Bitcoin. Can we trust it as we trust the Dollar or the Euro or the Dong?

Joe viết ngày 07/09/2017


Giaosucan wrote an interesting article and a good technical overview about Bitcoin (Blockchain). If anyone does have interest on the Blockchain technology which is curiously misunderstood as a part of Bitcoin technology. No, it isn't. I'd recommend him/her to view this Blockchain-Youtube

explained by Shai Rubin in English.

There's no need to go into details that were already told and explained by Giaosucan. But the term "Bitcoin - Đồng tiền máu" is absolutely appropriate...
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However, I would like to discuss with you about Bitcoin in other perspective: The political and economical perspective.

Politically speaking Bitcoin is illegal. Illegal? Yes, because unlike money which bases on trust and is backed by an official authority that warrants and sets the value which is then accepted by everyone. Bitcoin is backed by nobody, its value is floating and it is not guaranteed by any trustworthy authority. And that makes Bitcoin becoming a speculative object, not money. Therefore Bitcoin is illegal if it comes to official commerce between nations and the States have to stand behind the deal as the Warrant for the transaction. Robert Shilly, an American Nobel Laureate, economist, said during an interview with

Quartz: What are the best examples now of irrational exuberance or speculative bubbles?

Shiller: The best example right now is bitcoin. And I think that has to do with the motivating quality of the bitcoin story. And I’ve seen it in my students at Yale. You start talking about bitcoin and they’re excited! And I think, what’s so exciting? You have to think like humanities people. What is this bitcoin story?

It starts with Satoshi Nakamoto—remember him? The mysterious figure who may or may not be real. He’s never been found. That has a nice mystery quality to it. And then he has this clever idea about encryption and blockchain and public ledgers, and somehow the idea is so powerful that governments can’t even stop it. You can’t regulate this. It kind of fits in with the angst of this time in history.

If you look at the third edition of Irrational Exuberance, I’m arguing that there’s a fundamental deep angst of our digitization and computers, that people wonder what their place is in this new world. What’s it going to be like in 10, 20, or 30 years, and will I have a job? Will I have anything?

Somehow bitcoin fits into that and it gives a sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst.

So I’m trying to deconstruct the bitcoin story. Big things happen if someone invents the right story and promulgates it.

(Source:Robert Shiller wrote the book on bubbles. He says “the best example right now is bitcoin.”)

Because of speculative danger that can pull down an established institution (e.g the bankruptcy of Lehman Brothers in 2008) and the State has to bail out, in order to rescue the savers, goverments around the world keep an eye on the "movement" of Bitcoin very closely. Further, every national goverment can only function if its citizens pay taxes (VAT, Income, sales, etc.) so that it could finance the services to them (e.g. the police workforce, schools, etc.) Without such taxes every national goverment will become corrupt or crumbles down.

Bitcoin becomes the most dangerous newfangled mean that encourages or elicits tax-evaders. The rich could transfer a huge asset to any tax-heaven paradise (like the Bermuda) -anonymously, of course! While the poor (i.e. plain people) have to pay tax for every cent they earned. That could cause a dangerous unrest or public chaos. China is the first nation that forbids the IPO/ICO (Initial Public Offering/Initial Coin Offering) of Bitcoin.

The People’s Bank of China said on its website Monday that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said that those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors.

(Source: Bloomberg).

Besides that, the social aspect and the individual privacy play a crucial key role in every human society. A proverb says "Money makes people". Bill Gates is NOT Bill Gates if his fortune is not counted in US-Dollar, but in "Bitcoin", or Warren Buffett would be a poor man if he could only prove his fortune in Bitcoin. The reason is simple: The affordability (or availabilty) of real money.

Bitcoin is poorly (or not) accepted everywhere. When you were in a rural area where neither Internet, nor access to any Bitcoin-accepted institution was available you got lost. But you could buy a bite with some Dollars everywhere. Even in the mountanous region in Nord or Central Vietnam.

The last and the most important political aspect is the State Power. NO national goverment on this planet Earth voluntarily gives up its sole authority on the money. It monopolizes and circulates the volume of (printed) money. No one else. Not an army of anonymous Bitcoin computers or servers. Hence China did the first move to forbid Bitcoin. The US and the EU are not so blunt as China. But: very interestingly that both unusually hold back their "criticism" from Chinese move. They probably back China with this forbiddance...

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