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Bitcoin: The Sexiest Non-Solution Of All Time?

 

 

 

 

 

Bitcoin rises above $19,500 and then falls, learn how to leverage

(AFP) 

New York — The virtual currency bitcoin Wednesday broke above $4,500 per unit, quintupling in a month, according to Mt. Gox, which manages trading in bitcoin.

Launched in 2009 as the invention of a mysterious computer guru who goes by the pseudonym Satoshi Nakamoto, bitcoins can be exchanged online for real money or used to buy goods and services on the Internet. The currency is not regulated by any government.

Bitcoin reached $4,523 at 1640 GMT. At 1746 GMT, the currency was trading at $4,523 plus or minus $25.

Still, bitcoin has gotten momentum in recent weeks after US regulators, including Federal Reserve Chairman Ben Bernanke, took a more positive view of the currency than many analysts had expected at a congressional hearing earlier this month.

Regulators have also discussed stepping up oversight in light of concerns that it could be used for money laundering and other illicit purposes.

Bitcoins recently made headlines when the US Federal Bureau of Investigation closed the Silk Road website where illegal drugs, forged documents, hacker tools and even the services of hit men were hawked. The FBI seized 26,000 bitcoins worth $3.6 million at the time in early days, but in last several years, no interference by regulators as it has become more acceptable than ever thought possible as main  street now accepts Bitcoins. 

History is listed below for a better understanding of crypto currencies and the future of this digital currency.

 

HERE ARE FIVE THINGS YOU NEED TO KNOW ABOUT BITCOINS:

  1. What is Bitcoin? It is a digital currency that is created and exchanged independently of any government or bank. The currency is generated through a computer program and can be converted into cash after being deposited into virtual wallets. In 2008, a programmer known as Satoshi Nakamoto - a name believed to be an alias - posted a paper outlining Bitcoin's design and later in 2009 released software that can be used to exchange Bitcoins using the scheme. That software is now maintained by an open-source community coordinated by developers.

  2. How does Bitcoin work? It exists through an open-source software program and its supply is controlled by a computer algorithm. Once you download and run the Bitcoin client software, it connects over the Internet to the decentralized network of all Bitcoin users and also generates a pair of unique, mathematically linked keys, which you'll need to exchange Bitcoins with any other client. One key is private and kept hidden on your computer. The other is public and a version of it dubbed a Bitcoin address is given to other people so they can send you Bitcoins. The process of generating Bitcoins is quite complicated and involves solving complex algorithms and sharing the solution with the entire network. The "mining" is very computationally intensive and requires powerful computers..

  3. How to transfer Bitcoins? When you perform a transaction, your Bitcoin software performs a mathematical operation to combine the other party's public key and your own private key with the amount of Bitcoins that you want to transfer. The result of that operation is then sent out across the distributed Bitcoin network so the transaction can be verified by Bitcoin software clients not involved in the transfer.

  4. How to trade Bitcoins? Exchanges like Mt. Gox provide a place for people to trade Bitcoins for other types of currency. Payments to a merchant who accepts Bitcoins are made from the wallet application, either on your computer or smartphone, by entering the recipient's address, the payment amount. At the end of August 2013, the value of all Bitcoins in circulation exceeded $1.5 billion with millions of dollars worth of Bitcoins exchanged daily, according to Bitcom website.

  5. Who controls the Bitcoin network? It is controlled by all Bitcoin users around the world. While developers improve the software, they can't force a change in the Bitcoin protocol because the virtual currency can only work correctly only if there is a consensus among all users.

 

 

 

 

Bitcoin: The Sexiest Non-Solution Of All Time?

 

 

 

 

 

 

 

PROS & CONS OVERVIEW

 

 

Toward the end of 2009, I was approached on two separate occasions by people claiming to be “representatives” of a digital alternative currency format. I was intrigued by the initial proposal, being that I had been writing for some time on the concept of non-participation as a way to insulate average Americans from the dangers of our unstable, fiat-driven mainstream economy. Before that, I had already dealt with just about every currency alternative one could imagine: from paper scripts backed by goods, to scripts backed by time or labor, to gold- and silver-laden currency cards, etc. All of them had the advantage of not relying on private Federal Reserve notes, and all of them had flaws as well. The proposed digital script, which the representatives called “Bitcoin,” was no different.

The idea was to recruit my website as a promoter for Bitcoin. But I had many questions before I would stick my neck out on a brand-new, high-tech anti-currency; and most of these questions were not answered in any satisfactory manner.

There is no shortage of “solutions” in liberty movement circles, but most of these solutions require that we work within the system, according to establishment rules (which can change at any given moment). In reality, if a solution depends on a paradigm controlled by the corrupt system you are trying to change, it is no solution at all. Because of this, my focus has always been on methods that separate Americans from reliance on the system as much as possible.

When first confronted with Bitcoin activism, I recognized almost immediately that this wasnot a method that operated outside the system, even though it tried very hard to appear that way. It was high-tech and sexy (admittedly, far sexier in its presentation than gold and silver); and it catered to the egos of the digital generation, the loudest voices in media today. This thing was certainly marketable. However, just because something is highly marketable does not make it a good idea — or a meaningful alternative.

The Tantalizing Allure Of Non-Solutions

 

Bitcoin promoters are not objective. They are becoming elitist. And if you dare to question the greater details behind Bitcoin, be prepared to be accused of anything from “conspiracy theory” to “jealousy” for missing the boat on Bitcoin profits.

Few of the Bitcoin promoters I’ve questioned are involved in the deeper aspects of the liberty movement, Constitutional activism, sound money, self-defense and so on. Almost none of them had a preparedness plan, few of them had experience with precious metals, none of them owned firearms, and none of them had any inclination to build local networks for mutual aid. Worst of all, many of them had no understanding of the wider threat of economic collapse that America faces today. In fact, when the possibility of full-spectrum collapse is brought up, many Bitcoiners respond with the same brand of shallow dismissals that one would expect from the Paul Krugmans and Ben Bernankes of the world.

This reaction is not necessarily shocking. Most people imagine themselves accomplishing heroic feats, and why not? It is one of the more noble and beautiful traits of mankind. For the crypto-engineers of the new century and the digital generation overall, heroics have felt unattainable. Elections are finally being recognized as the sham they represent, while protest activism has fallen flat on its face.

Anti-establishment champions desired an intellectual method of combat. Enter Bitcoin.

Bitcoin gives the digital generation the chance to feel heroic. They don’t have to face the machine head on. They don’t have to fight. They don’t have to suffer. They don’t have to die. All they have to do is use some cryptographic wizardry within the supposedly anonymous safety of the Web, buy Bitcoins en masse and watch the system crumble at their feet, rebuilt in the name of free markets by the electronic commons and without a shot fired. Again, very sexy.

Unfortunately, the real world does not necessarily lend itself to the demands of the digital world. The digital world is at the mercy of the physical world. The real world is not sexy; it can be ugly, brutal, hypocritical, illogical and psychotic. The real world, at times, can break. And when it does, the digital will break with it. The digital world is in large part a fantasy supported by the whims of the real world, which leads me to the core failings of the Bitcoin adventure.

Bitcoin Theater

 

We’ve all heard praises lavished on Bitcoin, not only from Web activists but from the mainstream media itself. Establishment controlled outlets like Reuters and Bloomberg have an astonishing number of Bitcoin stories per week, and most of these stories paint the crypto-currency in a positive light. We’ve all heard about Bitcoin’s “unbreakable” cryptography: its finite supply, the inability to duplicate the currency from thin air, its rising acceptance in the corporate world. The Cinderella stories of Bitcoin investors buying Lamborghinis and New York brownstones. Even Bernanke seems to have a soft spot for Bitcoin.

But is Bitcoin’s rise really all it’s cracked up to be? Here are just a few of the problems that lead me to believe the digital currency is ultimately a clever distraction.

Who Really Started Bitcoin?

 

One of my first questions to Bitcoin representatives in 2009 was who, exactly, founded the operation? Well, Satoshi Nakamodo, everyone knows that, right? But who is that? Who is the original designer of Bitcoin? Who holds the digital key to the structure of Bitcoin’s cryptography? Is Nakamodo a person or a group? Why should we trust him, or them, to safeguard our wealth any more than the Federal Reserve? The fact is no one except maybe Gavin Andresen, the chief scientist at the Bitcoin Foundation, knows who is behind the digital currency. We actually know more about the banking elites behind the Fed than we do about the founders of Bitcoin.

The common response to this concern is to suggest that it doesn’t really matter, that Bitcoin is secure, that it is cryptography’s holy grail, that the creators are protecting their identities against retribution from the establishment… and the excuses go on.

This attitude constitutes an act of blind faith in a currency mechanism, which is exactly what proponents of the dollar are guilty of. If an activist individual or group is going to offer a solution to the movement, then they had better be willing to take the risk of being personally available to the movement. If you don’t have the nerve to show your face to help legitimize your idea, I can’t take your idea seriously. Maybe I’m just old-fashioned.

For all we know, Bitcoin is a creation of the establishment, not a creation countering the establishment.

The Media Love Affair With Bitcoin

 

During the first and second Ron Paul campaigns, the mainstream media made a blatant and obvious effort to purposely ignore the candidate, his arguments and his successes. Coverage was next to nil. His crowds of supporters were edited out of news footage. His high polling numbers were censored. If not for the independent media, you wouldn’t have known the guy existed. When someone or something presents a legitimate threat to the establishment, the establishment’s first tactic is to make sure no one knows.

Bitcoin, on the other hand, has received a steady flow of positive media attention, with the random critical piece thrown in for good measure. Overall, the establishment has embraced, if not directly fueled, the Bitcoin trend. This is rather surprising to me, considering the “destroyer of the dollar” has only been around for four years.

When an anti-establishment vehicle suddenly becomes the center focus of establishment affections, and when globalist monsters like Bernanke throw flower petals in its path, I have to wonder whether Bitcoin is a real threat or a ruse.

Bitcoins Can Indeed Be Confiscated

 

Some of the early hype surrounding Bitcoin claimed that the currency could not be confiscated, making it “better than gold.” (The “better than gold” motto has been widely espoused by Andresen.) This claim turned out to be false when the FBI became the holder of the world’s largest Bitcoin wallet.

I find arguments that this is only a temporary condition and that the Feds will eventually auction off their holdings a bit laughable, but indicative of the denial inherent in Bitcoin culture.

Bitcoin Values Can Be Manipulated

 

Another claim was Bitcoins cannot be created out of thin air; they must be “mined” using powerful computers, which removes centralized manipulation of value. This may be true in certain respects (for now), but anything digital can be exploited in one way or another.

Bitcoin malware, for instance, hijacks the computers of unwitting people and uses them to artificially “mine” the currency.

The Bitcoins mined are then transferred into the hands of anonymous hackers. This represents a serious threat to the stability of Bitcoin, because it removes liquidity from the market and out of the hands of honest users. Could hackers, or governments, kill the Bitcoin market by mining a large portion of them out of circulation, artificially hyperinflating the value of the remaining coins (like a speculator would do with commodities)? Yes, absolutely. Could the Nakamodo majority stockholders (whoever they are) use their massive Bitcoin stake to shift values at will? Certainly, as long as Bitcoin operates on supply and demand.

Bitcoin is just as susceptible to manipulation as any other currency or commodity, though the methods are slightly updated.

Bitcoin Is Not Private

 

While Bitcoins can apparently be stolen or criminally mined by anonymous people or organizations, honest users are subject to considerable scrutiny. Perhaps the strangest and most disturbing aspect of Bitcoin is the group surveillance that goes into tracing transactions. The Bitcoin network is actually dependent on decoders who constantly track and verify Bitcoin trades in order to ensure that the same Bitcoins are not used during multiple trades or purchases. Anyone with the desire could decode the transaction history of the network, or “block chain,” including governments. The use of anonymising browsers like Tor have not produced the kind of privacy that was promised when Bitcoin was introduced.

This is exactly the kind of currency system global bankers have sought for some time: total information awareness of all financial transactions and purchases within the system. While Bitcoin proponents claim that their currency is a revolution against centralized oversight of monetary transactions, the truth is they have built the perfect centralized surveillance solution. Paper dollar purchases are difficult to trace. Gold, silver and barter purchases are nearly impossible to track. Bitcoin, though, is the most traceable form of currency on the planet; and this is basically required by the network itself. The digital landscape is the ultimate form of privacy invasion, especially for the likes of supercomputer-wielding agencies like the National Security Agency. Bitcoin aids the development of this intrusive system.

Bitcoin Relies On The Continued Survival Of The Open Web

 

Bitcoins can be stored on physical wallet devices, but the majority portion of Bitcoin trading and Bitcoin mining requires the continued operation of the Web. The Internet is not a creative commons, as many believe. It is, in fact, a controlled networking system that we have simply been allowed to use. The exposure by Edward Snowden of NSA activities has proven once and for all that nothing you do on the Web is private. Everything is tracked and recorded. Period.

Web access can also be easily denied by governments, and power centers around the globe have been using this option more and more. During a national crisis, whether real or engineered, the continued function of the Internet as we know it is not guaranteed. A currency relying on a government-dominated Internet is not truly independent. A grid-down situation would also make Bitcoin stores virtually useless.

The Suspicious Nature Of Bitcoin

 

Bitcoin is consistently touted as a superior option to precious metals as a way to decouple from central bank fiat. Under examination, though, it appears to me that Bitcoin is instead a deliberate distraction away from gold, silver and other tangible solutions, or a form of controlled opposition.

A vital aspect of physical gold and silver investment is not only to break from the dollar, but to also remove physical metal from the system and starve international banks that issue millions of fraudulent unbacked paper certificates. The strategy, which I still stand by, is for the public to absorb as much of the precious metals market as possible until manipulators like JPMorgan finally have to admit that they don’t have the coins and bars to back all the fake exchange-traded funds they have been issuing investors for years. In the process, we decouple from the dollar and do damage to the banking cartel itself. The Bitcoin fad, I believe, is designed to lure the public away from overtaking the metals market, while banks and foreign governments vacuum up remaining physical in preparation for a dollar collapse.

Not only is Bitcoin’s market value volatile, but the currency is also subject to replacement at any time. Anyone with an interest can create a crypto-currency. There is nothing particularly special about the Bitcoin design; and if someone offered a digital currency tomorrow that wasn’t fully traceable, it could quickly supplant Bitcoin. Though its cryptography makes it difficult to artificially inflate (again, for now), other digital currencies can still be produced out of thin air. Bitcoiners desperately want to equate cryptography with tangibility, but the truth is that there is no comparison. Physical gold and silver cannot be artificially produced by anyone, anywhere.

The most unsettling aspect of Bitcoin, however, is not its distraction away from precious metals. Rather, it is the distraction away from localized solutions. Bitcoin proponents may be searching for decentralization, but they seem to have forgotten the most important part of the process: localism. The trade of digital mechanisms over impersonal Web networks and online marketplaces is not conducive to local economic stability or sustainability. Bitcoin does not encourage people to build local markets, to adopt useful trade skills or to circulate wealth within one’s community. Bitcoin only furthers the removal of independence and self-sustainability from the global economy by fooling activists into thinking that buying things without dollars is enough.

If Americans in particular want to pursue any solution to the threat of globalism or dollar collapse, they are going to have to start with themselves and the community around them. Online trade is the last thing they should be worried about. Only when neighborhoods, towns and counties become producers and self-suppliers will they be safe from financial instability. Only when those same communities band together for mutual aid and self-defense will they be safe from tyrannical political entities. Bitcoin accomplishes nothing in either of these categories, making it possibly the most popular non-solution for liberty to date.


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