Bitcoin and the Power Grid

BPowerGrid

“Bitcoin is evil” articles exist in profusion, and these days I pretty much ignore them. But one of the recent types – raising awareness of Bitcoin’s environmental unsustainability – has engaged me. As it turns out, I have an unusual background to bring to this topic, and I think I should contribute.

So, here we go:

Another Apocalypse?

Let’s be honest and admit that most of the “environmental movement” sells fear of an apocalypse. And as we should all realize by now, humans have an innate weakness for fear.

More or less every apocalyptic environmental prediction has failed. (I’m talking about those that could actually be measured, obviously.) That won’t stop the fear-sellers of course, and now Bitcoin has come into their sights.

The fear is that because crypto mining uses so much power, it will bring down the grid or cause various environmental disasters. The advocates of this fear throw around scary sounding numbers (measured in terawatts) and assorted scientific terminology. (“They understand it and you don’t… don’t expose yourself to ridicule.”)

But it’s mostly just fear. Sure, proof-of-work sucks up power, but that’s nothing new. How much power do you suppose all those millions of air conditioners suck up every summer? I haven’t dug up the figures, but I’m ready to take bets that it’s several times more than crypto mining. Shall we now fear the air conditioner?

Further Factors

I worked for decades in the electrical industry, and so I’d like to give you some facts from that perspective:

  • Power use has been going up since the beginning. These days most houses get 200 amperes of electrical service. But there are still thousands of houses that are wired with only 60 amperes. That was plenty 60 years ago. New loads (devices using power) come along all the time. In just my time, we’ve added air conditioning, microwaves, and lots of computers.

  • Mining is a nice, steady load. The kind power companies thrive on. What makes their lives crazy are seasonal loads like air conditioning, which occur only a few months per year.

  • Power failures happen every year, especially in summer due to the aforementioned air conditioning load. It’s a good bet that several fear-sellers have press releases ready to go for this summer.

  • The utilities are making money on this. More power use means more income.

  • If people use too much power, the providers will raise their prices. Econ 101.

And the Big One

Cryptocurrencies don’t finance war.

The public hasn’t actually paid for a war since WW2. Since then the whole game’s been run on credit. (The same goes, more or less, for everything Big Guv does to save us poor, helpless sheep.)

With Bitcoin and all the cryptos that I know of, you can’t do such things. If you want to throw a war in a crypto-based economy, you’ll have to convince people to pay for it. Good luck.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 19: Back to the Shadows

ROSC19

I got a strange phone call the other day. The person on the other end played like it was a wrong number, asking for Angie something, but they were listening to my voice way too closely. What they were doing, I was pretty certain, was to see if it was really me using the phone billed to me.

The next day, I stopped by Jay’s Bar*, partly because I was nearby and partly to see if anyone was hanging around looking for me. I sat at the far corner of the bar, where I had a good angle on nearly the whole of the establishment. I ordered a tonic and lime (I don’t drink a lot of booze) and read through some of my notes.

I could see the look in Michele’s eye. He greeted me and then moved past, wiping down the bar. But as he did, looking away from me, he said, “There was a man asking about you a day ago… forty-ish, white… a pro.”

“Grazie,” I murmured while taking a drink.

That settled it; “they,” whoever they were this time, were looking for me. And so I started making notes. Some kind of government operative (and there are literally hundreds of spy agencies to choose from these days) wanted information on me and my new friends. Since we all use encryption and anonymization, getting information the usual way hadn’t done them much good. Now they were back to old-school methods: sending someone to watch and perhaps to confront.

After scribbling down a number of ideas, examining them, and choosing between them, I came to three big conclusions:

  1. We’d move our meetings between small taco joints on the north side.

  2. I’d make myself available to the watchers.

  3. I’d immediately have a talk with an old friend who is deeply connected.

I finished my second tonic and lime while trying not to look too disgusted. I motioned for Michele, handed him my money, and said, loud enough but not too loud, “See you Thursday after work.”

If “they” were listening somehow, they’d be waiting for me.

The next day I went to where my connected friend habitually eats lunch. I have his old phone number somewhere, but things like this are better done in person. And fortunately, I found him. We caught up on family and friends for a few minutes, and then I told him precisely what was going on and asked for his advice.

My friend thought for a moment, smiled at me, and pulled out his phone.

“Hey, Johnny,” he said into it. “You still bored?”

I was pretty sure whom he was talking to: a mutual friend who used to be a major player in state politics but who had left the big game and wasn’t doing much. And the continuing conversation between the two (or at least the half of it I heard) confirmed it.

“So,” my friend said as he turned to me, “you’ll meet Johnny at that bar Thursday at six, then buy him dinner next door?”

“Deal,” I said.

I thanked my friend for setting up the dinner and tried to pick up his check. He stopped me, but I protested.

“You did me a favor,” I said. “You can let me pay for your lunch.”

He shook his head and held the check.

“No,” he said. “Friends do favors for friends.”

I thanked him again and left, making a reservation at the Italian place on my way home.

Thursday I’ll meet the retired politician at Jay’s. My guess is that we’ll talk about anything but crypto for 90% of the evening: old friends, interesting stories, our families, and so on. Johnny’s a very entertaining guy.

But at least the watchers will see that I have a friend with some juice, and maybe they’ll back off a little. If nothing else, I think it will secure my position on the “non-violent dissident” list. That’s a position I can live with.

Our group’s weekly meetings, however, will have to move from place to place. That way they’ll need extended surveillance on at least some of us if they want to bug our meetings… and I can’t imagine that we’re important enough for that. The worst these kids would do is to stiff the IRS.

Our only “weapon” is cryptography… which boils down to math. This is a point that Satoshi Nakamoto made when he announced Bitcoin:

[I wrote Bitcoin to] win a major battle in the arms race and gain a new territory of freedom for several years.

The “arms race” of Satoshi and the cypherpunks was this:

  • They have cops, guns, and bullets… and court orders backed by them.

  • We have crypto.

And I still think that’s a good way to look at things.

More next time.

 

* Please note that the stories set in and around Jay’s Bar are fictional. They’re often based upon real people and events, but they are fiction.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 17: The Rise of the Elderly

rosc17

Under the mindset of the factory era, old people were expected to move quietly to the side after they stopped working. From there they were to quietly dote on grandchildren, then get sick and die. That, however, has changed.

For one thing, people are living longer and retaining their health into advanced ages. Also, old people never really were fit to be pushed off the stage. Certainly old people tend to slow down, but “slower” is a long way from “no movement at all.” Old people are more than capable of many things, and they frequently have piles of massively valuable experience.

Anyway, what we learned as the sanitarium (and now Crypto House) opened back up last week, was that Esther and the sanitarium refugees have been busy. While they were away, they spread their new ideas to at least three different old folks’ homes. Contrary to the system’s assumptions, the people there – or at least a decent percentage of them – don’t want to disengage from the world, and they do want to continue making an impact in it. Three cars full of such people have visited the sanitarium/Crypto House this past week, and more are expected.

On top of that, the Swedes (wonderful people) are settling in, and the Bitcoin Bus family is slated to stay at the house for a month. As a bonus, the musicians (a few will remain in an extra room for a while) are going to put on weekly concerts in the factory parking lot next door once weather permits. The factory manager ended up being a pretty cool guy, and he thinks his workers will enjoy it after the last shift on Friday. The cops will probably find some permit violation to shut it down with (or rather, their bosses will… God forbid someone might have fun without paying them first), but the manager is game for it as long as the musicians are.

So, lots of good things are happening. But I’m straying from my main subject: the old folks.

Old and Smart Go Together Really Well

The status quo system we all grew up in made a major error by ignoring the abilities of old people. These are people who spent long decades developing important skills. To simply ignore that was ridiculous. Worse, the assumption that they should be moved to the side has been encoded in laws for Social Security, health care, professional regulation, business insurance policies, and more. The legacy system forcibly ejects old people from the pool of the productive.

In the crypto-world, however, they can do whatever they want, and no one need ever even know their age. There are many in the old-age homes who take comfort in filling the role assigned to them by the status quo, and we really have nothing to offer them. But we’re finding a pretty strong percentage of oldsters who don’t want to tread water for 10 or 20 years and then die. They may not want to work full days or weeks, but they do want to work… they don’t want to give up being productive until they need to.

I’ve talked with only five or 10 of these people so far, but here are the things I know they’re up to:

  • An elderly lawyer has taken up online arbitration work on the Open Bazaar system.

  • Three sets of old ladies are setting up to work as sales agents for anonymous buyers, working through Open Bazaar. They’ll wear cop-type body cameras and drive from one estate sale or garage sale to another, taking live bids from remote purchasers. They already have a dozen or more customers lined up.

  • Two retired engineers and a retired programmer have just acquired their first customer for anonymous drone delivery. Their drones (they have two at the moment) are being programmed with a set of maps, GPS, and a memory system using ephemeral key encryption. And so, a client enters his or her address, which goes directly to the drone, which verifies it to be within its flight radius. But it does not share those details with anyone else. The “Tech Elders” team (that’s what they’re calling themselves) then attaches whatever goods are to be delivered (within a specified weight limit) and sends the machine on its way. They are never told where it will go. Once the delivery is completed, the keys that encrypted the address are automatically dropped from the system. It is known that the drone delivered something somewhere, but only the purchaser knows where.

  • Two friends of friends who really are past their ability to do much have offered their postal addresses for deliveries. If something forbidden gets delivered, what are the enforcers going to do, put them on trial? They’d hardly be considered fit for trial, they’d have no information to give up, and by the time a trial could be arranged, they’d likely have checked out anyway.

All of this will be done behind walls of cryptography. A variety of cryptocurrencies will be used (Bitcoin will mainly be a settlement currency between the other currencies), all communications will be encrypted, and only pseudonyms will be used. But for customer comfort with pseudonyms, they’re using realistic names (Sean W. Thornton, for example) rather than the purposely quirky names we used in the old days of crypto-anarchy.

The Purpose of It All

The entry of the old folks really made me happy. The deep purpose here isn’t to make money or even to escape tyranny. Rather, it’s to help life function in the world. And these old folks still have life in them. They should be able to use it any way they wish to. Crypto gives that to them.

More next time.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

The Essential Goodness of the Crypto Community

CryptoCommunity

Quite a few people have been complaining about the cryptocurrency community lately. And to be fair, they have legitimate reasons: Many get-rich-quickers, corporate sellouts, and outright scammers have shown up recently.

But it’s far too easy for us to focus on the malicious and the misguided. The bulk of the crypto community are decent people, even if they’re unsure of the best paths forward. (No surprise in that, with perfect knowledge remaining scarce on this planet.)

What I want to point out today is that most of these people are caring and decent. And here’s why I say that:

A couple of weeks ago one of the best Bitcoin advocates, Andreas Antonopoulos, rather publicly admitted that he had serious money problems of his own making. (If you don’t think that takes guts, imagine doing it yourself… after first imagining yourself way out and alone in front of millions of people… including plenty of immature trolls.)

And Andreas did get critical comments. But then something else happened: Hundreds of people – many hundreds, I think – stepped up to help him. Andreas has been working full time to promote Bitcoin for years and has done it well.

And people had noticed.

And they remembered.

And they cared.

Over the following days, hundreds of people signed on to be his patrons and lots of people made Bitcoin donations… in some cases giant donations. (Emphasis his.)

As a result Andreas will not have to worry about money for a long time. He can continue (and expand) as an independent voice for cryptocurrencies.

Out Here on the Frontier

Cryptocurrencies, while gaining some measure of acknowledgement, even if not acceptance, remain a frontier technology. For those of us out on the frontier, there is no one to help us when we fall except a few others like ourselves.

A few weeks ago, one of us fell… and the other frontier-dwellers ran to him and helped him back up.

The people on the frontier are good people. They just proved it.

So, acknowledge problems in the crypto community when you see them. Fix them if possible. But don’t go negative. Once you start “fighting the threats,” inertia will carry you forward into finding one new threat after another, and you’ll end up like Inspector Javert, feeling ever so righteous about enforcing purity.

Killing the bad, I’m here to tell you, is a dead end. Your job, rather, is to build the good.

So, evade errors as they appear. But far more importantly, help each other, improve each other, find better ways, and share what you find.

Keep building a better world. All else is detail or distraction.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 16: Rebels with Full Bellies

ROSC16

Thank God for experience. Last week we had another of our meetings at Jay’s bar, and it almost turned into a disaster. Only long experience saved it.

Everything was proceeding nicely until I saw my old friend Martin walking up to the bar with a man who creeped me out. This guy was perfectly attired and wore the same type of overcoat I used to see in and around power centers in Rome. (I lived in Rome for a short time.) This guy smelled of “heartless elite.”

The last time I talked with someone who gave me that vibe, she asked me about e-gold… which was attacked and destroyed a year or two later. Coincidence, perhaps, but I wasn’t about to take such a chance again.

I know that Martin worked for those groups for 30 years or more. (Though I never asked for details and he didn’t offer many.) I met him only after he had retired… and Martin knew things that he really shouldn’t have.

“Listen to me,” I said to our table with urgency. “I don’t have time to explain, but please trust me and get the hell out of here right now. I have to stay and deal with something. I’ll pay the bill, and I won’t be in any danger, so please leave now.”

They all looked at me, unsure of what was happening.

“There’s someone here who very much should not see you. Please go. Now!”

With just a bit of hesitation, they did.

“Email us later,” a few of them said on their way out.

“I will,” I said.

And then I turned my back toward Martin and the man with him. I didn’t want Martin to notice me until my guys were out of view.

I motioned to the busboy, who looked at plates of uneaten food and asked me with his eyes if he should really remove them.

“They had to go,” I said. “I’ll settle up with Michele.”

Martin was my gym friend. He was, by nature, a decent guy. But he grew up poor in a small town in Montana, and so, when one of these elites noticed his innate intelligence (he is very bright), they offered him good money and he accepted. I think he was happy to finally leave his job of drafting legislation, securing the votes for it, coordinating mega-corporate plans, and so on.

Once my young friends were clear, I walked up to Michele at the bar and asked to pay the bill. Michele was surprised to see me so soon (our food was served just a few minutes prior), but he was too busy for questions and we made our transaction quickly. And it was then that Martin spotted me.

“Paul, what a nice surprise.”

And I really was glad to see him. Then he introduced me to his friend, whose name I’ll leave off. My first impression remained.

“Let me buy you a drink,” Martin said. “We have to wait for a table next door.” (As I mentioned before, there’s a restaurant next door, and the two establishments work with each other.)

I agreed, we got our drinks, and we sat at an empty section of the bar. I asked Martin how he was feeling, and we engaged in small talk for a few minutes. Then, wanting to include his friend, he went on to ask about Bitcoin.

“I remember you telling me about the genius of Bitcoin,” Martin said. “We were discussing it earlier, so perhaps you can help us understand it.”

I understood Martin’s interest. He saw Bitcoin as an intellectual entertainment. I was a lot less sure of the other guy’s motives. And so I stared at the guy, waiting for him to express an interest.

“What I’m trying to understand,” he said, “is who the prime movers behind it are. They say it’s decentralized, but there have to be a few people with outsized power. I’m trying to understand who that might be.”

“Well,” I said, “it really is decentralized. There is no office, no customer service, no one with final approval.”

“Yes, we are aware of that,” he said, clearly presuming that I wasn’t bright enough to grasp his intent, which I took as a good thing, “but I know the software has been updated, for example. Some group of people had to decide to do that.”

“Yes,” I said. “There’s a group of Bitcoin developers, but they are widely mistrusted. In fact, there have been several forks of the Bitcoin protocol, undertaken by groups who were very much displeased with the core developers. So, they don’t actually have oversized power, as you call it. And the miners don’t have to use their code anyway.”

“Then the miners have final say over things?” he asked.

“Not really. Some people think of miners as Ferengis… even if unfairly.”

He looked at Martin, to see if he understood what I was talking about.

“That’s a Star Trek reference,” I added. “The Ferengis were an offensive race who cared for absolutely nothing so much as numbers in bank accounts. And that’s the reputation at least some of the miners have.”

He looked confused, and I thought it was best to leave things that way. I turned things in a different direction.

“You know, Martin, I have a question of my own. We used to discuss macroeconomics, and perhaps you gentlemen can help me understand something.”

Martin smiled and his friend seemed content to accept the change of subject.

“I see, in the overall, a generally deflationary environment, due to technological advances, but all of the expenses faced by average people are rising in a near lockstep, soaking up the extra money… be it direct taxation, rising medical fees, paying for corn… ethanol… to be added to gasoline, and so on. Would you agree?”

“I do,” said Martin.

“Yes,” said his associate.

“What I wonder,” I went on, “is when the rising number of people who are officially ‘out of the labor force’ – and mainly on disability or some other handout program – will begin to rebel at being made superfluous.”

This time Martin said nothing, eventually making an “I dunno” expression. I turned to the other man. He seemed disgusted with the question but answered anyway.

“People with food in their bellies do not rebel,” he answered.

Just then Michele informed them that their table was ready. We politely parted company and I finished my drink.

Michele walked over. “Who was that other guy,” he asked.

“I don’t rightly know, Michele, but he’s not my kind of guy.”

“No, not mine either, I think.” Michele has a good nose for people. “But I tell you what, if I find out anything, I’ll tell you.”

I thanked him, shook his hand, and walked out.

On my way back to the train station I made myself happy by thinking of dozens of “rebels with food in their bellies.” Food simply isn’t enough. Complete personalities need to know that they are producing; that they’re doing things that improve the world.

Old Rabbi Heschel was right: Mankind is not always blind.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

Is Bitcoin “Bigger than General Electric”?

GeneralElectric
I’ve seen a lot of headlines like these lately, and so I’ll take a moment to point out how wrong-minded they are. To compare Bitcoin (or any cryptocurrency) to a company is just wrong.
As I keep saying, Bitcoin is not an investment. That is,

  • It’s not a share of ownership in a corporation, like a stock.
  • It’s not a promise of debt repayment, like a bond.

Bitcoin is a currency.
And so, if we want to compare it to something, we must compare it to other currencies, not to stocks, bond, real estate, or whatever else.

So…

So, let’s compare Bitcoin to dollars.

In 2013, there were said to be 10.5 trillion US dollars in existence. That was the figure for “M2” (M3, the broader figure, is no longer published.)

There are currently some 16.7 million bitcoins in circulation.

At its current valuation ($11,000), Bitcoin is worth about 183 billion dollars, or just 1.7% of the US dollar’s value.
That doesn’t make it sound quite so big, does it?
So, what if Bitcoin captured just 5% of the dollar’s value? In that case (and presuming that the relationships remained the same), one Bitcoin would be worth more than $31,000.
And if it captured 1/10 of the dollar’s action, Bitcoin would be some $63,000 each.
And bear in mind that we’re using a figure for US dollars that we know is too low.

But There’s More

Consider this please:

Bitcoin isn’t a replacement for just dollars, it’s a replacement for all government currencies.

Money supply figures are purposely difficult to find, but we can say that the value of dollars, euros, pounds, yuan, and yen – that is, just the biggest currencies, ignoring more than a hundred others – comes to at least 18 trillion dollars, and probably quite a bit more.
Presuming that those hundred-some smaller currencies equal the five big ones, that comes to a world money supply of 36 trillion dollars, minimum.
And if so, Bitcoin accounts for just 0.51% of world money supply.
If, then, Bitcoin captured 5% of world money supply, a single coin would sell for $108,000. At 10% it would be $216,000 each. At 25% it would be $540,000 each.
Granted, these are very rough numbers and the correlations are uncertain. This is definitely “back of the envelope” figuring. But after all the dramatic numbers, the point is this:

If we’re going to compare Bitcoin to something, it needs to be compared to currencies, not to investment vehicles… and Bitcoin is simply better currency.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 15: Building Ourselves a City

ROSC15

Theorizing is one thing; doing is quite another. No matter how good you think your theories are, applying them to the real world is always a revelation. More than that, actually doing is far more fun that theorizing. And right now hundreds of thousands of young people (and a lot of older ones too) are building the economy of the future. It’s a magnificent thing to be part of.

The sanitarium is well on its way to becoming a Bitcoin House. The renovations proceed apace and the musicians currently living there, and their friends, are thoroughly intrigued not only by Bitcoin, but by the concept of decentralization. They’re writing songs about it.

At the same time, the members of our little group have their own projects blooming: decentralized exchanges, drone delivery, biohacking, OTC Bitcoin exchanging (that is, buying and selling Bitcoin for cash, usually at a Starbucks), and of course lots of ridesharing and apartment sharing.

I think Johnny and his uncle are about to launch a crypto-based certification agency for home remodelers. Municipal regulation of construction has gone insane over the past two decades, adding thousands of dollars to even the smallest construction projects. And so, a workaround that still delivers quality is something people are willing to take a small risk on.

The New Plaque

You may recall that there was a rather depressing plaque that used to hang on the wall of the sanitarium. As several of our group reviewed the remodeling work last week, they decided that a new plaque would be nice. And as it happened, Nikos had stumbled upon something just days before.

At one point, as we sat at Jay’s bar discussing books and authors, I mentioned that I enjoyed the work of Eric Hoffer, the “Longshoreman Philosopher.” Later, Nikos remembered the conversation and started checking into Hoffer. One of the things he found was an interview Hoffer did in 1967 with Eric Sevareid. (Sevareid was a famous broadcaster of that era.) In the interview, he talks about a poem that he found written on a wall at Pier 35 on the San Francisco docks. He recited it in the interview:

Build yourself a city; found yourself a state.

Do not cry for pity; grab a master fate.

Grab a swamp and drain it;
cut a log and plane it.

Make the hills and valleys fields.

And on the manmade plain,
breathe your last complaint.

Slay your shame;
forget your name.

Do not strive for pity; build yourself a city.

That of course is what’s going onto their plaque – a large plaque – and that’s exactly what these young people are doing.

“It’ll go back down”

The day after Nikos sent me the link to the interview and told me about the plaque, I received an email from an old friend. This guy has seen dozens of hotshot investments come and go, and so I think he can be forgiven for thinking that Bitcoin is just another of them. In this email he said something about it going up, then coming back down. And that got me thinking: Could Bitcoin – and cryptocurrencies in general – really crash back to the ground?

But before we can address that question, we have to specify something: Bitcoin is not an investment. Rather, it’s a revolution in currency. That’s a fundamental difference, and it set my thoughts in the right direction. Here’s what I wrote back to my friend:

Honestly, I don’t think this one’s “coming back down.” There will be choppy times for sure, but the underlying technology is simply not going anywhere. This is not a company or a strategy; it’s just a protocol.

That’s a very different thing from past “hotshot investments.”

Bitcoin has withstood endless attacks from people who hate it (more or less none of whom have taken the time to understand it). And more than that, it has survived its friends acting stupidly.

I think it’s important to stop and think about this for a moment.

Bitcoin has survived under extremely hostile conditions, taking blows from both enemies and friends, and it has remained standing. And the core reason is its central feature: It’s decentralized. There is no center to grab and no controller to be corrupted. Cryptocurrencies are simply protocols… protocols that establish trust via applied mathematics.

A protocol doesn’t disappear when some ruler declares it a danger to nation and motherhood. It doesn’t even disappear if people ignore it. It just is. Using a protocol as money is a new and different thing and utterly unlike any investment of the past.

Here’s how I finished the email:

It’s hard to imagine how Bitcoin could actually “go to zero.” There is no center to kill, and it’s simply better at doing what currencies are supposed to do. A demand for it will remain, no matter what.

To actually kill Bitcoin would involve breaking the encryption (which is really unlikely) or for governments to kill every person caught using it. (And that’s pretty unlikely as well.)

And Now…

Cryptocurrencies are simply different. They are not investments. They have no center. They have operated for nine years under hostile conditions, starting from nothing at all. They were born into a world that rejected them from the outset and has attacked them nonstop.

In addition, they’ve survived the foolish behavior of some of their biggest advocates.

Cryptocurrencies, in the end, are decentralization protocols. They provide no privileged position from which controllers can control transactions or take money by force. They have no tools for setting interest rates. No one is forced to use them.

With apologies to Ecclesiastes, this really is a new thing under the sun.

My young friends are embracing this, and they’re spreading the concept to their friends, who are spreading the concept to others. And now Bitcoin Houses, Institutes of Cryptoanarchy, innumerable Bitcoin, cryptocurrency, and blockchain meetups, and God knows what else are spreading everywhere. We’re actually moving quickly through the “new concept” pattern attributed to Arthur Schopenhauer:

All truth passes through three stages.

First it is ridiculed.

Second it is violently opposed.

And third it is accepted as self-evident.

It’s awfully hard to know what the future holds of course, but the enforcers of the old way seem to be running out of time, being busy with troubles of their own and with all the usual wars, financial manipulations, and general mayhem.

And so a new world is taking shape. Slowly, erratically, even sloppily… but sinew is joining to sinew… and they are building themselves a city.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

Advice To Bitcoiners Who Are Finding Themselves Rich

Bitcoiners

A lot of Bitcoiners are waking up to find themselves rich these days, and I suspect that most of them have little experience handling significant amounts of money. And so, having been around the block a few times, I think I should pass along some lessons.

  1. Shut your mouth. Seriously. Tell your spouse, of course, and if there’s someone else you trust deeply, but after that shut up. If asked (your friends must know that you have Bitcoin) be vague. And do not be the schmuck who buys the Lamborghini. Repeat these words: Low Profile.

  2. Go ahead and buy a house. You’ll always need somewhere to live, so go ahead and buy a home. But notice that I said a house, not mansion. (Again, Low Profile.) Buy a nice, comfortable place where you can live pleasantly. Make sure you’ll have good neighbors. Think about maintenance. Think long term.

  3. Buy assets. An asset is something that brings money in. A boat, for example, is an not an asset, it’s an expense. A functioning business is an asset. Buy assets.

  4. Put your extra Bitcoins to work building the crypto-economy. We need an entire, functioning, cryptocurrency ecosystem, and Bitcoin was just the start. Find a project you can put your heart and soul into (or start your own), and pursue it.

  5. Understand that money management is a skill. If you haven’t spent years building up that skill, be clear on the fact that you don’t have it. Find professionals to help you. Don’t give anyone “the keys to the kingdom,” and don’t give away any of your decision-making power, but do get advice from experienced people.

  6. Don’t get cocky. Having more money than your friends can make you over-estimate your genius. Your money came from both insight and luck, not from insight alone. Don’t forget that. Now your job is to earn your luck.

  7. Don’t let money define you. If you start thinking about status… if you start enjoying people paying deference to you because you have money… you’ll get sucked into a miserable life of “he has a yacht and I don’t.” It never ends and it’s a miserable way to spend decades.

So, decide right now who you want to be, how you’d like the world to be, and how you’d like to be remembered. Use your money for those things. Start getting wise. It takes time and effort, but you’re as able as anyone else.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 14: The Bitcoin House

It’s been a strange but recurring theme in my life that when a cluster of bad things hit, something good follows close behind. Often, I learn later that the good thing was initiating just as the bad things struck.
But whatever that is and however it works, it happened to me again. There is currently so much going on that I barely know where to begin.

BitcoinHouse

It’s been a strange but recurring theme in my life that when a cluster of bad things hit, something good follows close behind. Often, I learn later that the good thing was initiating just as the bad things struck.

But whatever that is and however it works, it happened to me again. There is currently so much going on that I barely know where to begin.

Creative Commerce

Chester Cruz, as it turns out, chose his friends very well. The sanitarium, we learned, was actually owned by a land trust, and the trustee, now quite elderly, is still a member of Chester’s old law firm. The group that opposed young Esther had contacted this man, wanting to kick Esther, Stanley, Sophie, and two others out of the sanitarium. The trustee and lawyer, a Mr. Medansky, explained to them that he would not do that, but if they were entirely serious about the matter, he could arrange to sell the property and distribute the proceeds to everyone living there.

And so the sale began. But after Esther and the others were notified of the upcoming sale by Mr. Medansky, they put together a new plan: to buy the trust themselves, and of course the sanitarium with it. The lawyer cleverly worked out all the details for them (which allowed them to keep all the sanitarium’s legal advantages), but it would require a cash payment.

This is where we all thanked God for the rise of Bitcoin. While none of our group (so far as I know) had a huge number of bitcoins, they had all accumulated some back when the price was low, and now (the price is hitting $8,000 as I write this) that translates to a lot of dollars… and so they’re buying the trust and property outright. The offended group will get their payout and go live wherever they wish, and the others will get to move back in. (They moved out once the sale was forced and are currently living in an Airbnb.)

The question then was what to do with the property. And that’s where things get really interesting.

First of all, the group will give the building a facelift. Being that no one is currently living there, this is a good time. But there’s more than that. The last month at the sanitarium was pretty ugly, and the group that forced the sale had been getting pretty dark anyway. More or less everyone agreed that the place needed a fresh start.

Now here’s the fun part:

As I discussed the remodeling with the group at Jay’s one day, I told the story of the very first agriculturalists of Europe and how they burned out their houses upon leaving them, even when giving them to new occupants((You can find more detail on this is FMP #73.)). We can’t use actual fire these days of course, but they liked the idea, and last week they came up with a cool version of it.

Adam’s youngest brother is in a band and knows a lot of other poor, young musicians. The group decided to let them have free run of the sanitarium during the remodeling, provided of course that they don’t damage the structure, don’t bother the neighbors (rather hard to do anyway, as their closest neighbors are a factory and a parking lot), and don’t interfere with the remodeling crews.

And so the sanitarium is now being “burned out” by members of four different bands, who are living there, rehearsing there, and entertaining there, and often all three at the same time. They’ll probably have only a month or two, but they’re already having a great time and have been respectful to all involved.

Enter the Swedes

“Synchronicity,” as we used to say way back when, “happens.” And it still happens. Just as our group had to make long-term plans on using the sanitarium, I got an email from a group we’re now calling “the Swedes.”

I ran into the Swedes at a cryptoanarchist conference in Europe a year ago, and they intrigued me. They’re actually two families from Stockholm who are traveling around the world, visiting “Bitcoin Houses.” How they can afford to do this, I didn’t ask (it’s really none of my business), but both families have young children and they’re educating them as they go. They had taken up residence in central Europe for a while, had been in Japan for some time prior, and were on their way to a Bitcoin place in India next. I was surprised that they had so many actual places to stay, each dedicated to cryptocurrency.

“It’s not just here in Europe,” they had assured me last year. “These places are springing up everywhere.” And lately I have seen others forming.

As I say, these people intrigued me, even though I didn’t have much time to spend with them. I couldn’t help feeling that a century ago they would have been Christian missionaries, traveling the world and “bringing light” in a somewhat different way.

Now, as it happens, they want to come to the Central US. Not to the glittering coastal cities, but to someplace where Americans still do productive work. And so, beginning in two months, they’ll take up residence on the second floor of the sanitarium, their purpose being to turn it into a functioning Bitcoin House. (Esther and company will use the top floor.) They’ll stay for six months at least, and they’ll have access to the sanitarium’s front room and rather large basement for any kinds of meetings and gatherings they wish to arrange. The backyard too, once spring hits.

This should be fascinating. More next time.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

The Day Bitcoin Was Hacked

In the ninth year of Satoshi, at 9:30am UTC on a cold February morning, Bitcoin was hacked. The hacker (or hackers) found a way to take advantage of a command in Satoshi’s original code. Then, using some very impressive number-crunching power, they played man-in-the-middle and intercepted transactions as they approached the big Bitcoin miners.

BitcoinHacked

In the ninth year of Satoshi, at 9:30am UTC on a cold February morning, Bitcoin was hacked.

The hacker (or hackers) found a way to take advantage of a command in Satoshi’s original code. Then, using some very impressive number-crunching power, they played man-in-the-middle and intercepted transactions as they approached the big Bitcoin miners.

But this required more than impressive number crunching – it required world-class intelligence, as well as access to dozens of major routers. This, however, didn’t become clear for a few hours. During that time, tens of thousands of bitcoins were stolen.

Whoever hacked Bitcoin had access to secret backdoors in the big commercial routers – backdoors that weren’t supposed to exist. A few ex-employees of the big router company had once tried to speak out on this subject, but they had been quickly silenced. (This wasn’t known till later either.)

By the time dawn broke in New York, bitcoiners in Japan, Korea, and all across Europe were in a panic. A couple of dozen key Americans were being roused as well. The old cypherpunk channels were busy for the first time in many years.

A hasty meeting was called in the oldest darknet chat room, and a moratorium was called on all Bitcoin mining (transaction processing), beginning immediately. Only two significant miners refused to acknowledge the move, but they were just being asses on principle. In any event, they joined the moratorium half an hour later. No transactions would be recognized.

Bitcoin had stopped.

It took just over an hour for the big financial sites to figure out what was happening, followed by a roar of victory that crossed continents. Central banks, Wall Streeters, and gold bugs joined together, rejoicing that their joint enemy… the curse that they all wanted to bury… the upstart that had thrown confusion into their lives… was dead. Many of them literally jumped, screamed, danced, and stomped their feet.

Comment boards erupted with glee. “Buttcoin is dead!” “Buh-bye TwitCoin losers!” and much worse were posted, over and over and over.

Several thousand neophyte bitcoiners panicked and tried to dump every coin they could on the exchanges, but the exchanges closed as well. The result of this was that the price for Bitcoin, was, for all practical purposes, zero.

At this, the enemies of Bitcoin let out an even bigger cheer than before. Their world view had been restored. Whereas they had been looking like fools – repetitively pronouncing Bitcoin dead as it inexplicably refused to die – it was now the bitcoiners who were the fools. The haters spewed a river of venom, with vigor and with glee.

A couple of dozen cryptocurrency scam artists emptied their bank accounts during that day, cleared out of their apartments, and headed to unknown addresses. They knew an opportunity when they saw one. And so they took advantage of the confusion, getting away before anyone could call the law down on them.

But it wasn’t just the scammers; at least as many Zuckerberg wannabes started looking for new ways to get amorally rich as quickly as possible.

The old chat room, however, remained choked with traffic. Literally dozens of Bitcoin developers, enemy miners, and altcoin developers had been sharing their findings. New information was deposited in the main chat room, while an old cryptographer summarized it all in a second room (where solutions were being discussed) and cross-posted conclusions between the two. In a third room the best programmers divided the code between themselves and hunkered down to find the vulnerability.

It took them all four hours.

An hour after that, a patch was being tested.

Three hours and four versions of the patch later, all agreed that it was ready.

At midnight in London (0:00 UTC), every major Bitcoin miner turned back on, and by agreement (an agreement they all kept), they restarted from block number 684273, which was the last complete block before the hack.

Bitcoin – to the shock and horror of the crypto-hate community – was back. In the end, only a handful of people lost money (mostly by providing products during the hack), and only one of those businesses failed. Bitcoin’s price (as measured in dollars, etc.) lagged for a few days and then returned to its previous trajectory.

Many of the altcoins remained shut for a day or two more, simply because they had less skilled manpower to throw at the problem. But soon enough they came back too, with the exceptions of the scammers who had run away and the get-rich-quickers who had wandered away.

The haters went right back to hating.

* * * * *

A book that generates comments like these, from actual readers, might be worth your time:

  • I just finished reading The Breaking Dawn and found it to be one of the most thought-provoking, amazing books I have ever read… It will be hard to read another book now that I’ve read this book… I want everyone to read it.
  • Such a tour de force, so many ideas. And I am amazed at the courage to write such a book, that challenges so many people’s conceptions.
  • There were so many points where it was hard to read, I was so choked up.
  • Holy moly! I was familiar with most of the themes presented in A Lodging of Wayfaring Men, but I am still trying to wrap my head around the concepts you presented at the end of this one.

Get it at Amazon ($18.95) or on Kindle: ($5.99)

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com