Tag Archives: Bitcoin

The Gamification of Bitcoin, by J.P. Koning

Heretical as it may be to suggest, Bitcoin may never be much more than a glorified pass line bet. From J.P. Koning at aier.org:

Eleven years ago, Satoshi Nakamoto announced the bitcoin whitepaper to the world. Coinbase, a large cryptocurrency exchange, recently celebrated this milestone with a retrospective.

I’m going to remix Coinbase’s narrative to tell a different account of bitcoin’s last 11-years.

The thing that fooled us all for a while, myself included, is that we all thought bitcoin was solving a monetary or payments problem. It was labelled a coin, after all, and coins fall within the realm of monetary economics. To further complicate matters, Satoshi told his story using phrases like “electronic cash system” and “non-reversible transactions”. Perhaps we deserve to be forgiven for not seeing bitcoin’s underlying nature. After all, tearing down the existing monetary system and building a new one was a fresh and exciting narrative.

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Set Money Free, by John Stossel

Money completely free of government is the only money that has a chance of being honest money. From John Stossel at townhall.com:

Set Money Free

Source: AP Photo/Susan Walsh

House members summoned Facebook’s Mark Zuckerberg to Washington, D.C., and grilled him — harshly — about his plan to create a new currency, Libra.

“Why should we trust you?!” asked Congressman Mike Doyle.

I liked it when Zuckerberg said, “I actually don’t know if Libra’s going to work, but I believe that it’s important to try new things.”

He was right. That’s very important.

The Libra would make it easier to transfer money anywhere in the world. It also promises stability. Its value would be based on a basket of currencies from different countries, which would protect Libra owners from inflation in any one country.

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Bitcoin’s Rally Exposes Central Bank Weakness, by Tom Luongo

A lot of decrepit institutions are scheduled for extinction, including central banks. From Tom Luongo at tomlouongo.me:

There’s something about the timing of this Bitcoin rally that should have your attention. It’s happening in the wake of President Trump’s big push to remake the world economy along his lines.

It’s also happening as central banks stand exposed as having no answers for the continued deflation and collapse of money velocity a decade of QE and zero-bound (or negative) interest rates were supposed to cure.

Trump’s Trade and Tariff War will not solve this. He won’t address the real problems but rather blame China. And now he’s putting upward pressure on Bitcoin while the yuan is under serious pressure.

Because while Trump is out tweeting this morning about how bad it will be for China, he’s also moving to label anyone with a trade surplus with the U.S. a ‘currency manipulator.’

So, there is no escaping Trump’s ignorance on trade. And now he’s trapped.

So much for “trade wars are easy to win.”

Now that the trade war is in full flower because Trump doesn’t get basic economics things will get worse from here.

The major capital markets stare on in disbelief, hoping for a last minute miracle in China trade talks. They’ve priced in Trump folding at the last minute and he hasn’t done so. The big markets resist big moves because of both deep liquidity pools and investor normalcy bias.

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IMF Reveals That Cryptocurrency Is The New World Order End Game, by Brandon Smith

Brandon Smith is probably right on this one. From Smith at alt-market.com:

There are two kinds of globalist schemes: First, there are the schemes they spring on the public out of nowhere haphazardly in the hopes that the speed of the event along with some shock and awe will confuse the masses and make them psychologically pliable. This strategy loses effectiveness quickly, though; the longer the plan takes to implement, the more time the people have to reconsider what is actually happening and why.

Second, there are schemes they slowly implant in the collective psyche of the citizenry over many years, much like subliminal messaging or hypnosis. This strategy is designed to make the public embrace certain destructive ideologies or ideas as if these ideas were their own.

The cryptocurrency scam is of the second variety.

I have been suspicious of the cryptocurrency narrative of a “decentralized and anonymous monetary revolution” since 2009, when I was first approached by people claiming to be “representatives” of bitcoin and asked to become a promoter of the technology. After posing a few very simple questions and receiving no satisfactory answers, I declined to join the bandwagon or act as a frontman.

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Conflation of Bitcoin and Blockchain, by John R. Skar

While you may not know all the in and outs of cryptocurrencies and blockchain technology, it’s important to realize that they are distinct concepts. Blockchain, while used in many cryptocurrencies, also has uses entirely separate from them. From John R. Skar at lewrockwell.com:

There it is again! That smooth, subtle and seamless transition conflating cryptocurrencies, like bitcoin, with the blockchain technology. There are thousands of blog posts and news articles about bitcoin and cryptocurrencies, but the great majority fail to clearly distinguish between the technology and the digital currency that is created and transmitted by it.  In a “Bitcoin Primer” published by Coinlab, “The term Bitcoin refers to both the digital unit of stored value and the peer-to-peer network of computers transmitting and validating transactions of these units.”

In another bitcoin primer, we read “Bitcoin is a decentralized peer-to-peer payments network and a virtual currency that essentially operates as online cash.”

To some degree, it is understandable.  The original bitcoin white paper by Satoshi Nakamoto described a digital currency produced on a unique-to-bitcoin blockchain platform.  They were as inseparable as Siamese twins and many bitcoin enthusiasts share exactly that view of the world.

Conflation creates confusion, however, particularly when discussing valuation.  Allowing bitcoin to ride the coattails of the blockchain technology is misleading at best. A typical example of conflation comes from trying to compare the valuation of bitcoin to the franchise value of Mastercard and VISA.  “Quite simply, Bitcoins have value because a growing group of people believe that the underlying Bitcoin technology has value.”

Bitcoin as “coin” does not equate to VISA as transmittal medium.  Blockchain is the proper comparison.  I think that might be what Warren Buffet and Jamie Dimon are getting at when they call bitcoin a fraud.  They certainly are not referring to blockchain technology, which they know has potential to improve their businesses in many ways.  They just aren’t falling for the conflation.  In fairness, some people do try to clearly distinguish between cryptocurrency and blockchain. My point is that in most cases we should strictly confine the discussion to one or the other or at least clearly try to avoid the conflation.

To continue reading: Conflation of Bitcoin and Blockchain

Bitcoin Drops to $5,860, Lowest since October 2017. True Believers with Fake Hopes Got Cleaned Out by Early Movers, by Wolf Richter

Cryptocurrency prices go down as well as up. Who knew? From Wolf Richter at wolfstreet.com:

Down 70% from the peak. This is just not fun anymore.

Bitcoin dropped to $5,860 at the moment, below $6,000 for the first time since October 29, 2017. It has plummeted 70% in six months from the peak of $19,982 on December 17. There have been many ups on the way down, repeatedly dishing out fakes hopes, based on the ancient theory that nothing goes to hell in a straight line (chart via CoinMarketCap):

If you’re a True Believer and you just know that bitcoin will go to $1 million by the end of 2020, as promised by a whole slew of gurus, including John McAfee – “I will still eat my dick if wrong,” he offered helpfully on November 29 – well you probably don’t need this sort of punishment. You’re suffering enough already. And I apologize. I feel your pain. I was a true believer too a few times, and every single time it was a huge amount of fun, and I felt invincible and indestructible until I got run over by events.

With 17.11 million bitcoins circulating today, if bitcoin were at $1 million today, it would amount to a market cap of $17 trillion. But new bitcoins are constantly being created out of nothing (“mined”) by computers that suck up enormous amounts of electricity. And by the end of 2020, there will be many more bitcoins, and if the price were $1 million each, the total would amount to about the size of US GDP.

This doesn’t even count all the other cryptos that would presumably boom in a similar manner, amounting perhaps to half of global GDP, or something.

People who promote this brainless crap are either totally nuts or the worst scam artists. But I feel sorry for the True Believers whose fiat money got transferred and will continue to get transferred from them to others.

So OK, there’s still some time left. It’s not the end of 2020 yet. And True Believers still have room for the fake hope of a $1-million bitcoin.

But at the moment, bitcoin is even worse – incredibly – than one of the worst fiat currencies in the world, the Argentine peso, which has plunged “only” 35% over the period during which bitcoin plunged 70%. That takes some doing!

There is always some reason or other that is cited for the drops: The endless series of hacks into exchanges during which crypto tokens and coins just vanish. Nervous regulators cracking down on the scams surrounding cryptos, initial coin offerings (ICOs), and how they’re being promoted. Or advertising platforms such as Facebook, Google, and Twitter, and email newsletter platforms restricting ads and promos about cryptos and ICOs.

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NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal, by Tyler Durden

So much for the anonymity of cryptocurrencies, which was always oversold. More worrisome, other intelligence agencies are using information the NSA sweeps up to make criminal cases. From Tyler Durden at zerohedge.com:

During his 2015 trial, Silk Road creator Ross Ulbricht’s defense attorneys raised questions about the government’s case that, although they were ultimately disregarded by the jury, have continued to bother crypto users with an affinity for so-called “conspiracy theories.” They pointed out vagaries in the FBI’s account of its years-long pursuit of Ulbricht, and questioned whether the bureau had truly discovered Ulbricht’s involvement on its own, or whether it had help from other deep state elements, namely the National Security Agency.

Of course, the judge, who eventually sentenced Ulbricht to life in prison without the possibility of parole, refused to entertain their argument. But if they were correct, it would mean that the government’s whole case was built on evidence that was ultimately inadmissible.

As it turns out, Ulbricht’s lawyers were on to something.

In a blockbuster report published Tuesday in the Intercept, reporter Sam Biddle cited several documents included in the massive cache of stolen NSA documents that showed that the agency has been tracking bitcoin users since 2013, and has potentially been funneling some of this information to other federal agencies. Or, as Biddle puts it, maybe the conspiracy theorists were right.

It turns out the conspiracy theorists were onto something. Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target Bitcoin users around the world – and wielded at least one mysterious source of information to “help track down senders and receivers of Bitcoins,” according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents.

Using its ability to siphon data directly from the fiber-optic cables, the NSA managed to develop a system for tracing transactions that went well beyond simple blockchain analysis. The agency relied on a program called MONKEYROCKET, a sham Internet-anonymizing service that, according to the documents, was primarily deployed in Asia, Africa and South America with the intention of thwarting terrorists.

The documents indicate that “tracking down” Bitcoin users went well beyond closely examining Bitcoin’s public transaction ledger, known as the Blockchain, where users are typically referred to through anonymous identifiers; the tracking may also have involved gathering intimate details of these users’ computers.

The NSA collected some Bitcoin users’ password information, internet activity, and a type of unique device identification number known as a MAC address, a March 29, 2013 NSA memo suggested. In the same document, analysts also discussed tracking internet users’ internet addresses, network ports, and timestamps to identify “BITCOIN Targets.”

To continue reading: NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal