The Digital Divide...
Is Microsoft preparing to absorb the financial and cryptocurrency industries at the same time?
That would be a conspiracy theory. But why are they warming up to banks and crypto's? Positioning?
Microsoft is no doubt, one of the most successful businesses on earth. But to watch the banking industry and the cryptocurrency blokes join hands in the Azure Cloud – well --it just bothers me. And it makes it really easy for the Department of Justice to obtain your information.
...and you don't have a right to privacy...do you?
We may be witnessing the biggest shakeup in the financial world in our lifetimes and that’s not the worst of it.
Recently and probably repeatedly, Jim Rickards (America Lawyer, Author and Commentator) said that anything can be money. Whether it’s gold, silver, paper fiat-dollars or even feathers – all have been money at one time or another. Rickards is quick to point out, however, that some of these forms of money have no backing or intrinsic value. Paper money and crypto-currency are examples of this.
Rickards also mentioned that the United States functions in a semi-gold standard state. In other words, gold is allegedly stored in Fort Knox and at various places around the country. This means that the fiat-dollars, paper or electronic, function as an irredeemable quasi-gold backed system. A system of trust. Trust that the dollars have real value. This is a specious connection at best. At any given moment this trust can evaporate.
And yes, I know that Rickards wants to sell you his books and newsletters. He sells "bad news." But we should pay attention anyway.
Cryptocurrencies, such as Bitcoin, Litecoin or even the “New Economy Movement” (XEM), are fiat systems as well. The difference is that they are not centralized systems and they are self-regulated. The layer of manipulation by interested parties, such as state entities or even the threat of corporate takeovers, has been mitigated and in some cases, eliminated altogether.
Ideally, a cryptocurrency is a neutral monetary system – an algorithmic clearinghouse – and nothing more. The trust is in the math, not centralized monetary planners. But in the end, someone or a group of someones, must maintain the "core" as it were. So there is the centralization problem, all over again.
Some crypto-currencies ‘build-out.’ They leverage the blockchain technology to verify contracts and even insure signatories. They add new programming languages, such as within Ethereum. They trade pegged asset crypto-currencies, as Bitshares allows.
This build-out will add service value to the various projects, but it is arguable if any ‘intrinsic value’ is added. In short, these projects become ‘gimmicky’ and one can witness their wild price swings when each new ‘gimmick’ is added.
One such new ‘gimmick’ is to cozy up businesses, primarily the ones which service the banking and financial industries. That should give the die hard Bitcoin fans pause.
Ripple was one such company that decided to go to the centralized way early in the game. Its success has been marginal at best. As of April, 16, 2016, their market cap is below 250 Million.
To contrast, Bitcoin itself, if it could be purchased and wholly owned by Bill Gates of Microsoft fame, is capitalized at about six billion dollars. Again, that's at today's levels -- April 16, 2016.
Azure is the lure.
Perspective is a nice thing to contemplate, but as Goliath goes, it’s not always rational to compare Samson’s size. Microsoft as Goliath is, however, making interesting inroads – into the world of crypto-currencies.
No doubt, the dream of electronic money or currency is a new dynamic for Windows' Gurus. We can debate the possibility that Microsoft may have created Bitcoin, but speculation is a moot point when one examines how Azure fits into this cryptic puzzle. And we won’t even get into the alleged appropriation of technology by Microsoft from Apple in years past. It just helps set the table. Thickens the plot. But you be the judge.
Microsoft Azure has been ever so nicely ‘partnering’ with various cryptocurrencies.
Here are a few, in no particular order below...
Microsoft Azure Crypto-currency 'Partnerships'
New Economy Movement
Microsoft has also partnered with various cryptocurrency related firms – again in no particular order:
Microsoft Azure Crypto-currency Service 'Partners'
What they do
a private “incorporated” block-chain
“…brings simplicity, security, and speed to the world's blockchains”
“Decentralized KYC and Credit Rating services”
DAPPS on Ethereum
Rapid Ledger Building
Bitcoin payment processor
Blockchain rewards platform
Bitcoin Tax Service
(The above lists are not exhaustive and not meant to disparage any of the associated companies, but to contrast the spirit of cryptocurrency, as being “decentralized,” with Microsoft’s penchant for “centralization.”)
Notably, the New Economy Movement (NEM, but the currency is labeled 'XEM') has balked. Will they be shunned or praised?
NEM is questioning certain rights the crypto-currency must sacrifice in order to partner up with Microsoft Azure...if they choose to partner with Microsoft Azure. Concerns about the continued ability of their system to maintain its autonomy – if they use Azure – have arisen.
This should make us stand up and listen. At least those who see promise in the crypto-world. NEM is experiencing heartburn. The question is, why did all these other crypto-currencies not question their rights? Did they see dollar signs and forget their true purpose? And again, that's just one problem with partnering up.
If the dollar were to collapse at a faster rate than it is presently doing, then what of the perceived value of cryptocurrencies? As fast as inflation creeps into the economy, the primary result of over-stimulation – running the proverbial printing presses at maximum output – the faster cryptocurrencies might also devalue.
That is, until they are detached from the fiat currencies altogether. Wouldn’t it be nice, sayeth the money changers of old, if the crypto’s could not detach?
Azure to the rescue?
It would behoove the money changers, the various state entities around the globe, to ensure that they could ultimately control (not regulate as some put it) all systems of commerce related to currency generation.
As systems, such as their fiat bill devaluation method, begin to fail, any other system which could compete or are competing, must be dealt with -- sooner rather than later. This leaves the various states (governments) with two options, generally.
Regulate or integrate.
Regulation, which often backfires and integration, which is the more pleasant approach. What better way to integrate is there? Just regulate a previously controlled entity: Microsoft Azure -- which partners with banks and cryptocurrencies.
Currently, we are seeing crypto-currency integration by proxy. Microsoft Azure partners with various crypto-currency blockchains. These pseudo-companies, run by citizens, often volunteers from various countries, some come along with their alleged voters, accept the partnering as a way to grow their systems. One wonders how an anonymous decentralized crypto-currency can partner, even loosely, with a regulated, heavily taxed company, like Microsoft and not lose in the process – their very soul.
Satoshi Nakamoto would certainly be concerned -- if he cared any longer. The New Economy Movement folks may actually buy their way into the fold of Azure, but that still makes one wonder. Would they too be subject to the laws of Washington State and the wayward (secret) info grabs by the Department of Justice?
But that is not the all of it. Microsoft Azure, along with Amazon Cloud services are doing more and more business with companies like J.P. Morgan Chase. Oracle Corp. and even IBM are using these ‘cloud based’ services. Microsoft is tossing out life lines to the old guard, made up of aging businesses long past their prime and cryptocurrency innovators alike.
All Seeing Eye
All Seeing Eye
Finally, cloud data is not beyond the reach of an over-reaching government or governments – as The Hacker News reported on April 14, 2016. Microsoft has sued the Department of Justice “to protest the gag order that prevents technology companies from telling their customers when their cloud data is handed over to authorities.”
Who do you think will win? Is your data, say your bank account, vacation photos, credit card information – your ‘monero’ as it were – safe on Azure? Not.
(The above is this author’s opinion.)
Sources (Links) - Recommended Reading
By Elatanatari (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
By Ncasolivat (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons