Tuesday, August 8, 2017

Potential value of bitcoin, empires, and taxes

M3 is roughly "all cash". For US dollars, it's about $30 trillion. The rest of the world I'll estimate at $25 trillion because the Euro is about $12 T in USD. I expect bitcoin and alts to roughly follow this ratio, so BTC would be compared to dollars. so the max would be 30T/21M = $1.5M per BTC. As this happens, dollars all over the world will come flooding home making them worthless, so it's more important for Americans to switch early than in other countries, to maintain current lifestyle. The ability to print dollars and the growing world economy accepting them has been the biggest boon any country has ever seen. We were basically allowed to print them as fast as the world's economy grew. We spent half the surplus on a military which pushed and supported the use of the dollar, enabling stability and exchangeability in the same way MicroSoft "helped" software. Bitcoin is the Linux of money. Wealth will be more evenly distributed as the dollar monopoly in currency ceases.

Not just the U.S. but all governments will lose power to control if they lose control of the currency that their citizens demand. Countries enforce a currency by demanding taxes and legal disputes be settled in their dollars. Empires use currency to enslave other countries. So countries can start their own cryptocoin, enabling them to enforce law more directly and automatically extract taxes by being privy to every transaction. This would relegate BTC to replacing only gold for private holders, which is $7T, $350,000/BTC, but potentially a lot more since a lot of countries want to be more fair in international exchange instead of being stuck with the dollar. Gold is harder to move so there's a great desire to switch to BTC. Also, buying stuff directly from other countries instead of Amazon will need BTC, which is a "black market" as far as the U.S. government will be concerned. It takes away their power as the dollars come home. They can make it illegal to import things from other countries without dollars. The U.S. desperately needs dollars to stay out of the country. When foreigners like the Chinese government start giving us wads of dollars to get BTC, that is NOT the time to switch back to dollars. That is the end of the U.S. as the world power. That is when great powers fall: they spend too much on military to support a coin or gold, lose their skills at production due to enslaving people in the distant lands (via the coin supported by the military), then find themselves powerless as their coin collapses. In the case of Spain getting gold, they just spent it all, then the armada fell and Britain's superior skill at ship building took over. There is also the possibility that BTC will be a basis for establishing ownership of assets and enforcing smart contracts, again putting it well over the $1M/BTC range. I do not expect it to go over $500,000 in 20 years. If it reaches $100,000 it will be a primary way of buying $1M beach houses as old money finds itself increasingly poor and BTC millionaires start looking for something to do with their gains.

50x = $150k/BTC does not need BTC to be lucky. It only needs to be the best idea. When BTC reaches $150k it will be because it is starting to be used as an international standard for trade. It will be because dollars are coming home which will make them lose all their value. The U.S. government will then have to decide to cancel all social security and most government expenses (pollution, law, roads, retirements) and foreign debts, or print money (hyperinflation). That will not stop the inflation because there will be 3x more dollars inside the U.S. from foreigner not wanting them. If it takes 15 years, that will be 7% inflation plus our current 3%. 10% inflation is far from hyperinflation, but still a disaster. Actually the disaster was letting there be a "balance of payments" surplus the past 50 years which means more money going out (via free trade, military, and dept) than what was coming in. This results in erosion of the country's ability to support itself. Free trade is a disaster if it makes the balance of payments worse. The U.S. (like China) got out from under enslavement of a foreign currency by enacting trade tariffs. China's devaluation of currency is in effect a trade tariff on the external world's imports which forces its people to work harder and develop more skill. I believe the U.S. is sophisticated enough not to have hyperinflation. When it reaches $150k, it is NOT the time the sell, but a time to keep holding, unless you see a better option. But I think a capped-quantity coin is not a good solution and not the solution the rest of the world will want due to late-comers being at a disadvantage. But unless a new coin lets smartphones determine their own time via the stars or random or 3rd party consensus trust, and combine it with a local trust network to decentralize the coin (protecting it from big miners), BTC may be the best option. This is because all alts subject to 51% can be destroyed via simple forward-stamping timestamps, and if BTC miners are hodlers, they will soon find it more profitable to destroy alts than to mine, forcing more money into a few coins. They may even use their BTC value gains to buy more equipment to retain power by destroying alts instead of mining BTC. The miners may turn into BTC's military. This is what happens to all empires: they win by might is right until all the slave countries figure out a way to get out from under the coin that controls them. The coin is backed by a military. Coins are how governments exert control. Some argue BTC has no government, that devs are not really in control. However that may be, anyone who holds BTC will be the new lords, enslaving the late comers, backed by our military, the miners. At least this is our best-case scenario in our search for personal profit.

No comments:

Post a Comment