Yes, the blockchain is truly revolutionary. Yes, bitcoin is Tulipmania 2.0. Yes, cryptocurrency is a nail in the coffin of the bankster parasites. Yes, digital currency is a tool of the totalitarian tyrants. No, these statements are not contradictory. But don’t worry if you think they are. You’re just a victim of “The Bitcoin Psyop.”
This is The Corbett Report.
So what’s the bitcoin psyop? Well, look at a headline like this:
If you immediately think “Aha! I knew it! The Fed is behind this bitcoin nonsense, after all!” then you might want to stop and contemplate this headline from two years ago:
Do you think there’s some kind of contradiction here? Or do you think that Bernanke has “flip-flopped” on the issue? Or do you suspect that Bernanke was always secretly behind bitcoin but couldn’t admit it until now?
If so, then you have fallen for an embarrassingly simple trick. That trick is to use the words “bitcoin” and “blockchain” and “cryptocurrency” and “digital currency” interchangeably, as if they are all the same thing. They are not.
Confused? Well, fear not! Our good friends at the Bank for International Settlements (BIS) have written a handy-dandy article that explains everything to you in simple, everyday language. They’ve even illustrated that article with easy-to-understand infographics!
Just kidding. Their unwieldy article on “Central Bank Cryptocurrencies” is a predictably hot mess of monetary jargon and Venn diagrams that somehow make things look even more complicated than they sound.
Now, to be fair, their proposed new “taxonomy of money” has real explanatory power, and the diagrams that result are genuinely insightful, but it hardly makes for light bedtime reading. So, let’s see if we can make it a little easier, shall we?
A free presentation templates how to reset my email password on my ipad customs writings https://lynchburgartclub.org/xkcd-master-thesis/ write essay paper resume in microsoft words organ donation essay outline cheap 5mg cialis thesis binding prices custom essays for sale ca i buy viagra online http://snowdropfoundation.org/papers/how-to-write-a-dissertation-proposal-introduction/12/ custom resume affects of past due date viagra viagra santa clara homework help hwcdsb myassignmenthelp co uk https://www.hsolc.org/apothecary/medications-like-viagra/98/ intervention essay source http://v-nep.org/classroom/cover-page-mla-template/04/ best websites for homework help does viagra help with recovery time enter site apa format essay example paper redemption by john gardner essays https://greenechamber.org/blog/identity-essay/74/ generic lowest price viagra viagra dolor de estomago cialis with food go here how to write research papers blockchain is a cryptographically secured ledger that can be permissionless and decentralized.
The geeks in the crowd will appreciate the fact that the blockchain is a stupendously elegant solution to some incredibly complicated problems in the obscure recesses of arcane subjects like distributed computing and payment processing. But for the non-geeks, perhaps this will suffice: Some of the oldest documents ever discovered have been ledgers of one sort or another. Medical records, legal and business contracts, accounting ledgers; as long as there has been civilization, there has been the need for secure and accurate record-keeping of transactions and events. And since the birth of civilization there has only been one way to keep those records: a system where a recognized central administrator stores, secures and updates that ledger.
Until now, that is. With the advent of the blockchain, an accurate ledger can now be maintained without a single, central point where that information is stored, maintained or updated. Registrars? Notaries? You might as well be talking about farriers and chimney sweeps.
So how does it work? And what does it do?
Mike Maloney, the filmmaker behind the popular “Hidden Secrets of Money” documentary series, describes it this way:
The system that bitcoin runs on is called “blockchain.” Think of it as a modern version of an old-fashioned bookkeeping ledger, but instead of a handwritten list of entries and calculations, a blockchain is a digital list of entries and calculations. A “block” is simply a bundle of transactions. Think of a block as a whole page of transaction in the old-fashioned ledger. A blockchain is just a chain of blocks. It’s the same as a whole series of pages in the old-fashioned ledger.
Easy, huh? Here’s how it works: The Bitcoin blockchain actually exists in every one of the millions of computers on the network as exact copies of each other. However, for this example, so that we can zoom in and you can really see just how a blockchain works, I’m going to show it as one giant blockchain in the middle of a small network of computers.
Let’s follow a pizza transaction with bitcoin. When the transaction occurs it first appears on the network in a pool of unconfirmed transactions along with thousands of others from all around the world. Millions of different computers from the network then gather some of these transactions and place them in their own blocks. The computers are all creating blocks constantly in the hope that theirs will be the next one added to the official chain.
A new block is added to the chain every ten minutes or so, when one of the computers wins the right to have its block recognized as the next in the chain and is rewarded with a prize of newly created bitcoins. The way a computer wins the prize is by trying to guess the answer to an extremely difficult math problem. In fact, the problem is so difficult that even with millions of computers making guesses billions or even trillions of times per second it still takes roughly 10 minutes to find the answer. Once one of the computers guesses the correct answer and wins, all of the millions of computers on the network that did not win are instructed to throw away all the work they have done, update their ledgers with the block from the winning computer, and start again with a new math problem.
In doing so, the computers use an immense amount of power and cost a literal fortune to run. So why do they do it? Because it can be very profitable. This is where the term “mining for bitcoins” comes from. Instead of striking gold by mining for precious metals in the wilderness, these computers are hoping to strike bitcoin by mining precious numbers on the blockchain.
But talking about the blockchain is like talking about the printing press. Yes, it’s revolutionary. Yes, it will change the course of history. But what, specifically, does it print? Well, whatever you want it to, of course. A papal bull or the Ninety-five Theses, the 9/11 Commission Report or The Road to 9/11, a GMO cookbook or The Anarchist Cookbook, colorful pieces of toilet paper or Federal Reserve notes (but I repeat myself).
So what does the blockchain record? Well, whatever you want it to, of course. It can be used as a tool for creating smart contracts or registering land ownership or creating decentralized cryptocurrencies.
This is where bitcoin comes in.
So what’s bitcoin?
Bitcoin is a peer-to-peer cryptocurrency whose transactions are recorded in a public blockchain ledger.
There are three things to note about this description of bitcoin.
Firstly, bitcoin is just one application of the blockchain ledger technology. They are not the same thing. Bitcoin is not blockchain. Blockchain is not bitcoin. Bitcoin uses the blockchain innovation to run an electronic payment system.
It’s important to stress this point. Confusing these terms is a purposeful tactic that a lot of 21st century snake oil salesmen are using to sucker a public that sees the bitcoin bubble and believes this is the next great investment opportunity. This “baffle them with BS” technique has been ridiculously effective in some cases. In one infamous example, “The Long Island Iced Tea Corporation” recently rebranded as “The Long Blockchain Corporation.” They still make iced tea, they just added blockchain to their name, and the market responded: The company’s stocks doubled overnight.
This is the exact phenomenon we saw emerge during the dotcom bubble when any company that added “.com” to their name saw their stock price rise. And it is a sure sign that people are being baffled by techno-speak that they don’t understand in the slightest.
Andreas Antanopoulos provides some straightforward advice for separating blockchain from BS:
So let’s get started. What exactly is going on here is this: the greatest technological innovation and explosion of innovation since the mobile internet, or maybe even the internet itself. Or is this the greatest load of hype ever arranged around the technology in the history of technology? Both. And in fact that’s a characteristic of advanced technologies.
I often say that where bitcoin and the other open block chains are today is approximately where the internet was in 1992. In terms of technology, in terms of infrastructure deployment, in terms of adoption patterns, this technology is approximately where the internet was in 1992. But the hype around blockchain is exactly where the hype around the internet was in 1998. You know what comes next.
There will be a shakeout. When the waters recede you can tell who on the beach wasn’t wearing a swimsuit. They stand there naked. It’s an empty promise this will happen in the blockchain space. There is a lot a lot of bullshit being peddled to VCs, to investors, to initial coin offering buyers, to uneducated investors. There’s a lot of Ponzi schemes, there’s a lot of pyramid schemes, there’s a lot of empty promises, there’s also a lot of business as usual disguised as innovation. Disguised as disruptive technology.
Now out of that came this fantastic saying: “blockchain is the technology behind bitcoin,” which is incorrect. Blockchain is one of the four foundational technologies behind bitcoin and it can’t stand alone, but that hasn’t stopped people from trying to sell it. Blockchain is bitcoin with a haircut and a suit that you parade in front of your board. It’s the ability to deliver a sanitized, clean, comfortable version of bitcoin to people who are too terrified of actually disruptive technology.
And so you get into this very strange world where the words no longer mean anything. Can you define “blockchain” for me? I think a few people in this room could probably define blockchain but the real challenge would be can you define blockchain in such a way that I can do search and replace with the word “database” and still make that sentence work? Because that’s the challenge. If what you’re doing is a database with signatures, it’s not interesting, it’s boring.
What is the essence of bitcoin? It’s not blockchain. The essence of bitcoin is the ability to operate in a decentralized way without having to trust anyone. The essence of Bitcoin is to be able to use software to authoritatively, independently, without appeal to authority, verify everything yourself. You don’t trust the other nodes you’re talking to; you assume they’re lying. You don’t trust the miners. You don’t trust the people creating the transactions. You don’t trust anything other than the outcome of your own verification and , through that you end up trusting in something more important: the network effect.
Bitcoin introduced the concept of decentralized security through computation and this has not yet sunk in. What bitcoin does is it allows you to replace a security model that is based around concentric circle most of access and control with an institution in the center with a security model that is inside out, open and accessible to everyone. A security model that is based on market forces and game theory. It is the first market-based security model where a series of incentives and punishments ensure that the ultimate result is you can trust the platform itself as a neutral arbiter, that is not controlled by anyone. Without third parties. Without intermediaries. Bitcoin revolutionizes trust.
SOURCE: Blockchain vs. Bullshit: Thoughts on the Future of Money
The second thing to note in our definition of bitcoin is that it is a cryptocurrency. That means it uses cryptographic functions to secure and verify transactions on the network and to control the issuance of new units. Bitcoin conforms to a certain protocol, and that protocol defines the rules by which the bitcoin network operates. You can tweak those rules and create similar-but-separate payment systems, each with its own qualities. These bitcoin-like cryptocurrencies are called altcoins.
Thirdly, bitcoin uses a specific kind of blockchain ledger called a “public” or “permissionless” blockchain. This means anyone can join the network and contribute to the maintenance of the ledger (“mining,” in the bitcoin parlance). There is another kind of blockchain, called a “private” or “permissioned” blockchain, that requires nodes to be invited to join the network or otherwise given permission to participate in maintaining the ledger.
And as a further level of analysis, it should be noted that all cryptocurrencies are digital currencies, but not all digital currencies are cryptocurrencies. Oh, and then there’s virtual currencies, which are, technically speaking, another thing altogether.
OK, this is starting to get confusing, isn’t it? This is about the point where we’d need to bust out the Venn diagrams and start coloring the overlapping parts, right? Well, if you’ve followed all of this, good for you. If not, don’t sweat it. The point for today is simply to recognize that there are a lot of separate-but-related concepts here, and to talk about them as if they are all just one big monolithic thing is not just unhelpful but purposefully misleading.
So, with all of this in mind, let’s look at those Bernanke headlines again:
Are you at least beginning to get a handle on how those headlines are not contradictory? How it could be that a central banker could be interested in blockchain technology but dislike the bitcoin application of that technology?
If not, think of it this way: The same DVD player that can play Century of Enslavement can also play The Federal Reserve and You. The same printing press that can print Crossfire: The Plot that Killed Kennedy can also be used to print The Warren Commission Report. The same web browser that can take you to corbettreport.com can also take you to NYTimes.com (and no, I’m not recommending that you go there!).
So, yes, the blockchain could be used to create digital currencies that represent the very vision of a totalitarian tyrant’s wildest wet dream. Central banks could use private blockchains to administer national digital currencies that permanently record and track every transaction in the economy. That currency could be distributed through government-issued digital wallets that act as an individual ID and allow the government to track everything you ever purchase back to you personally. It could be used to create the perfect system of panoptic oversight, and the totalitarians could, as sole proprietors of the private blockchain, target anyone they saw as a threat for removal from the economy by simply revoking their wallet.
And, yes, the blockchain could be used to create a digital currency that represent the banksters’ worst nightmare. Free individuals could use a public blockchain to create a cryptocurrency not issued by or subject to any central authority. Or they could use it to raise untaxable cryptofunds for agoristic start-up ventures through unregistered ICOs. Or it could be used to transfer value or property instantaneously across the imaginary lines on the map that define the supposed boundaries of the would-be tyrants’ geographical monopolies without the permission of said tyrants.
Are you starting to get the picture?
A gun can be used by a jackbooted minion of the police state to murder you and your family, or it can be used by you to defend yourself and your family. It is a tool, just like the blockchain, and can be used for good or for ill.
So what I’d like to equip you with is a set of criteria to understand when you are being presented with something, perhaps to invest or to be employed or to engage in some way, and it calls itself a “blockchain” or a “distributed ledger” or one of these other names that are coming out. How can you tell blockchain from bullshit? They both start with a “B.” What’s the difference? If you can replace the word “blockchain” with “database” and the brochure reads the samel it’s business as usual. It’s not decentralized, it’s not borderless, neutral, censorship-resistant, open. It re-establishes trust in intermediaries. It’s just a database and that is not disruptive.
In fact, there are some rather disturbing possibilities in this model. Let’s think about it for a second. The most commonly expressed application for these new distributed ledger technologies is to replace the function of a centralized clearing house with a consortium of n participants where n is 2, 3, 4, 5, 10 known, permissioned, controlled participants, who will assemble transactions and assign them, rather than compete through market forces in a security model like bitcoin. We discard currency as the underlying mechanism for building market based security. We discard proof of work as wasteful because all it allows you to do is decentralize a secure, neutral, censorship-resistant blockchain. And we trust five named parties to sign transactions. At that point, they don’t need to assemble these transactions in blocks, they can just sign the individual transactions. They don’t need to chain them together, because absent proof of work and a system of currency incentives. rewriting that is easy; there’s no immutability. So it’s not a blockchain anymore because there’s no blocks and there’s no chain.
Now that’s at a technical level, but let’s look at the more important level. What do you achieve by replacing a clearinghouse with a consortium of players? You know, there’s something unique a clearinghouse does. If you understand the role of a clearinghouse. one of its most important functions is that it is not a participant in the market. It has no skin in the game. The New York Stock Exchange is not an active trader. That’s not an accident. That’s called separation of concerns. The clearinghouse is an independent party with oversight that is not a market participant. If you take that party out and replace it with five banks, all of which have skin in the game, how do you run a consensus algorithm when the incentives to cheat, front run, manipulate the market and break the consensus rules (even adversarially against the other four parties) are so high there’s no incentive to keep the consensus rules. All you’re doing is you’re saying “trust us, we’re in a consortium.”
Trust us? These five banks? Where were you in 2008 where were you when Libor was fixed? Where were you when the gold markets were fixed? Where were you when front running and high-frequency trading was creating these monsters of crony capitalism? Trust us? Hell no!
Removing the clearinghouse and replacing it with…What’s the word? It’s not consortium…”Cartel!” That’s the word!…with a cartel of the same market makers who have manipulated and compromised every market in history, and doing that in a way that closes this from transparency, that’s not a recipe for efficiency, immutability security, transparency. That’s not a blockchain. That’s a bullshit. It’s a very profitable bullshit. It requires you to have confidence in the game. A “con game,” as it’s known.
Be careful what you evaluate when you see these technologies. Taking something whose fundamental purpose is to remove trusted intermediaries and create an open, borderless, neutral system and turning it into a tool for a bunch of untrustworthy trusted parties to manipulate markets is going to be a disaster. And they’re going to do it.
Now let’s look once again at the statements that opened this podcast episode.
Is the blockchain revolutionary? Well, since no decentralized, peer-to-peer ledger has ever existed before, yes, it is that rarest of rare things: something new under the sun.
Is bitcoin Tulipmania 2.0? Yes, in the exact same sense that the dotcom bubble of the ’90s was Tulipmania 2.0. Just as Pets.com and other ventures that earned (and lost) hundreds of millions of dollars in the blink of an eye were the result of a speculative frenzy, so too are the sudden run-ups and run-downs in bitcoin’s price the result of a speculative frenzy. But the bursting of the dotcom bubble wasn’t the end of the worldwide web anymore than a future bursting of the bitcoin speculation bubble will be the end of cryptocurrency (or even bitcoin).
Is cryptocurrency a nail in the coffin of the banksters? Yes. Cryptocurrencies can now be (and already are being) used by millions around the world for instantaneous and virtually free international remittances, all without the aid of a bank account. Start ups have raised billions of dollars in capital through ICOs without a VC predator or investment bank underwriter in sight. More broadly, a whole host of banksters and their associated cronies in the third-party middleman parasitic class are already openly contemplating the fact that they have already been made obsolete by the blockchain technology which underlies the cryptocurrency boom. So is the blockchain the one and only silver bullet that will end banking all by itself? Don’t be ridiculous. But it’s one more arrow for the quiver.
Is digital currency a tool of the totalitarian tyrants? Well, we’ve already seen how the BIS is musing about central bank-issued cryptocurrencies, and we’ve contemplated how that nightmare scenario of control and surveillance might unfold. It hardly takes a Nostradamus to envision how the forces of centralization are going to push as hard as they can to put the cryptocurrency genie safely back in the bottle of central-bank issued fiat.
Are any of these statements contradictory? Nope. But the bitcoin psyop might have made you think they were. And now you know better.
So, here’s a test of your newfound, nuanced understanding of the intricacies of digital currencies. Can you explain how this headline:
And this headline:
Are perfectly compatible?
If so, then give yourself a pat on the back. You’ve just seen through the bitcoin psyop.