The TikTok indicator is saying crypto is here to stay…
It was, astoundingly, less than a month ago, May 8th, 2021, that Ethereum reached an all time high of $4,169. That was two days after Dogecoin, full of Musk momentum, hit .69 cents, after starting the year around .10 cents. Bitcoin had peaked about a month earlier at $63,674 on April 12th.
As is so often seen in manias, bubbles and feeding frenzies, at the time you could not find a person in America who was not talking about crypto. The proverbial shoe-shine boy was now your cousin, your uncle even your grandmother and they were all bursting with FOMO after reading the articles, especially the ones about the Dogecoin millionaires, who had made fortunes starting with a tiny sum.
Now, many of those same people are seeing a typical reversal, correction, bear phase, whatever you want to call it, and they are just as convinced of crypto’s demise today as they were that it was a sure-thing less than a month ago.
The kids get it and are not backing down
Much like TikTok itself, the later arrivals to the huge phenomena that is Crypto are the old and out-of-touch, not the young and fast. Interestingly, an anecdotal survey of young and successful crypto “influencers” on TikTok and other social media are not shocked about the downturn. They get it.
Many have been learning about and actively involved with the crypto world for years. There is a real sense that the corrupt events that led to the financial crisis and near collapse in 2008 shaped their thinking and hardened their resolve to search for a better way. Crypto’s ideals and independent foundations have provided that in a real, tangible way, it seems.
While the mainstream of the media and the bulk of the financial establishment swing from an almost grudging respect to complete derision and rejection, it appears to be the underlying concepts and ideologies that present such a stark contrast in the perspective of up and coming generations.
While perhaps no less vulnerable to the excitement of 20,000 % gains and other sensational enticements, there is a somewhat surprising depth and resolve that is demonstrated in a level headed and clear thinking allegiance to the reasons crypto was created in the first place.
The outlandish price gains (and drops) are only window dressing
At the core of the question of crypto’s eventual widespread adoption and long term success lies a simple truth: fiat currencies and the governments that print them are a big problem for the world’s future. And, naturally, the new generations of the future will be those that are most affected.
What Elon Musk recently called “The true battle… between fiat & crypto” is one that Gen-Z appear to understand in ways that 100-year-old billionaires like Warren Buffet and his side-kick Charlie Munger do not. Or maybe they just side with the financial establishment they helped build, to the bitter end.
For any reading this that also “get it”, it would be wise to understand that, even at this early phase in the future of “the true battle” there is an army rising. It is not one of suicidal fossil fuels and battlefield tanks but one of ideology and belief in the possibility of a better way.
The army that will stand up for the survival and continued development of cryptocurrencies and blockchain and “DeFi” are not a few random conscripts, they are the generations of the future and they have chosen a side.
For that reason, all signs point to an unlikely permanent collapse of cryptocurrencies and an impossibility of banning or stopping them. It is already too late to prevent their eventual rise.
If you are stuck on the word ‘fiat’ this post can help you (everyone else too)
In a single, 14 word reply to a follower (@TheRealShifo) that asked “Yo Elon what do you think about the peeps who are angry at you because of crypto?” He gave a simple answer that is the often unmentioned, yet most important, question regarding crypto vs. fiat, government issued, currency such as the US dollar.
Looking around during the ongoing frenzy surrounding crypto and digital finance you’ll see countless ‘news” stories and blog posts comparing, or pretending to compare cryptocurrencies, especially the two biggest Bitcoin and Ethereum (as coin sometimes referred to as “Ether”) and they virtually always quote the “price” fluctuations of those coins as a certain number of dollars and cents.
Interestingly I have yet to see any of these “comparisons” use the reverse valuation method, such as, “the US dollar is currently worth .00002703 Bitcoin. Can you imagine everything using that as a standard – CNBC quoting stock prices in Bitcoin, your house is “worth” 32 Bitcoins (if you’re in California, for example).
The reason this comes off sounding strange and ridiculous is that all communication related to the US dollar, which has been a fiat currency since abandoning any “backing” (such as gold) and continuing on by decree (or fiat) of the government with no backing other than than decree, also carries a decree (tacit) not to undermine it in public.
So when Elon says:
“The true battle is between fiat & crypto. On balance, I support the latter.”
The true battle is between fiat & crypto. On balance, I support the latter.
Simple and straightforward and yet intentionally shrouded in mystery
Musk is directly comparing crypto, generally, and fiat currencies around the world that “float” against each other. And by inference, doing so in terms of the difference between a fiat currency like the US Dollar and a crypto currency, like Bitcoin.
A fiat currency is money that is not backed by a physical commodity like gold, but instead backed by the government that issued it. Most modern currencies, such as the U.S. dollar, euro, pound and yen, are fiat money.
from Wikipedia
The term fiat derives from the Latin word fiat, meaning “let it be done” used in the sense of an order, decree or resolution.
— common Definition
The fact that Bitcoin was created as a digital alternative to fiat money stands at the forefront of that point. The fact that it was designed precisely to counter the drawbacks and dangers of a system based on fiat paper money (or digital ledgers of those paper dollars such as your bank balance or any method to keep track of how many “imaginary” paper dollars you “have”) is exactly the real issue at hand.
photo credit: twitter
It’s no secret that many attack those goals and intentions superficially and dismiss the entire discussion with a wave of the hand. They willfully use the complexity of the cryptographic solutions, at the heart of cryptocurrency, as a way to gloss over the real and substantive problems being targeted.
They prey on the ignorance of the majority to try and discount out of hand any value at all for the movement and the various products.
Opening up the door to this exact exchange and characterizing it as a “battle” in one fowl swoop clarifies and simplifies the real issues and the real reason for the existence, and according to many, including Elon Musk, the need for monetary “reform” or change via a shift toward crypto.
Opening up the door to this exact exchange and characterizing it as a “battle” in one fowl-swoop clarifies and simplifies the real issues and the real reason for the existence of, and the need for, monetary “reform” or change via a shift toward crypto.
D.L.
The “price” of Bitcoin or any other crypto currency on any given day has almost nothing whatsoever to do with that debate.
Speculation abounds but not just in Crypto
The “price” is a function of, mostly, speculation and scarcity, due, in the case of Bitcoin to the mining cap, or at least a perceived scarcity. And additionally the various perceived advantages of crypto such as privacy, decentralization, use of block chain systems, etc.
But the price is like the smoke above the battlefield, not the reason for the battle or any indicator who is winning or who is on the side of might or right.
Two major questions that arise from this tweet and the potential shift toward a clearer and simpler dialogue on crypto are the following:
Is crypto generally, and Bitcoin / Ether more specifically established and entrenched enough to withstand the coming backlash from governments that feel threatened and other status quo institutions that will do whatever it takes to discourage or even stamp out crypto usage?
Will the very battle itself, that Elon Musk says is the current “true” battle, bring even more attention to the weaknesses and problems with the current fiat money system and thereby increase, perhaps inadvertently yet massively, the size of the battle and its stakes?
Alternative systems of trade have been tolerated in the US for some time now. How are those air miles doing? What about the chips and points for perks you got at the Indian Casino? Is it too late to outlaw all crypto without causing a revolution in the streets?
The other side of the (clipped) coin
It is truly surprising to see how little is to be found in the media about the deeper reasons for the rise of crypto. How it sometimes seems like direct criticism of fiat currency is almost taboo.
Naturally any internet search will find many “rabbit hole” sources for all kinds of information critical of the current monetary system, the same system the near total collapse of which in 2008 inspired the creation of bitcoin.
It appears that Elon Musk is emphasizing, in a subdued manner, exactly the way that the nonsense-furor over huge price gains or declines is completely missing the actual point. The “true battle”.
Many stories in the media and millions of private comments are currently following a kind of convoluted logic – first the popularity of crypto (which is linked to the unpopularity of the very messed up fiat system) artificially and massively increases prices in many crypto assets.
This “bubble”, a typical outcome of human herding behavior in financial markets, inevitably bursts or sees large setbacks. Then the coin or crypto system itself is blamed for the human stupidity and greed that caused the distortions of price, just like happened in the dot-com bubble and the 2007 housing bubble and subsequent crash.
The difference is that the crypto bubble, in an interesting way, is in reality due to a surge in skepticism toward fiat currencies, a boom in the prevalence of mistrust toward governments and a combination of fear and greed that is growing, not dissipating.
Although many have rightly criticized Elon Musk’s tweets and odd Saturday Night Live appearance, and there is a kind of mini-backlash (growing?) against all things Musk, in this case it is a healthy and wise tweet that we have shown above.
Reframing, or more aptly refocusing the discussion away from prices and speculative profits and back to the real reasons that cryptos were initially created and why it has gained such massive support is a welcome shift. That this reframing comes from the likes of Musk himself, is fitting and who better to put forth a message to simplify and clarify the nature of the real “battle” at hand.
The following video has some interesting data and arguments for, and mainly against, the fiat regime under which we have lived for most of the last century. Although, in a sense, a kind of advertisement for Gold and Silver, the overview is nevertheless accurate and does not exaggerate the dangers and issues that revolve around the fiat system.
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