The Untold Story of the Greatest Crypto Project Ever

INTRODUCTION:

I’m about to tell you the true story of the greatest of the crypto projects… a story you’ve never heard. It took place in the late 1990s and early 2000s. It was a massive experiment and one that had a serious impact on what came after. I almost wish I still had my donors list, because I’d love to see if my favorite Satoshi candidates were on it. (I was one of very few people who had the list, but I destroyed it on principle once I no longer needed it.)

This project had more or less anything you would imagine it having and much more besides. My brief history of it runs to six installments, but many times that many could be written. I’m covering only the highlights and mainly from my own perspective. But my perspective was a useful one, especially because I oversaw the investigations that closed out the project.

Unlike some of my other stories, this one is not fiction.

And so, here’s my brief explanation of the project:

We had perhaps the best financial mind of his generation, who became a cryptographer after seeing the true face of the beast. We had the second Linux developer. We had hundreds of the most serious libertarians and objectivists. We had Gorbachev’s translator. We had abandoned spies, both American and Russian. We had our own newspaper. We had our own restaurant, and a good one. We even had an honest-to-God, authentic embassy. We had a wild collection of geniuses, near-geniuses, and trying-to-look-like geniuses.

The wildest of the bunch (a guy whose life alternated between quasi-scams and the Pentecostal Church) pumped millions of his own dollars into the project. He had run for governor in Nevada once and didn’t do too badly. Then, when things got rough for him, he got his silver out of the country by having it turned into a set of sculptures entitled, The Butchers and Bastards of History, which included, as I recall, likenesses of Mao, Stalin, Hitler, Lenin, and Bill Clinton.

Dull, this project was not.

And in the end we produced a fully functional, end-to-end encrypted financial system, complete with holding corps, a stock market, and futures options. It all functioned with anonymous digital bearer certificates (aka digital coins). On top of that, we had a functioning dispute resolution system that resolved a number of commercial disputes. We had PGP-encrypted webmail and a fully encrypted news/forum/messaging system designed to be decentralized.

And all this happened by the end of 2002, a solid six years before Bitcoin.

From this project came the first VPNs and anonymity services, cyber law, Yodelbank, and several early Bitcoiners. Some of the people involved became I2P developers, e-gold operators, the first Seasteaders, and I’m not sure what else.

For better or worse, this project accomplished things. It was a grand and tumultuous season of doing, rather than sitting around and pontificating, which is what most people were up to at the time.

To be Continued…

An Interview on Crypto, Fiat, and the Mid-terms

Here’s an interview Paul did with the Wealth Research Group last week on cryptocurrencies, government money, financial predictions, and the US mid-term elections.

It runs about 21 minutes. (And the YouTube title doesn’t match the content.)

WRGInterview

Here’s an interview Paul did with the Wealth Research Group last week on cryptocurrencies, government money, financial predictions, and the US mid-term elections.

It runs about 21 minutes. (And the YouTube title doesn’t match the content.)

The ECB and the Feds Are Treating Bitcoin Very Differently

ECB

Having been involved with digital currencies for quite a long time, I get more information on the subject than most people, and that includes information on what regulators are doing. I’ve been seeing differing strategies among the central banks for some time. But some information I obtained recently made the Euro–American difference very plain to me, and I think I should pass it along.

The US Model

It seems to me that this model is being spawned by the Treasury and associated agencies, rather than the Federal Reserve, but the Fed is such a black box that I can’t say for sure.

The model developing in the US is to take advantage of cryptocurrencies (that is, Bitcoin and its children), rather than trying to kill them outright. And there are serious advantages to this strategy. Here’s what they’re doing:

  • The Treasury is reaping from the rise of Bitcoin, Ethereum, and the others. Capital gains taxes run in the 20–25% range, and with crypto prices surging every couple of years, that brings in some significant revenue. Accordingly, the IRS has made compliance easy, treating crypto gains precisely like gains in precious metals. Everyone understands that and knows how to deal with it. Exchanges like Coinbase are being quietly forced to comply with whatever the US government wants.

  • They are moving to swallow up crypto incrementally. Regulators are surrounding the crypto scene gently, not aggressively. They show up at meetings and ask questions, rather than threatening people. They bring in crypto advocates to make presentations at their offices. Little by little, they’re not only learning how to deal with crypto but are convincing susceptible people that “a little regulation is necessary” because of scammers, hackers, or whatever flavor of fear seems to be working that month.

  • They are allowing Wall Street to take incremental steps into crypto. They are making them go slowly, presumably not wanting to stoke crypto’s fires, but they are allowing fully regulated and compliant firms to slide in. They’ve rejected all the ETF (exchange traded fund) proposals thus far, but that will likely change at some point, bringing higher and higher percentages of crypto holdings under their control. (Directly controlled by Goldman, etc., but ultimately controlled by the feds: Stockbrokers always comply.)

  • Thus far they are holding the line at tax compliance for daily commerce. The obvious model for that would be how gold is handled, with transactions under a certain amount being exempt from reporting. And while laws have been proposed for this, none have been permitted to pass. What the feds want is to reap capital gains and discourage commerce.

  • They are paying people whom I can describe only as sellouts to do blockchain analysis, hoping to attain a useful level of surveillance.

The financial power elite were actively seducing early Bitcoin developers for a while, but that seems not to have worked terribly well. Bitcoin, after all, is just a computer program, and no one by themselves can control it. (Neither can it ever go broke, but that’s another story.)

The Euro Strategy

The strategy across the Pond is quite different. There, aggressive subversion is under way, mainly by the ECB (European Central Bank). Laws have been passed in some countries to explicitly make every tiny transaction a taxable event. This will have unintended consequences, but its goal is simply fear.

Laws have also been passed making cryptocurrency wallets illegal to sell or distribute, unless the wallet forces a user to comply with AML (anti money laundering) rules.

Behind the scenes, the Euro regulators are getting very aggressive. We know someone on the board of a bank in a smallish European country, in other words, a voice from the inside. Here’s what that voice has told us:

  • Crypto is totally evil according to the central bank. It’s absolutely radioactive for us. We are barely allowed to talk about it, let alone do something distantly related to it. We can’t even lend to an entity that does crypto. We as bankers are not naturally against crypto as is often cited, but one step into the crypto arena and we would have regulators all over us.

  • Our central bank gets its marching orders from the ECB, and the ECB’s reach extends to other central banks. The press here is full of articles on how other countries are obstructing crypto.

  • This reminds me of the huge effort in AML. The public may hear little but it’s a massive issue in the financial sector and is at the crux of the battle on crypto. AML has become a monster that has vastly outgrown its initial purpose. (Or perhaps it is doing exactly what someone really wanted it to do.) It is a huge, expensive, and quite effective spy mechanism.

  • The financial system has been turned into a massive database and search engine for authorities. It is a major weapon in the financial wars of the day and may be more effective than conventional weapons. In decades of banking I’ve never seen anything like it. Initially most bankers brushed it off as just another nuisance regulation, but this was not the case. This is a worldwide effort.

  • If you don’t cooperate, you are cut off. You basically can’t make a mistake without very heavy penalties. You have to report on your customers or else you will look like you are not a player. The whole model is very Soviet and it works almost worldwide. Most bankers feel it is political issue wrapped in financial regulatory clothing. It’s hard for the public to understand, and politicians won’t touch it.

  • The authorities are coming down on all institutions in the region. Correspondent lines are being cut… High-ranking US financial officials make house calls to all the finance ministries in the region and remind them about how compliance complements military and other aid… some of those compliance issues are such a hot potato that few managers are even willing to talk about them. [The financial elite] finally have open season on financial data and they don’t want anyone taking that stick away, including crypto.

Final Thoughts

So, there you have it. What to do about all this is a second question, but this is pretty clearly what’s going on at present.

Act carefully, but do not stop building the future.

* * * * *

New-Age-Intelligence

The 20th century, for better or worse, is over. This book was written from the trenches of the new data wars. It offers a raw, apolitical view of what is happening and where the practice of intelligence is headed.

Comments from readers:

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If you have a glimpse of the whole picture of history and where we can head (or are heading) as a civilization, you should come away from this read with new insights.”

Get it at Amazon or on Kindle.

* * * * *

Paul Rosenberg
www.freemansperspective.com

Bitcoin and the Power Grid

BPowerGrid

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

So, here we go:

Another Apocalypse?

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

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

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

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

Further Factors

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

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

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

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

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

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

And the Big One

Cryptocurrencies don’t finance war.

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

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

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

More Revolutionaries Are Coming

The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.
– Princess Leia, Star Wars



Assange, Ulbricht, Manning, Snowden… we’ve seen a slow stream of revolutionaries over the past decade or so, a few of whom became well-known. More will be coming.

Revolutionaries

The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.

– Princess Leia, Star Wars

Assange, Ulbricht, Manning, Snowdenwe’ve seen a slow stream of revolutionaries over the past decade or so, a few of whom became well-known. More will be coming.

The reason I’m sure of this is that the two forces driving it are increasing:

  • On one hand, humanity is becoming better. You’ll never believe that if you watch “the news,” but out here in the real world humans are slowly improving. I’m tempted to say that I’d like the progress to be a bit more rapid, but the truth is that recent progress has sometimes been faster than I expected.

  • On the other hand, elite control, empowered by the internet’s parasitic “free stuff” model, has bypassed all known limits and is riding the numbness and compliance of the past few generations into new territory.

And so the best and brightest are increasingly caught between hammer and anvil. And when struck, they’re tending to see the entire system as retrograde and absurd. Which of course it is.

What happens when the young and healthy see themselves cast in the role of “the permanently abused,” then, is quite predictable, all the more so because they’re expected to thank their abusers: They rebel. As they should.

The Path Around Violence

You’ll notice that the four revolutionaries mentioned above have been fully non-violent. That of course is a very good thing and can be attributed to a mix of intelligence, information, and general goodness. What truly healthy person, after all, prefers violence as a tactic?

This, however, is bad news for elite power addicts. They need rebels to lash out violently. Their propaganda systems are designed to scare the rest of the sheep with images of violence and to use the whole drama to their advantage. That’s “their thing,” as John Lennon noted decades ago:

When it gets down to having to use violence, then you are playing the system’s game. The establishment will irritate you – pull your beard, flick your face – to make you fight. Because once they’ve got you violent, then they know how to handle you. The only thing they don’t know how to handle is non-violence and humor.

This is why, as you may also have noticed, all four of these revolutionaries have relied upon cryptography: because cryptography transcends violence.

You can bomb a car or a building, but you cannot bomb a math problem… and cryptogrphy is simply math.

The Crypto Platform

In the end, it is cryptographers who are preventing violent revolution, while the elites are provoking it.

And so, whether or not you think new tools like cryptocurrencies are flawed (and why would we expect perfection of anything?), it remains very much in your interest to support them in one way or another. We do not want violence, and the current system is pushing the young generation into it. Instead, we want abused young people to find peaceful, productive outlets, and crypto is pretty much it these days. (Though others would certainly be welcome.)

It really boils down to a type of equation:

Pressure A + Pressure B = Expulsion Energy C

Whatever values we plug in for these variables, we know that A and B are increasing. Humans really are improving and the elites have become degenerate control addicts; they can’t even see anything else.

Expulsion Energy C, therefore, will increase. We’ll be having more and more revolutionaries, whether or not they show up on authorized vid feeds.

It is very important that these young people find productive avenues. If they do, a benevolent future can form.

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

So, You Wanna Get Involved with Crypto… Here’s What You Need to Know

InvolvedCrypto

After several quiet months, I’m hearing of more and more people who want to get involved with cryptocurrencies, and not just buying and selling. I’m hearing about people who want to start crypto-related businesses, even things like crypto-themed bars. These people need some orientation and most long-time crypto advocates are simply too overwhelmed to help much.

So, if you’re thinking of getting involved with cryptocurrencies, I’d like to give you the lay of the land, because crypto is not like other kinds of business.

Here are five things you should understand:

#1: It’s not just about money.

If you want to gain any amount of respect among crypto people, you’ll need something more than just a way to make money… you’ll need a why. If you don’t have something driving you besides naked profits, most people will shy away from you. They’ll probably be quite polite about it, but they’re not going to invest their passion in your venture… and probably not their money either.

Bitcoin is far bigger than just money, and so are its children (the newer cryptocurrencies). What Satoshi Nakamoto created was a decentralization tool… something the world had never seen before. It’s going to take you some time to wrap your head around that, so you should get started as soon as possible.

Bitcoin inaugurated a new step in social evolution, and you’ll need to understand that if you’d like bitcoiners to take you seriously.

#2: We’ve had way too many hopeful projects.

For several years we’ve seen a stream of ideas that I can only characterize as “hopeful”; they relied on the genius of crypto to make everything work. But crypto isn’t magic, and we’ve learned that hopeful projects don’t work out.

So, if you want people to throw coins into your project these days, you’ll need more than just excitement; you’ll need adult-level plans and products. Throwing “blockchain” into your product’s name isn’t going to work anymore… and it was a mistake that it ever did.

#3: A whole lot of us are not impressed with “meeting regulations.”

Government regulations are the impositions of centralized regimes… of fear- and violence-based regimes. Large numbers of us want as little to do with them as possible. And so, when someone comes into a meeting and brags about their product being compliant with government edicts, we mutter “barbarity” to ourselves and look around for something more interesting.

What percentage of the crypto-economy do such people account for? I don’t know, but it’s a significant percentage, and it may in fact be growing. (It takes a while to really “get” decentralization, but nearly everyone eventually does.)

In #1, I said that Bitcoin was a new step in social evolution. Governments, functioning on a model that’s more or less unchanged since the Bronze Age, are quite the opposite. To put it simply, government money and all that’s attached to it enforces the past.

Some significant percentage of the crypto world is deeply interested in creating a better future and will walk away from gleefully compliant companies… or at least hold their noses if they have to use them.

#4: Don’t make appeals to authority.

You are not going to impress most of us when you advertise that your new thing is supported by the European Union or a Fortune 100 company. We’re not seeking the approval of authority, and we’re not awed by them. You’ll find exceptions of course, but most of us look at authority as fundamentally retrograde. Neither do we find corporate-speak comforting.

And please don’t imagine that the system at large is going to love crypto someday. Decentralization is fundamentally at odds with centralization.

#5: People in the crypto-economy are more concerned with morality than are people in government economies.

The morality of government economies (such as it is) is imposed with force. In a crypto-economy, no such centralized force is possible. So, whatever morality there is in a crypto-economy is brought into it by the participants. As a result, crypto people pay more attention to the ethics of others, and they’re far more likely to examine the person they’re dealing with.

Granted, a fair amount of “crypto” business has been done in government currencies, but in the rest of the crypto-economy, people understand that morality matters, and they may want to understand yours before doing much business with you.

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

Free-market Parasites

Free-market

The crypto economy can’t get here fast enough.

In addition to writing, I manage businesses. And as I review the financial records of these businesses every year, I see corporate parasitism biting them worse and worse. But if pushed, the bosses of these outfits would claim free market justification. After all, they didn’t hold a gun to anyone’s head!

But they do hold the proverbial gun. More precisely, they arrange for government guns to do their bidding. For example, one of my companies made monthly payments to an internet faxing company for years. We tried to cancel the service over and over. We changed the debit card it was being charged to. And yet the charges came through every month. And I can guarantee you that it was all very legal and that they were “compliant with all banking regulations.”

Such companies are simply parasites, and they know exactly what they’re doing. In fact, they’re just like my first serious boss.

Jack was an old man when I went to work for him in the early 1980s, and his model of commerce was to take advantage of everyone he could, any time he could. And if those people were stupid enough or weak enough to get ripped off, that was just the natural order of things.

Needless to say, Jack and I had a lot of arguments. He ripped off his customers, his workers, his suppliers, and anyone else he could. That was just the way he did things… for more than 50 years.

And that’s the same model that many companies are using these days. It’s very clearly true of the healthcare sector of the US economy, where paid-off politicians prepare incomprehensible legislation that bleeds the US public dry. It’s all done legally of course and is dedicated to “helping the middle class” or whatever BS they’re spewing this year. But in honest terms, it’s simply a mass fleecing.

It’s also done by the banks and financial companies. After all, they can comply with all the thousands of government regulations, which keeps them free of competitors and leaves you and me with no practical alternatives. How many types of bank charges are you paying every month? And if your business takes credit cards, how much are you paying them every month? Is what they do really worth all that money, or are you simply stuck with them?

And this list could go on at length, reaching down to small companies like the one I began with.

Crypto doesn’t directly protect us from criminals of course, but since it hasn’t yet been regulated (read strangled) by the state, crypto gives the parasites no good way to point government guns at us.

Those who steal via crypto are straight-up thieves, and as vile as they may be, I’d rather deal with them than parasites who hide behind “free market” and rip people off by manipulating government force.

The whole situation reminds me of a quote from the great historian, C. Delisle Burns, explaining why Rome crashed:

Great numbers of men and women were unwilling to make the effort required for the maintenance of the old order, not because they were not good enough to fulfill their civic duties, but because they were too good to be satisfied with a system from which so few derived benefit.

In like manner, great numbers of us will make no effort to save the existing financial system. Not because we don’t care about commerce, but because a system that services parasites isn’t worth saving.

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 21: Roll It Up and Move Along

rosc21

Once you know a storm is coming, the only sensible actions are to either protect yourself or to get out of the way. And so it has become time to roll up the Jay’s Bar show and move along. If we simply vanish from view now, there won’t be much in the way of targets to destroy.

None of us, however, are about to deny ourselves: what we are, what we love. We’re still going to live our lives our way. But neither do any of us want to be locked into cages; that helps no one, save self-righteous enforcers. (About whom I can’t help remembering a line from Jesus: Whoever kills you will think he’s doing God a service.) And so we’ll simply change tactics and survive into another day.

The Crypto House looks like it wasn’t connected to this storm, so as long as none of us from the bar make things worse, they should be fine. But Esther will have to avoid the sanitarium for some time. (She and young Johnny have moved in together.)

The kids running the seminars face a harder issue. I’ve talked to them about this and they’re divided. Some want to just sell videos on the darknet and be done with it, while others want to keep going, albeit more carefully… doing it the underground way. I suspect that various of them will take each of those paths.

And what of Mike, our exchange operator in Poland, who is in the enforcers’ sights? Well, I’m as sure as I can be that his friends will warn him to move along. The Polish government is far too close to the US government; they’d pick him up in a minute if asked.

Personally, I hope he gets far away from the Western enforcement sphere (maybe to Southeast Asia). And that he winds down or sells his business, waits for the statute of limitations to expire, then comes back home for a visit. His record will be marked, but so long as he colors mostly inside the lines, they’ll probably leave him alone.

As for myself, I will cease reporting this story. This is my last dispatch.

But this is the closing of a chapter, not the closing of a movement. These kids have broken out of the status quo and have been exposed to the life of adventure. They won’t just give it up.

I’ve warned them, of course, about dealing with such storms: that you must not only be smart about it, but you must have a “why” for what you do. You need a larger reason than “to make money” or “because it’s cool.” If you don’t, the first wave of tribulation is likely to wash you away.

Nonetheless, some small number of us will suffer for moving the world into a better day. It has happened innumerable times in the past, and it’s already happened this time… and it more than likely will happen again. We’re moving out of an archaic and barbaric era and into a humane and open era… and that won’t happen without resistance; people addicted to status, power, and control will fight it.

But I do think I’ve shown these young people how to turn the odds in their favor, which was my mission from the beginning.

Further, I’m convinced that this will spread. As I was working on this article a quote from the psychologist Carl Jung came to mind:

[M]an doesn’t permit, forever, his nullification.

Man does allow himself to be nullified for a time. And this has been seen in the status quo world over several generations: in the docile compliance of the factory model, in the forced grouping and conditioning of government schooling, in the modern West’s automated obedience to authority… no matter how badly authority screws up.

But that’s changing now. My young friends are no longer happy being nullified. They could live on government handouts if they wanted – everyone in their generation knows how, after all – but they don’t want to be null beings, housed and fed by a monster state until they die. They want to be alive and self-determinant. They’ll take the blame for their errors and the credit for their successes.

This mindset, which is spreading, will eventually break up the old, archaic regime and bring something better into the world.

To wrap everything up, I went by Jay’s yesterday, to give Michele the news. He understood very well – half a dozen of his customers have been run over by the feds in recent years – but I think he’ll miss us. He very much respected that we were helping disabled people.

As I bade him goodbye for a while (I’ll still stop in occasionally), he smiled. He obviously had something on his mind, and so I waited for him to let it out. And it didn’t take long.

“You’ll be back with a new group in another 20 years, Professor?”

We both laughed.

“God willing, Michele,” I replied as I turned to leave… “God willing.”

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com

ROSC 20: A Storm Warning

rosc20

I walked into Jay’s expecting to find Johnny to be his usual gregarious self. And he was, so long as he was greeting people at the bar. Once we sat by ourselves in the restaurant, however, he changed.

I had never seen Johnny scared before. I’d seen him angry, disgusted, and irritated, but not scared. We were barely through the usual “How’s your family?” stuff before he jumped into crypto.

“I did some looking, Paul, and it seems like you’ve got a handle on this stuff. Do you really?”

“I suppose so, John, but there’s so much action these days that no one can keep up with it all. So I can help you with the basics but not on the newest things. There’s just too much.”

The idea that this crypto thing was expanding beyond the ability of its friends to monitor frightened him further, but neither of us pursued that avenue.

“Listen,” he said. “I know you’re a reasonable guy, even if you are a little crazy…”

We both laughed; I was always the crazed radical in our group of friends.

“But a lot of us are concerned about this. It’s like a genie let out of its bottle, and it may not be controllable pretty soon.”

It was the usual fear of control addicts, but Johnny is my friend and I wanted to help him.

“I think you’re right, Johnny, this thing is growing wildly, but I want to set your mind at ease in at least one way: With the exception of a few scam artists and a small fraction of just plain assholes, the crypto crowd are decent people. They may disagree with the political class on how the world should operate, but they’re not remotely interested in forcing their ideas on people.”

John was partly comforted but only partly.

“Yeah, I get that,” he said, slowly nodding his head. “The question is how far can this thing go? How big can it get?”

This put me into a bit of a dilemma. John is my friend, but I don’t want to give him information that he could pass along to bigger operators than himself. So I addressed only the currency aspect of it.

“The real issue is that this is currency. And it’s better currency. Right now all the cryptos combined account for less than 1% of world currency value. So the question is how much of world currency should be in cryptos rather than government currencies? Are the cryptos good enough for 1% of world value? 10%? 50%?”

Johnny shook his head and waited for me to answer my own question.

“I don’t know where it will end up, but I do know that this stuff is better in a bunch of ways, and people will eventually figure that out.”

“So you think they could really win?”

“I’m not sure ‘win’ is the right word, John, but yeah, there’s a good chance they’ll keep spreading for a long time and become a very significant thing.”

Then without skipping a beat, Johnny pulled out his iPhone and typed something on it.

“It’s from your cousin,” he said. “Cousin” is his slang for our mutual friend. I looked at the screen. It clearly was not an incoming message; it displayed only what Johnny had just typed. It said,

Laugh like it’s funny.

I did. The second line said,

Turn off your cell phone and sit on it.

I typed back,

I turned it off and pulled the battery before walking in.

He read it, we both laughed together, and he turned off his phone then slid it under his leg, while making it look like he was putting it into his pocket. And I quickly remembered that as we were seated, Johnny asked for a different table than the one we were first shown. Johnny’s better at cloak-and-dagger than I thought.

We each took a sip of wine and waited a few seconds. Then Johnny leaned in.

“Like I say, I checked on this, and a couple of the agencies are watching the group meeting at the bar.” I groaned a little. “The first thing that got their attention was the kid who flew off to Poland and opened an exchange.”

“I knew the kid, but I didn’t know he went to Poland.”

“Well, he did, and he stepped right into their sights. They’re paying a lot of attention to those exchanges.”

I nodded my head and said, “Yeah, I know… they have to. It’s the last control point and they need to collect taxes from this.”

“Yeah,” Johnny said, “they do.”

“And the second thing was the seminars?”

“Yes,” he said. “They probably wouldn’t have cared about them, but they think these kids are taking that same kind of rebellion on the road…” He trailed off.

“And so they need to kill it,” I said, concluding the statement.

Johnny nodded his head in agreement.

“Okay, Johnny, please tell the agencies two things. First, that I’ll do what I can to get the kids to pull back. Second, that they’re fools if they try to take these kids down in their usual hyper-aggressive way. Look at what they did to Ross Ulbricht: They wanted his head on a pike, but all the exercise did was make the agencies look like maniacs, turn Ulbricht into a martyr, and spawn a dozen new dark markets.”

“I didn’t know that,” he said.

“Well, it’s true,” I went on. “These guys have no idea how barbaric they look to the kids on the darknet.”

“I believe you, Paul, but I don’t think I can say that to the agencies; they really believe that they’re working for God.”

I quickly realized that he was right.

“You’re right, John. Don’t tell them anything. Say something about me not realizing how extreme those kids were getting and leave it at that. They’re never going to see what they don’t want to see. Let ’em screw themselves again.”

John and I ordered more drinks and went back to talking about old friends. He pulled out his phone and turned in back on. I picked up the check, we hugged, I thanked him, and I headed back home.

At least we have a storm warning, I muttered to myself as I went.

* * * * *

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Paul Rosenberg
www.freemansperspective.com

The Discovery of Terra Nova by the Cypherpunks

Cypherpunks

Ten years ago the cypherpunks were almost entirely forgotten. But now – and quite shockingly to those of us who were involved – cypherpunks are cool again. More than that, the discoveries of the cypherpunks are starting to change the world in a serious way.

That being so, I’d like to briefly recap what the cypherpunks discovered, because what these people found was a new world… a “terra nova.”

Land Ho

Our new territory was created by a combination of the internet and encryption. The internet gave us unlimited community, and encryption became our “city walls,” allowing us to separate ourselves from the rest of the world.

The first cypherpunks, being clever lads, began using the internet and encryption because they were interesting and fun. Shortly, however, they realized that they were actually building a terra nova and were instantly confronted with a huge question: How should we arrange our new world? That cranked everything into high gear.

I didn’t know this passage from Tom Paine’s Common Sense (1776) at the time, but it captures the astonishing thought that sprang from the discovery of terra nova:

We have it in our power to begin the world over again.

The First Crypto War

Not all was sweetness and light, however. Encryption was considered a munition, and exporting it was highly illegal. But it was easy to see that public key encryption (actually key exchange, published by Diffie and Hellman in 1976) was the perfect technology for the internet… and the internet was not limited to the USA.

So, a group of the clever lads hatched a plan in 1991: They’d write a nice little encryption program and send it around the world. An anti-nuke advocate named Philip Zimmerman drove the project but everyone involved wanted to avoid the jail sentence that would come from exporting their new program. They did have one trick available to them, however: the First Amendment.

So, they took the program, called Pretty Good Privacy, or PGP, and printed it as a book. And since books are protected speech, they pushed copies of the book into envelopes and mailed them to friends in Europe. Once on the far side of the Atlantic, the books were keyed back into computers and turned back into a program… and then distributed everywhere.

Zimmerman very nearly went to jail (based upon an upload to a BBS system), but the world received strong encryption.

Encryption Plus Commerce = “Oh My…”

Once you begin exchanging encrypted messages with friends, one of the next ideas to cross your mind is, Gee, some kind of electronic currency would be really nice to go with this. (David Chaum, for example, began working on digital cash after he invented cryptographic mixes back in 1981.) And once you start imagining encrypted commerce, you quickly realize just how radical this technology can be.

One by one this thought dawned upon us all. I wasn’t among the very first to grasp it, but by the mid-1990s I was struck by it as well. In a continuing education course I conducted for Iowa State University, I wrote this:

Another huge thing in years ahead will be electronic cash for Internet commerce. Electronic cash can be transferred on-line instantly, inexpensively (almost free), and, if encrypted, privately. Think about this for a minute – it will change the world.

“The Universe Favors Encryption”

The awesome power of encryption is not something that is instantly grasped.

The quote above is from Julian Assange (also a cypherpunk), and it’s quite true. Encryption, after all, is merely applied math, and math is built into the structure of the universe.

Now, to illustrate just how strongly the universe favors encryption, please consider this:

It is roughly 2100 (2 to the 100th power) times harder to decrypt a message than it is to encrypt it (unless you have the key).

Engineers debate this number of course, but it’s clearly in that range.  Here it is precisely:

1,267,650,600,228,229,401,496,703,205,376

So, when people like Satoshi Nakamoto, creator of Bitcoin, talk about an arms race between cypherpunks and old-world power, don’t simply assume that the old way will win((You should also know that post-quantum encryption already exists and is being incorporated into leading edge systems.)).

Many Other Pieces

But while the cypherpunks dropped off the radar for a couple of decades, they still produced things like BitTorrent, The Onion Router network (aka Tor, or the darknet), I2P (an even better darknet), a variety of digital cash systems, privacy systems (including the first commercial VPNs), and even commercial tools like digital escrows and dispute resolution.

The big, new cypherpunk creations, however, everyone knows: WikiLeaks and Bitcoin. I’ve explained WikiLeaks before and we have a report on Bitcoin, so I’ll leave those aside for today. But suffice it to say that a cypherpunk world has been building for some time and may form much further in the years ahead.

Is That a Good Thing?

A Planet Cypherpunk would be a radically different place from our current Planet Status Quo, and that scares some people very badly.

That fear isn’t rational of course. The ancient world is very happily long gone. We live better and behave better. The rational choice, then, is to keep that progress going, and that necessarily includes change, including radical new adaptations.

Status quo systems, however, major on fear. That’s the secret ingredient that keeps their game together. And so “right-thinking” moderns have been trained to fear anything new. That’s not rational, but it makes people feel safe.

But rather than conducting a further discourse on why Planet Cypherpunk would be better than Planet Status Quo, I’ll simply leave you with the conclusion of one of the very first cypherpunk documents: Timothy C. May’s Crypto Anarchist Manifesto, published in November 1992:

Arise, you have nothing to lose but your barbed wire fences!

* * * * *

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

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

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

TheBreakingDawn

* * * * *

Paul Rosenberg
www.freemansperspective.com