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Ransomware is to bitcoin what the Tax Agency is to your salary




In a similar way to how citizens are required to pay their taxes in dollars, ‘ransomware’ (data hijacking) demands the payment of ransoms in bitcoin, forcing companies, individuals and even some governments to use this currency if they want regain control of your systems computer scientists.

If this sounds crazy, be patient. Before explaining it in detail, a brief review of monetary theories will be necessary. The most accepted version is the one that says that money was created to solve the inconveniences that bartering with pigs, llamas or berries generated our ancestors. It would be much easier to trade a few llamas for generally accepted items, such as cowrie shells, elegant feather boas, or carved stones, and then exchange those items for grain, than to find someone with grain who would just like a llama.

Money also allowed book debtsAdding a few notches in a carved stick at the time of obtaining the cereals and later providing the llamas, cereal, or whatever would have been agreed upon as payment of the debt was even easier than using cowrie shells.

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The first theory revolves around money as a medium of exchange, an area in which bitcoin has fallen short due to the cost and inconvenience that must be assumed to buy something using this currency. Its use is only more common when its international nature and the anonymity it provides have the necessary weight to compensate for these disadvantages, such as when evading laws against money laundering, taxes or capital controls. For the rest, bitcoin trading is currency speculation and arbitrage.

The second theory focuses on the use of money as a unit of account, a role that bitcoin has yet to play successfully. Even in El Salvador, where bitcoin is legal tender, the prices of products are put in dollars first, and then converted to bitcoin when someone wants to use this currency when paying.

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The third theory is increasingly popular thanks to modern monetary theory (MMT), and includes the Internal Revenue Service (IRS), the United States Government Revenue Agency, as a key element. One of the basic principles of MMT is the cartalism, the idea that money has value because it is used to pay taxes. The government issues bills (or coins) and, as it requires citizens to return a part of that money each year, they have to obtain it first. In other words, the dollars are backed by the IRS, which has armed men and women.




Cryptocurrency buyers often refer to the spending style of MMT advocates to the left of the Democratic Party as argument to abandon the dollar. However, this theory also reinforces the idea that ‘ransomware’ supports bitcoin: these programs restrict access to the hard drive and demand a ransom in bitcoin, in a manner comparable to a ‘crypto’ version of a combination of payments of taxes required by the IRS and steps to ensure compliance with relevant regulations.

If enough people have to go out and buy bitcoin to pay ransoms, others will produce it and keep it ready to sell, as there will be a constant demand. Likewise, those who already have bitcoin ready to pay bailouts or taxes, could choose to use them for other payments, just like dollars.

To pay for the ransom, they must buy it from someone else who is either mining bitcoin or speculating about its future value.

In reality, when there is no other option but to pay in bitcoin, no matter the inconvenience. This is also true of other forms of money that are even less useful, such as the nearly 20 kg copper coin used in Sweden in the 17th century as a high value one.

Similar to taxes, the forced use of bitcoin by victims of ‘ransomware’ creates the need for a certain amount of this currency to exist. To pay for the ransoms, they must buy it from someone else who is either mining bitcoin, which is energy intensive, or speculating about its future value. So far, this has not served as the basis for wider adoption, not least because most consider the dollar to be much better as a medium of exchange and unit of account. However, ‘ransomware’ generates a base level of demand and plays the same role as taxes in the traditional system.

Unfortunately for bitcoin, the hack of the Colonial Pipeline systems was the final straw. Governments have realized that they need to take seriously the fighting ransomware threats, and many ‘hackers’ have started to opt for other more discreet cryptocurrencies after seeing how the FBI managed to recover around half of the ransom paid by Colonial Pipelines.

Although bitcoin is not as attractive as gold, it will serve as a store of value as long as there are enough people who perceive it.

Many buyers of bitcoin do not care if this currency is used for other payments frequently or not, they prefer to think of it as a store of value than as medium of exchange or unit of account. The argument is that, like gold, bitcoin has value because others attribute it to it. Although bitcoin does not arouse in us the attractiveness of shiny things or has not been used historically as money, as is the case with gold, it will serve as a store of value as long as there are enough people who perceive it as such.

It is not clear that a sufficient number of people understand the bitcoin as a store of value, although there are those who clearly do, such as the ‘HODLers’ or long-term investors. Beyond the absurd swings in its value (ideally, stores of value should not double or halve every two months), many trade bitcoin to try to get rich in the blink of an eye. This differs greatly from buying a currency as a way to protect your wealth in case everything goes wrong, which is the common reason for investing in gold.

Perhaps we should add a new section to monetary theory: the volatility reserve. If we understand bitcoin as casino chips, it makes sense. It would be attractive to traders who want to get rich overnight and scammers, and they would be a reliable source of buyers to support prices. If enough people participate, they may want to spend their winnings to endorse the use of bitcoin as money. Of course, the IRS will want its share of the profits, whatever the currency.

* Content licensed from ‘The Wall Street Journal’

In a similar way to how citizens are required to pay their taxes in dollars, ‘ransomware’ (data hijacking) demands the payment of ransoms in bitcoin, forcing companies, individuals and even some governments to use this currency if they want regain control of your systems computer scientists.




TAMMY SEWELL
Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: [email protected] Phone: +1 513-209-1700

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