How to Save the Blockchains

imageWhile we wait to see the market open (which won’t be nearly as exciting as yesterday when things were down more than 500-points on the Dow at one point), I happened to be reading through the latest press releases out of the IMF.  This one on Virtual Currencies caught my eye:

Virtual currencies (VCs) and especially their underlying technologies are a potentially important advance for the financial sector that could increase efficiency and financial inclusion, but can also serve as vehicles for money laundering, terrorism financing, and tax evasion. Achieving a balanced regulatory framework that guards against risks without suffocating innovation is a challenge that will require extensive international cooperation, says a new staff paper, “Virtual Currencies and Beyond: Initial Considerations,” released today by the International Monetary Fund (IMF) during the World Economic Forum.

A good bit has been made lately about the limitation of Bitcoin to about 3-transactions per second and being a possible stumbling block and end of the experiment.

But then the inventor appeared.

What IF a new layer were added to Bitcoin that would process financial transactions based on their size?  In other words, if you buy something with a Bitcoin worth the equivalent of $1 dollar, it would process on a server over in, oh, say Connecticut.  But, if the purchase was for $1.01, then that with route to a different server, say one in Hawaii.

In background, each of these servers would move money between themselves, and life would go on.

Right now, it appears the overhead of Bitcoin (processing all transaction as they are) tops out at $6-billion (in dollars) worth of BTCs sloshing about.

But with Ure’s option, slicing up the BTC servers to automatically load-balance by transaction size, might see the increase in capacity massively increased..

Just on whole dollar (or BTCs), the implementation of multiple blockchain processing by transaction size between 1 BTC and 1,000 BTC would add a 1,000-times increase to processing.  Instead of limited at 3-transactions per second, this tiered server approach would allow 3,000 transactions per second. 

Not enough horsepower?  Route at one-half a BTC levels, which doubles capacity, again to 6,000 transactions per second.  At one USD per transaction, what is that?  $36-trillion of capacity?

Of course, there would be overhead and a continuously updated clearing table to deal with, and there would be a fair bit of monkey-motion between servers (and that’s power and cost) so that would tend to limit things.  But, on the flipside, you look at going down to Satoshi-level clearing and now you multiply the clearing capability by one million times!

Pretty soon, derivatives could go BTC.

This might not be practical, but I was sitting here looking at the IMF paper and thinking about the Hearn comments on the speed bump and with one architectural change in software design, the whole process could be “opened up” – or so it seems to an old software geek like me.

If you want to run this up the flagpole with the BTC folks, that’d be fine.  My consulting fee is two BTCs….I’ll send the wallet details when the payment for this rather elegant solution is ready.

Or, more likely, I’m  failing to properly comprehend the problem.

Meantime, Back in Dollars

The Dow futures are down about 80 (or were when I looked).  Our Peoplenomics readers have been in cash or short for weeks.

And the most exciting thing to look forward to today is waiting to see if the market will go all the way down to the major support around 1,740-1,760 before we get the next rally.

Once the coming rally gets organized, the critical level will be the bottom of the trend line, and if turned back there, we should all be starting to attend religious services.  You’ll want to pray that the modern equivalent of the Roaring Twenties hangs on another couple of years – which it should.

Still, fifth wave failures are not terribly uncommon, and if it comes, we will be able to run out some numbers on “How far is down?”

It’s like the bass singer who used to be on the Lawrence Welk Show…”Howe low can you go?”  [I haven’t seen a deep-voice play on South Park or the Symptoms (sic), or a more contemporary analog would have been cited.)

imageBut speaking of missed comedy, we do have the Phlly Fed Business Outlook to deal with:

“Manufacturing conditions in the region contracted modestly this month, according to firms responding to the January Manufacturing Business Outlook Survey. The indicator for general activity remained negative this month; however, it rebounded from a lower reading in December.

Other indicators offered mixed signals: Shipments increased this month, but new orders and employment declined modestly. The survey’s price indexes suggest continued downward pressure on manufacturing prices. With respect to the manufacturers’ forecasts, nearly all the survey’s future indicators showed continued weakening this month while remaining positive.

I expect the hushed anticipation will return later today.  Japan was down another 2.4% overnight and the Hang Seng was down a further 1.8%.

Europe has a small 1/2 to 3/4 percent rally going.  But I’d expect that to moderate the U.S. at least until the Richie Rich types blow out of Davos.  Try a read of Who won Davos? Day 1: O Canada!  Then top with The Atlantic’s discussion of The Anxiety at Davos.

The problem which no one is coming right out and pointing to is simply this:  You can’t have a period of plateau (or even modest decline) due to deconsumption because if you do, all those fat defined-benefit plans will start to blow up.

We are starting to thing that the next big bailout which will be along in a few years will be of big pension plans.  Already we see elsewhere how Ferries stay docked, farmers empty milk churns in Greek pension protests.

If pension plans could be confined to Europe (now Eurabia, a region addicted to immigration as a panacea for rational finance), that would be fine.  Hard-working folks like us would be able to go into isolationist mode and pretend that in a globally-link financial Ponzi scheme, we can remain unscathed.

Sadly, there are stories if you look to the corners of finance like CNBC’s “Here’s Your Share of State Pension Shortfalls.”

The problem is, unlike when banks ran into trouble, the bail-out of pension plans, particularly the large defined benefit plans, won’t have much going for them in a marketing sense.  Sure, these plans are big, but their liquidation will just drive down share prices, and presumably done over time, that would not implode a major bank, although that’s possible, too.

No, instead, this would be the ugly side of finance coming home to roost.  We know that as the Baby Boomers start to cash in their lifetime savings for the final fling before “box time” that there will have to be at least as many buyers for their assets.

Thanks to a basket of Obamacare, student loans, a lack of manufacturing jobs due to outsourcing and an economy that is 95% service industry (and thus extremely dependent on good times) there won’t be anyone buying.

The problem is not going away.  There will be new data shortly on the amount of money that will be heaped onto the Federal Debt next year.  It would have been a 23.9% increase this year, but the crooked budget deal between the traitorcans of Paul Ryan Party (formerly republicans) and the demoncrats (formerly democrats) pushed the big increase out until after the next coronation. 

America’s political parties have been screwing each other for so long now that they have become the offspring of each other.

These children of the devil will have their terrible twos in 2017-2018 – Then shit will hit the fan.

Both parties are really nothing more than the political apparatchik of corporations now, so what does it matter?  My thinking is that no genuine agent of change can be allowed to hold office, and if we get to that point, another Kennedy-like ending will be arranged.

Could the rich guys at Davos be hearing this kind of plan?  I’d put money on it, but I won’t bet on crooked games when it’s possible to avoid it.

So here we sit,. in the middle of the woods, enjoying those bits of life that can’t yet be taken from us.

But rest assured, if you find something you like and enjoy, some sonofabitch in the back halls of government is busy plotting a way to take it away from you and then rent it back with lots of strings and conditions attached. 

No, I’m not just talking gun control.  I’m  talking the real basics…like no matter how much money you make, you’re nothing more than a sharecropper on government land.

Don’t believe it?  Try not paying your property tax for a few years and let me know how it goes.

The answer is obvious:  Away.

Ure’s 14th Axiom is simple to remember:

Banks are too big to fail.  You’re not.

Over the coming few years, we expect to pick up our penchant for pension stories, and this axiom is what drives it. 

On Monday we were reminded how America has sort-of addressed racially based slavery.  But financially based slavery is another matter. 

We (the people)  ain’t the Man anymore.  Unless you have a client retainer with a Washington Lobbyist law firm, you’re not going to be, either.

Now, is it really any wonder why Trump and Sanders are picking up steam?

Being tax chattel is easy…and there’s even good money to be made helping out…
.

Comments

How to Save the Blockchains — 9 Comments

  1. Sorry G
    Its getting a mite ‘iffy’ out there in investmentland (bitcoins or not). Not sure how to even start with options.
    Seems with the DOW doing its rollercoaster = depression looming ride, that WALL ST bankers and their supercomputers
    have the upper hand with the Quotes stuffing.

    It reminds me of the days I played with Forex. Staying up all hours to ride the London open was okay for a while though disruptive to my biometrics….
    However, the day I was in the black, made a trade in the Japanese market and saw all my profits vanish in less than one minute I knew those supercomputers were lurking.
    How can anyone compete with them?
    Peoplenomics charts and all, how can anyone outsmart a supercomputer? The AI is taking over the galaxy not just our jobs, the planet, and cyborgs (people). It hit our investment pocketbooks too.

  2. As I understand it, BTC uses the blockchain system to verify any and all transactions back to the original one, and also to verify that each BTC is used only once by each successive owner. Originally, anyone with a reasonably powerful computer could verify this, and consensus would confirm legitimacy.

    Today, you need your own quantum castle in Utah to keep up with this. To quote Kelly Bundy: “It wobbles the mind!”.

  3. I have a service connected disability and also received the Oslamma papers, Next I suppose we will have to give it up and join the Oslammacare crap brigade,

  4. Bitcoin has always reminded me of the multi-level marketing (ponzi) scams of the 80’s and 90’s. With all of the same promises, buzz words and phrases, blended with a twisted version of HFT Wall Street panache.

    Add in the fact that no government on earth will long tolerate a non-government fiat competitor, especially within its own borders… and the whole point of Bitcoin becomes irrelevant. Double down with government regulation of Bitcoin? Which was meant to bypass government regulated fiat currencies …with a non-government backed fiat currency?? None of it makes any rational sense, imo.

  5. “”””I’ve been saying for years that Dave Ramsey has caused the collapse of the economy because he has helped multitudes pay off debt and save, save, save! LOL”””

    I just have to make a comment on this comment from Tuesday.. Not true.Its not exactly true..
    From my perspective this is what is the major reason thats causing the collapse in the near future.
    When I first started to work..
    I was in the bank visiting with a bank manager.. in the early eighties.. we got on the subject of future events in the banking industry and how are government had sunk the future of the dept of social security and our country by putting those funds into the hands of our competent congress.
    he brought up the story of a man that came in applying for a job fresh out of college.. he said when he asked what are you looking for for a wage to get you started the man spit out a figure.. he said I had to turn him away.. I asked why his response was he wanted five dollars an hour more than I make..
    this got me thinking even back then about my job.. wage was low.. ( we made two dollars and fifty cents an hour..) only needed one job to survive etc..insurance well all employees got it as a standard benefit even for part time employees.. life was good.. at the end of the year our company would hand out a nice Christmas bonus that on average was about five percent of your gross wage. ( this was to invest etc. ) for some companies.. one in particular the owner noticed that when school was open and kids got sick his single parents or mothers would have to stay home his solution was to hire a person to take the kids offer a free daycare busing to school pickup etc.. he always gave ten percent bonuses etc… when him and his wife got a big screed tv he gave one to everyone working for him.. took the whole plant on a cruse with him and his wife as a business cruse..Needless to say he is gone and the present owners don’t do that. the same thing for the company my father worked for. I first met the colonel when I was five or six..it was my birthday.. he took me into the sample room and gave me a case of what ever I wanted.. my father told me that he came to check the warehouse and books from the home office in New York City.. a multi national company mind you.. years later.. I was off loading a semi trailer.. ( the company had a no family working in same plant policy but I could off load the trailers for the driver) anyway here comes the colonel checking the facility.. he takes off his suit coat and jumps in the trailer and off to work we went visiting the whole time.. after we were done about two hours.. he returns to his what he was doing.. again a large expanse in time.. just before he retired and sold off the company to another larger company.. I was working in a grocery store.. (I had tried several time to get a job but employees didn’t leave their jobs till they retired.. and there just wasn’t any openings.)
    I was sacking the groceries.. down the hall comes the store manager a few other big wigs from the store chain and the colonel. the colonel once again takes his coat off and jumps in all the while asking how my father and mother was and how each of my brothers and sister were etc.. we talked about fifteen minutes. he made sure that everyone that retired from his company and worked for him had a reasonable living my mother never paid more than a hundred dollars a year for medical all because of the colonel. ( I bet your wondering where am I going with these two stories.)
    what executive today knows who the person emptying their trash is much less some employee thousands of miles from the home office.. in most companies unless your are an executive what company gives its employee’s a bonus.. very very few.. and even today most companies don’t even offer a retirement plan..
    the wealthy have gotten int ME mode.. they shovel away the vast earnings in banks someplace where they are exempt from paying taxes on it.. the workers are usually making just enough to survive.. I had one five hundred company offer me the job and during the interview he was real excited offered me the job and said you could qualify for food stamps.. I chuckled and said you do realize that that isn’t a benefit and walked away..
    that is whats killing the economy.. people want more and you will never have enough more to satisfy.. even with the new spending bill its evident that the whole thing behind that was to give those with the most more..
    It isn’t the little guy paying his debts down but the guy that doesn’t want to invest in our economy so they outsource our jobs and income to another economy so they can get more.. we in turn have given away our industry..

    • I agree with the above: when I started at this one company, we had medical insurance, matching investments, being ‘vested’ after a certain amount of time – and ‘freebees’ – regular gifts from the company of products – overstock, but sometimes useful. The downside was that they were awfully ‘paternal’ – but when I left, they had already started to get ‘greedy’ and what had been ‘the norm’ was being eroded . . . now the original company is literally history and the replacement is but a shadow of its former glory . . .

  6. I just received a health coverage form 1095-B, from the VA. It looks like my hard earned veterans medical benefits have fallen into Obamacare status. Please comment on this….

    • Yes, we received one, too, here is the critical paragraph: “Because the Affordable Care Act (ACA) requires VA to notify enrolled Veterans of their period of health care coverage during the previous calendar year, enclosed you will find an Internal Revenue Service (IRS) Form 1095-B, which documents his coverage during 2015. No additional steps need to be taken with this form; just follow the IRS instruction, as applicable, for completing your Health Care Individual Responsibility information on your tax return form. The law also requires VA to provide this notification to the IRS, which we will do in March 2016.”

      First of all, we are told the VA is separate from normal healthcare, but as one can see, it is not exempt from reporting to the government. What is ALSO very telling, is the VA is reporting to the IRS. Now bear with me here. The IRS will NOT track the citizenship status nor cross reference the illegal use of Social Security Numbers of an illegal because they claim they are NOT in the enforcement business nor work with the INS or Homeland Security. Therefore, illegals have no fear of deportation from the IRS and are eligible and receive, to the tune of 5 billion dollars a year, annual REFUNDS from the IRS.

      YET, THE IRS wants to know if a VETERAN has coverage in order to comply with the ACA so that if they are NOT compliant, they can be FINED!

      And that my friend, is the NEW AMERICA!

  7. “””””Can I teach you celestial navigation in an hour? Oh, easy-peasy. EXCEPT I would have to review in order to brush up on the recipe because I haven’t used it since we sold our sailboat in 2001, sorry. “”””

    I had to make a post on that statement.. LOL lol.. I was out running a few years with someone I am close to that is in the rangers.. I beautiful evening job for a few miles.. and we got in a discussion about the north star and little and big dipper etc… the conclusion…

    If we are lost in the wilderness and it is up to me to navigate us to safety.. you better hope you have satellite GPS on the phone or that your right handed and I am left handed or vise versus. Otherwise we are doomed I say doomed to wander in circles… LOL LOL