A three-pronged assault on cryptos… The “evil spawn” of the financial crisis… Financial elites want to knife bitcoin in the back… In the mailbag – “Oh Cannabis, our home and native land!”…
As we told you yesterday, bitcoin just crashed to a 13-month low.
This follows a bout of heavy selling pressure that started last Wednesday and has wiped $33 billion off bitcoin’s market value.
This isn’t just a concern for bitcoin investors. (For more on what to do if you hold bitcoin, catch up here.)
It’s also causing thousands of bitcoin “miners” – the folks who use high-powered computers to verify the transactions on the network in exchange for newly minted bitcoin – to shut down their operations.
With prices crashing, it’s no longer profitable for many of these folks to expend so much costly computing power (which involves sky-high energy bills) to keep on mining.
And as you’ll learn today, something more sinister may be weighing on bitcoin than the explanations that have been offered up in the mainstream press.
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Most mainstream reporters don’t have the first clue about cryptocurrencies or how they work.
But something the press has picked up on is the “hard fork” in the fourth-largest crypto by market value, Bitcoin Cash.
As we told you last week right after the crypto tumble began, a hard fork is when the programmers can’t agree on which direction the project should go.
So it splits into two projects.
And in the case of Bitcoin Cash, Craig Wright – one of the biggest holders of the bitcoin – has been threatening to dump all his bitcoin to support the Bitcoin Cash hard fork.
In particular, increased scrutiny of crypto fund-raising projects – or initial coin offerings (ICOs) – by U.S. regulators.
So far, the U.S. Securities and Exchange Commission (SEC) has allowed ICOs to go ahead more or less unregulated, unless there’s been cause to believe some form of fraud was afoot.
That’s because it didn’t deem digital tokens to be “securities,” which have traditionally fallen into two categories – stocks and bonds.
But last week, the SEC said it had settled charges against two companies that issued digital tokens during an ICO because they didn’t first “register them pursuant to the federal securities law.”
And there are fears that this could be just the start of a wider clampdown by regulators.
It’s what Bill Bonner Letter coauthor Dan Denning calls the “assassination of bitcoin” by global financial elites.
Here’s Dan with more…
Cryptos have proven there is an appetite for a cashless digital payment system AND purely digital money. What central bankers and the world’s financial elite have figured out is that bitcoin stands in the way of this new world financial order.
It’s an order where centrally controlled digital money promises complete political power over the lives and choices of billions of people. They’re making their move to establish that order now.
The first attack came last Tuesday, in the form of a post on Bank of England’s blog.
John Lewis, a researcher at the central bank, claimed bitcoin was plagued by seven fatal flaws.
These include sluggish transaction times and a hoarding mentality among bitcoin holders that crimp its use as a payments option.
A day later, Christine Lagarde, the head of the International Monetary Fund (IMF), gave a speech in Singapore.
It was titled “Winds of Change: The Case for New Digital Currency.” And it was a bombshell…
Citing “new and evolving requirements for money,” Lagarde asked if central banks should “issue a new digital form of money.”
In other words, a fiat currency in crypto form.
This is already happening. More than one in three central banks around the world are already seriously considering issuing a crypto replacement for their fiat currencies – including the central banks of Canada, China, Sweden, and Uruguay.
These fiat-crypto hybrids won’t be decentralized like bitcoin. Central banks will still be able to issue new fiat cryptocurrencies at will. But they will do away with the need to issue physical banknotes.
As Lagarde told the audience in Singapore, she’s on board with this radical new idea…
I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.
Speaking at a conference in Switzerland, Benoȋt Cœuré – a French economist who sits on the board of the European Central Bank – called bitcoin the “evil spawn” of the 2008 global financial crisis.
Cœuré delivered his broadside against bitcoin a day after Lagarde floated the idea of a state-run alternative to bitcoin in Singapore. And he didn’t mince his words…
[B]itcoin was an extremely clever idea. Sadly, not every clever idea is a good idea. The opportunities of the blockchain are many, but the problems of Bitcoin are also plentiful. I believe that Agustín Carstens summed its manifold problems up well when he said that Bitcoin is “a combination of a bubble, a Ponzi scheme and an environmental disaster.”
He also echoed Lagarde’s call for a central bank-issued crypto-fiat hybrid.
It’s what he described in typical, central banker jargon as a “widely available, consumer-facing payment instrument targeted at retail transactions,” or “general purpose central bank digital currency.”
As Dan says, it’s part of a war that’s raging for control of digital money.
Cœuré is right: Bitcoin was a response to the 2008 meltdown.
It’s no coincidence that the bitcoin white paper was published in October 2008 – one month after the collapse Lehman Brothers nearly brought down the banking system.
As Cœuré pointed out, bitcoin’s pseudonymous creator, Satoshi Nakamoto, etched an important clue to cryptocurrency’s origins in the bitcoin code.
Embedded in the first group of transaction records on the bitcoin blockchain – the so-called “genesis block” – was a Times of London headline from January 2009 about Britain’s bailout of its banks.
It reads: “Chancellor on brink of second bailout for banks” (a reference to the Chancellor of the Exchequer, Britain’s equivalent of the Secretary of the Treasury in the U.S.).
After all, why would anyone want to hold fiat money when the banks that facilitate its payments acted so recklessly… and when central bankers are systematically destroying its buying power by printing it at will?
Bitcoin solves the problem of having to rely on corrupt institutions… and Cœuré knows it.
Central bankers and their backers at the IMF want to keep control of the money system. And bitcoin and other private, decentralized currencies threaten to take that control away from them. Dan again…
Central banks aim to capitalize on the budding popularity of cryptos and then harness it for their own ends. Cryptos and bitcoin threaten that control. So they have to go.
Bitcoin gets knifed in the back by the SEC, central banks, and the IMF. And we get a digital money system where cash disappears… and the authorities have full transparency over our monetary affairs. Our worst nightmare, in other words.
Of course, just because central banks want to supplant cryptos with their own fiat-crypto hybrids… doesn’t mean that bitcoin and other private cryptos are going away.
As we’ll show you next week… the more control governments and their central banks try to seize over the financial system, the more popular private, decentralized cryptocurrencies such as bitcoin will become.
As regular readers know, there’s been plenty of controversy over the pot legalization debate in the mailbag this week.
And on Monday, reader Michael M. said, “Just let people do what they want. If that’s self-destruction, that’s THEIR CHOICE.”
That drew these responses from your fellow readers…
From a basic philosophical standpoint I agree with Michael. He should in fact be free to huff all the paint he wants.
I actually 100% support marijuana legalization. Unfortunately what happens, is that there are plenty of Michaels out there that choose to huff paint… and then end up in my local Emergency Room… not only clogging up the hospital system unnecessarily, but also draining the financial resources available to treat others who are sick by no fault of their own.
How do we deal with this dilemma of allowing people to “choose what goes into their bodies” and yet hold harmless the rest of society for the repercussions of their choices? I do not have an answer, I only bring it up as it is a very real issue.
– Vince W.
Michael is on the right track… With any freedom comes responsibility. Lots of people chant “freedom” but very few practice “responsibility” with it. Most people would rather let government, religion, and celebrities white wash individual responsibility for their actions. When do we take responsibility for our actions and turn those actions into something that will make our lives better? That’s what it takes! Period!
– Delton G.
I do not like the government telling me what to do in every part of my life. I do not have any problems with people expressing their free will to partake in mind-altering drugs.
But I have a big problem with those that do partake and endanger my life, my family’s lives, or other families’ lives on the highway or by other means. Consequently I would not endorse the legalization of any more mind-altering drugs.
Alcohol is bad enough and has created enormous suffering and family breakdown. (Not to mention the cost of rehabilitation for all the various destructive habits mankind has developed.)
– Charlie S.
I read the comment by Michael, but he does not consider the responsibility that goes along with doing whatever you want to yourself.
If you harm others while doing drugs is that okay? To reverse the situation, if I got high on something and seriously injured Michael M., is he still going to stick with his original statement of “just let people do what they want”?
That fellow Michael is a perfect example of someone who cares not for anyone else but himself. He should go find an island where few people live and get as high as he wants to when he wants to. Freedom of choice. But when you live amongst each other in a crowded environment there are rules that need to be in place so a society can function well. It stands to reason. Folks on drugs continuously tend to lose sight of reason.
– Tim B.
Oh Cannabis, our home and native land! In our wisdom, Canada has made cannabis legal to consume. And immediately the Ontario government has published and advertised the penalties for driving under the influence of pot. Go figure.
We claim we don’t have the government telling us how to run our lives, but we need to change the law – or at least to re-emphasize the rules. A society in conflict!
– Peter B.
Should we allow the government to tell us what we can and can’t put in our own bodies? Would the world be a better place if we went back to alcohol prohibition, too?
Send your thoughts and ideas to [email protected]. We read every email you send, whether we publish them or not.
November 21, 2018
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