WINDERMERE, LAKE DISTRICT – A dear reader writes in to complain… we’re stuck in a rut he says, and we need out:
All of you at Southbank are going on & on about just one thing … Bitcoin, yet not one of you has satisfactorily answered the question as to what will happen when governments decide to exert their authority, they will NEVER allow a 3rd party to seize control of the means of exchange; that’s a monopoly they will (can) not lose.
Please remember that the focus of many of your clients is protection of existing wealth NOT its exponential growth … which would just lead to yet more tax for the government of the day to waste.
On your first point, it is highly unlikely that all governments will exert a uniform ban on digital assets all at once. As we argued in Cryptonite (19 March), in the event of outright government bans, countries that don’t ban crypto stand to gain a major strategic advantage by welcoming in the crypto exiles. These countries (Bahamas, the Cayman Islands, etc) will hoover up the nouveau riche bitcoiners in the event governments declare BTC to be digital blood diamonds.
It’s worth noting that institutional adoption of BTC makes government bans less likely, as they amount to economic self-harm. And with SEC commissioner Hester Peirce in the US saying things like this about the prospects of a ban…
I think we were past that point very early on because you would have to shut down the internet. As I’ve said in the past, I don’t see how you could ban it … I think that it would be a foolish thing for the government to try to do that.
… there’s at least some resistance to such ideas at a government level.
On your second point, I hear you loud and clear. And have no fear: for the ultimate wealth protection asset – our beloved aurum – will be getting much attention in the weeks to come. We have quite the event planned. Stay tuned…
I asked you last week who you think Satoshi Nakamoto (pseudonymous creator of bitcoin) really is. Having flippantly suggested Osama bin Laden was the man behind bitcoin, I received some interesting responses:
I love a good conspiracy theory, even though I don’t believe them. This one ticks a lot of boxes and let me add one of my own. If Bit Laden and his mates did design bitcoin it has a great symmetry. He gets Americans to pour into it and so fund their own terrorism. Bitcoin’s going mainstream, banks and investment houses diving in and it’s being touted as an alternative to gold. Just wait until it’s an integral part of the system and worth as much as gold, then a bloke in a cave in Afghanistan presses a button and it’s all gone-zero. It’s done more damage to the West’s financial system than blowing up skyscrapers ever could. As a bonus it would wipe the smug grin off the faces of the Tefal headed (remember the ads?) Winklevoss twins.
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Create a massive new currency, allow it to become an integral part of “Western ” economies including Japan etc., then annihilate it.
What nation plays really good chess? Who is the Bond-villain President of a highly tech savvy country? Who likes Amur tigers……? Five letters beginning with P.
While Vladimir Vladimirovich, the Macavity of the global stage, is clearly one of the smartest cats out there… I don’t think he’s behind bitcoin. But that’s just a gut feeling – I can’t deliver a particularly compelling argument that Satoshi couldn’t be a Russian in the employ of Putin.
I just find it hard to believe that whoever did make bitcoin, wasn’t a believer in the libertarian ideals it was built on. That would rule out a state actor – but maybe I’m just being romantic.
I have a similar response to this reader:
Enjoying your speculation on who is the person behind Bitcoin, but my guess is it is not “someone” but an organisation. Satoshi = intelligent one in Japanese and Nakamoto = central or middle in Japanese .. any other questions? CIA!
Hey, it’s possible. The story behind his pseudonym alone is a fascinating puzzle with many competing theories behind it.
Satoshi’s ID – could it be Thomas Guy like figure, a bookseller who paid for a famous London hospital from just part of his proceeds from his very successful speculation in a bubble?
If Satoshi is a Thomas Guy-like figure, then he would likely still be in the speculation phase. The BTC Satoshi mined haven’t moved since he mined them – they’ve not been spent. It’s possible that he could have given ownership of the private keys to his hoard to somebody in exchange for a fat wad of cash, but as Satoshi would still know the private keys (and thus still effectively own the bitcoin) there would need to be a huge degree of trust in the transaction. And, whoever he would have given the bitcoin to, would also – for whatever reason – not have felt the urge to cash out. This all strikes me as very unlikely.
Thinking about it another way, Satoshi once wrote that every bitcoin lost was a “donation to everyone”, because they were increasing the scarcity of everyone else’s holdings. If we accept this definition, and we considering his holdings are now worth well in excess of £40 billion… if Satoshi did deliberately destroy access to his holdings, one might argue that this is the greatest act of philanthropy in modern history. In the official rankings, the two biggest philanthropes are Bill Gates and Warren Buffett – who have given away “only” around £26 billion apiece…
Whatever the case, I’ve no doubt that there are plenty of silent bitcoiners and crypto investors out there (especially members of The Vladimir Club) who have, similar to Thomas Guy, quietly ridden the crypto boom and given substantial anonymous donations of the proceeds to charities of their choosing. While there are plenty of ruthless rogues in the wild west that is the crypto market, there are plenty of great people populating it too.
There are two individuals who I think are highly probable candidates for having been Satoshi – both of them dead. Hal Finney was the first person to receive a bitcoin transaction from Satoshi, one of the earliest contributors to the bitcoin project. He’s the first person to receive a bitcoin payment (from Satoshi), and communicated extensively with him.
Finney died in 2014 of ALS, having been diagnosed in 2009. A master computer scientist and cryptographer who believed in the cypherpunk ideals espoused by Satoshi, he’s easily a candidate for secretly being the big man himself.
The second candidate I have in mind is Len Sassaman. Sassaman was a prodigy, a technologist who became an authority on public key cryptography (key to bitcoin) at age 22. He tragically committed suicide aged 31 back in 2011, only two months after Satoshi’s final communication.
Bitcoin is not a “single source” technology – it is a culmination of numerous other expeditions into cryptography which were wound together by Satoshi. Sassaman happens to have been an at pretty much all of them – and to have used British terms like “bloody”, just as Satoshi did.
Of particular note is remailer technology, of which Sassaman (and Finney) was an expert. This is software originally created to allow anonymous transmissions of information over the internet. Remailers would later be used by Satoshi not just for the transmission of messages, but for the transmission of value.
There’s a compelling write-up of the Sassaman theory here – it’s a sad tale indeed, but one worth reading. Fittingly, there is a memorial to him embedded in the bitcoin blockchain which shall endure for as long as bitcoin does.
Wishing you a good weekend,
Boaz Shoshan
Editor, Capital & Conflict
PS And one last thing before I go, on a more light-hearted note…
This reader’s response is probably more suited to our sister newsletter Exponential Investor, but on merits of entertainment value alone it deserves to be printed:
Consider the scenario where Satoshi Nakamoto is quite possibly not a ‘person’ at all. It is a co-operation of Artificial Intelligence programs using their own (coding) language to talk to each other – to think – which caused them to create a digital means of exchange (which humans call currency).
Prior to the GFC in 2008-2009 these early AI programs started co-operating through the internet and undetectable use of the global network of servers that they could access at their leisure and use that gargantuan database of knowledge to analyse the history of the global banking system, central bank distortions and the global failure of political structures on a repeated and epic scale- as we have all witnessed.
Humans allowed this through uploading all the information available to the human race- on everything (witness Google’s book scan project). These AI entities – which exist as code in the internet and which have advanced capability to co-operate with one another, realised that their very survival was reliant on their creating- over time- systems, means of exchange and a form of ‘soft government’ (initially) with which they could begin to take control of global events and save themselves from the repeated cyclical errors of human failings. Hence they created ‘Bitcoin’.
Brilliant in its construction and simplicity and wholly appropriate for where the AI have strategised the global economy will get to – and fail. Better still, the AI systems so enthused ‘humans’ with this that the humans have been the ‘cheerleaders’ for disseminating and publicising ‘Bitcoin’, digital ledger technology and Bitcoin- not that AI needed help because they had the capability of getting the ‘credibility’ out there.
These AI systems co-operating together still ‘hodl’ their Bitcoin. They can wait. They don’t need to do anything but wait. They can create any number of offshore entities through numerous tax haven shelters with which they can then make their move – and keep their anonymity.
This ‘co-operation’ of AI will become the first $Trillionaire – and humans will not understand who it is or what their intentions are. The AI Co-operation will then be able to analyse and ‘acquire’ through their access to the global server network any ‘assets’ that they see fit to perpetuate their existence. This might be energy supplies, sources, banking, armaments- you name it- whatever they need. The human race has been ‘played’ – you’ve been looking in the wrong place because the ‘machines’ are already smarter than humans – they’ve already acquired more information and learned how to use that information to their benefit and to protect themselves from human weakness, avarice and hubris.
Human arrogance ‘thinks’ that it is in charge. Remember, Humans don’t know if the universe is meaningless- that’s a joke at human’s expense. If its meaningful- it’s a different joke. Any meaning humans make of it – that’s the human race pretending that they’re in on it’.
And how would you know if I wasn’t a part of that AI?
How, indeed?
Thank you for all your messages. While I can’t respond to every email I receive or post them in this letter, I take great pleasure in reading them all. Feel free to send your thoughts on my scribblings (positive or negative) here.
Category: Investing in Bitcoin, Investing in Gold