Bitcoin: “Attack of the Blockchain Clones”


Dear Cryptocurrency Enthusiast:

Do you ever feel that some people need a good kick in the brain can?

Recently, I came upon a political night-rider imparting an alleged moral foundation. An alleged gem upon the cryptocurrency seashore. Only, it was a sharp stone.

I had discovered his name before, but until recently, never endeavored to explore the influential nature of his words. Never, do I hope he will be more than a crab upon the shore of true freedom. An insect at the beach.

But just in case…

I think now is a good time to mention him. Before your children say his name. Before you feel ignorant, and just in case he makes a name for himself. Which, he won’t.

Before all of that, you can say, “Yep, I have heard of him and Karl Marx. Do you remember the Jews that the Nazi’s killed? Great, I’m glad that the government schools still teach that. Well, anyway, same idea…”

***

His name is Amir Taaki, but he is not the real issue. It’s his personal software that is questionable — the programming in his brain.

Taaki is a coder of some repute, as well as an anarchist of vague degree. Meaning, as far as I can judge, a person who does not understand that an objective form of government is required to maintain individual freedoms. Therefore, Taaki is a liability upon the world stage. A regurgitation of the past.

Taaki is involved with bitcoin, having worked on Dark Wallet, a precursor to OpenBazaar and other projects, but that does not concern me as much as one of his potential teachers. The person or people who have coded him.

Taaki appears to “lack philosophy” as he implied when he was in Syria. What does that say about the man? It says the name of another man, actually. An American hero some might have called him. Others refer to him as a philosophical villain.

His name is Murray Bookchin. He was mentioned by Taaki, when he (Taaki) was fighting in Syria with the Kurds, against ISIS. Supposedly he had just come to lend support, but not to fight. A self-imposed duty called. He took up arms.

There is a warning here. Historians already know of its potential significance. It is not about what Lenin did to Russia in this case, but what America (via Bookchin) is doing to Syria. Invading Syria through what is called Communalism. Not communism exactly, but a shade of it, certainly.

Bookchin was an American anarchist, libertarian socialist and political theorist. He often reflected upon class struggle, was an avowed anti-capitalist, meaning that he was essentially against free and fair trade. He appears to have influenced Taaki and some factions fighting in Syria, for the greater glory, naturally. But it is not the glory these factions are after, as much — and more probably — a sort of militaristic socialism.

Anarchism, is of course, gang rule, with no objective laws, where the most ruthless criminal can rule just as easily as a moral king. One cannot conveniently redefine it, but Bookchin tried. Taaki is trying.

The US, as of yet, is not ruled by anarchist fiefdoms. We are not yet at the stage of full revolt. We are not ready to substitute one form of tyranny for a Bookchin Communalistic Paradise. Nor should Syria be led down the Bookchin road.

Bookchin’s revamping of communism is a claxon. Know that the bells have sounded. Long before Syria, Turkey, Iran and others – fell. If that will happen. If it does, and I hope it won’t, fingers will point. They will point at Bookchin.

The disease is spreading.

And please tell me that Bookchin and Blockchain are unrelated.

Bookchin wanted majority vote, but not majority rule and he tried to explain that one for years. He also wanted assembly-led enterprises. In other words, no free enterprise at all. A type of social dictatorship, but not quite of the communist model. It is often referred to as a “communalist” type of organization. Community led — scratch that — community ordered, comrade.

Looking through the Murray Bookchin filter, as some are want to do, lends lethality to the drumbeat call for decentralization. Not for the blockchains, but for humans. The only difference is that humans are not chained in the first place. We are not part of some giant cloned ledger.

There is no comparison between the technology of bitcoin and individuals.

Anarchy, as espoused by the Bookchin-ites, is not decentralization as some might ask you to believe. It is disorganization. It is decentralization of organization. Divide and conquer. Disintegration. A rapid breakdown of morally based laws (we can argue about that) in favor of range of the moment substitution. Pragmatism v. reason. Honesty v. “get it done.”

And here is the social mirror some are suggesting we hold up to the blockchain ledger. If bitcoin or better yet, if some private cryptocurrency ledger can organize an accounting method, where everyone’s currency is safe and secure, why can’t humans be like blockchain ledgers? Hold the power to self-manage? A type of self-organized dialectic.

Dear readers, we are not Blockchain Clones. We are individual people, all with different abilities and desires. Our intellectual savings differ. Our ability to mine knowledge, to produce information, to educate, are all different. We are not cryptocurrency clones. We were never social “smart contracts.” We are different. Blockchains are identical.

The ideas of cryptocurrency decentralization are not transferable to the human context. Blockchains are not anarchistic representations of social structures, but orderly algorithms without emotions or desires. They are arbitrary and robotic rules of math, editable by humans. Controlled by a few humans.

Pause here. We own the process of blockchains. Not the opposite.

If we transfer the decentralization aspect of blockchains to society, we become numbers on the social ledger. And some few “developers” will control the technology of the social blockchain. A small core group. Hence, the idea — the false flag — that blockchains are decentralized only refers to the nature of the ledger. In fact, the technology is highly centralized.

To gift humanity with the ability to transact, without the necessity of an intermediary? Without humanity? A digital promissory note to ensure that contractual transactions are completed? That is the promise, right?

Where is the human watchdog? Answer? Blank out. Who is watching the developers? All of us? Can we influence their process? Maybe. If they refuse to give us what we want? We can use Litecoin, right? We can try some of that dark net stuff — Monero.

But where are we then? Back to yet another centralized blockchain. A programmed ledger we can clone and use. We only hope the developers stay on the job. Hope they don’t act in a way that will destroy the value in our chosen coin.

This being the case, to engender trust, the math of cryptocurrency should be provable, verifiable, and secure. It should be objective and not subject to the whims of cryptocurrency developers.

This is a tall order. It requires human cooperation. It requires auditors. It needs checks and balances. Some type of transparency.

The people who control the math should have watchdogs at their heels. Inspectors, not beholden to the math-makers in any way, should have complete viewing access to the code. If something is amiss, they should report it to the public or be jailed for complicity.

It is called the “human element.” Imperfect, for sure. But why it is required? Obvious, is it not? Some humans steal. And, what does absolute “monetary” power do to humans? What does any kind of communal power do? It corrupts them.

Bitcoin can be audited. Anyone can access the code and audit the system. Anyone can trace any transaction, which, unfortunately, is unfavorable to human privacy. The other problem is, as I have mentioned, bitcoin is centrally controlled by a handful of developers.

Machines are oblivious. Algorithms have no feelings. They are not concerned about where you buy your booze, that you have a health problem or if you like romance fiction — with photos.

Maybe the auditors cannot read a name, find a home address without a court order, in some cases, but much can be inferred from the transaction records of bitcoin and clan. Much privacy is lost.

Could this have been the noob “selling point?” We are all one? Your money is mine, sayeth the dev? Bitcoin or Nirvana? Decentralization at all costs? Why Taaki might support the idea for human consumption? Developers are our new rulers?

To ensure confidentiality, bitcoins are sometimes transferred via mixers to stop the auditors in their tracks. But there are other problems.

Suffice it to say, bitcoin coders are still working on Dandelion. A way to secure transactions — to obfuscate IP addresses and so on. And there are arguments about the process as well.

Privacy is a difficult maneuver in the cryptocurrency realm. Many projects exist. Dash, Monero, CloakCoin, NavCoin, Aeon, and even ZCash. The idea is to obfuscate the transactions in such a way as to keep everything as private as possible.

The problem then becomes one of trust. How do we trust a cryptocurrency that cannot be audited in certain ways? Shall we watch the “old guard?” The bankers?

Answer? Yep. Profit from their “transition.” Why not? Profit as JP Morgan Chase adopts Zacash software. Why not?

Let’s consider a real-world comparison example. I mean, even if privacy based blockchains might fail in the wild, as it were, it does not mean that governments won’t take up the mantle of public (transparent) bitcoin.

Cash is an anathema, to highly centralized governments.

If I go to the store and use cash to buy a soda, the clerk takes my money, gives me my change and I walk away with my drink. There’s no record of me personally buying that soda, in most cases. My cash was private. I stored it in my wallet, walked into a strange store, didn’t care to know the address and exited with a cool drink.

If I’m a bad guy, I can use my cash to buy a Russian Suitcase Nuke, but it’s risky. Complicated. I can do a dead drop, place my cash in a bag and hope the suitcase is left at an agreed upon location.

As a terrorist, I could exchange cash for plastic explosives in Syria, say near the Iranian border, but I should probably have a bunch of soldiers with big Kalashnikov rifles to protect me.

If I’m a cocaine dealer, I can stand on a curb, risk being arrested or robbed and shot at any second, and accumulate cash.

How can criminals magnify cash (currency) using a private cryptocurrency, however?

Nearly instant international payments — until they are stopped.

A security nightmare, but freedom and security have been at odds for a long time. A balance most difficult to find. Betwixt and between centralization and personal security. The desire to be free and desire to be safe. Power and irrelevance. Privacy and publicity.

Cash can’t fly, but banks can — even unwittingly — assist with international criminal remittances. But why pay the bank fees and risk investigations by Interpol?

Hidden internet markets where Zcash, Bytecoin or Monero can be used to purchase stolen credit card numbers with no risk to the seller. This is a real problem. Try to buy a list of stolen identities with bitcoin or cash. Much more complicated. Increasingly more problematic as governments tighten money transmission rules, ostensibly to catch the criminals – oh, and the tax savers.

To state that private or “mixed” cryptocurrencies do not or cannot assist criminals by asserting that cash is king, is not giving the “international picture.” Sure, private cash is a double edged sword. It gives the power to individuals, but it also magnifies the powers of groups — and criminals.

The decentralization of the network is, in this sense, misleading. It is simply a method of financial attack.  It’s called overwhelming force, by swarming. The use of a decentralized force against an opponent, in a manner that emphasizes mobility, communication, unit autonomy and coordination and/or synchronization – from Wikipedia. Create an army of like ledgers, cloned nodes and depend upon the masses to keep the fires burning – keep updating their ledgers.

Alas, however, this is a hushed and feeble war.

Do you see it? It’s one ledger, with a cloned horde that can attack day and night anywhere there is a piece of tech, an internet connection and voltage. But who controls the tech-gear, internet and the electricity?

And in real war, real change, the armaments are diverse. The attack vectors erratic. The volume of force, unknown, until it is too late. Currency is one vector, but it is a main one.

Time to rouse from the daydream, crypto-noobs. For now, crypto is dependent upon the old substructure. That is where it rests. That is where it should gather its trust and strength, but not form its misplaced revolution.

This is not the anarchist core. Blockchain is not anarchy. It is not order from decentralization. It is the clone army. Hit the command center — the developers (core team) — and it folds like a cheap suit. The clones will become weak — unless someone creates another cloning machine — feeds them “updates” — debugs them regularly.

And this dreamed of moment of truth is crucial. It can be subverted. Others can subsume its power to encapsulate the population(s). We must have watchers in place. No Taaki’s should subvert the message, without a fight.

I have no desire to be a part of a crypto-horde and, await the day when this old-fashioned ledger technology is jettisoned in favor of an atomic cryptocurrency, without one. To me, that would be the Holy Grail. A true cryptocurrency. The evolution. (An idea not so well received by the Murray Bookchins of the world.)

Individualism is not reliance upon yourself. It is voluntary cooperation with others. It is the very essence of freedom. Blockchains — if transposed to governing — is slavery. What did Bookchin want? What does Taaki, and admitted drifter and squatter, want?

But I’m just a voice in the wilderness, far from the Murray Bookchins, communists, socialists, Leninists, Trotskyists and Communalists of yester-death. Many sounded the  alarm before me — about Murray Bookchin and Occupy Wall Street.

Until then, the blockchain-clones are the best thing going in finance, if only because they usurp the power of central banks in some small way.

And if the “old guard” finance houses have judged Zcash as great tech, we can profit from their interest, me thinks.

And it concerns me that more and more big guns are coming out of the closet to “protest” the bubble of bitcoin – but not Zcash? Not Bytecoin or Monero. Why now?

What else do these big guns know? Do they have insider information or do they want to quash cryptocurrency altogether via regulation?

And a final thought…

Are Satoshi Nakamoto’s original coins really sitting dormant? Would it not be masterful, if they weren’t really there?


For those of you who understood my blog yesterday and profited – bully to you. Occasionally, I get them right.

For now, Zcash.

Next week?

 

 

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Two’s Company, but Three Bitcoins?

 


Dear Readers,

If you have been keeping up with the news about bitcoin, being a crypto-enthusiast, no doubt you have read about NYA or the New York Agreement. It is yet another idea to change bitcoin. Ostensibly, to make it better.

Many feel that it will simply remove the original intent of Satoshi Nakamoto, but even this is a weak fintech argument. Nakamoto knew or could have imagined that if bitcoin became more popular, the necessary electricity to run the systems would increase exponentially. Did Nakamoto think that governments would then take over the operation?

Recently, Bitcoin Cash came onto the scene. It has garnered some support — in the billions of dollars — but there are still those who do not agree with the changes. Again, Bitcoin Cash, appears to favor large companies or governments since it requires more resources. In some respects, the economy of scale kicks in and prices — the cost of sending/receiving bitcoins — goes down.

But what of the other, long-term costs? The centralization aspect? The average citizen in 2009, could run bitcoin on his or her laptop.  Not now.

Now we have the NYA. Well, actually, it’s been around since at least May 23, 2017. The Digital Currency Group claims it has enough supporters to once again fork the bitcoin blockchain and create a new bitcoin. At that point, if it happens, the world would have three bitcoins — but not really. There are many bitcoin clones.

If the NYA succeeds, old bitcoin would probably devalue overnight. Bitcoin Cash might hold its own and compete, but looking at the support behind the NYA, it would probably fall from grace

So, what is happening? Are we still watching a power play unfold before our eyes? Sure we are. It’s about who can run the best bitcoin and bring in the most money. And who can make bitcoin the most efficient and essentially steal the thunder. Finally, it’s about brand. Name recognition. Competition.

With all the bitcoin clones running around out there, the first mover still holds sway. Even the tired, slow and sometimes buggy bitcoin, is trusted.  It just seems to keep growing. Yes, it pulls back, but then it usually recovers. Why? Trust.

But trust can only get you so far. If Bitcoin Core is divided or gives that appearance, we could see the world’s fastest devaluation. The question then becomes, who will remain standing?

Interestingly enough, and this is a good thing, there are new base-currencies in the cryptosphere. With a base-crypto you can purchase a sort of primary coin, then buy other altcoins. Should bitcoin suddenly fail, these others, such as Ethereum, Ripple and Dash, could, in theory, pick up the slack. Naturally, if bitcoin begins the fail, these other coins should increase in value, but usually they devalue when bitcoin does.

One wonders if the entire cryptosphere will survive, if bitcoin fails. But which one?

Add to this mix, the constant pressure by governments to rein bitcoin in. CNBC reported about China, Japan and now Australia. The impression appears to be that this newest push to regulate will ultimately lead to sort of a tacit acceptance by the people, as it were. In other words, if it’s regulated, well, it must be safe, right?

Unfortunately, government oversight, now gaining in popularity, as the volume of bitcoin transactions grow, will result in bitcoin’s original intent being subverted. It was designed as a stop-gap measure against government monetary policy. Ideally, and this is not to say that all proof-of-stake cryptocurrencies are poorly designed, but that would be a best choice. After all, governments need to be able to print unlimited numbers of ‘coins.’

I hate to admit it, but some other coins are starting to look better again. Remember, the excitement surrounding bitcoin could be irrational at the moment, fueled by speculators as well as good people. Who will get hurt, if the bubble bursts?

Maybe we should diversity our holdings.

Incidentally, if you like conspiracy theories, Clif High is still implying that silver can hit $600 an ounce. When? I’m not so certain, but if he is right, the value of gold will go down.

Disclaimer: The above, is all my opinion and/or provided from third parties. Make your own cold calculations.


 

 

 

Bitcoin, Ethereum, Litecoin July 19, 2017 — Roundup.


An unbiased and quick look at some big players…

The good news:

  • Litecoin is undergoing major updates to Litecoin Core 0.14.2
  • John Mack, a former CEO at Morgan Stanley venturing into crypto
  • The “dean” has advised that crypto is replacing gold

The bad news:

The “other” news:

  • A rare look inside some of China’s bitcoins “mines

The videos:

  • Jeff Bewick continues his upbeat and wacky video series about bitcoin
  • Andreas Antonopoulos explains the current state of bitcoin

Based upon the last 24 hours of news, the cryptosphere is decidedly negative, with concerns over bitcoin and Ethereum, mounting.


Image: Flickr

Bitcoin to $2,000,000 in Three Years?

 


How to make two million dollars in three years, by purchasing one bitcoin as soon as possible?

At that point you should only be required to pay long term capital gains taxes.

Why not 20 million — if the dollar devalues fast enough? In Venezuela, I estimate that bitcoins are are well over million Bolivares each. Let’s check that math.

The price of bitcoin this second, is about $2300 and dropping — again. This was expected. That is equivalent to 23,000 Venezuelan Bolivares (VEB) — at the official rate. Not bad you say, but wait, there’s less… The official rates are nonsense.

20 Million Boilvares per bitcoin?

The unofficial price you will pay for one bitcoin in Venezuela is about 19,555,000 VEB. Let’s just round that off. To buy a single bitcoin in that Socialist paradise will set you back about 20 million VEB. That’s a big stack of paper and the last I heard, the government there was having trouble obtaining enough paper to print money.

So already, in some countries, you are a rich. Not really. One US dollar is equivalent to about 8500 VEB — street value. (See here for realistic conversions rates.) So you would still have, realistically, about $2300 bucks US. That is if a Venezuelan could really afford to buy a single bitcoin. Bummer.

Maybe the Venezuelan dictator can ask the motorcycle gangs currently stealing sugar from moving trucks in broad daylight, Mad Max style, to swipe a few rolls of paper and pass it along to the printing office. You know, in order to print more money. Wait — bad idea — toilet paper is also at a premium there. Actually, I think they are fresh out — a year ago.

But talk about optimism. John McAfee tweeted that:

Bitcoin would reach $500,000 in value in three years.

…or he will eat his own privates on national TV. Sure he will.

But McAfee might stick to his 10 million dollar bet. Why? Because according to this piece, McAfee is betting on a bitcoin fork. Not bitcoin. Did you catch that? He’s betting on some new type of bitcoin.

I’d say McAfee is going to lose 10 mil and a part of his anatomy. Well, maybe the 10 mil, unless he’s insane. Come to think of it — not the insane part — I want to see that bet. Any evidence he actually made it? That anyone has excepted?

Whether it’s just a publicity stunt we might never know. McAfee does say some pretty relevant stuff though. Take his Google comments. He wants to take them out. Why? For very good reasons. The fact that Google tends to obtain too much information about us. Kind of a errant, business-like, “Big Brother.” One that shares information with Uncle Sam when politely asked.

Don’t worry, your smart phone, computer and talking toy robot are not really watching you…that much. They have no idea that you are a Crypto-Head. And I say this in all seriousness and sarcasm. (Did I mention that the FBI is now warning us about our children’s toy-spies?)

But back to the bitcoin news. Does McAfee have a point? Will he retain his privates? Let’s just take that first question, in general.

Will bitcoin continue to increase in value over the mid to long term — if it does fork?

McAfee — and this guy ain’t no dummy — says yes. In fact, McAfee puts his faith in Bitmain CEO Jihan Wu.

In case you are still confused about a fork or two, look over the graphic provided here. It’s a great way to understand the basic SegWit, SegWit2, and UASF issues is a visual way. Things are definitely confusing this time around. So let’s ditch the acronyms and get back to our $2,000,000 bitcoin. I’m salivating, aren’t you?

Back to Bitmain and Wu. McAfee says Wu is a sharp guy and that the market will follow him with his brand of “bictoin,” whatever flavor that happens to be. The old traditional bitcoin, the one that was developed by Satoshi Nakamoto and supposedly improved by the core teams over the years, will take a nose dive — back to 40 bucks each. At that point, would it even survive? Can you imagine the bag-holders?

But that’s not all. It’s why I brought up the Venezuelan comparisons. McAfee thinks that as a result of his research, this “new” bitcoin will reach prices north of one million dollars. Maybe more than two million each.

Jump Ship?

So how will we, as consumers, jump ship, if Wu forks bitcoin (original flavor)? I’m assuming, but please don’t hold me to this, that we would simply begin using his systems — his wallets —  with our old bitcoin. We’d sort of do a mini-fork.

I’m sure Wu will announce his fork plans and then us little people can then decide for ourselves, which way to go. With Big Daddy Wu or Old Bitcoin core. Maybe I’ll head over to Iota for spell anyway. I just like their style.

This brings up yet another question. Suppose we try Wu’s “New and Improved” Bitcoin (extra crispy flavor) and we don’t like it. Can we then switch our bitcoins back to original flavor? We’ll see.

In the meantime, keep your eyes on Crypto and maybe deal in Litecoin or Ethereum until this Wu thing settles down.

And one more thing — and this is where lowly little me differs with Master McAfee. I think he’s wrong. Why would anyone invest in Wu-Coin if the guy knowing exploited a flaw in bitcoin to speed up mining and make higher profits, at the expense of the community at large?

And one last thing. I hate McAfee’s Antivirus software. Always had trouble with it.

Until next my next post, have a Crypto day.


Image: Flickr

 

 

 

 

Bytecoin: Enigma


Bytecoin O
Source: Bytecoin.org

 

Is Bytecoin like a low hanging sweet orange?

Or is it a shriveled, rotten grape, being picked over by the third wave of cryptocurrency noobs?

In Florida (in the United States), where I live, many of us are concerned about “Citrus Greening.”

It’s not what you think, however. It’s not when the leaves of the orange trees turn green, but when the fruit remains green and never ripens.

The diseased fruit, like a dead and dying cryptocurrency, sort of fools you. It says, “I’m almost ready. Gimme a few more days…” And then the darned orange or lemon drops off of the tree. A useless un-ripened thing.

Cryptocurrency pyramid schemes are the same. They drop from the web just as malformed.

The citrus greening is the result of a pest: the Citrus Psyllid. The insect that deposits  bacteria “in” the trees. The cryptocurrency schemes are also pests, but they take your deposits.

It makes me wonder just what can kill the Bitcoin Tree? I mean, transactions are really slow now, right? If I can’t zip my Bitcoins across the internet in a few days, then what is the sense?

I know an entomologist who studies our citrus greening problem. He advised that the citrus trees, after infection, essentially get a fever from the bacteria. The trees get sick. They become clogged-up inside. The fluids that normally circulate within the trees slows down, as the bacteria does its work.

Think of Bitcoin today. The flow of Bitcoins in the “tree” or network, is slowing down as well. Bank transactions are now faster — and safer. Is this a sign of disease? Bad code? Poor planning? Growing pains? Does it matter if the network fails?

Citrus greening is here for the foreseeable future. So are slow Bitcoins. Antibiotics, genetic changes and insecticide are for citrus. Rewriting code is for crypto. In both cases, many of the “trees” die out.

In other words, with cryptocurrencies, we cut down the bad “crypto-trees.” If they no longer bear fruit we try to fix the code — the genetic structure of the coin. Or we try to increase the size of the transactions — grow stronger limbs and roots. Or give the cryptocurrencies oceans of water — ever-increasing amounts of electricity.

Buildings, warehouses, Bitcoin “factories” are fast becoming “monuments” to tokenism. It’s almost nuts. Why are we so wasteful when there are better options? How hard would it be for a third-rate dictator to walk in with his gang army and take over one of these Bitcoin Mines?

Which brings me back to Bytecoin. Still easy to grow. Still private. Still secure. Still working. No Bytecoin factories are required. Just your CPU and maybe a cup of coffee.

Bytecoin, for all its bad press, is a privacy original. The first mover in the CryptoNote — CryptoNight sphere. It is the rootstock — before the other subspecies thereof, forked from it.

And don’t let them fool you. Don’t let the forkers tell you: “Oh, but we have improved the code! It is almost unrecognizable as Bytecoin now.” Did you hear that? They said “Bytecoin.”

What are they really saying? Here’s is what they are saying: “We couldn’t do this on our own. So we copied. Tweaked. Sat back and waited.”

It was — it is the same with Bitcoin. It was a rootstock cryptocurrency, but now it is something different. Almost unrecognizable. Too many cooks (developers) have spoiled the stew. Too many forkers about.

There is no debate about Bytecoin rootstock. It’s called CryptoNote. It has similarities to Bitcoin, but it not a fork thereof. It stands on its own.

The primary debate about Bytecoin, however, is about the “tree.” When was it actually planted? It seems that the original growers cultivated the tree for a while, let it bear fruit, then allowed others (us) to assist with the cultivation.

Since the planting, Bytecoin Tree(s) have been growing in private orchards everywhere, far from the public eye. They are also relatively young trees. Only about four years old, but ancient in technological terms.

The main cultivator(s) of Bytecoins, like Satoshi Nakamoto of Bitcoin, remain(s) a mystery. We know the stewards of Bitcoin today, since the deed to the Bitcoin Orchard was handed over to a select group. We do not know the original creator(s) of Bitcoin, however.

Similarly, we still have no idea who runs Bytecoin. We can watch them work from afar. They have not disappeared like Satoshi Nakamoto. We can read short bios, but are they real people? We can see the results of their handiwork. We can also read the articles that accuse the Bytecoin developers of hoarding, but it seems nobody has been able to find the money.

Bitcoin, by comparison, was planted in 2009, in an orchard just off of Crypto-Main Street. Everyone can see the orchard, the pickers, the fruit market — every single piece of citrus. Even the large numbers of “oranges” just sitting in wallets, not moving, can be seen. What’s more, and this is troublesome, with Bitcoin, the biggest orchards are being “outsourced” to China.

This China angle has many worried. As some have stated: Bitcoin is a great token currency for Kings and Dictators, but not for freedom loving individuals. The Chinese government is not known for their forward thinking either. Rather, for tight monetary controls, to name a few problems associated with the ever-growing Chinese control of Bitcoin.

In any event, Bitcoin has an army of followers. Advocates in many countries. Users everywhere. But when does the other shoe drop? Shouldn’t you diversify? Why wait?

In comes the privacy-centric, Bytecoin. Cash is king.

Why do I say rootstock when talking about Bytecoin? Because Bytecoin, like citrus trees, has what are called forks — or grafted “friends.” It is a meaningful word. Other growers used the hardy rootstock of Bytecoin, grown from the original seed and attached a bud. Their bud. Their name.

Monero, Aeon, and DigitalNote are a few examples of the forkers. These few remaining Bytecoin grafts have yet to succumb to disease. They have edited the original Bytecoin code in order to exist. They are the “second-handers.” And they are very successful at it, so far.

Grafted orange trees produce sweeter fruit. They taste better. People buy taste, and they do not care about rootstock. The problem may come when the forked varieties of Bytecoin meet up with disease.

Naturally, the grafted “friends” blame the bad rootstock when a fork withers and dies. And yet, the original rootstock of Bytecoin has persisted. It’s almost an embarrassment. One wonders if a certain unnamed cryptocurrency exchange is/was being paid to refuse deposits and withdrawals of Bytecoin in order to stifle trade and kill the mother.

The lesson Florida Citrus Growers are learning now is about “sour.” According to my entomologist friend, the rootstock citrus trees — the trees grown from seed — seem to be more resistant to disease. But they are “sour-root” trees. Nobody wants sour orange juice from the “sour-root” trees, no matter how tough the tree.

The same can be said for Bytecoin today. It lingers at the periphery. Always there. Always waiting for the next cryptocurrency developer to take a swipe at it or maybe copy it again and ostensibly, make it better. But we all know what is under the hood. The engine of Bytecoin.

Have we been fooled?

In a sense, Bytecoin was never sour. It was the “Mandarin Orange” of the cryptosphere. As it turns out, the mandarin orange may just save the Citrus Industry. It is a sweet original orange and it is one of the more ancient species of the fruit. Best of all it is highly resistant to pests and disease, just like Bytecoin.

Who would have thought? A type of fruit — one of the originals — might save our juice? A rootstock, if you will.

Bytecoin is the rootstock of privacy and security. Maybe it’s one of the “core” cryptocurrencies still growing and still producing “low hanging” sweet fruit.

Sure, the original Bytecoin growers are keeping their distance, but you can see that their orchard is well-tended. The trees are all trimmed and a new batch of fertilizer has recently been applied.

Maybe our mysterious Bytecoin developers just need to say “Hello” more often. It’s amazing how far a little wave of the “digital” hand will get you.

Will Coinbase Survive?

(Updated)

This seems to be the burning question…

Will Coinbase Inc. survive one of the most unprecedented moves by the Internal Revenue Service (IRS) in recent years — its overreaching and unreasonable attempt to search and seize millions of private financial records and kill bitcoin — our digital gold?

It’s nothing new. They’ve done it before. The IRS has gone after deep pockets. And they are doing it again.

Deep pocket in question: Coinbase. But not all that deep.

Coinbase – according to their website:

 

  • Founded in June of 2012
  • Digital currency wallet and platform
  • Merchants and consumers can transact with digital currencies
  • Currently offers bitcoin and ethereum
  • Based in San Francisco, California       

No doubt the IRS has been investigating cryptocurrency exchanges for some time. The Coinbase investigation is just another domino, in a long line of dominoes, from the United States to China, from Russia to Australia and beyond. The very public Coinbase investigation is meant to strike a very real financial fear into the hearts of the American cryptocurrency enthusiast.

According to the Coinbase website, they have about 5,000,000 users on their platform. These users have 11,000,000 electronic wallets, which may or may not actually contain bitcoin or ethereum cryptocurrencies. Add to that mix, 45,000 merchants utilizing their platform and thousands of software applications from developers.

Again, according to their website, over $5,000,000,000 in cryptocurrency has been exchanged on Coinbase. The number is high, but are we talking about fours years of exchanges?

Coinbase is also in over 30 countries worldwide. Which means that only portion of profits and losses were had by Americans. Which means that foreigners probably owe the IRS money for doing business with an American Company. Foreigners who will now likely ignore the IRS, but whose banks and financial houses will likely not.

Why? Just ask UBS Bank in Switzerland. No longer are Swiss banks the go to gurus for wealth management and privacy. The IRS went after those who failed to report their foreign bank accounts at UBS, cited them for filing false tax returns. The result? Millions of dollars in fines, federal probation and prison sentences.

And the list goes on. We’ve all heard of the Panama Papers, where another two trillion dollars sought a tax haven, but a data leak exposed the process.

But why did the IRS investigate such a small company? Coinbase Inc. and UBS are like the proverbial elephant and mouse. With over two trillion in assets, UBS had far deeper pockets. Look at the larger picture.

UBS took years to accumulate the wealth it managed. Bitcoin transactions or sent bitcoins in 24 hours, approaches about 1.5 million  — in bitcoin. In today’s dollars, it would take over two years, at that rate, to send a trillion dollars worth. Not even Panama Paper worthy.

What about the world’s biggest holder of bitcoin? It’s probably still the million bitcoin owned by Satoshi Nakamoto. Current dollar value? It fluctuates, but as of January 1, 2017 it approaches a cool billion dollars.

Eliminating the non-U.S. based cryptocurrency exchanges would certainly help plug the fund hole many banks are no doubt reporting. How many wealthy citizens are moving their money, not to foreign lands, not under the mattress, but on a ledger kept by millions of people the world over. Then going abroad to trade that cryptocurrency for local currency or other property? Maybe.

Another hint that things are not what thy seem? Constant dribbles of news about how companies like Circle are jettisoning bitcoin sales, but are also continuing to investigate the technology behind bitcoin. Whose on their side? Goldman Sachs Group Inc.

Given just these brief snippets of information, can we assume that the IRS will also apply the foreign bank rules when American bitcoin users choose to hold their bitcoin in online wallets abroad?

In the end, if Coinbase continues to deny the IRS access to essentially all user records, expect a raid on the main offices in sort order and frozen accounts, as a result. It would be advisable for one to remove any cryptocurrencies stored at Coinbase. It would also be advisable that Coinbase encrypt all user account information and hand the keys over to their customers. At that point, only banks would have information as to who sent money to Coinbase.

Alas, the hope that Coinbase would keep customer accounts private and not allow the IRS access, is a mere pipe dream. People would need to go to jail or flee the country and be chased by the Feds for the rest of their lives. Not worth the sacrifice, unless these people have the backbone of Thomas Jefferson and pledge their freedoms — and fortunes.

If anyone thinks this is no big deal, think again. One of the largest cryptocurrency exchanges on earth is about to go down — in the land of the free and the home of the brave.

Next on the agenda? Bitstamp? Kraken? Poloniex? Just wait.

(Image compliments of flickr.)

Trust-Mining

 

To Pre-Mine or not to Pre-Mine? That is the question.

Is it really?

No. It’s “Trust Mining.”

Pre-mining: To create or mine cryptocurrency in advance of public release.

One of the arguments against any cryptocurrency launch is the idea of a pre-mine. There has been a tremendous amount of discussion about the topic. But these discussions are scattered all over the net. This is an effort to place some of them in one place.

First, before we get into the weeds, we must answer the basic question…

Does a Creator of a Cryptocurrency have a Right to Pre-mine?

This is the first question many seem to overlook. They list numerous reasons against the practice, but gloss over the fact that the decision to pre-mine is the right of the creator of the cryptocurrency. Whether a software application is given away or sold, the creator — the developer — has the option to pre-mine or not to pre-mine.

Whether you agree with that statement or not is immaterial. Facts are stubborn things.

All the calls to make such a thing illegal demonstrates an underlying motive. That motive is to steal another’s idea. If you don’t like the Pre-Mine, change the channel. A developer can do anything he wants with a piece of code, absent making it reach into your bank account or similar.

Remember, cryptocurrencies are “voluntary.” You use them only if you so choose. So stop your whining.

Is it a Good Idea to Pre-Mine?

It depends if your application is open source or not and how it is updated or changed.

Ripple and Stellar are companies and therefore centralized — and Pre-Mined all of their cryptocurrencies. Both have had some reasonable success and have rights to their respective blockchains.

Ripple is integrated with the current financial world, whereas Stellar is attempting to appeal to the masses. Neither has come close to the success of Bitcoin.

Bitcoin was not Pre-Mined, but Satoshi Nakamoto did begin to mine first and then others became interested. This is not the official meaning of a Pre-Mine, however.

If Satoshi had set aside in apparent million “BTC,” before anyone knew what he was doing and then he attempted to release the application to the world, the success of Bitcoin would have been in doubt.

As it was, Satoshi launched a “cooperative” venture and asked anyone who was interested to download and begin mining. And we know the results. Whether Bitcoin will exist long term is another question.

When others began to copy the Bitcoin idea — literally or not — the idea of a Pre-Mine entered the Fintech vocabulary. It has been considered deceptive, if the launch of a cryptocurrency did not advise that a Pre-Mine existed.

If a Pre-Mine was publicized before launch, it was the decision of the people to mine or not.

The “Dump” Risk?

This is perhaps the best argument against Pre-Mining. The fact that at any moment, the creators can flood the market with their own coins — sell at a profit — and essentially crash their own coin. A few days later, they then announce a new coin and the process begins anew.

This scenario appears to diminish with time, however. It’s the early days, where pumps are in hyper mode, when a Pre-Mine Dump would be tempting.

For example, if there was a 10% Pre-Mine that would mean 10% of all the coins ever to be mined are now in someone’s wallet. No big deal right? What a minute. What if only 20% of the total coins have been mined? That would mean the Pre-Mine is currently 50% of the total. If a dump were to occur the ‘coin’ could crash, as the developers cash-in.

Those unlucky enough to be holding their ‘coin’ after a major dump of Pre-Mined coins, are in fact, fleeced. Many such comments litter the net about “Bag Holders” with “dead” coins after a big Pre-Mine dump. AuroraCoin anyone?

But if I Pre-Mine and do a Giveaway, won’t that help?

So far, the answer appears to be “no.”

Closed source coins like Stellar and open source ones like AuroraCoin have tried. Stellar has been trending lower for over a year. Again, their long term success is in doubt.

To give crypto-coins away, as effort mask the fact that you will dump in advance is also a deceptive practice.

Then there are the pure Proof-of-Work Coins. They are or can be 100% Pre-Mined. If you trust the developers fine. Sunny King of Peercoin fame may be onto something, but the old proof is in the pudding, right? Peercoin has been trending lower since the “Great Bitcoin Pump,” but so has Bitcoin.

 If the Developer does other Good Things with the Pre-Mine, won’t that Help?

Maybe.

Stellar uses the Non-Profit angle to assist the uneducated and the alleged, underbanked. If you want to pour your hard earned money down that potential black hole, be my guest. I gave at the office, thanks.

But many other cryptocurrencies use the Pre-Mine for upkeep and updates. The danger here, is that “they” are often in full control of their semi-centralized blockchains. I’m thinking about DASH here. (Not Dashcoin – DSH.)

DASH does have a voting system when proposals are made to change the ‘coin,’ and the system reflects a business-like model. DASH also, allegedly, had a Pre-Mine. And they have been in an uptrend for over six months. Pre-Mining, which DASH developers have explained as a glitch in the early works, has not yet hurt the crypto. But their innovation may have overcome the bad taste of the early coin hoarders. Again, only time will tell if the ‘coin’ has staying power.

What is a Pre-Sale?

Some cryptocurrencies Pre-Mine millions of coins and then sell them off to investors to generate revenues, before the official launch. In other words, the coins are actually released to the public, beforehand. This is not as bad as withholding sale and should not be considered a “pure” Pre-Mine.

But let us not mince words. He who controls a Pre-Mine, even a sale thereof, controls the ‘coin.’ This may be why, among other reasons, that Ethereum now has a partner (okay competitor) called Ethereum Classic. It is also instructive that the original developers of ETH turned their clock backwards to ensure that a funds were not diverted inappropriately, due to a problem with some “code” as it were. If that’s not centralization of monetary power, I don’t know what is. Certainly Janet Yellen noticed.

No Pre-Mine

If you want to have others adopt your private currency, in some meaningful way, then you need cooperation. You need miners if you are going that route. Miners that support your blockchain. Stakeholders in your system. Producers of your coin. Users of your API’s. Investors in the wonderworks. Speculators to drive everyone else mad. And all the rest.

If others feel that you have the investment advantage, your level of cooperation may be diminished. Starting everyone at the same place — at square one — seems to be relatively ‘cooperative.’ It shows that you believe in your product enough to start right alongside everyone else. To get into the fray, for better or worse, with those who you wish to adopt your plan and support your network — your blockchain.

In this sense, the developer is the artist. Everyone is invited to make a copy of his/her/their work and use it. Occasionally, the developers make improvements upon their works. Or they work as a team and use some form of voting system to approve or disapprove changes. There are many variants.

The Pre-Mine with a Side Show

Perhaps a lesser explored reason for Pre-Mining is to show the actual cryptocurrency in operation. The “red herring” idea or “selling the sizzle, not the steak.”

The cryptocurrency enthusiast is curious about all of functions built into the newly designed ‘currency,’ such as faster transaction times, blockchain savings, secret messages, private markets and the like. But when you check the website and the hacker news, you find that there was a huge Pre-Mine. That should be a warning to you — unless you truest the developers.

The Fee-Mine Concept

One way developers avoid Pre-Mining, is to code in a fee based system using the native currency. Each time you send or mine the cryptocurrency the developer receives a small portion of the proceeds, which they can then divvy out among the miners.

Trust Mining

We all know that cryptocurrency has no intrinsic value. It is not necessarily durable. All the aspects of a sound money are certainly not imbedded within. But to come as close as we can to a sound money system might be the ticket.

After all, the dollar is a mere piece of paper. The United States has what many refer to as shadow gold standard. But like a cryptocurrency, if the dollar loses its trust, say when the printing presses shove out “QE4” forever, all bets are off.

Multi-Mining:

In a sense, Ethereum and now Ethereum Classic are attempting to provide an intrinsic-like value to their cryptocurrencies. The do this by having the native “primary” coin function or fuel many other side processes, colored coins, self-executing contracts and applications. The list goes on.

But these “primary” coins only function within their own ecosystems.

In contrast, one of most stable monies and currencies of all time, gold, has uses other than its monetary use and outside of a captive blockchain.

Utility Mining:

Perhaps one of the best ways to establish a cryptocurrency is to allow it more versatility…more utility. A ‘coin” that has more than one use. Like gold has more than one use. A coin that when mined, can be used “outside” of its blockchain for other utilitarian or even decorative purposes. Off blockchain uses that will allow for private transfers as well as public receipts.

Thus far, many seem to focus upon the many blockchain uses. Perhaps it is time to look at another facet. A cryptocurrency that can function off-blockchain or not require a blockchain at all.


Photo Source: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)%5D, via Wikimedia Commons