Last week, the Financial Times produced a largely scathing A-Z of crypto, filled with inaccuracies and myths. In response, here is our very own A-Z of crypto (and banking), where we set the record straight.
A – Adoption
You can spend Bitcoin and other cryptocurrencies at Starbucks, Whole Foods, Nordstrom, Xbox online store, and more. Businesses can even pay their taxes in Bitcoin in some American states. Yes you can spend fiat in more places, but Bitcoin is 10 years old, whereas the dollar is 234, so it’s had a bit of a head start.
B – Banks
You know, the ones whose greed caused the 2008 financial crash. The 2008 collapse is thought to have been the reason behind the timing of Bitcoin’s launch, although of course it had been in the works for some time prior to this.
C – Cash
Bits of paper and metal discs, soon to be redundant as a means of transacting money. It may have been king once, but not any more. Times are moving on, and crypto will one day be just as easy to pay with as fiat, and will cost retailers less to accept.
D – Dinosaurs
Munger, Buffett, Gates, Cœuré – these dinosaurs are all successful men, but they either can’t see or refuse to see the benefits, or the ideology, behind owning your own money away from banks. Instead they trot out ever more excessive criticisms about cryptocurrency, but at this point barely anyone is listening anymore. And we all know what happened to the dinosaurs…
E – Energy Consumption
The world’s press loves nothing more than to bemoan Bitcoin’s energy consumption, saying Bitcoin mining uses as much energy as a small country and for no good reason. In fact, almost 80% of Bitcoin mining involves renewable energy, with the largest mining province, Sechaun in China, using 90% renewable energy. Meanwhile, financial regulators and banks have been told to “raise the bar” and reform to avoid playing a big part in climate change.
F – FOMO
What helped Bitcoin get from $10k to $20k and alts to go 100x and more in 2017. Fear of missing out was perpetuated by the media, who then slammed the markets for buying into the hype they had created. Bad crypto, bad.
G – Gold Standard
The gold standard was used by Britain and the USA as a way of backing the value of banknotes and to avoid the whims of governments who simply wanted to print money. Britain hasn’t used the gold standard since 1933 and the USA since 1971, meaning that a British or American government-issued banknote is backed up by the faith of the populus in what the government tells them its worth rather than anything tangible. Many influential financial experts have issues with this form of currency, as it can inflate exponentially or collapse entirely (Zimbabwe, Venezuela) if not properly managed.
H – Hypothecation
The way that Wall Street plans to “solve Bitcoin’s scarcity problem”. Hypothecation, and rehypothecation, involves a bank receiving an asset as collateral for a loan it has given out. It then uses this asset as collateral to obtain a loan itself, passing the asset on and on down the chain. If one counterparty defaults, or the holder of the asset loses it somehow (e.g. a hack), the entire chain collapses. Hypothecation of gold has led to lost funds and million-dollar lawsuits in the past. Joy.
I – I’m Still Standing
Bitcoin’s song if it were to do karaoke.
J – Job
What we are told we need by the educational system, and what many in the crypto space are trying to free themselves from. This goes against the established life route and is therefore frowned upon, meaning that those who spend their days researching and trading cryptocurrencies and make millions are just ‘lucky’.
K – Kiyosaki, Robert
The best selling author of many financial books has said that Bitcoin will one day replace “fake money”. His best known book ‘Rich Dad Poor Dad’, which has sold over 32 million copies, bemoaned the removal of the dollar from the gold standard, and thinks that Bitcoin is a “wonderful idea”.
L – Laundering
Money laundering is something that cryptocurrency is criticized for enabling. Global money laundering is estimated to involve 2-5% of the world’s GDP ($800 billion – $2 trillion), and it’s a fair bet that this was going on before cryptocurrency came about. Despite the headlines, money launderers, drug dealers, and terrorists still primarily prefer one kind of currency – the U.S. dollar.
M – Mainstream media
Mainstream media, many of whom are funded by the kind of institutions and financial houses that Bitcoin wants to take down, have been negative on cryptocurrencies since their inception, and have famously predicted Bitcoin’s death on hundreds of occasions. They often take any chance they can to bash the ecosystem, both when the market is going up and when it’s going down.
Like what you read so far? Check out Part 2 of our BitStarz News Crypto (and Banking) A-Z right now!