Bitcoin can be hacked!

Yes, Bitcoin can be hacked. I will give a technical explanation below, regarding how it can be done. The total cost involved in less than US$ one million. Any government or company can spend this amount to break Bitcoin.

The hacking entity will need about 50 computers say C01, C02 to C50. Each computer will initially have about 1 Bitcoin. Now, C01 will transfer one millionth of Bitcoin to C02 continuously; C02 will transfer one millionth of Bitcoin to C03; C03 to C04. Lastly, C50 will transfer one millionth of Bitcoin to C01. Now we have a cycle. A large number of transactions will need to be written on block chain i.e. distributed ledger. These transactions will have to be recorded by all computers running Bitcoin software. This will cause the Bitcoin block chain to become very slow. For all practical purposes, now Bitcoin transactions cannot be used.

You can confirm from any block chain expert, that the above method will succeed. Bitcoin and other distributed crypto-currencies cannot fix this flaw, because this flaw lies in the basic algorithm of a distributed block chain.

Disclosure: I am a technical person and have no investment in any crypto-currency.

The coming crisis

During the next few years, the entire world is going to see a financial crisis. No one alive has seen this kind of crisis before; no one alive will probably see this kind of crisis again during their lifetime.

This is what will happen during this crisis

• A large financial institution or a sovereign nation will declare bankruptcy.
• Because of derivatives, which cannot be honoured by a bankrupt entity, other financial institutions will declare bankruptcy.
• The world financial market will come to a standstill.
• People will not be able to buy/sell bonds/shares.
• Credit cards will stop working.
• Banks will stop cash withdrawals.
• Goods will stop flowing because once credit stops, oil delivery will stop.

Here the world governments will have two choices: Hyper-inflation or Depression.

The world will need a new reserve currency. The governments will insist on a new world currency because existing currency will have either lost value (hyper-inflation) or be unavailable (Depression). The World Bank will suggest governments use SDR as their world currency.
SDR is just another fiat currency like Dollar, Euro, Rupee, etc. It will allow the world bankers to create inflation / deflation on a need basis. It will transfer the wealth of the world from the poor and middle-class to the rich; because the rich friends of World Bank will be informed in advance about coming inflation / deflation. So these rich people can play in the financial markets without any chance of a loss.

We, the common-people, can protect ourselves from this coming crisis by performing the following steps:

• Keep most of your wealth in Gold, Silver, etc. Don’t store this gold/silver in any bank locker. Don’t use ETFs to buy gold/silver. Store the physical gold/silver at location where you can touch it.
• Use cash or Bitcoin (or some other decentralized crypto-currency) for transactions.
• Keep minimal cash in banks, fixed deposits, stocks, life-insurance, debt, etc.
• Pay off your debts early, if possible.
• Keep cash with you to cover expenses for 6 months or so.

A huge percentage of people across the world will not survive this crisis. But the people, who perform the above steps, will greatly increase their chances of survival. In fact, the crisis will transfer wealth from the unprepared to the prepared.

BRICS rating agency

There are three popular rating agencies in world today i.e. Fitch, Moody's and S&P. These rating agencies have consistently given a poor rating to India because

• Indian taxes are too high and complex.
• India law&order situation is weak. Justice is not delivered or often delivered late.
• Indian bureaucracy is big and corrupt. It is difficult to get work done on time in any government department, without paying bribes.

To improve its rating, India had to

• Reduce taxes
• Reduce bureaucracy, rules and regulations
• Privatize many government agencies like BSNL, MTNL, Railways, etc.
• Stream-line the justice delivery system.
• Disallow politicians/bureaucrats from interfering in the day to day running of any government owned business.

But instead of making the above changes to improve the life of Indians, the government wants to setup a new rating agency. Reference.
This is akin to a student, who keeps failing in exam. Instead of studying harder, he wants to change the teacher.
With an attitude like this the student (Indians) will not see any real improvement.

Why do Governments hate cash?

Most governments, all over the world, encourage citizens to go cashless. The main reason are

• Control: If government can see all transactions, then it gives more power to government. The Government can easily see who is participating in anti-government riots, which business house/group is financing its opponents.
• Taxes: A cashless transaction is a taxable transaction. Cashless means more taxes for government.

What should common citizens do?
A common citizen should not allow government to grow bigger or powerful. So a common citizen should transact using cash (or crypto-currency like Bitcoin). This way government has lesser control over people and taxes may be lesser.

So let us be smart. Pay cash wherever possible.

Bullet train from Mumbai to Ahmedabad

The cost is expected to be 17 billion US dollars. Let us assume that cost of maintenance is 10%. So if the project is used for 50 years, the total cost over 50 years will be 13,781 billion US$.
Let us say the cost of ticket is Rs 1,000. So per day about 500 lakh people have to travel by this train so that project does not make any loss. This is impossible because the bullet trains don't have that carrying capacity and there is not so much traffic between the two cities.

BitCoin is a bubble

In Year 2000, .com stocks were going exponential. Many people, without knowledge of how to read a company financial statement, were buying .com company stocks. Some people (initial investors who cashed out before the bubble burst) did make money. But many people lost a lot of money in .com crash.

Nowadays, Cryptocurrencies (like Bitcoin) are going exponential. Many people want to buy these cryptocurrencies. This is a repeat of .com bubble.
.com companies stock crashed because the companies were not making any profit. So the shares did not have much value.
New cryptocurrencies are springing up almost daily. Cryptocurrencies have no intrinsic value. So, in future, most cryptocurrencies will crash (but some will likely succeed).

Some people (initial investors who cash out before the bubble bursts) will make money. But many people will lose a lot of money in cryptocurrencies.

Real estate as investment

Why do real estate prices keep rising faster than people's income in most parts of the world?
Governments want real estate prices to rise faster than the economy. When prices rise,

• more taxes are collected.
• more employment is generated.

To aid the rise in real estate prices, governments

• give tax concessions to real estate investments.
• lower interest rates for real estate loans.

When real estate prices rise, more people are attracted to the real estate investments. The cycle is self-fulfilling and similar to a Ponzi scheme.

How will this cycle end?
The cycle can end in two ways

1. There is a collapse of real estate prices. This is unlikely because government will pass laws to cushion the fall e.g. lower interest rates, tax concessions to real estate investments, etc.
2. Real estate prices will stay flat or be mostly stable. This is more likely because of government's support to real estate.

Real estate has ceased to be a good investment in most parts of the world. Sure, if you want to live in a house, go ahead and buy it. But, if you are purchasing property, so that you will sell it for a profit in few years; then it is likely that you will make a loss or (at best) little profit.