Crypto’s future appears to be headed east

I just do not believe there to be a more pro-Western thinker than myself. Granted, I am a creature of the West, a cultural chauvinist of the highest order. Western society, far from a plague to be overcome, is a gift to all humanity: literature, art, film, architecture, cuisine, philosophy, even religion. The Enlightenment and its resulting liberality I count as monumental achievements for the species.

That written, of all the places to flower a crypto revolution in an otherwise mostly closed society, China was for sure not high on my list. Asia is such a loose word, and doesn’t mean much but it will have to do for the purposes of this particular column. The stereotype here in the United States is of cultures and nations repressed, controlled, still fighting for basic freedoms at least politically.

And that appears to be true on some level, as any cursory look at a given Eastern or Asian country would reveal. They often lack the liberality of migration, of allowing others “in” to their societies. Speech is a careful freedom, and does not seem to be a Right in the way we imagine. All of that, and to say nothing of the political struggles for more democratic participation.

George Gilder

Crypto’s future appears to be headed east“Only in China! After 40 appearances in nine days in four cities,” famed futurist George Gilder explained in a social media chat, “I return exhausted and edified by this nation of engineers and entrepreneurs, all inspired by the U.S. Silicon Valley example, now wilting in green Marxism and demented diversity politics.” Gilder’s latest book, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy (Gateway Editions, 2018), a follow up to his Scandal of Money, has since been released in China, and he gave a series of talks in support.

We were to do an on-camera interview in Las Vegas this Summer at the annual Freedom Fest (I ended up with a lovely and very impromptu discussion with Jeffrey Tucker), but instead spoke from an ironically weak internet connection hideaway in the Berkshire Mountains (I in Southern California). Days away, as of this writing, from his 79th birthday, he’d come back from a morning run, as I recall, and was eager to talk about his latest book. About to hit 80, and the dude runs marathons (plural) throughout the year. Jesus.

His entire life has him in close proximity, Gump-like, to the movers and shakers of American politics and business. He’s written speeches for Nelson Rockefeller, George Romney, Richard Nixon, along with dozens of well regarded books on a variety of subjects. He was one of the key figures who developed supply-siders’ ascension to the White House by way of the Wall Street Journal editorial pages. He was said to be President Reagan’s most quoted intellectual.

China? Really? Yes

Crypto’s future appears to be headed eastGilder received push-back on his assessment after he returned from China recently. The country, he responded, “thrived by reducing govt spending by 80 per cent (to a level lower than the U.S. as a share of GDP) and refusing to float their currency.”

When a few folks commented the Chinese might’ve picked up hints from his supply-side days, Gilder confirmed he believed progress began “after I visited in 1988 and urged them to ‘let a billion flowers bloom.’ I also told them to lower marginal tax rates. It was Bob Mundell, though, who told them not to float their currencies, and was rewarded by having the University of Finance in Beijing named after him. I was just made an ‘esteemed honorary professor’ at Shenzhen University of Technology. Voodoo marches on, in China, and underlies their economic miracle,” he wrote, using the famous George HW Bush’s characterization of Voodoo economics to describe supply-siders.

When another commenter listed grievances against the country, Gilder asserts, “China has increased its power and wealth by a factor of 10 or more since the Maoist days. Regardless of what we do, at a minimum they are going to be dominant in Asia. Objecting to

‘island building’ in the Spratlys or naval clout in the South China seas, or foreign aid (‘hegemony building in Africa’), or infrastructural prowess (no problem with finding ‘shovel ready projects’), their ‘art of the deal’ with Western tech companies for whom they do most manufacturing, [complaining] at all this shows an incomprehension of China’s earned position as a great power.”

Undignified, hypocritical, and quixotic

Crypto’s future appears to be headed east“We can change our own behavior but we probably cannot change China’s determination to be number one in Asia,” Gilder assured. “Attempts to stop them are undignified, hypocritical, and quixotic and a distraction from the war against industry being conducted in the U.S. on every campus and environmental cult and blue state office,” insisting the U.S. has far more of its own problems to tend than fretting over China.

Ultimately, in order to survive, he believes “the U.S. and China are destined to collaborate. Gratuitous trade conflicts based on ‘trade gaps’ are just self-defeating, particularly for us with most of our high tech manufacturing in China and Taiwan exporting to the U.S.”

Perhaps the biggest slur against the industrious nation is the charge it is merely faking, a Potemkin village at scale. And while some of that is no doubt true too, China is easily one of the most entrepreneurial economies going at the moment. It accounts for three times the initial public offerings (IPOs) than that of the U.S. When Taiwan is brought into the picture, whose business folk have pointed a majority of their investments at the mainland, greater China makes most of the world’s high tech goods.

Economically retarded, politically repressive, socially manipulative

“Taiwan Semiconductor Manufacturing Co.,” Gilder notes, “is the only mass producer of 7 nanometer chip geometries for the new Apple cellphone. Yes, the new government is economically retarded in some ways, politically repressive and socially manipulative. But the magnificent previous leadership under Deng Xiaoping et al provided a real foundation for an utterly solid trajectory of growth with an ever diminishing government spending as share of GDP (now at around 19 percent well below [the U.S.]). The new generation, unlike [the U.S.], is anti-socialist and throngs to their ‘free zones,’ which as I discovered in Shenzhen, have to be seen to be believed.”

He ends with a plea of sorts, an appeal to sanity. “It is foolish to deny the feats of the Chinese economy and the proliferation of entrepreneurial businesses, particularly in my areas of current focus, electronics and cryptocurrencies. For better or for worse, China is on a path to be the world’s largest and most powerful country. Making them an enemy is a suicide trip,” he concluded the chat.

South China Morning Post recently announced, as if channeling Gilder, “Hong Kong’s new regulations for cryptocurrencies have security at their heart, specifically the safeguarding of digital assets from theft or loss.” It might appear heavy handed, but the subtext is one of tacit acknowledgement crypto is here to stay, and that its people are clamoring for digital assets.

InVault

Third party custodians are key to institutional adoption in the wake of exchange hacks and wallet insecurities. “InVault,” the SCMP write, “a Shanghai-based start-up, claims to be the first such digital custodian to take advantage of the new licensing requirements to launch its services in Hong Kong.” It already holds about a million ETH on the mainland, and this new license will allow it to begin automated services next month.

They’re looking internationally as well, becoming leaders in the protection of crypto assets. CEO Kenneth Xu told the news agency, “We believe that globally, custodians for cryptocurrency assets will be regulated and operated under a trust licence.” Using the models of Coinbase and BitGo, they’re to be a kind of trust agency, a form of insurance.

“Xu said InVault is in discussion with two ‘mid-sized’ insurers which potentially could provide coverage that could be included as part of its custody services,” SCMP reports. “He said the biggest challenge for insurers today is how to accurately measure the risk profile of a custodian, and its internal systems, to price the cryptocurrency insurance premium accordingly.” It’s yet another step, albeit a quiet and unsexy one, in the country’s business culture to get economic’s future right. China! I would’ve never guessed.

C. Edward Kelso is a financial technology journalist. Follow him on Twitter.

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Silk Road, Ross Ulbricht, half a decade and 100,000 signatures later

The crypto community is libertine, candid, permissive. Wish to imbibe your way through life, slamming heroin while snorting cocaine, be our guest. Want to sell your ass to the highest bidder, go for it, Jack.

Silk Road, Ross Ulbricht, half a decade and 100,000 signatures later

There’s something about acts of privacy, the secrecy baked-in to cryptography, that leaves the ecosystem comfortable with others doing things we’re not exactly thrilled about endorsing in the personal sense. At the root of crypto as currency is the ability to make cash an instrument of caprice, whim, desire, subjectivity.

Humility seems to be in the cryptocurrency ethical melange as well. The ecosystem has plenty of opinions, and on about every topic imaginable. All the good and shittyness of any given society finds its way into crypto, for sure. The difference between it and other forms of money issued by bodies with legal monopolies on violence is we cannot force folks to use our version. This can lead to an orientation of leaving people alone because we must, but it also encourages doing so because we simply do not know what is best for them. They’re left to make their own decisions, for better or worse.

Nascent

And so it was with all this in mind, a young Ross Ulbricht helped create the notorious underground marketplace Silk Road. It was an ideological move. Forget the goings-on within the site for now, and understand Ulbricht did this on purpose. Dark or deep web sites were nothing new. Lots already existed.

Silk Road, Ross Ulbricht, half a decade and 100,000 signatures later

Instead, it was a chance to merge at least two technologies within a firm philosophical grounding. Bitcoin, then the plaything of cypherpunks, themselves very ideological, was still finding a use case, something to prove its viability as a peer-to-peer electronic cash. And since legacy payment systems, credit cards and their less friction involved sister platforms such as PayPal, involve lacks of privacy, bitcoin might be an attractive alternative for an online bazaar.

Bitcoin was enticing tech because it allowed a digital form of pseudo anonymity in the paper money sense. Silk Road, the eBay of products and services run afoul of government prohibitions, married the nascent tech with a Tor-laden, privacy zealous community in dire need.

Silk Road

Ulbricht’s insight was merging crypto with overt, radical free marketism. Silk Road brought buyers and sellers together, each allowed to be as open and transparent as they’d like. There’s plenty of anecdotal study to suggest Bitcoin thrived under such an arrangement, signaling to early adopters cryptocurrency was for real. Everyone was watching.

And, sure enough, Ross Ulbricht’s arrest sent the price into free fall, confirming as much. The evidence, however, was impossible to deny: it was too late for those who might’ve hoped the crypto experiment would die by sending Ulbrichts of the world a nasty message.

The community divided over what it all meant, and still does although less so now. Some blanched at the idea Silk Road could be credited with jump-starting crypto. Great, they outwardly lamented, now we’re forever tied to drugs and scofflaws—no one will ever take us seriously.

Ross Ulbricht

Maybe they were right. Certainly mainstream press outlets ran with the narrative, and it has been hard to shake this reputation. I’ll concede that right away. But crypto enthusiasts have to know better ultimately.

Silk Road, Ross Ulbricht, half a decade and 100,000 signatures later

Again, we’re agnostic on prohibition and petty legalisms. Bitcoin and the broader world Satoshi Nakamoto gave intellectual birth to is and was an illegal endeavour on its face. If crypto zealots are going to use government laws of their barometer for what is right and wrong, stop using crypto right now and return to fiat.

There’s plenty to speculate about Ross Ulbricht. The murder for hire trope is tossed around loosely and rarely followed up upon (charges were dropped). That he was something of a monster fits well with the overall storyline, but it is not true. Click over to FreeRoss.org, and have a look around. Obviously, it’s a site keen on defending him, but at least readers know that going-in and can account for bias. Agents involved in his arrest and conviction were themselves sent to prison for direct wrongdoing in his case—and that’s just one twist rarely given attention.

Clemency petition

He’s a compelling fellow, and at worst he provided an online market where people were able to meet in relatively safety. He’s now serving a double-life sentence without the possibility of parole. From my understanding, his appeals and legal challenges have exhausted all the way through a U.S. Supreme Court remand. That part of the case appears to be over.

Silk Road, Ross Ulbricht, half a decade and 100,000 signatures later

As a last ditch effort his mother and supporters launched at Change.org petition, asking President Trump to grant Ross Ulbricht clemency. Online signatures recently passed 100,000 thousand, and more can only mean better. For all his perceived ills, Trump has shown a remarkable sensitivity to a few incarcerated cases and a willingness to act. Crazier things have happened.

On January 13, 2015 in New York City.

He’s crypto’s first real martyr. Lay the facts out for yourself. Chew them over. The realization of what he’s suffering versus the crimes committed do not mesh. I believe our world would be a much better place if Ross Ulbricht was out of prison and allowed to create and build with us. It’s only a digital signature, and won’t take long. It’s a small gesture that could lead to a man’s life being spared. Thanks for even considering.

Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Widespread crypto adoption could mitigate against gov’t martiality, foreign adventurism

As a militant atheist, I am often struck by my fellow rational travelers’ foray into state worship. Library shelves are filled with sublimation, psychologically replacing the need for a sky god, father figure, with big daddy government. The simony of indulgences by robed dudes is now the distinct ethical and moral jurisdiction of politicians. If an elected representative, or enough of them, is convinced X far off land poses a threat, normally sane folk appear all too eager and willing executioners. The cross, at least in the West, is simply replaced with the flag.

Widespread crypto adoption could mitigate against gov’t martiality, foreign adventurism

Here in the United States, Veterans’ Day has recently passed. For the vast majority of my countrypersons war is synonymous with honor and duty, and so there’s very little association made between mass murder and how it’s always a government policy in need of funding.

Less still is any connection whatsoever to troops soldiering around Southwest Asia and filthy fiat lucre sloshing about the average person’s pocket. When various progressive news outlets make a claim to military spending or tally, they’ll do so in comparison to other government programs such as health care. Why, “we” could be spending expropriated tax revenue on schools, roads, environmental protection! Those zillions could be put to better use!

Stupid Brandon Theory

And if economic theory enters the discussion at all, it’s usually to trot out Keynesian tropes turned articles of faith about the fiscal benefits of, say, World War II and how it brought the U.S. from the Great Depression (caused of course by too much economic freedom). All ordinance flung around Europe and the Pacific, the uniforms, arms, planes, battleships, and millions killed jump started a dormant American economy.

Widespread crypto adoption could mitigate against gov’t martiality, foreign adventurism

I refer to it as Stupid Brandon Theory (SBT). My grade school friend and I attended hair metal concerts, and on one such walk to the arena to see the band Ratt, my stupid buddy Brandon began tossing food wrappers with abandon. What the fuck, I admonished after about the third or so hot dog napkin floated to the ground in clear violation of a basic societal norm. The littering asshole smiled and chewed as if this was his usual practice.

He explained to me, in all earnestness, he was “creating jobs.” The way SBT figured, those wrappers would eventually need to be picked up, dealt with at some level, and, well, the most efficient way to get any task done on a large level is to hire someone. Numbnuts Brandon, job producer. Hahaha. Little did he know if he’d only refined his vocabulary a tad, used terms like elasticity, he’d probably earn a Nobel Prize.

Widespread crypto adoption could mitigate against gov’t martiality, foreign adventurismThose who dared say no to war

Modern economists have all but embraced SBT, and without irony fill undergraduates’ soft heads with charming notions of conscription (slavery), assembling full scale human slaughter, as consisting of a net economic benefit. It’s so absurd as to hardly merit intellectual takedown, though some wag once proposed skipping mowing down millions of souls, and just building a shit ton of ships, planes, munitions, and bombing them into oblivion somewhere far out in the ocean: all the economic benefit with none of the icky blood.

Those who dared say no to war are not celebrated in my neck of the warring woods. We much prefer chugga-chugga guitar riffs and tattooed dudes in desert fatigues looking fierce in recruitment videos to that of conscientious objectors and peacemakers. The economics of the matter, again, are never really addressed.

One American statesman did, however, attempt at making the economic case. Ron Paul, a longtime congressman from Texas, once asked an audience how much per day the country was spending on its sacking of Iraq and Afghanistan (last month marked 17 years of U.S. occupation). The answer he gave was per-person, and the number was staggering. The total bill, just for reference might be, say, $40,000 per U.S. citizen (I made up that number, but it’s not out of the question). What if, Paul asked pointedly, you were told to pay up front before your government went off to adventure in foreign lands?

The crypto mitigation

Widespread crypto adoption could mitigate against gov’t martiality, foreign adventurismPerhaps my notoriously blood thirsty countrymen might not be so quick to urge intervention and “kill ‘em all” if presented an invoice. $40,000 immediately, right now, would involve grave opportunity costs and tradeoffs for a great many people. Few could afford it, and fewer still would seriously entertain handing it over, and that’s before any kind of moral or ethical argument.

The tragic failure to divorce state from money, to separate as the U.S. has rightly church and government, is what is really at issue. Politicians have access to the printing press, admittedly in digital form, and can grant themselves the world’s best (or worst) credit card. First they go to war, using whatever urgent pretext, and then politicians collect through inflation by way of central bankers at its Federal Reserve (Fed).

The Fed can issue IOUs for the world’s reserve currency, and then push and pull on the money supply to seigniorage-infused riches the average person can hardly imagine. It’s SBT on steroids. The only answer to slowing war, which is a government program and nothing else, is slowing, starving government. The only way to accomplish that in our lifetimes is through cryptocurrency. Iterations such as Bitcoin Cash have the potential to be that so badly needed separation between our new religion, government, and sound wealth based upon production rather than destruction. The more we use crypto, the more we sideline our reliance on fiat, the more steps are made toward peace … even if only by accident.

Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

If all goes well, construction begins late next year. EYRC Architects and Tom Wiscombe Architecture already have renderings. Roughly 100 square miles. 67,000 acres in Storey County, Nevada, USA. Desert. Population roughly 4,000. $300 million spent. 70 staffers. A town to be built by the river, with a gaggle of homes, a school, drone delivery systems … you get the idea.Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

It’s being referred to as a kind of first, a “distributed collaborative entity,” if you will. The originator, the bankroller, promises it isn’t just another get rich real estate scheme, using crypto buzzwords like distributed and blockchain. Even NV Energy has agreed to process payments from the community via blockchain. It’s happening.

In fact, the patron is so serious he’s vowed to place decision-making in the hands of investors, residents, employees, all held in a kind of corporate legal apparatus. Ninety percent of dividends generated by the project will be turned over to that corporate entity as well, operating “on a blockchain where everyone’s ownership rights and voting powers will be recorded in a digital wallet,” writes Nathaniel Popper in a fantastic profile for the New York Times.

Blockchains, LLC

Governor Brian Sandoval proclaimed it, “Innovation Park,” broadening the name of just one plot to be located on the overall property sprawl. And maybe it’s not a coincidence. Low-to-no state taxes have lured tech giants nearby: Switch, Google, Apple, and Gigafactory (Tesla’s building, thought the largest in the world) are neighbors.

Incorporated in Sparks, Nevada, Blockchains is the limited liability corporation heading up the project at the behest of founder Jeffrey Berns. He made enough money in class-action litigation to invest in an earlier iteration of Ethereum (ETH). Shorting just prior to its price collapse last year afforded him the opportunity outlined above.

Popper continues, “Every resident and employee will have what amounts to an Ethereum address, which they will use to vote on local measures and store their personal data. Mr. Berns believes Ethereum will give people a way to control their identity and online data without any governments or companies involved.”

Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

Not the first, nor the last

“This will either be the biggest thing ever, or the most spectacular crash and burn in the history of mankind. I don’t know which one. I believe it’s the former, but either way it’s going to be one hell of a ride,” Berns told the New York Times.

Among the many issues facing these kinds of projects is scaling. Ethereum has a notorious problem on that front, and a real world application might just be the motivation for eggheads and super smart developers to move their talents over and attempt workable solutions using live ammunition.

It’s not the first, but it does seem to be moving along at a pace like no other project on a similar basis, similar idealistic train of thought. Coincidentally, another like-minded project, Bitcointopia, recently came to a kind of strange conclusion as its ‘visionary’ was arrested and held on federal charges, mostly unrelated.

The ballad of Morgan Rockcoons

It too boasted of experimental societal goings on, schools, houses, the whole schmear. Only it would live on the Bitcoin Core (BTC) blockchain. It too claimed Nevada as its to-be home, 3D printed homes. Maybe shipping container homes to begin with. Drones. Driverless public transportation. You, again, get the idea.

Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

The San Diego Union Tribune detailed how “Morgan Rockcoons, 31, envisioned a new kind of community, one not dependent on the U.S. dollar, an experiment based on artificial intelligence and automation and technology. He has likened it to the futuristic city Walt Disney dreamed up as Epcot — Experimental Prototype Community of Tomorrow — decades ago in Florida.”

Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

Rockcoons began selling plots. One problem. He didn’t own the land, and therefore wasn’t permitted to sell parcels. Last week, he was booked on wire fraud, charges stemming from trading BTC while avoiding legal requirements. Rockcoons maintains his innocence in that case. However, with Bitcointopia, 25 plots were sold for a couple thousand a pop (in BTC, of course). Feds maintain all Rockcoons had right to were two lots, less than five acres total and far short of the 1,000 acres he allegedly put up for sale.

Dreamers

“The bitcoin community, we’re a lot of dreamers. We want to see the world change, and this was like the start of a seed to change,” the project’s marketing head explained. True enough, and though it’s important to balance probably legit projects such as Blockchains, LLC with that of Bitcointopia, it’s also just as vital to not completely sour on the idea no matter how ambitious, far-fetched, or failed each turns out.

In Puerto Rico, wide-eyed crypto evangelists are attempting to bring innovation and growth to an island plagued by worse human made disasters than well-known natural ones. It has been basically bankrupt for years, the public sector sucking every last dime from whatever remains of its producer class. The group, led by eccentrics to be sure, has been heavily criticized and mocked. That’s a mistake.

Welcome to the distributed collaborative entity: Terra firma societies are possible with crypto, and it’s not a fantasy

It’s a mistake to overlook those who’re trying. Even the scams, which I understand hurt a lot of innocent people. The community just needs to keep forging ahead, be it seasteading or chopping our way through the jungles of Chile to erect Gault’s Gulch, supporting Liberland, or even pooling crypto profits to buy sovereign land. All of it adds up to something, and it will yield fruit. Just keep building. Buidl.

Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Trillions of Wall Street dollars begin to point at crypto: JP Morgan, Goldman Sachs, Fidelity, ICE are getting serious

Back of the envelope calculation reveals crazy amounts of zeros. Goldman Sachs, $916 billion; ICE, $78 billion; Fidelity, $2.1 trillion; NYSE, $23.2 trillion—whether including assets under management, total assets, or even market capitalization, trillions of Wall Street dollars are beginning to pivot toward cryptocurrency, and I didn’t even include JP Morgan.

It’s fair to point out fractions of those amounts are actually being spent in the name of crypto, but the fact remains heavy, heavy hitters are slowly beginning to realize digital assets are to be taken seriously.

Intercontinental Exchange (ICE) are Yanks who own a dozen legacy exchanges, including the grandaddy, the New York Stock Exchange (NYSE). ICE announced recently its as-yet created crypto exchange, Bakkt, will green light, if all goes well, December 12, 2018, as these pages reported.

The Adam White component
The plan appears to be offering physically settled futures, as Bakkt holds the Bitcoin backing futures, in what’s being called the ICE Digital Asset Warehouse. Of the several advantages is one stop shopping for whales: contracts are to be cleared through ICE Clear US. The press release explained, “Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse, and will trade in U.S. dollar terms. One daily contract will be listed for trading each Exchange Business Day.”

Bakkt made even more news this month, albeit not in as grand a fashion. A Medium post by CEO Kelly Loeffler boasted of bringing Adam White, formerly of Coinbase, to its founding team. White’s significance is at least two fold. He is to head operations as COO, beginning in November, and so the deck is being assembled in hopes of providing confidence to insiders surely looking on.

Adam White is also defecting from the crypto world, having been the fifth employee ever hired by the largest bank slash exchange in the ecosystem … now valued at $8 billion. Those who might have been wondering if Wall Street was ready to take the sort of leap Bakkt is pushing, can be assured by White’s crypto street cred.

The language of Wall Street
Bakkt’s model is to take out stereotypes built and promoted by conflicts of interests perpetuated by legacy business news media. For example, favorite sayings in the workaday corporate world often involve ‘risk.’ Loeffler address risk, “Our patent-pending market model is focused on mitigating risk while creating opportunities for institutions to serve their clients in a regulated framework for digital assets. This means creating a solution that both provides wanted exposure and limits unwanted exposure.”

The language is designed to entice institutional wallets, and she’s rather wonderful at it. Their proposed conservative market model involves “a requirement of full prefunding for all Bitcoin trades, allowing clients to onboard directly to the warehouse, meaning that clearing members will not be required to handle cryptocurrency themselves, and a new, separate guaranty fund for Bitcoin, fully funded by Bakkt and ICE, helps ensure that non-defaulting clearing member capital is not at risk in the waterfall,” she explained.

The bottom line for Wall Street is put well in her conclusion, as she believes “the sooner a regulatory approach to digital assets is determined, the better positioned we are to support healthy markets and innovation within a dynamic global marketplace.”

Bear market bargains
Trillions of Wall Street dollars begin to point at crypto: JP Morgan, Goldman Sachs, Fidelity, ICE are getting serious All of this is happening in a decidedly bear market, of course. Undeterred, smart money tends to do the buy low, sell high dance—and the present tune is all about positioning. Talk has even spread to the expectations game, with a recent report by Abacus Journal regarding JP Morgan and Bakkt.

JP Morgan, of course, is notoriously coy when it comes to crypto. Ecosystem foil, Jamie Dimon, is among the most quotable haters in the world. A good of rule of thumb with these fools is not to listen so much to what they say but, rather, watch what they in fact do.

Abacus claims to have spoken to “two staffers at the firms’ global headquarters who have been working on the relationship between Bakkt and JP Morgan. Let’s just say they didn’t disappoint and their comments just may represent how every global investment bank is planning to engage with Bakkt.”

Starbucks
One of the sources has been at JP Morgan for over ten years. The import here is how Bakkt provides easy landing into crypto, an area many JP Morgan investors are itching to explore, if the source is to be believed. The source explains further, “If I was forced to disclose where we are headed, take a look at the products that Goldman has become comfortable with and that is what we seem to be comfortable with at this time. Not confirming any product or offering, but I can speculate that we will have a trading desk and that clients will be able to access Bitcoin, via Bakkt, in some way shape or form.”

With a little over a month to go until Bakkt makes its formal entrance, another source explains the sleeper power the deal announced with Starbucks placed ICE’s project. “You may be interested in this fact: Starbucks occupies the largest mobile app payments ecosystem in the United States. Bigger than Apple Pay, Google Pay, and Samsung Pay – with 23.4 million users,” this person tells Abacus.

And speaking of Goldman Sachs, at least one report suggests they have customers ‘getting ready’ to actively trade their derivative. Guess which trading platform the Goldman custody offering will employ? Bakkt.

Cold water
Goldman too has played the expectations whisper, biding their time, even pulling back a proposed crypto trading desk this year. Abacus Journal, again, roots out sources willing to spill the beans in an anon fashion. “All of the pipes, levers, and ‘factories’ that are being constructed to process billions of crypto trades per day will eventually all work together. Bakkt, Fidelity, Nasdaq, ErisX – all of them will eventually clear trades from a place like Goldman Sachs on a daily basis. These firms are just providing access and ‘regulatory insurance’ via custody and some warehousing services. Goldman choosing to work with Bakkt is a nice headline today but may be irrelevant by late 2019.”

Indeed, as quickly as the financial press gives, of course, it can take away. Business PR folks are masters at manipulating journalists in search of clicks and headline fires. Floating rumors gives the company a chance to gauge initial reception to a less than conventional idea, and crypto for sure qualifies.

Newly formed crypto news site, The Block, contrasts Goldman’s supposed entry into the space with that of BlackRock, the multi-trillion dollar asset management company. CEO Larry Fink has long maintained there to be very little relative interest in crypto. This Summer, he stated flatly, “I don’t believe any client has sought out crypto exposure. I’ve not heard from one client who says, ‘I need to be in this.’” Mind the head fakes, Dear Reader. Watch, don’t listen. Watch.

C. Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Unsexy truth: Crypto’s bear market, its extended winter, is a good lesson

“Money is a living power that dies without its root. Money will not serve the mind that cannot match it,” spoke the character Francisco d’Anconia, an anti-hero, sometimes protagonist in Ayn Rand’s mid-20th century novel, Atlas Shrugged.

Alisa Zinov’yevna Rosenbaum escaped Russia just as it descended into Marxist hands. The great German thinker fancied his communism to root and flourish in what he described as cosmopolitan, industrial capitalist economies. That instead and in fact it rose and gave hope to unwashed, superstitious masses, tribes lining a loose confederation east of The Continent, never entered Karl Marx’s racist thoughts.

The rest of that sorry story lasts a few horrible decades, tens of millions of bodies stacked in its wake from cold and hot wars, purges, pogroms, gulags. The superstate lost a seemingly insignificant teen Jewess during its revolutionary fervor, who bounced to the United States on a family visitation visa, ending up in Chicago and then, later, Hollywood. She overstayed that visa as an illegal immigrant. She would never return to Russia.

The lottery

Writing was her calling, and she supposedly chose Ayn (like pine) Rand to Americanize her very Russian Jew-sounding name as neither were particularly well regarded in her adopted country. Legend has it Rand came from the typewriting manufacturer. Whatever the case, she became a famous, hated and loved, philosopher and novelist. Atlas Shrugged was her final novel, musings on what happens when the few geniuses of the world strike in solidarity.

Francisco d’Anconia in Atlas she fashioned as an heir, a playboy, presumed lout. There’s more there-there to him, of course, and his famous monologue at a social gathering, The Money Speech, has become something of legend.

It’s particularly insightful in light of recent goings-on in the United States, where lottery fever has officially taken over. Folks I’ve never heard speak of money, of wealth, have newly found enthusiasm for the subject, making for great conversation.

Thrift, savings, investment

The unsexy truth of the matter is wealth takes prudence, delay of instant gratification, and a longer time preference. What is earned must be spent wisely, choice by choice, between appreciating and depreciating assets. Income portions must be set aside, as a matter of course, and plugged into rigorous untouched boxes. That surplus, after living beneath our means, must be made to work while we work.

Thrift, savings, investment. Master those, or get close, and you won’t ever be poor. In fact, there’s a better than even chance you’ll accumulate wealth if compound interest has a say in your financial affairs.

For those in my circle consumed with lottery talk, they regaled me with dreams of huge houses, mega cars, lavish vacations, and a kind of emotional security presumably unfathomable. The lottery plays on our envy, our anti-capitalist mentality so ingrained by government schooling. Wealth is luck. Wealth is inherited. Wealth is unfair.

North Carolina

Just this week, someone in the U.S. state of North Carolina took home the giant winnings, over one billion dollars. After taxes, the lottery lucky duck pocketed hundreds of millions. Friends were floored to learn this, being of two minds: one, my god how much the government claims; the other, well, who cares, they’re rich now! The assumption government has a right to wealth, especially wealth of the excessive kind, is never questioned. And the issue, if ever entertained, is only to confirm government’s need for fuel on its way to do benevolent and wonderful things.

What will become of the North Carolinian is actuarially knowable. Chances are good this person will blow sizeable chunks on frivolous nonsense. And who cares! Hundreds of millions of bucks means s/he can afford the fun. Maybe.

To take up with the Randian character again, he explains, “When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears not all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow.”

Bull markets are cancerous

I won’t lie. A shit ton of money rolled my way during the crypto boom of late 2017. Cashed out enough to give my little family extras, doodads, treated the wife to some fun, and upped after school activities and even a week-long surf camp for my then 6 year old. I felt like a goddamn genius.

Friends back then thought I was a financial savant. Kelso has the key to getting rich! Kelso knows money! No, the truth of the matter is I am a colossal jackass. How bad am I at handicapping markets, at financial predictions? Well, we can examine my record in other popular wagers to reveal my now natural law like wrongness.

While El Donald Pussy Grabber Orange God of Thunder was running away with the 2016 presidential election, I was sure, sure as I was of anything, Bill Clinton’s wife would eventually take it. Even as President Elect Trump ascended the hotel stage to claim his crown, I was adding up states. Yeah, I am that guy. I also predicted with retard confidence McGregor trouncing Mayweather. Uh, no.

Crypto speculation, lottery are sides of same evil coin

The crypto boom erased all of that, and a new found confidence overcame me. After a few months of double digit gains, I got used to the divine compounding. A sincere part of me believed this would go on in perpetuity

Until it didn’t. The crypto market bottomed under the weight of economic reality, a crashing back to earth badly needed … even if it mean stinging me something fierce. I won’t ever celebrate someone losing their wealth, but this was a good thing for economic maturation. It was for me too. I was forced to revisit my assumptions, to heed d’Anconia’s warnings, to again practice thrift, savings, and wealth.

Cryptocurrency will be the greatest wealth transfer in human history. It has already started. Those kept from access to capital, to investment, for their own good by regulators, will continue to seek out the refuge that is decentralized digital cash. But will we be ready for the challenge anew? Will we understand it is not the token, the code, but the community and brick and mortar things that constitute bitcoin cash’s value? Grow those. Invest in them, and a responsible, tidy, long term bull jog, bull sache, a bull power walk will be ours.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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We’re from the International Monetary Fund, and we’re here to help

In late 2018, it’s strange to me so many adults require, crave minders. In financial matters especially, aren’t you sick and tired of having a government nanny at every interval of life? I’ve seriously had an ass full. And when it comes to money, the ticket by which we measure success, wealth, time, and access to the good life, every attempt at bureaucratic intervention grates, gnaws at me to my core.

We’re from the International Monetary Fund, and we're here to help

To that end, the International Monetary Fund (IMF) has had a more hate-than-love relationship with cryptocurrency, at once pretending (early on) to embrace the tech while at the same time ramping up warnings. Christine Lagarde and her outfit for a solid calendar year, going back to this very month in 2017, have been hammering away at cryptocurrency.

In its recent and very typical over-titled report, World Economic and Financial Surveys: World Economic Outlook, Challenges to Steady Growth 2018, on page 41, of a 215 page tome, rests its lone reference to cryptocurrencies and their promise. Chapter 1, “Global Prospects and Policies,” under the subheading “Financial Tensions,” at the section’s very end, is a rather dire warning.

New vulnerabilities

“Cybersecurity breaches and cyberattacks on critical financial infrastructure,” the sudden phrasing turns, “represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”

Without any hyperbole, this literally is a Keynesian outfit—as in it was the brainchild of Lord Keynes. The father of modern quantitative easing and short run thinking gave birth to the IMF. It’s comprised of over 180 nations, founded in the wake of Bretton Woods following World War II. Carrying the day was infusing economies with cash, lots of paper, to jump start rebuilding places like an utterly gutted and defeated Germany.

We’re from the International Monetary Fund, and we're here to help

The IMF has since morphed into a fixer, facilitating bailouts through special drawing rights (SDR), a kind of forex reserve. Its unit of account is the XDR, a pseudo currency in lieu of dollars or gold. At any one time, the IMF holds over half a trillion worth of SDR in XDR from which member countries can pull during a crisis. Uncontroversial would be to write a 73-year-old legacy, internationally connected reserve banking organization, designed to bail out the world’s worst economies, might have something to say about the increasing popularity of cryptocurrencies. And less shocking still is how that body wouldn’t be too pleased economies it demands seek its help could have other options in the near future.

Consistent pattern

Indeed, it was around this time last year Lagarde began to make overtures only someone in her position could: it’s getting close to having to care about crypto in general and Bitcoin in particular. Then, as now, she warned at an annual meeting how the IMF is “about to see massive disruptions,” and they should adjust “to the impact of the combined breakthrough technologies that will impact markets,” which she had pinned as blockchain and cryptocurrency both.

The run-up of late 2017 surely fueled IMF fears, as by mid December Bitcoin Core (BTC) had hit as high as $18,000, sending its market capitalization beyond that of the legacy agency’s own reserves. BTC was then valued at some $300 billion, while SDR/XDRs were roughly 10 billion less. That a technology in fewer than 9 years could leapfrog a better than 7 decades-old institution must’ve sent shockwaves through its Washington, DC hallways.

By spring of the present year, the gloves were off. Addressing the Dark Side of the Crypto World  were Lagarde’s pointed comments at crypto. She insisted, “The same reason crypto-assets like Bitcoin are so appealing is also what makes them dangerous.” Her tone set how future takes on crypto would be framed. “The rapid growth of crypto-assets,” she continued later, “the extreme volatility in their traded prices, and their ill-defined connections to the traditional financial world could easily create new vulnerabilities.” Clearly a pattern is developing.

Schizophrenia

A tad later, Lagarde offered a more measured approach to crypto, issuing a pair of blog posts aimed at coming to grips with money’s future. She intended to “examine the promise they offer. A judicious look at crypto-assets should lead us to neither crypto-condemnation nor crypto-euphoria.”

Of the then blooming ecosystem, where the space had grown to thousands of digital variations on the BTC theme, she stated flatly how “it seems inevitable that many will not survive the process of creative destruction. The crypto-assets that survive could have a significant impact on how we save, invest and pay our bills. That is why policymakers should keep an open mind and work toward ¬¬an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit.”

We’re from the International Monetary Fund, and we're here to help

Her agency’s main talking point when speaking on crypto made its way into a post, however. “Our preliminary assessment is that, given their still-small footprint and limited links to the rest of the financial system, crypto-assets do not pose an immediate danger.” Still, regulators should keep close watch of the potential for crypto “to magnify the risks of highly leveraged trading, and to increase the transmission of economic shocks should they become more integrated into mainstream financial products.”

Return to form

By September of this year she and the agency returned to doing what they do best, bullying. In nearly 60 pages, the IMF addressed the Marshall Islands and their interest in mounting a state-backed version of crypto. “The potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT, and governance risks. In the absence of adequate measures to mitigate them, the authorities should seriously reconsider the issuance of the digital currency as legal tender,” the agency scolded.

For a smaller country, IMF chastisement is the kiss of death. Banks particularly in the United States were told to stay clear of the Marshalls, effectively. The Marshall Islands had planned to launch about $30 million worth of crypto through an airdrop and initial coin offering. A philosophically secure regulatory body would’ve issued pros and cons, and left it at that. Allowing countries, especially smaller economies, to sandbox crypto is probably the best of all worlds if the IMF is truly worried about vulnerabilities and the like. They could’ve allowed the plan to fail naturally and sat back, watching the chaos knowingly.

We’re from the International Monetary Fund, and we're here to help

And that’s the truth of the matter, ultimately. The body only pretends at help, and is much rather inclined to dictate terms in favor of existing economic arrangements. This is why their calls to stabilization ring so hollow to modest income countries. That only means propping up the well-connected, dictators, banksters, those who benefit most by state graft and corruption. In the name of vulnerabilities and stabilizing, anything is game, possible with the IMF so long as nothing substantive changes.

Cryptocurrencies such as Bitcoin (BCH) are very real threats. They’re officially dismissed now, but the chatter in recent years and months from legacy bodies such as the IMF is telling. In the streets of Turkey and Venezuela, no sentence means less than “We’re from the IMF, and we’re here to help.” Turks and Venezuelans are already ditching fiat and plowing their wealth into crypto, and the trend worldwide is only growing.

C. Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Toward a new and better World Wide Web?

It was a fitting profile for the World Wide Web’s proclaimed father. A Vanity Fair feature, of all places, taken up by Katrina Booker, photographed by Olaf Blecker. Tim Berners-Lee (TBL), 63, Sir Tim Berners-Lee as he’s often introduced, is the well-regarded genius who many feel gave birth to the modern convenience of the internet, the stringing together of content and, later, our very lives. These days, he’s out to mend what he considers his rather broken creation.

Toward a new and better World Wide Web?

Berners-Lee comes across as the absent minded professor, sentences not quite finishing as he moves frantically to another, seemingly related, topic and tech-filled abbreviation. In 1989, “Berners-Lee’s innovation was intended to help scientists share data across a then obscure platform called the Internet, a version of which the U.S. government had been using since the 1960s. But owing to his decision to release the source code for free—to make the Web an open and democratic platform for all—his brainchild quickly took on a life of its own,” Vanity Fair proposes, eerily describing another epoch-changing event given away by Satoshi Nakamoto.

Unlike Satoshi, Berners-Lee has been lauded ever since. Turing Award. Knighted. He, from the beginning “understood how the epic power of the Web would radically transform governments, businesses, societies. He also envisioned that his invention could, in the wrong hands, become a destroyer of worlds, as Robert Oppenheimer once infamously observed of his own creation.” For TBL, a final revelation in this regard happened with the 2016 American presidential election and things Russian, and after investigations of Facebook and its data breach via Cambridge Analytica.

Devastated, mind and body

“For people who want to make sure the Web serves humanity, we have to concern ourselves with what people are building on top of it,” TBL warns during the interview. Of the realization concerning what his invention wrought, he verbally clutches at pearls, couch fainting, “I was devastated. Actually, physically—my mind and body were in a different state.” Centralization of the web, he explained, “ended up producing—with no deliberate action of the people who designed the platform—a large-scale emergent phenomenon which is anti-human. We demonstrated that the Web had failed instead of served humanity, as it was supposed to have done, and failed in many places.”

The article continues to offer TBL dark night of the soul quotes, such as how he “demonstrated that the Web had failed instead of served humanity, as it was supposed to have done, and failed in many places,” and “ended up producing—with no deliberate action of the people who designed the platform—a large-scale emergent phenomenon which is anti-human.”

Toward a new and better World Wide Web?

His pain has given way to a combative project, Solid. It’s an effort to reimagine the web, mitigating what he feels is pernicious corporate influence. He’s fond of repeating a statistical chestnut to buttress urgency: before the current year’s end, more than 3 billion people, something like half of humanity, will be online. The cascade impact of that many people seemingly integrating their lives into 1s and 0s makes the internet arguably the most important conversation anyone could have right now.

Solid

Toward a new and better World Wide Web?Maybe it’s important to store our tinfoil hats for a moment, or at least take them off for the time being. The web wasn’t taken hostage by maniacal actors. It was subsumed by the logic of what’s known as the Free Economy. Folks, at least so far, prefer free platforms, free access to kitty videos, fisting porn, news, etc. Gleefully, hundreds of millions, turning to billions, of people User Agreement-ed into behemoths the likes of Amazon, Facebook, Google. Those became business models, algorithms, for how to succeed online. Important, too, is explaining these entities knew enough to capture elements of the regulatory state, the elected who carry a monopoly on violence: guns, courts, cages. Consumer confidence plus state sanction and support often lead to fuckery.

Vanity Fair interesting describes Berners-Lee as “methodically attempting to hack his creation.”  TBL examined in particular Facebook, “Looking at the ways algorithms are feeding people news and looking at accountability for the algorithms—all of that is really important for the open Web,” he said. The chestnut above returns, “Crossing 50 percent is going to be a moment to pause and think,” a point of contention he believes won’t empower the newly onboarded but will, instead, push them further behind. Indeed, it is a stark, Grand Canyon gap between Elon Musk’s web usage and relative freedom versus that of, say, “people in Ethiopia who have reasonable connectivity but they are totally being spied on,” Berners-Lee scolded.

Toward a new and better World Wide Web?

“There are people working in the lab,” Berners-Lee elaborates on Solid, “trying to imagine how the Web could be different. How society on the Web could look different. What could happen if we give people privacy and we give people control of their data. We are building a whole eco-system.” Solid, then, is his attempt to once again decentralize the web, giving back to individuals what they handed over to corporations: data control. And he isn’t the only one concerned about the problem of centralization and the web. Ryan X. Charles, of Yours.org and Moneybutton fame, recently gave an interview where he explained how in the future users might be paid for such access to their data. Futurist George Gilder has written an entire book about the subject, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy. TBL is clearly on to something.

Early days

It’s early days for Solid, but because TBL swings such great influence it is worth exploring if only as an intellectual exercise (in case nothing comes of it). “Solid is an exciting new project led by Prof. Tim Berners-Lee,” their website immediately announces, “inventor of the World Wide Web, taking place at MIT. The project aims to radically change the way Web applications work today, resulting in true data ownership as well as improved privacy.”

The name itself is a neologism from “social linked data,”  “is a proposed set of conventions and tools for building decentralized social applications based on Linked Data principles. Solid is modular and extensible and it relies as much as possible on existing W3C standards and protocols,” they explain. They’re poised to offer three basic promises: “True data ownership: Users should have the freedom to choose where their data resides and who is allowed to access it. By decoupling content from the application itself, users are now able to do so. Modular design: Because applications are decoupled from the data they produce, users will be able to avoid vendor lock-in, seamlessly switching between apps and personal data storage servers, without losing any data or social connections. Reusing existing data: Developers will be able to easily innovate by creating new apps or improving current apps, all while reusing existing data that was created by other apps,” Solid claims.

Toward a new and better World Wide Web?

With a goal of worldwide adoption, the project’s current status involves its startup, Inrupt, Inc. It is “building a commercial ecosystem to fuel Solid’s success and protect the integrity of the next phase of the web. Its mission is to restore rightful ownership of data back to every web user and unleash a new wave of innovation – for developers, for business, for everyone.” It’s also launching the Solid Community Site for “regular community updates, a wealth of developer resources and documentation, and general information about how Solid works.”

Reads like many initial coin offering (ICO) projects, to be honest. And, for all the talk and worry about governments and corporations, Solid has two main sponsors: CSAIL-Qatar Computing Research Institute (QCRI) research collaboration and Mastercard. Go figure.

C. Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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ShapeShift is still punk rock

It’s more than fair to have deep misgivings about alternative coins, tokens and the like. Security reasons. Economic reasons. Technical reasons. I have considered them all, and even found some persuasive. It’s an important conversation.

I fall on the thousand flowers blooming end, trusting markets to regulate themselves and for folks to take whatever cryptocurrency is, and fashion it in the way they’d like. If my personal favorite, Bitcoin Cash (BCH), is ultimately chosen, awesome. If not, and markets have looked elsewhere, so be it.

Lemonade

ShapeShift is still punk rockWhatever the case, September was a shitty public relations month for ShapeShift, a veteran digital asset exchange within the ecosystem for half a decade. It began with the company having to disclose it will no longer allow relatively anonymous transactions on its platform. “Nothing changed,” its CEO Erik Voorhees posted in answer on an Andreas Antonopoulos Twitter thread. “I am still those things. Yet, I must also calculate risks carefully. I’ve always despised taxation, yet I pay it. Same situation here. Financial privacy is absolutely a right and I will continue struggling for it in ways that are effective.”

Mr. Antonopoulos struck out at the company, tweeting “Very disappointed that @ShapeShift_io is implementing KYC. Just goes to show that any centralized entity will be pushed in that direction, which is why LN, atomic swaps and Decentralized Exchanges are the only way to resist surveillance economics. In the end,” he followed up, “strength of principles is less effective defense than decentralized architecture: ‘can’t do evil’ is the only effective approach.”

How ShapeShift Is Keeping Your Data SafeShapeShift is still punk rock came the announcement drawing all the ire. The exchange’s CSO, Michael Perklin, outlined its all-of-the-sudden Membership Program. “However,” Mr. Perklin was careful to write up front, “becoming a member requires verification of basic customer information. This changes the way ShapeShift handles data– now that we have to collect and store your information, we need to do everything possible to keep it safe.”

Mr. Voorhees described the move as preemptive, a way to scale, taking government mandated lemons and making freer market lemonade. ShapeShift has grown and was growing, and it was beginning to attract more and more attention, not all of it wanted. And much of that notice was coming from regulators who, especially in the United States, have been closing in all around companies like it who dealt in anonymity. It for sure had taken a while. Regulators aren’t the sharpest tools in the shed, and they spent the better part of the last 10 years trying to digest the neologism cryptocurrency—forget trying to explain ShapeShift’s business model.

Punk rock

Through a series of encrypted methods, “a 4096-bit RSA key using the widely-used open-source GPG software,” Mr. Perklin detailed, “stored in our database and in most cases is never used again,” the company essentially, and seemingly voluntarily, changed a fundamental reason for its existence. It certainly isn’t a first in the ecosystem, and it will not be the last.

At some point, however, it was clear to the company’s leadership a reckoning was about to happen. There are, essentially, four choices at such a realization: 1, complete capitulation and hope for the best; 2, rogue rejectionism and hope for the best; 3, close the business altogether; 4, move into something like the inevitable regulation, and perhaps permanently avoid numbers 1 through 3.

It’s 4 ShapeShift has opted, and that’s due to the leadership’s tenacity, chess-playing acumen, and punk rock ethos. It’s somewhat like when The Clash, the late 70s and early 80s British pop band, strayed from the garage and incorporated horns. They did lose some edge, some grit, but they managed to survive a few years longer in order to tour and continue doing what they’d always done, make music.

ShapeShift is still punk rockStill, the move under question herein hasn’t stopped longtime fans from openly wondering at the company’s future. Businesses building on the Bitcoin Cash (BCH) chain, the most punk rock of all blockchains, such as Money Button, were asked about their plans going forward. CEO Ryan X. Charles started Money Button as a micro tipping payment platform, one without recourse to KYC and AML, and ShapeShift was a big help when dealing with multiple cryptos. “Have you spoken with Erik about shapeshift integration once KYC is required?” a curious tweeter asked of Mr. Charles. “No,” he answered, “we may either integrate with the KYC system somehow or switch to another service.”

He then elaborated, and promptly hit the nail on the philosophical head. “TBH, long-term, KYC for exchanges is inevitable,” Mr. Charles continued. “I wouldn’t bet on being able to do anonymous exchange legally for much longer.” Again, there are four choices, basically, from that realization. See above.

Legacy financial news outlet attacks

ShapeShift is still punk rockThat shittiness continued in a big way toward the end of September, when the Wall Street Journal (WSJ) completed a nearly half of a year investigation into the doings of crypto exchanges such as ShapeShift. Immediately, the article turns sour, playing on scares long drummed up by mainstream media hysterics. “Since bitcoin was introduced nearly 10 years ago,” the WSJ began, “law-enforcement authorities have worried the technology could ease money laundering. Now a new breed of cryptocurrency intermediary is giving fresh urgency to those fears, operating in plain view with scant policing and often allowing users to engage in anonymous transactions.”

Circling back to our above discussion, get this: “Most operate beyond the reach of U.S. authorities,” the WSJ scolds about exchanges within the space, “with unidentified owners and addresses in places such as Eastern Europe and China. Not ShapeShift, the largest recipient of the funds with a U.S. presence. The company is officially registered in loosely regulated Switzerland, but it is run out of a 1980s-era office building in a Denver neighborhood packed with tech companies and marijuana entrepreneurs. ShapeShift’s founder and chief executive, Erik Voorhees, along with its chief operating officer and its marketing chief, all live in the Denver area.” Readers might be ready to believe journalists are citing these facts as lauds. Not so fast.

“A parade of suspected criminals has taken advantage of ShapeShift’s services since the exchange began in 2014, according to law-enforcement officials, independent researchers and the Journal’s investigation,” reporters shrill, pointing fingers at the likes of dastardly North Koreans. “Many cryptocurrency exchanges say they follow federal rules intended to combat money laundering, even though the question of whether they are subject to them hasn’t been tested. They keep records of their customers’ identity and monitor transactions to root out and report suspicious activity,” the WSJ asserts. “Mr. Voorhees has long scoffed at such constraints. ‘I don’t think people should have their identity recorded to catch an occasional criminal,’ he said in a May interview.” Savvy readers can quickly see where this is heading.

“The Journal found that ShapeShift processed nearly $9 million of the suspect funds, more than any other exchange with U.S. offices,” the WSJ claimed. And the accusations fly from there. Tales of its own customers robbing one another, “sextortion,” and all sorts of nonsense seem to be plaguing the exchange. The article is so filled with woe, no one could blame the intended reader, regulators and potential institutional investors, from concluding the entire business is a giant money hole of loss and horror. The WSJ piece devolves into blaming Mr. Voorhees’ libertarian worldview, implicitly, and cherry-picking quotes from talks and panels to paint him as just another crank.

I recommend reading the WSJ piece for no other reason than gaining a crash course in how any crypto business even mildly principled will be treated going forward. Read it. Learn. To a casual crypto enthusiast, it’s pretty damning stuff. Really bad, in fact. But then do yourself a favor and click on over to Shining Light on WSJ’s Attack on ShapeShift and Crypto. It’s Mr. Voorhees’ punk attitude in full force, defending his and his company’s integrity. And you don’t have to like ShapeShift nor Erik Voorhees to understand what all this means in the broader scheme of things. But for sure don’t live in Mr. Antonopoulos’ judgmental, condescending salon. The real world exists, and punk rockers are keen to engage if only to ultimately best it.

Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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BTC cult gets creepier at Baltic Honeybadger 2018 Conference

For the second year, Rīga, Latvia was host to the Baltic Honeybadger conference (BH). Billed as “the first major event in Latvia dedicated to Bitcoin and the technologies built around it,” the website read, their “goal is to create an educational and community-driven event with high-profile speakers from all around the world and with different backgrounds — from technical engineers and cybersecurity professionals to business owners and bestselling authors.” And if there was any doubt, they’re “not promoting various so called altcoins, ICOs, banks and other blockchain-based ‘snake oil.’”

Of the two day conference, the final morning in Rīga began 9 a.m. in the Riseba, Arhitektūras un mediju centrs H2O 6. Bitcoin Maximalism Dissected by Giacomo Zucco was that day’s kickoff presentation. Mr. Zucco is a lesser-known personality in the space, CEO of the Italy-based Blockchainlab, and a polemicist who increasingly divides the world between those who embrace Bitcoin core (BTC) and those who are evil dupes.

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

For the uninitiated, bitcoin maximalism was essentially a neologism fashioned a slur by Vitalik Buterin, one of Ethereum’s founders. The insinuation was how certain factions within the ecosystem refused to consider anything other than the BTC ticker as a viable cryptocurrency project. Little did he know a group of pasty social media mavens would embrace the phrase, fully remaking it into a kind of religion complete with dietary restrictions.

Such factions embraced Mr. Buterin’s characterization, doubling down on the concept, all the while themselves insisting BTC needed to be changed in rather significant ways—by their own admission, the Satoshi Nakamoto white paper left a lot to be desired, and this became the entry point into altering BTC away from its once cash-like qualities, and on purpose.

Chris Pacia of OpenBazaar and a tweetstorm

“As some background to this presentation,” Mr. Zucco, self-described bitcoin maximalist, begins, “the idea for this presentation comes from an infamous tweetstorm. Basically, there was a day in May where basically Chris Pacia asked why do I think that bcashers are either malicious or stupid. He seemed interested in an honest debate about that. I tried to formalize my argument about why I do think that bcashers are either malicious or stupid.”

Mr. Pacia is a very well-known and sober voice within the community. His credits include being lead back-end developer for OpenBazaar. He often has tried to be a go-between, offering to debate publicly those who demonize and hector Bitcoin Cash (BCH) enthusiasts. It was here Mr. Zucco was able to use the good name of Mr. Pacia and gain some notice. Their back and forth on Twitter eventually was turned into an essay by a maximalist admirer, one summarizing Mr. Zucco’s position while arguing against Mr. Pacia’s larger block, pro BCH stance.

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

Making the Strongest Case for Small Blocks,” then, was published by blogger Sosthène on the Le Blog de Sosthène. Written originally in French, its English version is careful to take Mr. Zucco’s broken Italian-English tweetstorm and form it into sensical statements. It doesn’t take long to figure out where all of this is headed.

After the fork creating Bitcoin BCH, Sosthène writes Bitcoin Cash “became a tool of agitprop leveraged by a small group whose leaders are a prooved [sic] scammer and a narcist [sic] sociopath that have made up a new narrative in which Bcash is the true and unique Bitcoin.”

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

Unironic irony

“Bitcoin is not a business,” Sosthène continues, insisting such truths are a prerequisite for understanding BTC’s purpose, “nor is it a currency and most importantly it is not a payment network. Factually, Bitcoin is a software, it is code, information, period.” You get the idea. The blog post is referred to as a way for listeners to get a fuller fleshing out of Mr. Zucco’s ideas, such as they are.

At any rate, Mr. Zucco anticipates the most common objections to the maximalist position, seizing on how people “have this vision of bitcoin maximalists as something that is emotional …,” he explained, and how “maximalists are ‘toxic;’ if you see the word ‘toxic,’ you should walk away because it’s usually someone who can’t conversate with you logically. Some people say maximalists are creating a bad environment and people feel unwelcome because of this. Maximalist means rude; you have to be kind of a dick in order to be maximalist, and it’s like… rude… we are maximalists, we don’t eat carbs, we are sad,” Mr. Zucco said tongue firmly in cheek.

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

The above stereotype is well-earned. A quick trip to an open conference, Twitter, YouTube will disabuse anyone of the notion maximalists are somehow being maligned unjustly. No, no. Maximalists have worked extremely hard and consistently for their dickish label. They are for sure toxic to any healthy debate and future innovation in the crypto space.

In fact, the uniformity in argumentative style, the insults, the dismissive tones, the dogmatic clinging to groupthink, have all combined to basically make BTC maximalists a cult. And it’s not even a cool cult with sex orgies and parties. It’s just a bunch of sullen dudes who’ve held on to a speculative science project that, had they jumped-in late 2017, has plummeted in price … thus almost defeating their entire reason for being. At least Scientology has Tom Cruise.

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

Carnivory
The next part of his presentation veers into a very strange place. I am sure it is meant to be funny, ironic, and truthful all at the same time. But the reaction by fellow maximalists to it says more about the BTC cult that I could ever in one installment of A Power of Facing.

Modeling in a jokey way so-called Universal Truths of Buddhism, Mr. Zucco outlines “four universal truth of maximalists. The first truth is that everything which is not bitcoin is a scam. The second universal truth is that every attempt at changing bitcoin is a scam. The third universal truth is that every attempting at pushing people to spend bitcoin is a scam. The fourth universal truth is that we shouldn’t be nice to scammers.”

BTC cult gets creepier at Baltic Honeybadger 2018 Conference

The meme has made its way around the Crypto Twitter, and it has become a kind of Rorschach for the maximalist camp. The slide with four points was immediately retweeted by supporters with a Hell Yes! zeal. Dickishness was on full display, especially as they championed the final bullet point. Intolerance in the least charitable manner seemed to carry the day. It wasn’t until a few who actually attended or viewed the presentation informed brutish cheerleaders much of it was on the jokey side of things that maximalists began to lighten up. A little. They then turned it back on BCH supporters who pointed to the slide’s bald assertions, suggesting BCH enthusiasts lacked a sense of humor. This simple display alone reminded me of cultish inside jokes, where members laugh maniacally at their leaders’ assumptions without explanation. Really creepy.

Lest readers feel I am being unfair with the cult charge, consider the fad these idiots are currently embracing, so-called carnivory. That’s right, an all meat diet. Oh, you’re reading, you mean paleo or keto. No. All meat. That’s it. And water. It’s one thing to grope and grasp at a theory of money, and struggle to find a balance between mediums of exchange and settlement layers, fungibility, tech security … but to take diet advice, like real life health advice, from dudes who cannot get laid … well, that’s just fucking stupid.

C. Edward Kelso is a financial technology journalist based in Southern California. Follow him on Twitter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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