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Cryptocurrencies Cryptocurrencies
by Joseph Gatt
2019-11-25 09:19:35
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Cryptocurrencies bring back two childhood memories: trading basketball cards in 5th grade, and a game of marbles in the 6th grade.

Back in the 5th grade I was in New York City. The 1994 Knicks were huge. Ewing, Starks and Oakley made it to the All-Star game. The Chicago Bulls had just lost Michael Jordan who had just retired. There was no serious threat in the Eastern conference for the Knicks, and Coach Pat Riley was the best in the league.

cryp01_400Now as kids we used to play a game. We had to assemble as many cards with teams as we could from the 1993-1994 season, and from previous seasons. Whoever could get all the Knicks rosters from as many seasons as he could would get all the respect. Other teams were not so much coveted.

So a Knicks card was worth the golden dollar. A card from a big player like Jordan or Barkley or David Robinson or Shaq was also worth a golden dollar, and so were vintage cards of Larry Bird or Magic Johnson. Other star players like Derek Colleman or Scottie Pippen or Shawn Kemp were worth a decent amount, perhaps a golden 50 cents. Cards from players of the Dallas Mavericks or the LA Clippers were worth less than a penny, unless it was Mark Jackson or a vintage Rolando Blackman or Charles Smith card.

Now myself being a foster kid, my foster mom did not bother checking on my food allergies. I get nauseous with cucumber, watermelon, milk, anything too sweet, syrup, onions, garlic and a few other foods. So my foster mom would put this artificially sweetened fruit salad with syrup that was highly popular among my classmates, but that made me nauseous. So I would sell that fruit salad for basketball cards, and the trade was negotiated randomly. It was something like 10-15 worthless cards, or one decent card. I once traded the salad for a Detlef Schrempf card when he was at the Pacers, and this other time I got Rick Smits, Manute Bol and this other unknown player.

So those cards were a form of cryptocurrency where the goal was quality as much as quantity. People showed off their cards like adults show off their sports car, and there were very serious negotiations for cards. One student got “ownership” of another student's soccer ball in exchange for a number of cards. Others sold food for cards. Some would get “help” with homework in exchange for cards. And some would give cards in exchange for secrets being kept.

Other cryptocurrency. October 1994 I moved to Maputo, Mozambique. The school I went to had a basketball court. But hospitals being what they are in Mozambique, there was one very strict rule during recess: no balls, no running. Some students would occasionally sneak in a tennis ball and start playing soccer, and would get a couple of slaps on the wrist for that.

So our cryptocurrency in Mozambique was not basketball cards, but marbles. You had something called “Mozambican marbles” which were undesirable, then you had the “stones” and the “seedy ones” and the “transparent ones” which were highly desirable. Some kids played marbles, but marbles were also a currency. People traded snacks for marbles, people got help with homework for marbles, and people bought silence for marbles.

Now for a cryptocurrency like Bitcoin or Libra to work, there has to be some kind of practical use. Right now Bitcoins are mainly speculative, and people are mainly trading dollars for Bitcoins. It would be interesting if people doing online or offline work asked to be paid in bitcoins. Then you could have a store or two that would only accept bitcoins, before you gradually have several stores saying “we welcome bitcoins.”

How do I see bitcoins being useful? I travel to Turkey as frequently as I can, and every time the Turkish Lira dips, people who work in tourism will sometimes say “pay me in any currency you want except for Turkish Liras.” That is you can get hard discounts in tourism if you pay in British pounds, Euros or dollars. So one area where Bitcoins could be welcomed would be in the tourism industry around the world. Tourism workers could then save some of the Bitcoins, and sell a few other Bitcoins for local currency.

Other area where Bitcoins could be welcome: small industry business transactions. That is giants like Coca Cola or Toyota or Ali Baba could take dollars. But some of those smaller factories could see an advantage if transactions were made in Bitcoins, especially if they are located in countries with unpredictable currencies and high inflation.

One final area where people could use bitcoins, as an example: employees of embassies or foreign firms overseas, in countries where inflation is rocking the boat. The last few weeks I was between Morocco, Algeria and Tunisia, and their local Dirhams and Dinars have taken a severe dip. In 2016, I used to get my carton of beer in Algeria for 1,800 dinars for good beer. Right now it costs me 3,600 dinars for very low quality beer. In 2016 in Morocco. In 2016, I could shop around for 20 Dirham, I will now need at least 50 to 100 dirham to cook a couple of meals. So if I work for an embassy or foreign firm as a local worker, perhaps the embassy or foreign firm could give me at least parts of my paycheck in bitcoins.

Final thought. Who controls the cash inflow for Bitcoins? Rumor has it that Bitcoins cash inflows are completely controlled by software that is unlike cash currency, you can't counterfeit it and you can't “print” bitcoins to repay national debt.

But, the very final thought. In the US at least, parallel currency is technically anti-constitutional. The constitution has it that the government controls currency, and Alexander Hamilton said in the Federalist Papers that the federal government deals with one thing: currency. Everything else, be it abortion or gun control or same sex marriage is dealt with at the state level, not federal government level. 

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