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Bitcoin Songsheet: Wind And Solar Are The Altcoins Of Energy

16/05/2022 by Idelto Editor

A misdirection of resources and an obstruction of progress, wind and solar energy reflect the same distracting qualities of altcoins.

Wind and solar are altcoins.

They are unreliable, costly and make as much sense as LUNA. “Green” energy takes up too much real estate for the energy they provide but they grow through propaganda and subsidization like preferred pronouns on Facebook. Despite claims of being renewable, they require resources from the earth like everything else and have a finite lifespan. They are ridiculously inefficient and if governments stopped subsidizing them, they would not survive. But through fiat money, these boondoggles continue their rent-seeking existence like a gender studies professor at a mid-tier university.

If you’re reading this column, you already know where I’m coming from and my opinion is probably not surprising. But like the degeneracy of Hollywood, wind and solar are much worse than you think.

Few People Understand Energy

Energy is like money, which people think they understand, but really don’t. The average person uses a lot of energy day to day, whether it’s the electricity to power their computers, gasoline to power their cars or natural gas to heat their homes. Like money, usage gives people the illusion that they understand it. But this is like thinking you can run a semiconductor manufacturer because you use a phone.

Furthermore, the government is actively deceiving the public about how both money and energy work. They assert the U.S. dollar is the same now, in the past and forever more, just like they assert that solar and wind are the same as coal and oil but cleaner. There’s little to no discussion of the downsides of the schemes they favor, like inflation from rampant money printing or the unreliability of “green” energy. They’re like altcoiners who change topics when you point out that the founder of their altcoin is a serial scammer or that the incentives of their system will result in a death spiral. Like a procrastinating teenager, they believe that not thinking about something will make it go away.

The downsides of green energy are enormous. Wind and solar are unreliable, take up too much real estate and are only good for electricity. They ignore the role of fossil fuels for heating and transportation, which are much less efficient using electricity. The upside is relatively modest: lower emissions of CO2. The public perception is that green energy is good and more expensive on the front end but pays off over time. This is far from the truth and the perception speaks to the effective propaganda that comes from the government. The nightly news plays like an infomercial. Think of all the benefits! Buy now! Similarly, we’ll regret paying for these wastes of money years later when it doesn’t save us money and takes up a lot of space.

Similarly, the downsides of fossil fuels are exaggerated and the upsides completely ignored. The environmentalist claims are not lies, per se, but omission of key facts. After decades of fiat subsidization, wind and solar supplies a scant 3% of the world’s energy, all in electricity. They cause more power outages because they only generate electricity when it’s sunny or windy. In addition, removing petroleum would remove lots of other goods and services in the economy. They ignore possible downsides more than an altcoin founder.

Energy From First Principles

To really understand energy, we need to go back to first principles. What is energy? What is it used for?

You might remember the definition from physics: energy is the capacity to do work. Work is what builds and maintains the things we use and work requires energy. Work is what builds everything. Without work, we wouldn’t have civilization. Without energy, we wouldn’t have work. Therefore, civilization needs lots of energy.

As humans, we get our energy through food and we are able to do work like walking, or digging or typing on a keyboard. For most of human history, we mostly harnessed energy from food, either through manual labor or using the labor of domesticated animals.

We discovered that we could use fire for energy, particularly for heat and cooking. We also captured energy from wind and water, with windmills and dams. Capturing energy is a productivity multiplier. Tilling soil with picks and shovels is much more difficult than using a horse to plow a field. Using farm equipment to do the same is even more efficient. Energy is the input that makes this efficiency gain possible. Food is not very efficient energy for the task of tilling soil, but gasoline is.

The productivity gains from energy abundance are dramatic. A hundred years ago, 26% of the US labor force was involved in farming. Now, it’s 1.5%. The productivity gains come from new technology, which requires energy. In every aspect of life, technology multiplies the effectiveness of labor through energy use. In a sense, we’ve all become Iron Man, able to work way more than one person could a hundred years ago.

Energy, in other words, is a way to multiply the effectiveness of our time. As we use more energy, fewer people are needed for what was once a labor-intensive task. The freed up people can then do other work, bringing in more goods and services to the market. Civilization grows when more work is done and new sources of energy have been how that work has been done the last 200 years. Each person has been given the tools to do as much work as hundreds of people from a hundred years ago. Energy has made us all 100x laborers.

Fossil Fuels

Energy abundance has primarily come through the harvesting of coal, oil and natural gas. These so-called fossil fuels are incredibly energy-dense and we can capture the energy for tremendous productivity gains. They are abundant, easily portable and incredibly efficient. Fossil fuels have contributed greatly to things we take for granted, like air travel and heating. They are demonized, however, because of carbon dioxide emissions.

I get it. CO2 is bad. It causes the atmosphere to warm. I’m not denying that. But how bad is the warming compared to all the other things that fossil fuels enable us to do?

That’s the topic of the book I read recently, Fossil Future. The book takes a balanced look at fossil fuels and the benefits it provides versus the drawbacks. Instead of only looking at the negatives, mostly the CO2 emissions, the book looks at the whole of what fossil fuels enable civilization to do, like the labor productivity multiplier I mentioned earlier. The book is a total red pill for thinking about energy and it woke me up to the reality of energy much in the same way Bitcoin woke me up to the reality of money.

The two uses of fossil fuels which were really compelling are the role of fossil fuels in transportation and everyday products. Neither cheap transportation or petroleum-based products are possible with wind or solar.

Airplanes, for example, are too heavy to fly using just electrical energy. An electrical plane is currently impossible because the batteries that are required would be too heavy to lift. It’d be like making a 400 pound person to run a 4 minute mile. The physics doesn’t work. You need a much lighter energy source such as jet fuel to make airplanes fly.

There are also all manner of petroleum based products that few people realize are made with oil. Nearly everything you own has petroleum products in it. Your clothes, your house, and your computer all have components that require oil as an input. Thus, the goal of net zero emissions, or canceling use of fossil fuels is sheer lunacy. Ending fossil fuel use would cause the collapse of civilization as we know it by making labor less efficient, energy more expensive and goods we use every day much more expensive.

The World Post-1971

This points to something that’s been prevalent in the world since getting off the gold standard in 1971. There’s been a persistent push to devalue human labor. The monetary case, we know; debasing money through inflation devalues our work. Monetary expansion is an implicit tax, time-theft and a form of economic slavery.

Similarly, fossil fuel reduction devalues our labor. Our time is enormously valuable because our labor is multiplied through energy. Taking that multiplier away or even curtailing that multiplier effect significantly shrinks our labor output. We won’t be forcing farmers to use horses again to till their land, but we will need a lot more farmers and many other manual laborers if we take away fossil fuels. By taking away cheap energy, we are being taxed on our labor.

Yet despite all that, labor productivity in the US has grown over 10% in the last 10 years. How is that possible? Even with all the regulation, fossil fuel providers have gotten better at producing cheap energy. Our productivity increased because cheaper energy further multiplied the output of our labor. If you think about it, productivity gains are ways of measuring this multiplier effect. Energy gains result in productivity gains, which builds civilization.

Yet since 1971, both monetary policy and energy restrictions have persistently debased human labor. What is going on?

A Drag On Growth

Our productivity increases when energy gets cheaper and more abundant. The energy sources that have proven to be the most reliable and abundant over the past 200 years are fossil fuels. Regulations on fossil fuels, and the clear bias against them in favor of solar and wind have come at the cost of civilization. Like the dollar hegemony, fossil fuel monopolization has oppressed developing countries.

Developing countries are prevented from multiplying their labor through the use of fossil fuel energy because the developed countries won’t let them. Instead of giving them reliable electricity through coal power plants or transportation fuel through oil refineries, they’ve essentially imposed on developing countries the use of solar and wind, the least reliable, most expensive and most limited sources of energy. It’s like they’re being forced to buy outdated Windows phones at full price.

Instead of building infrastructure and developing, these countries are saddled with worse tools and prevented from growing through western countries’ energy imperialism. Neo-environmentalism is similar to the IMF, which is viewed as benevolent, but is, in reality, a form of control and exploitation over developing countries. Like any rent seeker, they tell you that their restrictions are for your own good, when it’s for their own good.

It’s no wonder the best and the brightest in developing countries immigrate. They’re multiple times more productive in developed countries because they have access to abundant energy!

Bitcoin Fixes This

As usual, we can trace this hysteria around fossil fuels back to fiat money. The ending of the Bretton Woods system in 1971 meant that the US needed a new system to perpetuate the dollar. The dollarization of oil created an oil crisis in the 70’s that turned public sentiment against fossil fuels. The propaganda at the time blamed greedy Middle Easterners as the reason why gas was so expensive, when in fact it was the creation of the petrodollar standard. Fossil fuels became the scapegoat and renewables became salvation.

The resulting demonization of oil, gas and coal has been nothing less than disastrous for the developing world. Though we do get power outages once in a while, it’s been less devastating for developed countries. The subsidization of solar and wind have directed a lot of resources toward these boondoggles rather than making fossil fuels a lot more efficient and available. The blue haired environmentalist has gotten favorable treatment at the expense of the blue collar worker. Is it any wonder we’ve gotten more of the former and less of the latter?

As we go toward a Bitcoin standard, we get better incentives with respect to energy. First, more energy is explored and made viable through proof-of-work. Because bitcoin mining is a portable customer, energy development is more economical everywhere in the world. Traditionally, energy producers had to make sure there were enough customers first before building out energy facilities. Now, they don’t because Bitcoin mining will be a customer, provided the energy is cheap enough. Economic incentives get realigned around energy production, not what the government deems acceptable.

Second, bad ideas like solar and wind are no longer subsidized through money printing theft. The market chooses what it wants rather than the government. This means that the best fuels will win and more development of sources like nuclear will commence. We developed nuclear submarines in the 1950s which never needed refueling! Nuclear has stalled due to environmental concerns. Much like their restrictions on developing countries, their restrictions even on developed countries have been a significant drag on progress. Blame squarely goes to them for the fact that we don’t have nuclear cars or airplanes that don’t need refueling.

Bitcoin will remove the bad incentives and create good incentives for energy. That means a more productive work force through the multiplicative effects of energy use. I reject the charlatanism of wind and solar. I am an efficient energy maximalist.

Fossil fuels are sound energy.

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Filed Under: Altcoins, Bitcoin Magazine, Bitcoin Songsheet, culture, Energy, English, Marty's Bent, Opinion, Solar, wind

The Role Of Art In The Bitcoin Renaissance

15/05/2022 by Idelto Editor

Bitcoin meets at a decentralized crossroads of communication, money and identity, which are three important elements of Renaissance periods.

This article is an unofficial follow-up to a previous article on a similar theme.

The Bitcoin Renaissance is well underway and the art gallery by the same name at Bitcoin 2022 was a prime example.

The Bitcoin Renaissance gallery offered a small glimpse into the future of the kind of influence Bitcoin will have on creative works and vice versa. Artists from all over the world gathered to exhibit their physical and digital artwork, auction off pieces and some of the participants gave talks on a small stage next to the gallery.

The importance of Bitcoin and its connection to art cannot be overstated. Art was one of the major factors of the previous Renaissance which led to a significant overhaul in human progress and culture. According to one interviewee, the three main components of the previous successful Renaissance were decentralized money, decentralized communication and decentralized identity. This article attempts to summarize those factors and compare them to the current markers which indicate we are in the midst of a brand new era with similar characteristics. The Bitcoin Renaissance is real and we are only beginning to scratch the surface of what it may look like.

(Photograph/Kit Stanwood)

Decentralized Money And Communication

I had a chance to talk to many of the exhibiting artists as well as one of the presenters on the gallery stage. A historian specializing in the time period between the late Middle Ages and the Renaissance, Joshua Rosenthal, Ph.D., explained some of the particular characteristics that made the last Renaissance lasting and noteworthy. He mentioned that there were dozens of renaissances throughout history, but none were as successful as the Renaissance from the 14th-17th century because the previous ones didn’t utilize decentralized technology and weren’t tied to money or communication.

The Renaissance period that most people are familiar with had a lasting stronghold on history because the people of the time took advantage of a newly rediscovered monetary system of double-entry bookkeeping. This type of distributed ledger allowed for people to access capital by having a mobile form of debit and credit. Talking about this double-entry booking, Rosenthal said, “That essentially removed the middleman or it allowed for a decentralized middleman; the middleman being the Church.”

The Church was the epicenter of power. According to Rosenthal, “It was hard to tease apart the religious and the political aspects of society.” The advent of this new double-ledger technology created an opportunity for people to travel because their money was able to move with them.

The rediscovery of double-entry bookkeeping and subsequent decentralization of ledger technology in the late Medieval period led to physical mobility of the populace. Similarly, Bitcoin provides a new way for humans to distribute a global ledger and presents the possibility for jurisdictional arbitrage because wealth is not tied to any geographic location — so long as Bitcoin users are able to keep track of their seed phrase, which allows them access to their wealth anywhere with an internet connection.

In addition to decentralized money, the invention of the printing press allowed for decentralized communication. Rosenthal described the average medieval person’s life as, “Not only could you not read, could you not write, if you wanted to share a document of power, it was permissioned.” Essentially, before double-entry bookkeeping and the printing press, the Church had power over everything.

“They [the Church] were really good at exercising dominion over evil, keeping people in their place and part of their tools were regulating money, regulating communication, but you, as a medieval person, it wouldn’t have occurred to you that there could be something else.” –Joshua Rosenthal

The printing press gave people the ability to share ideas at scale. Before its invention, all documents were distributed by the Church, but now there were decentralized vectors of transmission for ideas. Most of what was printed was one big image which Rosenthal likens to current-day memes.

“The people are seeing some images for the first time. It’s not just a realistic representation. It means something and it’s crazy. Basically the content of the images displayed the hierarchy as illegitimate. They printed images to show viscerally that the previous world was illegitimate and to show worlds that were unimaginable at the time.”

While many people associate the printing press with mass production of Bibles and longer texts, Rosenthal says that it was actually the widespread sharing of images which was the main way people were able to experience something that was completely beyond belief. Below is an example of an image he shared from his presentation. “The Birth And Origin Of The Pope” shows a female demon excreting a pontiff. This type of crude image would have been shown in a communal setting, such as a town square, and the observers would share in an experience that upended their ideas of the current power structure.

(Source)

This type of mematic expression is a way of creating a new image for what could be possible and the decentralization of the printing press is what actually made it possible.

Again, Rosenthal explains the way this technology allowed for the mass sharing of ideas, “The printing press allowed people to share an idea. You can put it in the backroom of the best butcher shop and print off tens of thousands of things in a week. And then of course the city officials tried to know your customer (KYC) the printers, some complied, but others said, ‘No, we’re not going to do it.’” By working anonymously and in a decentralized manner, ideas were able to be spread far and wide.

Reflecting The Structures Of Power

I spoke with Marissa Jean to discuss how she started disseminating Bitcoin-related ideas through her art. “I just started incorporating emotions or basic feelings into the painting. For example, the first one I ever made was called ‘Inspiration,’ I started chronologically. I asked myself, how did I feel when I first got into Bitcoin?”

Jean used these emotions to portray her journey through Bitcoin. “I connect my emotions and my interest in Bitcoin because it’s kind of become a pastime of mine. And so since it’s on my mind anyway, I might as well paint it.”

(Photograph/Andrew Catron)

Painting about Bitcoin and its ethos was easy for Jean because “Bitcoin has changed many people’s lives for the better. And so it’s a subject worth painting about that has different levels of meaning for everybody.”

The layers of meaning and direct representation of Bitcoin in her art as well as other Bitcoin-themed art in the gallery paves the way for observers to connect to it in ways that are meaningful to them individually. It also provides an opportunity for viewers to begin questioning the current power structures of today.

In discussing the Bitcoin Renaissance gallery, Jean reflected, “You see a lot of artists interested in portraying the fact that the U.S. dollar is failing them, losing value and that Bitcoin is their savior. You see a lot of rebellious stuff, you know, rising to the occasion or fighting against oppressors. We are in this phase where we are against the oppressor. So that [type of painting] is the norm, but it’s also staying weird; the memes aren’t gone, they’re just ingrained. There was so much amazing, beautiful oil, Renaissance-style art there that was a freaking Pepe.”

This brings us back to Rosenthal’s point about the memification of art that presents the world in a completely ludicrous way, in the process flipping the current paradigm on its head, and then offers a new framework for viewing the world.​

Conceiving The Previously Unimaginable

The theme of creating worlds that were previously unimaginable is something with which the artist Sarah Meyohas is quite familiar. Inspired by the immaculate conception of Bitcoin, Meyohas said, “It was like a new creation of currency, in a way that has not been done before. Bitcoin was the ultimate inspiration because it was a re-imagining of value.”

Meyohas is not new to Bitcoin. In her personal quest to understand subjective value, including the etymology of financial terms, Meyohas created Bitchcoin in 2015 and backed the tokens by photographs from her “Cloud of Petals” exhibition, subsequently releasing the first example of tokenized art on a blockchain.

Pressed petals from Meyohas’ Cloud of Petals

Meyohas recently made a Bitcoin hologram piece that was displayed in the Bitcoin Renaissance gallery and described how this intangible asset was turned into a physical work of art. “Bitcoin is both hyper-physical and completely nonphysical at the same time. So that’s part of what I was really excited about, making holograms for Bitcoin. Bitcoin is the one cryptocurrency that has this image that’s super strong and it has this image that feels like it should be physical.”

Meyohas’ “BTC Interference, 2022” Description: 9 Denisyuk holograms

By marrying the metaphysical and the physical, Meyohas is able to create a vision for new possible realities — visions that were unthinkable before Bitcoin.

In her “Speculations” series, she created a story of the new innovation of Bitcoin’s timestamping through the use of distributed consensus and blockchain. “Speculations bring time and space together. The Bitcoin blockchain is an innovation of time. It’s timestamping with a new agreement on time.” (For more about Bitcoin and time, read Gigi’s “Bitcoin Is Time.”)

Meyohas’ Liquid Speculation #1, 2021

Bitcoin offers artists the opportunity to present a new version of reality, inextricably tied to this completely new way of determining value.

“It’s an intense cultural development and that gets put into art. But the thing that’s interesting about Bitcoin that does appeal to artistic creation is it’s like the Genesis story of Bitcoin has lore and magic to it and feels like itself, a moment of creation.

“True art is made in a pure way; you’re not making art to become a gagillionaire, you make art to create something radically new; that is totally avant-garde; that presents the world in a new way to people.” -Sarah Meyohas

The artists in the Bitcoin Renaissance gallery are presenting new possibilities for viewers to demonstrate worlds that are possible, but which many observers may not even be aware could potentially exist. In his talk, Rosenthal explained,

“Both then and now, art is more than it seems, more than real. The art in the Bitcoin Renaissance gallery is not just pretty, but a way of defining identity and recreating our reality. The art points to something beyond our current perceptions, the new, the possible, and the world to come. In a real way, the image is more real than the thing itself as it gives expression and thereby reality to the idea, concept and construct. Medieval you could not envision self-sovereignty until faced with a technologically empowered art that reshaped your identity and recreated your world.

“Art points beyond itself to the possible reimagining of a new world, with failing institutions reformed through self-sovereignty … then instantiating that reality.”

Reshaping Identity To Re-create The World

In addition to the decentralized nature of money, with double-entry bookkeeping and communication with the printing press, Rosenthal named decentralized identity as the final trait of the last Renaissance period that made it lasting and effective. The early stages of this shift in identity during the Middle Ages happened once peasants saw imagery that reshaped their worldview. During the shift, this restructuring of identity gave medieval people a new perspective on potential realities that were impossible to imagine before the advent of the printing press.

Many times throughout our conversation, Rosenthal likened Sathoshi Nakamoto’s white paper to Martin Luther’s “95 Theses.” By pointing out the inconsistencies with the Church selling indulgences in order to finance war, the whole system fell apart. “He pulled the plug from the economy of the hierarchy … He pulled that pin and like, it’s just a little thing, but then you realize the whole thing unraveled. Then you read the Bitcoin paper and you realize the whole financial system unravels.”

Before posting his theses, Luther was an unknown figure. After he nailed his theses to the church door, Luther continued to write using a pseudonym. He essentially took down the economy of salvation and had to go into hiding to avoid being arrested and potentially killed. Rosenthal shared, “It was a monetary attack. What he did though, was on the legitimacy of money, which obviously ties into the legitimacy of authority.” Again comparing Luther to Nakamoto, Rosenthal ponders if the publishing of the “95 Theses” bringing down the legitimacy of the Church is exactly what is in the process of happening since the publishing of the Bitcoin white paper bringing down the legitimacy of the current financial system. (Interestingly, Luther posted his “95 Theses” on October 31, 1517 and Nakamoto published the Bitcoin white paper on October 31, 2008.) Due to the anonymity of the internet, the identity of Satoshi Nakamoto remains unknown. The use of Bitcoin in conjunction with the internet is allowing for a new type of decentralized identity.

Decentralized Pseudonymity

One artist I spoke with is extremely familiar with remaining anonymous behind his work; I sat down with cryptograffi to discuss his perception of Bitcoin and its influence on his art. He shared, “When I saw the potential for Bitcoin and the dearth of art and design in it, I knew that there was an opportunity there. And also I was just extremely passionate about it. It’s a never ending source of inspiration. I think, especially in this society, we need this [inspiration]. I don’t want to raise kids in a world without bitcoin. It’s hope for me; I don’t know what I’d be doing without it.”

By remaining shielded behind his pseudonym, cryptograffiti is allowed to let his work speak for itself, “The typical idea with art that you’ll oftentimes hear is ‘you want to ask something that’s recognizable,’ but I pushed back against that because usually like the unsaid part of that is, ‘so that collectors will know that it’s your work.’ It’s more from an investment standpoint, but art, to me, is not about trying to make work that is easily bought. It’s about just doing what you’re passionate about and what resonates with you. And it just so happened that mine is a concept that tries to push me going forward.”

(Photograph/Kit Stanwood)

This freedom has also given him time to reflect on Bitcoin and the ways in which its decentralized nature and ability to process borderless, nearly instantaneous transactions. Cryptograffiti gave encouragement for other artists to accept bitcoin for their work in order to “get into a circular economy and get past this stage of people not wanting to spend bitcoin at all. People will use the Lightning Network more readily if they’re also earning in Bitcoin.”

“I think as we see how Bitcoin has shaped up over the years and proven itself as a store of value and it’s provided more inspiration in many different ways for artists to take from it. It’s great to look at the work here on display at the conference from different people in different parts of the world and see what Bitcoin means to them because it might not be the same for everyone.” – cryptograffiti

By using a pseudonym and having the ability to remain anonymous, cryptograffiti was able to find a path towards sovereignty through Bitcoin. “First of all, the self-sovereignty thing, where I just want to be able to take my ideas, bringing them to life and not have to work for anyone else to do exactly what I want. Bitcoin has allowed me to do that.”

Decentralized identity can mean different things and it’s likely we are still only beginning to scratch the surface of what that looks like. For some, the first steps are the ability to use a pseudonym. As society moves further into the Bitcoin Renaissance, we may see more markers of decentralized identity, such as the Decentralized Identifiers being explored by Impervious.ai or even ways to log in to websites through LNURL-auth, which uses a public key and doesn’t give any personally identifying information. This piece of the Renaissance puzzle is still being explored and it will be exciting to see the trajectory.

Conclusion

The Bitcoin Renaissance gallery demonstrates how Bitcoin as decentralized money can inspire a new kind of decentralized communication and identity through art, paving the way for a new vision of the future and the means to make it a reality.

“The art in the Bitcoin Renaissance gallery is not simply visuals or a way to express wealth, but rather a means to express agency and instantiate a new world via recreation. What we experience in this gallery is identity, coordination and sovereignty. The media endemic to the nature of this technology, the value of Bitcoin, inextricably linked with its meaning. The Bitcoin Renaissance is not another renaissance, but a new kind of recreation — a revolution of renaissances … Art resists, toppling failing institutions.” –Rosenthal

While we are most likely still going through times analogous to the late Medieval period, Bitcoiners are bearing witness to the early stages of a new Bitcoin Renaissance. Historians will look back on this time period of failing institutions, debased fiat money and a misaligned incentive structure with incredulity. We are currently going through major changes in the structure of society, with most people unaware.

Rosenthal closed his talk by stating, “The people that are in the greatest periods of change are the least likely to notice it.”

It’s time to look closely at the art and envision the new reality we can create — thanks to Bitcoin.

This is a guest post by Craig Deutsch. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Filed Under: Art, Bitcoin 2022, Bitcoin Magazine, Cryptograffiti, culture, English, Gallery, Opinion, Renaissance

An Open Letter To A Bitcoin-Doubting Friend On Wall Street

14/05/2022 by Idelto Editor

Being employed by Wall Street colors how some people view Bitcoin. This letter is an attempt to lead one such person to the Bitcoin rabbit hole.

Dear Wall Street friend, 

I write this letter because I like you. I know we have our differences, especially in terms of how we view the financial institutions that dominated the last century of history, but I understand where you’re coming from.

You are a smart and communicative person, banks and managers have identified your potential, offered you a well-paid career and a financial education along the lines of the fiduciary system. Suddenly I appear with an obsessed gaze, telling you that an anonymous individual has created digital money that, in addition to being an unparalleled investment, is a technology that will revolutionize humanity and turn everything you’ve learned from your successful billionaire employers upside-down.

At first glance, I must seem like a crazy person, but be patient and read this letter until the end. I write it from the bottom of my heart.

This is not a definitive article to convince you that bitcoin is the best investment at your disposal or why it represents the biggest social disruption of this century. My intention is just to give you some warnings and suggestions on how to approach this topic so that you may find your way down the Bitcoin rabbit hole.

Bitcoin Is A Threat To The Financial Industry

This may scare you, but I can’t tell you otherwise. Bitcoin is indeed a threat to the entire financial industry. As the adoption of bitcoin increases, the trend is that the entire sector of funds, banks, brokers, investment banking, etc., will decrease in size.

Please don’t let this fact keep you from understanding Bitcoin in depth. Those who understand the orange coin today are only a part of the entire population that will adopt the technology in the future. Even with a pessimistic outlook for the investment industry, the opportunity you will see is so massive that you will soon forget about the disruption of the industry that employs you.

Bitcoin Is Not A Company

Bitcoin is a weird beast, but it’s especially weird if you try to understand it through the traditional lens of analyzing income-earning assets like companies, real estate and debt. Bitcoin is difficult to define even for someone obsessed with the subject for years, like myself.

My suggestion is to approach Bitcoin from a network technology perspective. Look for parallels in the development of the internet, decentralized peer-to-peer networks like Tor or BitTorrent and even sea and air routes.

And of course, be sure to study monetary history. Placing bitcoin and fiat money on an evolutionary timeline will make it clear how much more dynamic this story is than central bank proponents would like to admit.

Bitcoin Is A Revolution Of Individuals, Not Of Institutions

Don’t look for the value of bitcoin in the big financial institutions and gurus. Its value lies in the anonymous people who make a conscious decision to participate in maintaining the Bitcoin network by purchasing their own in-home equipment, and saving via small weekly purchases of bitcoin.

This is quite different from what you are used to. In the fiduciary world, names, surnames, positions and institutions are agents of great importance and value. In Bitcoin, the opinions of Jamie Dimon, Warren Buffet and the CFO of BlackRock matter little. What makes this technology inevitable is the existence of an anonymous, uncompromising and unstoppable minority.

Try to understand what this minority thinks, what motivates them, how they interact with Bitcoin and why it is so difficult to stop them. The next time Charlie Munger gives his opinion on the matter, ignore it.

Bitcoin’s Technical Nuances Matter

You may not be interested in understanding the difference between asymmetric key cryptography and a hash function, nor the difference between computation and predicate verification. It also may not seem very important to understand the nuances of governance of an open-source project or what a soft fork means and the Bitcoin tendency to avoid investing in hard forks. I understand you, they are specific ideas and are not part of your daily life.

But know that these concepts make a difference, especially when you want to understand why Bitcoin is different from all altcoins, which we Bitcoiners affectionately call “shitcoins.” Take the time to research how Bitcoin works at a deeper level than the articles on financial news portals. Some technical details are essential to understand the guarantees that Bitcoin offers and why they are unique compared to all the projects that exist in the “crypto” world.

Study Austrian Economics

I’ve heard big names in Wall Street claim that bitcoin has no “intrinsic value” more times than is reasonable. After a few years of not understanding this “phenomenon,” I came to learn that many economists who have advanced degrees and work in finance have never read even one essay by Friedrich Hayek or Ludwig von Mises.

It would be of great value to your Bitcoin journey to set aside linear regressions and differential modeling for a while to focus on the ideas of Carl Menger and his disciples. I promise you that you will not become a gold bug overnight, but at the very least you will understand that the term “intrinsic value” does not make sense.

Everything Will Be Fine

This journey will not be comfortable. Realizing that the investment industry — probably the most powerful sector of the economy in the last 50 years — is about to be shaken up, and understanding that many of the teachings of your status-laden billionaire bosses aren’t exactly the best in a post-fiat world will be sore, but it’s going to be okay. As I told you at the beginning of this letter, you are an intelligent and communicative person, once your Bitcoin domino, you will be faced with one of the greatest opportunities of your life; and I promise you that after the initial scare, the only thing left is an inexhaustible optimism.

This is a guest post by João Grilo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Filed Under: Bitcoin Magazine, culture, English, Letter, Opinion, Orange Pill, Wall Street

The Financial Dark Ages Are Ending Thanks To Bitcoin

14/05/2022 by Idelto Editor

Bitcoin represents a financial renaissance, which means society still exists in a monetary Middle Ages dominated by the alchemy of fiat currency.

During the Middle Ages, a group of men tried to turn base metals into gold; they were known as alchemists and they did not succeed in their endeavors. We’re fortunate that they didn’t. Why? Consider the alternative.

Had the alchemists found a way to transmute base metals such as lead into the monetary unit of the time, a race would have kicked off. A race to find as many metals as possible to turn into gold.

The first users of this newly created gold would have enjoyed tremendous wealth, but as it circulated throughout the economy — a much smaller sphere of opportunity in the Middle Ages — calamity would have ensued.

Those with less personal or political connection to alchemists would have found themselves outside of any market economy. They would no longer be able to bid on goods and services. The price in gold terms would simply be too high.

It would have created the ultimate boom-and-bust cycle. Given where economic development was at the time, that could have prolonged the Dark Ages by hundreds of years.

While considered part of the lore of the Middle Ages, the work of alchemists in experimenting and documenting their results paved the way toward the scientific method of discovery. In other words, they failed at their primary goal, yet they found something that would be far more valuable for mankind.

Where the alchemists failed in trying to create value from something out of lesser value, a group of people in the 20th century found success. These modern alchemists are known as central bankers.

The Current Age Of Financial Alchemy

The early 1970s saw a surge in inflation and commodity prices, much like today. Dollar printing had been persistent for years, also much like today. With the end of money having any tie to relatively limited gold, any pretense of responsibility flew out the window. Price increases were the name of the game and Americans, able to own precious metals again, did so in droves. They sent the price of gold from $268 per ounce to over $2,400. The more accessible silver went from $9 to over $130.

Buying of stock in a silver-trading company, Bache, was halted in 1980 to get a curb on rising silver prices. (Had the billionaire Hunt brothers not used leverage to buy their later silver holdings, there’s no telling how high the price could have gone.)

The age of financial alchemy reached its height in the early 1990s. Inflation was tamed by a sharp rise in interest rates and a necessary recession. Federal Reserve Chairman Alan Greenspan — a former acolyte of Ayn Rand and gold bug — became the face of the managed economy.

In one of his numerous appearances before Congress, he once stated, “I know you think you understand what you thought I said, but I’m not sure you realize that what you heard is not what I meant.”

Policymakers loved the Greenspan era. It was a time of relatively easy money, relatively little monetary turbulence, and it made it easy to promise ever-growing government programs with no seeming long-term cost. Those all added up to easy re-elections.

It was not to last forever.

Greenspan created market risk in his first year as Fed Chairman. There was a massive rally at the start of 1987, but there was a brutal correction in October. On October 22, 1987, the Dow dropped 22% in a single day.

Unsurprisingly, Greenspan came out to note that the Fed stood by ready to ensure that capital markets flowed smoothly. Markets interpreted this as a greenlight to assume that the Fed would intervene if a market drop was big enough.

With programs like 401k plans on the rise, it was no surprise that such a backstop would be needed — even if it kicked off the mother of all bubbles over a number of decades in the process.

Greenspan held interest rates low throughout the late 1990s. Tech stocks formed a massive bubble and burst. Then housing burst. The “Greenspan put” changed names as new Fed Chairs came into the role. As Greenspan was retiring in 2006, the seeds had been sown for the start of the bursting of a bubble in housing, but it was also a time where a number of technologies were coming along that could free the world from the boom-and-bust cycle being exacerbated by central bankers.

Bitcoin And The Emergence From The Financial Dark Ages

The past 50 years of a global fiat system have had a poor track record. Boom, bubble, bust. Boom, bubble, bust.

Central bankers, armed with advanced degrees, have shown that they only know how to do two things: print money or print less money.

Attempts to lightly rein in the Fed’s balance sheet in 2019 had to be quickly reversed when financial markets started to show strain — even a few months before the world heard of COVID-19.

The past 51 years has been a financial Dark Age of quantitative easing, currency debasements and the financialization of the economy at the expense of other sectors. Added on top of the remnant of the gold standard before that, most of mankind has been at the whim of an unelected few holding power based on academic credentials and theories, rather than by the consent of the market.

As a result, it’s been a global free-for-all.

Some countries, like Argentina and Zimbabwe, have had a hyperinflationary collapse. Others, such as Japan, have tried stimulus programs to get their economy moving, only to find that they’re pushing on a string. Still other countries, like El Salvador, have been pegged to the U.S. dollar and have found relative stability, but without the freedom to control their own financial destiny.

In late 2008, the Bitcoin white paper was released. The timing of the paper was inspired by the plan to inject hundreds of billions of dollars to “stabilize” the bubble rather than let it collapse. Those numbers now seem quaint in the age of trillion-dollar stimulus programs … a mere 14 years later.

But Bitcoin is hope.

It is hope for the globally unbanked. It is hope for those who have had their wealth confiscated by government officials, whether directly by force or through the indirect theft of inflation and hyperinflation.

The Bitcoin protocol guarantees only 21 million will ever be mined. The 19 millionth Bitcoin was recently mined and several million may have already been lost from a poor understanding of the value of the asset. No matter what the “final” number is, the key is immutability.

We now live in a world where the printing press has given way to direct-deposit stimulus checks, And where the possibility of robots mining asteroids could crater the price of precious metals in just a few decades.

It’s clear no other asset class can truly be said to have a cap on its scarcity.

Already, a thriving community has grown around Bitcoin, exploring its potential in fields such as art, philosophy and human rights. For what was simply described as a “peer-to-peer electronic payment system” has far more to it than meets the eye.

Welcome to the financial renaissance. The age of financial alchemy won’t go down without a fight, but with Bitcoin, the chance to build a new system exists while leaving the old to wither on its own.

This is a guest post by Andrew Packer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Filed Under: Alan Greenspan, Bitcoin Magazine, Central Banks, culture, English, interest rates, Opinion, Renaissance

Going Against The Flow With Bitcoin

14/05/2022 by Idelto Editor

A broadcast recorded at Bitcoin2022, reflecting on El Salvador’s bitcoin legal tender law and the intersection of health as it relates to Bitcoin.

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Mike Hobart returns for Episode 30 with C.J. Wilson, cohost of “Bitcoin Bottom Line,” for a live broadcast from the Bitcoin22 conference.

The two begin by discussing the conference, meeting celebrities in the Bitcoin space and the approaching one year anniversary of El Salvador announcing their plan to make Bitcoin legal tender. Hobart said, “El Salvador making the move was like the one person willing to go against the flow. Since that country doesn’t have a history of innovation in that way, people didn’t follow them right away.” Wilson responded, “Things are changing.”

The two go on to discuss the role that bitcoin is playing in the current war between Russia and Ukraine, and how the currency is helping the Ukrainian government. Wilson continues by mentioning, “If the government is running out of FUD [fear uncertainty and doubt] weapons, and Bitcoin is growing at the same time, you’re going to have more voices that can attack those FUD vectors faster.”

Hobart shares about the release of an article through Bitcoin Magazine in which he interviewed one of Bitcoin Twitter’s favorite female personalities, HumbleWarrior, and she talked about how bitcoin made her value health in a new way. “With health, it’s all proof of work,” he continues, “If we don’t have new kids to grow the economy, in terms of not only consumption but new thoughts and ideas, we don’t solve the problems.”

Listen to the full episode for more!

Filed Under: Bitcoin 2022, Bitcoin Bottom Line, Bitcoin Magazine, celebrity, culture, English, Health, Podcast

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