It's time to use crypto

Published 2022-04-15 on Yaroslav's weblog. Last edited 2022-04-19

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Cryptocurrencies have been around for well over a decade. Everybody who's ever used the internet has at least some basic understanding of what a cryptocurrency is, yet most people seem to miss the point of cryptocurrencies. Nevertheless, recent events have shown us how important this technology actually is and why it is better than the alternative.

Long gone are the days when simply exchanging one product or service for another suffices. We have a better way of exchanging value through our monetary system. The classical monetary system is also not enough anymore. Gone are the days of the gold standard, and here be the days of instantaneous transactions across the whole world using electronic means to transfer money.

However, with all those benefits have come a lot of drawbacks that have reduced our freedoms and intruded in our privacy. If you want to trade electronically across countries or even inside the same city, you have to go through a dozen of intermediaries each of whom gets a piece of the transaction, each of whom has their own rules and each of whom can track what each person buys and sells at any moment.

Basically, we've allowed ourselves to take part in an Orwellian financial system that has the say on how, when and with whom we are allowed to trade. The worst part is that we all are taking part in this voluntarily.

Many people might dismiss the arguments against such centralized control of the finances as being paranoid, but there are already great examples of why such centralized control is bad for people's ability to trade freely.

Starting from people with opinions that are not very popular among those in charge to now, canceling an entire country because the government of said country did something that the powers that be didn't like. It's nothing new that we are limited by the rules of of those who are in charge of the system. After all it's their system and they set the rules. That said it's not like there are no alternatives.

That's where cryptocurrencies come in. Whereas traditionally financial systems have relied on a central authority to set and apply the rules, to mint or print money basically reducing the wealth of the people that hold said currency at their mercy, cryptocurrencies allow no one person to control the system.

The premise of cryptocurrency is that no one person controls the system. There are a set of rules by which all of the parties of the game agree to play, and each participant controls make sure each other play according to them. If there is some discrepancy with the rules or some manipulation is seen by the rest of the participants they won't allow such behavior to go on and will simply refuse the malicious actions to take place.

Basically a cryptocurrency is a network in which anybody can take part, giving some computer resources in order for the network to work by generating blocks that contain the transactions and possibly some new unit of cryptocurrency that is mined. No one party in the network can change the rules. The system is made in such a way that mathematically no one person can go against the rules (e.g. double-spending currency) without said person or party owning more than 50% of the network's capacity, which, at least for Bitcoin and most major currencies, is basically impossible now.1

Not all cryptocurrencies are equal, though. Bitcoin is the most popular and the most valuable crypto out there on the market on the merits of being the first such system. Back when it was announced and launched by the mysterious Satoshi Nakamoto it was a revolutionary system. It still is, but it's not without it's flaws.

The biggest flaw that I see with Bitcoin is its lack of privacy. I'm actually surprised that more governments are not on board with Bitcoin2, taking into account how easy it is to track transactions. And it's not like it is a bug of the system or something, it's more of a feature actually. In order for the original concept of the blockchain to work, a public ledger was needed.

Bitcoin also has many other problems such as very poor performance, and its proof-of-work algorithm being very prone to centralization, or at least making it harder for smaller players to take part in the system due to how easy it is to make ASICs for it.

With that said, the biggest advantage of cryptocurrencies still holds for Bitcoin. It is a decentralized currency. No one person, corporation or government controls it. You can create as many addresses (think of a bank account) as you want and all it takes is a couple of clicks. No need to enter into any contracts or give your ID and private information to some bank.

Fortunately the biggest problem with Bitcoin, privacy, is fixed in other cryptocurrencies, namely Monero3. Monero, in my humble opinion, is the one cryptocurrency which I think offers the most advantages with the less disadvantages. It's not only completely decentralized as Bitcoin, but it also offers full privacy by default. Nobody, except for the sending and the receiving parties, knows how much is being paid, and who is paying whom.

Apart from that I have also found Monero much simpler to use. It is easier to take part in mining, due to their proof-of-work algorithm, transactions are faster and commissions are lower. I do think that it is the cryptocurrency to rule them all.

I had already started using crypto, specifically Monero, since some time ago, and was interested in the technology since I found about it in the early 2010's. However, I was never really an active user. For me, that has changed now.

On the 24th of February the Russian government decided to actually do something about the conflict that was already happening since 8 years ago. Of course, the United States didn't like it that somebody else had some agency over their interests proceeding to have a hissy fit and basically taking cancel culture to a whole new level by what amounts to trying to cancel the entirety of Russia.

The irony of the situation is intense, not only are those sanctions affecting mostly people who have nothing to do with the conflict, they are also affecting the people who they are supposedly defending with these sanctions. Believe it or not, many Russian people have relatives in Ukraine.

And of course the hypocrisy is through the roof. I'm not taking about the American government themselves, of course they would act like they do, might makes right in our world after all. I'm talking about all of the other countries and the corporations that are "supporting Ukraine" by "stopping all work in Russia". Nowhere to be seen was their support of the people that the US glowniggers government invaded or carpet bombed, but anyways, that's a little off topic.

The point being that the ability of the Russian and Ukrainian people to trade with other people is being crippled right now because of the decisions of some politicians and businessmen. The Ukraine is of course the most affected right now, since it has itself become the victim of a proxy war between the US/NATO and Russia. And those of us who live in Russia now cannot properly trade with people of other countries, or even send money to relatives in other countries.

These problems can be overcome fully only by using a fully decentralized electronic money system.

I think, and I actually hope, that cryptocurrencies will never replace cold hard cash. I would prefer, of course, if we traded in non-fiat currencies, but that is a story for another day. I do think that cryptocurrencies should become the standard for electronic transactions.

I care not for who is in charge, be it a corporation or a government, neither of them actually have4 your or my interests in mind. The only solution to the problem is something that is not controlled by anybody.

Personally, since the start of this conflict I have started to use more cryptocurrency, especially as a store of value. Right now inflation, both in Russia, where I live, and outside of Russia, is really high which means that fiat currencies are just a loss of money if you hold5 them. Right now even a savings account isn't actually that worth it. On the other hand, Bitcoin and Monero are overall deflationary so, even though not as good as precious metals or real estate, they are a pretty good way to store value and keep some savings.

In short, I want to summarize the reasons why I believe cryptocurrencies are the way to trade electronically:

  • No central authority. Nobody can steal your money (close your account, reposes your funds, etc). because someone (bank, government, etc.) said so. Only if someone gets hold of your keys can they steal your money.
  • There are no terms of service or contracts that you have to sign. Everybody is free to create an address without any ID or documents, completely anonymously.
  • Nobody can "print" or create more cryptocurrencies at will, like the Federal Reserve can with the dollar, or the Central Banks with other currencies, which leads to the next point:
  • Crypto is not inflationary; right now most are quite volatile, but overall they grow in value against fiat currencies.
  • And, in the case of Monero: your transactions are completely private; there's no government or corporation spying at what you buy or who you send money to.

In this troubling times stay safe and remember, do not trust anybody, with whom you are not acquainted in real life.

1

This is just a very very simple and short overview on how (most) cryptocurrencies work. If you are interested in learning more, I suggest you start by reading the bitcoin white paper. https://bitcoin.org/en/bitcoin-paper

2

You know, with how all current governments love to spy on their people and steal from them tax them as much as possible.

3

Check out Monero's website for more information: https://www.getmonero.org/

4

The government is supposed to have the interests of its people in mind; the thing is that de facto it has never happened and will never happen.

5

Well, they always are, it's just higher than usual now.

© 2018—2022 Yaroslav de la Peña Smirnov.