While 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.)
“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…