Andalucia Steve

...living the dream

Posts in Category: Economics

Bitcoin Is Doomed And So Are We

I recently had an epiphany. It doesn't end well.

I had an epiphany last week. Do you get those? Suddenly the clouds part and you see the way forward in a moment of clarity. Only rather than being a positive experience, this one was dark. Very dark. End of days dark.

 
gold and silver round coins
Photo by Kanchanara on Unsplash

This is going to be a tough one to explain as it is a bit technical. I'll try to simplify as best I can.

I had a similar epiphany the first time I used the World Wide Web. I was already an Internet user as I'd been working in the field since the late 80s. I'd been sent a CD with the first Mosaic web browser on it. When I fired it up and clicked on a link, this buzzed the modem, dialled up the Internet and pulled down an external web page from a server in California. I knew in an instant this was transformative. I could see this was going to make the Internet available to the man in the street. I instinctively knew we would all soon be shopping online and that one day, delivery would be as important, if not more, than retail premises. Soon after, I quit my comfy Civil Service job and embarked on a career in the private sector doing all things Web related.

My most recent epiphany wasn't quite so instant. It came about through watching a couple of unrelated Youtube videos, coupled with a little insight into digital money, a subject that has interested me for sometime.

I first grappled with the notion of digital money when I read an article about the invention of Bitcoin. I recall I was sufficiently intrigued to print out the article and put it to one side with the intention of downloading the software and investigating the brave new world of Bitcoin mining. In the manner of 'boat-missing' that characterises my life however, this was 2009 and I was in the process of moving from one side of Spain to another having met a new lady on Facebook. I never returned to the article. Had I done so I may well have mined enough Bitcoin to be a multi-millionaire by now. Call me Captain Hindsight!

Now I won't get into a protracted explanation about how Bitcoin works or we'll be here all day. For the purposes of explaining my epiphany it's sufficient just to know that Bitcoin enables a financial transaction to take place between two individuals anywhere in the world, without the need for any intermediary. There is no need for a bank or any other kind of money manager taking a cut for providing the infrastructure in between. All you need is the Internet and the right software at each end (remember that bit - it becomes important later!) This means you have personal sovereignty over your own money. You are your own bank. Now I think 'the powers that be' don't like this notion. My epiphany is that events are conspiring to prevent us enjoying our own financial independence.

The first video that kicked off this train of thought was by a savvy Australian called Naomi Brockwell

whose YouTube channel is a watchable way to keep up with the latest news in crypto, privacy etc. In the video she alerted me to the new EU law which is planning to ban people from running their own crypto wallets, instead forcing them to use regulated exchanges ( https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3690 ).

So going back to what I said earlier, it is currently possible for you to download software like Bitcoin Core on to your personal computer and be your own bank. Over the years, Bitcoin exchanges have sprung up that can run crypto wallets for you. However they're the weak link in the chain. If you've ever read any horror stories about Bitcoin fraud or hacking in the press, chances are it was an online exchange that is the victim (or culprit). E.g. https://en.wikipedia.org/wiki/Mt._Gox

I was initially quite sanguine on hearing this news as it would be almost impossible for the EU to block or adequately police Bitcoin given that I can run whatever the hell software I like on my own PC. Then I watched the second video. This is by a veteran PC repair guy called Jody Bruchon who is new to me, as it was a video YouTube's algorithm suggested as one I might find interesting. They weren't wrong!

I won't go into all the gory details but long story short, you may be aware if you are a PC user that Windows 11, the latest incarnation of the operating system imposed on us by Microsoft, has some very specific hardware/firmware requirements. As the video explains, there are some potentially sinister issues with this, as it means Microsoft is taking control of the software you are able to run on your own computer.

[BTW, Jody contacted me to request I also include his follow-up video which addresses some comments in the original video Here it is…]

Like me, you may have been slightly affronted when you got your first smartphone and discovered that you could only run apps on it that you downloaded from the app store. Jody is suggesting that this is the way Microsoft may be headed. Even alternative operating systems like Linux can only be installed now on a Windows 11 compatible PC because they are issued with digital keys by Microsoft. If those keys are denied at some point in the future, Microsoft could force all PC owners to use only Windows and software it has vetted through it's own app store. And, by extension, that app store could potentially deny users from downloading software that allowed them to run their own crypto wallets.

I don't want you to think of me as a conspiracy theorist, but do you see where I'm going here? My guess is the EU didn't think to introduce such draconian, freedom-busting legislation all by itself . Occam's Razor suggests to me it was probably arm-twisted by 'the powers that be'. I doubt Microsoft is really going to all this trouble to lock down personal computers for commercial reasons. There is a lot of resistance to Windows 11 and many people are already jumping ship, deciding to run Linux on their PCs instead, so they are potentially risking the loss of many customers. Occam's Razor leads me to think it is more likely that 'the powers that be' are arm-twisting Microsoft to lock down software with the express intention of ambushing the very notion of personal financial sovereignty. This is because there is a lot at stake. In fact, everything is at stake.

Governments and central banks around the world are currently engaged in the development and testing of digital currencies - (CBDC - standing for Central Bank Digital Currencies). The aim is to do away with cash altogether, then the government will have complete control over the money supply. They will literally be able to track where every penny goes.

Now you may be one of those flag waving 'God Save the Queen' types who trust the government and thinks it should be doing everything in its power to protect us from those dastardly criminals and funders of terrorism. To that I'd say absolute power corrupts absolutely. We're entering a new era beyond Big Brother, where the government could, for example, attempt to control inflation with negative interest rates - literally taking money out of your account to limit your ability to spend, and there will be nothing you can do about it because you have no cash or crypto to move your money into. They could seek to make you healthier by restricting your expenditure on certain types of foods - 'no sausages for you this week citizen Smith, you're going on a diet. We're banning you from spending your money on certain foodstuffs - only lettuce leaves for you'.

You may think this is science fiction but China has already for some years had a system of social credit scoring where offenders are punished by being denied travel tickets etc https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4 China is further down the road to the development of a CBDC than any other nation, already having trialled it in some states and it will be interesting to see how that pans out. We tend to think that the difference between China and the West is of state control. China isn't a democracy they say, China has the communist party and central planning, while the West has the freedom to choose its leaders via the ballot box. Do we though? Or are our two party systems really as independent as they may seem?

I don't think it an accident, fashion or fad that all countries are moving towards CBDCs, I think it is arm-twisting by ‘the powers that be' It is a global system that we won't be able to vote out. Real power isn't with the jackboot, the gun or the ballot box, it is in the control of money. The race to eliminate personal sovereign money i.e. cash and crypto will be the end of liberty and personal freedom. For thousands of years we've enjoyed that freedom but I fear in the next five to ten years it will be taken away from us and we will never get it back. 'The powers that be' that control the money will have achieved absolute power. And will they be corrupt? Absolutely!

Note this a backup of the most I originally made on Substack

Posted by Steve Gould Tuesday, June 7, 2022 12:32:00 AM Categories: Bitcoin crypto Economics Microsoft politics Tech technology Thought
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Brexit: What's Next for Britain?

A few thoughts on where things are headed in coming decades.

 

I've been keeping this blog fairly free of politics but this weekend I seem unable to be thinking about anything other than Brexit. In a way, today is the most significant day since the referendum, if, as we are told, it is the last day by which a deal can be made. Though the last day of the withdrawal agreement is the 31st December, the thinking is there wouldn't be enough time to author and ratify an agreement beyond today.
 
So the question that is on my mind is what is next for Brexit. I'm not thinking short term here. Whichever way you slice it, 2021 will start out as a humiliating fiasco. Whether a deal is achieved or not there will still be months of disruption as new ways of doing things are explored and new, unintended consequences of Brexit arise to surprise us. The only question here is how long it will take things to settle down to some sort of normality.
 
No, I'm thinking more of what will happen to Britain in the decades ahead. Geopolitics is a little trickier than it used to be. Immediately following Bretton Woods, the end of WW2 and the exploding of two nuclear weapons in Japan, American might and money was the only game in town. The USSR grew and was, probably for the purposes of political expediency, demonised by America to be a greater threat to its dominance as a world power than it ever really was. Then the USSR fell and for a brief period of time it seemed the world was for the first time truly mono-polar.
 
More recently though the US has become increasingly indebted and less innovative and industrious. Meanwhile the EU has expanded, its currency becoming increasingly important on the world stage, and China has undergone massive economic growth. Despite Trump's efforts to stop China eating America's lunch, she remains a massive industrial power and the growth of her domestic market with a new and enriched middle class means China is here to stay, even with her exports reduced. It is now looking as though the future will consist of a tri-polar world in which the major players will be America, the EU and China, with other BRICS countries emerging and aligning themselves with one of these three main players. I see this as the new world stage into which Britain as an 'Independent Sovereign Nation' has to fit.
 
Old world, old money thinking sees Britain as a nation of traders who straddle the globe buying and selling stuff. We're the nation who started the East India Company after all. The trouble with this 'old skool' thinking is that the world is moving from physical to virtual. If I wanted to order a ton of spice in 1600 when the EIC company was formed, the only way to do it was to travel to India or wherever the spice was grown and to do a face-to-face deal. These days all you need to do is go to alibaba.com and you can find dozens of spice suppliers all competing with each other to deliver to you your ton of spice at the lowest price. By way of experiment I requested quotes for a particular chemical I was thinking of importing into Spain last year, and I was still receiving emails months afterwards from prospective suppliers. Global trade is so fluid these days, the only thing in the way of a deal is the lack of a free-trade agreement, which is why Brexit seems so absolutely nonsensical to me. I was looking into exporting olive oil a few years back and I was struck by how the trade agreements the EU already has with various third-party countries make the process to arrange an export to most parts of the world very simple. The idea that Britain is opting out of these in order to make its own bespoke arrangements seems to me to be a recipe for disaster. The EU has at its disposal an army of around 800 trained and very experienced trade-negotiators who are bashing out new global deals all the time. Britain has Liz Truss! As Britain does not manufacture anything of note, I just don't see a future for Britain as either an exporter or some kind of trading intermediary buying from one country and selling to another, as in an increasingly virtual world there doesn't seem a way to add value. We can add markup but in a world where sales are increasingly made directly, who wants intermediaries taking a slice?
 
Speaking of intermediaries, another area that is about to change dramatically on the world stage is money. China has for several years been developing and trialling the world's first Central Bank backed Digital Currency (CBDC). They are already leading the field and more recently America, Europe and other countries have started researching the idea and publishing policy papers and so forth, making noises that they are about to do the same. The lure of a cashless society is too good for the banking community to pass up and clearly there is a fear that if China's CBDC gets a head start, it could ask its trading partners to use it, suddenly threatening the place of the dollar as the world's leading currency. Obviously this is all very new and it is quite difficult to foresee how things will pan out, but again, the odds are that there will be three main CBDCs, the Digital Yuan, Dollar and Euro. As with crypto-currencies one of the main characteristics of CBDCs will be transparent accountability. It will become much more difficult to launder dirty money through currencies that have an online ledger. Given the chequered history of UK banking institutions and London's existing reputation among anyone from Mexican drug lords to Russian oligarchs as the go-to place to launder money already, my guess is Britain will resist the race towards introducing a CDBC for the Bank of England and instead, the fiat pound will become the central clearing house for the world's black money.
 
As I see it, that's a Britain Johnson & Co are quite happy about. It seems to me that this government is more mendacious than any other in British history. I sense they have no vision for the British people, nor do they care what happens to them, as long as they keep making money. It's clear they have a desire for small government and I fear without the stabilising hand of the EU, centuries of hard-won social and employment protections are about to be thrown out of the window. The welfare state and the NHS will be gone, quite soon I should imagine. Health & Safety and pesky employment regulations will be thrown on the bonfire. I should imagine Scotland will fight for and probably win independence. As the realisation of what is being done to Britain starts to sink in, the will in Scotland to escape the Tories and rejoin Europe will become compelling. The situation with Ireland may take longer to fester but the north of Ireland will become a gateway for smugglers to bring contraband into Europe and measures introduced to counter this will increase tensions and will bring pressure on Britain from the EU and America to reunite Ireland. Again, though publicly affronted, the Tories will be privately delighted to lose Scotland and Northern Ireland, as in their view there will be less money going out and more for them to secure fortress London, which will, as the decades roll by, start to resemble some 18th century Bahamian island beloved by buccaneers and cut-throats.
 
I don't think it is accidental that many of the current crop of Tory nationalists did their degrees in history or classics. It came as no surprise to me yesterday to see Johnson's government boasting it will have gunboats ready to defend British fish. Their thinking is aligned with the glory days of Agincourt and Waterloo. They think in terms of Empires and battles, a mindset that is out of step with the modern world. The days of the opium wars and gunboat diplomacy are long gone. France is a nuclear power (the only one in the EU post Brexit) and China, Russia and America dwarf Britain in military might. I can't help thinking that if the British government continues on it's current selfish, belligerent path, there will come a time, given the way the world is shaping up, that it will end up being put in its place by being on the receiving end of a bloody good kicking!
 
 
Posted by Steve Gould Saturday, December 12, 2020 11:34:00 PM Categories: Black money Brexit Economics Geopolitics politics
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