The idea of charity is a deeply Christian notion. Charity is love for your neighbor, the idea that you provide for them when they are in need. Some of the first hospitals, for example, were Christian charity institutions. The principle that the poor and needy should be treated with love and dignity was an alien notion to most philosophies, from those developed by the Romans to those of Nietzsche. Charity is one of the markers of Western civilization.
Unfortunately, charity has been debased. As a Christian virtue, charity is a much greater notion of love than just almsgiving. Sadly, the word “charity” has changed to mean pretty much only almsgiving as a result of fiat money. Instead of meaning helping the poor and vulnerable neighbor when they are in need, it now means giving money to some central organization to help people on your behalf. Charity has transitioned from a concrete action helping someone to a monetary gift to a central party. Charity has devolved like an absentee dad making up for a lack of relationship by buying his kids toys.
Unsurprisingly, fiat money has contributed greatly to this debasement.
Charity In The Past
Charity used to be very local. You had a relationship with your neighbor and helping them out was a part of the communal experience. There was already a web of relationships that connected you and charity was received with gratitude. The giver and the recipient both knew that the help wasn’t something you could take for granted. Abusing charity had harsh consequences. Taking advantage of charity would be breaking the very relationships that provided that charity and would damage more relationships besides. Abusing charity would be like sawing off the branch you’re standing on and few people would be foolish enough to do so.
Nowadays, relationships are treated as disposable. People don’t have an incentive to act well because ultimately, the bad reputation that it should engender doesn’t really come back to bite them. Most people are dependent on their employers or governments, so as long as those relationships are good, they’re fine letting other relationships go.
Thus, relationship dynamics are much more high time preference. A relationship with a person is very different than a relationship with an organization. Organizations, quite frankly, are much easier to fool and they rely on bureaucratic procedures to determine your neediness. The centralization of our relationships around large organizations has made abuse of charity much easier.
As a result, charity has become less effective and mostly economic. What used to be fulfillment of all sorts of human needs has been reduced to monetary help. Fiat mentality is thinking that money can solve any and all problems, and charities are infected.
As with all virtues, practicing real charity is hard. It not only requires sacrifice on the part of the giver, but also their effort, whether it’s time or relationship capital that’s spent, or your personal skills that are used to help. What charitable organizations have done is to outsource all of that in an economic transaction with themselves in the middle.
The fiat mentality that money can solve everything has placed these large organizations in the middle and unsurprisingly, the money often isn’t used very effectively, nor in a way that actually helps.
Cantillonaire Almsgiving
Fiat money has made charity pretty impersonal. Giant organizations sit in the middle of the almsgiving. These organizations are very convenient for the would-be altruist. The hard work of virtue is outsourced to someone else. Love for a neighbor can be bought for some money.
The money, if earned under a sound money economy, likely produced a lot of goods and services. In a fiat money economy, however, that money may have been earned through Cantillon effects, that is, through theft. The reputations of Cantillon winners are generally pretty bad. Think about the typical investment banker and what sort of reputation they have. Many people want to be investment bankers, it’s true, but they’re not exactly beloved.
Rent seekers don’t really add anything to society and that’s why their reputations are terrible. They need some level of reputation repair and charity gives them a convenient way to do that. They can buy a good reputation through charity.
This is a tried and true strategy for many billionaires. By focusing on “charity,” they get a tremendous reputational boost and many of their fiat abuses are put on the back burner. The incentives of fiat money are such that it encourages almsgiving, especially as a way to whitewash your fiat abuses.
At this point, you might be thinking, isn’t that good? Don’t we want charities to be funded well? Don’t we want good things that a charity provides? Allow me to disabuse you of that notion.
Charities Have Terrible Incentives
Certainly, the goals of most charities are noble. They want to end world hunger and reduce pollution and cure diseases and promote the arts. Their goals are noble, but do they actually achieve them?
The charities would have you believe that they do. Unfortunately, the incentives are such that they only tell you about their successes. After all, if they told you that they wasted millions of dollars on a scheme that didn’t work, would you donate to them? Yet there must be lots of failures. If charities were all successes, wouldn’t all of their noble goals be achieved already given the enormous amounts of funding? Wouldn’t we have world peace, lifted billions out of poverty and have cured all kinds of diseases?
This should sound familiar. These same incentives exist in a decidedly different area: government. It’s in their interest to tout only their successes. It’s in their interest to make it seem like they’re not wasting money, even if they are. We know that government wastes a tremendous amount of money. The market incentives aren’t there and funding comes through political means. As a result, we get a lot of rent seeking.
Similarly, charities tend to also have a lot of rent seeking. In Barack Obama’s autobiography, “Dreams From My Father,” he talks about his experience as a community organizer. He was frustrated at how many of the charities that were supposed to help these communities were staffed by people who didn’t do anything. This behavior was so common that whenever he was associated with a charity, people in these neighborhoods would hit him up for jobs at that charity. In other words, charities are known to be a haven for rent seeking.
Charities have a structural problem and unfortunately good intentions, or noble goals, are not enough. Too many people trust charities to do the right thing and that trust unfortunately gets abused.
Very Little Verification
People like charity. It’s the original virtue signaling. Donate some money to some cause and it makes you look altruistic. I say this somewhat cynically, because so many of the people who donate to charity don’t actually follow up and verify whether the money is being spent well. If people really cared about the results, most of their effort would be on the verification aspect of these charitable endeavors.
Sadly, the only verification you receive are from the charities themselves and of course they have a huge incentive to make it seem as though they’re doing massive good. Sadly, the accountability is lacking in most charities. If we really cared about the good they were doing, then each charity would be much more scrutinized.
But, as we saw with fiat monetary systems, there’s much less scrutiny in general. VC due diligence is a complete joke. We’ve seen this over and over again, whether it be WeWork, Theranos or FTX. The money isn’t real anyway, so the more important job for a VC is to get in on investments that everyone else is getting into and dump. They give lip service, but don’t really care all that much about dull things like profit and loss. Sound money systems have much more scrutiny because there’s no endless spigot of money coming in.
And indeed, this pattern of much less scrutiny extends to charities. In a sound-money economy, charities are deeply scrutinized for actual good that’s done because the money is scarce. There’s more verification and less trust. In a fiat money economy, there’s way more money, so there’s more dependence on trust.
A charity is, in some sense, an investment. The investment is not for your own profit, obviously, but for the good of civilization. And those need to have at least as much accountability as normal investments. Instead, most people outsource that verification to others, often the charity itself. Do you honestly expect someone taking your money to tell you about how they spent it badly?
The Politicization Of Charity
One of the reasons why charity has become so political and rent seeking is because of the special player in the fiat money economy: the money printer. Charities don’t just get money from rich people, they often get money from government coffers.
Since 2018, San Francisco has given over $1 billion in grants to nonprofits to fight homelessness. That’s a single issue in a single city. I will note with prejudice that the homelessness problem in San Francisco since 2018 has gotten much worse, not better. Would you stick with a workout regimen if it made you weaker? What are all these nonprofits doing, anyway?
As you might expect with fiat money, the charities that survive are the ones that are connected politically. Outcomes are secondary to getting access to government coffers. Further, government funding of these charities serves as an informal verification system to donors that can’t be bothered.
Charities are perceived to be not driven by money. Yet if you look at their organizational structure, what becomes very clear is that money is at the center of everything they do. Instead of earning money through useful goods and services provided to the market, they go straight to donors like city governments to provide them with money. They sound noble, forsaking the dirty game of capitalism, but in its place is a dirtier game of playing politics to get the money they need to operate.
Further, because these charities aren’t dependent on outcomes or markets, the people that are in these organizations generally aren’t very good with money. Which is to say, that they’re not good at achieving the goals of the charity or making things more efficient. Their specialization is politics, marketing and publicity. Many are very good at throwing $20,000-per-person parties to raise money, but not so good at actually building wells. A lot of money going into charities gets wasted.
Because of fiat money, charities tend to leverage political skills rather than economic ones. They’re good at getting the high esteem of others and being viewed a certain way. They are in a sense a market good. The donors get a status boost for their donation. Charities survive despite their ineffectiveness, because of their political positioning.
So, What Now?
My view of charities is a bit depressing. I’ve just told you that many charities run on trading money for virtue signaling. How can we turn this around? Should charities even exist? Can we prevent bad organizations from taking advantage of our desire to virtue signal?
There is hope. There is a good way to do charity and, given that I expect many of you reading this to be in positions to give a lot of money away in the future, I have some thoughts.
First, verify. The sad reality of today’s charitable giving is that there’s too little verification and way too much trust. Giving away money for the greater good is not easy. I daresay that it’s often harder than earning it. Fiat money created this culture of trusting the slick salesman instead of verifying things for yourself. Much like with our money, we need to verify the charities we give to. Your money isn’t enough, your effort is required to give effectively.
The easiest way to verify is to have a close relationship with the person you’re giving your money to. This doesn’t mean that you’re in the same country club as the president of the non-profit, but doing some due diligence on the actual people that the charity is helping. Humans are built for relationships and that should be at the center of charity, not the money. The money is supposed to be secondary to the real virtue of charity, which is loving others.
Another possibility is to cut out the middleman and reduce the politicization of charitable giving. The giant charitable organization makes the monetary giving very easy, but in many other ways adds a lot of cost. By cutting out the middleman, we reduce the possibility of rent-seeking.
Middlemen are less necessary than ever. Giving direct contributions to the people that need it is much easier with Bitcoin. Verification, again, is difficult without some real relationship. Thus, if you really care about charity, go and make some relationships with the people that you want to help. Instead of waxing poetically about some oppressed group somewhere, go become friends with members of that group. I’m not saying this will be easy, but actually having a relationship with the people you’re helping will go a long way toward verification. Incidentally, this is one of the many reasons I really like going to the Oslo Freedom Forum. You can meet and interact with the people that need the help.
Second, look at the incentives. Charities like to think that they’re above economic incentives, but that’s not the case. Who’s in charge and how can you be sure that the money is going to the right place and done so in a way that’s efficient? If the charity pays more than the market rate for some good, that’s going to have second- and third-order effects. For example, many local clothing makers in developing countries go out of business when a charity gives clothes away for free. Yes, it feels good to help people get clothed, but you’re also stifling entrepreneurship in the region. You may be causing more harm than good. Make the calculation yourself instead of outsourcing it to the charity.
Third, beware of your own motivations. There are numerous altcoins which use charities as a way to whitewash the fraud they’re engaged in. They virtue signal because what they’re doing is so clearly scammy. This is so prevalent, in fact, that I see it as a horrible signal. If you feel the need to whitewash your gains through charity, those gains are likely ill gotten.
In the same way, we often give to charity as a way to boost our social standing, ease our conscience or to feel good about ourselves. Our motivation matters because it’s going to affect how much we verify. Give without telling other people that you’re giving. And give to people who you already know. If you don’t know anyone in need, go and make more friends outside of your bubble. Having the right motivation isn’t a cure-all, but it certainly helps you to put your money in the right place.
Bitcoin Fixes This
Thankfully, charity is strengthened by Bitcoin. Fiat money makes trusting other people to do the right thing the norm and of course, that trust gets abused. With Bitcoin, we can cut out the middleman and have direct relationships with the people we want to help.
Fiat money has made charity much shallower. Charity shouldn’t end with a donation, it should continue until the actual people that it’s supposed to help are actually helped. As such, we need a much deeper understanding of what helping the poor and vulnerable is. In that sense, charity demands not just money but also our time, effort and energy.
Fiat charity has been debased through fiat money. Exercising real charity is much harder than the current fiat version, which is outsourcing virtue to some monolithic organization.
Giving money away in an effective way is very hard. It’s as hard or more difficult than earning money from the marketplace. The same level of rigor needs to be applied to giving as earning, otherwise, you’re just going to enable a bunch of rent seekers.
Verify, don’t trust. Verify the organization, yourself and the people that you’re helping. Charity requires more from you and anything less may very well be paving a road to hell.
This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Opinion by Jomo Kwame Sundaram, Timothy A. Wise (boston and kuala lumpur)
Inter Press Service
BOSTON and KUALA LUMPUR, Nov 29 (IPS) – Despite its dismal record, the Gates Foundation-sponsored Alliance for a Green Revolution in Africa (AGRA) announced a new five-year strategy in September after rebranding itself by dropping ‘Green Revolution’ from its name.
Rebranding, not reform
Instead of learning from experience and changing its approach accordingly, AGRA’s new strategy promises more of the same. Ignoring evidence, criticisms and civil society pleas and demands, the Gates Foundation has committed another $200 million to its new five-year plan, bringing its total contribution to around $900 million.
Timothy A. WiseMore than two-thirds of AGRA’s funding has come from Gates, with African governments providing much more – as much as a billion dollars yearly – in subsidies for Green Revolution seeds and fertilizers.
Stung by criticism of its poor results, AGRA delayed announcing its new strategy by a year, while its chief executive shepherded the controversial UN Food Systems Summit of 2021. Following this, AGRA has been using more UN Sustainable Development Goals rhetoric.
Hence, AGRA’s new slogan – ‘Sustainably Growing Africa’s Food Systems’. Likewise, the new plan claims to “lay the foundation for a sustainable food systems-led inclusive agricultural transformation”. But beyond such lip service, there is little evidence of any meaningful commitment to sustainable agriculture in the $550 million plan for 2023–27.
Despite heavy government subsidies, AGRA promotion of commercial seeds and fertilizers for just a few cereal crops failed to significantly increase productivity, incomes or even food security. But instead of addressing past shortcomings, the new plan still relies heavily on more of the same despite its failure to “catalyze” a productivity revolution among African farmers.
Jomo Kwame SundaramThe supposedly new strategy dashes any hopes that AGRA or the Gates Foundation would acknowledge the harmful social and environmental effects of Green Revolutions in India, Africa and elsewhere. AGRA offered no explanation for why it dropped ‘Green Revolution’ from its name.
The name change suggests the 16-year-old AGRA wants to dissociate itself from past failures, but without acknowledging its own flawed approach. Recently, much higher fertilizer prices – following sanctions against Russia and Belarus after the Ukraine invasion – have worsened the lot of farmers relying on AGRA recommended inputs.
It is time to change course, with policies promoting ecological farming by reducing reliance on synthetic fertilizers as appropriate. But despite its new slogan, AGRA’s new strategy intends otherwise.
Last month, the Alliance for Food Sovereignty in Africa rejected the strategy and name change as “cosmetic”, “an admission of failure” of the Green Revolution project, and “a cynical distraction” from the urgent need to change course.
Productivity gains and losses
Despite spending well over a billion dollars, AGRA’s productivity gains have been modest, and only for a few more heavily subsidized crops such as maize and rice. And from 2015 to 2020, cereal yields have not risen at all.
Meanwhile, traditional food crop production has declined under AGRA, with millet falling over a fifth. Yields actually also fell for cassava, groundnuts and root crops such as sweet potato. Across a basket of staple crops, yields rose only 18% in 12 years.
Farmer incomes have not risen, especially after increased production costs are taken into account. As for halving hunger, which Gates and AGRA originally promised, the number of ‘severely undernourished’ people in AGRA’s 13 focus countries increased by 31%!
A donor-commissioned evaluation confirmed many adverse farmer outcomes. It found the minority of farmers who benefited were mainly better-off men, not smallholder women the programme was ostensibly meant for.
That did not deter the Gates Foundation from committing more to AGRA despite its dismal track record, failed strategy, and poor monitoring to track progress. Judging by the new five-year plan, we can expect even less accountability.
The new plan does not even set measurable goals for yields, incomes or food security. As the saying goes, what you don’t measure you don’t value. Apparently, AGRA does not value agricultural productivity, even though it is still at the core of the organization’s strategy.
Last month, the Rockefeller Foundation, AGRA’s other founding donor and a leader of the first Green Revolution from the 1950s, announced a reduction in its grant to AGRA and a decisive step back from the Green Revolution approach.
Its grant to AGRA supports school feeding initiatives and “alternatives to fossil-fuel derived fertilisers and pesticides through the promotion of regenerative agricultural practices such as cultivation of nitrogen-fixing beans”.
Business in charge
AGRA’s new strategy is built on a series of “business lines”, e.g., the “sustainable farming business line” will coordinate with the “Seed Systems business line” to sell inputs. Private Village Based Advisors are meant to provide training and planting advice in this privatized, commercial reincarnation of the government or quasi-government extension services of an earlier era.
The UN Food and Agriculture Organization successfully promoted peer-learning of agro-ecological practices via Farmer Field Schools after successfully field-testing them. This came about after research showed ‘brown hoppers’ thrived in Asian rice farms after Green Revolution pesticides eliminated the insect’s natural predators.
China lost a fifth of its 2007-08 paddy harvest to the pest, triggering a price spike in the thinly traded world rice market. Seeking help from the International Rice Research Institute, located in the Philippines, a Chinese delegation found its Entomology Department had lost most of its former capacity due to under-funding.
Earlier international agricultural research collaboration associated with the first Green Revolution – especially in wheat, maize and rice – seems to have collapsed, surrendering to corporate and philanthropic interests. This bitter experience encouraged China to step up its agronomic research efforts with a greater agro-ecological emphasis.
Empty promises?
The new strategy promises “AGRA will promote increased crop diversification at the farm level”. But its advisers cum salespeople have a vested interest in selling their wares, rather than good local seeds which do not require repeat purchases every planting season.
AGRA is not strengthening resilience by promoting agroecology or reducing farmer reliance on costly inputs such as fossil fuel fertilizers and other, often toxic, agrochemicals. Despite many proven African agroecological initiatives, support for them remains modest.
The new strategy stresses irrigation, key to most other Green Revolutions, but conspicuously absent from Africa’s Green Revolution. But the plan is deafeningly silent on how fiscally strapped governments are to provide such crucial infrastructure, especially in the face of growing water, fiscal and debt stress, worsened by global warming.
It is often said stupidity is doing the same thing over and over again, expecting different results. Perhaps this is due to the technophile conceit that some favoured innovation is superior to everything else, including scientific knowledge, processes and agro-ecological solutions.
This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis about Bitcoin in 2015.
The following article is the last part of a series of articles in which I aim to explain some of the benefits of using bitcoin as a “tool.” The possibilities are endless. I selected three areas where bitcoin has helped me. Bitcoin helped me take my entrepreneurial endeavors to the next level by allowing me to easily and efficiently manage my money and build savings. In part one, I explained what opportunities bitcoin offers for real estate investors.In part two, I described how bitcoin can help us find optimism for a brighter future.
Evolutionary psychologists believe that the ability to preserve wealth gave modern humans the decisive edge in evolutionary competition with other humans. Nick Szabo included an interesting anecdote in his essay “Shelling Out: The Origins of Money.” When Homo sapiens sapiens displaced Homo neanderthalensis in Europe roughly 35,000 years ago, a population explosion followed. It’s difficult to explain why, because the newcomers, H. s. sapiens had similar-sized brains, weaker bones and smaller muscles than the Neanderthals. The biggest difference may have been wealth transfers made more effective or even possible by collectibles. H. s. sapiens took pleasure from collecting shells, making jewelry out of them, showing them off and trading them. Neanderthals did not.
It follows that the capability to preserve wealth is one of the foundations of human civilization. Historically, there have been a variety of wealth preservation technologies that have constantly changed and adapted to the technological possibilities of the time. All wealth preservation technologies serve a specific function: to store value. Chief among the early forms is handmade jewelry. Below I will compare bitcoin to the four most commonly used wealth preservation technologies today — gold, bonds, real estate and equities — to show why they underperform and how efficiently bitcoin can help us save and plan for our future. For equities, I focus specifically on ETFs as equity instruments used as a means of long-term savings.
What Makes A Good Store Of Value?
As explained by Vijay Boyapati, when stores of value compete against each other, it is the unique attributes that make a good store of value that allows one to outcompete another. The properties of a good store of value are durability, portability, fungibility, divisibility and especially scarcity. These properties determine what is used as a store of value; for example, jewelry may be scarce, but it’s easily destroyed, not divisible and certainly not fungible. Gold fulfills these properties much better. Over time, gold has replaced jewelry as humankind’s preferred technology for wealth preservation, serving as the most effective store of value for 5,000 years. However, since the introduction of bitcoin in 2009, gold has faced digital disruption. Digitization optimizes almost all value-storing functions. Bitcoin serves not only as a store of value but is also an inherently digital money, ultimately defeating gold in the digital age.
Bitcoin Versus Gold
Durability
According to Boyapati, “Gold is the undisputed king of durability.” Most of the gold that has been mined remains extant today. Bitcoin is a ledger of digital records. Thus, it is not bitcoin’s physical manifestation whose durability should be considered, but the durability of the institution that issues them. Bitcoin, having no issuing authority, may be considered durable so long as the network that secures it remains intact. It is too early to draw conclusions about its durability. However, there are signs that, despite instances of nation-states attempting to regulate Bitcoin and years of attacks, the network has continued to function, displaying a remarkable degree of antifragility. In fact, with nearly 99.99% uptime, it is one of the most reliable computer networks ever.
Portability
Bitcoin’s portability is far superior to that of gold, as information can move at the speed of light — thanks to telecommunication. Gold has lost its appeal in the digital age. You can’t send gold over the internet. Online gold portability simply doesn’t exist. For decades, the inability to digitize gold created problems in our monetary system. With the digitization of money whether national currencies were actually backed by gold was not clear. Additionally, it is difficult to transport gold across borders because of its weight. This has created problems for globalized trade. Our fiat-based monetary system exists today because of gold’s weakness in terms of portability. Bitcoin is a solution to this problem as it is a natively digital, scarce commodity that is easily transportable.
Bitcoin is purely digital, so its divisibility is much better than gold. Information can be subdivided and recombined almost infinitely at almost zero cost. A bitcoin can be divided into 100,000,000 units called satoshis. Gold on the other hand is difficult to divide. It requires special tools and carries the risk of losing gold in the process.
Fungibility
Gold can be distinguished in many ways, i.e., with an engraved logo, but when it is melted down it becomes fully fungible. With bitcoin, fungibility is tricky. Bitcoin is digital information, which is the most objectively discernible substance in the universe. However, since all Bitcoin transactions are transparent, governments could ban the use of bitcoin that has been used for activities deemed illegal. This would negatively impact bitcoin’s fungibility and its use as a medium of exchange, because when money is not fungible, each unit of the money has a different value and the money has lost its medium-of-exchange property. This does not affect bitcoin’s store-of-value function, but rather its acceptance as money, which can negatively impact its price. Gold’s fungibility is superior to bitcoin’s, but gold’s portability disadvantages make it useless as a medium of exchange or a digital store of value.
Scarcity
Gold is relatively scarce, with an annual inflation rate of 1.5%. However, the supply is not capped. There are always new discoveries of gold and there is a possibility that we will come across large deposits in space. Gold’s price is not perfectly inelastic. When gold prices rise, there is an incentive to mine gold more intensively, which can increase supply. In addition, physical gold can be diluted with less precious metals, which is difficult to verify. Furthermore, gold held in online accounts via exchange-traded commodities or other financial products is difficult to control and negatively impacts the price by artificially increasing supply. On the other hand, the supply of bitcoin is hard-capped: There will never be more than 21,000,000. It is designed to be deflationary, meaning there will be less of it over time. Bitcoin’s annual inflation rate is currently 1.75% and will continue to decrease. Bitcoin mining rewards are halved roughly every four years, in accordance with the protocol’s code. In 10 years, bitcoin’s inflation rate will be negligible. The last bitcoin will be mined in 2140; after that, the annual inflation rate of bitcoin will be zero.
Auditability
This is not a unique proposition for a store of value, but it is still important because it provides information about whether a store of value is suitable for a fair and transparent financial system. Bitcoin is perfectly audible to the smallest unit. No one knows how much gold exists in the world and no one knows how many U.S. dollars exist in the world. As pointed out by Sam Abbassi, bitcoin is the first perfectly public, globally auditable asset. This prevents rehypothecation risk, a practice whereby banks and brokers use assets posted as collateral by their clients for their own purposes. This takes an enormous amount of risk out of the financial system. It allows for proof of reserves, where a financial institution must provide their Bitcoin address or transaction history in order to show their reserves.
In 1949, Benjamin Graham, a British-born American economist, professor and investor, published “The Intelligent Investor,” which is considered one of the foundational books of value investing and a financial literature classic. One of his tenets is that a balanced portfolio should consist of 60% stocks and 40% bonds, as he believed bonds would protect investors from significant risk in the stock markets.
While much of what Graham described still makes sense today, I argue that bonds — particularly government bonds — have lost their place as a hedge in a portfolio. Bond yields cannot keep up with monetary inflation and our monetary system is systematically at risk. This is because the financial health of many governments that form the heart of our monetary and financial system are also at risk. When government balance sheets were in decent shape, the implied risk of default by a government was almost zero because of two main reasons: their ability to tax and, more importantly, their ability to print money to pay down debt. In the past, that bond allocation made sense, but eventually printing money has become a “credit boogie man,” as explained by Greg Foss.
Governments are circulating more money than ever before. Data from the Federal Reserve shows that a broad measure of the stock of dollars, known as M2, rose from $15.4 trillion at the start of 2020, to $21.18 trillion by the end of December 2021. The increase of $5.78 trillion equates to 37.53% of the total supply of dollars. This means that the dollar’s monetary inflation rate has averaged well over 10% per year over the last three years. Treasury bonds are yielding less.
The return that one could earn on money tomorrow by parting with that money today should theoretically be positive in order to compensate for risk and opportunity cost. However, when inflation is accounted for, bonds have become a contractual obligation to lose money. In addition, there is the risk of a systematic failure. The global financial system is irreversibly broken and bonds are at high risk.
There is an irresponsible amount of credit in the markets. In recent decades, central banks have had very loose debt policies and nation-states have incurred large amounts of debt. Argentina and Venezuela have already defaulted. There is a possibility that more countries will default on their debt. This default does not mean they can’t pay back their debt by printing more money. However, this would devalue the national currency, causing inflation and making most bonds ever less attractive, with their comparatively low yields.
For the past 50 years, when equities sold off, investors fled to the “safety” of bonds which would appreciate in “risk off” environments. This dynamic built the foundation of the infamous 60/40 portfolio — until that reality finally collapsed in March 2020, when central banks decided to flood the market with money. The attempt to stabilize bonds will only lead to an increased demand for bitcoin over time.
Graham’s philosophy was to preserve capital first and foremost, and then to try to make it grow. With bitcoin, it is possible to store wealth in a self-sovereign way with absolutely zero counterparty or credit risk.
Bitcoin Versus Real Estate
Given the high levels of monetary inflation in recent decades, keeping money in a savings account is not enough to preserve the value of that money. As a result, many people hold a significant portion of their wealth in real estate, which has become one of the preferred stores of value. In this capacity, bitcoin competes with real estate. The properties associated with bitcoin make it an ideal store of value: The supply is finite, it is easily portable, divisible, durable, fungible, censorship resistant and noncustodial. Bitcoin is rarer, more liquid, easier to move and harder to confiscate. It can be sent anywhere in the world at almost no cost and at the speed of light. On the other hand, real estate is easy to confiscate and very difficult to liquidate in times of crisis, as recently illustrated in Ukraine, where many turned to bitcoin to protect their wealth, accept transfers and donations and meet their daily needs.
In a recent interview, Michael Saylor detailed the downsides of real estate as a store-of-value asset. As explained by Saylor, real estate in general needs a lot of attention when it comes to maintenance: rent, repairs, property management and other high costs arise. Commercial real estate is very capital-intensive and therefore uninteresting for most people. Furthermore, attempts to make the asset more accessible have also failed, with second-tier investments, such as real estate investment trusts (REITs) falling short of actually holding the asset.
As bitcoin (digital property) continues its adoption cycle, it may replace physical property as the preferred store of value. As a result, the value of physical property may collapse to its utility value and no longer carry the monetary premium of being used as a store of value. Going forward, bitcoin’s returns will be many times greater than real estate, as bitcoin is just at the beginning of its adoption cycle. In addition, we will most likely not see the same type of returns on real estate investments as we have in the past. Since 1971, house prices have already increased nearly 70 times. Beyond that, as Dylan LeClair points out in his article, “The Conclusion of the Long-Term Debt Cycle And The Rise Of Bitcoin,” governments tend to tax citizens at times like this. Real estate is easily taxed and difficult to move outside of one jurisdiction. Bitcoin cannot be arbitrarily taxed. It is seizure resistant and censorship resistant outside of the domain of any one jurisdiction.
Exchange-traded funds (ETFs) emerged from index investing, which utilizes a passive investment strategy that requires a manager to only ensure that the fund’s holdings match those of a benchmark index. In 1976, Jack Bogle, founder of the Vanguard Group, launched the first index fund, the Vanguard 500, which tracks the returns of the S&P 500. Today, ETFs manage well over $10 trillion. Bogle had a single tenet: Active stock picking is a pointless exercise. I recall him stating in his interviews that over a lifespan, there is only a 3% chance that a fund manager can consistently outperform the market. He concluded that average investors would find it difficult or impossible to beat the market, which led him to prioritize ways to reduce expenses associated with investing and to offer effective products that enable investors to participate in economic growth and save. Index funds require fewer trades to maintain their portfolios than funds with more active management schemes and therefore tend to produce more tax-efficient returns. The concept of an ETF is good, but bitcoin is better. You can cover a lot of ground through an ETF, but you still have to limit yourself to one index, industry or region. However, when you buy bitcoin, you buy a human productivity index. Bitcoin is like an “ETF on steroids.”
Let me explain: The promise of Bitcoin should at least be on everyone’s minds by now. Bitcoin is a decentralized computer network with its own cryptocurrency (bitcoin). As a peer-to-peer network, this enables the exchange and, above all, the storing of value. It is the best money we have and is the base protocol for the Lightning Network — the most efficient transaction network there is. It is very likely that Bitcoin will become the dominant network for transactions in the not too distant future. At that point, it will act as an index of global productivity. The more productive we are, the more value we create, the more transactions are executed, the more value needs to be stored, the higher the demand for bitcoin, the higher the bitcoin price. I’ve come to the conclusion that instead of using an ETF to track specific indices, I can use bitcoin to participate in the productivity of all of humanity. As you might expect, bitcoin’s returns have outperformed all ETFs since its inception.
The SPDR S&P 500 ETF Trust is the largest and oldest ETF in the world. It is designed to track the S&P 500 stock market index. The performance over the last decade was 168%, which translates to an average annual return of 16.68%. Not bad, especially given that all an investor had to do was hold.
However, over the same period, bitcoin’s performance was 158,382.362%. More than 200% per annum. We’ve all heard the phrase that past performance is no indicator of future results. That may be true, but that is not the case with bitcoin. The higher a stock goes the riskier it becomes, because of the P/E ratio. Not bitcoin. When bitcoin increases in price, it becomes less risky to allocate to because of liquidity, size and global dominance. The Bitcoin network has now reached a size where it will last, due to the Lindy effect. We can therefore conclude that bitcoin is likely to continue to outperform ETFs going forward.
Bitcoin has other advantages over an ETF. First, it has a lower cost structure. Second, ETFs are a basket of securities held by a third party. You are not free to dispose of your ETFs. If for whatever reason, your bank decides to close your account, your ETFs are gone too, but bitcoin cannot be taken away from you so easily. Additionally, bitcoin can be moved across the internet at will at the speed of light, making confiscation nearly impossible.
Conclusion
Bitcoin is the best wealth preservation technology for the digital age. It is an absolutely scarce, digitally native bearer asset with no counterparty risk, it cannot be inflated and it is easily transportable. A digital store of value, transferable on the world’s most powerful computer network. Considering that the Bitcoin network could theoretically store all of the world’s $530 trillion of wealth, it may well be the most efficient way we humans have ever found to store value. By holding bitcoin your wealth is going to be protected, and likely increased during this early monetization process — if you hold out for the next few decades.
In closing, I’d like to revisit Jack Bogle, who had a huge influence on me. As described by Eric Balchunas, Bogle’s lifework is addition by subtraction: getting rid of the management fees, getting rid of the turnover, getting rid of the brokers, getting rid of the human emotion and the bias. I think bitcoin fits well with his investment ethos. Bogle’s primary philosophy was “common sense” investing. In 2012 he told Reuters, “Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don’t save, then you’re guaranteed to end up with nothing.”
Bitcoin is very similar to what Bogle envisioned with passive mutual funds: a long-term savings vehicle for investors to place their disposable income with low cost and little risk. Don’t be distracted by bitcoin’s volatility or negative press; Jack Bogle says to “stay the course.” We’re just getting started. Stay humble and stack sats. Your future self will thank you.
This is a guest post by Leon Wankum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Phil Snyder, professor, video director and editor.
According to Merriam-Webster, a nation-state is: “A form of political organization under which a relatively homogeneous people inhabit a sovereign state.”
Is that what Bitcoiners are — or are becoming? Like it or not, Bitcoiners are political by default. If you believe in sound money and act upon that belief through investing financial resources, time, energy, intellect, emotion and will into space, you are in direct political opposition to the current world system. But are we relatively homogeneous? Yes! If we allow that homogeneity can be an abstraction rather than limited to physical genetic origins. What binds us as a nation is our shared allegiance to such eternal values as love, peace, fairness and liberty. What preserves us as a nation is that we voluntarily submit to the rule of law embodied in the Bitcoin protocol — a code of honor that rewards the practice of those values and punishes breaches of the contract written in that code. Do we inhabit a sovereign state? Again, I believe that in the abstract the answer is “yes.” Bitcoiners, by definition, are sovereign individuals. We declare ourselves sovereigns over our own wealth and destinies by eschewing the Keynesian economics model and its fiat money system enshrined in Modern Monetary Theory (MMT) that corrupts everything it touches.
We are what Abraham Lincoln describes in the Gettysburg Address as “…a new nation, conceived in liberty and dedicated to the proposition that all men are created equal.” This kind of talk is “fightin’ words” when it reaches the ears of the King Georges of the world, who declare themselves sovereign over us. We are revolutionaries in the true sense of the word and are at war with those who seek to enslave us. Though we commit no physical violence, our very existence and our thought crimes are anathema to the fiat elites. We can point to January 3, 2009, as the day the nation was conceived with the Genesis block. Since then, we have been gestating and developing as body and soul, hidden in the womb of cryptographic code and protected from prying eyes. But the day of birth is coming soon with the requisite labor pains. It looks like we have escaped the abortionist, but will we succumb to fear at the crisis of birth as enemies unleash all the weapons at their disposal? The ESG disinformation peddlers, the global banking establishment, their minions in governments and their vicious enforcers are not going to simply declare victory and let us be on our way in peace.
There are some who talk of forming a Bitcoin political party, which may sound good at first, but Bitcoiners are international, citizens of the world. If you follow the logical progression, you could even say we already have a world government, one that isn’t beholden to any other government with aspirations of world domination. “Bitcoinia” is genuinely sovereign, and that bestows on us the potential to be sovereign individuals as well. We have, if you will, plural citizenship. I’m a citizen of the USA, of Bitcoinia, and the Kingdom of God (a.k.a., the Kingdom of Heaven). One is natural, one is digital and one is spiritual — a trifecta of sovereign allegiances.
As we all know, Bitcoin is something new, unique, and powerful enough to change the world for the better. I would declare the same for “Bitcoinians.” As a nation, we are also utterly unique — and yet we are the most diverse union of peoples in history. There are many things we disagree on, i.e., how to evangelize nocoiners, what swear words to use as adjectives when describing altcoin scammers, and just how much privacy we are willing to give up for institutional adoption and hyperbitcoinization. We are an unlikely collection of some of the wealthiest, most well-educated of every race and creed, together with some of the unbanked poorest of the poor — all yearning to breathe the fresh air of freedom and drink the pure water of our God-given liberty. We long to make our own life choices, and not to be treated as chattel by a cabal of amoral self-anointed overlords.
But who, until now, ever thought there could be a functioning decentralized government with no dictator, president, or prime minister? Even in a libertarian’s wildest dreams this might seem an impossibility. And yet, here we are. The possibilities are endless, and the potential for good in this world “simply” by fixing the money are beyond measuring. This isn’t to say that this miraculous protocol is a panacea for all the world’s ills but is a great base from which to launch ‘till Christ returns.
We have abundant reasons to be optimistic and even giddy at the prospects of all that can and will be accomplished in this revolution. We are witnesses and participants in an unprecedented historical turning with promises of ending endless wars, worldwide productivity, and fully unleashed economic prosperity. How does that look in real life? Enjoy the show, folks!
This is a guest post by Phil Snyder. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
This is an opinion editorial by Maximilian Brichta, a doctoral student at the University of Southern California currently working on his dissertation, “Vernacular Economics: On The Participatory Culture And Politics of Bitcoin”
It’s hardly a surprise that bitcoin gets maligned as a “bubble,” a Ponzi scheme, a fad, a greater fool’s theory racket or the tulip phenomenon of the 21st century. Coming off the heels of the 2008 Global Financial Crisis and the bursting of the dot-com bubble nearly a decade prior, it’s healthy to be skeptical of novel financial products. Bitcoin is commonly filed in the same category of bunk investments that have spun out of control. It’s a fair question to ask: How is bitcoin similar or different from prior speculative booms? In each case, there are constellations of narratives around the new asset class that generate ecstatic attention from investors.
There is a strand of scholarship that seeks to make sense of these narratives, but largely fails because they do not take the technical foundations of Bitcoin’s incentive structure seriously. They also mostly ignore the most active participants and texts that lie at the core of Bitcoin culture. In this essay I take a look at two such analyses, demonstrate some of the weaknesses in each of their arguments, and work toward a set of guidelines for nuanced investigations of Bitcoin narratives.
In Robert Shiller’s book “Narrative Economics,” he uses Bitcoin as a case study to illustrate how sticky economic stories arise within contemporary culture. “The Bitcoin narrative,” he suggests, “involves stories about inspired cosmopolitan young people, contrasting with the uninspired bureaucrats; a story of riches, inequality, advanced information technology, and involving mysterious impenetrable jargon.” Like Jon Baldwin, whose article “In Digital We Trust” I evaluated in part one of this essay series, his main avenue of critique is the “technobabble” or hype that characterizes Bitcoin discourse.
The issue is that neither of these authors give much consideration to how the technical features of the code shape these narratives. These features might include the proof-of-work consensus mechanism, the difficulty adjustment algorithm and the supply distribution schedule that produce Bitcoin’s incentive structure and shape its market rhythms. On the few occasions that Shiller does consider the role of its technical aspects in his analysis, he only does so to demonstrate how little “Bitcoin enthusiasts” seem to actually know about the technology:
“I will make no attempt here to explain the technology of Bitcoin, except to note that it is the result of decades of research. Few people who trade Bitcoins understand this technology. When I encounter Bitcoin enthusiasts, I often ask them to explain some of its underlying concepts and theories, such as the Merkle tree or Elliptic Curve Digital Signature Algorithm, or to describe Bitcoin as an equilibrium of a congestion-queuing game with limited throughput. Typically the response is a blank stare. So, at very least, the theory is not central to the narrative, except for the basic understanding that some very smart mathematicians or computer scientists came up with the idea.”
There are multiple weaknesses in this line of argument. Foremost, this assessment is based on anecdotal evidence of “Bitcoin enthusiasts” he’s encountered. Throughout the book, it never becomes clear who these “enthusiasts” are, where he encountered them, or what sort of knowledge or personal investment they have in Bitcoin.
Second of all, he prompts his anecdotal subjects to explain complex cryptographic features that are fundamental to Bitcoin’s protocol, yet rarely play prominent roles in Bitcoin discourse, even within some of the most dedicated circles of Bitcoiners. It is a curious choice of technical features given that he appears to borrow these terms from an article focused on the “Economic Analysis of the Bitcoin Payment System.” This article primarily focuses on the way Bitcoin’s protocol adjusts its rewards to incentivize participation. These features are fundamental to understand when considering narratives around the plausibility of Bitcoin’s perpetuity and projected ability to remain in a state of price discovery. In other words, he deflects the key technical features that affect Bitcoin’s narratives and selects features that are likely to stump his research subjects.
In my experience of almost daily immersion in Bitcoin’s digital ecology, the primary technical features that drive its narratives are the proof-of-work consensus mechanism and difficulty adjustment algorithm. These protocol features are central to understanding Bitcoin mining and the reward schedule of newly created coins. A basic grasp of this process helps explain the basic incentive structure that motivates people to mine and accumulate Bitcoins. In simple terms: miners earn Bitcoin in proportion to the computational energy they supply to the network. More computer power contributed to the network means higher difficulty for mining coins. If miners perceive their rewards will appreciate, the incentive persists. Every four years, the size of the rewards is cut in half. Therefore, there are consistent adjustments in the difficulty and rewards to sustain interest in the process of mining. This serves as the underlying material process for assuring Bitcoin’s continued operation and for converting energy into digital assets. The provable scarcity of the asset and the sustainable incentive structure for participation is a centerpiece to the narrative of bitcoin’s possibility of appreciating into perpetuity.
Had Shiller searched “proof-of-work” or “halving” rather than “digital signature algorithm” in his ProQuest News and Newspaper query, I anticipate he may have discovered a relative heap of results compared to the handful that turned up. Although, it is also noteworthy to mention that Shiller queries mainstream news and newspapers — unlikely outlets to find content where you might find originally sourced content from Bitcoiners. I would suggest that actual “Bitcoin enthusiasts” would more likely be found on Twitter and reading publications like Bitcoin Magazinerather than mainstream newspapers. On top of that, his footnotes only reference two news articles from Bitcoin.com, four mainstream news articles, one academic article, and the Bitcoin white paper. In short: Shiller seemingly ignores the forums you’d likely find Bitcoiners congregating on the web, despite the fact that his book highlights the importance of social media’s role in narrative virality. His analysis lacks grounding, or at least makes the mistake of confusing mainstream news sources as a primary body of texts in which Bitcoin narratives form and proliferate.
Another instance of Shiller’s loosely grounded generalizations appears in his assertion that “There are brilliant computer scientists who are fascinated by cryptocurrencies but who won’t say whether the captivating ideas that generate public excitement are ultimately right or wrong.” Who are these brilliant scientists he speaks of and what does it mean for them to apparently avoid commenting on the validity of the hyped narrative around Bitcoin? Again, readers are left guessing who Shiller’s shadowy research subjects are and what texts he’s referring to as grounds for these claims.
Later in the book, Shiller suggests that the younger generation’s superior ability to understand Bitcoin while older generations struggle with it also has narrative appeal:
“Maybe part of the appeal is that understanding Bitcoin requires some effort and talent. There is an air of mystery around Bitcoin, just as there is conventional money. Few people understand how paper money gets its value and sustains it either… The idea that savvy young people understand Bitcoin, but that old fogies never will, appeals to many.”
Perhaps there is some of this generational appeal to Bitcoin narratives, but Shiller merely speculates that it exists. If Shiller were to explore the discourse of actual Bitcoiners, which he never demonstrates that he does, he might have found thousands of pages of books and articles and countless hours of videos and podcasts that take deep dives into Bitcoin’s philosophy, economics and social theory. Indeed, there is an air of mystery around Bitcoin. But there is also a robust body of knowledge that Bitcoiners have contributed to relentlessly for a decade and have shaped the stories that Shiller largely writes off as misguided. And if the stories are deemed pure hype, a logical conclusion is that Bitcoin lacks real value.
Baldwin and Shiller seem to agree that Bitcoin represents a speculative bubble with no underlying material value. In investing parlance, it lacks “fundamentals,” at least in the traditional sense of production reports, revenue streams and earning per stakeholder shares. Whereas Baldwin denounces Bitcoin as a Ponzi scheme that “must constantly be talked up” to appreciate, Shiller does not explicitly make this charge. However, he does consider how disparate, often mutating stories around Bitcoin continue to sustain its perceived value by contagiously leaping from person to person.
His narrative framework seeks nuanced explanations as to why people would believe it has value at all. Some of the key factors in these stories are fear of missing out; celebrity endorsements; mysteries about the value of conventional money; the mystery of Satoshi’s identity (or identities); the notion that Bitcoin is “the future”; economic empowerment; and its potential function as “membership token in the world economy.” He argues that these narrative constellations make Bitcoin’s value self-referential: “people are interested in Bitcoin precisely because so many other people are interested in it. They are interested in new stories about Bitcoin because they believe that other people will be interested in them too”. In short, he contends that Bitcoin’s value traces the potency and virality of its narratives at any given time. The narratives of Bitcoin’s success become self-fulfilling prophecies.
The assumption baked into this conclusion is that Bitcoin doesn’t have any real social value. An important question that seems to be left of both Shiller and Baldwin’s analyses is: To whom does Bitcoin have value for from a use case standpoint? Both authors are so focused on the narratives that they believe are untethered from reality that neither of them look beyond the use cases such as Silk Road for how people are using Bitcoin and what user demands are driving Bitcoin development. Bitcoiners, who develop, and theorize about the network are largely abstracted out of their analyses. Academic studies of Bitcoin would benefit greatly from taking a concrete look at Bitcoin culture and assessing where the narrative sync up with reality and which narrative elements are mere hype.
For example, in his article “Magical Capitalism, Gambler Subjects: South Korea’s Bitcoin Investment Frenzy,” Seung Cho Lee offers an empirical account of Korean bitcoin investors during the 2017-2018 bull run. Unlike Baldwin and Shiller, Lee is refreshingly clear about who his subjects are and the cultural context they are participating within. During the 2018-2017 bitcoin bull run, Koreans made up roughly 21% of the global bitcoin investors. Lee observed two of the most popular Bitcoin social media forums, one in which the user profiles were anonymous and the other not. He characterizes these participants as “lay bitcoin investors” who appear to walk a thin line between investing and gambling.
The one caveat to this analytic clarity appears in his first footnote where he writes “I will use bitcoin as a sort of synecdoche for all the cryptocurrencies discussed throughout this article”. As a general rule, I would argue it is analytically stronger to make a clear distinction here between bitcoin and altcoins. The different consensus mechanisms and capacities of these blockchains inspire differing and sometimes contradictory visions for the future of crypto and money. For instance, Bitcoin maximalists exclusively advocate for bitcoin and view all other cryptocurrencies as unviable, or worse, scams. The cryptocurrency space at large is characterized by intense tribalism. It is also noteworthy to point out this bitcoin buying frenzy coincided with the initial coin offering (ICO) boom, in which billions of dollars rushed into hundreds of new altcoins. That said, it is reasonable to believe the lay investors represented here may not have made many critical distinctions between coins they invested in.
He frames this frenzy as taking place against a post-developmental, neoliberal cultural backdrop. South Korea had gone through a pivotal economic transformation marked by growing wealth inequality, low wages, precarious employment and riskier investing fueled by loosely regulated consumer credit. Lee describes a scene of disenchanted youth with high hopes to strike economic success in booming capital markets. The advent of online exchanges, mobile investing apps and global crypto markets opened the possibility for mass retail investment in these “magical” markets. “The magic of financial capitalism,” Lee argues, “is deeply rooted in a mechanism that functions through self-referential valuation and self-fulfilling performativity.” Within these markets, participants perform a repertoire of rituals that justify their economic behaviors and collectivize their hopes and fears, all while calling into question the rationality of market fluctuations. As Baldwin and Shiller also argued, this creates mimetic spirals of valuation narratives that are seemingly untethered to material realities. Nevertheless, these markets offer enchanting possibilities of success during a time when disciplined labor no longer seemed to offer as much promise for material success as it had in past generations.
What stands out about this cultural context is the economic scene that Lee describes. He argues that the post-developmental era began with a South Korean financial crisis followed by a government bailout by the IMF and a deteriorated labor market. While Lee is focusing on lay investors with seemingly absent political investment in Bitcoin, it is striking to highlight that Bitcoin was introduced as a critique of the very conditions that contributed to South Korea’s economic condition. Bitcoin was positioned as a critique of failing banks and fragile monetary policy. It’s also notable to point out that the IMF has become one of the Bitcoin community’s top institutional enemies. His analysis suggests that bailed out banks and deregulated markets have created the conditions for Bitcoin to receive mass retail attention, even if its investors are unaware of the flawed monetary system that helped shape these post-developmental conditions. Bitcoin is therefore both a product of and response to poorly managed global economies by existing institutions.
Lee demonstrates how social media helps facilitate the ritualistic incantations of market participants. Lay Bitcoin investors openly questioned the rationality of the market and frequently circulated memetic expressions that helped them navigate the largely unexplainable market volatility. This is the distinguishing factor between the gambler and investor: for the gambler, “expertise consists in dealing with chance and uncertainty. Unlike the laborer, who builds an organic and continual relation with the world, the gambler embraces uncertainty and seeks to find the right moment to quickly seize opportunities”. This notion of expertise is crucial to emphasize. I would argue this includes network-specific conventions of intelligence and emotional control. Since Bitcoin is still a relatively new asset with novel metrics for its fundamentals, the social network becomes especially important for guidance on how to navigate the market. As Lee shows, this entails a repertoire of memetic behaviors that instill hope, confidence, and trust while quelling fear, uncertainty, and doubt. When it comes to prediction tools, technical analysis is heavily relied upon. Although, many participants within the market community openly cast doubt on the efficacy of technical indicators that are frequently invalidated by abrupt and exaggerated moves on the price charts. These conventions of participation make it possible for investors to form meaningful relationships to the market.
Similar to Baldwin and Shiller, Lee is burdened to make sense of Bitcoin’s value that is generally agreed to have no objective, intrinsic anchor. Like the previous authors, he concludes that ultimately bitcoin’s value is a matter of self-reference: “What determines the price of a financial commodity is thus people’s beliefs about what other people believe, or collective belief on collective belief.” Notably, Lee generalizes this principle to all financial markets. Yet, Bitcoin remains a prime example because it lacks clear fundamentals and is an altogether new financial product that is hard to make meaningful comparisons to. Due to its self-referential nature, any information that circulates about Bitcoin or events that may affect its price are interpreted through its community’s conventions for valuation. News is framed in such a way that it constantly fits the desired valuation narratives. He argues that “every piece of information and every statement about Bitcoin is supposed to be subject to this self-fulfilling valuation process in which the ‘constative’ meaning [its nature of being true or false] of a certain statement is deciphered based only on its ‘performative’ effect”. In this regard, the Bitcoin valuations can be based on faith in the potency of its narrative to continually inspire confidence in more market participants.
Out of the three authors, Lee offers the most compelling case for how Bitcoin’s narrative is shaped by its actual market participants. By situating actual investors within a cultural context, it becomes increasingly clear what motivations might be involved in financial risk taking, how this participation can function as enchantment, and how news about Bitcoin is filtered into ever-bullish narratives. While Shiller appears to look at newspapers for instances of these narratives, Lee argues that news information is poached, interpreted, and circulated between market participants. This is of course an information feedback loop itself. The community filters news and fortifies the bullish case for Bitcoin. This increases interest in the asset. The news reports on the fluctuations of this market because it proves to be a popular asset. However, Lee only offers a small set of examples regarding how different messages are performatively interpreted. Baldwin and Shiller’s focus on the political and techno-utopian discourse offer clues as to what interpretive conventions may be at play. In the following essay of this series, I will consider how aspects of each of these authors may inform a vernacular theory framework for studying the culture of Bitcoin’s most ardent supporters.
This is a guest post by Maximilian Brichta. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The 17th Internet Governance Forum (IGF), to be hosted by the Government of Ethiopia with the support of UN ECA and UN DESA, will take place from 28 November to 2 December 2022 in Addis Ababa, Ethiopia, under the overarching theme “Resilient Internet for a Shared Sustainable and Common Future”. There are five themes that guide the agenda of the meeting, drawn from the Global Digital Compact found in the UN Secretary-General’s report on “Our Common Agenda”. Credit: United Nations
Opinion by Emma Gibson (addis ababa, ethiopia)
Inter Press Service
ADDIS ABABA, Ethiopia, Nov 28 (IPS) – The upcoming consultation on the Global Digital Compact presents a unique opportunity to ensure that human rights in the digital world are protected in international common standards.
The United Nations has proposed a Global Digital Compact, a set of shared principles for our digital future, which is scheduled to be agreed upon by Member States in September 2024. The Compact is expected to “outline shared principles for an open, free and secure digital future for all”, and the consultation being conducted by the UN Secretary-General’s Envoy on Technology presents a unique opportunity to ensure that these principles are rooted in human rights law and underpinned by an intersectional feminist, anti-discrimination analysis.
This is not the first time a range of countries have contributed to a document articulating a better way forward in the digital world. The Declaration for the Future of the Internet lays out priorities for an “open, free, global, interoperable, reliable, and secure” Internet, and establishes a code of practice for how nation-states should act in the digital sphere. Sixty-one countries have signed on, and while this is a welcome step, it underscores how the world’s current patchwork of laws and policies are failing to adequately protect and promote human rights online.
The Declaration envisions a well-governed digital domain in which human rights and democracy are defended, privacy is protected, freedom of expression is upheld, and censorship condemned.
But all this cannot be achieved simply by making a statement of intent. Our human rights apply in the digital world too and our digital rights have to be protected in law.
Securing our human rights in the digital world. Credit: Millicent Kwambai / Equality Now
The Internet – a tool for great good and huge harm
Early predictions on how the Internet would remove barriers and usher in freedoms, connect people globally, and help achieve liberty, democracy, and equality, have only partially been realized.
While the Internet has been a conduit for much good, it has also become a powerful tool to commit harm, including facilitating the proliferation of disinformation, surveillance, and polarization, alongside an explosion in online crime, harassment, and abuse.
Digital dividends do not benefit people in the way they should, and the facade of the digital world that most people see conceals the rife existence of exploitative and often low-paid work.
The application of uneven regulations across jurisdictions, and the continuing use of standards and principles that are voluntary for the private sector, has resulted in multinational tech companies largely regulating themselves. But they have failed to stem the rising tide of harmful narratives, hate speech, and disinformation that is poisoning our digital ecosystem.
We need to rethink how we ensure that the Internet and digital technologies are available, safe and accessible to all.
The call for universal digital rights
To achieve a well-governed digital realm, international women’s rights organizations Equality Now and Women Leading in AI are calling for universal digital rights, rooted in human rights law and underpinned by an intersectional, feminist informed and anti-discrimination analysis. Clearly articulating how human rights apply in cyberspace would ensure accountability on the part of governments and companies.
Some laws and regulations exist, particularly around data privacy and freedom of expression. However, what is needed is an agreed understanding of fundamental digital rights.
Providing clarity on what constitutes universal digital rights would address the current critical failings arising from the misuse of the Internet and digital technology. It would protect people from human rights violations that are outside the framing of current laws, such as how the law applies in the virtual world of the Metaverse. And it would foster an inclusive digital landscape, including by promoting equitable and affordable access to the Internet and digital technology.
Clarity on universal digital rights would respond to existing challenges around protection of a person’s “digital twin” — their digital representation. It would ensure trustworthy Artificial Intelligence, and address the current uneven and ineffective regulation of the Internet.
Human rights apply in the digital world too and our digital rights must be protected in law
Achieving universal digital rights is ambitious in scope but the only way to truly guarantee an equitable Internet and use of digital technologies is through international, multi-sectoral cooperation. Just as the efforts of individual nations alone can never solve a worldwide environmental crisis, nor can we rely on separate national laws and policies to guide, regulate, and care for our global digital ecosystem.
The fact that over five dozen countries have signed up to the Declaration for the Future of the Internet is a sign that, even in these times of geopolitical instabililty, there is still an appetite to rally behind an ideal of how the digital world should function. The Digital Global Compact provides an opportunity for realization of this ideal at the global level.
Diverse voices need to be heard and contribute to global and multi-stakeholder discussions on how we will achieve universal digital rights This is why Equality Now and Women Leading in AI are taking part in the 2022 Internet Governance Forum in Addis Ababa and are excited to connect with others who want to co-create legal, ethical, and technical solutions to address current and future harms in the digital realm.
We want to make sure that the perspectives of women, girls, and other discriminated-against groups from every part of the world are fed into the consultation on the Global Digital Compact so that the Internet and digital technology works in everyone’s interests, not against them.
Emma Gibson is the Campaign Lead, Universal Digital Rights, for Equality Now.
For media inquiries please contact: Tara Carey, Equality Now Global Head of Media, E: [email protected]; M: +447971556340 (WhatsApp)
Equality Now is a feminist organization using the law to protect and promote the human rights of all women and girls. Since 1992, an international network of lawyers, activists, and supporters have held governments responsible for ending legal inequality, sexual exploitation, sexual violence, and harmful practices.
This is an opinion editorial by Anita Posch, the founder of Bitcoin For Fairness who has traveled extensively around the world to learn how the globally unbanked can benefit from sovereign money.
In 2022, European politicians formed an initiative with the goal of banning proof-of-work mining because of its high electricity consumption. The underlying goal is to blame Bitcoin for damaging the environment, when it’s — as they claim — just a tool for useless speculation.
In 2021, the co-founder of Ripple, which advertises itself as having better qualities than bitcoin, donated $5 million to support Greenpeace USA with a campaign called “Clean Up the Code.” It attempts to lobby Bitcoin developers to change the mining mechanism from proof of work to proof of stake, which would supposedly reduce its power consumption by 99%. With Ethereum moving from proof of work to proof of stake recently, these actors feel they have seen their theory confirmed and are trying to lobby against Bitcoin even more.
What they don’t mention is that the differences between proof of work to proof of stake are huge. These mechanisms have different goals and very different outcomes, which result in different properties of the cryptocurrencies they secure. In short: the immutability of proof of work is stronger than that of proof of stake.
Proof of work is better at producing a robust, immutable blockchain that has a fair degree of decentralization and cannot be easily tampered with, even by very rich, very influential, very powerful organizations and entities. Proof of stake doesn’t have any of these goals. It has the goal of governance in an environmentally-friendly way that still maintains decentralization but allows some flexibility of a blockchain. In the short weeks after Ethereum’s switch, the overwhelming proportion of validators started to censor transactions following the U.S. Office of Foreign Asset Control (OFAC) sanctions list.
Proof of work makes Bitcoin uncensorable, immutable and permissionless. These are the properties for resistance. It’s a tool for financial self defense and a Trojan horse for freedom. Bitcoin is a silent revolution. It empowers civil resistance. It’s our only shot at finding a better money that actively enforces human rights and supports activists in their resistance against dictators and authoritarians.
In this article, I won’t discuss energy use, because as soon as you understand the importance of Bitcoin to make the world more fair, you’ll get that the amount of energy used is off topic. You’ll understand that even better when you understand that Bitcoin mining is securing the total value stored on the blockchain and renders it the most secure network that we know of. And, on top of that, Bitcoin mining is already one of the greenest industries globally.
In the following, I lay out how Bitcoin enforces seven of the 30 articles mentioned in the Universal Declaration of Human Rights. It should become clear that Bitcoin is neither useless nor just a tool for speculation.
The Universal Declaration Of Human Rights
Let’s turn back time to December 1948. Three years after the end of World War II, the world was still in horror over what had happened since Germany attacked Poland in September 1939. It started a war that lasted six years, killed approximately 80 million people, including six million Jews and many other members of minorities like Roma, Sinti, Black Germans, the differently abled, socialists, communists and homosexuals.
As a consequence, the United Nations was founded in 1945 by 51 countries committed to maintaining international peace and security, developing friendly relations among nations and promoting social progress, better living standards and human rights.
One of the outcomes was the Universal Declaration of Human Rights which was proclaimed on December 10, 1948. In succeeding decades it has been integrated into many countries’ laws and can be seen as a common standard of achievements for all peoples and all nations. It sets out, for the first time in human history, fundamental human rights to be universally protected and it has been translated into over 500 languages.
An UN committee chaired by Eleanor Rooseveltdrafted 30 articles. Hansa Jivraj Mehta, an Indian educator, independence activist, feminist and writer, was responsible for changing the language of the Universal Declaration of Human Rights from “all men are born free and equal” to “all human beings are born free and equal,” highlighting the need for gender equality.
The Universal Declaration of Human Rights served as a recommendation for a number of laws. Laws can be enforced or not. Laws in themselves are no guarantee that anyone is treated equally or is not being discriminated against or free from suffering under financial oppression. Contrary to human-enforced laws, a protocol that is enforced by mathematical rules built in consensus with all its users will always be non-discriminatory and provide an inclusive financial system. “Rules without rulers,” as Andreas M. Antonopoulus says.
The questions remain: How much electricity is the life and freedom of billions of people worth? How do people in the developed North come to decide what a good use of energy is for the South? Beyond a tool for “speculation,” isn’t Bitcoin also a great tool for privacy and financial self-sovereignty globally?
Let’s take a look at the state of the world today and how this global regulatory regime came into place that is defining who has possibilities and who hasn’t.
Fifty-four percent of the global population lives in authoritarian or hybrid regimes. They don’t enjoy the privilege of living in full democracies. Only 6.4% of all people live in countries of “full democracy” like Germany, France, Austria and so on, or in the U.S. All of the others around the world are living in either flawed democracies or they are in full dictatorships or authoritarian regimes. The place where you were born largely defines the chances you’ll have in life (exceptions are rare).
A look at the map of the democracy index shows a pattern to remember. The dark red areas are the countries where life is the worst, their peoples have the least freedom. The worst country per this metric is Afghanistan, followed by Myanmar, North Korea, the Democratic Republic of the Congo, Syria and the Central African Republic.
A look on the map of political corruption shows a similar pattern. The dark red areas are stretched from the Northeast, starting in Russia and China, going over Africa and into South America. There seems to be some sort of correlation between corruption and failing democracies. That is corruption enables both human rights abuses and democratic decline. In turn, these factors lead to higher levels of corruption, setting off a vicious cycle.
Finally, let’s look at the world wealth map. The same pattern is visible. In countries with dictators and authoritarian leaders, people are on average poorer, with the poorest countries being in Africa and the Middle East.
The average net worth across the entire world indicates the enormous disparity between the developed world and everyone else. At one extreme, there are countries with net worth (with “net worth” being measured as the market value of all assets minus any outstanding debts) numbers over $500,000, and at the other extreme, there are places where people have less than $500 to their names. There is a smattering of light orange countries in between, but the worldwide map demonstrates an astonishing level of inequality between the haves and the have nots.
A History Of Monetary Power
The British Empire
The reasons for the huge inequality are manifold. Colonialism has definitely been one of them. This map below shows the British Empire in 1910. This political and economical control enabled the United Kingdom to become the first monetary hegemon (“hegemony” refers to a single state that has decisive influence over the functions of the international monetary system). In 1910, the British pound was still backed by gold (the gold standard meant that all circulating money was backed one to one by gold in the treasuries of banks) and everyone used it for trade.
“With the Bretton Woods system and the following petrodollar system, the United States obtained a near-global lock on the international money system. Previous empire currencies never obtained that complete of a financial lock on the world, and thus were never true ‘global reserve’ currencies but instead were just ‘widely recognized and dominant’ currencies…
“However, after only a decade, the Bretton Woods system began to fray. The United States began running large fiscal deficits and experiencing mildly rising inflation levels, first for the late 1960s domestic programs, and then for the Vietnam War. The United States began to see its gold reserves shrink, as other countries began to doubt the backing of the dollar and therefore redeemed dollars for gold instead of comfortably holding dollars…
“The system had an underlying flaw that when left unaddressed brought the system down. It was never truly sustainable as designed. There was no way that the U.S. could maintain enough gold to back all of its currency for domestic use, and simultaneously back enough currency for expanding global use as well (which was the part that was redeemable).”
“Eventually in 1971, math came back with a vengeance on the Bretton Woods system, and Richard Nixon ended the convertibility of dollars to gold, and thus ended the Bretton Woods system. The closing of gold convertibility was proposed to be temporary at the time, but it ultimately became permanent. Rather than shifting to another country, though, the United States was able to re-order the global monetary system with itself still in the center, in the next system.”
When Richard Nixon abolished the gold standard in 1971, he basically rendered all currencies in the world as fiat money. “Fiat” is a Latin word that means “let it be done.” Since 1971, our currencies aren’t backed by gold anymore and only have value because they are legal tender. The economical consequences have been immense.
It was the first time in history that only fiat currencies existed. This can lead to serious problems, for instance when one tries to use printed paper in another country. Why should businesses and governments in other countries accept pieces of paper, which can be printed endlessly by a foreign government and have no firm backing, as a form of payment for their valuable goods and services? The fiat system had a problem.
The Petrodollar
In 1974, following a variety of geopolitical conflicts including, the Yom Kippur War and the OPEC oil embargo, the United States and Saudi Arabia reached an agreement to sell their oil exclusively in U.S. dollars in exchange for U.S. protection and cooperation. From there, the world was set on the petrodollar system; a clever way to make a global fiat currency system work decently enough.
But the system is cracking here and there. In August 2017, for instance, Venezuela declared that it would cease pricing its oil in U.S. dollars and instead use euros, yuan and other currencies. In March 2022, media reports suggested that Saudi Arabia was considering pricing some of its oil sales to China in the Chinese yuan rather than the U.S. dollar. On March 23, 2022, Vladimir Putin announced an order forbidding “non-friendly” countries (including EU countries, the U.S. and Japan) from buying Russian gas in any other currency besides Russian ruble (although the Russian Finance Ministry reportedly said it would also accept gold or bitcoin).
“…over the next several years, the global economy will, more likely than not, encounter a bear cycle of the current petrodollar system. If so, assets such as global equities, quality residential real estate, precious metals, industrial commodities, and alternatives such as Bitcoin, are likely to do well.
From there, the global monetary system will gradually become more decentralized, in the sense that alternate payment systems and alternate currency settlements among trading partners are growing in use. This will indeed be a more structural shift towards a new system. It could happen slowly, as it already is, or it could accelerate if the US itself also shifts out of the fraying system.”
Consequences Of Monetary Hegemony
For at least the past 78 years, marked by the end of World War II, the global economy has more or less revolved around the U.S. dollar. The Bretton Woods system was also the start of global financial institutions like the International Monetary Fund (IMF) and the World Bank. Since then, a lot of additional organizations like the Bank For International Settlements (BIS), the Financial Action Task Force (FATF) and OFAC were launched. Unelected representatives are inventing rules to fight money laundering, tax evasion and, in recent decades, terrorism.
I haven’t heard of any financial regulation that was voted on by the population. But every country in the world has to regulate its banks. In parts for good reason, but despite the overarching regulations, the world is still riddled with fraud, banking failures (and now, also cryptocurrency fraud in cases such as FTX, Luna, etc.) and money laundering. It’s just that the small fish get caught, while the big fish in most cases simply pay a fine which is less than their profits and move on.
There is already enough regulation and laws around traditional finance and the cryptocurrency industry. The fall of FTX was caused by fraud, not because Bitcoin is a tool to rip off people. The opposite is true. If all actors in the industry were to stay true to the Bitcoin principles of transparency and not building on debt, then these things wouldn’t have happened. It’s centralized actors and their secrecy that allow fraud like that to happen. Fraud has always been a crime, there are laws to deal with it. It’s not lack of regulation, it’s lack of oversight.
Organized And Willful Financial Exclusion
How did the above institutions come into being? It’s interesting to see the background of organizations which make decisions determining the difference between the have and have nots.
The BIS: The Central Bank Of Central Banks
The BIS is an international financial institution owned by central banks that “fosters international monetary and financial cooperation and serves as a bank for central banks.” Interesting sidenote: the BIS shouldn’t exist anymore if it was for members of the Bretton Woods conference.
The BIS was founded in Europe in 1930. During the second world war, the BIS helped the Germans transfer assets from occupied countries. The fact that top-level German industrialists and advisors sat on the BIS board seemed to provide ample evidence of how the BIS might be used by Adolf Hitler throughout the war, with the help of American, British and French banks. Between 1933 and 1945, the BIS board of directors included several Nazis, for instance, a prominent Nazi official, Emil Puhl responsible for processing dental gold looted from concentration camp victims. All of these directors were later convicted of war crimes or crimes against humanity.
For this reason, the Bretton Woods Conference was meant to be Norway’s proposal for “liquidation of the Bank for International Settlements at the earliest possible moment.” Moreover, now that the IMF has been established, the BIS seems even more superfluous.
But the momentum for dissolving the BIS faded after U.S. President Franklin Roosevelt died in April 1945. Under his successor, Harry S. Truman, the top U.S. officials most critical of the BIS, left office by 1948, the liquidation had been put aside.
The FATF: The Financial Action Task Force
The FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. Following the September 11 terrorist attacks in the U.S. in 2001, its mandate was expanded to include terrorism financing.
Since 2000, the FATF has maintained the FATF blacklist and the FATF greylist. These are lists of countries that the FATF considers non-cooperative and deficient in the global effort to combat money laundering and terrorist financing. While, under international law, the FATF blacklist carries with it no formal sanctions, in reality, FATF blacklist members often fall under intense financial pressure.
Accepting Two Billion Excluded People As Collateral Damage
The effects on people in these countries are huge. Sanctions always hurt the poor and vulnerable the most. The powerful find their ways out. For instance, FATF has made it difficult for non-governmental organizations (NGOs) in these countries to access funds to aid in relief situations due to strict FATF criteria. The FATF recommendations do not specifically set out restrictions for NGOs.
“In a 2020 paper, Ronald Pol states that while the FATF has been very successful in getting its policies adopted worldwide, the actual impact of those policies is rather small: according to Pol’s estimates, less than 1% of illegal profits are seized, with the costs of implementing the policies being at least one hundred times larger. Pol contends that industry and policymakers consistently ignore this, instead evaluating the policies based on success metrics that are largely irrelevant.”
The U.S. was attacked in 2001 and in the following years, it strengthened regulations to combat terrorism which trickled down to almost all jurisdictions in the world, consequently excluding billions of unregistered and stateless people from establishing bank accounts, get jobs, purchase homes or start businesses. In addition, these people are impoverished, marginalized, discriminated against, disenfranchised and politically excluded.
For instance, there is Winnet Zhamini, aged 33 and grandmother. She is one of 300,000 Zimbabweans who will never have access to a bank account because of her lack of identification papers. As she told The Guardian:
“I have never had a birth certificate or an ID. My father was Malawian and settled here in the 70s. When we were born, we never had an opportunity to get birth certificates. My mother, who was Zimbabwean, died, my father just disappeared. My husband left me because I do not own any particulars. My sister got married and bore four children, but the husband chased her away because she has no ID. I cannot even buy a sim card. I cannot get a job, I survive on doing laundry. But we get exploited because there is no choice.”
These organizations are forcing everyone into overarching regulations and bureaucracy, which enable control on the level of the individual leading to financial exclusion and oppression of billions of people.
The data collected by authorities is a honeypot for hackers, online crimes and extortion. And this all to find the few who are really money laundering or financing terrorism. Instead of general surveillance, why not focus and target the few? It’s a vicious circle. Sanctions, overarching regulations and financial control are the reasons why people need Bitcoin.
How Bitcoin Enforces The Universal Declaration Of Human Rights
A global regulatory regime is excluding an estimated 1.7 billion (perhaps 3 billion if you include an estimated two children per adult) people from having a bank account. Which leads us to the Universal Declaration of Human Rights and its 30 articles. I’ll refer to seven of these articles to demonstrate how Bitcoin is supporting Human Rights.
This human right would suggest we all are born free to enjoy dignity and rights. But this is definitely not the case financially. Billions of people being too poor or without IDs are excluded from financial services. Of the 1.7 billion unbanked (these are just the household heads, including families, it’s more), 980 million are women.
Unbanked people can’t store their cash safely because of potential damage from animals like rats or because it makes them a target for robbery, and they can’t borrow money or else they fall prey to loan sharks.
“Towards the last days of February (2022), I borrowed N18,000 ($43) from the Soko-loan app which I saw on Facebook. During the application, the app displayed 92 days as the minimum loan tenure but after I had submitted my data, I saw an interest rate of (about) 45% for 14 days!”
The solution is not more regulation, but open access to secure, decentralized money.
Financial Illiteracy And Lack Of Wealth Cause Exclusion
If you do manage to have an ID and access to a bank account or mobile money service in Africa, it still doesn’t mean that you can access it easily or send money to someone in your own country or abroad. Red tape, unfunctional or non-existent IT infrastructure and high fees make this so hard that many people, even though they own bank accounts, just stop using them.
The fee structure of South African banks, for instance, is up to four times higher than in countries such as Germany, Australia and even India. Many people are willing to run the risk of loss and theft associated with cash to avoid the fees and the red tape.
People on low incomes have a deep mistrust of the formal financial sector, which is rooted in fears of exploitation. Past abuses, such as the inappropriate marketing and selling of financial products, have shown that poor people are highly susceptible to rapacious commercial interests.
Africa’s poor are particularly vulnerable due to widespread financial illiteracy, exacerbating the sense of mistrust and levels of exploitation fostered by these practices. Unfortunately, this is a systemic education problem within Africa that cannot be addressed in the short term.
This is also a problem with all crypto tokens and outright scams as well. Bitcoin educators must make the difference between centralized institutions and the internet protocol of money clear to the people. Education is key, especially when the existing system must not be copied into the future, which was the goal of Bitcoin and Satoshi Nakamoto in the first place.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
Fourteen African countries which were colonized by France with about 200 million inhabitants are still obliged to use the Central African franc and the West African franc, collectively known as the CFA franc. The CFA franc is legal tender and is pegged to the euro. The countries must deposit half of their foreign exchange with the French Treasury. Although these countries have been independent for decades, they don’t have financial sovereignty. That’s not independence, that’s monetary colonialism.
Inflation Is Hidden Tax
For the first time since the 1920s, Austrians and Germans are feeling the impact of inflation. Ten percent was the peak in November 2022. Energy prices in Europe are skyrocketing. Friends in Austria are telling me that they won’t heat their flats this winter and are buying cheap food. They have “middle-class” jobs, they are well educated. Ten to 20 years ago, the jobs they are doing were paying enough to buy an apartment on credit, own a car and go on a holiday trip with the family. Those days are over.
Just imagine that the value of your money is decreasing by 500% per month. The salaries of civil servants, doctors and teachers in Zimbabwe are around $300 per month, and they are paid in the Zimbabwe dollar. Saving money is completely impossible. Either you spend it immediately or you try to find someone who wants to exchange it to the U.S. dollar. Every day is centered around money management. “What is the rate today?” might be the most used question after “Hello, how are you?” in Zimbabwe, followed by the decision of “in which currency am I going to pay?”
There will only ever be 21 million bitcoin. When I mention that in my talks in Zimbabwe, people immediately understand the use case. There will be no monetary inflation, which would render bitcoin to have less value. Yes, bitcoin’s value is volatile, that’s because its price is determined by supply and demand and there is simply not enough demand yet to stabilize the value. But nobody can inflate the maximum amount of bitcoin that will be available. Bitcoin can also not be forged like cash or gold.
Corruption
Speaking of corruption and gold. Corruption is abuse of entrusted power for private gain. In Zimbabwe, the ruling elites are behind its disappearing gold. Every year, gold worth $1.5 billion is being looted.
At the same time, Zimbabwe’s once enviable healthcare sector is collapsing under the weight of dilapidated infrastructure, a lack of drugs and poorly-paid staff going on frequent strike. Pregnant women are being forced to pay bribes to get help with giving birth, with reports of babies being born in queues outside maternity clinics. People are dying in traffic every day due to the poor condition of streets, while the government and ministers are rewarding themselves with new luxury cars.
The Bitcoin blockchain is a transparent ledger of all transactions that took place since Bitcoin started publicly on January 3, 2009. That means that budgets for ministries or projects can be audited. With multisignature wallets, the possibility to steal funds shrinks. This would only be possible if all signers were to collude.
But this doesn’t contradict the privacy-preserving properties of Bitcoin. If you choose to make a budget auditable, you can. The private keys give you the possibility to stay private or to reveal data. If you self custody your bitcoin, you decide. This is how Bitcoin empowers individuals and keeps authorities in check.
How Bitcoin Fixes the Right to Equality
Bitcoin is a neutral, global, borderless money. As an open protocol, it can be used by anyone. No one can be excluded and everyone is treated the same. Bitcoin gives self sovereignty on a personal and national level. Bitcoin doesn’t care where you were born. Suffering a high amount of inflation and corruption is a result of the misfortune of your birth location.
Article 12: The Right To Privacy
You read that correctly: privacy is one of the human rights mentioned in the declaration. How can it be that our privacy is highly infringed not only by companies like Facebook, but also by the regulatory authorities? In the name of preventing money laundering and child abuse, we’re all under constant surveillance.
“We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is, the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
Yet people argue with me, saying things like, “But I’ve got nothing to hide, it’s OK, we need this control to fight criminals.”
My answer: it’s not about having nothing to hide! Alone, this idea is pushing human rights activists, lesbians and gays, opposition members and so on under the suspicion that they have something to hide. No, they do not have anything to hide. Nonetheless, they are targets of violence, intimidation and prison and are facing death in many countries. That’s the reason why privacy is important.
Even more so, it’s important that everyone is using privacy protection. The more people who care about privacy, the better protected freedom fighters and vulnerable groups are. This means that more privacy protection needs to be included in Bitcoin at the blockchain level. Less-wealthy people can’t afford a VPN service that costs $10 per month. They use what they get for free.
Many millions are on Facebook and WhatsApp in Africa. Why? Because it’s the only option they have. The cheapest option that telecom providers there offer are “social media” bundles. That’s why thousands of people believe that Facebook is the internet. We shouldn’t repeat that mistake. But we’re on the brink. Luno, Binance and Coinbase are well-known brands in Africa. Most people believe that one needs to use an exchange or a bank to be able to use Bitcoin, and not only in Africa. I’ve heard that several times from people.
Privacy is a luxury for most Africans. They are even more prone to data collection and abuse.
How Bitcoin Fixes The Right To Privacy
Bitcoin’s privacy isn’t perfect, yet. New technologies like PayJoins or Confidential Transactions will hopefully be implemented in the coming years. Payments on the Lightning Network are more private already. Wrapped Lightning invoices protect the recipient from being identified by custodians. With CoinJoins, you can already achieve a high level of privacy. In the future, this kind of protection needs to be the standard.
Still, since Bitcoin is pseudonymous and many people in African countries use it peer to peer without know-your-customer (KYC) identification, it gives them more privacy than their bank or mobile money provider. In Zimbabwe, all digital transactions are automatically taxed at 4%. Every payment is traceable by the government since mobile money transactions are moving from one SIM card to the other and SIM users are registered.
Privacy is never zero or one. It’s on a scale. The privacy possible while using Bitcoin is higher than that of your credit card, but lower than that of using cash. There is definitely a lot of work to be done and it’s important to make Bitcoin on the base chain more private. But Bitcoin gives you plausible deniability already now. It protects one from being an easy target.
Article 19: Freedom Of Speech
Funding the opposition in Zimbabwe? Supporting a gay rights group in Saudi Arabia? Protesting against China in Hong Kong? Donating toward Ukrainian refugees? Then you’re sharing your opinion with the world through your financial transactions. If you can’t send money to an abortion clinic in the U.S. for fear of being prosecuted, then your freedom of speech has been taken away.
Similar cases to the below are not unique to Zimbabwe, but that is just the country I visited for the longest period. The young man pictured on the left was brutally murdered because he was an activist. The man pictured on the right was arrested because he was wearing a yellow t-shirt. Yellow is the color of the opposition, and wearing yellow was forbidden by the government.
“Even schoolchildren have not been spared with reports suggesting that schools with yellow uniforms have been directed to abandon them and pick different colours,” ZimEye reported.
Bitcoin transactions are uncensorable. Used the right way, Bitcoin gives you enough privacy to express your opinion (I’m not talking about any privacy it may grant for committing crimes).
Freedom of speech goes hand in hand with freedom of association. If you can’t express your political opinion, if you can’t meet with your fellow demonstrators or freedom fighters because of financial surveillance, then you’re stripped from political power. If your activism endangers the authoritarian powers, then they cut you off from your bank account.
This happened in Nigeria during the EndSARS movement which started in October 2020. The demonstrations against police brutality were supported by the Nigerian Feminist Coalition. They collected donations via their bank account and gave food, drinks and other needed support to the demonstrators, but not for long. The country’s central bank cut off their bank account. But the women remembered Bitcoin, the technology that works without banks. Tech savvy as they were, they set up a BTCPay Server instance and started collecting donations in bitcoin from all over the world.
Bitcoin’s privacy and uncensorability enables people to cooperate against dictatorships. You simply can’t freeze a Bitcoin account, because there are no accounts. As long as you self custody your keys, no one can take your money away from you.
“Foreign exchange controls are imposed by a government on the purchase/sale of foreign currencies by residents, on the purchase/sale of local currency by nonresidents, or the transfers of any currency across national borders. Countries with weak and/or developing economies generally use foreign exchange controls to limit speculation against their currencies. They may also introduce capital controls, which limit foreign investment in the country.”
Thirty-one countries globally are imposing foreign exchange controls, such as Argentina, Ethiopia, Ghana, Nigeria, Russia, Ukraine, Venezuela and Zimbabwe, just to name a few. These discriminatory restrictions are financial oppression.
In Zimbabwe, for instance, online banking transactions are limited to $600 dollars per month. Per transaction you can only transfer $37. It’s basically impossible to run a business like that.
Another form of financial discrimination is the war on cash. In 2016, the Indian government and central bank withdrew the highest-denominated banknotes from one day to the other to fight money laundering and the black market. Hundreds of thousands of cash dependent people stormed banks and ATMs to exchange their banknotes. But, of course, ATMs were empty and it was a weekend.
The result was that 82 people died and millions lost their money. And this overreach had seemingly zero positive effect, because two years later, the black market money problem still existed.
How Bitcoin Fixes Freedom From Discrimination
Bitcoin is permissionless. Anyone can use it, regardless of race, gender, status or wealth. Nobody can take it away from you. Since it’s a protocol controlled by code and machines, there can be no discrimination based on human prejudices.
Most people don’t have the right to free movement — at least they aren’t welcome to arrive in many countries. Even if one is allowed to move freely, one can’t take all of their wealth with themselves.
Imagine you need to flee your home because of war or discrimination and persecution. You can’t just go to the bank and ask for all of your money and transfer it abroad. Foreign exchange controls and regulations ban the import of a stash of money higher than a few thousand U.S. dollars. If you own a house or land, you need to sell it and see how you can transfer it from one jurisdiction to the other.
How Bitcoin Fixes Freedom of Movement
Bitcoin is borderless. It enables free movement without losing all your wealth.
The Ukrainian referred to in the above headline was able to flee the war zone because they could take their bitcoin with them. In fact, you don’t even need a device to take all of your wealth with you. Memorize the 12 seed words to your Bitcoin wallet, throw away your smartphone or computer and move over borders. On the other side, get yourself a phone, install a wallet and import the seed words. You’ll have access to your money.
Seventy-five economies globally still limit women’s rights to manage assets. There are countries in which women are not allowed to own property or inherit it — they never will be owners of land that could be used as a security to apply for a loan or support their informal businesses. This is occurring mostly in countries in the Middle East, North Africa, South Asia, Sub-Saharan Africa, East Asia and the Pacific.
“Data shows that giving women greater access to assets through inheritance can change outcomes for children, particularly girls. In 1994, two states in India reformed the Hindu Succession Act to allow women and men the same ability to inherit joint family property. This altered control over assets within families and increased parental investments in daughters. Mothers who benefited from the reform spent twice as much on their daughters’ education, and women were more likely to have bank accounts and sanitary latrines where the reform occurred.”
Women are the majority of Kenya’s population; they perform 70% of the agricultural labor, but they own less than 2% of the land and control very little of the income produced by their labor. According to a Savings Learning Lab report, after being provided with savings accounts, market vendors in Kenya, primarily women, saved at a higher rate and invested 60% more in their businesses. Women-headed households in Nepal spent 15% more on nutritious foods (meat and fish) and 20% more on education after receiving free savings accounts. Moreover, farmers in Malawi who had their earnings deposited into savings accounts spent 13% more on farming equipment and increased their crop values by 15%.
Bitcoin empowers women and vulnerable groups, because one can own it secretly. No one needs to know. This lowers the danger of money being taken away by partners and family members.
In the near future, people will be able to use bitcoin as a collateral for micro loans. One can save as little as one cent or $1 in bitcoin a day on the Lightning Network. After saving a certain value, like $50, they can receive a micro loan. After paying back, they’ll get back the collateral.
How Bitcoin Fixes the Right to Property
Bitcoin is not only digital money, it’s digital property. Therefore, self custodying your bitcoin makes you an owner of property. Since Bitcoin is permissionless, the right to own property is granted to anyone.
Bitcoin is carried by a social movement. It’s a silent revolution. By being in charge of our private keys, each one of us is part of a collective with the power to force governments to be held accountable. With the help of Bitcoin, dictators can be toppled. Self custody your bitcoin, incapacitate them from the power to create and seize money and their funds will dry out. Hold them accountable by pressuring them to audit public funds.
It may sound illogical, but by using Bitcoin, you’re supporting freedom fighters globally and helping make the world more inclusive. This is why my non-profit initiative is called “Bitcoin For Fairness.” Ultimately Bitcoin doesn’t fix everything. There will always be rich and poor people. But Bitcoin definitely fixes one huge thing: It enables fair access to a borderless, neutral money that can’t be altered to the advantage of any single entity.
Bitcoin delivers the opportunity for historical reparation from the effects of colonialism. It can make the gap between rich and poor smaller. That’s why I put so much effort into sharing Bitcoin self-custody knowledge in African countries and the Global South. The peer-to-peer, non-KYC revolution will take place here, where people are used not to using banks. My motto is: “Keep the unbanked unbanked” and support them in their fight for financial freedom. I’m just an ally visiting and sharing knowledge. The local people are key. The opportunity is there, I trust they’ll take it and run.
Bitcoin isn’t useless, it’s priceless. Anyone who is lobbying for a Bitcoin ban or attempts to control it is an enemy of freedom and of humankind. It’s a voluntary network, if you don’t like it, don’t use it.
This is a guest post by Anita Posch. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
UNITED NATIONS, Nov 28 (IPS) – A sign outside the United Nations reads, perhaps half-seriously, that it is a “No Drone Zone”—and “launching, landing or operating Unmanned or Remote-Controlled aircraft in this area is prohibited”.
The “warning” comes even as Unmanned Aerial Vehicles (UAVs) – or drones – are some of the new weapons of war deployed mostly by the US, and more recently, by Iran, Ukraine and Russia in ongoing military conflicts.
But the unarmed versions continue to be deployed by UN peacekeeping forces worldwide and by national and international humanitarian organizations.
In a recently-released report, the UN Population Fund (UNFPA) says for women in Botswana, especially those living in remote communities where medical supplies and blood may not be in stock, giving birth can be life-threatening.
In 2019, the country recorded a maternal mortality rate of 166 deaths per 100,000 births, more than double the average for upper-middle-income countries.
Lorato Mokganya, Chief Health Officer in the Ministry of Health and Wellness, is quoted as saying that when a woman has lost a lot of blood during childbirth and may need to be transferred to a bigger medical facility, she first needs to be stabilized where she is before being driven out of that place. Timely delivery of blood can be lifesaving.
“A drone can be sent to deliver the blood so that the patient is stabilized,”
In an effort to curb the country’s preventable maternal deaths and overcome geographical barriers this innovative initiative will revolutionize the delivery of essential medical supplies and services across Botswana, says UNFPA.
Joseph Chamie, a former director of the UN Population Division and a consulting demographer., told IPS the increased use of drones for humanitarian and peacekeeping missions of the United Nations is certainly a good idea and should be encouraged.
“Why? Simply because the numerous benefits from the use of drones greatly outnumber the possible disadvantages”.
As is the case with all new technologies, he pointed out, resistance to the use of drones is to be expected. The public’s distrust in the use of drones is understandable given their use in military operations and surveillance activities.
Also, it should be acknowledged that drones could be misused and efforts are needed to ensure privacy, security and safety, said Chamie.
“In brief, the use of drones should be promoted and facilitated in the work of the UN’s humanitarian and peacekeeping operations as it will greatly enhance the effectiveness of their vital work,” he declared.
Credit: United Nations
Drones have been deployed in several UN peacekeeping missions, including the Democratic Republic of Congo (DRC), Rwanda and Uganda—going back to 2013.
Although this technology is not a magic solution, “the promise of drones is really tremendous,” says Christopher Fabian, principal advisor on innovation at the UN Children’s Fund (UNICEF).
For UNICEF and other humanitarian and development agencies, he said, in an interview with UN News, drone technology can make a big difference in three ways.
First, drones can leapfrog over broken infrastructure in places where developed transportation networks or roads do not exist, carrying low-weight supplies.
Second, UAVs can be used for remote sensing, such as gathering imagery and data, in the wake of natural disasters like mudslides, to locate where the damage is and where the affected peoples are.
Third, drones can extend wi-fi connectivity, from the sky to the ground, providing refugee camps or schools with access to the Internet.
As big as a Boeing 737 passenger jet and as small as a hummingbird, a huge variety of drones exist. According to research firm Gartner, total drone unit sales climbed to 2.2 million worldwide in 2016, and revenue surged 36 per cent to $4.5 billion.
Although UNICEF’s use of drones has been limited, the agency is exploring ways to scale up the use of UAVs in its operations, Fabian said.
“Hardware itself does not violate human rights. It is the people behind the hardware,” said Fabian, stressing the need to “make sure that any technology we bring in or work on falls within the framing of rights-based documents,” such as the Convention on the Rights of the Child.
UNICEF has a set of guiding principles for innovation, which includes elements like designing with the end-user.
For drone applications to spread further, Fabian said, the UN has a strong role in advocating this technology and ensuring that policy is shared with different governments.
In addition, governments have to clearly define why they need drones and what specifically they will be used for, while also building up national infrastructure to support their use.
The private sector must understand that the market can provide them real business opportunities.
In 10 to 20 years, drones might be “as basic to us as a pen or pencil,” said Fabian.
“I believe this technology will go through a few years of regulatory difficulty but will eventually become so ubiquitous and simple that it’s like which version of the cell phones you have rather than have you ever use the mobile phone at all,” he said.
Meanwhile, armed UAVs are being increasingly used in war zones in the Middle East, Asia, Africa and most recently Ukraine.
The US has launched drone strikes in Pakistan, Syria, Yemen, Somalia, Iraq, Libya and Afghanistan targeting mostly terrorist groups. But the negative fallout has included the deaths of scores of civilians and non-combatants.
In recent months, the use of drones by both Russia and Ukraine has triggered a raging battle at the United Nations while Iran has launched drone attacks inside Iraq.
The US, France, UK and Germany have urged the UN to investigate whether the Russian drones originated in Iran. But Russia has denied the charge and insisted the drones were homemade.
Russia’s First Deputy Permanent Representative to the UN, Ambassador Dmitry Polyanskiy, urged Secretary-General António Guterres and his staff on October 25 not to engage in any “illegitimate investigation” of drones used in Ukraine.
Meanwhile, going back to 2017, Malawi, in partnership with UNICEF, launched Africa’s first air corridor to test the humanitarian use of drones in Kasungu District.
Also with UNICEF, Vanuatu has been testing the capacity, efficiency and effectiveness of drones to deliver life-saving vaccines to inaccessible, remote communities in the small Pacific- island country, according to the United Nations.
Vanuatu is an archipelago of 83 islands separated over 1,600 kilometres. Many are only accessible by boat, and mobile vaccination teams frequently walk to communities carrying all the equipment required for vaccinations – a difficult task given the climate and topography.
To extend the use of drones, UNICEF and the World Food Programmes (WFP) have formed a working group.
In addition, UNICEF, together with the Office of the UN High Commissioner for Refugees (UNHCR), chairs the UN Innovation Network, an informal forum that meets quarterly to share lessons learned and advance discussions on innovation across agencies, the UN points out.
“Drones are also used in other parts of the UN system. The International Atomic Energy Agency (IAEA) and its partners have introduced a new quadcopter drone to visually map gamma radiation at Japan’s Fukushima Daiichi nuclear plant, which was damaged by the devastating 2011 tsunami”.
ROMEO, or the Remotely Operated Mosquito Emission Operation, met the competition’s aim of improving people’s lives. It was designed to transport and release sterile male mosquitoes as part of an insect pest birth control method that stifles pest population growth.
Some UN peacekeeping missions, such as those in the Democratic Republic of the Congo, Mali and the Central African Republic, have deployed unarmed surveillance UAVs to improve security for civilians, according to the UN.
The UN, however, warns that drone technology can be a double-edged sword. UN human rights experts have spoken out against the lethal use of drones.
This is an opinion editorial by Don McAllister, a technologist who has made several video tutorials on Bitcoin.
At its inception, bitcoin was worthless; it had no monetary value. Early adopters could mine hundreds, if not thousands of bitcoin on simple laptops. As such, there was no need to enumerate it in other units than whole bitcoin. The Bitcoin protocol was designed to accommodate smaller fractional units but there was no need to use them in the early days as tens, hundreds and even thousands of bitcoin were the norm. The first known purchase using bitcoin was 10,000 bitcoin for a couple of pizzas.
Using whole bitcoin to enumerate was logical and necessary. As bitcoin adoption and its monetary value increased, there was still no need to use the smaller fractions of bitcoin — these fractions being the bit and the sat. A single bitcoin can be divided into 1,000,000 bits or as small as 100,000,000 sats (short for satoshis).
However, as bitcoin has increased in value to tens of thousands of dollars for a single bitcoin, a reset is well overdue for how we quantify value using the Bitcoin protocol. A reset is needed to foster familiarity for new adopters as bitcoin edges ever closer to being used as a medium of exchange.
We are still so early in the bitcoin adoption cycle. Although it’s estimated that up to 100 million people hold the asset, most people yet to adopt bitcoin are both suspicious and confused as to what bitcoin actually is. At this point in the adoption cycle, it’s probably safe to say that the vast majority of individuals introduced to bitcoin in the retail space will never accumulate one whole bitcoin.
As bitcoin issuance slows down and as institutional investors jump in and as the price invariably increases, this will only be reinforced over time. If you hold one or more bitcoin at this point in time, you’re in a very fortunate position that will be unattainable for most individuals moving forward. Not even every millionaire in the world will be able to own a single bitcoin. It’s estimated there are over 50 million millionaires in the world, but there will never be more than 21 million bitcoin.
To be honest, bitcoin is a terrible name. For the uninitiated, a bitcoin could be a reference to a physical object, i.e., a bit coin. Obviously, bitcoin is a digital asset, but this is in conflict with its name. In addition, bitcoin can be used to describe two things: the monetary network (Bitcoin) and the monetary asset (bitcoin).
Bitcoin the monetary network is one of the largest and most secure computer networks in existence. It is the core technology that provides the necessary framework and communications channels for bitcoin transactions and runs on thousands of nodes around the globe. The Bitcoin network is unparalleled for reliability and security.
Bitcoin, the monetary asset, is both confusing and alien to those who have yet to adopt it. Its current high value leads many people to think they cannot afford to adopt bitcoin or that they have missed the boat. This is because most people still hear about bitcoin priced as whole units with an unaffordable price tag.
Even though current early adopters of bitcoin are comfortable breaking down bitcoin and using eight decimal places, e.g., 0.00002345 or 2,345 sats, this method is completely alien and off-putting to non-holders.
To understand why, let’s apply some of the mechanisms and nomenclature of bitcoin to familiar fiat currencies. Let’s start by applying this existing method of bitcoin enumeration to the U.S. dollar.
Let’s invent an imaginary USDcoin.
USDcoin = 100,000,000 cents. (Let’s ignore the fact that in reality, 1 dollar = 100 cents.) Now let’s say that the USDcoin has been adopted and is used as a medium of exchange. Imagine the average person walking into a store to purchase a fridge and seeing it priced as: Fridge = 0.00030000 USDcoin or 30,000 cents.
This is totally alien and unfamiliar. So let’s banish the USDcoin moniker completely.
Instead, let’s enumerate using dollars at their actual value of 1 dollar = 100 cents.
So 30,000 cents = $300.00.
See how much more familiar and comfortable that feels?
You have the dollar symbol so you can instantly see it as dollars and you have the decimal point so you can clearly differentiate between dollars and cents.
So a USDcoin is 100,000,000 cents or $1,000,000 dollars.
Why use the USDcoin label at all? Everything can be enumerated in dollars and cents. Instead of 3 USDcoin you have $3,000,000 dollars.
Why do we impose the former methodology on new entrants to bitcoin? It’s totally alien and unfamiliar, but this is exactly what we are expecting people to adopt with bitcoin.
Bitcoin = 100,000,000 sats.
If adopted as a medium of exchange, the fridge would be priced as: fridge = 0.00030000 bitcoin or 30,000 sats.
Instead, let’s keep the bitcoin moniker for the Bitcoin network and start to use “bits” for the currency and remove the complexity.
100 sats = ₿1.00 or 1 bit.
The fridge would now be priced as: 30,000 sats = ₿300.00.
See how much more familiar and comfortable that feels? The ₿ symbol has been historically used to enumerate whole bitcoin and is highly familiar to people. I would suggest that we now adopt the ₿ symbol for bits. It’s highly unlikely anyone will confuse whole bitcoin with bits. If you see a price tag of ₿300.00 you’re not going to think it’s 300 whole bitcoin. If you want to deal in whole bitcoin, you can go back to eight decimal places, e.g., 3.09367835 BTC.
But most normal people will never need (or be in a position) to transact in whole bitcoin. If they are fortunate enough, they can transact in millions of bits. Remember 1 BTC is ₿1,000,000, so 3.09367835 BTC is ₿3,093,678.35. This is what we do with USD or GBP: we use millions of units, e.g., $1,000,000 or £1,000,000.
We need to move away from talking about the price of bitcoin in bitcoin and start talking about the bit price, just as we talk about things priced in dollars or pounds. Let’s leave the name Bitcoin for the network and let’s focus on bits.
Adopting bits to enumerate bitcoin has other benefits. A bit is a “bit” of a bitcoin. People are more likely to associate the word “bit” with bitcoin and are more likely to understand that a bit is a part of a bitcoin. A “sat” means nothing to the average person.
If this terminology is adopted by exchanges, people will perceive lower prices because bitcoin would be priced in bits making bitcoin appear more affordable. People would be encouraged to buy and spend in bits.
As previously mentioned, nothing new is required. No changes are needed to the underlying monetary asset or Bitcoin network. Bits are already built in and they were included for a reason. Do you really think the fact that they mirror dollars and cents, or pounds and pence, is a coincidence? I think Satoshi Nakamoto was already looking to the future when bits would become the new global currency and built this familiarity into the protocol.
This is a guest post by Don McAllister. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Sydney Bright, a professional science writer on the topic of health benefits from mindfulness-based practices.
Where is technology taking us? Will robots surpass our intelligence and replace us altogether? Will we combine with machines in some symbiotic merge that creates a new super being? Or are machines merely tools that will allow our more fundamental nature to thrive? In this article, I will argue that technology is how human beings will be able to return to a more natural life that is devoid of the harsh realities that existed 10,000 years ago.
Those who are aware of my work on the science of meditation ask me why there is also a discussion of economics and Bitcoin on my blog. First, I feel that any curious mind should be well-rounded: Multiple fields of study are worth pursuing, as they all compile a more complete understanding of reality. At first, I felt that they were simply separate interests of mine. However, now I have come to realize that they are partly connected and suggest an exciting forecast for humanity’s future.
As I become more involved in Bitcoin and learn more about the history of the internet and the invention of computers, I have grown an appreciation and curiosity toward computers in general. With such an interest and education comes a greater understanding of computers and where they may take us. Of course, this is a popular topic, especially when people speak of artificial intelligence (AI) and robots. Many worry that computers will soon become more intelligent than us, which would be a problem. Elon Musk has stated that a significant purpose of Neuralink is to allow humans to acquire the same processing power as a computer so that they do not overcome us. In truth, I think this is a potentially misguided point of view. I think it is possibly the other way around: What is overcoming us are our overly thoughtful minds. Computers should do some of the thinking for us so that we may return to a healthier existence characterized by mindfulness, the scientific benefits of which are explained throughout this article.
To explain what computers have to do with this, let us first examine some history. The history of computers seems to begin with Charles Babbage and Ada Lovelace. Charles Babbage was born in 1791 and is credited as the “father of the computer.” He was a mathematician who invented the machine known as the difference engine. When cranked, this machine would solve a specific mathematical problem. It could be seen as a very complicated and powerful calculator, except that it was programmable because the machine would output a new value once it was fed inputs. However, the machine was never finished because of funding issues. Ada Lovelace, the daughter of Lord Byron and an acquaintance of Babbage, wrote an algorithm for the machine that would solve Bernoulli numbers. She is therefore referred to as the world’s first computer programmer. She also contributed significantly to the field, after noticing that a machine like this could solve math problems and other forms of problems. This is perhaps the most crucial idea that moved the field forward. Maybe we should refer to her as the mother of computer science.
Fast-forward to WWII. Alan Turing, a mathematician, is hired by English intelligence to crack the Enigma code of the German opposition. This cryptographic cipher would be needed to decode German communications, but the code changed daily. Given the cipher’s complexity, it would be virtually impossible to solve with human resources within 24 hours. So, Turing decided to generate a machine that would do it instead. This story is wonderfully told in the film “The Imitation Game.” Imagine that before this time, each machine performed a singular purpose: cars drove, plows plowed, calculators calculated, etc. Mr. Turing, likely influenced by his mathematician predecessors such as Lovelace, came up with the design of a machine that could be programmed to “think.” More specifically, a machine that could “carry out any operation which could be done by a human computer.” Turing envisioned a universal machine that could be programmed to do anything by “thinking.” We know now that he successfully invented a version of such a machine during the war, which saved many lives. He created the first fully functional computer. Of course, his machine couldn’t actually think through anything. Nonetheless, it set in motion something grand.
Ever since Turing, human beings have been working on creating more advanced computers. Unlike Turing’s machine, the modern computer uses electrical circuit boards rather than mechanical parts. Additionally, ours have been programmed to perform more actions than Turing’s machine ever could. Looking back, humans have been continuously developing one big universal machine. Of course, many different computers have different shapes, sizes, qualities, etc. However, most are connected by the internet and perform actions that many of us take for granted. They uphold the very fabric of our modern society. Even more interesting to think about is that people developed the code and programming required to generate the internet in a globally distributed way. Programmers and researchers across the globe began developing protocols such as Transmission Control Protocol and Internet Protocol (TCP/IP) which governs our modern internet. Imagine that, aside from academics and select companies, many computer enthusiasts sat in their room, tapping fingers against a keyboard, communicating with one another. They generated the backbone for our global internet without any financial incentive, doing so without institutions or customers paying them. In the end, individuals continue to come together to help build the internet’s infrastructure, all for the greater good. It seems humans are naturally inclined to make this worldwide Turing machine, but why?
I have heard the idea that human beings are the caterpillar that will create our butterfly replacement: robotic life. However, I think this prediction is misplaced. It conflates logical intellectualism with life, and misrepresents what the worldwide Turing machine means for our human progression. What are we building? The internet is a global communication network that allows for information transfer. We created a worldwide Turing machine that would record, remember, filter and process information for us. Bitcoin was the next great decentralized innovation built on this worldwide Turing machine. What does it do? It records, maintains, manages and keeps our monetary infrastructure safe. Soon, we will have incredible robots and AI. They will farm for us, build for us, clean for us, etc. We are making a worldwide Turing machine to do all our thinking-oriented tasks.
To what end? The philosopher and mathematician Alfred North Whitehead once said, “It is a profoundly erroneous truism that we should cultivate the habit of thinking of what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them.”
This is precisely the point. We are building a machine that will do our tasks so that we do not have to think about them anymore. In our modern, Western, analytically oriented culture, we believe that thinking is the highest form of being. We become afraid of the notion that a machine will replace our need to think because we believe it is what makes us unique. However, it would do us wonders to let go of this hubris. Knowledge is not the final frontier of understanding reality; wisdom is.
This idea is well elucidated by Daoist philosopher Zhuang Zi (庄子) in this parable:
“Yan Hui said, ‘I am making progress.’ Zhongni replied, ‘What do you mean?’ ‘I have ceased to think of benevolence and righteousness,’ was the reply. ‘Very well, but that is not enough.’ Another day, Hui again saw Zhongni, and said, ‘I am making progress.’ ‘What do you mean?’ ‘I have lost all thought of ceremonies and music.’ ‘Very well, but that is not enough.’ A third day, Hui again saw (the Master), and said, ‘I am making progress.’ ‘What do you mean?’ ‘I sit and forget everything.’ Zhongni changed countenance, and said, ‘What do you mean by saying that you sit and forget (everything)?’ Yan Hui replied, ‘My connection with the body and its parts is dissolved; my perceptive organs are discarded. Thus leaving my material form, and bidding farewell to my knowledge, I am become one with the Great Pervader. This I call sitting and forgetting all things.’ Zhongni said, ‘One (with that Pervader), you are free from all likings; so transformed, you are become impermanent. You have, indeed, become superior to me! I must ask leave to follow in your steps.”
The message I glean from this passage is that it is the absence of analytical knowledge — rather than the presence of it — that allows one to arrive at a state of enlightenment. In other words, rather than the typical idea that knowledge and thinking are what we need to arrive at the truth of the world, wisdom achieved through mindfulness brings one to that higher state of understanding. This is what meditation contributes to. It is the practice of acquiring a calmer mind that is more present to gain greater wisdom of ourselves and our universe. This is what makes human beings extraordinary. It is what makes beings of biology special. Intellect is the talent of the computer, while wisdom is the talent of life.
Machines can take over the laborious nature of our lives, so we may find time to simply be. An understanding of this consequence can be achieved from the economics of a hyperbitcoinized world. One of the arguments in favor of Bitcoin is that it can replace our current monetary system based on fiat money with a system replaced by sound money. A fiat currency system is defined by inflation, whereas a sound money system is characterized by money that has its purchasing power determined by markets, independent of governments and political parties. This is crucial to consider. In an inflationary world, the cost of living continuously increases, which means that every paycheck is worth less than the previous one. This incentivizes people to spend money rather than saving it. Policymakers tend to favor this system because this spending stimulates the economy — which helps the rich get richer as the poor get poorer. Instead, it is a deflationary environment that would benefit us most. In a deflationary economy, the cost of living goes down every day. The next time you get a paycheck, even if the paycheck has the same number on it, it grants you a greater purchasing power. Savings become more valuable daily, even if there is no interest, therefore, someone can retire sooner. Imagine if 100 years ago, it took 60 years to save and retire. For the next generation, it took 40 years, and so on. Eventually, in a deflationary system, it took only one day to have enough wealth to retire. Eventually, people would hardly have to work to save enough for them to live the rest of their lives with abundant free time. Of course, this is not only because of the monetary system; it would be largely due to the advancements in technology that make our lives easier and more manageable. If Bitcoin didn’t exist, this could still happen.
The worldwide Turing machine will grow and replace many of our jobs. However, without Bitcoin, the monetary system would funnel all the wealth to the rich and powerful and the poor would not see the full benefits of the advancing economy. We already see much of this today: Rich people live incredibly luxurious lives without having to work excessive hours, while middle- and lower-class people work hard every day with only tiny bits of wealth to show for it. With Bitcoin, everyone can benefit from advancing technology. It does the “thinking” for us in keeping track of global transactions, accounting, etc., so we do not have to rely upon corrupt central banks to do it. This way, all ships rise with the tide. Again, the worldwide Turing machine will think for us so we can live tranquil and relaxing lives. Bitcoin is simply the newest advancement in this fantastic machine.
This is not an entirely novel idea, of course. Many people have foreseen the rise of computers and robots replacing us in the workforce and giving us more time to relax. Given the invention of Bitcoin, we can be more assured that this wealth will be distributed fairly across the globe. The question then becomes: What will we do in our free time? With this free time, we will be given a choice. I argue that we must consider the benefits of mindfulness and the dangers of an overly thoughtful mind. In this overabundant future, we can choose to just be.
Throughout this article, I will discuss the scientific research that illustrates the great and many health benefits that mindfulness meditation provides — both mental and physical. I think this is profound in demonstrating how health can be improved holistically and naturally, and illustrates a more fundamentally true aspect of the human condition that we do not often consider today: We evolved to be mindful.
Our modern society highly values intellect and thinking. People are sent to school to learn how to think so they can either solve problems at work or at universities. Think, think, think, think. The issue is that thinking takes us away from being mindful and can contribute to poor health if not kept under control. Thinking can be helpful in problem-solving and engineering, helping us develop our modern comforts. However, thinking also invites a mind burdened with repetitive, nonconstructive thoughts that lead to all sorts of poor mental health conditions. The benefits of mindfulness meditation cannot be stressed enough. Mindfulness involves the reorientation of the mind toward the present experience. A state of being absent of a ruminating mind and can be characterized as a state of experiencing life as it currently unfolds. It is a practice that removes the repetitive ruminations that keep us trapped within our heads. I also would argue that intellect is not, in fact, the most helpful method in understanding higher truths of reality, as illustrated by Zhuang Zi above. One who meditates will learn to experience and understand the world for what it is, rather than simply theorizing. Yet we are told that thinking will bring us to the truth, and not that thinking is for fools. The answer is found within a balance of the two. Human beings have thought long and hard about how to progress our economies forward and create this worldwide Turing machine. Thought has undoubtedly benefited us.
Nonetheless, it has come at the cost of our health. My argument is not that this has been wrong. I’m suggesting that this was a necessary sacrifice, so that future generations will not have to work and will be given a space to practice mindfulness. The amount of work required to live will be so minimal in a world where all thinking-related tasks are handled by the worldwide Turing machine. Future generations will have an incredible amount of free time to focus on health, well-being and happiness. Everyone will find these things in their own way, but it seems evident that this will inevitably involve mindfulness practices that keep our mind and bodies healthy. This free time and prosperity will give them the opportunities that we do not have for maximizing their health. This way, our future generations can enjoy the fruits of nature, which would likely lead to a healthier society and planet.
I find it helpful to think of life as full of balance. Often, systems oscillate and act as a pendulum, swinging back and forth. Humans were once hunters and gatherers, living a mindful experience. Then, we began to farm which radically increased the hours of the day we worked and dramatically reduced the diversity and health of our diets at the same time. From a certain point of view, it was a weird path to take. We worked longer hours in the day for less quality nourishment. The pendulum is swinging backward and the evidence is in the technology we began to build at the onset of our agriculture revolution. We are creating these elaborately efficient economies alongside a global computer that can do the labor for us so that we may return to a more natural and mindful way of being. However, in contrast to 10,000 years ago, we will live in great abundance and wealth rather than struggling for necessities — a stunning conclusion to a long history of strife.
Of course, this narrative is not without its cautionary side. Many reading this article may agree that we are moving toward an automated world, where humans are no longer forced to work to survive, but some may see that as dangerous. Some may view this world as dystopian, full of lazy individuals who have no purpose and live unhealthy lives, being absorbed in their virtual worlds and removed from reality. This is also an aspect of the balance, and it is a possibility. The worldwide Turing machine can think for us, but that doesn’t mean it should do everything for us. It is, and always will be, a double-edged sword. Technology can be beneficial, which means it can also be destructive. A good example is social media: it is incredibly positive because it brought the world together through greater communication and cultural exchange. Yet it also began to steal away our attention, poisoning our minds with habits that take us away from being mindful of our present environment. There are things that we should not use technology for and there are temptations that it brings that we should learn to avoid. In general, we should not use technology in ways that prevent us from being mindful and present in our natural environment.
The research explored in this article, including the benefits of meditation and being out in nature, show that there are aspects to our mental and physical health that we take for granted in this thought-driven society. Our bodies were designed to prosper outside. They do not thrive inside, and especially not inside a virtual world like the metaverse. Now, people wish to move out of a concrete jungle into a virtual jungle without fully appreciating our biological needs. Even though our minds may love the idea of living in a virtual world, our bodies will not. This behavior is promoted by our modern culture that puts the pleasures and activity of the mind first and the discipline of maintaining a mindful state of being last. Let computers think for us, so we may pursue a life of simply being. Let us not allow computers to dominate our minds.
It is an incredible time in human history. Thanks to technological advancements, it is becoming clear how prosperous human life could become. However, it will not be handed to us on a silver platter. Technology can grant us lives beyond our wildest imaginations. At the same time, the dualistic nature of technology also means without a cultural shift in the way we view life, it could be a tool for destruction. Ancient cultures understood the importance of mindfulness practices. There was an inherent recognition of our connection with Earth and nature, due to the conditions of our lives at the time. This brought benefits toward the mind, body and spiritual understanding of our place within the cosmos. It is evident that wisdom achieved through mindfulness is slowly being lost to time. This global computer, the universal thinking machine invented by Turing, has the capability of providing a life of great luxury where we may live in a state of being more akin to our biological evolution. It also has the capability of distracting us, pulling us away from nature and ruining our health in the process. We should be cautious of integrating computers with our brains or thinking we can make a virtual reality world that will be a suitable replacement for our natural world. The choice of whether technology will bring us closer to health and prosperity is ours to make. It will shape into whatever form we guide it toward. Our guidance is determined by our own ability to either choose a life of mindfulness or choose a life of indulgence as we build.
This is a guest post by Sydney Bright. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This is an opinion editorial by Kent Halliburton, President and COO of Sazmining.
Though the intention of the Bitcoin white paper was to usher in a financial revolution by introducing the first effective peer-to-peer electronic cash system, we’re now seeing the inception of Bitcoin’s second revolution: Energy.
Bitcoin miners serve as energy buyers of last resort, can work from anywhere and can turn on and off with nearly infinite flexibility. As such, bitcoin mining can render viable renewable and remote energy sources that would have otherwise been unprofitable. Additionally, miners can convert waste energy into digital gold, drastically curbing humanity’s emissions problem. Interestingly, these improvements to our relationship with energy are already underway, even before bitcoin has evolved into the next global reserve asset. Could it be that Satoshi Nakamoto’s unstated energy revolution actually takes hold before the first revolution of a peer-to-peer cash system? Although we can’t know with certainty, the data suggests that could be the case.
The Energy Revolution Gains Steam
Though imperfect, the best metric for comparing Bitcoin’s monetary and energy revolutions is growth. Let’s look at growth ratesbetween the total number of bitcoin holders and the total hash rate of all bitcoin miners. Hash rate, the total computational power used by miners to process bitcoin transactions and earn new bitcoin, serves as a good proxy for miners’ energy consumption. However, this still does not give us direct data about bitcoin mining’s increasingly positive effects on the energy sector. After all, if greater energy consumption by bitcoin miners simply corresponds to greater demand for energy, then Bitcoin will not have caused a paradigm shift in our relationship with energy at all. But, as we will see, the energetic benefits of bitcoin mining haverisen along with Bitcoin’s energy consumption.
As you can see in the first chart, the number of bitcoin users increased at a rapid rate until mid-2021, when the rate of growth slowed. The drop in adoption roughly corresponds with bitcoin’s price drop from over $61,000 to under $32,000. While the hash rate also crashed around this time, it steadily climbed back and continues to reach new heights. Although bitcoin adoption has slowed, the network’s energy consumption and mining activity continues to grow significantly.
As mentioned earlier, bitcoin mining’s increase in energy consumption alone does not tell us that Nakamoto’s second revolution is underway. To argue that, we need to know how much of that energy comes from renewable, waste and stranded energy. The Bitcoin Mining Council’s Q3 2022 report explains that bitcoin mining’s sustainable electricity mix is nearly 60% as of October 2022, up by about 3% from a year ago. Bitcoin miners purchase renewable energy as buyers of last resort; they are not consuming energy that would have been bought by other consumers. Rather, they purchase the energy precisely when there is little demand from others, increasing the profitability — and therefore the viability — of renewable energy sources across the world. As bitcoin mining’s renewable energy consumption increases, so does the global market for clean energy.
Future Indicators Of Nakamoto’s Revolutions
In addition to measuring the number of bitcoin holders (or wallets) in existence, another metric by which to gauge the success of Nakamoto’s monetary revolution is the number of transactions per unit of time that involve bitcoin.
The Lightning Network, a Layer 2 technology designed to make bitcoin transactions cheap, quick and user-friendly, is growing in prominence as bitcoin evolves from a store of value into a medium of exchange. The number of transactions executed on the Lightning Network per unit of time will be a straightforward indicator of bitcoin’s growth as a monetary instrument.
As more and more energy projects take advantage of bitcoin mining, Nakamoto’s energy revolution will be measured by tracking all of the following:
Tonnes of carbon dioxide equivalent reduced per unit of energy consumed by bitcoin miners per unit of time.
Wattage output by stranded energy sources that would have been unviable in the absence of bitcoin mining.
Wattage output by intermittent (and renewable) energy sources that would have been unviable in the absence of bitcoin mining.
As we receive more data about both the Lightning Network and the intersection between bitcoin mining and the energy sector, we will be able to compare how much each of Nakamoto’s revolutions is progressing over time. As stated earlier, although there will never be a single moment at which either revolution will have officially come to pass, we will at least be able to measure the speedat which each is progressing.
What We Now Know About The Dual Revolutions
Current data indicates that the growth of bitcoin owners has slowed relative to the growth of mining. If these trends continue andif bitcoin miners’ renewable energy mix continues to be among the greenest on the planet, then Nakamoto’s second revolution could indeed overtake his first. Bitcoin could acquire a reputation as a significant asset in the battle against global warming, rivaling its emerging reputation as the next global reserve asset.
Nakamoto’s unintended energy revolution will continue to grow in force. Fortunately for humanity, it does not matter which of Nakamoto’s revolutions is happening faster. We all win with drastically improved money and energy.
This is a guest post by Kent Halliburton. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Several years before my father’s death, he offered me and my two siblings each an early “cash gift” from his estate in the amount of whatever the maximum non-taxable amount was at the time. He was an active investor and offered the gift in the form of the stock instead of cash. My siblings took the cash and I decided to take it in stock valued the same as the cash amount.
Fast forward five years: My father just passed away and my siblings bought expensive toys and luxury automobiles with their cash, while my stock is worth many times what it was when it was given to me. His will states that the three of us should share in equal parts of his estate, but my siblings are arguing that my now very valuable stock should be included as an asset to be split among the estate.
Legally, they have no leg to stand on, but both are insistent that I’m taking money that is morally theirs. There’s no changing their mind and I’m convinced that we’re headed for a family feud. I’m not sure what I should do. Had the stock value gone to zero in that time, they wouldn’t be arguing that I should get extra to compensate for my “bad gamble.”
The Other Brother
Dear Other Brother,
Them’s the breaks — in this case, the sudden screeching of car brakes.
Your siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it. Buying stocks are more likely to pay off if you hold on to them over the long term. You did just that. Instead of buying a Ferrari or a Tesla TSLA, -0.19%,
you effectively chose to invest your gift.
Show the same certainty now, and don’t cave to your siblings’ demands. Don’t allow them to bully you into selling.
Investing is all about delaying your gratification — the ability to live for today and save for a more comfortable tomorrow, as opposed to having everything today and to hell with tomorrow. The gamification of stock trading with apps such as Robinhood HOOD, -0.74%,
which has extended its trading hours beyond the market’s official hours, is in part about getting that dopamine hit. (However, trading after hours comes with risks — chief among them warped stock prices.)
This dispute is about choice. If you had taken the cash, those stocks would still be part of your father’s estate, but you made the choice to take the stock. Your siblings had the same option and chose not to exercise it. Tell them, “I know it must be frustrating for you, but we all had the same opportunity. I took it. You took the cash.”
There is only one reason they missed out — and if they look in the rearview mirror of their respective luxury cars, they will see that reason staring right back at them.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
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UNITED NATIONS, Nov 25 (IPS) – Five years ago, the global #MeToo movement brought new urgency and visibility to the extent of violence against women and girls. Millions of survivors came forward to share their experience. They forced the world to recognise a reality that shames every one of us. Their courage and voice led to a powerful collective activism and a sea-change in awareness.
This wake-up call, alongside other invaluable initiatives around the world, continues to resonate. Grassroots activists, women’s human rights defenders and survivor advocates remind us every day, everywhere.
They are revealing the extent of that violence, they collect and shape statistics, document attacks and bring the violence that happens from the shadows into the light. Their work remains as crucial as it ever was. They offer us a path to bringing this violation of women’s rights to an end.
The work of women’s rights movements and activists is the bedrock of accountability and making sure that promises made many times become reality. They are mobilizing and they are powerful. We celebrate them today.
The evidence is clear. We have to invest urgently in strong, autonomous women’s rights organizations to achieve effective solutions.
This lesson was taught to us most recently during the COVID-19 pandemic. Countries with powerful feminist movements, stronger democracies and more women in parliament were the most effective in responding to the surge in gender-based violence, the shadow pandemic of COVID.
In this area as in others, we see time and again that when women lead everyone wins. We all benefit from a more inclusive and effective response to the challenges we face. We all profit from more resilient economies and societies.
Alongside these efforts, men must step up and push forward. They must play their part in change. They can begin where they live. It is an uncomfortable truth that for some women and girls rather than being a place of safety, as it should be, home can be deadly.
The latest global femicide estimates presents an alarming picture, one made worse by COVID-19 lockdowns. Our new report, released with UNODC, shows that on average worldwide, more than five women or girls are killed every hour by someone in their own family.
These deaths are not inevitable. This violence against women does not need to happen. Solutions are tried, tested and proven, and include early intervention, with trained, supportive policing and justice services, and access to survivor-centred support and protection.
I have three calls to action. I believe these are our priorities and our essentials. They are the basis on which we can push forward and make a reality of stated commitments to end violence against women and girls.
First, I call upon governments and partners across the world to increase long-term funding and support to women’s rights organizations, to make commitments to the Generation Equality Action Coalition on Gender-based Violence and donations to civil society organizations through the UN Trust Fund and support to the Spotlight Initiative. Resources matter and the scale of financial support for this cause does not match either the scale of the issue or the statements of concern made by those in leadership roles.
Second, I ask that we all, in our own ways, resist the rollback of women’s rights, amplify the voices of feminist women’s movements and mobilize more actors. We can all be advocates and our voices combined can drive the change we seek. In doing so, we must also ensure the promotion of women’s and girls’ full and equal leadership and participation at all levels of political, policy-making and decision-making spaces. Accelerated progress toward ending violence against women and girls is just one of the dividends.
Third, I ask for the strengthening of protection mechanisms for women human rights defenders and women’s rights activists. No one anywhere, ever, should face violence or harassment for standing up for what is right and calling for what is necessary.
We cannot let our determination to keep “pushing forward” for gender equality waver. Our goal of a world where violence against women and girls is not just condemned but stopped is possible. By pushing forward together we can attain it.
Sima Bahous is UN Under-Secretary-General and UN Women Executive Director.
DOHA, Qatar, Nov 25 (IPS) – The sun is shining, and the temperature sits at an idyllic 28 degrees Celsius. The Uber driver taking me to work is from Pakistan and devastated about the recent loss to England in the T20 Cricket World Cup final in Australia.
On route to the office, I stop to get a coffee and the barista is from Gambia, the server from Uganda and the cashier from Nigeria. They all smile and greet me as I travel through the line. As I enter the office, I am greeted by the Indian and Bangladeshi security guards and then pass the Filipino, Togolese and Algerian cleaning staff who are preparing for the rush of staff on what will undoubtedly be a busy morning.
The world’s real melting pot is not London, Melbourne or Los Angeles. It’s here in the Middle East. The representation of cultures here in Doha dwarfs anything outside of the Arab Gulf and many are here for the prospect of work and the opportunity brought about by the ongoing FIFA World Cup in Qatar.
Qatar’s open door
As an underlying groundswell of xenophobia has permeated through much of the world – the Global West has shut its borders, limited migration and made the process of entering, let alone working, more difficult – Qatar has opened its doors. The people working here are searching for a way to improve the situation for their families.
Many are from some of the poorest places on the planet where the people are most in need. The media have filled newspapers and TV screens with negative stories about Qatar, a country they have never visited and a culture they have never experienced.
When the majority have turned their backs on these poorer countries, could the conversation surrounding workers for this World Cup not have been about opportunity? About the incredible impact and lasting legacy, the jobs generated here will have on families and communities across the globe? About the dissemination of wealth back to the areas and communities who really need it?
For decades the world has shifted industry towards regions that can provide cheaper labour. The movement of whole sectors to Asia and the sub-continent have kept many organizations afloat. This was seen as a creative way to save money, drive higher dividends for shareholders and keep prices low for consumers despite the effect it would have on local jobs.
This paradigm is alive and well. Salaries and wages are much lower in Eastern European countries like Poland, Hungary or Bulgaria than in countries like Germany, Austria or France. In many cases, this has led companies based in Western Europe to build subsidiaries in Eastern Europe to take advantage of lower labour costs. Western European economies heavily depend on working migrants from the East earning low wages and working in poor, unregulated conditions. That isn’t particularly controversial in Europe.
The same can be said for Eastern European countries who replace the workforce that has departed with workers from Central Asian countries such as Kyrgyzstan, Uzbekistan and Kazakhstan. So, for all the outrage and condemnation that has been aimed at Qatar, a quick google search would show the very thing they are advocating against is happening under their own nose.
Uniting instead of dividing
However, hypocrisy is not limited to Europe. Australia, for example, became the first 2022 World Cup team to release a collective statement against Qatar’s human rights record, compiling a video message critiquing the World Cup host’s treatment of migrant workers. It may surprise those individuals to learn that Australia’s track record on human rights is not exactly squeaky clean.
More than 40 nations at the UN Human Right Council, including Germany, South Korea and the USA, have questioned Australia’s policies toward asylum seekers and refugees. Among the issues raised are Australia’s continued use of offshore processing and prolonged detention for asylum seekers.
The council accuses the Australian government of not following through on some of its key past pledges and of still subjecting refugees to immense harm.
The World Cup in Qatar is the 22nd iteration of the international tournament which was first held in Uruguay in 1930. In the 92 years since, the ‘world game’ – despite its interest across the globe – has held 15 out of 20 World Cups in Europe and South America.
Five nations have already hosted the event on more than one occasion. An incredible concentration given the participation and interest. This time things are different. The world game is branching out and reaching a new audience.
The World Cup in Qatar represents the first major sporting event in the Arab and Muslim world. The impact will not just be felt amongst the 2.7 million population of Qatar, or even across the 475 million people who call the Middle East home. This event will resonate with the 1.9 billion Muslims across the globe.
From Indonesia to Morocco, the Maldives to Egypt, roughly one quarter of the world’s population, who in almost 100 years of World Cup football have been in the background, will be front and centre.
If the focus of the next four weeks can be the incredible football played on the pitch, the generosity and kind-hearted nature of the hosts and the collective joy that bringing cultures, religions and people together – not just those from Europe and South America – this World Cup may end up being a turning point for a truly world game.
They say that World Cups are a life-changing experience for the players and teams that compete in them, and even more so for the winner. However, for this World Cup, for the first time in history, the real winners won’t be on the pitch at Lusail Stadium on December 18.
They’ll be behind the scenes, in the Ubers, coffee shops and security points across the country, taking the opportunity, the generational-altering opportunity, only the World Cup in Qatar was offering them.
Myles Benham is a Freelance Event Manager with 15 years’ experience working in Global Mega Events and is currently in Doha for the World Cup.
After days of intense negotiations that stretched into early Sunday morning in Sharm el-Sheikh, countries at the latest UN Climate Change Conference, COP27, reached agreement on an outcome that established a funding mechanism to compensate vulnerable nations for ‘loss and damage’ from climate-induced disasters.
Opinion by Felix Dodds, Chris Spence (sharm el sheikh, egypt)
Inter Press Service
SHARM EL SHEIKH, Egypt, Nov 24 (IPS) – COP 27 was both better and worse than expected, say Prof. Felix Dodds and Chris SpenceIt’s finally over. After the anticipation and build-up to COP27, the biggest climate meeting of the year is now in our rear-view mirror. The crowds of delegates that thronged the Sharm el-Sheikh international convention center for two long weeks have all headed home to recover. Many will be fatigued from long hours and sleepless nights as negotiators tried to seal a deal that would move the world forwards. Did all this hard work pay off? In our opinion, COP 27 was both better and worse than we’d hoped.
Failing to Follow the Science
First, the bad news. COP 27 failed to deliver what the science tells us was needed. With the window of opportunity closing fast on our goal of limiting global temperature rise to 1.5C or less, COP 27 did far too little on the all-important issue of mitigation—that is, cutting emissions.
The case for urgent action keeps getting stronger. The latest reports from the Intergovernmental Panel on Climate Change (IPCC) make for grim reading about what to expect if we let temperatures rise too much. Nowadays, though, we just need to read the newspapers to catch a glimpse of the future.
The head of the key negotiating Group of 77 – 134 developing countries – was Pakistan which has been dealing with the worst floods in its history, leaving 1717 people dead and dealing an estimated $US40 billion in damage. In 2022 in the USA, there were 15 climate-related disasters which each exceeded $1 billion in costs.
Meanwhile, in Africa, according to Carbon Brief’s analysis of disaster records, “extreme weather events have killed at least 4,000 people and affected a further 19 million since the start of 2022.”
Since this COP was billed by some as the “Africa COP”, one could expect a strong response to such news.
The pressure was therefore on at COP 27 to respond to such disasters. Attending COP27 were 112 world leaders and over 300 government ministers: not as many as at COP 26, but still a good number. Something like 27,000 people from governments, intergovernmental, stakeholders, and journalists also attended the COP. This was to the backdrop of the UN Secretary General warning us that we needed to “cooperate or perish,” to take urgent action to take us off “a highway to climate hell”.
Messing up on mitigation: And yet progress on mitigation was modest, at best. While some delegations pushed hard for stronger commitments on cutting emissions, the appetite in some quarters just didn’t seem to be there. After being pressured to do more in Paris and Glasgow, China, India, and some of the oil-producing countries appeared reluctant to take much more in Sharm el-Sheikh.
They feel developed countries, which are historically responsible for the bulk of emissions, should be doing more themselves, rather than coercing others. The result was a negotiated outcome with little more on the table than we had in Glasgow. For instance, delegates could not agree to ramp up their language on fossil fuels, much to many people’s disappointment.
Finance: Likewise, there was not too much to report on the issue of climate finance. The $US100 billion annual support for developing countries initially promoted by Hilary Clinton at the 2009 Copenhagen COP and enshrined in the Paris COP in 2015 will be reviewed in 2024 with a new figure being hopefully agreed then for 2025 implementation.
The Global South has been talking of this new sum numbering in the trillions to help adapt and mitigate against climate change. And yet there were few signs of movement towards anything of that magnitude.
Given that the North has still not met its pledge of US$100 billion by 2020, it’s clear a lot of movement is needed in the next couple of years. Yet news from outside the conference, such as the US House of Representatives now having a Republican majority, does not bode well.
For a meeting billed as the “implementation COP” where climate action was taken to another level, the news on mitigation and finance was therefore disappointing.
Just prior to the start of COP27 the lead negotiator for Egypt Mohamed Nasr underscored: “science reports were telling us that yes, planning is not up to expectations, but it was implementation on the ground that was really lagging behind.”
For a meeting billed as the “implementation COP” where climate action was taken to another level, the news on mitigation and finance was disappointing. Credit: Shutterstock
Exceeding Expectations—the Loss and Damage Fund
There were some bright spots, however.
Perhaps most surprising was the agreement to create a ‘Loss and Damage’ fund to help the most vulnerable countries. This has been a key issue for almost 30 years, particularly for small island developing countries.
In Glasgow this looked very unlikely to be resolved in the Sharm COP, but with a late change of heart by the Europeans and eventually by the USA and others in the OECD, this is perhaps the most significant and surprising outcome from COP 27. Even as recently as October, the signs were that OECD countries were not on board with calls for a new fund. However, at COP 27 the “trickle” of earlier action in this area turned into a flood.
Interestingly, it was Scotland at COP 26 that started things off, with a modest, voluntary contribution. More recently, Denmark, Austria, New Zealand and Belgium had also financial commitments to loss and damage, now amounting to $US244.5 million. Mia Mottley Barbados’ Prime Minister has called for a 10% windfall tax on oil companies to fund loss and damage caused by climate change, which could raise around $US31 billion if it had been introduced for 2022. Still, the signs a fund would be agreed at COP 27 had not been good.
This makes the final outcome all the more welcome. The idea, the door is now open for the most vulnerable countries to receive more support. A goal has now been set to fully operationalize the fund at COP 28 in a year’s time. For the most vulnerable nations, this cannot come quickly enough.
Global Goal on Adaptation: Another positive development, albeit on a more modest scale, was in the area of the ‘Global Goal on Adaptation’. Here, delegates agreed to “initiate the development of a framework” to be available for adoption next year.
A lot of work will need to be done at the intersessional meeting of the UN Climate Convention’s subsidiary bodies in Bonn in June next year to prepare for this, including how to measure progress towards this Goal. An approach similar to the development of the Sustainable Development Goals in 2015 might be appropriate, perhaps?
Article 6: Another of the Glasgow breakthroughs was that on Article 6 of the Paris Agreement on carbon markets and international cooperation. COP 27 saw some solid work undertaken on how to operationalize this both in market and non-market approaches.
There are still a lot of sceptics on this will have a genuine impact and how to ensure not double counting or even that any offsets are real. An approach that is more ecosystem-based than just trees is gaining momentum. Such a change, if it happens, also offers a real chance to link the two major UN conventions on climate and biodiversity.
Agriculture: The work on the Koronivia Work Programme on Agriculture went down to the wire. The outcome was a four-year open-ended working group reporting at COP31 (2026). Some controversy on the term ‘food systems’ may see its first workshop address this issue.
It will also look at how we can better integrate the programme’s work into other constituted bodies such as the financial mechanisms of the convention. The Green Climate Fund has given only $US1.1 billion for adaptation on agriculture. It says one of the major reasons for this is the:
“Lack of integrated agricultural development planning and capacities that consider maladaptation risks and investment needs across the agricultural sector, climate information services and supply chains.”
While these outcomes on agriculture, adaptation and Article 6 may seem modest, they should be welcomed as steps in the right direction.
Coalitions of the Willing: One of the outcomes from the Glasgow COP was the launch of ‘Coalitions of the Willing’; groups of countries and stakeholders wanting to move quicker on an issue than they might under the official UN negotiations, which are consensus-driven and involve more than 190 countries. In Sharm el-Sheikh we saw a number of countries join the Methane Pledge, including Australia and Egypt. China joined the meeting on the Pledge and committed to its own national methane strategy.
In Glasgow, 137 countries had taken a landmark step forward by committing to halt and reverse forest loss and land degradation by 2030. With the imminent return to leadership in Brazil of President-elect Lula da Silva, there is renewed hope that real action on the Amazon forests is possible again. Lula committed Brazil to reaching zero deforestation and was hailed as a hero by many when he turned up at COP 27 during the second week.
Meanwhile, the Glasgow Financial Alliance for Net Zero (GFANZ)—the global coalition of leading financial institutions—committed to accelerating the decarbonization of the economy. GFANZ, which includes over 550 of the world’s leading financial institutions, has committed to reduce their financed emissions in line with 1.5 degrees C.
With $US150 trillion of combined balance sheets, the accountability mechanism announced of a new Net-Zero Data Public Utility is yet to prove if it is effective in holding the finance sector to their commitments. However, if it can deliver on its potential, this could be a game changer.
There was plenty more activity at COP 27 where the results are harder to measure. Most people at these large UN climate summits are not negotiators and COP 27 was full of “side events” and government and stakeholder pavilions each with its own set of events and agendas.
Country pavilions provided a venue to talk about their challenges, issue pavilions on oceans, food, water, health, education, and resilience highlighted their issues and how they fit into the climate agenda. These enable critical issues to be discussed in a more open way than could be undertaken in negotiations.
Ideas were shared, connections made, and partnerships for further action shared. The upshot of all of this activity is hard to measure, but probably considerable. The thematic days organized by the Egyptian Presidency also gave space to these issues and helped bring together ideas that may ultimately find their way into future UN decisions. In this respect, too, the quality of the side events and pavilions at COP 27 exceeded our expectations.
On to Dubai and COP28
Was COP27 a success or failure? When it comes to keeping up with the science, the answer can hardly be positive. The call to “keep 1.5 alive” hangs in the balance and is still on “life support”. In that sense, COP 27 had very little impact on our current trajectory, which is a likely warming of 2.4-2.8 C by the end of the century.
On the other hand, the promise of a loss and damage fund, as well as modest successes on adaptation, Article 6, agriculture, and actions outside the official negotiations, mean COP 27 delivered some bright spots of success.
Looking ahead to next year, COP 28 will be important as it marks the first “global stocktake” to judge where things now stand. We hope this will focus world leaders to increase their pledges (or “nationally determined contributions”) significantly. It will be interesting to see how the United Arab Emirates, as COP 28 host, performs. As a major oil producer, it faces some serious challenges in transitioning to a net zero world.
At COP 27, there were rumours the UAE was ramping up its team and bringing in additional external expertise ahead of next year. This is certainly a good sign if COP 28 is to deliver the kind of groundbreaking outcomes the science now demands.
Felix Dodds and Chris Spence are co-editors of the new book, Heroes of Environmental Diplomacy: Profiles in Courage (Routledge Press, 2022). It includes chapters on the climate negotiations held in Kyoto (1997), Copenhagen (2009) and Paris (2015).
This is an opinion editorial by Stanislav Kozlovski, a software engineer and macroeconomic researcher.
Many Bitcoiners have heard of Bitcoin’s “lack of scalability” — it is one of the most common critiques waged against the project by both gluttonous cryptocurrency competitors and incumbent establishment actors.
Some oldtimers may remember the heated, bathed-in-controversy Blocksize Wars of 2015 to 2017 which, aided by industry insiders, most shallowly aimed to make Bitcoin scale to more transactions by increasing the maximum block size and by doing so, almost set precedent and changed Bitcoin’s future course forever.
Both of these issues will ultimately prove to be left on the wrong side of history. In this piece, we are going to show how the Lightning Network addresses Bitcoin’s scalability problems and undoubtedly proves that the small-block decision was ultimately the right one.
Base Layer Limitations And Choices
Before we understand what the Lightning Network is solving, we should first understand what the inherent problem is. Simply put: You cannot scale a blockchain to validate the entire world’s transactions in a decentralized way.
Source: Author
Blockchains suffer from an inherent limitation which forces them to trade off between three qualities — one quality of their system has to go for the other two. As pictured above, a blockchain can only reliably have two of these three qualities:
Decentralized: not controlled by any single party or a small number of elites
Scalable: scale to a sufficient number of transactions
Secure: not be easy to attack and break its invariants
It is worth noting that all of these characteristics sit on separate, complex spectrums. For example, you don’t become “secure” over a certain threshold, it is very dependent on the use case and many different characteristics.
Bitcoin is slow for a reason. It explicitly picked to optimize the “security” and “decentralization” sections of the trilemma, leaving “scalability” (transactions per second) on the sideline.
The key realization is that, much like today’s internet and financial system, it is more optimal to comprise the whole system of separate layers, where each layer optimizes for and is used for different things.
Bitcoin, the base layer, is a globally-replicated public ledger — every transaction is broadcast to every participant in the network. It is evident that one cannot practically scale such a ledger to accommodate the entire world’s growing transaction rate. Apart from being impractical and privacy damaging, its drawbacks vastly outweigh its insignificant benefits.
Back in the day, there was a major civil war between the online community in what Bitcoin should do to increase its transaction throughput capacity. There is major, infuriating controversy in this story and is in large part what shaped Bitcoin to remain what it is today — a grassroots, bottom-up movement where the average people (plebs), in aggregate with one another, dictate the rules of the network.
“The Blocksize War” by Jonathan Bier illustrates the battle between the decentralized network supporters wanting what’s best for the long-term viability of the network and the greed and propaganda perpetuated by major players and corporations to further their own power-gaining and profit-seeking agendas.
Long story short, Bitcoin was forked into a failed fork named “Bitcoin Cash.”
Bitcoin (blue) price compared to Bitcoin Cash (orange). The fork can be seen at the start of the chart. Source: tradingview.com.
The little guy eventually won — Bitcoin did not rush any bad design choices that would come to compromise its decentralization, security or censorship resistance. The decision was effectively made to scale Bitcoin through layers, introducing second layers that work separately from Bitcoin and checkpoint their state to the main, slower-but-more-secure network.
In stark contrast, the evidently-unsuccessful fork Bitcoin Cash sacrificed all hopes of decentralization by increasing its block size to 32 megabytes, 32 times more than Bitcoin, for a mere maximum of 50 payments per second on the base chain.
Block Size
Each Bitcoin block has a cap on its size and this denotes the upper bound on how many transactions can exist inside of a block. If demand grows to outpace the amount of transactions a block can have, the block becomes full and transactions get left unconfirmed in the mempool. Users begin to outbid each other via the adjustable transaction fee in order to have their transaction be included by the miners, who are incentivized to choose the highest-paying transactions.
A naive solution to this would be to simply increase the block size limit — that is, allow more transactions to be included in a block. The negative side effects of this are subtle enough that even intellectuals like Elon Musk make the mistake of suggesting it.
Increasing the block size has second-order effects which decrease the decentralization of the network. As the block size grows, the cost to run a node in the network increases.
In Bitcoin, each node has to store and validate each transaction. Further, said transaction has to be propagated to the node’s peers, which multiplies the network’s bandwidth requirements for supporting more transactions. The more transactions, the more the network’s processing (CPU) and storage (disk) requirements grow for each node. Because running a node yields no financial benefits, the incentive to run one disproportionately decreases the more costly it is.
To put it into numbers, if Bitcoin is to ever scale to Visa’s purported peak capacity levels (24,000 transactions per second) a node would need 48 megabytes per second just to receive the transactions over the network. The following is a map showing the average internet speed in the world:
As you can see, a massive part of the world’s average speed would exclude them from the ability to run a node under these conditions. Note that average speed implies that many are even lower than said threshold. Additionally, it doesn’t account for the fact that a user would have other uses for their bandwidth — few selfless people would dedicate 50% of their internet bandwidth for a Bitcoin node.
More importantly, the amount of data this would generate would make it impossible for anybody to practically store it — it would result in 518 gigabytes of data per day, or 190 terabytes of data a year.
Further, spinning up a new node would require one to download all of these petabytes of data and verify each signature — both of which would make it so that a new node would take a long time (years) to spin up.
And to make matters worse, 24,000 transactions per second doesn’t make for a truly unique global payments network in and of itself. Visa isn’t the only payments network in the world, and the world is growing more interconnected every day.
Lightning Network 101
The Lightning Network is a separate, second-layer network that works on top of the main Bitcoin network. Simply said, it batches Bitcoin transactions.
To access it, you need to run your own node or use somebody else’s. The network has two concepts worth understanding for the purposes here:
A Lightning node: separate software that communicates with each other and constitutes a new peer-to-peer network.
Channels: a connection opened between two Lightning nodes, allowing for payments to flow between them.
A channel is literally a Bitcoin base layer transaction, anchoring the channel to the secure chain.
Once two nodes open a channel between one another, payments start flowing between them. Each subsequent payment modifies the channel’s state, cryptographically revoking the old one and checkpointing the new one in memory and on disk of both nodes, but critically, not to the base chain.
Channels can and in my opinion ideally should stay open for a long time (e.g., a year or more). If the nodes ever decide to close down their channel, their latest balance after all the off-chain payments is restored to their original wallets. This is cryptographically-secured by hashed timelocked contracts (HTLC) and digital signatures, which we won’t get into detail for the purposes of this article.
This allows one to batch billions of payments into two on-chain transactions — one for opening the channel and one for closing it. Once a payment is complete, it is indisputable what the latest balance is between all parties (assuming nodes redundantly store their channel checkpoints).
Critically, one need not be directly connected to another party in order to pay them — channels can be used by other nodes in the network in order to increase their reachability. In other words, if Alice is connected to Bob and Bob is connected to Caroline, Alice and Caroline can seamlessly pay each other through Bob.
Lightning Scalability
As we will now prove, the Lightning Network already scales to support 16,264 transactions a second today and therefore solves the scalability problem while preserving all the benefits Bitcoin has to offer — permissionlessness, scarcity, user sovereignty, portability, verifiability, decentralization and censorship resistance.
For a payment to make its way through the network, it typically has to go through multiple payment channels. To answer how many payments the network can do in a second, we need to understand how many an average channel supports.
Statistics show that the average payment goes through around three channels.
The benchmark numbers we will use for this analysis have per-node throughput capacity, not per-channel. Therefore, we will inaccurately assume that each node has just one channel. The default LND node is said to be able to do 33 payments per second with a decent machine (8 vCPUs, 32 GB memory) according to the benchmark.
With 16,266 nodes in the network (as of November 2022), assuming each payment has to go through three channels (four nodes), the network should be able to achieve around 134,194 payments per second.
That is, each payment has to go through a group of four nodes, and there are 4,066 such unique groups in the network. Assuming each node can do 33 payments a second, we multiply 4,066 by 33 to reach 134,194.
Now, to be realistic: Not every node is running a machine like the one in the benchmark — many are simply running on a Raspberry Pi. Thankfully, it doesn’t take much to be able to beat the current payment systems.
Lightning Vs. Traditional Payments
Finding authentic numbers about the peak capacity of traditional payment systems is hard, so we will rely on their average payment rate throughout the 2021 financial year. We will compare that to the theoretical capacity of Lightning, because conversely, getting the average rate of payments in Lightning is impossible due to its private nature, and is also not revealing of capability because the demand for Lightning payments is still relatively low. This comparison will give us an idea of how many payments a Lighting node needs to be capable of routing in order to out-compete traditional finance.
The numbers are promising — it takes each Lightning node to be capable of doing just four payments a second in order to beat the current payment networks by at least two times. At that rate, 4,066 unique four-node groups can achieve 16,264 payments per second — 2.2 times that of the largest competitor, Visa.
Source: Author
To make matters worse for traditional payment networks, the average Lightning transaction fee is 13 times less that of Visa — 0.1% compared to 1.29%.
It’s worth remembering that one could always continue to scale the Lightning Network by creating new nodes. Since it is peer to peer, its scalability is theoretically unlimited as long as nodes in the network grow.
Further, the aforementioned benchmark by Bottlepay makes the case that there are no real technical blockers for Lightning node implementations to eventually reach 1,000 payments per second. At such a number, the network’s current throughput would be closer to four million per second, not to mention what it would be with an increase in the number of nodes.
And lastly, it is worth remembering that the Lightning Network is still very much immature software and has a fair amount of future optimizations to be done, both in the protocol and its implementations. Resources in terms of developers are the only short-term constraint to increasing scalability, which has rightfully come second to more important matters like reliability.
In this piece, we exposed all of the negative drawbacks of scaling the Bitcoin blockchain through increasing the base layer’s block size, most notably severely compromising its decentralization and ultimately failing to achieve its aim of reaching the immense scalability needed for the demands a global payments network has and will continue to increasingly have in the future.
We showed that the Lightning Network, as a second-layer solution, most elegantly solves the scalability problem by both preserving all of Bitcoin’s benefits while at the same time scaling it way beyond what any base-layer solutions promise.
This is a guest post by Stanislav Kozlovski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
LONDON, Nov 24 (IPS) – In our recent book, “The Connections World: The Future of Asia”, published by Cambridge University Press in October 2022, we argue that mutually beneficial links between dynastic business houses and political elites have been important drivers behind Asia’s extraordinary renaissance. Yet, these close ties now threaten future economic growth.
That is because the ubiquitous Asian corporate structures of Business Groups systematically work with politicians in Asia to create excessive market power and overall concentration. They have proven remarkably adept at entrenching themselves.
Although, by concentrating resources in relatively few hands, this was quite an effective engine of growth in the past half century, the limitation of competition and brake on innovation threatens future progress.
The pervasive and highly resilient networks of connections running between businesses and politicians have provided a common backbone to Asian development and have cut across political systems. We characterize these networks as the Connections World.
That world comprises a web of interactions between businesses and politicians/political parties that are highly transactional and commonly contain significant degrees of reciprocity.
Thus, politicians look to firms to make campaign or personal contributions; pay bribes; provide jobs for family or associates whilst also providing reciprocal favours, such as creating jobs in regions or at moments that are politically advantageous.
At the same time, businesses look to politicians for protection from foreign or domestic competition; to supply subsidies, loans and/or public sector contracts. All parties benefit from these interactions, creating a stable political economy equilibrium.
These arrangements have served Asia well over the past half century, with Asia’s share of the world economy rising from 9% in the 1970s to nearly 40% now. However, the connections world will provide a less supportive foundation for growth in the future for a variety of reasons. Neither politicians nor business groups have sufficient interest in stimulating competition, whether through the entry of domestic or foreign multinational as competitors.
Moreover, because Asian business groups are often highly diversified, with the control of the oligarch or dynasty enhanced by cross-holdings and ownership pyramids, their economic consequences must be measured not only by the traditional measures of market power, but also by overall levels of concentration as, for example, indicated by the share of total revenues for the largest five firms relative to GDP.
To put this in context, while the market concentration ratio (CR5) of the largest US firms, mainly in tech sectors, is often high, the five-firm overall concentration ratio is only around 3%. The comparable figures across Asia in 2018 are much higher, as can be seen in Figure 1. The CR5 in South Korea exceeds 30% and even in very large economies – India and China – it exceeds 10%.
The findings are even starker when we consider the largest ten firms (CR10). In the US, this is only around 4% but in South Korea exceeds 40% and in India and China exceeds 15%.
Looking forward, the consequences of the connections world will be far less propitious, not least because growth will have to rely increasingly on innovation. The existing networks are, for the most part, ill-suited to promote innovation which thrives on an open ecosystem of science universities and business parks, capital funders, lawyers and entrepreneurs and a healthy willingness to risk and lose.
Moreover, the connections world crowds out new entrants, soaks up capital and skilled workers and managers and suppresses the competitive environment so essential for the trial-and-error process at the heart of much successful innovation. Even when the business groups themselves are innovative, there is relatively little innovation going on in the wider economy.
What should be the policies and other measures that could address the shortcomings of the connections world? Central to the policy menu for loosening the grip of entrenched business will have to be measures designed to induce the transformation of business groups into more transparent and better governed businesses, while also radically weakening the links between politicians and business.
This will not happen naturally because the mutual benefits from market entrenchment and political connections outweigh any gains to the current players from reform. The required policies will need to include changes to corporate governance that undercut pyramidal ownership structures, mergers and cross-holdings, that impose inheritance taxes and shift to new types of – and targets for – competition policy.
Some of those policies were successfully introduced in the USA under Roosevelt. More recently, Israel has adopted criteria in competition policy for overall, as well as specific market, concentration levels, while South Korea has placed high inheritance taxes at the heart of their raft of policies to weaken the vice-like grip of their gigantic business groups.
At the same time, measures need to be adopted aimed at limiting the discretionary scope and incentives for politicians to leverage their connections for personal or family benefit. Although hard to achieve, incremental improvements, such as through audited registers of interests, can start to affect behaviour.
In short, although many commentators have already declared the 21st century to be Asia’s, that is far from predetermined. Unless the sorts of policies that we propose are introduced to roll back the tentacles of the connections world, many Asian economies will in fact find themselves unfavourably placed to exploit their potential in the coming decades.
Simon Commander is Managing Partner of Altura Partners. He is also Visiting Professor of Economics at IE Business School in Madrid. Saul ESTRIN is Professor of Managerial Economics at LSE and previously Professor of Economics and Associate Dean at London Business School.
This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before transitioning to the Finance Corps.
I wrote earlier this year about how FTX rescuing other companies was not altruism, but rather good for business. I had no idea how essential for business it ended up being. It was their last desperate attempt at self preservation, ultimately before they crashed and burned in a full-blown liquidity crisis.
As I sit here absorbing all of the news surrounding FTX, I can’t help but be thankful for Bitcoiners deemed toxic by the cryptocurrency community writ large. It is none other than those toxic maxis like Matt Odell, Marty Bent and Cory Klippsten who got me off my ass to actually make positive steps to secure my stack and take self-custody.
I think many of us owe thanks to the likes of Ben at BTCSessions, undoubtedly teaching tens of thousands of us just how to use these once-intimidating devices used to generate private keys and sign transactions.
Without these gentlemen, my wife and I would have lost everything. Many did. But because of them, we’re doing just fine. Thank you.
Thanksgiving Is For Family
As we move into Thanksgiving, remember the lessons you’ve internalized from becoming a hardened and seasoned bitcoiner. First and foremost is having a low time preference.
A call for articles went out recently on tips about how to orange pill friends and family during Thanksgiving. My advice to you: don’t.
Listen more and talk less. Time is the only thing as scarce as your sats. Enjoy your time. Don’t worry about getting people onto the life raft. When comments about price inevitably come up just smile and nod.
I’m sure they already know what you’re all about. They will come to you when they’re ready. In the meantime, just enjoy quality time, and the ability to perform information arbitrage on most of the rest of the world. They’ll catch on eventually.
Lastly, I’d like to announce that the CEO of bitcoin is having a special Black Friday sale on bitcoin until further notice. Up to 73% off. Use code BTFD at your local bitcoin-only exchange like Swan, River or Strike.
Happy stacking, and happy Thanksgiving.
This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
PORTLAND, USA, Nov 23 (IPS) – Countries worldwide, and as different as India, Indonesia, Iraq, Iran, Ireland, Israel and Italy, are struggling with the issue of how best to balance diversity and meritocracy across disparate ethnic, racial, caste, linguistic and religious subgroups in their populations.
In a growing number of areas, including politics, employment, careers, education, armed forces, immigration, the judicial system, entertainment and sports, countries are making far-reaching decisions regarding when to strive for diversity and when to stress meritocracy.
Some may consider the goals of diversity and meritocracy to be noncontradictory. In practice, however, the two goals are often difficult to reconcile, especially with imprecise definitions, differing concepts and lack of reliable measures.
Promoting diversity certainly poses a variety of challenges for societies. However, the pursuit of meritocracy also faces unrecognized risks and biases as well as discrimination behind efforts to reward merit.
The rewards ascribed to meritocracy are often simply the result of privilege, legacy and entitlement. In addition, some have argued that the pursuit of meritocracy actually produces inequality, stifles social mobility and increases unhappiness.
Admittedly, diversity and meritocracy across country populations are varied and differ considerably globally. Nevertheless, useful insight may be gained from considering the experience of a country that exemplifies a nation attempting to find the appropriate balance between diversity and meritocracy: the United States.
U.S laws prohibit discrimination on the basis of race. At the same, however, policies and practices, such as affirmative action, aim at countering discrimination against certain racial groups by increasing their chances for employment, promotion, higher education and other opportunities.
Since the first U.S. census in 1790, the U.S. Census Bureau has been tasked to gather information on the racial composition of America’s population. In the 1790 census an estimated 81 percent of the U.S. population was identified as white with the remaining 19 percent enumerated as black, with 92 percent of them being slaves.
The white proportion of the U.S. population rose to 90 percent in 1920, where it remained until 1950 when it began declining and reached 80 percent in 1990. At the start of the 21st century the proportion white declined further to approximately 75 percent where it has remained. The proportion white is projected to continue declining, reaching 68 percent of the U.S. population by 2060 (Figure 1).
Source: U.S. Census Bureau.
The methods employed by the Census Bureau to collect race data over the past 230 years have evolved, reflecting changes in American society. Based on the 1997 Office of Management and Budget (OMB) standards on race, the Census Bureau gathers self-identified responses to the race question, with respondents permitted to select more than one race.
OMB requires five minimum categories: White, Black or African American, Asian, American Indian or Alaska Native, and Native Hawaiian or Other Pacific Islander. Those categories reflect a social definition of race and do not define race biologically, anthropologically, or genetically.
The race categories and their proportions of America’s 2021 population of 332 million are: White at 75.8 percent, Black or African American at 13.6 percent, Asian at 6.1 percent, American Indian or Alaska Native at 1.3 percent, Native Hawaiian or Other Pacific Islander at 0.3 percent, and two or more races at 2.9 percent (Figure 2).
Source: U.S. Census Bureau.
Reviewing a number of examples from different areas of life in the United States is useful in illustrating the various aspects of the country’s efforts to balance racial diversity and meritocracy.
In professional basketball African Americans represented 20 percent of league players in 1960. Today African Americans account for approximately 75 percent of basketball players in the National Basketball Association.
Among the country’s orchestras, in contrast, African Americans account for less than 2 percent of the players. Nearly a half century ago, the selection of musicians for orchestras was changed to blind auditions in which candidates performed behind a curtain. As blind auditions have not led to making orchestras more diverse, some have called for ending blind auditions and taking race into account so orchestras reflect the communities they serve.
In professional football African Americans represent 58 percent of the players. However, they account for 9 percent of the head coaches, or five head coaches in the 32-team league of the National Football League (NFL).
Nearly 20 years ago after accusations of discriminatory head coach hiring practices, the NFL team owners agreed to policy changes to address those accusations. Among those changes was the so-called Rooney Rule, which said, “Any club seeking to hire a head coach will interview one or more minority applicants for that position.”
In the armed services, African Americans make up 23 percent of enlisted soldiers, which is approaching nearly double their proportion of the U.S. population. Among officers, however, the percentage of African Americans is considerably lower at 11 percent.
The U.S. military has taken a number of initiatives to promote racial diversity at the higher ranks. The Army, for example, has removed photos of officers from personnel files so promotion boards are less aware of race and they have more minority officers choosing combat assignments, which is a critical stepping stone to high-star officer ranks.
With respect to higher education, the racially conscious admissions practices of Harvard University and the University of North Carolina are being challenged in cases currently before the Supreme Court. The court is being asked to consider the constitutionality of racial preference in college admissions of those two universities.
Asian Americans admissions to Harvard University and the University of North Carolina are 25 and 22 percent, respectively. Those percentages are approximately four times the proportion of Asian Americans in the U.S. population.
Nevertheless, the racially conscious admissions practices of those two universities are being considered by the court. After its initial hearing of the cases on 31 October, the Supreme Court appeared ready based on its questioning and comments to rule that the admissions programs of Harvard and the University of North Carolina were unlawful.
In four Gallup polls from 2003to 2016, at least two-thirds of Americans saidcollege admissions should be solely on the basis of merit. A more recent national Washington Post survey in October found a majority of Americans, 63 percent, supported a ban on the consideration of race in college admissions. At the same time, however, a majority in that survey, 64 percent, endorsed programs to boost racial diversity on campuses.
Imbalances in achieving racial diversity are also reflected in the composition of America’s professions. For example, while Asian Americans represent 17 percent of active physicians, the proportion for African Americans is 5 percent.
Similarly in science and engineering occupations, the proportions for Asian Americans and African Americans are 21 and 5 percent, respectively. Among U.S. lawyers, the proportions are relatively low for both Asian Americans and African Americans at 2 and 5 percent, respectively.
The personal views of Americans concerning workplace diversity also reflect the difficulties in balancing racial diversity and meritocracy. One national PEW survey in 2019 found that a majority, 75 percent, value workplace diversity. However, a majority in that survey, 74 percent, also felt that only the qualifications and not an applicant’s race should be taken into account in hiring and promotions even if it results in less diversity.
The issue of how best to balance diversity and meritocracy remains a major challenge for America as well as for many other countries. That challenge has become more difficult in the United States. with the puzzling and prejudicial use of racial, ethnic, linguistic, ancestry and origin categories that increasingly make little sense.
In sum, with a growing world population of eight billion, the shifting demographic landscapes of national populations and the fundamental need to ensure human rights for all, the challenge of how to balance diversity and meritocracy can be expected to become even more critical and consequential for countries in the years ahead.
Joseph Chamie is a consulting demographer, a former director of the United Nations Population Division and author of numerous publications on population issues, including his recent book, “Births, Deaths, Migrations and Other Important Population Matters.”
The International Day for the Elimination of Violence Against Women on 25 November, followed by the global 16 Days of Activism Against Gender-based Violence, is a moment to reflect on, renew, amplify, and strategize to achieve commitments to eliminate violence against women by 2030. Ending violence against women is possible, but only if we act together, now, says the United Ntions.
Opinion by Jacqui Stevenson (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Nov 23 (IPS) – Violence against women is a global crisis, prevalent in every community and society around the world. Globally, estimates published by WHO indicate that about 1 in 3 (30%) of women worldwide have been subjected to either physical and/or sexual intimate partner violence or non-partner sexual violence in their lifetime. Yet, there is limited coordination and insufficient funding to truly address the scale of the issue.
This has catastrophic consequences for the individual women affected, who have their rights violated, bodily integrity and psychological wellbeing undermined and health harmed. It also has ramifications across society, including the costs of providing services to respond to violence and the financial impact of violence itself.
While these costs are borne across sectors, including health, policing, social services and education, among others, often efforts to reduce or prevent violence against women suffer from limited budgets and siloed funding streams. The invisible costs borne by women, and their children, families and communities, are also missing from many responses.
While nearly three out of four countries have policy infrastructure in place to support multisectoral action to address violence against women and girls, only 44 percent of countries report having a national budget line item to provide health services to address violence against women. Recent analysis indicates that foreign donors play a critical role in financing GBV interventions but funding is limited and uncertain, and fails to comply with human rights principles.
Bridging the gap between policy and implementation is critical if efforts to reduce violence against women are to meet the urgency and scale required.
Ending violence against women is an urgent legal, moral and ethical imperative. Effective interventions to reduce, prevent and respond to gender-based violence in all its forms must be a priority for all governments. In addition to ending the violation of women’s human rights and the perpetuation of gender inequality that violence against women represents, interventions to end gender-based violence contribute to achieving the sustainable development goals and more broadly to furthering the development of societies.
Effective coordinated investments are a key part of achieving this necessary aim, but it is important to underscore that the case for ending violence does not turn on return for investment.
Recognising the challenges introduced by siloed budgets, UNDP and UNU-IIGH collaborated on a project, with the support of the Republic of Korea, to produce new tools and evidence on “participatory planning and paying models”. These models engage diverse community stakeholders in defining their own solutions and establishing sustainable financing for local GBV action plans.
The approach prioritises the need to engage with diverse policymakers and stakeholders at the local level to generate effective solutions to address violence against women that are both contextually relevant and locally led. The pilots were implemented in Indonesia, Peru and the Republic of Moldova.
Findings from these pilot projects have been published to mark the International Day for the Elimination of Violence against Women. Importantly, the models centre the participation and leadership of women and women’s civil society, embedding women’s rights activists in local structures that develop the plans and budgets to address gender-based violence.
The core idea underpinning the participatory planning and paying approach is simple: the benefits of reducing violence are shared by everyone, so the costs can also be shared. Different sectors stand to gain from the financial benefits of reducing violence against women, but are unlikely to adequately fund a comprehensive programme of prevention and response if each acts separately.
Instead, bringing these sectors together along with local communities and other stakeholders, the project facilitated the development of local action plans (LAPs) to address GBV, using participatory methods. Each LAP addressed locally defined priorities to prevent and respond to violence with targeted benefits across a range of health, economic and social sectors and issues.
The LAPs are costed, and, just as the plan itself is participatory, so too is paying for its implementation, with ‘payers’ identified across sectors, and budgets pooled to maximise impact. Rather than siloed budgets funding a mixture of interventions and services with no coherent structure, funding streams are pooled to support a coordinated plan. Through collaboration, shared expertise and decision-making, and local community accountability, the total is greater than the sum of its parts.
Implementing this innovative model is inherently challenging. Particularly in resource-constrained settings such as the settings for these pilots, there are competing demands for limited budgets, and multiple priorities that struggle for attention and funding.
Breaking down siloes to achieve shared financing is a political, contested process, and centring the voices, priorities and rights of women, especially those most marginalised, is a challenge. A key learning from the pilot projects is the need to ensure that senior decision-makers who have budget responsibilities in key sectors and government departments, are engaged early in the process of developing LAPs to gain their support.
Despite the challenges, the benefits of shared budgeting and resource mobilisation are clear. In Peru, UNDP undertook a ground-breaking study to estimate the costs associated with failing to prevent gender based violence. The “Cost of No Prevention” study estimated the annual costs of GBV in the Villa El Salvador community (where the project pilot was implemented) at nearly $72.9 million USD (in 2018 figures), including direct costs such as health care and indirect costs such as absence from work and loss of income, borne by affected women, their children and families, networks and wider communities.
Cost estimates for the participatory planning process to prevent and respond to GBV were estimated at $256,000 USD over 2.8 years (including the costs of project initiation and development of tools and products, so will reduce over subsequent years). This is a clear demonstration of the value for money of participatory approaches to planning and paying models to address gender-based violence.
Failure to adequately prevent and respond to violence places the costs squarely on women’s shoulders. The “Cost of No Prevention” study estimated that 45% of the costs of GBV are absorbed by the affected women themselves, including the costs of increased physical and mental health problems, out of pocket expenses and lower income.
A further 11% is subsidised by households and 44% by the community, including missed school days for children affected by violence in the home, and provision of emotional support, shelter and personal loans by others in the community. Inadequate funding, siloed budgets and limited resources only increase the costs for women, communities, and societies.
Participatory planning and paying models offer a blueprint to fund and provide the services and interventions women need, want and are entitled to. Ultimately, someone must pay the price of violence against women.
Dr Jacqui Stevenson is a research consultant, leading work to generate new evidence on the intersections of gender and health, including GBV and COVID-19, at the UN University International Institute for Global Health (UNU-IIGH).
