In Bitcoin Sinks Below $7000 on China Crackdown I posed this issue.
If and when central banks crack down on digital currencies it will be lights out. People keep asking me what can central banks do. The question should not come up as the answer is obvious: ban transactions in Bitcoin.
If the US banned bitcoin transactions, people would still have their digital coins, but they would effectively be worthless. One could not buy anything with bitcoin other than barter transactions. There would be no way to get money in or out, at least in the US.
To that I have countless replies along the lines that Bitcoin is decentralized so my idea is preposterous.
If governments ban transactions in Bitcoin does one get money in or take it out? OK you still have your Bitcoins, but what the hell can you do with them?
No one has answered my questions. They just tell me it can never happen.
I have been asking simple questions for years. None off the bitcoin true believers has given a satisfactory answer.
Question of the Day, Month, Decade
Both totally irrelevant.— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
Please tell me
1. How do you get US dollars into Bitcoin.
2, How do you cash out Bitcoin for dollars
3. How do you buy anything with it?
Transfer is easy enough in all kinds of ways. So what?
What the hell can you do with it but barter? https://t.co/WEGChrv3BB
I have asked these questions for years. @stacyherbert— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
To repeat: If the US prohibited banks, merchants and citizens from accepting or dealing in Bitcoin, how does one legally get money in or out?
OK you have your bitcoins, You can even mine more. But how do you sell or buy?
So far, peer-to-peer is the only answer.
OK but that presumes one can find a person willing to barter who has what you want and is also willing to hold more Bitcoin in exchange.
But how does one sell for cash?
Understanding My Message
Pretty much my position. Bitcoin will still exist, but what can you do with it?— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
In regards to gold, I do not believe central banks feel threatened by it.
Perhaps at some price, but what price?
Given the talk, I think they may already be threatened by Bitcoin. https://t.co/b0FsWqPMSi
Failure to Understand
Let's assume that you are willing to fly to wherever, and found some way to get $1,000,000 in cash.— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
How do you get that back in a US or European bank?
Let's assume you have a way and are willing to break the law.
Is everyone in your shoes? If not, what happens to the price? https://t.co/h0axMIcsqr
Even if one manages to get money out via the black market in some illegal transaction, how does one get the money in a bank when they are likely going to hove to explain what they are doing with amounts of cash over $10,000.
Millennial's Fake Gold
My weekly podcast is up!— Vitaliy Katsenelson (@vitaliyk) January 2, 2020
I have been asked a lot about Bitcoin lately. For me, the truth is simple and clear: Bitcoin is a bubble.
Listen here: https://t.co/v7TuJcWgfY
You can read this article online at: https://t.co/9WsVGdS95b pic.twitter.com/QOx1PKdDmN
Vitaliy Katsenelson calls Bitcoin the Millennial's Fake Gold.
Reflections on Hindsight
Katsenelson poses similar issues as mine, notably, "Governments tend to look at Bitcoin and other cryptocurrencies as a threat to their existence. First, governments are very particular about their monopolistic right to control and print currencies – this is how they can overpromise and underdeliver. "
But this is my favorite line, "It is crystal clear to me, with the benefit of hindsight, that I should have bought Bitcoin at 28 cents. But you only get hindsight in hindsight."
On what are those $1 million to $4 million projections based?
- Price Follows Hash Rate
- Alleged scarcity
- Central Banks and Governments are Powerless to Stop Bitcoin
Yet, no one has properly addressed point number three.
Price follows hash rate is a proven joke, yet it came up again today.
Hash Rate Hits Record
CoinTelegraph via ZeroHedge commented
Commentators, including Keiser Report host Max Keiser, have also claimed that hash rate highs will ultimately produce new Bitcoin price highs.
That's more misplaced faith. Price hasn't followed the hash rate for years.
Central Banks to the Forefront
The issue of central banks came up again today.
Please consider ECB’s Weidmann Urges Euro-Area Banks to Battle Facebook’s Libra
European Central Bank policy maker Jens Weidmann called on banks to come up with cheaper and faster systems for transferring money to combat alternatives such as Facebook Inc.’s Libra, and said there’s no pressing reason yet for the ECB to develop its own digital currency.
“I’m not in favor of always immediately calling on the state” to come up with solutions, Weidmann said in an interview with German newspaper Handelsblatt published Thursday. “In a market economy, it’s up to companies to develop products that meet customer demands.”
Weidmann, who heads Germany’s Bundesbank, has long called for caution over private-sector digital currencies and his comments echo concerns among officials from Europe to the U.S. over Libra, a planned digital token backed by multiple national currencies.
In case that was not obvious, I offer this proper translation: "I am immediately calling on the state to deal with the threat of cryptocurrencies".
ECB President Christine Lagarde and BOE Chime In
ECB President Christine Lagarde -- in common with Bank of England Governor Mark Carney -- has said central banks should consider whether it makes sense to launch their own digital coins, and she may make that question part of a wide-ranging strategic review planned to start this month.
OK, believe what you want, and you will, because if you are a true believer, Bitcoin is now an act of faith.
Meanwhile, the ECB and BOE flashed another warning card today.
Not to worry, you still have peer-to-peer bargaining.
No Faith in Fiat
I have no faith in fiat currencies except on occasion some are much better than others.— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
In general this is my position:
Fiat currencies don't float, they sink at varying speeds. https://t.co/SUvukfU2w4
Method of Central Bank Attacks
1: China is more likely to ban Bitcoin than the US. Perhaps that would be enough to kill it.— Mike "Mish" Shedlock (@MishGEA) January 2, 2020
2: The mere threat of the US and EU doing so could easily suffice as well.
3: Point two would be coupled with warnings and lies (fraud prevention, money laundering, security issues etc)
Change the title to remove faith-based Global Warming. Created too much of a sideshow.