HBD Over BTC As Medium Of Exchange Shown By Former Bitmax CEO Statements
The Bitcoin maximalists are not going to like this.
Before going any further, we have to do the proverbial disclaimer. This article is not referring to the future price prospects of Bitcoin nor its viability as an investment. Instead, we are focusing upon the network along with adoption for payments. None of this should be taken as financial advice.
Former Bitmex CEO Arthur Hayes made some waves by affirming what we have discussed for a long time.
Bitcoin is in the process of being hijacked by Wall Street. This is something I received blowback on yet it is happening before our eyes.
In this article we will discuss what is taking place along with Hayes' comments. We will move onto the next stage of crypto evolution.
Source
Wall Street Hijacking
The Bitcoin world is watching Gary Gensler and the Securities and Exchange Commission (SEC). Many are anxiously awaiting the approval of a Bitcoin ETF based upon the spot price. This is viewed as a windfall for cryptocurrency. Of course, many are expecting the price to skyrocket.
Whatever the market reaction is, there is something these people are overlooking. How are the tenets of Satoshi Nakamoto being upheld if Wall Street is in control of large amounts of BTC? In fact, how can there be any prospect of a new financial or monetary system if the same institutions are in control?
The answer is obvious.
It is rapidly becoming a reality that maxis, led by Michael Saylor, are cheering on Bitcoin's demise. Saylor's firm is holding a ton of the coin, providing the path for other firms. With the recent change in accounting standards that corporations follow, the likelihood that more companies put it on their balance sheets increases.
Naturally, we still have central banks and sovereign wealth funds to content with. These both have treasuries that are in the trillions.
That is a lot of money to be buying Bitcoin. While it might be good for the price, it makes it a crappy medium of exchange. When the money stops moving, it is game over in that regard.
What is going to happen if hundreds of billions flow into the ETFs on application? Who is going to hold that Bitcoin? Certainly not the buyers since they are getting a derivative. It will be in the hands of Wall Street institutions.
This is a problem most are not talking about.
Hayes: Threat To Bitcoin Network
Hayes looks at the situation a bit different.
He focused upon the network itself and ponders what happens as this Bitcoin is locked up. How does this change things?
The price watchers will get excited since it will likely go up. The effective circulating supply will diminish as people hold the coin on their balance sheets. Unless people start unloading the ETFs, the custodian simply will keep the BTC off the market.
It is not the perspective of Hayes. Here is what he said:
Bitcoin is the first monetary asset in human history that exists only if it moves. But if there was never another Bitcoin transaction between two entities, miners would be unable to afford the energy it costs to secure the network.
This brings up a valid point. How is the network sustainable after the inflation goes away. Of course, people today are not really concerned about 2140 since none of us will be here. However, with each halving, the dependence upon inflation can be viewed as being reduced.
Even without looking at the network, how can something serve as a medium of exchange if everyone is hodling? To full that role, transactions are required. Getting to the point where central banks, as an example, are getting involved, they are long term holders. The velocity of money with them becomes basically zero.
We already see this with the likes of Saylor.
This gets compounded by the millions of BTC wallets owned by people who believe the price will be much higher in the future. Why spend now if the value of BTC will be 4x or more down the road?
Even without the network situation, this is a major challenge.
Stablecoins
The solution to this problem is already being provided by the market.
Stablecoins will end up being the medium of exchange. Having it tied to the USD as the unit of account is where medium term price stability comes from.
That said, notall stablecoins are alike. My view is the real game changer is algorithmic stablecoins like the Hive Backed Dollar (HBD). Unlike asset backed coins such as Tether or USDC, these operate completely outside the established banking system. That means any expansion increases the money supply yet does so outside the realm of entities such as the Federal Reserve.
Since the base concept of a stablecoin is not price appreciation, we can see how this offers more functionality for trade. Volatility is the enemy, something that is (and will be) a constant with Bitcoin. In fact, this applies to all value capture coins although the cap in number of BTC means it will always have more volatility.
Going back to Hayes, he mentions this:
Hayes adds that this could happen if users come to value bitcoin as a financial asset more than a store of value, favoring the purchase of derivatives instead of the cryptocurrency. However, if bitcoin suffers this fate, Hayes anticipates the birth of a similar asset to allow people to transact in a non-state-owned financial system.
“Hopefully, the second time around, we will learn not to hand our private keys to the baldies,” he concluded.
To me, there is no if with Bitcoin. Again, the network doesn't need to suffer for HODLers to completely destroy the utility. They can simply opt to keep their BTC in storage, not spending it. As this happens, volatility will remain (if not increase), killing it as a medium of exchange.
In other words, it does not take Wall Street entering to provide this outcome. The addition of those sharks along with other aspects of the existing system only enhances this fate.
Therefore, we are looking at the second time around already. Here is where HBD and other algorithmic stablecoins can step up. It not only provides the price stability required to be a medium of exchange, the market is driving it. We are not capped to what stablecoins can be created. They piggy back off the value of the asset they are tied to, both of which are not part of the present financial system.
Here is where the asset backed stablecoins fall short. Who controls them? Leaving aside the fact they have centralized entities such as Circle, where are the assets backing the coins?
Fortunately, it is on the Circle website:
Cash is held at regulated financial institutions. The portfolio of the Circle Reserve fund, which can contain short-dated US Treasuries, overnight US Treasury repurchase agreements, and cash, is custodied at The Bank of New York Mellon and is managed by BlackRock.
The solution should be clear.
If we are going to create a new financial system, complete with a decentralized medium of exchange, it is not going to be with something that can be completely controlled by Wall Street. This is exactly what is taking place.
Hayes is spot on with his analysis. However, the view it might happen in the future is mistaken in my view. As we can see, it is already taking place simply through the way these financial institutions are involving themselves.
The first phase of cryptocurrency as a replacement system is over. That path failed. We are already into round 2.
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Reading the last sentence gave me goosebumps.
I predict that the price will be manipulated with naked shorts once they can cover that with an etf.
It's not like the regulators are not captured and staying that way.
Btc and eth are ded.
Fees killed them.
Bitcoin will be 100K within two years. The path is clear. I love HBD but even comparing these two is nuts. The network effect can’t be compared.
Yes, I agree, people new to the game may not recognize the btc and eth drawbacks that high fees are.
They are happy to escape their monetary masters and don't look too close at the exit until later.
I was a fanboy, trubelieber, too.
Now, not so much.
However, the incidents of hijacking are becoming common these days. Anyway, hopefully this time the price of Bitcoin will skyrocket.
@btcyberpunk check this out.
En serio, 😂😂😂
Vendan entonces o pásanse a usdt dale
😂 Verdad que hay gente que está en el pueblo y no ve las casas. Concéntrate en la problemática que te plantean sobre el uso de Bitcoin y el control de grandes cantidades de BTC inmóviles por Wall Street.
Dale mijo está bien, maté de debatir contigo, ni una charla bcasher sin sentido más
Estás igual que la asamblea nacional, la culpa es de los que te muestran los problemas que hay o pueden haber, nunca del problema en sí ni quienes lo causan 😂
!BBH
@taskmaster4450! Your Content Is Awesome so I just sent 1 $BBH (Bitcoin Backed Hive) to your account on behalf of @fiberfrau. (1/5)
This is the scary future that I am envisioning. There is no way to win. When a new asset is gaining popularity they will always try to control it. Even an algorithmic stablecoin is not safe, because they can still buy it and control it. They will always have more funds than we do.
There’s plenty of ways to “win” or to cover your self. Why would u be so willing to give up and say there’s no way to win?
I guess I was a bit vague. When I said there is no way to win, I was referring to one asset or technology to fully disrupt or overthrow the control of the government or big organizations. As an individual I agree that there are plenty of ways to "win". It will be like guerilla tactics of choosing your battles and going for those that have potential.
What are your thoughts on the Circle IPO? I am thinking about trying to put some cash together to buy some shares. Coinbase seemed to do well.
So many operations and influence trying to fight down the power of bitcoin
One question, in BTC can some holder hurt another financialy? In Hive the platform have staking and minting via voting. Later this Hive can be converted to HBD and back. So HBD is highly coupled to Hive were holders can downvote and cause financial damage. Is this the economy we strive for?
“Bitcoin is in the process of being hijacked by Wall Street. This is something I received blowback on yet it is happening before our eyes.”
This is a silly take. I love and Hold thousands of HBD! But to even compare the network effect is massively ridiculous.
Secondly, why on earth would an item pegged to a fiat currency be a great solution to bitcoin long term? Again I’m a fan of HBD but this makes zero sense.
It was obvious to me since day one, or at least when I published my first writing on cryptocurrency in 2014 (an essay on my old social network - that will be reborn on Hive at some point) - that Bitcoin could not possibly solve the world's economic problems in the way that so many have claimed (... claims usually made without evidence or addressing the key points). In essence, those who control the infinite fiat system will always be able to take control of any such crypto system in a variety of ways.
Even if the fiat system collapses (rendering pegged stablecoins useless in the process too), those who accumulated the greatest fake wealth through fiat will be able to control any replacement systems in advance - hence, even if they publicly reject BTC, they will certainly be making moves to control it as much as possible behind the scenes (exactly what Jamie Demon and others have been caught doing already).
The net result is and has always been that either:
a) Crypto and money itself eventually get phased out as we evolve into more harmonious ways of relating with each other.
b) BTC and perhaps many other larger crypto projects get dominated by the 'old money' and some of those who make the most from this process but who actually intend to replace the 'old money' people end up using their new wealth to create alternate projects that replace the 1st gen system, eventually 'forking out' the old money - as Hive did to Justin Sun.
c) Neither a nor b take place and we end up continuing on the same path as we were always on using Fiat, since "fundamentally nothing has changed".
For these reasons, I view as very short sighted (at best), those who claim that Bitcoin solves all economic problems and I also view Hive's governance model as potentially key in securing a better financial and tech future for all.
In actuality, it really should be the case that the world looks back on the forking of Hive as an essential moment in the history of technology and money/economics - providing the basis of a template for increasing free will and self determination in the face of everything that has been born of hundreds of (thousands of) years of gradual erosion of personal power.
Let's not let this be forgotten! I and many others continue to take steps regularly to build on this reality, yet our actions are invisible to the majority at present. It's going to be a very interesting next 1-2 years :)
For many people that have not yet believe so much in the future of HBD, I am here to tell them that hbd will be the next big thing in the Crypto space
I think it's inevitable that BTC will be taken over by legacy finance organisations. They've got the cash to do it (or can produce the cash out of thin air... same end result).
HBD is something I really like, and I'm building up my stack slowly. But it has a problem; it is linked to the US Dollar. I believe that within 5 years, the US Dollar is in for a big adjustment as it's likely to stop being the only global reserve currency. The BRICS countries are de-dollarising as rapidly as they can, and trying to get assets out of US dollars after seeing the US freezing Russian reserves and now trying to permanently confiscate them. China is using CNY to trade where possible, and is dumping their US Treasury holdings.
So what I'd love to see HIVE doing is come up with an imaginative alternative. Ideas I've got, although I have no idea how they'd be coded include;
Can we still fight back?
These are great questions:
How would you respond to AI saying that HBD may not be considered a purely algorithmic stablecoin for it relies on collateral backing and market dynamics to achieve stability?
!BBH
!PIZZA
$PIZZA slices delivered:
@rzc24-nftbbg(4/5) tipped @taskmaster4450
HBD over Bitcoin as a medium of exchange? I reason with you @taskmaster4450. But scanning through the realities on ground it looks like comparing HBD with Bitcoin isn't workable in the nearest future.
Interesting. This makes the wheels in my brain turn.
In order to increase the use of HBD as a unit of exchange, we wold need to free ourselves from the prevailing notion that algorhythmic stable coins are dangerous and repell efforts by people like ELizabeth Warren to make them illegal in the US and abroad.
Next, they would need to be readily available on an exchange or dex that people lliving in large western markets have access to. BUt the only dex I know of with HBD is PanCAkeswap and access to the Bnance systen is tough in the US, so my knowlege of it is limited. I guess some hope may lie in the dex agregators and the metamask wallet dex , so I will see what it available there, but so far it has been limited to ETH and ETH based tokens.
What are your toughts on the availability of HBD to mass markets?