Wednesday, January 8, 2014

MUST READ "Bitcoiners actually respond with the same brand of shallow dismissals that one would expect from the Paul Krugman's and Ben Bernanke's of the world."

This is a great analysis of the problems with Bitcoin, the curious support it is receiving from mainstream media and the psyche of those caught up in the hype. Also note that the author informs that early on he was approached to help promote Bitcoin, which is supportive of my charge that Bitcoin is partly a pump and dump scheme.-RW

By Brandon Smith

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

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

There is no shortage of “solutions” in Liberty Movement circles, but many of these solutions require that we work within the system according to establishment rules (which they can change at any given moment). They assume that the system will abide by some kind of internal code, that our candidates will be treated fairly, that elections will not be rigged, that a better methodology or technology will be acknowledged and eventually adopted, that the “majority” of the public will someday see the light and back our cause, that the elite will not simply decide to put a bullet in our head.

The reality is, if a solution is dependent on a paradigm controlled by the corrupt system you are trying to change, it is no solution at all. Because of this, my focus has always been on methods that separate Americans from reliance on the system as much as possible.

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

Read the rest here.


  1. Great article, here's the "money shot" IMHO:

    "When a person invests a sizable amount of capital into an idea, not to mention a sizable amount of philosophical faith, they tend to lose a measure of objectivity."

    1. Faith is only required when you do not take the time to study it out in your own mind versus taking the word of someone with a platform such as a blog.

  2. Smith's "controlled opposition" argument is what my gut has said all along.
    A bitcoin-type currency is a globalists wet dream.
    For the time, I'll stick with our local currency.
    (crushed 12 ounce beer can=2 cents).

  3. also.......I read somewhere that Satoshi Nakamoto is 17th century Japanese slang that roughly translates into "bearded Keynesian that laughs".
    also........In December 2013, Josh Zerlan, the Chief Operating Officer of Butterfly Labs (the first Bitcoin hardware manufacturer), stated his belief Nakamoto was a group of people based in Europe, who had connections with the financial sector.
    so.....I don't know.
    just saying.

    1. Well, it is European, but it's not based in Europe, necessarily.
      It's a private firm devoted to futuristic technologies.
      Just trace the connections, folks.

      The name is a dead give-away that it's NOT Japanese.

    2. Lila-- I love most of what you write, but I think you are almost certainly wrong about Bitcoin. And as for Satoshi Nakamoto, I (and many others) think this is most likely a pseudonym for the American cryptocurrency researchers Nick Szabo (+/- Hal Finney +/- Wei Dai). . . see:

      I find it interesting that you view the MSM as suspiciously supportive of Bitcoin. I'd say they are almost 10 to 1 against it. And the NYC elite bankers I know HATE it.

      If I may suggest an empirical approach: Download a wallet and play around with a few coins (PM me on reddit if you need a few millibits to start out.) You may be surprised at how fun Bitcoin is to use and how liberating it is to be able to transfer any amount of money to anyone anywhere with no one's permission.

      Yes, I own some bitcoin. So I must be talking my wallet. Do you own dollars?

  4. If I may add to 1st Anon's "money shot":
    "The bitcoin fad, in my opinion, is designed to lure the public away from overtaking the metals market while banks and foreign governments vacuum up remaining physical in preparation for a dollar collapse."

    1. What a stupid theory. Has the public ever cared about commodities markets?

  5. Rebuttal: Part 1

    This author marches out the same old and tired arguments that have been rebuffed a thousand times before in the comments section of this site and elsewhere. For the sake of the newbies I will address each of these points again here:

    Author's argument: The digital world will break if the physical world breaks.

    Rebuttal: Not necessarily so (google these terms: Ad hoc networks, mesh networks). If the “real” world breaks we'll have much bigger problems than worrying about our digital currency. The libertarian bitcoiners have never said to abandon gold, silver and other “end of the world” survival items. They can co-exist.

    Author's argument: Mysterious creator = bad!

    Rebuttal: The code is open-source and publicly auditable by anyone therefore the identity of bitcoin's creator is irrelevant. Any divergence from the core protocol that is contrary to the founding principles will cause an immediate fork in the blockchain and “govcoin” will be left to die on a vine while “Bitcoin 2.0” marches on.

    Author's argument: The media's love affair with bitcoin is a bad thing.

    Rebuttal: Really? This is an argument? The author clearly hasn't been paying attention. Bitcoin has been slammed by the media since the beginning. Only recently has the tone turned neutral to positive as more people realize the benefits and power of both the currency and the protocol.

    Author's argument: Bitcoins can be confiscated.

    Rebuttal: Of course they can. The key point is that they are much harder to confiscate than any other asset. With bitcoin you can memorize a private key and carry access to an unlimited amount of wealth anywhere in the world effectively making capital controls irrelevant.

    Author's argument: Bitcoins can be manipulated (by theft or the taking over of the mining network)

    Rebuttal: Theft can still happen. Security is important, just like with any other valuable asset. New security tools are being developed to make security for bitcoin easier.

    In regards to the government taking over the hashing power: The distributed hashing power is now larger than the 500 most powerful super-computers combined – including those run by governments. Even if governments were to somehow amass the necessary hashing power the bitcoin developers have several solutions up their sleeves. Google “solutions to 51% attack” for an idea.

    Author's argument: Bitcoin is not private.

    Rebuttal: Bitcoin is private if you want it to be. Google the following terms for simple solutions: CoinJoin, CoinControl, SharedCoin, Trustless Mixing, Open Transactions, CryptoCurrency Exchanges, TorProject, I2P.

    1. "Rebuttal: Bitcoin is private if you want it to be."

      In other words, Bitcoin is not private, and it was not designed to be private. Still, it may be possible to remove one's fingerprints from Bitcoin, but one must go through a hassle of which part involves investigating numerous alleged fingerprint removers. Probably some of those "simple solutions", too, are "open-source and publicly auditable by anyone".

    2. "Rebuttal: The code is open-source and publicly auditable by anyone therefore the identity of bitcoin's creator is irrelevant."

      If the code of some malware OS were open source and publicly auditable by anyone, would the identity of the black hats be "irrelevant"? Well, no. Anyone burned by the malware would be interested in payback, not to mention in avoiding the black hats' next exciting venture.

      Also, let's bear in mind that the wonderful open source code of Bitcoin involves cryptography, one of the most complex areas of computer science. So your remark about public auditability is a flippant trivialization of the difficulty of learning how Bitcoin works.

    3. @ Anonymous

      No one said achieving freedom would be easy. No one will hand it to you on a silver platter. You may want to roll up your sleeves and see if you want to include Bitcoin in your Freedom Toolkit. Like any other tool, it can be used to your advantage if you want it to.

  6. Rebuttal: Part 2

    Author's argument: Bitcoin relies on the continued survival of the open web

    Rebuttal: False. Bitcoin can survive just fine on the dark web. Nevertheless, please google the following terms: Mesh Networks,

    Author's argument: Bitcoin is volatile and can be replaced by another cryptocurrency at any time.

    Rebuttal: Yes, Bitcoin prices are volatile – why would one expect anything different from an emerging, global currency? Owners will go through many periods of mania and despair as bitcoin continues to displace every other currency on the planet. What other currency can complete with bitcoin's decentralization, limited supply, low cost, ease of storage, and speed of transfer?

    Yes, other cryptocurrencies can be created easily but none of them have the infrastructure, first-mover advantage, network effect, and capital that has been invested into the Bitcoin ecosystem. Consider the fact that there are a thousand Facebook and eBay clone sites out there but none of them have the audience and network effect of the dominant players.

    Alternative cryptocurrencies will remain for niche markets and any meaningful advancement in technology will likely be adopted into Bitcoin. If Bitcoin doesn't adopt a superior technology then its users will simply shift to the better technology. Either way, there will always be one dominant cryptocurrency.

    Author's claim: Only when neighborhoods, towns, and counties become producers and self suppliers will they be safe from financial instability. Only when those same communities band together for mutual aid and self defense will they be safe from tyrannical political entities. Bitcoin accomplishes nothing in either of these categories, making it possibly the most popular non-solution for liberty to date.

    Rebuttal: Bitcoin helps to remove borders and can turn the world into a global community harnessing the benefits of freer trade and the specialization of labor. Bitcoin also raises the cost of violence therefore weakening nation states and tyrannical regimes. When you free the money you can help free the people. Bitcoin is one of the brightest solutions for the advancement for liberty to date.

  7. Replies
    1. TechnoBabble, set to music.

  8. Bitcoin is confusing the governments worldwide. That's a great thing. If they tax it they have to validate and define it. Those who say it not this and that will have to validate and verify what it is as well. Wait for Dark Wallet and the next iterations of government free exchange. No one knows where this can go, the most fun part is going. The second most fun part is watching thugs and talking heads try to define and attack something they truly don't understand yet. Reactionaries are trying to crystal ball this and stop it.

  9. The American dollar is a pump and dump scheme too. The only difference is time scales.