Bitcoin and blockchain are supposed to bring us all kinds of Freedoms. Freedom from banks, freedom from governments, freedom from taxes, freedom from corporations. The blockchain will set us free in a decentralized world of anonimity and power to the people. Unfortunately, this is a dream that is very unlikely to ever come true.
BLOCKCHAIN IS NOT ANONYMOUS
...and probably never truly will be. Anybody who tells you different has likely not done their research well enough. Bitcoin especially is 100% traceable and will forever remain traceable. Any criminal or shady transactions you make today, will be 100% traceable 20 years from now. While authorities worldwide are pretty oblivious about blockchain technology right now, you'd be sorely mistaken if you think they won't be analyzing the blockchains thoroughly in the future when they do figure it out. There are already companies offering blockchain analyses, and these will be in high demand by the Taxman in the future. Already the funds of hackers are being tracked and followed - most of those funds have not been withdrawn or used for this reason. It is likely these funds will remain 'tainted' and will be tracked continuously. Some coins offer privacy features, but it seems only Monero offers reasonably reliable privacy. Even then, you can rest assured that one day even Monero's encryption and methods can be cracked (for example by advances in AI technologies).
The very moment you attach your real life identity to any wallet that you own, you lose all your privacy protection. Essentially this means that if you signed up to Coinbase to buy your initial Bitcoin, your funds will forever be traceable to your personal name through Coinbase. It means that if you want to cash out and deposit any funds on the bank, your wallet will be linked to your bank account and thus your name. If you use an exchange, they have Know-Your-Customer. Even Shapeshifting your funds is no guarantee whatsoever. Anywhere you want to do something with your funds, you are linking your funds to your identity. It does not help to move your funds into another wallet before you spend it, as the transaction of you sending it to your other wallet is completely visible. What about your e-mail that is easily linked to your identity? or your IP address whenever you make a transaction? Only the most adept techno-geeks will be able to stay one step ahead, and will likely always have to be on guard and stay on top of their game in order to do so.
The future is not anonymous. The future is 100% transparant.
FREEDOM FROM BANKS AND GOVERNMENTS
For the above reason, you will not gain freedom from banks and governments. Tax authorities will have software to analyse the blockchain which will be able to see exactly where you spent your money and which identity is linked to your wallets. Your income will be easily visible and thus taxable. Truly anonymous blockchains like Monero run a significant risk of being outlawed - possibly all the way up to the point where any crypto transaction that even touches the Monero blockchain will be blacklisted from payment processors, and sending it to another person could even taint their wallet. In the future there may be legal bitcoins and illegal bitcoins.
Banks do not care, as long as they can amass more wealth. And we are creating so much wealth for them. Why would they even care? They'll just open payment portals for their customers when crypto does go mainstream. And it's going to be the banks that will make it go mainstream. And they are fine with that, because they will be making boatloads (yet again) in the entire process. It's their money people will be lending to buy crypto, it's their transaction costs they will be incurring.
THE FUTURE IS NOT AS DECENTRALIZED AS YOU THINK
If the economy truly switches to a digital one, so will this have an effect on the balance of power. Some people think this will bring freedom to the people, through a decentralized way. But as the Bitcoin network already proves, it is not nearly as decentralized as we'd like to see. Most of the hashing power comes from large factions and is often centralized in a few countries (notably China). The cryptoindustry is looking for solutions through PoS, nodes and whatnot, but it matters little. If it truly becomes a matter of power or control, 'they' will win out because they will always have more money than 'us'. If not, they will print more. You can fully expect regulations in the future, or perhaps in a sort of economic-warfare-model, it will make sense to spend billions of dollars to set up enough hashing power so you can control the network. It is very likely is happening already: Russia is setting up Bitcoin miners, and behind the scenes other parties are doing the same. If governments can spend trillions of dollars on missiles, they sure as hell can spend a few on server farms. You cannot win a monetary battle if their funds are unlimited and yours are not.
Even moreso, projects which aim to provide services such as decentralized webhosting or cloud storage, or even a completely decentralized internet, will not be very decentralized at all. You can expect most of the network's processing power to come from exactly the same mining facilities in China and other places where electricity is cheap. Cost-effectiveness will quickly make it impossible for the average person to even try to be profitable by participating, just like how Bitcoin mining is not cost-effective in many places today. The centralized-decentralized future is large mining corporations who control the network, and cryptofinancial investment funds which control the staking voting rights.
HERE ARE SOME HAPPY THOUGHTS
I know, it hurts. I have 'the dream' as well, and would love to see it come true. But let us remain realistic...
There are big advantages of blockchain though, and although it will not be revolutionairy like Che Guevara, it will be a revolutionairy like the internet was. The future holds transparency and openness, not just will your anonimity be at stake, but so is the government's and 'the man' and corporations. Blockchain offers accountability and transparancy and promotes honesty and truthfulness from top to bottom. It will fight corruption and fraud and make illegal activity even more difficult, which would help in fighting crime.
Technologically, in 15-30 years time the entire internet will be on the blockchain, and all blockchains will be linked together. You'll be able to spend your Airmiles on Warcraft-gold (or equivalent) and it will all be crypto and interchangeable and of varying value. Money is no longer one-sided, but some money offers features (like dividends) that other kinds of money does not. Because all the blockchains are linked, and all data is a form of digital money, most of the middlemen in the world are disappearing. Facebooks, Googles, Wikipedias, Amazons, Ebays, Alibabas, are all replaced by blockchain varieties of course. But there is much more. All property and assets will be digitized. You will be able to get a loan from 'someone' to buy a house, and shares of your house will be digitized into tokens, which will then be traded openly on the marketplace and go from owner to owner. Products will be digitized, but their parts also. You may think only middlemen such as shops will disappear, but I believe the impact will be much larger.
I envision a world where a 'designer'(could be some kid on the internet) shops around and custom picks each part and item from the factories of his choice. Through various blockchains the whole process in the factory is automated, which transfers the package to a shipping company's blockchain for assembly at another factory, and after assembly the blockchain will tell the item where to go, which container to be put into, which port to head for, it will tell FedEx to pick it up and deliver it at your door. I foresee the end of mass production consumerism and the beginning of an era where everything in the world is accessible and controllable through blockchain. It will be the internet, or internet of things, like it always should have been and how we always wanted it to be. It will create a truly new world, where anybody can create any concept and sell it to anybody peer-to-peer. Large corporations of today will need to significantly downsize, or switch to production or logistics entirely, in order to survive. Retail, existing consumer and industry brands, and such are going to be hit hard.
There has been a lot of talk over the years of the effect of automatisation on the job supply, and worries about jobs disappearing. Often these jobs are low-skilled jobs, but blockchain will instead be the automatisation of the corporation. For the first time it's not low wage workers that need to worry for their jobs, but it's CEO's and HR departments and administration departments that are going to be made obsolete by being replaced by blockchain variants.
THAT BEING SAID
With that being said, there is no need to panic or worry, unless you are into blockchain for ideological reasons. If you are interested because of the technology, or as an investors, you are still golden. Blockchain technology is set up to conquer the world as it evolves and scales to meet it's demands. It will be the Internet 3.0 for years to come, until we come up with an even better solution.
I have few followers and my ability to get reach people is limited, so if you like this post please consider Resteeming and/or upvoting, I appreciate it a lot!
I like to read a differentiated post in times of hype. Thank you! :) I'll follow you.
Not a Zcash fan, I take it? Me neither. Their oracle generation ceremony gives me the willies.
Anyway, I don't foresee Monero being crackable in a way that would hold up in court -- plausible deniability and all.
For the time being I agree, but in the future I would not rely on the anonymity of any immutable, permanent ledger. Advances in AI and Quantum computing pose a serious risk of being able to see through all the smoke and mirrors, and piece it all back together. I think it will require some kind of new technology that will not leave a permanent trail, in order for something to truly fade away.
By that time, we'll have made our getaways 😉
Any getaway away from digital money back to 'real' money will involve you giving up your identity in some way though. Wether it by bank account or other method that requires some form of identification 😞
There are Bitcoin ATMs, for example. That doesn't require identification.
great post
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I wish I had seen this post before. Now I can't vote on it and give you some well deserved rewards. Oh well! I'll give a symbolic vote :/
Wow I read the first paragraph and 100% on point!! I will read the rest on my way out of town
OK I ABSOLUTELY LOVE WHAT YOU SAID HERE!! I have been trying to explain blockchain technology to people for years and very few people grasp the concept and it's meaning.. Thank you for helping me explain yet another tutorial to an individual that we have help bring into the network@
Very Interesting post! You clearly make some points that we definitely need to come to terms with. A big part of the reason for these things that few people consider is the Paretto Principle, aka the 80/20 principle. It's a pervasive organizational principle that for some reason holds true for almost all human groups and activities. IE 20% of the people control 80% of the wealth and resources, 20% of hold 80% of the influence, etc.
Until there is something close to a universal focus that every human being gets his or her needs and requirements met without having to be be involved in a struggle to just survive (as is the case for billions of people at the moment), then this will never change in any significant way.
The great promise of blockchain to me is not, can I spend my money in such a way that no one knows about it, but rather how can we much more effectively organize society in ways that are equitable and non-punitive to everyone. We can see that as we remove inefficiencies and unecessary middle men, that enormous amounts of human energy and capital become available to be reallocated. One of the benefits of that would be of course, that individuals are dramatically less concerned about keeping what they have hidden, because levels of thievery will be universally decreased (though probably never full eliminated).
It comes down to this - do we want to redesign the world be one that is made of systems which are fundamentally built on values that are human/kind/creative/equitable or will we allow ourselves to be moved into a world that has as its core systems which are inhuman/cruel/desctructive/parasitic. I think now we are moving into the later, where as blockchain has the power to create the former. Perhaps still a little pie in the sky thinking, but we do have to think big and have real vision, because all life on earth, and the well being of all people is in jeopardy. No question about it.
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Thank you!