The Economist's Fallacious FUD About Bitcoin

This article about Bitcoin, while knowledgeable and well-written, is a classic example of how even the experts can misunderstand how Bitcoin functions:

http://www.economist.com/news/technology-quarterly/21590766-virtual-currency-it-mathematically-elegant-increasingly-popular-and-highly

No, Bitcoin is not unprofitable to mine, it is fairly profitable, if you know what you're doing.

No, Bitcoin's open source nature and the software's ability to be easily modified democratically does not make it fragile, it makes it remarkably strong and resilient, just like any other governing system of such a nature.

No, Bitcoin would not have difficulty maintaining nodes once the block rewards become negligible, the transaction fees have already been implemented, and the plans to scale the transaction fees to account for diminishing rewards has already been established.

No, decentralization and a lack of reliance on government or bank authorities does not make Bitcoin "untrustworthy" or "fictional", it makes Bitcoin more democratic, more trustworthy (since it is almost purely logical, and does not depend on the highly faulty and plutocratic exchange of power imposed by governments and banks), and far more resilient than any other existing financial system in place, particularly since Bitcoin has no single points of failure, unlike traditional financial institutions and currency authorities.

No, Bitcoin is not particularly vulnerable to security. Exchanges and wallets are hacked, not Bitcoin, and that is the fault of the users and the exchanges, not the Bitcoin software. and even if the software was at fault, it can be easily (within minutes, often) be patched and secured, and is guaranteed to be so due to the active Bitcoin community and the open-source nature of the product. So overall, Bitcoin is far more secure than any conventional currency could ever be.

No, Bitcoin is not suffering from its several gigabyte blockchain of transactions. The average hard drive size is growing exponentially, and the current Bitcoin blockchain is less than 12 GB. that's not even half a single layer Blu-ray of data. to suggest that this is a massive, unmanageable amount is just plain asinine!

No, the "arms race" of Bitcoin ASICS is not destabilizing the currency or interfering with its viability. On the contrary, it vastly increases the network's total hashing power, making it exponentially more secure and protected against external threats.

No, Bitcoin transaction times and sizes cannot tell you who made the transactions, even if you "follow the money". The reason Silk Road's CEO and higher level users got caught, wasn't because of the transactions being analyzed, it was because they bragged at length about their exploits, used real names for registration, and made a myriad of other mistakes.

Tell me +The Economist, is you can follow the Bitcoin money to discover the originator of Bitcoin transactions, then (excuse my french) why the fuck hasn't anyone discovered the identity(s) of the single largest Bitcoin owner, and the one who mined the first (genesis) block? Satoshi Nakamoto, despite numerous high profile attempts, remains unknown after all this time, even though he has a bigger Bitcoin footprint than anyone. It's all guesswork, plain and simple. This supposed "follow the money", while useful for formulating educated guesses, is useless for discovering any Bitcoin user's identity, without other, more concrete and transparent sources of information. Ultimately, the ledger of transactions serves no more than as a collection of "hints", the vast majority of which are far too vague to provide any value to investigators.

All and all, while the writers of this article obviously did their homework enough to be knowledgeable about Bitcoin, they obviously haven't analyzed their research enough to really understand Bitcoin, only enough to post FUD and misinformation that can convince the less initiated. This goes to show that even established and reputable journalism firms like the Economist can be very, very wrong!

What Is Game Theory?

While I'm still a bit new to the concept of Game Theory, the following is my understanding of Game Theory, in the context of economics. Hopefully this will help newcomers to the subject develop a better understanding of it ;)

Some background: I have been tracking the stock market for several years, but never had the capital to invest in it. If I did, I would have been able to retire from Google stock by now

because every prediction I made about the price of Google stock for the past 5 years has been correct

I have in the past 5 years set 7 price targets for them, and every single price target, they have reached when I said they would. I am extremely good at analysis and stock prediction, evaluating financial variables. if I wanted, I could easily become a stock analyst.
----

Contrary to appearances, The discipline of stock analysis is not actually economic fortune telling, though many of the less prodigious economist may well be employing a high degree of fortune telling to compensate for their intellectual deficiencies. But when done correctly, the analysis of stocks, and of the economy generally, involves statistical evaluations based on information tracking. While perhaps to the average person this amounts to an educated guess,those more intimately  familiar with the variables involved are able to consistently make accurate predictions.

Part of why I personally don't have the money to invest into companies that I have accurately determined to be good investments, is because I have no interest in money. I only care about the analysis and valuation of entities, and making reliable predictions based on my analysis. For example, I know for a fact that Bitcoin will go up a lot in price. because even under the most pessimistic of economic projections, it will be profitable to mine, and at the current price, even to invest in.

This is exactly how game theory works. It's called game theory because every game has rules and variables that determine the outcome, and that model can be applied to every science and discipline that relies on knowledge of the rules, protocols, and variables of a system to succeed. Economies can only function if there is a consistency of protocols and rules of trade, reliable patterns for the prices of commodities and currencies, and variables that can be consistently tracked and predicted to a relatively high degree of precision. Those who can effectively utilize game theory to accurately determine lucrative economic investments, they are the gurus of the economic world.

On the Fallacy of Force: Neutralizing the Libertarian Objections to Statism

The following essay, inspired by and written also to address objections made by+Noel Yap and other libertarians (including myself), and which +J. M. Weber has inspired implicitly but yet to explicitly incorporate into our discussions on the matter. To further refine our discussion on the role of the state, and determining how to best leverage its scalability to optimize, rather than interfere with free society:

Is the State Forceful? This is the most compelling argument libertarians have made, and the one that made me most sympathetic to their cause. After all, since everyone has at least slightly different morals, ethics, values, priorities, and perspectives, and different ideas and theories about the proper implementation of the objectives concerning these things, it's impossible for any power, no matter how wise, considerate, knowledgeable, or democratic it is, to provide a world or even nation that all of its people will be happy to live in. 

Voluntaryism: This being the case, Libertarians make a cause for Voluntaryism, a conditional government solution that wishes to convert the theory of the "social contract" into an actual contract with the government, one that is voluntarily signed and accepted by those that wish to participate in the government system. Those who do not wish to participate in the system, Libertarians argue, should not be forced to participate in it; they should have the freedom to opt out of it, and forfeit both taxes/laws, and the benefits ("entitlements") they provide. So long as they are not infringing on other's life, liberty, or pursuit of happiness, the government has no right to interfere with theirs.

The Fallacy of Force: Here is where the libertarian argument goes from logic and idealism to propaganda and ideology: the idea that the state is forcing anyone to pay taxes or to conform to laws. Libertarians argue-- but wait,it is force:

1. If you don't pay taxes, you will be fined...and compelled by the courts to pay the fines and the taxes, and upon further refusal, you will be eventually be arrested with threat of force (law enforcement), and imprisoned.

2. Your property can be repossessed by the state at any time it deems justified, and if someone does something the government doesn't want, even if it harms no one, they can and do freeze assets, block travel, cut off contact, and detain them indefinitely, in some cases (i.e. the NDAA) without even due process.

3. The state holds a monopoly on the right to force people to follow its laws, which span virtually every aspect of life, including the economy, business, health, food, transportation, weaponry, foreign relations, the press, telecommunications, and even religion and non-profit organizations. The state can and has regulated everything that can be regulated, effectively imposing its will on every aspect of our lives.

4. Theoretically, the state's powers are broad and pervasive enough so as to be tyrannical, and very effectively so, should they choose to be. The issue of government abuse of power has become a major concern in recent years.

5. The state's power to control the money supply and regulate the free market interferes with laissez-faire market dynamics, undermining the merits of capitalism and exploiting its weaknesses. This prevents anyone from living economically independent from the state, effectively forcing them to live in some way dependent on the fiat currency policies that influence global economics.

6. The state's heavy involvement in the educational system and aggressive public awareness campaigns distort our perception of core human issues, brainwash our youth, encourage the people to embrace conformity and complacency, and promote systems which deteriorate or psycho-social and physiological health, and condition an unhealthy system of waste, consumerism, immorality, and ethical depravity.

7. The state is morally, ethically, rationally, and culturally incompatible with society, and as such its policies, regulations, laws, and legislation is counterproductive, hypocritical, inefficient, and ultimately futile. No matter what kind of laws the government makes, they people cannot or will not follow them all, simply because they are conditioned and/or encouraged by society not to.

There's a lot of truth to this: all of these arguments are true within the Libertarian viewpoint of the government and its impact on our lives, and to an extent, we can all agree that the state can or does have all these defining attributes, powers, and flaws. No government is perfect, of course. But libertarians argue that, for this reason, everyone should be free of the government's control over their lives, and decide for themselves how to live their lives, and make their own mistakes.

The problem with this logic is that libertarians aren't forced to participate in this system, as they claim. Every single one of the aspects the state has control over is rooted in institutions that have their origin in government. Not a single one of these institutions controlled or influenced by the state even exists outside of the government, nor could the state realistically control anything outside of its domain. The government can only control what it has created, and this of course includes capitalism, one of the greatest inventions of the government. More on that later- for now, let's go through some of the institutions that originated in the government and could not exist without the government:

1. Money: This is the big one- a lot of people don't realize that while barter has existed for a while and symbolic trade itself was not created by the government, the money system- a universal system of trade agreed upon by the people to permit the buying and selling of goods asynchronously (being able to sell one kind of goods to one party, and buying with the money earned from another), was developed and standardized by the government.  

Yes, we now have systems of money that can exist outside of government(such as Bitcoin), but notice that shocker Bitcoin is not affected by government inflation, trade dynamics, or money controls. However, Bitcoin is affected by its own system and the people who develop and maintain its code, and that is in itself a government system, an economic statism. This fact will become important later, so keep that in mind.

2. Taxes: Without using the government's money, you can't pay taxes, simply because legally, you didn't make any money to be taxed. If you are being taxed, it is thus because you made money by making use of the government's economical system, and it is unreasonable to not pay the dues decided upon by the government for the use of that system.

3. Property: Outside of the government, there are no laws to enforce property rights- indeed- the very concept of a "right" does not and has never existed outside of the government. Without the government, you would have no property except that which you alone control and defend against usurpation, in which case you would, by definition, become your own government, deciding what you own and what you don't own.

4. Business: There is no requirement for you to do business with people using state money or state-occupied land, to make use of government infrastructure, roads, or framework. By making use of anything funded or facilitated by the state, you implicitly agree to the government's rules and regulation for business done within their domain. The biggest advantage of the state in this regard is interstate trade, which could not be done nearly as efficiently outside it. When you utilize the state to do business, it's reasonable that you agree to its TOS (terms of service).

5. Religion: Despite there being a separation between church and state in most governments, the state continues to control, influence, and exploit religion for its own purposes. It decided what religious institutions can legally exist, whether religions must pay for their upkeep, what religious practices are acceptable, and even what church organizations can be donated to/supported. 

However, there is no requirement that religions or churches use money, property, or government infrastructure, or that they are even recognized by the state. Churches can freely exist without money, property, or state recognition, and this is indeed how the original churches of Christianity were. When a church or religious organization relies on government institutions, services, and infrastructure, they should reasonably expect to abide by the government laws, rules, and regulations.

More interestingly though, religion is itself a form of state, and the first known governments were in fact religious organizations (theocracies), taking the form of priest-led city-states. So to expect freedom from the state to practice your religion without interference, is a bit of a paradox ;)

6. Education: While there are major problems with the state-funded educational system, and yes the state (at least in America) teaches conformity, collectivism, and propaganda, there is no need for parents to send their kids to government schools, or even to send them to school at all. You might argue that the parents will be compelled to send their schools by government laws, but this is actually not the case, as is addressed in point 7:

7. Law Enforcement: Libertarians claim that the government imposes its laws upon everything, even if they are unfair, unjust, unreasonable, or beneficial only to particular demographics (only benefiting certain races, religions, ideologies, social classes, etc.), and for the government to force its laws on people who don't agree with them, even when disregarding those laws does not interfere with the livelihood, well-being, or safety of others, constitutes: 

Theft (laws forcing to pay taxes), 

Extortion (law enforcement requiring conformance to the law under threat of imprisonment, fines, or even death), 

Assault and Battery (in the case of arresting people not obeying these laws),

Murder (of those killed by law enforcement agencies and the military),

etc.

This is the most important part of the Libertarian argument for their claim that statism is forceful, and while they're right that it's forceful, their conclusion that the state interferes with, undermines, or destroys their freedom, is completely wrong.

The State can't do anything to limit your freedom outside of itself

This is the point that libertarians are missing- that the state only has power within its domain, and its domain is limited to the services that it develops and maintains. If you refuse to use state money, services, infrastructure, roads, social institutions, education, and rights, you have rejected its social contract. 

If you want to become a true Voluntaryist, you must do no less than this, and perhaps then you will understand the real truth that Libertarians are not getting: that freedom is not free, and it's not convenient either. The price forreal freedom and independence is a great deal of hardship, inconvenient, and ultimately- a loss of many other, far more essential (and convenient) freedoms. 

Ultimately, it comes down to this: Civilization was built by governments, so if you want to live free of the state, you're not being forced to live in civilization, you're welcome to leave civilization. Go live a nomadic lifestyle, there's plenty of open-land in most countries to do so. Sure you won't live a life full of technology and economic prosperity, but these things are the product of the state, and you wouldn't want to rely on the state anyway, would you?

Addressing contentions that money, property, or rights exist independently of the state


Never has there been a stateless society where money, property, or "rights" have been in use. But more accurately, never has a stateless society ever existed. 

This is the central cause of the libertarian's mistaken belief that the state is an enemy of freedom. The false belief that the state is distinct from civilization and society. In reality, the state is the forceful part of civilization and society. 

In familial terms, The mother (the one who nourishes and rears civilization) is society, while the father (the one who gives civilization structure and enforces law and order) is the state. Both the state and society are necessary for civilization to exist, so if you want to live outside of the state, you must either establish your own society/state outside of existing civilization, or live outside the civilized world entirely (anarchism).

The reason for libertarian confusion, is because most of them live in governments similar to the U.S., where society and the state are fighting against each other. In the U.S., the state and society, rather than working together to build civilization, are competing against each other or even fighting with each other, creating strife, corruption, and cultural entropy. 

It's no wonder that people are confused, but it's important to understand the sources of this confusion, which will help you to understand the real problems with the U.S. and other countries, which are not state-caused, as it would seem, but cultural issues.

The problems with the state are actually due to fragmentation of the government and society from the national to the local levels. America in particular is a young nation and lacking in cultural depth or identity. The only consistently pervasive element of American pride is freedom, and as the state exists solely to control, this results in overwhelming inconsistencies in laws and policies between individual states, cities, or even neighborhoods. Basically, America is fighting against itself culturally, and its government entities are at odds with each other as a natural result of that infighting. 

America's greatest weakness, and the fundamental reason why statism has never worked well here, is its individuality. Because we emphasize egoism and individual liberty so much, every government official, special interest group, religious organization, teacher, doctor, lawyer-- every single group and person in America has a tendency to be self-serving. 

We all have our own special interests. lobbyism, entitlements, "rights", beliefs, opinions, ideologies, theories about what makes this country work best. Ironically enough, it is the libertarian individualism and the fragmentation of government it comes with-- that is the principle cause of the dysfunctionality of the state in the U.S. The libertarian ideal for freedom is a worthy one indeed, but when they try to impose that ideal on society, and on the state, they serve only to undermine the cultural and national unity and pride necessary for any civilization to thrive. 

Without collective unity, without universal agreement about what must be done as a culture, as a society, and as a state, civilization remains divided and self-defeating, remaining in a state of perpetual civil war. Libertarians keep the fire of this civil war in the name of "freedom" raging, Attacking every government policy, regulation, law, and tax that interferes with their right to individuality, independence, and freedom, not realizing that their ideals are incompatible with the very society they claim to be fighting for. 

If libertarians wish to make society or the state- for civilization to be more free, they will need to accept the fact that true liberty isn't the way they imagined it, it's not "Do as ye wilt, an' ye hurt none"- true liberty is a balance between chaos and control, between the individual and the collective. Until they realize the importance of embracing society and the state as enablers of freedom to transcend the limits of the individual (whom apart from the collective can create nothing beyond himself). 

A moderate measure of control is necessary for freedom to be appreciated, just as at least some freedom is required for statism to be productive. Without statism on some level, be it centralized or decentralized, freedom creates nothing but chaos and disorder. If libertarians wish to promote freedom and creative thought, they should not try to eliminate the state, for without it freedom loses all meaning- rather, they should try to improve the state, so as to ensure the control the state exerts over the people is in the best interests of the collective for whom the state exists to serve.

To truly improve or change the world for the better, one's values must be balanced, and freedom is no exception. For libertarians to fruitfully coexist with civilization, they must embrace the state and society as the necessary constructs of civilization. One cannot hope to improve civilization by undermining its foundations, and this makes the libertarian ideological war against the state truly idiotic.

When freedom lovers fight against the state, the state fights back, and the results are less freedom. The vast majority of suppression of freedom in the state, particularly in recent times, is due to individualist and freedom-obsessed libertarians challenging the state, rebelling against its rule, the state responds defensively, cutting off the freedoms that permitted them to express their dissent and rebellion. The state, in order to protect the integrity of the established system, silences dissent to prevent further damage being done to its authority. It's a vicious cycle where the end result is always less freedom for everyone.

The federal government of the U.S. was created because the Confederation had too much freedom. Civilization (in particular, interstate trade and transportation, the two biggest concerns at the time) was threatened by the lack of state unity. If the states gave up a bit of freedom and relinquished their individual identities, a federal government of the U.S. would not even be necessary. From day 1, libertarians forced the state to take on more power and interfere with more liberties, libertarians are the ones who forced the state to infringe on our civil liberties and rights, ironically enough, to protect the civilization that makes our liberties and rights worth anything in the first place!

In conclusion, the forcefulness of the state was caused by libertarians and anarchists-- or more specifically, by the irrational, destructive, counterproductive hatred, fear, and distrust of the state. You brought it upon yourselves. You projected what the state would be, and the state became what you believed it to be, because you believed it. You sowed fear, uncertainty, doubt, and hatred of the state, and it became scary, bureaucratic, untrustworthy, and hateful. The state, as we know it today, is a product of the uncompromising individualism of America.

You had your chance, your America started out free. Then your Anti-Federalists gave the U.S. government and executive branch broad powers with the U.S. Constitution, but you still had freedom. You demanded rights to own slaves and women in the 1800s, and your civil liberties were curtailed as a result of that statist rebellion. You complained of political tyranny and corporate corruption in the late 19th century, and of John D. Rockefeller's immeasurable power over the state and society, and your revolutionary yellow journalists and "muckrakers" brought us the progressive movement, the Federal Reserve, the income tax, and the Prohibition, and hippies instigated the War on Drugs.

I'm not saying it's all libertarians, far from it. We're all to blame on some level, and the American culture is in its current state far too corrupt, selfish, and egotistical for anyone to be blameless. Radical statists who think they can solve everything with force and nationalism- they're just as bad. 

In the end, it all comes down to balance- we gotta stop thinking in terms of uncompromising principles, and start thinking like adults. If we wish to improve the government, a measure of individual liberty and collective statism is necessary to bring that improvement to fruition. Nothing good in life is black-and-white. There's nothing productive about obsession or radical thought. If we want a culture, a people, a nation, a world that is truly free, we're going to have to settle somewhere in the middle, a reasonable balance between the individual and the state.