Mises Wire: The Government Wants Your Crypto Data. And Lots of It.

Bitcoin Manifesto author Allan Stevo has an article at the Mises Institute about how the government would like to track your crypto transactions, as well as ways that can help anonymize your cryptocurrency use – The Government Wants Your Crypto Data. And Lots of It. Don’t be scared off of cryptocurrency just because governments want to control them. It takes some time and effort to understand and take countermeasures. While governments would have you think otherwise, the money you have earned is yours not theirs.

he Venezuelan government recently announced that its Administrative Service for Identification, Migration and Foreigners (SAIME) is now accepting bitcoin as a payment method for passports.

The problem with that is that bitcoin is not anonymous but pseudonymous.

To interact with any government using bitcoin is to reveal to them the wallet you are paying from. The blockchain is public. When commentators like Caitlin Johnstone and Stefan Molyneux or organizations such as the Mises Institute or TOR Foundation ask for bitcoin contributions, one can follow the money with a blockchain explorer to see how much comes in and how it is spent. One can also see who gave it to them if a donor hasn’t exercised some caution in protecting their privacy.

I would never want the Venezuelan government, the US government, or anyone else who might misuse that information to be able to peek into my crypto finances, especially not through a transaction tied to my passport. Who’s to say that the next time I appear at an immigration checkpoint I won’t be flagged for having too fat of a bitcoin wallet or putting money toward some politically incorrect use?

Though the Venezuelan government dedicates a fraction of the resources to spying on its citizens that the US government does to spying on Americans, there is no need to carelessly provide any government with extra personal data. Knowledge in the hands of the state will be used as a weapon in the hands of the state.

There are plenty of lists of big bitcoin wallets and there are people who make a name for themselves by watching bitcoin move from one account to another. Among them is the US government.

On February 6, 2018, Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo before the US Senate Banking Committee revealed that the US government uses spot exchanges such as Bitstamp, Coinbase, itBit, and Kraken to glimpse into the industry.

Chainalysis, run by Kraken’s cofounder and former COO Michael Gronager, exists to tie personal identity to bitcoin transactions. Their business model is the reduction of other people’s personal privacy, data that they then monetize by selling it to their customers. Far more sinister than Google or Facebook, which at least anonymize data prior to selling it to advertisers, Chainalysis links real-life personal data, including legal name, to a specific wallet. Many blockchain analysis competitors exist.

Coinbase has recently come under fire for having a similar service, Coinbase Analytics, which has a contract with the US Department of Homeland Security. “Coinbase joins a crowded field of cryptocurrency analytics companies – Chainalysis, Elliptic, CipherTrace and others – vying for a piece of the federal pie. Agencies from all corners of the U.S. government regularly contract with crypto intel firms, inking deals for their tracing software worth millions, and sometimes stretching years,” reports Coindesk.

The bitcoin exchanges that KYC (know your customer) their customers are a perfect place for industry data collection to take place. Coinbase could monetize and simplify that data collection process, not only charging fees for their exchange services, but taking it a step further and monetizing their user data, making their users the product. This is especially pernicious in the privacy obsessed, smaller-government realm of cryptocurrency.

How much money did it take for this $8 billion company to sell out crypto consumers to the US government? Government disclosure shows that the contract has a current award amount of $49,000, with potential for another $134,750 total over the next four years.

Coinbase has reassured users that it is only collecting publicly available data about its users, nothing more, and packaging that for government use. Its CEO, Brian Armstrong, has encouraged users not to use bitcoin if they don’t want to be snooped on by Coinbase, but to use privacy coins instead.

Luckily, the marketplace is responding to privacy incursions like this:

  • There are decentralized exchanges like Bisq that can’t easily be subpoenaed because there is no central entity to subpoena.
  • Additional ways of anonymizing bitcoin purchases exist, such as with cash or through ATMs, which may or may not KYC customers.
  • We are now witnessing the introduction of “privacy coins.” These are designed to be far more difficult to trace—some might even say impossible—though I long ago learned that the word “impossible” is not really that accurate, as possibility or impossibility is merely a question of will and available resources.

This topic of maintaining privacy in bitcoin transactions is especially pertinent as personal privacy comes under attack.

  • US Senators Lindsey Graham (R-South Carolina), Tom Cotton (R-Arkansas), and Marsha Blackburn (R-Tennessee) have introduced the “Lawful Access to Encrypted Data Act,” an antiencryption bill that insists that all encryption without a government back door is illegal. To follow such an order would spell the death of encryption. Any encryption with a back door is not actually encryption.
  • The pseudonymous Scott Alexander of Slate Star Codex was under threat of doxxing by the New York Times and consequently deleted his popular blog out of privacy concerns. The New York Times defended itself by saying it has a policy to identify all people it writes about. Alexander, after a month of silence from the New York Times on the topic, believes the threat has subsided. The callous disregard for privacy remains.
  • Google and Apple are begging governments to let them use mobile phones to monitor the whereabouts of users in the name of the latest cause against liberty—public health.

As journalist Peter Chawaga has pointed out, “Privacy is becoming one of the most scarce resources in the world.”

If these attacks on privacy were without consequence, then perhaps one might feel better about them, but as the current spate of cancel culture demonstrates—from Central Park Karen to Seattle’s middle finger Karen—merely having a camera turned on a person when they’re showing disagreeable behavior can be enough to shatter the fragile lives that many live. There’s almost a sociopathic hunger to destroy a person intertwined in some of this behavior. How much worse would the impact of that mob of sociopaths be if they also had access to all of a person’s financial data?

It’s a great time for more encryption and more privacy, and an awful time for helping governments or any other organization populate databases that you can guarantee will one day be used heartlessly against you.

Fr. John Peck: What “No Cash” Actually Means

Dave Ramsey writes about the push for a cashless society and a move to a government-controlled digital currency (as opposed to free/uncontrolled digital currency like Monero, Bitcoin, Ethereum, or many others) and what that means to you in What “No Cash” Actually Means

A cashless society means no cash. Zero. It doesn’t mean mostly cashless and you can still use a ‘wee bit of cash here & there’. Cashless means fully digital, fully traceable, fully controlled. I think those who support a cashless society aren’t fully aware of what they are asking for. A cashless society means:

* If you are struggling with your mortgage on a particular month, you can’t do an odd job to get you through.

* Your child can’t go & help the local farmer to earn a bit of summer cash.

* No more cash slipped into the hands of a child as a good luck charm or from their grandparent when going on holidays.

* No more money in birthday cards.

* No more piggy banks for your child to collect pocket money & to learn about the value of earning.

* No more cash for a rainy day fund or for that something special you have been putting $20 a week away for.

* No more little jobs on the side because your wages barely cover the bills or put food on the table.

* No more charity collections.

* No more selling bits & pieces from your home that you no longer want/need for a bit of cash in return.

* No more cash gifts from relatives or loved ones.

What a cashless society does guarantee:

* Banks have full control of every single penny you own.

* Every transaction you make is recorded.

* All your movements & actions are traceable.

* Access to your money can be blocked at the click of a button when/if banks need ‘clarification’ from you which will take about 3 weeks, a thousand questions answered & five thousand passwords.

* You will have no choice but to declare & be taxed on every dollar in your possession.

* The government WILL decide what you can & cannot purchase.

* If your transactions are deemed in any way questionable, by those who create the questions, your money will be frozen, ‘for your own good’.

Forget about cash being dirty. Stop being so easily led. Cash has been around for a very, very, very long time & it gives you control over how you trade with the world. It gives you independence. I heard a story where a man supposedly contracted Covid because of a $20 bill he had handled. There is the same chance of Covid being on a card as being on cash. If you cannot see how utterly ridiculous this assumption is then there is little hope.

If you are a customer, pay with cash. If you are a shop owner, remove those ridiculous signs that ask people to pay by card. Cash is a legal tender, it is our right to pay with cash. Banks are making it increasingly difficult to lodge cash & that has nothing to do with a virus, nor has this ‘dirty money’ trend.

Please open your eyes. Please stop believing everything you are being told. Almost every single topic in today’s world is tainted with corruption & hidden agendas. Please stop telling me & others like me that we are what’s wrong with the world when you hail the most corrupt members of society as your heroes. Politics & greed is what is wrong with the world; not those who are trying to alert you to the reality in which you are blindly floating along whilst being immobilised by irrational fear. Fear created to keep you doing & believing in exactly what you are complacently doing.

Pay with cash & please say no to a cashless society while you still have the choice.

Mises Institute: Bitcoin and the Theory of Money

It has been a while since we last ran a bitcoin article, but we certainly haven’t forgotten about it. With the economic woes gripping the world, the precarious place of the US dollar, and a lot of uncertainty about everything, gold has risen 12.8% year to date and thoughts turn to alternative money. Here’s Robert Murphy at Mises Institute with Bitcoin and the Theory of Money.

In a modern primer on money mechanics, it is necessary to provide at least an introduction to Bitcoin.1 Consequently, in this final chapter we will first give a basic explanation of what Bitcoin is and how it works. Then we will place Bitcoin in the framework of money that we developed in chapter 2, seeking to answer the fundamental question: Is Bitcoin money?” Finally, we will relate Bitcoin to an important component in the Austrian school’s discussion of money, namely Ludwig von Mises’s “regression theorem.”

Explaining Bitcoin with an Analogy2

“Bitcoin” encompasses two related but distinct concepts. First, individual bitcoins (lowercase b) are units of (fiat)3 digital currency. Second, the Bitcoin protocol (uppercase B) governs the decentralized network through which thousands of computers across the globe maintain a “public ledger”—known as the blockchain—that keeps a fully transparent record of every authenticated transfer of bitcoins from the moment the system became operational in early 2009. In short, Bitcoin encompasses both (1) an unbacked digital currency and (2) a decentralized online payment system.

Bitcoin

According to its official website: “Bitcoin uses peer-to-peer technology to operate with no central authority; managing transactions and the issuing of bitcoins is carried out collectively by the network.”4 Anyone who wants to participate can download the Bitcoin software to his or her computer and become part of the network, engaging in “mining” operations and helping to verify the history of transactions.

To fully understand how Bitcoin operates, one needs to learn the subtleties of public-key cryptography, which we briefly discuss in a later section. For now, we focus instead on an analogy that captures the economic essence of Bitcoin, while avoiding the need for new terminology.

Imagine a community where the money is based on the integers running from 1, 2, 3, … up through 21,000,000. At any given time, one person “owns” the number 8, while somebody else “owns” the number 349, and so on.

In this setting, suppose Bill wants to buy a car from Sally, and the price sticker on the car reads “Two numbers.” Bill happens to be in possession of the numbers 3 and 12. So Bill gives the two numbers to Sally, and Sally gives Bill the car. The community recognizes two facts: first, the title to the car has been transferred from Sally to Bill, and second, Sally is now the owner of the numbers 3 and 12.

Further suppose that in this fictitious community an industry of thousands of accountants maintains the record of ownership of the 21 million integers. Each accountant keeps an enormous ledger in an Excel file. The columns run across the top, from 1 to 21 million, while the rows record every transfer of a particular number. For example, when Bill bought the car from Sally, the accountants who were within earshot of the deal entered into their respective Excel files “Now in possession of Sally” in the next available row, in the columns for 3 and 12. In these ledgers, if we looked one row above, we would see “Now in the possession of Bill” for these two numbers, because Bill owned these two numbers before he transferred them to Sally.

Bitcoin Car Sale

Besides documenting any transactions that happen to be within earshot, the accountants also periodically check their own ledgers against those of their neighbors. If an accountant ever discovers that his neighbors have recorded transactions for other numbers (i.e., for deals for which the accountant in question was not within earshot), then the accountant fills in those missing row entries in the columns for those numbers. Therefore, at any given time, there are thousands of accountants, each of whom has a virtually complete history of all transactions involving all 21 million numbers…

Click here to read the entire article at Mises Institute.

Medium.com: YouTube Is Censoring Crypto Videos

Vincent Zandri has written an article over on Medium.com about how YouTube is censoring various crypto-currency videos and/or threatening to shut down the accounts of those who post them. Governments and banking systems are against cryptocurrencies outside of their control. If you control the money (which they currently do), then you can control just about everything else – including people’s behavior.

The first threat to government of an independent and opaque currency is how do they control taxation or government revenue. Our current system of government graft, masquerading as democracy, is dependent on the reliable extraction (some would say theft) of money from the populace on an ongoing basis. When people are receiving payments and making purchases in an encrypted medium, how does the government collect its cut?

Second, control of the money/banking system allows the government to control people’s behavior. As an extreme example, how many people will join an uprising against the government, knowing that their bank account will be frozen or seized so that they cannot pay their mortgage, or rent, or buy food? Or if their retirement fund/children’s college fund, etc. is seized? People already worry about making certain entirely legal banking transactions because the know or worry that the government or banking system will have information about them that either invades a person’s privacy or flags them for criminal investigation.

Altcoin Daily, a popular Bitcoin and crypto education video channel is alleging that YouTube is not only censoring theirs and many other crypto channel’s online content, they are threatening to shut them down altogether. The popular, Google owned, video-sharing platform is slapping many sites like Altcoin Daily with an accusation of “sale of regulated goods,” which is akin to selling alcohol or drugs to the general public and/or minors. As far as I can tell, Altcoin Daily doesn’t sell so much as a stick of gum to anyone. The two twin brothers who run the channel don’t offer financial advice, rather, they describe themselves as “crypto enthusiasts” who offer crypto news with a heavy focus on Bitcoin.

Fellow affected crypto YouTube Channel content creators are making their voices heard about the censoring via social media…

Click here to read the entire article at Medium.com.

Natural News: NSA Archiving Encrypted Communications to Decrypt Later

Encryption works. But as computing power increases the time requires to brute force crack your encryption keys decreases. This article from Natural News notes that the NSA is archiving all eencrypted emails and transactions in the hopes that increases in computing power, including quantum computing, will allow them to be decrypted in the next few years. Note that it mentions 256-bit AES and RSA keys. Upgrade your encryption to elliptic encryption if your apps support it. If your apps don’t support it, look for ones that do.

That said, the NSA also has a vested interest in making people believe that using encryption is useless. So this could also be a smoke screen. Cover your bases and use the best encryption practicable. The government has no business reading your correspondence without a valid warrant.

The NSA is archiving all encrypted emails and transactions, knowing they will be able to decrypt most digital files in about 3 years, thanks to quantum computing

All encrypted emails, files and hard drives that currently rely on 256-bit encryption (such as AES or RSA) may be retroactively broken by the NSA in the next three years, thanks to rapid advances in quantum computing recently announced by Google scientists.

The NSA is currently archiving all encrypted communications and storing the digital files on offline storage servers in its “Bumblehive” domestic spying facility in Utah. Currently these digital files cannot be broken because classical computing presents a strongly asymmetrical complexity problem that makes breaking encrypted files prohibitively time consuming and expensive. Files encrypted with 2^n bits currently present computational complexity that requires 2^n computer power to break. In other words, encrypting files is easy (linear), but breaking encryption is incredibly difficult (logarithmic).

But rapid advances in quantum computing transform the breaking of encryption from a logarithmic mathematical problem to a linear problem, collapsing the complexity to 2 * n instead of 2 ^ n…

Technology and Avoiding Censorship

The world of news reporting has been metamorphosing since the Internet became easily available. Print journalism is dying. The newspaper and magazine news sources that have survived have moved onto the internet to some extent, though they may still have a print presence. But the Internet is a funny place, and it, and dwindling financials, have changed those venerable news dinosaurs. Making profits became dependent upon Internet advertising which was measured by ad views or ad clicks. It became more important to these institutions to have stories that received more views rather than stories of deep substance, not that the two are mutually exclusive. Inevitably, the businesses started catering to specific audiences or demographics, posting stories and headlines that would invite those users to click into the article to view the ads. Once proud institutions like the New York Times have become more of a television sitcom, where the stories are played to a captive audience with implied “applause” and “laughter” cue cards. CNN is more like People magazine than a news network.

Speaking of television, much the same has happened to news sources there. As viewers switched from advertising-supported television channels (or paid cable channels) to watching shows and reading news on the Internet, the financial support of the captive television audience dwindled. As that revenue dwindled, television companies had less money with which to subsidize their news. When once news was a point of pride of the stations that they gladly subsidized, the broadcasters now had to compete for advertising revenue for their news shows. These causes likewise led to a similar chasing after of sensational headlines as was occurring in the Internet space.

In short, the mainstream media news sources have turned into a wasteland as far as actual news goes. Instead they relay stories that will play well with their respective cash-cow herds. Or they run stories that are profitable for them to air, either because they are paid to do so or to ingratiate themselves with government agencies or corporations in order to have access or the personal prestige of being seen with later (for those persons high up enough in the pseudo-news organization). It is well documented, for instance, that the CIA has for decades worked with news organizations of all kinds in order to either relay or suppress the stories or propaganda that they want to shape public opinion. This is no less true for many large corporations and political parties who actively work with these organizations for their own propagandistic ends.

It should be no surprise to anyone, then, that people have turned to alternative news sources. This is a great danger to the power of all those organizations currently involved in mainstream news organizations – i.e. government agencies, political parties, corporations, foreign entities, etc. Controlling the media is a way to control the people. People cannot get angry over something that they never hear about, or better yet, they can’t believe anything that the media is portraying as laughable. Because people are, indeed, looking for real news, these interests are doing their best to prevent alternative news sources or at least people’s access to these sources.

In the past several months, we’ve seen many alternative news voices as well as individual users banned from various Internet social media platforms which they used to communicate with the people who followed them – a process called de-platforming. Because these social media platforms are owned by private corporations there is no first amendment violation, even when some of the corporations are counseled by advisory entities with close government ties. Little justification is given for these deplatformings other than vague mumblings from the corporations about hate speech, extremism, insults, Russian spies, and so forth. The corporations are under no obligation, currently, to provide any truth. They say something the content creator did violated their terms of use and that is the end.  So far these deplatforming actions have been overwhelming against conservative voices, though not entirely so.

Continue reading “Technology and Avoiding Censorship”

Liberty Blitzkrieg: The Times for Which Bitcoin Was Made

Michael Krieger of Liberty Blitzkrieg has an article, These Are the Times Bitcoin Was Made For, in which he discusses Bitcoin and its role in evading the techno-censorship of the 21st century.

…There are two crucial attack vectors being targeted when it comes to punishing the transgressions of American thought criminals; money and communications, and we need to understand that Alex Jones is our cultural guinea pig. The tech giants started by kneecapping his voice by simultaneously deplatforming his presence from many of today’s dominant communications platforms. Now PayPal’s moved in to make payments more difficult, thus threatening his ability to earn money. You don’t have to like anything Alex Jones does to see how dangerous this is. What’s being done to him can and will be to done to others deemed undesirable by Silicon Valley oligarchs should they get popular enough. What’s emerging is a playbook on how to exert pressure and encourage self-censorship in the digital age and you better pay attention.

Money and communication are fundamental to our experience as humans here on earth in the early 21st century. As such, these things must be as neutral and permissionless as possible. The moment you have human beings in charge of communication and money systems you introduce bias and corruption. This is particularly dangerous in our current stage of human development considering the extent to which power and wealth have become concentrated in so few hands globally. You can bet the farm this small group of people will do whatever it takes to preserve the gravy train that is our current paradigm, including using tools of communication and money to prevent those who want change from influencing the conversation. This isn’t theoretical, it’s happening right now and will surely escalate from here.

Which is precisely why the emergence and continued success of Bitcoin is so fundamentally important to understanding the best way to challenge the forces attempting to bully us into an acceptance of their worldview. Unlike PayPal, Bitcoin is permissionless. There’s no central party, management team or CEO who can decide to stop you from using Bitcoin, something completely distinct from the likes of Facebook, Twitter, YouTube, PayPal, etc. As such, we can clearly see the fundamental flaw of these platforms by comparison. Centralized money and communications platforms are ultimately not conducive to a free society, which we can clearly see now, especially with the recent suspension of James Woods from Twitter for the most trivial of reasons…

If we’re going to challenge the current way of doing things and create a more free and decentralized world, we need to create and use tools that reflect and promote those values. Bitcoin is an example in the realm of money, but we’re still sorely lacking in the realm of communications. If a government or some massive corporation can shut down conversation simply because they don’t like what’s being said, we simply are not free humans.

If we want to be free, we need to use tools that reflect and protect such values. We aren’t there yet, but the path forward is being built. These are the times Bitcoin was made for.

Related:

Fast Company: Tim Berners-Lee tells up his radical new plan to upend the World Wide Web. Berners-Lee is a “father of the web,” having invented the hypertext transfer protocol (http). He’s been working on a project to decentralize the web and put data ownership back in people’s own hands rather than in the control of internet mega-corporations.

Make Use Of: I2P vs Tor vs VPN A simple explanation of three tools which can vastly increase your internet security and privacy.

Finances Online: tope 10 Alternatives to PayPal Payments Pro

Gab – Free speech alternative to Twitter.

K of Combat Studies Group to Speak at March 8th LVA Meeting

K of Combat Studies Group will be the featured speaker at the March 8th, 2018 Lower Valley Assembly of the Whole in Prosser, WA. His topic will be digital security.

K is a combat veteran, owner/instructor of CSG Inc, overseas government contractor, and a wilderness medic. He has trained thousands of personnel from all four branches of the military, special operations forces, federal agencies, police and responsible citizens, in firearms, tactics, survival and trade-craft. Combat Studies Group teaches classes in firearms tactics, kidnap defense, austere medicine, vehicle and home defense and most recently has been teaching many classes around the country about digital security dubbed “Groundrod” courses.  Combat Studies Group also creates and sells secure phones, tablets and laptops.

“A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.”

― Robert A. Heinlein

Ben Yu: Cryptocurrency 101

Over at Medium.com, Ben Yu has written a cryptocurrency primer called Cryptocurrency 101. It is a long read, but it has much good history and other background information to enhance your understanding of the reason for and value of cryptocurrencies.

Bitcoin was designed, essentially, as a better ‘digital gold’. It incorporates all of the best elements of gold — its inherent scarcity and decentralized nature — and then solves all the shortcomings of gold, in allowing it to be globally transactable in precise denominations extremely quickly.

How does it do this? In short, by emulating gold’s production digitally. Gold is physically mined out of the ground. Bitcoin is also ‘mined’, but digitally. The production of bitcoin is controlled by code that dictates you must find a specific answer to a given problem in order to unlock new bitcoins.

In technical terms, bitcoin utilizes the same proof-of-work system that Hashcash devised in 1997. This system dictates that one must find an input that when hashed, creates an output with a specific number of preceding zeros, among a few other specific requirements.

This is where the ‘crypto’, incidentally, in cryptocurrency comes from. Cryptographic hash functions are fundamentally necessary for the functioning of bitcoin and other cryptocurrencies, as they are one-way functions. One-way functions work such that it is easy to calculate an output given an input, but near impossible to calculate the original input given the output. Hence, cryptographic one-way hash functions enable bitcoin’s proof of work system, as it ensures that it is nigh-impossible for someone to just see the output required to unlock new bitcoins, and calculate in reverse the input that created that output.

Read the entire article by clicking here

Federal Bill Introduced Against Cash and Cryptocurrencies

Senate bill 1241 was introduced last month entitled “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” Simon Black of Sovereignman.com writes a summary.

Recently a new bill was introduced on the floor of the US Senate entitled, pleasantly,

“Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.”

You can probably already guess its contents.

Cash is evil.

Bitcoin is evil.

Now they’ve gone so far to include prepaid mobile phones, retail gift vouchers, or even electronic coupons. Evil, evil, and evil.

These people are certifiably insane.

Among the bill’s sweeping provisions, the government aims to greatly extend its authority to seize your assets through “Civil Asset Forfeiture”.

Civil Asset Forfeiture rules allow the government to take whatever they want from you, without a trial or any due process.

This new bill adds a laundry list of offenses for which they can legally seize your assets… all of which pertain to money laundering and other financial crimes.

Here’s the thing, though: they’ve also vastly expanded on the definition of such ‘financial crimes’, including failure to fill out a form if you happen to be transporting more than $10,000 worth of ‘monetary instruments’.

Have too much cash? You’d better tell the government.

If not, they’re authorizing themselves in this bill to seize not just the money you didn’t report, but ALL of your assets and bank accounts.

They even go so far as to specifically name “safety deposit boxes” among the various assets that they can seize if you don’t fill out the form…

Click here to continue reading at sovereignman.com