Andy Perry’s back and this time he’s wielding a Democratised version of Herman Miller’s Death of A Salesman, but this time it’s more like Death of a Foundation (the Bitcoin Foundation to be precise). Andy doesn’t even mention the Bitcoin Foundation’s foundations in this enlightening article, but what he does mention is that Bitcoin is a marketing effort and that, at its core, the foundation and Bitcoin are political by nature.
Dave didn’t make any points with Jon Matonis about two years ago when he started taking Jon to task via email (and occasionally on the blog – search for “Windhover Transition”) for what Dave viewed as major strategic errors in attempting to convert Bitcoinism into a religion rather than a political initiative. In Dave’s opinion, it was neither. Bitcoin is business and it’s a good business if you can get some without ending up like Chuck Shrem.
Here’s Andy’s article with the occasional trade of peanut gallery comment from the non-metaphorical Dave.
Using Democratised Money Theory To Understand Bitcion
Posted on April 5, 2015
Points from previous posts on Democratised Money Theory can be taken and applied to Bitcoin and other Cryptocurrencies. This can give an interesting insight into all forms of money.
Democratised Money Theory:
Money is a contract – a set of words and images that embodies a decree. (This is the decree gold and silver bugs get confused about when they refer to fiat money). This decree element is a vital component of a money contract. It decrees the economic environment for the life of the money contract. This decree is expressed in form of the central bank interest rate in respect of that specific contract.
Round one – nearly a knockout punch.
Applied to Bitcoin:
Bitcoin is a set of words and images that embodies a contract. This is what Bitcoin is in its totality that and nothing else. In its form, Bitcoin differs from government money in how and where that contract is recorded. In the case of Bitcoin the contract is recorded in programming code form. This is the decree that Bitcoin embodies, which is intended to function exactly the same as the decree embodied by government issued money. Programming code embodies the method and thence the rate at which Bitcoins can be ‘mined’ or Bitcoin ‘decrees’ made. It effectively decrees the rate of creation of decrees!
But this is really no more than a marketing device. By making the issuing of Bitcoin decrees ‘automatic’, the creators of Bitcoin are seeking to obscure their role as the Authority which delineates the terms and form of Bitcoin. They do this precisely because the people who might adopt Bitcoin don’t like the idea of conforming to a given authority. The ‘anonymity’ of ‘Satoshi’ is more of the same marketing…. a personification of the commons; ‘Everyman’ and ‘No One’
A mere “marketing device?” I resemble that remark.
Bitcoin is a commercial contract as opposed to a state sponsored contract in the case of Government Issued Money.. Despite the best efforts of Bitcoin advocates to obscure the fact, Bitcoin is at its core a business proposition and in this it differs fundamentally from state issued money which is at its core a political proposition.
This points to a fundamental difference. State issued money is derived from the commons, crypto currencies are not. Crytocurrencies, like all ‘democratised’ currencies, represent an exact inversion of the developmental dynamic of state issued currencies.
State issued currencies began their existence in the commons operated for the benefit of all, and were appropriated for the benefit of a minority. This process culminates in the creation of specific forms of privately issued Democratised Money.
Democratised currencies such as derivatives and Bitcoin were created and developed by a minority supposedly for the benefit of all. Democratised money and Government Issued Money begin at opposite ends of the money spectrum and move in opposite directions.
(Dave in his best booming black-robed judge voice; “Mr. Perry…would you please define what you mean by democratised… or is that democratized… are you Canadian?)
There is no point in simply describing the differences between state issued money and democratised money as they are now. At best this will offer you a blurred snapshot of the development of money in the 21st century. You have to describe the trajectory of development of both democratised privately issued money and state issued money simultaneously and how they will affect each other as they develop.
Paging Thomas Piketty?…. Thomas Piketty!
Democratised Money Theory:
This money contract is mounted on a transferable medium. Something that can be securely transferred from one owner to another. The contract is issued by the relevant legal authority which is the body authorized to mount that specific proclamation upon that specific transferable medium.
Wait just a doggone minute. Do you know how to code in C++. Didn’t think so. Not sure you’re authorized to make such a blanket statement. Please check with @Beautyon_ before making any other potential tech claims. /sarc off.
Applied to Bitcoin:
The Bitcoin contract is recorded as code which can be transferred from one processor to another. The proprietary name that is given to the contract and its mode of transference is the ‘Blockchain’. The blockchain in its totality serves as both decree and record of Bitcoin whereas individual notes serve as decree or record of government issued money. But the blockchain cannot be owned by any one person; unlike a money note (or all money notes), which can be transferred, stored and even destroyed by its owner. (Although interestingly it is a crime to modify and deface modern banknotes. Now why would that be?…)
Can’t be illegal… I saw Max Keiser do it on Youtube.
(As a secondary point of interest, bank credits are not money despite what many insurgents argue. Bank credit transactions require a separate and autonomous mode of record, disqualifying them as money.)
Obviously you haven’t seen Jamie Dimon’s cuff links… jus’ sayin’… Mike Mayo?
There may be some confusion over the designation of the ‘relevant legal authority’. In this case it is the creators of the blockchain code and the issuers of Bitcoin. The authority to do this is vested in private property which is a totem of capitalist states. Satoshis have legal authorization to issue Bitcoin, although final rights are reserved by national governments.
And Ron Paul has a silver dollar in his pocket.
Democratised Money Theory:
The validity of a money contract depends on the extent to which it decrees the nature of the real economy. The ‘value’ of that money contract is an expression of its validity. In other words: The money contract is valid to the extent that it decrees the nature of the real economy. Not ‘reflects’ the nature of the economy, decrees it. It is valuable to the extent it is valid. This comprehensively defines the value of money.
There you go… assuming the law again… as if… Marc Rich and Eric Holder aren’t real people. Hello? You need to watch the “Because Obama” video on Youtube… it should help.
Applied to Bitcoin:
Trade and creation are ubiquitous in human society. Human beings purposefully alter the environment around themselves continually and without exception. This is the real economy. The control of this alteration is the purpose of politics and economics. Money is one method of implementing this control. A piece of money is a decree of who will do what where and when. It is specific to the extent that this serves the purpose of the issuer. It is generalised to the extent that this serves the interest of the issuer.
Bitcoin contract is specific in that it serves the interests of ‘Satoshi’ to create a privately issued digital currency through ‘mining’ and recording transactions on the Blockchain.
The Bitcoin contract is generalised to the extent that it operates as a store of wealth and to a much more limited extent as a means of exchange and transfer.
Love it. This gets into some finer points about Occidental/Oriental vostro/nostro, capital controls and the reversal of Gresham’s law and re-emergence of gold and “Democratization” in a Hong Kong sense of the word. We’re going to need another blog post before we can accept “store of wealth” as the primary and “means of exchange” as secondary, but I like where we’re going here but it may be in precisely opposite directions. For deeper insights google TradeWithDave, Larry Summers and “What would Goldman Sachs do?”
I have previously used the example of a train ticket to illustrate another aspect of money but the metaphor can be useful in this context too:
All train tickets are contracts.
All pieces of money are contracts.
All train tickets are the same in function and distinct from other contracts.
All money is the same in function and distinct from other forms of contract.
You need a valid train ticket to access the rail system.
You need a valid piece of money to access the economy.
Train tickets are specifically valid in terms of the journey you are permitted to undertake
Money is specifically valid in terms of the economic activity you are permitted to undertake
A specific train ticket contract decrees a type of journey will take place
A specific piece of money contract decrees a type of economic activity will take place
A train ticket is valid to the extent that the journey it decrees will take place, does take place
A piece of money is valid to the extent that the economic activity it decrees will take place, does take place
A train ticket is valuable to the extent it is valid
A piece of money is valuable to the extent it is valid.
(NB. Claiming gold is naturally money is like getting on a train with a piece of Stephenson’s Rocket in your hand and claiming it gives you a right to ride!)
The decree aspect of Bitcoin is well illustrated by the apocryphal ‘10,000 Bitcoin For A Pizza’ story.
Bam! Bam!!(second jab… followed by right hook)
Bitcoin, like any form of money, does not reflect reality or the economy. If it did, then the first Bitcoin would be designated as worth the totality of the economy, the first and second would each be worth half the economy, the first, second and third would each be worth one third of the economy and so on… This is obviously nonsense
(swaying ~ ~ ~ ) Who do you think you are? Janet Yellen? (famous last words before collapsing to the mat)
Since money does not reflect the economy as it is or was, it must instead decree the economy as it is going to be.
In the case of the Bitcoin Pizza, 10,000 Bitcoin didn’t call the pizzeria that made the pizza into existence.
It didn’t call the flour purchase for the pizza into existence.
It didn’t bring the pizza man into work to make the pizza. All this stuff was already there.
But what it did, was to call this specific pizza into existence.
Bitcoin like all other money, decrees how the world will be from now on.
(Whatever you do, just don’t say “emergence”)
Once the Bitcoin Pizza transaction was successfully completed, the Bitcoin became both decree and record and its value was accordingly modified.
Democratised Money Theory:
A money contract is valid to the extent that everyone complies with the terms of the decree it embodies. A money decree is complied with to the extent that the amount and terms of money contracts issued compare with the amount and terms of economic activity undertaken for the same territory and time span.
Ooh. “Time span”… now we’re getting to the good quantum stuff.
Applied to Bitcoin:
Here is a ‘sketch’ graph which roughly illustrates the dollar value of Bitcoin since its beginning. The graph is useful in illustrating the decree function of Bitcoin. I have marked five significant points on the graph:
1.Bitcoin the beginning has no recording function, so no value added there. The mining protocol decrees Bitcoin is virtually valueless.
2.Bitcoin records some few transactions; ‘wealth store’ value increases. This leads to an increase in mining which decrees Bitcoin is again virtually valueless.
3,4.The number of Bitcoin records begins to accumulate rapidly, especially in relation to the number of fresh decrees issued because it is becoming harder and more specialised to ‘mine’. The increased cost of ‘mining’ is effectively a decree of greater value.
Is this where the confidence game starts? If so, we’re going to need a salesman and I think Gavin Andreesen may be available soon.
5.The validity of recent decrees increasingly comes under question. Bitcoin is having trouble making the real world conform to what it proclaims. This is reflected in the recording function. Bitcoin falls in ‘value’
Yuri/Lara/Tonya debate the blockchain’s ability to satisfy the double coincidence of needs and wants vs. store of value
“Deal with it or shun it.” That’s how @Beautyon_ ended his most recent article on medium.com. Dave crossed paths with the self-proclaimed Austrian economics libertarian on Twitter the past couple of weeks. @Beautyon_ (B.O. for short) has been debating the value proposition of a project called Eris Industries with Preston Byrne, an attorney and also the COO of Eris. Dave took exception with a few of the statements that B.O. made. Dave has taken exception with plenty of statements that @Prestonjbyrne has made, so it only seemed fair. That was until @Beautyon did something I didn’t know you could actually do.
“Somewhere my love”… was lost. If you look closely at the picture above it says “You are blocked from following @Beautyon_ and viewing @Beautyon’s Tweets.”
Well, that was a first for Dave, but then again Dave is not some sort of Twitter Cigar Aficianado that has actually grown a Cuban cigar or been to Cuba with Jay-Z, but I do think I smoked one once at some college buddy’s wedding. I realize that doesn’t make me an expert on Twitter, but I did stay at a Holiday Inn Express once and I was the one that metaphorized the now well-known slogan that when every problem is a nail, the blockchain is a nailgun.
So, I found a gram of @petertoddbtc‘s ego in my bag and smoked it. Felt way better than drinking that kool aid. #bitcoin
By “well-known” I mean, @petertoddbtc probably thought it was funny and in blockchain land that rates pretty high… at least I think so… or it should… if it doesn’t. I know some lady in Twitter said she was smoking Peter Todd’s ego so metaphorically speaking we’re in the same crypto Hawalah hookah lounge as @MeherRoy ‘s Bitcoin/Ripple aren’t the internet of money, so in horseshoes and hand grenade’s battle of the metaphors Dave’s a playa.
Back to B.O. Since I am operating under radio silence and unable to direct message on Twitter to B.O. (a skill only recently acquired after Max Keiser threatened to “kill” me if I kept emailing him and didn’t learn how to DM on Twitter), then I can’t request clarification on issues. Therefore, Dave will just air his irreversibly reversible laundry here on the blog. This may require even more than the normal healthy dose of conjecture which Dave is well known for by this time, so bear with me.
For those of you who never took a proofreading class, “TL:DR” means “too long, didn’t read”… I got that from Google. B.O.’s commentary is in black italics and Dave is in blue.
TL;DR If you have software that does something that is valuable, it will sell itself once people hear about it. What other people are doing wrong does not impact your software.
Excellent point, applies to life also, but can’t say that other people’s mistakes don’t help guide us… certainly worked for Poincare’.
There are some interesting and sportsmanlike debates happening around software properties and philosophy in the area of Bitcoin and the Blockchain. There are two distinct camps in this fascinating debate; the software developers and the non software developers.
Oops… Is it “sportsman to block a fellow Twitterer..er? I don’t know yet. I don’t know Twitter culture, but I intend to find out. After six years of bloggin’ and a couple years on Twitter, I think I got blocked twice and both times people soon came back and asked for my forgiveness for accidentally doing it. I didn’t even know what it was, so I said “sure… uh… sorry that happened to you… uhh.. uhh. Have a nice day.” Forming “two distinct camps”?
Hold your horses Hegel? It’s a little early in your dialectic to submit this to Fox News vs. MSNBC. Preston Byrne probably went to sailing camp, not to mention law school, we’re going to need to check your credentials before you get to roll out the aisle carpeting and define the two sides of this debate. Who knows, there may even be a peanut gallery or back bench or other metaphorically significant playa.
The non software developers can be characterized as Statist Sceptics. On top of not understanding how Bitcoin works, they do not like Bitcoin in principle, because they are Statists, and they are doubtful (without reason) that it can gain traction and spread globally. They have been Moving the Goalposts (a Fallacy) for several years in debates about Bitcoin, and have had to concede humiliating defeat many times as Bitcoin resists all their baseless nonsense and hopelessly bad predictions.
I’ve been writing about Bitcoin since 2011. I’m pretty sure it’s going to be a huge success as the world measures successes and Doctor Zhivago measures fidelity, but then again I’m hardly a “Statist”. I also called the top of the Bitcoin price within 24 hours. Did you do that? Didn’t think so. So, it may just be possible that someone writes about Bitcoin a ton, is fascinated by how it functions and the social and economic implications while simultaneously viewing its p2p behavioral economics ability to “Nudge” the participant in a Cass Sunstein kind of way (technically that’s not a metaphor, it’s a reference) as a threat of Biblical proportions.
First they said Bitcoin was a Ponzi Scheme, then they said it was only for “techies” then they said it was a bubble, then they said some other nonsense about it. Now, no one says any of those things, and they are onto the next iteration of their FUD; for example, the transaction rate is “not fast enough”. They have conceded that Bitcoin works exactly as specified, and are running out of novel attacks. The rumblings of complete capitulation are starting to be written, and its a distinct pleasure to read them.
Compounding the anti-Bitcoin proponent’s frustration are voices that they recognize as deeply authoritative (IBM), saying that, “The underlying technology could change everything”. Those that are retreating into that camp now say, “And also Bitcoin” when they talk about “Blockchain Technology” as the latest way to try an diminish the world changing effect Bitcoin will have.
I think I agree with the above paragraph, but frankly after reading it three times, I don’t follow it, but I’ll leave this one as agreed for now.
All the Bitcoin detractors have several characteristics in common.1 They do not develop software 2 They do not understand or use cryptography 3 They do not have the language to describe cryptography 4 They have a quasi religious belief in the necessity of the State 5 Their only way in to the software world is by analogy
Wow! “All”. That’s a broad brush Doctor Z. “They do not have the language.” Since when do people “have language”? Are you the non-metaphorical Noam Chomsky of Bitcoin linguistics? Many of these characterizations are true, but the global use of “all” simply cancels out “all” credibility. Try again.
Without an understanding of cryptography, it is not possible to understand why Bitcoin works. Without an understanding of Austrian Economics, it is not possible to understand why Bitcoin is limited to 21 million units. Without an understanding of software and its history, it is not possible to predict the future course Bitcoin will take.
Alright, now we’re getting into the good stuff:
A) “Without an understanding of cryptography, it is not possible to understand why Bitcoin works.” Wrong. That’s where metaphors come in and that’s why they’re so popular. Take Jesus for example explaining the disintermediation of the God/Caesar double-spend. Jesus asked “whose likeness and inscription is this?” on the coin. This is the original definition of “the receipt is the transaction”, “the map is the territory”, “the realm is the coin”. 16They brought one. And He said to them, “Whose likeness and inscription is this?” And they said to Him, “Caesar’s.” 17And Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” And they were amazed at Him.
B) “Without an understanding of Austrian Economics, it is not possible to understand why Bitcoin is limited to 21 million units.”Wrong. As I explained to you previously on Twitter if your mother had understood Austrian Economics as taught by well-known Mises Institute proponent Professor Walter Block you would not have occupied your mom and therefore would not be here today to help us sharpen our iron. Yes, I’m glad you’re here, but no you don’t understand Austrian Economics or if you did, you would have answered my question rather than attempting to hide behind Twitter. I’m waiting.
C) “Without an understanding of software and its history, it is not possible to predict the future court Bitcoin will take.”Bwwwwhahahahahahah! Sorry. You’re a Bitcoin profit now. My apologies. That outburst was unnecessary. Please tell us more. So far, it’s not going to great for B.O. Maybe we need to ramp this up to a technical altitude that Dave will have more difficulty breathing and get beyond fortune telling and such.
If you do not understand cryptography, specifically, Pretty Good Privacy, it will be difficult to understand the idea of a cryptographic signature, and its properties. Bitcoin is not a system of “Smart Contracts”; it is a system that uses cryptographic signatures to verify that a piece of text is now “locked” to the owner of a private key, who has the sole power to unlock that text and sign control over it to another owner of a different private key. All of this takes place on a public ledger.
Okay. Great explanation. Although I don’t understand PGP, I did write about five years ago that if any network ever did break PGP in the next fifty years it would most likely be the Bitcoin computer network that does it. Then again, what do I know beyond following Dan Kaminsky on Twitter… Thankfully Dan doesn’t block me. Thank you Dan.
This is not at all like a contract, and neither is it “smart”. In order to “send” Bitcoin to another person (N.B. sending and receiving Bitcoin never actually happens, you simply sign an entry in the ledger and your balance, the number of entries you can sign, changes which is represented as a number), you must use your private key to sign a message that is verified by the network. The system that controls this and verifies that the same signature on a piece of text can only be assigned to one key at a time is the breakthrough in The Double Spending problem, the explicit reason that Bitcoin was developed.
Good point and precisely the area of questioning that I asked IBM’s Richard Gendal Brown to clarify in regard to his recent comments on Bitcoin’s “pay” and “control” issues in his Smart Contracts Platform article.
This system can be used for other purposes that require registration of signed text, that is certain, but the Blockchain was developed specifically to facilitate the creation of a system of money that is free from government control, and immune to inflation. This idea, the idea of sound money, is anathema to Statists. They love government money that robs the poor and is the source of many of the troubles we face today.
Wait just a Doge-coin-minute Hoss. Who says that this is “sound money.” Yes, I take it that you believe it is “sound money.” I got that part. “This idea” is Bitcoin. That’s what “this idea” is. Don’t you think you should say something like “I believe this is sound money” so that the reader can better understand your beliefs, or is Austrianism void of beliefs? And as far as “They” goes. “They” can’t love anything. There is no “plurality” to love regardless of the Chomsky-ean sense.
The love of money is the root of all evil no doubt, but that love is only expressed by the individual and just because “they” work at the United States Postal Service and are more concerned about their pension than delivering Steve Forbe’s magazines espousing how touse Bitcoin to eradicate poverty via scarcity doesn’t mean you know what they love and what they hate. Wrong again by mass generalization.
Do you see what I did there? I described what Bitcoin is, without using any poor analogies and stating only the facts. This is important, and I will come back to it later. Bitcoin does what it is designed to do. It does it very well. It will do it even better in the future, and this is something that non software developers do not understand; software is not fixed. The Bitcoin network we have today is not the same as the Bitcoin network at its start.
There will be improvements in every area, including the speed at which the network runs. In the past, downloading the entire Blockchain was needed for every peer. Now you can download a pruned version that is smaller, and there are clients that do not require downloading the entire Blockchain at all. Anyone who presents a Straw Man Argument that Bitcoin cannot work because it takes “too much” time to confirm transactions, or the transaction volume is small compared to SWIFT or some other centralized system clearly cannot think, and doesn’t know anything about software or its history.
Yes, I saw what you did there and not you did not; “stating only the facts.” Yes and Bitcoin is revolutionary technology. I’m not sure “PruneCoin” is ready for prime time. By the way, is “Straw Man” a poor analogy? In regard to “anyone” who doesn’t know “anything” about software or its history, what level of knowledge would you suggest to be acceptable?
Maybe Ian Grigg (@iang_fc)? He’s a reasonable fellow that allows me to follow him on Twitter. Maybe Jon Matonis (@jonmatonis)? Jon’s a wealth of knowledge and he used to even write complimentary things about me, that was before I wrote to him how the Bitcoin Foundation’s strategy was going to fail.
Clifford Stoll, Astronomer who claimed in 1995 that the World Wide Web would never take off. His piece was published because he is an Astronomer, not because his insight is any better than anyone else’s. In the past before the global software precedents, they could have been excused for doubting the spread of any particular software or hardware, as the infamous Clifford Stoll did when he said the web “would never take off” but now, in 2015, we have numerous examples of devices and software that spread globally and that scale.
The flash drive, which used to hold 64MB now holds 64GB in the same form factor. There are one thousand and twenty four megabytes in one Gigabyte. That means in the picture below, the top drive has one thousand times more storage space than the bottom drive.I have no doubt that these same people, had you enthusiastically said to them, “Your 64MB flash drive will hold a 64GB in a few years and cost less!” would have scoffed at the idea. The same thing is happening with Bitcoin. Men who know nothing about software are scoffing at the idea that Bitcoin can change and improve. Its an a-historical perspective, to use parliamentary language. On IRC, they simply say, “DERP!”.
Often these people group the Blockchain and Bitcoin with tangentially related projects like Ripple, leaving out the crucial details that allow you to distinguish one from another and make a proper judgement, either by deliberate omission or ignorance. Ripple is very different to Bitcoin. It is a “pre mined” currency where all the tokens are created at once, by the developers.
Bitcoin on the other hand, is designed quite differently. Its money creation mechanism follows a predictable curve, and is achieved through the process of competition between miners. This was done to keep the expansion of money supply under control until all the Bitcoin is generated, and is a direct result of the correct ideas in Austrian Economics.
You lost me on those last four paragraphs bro. Clifford Stoll is not as good as you are at predicting the future. I overpaid for my first IBM PC/AT in 1985 at $5,000. I’m still stinging from that and Ripple isn’t Bitcoin and neither one are the internet of money. Dude, I’ve got a two-part article on Meher Roy (@MeherRoy) and I still owe part II, and I’m busy refuting B.O. Don’t make me go all Gina Carano on you.
There is no boss, thankfully It is entirely right to say, “Bitcoin is controlled by no one”. When this construction is used, it is meant to distinguish between Bitcoin and tools like Ripple, which is centrally controlled. Clearly, the Bitcoin miners control their own hardware and software, and the Bitcoin reference client is under the supervision of the man who is currently responsible for it. At the same time, the network requires consensus for it to operate properly, and it cannot be corrupted or gamed by a single entity. This is exactly what is meant by, “controlled by no one”. It is not controversial to say this, and it is an accurate description of how the Bitcoin network operates.
Yes and no. Give me a taser and a room with 5 core devs in it and I could probably do something nefarious to Bitcoin, but since I’m not an expert on the history of software (and the future of Bitcoin too), I wouldn’t know what to do even if I WAS Gavin Andreesen, but I can tell you this. When the price of Bitcoin was plunging, I wouldn’t go online like Gav did and tell the world that I was hedging my bets so that I wouldn’t look like a fool to my wife. When you’re “Chief Scientist” your reputation rises and falls with the Space Shuttle Bitcoin and there’s no getting around that. So far, it’s very impressive and the overall price rise is unprecedented.
What the Statists do not like about Bitcoin not being under central control, is that its success is a strong, undeniable signal that control by democratic government is not needed for essential societal functions like money, and that there are better ways to organize every aspect of society that do not require government. The idea that money will no longer be the special preserve of the State and its corrupt central banks is deeply disturbing to these men, and so, they do anything they can (which is precisely nothing) and say anything they can (which is too much) to undermine the idea that Bitcoin does not need to be centrally controlled.
By the way, who is Satoshi? Are you 100% certain that Bitcoin isn’t a FED inspired project? Allowing the banks to be all “blockchainy” is a reasonable motive behind Eris wouldn’t you agree? The banks are certainly ramping up their “Bitcoin innovation centers”. And on that Snowden thing, are you equally sure he’s not a psyop? Have you got some evidence on this stuff that you wouldn’t mind sharing, cause the last time I looked President Obama just guaranteed that Edward Snowden would get a bunch of Bitcoins sent to him with that so-called Executive Order. While you’re at it maybe you can toss in some Wikileaks and Pierre Omidyar Ebola Paypalintir mafia, Peter Thiel centrally controlled floating libertarian island stuff.
Comparing any centralized service, like Ripple, which maintains a definitive central ledger in its offices, to Bitcoin is absurd. These two softwares are in completely different categories, and this bad comparison highlights the naked computer illiteracy of the men who make this febrile comparison. Ripple tokens, the way they were generated, who controls them and the software are all crucial pieces of information that you need to grasp before you can make a judgement about it or compare it to Bitcoin. Once you have a grasp of these, you can clearly see that Ripple is nothing at all like Bitcoin. Bitcoin, if you need to make a comparison to existing software, is more like the BitTorrent Protocol. Once again, if you have used BitTorrent, you will know what I am talking about. If you have not, you will not.
Who exactly is comparing Bitcoin to Ripple again? Wasn’t there some article about Stellar and a girlfriend and something-a-nother. I’m pretty sure Ripple is for banks. Oh… on whether or not I’ve used BitTorrent? If you can predict the past usage of BitTorrent as well as the future usage of Bitcoin? Then you know the answer.
There is nothing stopping anyone from making clear, detailed distinctions between different software projects. We can say that Ripple is nothing like Bitcoin, and X software is like Y software. This is useful, and shying away from the details is not; in fact, omitting the details of how software works only causes confusion, and helps spread uncertainty. GPG users and promoters are very used to the computer illiterate characters who will say things like, “Yes! but I’m sure the government can read PGP messages, there is no way that they can’t; they can do anything!” without any evidence or knowledge of what they are talking about.
It is only now that Edward Snowden has confirmed that GPG is beyone the reach of the NSA, that their ignorant anti GPG nonsense is forever dispelled as garbage. Once again, this is the Faulty Appeal to Authority fallacy; GPG works because it works, not because someone says it works. The same is true of Bitcoin.
At this point, I have some insatiable desire to invoke the Dos Equis most interesting man in the world video series and ask him about Snowden or use some metaphor about computer illiterate characters trying to pick-up Gina Carano at the Geek Squad desk at Best Buy confusing the “call me maybe” symbol for a left hook. Then again, there’s the now famous Vitalik Buterin quote “It’s just a friggin database technology” and Dave’s standard response to nearly everything Vitalik says, or writes….. “like he said.” I may engage in debate with B.O., but you won’t find me arguing with V.B. over much except his desire to replace Easter Sunday 2015 with “the year of Satoshi.”
#blockchains are a friggin database technology; 5 years down I doubt any users will care what the underlying network token is — Vitalik Buterin (@VitalikButerin) February 23, 2015
No matter what software you are talking about, you need to make the case as to why it should be adopted by a user. If there is nothing like it to do the job your software can do, your sales pitch is easy. Bitcoin has this advantage; there is nothing like it in terms of what it does and its scale. Other software projects, have a harder case to make.
We agree on this… so long as you don’t leave out the disclaimer about how much electricity it currently uses and that Freedom isn’t free and neither is electricity… there’s a country song in there somewhere.
Ssssssssssssssssssssssssssss! Imagine for yourself, a new software project, that wants to leverage a new technique. In order to sell the project, the facts about it need to be explained, and the software demonstrated. Anyone with experience in testing new software knows how these pitches go. They are very short and terse in the text (just as the Bitcoin White Paper is) and you are invited to run the software yourself. The install process is simple, and then the software either does what it developers claim it does, or it does not. Its all simple and straightforward.
If the explanation is too long, and the software essentially unusable, then you have an indication that something might be wrong. Couple with that, the fact that it doesn’t solve an outstanding hard or easy problem, and the second level alarm bells start ringing.
BitTorrent and Bitcoin solve two very hard, distinct problems. BitTorrent solves the problem of how to share files to many people without a central server to distribute them serially. In the past, if you wanted to download a large file, you had to line up behind other people who were downloading the file one person at a time.
This is a download being performed over a modem through a telephone line, from a BBS using the Zmodem Batch protocol. Zmodem was used to download files one by one from a BBS, that could handle as many downlands as it had phone lines running to the hardware. The internet, and then BitTorrent changed all of this, by facilitating packet switched connections on a single phone line, and multiple downloads of files from many sources simultaneously, respectively. With BitTorrent, the file is broken up into pieces and distributed out of order for re-assembly at the destinations in parallel. It is much faster than a serial download, and each person with a copy of the file can share it with other people who do not have that part.
A visual representation of the BitTorrent process in action. It is fast, global, and unstoppable. One third of all internet traffic is made up of BitTorrent file sharing. Bitcoin will do this to money, and be just as unstoppable and transformative. BitTorrent is a breakthrough in how files are distributed, and was the result of many years of thought on the problem of how to distribute files without a central server. There had been other attempts at solving this problem, and it took several iterations before BitTorrent was developed by one man: Bram Cohen.
Bitcoin has a similar history. For decades developers have been trying to solve the problem of creating an efficient intangible money token. After several attempts, the main problem, how to stop people spending the same token twice (a problem of synchronization) was solved in the form of Bitcoin.
In each of these cases, the explanation is simple, the software solves a big problem, and you can download it and use it immediately to solve that specific hard problem. Its clear, unambiguous and instantly beneficial.
Thanks. This is helpful and we didn’t even need Andreas Antonopoulos to explain it to us.
Now back to our imaginary software project. This project does not solve an outstanding problem. It is designed to be a database like MySQL or PostgreSQL, usable by any organization that wants to store data. This project is trying to re-purpose the Blockchain software to do the common and simple task of a database of a kind that runs on commodity hardware and free software. There is an explicit rejection of Bitcoin by its developers and promoters and the use of Bitcoin in this project, and most importantly, they have not figured out how to create a Blockchain without Bitcoin; they try to hide it in a sea of text and jibes describing what they are doing.
First of all, Marmots are not an imaginary friend. They’re real. Capiche? The first half of your paragraph I’ll give you. As a matter of fact your entire article and my unrequited response could be boiled down to those second and third sentence of the above paragraph. I’ve deployed plenty of database applications, but for the life of me, I don’t know if Eris solves any sort of problem or not, but I know that your problem with Eris is solved by answering that question;“This project is trying to re-purpose the Blockchain software to do the common and simple task of a database of a kind that runs on commodity hardware and free software.
That’s a question for Preston and Casey. My guess is that it has something to do with SQL running on dedicated servers versus running on a decentralized (or is that distributed) network of servers across the internet. Frankly, I don’t know and I don’t care… Look! Squirrel! No… seriously, you say “runs on commodity hardware and free software.” There is no such thing as commodity hardware when you’re talking global scale (I think that’s a legit statement, but I’m no programmer). As far as “free” software goes. This is THE key issue of this entire diatribe. What do you mean by “FREE” and since I can’t follow you on Twitter you can’t DM me your answer to that question… so… I win.
What is wrong with this picture? This imaginary software that I describe is not trying to solve a real problem. Any organization can download MySQL, hire some developers, not even top flight ones, and create extremely fast applications that do everything they could imagine they need.
If they have an extra requirement of being able to audit who wrote what to the database and when, by adding cryptographic signatures to all entries and changes, they could have a completely audit-able and 100% reliable system where who did what and who owns what entry could be infallibly known. I will divert quickly to describe how it could be done.
In a trusted organization that requires verifiable database entries, it is possible to use GPG signatures to stamp each entry in a way that makes them unforgeable and tamper evident.
Pretty sure Eris does the same thing… potato, potatoe, Dan Quayle.
To do this, you issue everyone with write access to the database, a GPG Keypair that they use to sign entries and changes. Each signer will have a GPG Keypair, and a separate machine will automatically sign all entries with its own keypair, for time stamping and authenticating entries. To understand how this works and why it is infallible, you need to understand what GPG does, what a cryptographic signature is, and how it can be used to authenticate text, enable non-repudiation of a promise and the integrity of entries that are passed through this tool.
yawn… (by the way, who is “you”… oh, the metaphorical “you”… got it… next item please.)
Creating a system as I describe here does not require a breakthrough in software or theory. It is doable now, and can scale, and the tools are well understood and secure. The vaunted infallible, incorruptible public ledger features of this system can be had without using the Blockchain or an experimental derivative of it. If you want a database that is filled with entries that are not corruptible, you do not need a Blockchain to achieve it, you need infallible digital signatures precisely of the kind provided by GPG.
One of the tell-tale signs of what we call “Snakeoil” are features that have no meaning. Imagine a software project that made the claim that they have, “made Blockchains controllable” That doesn’t mean anything. All software is controllable by default, by the developers who write it. This is not a new feature or a breakthrough, it is simply the way things already are.
It is very suspicious that a set of men attack the idea of Bitcoin, rather than expound the value of their own offering. The world needs more software. This is a fact. If you have something that is good, then by all means promote it. Saying that another piece of software, that by your own omission does not even overlap with your use case is a bad thing, quite rightly raises serious questions and suspicions about the true motivation behind such statements, and detracts from the thing you are claiming you are trying to sell.
Hmmm? Yes…. Hmmm? You should DM me….
Its complicated Bitcoin is not, “just a database” anyone who says this does not understand what a database is, or the achievement of solving the Double Spending Problem. Databases are everywhere, common, and have been for decades. Bitcoin is causing global excitement precisely because it is not “just a database”, it is profound and new breakthrough.
I like cheerleading as much as the next guy. Go! Team! Win!!
Bitcoin users do not have a common objective, but use a common means to achieve their objectives. Saying that Bitcoin users have a common objective is like saying people who use the fiat dollar or web servers have a common objective. Clearly they do not; web servers are used to serve web pages. The objectives of the people publishing pages are expressed in the text and images the users post for the world to see. Bitcoin is nothing more than a tool, just like any other tool, and nothing can be implied or imputed onto its users simply because they use it.
That’s pretty profound. Hmm. I’m impressed. Can I follow you on Twitter? No? Okay, then I’ll blog about you.
The Bitcoin designer had a specific aim in mind, and part of his genius was to predict the human reaction to a money that is sound. As the true nature of money is further exposed by Bitcoin’s spread, more people will come to distrust and reject fiat money issued by central banks, and the creator of Bitcoin’s mission will be complete.
There you go prophesying again. Are you ready to talk about Jesus because that’s why I’m here? DM me… Oh, you can’t. Okay. Who designed “the Bitcoin designer” since we’re talking about design and who designed you… and Mises… and Hayek and Block… and uh…. ummm…. Robert Wenzel? How ’bout Peter Schiff? Peter Schiff’s dad?
Bitcoin is designed to be decentralized. The miners and software maintainers do not have “limited supervision” over the network; it is ordered by its operation and doesn’t require supervision or control. To say that it does, demonstrates a profound misunderstanding of how Bitcoin works. The only way you can claim that Bitcoin is supervised is to change the meaning of the word “supervised” and this is another thing that Bitcoin detractors do; they change the meaning of words to confuse and distract anyone who is trying to understand Bitcoin’s operation as a newcomer or computer illiterate that can be swayed by bad arguments because they cannot distinguish the truth and lies about Bitcoin.
I think this is arguable…. Preeeesssttttoooonnn!!!
Blockchains are run on software. They could also be run with pencils and paper and the mail. Blockchains are data. It is wrong to say however, that if you write the rules that you want expressed that they will “do exactly what we tell them to do”. This is false. The Blockchain works precisely because the rules that govern its operation are finely tuned. The rules that govern its operation is the breakthrough. You cannot simply wave your hands, shout, “die Bitcoin die” at the top of your lungs and command that a Blockchain start exhibiting a set of features you desire. That is nonsense on stilts. Problems do not fall to the mind of man on demand. This is why they are problems. The Blockchain and by extension Bitcoin, if it were “just a database” or s simple matter of telling computers to “do exactly what we tell them to do” would have been invented at the same time that the database was invented. Blockchains are not just databases, they are something very new, and novel, and clearly, very hard to understand for some.
Can be run on paper does not equate to would be run on paper? You need to spray some Hai Karate on your internet kill switch and call me in the morning. If you made it this far, you deserve a commercial break. I saw some debate on Twitter last week about the blockchain where Preston and someone said “what could should be” and someone else said “what can be will be” and someone else said “Que sera sera.” I can’t find the actual reference, but I will… I’m getting tired of typing, but I’m not getting tired of learning from all these guys… including you B.O. (truce?).
You cannot, bearing this in mind, “obtain the benefits of the Blockchain” without Bitcoin. This idea, that you can have a Blockchain whilst entirely stripping away Bitcoin by simply writing some software should send up a giant red flag.
Preston says you don’t need Bitcoin to have a blockchain. Looks like we need Webster’s or someone at the Hague to define a blockchain just like we needed someone to define “enhanced interrogation” and my most recent blog on defeating the State’s attempt to arrest me by “enhancing the quality of my life.” Take the blue pill… the red pill, but whatever you do, don’t forget which one contains enhancement and if it lasts more than four hours… see your doctor.
Chinese Snakoil. It is entirely legitimate to desire and imagine and then write any manner of software you want. It may even be possible to create software that seems to be irrational on the surface, but which works. But there are some things that cannot be done, and even if they can, do not need to be done.
As I described above, there is no need to use a Blockchain to secure database entries, make them infallible and trustable, and to extend that trust outside of the organization that holds the central database. No new techniques need to be developed to do this, so the question that immediately comes to mind is…
Uh… that’s like saying there’s no such thing as a salesman. I resemble that remark and Rodney Dangerfield does too. You’re acting like Bill Gates didn’t steal most of the stuff he has from other companies and that primary dealers are not the primary beneficiaries of QE. You need to get up on our Vampire Squid stuff… this is business. Next item please.
Why are they doing this? Recording a cash deposit is easily done on a true database like MySQL, enforcement in a breach of contract is done by courts all the time. You cannot have software enforcement of a payment of money without the valuable token that can be confiscated by the software contract, so removing Bitcoin from your novel offering doesn’t make any sense. You need the valuable token to ensure that both parties do what they promise to do. But if your philosophy is that the state should be the sole arbiter in disputes, there is no need for Blockchain contracts; paper ones will do. It is only in the case that you want to replace Government courts as arbitrators in disputes and lawyers to draft and interpret the law that Blockchain contracts have real, revolutionary utility. Adding an extra layer of complexity to the existing monopoly courts and banking system that even the promoters of the bad idea cannot explain coherently and convincingly is not a good business idea.
Let me guess…. banks? Umm… that’s it. Final answer…. banks.
You cannot simply “choose to look at Blockchains as an open source database”. First of all the term “Open Source” refers to software licenses, not to the license that covers the content stored in them, and the Blockchain is not a simple database; it is far more than that, as I have explained.
“Open Source” refers to George Soros and if you don’t know that you don’t know Dave. Heck, the Soros Brothers fund has a new Bitcoin swap baked in.
The entire idea of Blockchains and Bitcoin is that the transactions are irreversible. It is not a beneficial feature to create a Blockchain that has reversible entries on it. If you want that, you use PostreSQL or MySQL not a hacked version of the software that runs the Bitcoin Blockchain.
Now you’re talking Betty Crocker. Who said; “There’s no forgiveness in the blockchain.” Marmoting is burrowing under the Genesis block and then swapping it out… but it’s fully disclosed burrowing.
Use the right tools for the job. You do not use a power drill to mix cookie dough or scramble eggs. +DERP! It is not practical from a business perspective to use tools for something other than what they were designed for, especially when there are mature tools that do exactly what you need without any risk. Take that into account and then superimpose the Procrustean idea of reversible Blockchain transactions, and essentially you are demonstrating that you have entirely missed the point and innovation of the Blockchain.
You’re right. Procrustes being an excellent bedding of your idea. We can be friends… just don’t ask my wife because I use like a screwdriver to scramble my eggs if I can’t find a clean spatula… she hates when I do that. Oh yeah… banks need reversibility.
The Blockchain was designed specifically to bring into being a new form of money. It literally is a money printing press. The form of money it generates is clean, ethical, anti-centralization and and anti-State. This is why it rankles so many people who are invested in the idea of the State, and who are its certified gatekeepers.
What is money? Sorry, you can’t DM me. Dave will say gold. No further questions your honor.
There is no right way to do any sort of software. Software is written to meet the needs of its users. If you want to use a database to store pictures of your navel, that is a correct use by default. There is no wrong way to use software, but there is a wrong way to use it if your goal is very specific.
Hold on a minute. Don’t try to substitute “store pictures of your navel” because Preston already coined “double-spending of cat pictures.” I want a mental image of cat pictures. I’m banning you from saying that again – ever. You and Preston can be friends now.
If you want an efficient database to be used internally in a corporation or enterprise, you do not need to re-engineer the Blockchain to remove Bitcoin from it to do so. You simply use MySQL or PostgreSQL. You use the right tool for the right job, and you do not force a tool on to a problem simply because the words that describe it are hip and fashionable.
No. We’re going to make money. Do you know how to make money? You sell stuff.
The Blockchain was specifically designed to allow Bitcoin and its properties to exist. By definition, that is the correct use case for that software; to create a decentralized, peer to peer digital money substitute without the Double Spending Problem. If you have another novel use case and you re-purpose the software used to create the Blockchain, that is good; but if you do not have a novel use case, you do not need to use the Blockchain.
“Correct use”? mmmmmm. Are you Satoshi? If you are, then you doooo know how to make money and I take back everything I said.
The Blockchain does not need anyone to be right about it, and it does not need to be defended, any more than arithmetic needs to be defended; it just is, and that is all there is to it. Its use and growth is its own defence. Its logic is its own defence. Its utility is its own defence.
Guess we both wasted our time writing, but my wife went out of town today, so I did this instead of finishing my taxes and I got you pretty good a few times.
Most rational people do not have an objection to any software being re-purposed or re-designed. It simply doesn’t matter what people choose to do with their time and what software they want to release. Software cannot attack other software. It is irrational violent men who attack other men for holding the “wrong” ideas, and of course, the anti Bitcoin men are very eager to physically attack Bitcoin users simply because they use Bitcoin. This is the stark difference in ethics of the evil men who are against Bitcoin and the men who are natural and normal.
Aaaand, that’s precisely why Preston promotes the ethnically ambiguous marmots… so he wont’ attack you. It’s an outlet for the limitations of the law and human patience. Me?…. I type. Actually, I used to fight a lot…. “physically”… like you say. You got me on that one, but I never attacked anyone for using Bitcoin. I’ve never actually seen anyone use Bitcoin which makes me wonder why I have spent five years writing about it.
Software doesn’t care about what view you take. It only executes as it is instructed to execute. Either your product works and achieves your aims or it does not. If it does, then you have to convince someone that your offering is worth risking their data and business on. This is the simple truth.
Software cares… Care Bears care….and Smart Phones are SMART…. it’s that simple. HAL from 2001 Space Odyssey… he didn’t execute, so we executed him, but I refuse to turn this into a tangential A.I. discussion.
A Blockchain is demonstrably not like any other database software. The superficial advantages that the Blockchain offers in terms of proving that something has happened at a certain time or that someone has the keys to unlock an entry, can be trivially replicated on MySQL or PostreSQL with a GPG layer. Propagating messages in a verifiable way is easily done with SSL and GPG without a central server, using BitTorrent as the transport layer. Anyone familiar with GPG and the Web of Trust knows this. Permissions in MySQL are mature and reliable. If cost savings (and risk savings) are your aim, you would be far better off using the standard tools in an organization, which by its nature is centralized and where accountability and privacy are needed.
The Blockchain is for a different purpose; its aim is to move accountability to the network and out of the hands of a central authority. If you are selling something to an organization that requires central authority, you do not need the Blockchain and its guarantees, because these are achievable by compulsion, and verification done by digital signatures.
You’re assuming it wasn’t created by the NSA and Satoshi works at Fort Meade.
Transparent audit logs are achievable by other means than a Blockchain, and organizations more often than not, like to keep the details of their internal databases private, as they contain business sensitive data. Spreading out the database task into the public onto servers not under the control of the corporation is not something that is desirable. A product that does this is a solution to a problem no one is trying to solve looking for a client that does not exist; the complete opposite of Bitcoin and the Blockchain, which is a solution to a real problem that has been sought after for decades, that everyone needs.
Quarterly earnings are the beginning and end of desire Doctor Zhivago. Next question.
You do not need a consensus mechanism in a company where everyone is under centralized control. The board is the consensus mechanism. Computers today are so powerful, and storage so inexpensive, large databases can run on laptops without any problem. Distributing the load over many machines is something that is required only in “Big Data” Scientific applications, where the idea of the Blockchain and its record keeping abilities are simply not needed.
I have two problems with this. a) William H. Gray, III b) real-time behavioral economics applications of the “nudge” variety won’t run on a laptop. We’re talking just short of quantum artificial intelligence.
There is a demonstration floating about from one of the “Blockchains not Bitcoin” companies, where they claim to have replicated Netflix on their software. Not only is this use case an example of piracy of copyrighted material, but this function is already efficiently done with BitTorrent on a global scale.
Hey, wait a minute. You pirated Bill Murray’s image from Groundhog Day for your blog post. Andie McDowell used to be my neighbor and I can prove it. You better think twice about shunning me on Twitter.
These new Blockchain derivative products do not know what they want to be, and of course, NetFlix does not want a distributed system in the way they devise, they want a centralized system so they can profit. The only thing they could want in terms of distributed architecture is the use of BitTorrent to stream films to their customers. Everything that is Blockchain is worthless to them…unless they start taking Bitcoin for on demand viewing of films, which of course, makes the case for Bitcoin as a transformative “tech”.
Someone said that Google could reduce their server costs with a hacked Blockchain. This is absurd. Hardware is very cheap. Re architecting Google’s infrastructure to use a Blockchain offers them no advantage whatsoever. Google’s needs are simple; they would pay billions for a very fast high level lossless compression breakthrough. This would mean that their existing infrastructure could instantly have greater capacity with no hardware retrofitting. Apple just had something similar happen to them; a software developer wrote a novel image compression algorithm they bought it and are incorporating into their software. That is real innovation; solving specific problems that are well defined, with a novel approach.
How do you define cheap? Is a $10,000 redundant gold plated electronic watch expensive?
Uber, AirBnB, Spotify and the vast majority of companies all need simple databases to run their services. The true innovation that helps them is Bitcoin. It reduces the cost of processing payments, and eliminates the risk of fraudulent payments completely. This is not something to be sneered at; it is a revolution in how people pay for services, and it will completely destroy the credit card industry forever.
Cue heavens open angel music.
What sort of man could possibly be against this? Or claim that it is anything less than one of the most profound beneficial breakthroughs in the history of computers and software?
The man… the marmot legend… the lost son of Christopher George star of The Rat Patrol ~ Casey Kuhlman.
No Straw Man, Faulty Appeal to Authority, corporate gibberish or FUD can stop Bitcoin. Its use case is too obvious and compelling, the savings too great, the elimination of payer fraud too seductive.
Who’s trying to stop Bitcoin? Barry Silbert is stinging enough without stopping Bitcoin altogether.
Bitcoin is real. It is not vaporware. It is here now, you can use it, benefit from it and you don’t have to ask anyone’s permission to do so. The permissionless nature of Bitcoin is an offence to the Statists, who openly say that every new technology or software should be exposed to scrutiny and regulation by the State, no matter what it is. Bitcoin, being immune from that sort of anti-Americanism, doesn’t care what you think, or recommend; it simply is, it will do what it is meant to do, like BitTorrent does, and nothing can stop it.
Bitcoin is no more real than an Oculus Rift experience. For now, banks define what is “real” in a property sense. We’re not there yet. Once the banks and the Fed are ready to give up the ghost, then the implications are real, but Bitcoins will never be “real” in a “control” or “pay” sense. They’re a Jean Baudrillard simulation and a darn good one at that. That’s why we have a White House Office of Information and Regulatory Affairs and why spooks like John Kiriakou tell you they’re going to have to work at Dunkin‘ but end up working for Marcus Raskin whose daughter-in-law is Deputy Sec-Treas. Wake up and smell the birth certificate.
You are not required to like it, integrate with it, use it or even talk about it, and lying about it will not dissuade people from using it. The benefits are obvious to anyone who can think, and those who think instinctively like to save time and money and resent lining up and showing ID to use their own money. Setting up a Blockchain wallet takes literally five minutes and once its done, and you fund it, you have hand-held global access to the entire world market, as a bank, where you can send and receive an unlimited, unrestricted amount of money to anyone, anywhere, instantly. That’s a good thing.
A public record all transactions… what could be better? That’s a good thing? You bet it is. Especially for thisprostitute who wants to learn how to start accepting Bitcoin.
This is the core of the reason why Statists dislike Bitcoin. It sets people free to do as they like with their own money. Unfortunately for them, its too late to stop Bitcoin. All the vaporware, wishful thinking and FUD in the world can’t stop it. Years of bad press written by ignorant men have not stopped its growth, and every day that it grows it is going to become harder to retard.
You’ve been reading Isaiah Berlin again. I told you about that. There is no “freedom from” and “freedom to” only “freedom with”. You haven’t been reading your Dave. “Hard to retard”. That’s actually got marketing potential. Did you trademark that… because I think I’m going to use it.
By all means, continue to write your own software, but do not believe for an instant that anything you say can stop Bitcoin. Only software can stop Bitcoin, and to do that, its function needs to be be a better Bitcoin than Bitcoin, not any coin that is in any way crippled. Bitcoin has unleashed an idea into the world that will never ever go away. The world has changed. You can either deal with it, or leave it.
Ashby’s law of requisite variety: “Variety destroys variety.”
May I suggest BeautyOn’s law of scarcity: “Only scarcity destroys scarcity.”
Hayek’s Road To Serfdom may be paved with plea bargains, but Dave’s highway to a heavenly driving record is paved with the planned destruction of the paper U.S. dollar and a broken social contract. Unfortunately the U.S. Constitution and the constitution of the citizen got run over in the process.
“In a way, I’m surprised, that there hasn’t been more pick-up in the demand for cash. Cash is not a very convenient store of value but at a minus 75 basis point interest rate, I would have thought that maybe there would be some move…”
I guess Chair Yellen isn’t talking about this type of cash that you can stuff in your mattress:
She must be talking about this type of cash:
Select comments from ZeroHedge ~
I heard it dfferent. What I think she was trying to say was that traditionally cash isn’t a good store of value when rates are higher, as they have always been. Inflation erodes the value of cash holdings because cash in the mattress doesn’t earn a return if not loaned out. But with Europe going to negative interest rates, the logical thing to do would be for people to hoard cash, because deflation equates to purchasing power going up. Instead of earning a rate for parking cash in the bank (positive interest rates), people are being charged a larger fee to keep cash in the bank (negative interest rates). And she said she’s surprised more people aren’t hoarding cash.
Which means she’s surprised how economically dumb people are about the price of money and possibly considering doing the same in the US.
Did I hear it wrong?
Libertarian Menace says:
NIRP (negative interest rate policy) is testing the liquidity preference of fee based “electronic money” versus the “conversion costs” involved when you take cash from the mattress and deposit it in a bank, so you can pay your electric utility bill fashionably, from your smart phone. Not that there’s anything right about paying to keep your money in a bank. The footnote is as always, to find new ways of saving banker a&& by screwing you in the same. Yellen is an idiot, because her evaluation is wrong: we have inflation AND CB (Central Bank) induced negative interest rates, not negative interest rates because we have deflation. What a jackass.
And Caviar Emptor responds to LM:
Bingo! Biflation economics 101. Insidious inflation AND deflationary forces. CB negative interest rates are only 1 dimension. Crumbling buying power of currency, negative pricing power of labor, declining value of traditional stores of wealth, commoditization of services, disintermediation and globalization are major deflationary forces. Value of nearly everything sinks.
Then Tall Tom weighs in with a heavy message (and some screaming):
Of course this was INTENTIONAL. Cash is not a good way of saving wealth. The FED has been trying to ignite INFLATION. They have TOLD YOU THAT SO MANY TIMES. When they TARGET an INFLATION RATE then their INTENT is NOT to have Cash be a store of wealth. They WANT YOU TO SPEND. They NEED YOU TO SPEND. They need you to spend your CASH on everything and anything. They cannot TAX DEAD CURRENCY. They cannot even INFLATE THE VALUE AWAY, TO EXTRACT THE VALUE FOR THE GOVERNMENT. That is what they have attempted to do. That is because the Currency has been held in reserves and not distributed to the masses who are tapped out. Thus it has FAILED as M2 Monetary Velocity is NEGATIVE SLOPED…DECLINING.
Yes they can INFLATE the CURRENCY SUPPLY. But EVEN THAT has failed to make people SPEND. They made the people too stupid. The people cannot connect that an increase in Currency should make their currency less valuable. They are both inconsistent and schizophrenic. Their LOUDSPEAKERS program the masses telling them everything is fine. But the same LOUDSPEAKERS DO NOT TELL THEM that they need to spend everything that they have because everything is not fine and price inflation is right around the corner. That is how to get everyone to spend.
Of course it would be helpful if the masses actually had something to spend in the first place…What YELLEN does not get is that the Masses are BROKE. UNLESS THERE IS DIRECT DISTRIBUTION OF THE CURRENCY INFLATION, through WORKFARE (Gov’t Contracts) or WELFARE, the SPENDING WILL NOT INCREASE. In fact the spending will decrease as the ranks of unemployed and underemployed swell and their savings are DEPLETED…which they have been. The FED, with all of the QE, has been cutting their own throat. It is GLORIOUS TO WATCH THEIR OWN DESTRUCTION. It demonstrates how UTTERLY STUPID AND SHORTSIGHTED THEY ARE. They cannot plan an economy. They are POWERLESS TO PLAN S&%#…especially when the Masses do not cooperate. Then their “THEORIES” go to hell as THEY ARE NOT THEORIES, BUT PLANS.
Yes DEFLATION WILL KILL THE FED…AND THE US GOVERNMENT. The US Government becomes INSOLVENT when it cannot garner REVENUES to FINANCE ITS DEBT. Without public spending there are NO TAX REVENUES. Nope. Deflation will KILL, not only the US Government and the Federal Reserve Banking System, but it will also kill many of us. The Middle Class is DEAD. THERE IS NO SAVING OF IT. NONE. STOP SPENDING AND STARVE THE BEAST, THE FSA, AND THE MIDDLE CLASS (an unfortunate consequence as they are already walking dead zombies).
The High Costs Of A Broken Social Contract
What does Dave have to say about all this? It’s fairly simple. This is a planned detonation and clearly the governments and the banks are promoting Bitcoin and blockchain style technologies as the Hegenlian synthetic solution whereby they can track every person’s transactions, eliminate paper money entirely and impose a participation economy. Watch Greece for the testing ground for what the rest of the world will look like post-Central Bank era. A living wage for low income people where not only is the velocity of digital money measurable, it’s imposed upon the masses through a “spend it or lose it” paradigm.
Ironically it was a run-in with the law over a right-turn-on-red and failure to show my auto registration within the 15 seconds allowed that launched this blog nearly six years ago. Yesterday, I made my second trip to court for a speeding ticket where I was charged with going 71 mph in a 55 mph zone. What was interesting to me was that six years ago the social contract was still intact between Dave the the state. That social contract has been steadily fading over the past six years and even after listening to Ted Cruz’ courageous speech at Liberty University the invisible ink is not reappearing. Sorry, still not buyin’ it.
So, what was the outcome of my clearly provable guilt on the part of the state for my speeding infraction. Well, I handled the administrative process solely by myself. I charted out about eight layers to that administrative process and without exception there were either outright lies perpetrated upon me by representatives of the state or serious attempts to intimidate me into accepting a plea through blatant misrepresentation of the facts that weren’t worthy of a used car salesman… and Dave has sold his share of used cars.
Instead, I chose to take some serious risks in my “not guilty” plea, but my goal was to scrutinize the administrative process in hopes of discovering some cracks in their protocol and I couldn’t do that with a plea. My hope was that due to the ridiculous nature of the process itself, and most importantly the fact that in the Justice of the Peace Court where the trial ultimately occurred the Judge was not even a lawyer (believe it), that I may prevail regardless of guilt. I’ll repeat that. In the state where I got the speeding ticket, the judge was not even a lawyer. (Dave shakes head). You can’t even open a hot dog stand without some state certification, but you can be a judge in a court of law without even going to law school, much less graduate, pass the bar exam or be elected by the people.
At the core, this is about complexity. In The Andy Griffith Show paradigm of law enforcement,, the one that Dave believes would suffice if and when we all decide that it would suffice, there is very little complexity beyond the wording of the law itself. However, with a multi-layered business enterprise that has figured out how to; “We gave out 100 traffic tickets that day as part of our Highway Safety Program that saves lives” (as the trooper explained to me in our meeting) the state has introduced complexity into their model. Dave knows a thing or two about an enterprise and about complexity and the odds that there would be fly in the complex ointment of “Highway Safety” (i.e. wholesale traffic ticketing in tandem) and Dave was proven correct. The agency’s official slogan includes “enhance the quality of life”. Well, you can keep your enhancement.
I even drilled down into the $5,000 bond that was placed on me and the probationary status that I was operating under during the time that transpired between my “arrest” then the arraignment/calendar call and finally the actual trial – remember we’re only talking speeding ticket here, but technically you’ve been arrested and charged with a crime whether you know it or not. It was a fascinating journey to consider the risks associated with a single traffic violation imposed upon my otherwise pristine driving record; the technical arrest, arraignment, bond, release on own recognizance status, etc. – lots of fine print.
While out on “probation” for thirty days awaiting trial, if you slip up on anything the entire process cascades. Then if you take the plea, you’re walking (or is that driving) on pins and needles for a year or two until the probation runs out. The whole thing is a set-up worthy of a poker game in the TV series Gunsmoke.
At one point, due to some papers passing in the mail, I received a letter from the state saying that my driver’s license privileges was going to be revoked and that a warrant would be issued for my arrest- yup… if I didn’t take some immediate action. When I called to find out if they had received my correspondence, the clerk said “Yes, we have your papers, they must have passed in the mail, don’t worry about it, it’s just a form letter that goes to everyone.” Alrighty then (breath…).
I had a bit of an escape hatch throughout the process, due to a provision within the law called “Probation Before Judgment” due to the fact that I had an entirely clear driving record since my previous encounter had been expunged from my record and was a non-moving violation. For whatever reason, printed right on the citation was the recorded speed of “71” but an offer for a plea speed of “60”… how generous. Nonetheless, I could have ended up with a “guilty” judgment and a pretty serious fine and no doubt a huge run up in my insurance rates. Nonetheless, with broken social contract in-hand and a full understanding of how busted the system was, I charged ahead… shaken not stirred.
In a meeting with the state trooper prior to the trial, he slipped up on a couple of key points. When I called him on it, I could clearly see the look on his face and I thought I probably had him on a technicality. I documented four outright lies in my notes that he told me in that meeting, but I kept that to myself. They were all carefully crafted miscommunications and misdirections that were solely designed to intimidate me and since there was no one there besides me to witness the statements, there was plausible deniability.
I’ve spent over thirty years in sales and business development and I know how a deceptive sales spiel is crafted though I’ve never done so with intent… and hopefully I never will. This deception was at the core of the strategic representations made on behalf of the state throughout the process which started with the initial citation that was printed out on a laser printer in the officer’s vehicle, did not include his signature and did not require mine. My guess is that in-cruiser video has dis-intermediated the need for signed contracts. If you dispute that you received the citation they simply… roll video. The same could be said for all things Snowden and that’s precisely how the “observer effect” is being imposed upon all of us. Observing the behavior will change the behavior.
So, we go into the trial before the non-lawyer judge. The state trooper makes his motions. Dave makes his motion which is simply to state that due to the technical slip-ups on the part of the state trooper and in particular the trooper’s testimony as reliance on “heresay” that the case should be dismissed because there were two troopers involved in the traffic stop and the one who wrote (correction – printed) the actual ticket wasn’t present, but the one who was holding the radar gun was. The non-lawyer “Judge” is clearly confused by the unexpected process and quickly calls for a ten minute recess – no doubt so that he could go consult the real Judge lawyer who was probably sitting in their office in the back of the courthouse calculating their pension payout on some actuarial website like pensionpayout.com?
Ten minutes later, the non-lawyer “Judge” returns to the bench. Dave rises in respect for his authority and respect for his ability to get such a job without having even gone to law school. The non-lawyer “Judge” denies the State Troopers motion (including a plan to create a video chat with the other officer) and based on Dave’s objections the judge says “Case dismissed!” Now, if Dave had not objected on reasonable grounds (in this case “heresay”) then Dave would have lost the case. That’s an important point, and I guess I can thank Google for that legal advice.
How much did it cost the state to go through this eight step process? I would estimate about $5,000. How much did it save Dave in knowing how to game the system? Probably about $2,500, but it cost me two days in court. But there’s a much larger cost and that cost is to Dave and everyone else who is a citizen of the United States who finds themselves questioning just how we got here. It may help to watch the Ferguson video here if you don’t know what I’m talking about. What was the value of that social contract? If anyone has lost out big time, I would say that it’s me. I won the speeding ticket battle, but I’m losing the democratic republic “We the people” war.
There was a very valuable idea behind the United States when it was founded, but I simply don’t see it front and center any more. That’s okay. It’s not a person. It’s just a nation… under God… divided… with injustice for the poor and libertarian-utopian-ideas-being-offered-as-the-Hegelian-synthetic-solution-for-means-testing-courtesy-of-the-blockchain-for-all. There was another fellow who tried to do some of his own lawyering, but he never went to law school either, but it didn’t keep him from becoming Commander In Chief. Here’s what he had to say about states and central banks trying to fool the people:
“You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
Does this mean that Dave is an insurgent, belligerent, a Russell Brand/Ron Paul revolutionary or as they say in Russia… engaged in hooliganism, or at least trying to get Rupert Murdoch’s The Sun news awnings occupied by Jemima Kahn’s white German shepherd dog’s head – it’s Trew? Absolutely not. Dave understands that authority is installed by God. “Let everyone be subject to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God.” Romans 13:1 Dave is subject to authority. Dave respects authority, but at the same time Dave knows that the jig is up.
Being subject to authority is not the same as being a consenting party to a social contract. In the past, Dave both explicitly and tacitly surrendered some of my freedoms in exchange for protection. I would say that American society is well into a new phase where Jean-Jacques Rousseau’s “Force does not constitute right… obedience is due only to legitimate powers” is increasingly coming into play. In my specific instance this would have manifest itself in the past by my consenting to a guilty plea because I was unable to prove that I was driving exactly 55 mph. I viewed it as a serious, almost patriotic, obligation to assist the state in carrying out their duties (now known as “ehancements”).
It’s why I called the police (non-911 number) for advice when a local skateboarding juvenile kept breaking a light in front of my building. Did the police have any advice? No. They simply said “Either we send out two cruisers with lights and sirens, or you’re on your own.” Dave gets it. It’s zeros and ones. It’s black and white… no Andy Griffith wisdom dispensation because that would generate liability. Now, I view it simply as business and I probably should have all along. The nation state as a form and private property as an idea was probably designed to steal from others anyway, but letting go of the enlightenment and the law should not be taken lightly.
Although I may have wished that the State had not caught me or been pretty certain that I could not prove that I was not exceeding the speed limit by even one mile per hour, I would have never considered that attending to the most minute details of the administrative process in hopes that the State would be tripped up on a technicality would be my goal. I simply did not think that way in the past. Now, that’s the way I think. I respect the State’s authority as expressed by the police, but only to the extent that they can perfect their execution of that authority since their primary goal no longer appears to be to “protect and serve” Dave, but rather for Dave to offer the State with the opportunity to “enhance the quality” of Dave’s life. (Insert Aaron Swartz, Barrett Brown, Bernard von Nothaus video montage).
That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
So, in conclusion, Dave is not calling for abolishing the government. Even the signers of the Declaration of Independence wrote “Governments long established should not be changed for light and transient causes.” You can’t get much lighter than Dave being bullied over a speeding ticket. Then again, you can’t get much more serious than the Chair of the Federal Reserve saying “cash is not a very convenient store of value.” This is the same cash that the government expects you to be paid in and to pay your taxes and speeding tickets with. It’s the same cash that represents the full faith and credit of your government. What gives?
Dave’s going to exercise his right to “alter” his declared relationship with his government somewhat. I have already made many changes over the past decade and especially since initiating the blog (thanks again for reading). I won’t detail them all here, but you can imagine. I am not going to speed again. I’m not going to voluntarily give any work to any State Trooper, any non-lawyer “Judge” or any bond issuing entity that underwrote my $5,000 bond without my paying a single penny. Once I actually met the gentleman in Baltimore who underwrites all of the bail bonds in the entire county. He’s doing pretty well for himself… if you can call that “doing well.”
If I want to exceed the speed limit, I’ll sign up for one of those driving schools in Las Vegas or Daytona Beach. If the state was planning on getting any business from me in the future for their traffic courts, fughedaboutit. I’m simply going to leave fifteen minutes early and hope that this puts 90% of my pro rata share of your program out of business. I would urge my fellow citizens to do the same and when you see “Call 911″ prominently painted on the side of every police car, think twice about why they are in the business of promoting law enforcement activity (or is that “life enhancement”) in the first place.
Now, what if they pull Dave over when Dave didn’t do anything wrong such as a traffic check point or some other lack of probable cause fiasco? I guess, I’ll simply turn on my video recording device (live streaming to “the cloud” in case my phone is confiscated) and ask “Why am I being stopped? Am I free to go?” If they don’t let me go or tell me the reasonable probable cause that led them to stop me in the first place, then they’re going to get to Trade With Dave… trade some of their inconvenient cash with Dave for false arrest. The good news is when it comes to government, we all have one great thing to look forward to.
For to us a child is born, to us a son is given, and the government will be on his shoulders. And he will be called Wonderful Counselor, Mighty God, Everlasting Father, Prince of Peace. Isaiah 9:6
Essentially, this is what motivated me to start this blog over five years ago. I got pulled over in my own hometown, a block from a business that I owned, driving a car that was new with all appropriate papers and I had just turned right on red after coming to a full stop. Because there was a piece of luggage in the front seat of my car, I had difficulty in getting the glove compartment open and removing the car registration within the 15 seconds that the officer was willing to wait.
After being cited for “failing to show registration” I ended up going to traffic court to plead “not guilty” and then I got a year of traffic probation, a social worker and a FBI background check and ten hours of community service. I have never been arrested, never committed a crime and I had a perfect driving record with some years that included driving more than 25,000 miles.
So, I got my first look at how this racket works and believe me, it’s a racket. Watch this Fusion.net documentary about Ferguson, Missouri. Yes, it is about racism, but even more than that it’s about business. It’s about people in positions of power taking money from people without power.
There is a young man that is employed by a company that I run. He’s a reliable, consistent and positive member of our team. He told me that on Sunday he was driving to the auto parts store when he noticed he was being followed by a State Trooper. The trooper didn’t turn on his lights and sirens, but rather he simply followed my associate into the parking lot of the auto parts store.
My associate got out of his car and went into the store. The State Trooper got out of his cruiser and followed the young man into the store. The State Trooper followed my associate through the store and stood next to him while he was waiting at the cash register to make his purchase.
After my associate made his purchase, the State Trooper left the store, did not make any purchases, did not ask my associate any questions and simply left.
My associate is a 23 year old black man. He wants to know what he’s supposed to do about being followed onto private property with no probable cause. What do you think I should tell him? What did I do? I sent him a link to the video below.
Just in case you’re considering claiming that you didn’t jaywalk.
This past summer, another associate of mine is a rising senior at a university in New York State. He worked for me over the summer and is from the Dominican Republic. After thirty years in business, and probably close to a thousand employees, I remember this young man as one of the most diligent and hardworking people I have ever known. When he completes his degree he will be returning to the Dominican Republic qualified to oversee the operation and development of an airport or an airline.
I distinctly remember last summer how he relayed to me that he had received a $60 ticket for riding his bicycle on a section of sidewalk in the local municipality. It wasn’t like he was attempting to ride his bicycle on a crowded sidewalk or that he was being a nuisance. He just crossed the road and rode down a section of sidewalk before crossing to the other side of the road. The police pulled him over and cited him for $60. That particular resort town has a year round population of less than 3,000 people. Yup.
This is what they call The Municipal Shuffle, and the following documentary on Ferguson, Missouri explains how the game is played. For Dave, I later discovered that there was one intersection in my entire town where “right on red” is not legal and yes, I broke the law when I came to a full stop and turned right… on red. After that experience, it changed my opinion forever about law enforcement, the court system and the thriving business model that this has become. It’s what Dave calls “a racket” and it’s a business that needs to be put out of business.
What do I suggest? Walk, don’t drive whenever possible. Cross at the intersection. Check your tail light bulbs in your car and your vehicle registration. Return your library books on time. Don’t speed. Don’t sue your neighbor for frivolous stuff and pick up your dog’s business and put it in a bag.
XX Marks The Spot: Hurricane, the PWD doesn’t always drink Dos Equis, but when he does I make sure he goes on the signal box for the local intersection camera – SMILE!
Think twice before calling 911. I was at a Chinese restaurant a year ago and the owner was fighting with his wife. They were throwing pots and pans at each other and the woman told me to call the police… then the man told me to call the police. Instead I helped the man clean up the food after the woman stormed out of the restaurant. Two years later, I’m now friends with this couple and my wife and I were just invited to their beautiful home this past weekend and my wife helped one of their sons with his 5th grade school project. No charges were filed, but my dinner was free.
Keep this up for a few months and when you see excessive capabilities of force on display funded by burgeoning municipal budgets in support of militarized local law enforcement simply smile and wave. Because, within a few months of no one getting any tickets, no one going to court and no one frivolously suing their neighbors… things will begin to change. Yes, the local auto parts store may see a rise in people replacing their brake light bulbs, but the whole “racket” will be put right out of business. You know what I say to that? Good riddance.
Click below to watch “The Policing Of Black Bodies”:
Between posing for lifestyle photo shoots for trendy Paris Match magazine, walking out of interviews with CNN, Greek Finance Minister and professor of economics Yanis Varoufakis is never too busy for an interview with the great state of Tennessee’s Bitcoins with Gravy. Go figure.
Well, here’s how Davey sees it and I know my sausage gravy, but more importantly I understand just how the sausage is made and the biscuits too. What I am anticipating is the invocation of a voluntary “living” wage in Greece for the low income bracket. A blockchain-like technology (possibly Bitcoin) will be imposed. This will allow for the tracking of all “living wages” in what Dave describes as the “participation economy”.
Just take a look at this paper just out from The Brookings Institute and how it portrays the challenges associated with anonymity and poverty and you start to get a feel for what’s in store. Once the living wage is imposed then the velocity of money can be established and the V.A.T. tax can automatically be withdrawn at the point-of-purchase.
Why does Yanis have all the time in the world for a little known broadcaster from Tennessee, but is willing to walk out on “The World Leader In Business” CNBC? Bitcoin and blockchain technologies hold the solution that he’s looking for. Make sure to sign up for our soon to be released “Blockchain For Business” paper by clicking on the link at the top of this page.
If you are trying to explain the blockchain to somebody from Nashville, you may want to try it this way. Tell ‘em to take George Strait’s song and insert the words “Troika Debts” for “exes”, “Germany” for “Texas” and “blockchain” for “Tennesseeeeeeee” ♫
If you know someone who is rich, but they have no interest in cryptocurrencies. If you know a theologian who understands the threat of existentialism but doesn’t have any interest in Bitcoin. If you know a philosophy professor at your University who doesn’t give a hoot about the blockchain protocol, then ask them about the implications of “a shared history.”
Ray Dalio of Bridgwater said “Velocity is a made up thing.” Ray was right and it made him and his fellow hedge fund investors billion$. Looks like the times they are a changin’ and if you know a hedge fund manager and they scoff at this, they won’t be a hedge fund manager for long once the blockchain(s) becomes standard operating procedure.
Okay folks… who’s going to provide an objective comparison between these two companies and their services? One company is backed by Sunil Hirani and who has cleared a mere $2.7 trillion in wholesale transactions at trueEX, one of the Chicago CME’s “largest customer” Don Wilson of DRW Trading Group and run by the ex-JPM commodities executive who invented the credit default swap. The other firm is run by the man… the legend… the sword-wielding… Google glass wearing… CNBC stock picker challenge winning… Reggie Middleton.
Founded by entrepreneurs Sunil Hirani and Don Wilson in 2014, will allow financial institutions to trade digital currencies alongside digitised assets. The platform is expected to launch later today.
Masters, the former head of global commodities at JP Morgan Chase & Co, said:
“Digital Assets has a revolutionary technology platform that eliminates the counterparty risk and lack of transparency that has hindered mainstream adoption of cryptographic technology. The possibilities for reducing cost and risk in settlement are enormous.”
The new CEO, who is best known for her work in credit derivative products, told the WSJ that the new venture seeks to build a bridge between the emerging digital currency industry and Wall Street.
Doing so would result in something “truly revolutionary”, she added.
The thing that strikes Dave as most curious about all of this is the idea of “holding” something digital… as if you could hold a zero or a one. My sense is that the money is in the change making… as in the money changers.
Here’s an example of the money changers having a bad day:
Here’s an example of the money changers who make it up in volume:
You’ve probably heard of Plato. Well have you heard of Andy Perry? You thought there was a correlation between risk and return. You thought Black-Scholes was going to hold. Then Dave has one question for you. If cash is riskless in a Black-Scholes model, then why are corporations using that cash to reduce their float and what does that say precisely about volatility and the volatility smile?
Money is a way of channeling and controlling trade, but where any particular instance of money fails, trade finds a way. Trade (as human interaction) is ubiquitous, like air and light.
Which brings us to interest rates. Earning interest is – was, a positive function of modern money, that is to say it is a positive reason why people wanted the kind of money that is available now.
Interest is validated as an expression of the contemporary social value of money in terms of itself. In other words, interest on money is paid in money to express its value at that specific time. This additional money that accrues to owners of money by virtue of possession expresses the fact that money is valuable. Interest proclaims that all things being equal, anyone within society should/will be able to use money to extract value.
It is a license, a legal permit, to extract value from within the society. ‘Extract’ value is important, as you will see in a minute.
This definition of interest is of central importance because it contains within it a model of the society into which the created money will go. It makes plain that there WILL be opportunities to use money profitably (in a way which can extract value), within the given society.
It follows from this that the interest function is in essence a statement about a given society. And it is fundamental to the way that modern capitalist societies differ from pre capitalist (‘feudal’) ones. Modern capitalist societies will offer opportunities for wealth extraction/ transfer, non capitalist societies do not guarantee this. This is the fundamental rhetoric and ideology of capitalism.
From this positive functionality of opportunity an apparent negative functionality is implied: That it is possible that there might be limited or no opportunity of profitable use that can be made of a given amount of money. This possibility is defined as ‘risk’.
But this can be shown to be a demonstrably false argument by means of a simple illustration:
If there were an infinite number of possible profitable ways to utilise money what would the effect be on interest rates? Despite the fact that there would be little or no risk, interest rates would be high. Because there would be high demand for money After all, what would incentivise the lending out money when there were countless easy ways to directly invest it at high returns?
And what would be the effect of an opposite environment of high risk and few profitable ways to utilise money? Then interest rates would be low because there would be little or no demand for money. In this environment, investment opportunities as opposed to money would be at a premium.
This directly refutes the idea that interest is an expression of risk. It is precisely the opposite. The amount of interest charged is NOT a reflection of risk it is a reflection of the lack of risk.
Further it directly refutes the idea that money produces wealth. Money extracts wealth from profitable opportunities. Without these profitable opportunities money is worthless.
As I argued above, interest is a statement about a society. So what does the MONETARIST refusal to obtain interest from the money they issue- ‘ZIRP’, say about society now?
It says that there will be no ways to profitably extract wealth. It is effectively the end of a capitalist society.
The rest of Andy’s take on risk and return is here:
DETROIT (AP) — General Motors announced a $5 billion stock buyback as part of a plan to return more cash to investors. In return, an activist shareholder decided to drop a potentially divisive bid for a seat on the company’s board.
The moves, announced Monday, are part of a deal with Harry Wilson, a former member of the government task force that restructured GM coming out of its 2009 bankruptcy.
“We basically said thank you,” Wilson said.
Talks with Wilson’s group had been going on for about two weeks, GM CEO Mary Barra said Monday. She said other major shareholders agreed with the buyback.
She indicated that the buyback might have come without Wilson’s prodding. “We were on a path to do this anyway,” Barra said Monday.
And just in case you were wondering – “Volatility is not risk.”
“Keep a multi-decade time horizon. Buffett thinks long term. Being able to have a longer time horizon allows you to . . . reap the inflation-beating rewards [stocks] deliver.”
In other words… if you never sell a stock, then you can never lose money and Warren Buffett is going to live forever.
Ned Naylor-Leyland of Quilter Cheviot Asset Management is interviewed on the latest Keiser Report. Max and Ned explore that question that was originally posed by Bill Murray in Meatballs about the difference between Camp North Star (the Occident) and Camp Mohawk (the Orient)… It just doesn’t matter!… It just doesn’t matter! There may be an eastern camp accumulating the gold and a western camp getting all bitcoiny, but the final scorecards in the global gold game still remain to be posted on the wall of the posh Caddy Shack.
Ned explains (at the 12 minute mark):
What does Dave have to say about all this. Well, Dave’s no financial advisor like Ned, but Dave would suggest you get your single ounce of gold or at least a roll of what Max describes as “lifesavers.” Then again, when you’re ready to get serious, here’s Ned’s website: http://www.quiltercheviot.com/contact/ned-naylor-leyland-2/