Bitcoin, Money Creation And A Henry Ford Moment Everyone is Talking About

How many of you have been recently put off by bitcoin? The negative and still unfolding drama of Mt. Gox who discovered 200,000 missing bitcoins in a unused wallet, has certainly been bad PR for the fledgling crypto-currency. Don’t give up just yet though! The guardian recently featured an important article, that should be read by everyone and confirms what we have privately been suspecting, which is, that Governments have misused the creation of money.

David Graeber writes “The Bank of England let the cat out of the bag”. He cites a paper called “Money Creation in the Modern Economy”, co-authored by three economists from the Bank’s Monetary Analysis Directorate, that stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.”

The article references a Henry Ford moment. Mr. Ford famously remarked once that it was just as well that US citizens did not understand the complicated banking system, because if they became truly lucid, “there’d be a revolution before tomorrow morning”.

Henry Ford . Illustration by Dugald Stermer

I feel we will get to the point where we will exchange these old guard institutions for something completely different, assuming of course that it is not hijacked and bastardized by the same banking interests, that now, if we are to believe the guardian, is apparently flawed. The Mt.Gok thing is only a tiny blip on the bitcoin radar, because there have been at least two major developments that tells me it is not over for Bitcoin:

1. First bitcoin swap agreement finalized 

Tera has announced the availability of the first bilateral bitcoin swap agreement. Everyone is paying attention to that newsbyte. The legal framework now allows two parties to hedge price risk (volatility) of bitcoin using standardized terms. It is a landmark event for the growing bitcoin community that is looking for ways to better manage the risk of fluctuations in the value of bitcoin. Tera has already constructed the terms for a planned multi-million dollar swap between two U.S. institutions, which would hedge the value of bitcoin against U.S. dollars.

“The use of a bitcoin swap is an inflection point in the evolution of crypto-currency,” said Tera CEO and co-founder Christian Martin. “There is incredible momentum and support behind this alternative global currency. But even with all this excitement it is critical that the market participants have tools at their disposal to hedge their price risk.” In a typical example, the swap will be used by a seller to protect itself from the price risk of bitcoin accepted in a commercial transaction.

2. Atomic-Trade becomes Pryto Merchant

Prypto has revealed their first Merchant will be the Atomic-Trade exchange. Prypto has been established to enhance and expand the Crypto Currency marketplace of today by giving consumers direct access to obtain crypto currencies with ease. In other words, Prypto creates an easy and familiar environment for consumers to acquire Crypto Currencies off-line. The firm’s first product utilizes Crypto Scratch Cards to allow consumers to feel a physical item with crypto currencies, then redeem the Prypto Codes available on the Crypto Scratch Cards either via a dedicated web site or directly on accepting Merchant web sites.

The new partnership means that by using Prypto’s Crypto Scratch Card, you can instantly deposit Bitcoin, and WorldCoin into an Atomic-Trade account balance, without having to run a QT or desktop wallet. The funds linked to the Crypto Scratch Card will be dispatched immediately, and without any fees.

At the moment, Bitcoin may not be the golden herald of crypto-currencies, its serious advocates yearn for, but it may yet in fact, herald the deeper financial revolution that we all have been waiting for. Bankers you have been warned.