"Fiat" and the Concept of Cryptocurrency

Fiat (fee-aht): noun

1. An arbitrary order, sanction or decree, esp. by person(s) that have the absolute authority to enforce it.
2. Any command, decision or act of will that makes significant things occur (main literary root ).
3. Descriptor term for promissory currency declared as legal tender by a government yet not backed by physical commodities (example: paper currency).

Wow. Makes the very idea of fiat currency (esp. as used in relationship to modern economics) seem like extortion dictated from some secretive authoritarian rule. The perfect scam, the perfect "take." On paper it's totally legit and with enough of the right thumbs up...well, then it becomes accepted as an essential component of modern economic theory. Like it or not, it is what it is. And the dollar? The dollar is most assuredly fiat currency. Ordered, sanctioned and decreed by folks that absolutely enforce its use for all debts public and private. That is fact.

So, what is cryptocurrency? Where did it come from? (in simple terms, please)...Okay, here's the 1, 2, 3. The Bitcoin Whitepaper is released in 2008...although the idea of digital cryptocurrency can be traced back to the late 1970s. One of the most notable, first ever Bitcoin transactions was on July 12, 2010. 10,000 Bitcoin (BTC) was used to purchase two pizzas. And, at the recent rate of  $1000.00 USD per BTC those were $5,000,000.00 dollar pizzas!!! Yes, two five million dollar pizzas!!! Five days later Mt. Gox went online (the first exchange). BTC are obtained, stored in personal digital "wallets" and are time-stamped in a way that also includes every single previous stamp. They are bought and traded through an exchange...like Mt. Gox...in, you guessed it, verified blockchains of transactions. A BTC Wallet makes the exchange/transaction request(s) and verifies before entering a blockchain. The block is built and then is mined, or verified by the community. Finally, all of the verified block's BTC transactions are allowed to fulfill...done deal. It takes about 10 minutes. Whew. We did all that without discussing public and private-key SHA-256 encryption, cryptographic nonce, Merkle Trees, nodes or proof-of-work verification using an exponent of the number of zero bits to verify through algorithmic execution of a single hash. Whew, again...

In reality, BTC works very similar to how debit cards are used through the internet and card terminals to purchase goods using money stored in a bank account. Banking System=Mt. Gox. Bank's account/debit card numbers=BTC Wallets. Request is made electronically from one bank's wallet to pay into specific account/wallet belonging to that bank. Everything is verified and USD are transferred...But it's really "digital dollars" that are exchanged. So, yes, there is encryption and verification on every step. Really, really similar.

In essence, the almighty fiat dollar is already a cryptocurrency. The biggest difference being that the new BTC does not need the current banking system or the dollar at all. That's the difference that got the attention of  most governments worldwide. The new realm of cryptocurrency has created a platform that exposes fiat currency for what it really is...play money with no intrinsic value. Scraps from the top of the table that trickle down to the floor...that's what the masses are forced to eek an existence from. The time has come to pull seats for the meek to the table; seats to be filled with the tired, the poor, the huddled masses of the world yearning to breathe free...

Wall Street is Already Investing Hundreds of Millions of Dollars in Digital Currencies.

Well, apparently the exact same cretins that have repeatedly plunged the United States of America into economic destruction  now have digital currency in their cross-hairs. Wall Street insiders are beginning to sink significant amounts of capital into this new, digital gold. Almost one hundred million dollars has already been invested, albeit indirectly, utilizing just one firm. SecondMarket, an online firm mainly dealing with private stocks, recently formed an online trust that invests 100% solely in Bitcoin…the Bitcoin Investment Trust. Basically, the "trust" seems to allow "accredited" clients to buy, sell and trade the cryptocurrency without being tied to any actual Bitcoin wallet. And just for the record, the term "accredited" is defined as having over a million dollars worth of managed investments (besides the value of their primary real estate, of course)…in other words, a Wall Street "Good Old Boy." Remember the Winklevoss Bitcoin Trust concept? There's a novel idea: the Winklevoss twins and the word trust...go figure? There has also been recent foray into using Bitcoin as IRA investments via the Entrust Group, Pensco Trust, and a few others…just a toe or two to test the water for now. It's only a matter of time before those same digital assets, including altcoins like Litecoin and Peercoin, become an integral part of the investment platform for every Wall Street bank, trust, group, firm and fund. Look out. There's blood in the water and the sharks are circling. I think it would be a safe bet to realize that if Wall Street and Congress keep winking and nodding then the same underhanded scheming will apply in the new digital realm that also applies to precious metals and fiat currency…Squeeze short term gains using whatever means necessary and at the same time passing enormous debts of long term consequences on to people who haven't even been born yet. Perhaps it's time for another way...

Local and Alternative Currency - Local Cash for Local Commerce

Phillymag.com just published a great article about alternative and local currencies. Certain localities have come up with many unique ideas. The article states...

You’ve got to love American resourcefulness. If the economy fails, if the dollar bottoms out, what do we do? Hey! Let’s make our own money!

It gives a few examples of local cash being used in new, novel ways...

That’s what more than a few municipalities have been doing recently. And it makes sense: If you can’t trust in God — or the U.S. government, anyway — you can still trust in, say, Collingswood cash. (Incidentally, Standard & Poor’s recent rating of AA- is the highest in the borough’s history, wiping out the Moody’s trash talk of 2011.)
Many towns have enacted initiatives to do their own brand of economic stimulus via local currencies meant to keep money in their own towns. Some towns give incentives to use their own currency instead of dollars: For six years now, Collingswood has one Saturday morning a year on which it gives $20 for every $50 worth of Colls cash you buy — a ridiculous incentive at a 40 percent return on the dollar. Haddonfield sells its own cash all year and offers 20 percent off as a pre-holiday promotion.
Several other communities have developed systems that combine the idea of time-share with local currency, with Ithaca Hours (founded by now-Philadelphian Paul Glover) being the most well-known and successful, inspiring other areas, such as the Lehigh Valley, to do the same. People trade goods and services for Ithaca Hours or Ardmore’s Downtown Dollars.

The overall value of fiat currency is being weakened to the point that these new approaches to money were simply inevitable...eventually it will include futures, options, bonds and, of course, stock. Local citizens having the ability to globally or locally issue bonds, create and sell stock, futures and options is simply the next logical step in the chain. Local business people wielding the weapons of Wall Street without the need of any central authority (including banks), or in other words, truly peer-to-peer. It's possible using Confidence Chains. Futures contacts and options, once created, are viewed as assets and can thus be marketed and sold. Lots of possibilities on the horizon. Especially taking back the financial power from those who have squandered it.

Fundamentals of Alternative Currencies and Value Measurement - (Thomas Greco)

Fundamentals of Alternative Currencies and Value Measurement. This article by Thomas Greco really drives home the need to split from the dollar not only as a medium of exchange but also as a value standard if an local currency system is to really have a positive impact on communities. This can happen when alternative currency flows directly into the community “monetizes” goods and services with real, assignable standards of value.

This is what I mean when I talk about liberating the exchange process and restoring (some part of) the “credit commons” and bringing it under local control. In this way, the community gains a measure of independence from the supply of official money (dollars) and the policies and decisions of the central bank (which in the US is the Federal Reserve) and the banking cartel. That is the primary mission that needs to be accomplished if we are to transcend the destructive effects of the global monetary and banking regime, devolve power to the local level, and build sustainable, economic democracy.

Get more by participating in our forums on alternative currencies…

A Peer-To-Peer Options and Futures Exchange Using Confidence Chains

Imagine, if you will, that the average world citizen could use the economic mechanisms of corporate conglomerates. Visualize a marketplace where merchants and farmers could take part in a locally maintained futures and options exchange. How about a real peer-to-peer bond auction system? What if John Q. Public could issue stock in his fledgeling company?

Sounds like a great idea. And, it sounds like a financial structure that could completely circumvent the need to include banks on any level. Here's a list of four whitepapers on just such a system; a system based on Confidence Chains (explained in the first whitepaper) which make the system truly peer-to-peer and not dependent upon a central authority, like a bank or digital currency exchange.

Check the whitepapers out here:

1 - ORIGINAL WHITEPAPER

2 - DISTRIBUTED EXCHANGE

3 - P2P BOND AUCTION

4 - P2P FUTURES AND OPTIONS -New-

Also, feel free to comment on the Whitepaper Forum

China Bans Bitcoin

China's central bank banned the use of Bitcoin by all financial institutions. Comment thread on altchain.org about China's Ban on Bitcoin...

Police Chief to be Paid in Bitcoin

Vicco, Kentucky Police Chief to be paid in Bitcoin link to my reddit post...

Check it out on Reddit also!!!

It seems as if the nice folks the make those wonderful toolbar/browser hijackers are now placing mining app malware in browsers...I posted about here - Malware Installing Bitcoin Mining Software in Browsers

Here's the link to my latest post about the bubble failing to burst as expected on Bitcoin.
Bitcoin Bubble Not Bursting - NASDAQ

Bitcoin Reaches the Price of Gold

Here's a link to my post on altchain.org about BTC and the price of gold.

And, here we are front page for a simple search of "cryptofinance" and "altchain."

It's been a wild week, that's for sure. I have added Redditt, Digg, etc. to try and stir up the nest so to speak. Been having a blast!!! Don't forget to check out Tumblr also...

Links to My Posts About Cryptofinance and Digital Currencies Like Bitcoin on Altchain.org

 Here are a few of the posts in the Altchain.org Forums that I have posted recently.

The Future of Digital Currency and Exchanges
Muhammed Yunus - Super-Happiness and Making Money
Do Banks Create Money Out of Nothing - Thomas Greco
Nathaniel Popper - New York Times Article on Digital Currency
Underground Investor Blog About Digital Currency, Fiat Currency and Precious Metals
Confidence Chains Whitepaper Link

Cryptofinancial? Who Knew?

There are emerging cryptofinancial peer-to-peer asset exchange platforms known as digital or alternative currencies. I am at the beginning of my journey in this realm. I created this blog to chronicle the launch and continued development of Altchain.org, an open source peer-to-peer cryptofinancial infrastructure. The approach is a bit different than Bitcoin and other alt-chains. It is based on a new idea called confidence chains. Let's see where it takes me!!!