Thursday, December 4, 2014

The Attacker Mindset

Being a software developer, and specially focused in Bitcoin, made me take a specific mindset when I tackle any problem and need to evaluate any solution.

I evaluate a solution always from an attacker mindset.
An attacker is defined by "any person wanting to hijack a system for his own profit and by making a victim".
A hacker is not always an attacker, a hacker can hijack a system without any victim.

One thing is certain : an aggregate of person tends to act rationally, in other words a group as a whole, wants to profit from any system.
One particular person, for ethical purpose, or for lack of skill, might no want to hijack a system.
But as time pass, the skill required to exploit any system goes down, and a group, having so diverse code of values, will tend to hijack the system for profit.

The goal of game theory is not to prevent a system from being hijacked. The goal is to make hijacking at worst self destructive, and at best, improving the system.

This particular mindset sticks with me outside of software development.
It is my guiding rod for expressing opinions any law.
I always ask myself : how someone can benefit from such law and make a victim ?

Any flaw will tend to be exploited and morally accepted with time.

When discovered by legislators, such flaws is "fixed" with some duck tape a.k.a a new law, that will necessarily also have flaws, and so on...
The only way to fix a law, or feature of a software, is not to fix the hole, but to modify this law, eventually removing it, so there is no benefit to exploit a flaw.

The more you evaluate any law from an attacker perspective, the more you tend to be libertarian.
By reading "For a new liberty" of Murray Rothbard, I've seen the only system which can't be exploited by an attacker without acting for his self destruction.

Sunday, November 23, 2014

The Killer App : Why it can't apply to Bitcoin

Too much ink is wasted trying to convince average Joe from using Bitcoin. I stopped trying to convince my friends.

"Average Joe likes Mobile Killer App, so that's how we should appeal him to use Bitcoin"

A clever propaganda to make developers waste their time for free on consumer products that would never take off but sold through the middle man.

The problem is that to appreciate Bitcoin, you need new eyes, you have to erase deep and false beliefs you held from school's days, you need to understand how the money system works, you need to understand the technology to see what kind of new opportunities it opens.
Having new eyes takes education, time and sincere curiosity, which, by definition average Joe has not. Average Joe prefers playing angry bird, taking selfies on facebook, and having a safe 40h/week job.

Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car and the house you leave vacant all day so you can afford to live in it. Ellen Goodman

I suspect that it will always stay like that for a long time, I don't believe in global enlightenment.
So, if we can't convince average Joe for using Bitcoin, how can it succeed ?

The first thing is that when someone deeply cares about why Bitcoin is catching up, he starts a journey to educate himself. Satoshi, through Bitcoin, educated way more people about money than any university could do. However, I think that such natural curiosity does not exist for the Average Joe.

The second point is that there is a deep entrenched rule in human behavior, and also in Average Joe : Everyone wants to maximize their profit if it is not at the cost of others.
Money is like water, it flows where there is the least resistance. That is, where the gain are the highest. Competition lower the resistance by lowering prices.

Entrepreneurs that first saw the least resistance path, are building a road that more and more people will notice and take for purely economic gain.
As time pass, more people notice, the path becomes more and more entrenched, until even Average Joe see it.
Thanks to the Network Effect, every individual going into the Bitcoin path, increase the value of Bitcoin for everybody.

No amount of propaganda can stop this movement. When someone see profit to be done, he does not become easily fooled.

The only thing that banks and gov can do to slow down Bitcoin, is making the life of entrepreneur harder, by licensing activities, and making it hard to open a bank account. (which they are doing right now)

Bitcoin is a programmable money that attract unlimited opportunities for entrepreneur, and thus competition that will lower the cost in lots of traditional industries.
The first that will get the profit is the entrepreneur, as the price of services goes down, this will bubble up to Average Joe that will not ignore anymore.

Bitcoin is a revolution, not an evolution. It is a change of paradigm that requires education, and profit is the carrot for education. This carrot will eventually come to Joe. No need wasting time convincing him. Better spending time creating services that make it economically profitable to use Bitcoin.

Monday, October 20, 2014

The Price of Knowlegde in an Untrusted World

Before Edward Snowden revelations, most companies did not care to trust a high profile company with its own data. Trust was based on company's brand popularity. The price of Knowledge was low, since customers had virtually no concern about the information they gave to their service providers.

But Snowden teached us a very important lesson. That popularity of an online service was the main reason why a service should NOT be trusted, because most likely NSA was using every kind of hack possible to spy everyone at the price customer's privacy and security.

This event, even if rarely spoke by the general public, shifted the mind of businesses depending on cloud services and privacy for their operations. This event had a direct impact on the economic activity of cloud provider such as Microsoft, Apple, Google, Facebook, the breach of trust is not free for these companies.

Cloud providers tried to regain trust by encrypting data by default (https), even with the FBI whining about it. This might appease a little bit general consumers, but not the security expert, nor companies depending on them, encrypting the transfer means that data is always stored clearly into datacenters.

Snowden shifted the world from a trust model to a trustless model.
In other words, the price of knowledge for a service is no longer a function of the popularity of its brand. This mean that whatever the service, the more it needs to know, the highest the perceived price of the service will be.

The shift had a tremendous positive impact on what we call "Zero Knowledge" services, which are cloud services which does not need to know your data to provide their services.

The ironical thing is that "Zero Knowledge" is not only needed to protect customers from their service provider.
It is needed to protect service providers against hacker and their own government as well.

Remember when megaupload has been seized and destoyed ? The reason was that megaupload stored the data of its customer in clear, thus "knowing" the illicit data, which permitted a warrant against them.

Kim Dotcom counter attacked with Mega one year later, for the anniversary of megaupload's destruction. Mega can't be seized, because he does not know the data of the user, it is a "Zero Knowledge" service.
This was not done to protect customer, but to protect Kim Dotcom to have his company robbed again by his own government. Such company is more afraid by their own government than hackers, it bears the scares of a previous defeat.

The breach of trust impacted dropbox in favor of its zero knowledge counterpart SpiderOak.
It impacted our wire transfers, which break trading privacy, in favor of its zero knowledge counterpart Bitcoin.

Now, the price of knowedge is part of the price of any service company, it is no longer negligible.
Sadly enough, most company are forced by law to know about you, which is, from the economic point of view equivalent to a government price control.
This, in turn, gives advantage to peer to peer decentralized services, which are not subject to any regulation since it is not oversight by any company.

Knowledge is like a real currency whose price have gone dramatically up since the revelations.
The market shifted as a natural consequence from trusted company to zero knowledge services and peer to peer systems.
The biggest loosers of this story are companies that paid such high price to earn trust that is now worth nothing.
The biggest winners are the ones that don't need to know about you.

Sunday, September 21, 2014

Why is your work so important ?

When one draws a clear line between work and real life, implicitly implying that work is less important, despite him passing more time in work than real life, I still remember of the discussion between Gail Wynand, the puppet master of the world, and Hoark Howard, the architect. Gail finds a strange relief when he is with Hoark, not knowing where it comes from, he questioned him.

Wynand asked:
"Howard, have you ever been in love ?"
Roark turned to look straight at him and answer quickly:
"I still am."
"But when you walk through a building, what you feel is greater than that?"
"Much greater, Gail"
"I was thinking of people who say that happiness is impossible on earth. Look how hard they all try to find somone joy in life. Look how they struggle for it. Why should any living creature exist in pain? By what conceivable right can anyone demand that a human being exist for anything but his own joy? Every one of them wants it. Every part of him wants it. But they never find it. I wonder why. They whine and say they don't understand the meaning of life. There's a particular kind of people that I despise. Those who seek some sort of a higher purpose or "universal goal,' who don't know what to live for, who moan that they must "find themselves". You hear it all around us. That seems to be the official bromide of our century. Every book you open. Every drooling self-confession. It seems to be the noble thing to confess. I'd think it would be the most shameful one."
"Look, Gail". Roark got up, reached out, tore a thick branch off a tree, held it in both hands, one fist closed at each end; then, his wrists and knuckles tesnesd against the resistance, he bent the branch slowly into an arc. "Now I can make what I want of it: a bow, a spear, a cane, a railing. That's the meaning of life."
"Your strength ?"
"Your work." He tossed the branch aside. "The material the earth offers you and what you make of it..."

The power to use our mind, to imagine what things should be, to act upon it, and to materialize our thoughts is the only thing specific to humans.
That's the reason what work we choose to do, and which we choose not to do, is so an important decision.
A good work is the one that make you use mind and muscle to shape the world with your own imagination. Anything less is evil and destroy us.

Saturday, August 30, 2014

The Great Skill Gap

It is a funny thing to see employers having such hard time to find skilled workers, but at the same time government denying it.

For the politician, it seems impossible to have at the same time high unemployment and skill shortage, so denial is their only logical explanation.
But this only reflect a total failure of the education system.

Government blames business managers for misreading government data, when business manager tells them it does not represent reality.

Throwing at money in the education black hole, is the same as thinking that brain cells grow out of green bills. Nothing will come out from it except parasites addicted by government subsidies.

The root of the problem is that when technology advances at such speed, the old paradigm is unsustainable.
The root of the problem is thinking that school should teach, when we need workers able to learn all their life, by themselves.
And you can't be self driven without curiosity, the only fuel of the mind.
You can't force someone to be curious about something, all attempt of coercion is useless.

Einstein said : "Student is not a container you have to fill but a torch you have to light up."

So how do we light up the torches ?
The ablest teacher can do that by asking the right questions and by not giving the answers.
With the same process by which a student is eager to see the next episode of your favorite TV show, he will step forward and will not wait you to give him the show.

The problem is that we are in shortage of such teacher, for the same reason as it requires their own torches to be lighted up. You don't light up a torch with a wet box of matches.

The only way to lighten a torch, if you don't have a great teacher is through entrepreneurship.
And children should be able to make their own businesses for this reason.

We should let them work, for the sake of their own business for other businesses, despite of their young age.
We should let them employ and trade with their parent or other children, by their own free will.
When start to understand that knowledge will serve your own purpose, the light comes up.

Let children make businesses, give them free will, let them trade, help them to ask the right questions, and let them search internet and books for responses. This is the only scalable way to light torches.

Friday, August 29, 2014

Responsibility and Freedom

Take both or neither. And this is not as easy as it sounds.

The great side of Bitcoin is Freedom. When you own a Bitcoin, nobody can take it by force, except if you allow it. And everybody will love that they can be free from the tyranny of banks or payment providers.
But Freedom and Responsibility are two sides of the same coin.

So, in counterpart of Freedom, you are accountable for protecting your money. You have the Responsibility to protect it from hackers, or looters (Mt Gox).
And most people are afraid of taking it, and would prefer transfer responsibility to a trusted party to which they will pay services.
But by giving up responsibility, you loose freedom, you become at the mercy, you don't own a bitcoin anymore, you own an IOU, a promise of debt, of one bitcoin to which you trust the third party to exchange at any time.
It is impossible to own a Bitcoin and give up responsibility at the same time.

But Responsibility and Freedom go hand in hand, increase your responsibilities, and you will increase your Freedom.
The fear of responsibility is the chain of voluntary slavery. And for good reason.
Any time we take a conscious action, and decide to bear the responsibility of our action, we become accountable to the most fearful of the bosses : ourselves.

When you take responsibility and bad things happen, you will judge your own action, others, often friends, will point the finger on your mistakes, and you will have to draw your own conclusion.
It is a painful process, but the price of Freedom.

When someone flees responsibilities, and bad things happen, he will judge the person who gave him orders, and if he doesn't find, he will blame weather and bad luck, "he could not help it", he will never blame his own inaction and voluntary ignorance.

When you meet someone who is teaching lessons on failures of others, or is blaming "the economy" or "weather" for his own misery, you know that your are talking to a slave.
A slave who thinks he is free even if 90% of his waking time is dictated by others.

By giving up the responsibility of our decisions, we give up our Freedom. There is no compromise to be made.

Sound money, be it gold, silver or bitcoin, is the step of monetary Responsibility and Freedom.
Bitcoin is the first money which is digital and where you also have the choice to be responsible for it.
Bitcoin is the only device into which you can store your efforts and can be traded remotely, that keep your freedom and responsibility intact.

Sunday, August 24, 2014

Why Bitcoin will succeed despite any attempt to restrict it

An interesting definition on what intelligence is, according this ted talk, the maximization of future possibilities.
And this make sense, the more you have possibilities at your disposal, the less you have to fight since you can just leap like a frog.
I like this definition, since it also explain why a completely unregulated free market is by definition superior.

Free market policies aims at nothing more than the maximization of trading alternatives.
When alternatives are abundant, you can easily change to the most suitable trading partner to improve your efficiency.

Bitcoin is the only way to trade with anyone, remotely and without any government approval.
Possibilities are multiplied, and so, actors in the Bitcoin economy will adapt faster than others.
Black market will have an edge on white market, I expect capital and brains will move to the most efficient and enter in the bitcoin economy, leaving no choice for white market but to deregulate.

Funny thing is that I recently read Altas Shrugged, were, in an heavily socialized US, smart people disappear one after and ask one question before leaving "Who is John Galt ?"
In today's economy, smart people will not disappear physically but economically from the white market, making no choice but to make the transition to Bitcoin.

Friday, August 1, 2014

Wealth and Money

The socialist viewpoint on wealth is that wealth equals money, from this viewpoint, there exists a fixed quantity of money so the problem is about how to distribute fairly.
What a chance that Keynes gave the intellectual justification for raising wealth by allowing a central bank to print more money.
The problem is solved ! If there is a not enough wealth, let's print more money, and in debt the state on useless program to stimulate the economy.

So, when I start learning about Bitcoin I asked why Satoshi decided to have 21 Millions Bitcoin with a minimum exchangeable value of 0.0000001 BTC ? Why not 10 Billions ?
The reason is that the amount does not matter as long as that the minimal exchangeable value can buy a cup of coffee. 21 Millions ? 40 ? or trillions of Bitcoins ? It is easy to see it would make no difference at all, and people would not be wealthier by the amount of Bitcoin in circulation.

So if wealth is not money, what is it ?
Contrary to the socialist point of view, the capitalist believe that wealth is infinite. Every one of us is creating wealth every times we trade with each other.
The most popular trading is labor for money. But you can replace labor and money for any other pair of goods you want.
When you work for your customer or boss, and get money for it, you just created wealth.
How much ?
This is a purely psychological concept.
By agreeing to work for money, you explicitly decide that you value your labor less than the money you get in exchange.
The difference between the subjective value of your labor, and the money you got in exchange for it is wealth.

Also, your boss or customer decided, by employing you, that his money was worth less than your labor. So on his side too, he just created wealth equal to the difference between his subjective value of money and the value of your labor.

When two people are trading with each other without any coercion, wealth is created.
If I agree to give you gold ingot in exchange for your pencil, we created wealth, because both of us agreed that we would be better off after making such exchange.

McDonald, by creating  a business which permits low skilled worker to trade their labor created major wealth equals not only to the number of burger it sold, customer it pleased, but to the number of workers that could finally trade their labor against money from any establishment's owner.
The breakthrough of McDonald was not hamburger but the concept of franchise, which permits low skilled workers to create wealth on a massive scale. This is genius.

What destroys wealth ?
If wealth is unlimited and created every time we trade with each others, it follows that every barrier preventing trade from happening is a destruction of wealth.
Any need unfulfilled, any service without its customer is a potential for wealth not yet discovered.
Any process preventing a need and a service to discover each other is a barrier of wealth.

Any trade enforced by coercion, that is against the will of one party, is a destruction of wealth.
When the difference between the subjective value of what is given what is received is negative, wealth is destroyed.
A major government agency created for the sole purpose of diminishing the employment rate is wealth destruction. Maybe its workers gain wealth by trading their labor for money, but the tax payer, that would know why his money is used would put more subjective value on its money than on the state's worker labor. His wealth is destroyed.

Any increase of the total amount of gold, the amount of silver, the amount of bitcoin, the number of fiat money printed is nothing but a temporary illusion of sudden new wealth, and such illusion create bubble. A burst happen like a return to reality, a painful reminder that wealth is defined by your ability to trade, your ability to produce, exchange and connect.

To conclude, I will quote the richest man in babylon :

“Wealth grows wherever men exert energy…If a rich man builds him a new palace, is the gold he pays out gone?  No, the brickmaker has part of it and the laborer has part of it, and the artist has part of it.  And everyone who labors upon the house has part of it.  Yet when the palace is completed, is it not worth all it cost?  And is the ground upon which it stands not worth more because it is there?  And is the ground that adjoins it not worth more because it is there?”

What is money, Atlas Shrugged.

Here a passage from Atlas Shrugged I advice to read. No book made me want to know a whole passage by heart, it is a reminder of what is money. I don't like to copy something without adding, but this passage is such perfect that I would not spoil it. Here it is :

Rearden heard Bertram Scudder, outside the group, say to a girl who made some sound of indignation, "Don't let him disturb you. You know, money is the root of all evil – and he's the typical product of money."

      Rearden did not think that Francisco could have heard it, but he saw Francisco turning to them with a gravely courteous smile.

      "So you think that money is the root of all evil?" said Francisco d'Aconia. "Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

      "When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor – your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil?

      "Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions – and you'll learn that man's mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

      "But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man's capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made – before it can be looted or mooched – made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can't consume more than he has produced.

      "To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except by the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more. Money permits no deals except those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss – the recognition that they are not beasts of burden, born to carry the weight of your misery – that you must offer them values, not wounds – that the common bond among men is not the exchange of suffering, but the exchange of goods. Money demands that you sell, not your weakness to men's stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best your money can find. And when men live by trade – with reason, not force, as their final arbiter – it is the best product that wins, the best performance, then man of best judgment and highest ability – and the degree of a man's productiveness is the degree of his reward. This is the code of existence whose tool and symbol is money. Is this what you consider evil?

      "But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires. Money is the scourge of the men who attempt to reverse the law of causality – the men who seek to replace the mind by seizing the products of the mind.

      "Money will not purchase happiness for the man who has no concept of what he wants; money will not give him a code of values, if he's evaded the knowledge of what to value, and it will not provide him with a purpose, if he's evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil?

      "Only the man who does not need it, is fit to inherit wealth – the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve that mind that cannot match it. Is this the reason why you call it evil?

      "Money is your means of survival. The verdict which you pronounce upon the source of your livelihood is the verdict you pronounce upon your life. If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men's vices or men's stupidity? By catering to fools, in the hope of getting more than your ability deserves? By lowering your standards? By doing work you despise for purchasers you scorn? If so, then your money will not give you a moment's or a penny's worth of joy. Then all the things you buy will become, not a tribute to you, but a reproach; not an achievement, but a reminder of shame. Then you'll scream that money is evil. Evil, because it would not pinch-hit for your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money?

      "Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and it will not redeem your vices. Money will not give you the unearned, neither in matter nor in spirit. Is this the root of your hatred of money?

      "Or did you say it's the love of money that's the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It's the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money – and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it.

      "Let me give you a tip on a clue to men's characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it.

      "Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter. So long as men live together on earth and need means to deal with one another – their only substitute, if they abandon money, is the muzzle of a gun.

      "But money demands of you the highest virtues, if you wish to make it or to keep it. Men who have no courage, pride, or self-esteem, men who have no moral sense of their right to their money and are not willing to defend it as they defend their life, men who apologize for being rich – will not remain rich for long. They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of the guilt – and of his life, as he deserves.

      "Then you will see the rise of the double standard – the men who live by force, yet count on those who live by trade to create the value of their looted money – the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law – men who use force to seize the wealth of disarmed victims – then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

      "Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

      "Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: 'Account overdrawn.'

      "When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world?' You are.

      "You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it's crumbling around you, while you're damning its life-blood – money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men's history, money was always seized by looters of one brand or another, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves – slaves who repeated the motions once discovered by somebody's mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers – as industrialists.

      "To the glory of mankind, there was, for the first and only time in history, a country of money – and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being – the self-made man – the American industrialist.

      "If you ask me to name the proudest distinction of Americans, I would choose – because it contains all the others – the fact that they were the people who created the phrase 'to make money'. No other language or nation had ever used these words before; men had always thought of wealth as a static quantity – to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality.

      "Yet these were the words for which Americans were denounced by the rotted cultures of the looters' continents. Now the looters' credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, like the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide – as, I think, he will.

      "Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns – or dollars. Take your choice – there is no other – and your time is running out."

Thursday, July 31, 2014

Bitcoin is not a geek curiosity, but a breakthrough

In a consumption society, most of the new stuff is considered cool just because it is new.
We call that a geek curiosity, wearable Computing Devices and the Internet Of Things is exactly that.

However, such curiosities lack depth and purpose, how cool is it to change powerpoint slide only by moving a hand whose gesture is detected by an arm band ?
Cool it is, yes, purposeful and deep ? not so much.
I am not meaning there is not something deep and purposeful to do with the help of such devices, but the device alone is not enough.

Bitcoin is deep and purposeful, or what I call a breakthrough, just like internet was.
Proof is that once you start educating on Bitcoin by  yourself, one question leads to several others, those question make you understand not only technological aspect, but what "trust" is, what the "incentive" means, what is an economic force, and what is a private property.
Those are concepts that got altered by our politicians but Bitcoin redefines it without ambiguity.

The questions lead you to educate yourself about the different school of thought in economics are, even if you never cared,  by questioning the premises of its creator, why Satoshi has done it ? His ideal is rooted on economic thought coming from the Austrian school, from authors like Milton Friedman and Adam Smith. Names I never heard before questioning the purpose of Bitcoin.
You understand what the state is, what the central bank is, what a bank is, what are their motivations, why they are here, how they became, their beliefs and intellectual background, how a free market is like. The history of money and why some people retract or contract it, and why other prefer to stay away. You understand money is not different than any good and has an exchange rate with any other good in existence which is influenced by both, the good supply and demand, and money supply and demand.
You understand that money is not always wanted and all kind of substitute exists.

Bitcoin is like a window that opens into a new world that a simple geek does not normally care, but which solicit his curiosity to the extent where the old world will never look the same in his eyes.

Then, as soon as you deepen your knowledge about money, you then stop buying Bitcoin for speculation purpose but with the certainty that the value we are giving to it is so undervalued that it is worth risking. You also buy because of the new values the questions taught you.
You understand there gold has no more innate value than this array of byte representing this Bitcoin key.
You understand why economic forces will be drawn to use it anyway, masses understanding or not, state controlling or not. This does not mean a catastrophic event can't break Bitcoin entirely.
But such event will be purely technical and mathematical.
No political, consumer trends or any law can break Bitcoin. If the only weapon of state, coercion, is rendered ineffective by anonymity, then the state is impotent to stop economical in motion opposing its interests.
Bitcoin is not a declaration of war of the black market to the state.
Bitcoin is the best private property you can have. Nobody can steal it without your consent.
Even torture or computer theft can be rendered ineffective by a wise Bitcoin holder who can hide not only his Bitcoins, but also the mere knowledge of their existence.
Nobody can prove how much one person has, except if he agrees to speak, but even if, no proof can be given that he is not lying.

This means Bitcoin is the hardest private property to steal and the easiest to protect.
The creation of State was the response of society for the need of an entity that get granted with the monopoly of coercion on a territory, whose only goal is to protect citizen from violation of private property, be it physical, material and immaterial.
State should be happy, since, for the first time, we have an asset so inviolable by design, that very few resources is needed to protect citizens.

Bitcoin is not a war between black market and white market.
Bitcoin is nothing but an inviolable property that require explicit consent of its holder for any transfer.

Sunday, July 6, 2014

How does Bitcoin came to be ? Beyond a payment system.

I am heavily invested into Bitcoin since my goal is to help entrepreneur to take the technology to the next level.

The mass is not yet completely aware of Bitcoin, and does not understand how it came to be. The concept of e-cash is not entirely new, so why Bitcoin is such a big deal ?

What is new is
"a reliable e-cash where you can transfer fund on the internet with A knowing B and B knowing A, the way I can take a 20$ bill and hand it to you, and there is no record on where it comes from, and you can get it without knowing who I am" quoted from Milton Friedman, 1999.
This economist could define Bitcoin before it even has been developed. He is libertarian, heavily influenced by Adam Smith.

So what is important ?
  • Reliable
  • Anonymity (A and B does not know each other, and nobody knows them)
  • No record of where it comes from
Such e-cash could not exist by being backed by a company, principally for money laundering problems, government would have put pressure to such company to disclose privacy and track funds.

The genius of Satoshi is about creating such e-cash without it being controlled by a company, so nobody can take control, or stop usage of Bitcoin. The incentive to make it works is backed in the source code and not defined by any legal terms. Bitcoin can't be controlled by a central body, Bitcoin is controlled by consensus, and this is enforced with source code, not with the subversive legal system.

So why Bitcoin came to be and why it is not a fad ?
First, a fad is fired by a marketing budget too fat for a product. Bitcoin started from 0.
Secondly, early adopters jumped in the boat for ideological reason more than speculation and fashion.
Third, we will not deny that it is in the human nature to find the most economical way of achieving its purpose. Small payment commission is not the real reason behind Bitcoin adoption, we must admit that the fiscal incentives play a way bigger part. Powerful economic incentives drive adoption.

The ideological reason of using a new money for transaction which is not controlled by any government or central bank that act for its self-interest is the prime motive for Bitcoin usage.

Why is it important ? As I will explain in future post, Milton Friedman explains how the FED did not saved the great depression, contrary to what we learned, but created it.
Intentionally or not, the main conclusion we should draw is that by giving too much power to a central body, a failure of that body will ripple through the whole system. 

"A system that depends on the right person to works is not a good system."

"We will not solve our problem by electing the right people. We will only solve our problems by making it politically profitable for the wrong people to do the right thing"
These quotes from Milton Friedman. 

For the believers, Bitcoin is a way to take that centralized power off the hand of a few, and back in  hands of merchants.

Saturday, March 1, 2014

Bitcoin's axiom, the Mt Gox scandal, and wealth

It is easy to get lost about what bitcoin is and is not, especially if you are not a technical person. So here are the three axiom of bitcoin, and other crypto currencies for the layman.
  1. A money that you can use to pay someone without any intermediary. (like cash)
  2. A money that you can transfer as easily as a post message on a forum. (like a web wire transfer)
  3. A money whose supply can't be controlled by anyone. (like gold)

These axioms are verifiable by everybody, without any ambiguity, by looking at the source code of the protocol on github. All changes to source code can be controlled and reviewed by the whole community and yourself without any permission needed.

Mt Gox stole money of their customers, because their customers decided to exchange the axiom 1 and 2 against ease of use. This turned a bitcoin into a fiat currency just as the current dollar USD is.
The "Mt Gox bitcoin" was not a real bitcoin, it was a money controlled by Mt Gox convertible into real bitcoin. The trick is that Mt Gox were free to print any "Mt Gox bitcoin" they wanted as long as nobody asked to convert them to real $ or real BTC.
Then, when a bank rush happened on Mt Gox, Mt Gox were unable to convert their fiat money to real BTC and USD.
Exactly the same thing would happen if the population would decide to withdraw all their cash from traditional banks. But bitcoin being more volatile, it was probable it would happen to Mt Gox.

The hacking bullshit is surely an excuse of Mt Gox.
People should understand the three axioms of crypto currencies, as breaking any one of them make the crypto currency useless.

Without axiom 1, why don't you just use USD with banking cards, wire transfers ?
Without axiom 2, why don't you just buy real gold ?
Without axiom 3, why don't you just use World Of Warcraft coins instead of BTC ?

What happened to Mt Gox is a bank rush, and our currencies are weak to the same trick.
How to protect against it ? With fiat currency : you can't. Even with cash, if banks are rushed, the government will print more money, depreciating your cash.
With fiat currencies, savers are losers. Mt Gox Bitcoin is a small scale example.
So either convert your money into real gold and silver. (not stocks about gold, because those are also fiat currencies under disguise)
Or build a company. A company is not weak against inflation because the price of the services goes up or down at the same time of inflation. Fiat currency is not wealth.

Thursday, February 27, 2014


Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it. Ellen Goodman
In short, normal is about building your own prison. Day by day digging your own rabbit hole, because outside is cold.

A free man and a prisoner wear the same clothes and do the same work, what differ them is not the activity but the purpose. The prisoner works to pay the bills today so he can continue to pay the bills tomorrow.

The prisoner works to pay the car, the house, the clothes, the electricity. Everyday, they live to turn their time and money to others. A ghost wandering waiting for his death, happily waiting to be freed by god. A rat in a wheel. He complains but never act. He contempt and criticizes but never fight.

The free man works for spiritual growth. Spiritual growth is not a religious concept, spiritual growth is belief that you are here to lend you hand, movement, to experience, to teach and to be taught. The money, the house, the car mean nothing. It is all trash able stuff, that can eventually get in the way of growth. I am not saying the free man is minimalist and frugal. But maximization of experience is what he is aiming for.

The free man never complains, he know he can adjust the sail.
The free man never seeks excuses but learn lessons, and change.
If he is victim of abuse, he will not attribute his despair to others, but ask himself what led him to permit someone to get so much power over his peace.

The free man knows that in deep seas, there is great rides on every storm.
He is a mighty god that acknowledge he is the creator of his own world, and as such, he believes in constant perfectness of where he is.