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57 minutes ago, Julian_Williams said:

I have often had this thought.  If XRP gathers value faster than inflation, whilst other money loses value if not spent, nobody will want to spend XRP and everyone will want to use it as a saving currency.  Eventually, perhaps quite quickly, XRP availability will dry up, I am not sure that this will be followed by a bust.

 

Of course there will be 100 billion XRP dividable into 1000000 droplets each, so the value of XRP could go very very high before it reaches the point where there are not enough droplets to keep the transfer payments system going

Inflation is a monetary tool of an outdated system.  As XRP adoption spreads, along with other crypto adoption, the purpose and influence of inflation will be reduced. Growth and economic production can be measured in something other than inflation and deflation metrics.  The purpose of inflation is built around the maintenance of a fractional system which uses fiat currency as its method of transferring value.  This will change.  Think outside of the box.

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Thank you for your detailed explanation JC.  I get where you're coming from, and agree.  However, of all the people in the banking industry I've spoken with, this guy (IMO) gave the most worrisome response.  Others since have echoed the "control" issue, but this guy brings up valid points like entire parts of the global economy becoming obsolete.  This is scary stuff, not just for banks, but for governments...the world.  There has to be some kickback, attempt to delay, attempt to destroy, attempt to prevent this from happening, don't you think?  One day, everything you said WILL HAPPEN, I believe, but I just think it's going to take many, many, many years.

https://www.xrpchat.com/topic/19924-response-from-a-bank/

 

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1 hour ago, BarryMcHockenue said:

Thank you for your detailed explanation JC.  I get where you're coming from, and agree.  However, of all the people in the banking industry I've spoken with, this guy (IMO) gave the most worrisome response.  Others since have echoed the "control" issue, but this guy brings up valid points like entire parts of the global economy becoming obsolete.  This is scary stuff, not just for banks, but for governments...the world.  There has to be some kickback, attempt to delay, attempt to destroy, attempt to prevent this from happening, don't you think?  One day, everything you said WILL HAPPEN, I believe, but I just think it's going to take many, many, many years.

https://www.xrpchat.com/topic/19924-response-from-a-bank/

 

I can present an alternative, if not equally tin-foil-hat-esque, explanation of cryptocurrency adoption. For the sake of argument, let's assume what you say is true--banks *will not* adopt a token based unit of account because it restricts their ability to create credit. This restriction on credit creation is viewed as an attack on their business model, not to mention the status quo, as banks are the allocators of capital in the economy. 

Let's also assume that governments remain neutral--because if they did not, then our discussion rapidly comes to a halt, as a global ban of crypto would likely end the viability of adoption in the mainstream, as businesses cannot operate entirely in gray or black markets, especially considering that the systems we are discussing are geo-trackable by authorities. We'll use @tar's institutionalist argument, and say that the adoption of a unit of account without government is impossible. 

Given a neutral gov, and a prohibition by banks, crypto adoption is still inevitable, because of the dynamic that is created between 3 variables:

1) A core group of adopters

2) An expanding supply of credit-money (fiat)

3) A decreasing supply of crypto token_i

If we take the core group of adopters, who allocate a portion of their fiat income per period of time to the crypto asset, its price will very slowly increase with respect to that currency. We take this price inflation as a baseline constant to begin. Next, a group of speculators will realize that there exists a return between fiat and the crypto token, and they will seek sources of fresh credit money to purchase the crypto token, a typical carry trade. This influx of new credit money further increases the price. This second price increase further increases the pool of speculators and the injection of credit money, this system is explosive, it will increase until the rate of inflow of fiat credit money stagnates.

Once the rate of inflow of credit money stagnates, the price increases of the crypto token slow dramatically, squeezing the speculators with large debt positions in the credit money fiat, as they depended upon the asset price inflation to roll over their debt. To close their positions they must sell their crypto tokens, which begins a price reversal, and then a deflationary spiral in the crypto token price, as all leveraged speculators seek to exit their positions and prevent losses. 

The result is many speculators take losses on their carry trade, and default on their credit money loans. If the crypto market is large enough, and the defaults large enough, this leads to credit-money banks insolvencies. As the banks collapse, fiat money deposits disappear, and to prevent collapse of the credit money system the central bank must intervene to bail out the banks--purchasing all the speculative loans for crypto assets--this results in political chaos, as we have seen in 2008. 

Meanwhile, the crypto tokens are asset only, they cannot be destroyed or disappear. Run this system enough and there are two outcomes:

1) Political intervention in the financial system, which forces central banks to open their balance sheets to the public, essentially a USD_crypto-token 

2) Adoption of crypto tokens, as a hedge against instability. 

That's the thesis at least. We'll find out in about 12-18 months whether or not its correct.  

Edit: It's an increasing oscillation like this: 

image.thumb.png.1a001d442b07aed1ba616e19f1525a72.png

 

Which we can also sort of see here, BTC log price:

 

image.thumb.png.d7c917af1f807cea3ff64b955602a98d.png

 

    Edit2: But yes, I think we would all likely agree with the gentleman you corresponded with via email, many jobs will be eliminated. Europe will be severely affected, as it feels like 50% of the jobs here are the type of bureaucratic functions perfectly fit for a D-ledger. No more accountants, far fewer analysts, half of gov jobs will be automated. It is also an attack on sovereignty, as it challenges the imposition of a currency on the body politic, which states will be forced to try and uphold.      

Edited by Wandering_Dog

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47 minutes ago, Wandering_Dog said:

Let's also assume that governments remain neutral--because if they did not, then our discussion rapidly comes to a halt, as a global ban of crypto would likely end the viability of adoption in the mainstream, as businesses cannot operate entirely in gray or black markets, especially considering that the systems we are discussing are geo-trackable by authorities. We'll use @tar's institutionalist argument, and say that the adoption of a unit of account without government is impossible. 

And this is one of my biggest fears.

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4 hours ago, JCCollins said:

Inflation is a monetary tool of an outdated system.  As XRP adoption spreads, along with other crypto adoption, the purpose and influence of inflation will be reduced. Growth and economic production can be measured in something other than inflation and deflation metrics.  The purpose of inflation is built around the maintenance of a fractional system which uses fiat currency as its method of transferring value.  This will change.  Think outside of the box.

@JCCollins you are one of the few folks who have stumbled into this XRP / RippleNet / new global monatary systemic infrastructure improvement situation... that has a qualified monetary & financial system opinion, Imho

Lots of technical folks & speculators around, which is truly great, but someone still needs to understand and provide guidance at the financial systemic level.

Having folks who understand and provide guidance at that level, is exactly how & why RippleNet will change the world, and why XRP will be the crypto with the most Utility Value.

I still need to find time to read one of your past write ups. Keep it up!

Edited by KarmaCoverage

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7 minutes ago, BarryMcHockenue said:

And this is one of my biggest fears.

It's a risk. It just means states would run there own chains, for example if xrp validators were various state institutions, in which case we are all shut out of a reward for early adoption. 

I like xrp for this reason, it could go either way, a state could co-opt it, or it can run privately. Better odds!

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2 minutes ago, Wandering_Dog said:

It's a risk. It just means states would run there own chains, for example if xrp validators were various state institutions, in which case we are all shut out of a reward for early adoption. 

I like xrp for this reason, it could go either way, a state could co-opt it, or it can run privately. Better odds!

Imagine Dollar/Euro/Yuan/Yen-bound tokens:

Since these are tied, their price cannot go beyond the currency anchor - and also not below it - or only extremely marginally (even with scandal rumors, see e.g. USDT). So why invest in them?

Furthermore, the problem of having to exchange these tokens remains with cross-border payments. This means that if bank A (country A) wants to make a transfer to bank B (country B), it must hold B tokens. This is tied up capital with foreign currency risk, similar to nostro accounts, which becomes superfluous with xRapid.

The advantages of bound tokens are limited to domestic payments.

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1 hour ago, BarryMcHockenue said:

Thank you for your detailed explanation JC.  I get where you're coming from, and agree.  However, of all the people in the banking industry I've spoken with, this guy (IMO) gave the most worrisome response.  Others since have echoed the "control" issue, but this guy brings up valid points like entire parts of the global economy becoming obsolete.  This is scary stuff, not just for banks, but for governments...the world.  There has to be some kickback, attempt to delay, attempt to destroy, attempt to prevent this from happening, don't you think?  One day, everything you said WILL HAPPEN, I believe, but I just think it's going to take many, many, many years.

https://www.xrpchat.com/topic/19924-response-from-a-bank/

 

I agree.  I believe we are going through the period now where some are attempting to delay and prevent.  But once an ideas time has come.....

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17 minutes ago, KarmaCoverage said:

@JCCollins you are one of the few folks who have stumbled into this XRP / RippleNet / new global monatary systemic infrastructure improvement situation... that has a qualified monetary & financial system opinion, Imho

Lots of technical folks & speculators around, which is truly great, but someone still needs to understand and provide guidance at the financial systemic level.

Having folks who understand and provide guidance at that level, is exactly how & why RippleNet will change the world, and why XRP will be the crypto with the most Utility Value.

I still need to find time to read one of your past write ups. Keep it up!

Thank you. I appreciate the vote of confidence.

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8 hours ago, JCCollins said:

I wouldn't consider that FUD.  It's a reasonable question and line of inquiry.  Control is something which isn't given up willingly, you are correct about that.  But let's consider what form of control banks are intending to maintain?  The argument can be made that they want to maintain control over the creation of money at all levels of the financial system and money supply types. But banks don't actually have direct control over the origin point of money creation.  The control remains with the Treasury Department and its equal in other nations.  The issuance of bonds represents the point of money creation.  Additional money or lets even say debt-based value, can be expanded upon this original issuance of bonds by banks acting under guidelines.  Contrary to what some are arguing on this thread, commercial banks cannot just create money to infinite because they want too.  

The IMF even recently stated that the connection between money creation and governments will be removed soon.  For me, this is an indicator that our whole debt-based central bank methodology will be transformed.  But it doesn't necessarily mean that central banks are going away, it just means the process by which governments issue bonds and central banks purchase them will realign with a new process which is now being built in the background.

Based on the above we can narrow down our understanding of what control banks would not want to give up, and it would likely have more to do with control over deposits, which are registered as assets on the bank's balance sheets.   The reason I say this is because of the whole function of a digital ledger.  An NSA paper from 1996 first mentioned digital ledgers and called them the new banks of the future.  I even suggested in a previous article that based on this understanding the Interledger Protocol developed by Ripple would, in fact, serve as a new form of a digital world bank.  What we need to understand is that money, or value, has begun the transition from debt-based creation to something much different.  I have used the fact that there were 100 billion XRP created at the beginning and this supply will only ever decrease as adoption and demand increases.  This will increase the value of XRP on a continuous basis moving into the future.  This is something fundamentally different from fiat money.

People love to talk about the store of value principle and the intrinsic value of a thing.  A store of value can be anything which is agreed upon with confidence.  It's a confidence game which is why there are interests out there attempting to prevent confidence building in the Ripple products and the XRP ledger.  The fact is that XRP has all of the qualities of a currency.  It is obviously a store of value.  It is fungible.  It can serve as a unit of account.  It will maintain and even increase its purchasing power.  It's increasing scalability also serves as the divisible quality which any currency would need. 

But... but, it's not backed by anything?  This is one of those statements which make little sense when taken to its logical endpoint of reasoning. The big saying now is that the USD is backed by the full faith and credit of the United States government.  That's is also a confidence game.  Even consider gold-backed monetary systems.  Our belief that gold has value is also a confidence game.  The moment confidence in the value of gold is broken it will cease to have any meaningful value.  Gold has been considered valuable by humans for thousands of years but that doesn't mean it always will, at least from a monetary perspective.  This is just an example of how confidence works in relation to value.

The fact that digital ledgers now exist and are spreading would suggest that the traditional banks which have built their business model upon the framework of the central bank fractional/fiat system are already outdated.  Confidence will build in digital ledgers and confidence in traditional banks will begin to subside.  Some banks will be able to transform themselves and come out the other end as successful value-based service providers.  Whether they want to give up control or not is irrelevant.  Things are changing and the whole edifice of banking and money creation is shifting under their feet.  The mere concept of deposits will be altered so that our personal wealth is no longer stored in deposit accounts with a middle-man institution.  Our personal wealth will begin to be accumulated in our own unique ledgers.  No doubt we are in the early stages of this, but things will move faster than most would consider possible at this time.  Knock down the walls inside of your mind and see the new horizons. Most people have a difficult time with that.   

The long-term value of XRP is appreciation based on its ever-decreasing supply.  Those who are suggesting that it may not be adopted are blinding themselves to the real-world events which are taking place, and the movement of structural columns which are incrementally being put in their strategic places.  The adoption rate and appreciation cycles of XRP will not be constant in the first phase of implementation.  The confidence which is behind the words I write comes from an extensive understanding of the inherent problems which exist in the traditional central bank methodology.  This process of money creation and monetary governance has run its course.  The Asian currency crisis of 1997 and the financial crisis of 2007 are strong indicators of this.  Monetary policymakers around the world understand this reality.  The system needs to change.  Replacing the international function of the USD with just another fractional based fiat currency, whether domestic or supra-sovereign, would be foolish when there are new technologies and more efficient means of storing and transferring value around the world.  Digital ledgers will store value and XRP (Interledger Protocol) will be used to move that value with zero friction across endless platforms and value-based service providers.  

Long answer but I hope it provides more clarity.  

thank you, that was awesome, best post I've read...it crystallizes a blurry vision I had about what crypto could represent when  I 1st started looking into it and finally decided to invest...now I gotta go re-read your posts (you have a blog too I believe?) that I initially dismissed as high-minded conspiracy rantings...sorry lol...never to late to learn I guess...please continue to post.   

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9 hours ago, JCCollins said:

Inflation is a monetary tool of an outdated system.  As XRP adoption spreads, along with other crypto adoption, the purpose and influence of inflation will be reduced. Growth and economic production can be measured in something other than inflation and deflation metrics.  The purpose of inflation is built around the maintenance of a fractional system which uses fiat currency as its method of transferring value.  This will change.  Think outside of the box.

Whereas it is true what you say, don't you think inflation has other useful purposes as well?  For example, it's a wonderful way to control laboring fiat earning populations. 

I like your outlook overall.  Yet it feels especially rosy.  I am not at all sure that the powers that be will relinquish control of their wheelhouse because they are becoming "outdated", or that there's a new kid on the block.  It is terribly hard to underestimate how low the ruling class will go to undermine any revolutionary ideas including technological ones.

You may be right about the IMF/digital asset changeover, but I am not so bullish on banks converting over to XRP because there is a tidal wave coming.  I HOPE that's the case, I'm with you on that, but my hunch is there is a lot more resistance to this changeover than you are giving it credit for in your posts. 

It does seem foolish for any institutions to resist this change.  Yet just look at Western Union as an example.  Clearly XRP would be helpful to them.  Clearly! 

Yet they just dropped it like a hot potato. That tells us all something I think.  It's a long long fight, and no guarantee the fight will be won.  And believe me I hope I am so wrong.  But that seems like reality in the world of kings and queens where kings and queens always rule the day.

Thanks for your thoughts. 

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8 hours ago, JCCollins said:

What we need to understand is that money, or value, has begun the transition from debt-based creation to something much different.  I have used the fact that there were 100 billion XRP created at the beginning and this supply will only ever decrease as adoption and demand increases.  This will increase the value of XRP on a continuous basis moving into the future.  This is something fundamentally different from fiat money.

There is no economic valuation that is not debt based because assets require enforceable rights that presume state obligations (which are debts!) and are serviced by tribute/taxes. In lawless areas one either arbitrarily determines what one has to give (exchange) (stage of submission, feudalism -> the only value reference is the tribute at the due date => debt) or it is given voluntarily and without concrete value determination and thus it needs also no measure of value (substinence stage, today still in the family and among friends).

9 hours ago, JCCollins said:

People love to talk about the store of value principle and the intrinsic value of a thing. 

There is no intrinsic value. Value is always a relation between two entities on a particular date and location.

9 hours ago, JCCollins said:

It's a confidence game which is why there are interests out there attempting to prevent confidence building in the Ripple products and the XRP ledger.  The fact is that XRP has all of the qualities of a currency.  It is obviously a store of value.  It is fungible.  It can serve as a unit of account.  It will maintain and even increase its purchasing power.  It's increasing scalability also serves as the divisible quality which any currency would need. 

The confidence is enforced by sanctions and backed by institutional legal regulations (esp. banking and credit requirements). Gold is also a store of value, fungible, can serve as unit of account and even increases or holds its purchasing power (like many other ressources) - but it cannot adapt flexibly to economic changes and even that it is one of the lesser volatile ressources/assets it is problematic to use as measure of value for mid- to long-term contracts (as I already mentioned) and therefore it is not used anymore, at all. Fiat money suits that much better. XRP also has no scalability regarding economic changes as there is a fixed maximum amount that even shrinks further and there is no connection of the available supply to any credit cycles.

This, of course, could change in the future. When this happens and there will be a global cryptocurrency established that is connected to all different legal regulations and institutions (which I doubt and I think there will likely be only domestic credit cryptos established that still have the cross-border problematics of currency risks), we could talk again about your flipping phantasies :bye:

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@JCCollins By the way, XRP is used for payments. Are you aware of the fact that payments are conditional on outstanding receivables/payables (=debts!)? This is only possible within a legal system. Exchange (natural exchange, barter) is based precisely on the absence of such obligations, because the exchange takes place in one act and the ratio is completely different at time T1 at place P1 between person A and B and at time T2 at place P2 between person X and Y. Even if they swap the same. There is neither a sufficiently stable measure of value nor a need for it. Instead, solidarity or loose social relations. In a legal system it is simply different: the due date is in the world and thus concretely measurable receivables and returns, on which everyone can orient themselves.

In short: without tax law there are no (general) prices.

Edited by tar

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Stopping the banking system from adopting new money saving tech is a bit like holding water leaking through a sieve, you simply cannot block all the holes all the time.  The effects will be asymmetrical.  Businesses are adopting blockchain, it is even going to be fitted into new cars.

If American and European central banks and regulators try to stop blockchain solutions being used in their businesses they will lag developments in the far East, like the connections that are being built between Japanese, Korea and Thai banking sectors.  They will not stop underdeveloped countries using transnational iphone banking to boost their rural economies.  The rural economies will grow and start to ignore the Western economies that refuse to play ball, and instead develop their businesses with the Japanese and Koreans and Chinese who long to become a hub for the blockchain revolution which is now under way.

Stopping blockchain is like stopping Free Trade.  It is isolationist (oops isn't that Trump's policy? ?)

Edited by Julian_Williams

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