The First Sovereign Cryptocurrency

This is a historically significant event:

It seems like the tiny country is simply using their upcoming ICO to exploit the current crypto-hype bandwagon to try to save itself from economic and environmental crises. Maybe the novelty of it will attract some initial buyers, but without meaningful privacy features and no meaningful advantages over Bitcoin or Ethereum, it doesn’t seem like it will have much value.

Does anybody think this sovereign cryptocurrency will actually attract any significant number of buyers globally? Any other opinions on this?

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Thats interesting… Yeah this is funny… I would never have imagine this back in 2009 lol… How far all of this has gotten… What was once just a small tiny ponzi scheme (Bitcoin) that has now grown into the biggest ever seen in history and what ripple effects it has had on the this world… Sometimes I have to pinch myself just to re-question myself if all of this is really real.

Regarding their coin.

If you can use it as legal-tender within the country and pay your taxes in it, not forced but with a choice of this coin or the dollar. Then there will be an intrinsic value of the coin, if it becomes cheaper to pay taxes in the coin versus the dollar, people in that country would buy up the coin to where the cost/benefit meets. So this creates an intrinsic value by arbitrage.

Something bitcoin will never have, that is, intrinsic value. Bitcoins intrinsic value is 0, now and forever, and you dont have to believe me, the market is stronger than bitcoin, and will price it at 0 eventually. This is the largest ponzi-scheme Ive ever seen, once we reach peak bitcoin, it could take a long time to die out.

Now if the country completely replace the dollar with a Crypto, that would mean the intrinsic value of that coin would be more or less the size of that economy - now due that economy probably being shit, without having done any research on it. No specific or unique companies within Country that would create demand for the currency to buy their products. So it is probably going to be your very typical and small economy which means it is only going to have value by arbitrage on the exchange markets - so there would be a floor. Value by arbitrage will work like this. If I can buy a product in this country that is cheaper than in another country I can buy the product here and sell it elsewhere.

Now I can see they have a BNP of 183 Million USD… At best I think the intrinsic value with FULL ADOPTION of the country, replacing the dollar as their national currency would be 40.000.000-400.000.000 USD

This is in comparison to average m1-m3 of GDP/Money supply in several countries, with a non-fractional banking system, the value will be somewhere in between - the market will find the true value.

Now if they make a Crypto, and if they fully adopted it, what value would it have to the overall crypto market. Well the overall crypto-market would use it as a intermediary, like Tether, this would just be a actual intermediary, and a trusted one - and here in lies the problem. If the fair value is 400M USD, and all this extra demand made it 800M USD,

If they have the rights to print more of this coin, they can benefit themselves from this by printing, stealing value from this overvaluation. Taking advantage of that… For their government or their people… Thats bad, but they would have an incentive to do this, and if they keep it to a minimal they will get away with it - everyone would be happy, because they would still be the best in town… for now…

People think tether works, but it doesn’t, because its a scam… and yes it will work… Until it doesn’t… and cause a lot of pain… and the crypto market is so desperate for a intermediary value stable coin that we are willing to risk to use Tether. Even the people who know it is a scam… Will use it as they assume they wont be in it when it goes to 0… Thats how desperate the crypto market is.

Now if its a fixed supply, they cant take advantage of it, which is good, and this overvaluation wont hurt them directly, but will hurt them indirectly through volatility. The market can probably handle a double up, but if it becomes 3, 4, 10, 20x over the intrinsic value now you have volatility and that means they would dump using that system since their internal economy cant function with that.

So again, they are simply to small to really bring in liquidity as a stable coin, the other issue is the anonymity, if it is not anonymous it wont be traded on exchanges and it cant be used as a intermediary coin, the market wont care about it. The real deal-breaker here is when we get a National, Private, Fixed supply, Crypto-currency backed by Assets, preferable Gold… Since this has always been the preferred money of choice of the free market, it still is to this day.

We can trust commodities because they are the same everywhere and no one controls them, they are, what they are. I believe the Ideal Crypto-currency for the next 50-300 Years (where we are not interplanetary society) would be a Crypto backed by gold. The only problem to solve is who manages the Gold… is a foundation and trust in Switzerland safe enough? is a government promise safe enough? Do we need put the gold in a vault and send it into orbit around earth? legally owned, audited, and its integrity validated, but non-accessible, but we know its there? Could we even maintain a peg that way?

@jb455 Really excellent post! Written like a true Austrian, which I appreciate. Even though we have some philosophical differences on a few things because I tend to view the interplay between markets, special interests, and governments a bit differently (and thus, my solutions tend to imply less faith in the integrity of pure free markets), I really do appreciate the consistency and depth of your thinking.

I’m slammed with a large project so I can’t get sucked into much deeper debates right now, but I do look forward to engaging you more deeply (and respectfully!) in some of our posts over time. Until then . . .

Great - not the no intrinsic value argument again. You must be a gold bug or silver stacker.

What about the Venezuelan Petro ? Is that not considered a sovereign cryptocurrency ?

What do you mean again? It was never invalid to begin with. If Bitcoin was the ONLY coin out there, it could actually work, since it had uniqueness to back it. I WOULD LOVE BITCOIN TO WORK, more than anything. But I understand what money is and how it works, I cannot let my emotions run off with me, and get fooled, just because everyone else is. There is no way Bitcoin can become money, from everything I know and understand about money, and I dont believe I am wrong, and we do not even have to debate that. The market will prove me right. I know there will be another excuse for why it failed, but thats that will just be “the story” the average joe will understand.

Now just because Bitcoin wont work, does not mean to write off the entire crypto-market.

Just because the bitcoin ponzi-scheme is till running, that proves nothing, it will go up, until it doesn’t - and I have already explained exactly why Bitcoin cant be money in another thread. The simple fact is there are no adopters, and there never will be. Do you even know a Bitcoin adopter? do you even know one?

Someone Who would have their savings, make contracts for their salary, or actual business who accepts bitcoin? and I dont mean that they accept it through an exchange program where they get dollars and the bitcoin is sold off to another speculator. The only demand for bitcoin is for appreciation, once it losses that, there will be no demand.

I get that there are runaway emotions in crypto but I don’t buy the no intrinsic value argument. The code alone is intrinsic value. The fact that I can buy something with crypto or use it as a means to transmit money / value to somebody across borders is intrinsic value. You can argue that the PoW and PoS algorithms are intrinsic value. I accept arguments about bubbles, speculation and possible collapse but not the no intrinsic value argument. Besides, intrinsic value is, to a degree, subjective.

The code alone has no intrinsic value, I could fork the code and make my own coin, anyone could. So the code itself has no value. The only reason there is a demand for bitcoin is for speculating on price appreciation. Every ponzi needs a good story to fool the participants, Bitcoin has a great story, such a good story that it even fooled many in the hard-money-group… and if it can fool them, it can fool anyone.

There are practically 0 businesses accepting bitcoin, they accept bitcoin, but it is a speculator who is buying that coin and paying the business. Businesses dont take bitcoin… For obvious reasons… and for every time someone spends their bitcoin they are creating downward pressure on the price.

Intrinsic value when it comes to money is not subjective, it might be in the short term, but in the long term it will be priced at Its real value, in this case, 0.

You can say a necklace has intrinsic value to the holder if there is a story behind it, and that becomes subjective, but there is no subjective intrinsic value to a fungible item.

Yes you can fork the code but the fact that someone spent countless hours writing it = intrinsic value. Your fork will most likely go nowhere.

How does the USD have value ? It’s based on money that does not exist i.e., fractional reserve banking and credit. Printing money.

Crypto is a new technology so you have no basis in your argument about people not accepting it. Few people used the internet soon after it was developed. I can buy a Porsche with bitcoin. I guarantee that in the future more and more places will accept crypto as payment. Why do you think Chase and Bank of America just listed crypto as a threat the modern banking system ?

Bla, bla, bla. Your argument is nothing new. People were making it 5 years ago.

You dont understand what gives the USD value, therefore you have no chance to understand why Bitcoin cant be money. Whoever made that statement for BOA dont understand money. Bitcoin will never be a threat to the monetary system. Just wait and see, you dont have to believe me. When it goes to 0, you will have some excuse, I know that, but I can tell you the real reason will not be that excuse.

Again to others reading, it is important not to group all cryptos into one, bitcoin wont work, but another crypto might if it can generate intrinsic value and demand for usage other than being money.

OK then, I guess JP Morgan ( Dimon ) and BoA are just talking out of their asses - lol

Yup - and it wouldn’t be the first time, these companies are just a collection of people, their opinions mean nothing.

as does yours

Well as I said, the market will prove it right. I dont need you to believe me, I have already explained in detail why Bitcoin cant work in another thread, I wont be doing it again. To me this is as obvious as 1+1 = 2, Its very very simple why this is a ponzi… Its so damn obvious… and I am always amazed of how it manages to fool so many… Just because it went all the way to 20K and maybe It will go higher proves nothing, that is how ponzis work, they go up until the last buyer is in… and there are many reasons why this became the biggest of all…

This is the first international mass-public collective mania/ponzi something we have never seen historically due to previous limitation that contained these ponzis within borders or limited circles, hence why they never grow to this size.

Indeed it will.

How many ponzi-schemes have you been involved in? How much experience do you have in ponzi-schemes?

The future of money may not be bitcoin or cadano but it will include DLT and DAO’s The fact that you can eliminate middlemen with smart contracts means that the technology is here to stay. There are too many wonderful things this tech can do. You can set the exact terms of a contract for it to be executed. That is infallible. DLT / crypto can be used for the IoT’s and AI among other things. It can be centralized, decentralized, mutable, immutable, fungible or non-fungible. If you think, with all of this new technology, that our overly convoluted and archaic system of money / investing will not change because of it, then I say you can’t accept change.

Well first Bitcoin and Cardano are not the same creature. Regarding DAOs I would still have to do research into those, I do not know enough about them to comment.

Bitcoin cant be money
Cardano could potentially, but there is still a long and tough path ahead to create non-speculative organic demand for the coin.

Now the easiest way is to just back your damn crypto with a commodity or assets then the value problem is solved - it is still not an easy one to solve, since you have to solve how this would work and still somehow be decentralized in a way.

For DAO’s to work you need an accompanying crypto

Yes it did increase do to speculation - no doubt. That is not why I think it is here to stay. It is the underlying technology, as I pointed out with smart contracts. People will be automatically paid once a job is completed. That is but 1 example out of thousands of use cases