reason #1
bitcoin IS FINancial freedom
We live under an illusion of freedom - that our decisions are the overflow of our free will. Our reality is quite different. We are a function of many things- our upbringing, our society, and our environment. Social media influences how we think, what we buy, and what we feel. Governments impinge on our personal freedom. Rules and regulations govern us every day. This control is not altogether bad because it gives us structure, predictability, and safety. However to grow as humans we need a balance of the known and the unknown. Without the unknown, we feel trapped and stagnant. There is a trade-off between control and freedom, and modern life is skewing us to one side. COVID restrictions were a savage display of the draconian powers of governments and how quickly we surrendered our civil liberties. But this surrender started before COVID. Our phones listen to our conversations. Google tracks our spending preferences, our moods, our fears, and our anxieties. Social media platforms sell out information to corporations that use this to push their products and services. High-speed internet breeds the need for immediate gratification and makes us slaves to our urges and desires. We are more controlled than ever.
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If you have never heard of the World Economic Forum, you need to pay attention. The WEF was started over 50 years ago in 1971 when Klaus Schwab invited a bunch of high-flying businessmen, politicians, and global leaders to work towards making the world a better place. Billionaires, rock stars, central bankers, politicians, global CEOs, and thought leaders now descend upon a small Swiss ski resort every January. Wrapped up in Burberry coats and $10,000 suits. they talk about climate change, income inequality, digital currencies, and anything else that is topical at the time. What could be more harmless than a bunch of well-to-do people talking about topical issues and challenges faced by the world? Recently, however, the phrase "you will own nothing and be happy" was lifted off their website as a byline to the WEF's new initiative known as The Great Reset. The Great Reset was set up as a way for the global economy to rebound from COVID and consisted of the following three objectives:
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1) creating conditions for a "stakeholder economy"
2) building in a more resilient, equitable, and sustainable existence using environmental, social, and governance metrics, also known as ESG and
3) harnessing the innovations of the fourth revolution.
This was further distilled into green growth, smarter growth, and fairer growth. So who are the stakeholders? Klaus says the stakeholders are the members of the WEF. Who are the members? Large corporations, large financial organizations, governments, politicians, and global leaders. Who are NOT members of the WEF - small businesses and the average man and woman in the street - approximately 99.999999 percent of global inhabitants. Shit!! Now the phrase "you will own nothing and be happy" starts to make more sense. The stakeholders will own everything and we will rent it from them. We will be slaves to this system of stakeholder capitalism. This is not a conspiracy theory - the WEF are transparent with its plans and this is how they plan to execute its mission:
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1) Property
Let's start with your biggest monthly expense - rental or mortgage payment. According to Yardi Matrix - a property data company in the US, by the end of this decade, 40 percent of single-family homes (SFRs) will be owned by large institutions. This makes sense. The money supply in the US is increasing by 7 percent every year. This money needs to go somewhere. It goes to the organizations that need it the least - large corporations. You must have heard the adage that banks love to lend money to people that do not need it because they are more likely to pay it all back. These organizations have a limited number of places they can put this money - the stock market, the bond market, and the property market are the three biggest asset classes. So why the sudden interest in SFRs? COVID and the Great Lockdown taught us that many jobs can be done at home. Remote workers are now upgrading their abodes and it is this demand that is pushing prices higher and the institutions want to profit from these rising prices. Notice what happens when big money enters the market. Prices go up. Average people are now competing with the deep wallets of these giant companies and are losing. They are being priced out of the market and are being forced to rent from the stakeholders.
2) Hardware as a Service
What is hardware? In the digital age, we often take a narrow definition of hardware and limit it to desktops, laptops, tablets, and smartphones. In reality, the definition is far wider. It covers tools, heavy machinery, and any durable item. It also includes cars, household appliances, and furniture, to name a few. Now you need to understand a few things about demographics. After the Second World War, people celebrated in many ways - one was to have lots of sex and plenty of babies. These were the baby boomers and they started to become adults in the late 60s and 70s. They bought cars, houses, furniture, TVs, and household appliances. They also grew up in decades of free love and flower power, so they also had lots of kids - the Millenials. The problem is that the millennials do not have as much sex as the parents of the boomers and the boomers, so population growth is slowing down and in many places like Japan, it is starting to decline. In Japan, they sell more adult diapers than baby diapers. China's population is also slowing, but this is because of their one-child policy.
What happens when populations get smaller? There are fewer people to buy stuff. Hardware is also more durable these days. Some cars are sold with 7-year warranties. My refrigerator has a 10-year warranty. This was a bit of a fuck up on the part of the manufacturers because consumers are now replacing their hardware less often. So there are fewer people and they are replacing hardware less often. Can you see how this messes up with the profits of the WEF stakeholders? What is the solution? Talk consumers out of buying hardware and convince them to rent it, hence the concept of hardware as a service.
Look at how this is playing out with your second biggest monthly expense - transportation. Uber, Lift, Didi, and other ride-sharing companies have sold us on the idea of having your own personal chauffeur. For people that like to drive, there is car sharing and car rental. Owning a car is shit - you have to finance it, fuel it, insure it, service it, and license it. Driving a car is cool - so you can see where I am going on this. Again, you will own nothing but be happy renting your car from the WEF stakeholders. And guess who is working on hardware as a service product - one of the first companies ever to reach a $1 trillion market capitalization- Apple. You can expect other hardware giants to follow.
3) ESG
This evil little acronym stands for Environmental, Social, and Governance and is often sold as ethical investing. I fell for it the first time I learned about it until I discovered the nefarious intentions festering below the surface. ESG is a way of rating companies based on how much they pollute (environmental), how equitable they are to their employees (social) and how transparent they are (governance). Volkswagen, a company that lied and covered (bad governance) up the levels of emissions (bad environmental) of its cars has a higher ESG score than Tesla, a company that sells EVs and solar panels. How crazy is that? But it gets worse. In the first half of 2022, Tesla was kicked out of the Standard and Poor's 500 ESG Index due to a “lack of a low-carbon strategy” and “codes of business conduct", and guess which company remains in the index? Exxon Mobil, an oil company specializing in oil spills and environmental destruction.
So why is this important and how is this a tool for the stakeholders? ESG is a perfect front because, on the surface, ESG sounds perfect. Who in their right mind would not be in favour of companies that pollute less, treat their employees fairly, and are transparent? The problem is that these three metrics are subjective. Can you really quantify how much companies pollute? A 2021 BCG GAMMA survey reveals that only 9% of organizations are able to measure their total greenhouse gas emissions comprehensively. 81% of respondents omit some of their internal emissions (those related to the company’s own activities) in their reporting, and 66% of respondents do not report any of their external emissions (those related to the company’s value chain). As for fairness and equity, again this is subjective- it deals with how employees are treated. It covers safety in the workforce, worker training, chemical safety, benefits, and internal communication. Not only is this subjective - because rating companies rely on information provided by the companies, but it also does not present a level playing field for companies. Google, which hires a bunch of computer geeks on a modern campus with unlimited vacation, free 24-hour dining facilities, and Google stock options will obviously outperform an oil/chemical company that has people hanging off the side of offshore oil rigs trying to weld pieces of steel together during a hurricane. Finally, there is the issue of governance that looks at business ethics, transparency, diversity in the board of directors, and accounting practices. These metrics are vague and you have to be puzzled as to how VW scores better than Tesla.
So, how are the WEF stakeholders using ESG to control the world? Musk has always been an outsider, a rebel, and anti-establishment. In August 2021, Joe Biden held an EV summit at the White House and invited all the major automakers except Tesla. Biden even praised GM as being the leader in the EV space. The WEF stakeholders want to force large institutional investors to put ESG considerations foremost in their minds when making investment decisions. Given that ESG scores are so subjective, they can use this as a means to channel investments into WEF stakeholder companies and away from rebels like Musk.
4) Going Digital
The WEF wants to digitize everything. They want asset ownership to be recorded on a permission-based blockchain that is controlled by the government and the central bank. The government would have absolute control over your assets and could extinguish your rights with a click of a button. But seeing as you are going to own nothing, that should not be much of an issue!
Then there is the creation of Central Bank Digital Currencies (CBDCs) which almost every central bank in the world is working on. Although CBDCs are digital, they could not be more different from cryptocurrencies. While cryptos are built from the ground up to maximize freedom, CBDCs are built from the ground up to maximize control. These currencies will give the government information about where you spend, what you spend on, and how much you save. They will know absolutely everything about your financial activities. In order for digital currencies to work, they need to be linked to your digital identity. Digital identifications make it easier for you to be censored online (the WEF proposes making use of AI to do that). This is by far the most important pillar of the WEF's assault on our personal liberties because if they control the information and the money, they truly do control everything. This digital ID is really scary because it also involves human tracking which leads to the next point.
5) Decarbonizing the Economy
Again, on the surface, this sounds fantastic - who would be opposed to such an objective? However, there is a right way and there is a wrong way to make this transition. You need to remember that this is all about control and the centralization of power. The WEF is most concerned about protecting the interests of the stakeholders and this is done through strengthening their positions and this is done through the concentration of as much power as possible into their hands. Removing fossil fuels and forcing everything onto electricity, greatly benefits the power utility companies. They will control the grid and allow them to create even more powerful monopolies. There is even talk of individuals being given a carbon score. Seeing as they can track you through the digital ID that is on your phone (which you carry everywhere), they can calculate your carbon footprint. You will lose points for driving to the gym, traveling on an airplane, going for a weekend getaway, and filling up with petrol. If you use all your annual carbon credits by September, you may find yourself biking to work until Christmas.
So what is the way out? You have two options - you can approach this challenge conventionally or unconventionally. Thinking conventionally means you die as a martyr for your country and your cause. But you don't win a war by dying for your country - you win a war by getting your enemy to die for his country. To survive this, you need to think unconventionally and embrace new paradigms. Cyberspace breaks old paradigms. Let's look at some old paradigms:
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-you need to live close to where you work
-you are limited by the physical location of your body
-you have to generate your income where you physically work
-you have limited options as to where you can store your wealth
Friedrich Hayek spoke about the denationalization of money: “ I don't believe we shall ever have good money again before we take the thing out of the hands of the government, that is, we can't take them violently out of the hands of the government, all we can do is by some sly roundabout way introduce something that they can't stop”.
Bitcoin is the closest thing we have to financial freedom. Bitcoin is not controlled by anyone. No one even knows who invented it. We do not know if Satoshi Nakamoto was a man, woman, or group of people. Apart from the Bitcoin protocol/manifest he/she/they left, and the message on the genesis block alluding to the bailing out of the banks in the wake of the financial crisis, there is not much we know. This message in the genesis block is important for two reasons. It verifies the date and also mentions the bailing out of banks. It has been inferred that Satoshi was a rebel. This is my interpretation. He was pissed off by the financial crisis of 2008. How was it possible that greedy and corrupt bankers could bring human civilization to its knees? The global banking system almost failed in September 2008. When the American bank Lehman Brothers collapsed, it created a crisis of confidence in all banks. Lehman Brothers was a well-respected organization and every banker in the world was asking the same question - if Lehmans could go bust, which bank is next? No bank could be trusted. If bankers don't trust bankers, people will not trust bankers and everyone would rush to get their money out of their banks.
Satoshi was horrified to be living in a world where his life was in the hands of bankers. The severity of the 2008 financial crisis cannot be underestimated. If the banking system does not work, we die. There is no food in the supermarket. Farmers sell their produce and are paid with bank transfers. If bread companies cannot buy flour, they cannot bake bread, and people who are not intolerant to gluten die. Satoshi's publication was Bitcoin: A Peer-to-Peer Electronic Cash System. Bitcoin was not merely an intellectual curiosity to Satoshi - this was groundbreaking and pioneering work - he was planning on designing a cash payment system that would require no banks. He was dreaming of a world in which greedy bankers could not bring civilization to its knees.
It is by design that no one knows who Satoshi is. A perfectly decentralized system has no founder/boss/godfather or dominant influence. Humans are not reliable stewards of power and authority. It corrupts, and if this power is absolute, it corrupts absolutely.
Bitcoin is controlled by its users, and this is a good place to explain what it is. Bitcoin is nothing more than software and is beautiful in its simplicity. This software is known as cryptography and invites anyone and everyone interested to participate in the challenge of solving cryptographic problems. Most of us were forced to do algebra in school. Many of us were waiting for the universe to reveal to us how exactly solving for x or y would help us in real life. For those still unsure, the time has come. Algebra was taught to set you up to understand the basics of cryptographic problems. But instead of saving for x or y, you now need to solve for many variables, and the only way to do this is by trying millions of combinations per second, and the only way to do this is through the use of powerful computers. When the problem is solved, it is necessary for the answer to be verified. Like the kid at school who sticks up his hand and says he has the answer, it is necessary to check his answer.
So where do we find these verifiers? This is where the size of the community is important. If there is only one person looking for the answer, and there is no one to verify, this network is not going to be robust. So Satoshi mined the first block on January 9th, 2009. This was known as the genesis block and was never to be spent - whether this was by design or an error will probably never be known. The first block contained 50 Bitcoins. The next block was mined six days later. Did you notice how I slipped the word "mine" into the conversation? This process of powerful computers solving complicated cryptographic problems is known as mining. There are a few things that happen after a block is mined. The miner is rewarded by receiving the Bitcoins in that block. Because there were no other miners at the time Satoshi mined the genesis block, it was not verified as happens today. This does not mean it was not verified- Satoshi probably called one of his mates to check if the problem had been correctly solved. The next block was mined six days later and it is expected that Satoshi was also the miner of that. It is believed that Satoshi did most of the mining in 2009 and mined in total about 1 million Bitcoin which in December 2022 prices would be worth around $17 billion. At Bitcoin's highest price of $68,800, Satoshi would have been one of the wealthiest humans on the planet.
It was only in 2010 that the network started to grow and new miners entered the picture and started to mine Bitcoin. Once a block has been mined and verified, it is entered into the blockchain which you can think of as a giant excel spreadsheet or accounting ledger. Banks also have ledgers. When money is deposited in the bank, that transaction is entered into the ledger. All transactions, whether they are deposits, withdrawals, interest transactions, or fee deductions are recorded on a centralized ledger. Customers are able to see their transactions but they are not able to see the entire ledger. The blockchain is similar and very different. When a block has been mined, it must be verified by 51 percent of the miners. If Satoshi and his neighbour were the only miners, they would both need to verify the block. If the neighbour recruited his uncle, the neighbour and the uncle could verify. You can see how at first Bitcoin was fragile. When there are only a small number of miners, it is easy for miners to collude and conspire for their own benefit. As more miners enter the network it becomes more difficult for bad actors to fuck around with the blocks. The security of the blockchain however is not only in the number of miners (incidentally there are approximately 10,000 Bitcoin miners present). It is in the number of nodes doing the verification. Another level of security is the way in which the blocks are chained together.
This is where it gets a little technical. A block stores information. There are many pieces of information included within a block, but it doesn't occupy a large amount of storage space. Blocks generally include these elements, but it might vary between different types:
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Magic number: A number containing specific values that identify that block as part of the Bitcoin network.
Blocksize: Sets the size limit on the block so that only a specific amount of information can be written in it.
Block header: Contains information about the block.
Transaction counter: A number that represents how many transactions are stored in the block.
Transactions: A list of all of the transactions within a block.
The transaction element is the largest because it contains the most information. It is followed in storage size by the block header, which includes these sub-elements:
Version: The cryptocurrency version being used.
Previous block hash: Contains a hash (encrypted number) of the previous block's header.
Hash Merkle root: Hash of transactions in the Merkle tree of the current block.
Time: A timestamp to place the block in the blockchain.
Bits: The difficulty rating of the target hash, signifying the difficulty in solving the nonce.
Nonce: The encrypted number that a miner must solve to verify the block and close it.
One 32-bit number in the header is called a nonce—the mining program uses random numbers to "guess" the nonce in the hash. When a nonce is verified, the hash is solved when the nonce, or a number less than it, is guessed. Then, the network closes that block, generates a new one with a header, and the process repeats.
You need to understand that all transactions are linked together in a chain. This means if you want to hack into block 50 and change it, you will need to hack into all 49 previous blocks because they are all linked.
The strength of the blockchain lies in the fact it is consensus-based. Every entry into the ledger needs to be agreed upon by 51 percent of the miners. You now need to understand the difference between a Bitcoin node and a Bitcoin miner. As a user of the Bitcoin network, you primarily want to transact by sending and receiving bitcoin. When a user sends a transaction, it is propagated through the network via gossip protocol. Basically, the transaction is passed to a few nodes who check that it is valid before passing it to more nodes, continuing until all nodes connected to the network are aware of the pending transaction.
Nodes hold a full copy of the Bitcoin blockchain, which is a universal ledger system. It contains the complete transaction history of all previous bitcoin transactions. By referencing the blockchain, nodes ensure that the sender of a transaction is not spending the same BTC twice and didn’t create it out of thin air. Once nodes validate a transaction, it’s shown in a “pending” state until a specialized node, known as a miner, or a collective of miners (mining pool), picks up the transaction. Bitcoin miners are located all over the world and compete to confirm the pending transactions. Going from a “pending” to “confirmed” state means that the transaction has been added to the universal ledger system (blockchain) and enables the recipient of the bitcoin transaction to send it to another user. Instead of confirming transactions one by one, miners will batch pending transactions into what are known as blocks. The confirmed block is propagated across the entire network back to all nodes to ensure the block is valid and adheres to the rules of the network. Once validated, the nodes add the block to the previous blocks, thus creating a blockchain.
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At this point, the entire network has witnessed this transaction being sent by the user, validated by each node, and confirmed by the miner. Final settlement is achieved and funds are irreversibly passed from the sender to the receiver. This process, relying on thousands of volunteer nodes and competing miners distributed across the world, is repeated for each and every transaction. Running through this simple transaction example, you can start to see how nodes and miners differ from each other. They both play crucial roles in the network and have their own checks and balances to ensure decentralization. Now let's dive a little deeper into the roles of each.
What Do Bitcoin Miners Do?
Mining bitcoin is a costly endeavor, requiring specialized hardware and using significant amounts of electricity. On top of those economic factors, bitcoin mining also requires significant expertise and entails a lot of risks (unlike operating a node). For example, miners can lose millions of dollars overnight due to extreme weather, floods, fires, and more. To incentivize people to spend resources and take on long-term risks, the Bitcoin network provides miners with the opportunity to earn revenue. Every transaction includes a transaction fee and every block contains a subsidy of newly issued bitcoins, both of which are paid to whichever miner adds the given block of transactions to the blockchain.
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Because miners must compete and spend resources to earn newly issued coins, bitcoin is more similar to gold and other commodities than to fiat currencies with unlimited supplies. This unavoidable cost to mine bitcoin is a critical part of its value proposition, as it makes for a relatively fair distribution of newly issued coins and it results in bitcoin is extremely difficult to attack. Nodes play an important role in this as well (as we will describe in the next section).
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Currently, more than 19 million bitcoin have already been distributed to miners through the block subsidy, and this will continue until all 21 million bitcoins are distributed around the year 2140. At that point, miners will solely earn transaction fees for confirming transactions and securing the network. However, miners are not all-powerful, but rather they are more like paid servants of the network. Ultimately, miners must play by the rules enforced by nodes in order to be rewarded with bitcoins. Nodes, on the other hand, are the true rulers of the network. Unlike mining, running a bitcoin node is not very costly (it’s typically in the $150-400 range). However, nodes are equally if not more important than miners in achieving decentralization. The roles of nodes are to:
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-Validate transactions
-Keep a historic record of transactions
-Dictate and enforce the rules of the network.
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In simple terms, nodes ensure that everybody — from miners to users and other nodes — plays by the rules. This can be done out of self-interest. Each user, wallet, company, mining pool, and exchange that runs a node is doing so in part to ensure they are not being cheated. Everyone running a node carries a copy of the blockchain and is responsible for maintaining and updating their copy. As transactions are propagated and confirmed, node operators are validating that these transactions meet the rules of the network. If a user receives a transaction that creates 1,000,000 bitcoin out of thin air, the user (and all other nodes on the network) will reject the transaction. If any invalid transaction somehow makes it into a block, all the nodes will reject the entire block and wait for another to be mined which doesn’t contain any invalid transactions. Bitcoin is based on consensus. All nodes are in agreement with the rules of the network and the state of the blockchain and will ignore anybody who is misaligned. While there is no direct revenue to be earned by running a node, it is important to run one to ensure you're interacting with the network safely and securely. A node can be installed on any computer with enough storage capacity. A popular approach is to buy $150-$200 worth of components and run a dedicated node on a raspberry pi. In doing so you can truly be your own bank by running and auditing the Bitcoin network. No one miner or node can control the network. They each put checks and balances on each other to ensure no one cheats the system. A monetary network that is open and permissionless for anyone and everyone to participate in can be the backbone of the most resilient, accessible, and inclusive financial system in the world.
This is the power of open networks. This is why millions of people around the world have already voluntarily joined the network. Whether you choose to run your own full node or become a miner, you’re taking part in the open and inclusive Bitcoin revolution. A revolution getting stronger and more unstoppable with each new participant in it.
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