Category Archives: Bitcoin

America’s Descent Into Despotism: Finding Our Source of Power Within

The United States is in a major upheaval. Trump’s cabinet shake-up moves the country into an alarming direction. From the nomination of torturer Gina Haspel as the head of the Central Intelligence Agency to Mike Pompeo, former CIA Director and a vocal opponent of the nuclear deal with Iran as new secretary of state, his selection exposes the White House’s dangerous kill instincts.

An ultimatum came with the president’s appointment of John Bolton, the former American ambassador to the United Nations as his 3rd national security advisor. Bolton, who served in the George W. Bush administration is notorious for his hawkishness, with a great zeal for military action against Iran and North Korea. This rearranging of the deck chairs in the sinking empire signals the great calamity of foreign policy ahead with potential threats of war.

In this seeming free-fall toward despotism, what can ordinary people do? Tackling corruption of our political system and averting a doomed future requires us to truly understand the problems we are facing. The crisis of representation didn’t just arise with Trump, the new commander in chief. A glimpse of it was shown during the 2008 financial meltdown, which was covered up swiftly by bank bailouts and politics of ‘hope and change’. The truth is that seeds for dystopia have been inside this country all along. The roots of the issues that are now emerging in Trump’s America go back to the very beginning of this nation.

In its modern formation, the United States inspired the world with its torch of liberty and equality. At the same time, this beacon of light had its darkness within. From the onset, America contained internal contradictions manifested as the founder’s hypocrisy and the violation of its own ideals with genocide of natives, slavery of blacks and suppression of women. The Founding Fathers of the United States brought a victory of rejecting the power of the King’s monarchy and pioneered a path for one’s own self-determination. The concept of “a government of laws, not of men” was groundbreaking at that time. Yet without reconciling its own shadow, this nation of law failed to fully shield the republic from the tyranny of the Old World.

Supremacy of reason

The unredeemed darkness found in America’s troubled past was a force inside Western civilization that tries to define history, subjugating other perspectives to its single vision. Europe, with its ethos of separation and objectivity set out to conquer the world, spreading its influence across many continents. This domineering power of reason found its new front of exploration in the New World.

America, driven by the monotheistic goal of Manifest Destiny, expanded its territory with brutality. It swallowed what is edible, assimilating immigrants one by one to its conception of what is civil, while spitting out those that it considered impalatable, relegating them into three-fifths of a person or exterminating them from the earth altogether as savages.

This maddened head centricity was manifested in the structure of a new government. Sheldon Wolin, author of Democracy Inc noted how the framers of the Constitution created a so-called managed democracy, a system that favored elite rule and that “the American political system was not born a democracy, but born with a bias against democracy” (2008, p. 228).

The intellectual elites regarded the democratic majority rule as an irrational force and they feared the tyranny of popular majorities. While the faculty of reason positioned itself as a supreme force, a potential to account its autocratic power was found inside America.

The sovereign power of We the People

Expressed in the preamble of the Constitution “We the People” was faith in the wisdom of ordinary people to govern themselves. This was an intention to shift from the model of government that acts as authority of their lives to one that places power in the hands of ordinary people. In this government established under the rule of the people, the source of legitimacy was not derived from a god or king, but was meant to come from people themselves.

This arrangement of governance was not granted from above. It was first demanded by those who opposed the ratification of the 1787 Constitution that lacked the guarantee of individual liberties. The proponents of the Bill of Rights articulated essential parts of the sovereign power of We the People as a freedom of expression; freedom of speech, religion, assembly and the right to petition the government for a redress of grievances. By building upon First Amendment rights, further efforts emerged from below. From abolitionists’ defiance and the women’s suffrage movement to civil rights and free speech movements, people’s determination for individual autonomy persisted.

Assault on this power of ordinary people intensified with the rise of corporate power in the ‘60s. Manifest Destiny is now carried out with Nike’s slogan of “just do it”. With limited liability and having no human beings in charge, the abstraction of the head inside transnational corporations took flight from the communal ground, plundering their way into the globe, without ever having to take responsibility for the consequences of their actions. Giant corporations became a sponsor for this managed democracy, gaining control over media to manipulate public perception, keeping American voters in hostage with the lesser of the two evils charade politics.

WikiLeaks, the rise of cryptographic direct action

In the political winter of the post-911 war on terror, as fear and apathy spread around the globe, a new civic force surfaced online. The waves of whistleblowers began shedding light on the collaborative secrecy of elites that deceive and manipulate the public behind a façade of democracy.

WikiLeaks, with its motto of “privacy for the weak and transparency for the powerful”, opened a floodgate of a free flow of information. This world’s first global Fourth Estate embodies the philosophy of cypherpunks– a loosely tied group of online privacy advocates who saw the potential of cryptography to shift the balance of power between individuals and the state. With the idea that cryptography is the “ultimate form of non-violent direct action” (2012, p. 5), WikiLeaks founder and editor in chief Julian Assange built the system of scientific journalism that would give everyday people around the world tools to combat military might and confront the madness of fallen reason that censors free speech.

The invention of the anonymous drop box was truly revolutionary. It enabled anyone to send information securely without a trace of his or her identity. Through the robust decentralized infrastructure built around this game changing technology, WikiLeaks was able to provide unprecedented source protection in the history of journalism. Here, the organization that derived its source of inspiration in American founding ideas, freed the First Amendment that had been captured through a corporate monopoly and co-optation of the media, making it available to people all around the world.

It is through WikiLeaks’ adamant commitment to the principle of free press that former U.S. Army intelligence analyst and whistleblower Chelsea Manning was able to exercise uncompromising free speech and engage in the American tradition of civil disobedience. Manning, whom the late attorney and President Emeritus of the Center for Constitutional Rights, Michael Ratner described as the “conscience of our nation”, let the American public see the US imperialism in action in the Middle East.

In her request for a presidential pardon, Manning stated her commitment to the ideal of America, saying how she was willing to pay the price if it would make this country be “truly conceived in liberty and dedicated to the proposition that all women and men are created equal.” Through her non-violent cryptographic direct action, she helped America find its conscience.

One individual’s act of courage brought another. Inspired by Manning, Edward Snowden came forward to inform people about the NSA’s mass surveillance. In one of the addresses he made, Snowden also described his act as a public service and connected it with Dr. King’s non-violent civil disobedience. Through his whistleblowing, the former NSA contractor defended individual privacy as fundamental civil rights for all people and tried to preserve the world where people can share creativity, love and friendship freely without every conversation and interaction being monitored and recorded.

Whistleblowers and their faith in ordinary people

From WikiLeaks disruptions to Snowden revelations, courageous act of truth-tellers renewed the faith in the wisdom of ordinary people to govern themselves. Both Manning and Snowden believed in the public’s right to know and held a view that when people are informed, they can make changes and determine their own destiny.

Faith is different than mere belief. It is not about one blindly trusting or passively accepting something. Faith is an active will that requires one to choose out of themselves to believe in something. When established media and trusted institutions failed, Manning chose to put her trust in the journalistic organization that was little known at that time. When the government’s internal mechanisms of accountability were broken, combined with the betrayal of Obama’s campaign promises and his war on whistleblowers, Snowden turned to American journalists whom he could trust by his own judgment of the integrity of their work. They placed faith not in political leaders or authority but in fellow men and women.

It is to this faith in the ability for the wise and knowledgeable public to govern themselves that fearless journalism responded. WikiLeaks, the publisher of last resort, kept its promise to the source by publishing full archives with maximum political impact and bringing information back to the historical record. By doing so, it has become an enemy of the most powerful government in the world, being subjected to legal and extra-legal pressure. Through honoring Snowden’s wishes, journalists Glenn Greenwald, Laura Poitras and Barton Gellman broke the story of NSA surveillance and led the Guardian’s independent journalism, making the established media fulfill its duty. In the aftermath of Snowden’s disclosures, when this young whistleblower was stranded in Hong Kong, WikiLeaks demonstrated its extraordinary source protection with journalist Sarah Harrison risking her own liberty to help Snowden attain asylum.

With this faith given by peers, citizens around the world who have been distrusted by their own governments and made powerless began to claim their own power. By recognizing that someone believed in them and sacrificed their lives so that they can be free, they were able to believe in their own ability to protect those they love and preserve rights that they cherish. The will to respond to this faith in one another made it possible for ordinary people to carry out extraordinary acts.

Bitcoin, Innovation without Permission

Contagious courage lit by people’s faith created a fellowship that can withstand the state violence. It began to shift the balance of power, replacing the source of legitimacy from trusted institutions to ordinary people’s trust in one another. As the network of resistance grew, new attacks emerged. Following the release of U.S. diplomatic cables in 2010, WikiLeaks faced the unlawful financial blockade imposed by Bank of America, VISA, MasterCard, PayPal and Western Union. When this economic sanction starved the whistleblowing site, destroying 95% of their revenue, the flow of autonomy that helped the organization circumvent economic censorship came from fellow cypherpunks.

Bitcoin, as a peer-to-peer electronic cash was the holy grail of cypherpunks. With its defining feature of censorship resistance and permissionlessness, Bitcoin makes free speech an app that can be distributed across borders and used by anyone regardless of nationality, religion, race, gender or economic status. Here, imagination from computer science redeemed the reason that lost its connection to the heart, by synthesizing bits of isolated knowledge that had created separation and injustice, transforming them into a higher order of unification.

Networks of equal peers emerging around this invention opened up a new avenue of dissent in a form of decentralization. Adam Back, notable cryptographer whose work was cited in the Bitcoin white paper, described cypherpunks as “a state of mind” and explained its philosophy of “writing code” as a “proactive approach to societal change by doing: building and deploying tech – rather than by lobbying politicians or asking permission.”

This path toward decentralization was first taken by the creator of this technology. The anonymity of Satoshi Nakamoto represents the power of ordinary people. Through an act of publishing the white paper under a pseudonymous name and making the protocol open source, the mysterious author gave up ownership and simultaneously gave users control of the software, making it possible for each individual to use it as a tool to govern themselves.

What is enshrined in a piece of mathematics is wisdom of ordinary people that understands that man is corruptible, as well as perfectible and recognizes the security holes inherent in the existing model of governance that requires trust in third parties. It is the wisdom of history that teaches us how the best way to secure the system is not to have levers of control in the first place through which power concentrates, leading to despotism. With a consensus algorithm placed as a foundation, laws can be built that is more immune to man’s fallen nature. With this, idea of a government of laws, not of men can be truly realized. Governance of We the People now becomes possible, where rules of law are validated by consensus of ordinary people as opposed to elected officials having power over them.

Andreas Antonopoulos, a technologist and one of the respected figures in Bitcoin, in his talk titled “Courage to Innovate”, captured new enthusiasm and passion ignited around this technology in a phrase “innovation without permission” and connected it with civil disobedience. He reminded the audience how “almost every important innovation in history starts out being illegal or unregulated” and interesting technology started out with people who forgot to ask permission. Describing technology’s core invention as a platform to scale trust, Antonopoulos described how this is a system that makes it possible for people to make social decisions without hierarchy, whether it is government bureaucracy, corporations or any other institution. This system Antonopoulos characterized as “rules without rulers” is being built by people around the world without central coordination.

Claiming our revolutionary spirit

Our Founding Fathers, no matter how imperfect they were, brought us ideas conceived in a revolutionary spirit. The genius of the Constitution is that it makes fundamental laws and principles of government amendable. The highest law of the land preserved space for people to not accept authority imposed on them and even to revolt against it when it is necessary, by giving ordinary people means to change rules. America indeed was founded on rebelliousness and distrust of their own government, demonstrated in the Declaration that reads “whenever any Form of Government becomes destructive… it is the Right of the People to alter or to abolish it, and institute a new Government…”

The government brought by our forebears not only allowed dissent, but depended on our rebellion. The realization of the Constitution as the fulfillment of ideals in the Declaration required individuals with a strong and independent mind. It demanded people to develop moral courage to defend these ideals against special interests of single groups or nations and any adversarial forces that try to deny them.

From the civil rights movement to whistleblowers at the frontier of digital liberation, we have seen the awakening of revolutionary spirit in people’s courageous civic action upholding the ideals of this country. The networks from below expands, converging together to build a new global civil society. Bitcoin developers around the world put their knowledge and skills together, making improvement proposals and fixing bugs, striving to meet the demands of all users.

Innovation without permission is enlivening entrepreneurship. Instead of waiting for problems to be solved by politicians or corporate CEOs, working class began to have faith in their ability to make changes, finding strength and resources within themselves. Around this currency, a new economy is now being bootstrapped, with startups and new businesses hiring people and providing them with skills and knowledge, while many other industries are stagnating.

Solutions to the crisis of representation are within us. Ordinary people, through freely associating with one another, can now give birth to the rule of a real democracy, securing Life, Liberty and the pursuit of Happiness for all.

Bitcoin, Innovation of Money and Reinventing Activism

Bitcoin’s price explosion made news headlines this last year. Topics of digital assets entered onto dinner tables and friendly chats at work places. Fever of the digital gold rush that has swept mainstream finance became contagious. Institutional funds are now entering into cryptos, seemingly hedging their bets with their “sugar high” bubble economy. Jamie Dimon, the JPMorgan CEO who previously slammed Bitcoin as a fraud is said to be regretting his claim. He now praises the blockchain, the underlying technology of Bitcoin. Goldman Sachs recently acknowledged Bitcoin as money, comparable to gold. The firm is already setting up a trading desk for digital currencies.

While Bitcoin is gaining traction in financial circles, Naval Ravikant, the CEO and co-founder of Angel List saw this technology’s profound socio-political impact. He noted, “Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme.” WikiLeaks founder Julian Assange also recognized the revolutionary power of this money based on math. At the end of 2017, from the Ecuadorian embassy in London where he has been confined more than five years, Assange tweeted, “Bitcoin is a real Occupy Wall Street”.

What is this disruptive force of Bitcoin? The Occupy movement that had spread over dozens of US cities and across many countries created a wave of uprising. It inspired a new vision of politics outside of the electoral arena. Now, years after Occupy’s demise, this new innovation of decentralized digital currency could offer a way to reinvent activism, helping all around the world to organize and create radical social change.

The era of creditocracy

First, let’s look back at the rise of OccupyWallStreet protest. The movement kicked off in New York’s financial district in 2011, uniting people from all walks of life under the banner of the 99% against economic inequality and corporate greed. Occupy emerged within a cultural milieu of transparency, spearheaded by WikiLeaks’ disclosure of documents pertaining to government secrecy and corruption.

The insurgency in lower Manhattan marked a peak of disillusionment about the current state of democracy. People began to wake up to an invisible hand of the market – 1% global oligarchy, that was controlling resources through money based on debt. In the article “Student Debt Slavery: Bankrolling Financiers on the Backs of the Young”, attorney and author Ellen Brown described the advantage of “slavery by debt” over owned slavery, which was an idea argued in a document reportedly circulated during the American Civil War among British and American banking sectors. Brown showed that while slaves need to be housed and fed, “free men could be kept enslaved by debt, by paying wages insufficient to meet their costs of living”.

This debt-based financial system has become what professor and veteran of the Occupy movement Andrew Ross calls a “creditocracy”. In this, ordinary people with student loans, medical and credit card bills have become indentured servants. Ross explains how it is the Western version of a “debt trap”, where debts are piled up with monthly credit card balances or underwater mortgages that cannot be ever paid to ensure continuing revenue for the banks. He notes how this is similar to the developing countries that fell under IMF dependency in the course of the 1970s and 1980s.

In the era of creditocracy, ubiquitous anonymous corporations keep the force of control invisible, making people obey their rules. MasterCard tells their customers who the master is with exuberant charge-back fees and penalties. VISA maintains US hegemony of the world, denying access to finance for refugees and immigrants and assisting US government sanctions on countries like Russia and Iran that challenge dollar supremacy. This is a two-tiered financial patronage network that exempts fees and extends credit lines to the rich and privileged, while it exploits the poor by seizing their funds and engaging in predatory lending.

Creditocracy now expands around the globe and threatens civil liberties. Recently, PayPal came under scrutiny, with their failure to provide services in the West Bank and Gaza, while making its service available in Israel. This payment processing company was accused by pro-Palestinian activists as enacting “online apartheid” against Palestinians.

Vision of new democracy

It is people’s indignation against this systemic economic oppression that sparked revolt at the center of world finance seven years ago. Occupy was unprecedented in its scale and its unique style of no central coordination or formal leadership. It was a move away from electoral politics and top-down decision making to the principle of consensus and direct action, which activist scholar David Graeber described as “the defiant insistence on acting as if one is already free”.

During the early days of this movement, the mainstream media criticized demonstrators for not having a clear mandate. Yet this lack of demand was a strength and refusal to recognize the legitimacy of power structures that protesters were challenging. What unfolded then was a new form of activism that truly channels uncompromising power of ordinary people. It was an activism that doesn’t acknowledge external power or seek for permission. Instead it encourages people to change society by simply building new alternatives.

This was a seed for a real democracy that is horizontal and participatory. It was manifested through activists’ effort of creating people’s libraries, media hubs and kitchens and forming a new way of governance through mic check and General Assemblies. This vision of organizing society through mutual aid and voluntary association went viral, spreading with internet memes and Twitter hashtags, creating solidarity across borders.

Cypherpunks write code

Occupy’s permissionlessness, without a need to refer to central authority, is embodied at the core of Bitcoin. The idea of Bitcoin was introduced in a whitepaper published in the midst of the 2008 financial crisis. It is clear that the anonymous creator of Bitcoin was concerned about deep corruption of government and their mishandling of monetary policies. This was shown in the message embedded in the genesis block of the block-chain. It contained a headline of a newspaper that read “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.

Richard Gendal Brown, chief technology officer at software firm R3, provides a summary of the invention of this open source software:

Bitcoin is the world’s first system of digital cash, which allows peer-to-peer value transfer over the internet with no reliance on third parties. It is built on a new invention, the decentralized global asset register. This global asset register is the world’s first decentralized consensus system.

What is behind the protocol of a truly peer-to-peer currency is a revolutionary mind that refuses to obey the command from above and declares independence from all that claim authority. This fierce autonomy is the moral value of cypherpunks, a group that emerged in the late 1980s, who saw a potential of cryptography as a tool to shift balance of power between the individual and the state.

Cryptographer and one of the notable cypherpunks Adam Back, who was cited in Bitcoin’s whitepaper for his invention of Hashcash described the ethos of cypherpunks as that of writing code. This is an idea of making changes by creating alternatives. Back noted how pressuring politicians and promoting issues through the press tends to be slow and create an uphill battle. He pointed out how instead of engaging in the political process through campaigns and appealing to authority for changes, people can simply “deploy technology and help people do what they consider to be their legal right”. Then society would later adjust itself to reflect these values.

Network of resistance

While the mainstream media is obsessed with Bitcoin’s price and investors speculating gains in their portfolios, this technology’s defining feature lies in censorship resistance. The integrity of Bitcoin relies on decentralization, which is a method to attain security by flattening the network and removing levers of control, rather than performing checks and balances of power that tends to concentrate through control points inherent within the system, seen in the existing model of governance. This unprecedented security creates a network of resistance resilient to any forces of control.

When governments that are meant to defend civil rights act against their own people, Bitcoin preserves the network value of public right to free association and speech and distributes this to all users. This right was claimed and exercised in real time. In facing the illegal financial blockades imposed by Bank of America, VISA, MasterCard, PayPal and Western Union, WikiLeaks showed ordinary people how they can circumvent and combat economic censorship with Bitcoin.

As the whistleblowing site continues to publish CIA Vault publications, political persecution intensifies. Now the Freedom of the Press Foundation, an organization that was founded to tackle attacks on free press, decided to terminate processing of donations for WikiLeaks. In response to this new political pressure, Assange urged supporters to continue making contributions with cryptocurrencies and unleash the power of free speech that belongs to all.

As trusted institutions and governments are failing, people around the world are finding their own path of self-determination. In Argentina, as the Peso has been steadily falling since the country’s 2002 economic collapse, Bitcoin adoption has been accelerating. Bitcoin historian and former tech banker who goes by Tweeter handle @_Kevin_Pham noted, “Bitcoin’s killer app can be found in Venezuela, it’s called: ‘not dying.’” As hyperinflation is rendering their national currency worthless, Venezuelans are flocking to Bitcoin as a safe haven to store their savings.

In Iran, the government came on full force, engaging in internet censorship and cracking down on protesters who revolted in response to the country’s long economic stagnation. It was reported that leading up to the civil unrest, the Bitcoin community has grown with more people entering into cryptocurrencies. In Afghanistan, a company that advocates Afghan women’s computer literacy empowered women with bitcoin, helping them gain financial sovereignty.

Permissionless activism

The Occupy movement ignited aspirations for the rule of the common people, verified and upheld by a network consensus created through people’s trust in one another. Yet the enthusiasm for real democracy that was mobilized through social media could not withstand state coordinated police crackdowns. With the eviction of encampments and squares, people’s power that had arisen then dissipated.

Now, with Bitcoin surging, a new stream of disruption is emerging. These old financial engineers aim to protect their dying fraudulent world of central banks by upending their speculative casino with this hyped crypto market. As incumbent banks geared with regulatory arms try to control the bubbling civic power, perhaps this technology calls people to rise once again to halt financial aristocracy by innovating the ‘activism without permission’ – this time with better security and robustness.

Knowledge of computer science empowered by the ethics of cypherpunks now provides a viable platform for people to occupy society with their heart’s imagining. Sovereign individuals can now defy the rule of creditors and create their own rules, ending financial apartheid and discrimination. They can coalesce to fund independent media they support with their money and defund wars that they oppose. Permissionless activism can bring a jubilee, making rapacious debt obsolete through each individual simply walking away from this erroneous system, uniting with those who share goals to create a new economy.

The imagination of this invention opened the potential for a radically different future. From Rosa Parks’ refusal to give up her seat on the bus in Montgomery Alabama to occupiers’ adamant refusal to make demands, Bitcoin’s networked consensus creates an autonomous currency that allows all to move struggles of the past forward.

The rise of Bitcoin is poised to disrupt the world of creditocracy, as we know it. As the price rally continues, many now proclaim the rise and rise of Bitcoin! The question that remains is: Can our imagination rise with the revolutionary force this technology brings? Bitcoin already unleashed a potent power within. The future is now in our hands. It is up to each person to claim this power and show the world what democracy really looks like.


Runaway Train Towards Full Digitization of Money and Labor

The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?

This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines. Your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.

The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks’ tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.

When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. ‘We are already closing all bank tellers, and so are most of the other banks’. Which means staff layoffs which, of course, makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they must study hundreds of extra hours within a few months to pass a test usually planned for weekends, so as not to infringe on the banks’ business hours. You got two chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the ‘retraining’, but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.

Surveillance is everywhere. Now, not only our phone calls and e-mails are spied on, but our bank accounts are too. And what’s worse, with a cashless economy, our accounts are vulnerable to be invaded and robbed by the state, by thieves, by the police, by the tax authority, by any kind of authority, and, of course, by the very banks that have had your trust for all your life. Remember the ‘bail-in’, the infamous “hair-cut”, first tested in early 2013 in Cyprus? Bail-ins will become common practice for any bank that has abused its greed for profit and would go belly-up, if there wouldn’t be all those deposits from customers. Even shareholders are not safe. This has been quietly decided some two years ago, both in the US and also by the non-elected white-collar mafia, the European Commission, EC.

The point is, ‘banks über alles’ (“banks above everything”, following Hitler-Nazis’ battle cry “Deutschland Über Alles”). And which country would be better suited to introduce ‘cashless living’ than Switzerland, the epicenter – along with Wall Street – of international Zion-banking. Banks will call the shots in the future, on your personal economy and that of the state. They are globalized, following the same principles of deregulation worldwide. They are in collusion with globalized corporations. They will decide whether you eat or become enslaved. They are one of the tree major weapons of the 0.1 % to beat the 99.9% into submission. The other two at the service of the master hegemon’s Full Spectrum Dominance drive, are the war- and security industry and the ever more brazen propaganda lie-machine. Banking deregulation has become another little-propagated rule of the World Trade Organization (WTO). Countries who want to join WTO, must deregulate their banking sector, prying it open for the globalized money-sharks, the Zion-controlled banking conglomerates.

Retrenchment of personnel in the banking employment market is increasing. The news only selectively reports on it, when there are large amounts of jobs being eliminated. Statistics lie everywhere, in the EU as well as in Washington. Why scare people? They will be scared enough, when they are offered jobs at salaries on which they can barely survive. That’s happening already. It used to be a tactic applied for developing countries: Keep them enslaved by debt and low pay, so they don’t have time and energy to take to the streets to protest.  They have to look for food and work, whatever menial jobs they can get, to feed their families. It’s now hitting Europe, the West in general. Some countries way more than Switzerland.

Cashless trials are going on elsewhere, especially in Nordic countries, where selected department stores and supermarkets do no longer take cash. Another monstrous trial has been carried out in India a year ago, in the last quarter of 2016, where from one day to another 80% of the most popular money bills were eliminated, and could only be exchanged for new bills by banks and through bank accounts. And this in an almost pure cash country, where half the population has no bank account, and where remote rural areas have no banks. People were lied to so that the sudden introduction had maximum effect.

It caused massive famine and thousands of people died, as they had suddenly no acceptable cash to buy food – all instigated by the USAID Project ‘Catalyst’, in connivance with the Indian rulers and central bank. It was a trial. It was a disaster. If it works in India with 1.3 billion people, two thirds of whom live in rural areas and most of them have no bank account, the scam could be applied in any developing country. See also India – India, Death by Demonetization: “Financial Genocide”, The Crime of The Century.

What is going on in Switzerland is a trial with the high end of populations. How is the upper crust taking to such radical changes in our daily monetary routine?  So far not many protests have been noticed. There is a weak referendum being launched by a group of people who want the Swiss Central Bank be the only institution that can make money, like in the ‘olden days’. Though a very respectable idea, the referendum has no chance in today’s banking and debt-finance environment, where youth is being indoctrinated with the idea that swiping your card in front of an electronic eye is cool. Today, most money is debt-money, made by private banks, like elsewhere in Europe and the US. Worldwide banking deregulation, initiated by the Clinton Administration in the 1990s – today a rule for any member of the World Trade Organization (WTO) – has made this all possible.

Digitization and robotization is just beginning. Staffed check-out counters in supermarkets are disappearing; most of them are converted into automatic check-outs – and that happened within the last year. Where are the employees gone?  I asked an attendant who helped the customers through the self-checkout. ‘They joined the ranks of unemployed’, she said with a sad face, having lost several of her colleagues. ‘It will hit me too, as soon as they don’t need me anymore to show the customers on how to auto-pay.’


Digitization also includes the cryptocurrencies, the blockchain moneys floating around – of which the most famous one is Bitcoin. It brings digitization of money to an apex. The system is complex and seems to lend itself only to ‘experts’. Cryptocurrencies are fiat money, based on nothing, not even on gold. Cryptos are electronic, invisible and highly, but highly, speculative, an invitation for gangsters and fraudsters. It looks as if cryptocurrencies were designed for crooks and speculators.

Bitcoin was allegedly invented by Satoshi Nakamoto which could be a pseudonym of a man or a group of people, suspected to live in the US. “Nakamoto’s” identity is believed to be commonwealth origin, due to the vocabulary used in his writings. One of his close associates is purportedly a Swiss coder, who is also an active member of the cryptocurrency community. He is said to have graphed the time stamp of each of Nakamoto’s more than 500 bitcoin forum posts. Such ‘forum posts’ exist in the thousands, worldwide. They form an elaborate network based on algorithms.

Bitcoin was formally created in January 2009 with a fix amount of 21 million ‘coins’, of which more than half are already in circulation, or ‘mined’ as the jargon goes, and 1 million, or about 4.75% (of the total) can be traced to Nakamoto. This, based on the current market value, corresponds to close to US$15 billion. Today’s overall Bitcoin market cap is more than US$ 315 billion. The market is highly volatile. Drastic daily fluctuations are common, especially within the last 12 months. If one of the major Bitcoin holders, like Nakamoto, would capitalize his profit by selling a big portion of his holdings, the Bitcoin price would be in free fall, functioning pretty similar to the regular stock exchange.

On 24 August 2010, when Bitcoin was first traded, its value was US$ 0.06. On 26 December 2017, the coin was worth US$ 15,770, an increase of more than 250,000%. In the last twelve months, its value increased from about US$ 800 in December 2016 to a peak of close to US$ 20,000 in mid-December 2017, an increase of nearly 2,500 %. However, in the last 7 days, after several ups and downs, the price has dropped by about US$ 680; i.e., by more about 4%, and the trend is uncertain. Perhaps a sign of quick profit-taking? This all shows how instable this cryptocurrency is, apparently much more so than trading corporate shares on the stock market. And certainly not apt as a every-day currency base.

The number of cryptocurrencies available over the internet as of 27 November 2017 is above 1300 and growing. A new cryptocurrency can be created at any time and by anybody. By market capitalization, Bitcoin is presently the largest blockchain network (database network, storing data in different publicly verifiable places), followed by Ethereum, Bitcoin Cash, Ripple and Litecoin.

Bitcoin may be the next bubble, bringing down a parallel economy which has already its fingers clawing into our regular western economy. Cryptocurrencies are officially forbidden in Russia and China, though stopping cryptocurrency dealings by individuals is hardly possible. They do not touch the traditional banking system. That’s why major banks hate them. They circumvent the banking suckers, prevent them from making ever higher profits from horrendous commissions, against which the people at large are powerless.

Here is Bitcoin’s positive side. It escapes bank and state controls. If countries’ economies were run on Bitcoins or another cryptocurrency, they would escape US sanctions which function only because western currencies are foster-children of the US-dollar, hence, subject to the dollar hegemony; meaning all international transactions have to pass through a US bank. A typical case is ‘banking blockades’, when Washington decides to stop all international transactions of a country until it submits to the wishes of the empire. It is blackmail; totally illegal, but unless there is a monetary alternative, the (western) world is subject to this system.

Argentina is a case in point. Buenos Aires was forced by a New York judge in June 2014 to pay a New York based Vulture Fund US$1.6 billion, an illegal ruling according to a UN Resolution. Argentina refused to pay, so the judge, interfering in a sovereign nation, blocked more than US$500 million of Argentina’s debt payment to creditors, bringing the country to the brink of a second bankruptcy in 13 years. Eventually, neoliberal Macri negotiated a deal with the Vultures and made a payment in excess of US$ 400 million.

This US blackmail would not have been possible had Argentina been able to make its foreign transactions in Bitcoins or another cryptocurrency. Venezuela has created the “petro”, a hydrocarbon and gold based national cryptocurrency to escape dollar-caused inflation and for some of its foreign transactions, thereby also escaping the sanctions stranglehold of Washington. Had Greek and Cyprus citizens had a cryptocurrency alternative to the euro, they would not have been subject to the cash control imposed by the European Central Bank.

On the other hand, funding of terror organizations, like ISIS, cannot be disrupted, if the terror group deals in cryptocurrencies.  This shows, for good or for bad, Bitcoins, or cryptocurrencies are for now unique in resisting censure and blackmail, or any kind of authoritarian outside interference in electronic money transactions.

Cashless Living

If Switzerland accepts the change to digital money, a country where until relatively recently most people went to pay their monthly bills in cash to the nearest post office, then we, in the western world, are on a fast track to total enslavement by the financial institutions. It goes, of course, hand-in-hand with the rest of systematic and ever faster advancing oppression and robotization of the 99.9% by the 0.1%.

We are currently at cross-roads, where we still can either decide to follow the discourse of a new electronic monetary era, with ever less to say by “We, the People” about the product of our work, our money; or whether, We, the People, will resist a banking/finance system that has full control over our financial resources, and which can literally starve us into submission or death, if we don’t behave. In order to resist we need an alternative monetary system or monetary network, away from the dollar-euro hegemony, and cryptocurrencies, as structured today, are no alternative.

All the more important is the ascent of another economy, another payment and transfer scheme which already exists in the East, the Chinese International Paymen System (CIPS), effectively a replacement of SWIFT, totally privately run and linked to the US-dollar and US banks. The world needs a multipolar currency system, based on the real economic output of a country or society, as is the case in China and Russia, not one based on fiat money as is the current western economy.

Will Switzerland, the stronghold of world finance, along with New York, London and Hong Kong, resist the temptation of increased profit, power and control, offered by digital money? We, the People, have still the chance to decide either for continuing rotting in a fraud economy, based on wars and greed for which digital money, exacerbated by cryptocurrencies, is a new tool for a new maximizing profit bonanza on the back of the common people; or do we opt for an honest future and for a life that leaves us free to take sovereign political and monetary decisions in a full cash society. For the latter we must wake up to see the propaganda fraud going on before our eyes, and to resist the robot and electronic money onslaught being unleashed on us.

From Gandhi to Catalans, the Revolutionary Movement of Peacemakers

As Trump’s dangerous move on Iran’s nuclear deal and his provocative reaction to North Korea undercut diplomacy, tension is rising for World War III. Discord in the international community has been amplified in conflicts of identity politics across America. Greed and power-seeking leaders’ ambition for profits never end. With ever-increased military budgets, combined with tax cuts for the rich and slashes in health care and public funds, the legacy of imperialism is carried on. Uncertainty created by economic stagnation is generating frustration and anxiety, which is turned into anger and fear. These emotions are then channeled to harness a false sense of nationalism and white supremacy.

In the air of hostility that surrounds us, it is tempting for people to shun those who have opposing views and to respond to hate with even more hate. Resistance can easily be relegated to reactionary rallies. Protests quickly turn into an ideological battle of us versus them, which often results in violence. Yet for real social change to happen, it is imperative for all of us to overcome this loathing toward different views and work together.

There is a force within each person that can counter the hatred that seeks to separate us. Mahatma Gandhi recognized this as the power of peace and applied it to create nonviolent civil disobedience that led to India’s independence from British rule. Now, more than a half century later, a similar peaceful resistance has emerged.

Recently, leading up to the independence referendum on October 1 in Catalonia, Spain’s richest province, Spanish police engaged full force to stop the voting. WikiLeaks founder and editor in chief Julian Assange, who has remained confined to the Ecuadorian embassy in London for more than five years, acknowledged the peaceful act of self-determination by the Catalonian people in facing this police violence. Calling it “the most disciplined Gandhian project since Gandhi,” he said that “its results will spread everywhere.” Peace is a revolutionary force that largely remains untapped. How can social movements be created by this innate transformative power and bring harmony to this divided world?

The great law of peace

The same force of peace that guided Gandhi to fight against the oppression of Britain was present at the beginning of the United States. In history classes, many learned about the American Revolution and the War of Independence, where founders bravely fought for separation from King George. We all know America was founded on revolutionary spirit, but little is known about the quiet strength behind a fiery passion of war at the birth of a nation.

Early colonists, after settling into this New World, interacted with indigenous people. Historians have consistently noted how the original framers of the US Constitution like George Washington and Benjamin Franklin greatly admired the core concepts of the Six Nations of the Iroquois Confederacy and their democratic governance that was based on a vision of peace. So what does peace mean?

From Leo Tolstoy’s War and Peace to John Lennon’s popular song Give Peace a Chance, the word “peace” is in our everyday vocabulary. Many of us make slogans, carry banners of peace, and march in the streets. In our culture, peace seems to have become a mere symbol and has come to simply indicate the opposite of violence or a lack of conflict. Native Americans had a different conception of peace. Philosopher Jacob Needleman1 described how to them, it is “not as something passive, not as a mere absence of conflict, but as a force that can harmonize the actions and impulses of human life in all their multiplicity and opposition to each other” (p. 215). Peace, to Native Americans, is at the center of their way of life.

Needleman recognized how this peace diverges from European religious and ethical principles that work in duality and supports the “radical separation of the good (however it is understood) and the evil (that which resists the good)” (p. 198). He noted how peace conceived by Native Americans acknowledges interconnectedness of good and evil and it “includes all the forces of life,” even “what we often call ‘evil’” (p. 195). He then described for them “to be at peace means to be at peace with one’s conscience” (p. 196).

The First Nation’s conception of peace calls on each to recognize and respect each other’s differences, even the opinions and viewpoints of those we disagree with or condemn. The Great Law of Peace protects independence and individual liberty, while at the same time bases decision-making processes on consensus rather than majority rule. This wisdom of peace was not only at the root of Native American governance, but also influenced the formation of the US government—in particular, the key concept of decentralized power that was secured by the separation of power and checks and balances incorporated into the US Constitution.

Lost ideals and call for love

This peace placed at the foundation of America is a radical acceptance of differences that recognizes all equally in their uniqueness. Out of this fertile soil that embraces diverse seeds sprang the sprouts of inalienable rights. These include life, liberty, and the pursuit of happiness that were promised in the Declaration of Independence.

Yet this revolutionary idea of peace that enlightened the mind and lit the hearts of early settlers seems to have been cast off by the shadow of the old world of monarchy. As Frederick Douglass reminded us in his famous speech “The Meaning of July Fourth for the Negro,” America became “false to the past, false to the present, and solemnly binds herself to be false to the future.” From the onset, with internal contradictions in the genocide of natives, slavery of Blacks, and the oppression of women, the nation diverged from the ground upon which it stood. The promise of equality in the Declaration became empty words. History, with absence of authors who can take responsibility for their creative power, remained asleep to its potential and fell prey to the darkness within.

As the republic expanded, with a focus on material happiness and short-term pleasure through acquisition, the force of peace retreated into the background. Yet it continued to speak to the hearts of ordinary people who still listened to the cries in the wilderness, awakening impulses for social change.

In the 1840s, women’s suffrage gained strength. Through the emergence of feminism, nature began to speak its silent language of peace. Some recognized the influence of the Iroquois principles of democracy, in which women played an important role. In the mid-1950s, mass protests erupted against racial segregation and discrimination in the southern states, which launched the nationwide civil rights movement. Martin Luther King Jr. found the power of peace that Gandhi had discovered. In his effort to liberate Black people in the struggle for civil rights, he inspired the nation through a true message of peace—its unifying force of love even for one’s enemies. In his speech delivered in 1957 in Montgomery, Alabama, Dr. King said:

Somewhere, somebody must have some sense. Men must see that force begets force, hate begets hate, toughness begets toughness. And it is all a descending spiral, ultimately ending in destruction for all and everybody. Somebody must have sense enough and morality enough to cut off the chain of hate and the chain of evil in the universe. And you do that by love.

Such is the decentralized power of peace. It inspires all to yield the urge for power in order to open a space for others to come forward, a principle necessary for democratic dialogue.

Rage against the machine

The ’60s brought the further destruction of the democratizing force of peace and at the same time created a resurgence of peacemakers. As the country engaged in military action overseas, the opposition to US involvement in the Vietnam War quickly organized anti-war protests. Jimi Hendrix’s rendition of “The Star-Spangled Banner” in 1969 at Woodstock struck a chord in the hearts of many, letting people hear “the rockets’ red glare, the bombs bursting in air” over Vietnam.

As the nation began seeking for answers blowing in the wind, a massive student movement kicked off at UC Berkeley. In the launch of the free speech movement (FSM), Joan Baez, who led the first group of protesters into Sproul Hall on the UC Berkeley campus, echoed Gandhi’s principles of nonviolence. She reminded the crowd of the commitment to act with love in the heart and that students were going to be “nonviolent in thought, word, and deed”.2

The clash of two forces became visible in images of flowers placed in gun barrels. As the youth turned to the hardened America represented by armed police, for a moment a breath of peace was brought back to resuscitate this dying culture. Yet this power of peace upheld by childlike innocence alone was not enough to confront the growing beast of the military industrial complex, which with its insatiable hunger consumes all into its soulless capitalism. As Mario Savio, the spokesperson for the FSM depicted in his passionate speech in December 1964, the “operation of the machine becomes so odious.”

As the rise of corporate power rolled back most progress that consumer advocate groups had made, the rage against this machine was quietly building up. Decades later, a call for an uprising came from southern Mexico, one of the poorest parts of the world, where indigenous people were treated like animals and abandoned by Western neoliberal economic policies. On January 1, 1994, the day the North American Free Trade Agreement (NAFTA) went into effect, the people in Chiapas revolted against the Mexican government. This ignited the revolutionary power of peace on the streets of Seattle in 1999. The protest against the World Trade Organization (WTO) spawned a cycle of global social justice movements. Yet this victory was short-lived and the enthusiasm for a different world was crushed by the Bush era’s “war on terror” and a draconian crackdown of dissent, creating a chilling effect and moved society toward a more authoritarian state.

The age of cypherpunk

In the moral ice age of the post-911 world, a new front of courage emerged from the internet. In April 2010, with the release of the “Collateral Murder” video, an unknown website burst onto the global stage. When the government’s internal mechanism of checks and balance had been broken, WikiLeaks opened an avenue for a new accountability. Through this whistleblowing platform, patriotic and liberty-loving men and women found a way to restore the peace of a nation by each choosing to be at peace with their conscience.

Empowered by the vision of cypherpunks, a group that advocates social change with the use of strong cryptography, WikiLeaks engaged in nonviolent information warfare, freeing speech that is censored and oppressed. With its radical acceptance of speech in all forms, backed by innovative technology, WikiLeaks made the First Amendment available to the whole world.

From the election in Kenya and the Icelandic revolution to the Arab Spring and Occupy movements, WikiLeaks’ publications sparked contagious courage, helping open a future where ordinary people armed with knowledge began claiming the power of peace that was for so long stripped away and denied. History that was awakened through this courage is still moving.

Now in Catalonia, as Assange observed, significant events were happening that would change the “relationship between population and state in Western Europe since the fall of the Berlin Wall.” As the Spanish government seized election literature, shut down websites, and threatened politicians as well as the offices of newspapers, the Catalan president gave his people instructions on how to circumvent this blockade and obstruction of free speech. Assange then noted: “When #Catalonia‘s press is Tweeting how to use proxies to avoid voting censorship we are in the age of cypherpunk.” He then provided technical support for people in Catalonia to communicate and organize securely, as they faced Spanish oppression for their right to vote for the referendum.

Currency of radical acceptance

The unchecked power of the dominant elite continues, engaging in the suppression of free speech through economic censorship. Along with control of public media and police, the Spanish government has been trying to seize control of Catalonia’s finances. Assange, who had firsthand experience of this kind of financial warfare with private companies’ illegal banking blockade of WikiLeaks, called people’s attention to the network of resistance that has been steadily growing online.

The invention of Bitcoin was the holy grail of cypherpunks. With features of permissionless, censorship resistant, and unseizable transactions, it was envisioned to become stateless currency that preserves the individual liberty of all. The white paper of this revolutionary decentralized money was published in 2008. It became operational in 2009.

The Iroquois’ law of peace codified in the wampum belt is now being coded into software. It becomes an armory that is made much more secure and immutable to any foreign or domestic attacks. Here, the First Nation’s vision of great peace that inspired its democratic confederation seems to have found its realization in the open source protocol of the consensus algorithm. Security expert and author Andreas M. Antonopoulos calls Bitcoin’s governance model “leaderless”—that which creates decentralized power. He describes how the system motivates people to come to consensus at a very high level and decisions are made by the circle of five constituents: miners, developers, wallets, merchants, and users.

As the era of cypherpunk opened up, the tyranny of the incumbent legacy system gathered up its power to define a new digital age on its own terms. Western liberal democracy, with the arms of technology and transnational corporations, has now expanded throughout the world, placing all into an elaborate web of a financial industrial complex. In this artificial machination of the world, money that has been used as a weapon to wage war and exploit can be automated, with humans no longer in charge. With mass surveillance and control, it can create a total dystopia. Here, the Great Law of Peace enshrined in a piece of mathematics can offer a shield for ordinary people to defend themselves against the sword of power that seeks to control and enslave all living beings into institutional hierarchies.

With Bitcoin, the First Amendment becomes an app that can be distributed across borders indiscriminately to anyone, including those condemned as enemies. Stewarded by developers around the world committed to the shared ideals of cypherpunk, Bitcoin makes its transactions from country to country, from belief to belief, from opinion to opinion, and traverses the way of peace. Having demonstrated its unbreakable integrity for the last eight years, the protocol of radical acceptance continues to evolve, providing an alternative to tyranny without fighting, by each engaging in the creative act of innovation.

As governments all over the world become destructive and old systems begin to crumble, new networks are being made by linking the knowledge of computer science with the wisdom of the First Nations, who have lived in harmony with nature. Now, the West and natives, two minds from the same roots that once diverged paths can come together to begin a new civilization. By each choosing freely to chart the way of peacemaking, social movements can be created. People walking side by side bring this world toward a more perfect union, founded upon a principle of equality that allows everyone to be free.

  1. Needleman, J. (2002). American soul: Rediscovering the wisdom of the founders. New York, NY: Penguin Group.
  2. Nagler, M. N. The search for a nonviolent future: A promise of peace for ourselves, our families, and our world. Maui, HI: Inner Ocean, 2004, p. 202.

The Currency Paradox

How Do You Tackle a Big Idea?

It has long been believed that Capitalism is the last economic system. It has triumphed over its rivals, socialism and communism, and has now come to define modern society. Many believe that the religion of Adam Smith was the culmination of all of our economic experiments. To many, not only is Capitalism the best economic system that humanity has ever devised, it is the best that it will ever devise.

About five years ago, I decided to challenge that premise. An idea had occurred to me which ultimately germinated into a system. For two years, I let the idea gestate, examined it from every angle which I could conceive. Finally, in 2014, I was able to bring the concept to fruition. In May, 2014, I published an 14,500-word essay titled The Currency Paradox, a work of economic philosophy. But, more significantly, it presented a concept of incredible audacity…

An economic system that could viably replace Capitalism.

I published it thinking it had the potential to open up a new way of thinking about economics, that it might spur new approaches that would lead to improved economic equality. I shared it with economists of all stripes and political leanings, hoping to create a dialogue. I was interested to know what they thought about my essay and, more importantly, if and how it might influence their thinking on economic matters.

However, a strange thing happened: silence.

Though many read the essay, the small bit of criticism I received was entirely ideological. No one assailed its basic premise and the viability of the economic system presented in it went completely unchallenged. Though I knew better, it was as if my essay didn’t exist. Despite making repeated attempts, the Econ community refused to engage. Economists have refused to tackle the ideas presented in The Currency Paradox.

Some may think that it was probably because the ideas in The Currency Paradox were unworthy of debate. Maybe, but I doubt that absolutely no economist over a three-year period would not have taken the opportunity to “educate” a layman on the error of his concept. Economists are known for many things but humility isn’t one of them. However, more saliently, the concepts presented in The Currency Paradox, once only recognized and examined marginally, have gone mainstream: globalization, economic inequality, student debt, the value of work… all of these topics, which now occupy the mindshare of the Econ community, were addressed in my essay. Solutions like Universal Basic Income (UBI) and Universal Job Guarantee (UJG) have become far more popular topics of debate though the economic innovation in The Currency Paradox elegantly encompasses and surpasses both. The Econ community has become more aware of the pathologies in the Capitalist system but have refused to even examine a possible cure.

In every sense of the word, The Currency Paradox has proven to be “anti-fragile”; it is an idea that has only grown stronger as time has passed. Indeed, much of it has been confirmed through independent research; for instance, my observations regarding the changes in global economic inequality were independently substantiated by economist Branko Milanovich with his now-famous “Elephant Chart.” You’ll now get a chance to decide for yourself. The following is my essay, with only mild edits relative to the original. As with my original essay, we’ll start with my initial thoughts on Bitcoin; keep in mind that this was written in 2014, when the trajectory of it was still very much in doubt. My thinking on the technology hasn’t changed; rather, it has been confirmed. Though I’ve been proven correct regarding its viability as a common money, some people still consider it “the future.” I still think it is a way-station on the road to a better idea.

On Bitcoin

There’s been a lot of press recently about Bitcoin. What exactly is it? The simple answer is that it is a virtual currency. However, what makes it unique is that it is also an astounding innovation in computer protocols, akin to HTTP, SMTP, and other core Internet technologies. The Bitcoin protocol eliminates the need for a trusted third party when performing electronic payment transfers. Rather than entrusting (and paying) a third party to handle a payment transaction between two parties, Bitcoin allows two parties to transmit money, in the form of bitcoin, to each other near instantaneously and at very little costs.

What is exciting about Bitcoin is its speed, security, and low costs associated with payment. Its infrastructure maintains a perfect record of all transactions and has proven to be impervious to any malicious electronic attack. Proponents are excited by its potential to financially empower billions of people without access to banking resources or for whom money transfer is expensive.

While a tremendous achievement in a technological sense, Bitcoin is highly unlikely to be effective as a currency. For the most part, the important qualities of a currency are efficiency, elasticity, and its ability to store value. How does Bitcoin measure up?

For practical purposes, consider “efficiency” to mean the ease with which money is used for payment or transferred. Is Bitcoin solving a problem related to the efficiency of modern money? Not really. Granted, transferring Bitcoin is extremely fast, inexpensive, and secure, but it lacks the comprehensive infrastructure of today’s fiat money. Literally trillions of dollars are transferred between parties for payment and foreign exchange using the current system, which is mostly electronic and largely frictionless. In this respect, Bitcoin and other so-called “crypto-currencies” aren’t solving a problem. As it relates to efficiency, the fiat money system as it exists is “good enough.”

In regards to “elasticity,” fiat currencies are very flexible relative to the needs of the market; the money supply can be expanded or contracted as needed by governments or central banks. “Elastic money” allows a central authority to address excessive inflation, deflation, recession, or other distortions in a Capitalist economy [or at least try to]. Is Bitcoin more “elastic” than today’s fiat currencies? Absolutely not.

Indeed, Bitcoin suffers from many of the same problems that make gold impractical for modern use as money. Similar to gold, Bitcoin is “mined,” but through the use of algorithms; as more are created, the computational resources required to mine them increases. The net effect is that relatively few bitcoin are produced. This condition causes Bitcoin to more closely resemble commodity money, mirroring the same deficiencies. The fact that the total supply of Bitcoin is always a known absolute quantity and that new ones are slow and resource-intensive to produce encourages price volatility that actually greatly exceeds gold.

However, the most damning aspect of Bitcoin is the fact that only 21 million units will ever be produced; whatever beneficial qualities they have will paradoxically encourage them to be hoarded, artificially limiting supply. Right now, over 60% of bitcoin have never been transferred or exchanged. As the absolute limit of its supply is reached, Bitcoin transactions could potentially slow to a crawl. Demand could exceed supply so greatly that it will become obsolete; losing whatever perceived value it has as a common money as people flee to a less scarce, more flexible currency.

Some make the argument that Bitcoin is infinitely divisible, making the elasticity issue moot. However, the likelihood is that dividing bitcoin will create the problem of “infinite denominations,” producing a substantial amount of complexity in matters of accounting. Also, dividing a currency does not truly address circumstances in which actual expansion of the money supply is necessary. It is the equivalent of stating that a bucket of water can be stretched by using an eye-dropper for distribution rather than a cup. No amount of rationing from one bucket of water will solve the problem of needing another bucket of water.

Finally, currency should be a relatively good “store of value.” In other words, a particular currency should be generally accepted as having a certain level of worth in current circumstances and a relatively high chance of having a certain level of worth in future circumstances. Not only is this criteria very difficult to meet with today’s fiat currency but it is a difficult standard to practically meet with any currency. However, the “store of value” problem is circumvented in a pretty interesting way with fiat currency… its value is more or less imposed by force. Governments make the determination of what the common money will be and then use force, implied or actual, to ensure the money’s stability. This creates an interesting correlation between a country’s money and the power of its armed resources relative to its population. It’s likely not a coincidence that the world’s most powerful country militarily also has the dominant money. The bottom line is that the government of the United States of America has the legal apparatus and force of arms to ensure and reinforce the acceptance of the dollar as legal tender for resolving debt among its citizens. More importantly, U.S. dollars are the only form of money accepted by the U.S. government for taxation. The act of taxation provides strong validation for fiat currencies and ensures their value; this concept is historically referred to as “chartalism.”

Is Bitcoin an effective “store of value”? It is a largely unregulated, pseudo-commodity created completely electronically, controlled and validated by no central authority. Its value is determined entirely by the market. So it is worth something as long as people think it is worth something. The main problem with Bitcoin is that it has no real-world analog with which to reference. They have no intrinsic value of which to speak and not even the benefit of force of arms with which to impose their value. They are created from thin air and the very equipment used to create them can only be purchased with government-backed fiat currency. There is nothing to indicate that Bitcoin is an effective store of value.

Some claim that Bitcoin’s intrinsic value lays in the protocol that enables it. This is reasonable thinking if there were no possible substitutes and Bitcoin had evolved as the sole means of making payments or transferring money electronically. However, the global currency market can and likely will continue to evolve without the Bitcoin protocol. An object, system, or protocol must not only be essential but also unable to be practically substituted or duplicated for it to be credibly claimed to have high “intrinsic” value. For instance, what effective substitute can there be for indoor plumbing? Bitcoin does not meet that criteria. The global currency system already processes trillions of dollars in payments and exchanges and will likely continue to do so indefinitely without it.

Whatever its technological merits, Bitcoin fails utterly to meet the basic criteria of a currency. It is possible that other crypto-currencies will solve the problems of efficiency and elasticity, but it is highly unlikely that any crypto-currency will solve the problem of being an effective store of value. While the technology underlying crypto-currencies will surely make an indelible mark on the overall technological landscape, it is doubtful that Bitcoin or its copycats/derivatives will succeed in the long-term as currencies.

The Paradox of Fiat Currency

There are a lot of fancy definitions for money, but I prefer to think of it as the “blood” of an economy. Much like blood transports oxygen and nutrients to the cells in a human body, money flows in an economy to transport goods and services from the people who provide them to the people who need them.

However, fiat currencies themselves are only placeholders for real goods and services. Without the backing of central authorities, they have no real value. Fiat currencies are a paradox, being inherently worthless yet able to be traded for things of actual worth. This is a fundamental flaw in the Capitalist system. Let’s examine this in detail:

Does money have an exact or even near exact correlation to the amount of goods and services available at any given moment? Those who believe in the efficiency of markets will generally say “yes,” but it is highly unlikely. To illustrate: one person may be willing to pay $100 for a cow, one may be willing to pay $1,000 for it, however, does the cow itself alter in any way if someone pays more for it? Does the same cow become a better cow if someone pays more for it or a worse one if someone pays less for it?

The belief is that “markets” are self-correcting; that, in the end, fair value for that cow is established as an aggregate of what the market is willing to pay for it. But, under any conditions, market pricing is highly arbitrary. It is actually an aggregate of what many people with many different levels of understanding and/or need related to price and value are willing to pay. In many circumstances, people may pay radically different amounts for the same item or service. On top of that, items can be (and often are) priced by their supplier (businesses) to appeal only to a limited segment of the population, placing it beyond the financial means of a majority of people who may actually desire that particular item or service. Luxury items are notable examples. Quality is often stratified by means; higher quality items are reserved for those who can afford them. In this manner, quality of life itself is stratified. In the situation of the cow, it is unlikely that the person who can only pay $100 dollars for the cow has similar financial circumstances relative to the person who can pay $1,000 for it. Also, it doesn’t matter how many cows are offered for sale, the person who can only offer $100 will likely always lose to the person who can offer $1,000 for the cow. Targeted pricing by suppliers and variations in the knowledge and the means of the population creates pricing distortions in which items and services that may be very similar intrinsically have radically different values as measured in money.

A more significant problem exists when it comes to financial and speculative markets, such as commodities. To illustrate: soccer is a universal game and millions around the world play it … but what are the odds that a group of moderately-skilled players will be able to defeat a team of professionals?The pros are separated from the moderately-skilled players by a number of factors such as talent, ambition, long hours of practice, and a love or understanding of the game that gives them insights that less-skilled players do not possess. The professional soccer player has an advantage over the moderately-skilled player that is substantial in the short-term and practically insurmountable over the long-term. It is possible that some of the moderately-skilled players could achieve a high level of proficiency at the game with intense practice, but the actuality of that is highly unlikely. The reality is that, among the millions of people who play and enjoy soccer, only a relative handful has the unique combination necessary to become truly elite players. Those players will always have an advantage against lesser-skilled opposition.

The same can be said of financial markets as well. There is a relatively small group of “professional Capitalists” with the particular combinations of talent, experience, insider knowledge and circumstances to have distinct advantages over others who participate in those markets. These circumstances create distortions that are similar to professional soccer players playing against lesser players. Rather than both teams winning an equal amount of times over the long-term as statistics would generally dictate in situations with 50/50 odds, the professional team will defeat the team of lesser players the overwhelming majority of the time. Many markets are likewise skewed, with the people possessing expert skills and/or insider knowledge having an indelible advantage over those who do not.

These conditions make economics as a discipline an inexact practice. As a result of naturally occurring distortions in market dynamics, it is practically impossible to know the value of money in an economy – as an accurate measure of goods, services, and productivity – at any given time. The reason for that is because market economics guarantees that nothing can ever have an absolute, permanently-fixed value defined in money. Indeed, there are substantial advantages for professional Capitalists that such conditions exist.

This brings us to the matter of money supply.  In theory, central banks or governments can create an unlimited amount of it. Fiat currency is an artificially-created commodity which, by the very fact that it can be produced practically without limit with relatively little effort, is worthless. Yet, every unit of fiat currency can be exchanged for real goods and services. In other words, something that is inherently worthless can be exchanged for things of actual worth. Central authorities get around this by letting markets determine what currency is worth in any given circumstance but, as shown, this is a symbolic exercise. Does believing that money is worth something actually make it so? Also, what actual choice do markets really have? Fiat currencies are standards codified by laws which are then protected with implied or actual force. It is impossible to live in a modern society without having to use fiat currency, especially considering its use for taxation purposes. As a result, people who control the production and lending of money wield an incredible amount of power and have a ridiculously unfair advantage over those who do not.

From a syllogistic standpoint, the following conclusion can be drawn: without a way to precisely correlate fiat currency to actual goods and services, the fiat currency system is very similar to theft. As previously stated, fiat currency is inherently worthless, yet can be exchanged for actual goods and services the moment it is created. Those responsible for producing and lending it benefit from legal monopolies that are protected by force. On top of that, even in an economic environment in which markets set its value, the constant production of fiat currency slowly erodes its purchasing power to zero. This in itself would not be as much of an issue if the decrease in money’s purchasing power was offset by relative increases in the amount of money people earned as a result of providing their services in the form of work. However, that is not the case. Globalization and technological advancements have deprecated the overall value of work by shifting labor costs from more expensive, highly-developed labor markets to less-expensive, developing labor markets. In other words, the earned incomes of workers in highly-developed regions are stagnant or falling as a result of their being displaced by technology as well as workers in developing regions, whose incomes are commensurately rising. The net effect is the leveling of most incomes across all regions to a common lower baseline. The improvement in the standard of living for some is coming at the expense of the standard of living for others.

This can be seen in the growing glut of labor supply in highly-developed regions taking the forms of high unemployment and underemployment. Because people, for the most part, cannot opt-out of the fiat currency system, the bargaining power of most workers is severely compromised. As the overwhelming bulk of necessary work doesn’t require advanced skills, there is always a ready pool of people willing to take the lowest level of compensation offered in order to survive. Efforts to destroy, severely hamper, or suppress collective bargaining in many developed regions has also greatly contributed to stagnant or falling earned income. The net effect is a system in which workers must compete individually against not only each other, but also a massive network of corporations and institutions that control the overwhelming bulk of the planet’s wealth and resources through the fiat currency system.

This condition could be offset if people could retreat to an alternative economic system outside of the fiat currency system. But such a system does not exist in a practical manner. There is not a practical alternative economic system in the world ready to claim the billions of people currently being economically exploited or neglected by the current system.

Massive unemployment and underemployment, widespread poverty, and escalating income inequality are the clearest evidence that the fiat currency system is a sophisticated form of theft; by correlating real work to an inherently worthless commodity and then deprecating the purchasing power of that commodity over time, the fiat currency system isn’t just an extremely efficient system of theft of goods and property, but one for theft of something far, far more important … time.

The Debt-Driven Economy

In order to get into the heart of the current economic system, it’s best to start with a simple question: why does the fiat currency system exist?

Some conspiracy theorists think that its purpose is global enslavement, that a cabal of the super-wealthy and powerful has created it to control the world. If there is indeed a conspiracy controlling the financial system, then:

1) it has beaten all odds by keeping such a thing relatively secret for presumably decades to hundreds of years;

2) Even still, the odds are very much against such a group maintaining this type of secrecy indefinitely;

3) Even if everything goes more or less exactly as this cabal plans, something completely unexpected will occur that will tip the apple cart. A perfect crime may indeed be possible, but not an ongoing one that lasts hundreds of years.

A simpler explanation is that the fiat currency system exists because it is practical and, for the most part, it has worked. It has been exceedingly effective as a mechanism for the advancement of the human species.

The fiat currency system is complex in its intricacies, but simple conceptually. It is actually similar to a game of “hot potato.” Basically, when money is created, it is immediately loaned to a person or entity with the expectation that the borrower will pay it back with interest. In many instances, the money initially borrowed is loaned out again at a higher interest rate to another party. The initial loan can change hands several times or not very much at all but, ultimately, a borrower without the means or inclination to pass the debt must invest time and effort to produce the goods or services that can be exchanged for the money to repay the debt. In this manner, value is actually created. It can be stated that this is the engine on which civilization runs.

However, there are signs that the system has reached the limit of its utility. The likelihood is that debt has exceeded the total capacity for human production so much that it can no longer drive real growth; debt has simply accumulated far beyond the practical ability for it to be repaid with productive effort.

To illustrate:

Since fiat currency is created by central banks in massive quantities, it can be loaned very cheaply; this is normally accomplished when they buy assets or securities from governments or large financial institutions, often ones native to the region in which the currency is produced. In some instances, such as China, the government itself acts as the central bank. When central banks or governments purchase securities from large banks, the funds are added to the institutions’ reserves and then used as the basis for what is known as “fractional-reserve banking,” a practice in which the bank is able to lend a greater amount than what it retains in actual monetary reserves. Critics of the fractional-reserve model claim that it creates money “out of thin air” and they are, for the most part, correct. However, the problem isn’t necessarily the money created through fractional-reserve banking, but the debt obligations created by the demand for interest on the money that is loaned.

To account for potential defaults and to make profit, banks charge interest on their loans, the rates of which are generally inversely related to the amounts loaned. In other words, money is cheap to borrow in large quantities and becomes progressively more expensive to borrow as the loan amounts decrease. This condition is mostly circumstantial; banks lend money based on the assessment of risk for default. Institutions and individuals that already control massive amounts of capital are seen as better risks when lending large sums of money. The less capital that is controlled by an individual or institution, the more it is perceived as a risk for default relative to the amount to be loaned. Even those with an excellent repayment history will be limited to how much they can borrow simply based on their capital levels. The greater the perceived risk for default, the higher the amount of interest that is charged for a loan. This creates the paradoxical situation in which the entities with the least amount of resources to repay loans have greater debt obligations in relation to those resources when they borrow money.

The likelihood is that debt creation has outpaced the practical ability for it to be repaid with work. Estimates place total world debt at roughly $224 trillion USD; split evenly among the roughly 7.13 billion people on the planet, that places the estimated debt burden of everyone at about $31,417 USD. A considerable figure, but maybe not as intimidating as some would think. However, consider the following:

Using the average world salary in Purchasing Power Parity (PPP) dollars of about $18,000 annual (the equivalent in USD), it would take every individual about two years to pay off their share of the debt. However, this can only be done if nobody pays for anything else, such as food, water, shelter, or clothing. If you assume that everyone will have a relatively generous 15% left over as disposable income after paying for necessities, this leaves about $2,700 per year per person to address the debt issue. Based on that number, it would take over eleven years for each person pay off their share of the debt. For many, that still may not seem like a particularly excessive burden until you take these other factors into account:

That debt burden is for everyone: man, woman, and child, from newborns to those only seconds away from death, not exclusively working-age adults. Labor force Participation in the U.S. is roughly a third of the population; applying that proportion worldwide, the debt load for each working-age person is $94,118 USD. It would take a bit over five years for each person to pay off their share of the debt provided they paid no other expenses. Using the disposable income figure of $2,700 per year, it would take each person about thirty-five years to pay off their share of the debt.

Over two billion of the 7.13 billion people on the planet live on less than $2 PPP per day. Multiplying their daily income ($2) by the number of U.S. standard business days in a year (260) yields an annual income figure of $520. At that annual income, it would take over sixty years for the members in this group of two billion to pay off their $31,417 share of the debt while not paying any other expenses. At 15% disposable income, it would take each of them over four hundred (400) years to settle their portion of the debt.

However, this assumes a complete workforce of 7.13 billion people. If we confine the debt to a labor force participation rate of roughly 1/3 the size of the total population, it would take about one hundred eighty (180) years for each person in this group to pay off their share of the debt provided they pay for nothing else. At 15% disposable income, it would take each of them over twelve hundred (1,200) years to pay off their share of the debt.

These figures assume a static debt. However, the debt is actually growing at a rapid pace. Almost every new unit of fiat currency created carries a debt burden (there are exceptions, U.S. minted coins being a notable one). Debt creation is not standing still.

However, things aren’t all bad … global wealth is estimated to be about $241 trillion. Operating under the premise that one dollar of wealth destroys one dollar of debt, subtracting total global debt from total global wealth leaves the world with $17 trillion net wealth. Not too bad, right? But …

Using the current distribution of wealth, the top 1% of the population will control 46% of what’s left while the top 10% will control 85%. Of the $17 trillion left, the top 1% will control about $7.82 trillion or about $109,677 per “1 Percenter.” The next 9% would control about $6.6 trillion or about $10,285 per person, rounding out the top 10%. This leaves $2.55 trillion dollars for the remaining 90% of the world, a little over 6.4 billion people. That equals about $397 per person or slightly over $1 per day over the course of a year.

While this is definitely a simplification of the debt situation, it should provide a pretty accurate sense of its scale. It takes real effort in the form of man-hours to pay off debt and the scale of the debt created by the fiat currency system is staggering. The debt situation facilitates tremendous financial inequality, as those with the knowledge, skills and connections starve the fiat currency system of money by accumulating it in huge quantities through profit and capital gains and using it to control massive amounts of natural resources.

The net effect is that fiat currency has likely outlived its usefulness as a practical means for managing an economy. In other words, the fiat currency system has simply become too expensive. For instance, even with massive advancements in technology, debt and inflation have made funding large- to massive-scale efforts such as actually returning to the moon or sending a manned mission to Mars economically unfeasible. Some may think that such efforts are unimportant, but, as I will explain later, the very survival of the human species relies on our ability to fund projects of those magnitudes.

Next:  Part 2