The title of this post is a hat tip to Jim Rickards, author of the best selling book "Currency Wars". It seems the battle over currencies is moving into the modern world of cryptocurrencies as well. Here is our article on that.
I am part of the generation often called the Baby Boomers.
We are heading into our retirement years now in large numbers. Baby Boomers for
the most part are not familiar with concepts like Bitcoins and
cryptocurrencies. They have heard these terms, but it all sounds kind of
“crypto” to them.
While there are exceptions for sure, the new technologies
driving Bitcoin and other new proposed currencies are more appealing to the
younger generations. They were raised in the smart phone era so using a Bitcoin
seems more natural to them. And it is clear that the movement towards Bitcoin
and other digital currencies has a strong appeal to a libertarian mindset.
There is a growing concern about centralization of power and a desire to seek
“decentralized” solutions to problems.
All this seems to lead to an inevitable culture clash
between the old guard financial establishment and this new and growing movement
away from the existing financial power structure.
We are still in the early stages of this evolving movement.
Most people still don’t think of a Bitcoin when doing their financial planning.
Baby Boomers have grown up with stocks, bonds, mutual funds, annuities and
other establishment approved savings instruments. If they have concerns about
the current financial system, they are comfortable with holding some tangible
assets like gold, silver, diamonds, or even art works for the well heeled. This
is how they diversify “outside the system”.
This means there is a tendency for most people to dismiss the idea of
Bitcoin or other cryptocurrencies as a passing fad. Something that is popular today, but won’t last.
That may be a mistake if you dig beyond the surface and take
a look at the battles going on in the cryptocurrency arena. Baby Boomers may
not understand much about cryptocurrencies, but they do understand war. They
have seen plenty of wars in their lifetime. They know that wars are not fought
over things that don’t matter. And recent news
events suggest we may have some cryptocurrency wars going on right
now.
Bitcoin is the biggest and most well known cryptocurrency.
It has become the symbol of the movement to challenge the paradigm of the old
guard financial system. Apparently, the old guard financial system has
noticed. It appears they are not excited
about a system that exists outside their sphere of control.
While they have not moved to prevent Bitcoin from operating
by challenging its legality, it seems like in the last few weeks they are
ramping up an effort to marginalize it in the eyes of the public. To keep it in
its place so to speak. If you follow the news you notice that all this seems to
have started after some comments made by Jamie Dimon (JPMorgan) and Treasury Secretary Jack Lew to CNBC. Secretary Lew was
quoted as saying he and Jamie Dimon “share incredulity” over Bitcoin. Dimon was
quoted as saying that when governments start regulating Bitcoin “that will
probably be the end of them”
Those sound like fighting words to me. They sound like
someone who thinks Bitcoin is just a passing fad and won’t last. But wait a
minute. If that is true why would JP Morgan be so interested in filing a patent
for a cryptocurrency of their own? This article in The Telegraph describes how JP Morgan filed a patent for “an
electronic currency with many similarities to Bitcoin”. They even provide a direct link to the patent filing itself.
Interesting.
I wonder whatever
happened to that patent? Accordingto M-CAM (a sight that reviews the status of patent applications), it
has been rejected. In their review linked above they state,
“However, Mr. Patel
might well have rejected the claims because of the ‘On Sale Bar’ rule under 35
U.S.C. Section 102(b), meaning that if the invention has been on sale for
over a year then the invention is no longer patentable. Under the ‘On Sale
Bar’ rule, the application could be invalid because it closely mirrors
Bitcoin with features such as making free and anonymous electronic payments
and Bitcoin has been in circulation since 2009.”
Hmmm. The
patent may have been rejected because “it closely mirrors Bitcoin”. If that is
the case, JP Morgan couldn’t be happy about that. It might even lead them to
put out a not very complimentary public report as noted here in Entreprenuer. It quotes the
report as calling Bitcoin “incredibly illiquid” and “extremely volatile”. But it doesn’t stop there. They add this
quote:
"At the risk of sounding like a Luddite, Bitcoin
looks like an innovation worth limiting exposure to," Normand says in the
report. "As a medium of exchange, unit of account and store of value,
it is vastly inferior to fiat currencies."
Vastly inferior to fiat currencies? Those
sound like fighting words once again.
I guess they mean unless it is a
cryptocurrency that is establishment approved. After all, they filed a patent to have
one, right?
And lately the news is filled with stories about denial of service attacks on Bitcoin exchanges. Someone out there seems to view this as a war.
And lately the news is filled with stories about denial of service attacks on Bitcoin exchanges. Someone out there seems to view this as a war.
What does all this tell us? It tells
us that Bitcoin (and the concept of cryptocurrencies) must matter more than
many of us old Baby Boomers would realize. People don’t fight wars over things
that don’t matter. Someone obviously thinks there is a
future for cryptocurrencies worth fighting for.
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