 transactions per second for those years. That is not good enough for the banking system as a tech. Visa and Mastercard process, in aggregate, about 29000 transactions per second. So now everyone should see BTC is not a suitable tech for mass adoption, it has a limited scope.

 

What happened to the Satoshi Vision - The Peer-Two Peer Medium Of Exchange?

 

The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling.

Satoshi Nakamoto (April 2009)

Indeed, what happened! BTC became a scam network where the majority of the miners are good guys as intended, but a majority of BTC is in wrong hands, and the market volume of BTC on the dark market is better kept unknown. BTC tech became a joke that cannot handle more than 7 transactions per second.

 

Anonymous ledger as the Medium of Exchange? And what about trust?

Further, BTC is an anonymous ledger which is again unsuitable for trade. In trade, the most critical factor is trust. Without trust, you can’t trade, unless you want to fall for likes of InnovaMine. BTC is dominant on the dark market, and the majority of coins are in wrong hands. The value of BTC is blown up by tons of traders who know how to make a buck on it, and because people are holding it, giving it hash rate, and using it as a trading asset.

 

BTC transiency and volatility

However, for these very reasons, the value of BTC is transient and very volatile, affected by whims of people purchasing a trust, which falls up & down with whims of governments, media, new adopters, trading winners and losers, all affecting the market volume.

Hashrate as a similar faith, BTC only gets the hash rate because it is considered to be the crypto gold and generally the most profitable and secure asset to mine. What many people are failing to realise, particularly most traders, it is the reason they have their trading asset is the underlying value of the technology. One of my trader friends even goes as far as thinking the value can be simply created by trading and this article is dedicated to him. Temporarily yes, and theoretically you could trade a thin air if someone would care for it. The bigger picture here is if the tech loses it’s value anyhow, there won’t be anything left to trade because without the benefit of tech it is a bubble destined to burst.

A better tech? Apple-like?

If there was a better tech on a comparable basis, i.e. let me put it like this, you cannot have two apples. After eating the first one, God will kick you out. You can have Apple and Microsoft, as Microsoft is more of cucumber in the divine category, and in business, you can’t have two Apples, one Apple would naturally consume the other sooner rather than later. All cryptocurrencies that have a similar value proposition with be engulfed by the one that delivers on their proposal. The winner simply will be one who brings the global tech to the table that everyone needs. But is it only about the tech? I will discuss this in detail further down below.

Centralised Blockchain Value Proposition

No doubt that Mark Carney understands these above discussed 'apple principles'. His purpose is to protect the existing financial system and seek a solution, which naturally for a banker of Mark's calibre who though might not be particularly technically minded, is the matter of choice based on convenience. Now we must ask what is convenient for such a banker. He seeks a solution that does not replace the existing system but fixes it, and the key criterion is a solution that is centralised to preserve the central control.

So his ideal value proposition he can think of given the nature of his profession is a solution such an XRP or Libra as he is fully aware of the unsuitability of BTC for the above-discussed reasons. He is also mindful of the inadequacy to XRP or Libra to become the medium of exchange he seeks, due to their private ownership. He, therefore, proposes a regulated stable coin run by the central bank. The idea of the decentralised currency is not even being considered as it relinquishes bank control over the transactions network, essentially putting them out of business.

It’s an entirely logical, smart and valid point from the perspective of a banker. The value proposition of centralised blockchain technology is it will better facilitate banking functions and accelerate worldwide transactions, and with the progressing trend mobile payments, new digital currency system will save governments tons of money expended on notes printing and handling services and eliminate falsification of cash.

It seems a great solution as it promises new opportunities that would inject added value into global economies. But what if there is a better solution? What if the value proposition of a decentralised solution is higher than of a centralised solution?

Can a banker get out of his comfort zone?

But one might ask, that would mean a revolution, end of banking would it not?

Not necessarily. The transformation had been underway right under eyes since Bitcoin. The question is who will join the game. The decentralised solution creates a global trust, while the centralised solution creates only a country or block trust. In other words, China or the EU will not trust US blockchain because the other nation has centralised control over it. As discussed above, trust is the most crucial factor in trade. The centralised blockchain model does not mitigate any existing restrictions imposed on global trade of which the banks want to have control over. Adaptation of centralised blockchain gives them just the edge.

GASPING FOR AIR - SHC AS THE MEDIUM OF EXCHANGE? FIAT v2.0 👎

SHC system is its very essence it a better auditing control over individual banks, to put such a solution in practice back in time, Greece would not have the chance to cheat on EURO.

Mark Carney is looking at pre-mined blockchain solution. It can support utility token & liquid asset tokens but cannot function as a Medium of Exchange. A pre-mined blockchain is only fit for transferring value across another border. It is not suitable for storing any tokens or as a Medium of Exchange because a pre-mined ledger burns to keep its balance.

Further, the centralised blockchain solution does not address the issue of inflation. It may become a better version of digital currency, Fiat v2.0 that is still subjective to the inflation caused by money emissions not founded by gold reserves. The world needs a better solution, one that is infinitely divisible and does not depreciate in value.

Inflation is simply the printing of money. The only thing that will stop the bankers from printing more money is if you eradicate greed from human behaviour or if you invent a new monetary system like Bitcoin, which means central banks won't be able to print & pay themselves whatever they like. Considering they also pay everyone else & money can be used to bribe ppl etc. It's a tall order.

SHC, despite its theoretical merits, demonstrate how even bankers of a calibre of Mark Carney don't understand Money. A Medium of Exchange has no credibility without proof of work. Effort must go into creating it in order to prove it is genuine. It must also have proof of work to incentivise the creators to exchange it themselves for the resources they put in. SHC has zero proof of work & will, therefore, fail before it has even started. Hashgraph so is a good DLT but cannot be used as a Medium of Exchange.

If anything destroys the banking system, it won’t be Bitcoin or any other coin. It will be obliviated all banking dinosaurs having the inability to solve the gargantuan levels of national debts amounting to trillions. Blockchain technologies offer a solution to salvage the best of the banking system by injecting a digital gold value to the economy, and we need bankers and their experience to enable for to the transformation to happen. It may not be an easy time for banking experts to adapt while their primary purpose is at the end of banking existence as we know it, as peer-to-peer electronic cash is taking over, but these are businesses that have the potential to transform and become a modern form of banking focused on added-value services.

 

GLOBAL MEDIUM OF EXCHANGE – MONEY 2.0 CLARIFIED

Global Medium of Exchange - Unleash the dragon

How Can We Predict Who The Crypto Winner Is? And Who Will Decide?

To understand who of a large number of coins and blockchains will emerge victoriously in the race of becoming the global medium exchange we need first to understand the three underlying blockchain concepts; pre-mined, proof of stake and proof of work.

 

What is pre-mined?

Pre-mined coins are coins of which a significant portion had been pre-mined by a blockchain algorithm before launching as a reward the developers, also to act as a way to gain an operating budget. This caused many so-called pump & dump scams supported by exchanges that don’t care about the value and legitimacy of proposed technology but about market gains. To be listed on an exchange, the exchange regulator asks for payment which is paid in the pre-mined coins as a fee.

There are great technologies in this category, with a great application to the financial sector, often perfect for cross-border transactions. In terms of becoming the global peer-to-peer medium of exchange, there is a lack of trust, due to the same principle why China should trust a private blockchain, and even if they would, others countries would not trust that particular blockchain. A global medium of exchange in the private hands of few is not going to happen.

 

What is proof of stake?

Proof-of-stake is a process where the creator of a new block is chosen from a pool of users that staked a certain amount of cryptocurrency. With proof-of-stake, there is no computational puzzle and miners simply take a fee from every transaction. It is environmentally friendly due to no power is expended on mining. However, the downside of proof-of-stake coins is that your coins are effectively staked while receiving rewards for keeping the coins on the network, so in consequence, the coins are not usable as a medium of exchange.

 

“A proof-of-stake system requires a single investment. Once the investment is created, the system is incentivised towards the protection of the earlier investment. This leads to a scenario that is known as a strategic oligopoly game. In a proof of stake system, prior investment is crystallised, allowing continued control with little further investment.”

Craig Wright

 

With the majority of coins on the network also there is a control of the system, and as discussed above, this would create a central point of power, which never will be fully trusted by everyone, again unsuitable as a global medium of exchange.

 

What is proof of work?

Proof of work requires nodes on the network to perform a complex mathematical puzzle, also called mining as a way of verifying the legitimacy of transactions on the chain. Miners engage in competition to of solving a mathematical problem on the network and get rewarded.

Proof of work concept is demanding on real-world resources reflected in the purchase of hardware and expenditure on electricity cost it may be seen as a threat to the environment. It would be however shortsighted to think that the demand for electricity is going to result in its scarcity. It is a well-known fact new methods of harvesting renewable energy are being sought, and it is reasonable to assume that with the blazing pace of technological progress we will soon have a cheap source of power, which will benefit the planetary eco-system.

Technological progress is necessary for the planet to survive, any excessive environmental interventions take away money from that hinder reasonable technological progress are endangering the very life on the Earth. What matters is not acted upon for decades, that is such proper incentives for Brazil to stop the destruction of the Amazonian forest and start rebuilding the decades of damage caused to global eco-system. Can't some wealthy people send a large sum of Bitcoins to Brazil government as a donation, so they do just that? People are worried whether one produces more CO2 than the other or whether proof-of-stake is an ecologically more friendly model and failing to focus on where the real damage is. Clearly, the planet would have a better breather if we did not cut our lungs. Therefore, I find the ecological proof of stake argument, which is all over the internet, totally absurd.

The more concerning issue with the proof of work concept is the relatively expensive mining equipment, so at this stage, it would be impossible for everyone to have a miner or two at home. In fact, the miners are not at home in most cases. Due to the advantage of cheap electricity in specific worldwide locations, mining centres were created to make the mining business more profitable. In hindsight, these centres, in a way, centralised the decentralised the system, effectively hindering its value proposition. For example, over 70% of ASIC miners are located in China.

A further issue with proof of work coins is you cannot have anonymous coins due to the above discuss trust issues and are therefore unsuitable to become the medium of exchange.

 

A Global Medium Of Exchange? How Feasible?

To apply proof of work concept and enable mass adoption, we must think big and address all the lacking BTC properties, i.e. scalability, transparency, trust, stability, security, and instant transactions. These all are the key elements of efficient trade.

The fact Squire mining is partnering with Samsung to produce the next ASIC chips helps to address the issue of availability of ASIC miners. As with any technology, over time, it gets better and cheaper and more inclusive.

To address the issue of the Bitcoin network, with 70% accumulation of power in China, we need to understand that mining is competitive. If 70% of mining is in China, it just means more Chinese companies and their investors get Bitcoin. If they turn their miners off, it's more money for those elsewhere. However, mining operations need to grow in order to cater to world trade, so the Bitcoin network does need them.

It is, therefore, the role of bankers and governments and global regulators to ensure balance in private ownership of mining equipment supporting the decentralised blockchain in a competitive environment.

Aside from the conflicts and arguments about who has a more prominent nuclear button, or who is going to impose higher taxes on the other, the main criterion in trade and politics is trust. Loss of credibility in both cases is often fatal to the business or the career of a politician. And a prodigious proposal of a decentralised global blockchain may, therefore, scare many off as the unknown that can't be trusted, sounding to many futuristic, if not science-fiction.

But let's consider the proposition.

Decentralised Blockchain Value Proposition

A decentralised infinitely scalable blockchain onto which institutions and individuals can upload their data for a micro-transaction fee. All data uploaded onto a blockchain are immutable by default design of the technology, and it cannot be hacked or anyhow else altered. In that respect, besides fully mitigating any cybersecurity threats and associated expenses, the blockchain solution brings a significantly cheaper method of storing all the world's data than any of the existing centralised solutions.

A Medium Of Exchange Better Than Gold

The time has come. As soon nChain restores Bitcoin protocol to its original state and deliver on its vision, fiat currencies will soon face a similar faith to those currencies that diminished when encountered with gold. Currencies made of clay, shells, beads, or stones had gone down to history books, and there fiat and gold will follow. We all have the immense opportunity to join and love or hate it, but no one stays behind. It is an inclusive journey. There is no stopping it. 'A Peer-to-Peer Electronic Cash' system is a train that does not stop. Once you have understood the vision and the value proposition it brings, you are in for an amazing journey.

 

Issac Newton Quote

 

BITCOIN SATOSHI VISION - MONEY v2.0

Bitcoin Satoshi Vision The Medium Of Exchange

Extract source: bitcoinsv.io

BSV Stability

Bitcoin SV restores the Bitcoin protocol to its original design known to be stable and enable further innovation to take place on the top of the stable base protocol.

Further, Satoshi op_codes will enable businesses and development teams around the world. Developers will create the many solutions possible due to the BSV blockchain, such as smart contracts, tokenisation, atomic swaps, and many more. See the bottom section of this article.

BSV Scalability

Bitcoin SV is scaling massively into order to demonstrate that the platform is ready to process the required scale of transactions. The BSV roadmap is primarily focussed on delivering larger and also miner configurable block sizes. BSV run nine test environments, identifying bottlenecks and performance measurement of proposed changes.

Massive scaling is also essential to encourage enterprises to use BSV for their blockchain applications – which will need big blocks and large throughput capacity.

BSV Security

Bitcoin SV will be global money. To facilitate such a future, we need to be ready to guarantee the necessary level of protection required. BSV project has focused on rigorous Quality Assurance implementing a rigid set of test phases with full traceability.

Safe instant BSV transactions

Instant transactions are pivotal to Bitcoin SV. Security enhancements can be made to better secure instant transactions for the future, and the BSV roadmap treats safe no-confirmation instant transactions as a key priority.

THINK BIG. DREAM BIG. INCLUDE BSV.

 

 

If your reading did worth your time, a satoshi or two would put a smile on author's face :)

 

[email protected]

$radek - HandCash.io

[email protected]

 

 

Alternatively, after reading my article, it may be understandable if you had the wish to rid of your BTC 💩coin. I will, therefore, graciously, only for a limited time, accept donations and help save the world and convert it to Bitcoin!

 

1LBgsjNx6mXrj7tkTdjRDVqwSzEeoGMK2J

('whale' transactions accepted!)

 

Register for a free Pretty Good Post account to be first to know of new press releases!

I would like to introduce as many people as possible to the BSV community. To first 50 PGP subscribers who own account at HandCash, Simply Cash, or Money Button I will send 25000 SATS each. Past registration, in below comments, pop in a sentence or two reviewing this article and include you BSV wallet handler. Please don't just post a comment only with your wallet handlers. Those comments will be discounted and might be deleted.

With every future article, I will propose a similar bounty offer, and with growing interest, I plan to be more generous with those who participate by posting comments. BSV brings fantastic opportunities for everyone. My goal is to share information on an ongoing basis and help those who might find themselves in a wee bit of assistance, throughout the ongoing monetary revolution.

 

Follow this link to register at Pretty Good Post. Don't forget to comment below and include your wallet id.

BSV Goodies

Handcash - BSV Wallet

Simply Cash - BSV Wallet

nChain - The leader in the blockchain industry. Oh boy, they have patented it!

City On Chain - Everyone dig in and stand in awe at the greatness of the project!

Good ID - Join the global movement for good digital identity

Weather SV - Global weather data on chain!

Gravity - Bitcoin SV Banking Ecosystem

Fivebucks - Drop Fiverr, get Fivebucks!

Twetch - You tweet I twetch!

RelayX - The new standard in open payments

Yours – Earn bitcoin for your content

Who needs Google when you have Agora

 

Please share my article on social media and help the world to realise that the new Medium of Exchange is underway, a powerful vision that redefines who we are. Bitcoin. The Peer-to-Peer Electronic Cash System, the way Satoshi envisioned it. BSV.


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