Federal Reserve Says Bitcoin Cannot Replace the US Dollar

The new chief of the San Francisco branch, of the privately held, Federal Reserve Bank has stated that Bitcoin cannot, and will not ever replace the US Dollar.  First of all, they are doing a fantastic job and understand their market and duties.  They cannot step into this job and say anything else and expect to keep it.

I get it, Bitcoin is printed without supposed backing, although it is backed by a lot of physical hardware assets and electricity.  Fiat currency, especially the US Dollar is printed and floated without any controls or restrictions.  Well, actually, the only control and restriction is that there is none.  The Federal Reserve prints at will and on demand, without limitation or backing of any sort, and they have long abandoned the gold standard.

The fact that the Federal Reserve would comment at all on this matter and mention Bitcoin, to me, is very telling that it is very much a possibility.  When you have this much money put into something that is being traded worldwide, every second, and such an ecosystem I think it is an excellent contender to the US Dollar and fiat currency in general.  Remember, fiat is backed by nothing as well and printed without any limit.  Most cryptocurrencies actually are limited in how many coins can be mined or minted at any rate.

Cryptocurrency is currently at a $421 Billion USD market cap and I think it won’t be long before it is in the trillion dollar range.  This is ultimately the worst nightmare for any central banker with so many competitors, of course your number one priority should be outlawing them and shutting them down.

On that end the Fed is right to do it and is doing their job well.  However, for people who don’t essentially control the fiat financial system, we would do well to root for cryptocurrency as an alternative system.  I think both systems can survive and work together, but if fiat pushes it too much, I think there may be a digital currency revolution that far surpassed the digital rights movement of the late 90s and early 2000s that caught the RIAA and MPAA by surprise.

Net Neutrality – USA’s Version of the GFW – Death of Freedom and Information

If you can understand the title you can probably guess where this article is going.  This is both my personal and professional opinion on a blindingly, obvious and simple issue that only benefits extremely large and powerful organizations and individuals.

What is really happening in a one-liner is the US is implementing it’s own Great Firewall Policy to rival and surpass China’s by far in terms of surveillance and censorship.

This is really a no-argument, argument the latest move in the US to get rid of Net Neutrality legally gives the ISPs the right to block, filter, throttle and censor content for any reason.  Obviously the primary and initial reasons will be for business and competitive reasons, this means if your ISP has an issue with Google you could have issues reaching Google services.  It could be if your healthcare provider is suing your ISP or vice versa that you’ll have trouble accessing their website.  It could be that your less than mainstream news sources are competing or disliked by management at your local ISP and you won’t be able to visit anymore.

Some of the first to be impacted may be services like Netflix, Hulu etc which most local cable or telco companies have lost a lot of revenue to.

But it can become so much more than this, access to certain banking portals, including cryptocurrency could be restricted.  In fact another huge implication is that if a US government agency orders an ISP to block access to content, both the government and ISP would be legally absolved.

Since the majority of internet traffic still transits the US and a huge number of services are hosted there, the impact is really the whole internet.

However, we can already see legal challenges on the way.  If they are successful then things will continue as normal but if they are not successful, the internet could enter a dark age.

In fact this should be interpreted more as the USA’s version of the Great Firewall masked as a good thing with ill-intentions that will harm virtually all people and businesses.

I don’t believe we will see massive changes overnight, the system will be implemented gradually to reduce the blowback.

With this insecurity there is also the chance that this could backfire and could create an alternative internet or secondary network that operates independently out of Asia, Europe, the Middle East and Latin America.  There is simply too much at stake to risk the USA Great Firewall from impacting business and freedom of access and information.  There is also the unintended risk that the USA could be isolating itself if other countries develop countermeasures.

Can VPN’s help get around this throttling?  Yes, and no as now the ISPs could legally block or throttle access to VPN providers’ websites, service or even the protocols themselves.  There is very little that can be done against these measures, it depends how the USA’s firewall is implemented though.  It may be possible to use a variety of protocols and proxy your traffic through hundreds of thousands of IPs collectively to try to avoid blockages and throttling, but it all depends on how aggressive their policies are.  Only the stakeholders who have unleashed this policy know what they really intend to achieve but it certainly isn’t of any benefit to us.

From my standpoint there is no benefit from me as an internet user or business person in having a censored, throttled and firewalled internet.

All speculation aside, it would be wise for both users and businesses to hedge and place their business IT assets overseas at least in backup or secondary mode.  this is the best way to insure against the risk that your business could be severely impacted or inaccessible due to the USA GFW 5.0 as I dub it.  Certainly Asia and Europe are locations that look attractive.  One of the top destinations in Asia to me would be Hong Kong’s internet, in fact I predict Hong Kong and other areas will see a surge in demand as a result of the current firewall policy in the US.