Class Consciousness of The Digital Age

“This means that formally the class consciousness of the bourgeoisie is geared to economic consciousness. And indeed the highest degree of unconsciousness, the crassest, form of ‘false consciousness’ always manifests itself when the conscious mastery of economic phenomena appears to be at its greatest. From the point of view of the relation of consciousness to society this contradiction is expressed as the irreconcilable antagonism between ideology and economic base. Its dialectics are grounded in the irreconcilable antagonism between the (capitalist) individual, i.e. the stereotyped individual of capitalism, and the ‘natural’ and inevitable process of development, i.e. the process not subject to consciousness. In consequence theory and practice are brought into irreconcilable opposition to each other. But the resulting dualism is anything but stable; in fact it constantly strives to harmonise principles that have been wrenched apart and thenceforth oscillate between a new ‘false’ synthesis and its subsequent cataclysmic disruption.

This internal dialectical contradiction in the class consciousness of the bourgeoisie is further aggravated by the fact that the objective limits of capitalism do not remain purely negative. That is to say that capitalism does not merely set ‘natural’ laws in motion that provoke crises which it cannot comprehend. On the contrary, those limits acquire a historical embodiment with its own consciousness and its own actions: the proletariat.”

György Lukács, History and Class Consciousness, 1923

To fully grasp the revolutionary nature of bitcoin, we first need to understand the internet and its role in forming a new class consciousness. I call this new class consciousness and its manifestation in the world The Digital Sovereign. Barley 20 years in the making, the internet is already the most powerful tool of global communication and information exchange that we have ever seen. With 3.2 billion people and growing with each day, the internet has put more people in contact with one another than at any other time in history. Digital communication is near instantaneous, access is ubiquitous and allows for a scale and magnitude of organization that has never been conceived. What unites the 3.2 billion people beyond the marketing and capitalist rubbish of the internet is a new crystallized form of class consciousness. This class consciousness is the true proletariat; the cohesive whole of humanity and the great society which contains us all.

What is Class Consciousness?

Class consciousness is the awareness of our identity as not as individuals, or even as a group, but as an entire classes of people. Historically, the class consciousness that we have been aware of since the advent of capitalism have been false consciousness based upon racial, nationalistic, religious, political; but most of all, economic consciousness. As Marx stated in, The German Ideology:

The Base and the Superstructure

“The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it. The ruling ideas are nothing more than the ideal expression of the dominant material relationships, the dominant material relationships grasped as ideas.”

Each time that we trace back the origin of prior false class consciousnesses we come to find that the ‘facts’ upon which they are based are little more than propaganda of the ruling class, only to be torn asunder by the next epoch. The only real class consciousness that we have been given by the various ruling systems is a consciousnesses of exploitation and objectification–alienation in its most sinister forms.

False Consciousnesses as Consumers and Citizens

The false consciousness that we experience in society today is based upon the process of reification; in which we develop a false identity in the reflection of the ruling system. This started long ago with the industrial development of the cultural industry being sold as mass enlightenment. As Theodor Adorno and Max Horkheimer explain so well, the cultural industry is a form of mass distraction and deception forced on to the whole population as bourgeois enlightenment. We were birthed into a world where for many decades the mythos of state and capitalism has reigned supreme, and crass avarice as seen as zenith of benevolence. For generations the masses have mindlessly obey the state and enthusiastically participated in capitalism. This has created a sort of stockholm syndrome of society under the barbarism of the state, and exploitation of capitalism. People truly believe that the answer to environmental catastrophe and genocide can be found within consumption and statism. Our identities are so entangled and interwoven as being subjects of both the state and capitalism that we cannot conceive any other sort of socioeconomic situation. This is where we find our common ground.

The false identities of consumer and citizen alike has made us into weak, solitary, individuals against the omnipotence of the states and markets–we are forced into roles and identities as only individuals to be exploited, not as empowered class of people who can resist. Within the system of state capitalism we cannot be autonomous, self-empowered humans; but only things to be exploited by capitalism, and subjugated by the state. This is why despite the power of the numbers that we have to actively resist such a system, there is no ‘consciousnesses’ that has formed to created such a resistance. From nearly a century of inundation and bombardment of mass culture, we no longer have any sort of a vision of what life can look like free of the state, or capitalism–the vast majority simply believe there is only a one-dimensional existence. Luckily, the revolutionary tools that will shatter these false identities, and unite us as a single people are already at play, and cannot be stopped.

Internet Sociology

The development of the internet and the formation of the social web has created a new territory. This space is unlike any other space or territory that we have ever encountered before because it is a sovereign space of non-physicality:

The axiom that the internet functions from is that it can only and explicitly exist non-physically, which is also the praxis of its inevitable success. Only expression can exist within the confines of this screen–the physical contact needed for violence and intimidation explicitly cannot exist here. Furthermore, the anonymizing properties of information dissemination via the web allows for personal discovery outside of the official indoctrination of state capitalism. These combine attributes of the internet have created the conditions for a new kind of social relation that has manifested as an ideological apparatus.

The self-interest of this apparatus (the internet) is to perpetuate itself; to freely disseminate information–that is what the internet does. This alone has made it a threat towards both the state and capitalism, however, it is the conscious organization of the internet into a political vehicle which will allow for it to defeat state capitalism. The revolutionary praxis of the internet demands for meaningful and constructive communication, which in turn is reliant on the freedom and liberty offered in this territory.

The freedom and liberty of the digital territory is not the vulgarized freedom of nation-states and capital markets, but that of an idealist one. Here is a territory in which we can all freely project our thoughts, while the physical corrosion and intimidation of the ‘real world’ cannot exist. This means that people have the freedom to both personally, and ideologically discover for themselves what the true nature of the world is for themselves through this space.

Only for so long will people fall for the ruse of state and capitalist propaganda masquerading as facts; and with each new lie this system purports acts as a testament against its own bankruptcy. In this digital territory we are stripped of our individual and state identities, and given new digital ones. This homogenization of people through the banishment of physicality, allows for us to see ourselves more as a single people than we could have ever experienced in the physical realm. The internet is what allows for us to see, organize, and interact for the first time on a truly global scale. This is the natural outcome of a world that has existed under the full weight of a century of globalized imperialist capitalism.

The Coming Digital Sovereign

This transformation of class consciousness is only in the very early stages. Even today the internet is still seen by most people as only a mode of communication which must be subservient to the state. But as we advance into the 21st century and experience the power that the internet has to shatter borders and disseminate the harshest of truths, we will find a class consciousness in that very power. As more and more people discover the radical personal empowerment the internet can offer in a world of unrelenting barbarism via state capitalism, the internet will take on the powerful ethos of the global proletariat.

The culmination of the ethos of the internet into a full social, political, and economic organization is the global proletariat; and the internet is its most powerful weapon of organization.

The internet thus far has been mostly used for the trite and vulgar needs of capitalist exploitation. The modes of power that exist to exploit individual users within the internet are present today, and they are very powerful, but so are the the modes of counter-resistance. In fact, this game of brinkmanship between the state and the individual in the digital realm has reached an end game that the state has lost. Crypto has reached sophisticated enough levels to hide the likes of men like Ed Snowden, and other whistle blowers, and there are plenty more of them to come.

Within the digital realm it is left up to individual actors to choose to what level of exploitation they will face, or how they will resist it. This is radically different from the world in which we live in. The panopticism of everyday existence forces us to conform to the will of the state capitalist system. This is what Max Weber called the iron cage. The internet is what gives us an exit, and a way to subvert this system.

It cannot be understated how powerful it is that a non-physical space can have a sociological influence on the physical world. It is within the very fact that the digital territory of the internet creates its power as The Digital Sovereign. The Leviathan of our time; the internet serves as the cohesive tool that can allow for humans to radically organize on a praxis that forces non-violent organization–the Achilles Heel of all States.

There is no immediate physical space in which violence can exert itself. The internet does this while directly influence the physical world, particularly in times of crisis. This in turn has allowed for the internet to become an ideological apparatus that will both organize and fight for its own existence, while finding solidarity for its fight in every corner of the globe. It is by no mistake that the several regimes spanning decades collapsed after the Arab Spring Revolts, which the internet was the influencing factor.

The Internet and The Global Proletariat

Slowly the interpellation of the values of the internet are overtaking that of the state. We are still subjects of our respective states, but no longer under the spell of statism. The radical values upon which the internet was created, and because of how the internet functions and influences our lives, we now have more loyalty to this territory than that of our own states. Due to the sovereignty of this territory, it has acted as a space for the radical education and dissemination of information throughout all of cyberspace, which in turn has self-propagated its own development. The truth can be demanded and told through this medium, without the direct physical oppression of states, or exploitation of capitalism.

The historical embodiment of people being used and exploited by state capitalism is now found in every person and everywhere around the globe. We have advanced so far and so deep into capitalism that there is no person, no space, or territory that has not been fully defined by capitalism. This in itself gives us a united identity as a single people through the shared exploitation and turmoil that we are all subject to under this system. With the advent of the internet and digital technology, the class consciousnesses that we all share as The International Proletariat is starting to gain momentum. It is forming itself through a variety of modes that cannot be stopped by states, or their capitalist allies. This consciousness is the pure historical information that has created the conditions of the proletariat.

The internet has made the suppression of information nearly impossible which allows for the naked facts of what is to be seen by all. This freedom of information is the bases of power for the class consciousness of the internet and the global proletariat. The free organization, collaboration, and dissemination of the facts of the world as it is, free of the propaganda of states and capitalists alike, allows for a new lens of view to come into focus: The true class consciousness of the global proletariat united through the internet.

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Next: The Revolutionary Vanguard of The Digital Age

The Reappropriation of Our Economic System

What we have been taught about money and the economic system is little more than a collection of lies, and propaganda shoved down our throats at the point of a knife. Our economy is far from being fair, or free; and we are exploited by the whims of capitalist whom have received the seal of approve from all governments. The financialization of the economy by the state started with the creation of the Federal Reserve, and finalized with the abandonment of the gold standard. This was the beginning of the end of money having independent value from governments. When governments of the world discovered at Bretton Woods that they could simply end the convertibility of gold, and all governments could move forwards with only fiat money they were exuberant. This removed the greatest check on government power that has ever exist: the power of the purse.

To Smash the Chains

The legacy of capitalism is deep, profound, and all encompassing within our society. The reification of everything by capitalism has left no stone unturned, and has sucked every facet of life into the economic sphere. This is not the capitalism that Smith and Ricardo understood; but a distorted, anti-human Deus ex Machina careening toward the destruction of both humanity and Earth. This greatest evidence of this is in the near complete and total environmental destruction that we have experiences all over the world with the sixth great extinction of species from this planet. Indiscriminate of nationality, race, or origin; our oceans, skies, water, and land has all been polluted and raped by the powers that be. The very governments that were empowered with protecting our sacred rights were overthrown by capitalist gangsters; thugs in suits who auctioned everything off for a meager thirty pieces of silver.

The issue is not with the capitalists who only know corruption and theft–this should be expect from them most of all! The issue is with the state, politics, and the corruption that has enveloped all aspects of our social spheres. This system is corrupted and festering to the core; it cannot be saved, nor should it. The men of politics who hold themselves in such high esteem for being the negotiators of the prostitute our political system are the very ones that hold us down to be raped and used, again, and again by the capitalist machine. Our cries of consanguinity are never heard; we are little more than objects to be tolerated by them, while they exploit us to our deaths. If we are to be liberated, and free, as we were promised by our forefathers and the constitutions that govern us, than we must smash the chains of economic enslavement which we keeps us tethered to the destructive machine that we call capitalism.

To Break a Monetary System

We must harness the power of markets and entrepreneurship for the good of all, while dividing ourselves from the parasitic nature of capitalism. We must rip power away from a corrupt state which empowers a very small, exclusive class of people to the right of destroying the world of tomorrow, for a collection of trinkets today. If we are to ensure that we have something to offer to our children other than imprisonment, and a burned Earth, than we must choose to end this system of abuse now, today, and permanently.

This can be done. We have the means to break this totalitarian socio-political-economic system of the old world, and usher in a new era of global development outside of the hands of both the state, and capitalism. We can reappropriate our respective national monetary systems, for new, independent digital ones. Through this single action alone–through the reclamation of our economic power–we shall create a domino effect that shall ripple throughout the economic, political, and social structures of the world. Through using an independent money whose control and power comes from outside of the state, people can reappropriate their economic power for themselves. This will come at the direct expense of the state and capitalist who bleed us like the vampires and leeches they are. By breaking the monopolistic control of the means of exchange by the state, we shall expropriated the system of exchange, and the means of exchange itself back to its rightful owners: the general public.

We see the corruption of their system. Beneath the shimmering veneer of capitalism’s accomplishments and supposed progress, lay the untold billions of shatter lives. At its base we see that the law is nothing more that offical violence–state sanctioned terrorism with propaganda from a capitalist third estate. To fight their violence we must use the most powerful weapon at our disposal to rid ourselves of this barbaric system:

Non-violent, direct economic action

Through simply using another form of money, we banish the violence and vicious fist of the state from the economic power that each one of us generates. No longer would the state have the ability to rob us, nor would they be able to fund their crimes, or continue their corrupt regimes. To cripple the monetary system would strike at the very heart of the corrupt state-capitalist machine, and would cause for it to come to a grinding hault.

International Money for All

Each state is invested into its own system of governance, money, and taxes so that the small powerful elite can rule over all for their own pleasure. They keep their power not through democratic means, but through oppression, division, regulations, controls, taxes, boarders, prisons, levies, and so much more. This is not for protection of the masses, but their oppression. This is not create justice, but to maintain injustice. Governments create these artificial rules and regulations so that they may steal from their people, and keep them divide and silent. We must see their petty tactics for what they are, and see the magnitudes of our own strength which we have in our numbers.

For the first time in human history we can smash these artificial boundaries and false consciousnesses of nationality and statism, and find solidarity in working together through simple rejecting their corrupt economic and political systems. There are billions of people across the global that create trillions of dollars of economic wealth each year; and yet these very same people live a life of poverty and insecurity from the exploitation they face. Through creating a new popular front against capitalist exploitation under the guise of the state, we can create a new economic and political movement that can break the bonds of debt that have enslaved us.

Using digital currencies as a political action, we can reappropriate our economic wealth away from the hands of corrupt politicians and their capitalist allies, while create a revolutionary new way forward. This single action alone can ensure that we will no longer be enslaved to the same system of debt bondage that has created the conditions of the world today. Together, as a single unite body of free people, we can banish the last vestiges of slavery from this planet for all history moving forward.

The crux of power within this system is control of the economy. This control is exerted through the monopolization of the object of exchange: Money. Governments steal fragments of the wealth from each and every person on this planet through taxation and inflation, while also give themselves the power to punish with legal violence and death to anyone who opposes this monopoly. The minders of this monopolies are the capitalist banksters, thugs who strut about in fine suits with no shame of their avarice, or the blood that taints their money. Through the direct expropriation of the system that benefits only the 1% at the expense of everyone else, we will create better conditions for the great tide of all.

International Direct Economic Action

We do not seek to create a party or to organize with titles and salutations; we simply demand direct action. We understand the most significant action we can take is to refuse to participate within the old economic system, while building our own independent one. Through boycotting fiat money and using digital currencies instead, we create a dual power of both economic boycott from the current system, and economic solidarity with the new emerging one.

This new system of exchange is not based upon the false nationalities that have been assigned to us, but upon the permanence of mathematics that applies to all of us. It is a form of money that is inclusive of all peoples, regardless of whatever oppressive state one may be forced to live under. Most of all, bitcoin is a form of exchange that is outside of the control of both statist scum, and capitalist pigs. It is a totally new form of money upon which we can build a new system of exchange, and an independent economic system. If we are ever to liberate ourselves from the chains of capitalism, and the impressment of debt, then building a new and independent economic outside of their control is the only way that we can move forward.

Bitcoin and other digital currencies can be the tools upon which we build this great new economic and monetary union–but only if people are willing to learn and participate. We know that there is a deep people problem with bitcoin, and that we will need to educate and agitate if we are to create a real and substantial change. This is the start of the global economic revolution that will smash down the artificial boarders that separate us, and will economically unite us against our respective oppressors. Bitcoin is the new economic Popular Front against the exploitation of capitalist, and enslavement from tyrannical state governments around the world.

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Next: Bitcoin, Economic Resistance, and Justice

Revolutionary Syndicalism of Bitcoin

Buried deep in the annals of history we find the powerful revolutionary praxis of syndicalism. Originally a radical movement for trade unions; syndicalism pulled its principles from “Reflections on Violence,” by Georges Sorel. In this revolutionary text, Sorel explores violence and how it can help humanity save itself from the barbarism it finds itself stuck within. The influence of this text helped create the largest working class movement in France and around Europe in the early 20th century.

During the October Revolution in Russia when the bolsheviks seized power, it was the anarcho-syndicalist, armed with these teaching, who valiantly fought both the corrupt communist army of the bolsheviks and the imperialist white army of the West. In the 1920s the fascist vulgarize syndicalist teachings to give themselves powerful, personalized mythos, in which they anointed themselves with divine right to rule over all as emperors. As dangerous as this praxis may be, it also may hold the key to liberation from the tyranny of our time. If we are to take the teaching of syndicalism and imbue them into cyberspace, we may develop one of the most powerful modes of organization ever conceived: The Digital Federation.

Revolutionary Syndicalism

The profound power of Syndicalism arises out of the nihilistic tradition of taking the mantel of God for oneself. Those that are of the Syndicalist’s teachings seek spiritual meaning, and a bond with one’s own God for which they fight: themselves and their communities.

This is not some imaginary, castrated god found stapled up on sticks; pathetic and defiled, to be made an example of. Not a god of religions or institutions, but the God that lives inside of us and insists that we forge a better world. The is a personal spiritual meaning that can only be found inside of ourselves; a personal knowledge that our struggle is righteous and meaningful. In many ways syndicalism is the jihad of the working class, and the General Strike is the apocalypse of the ruling class. Sorel, who has been called ‘the most powerful socialist since Marx’ is widely unknown today. This is mostly because of the spectacular conclusion in which Sorel presents his theory of The General Strike:

“Syndicalism conceived the transmission of power not in terms of the replacement of one intellectual elite by another but as a process diffusing authority down into the workers’ own organizations. Those organizations, unlike a system of political democracy replete with Rousseauian baggage, provided a pattern of genuine and effective representation. Most importantly, the violence employed by the proletariat in the course of the general strike bore no relationship to the ferocious and bloodthirsty acts of jealousy and revenge that characterized the massacres of The Reign of Terror.”

Sorel unapologetically embraced that we must understand violence as a tool that the state has monopolized for themselves to create the oppression we experience today. The Revolution can only be created through direct struggle against the illegal transgressions of the state unified with capitalism. It is only from demanding from ourselves, and our communities that we can build a true, and radical change that does not allow for the putrid slime of politicians and capitalists to keep a foothold in our systems of government.

A Breif History of Anarcho-Syndicalism

The power message of syndicalist can and is easily be vulgarized to serve national socialist, and their racist, authoritarian, ignorant perspectives. Fascism is the greatest form of government for the weakest and most sniveling cowards of democracy. This is what happened in Italy in 1924, Germany in 1932, and Spain in 1936 where the fascist seized power because of the cowardice of pathetic democratic governments that could not stand against them.

The fascist were able to come into power through this mystical perspective they carefully constructed with sinister propaganda that created the cult of the Great Leader. However, each of these seizure of power were valiantly resisted by the people on their own accords. The largest anarcho-syndicate ever created fought a long and bloody civil war with the fascist in Spain from 1936-39. The blasting cap of syndicalism finds its praxis in direct action, personal liberation, and knowledge that the revolution must be built and fought for. When Franco seized power in a coup in 1936, the CNT–the Spanish Anarcho-Syndicalist–rose to the occasion and heroically fought the fascist for three long and bloody years. Great citizens from around the globe answered the call of justice, and fought shoulder to shoulder with men and women of all nationalities, including 2,800 brave Americans. With the defeat of the CNT, and with the most powerful anarchist having been killed or jailed, anarchism moved underground to be forgotten for another age when the people would be ready to struggle again. That age is now upon us, and the spectre of anarchism has risen from its shallow grave to haunt the digital realm until its prophecy is realized.

The Digital Federation

The time is upon us to create the organizations that can lead a new way forward. We have the technology, and we have the will power–now we must organize. Over the coming years we will find one another in the streets, and on digital forums spread through cyberspace. We will organize from the shadows, and will strike out viciously from the night, only to abscond back into the digital sphere where we are Sovereign. Using the powerful ideology of revolutionary syndicalism we can create the digital-political organizations that shall allow for us to break the state, crush their capitalist allies, and build a new way forward. We openly declare that our ends can be attained only by the subversive overthrow of all existing social conditions through the empowerment of all people within the digital sphere. Let the ruling classes tremble at the revolutionary power of bitcoin, the personal empowerment of privacy through crypto, and the auto-didactic nature of the internet itself. There is nothing to left to lose but our chains, and there is a whole world to liberate.

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Next: The Reappropriation of Our Economic System

Antifragile Bitcoin

Thieves love bitcoin. Why wouldn’t they? Pseudo-anonymous digital cash that can easily be laundered, and taken while being personally physically secure from any sort of immedate counter-aggression. What more could a thief ask for? Not to mention that you can make off with much more than in any typical bank robbery, like the most recent bitstamp hack, where the bandits made off with around 19,000 BTC.

At first stealing bitcoin was pretty easy–here is a list of several early hacks put together on bitcointalk. But you can see that over time it has been getting harder and harder to rob exchanges. Why is the good life of a crypto-thief going extinct?

I’m sure that bitcoin thieves dress like this.

It is because crypto-thieves are putting themselves out of work–they are helping solve the security issues of bitcoin! We can see this evolution over the course of the last few years with hacks becoming more sophisticated, detailed, and sneaky as the price of bitcoin grows, and the network expands to include more people. Now altcoins, with less savvy developers, and smaller exchanges which lack the same resources as major bitcoin exchanges are being targeted more frequently. This is occurring because the security infrastructure around smaller exchanges that cater to altcoins are less developed than bitcoin, so altcoins are being targeted more like the NXT hesit from BTER last year.

As the various altcoin ecosystems develops, they will either gain enough traction to exude the same antifragile properties of bitcoin, or drown under the weight of major attacks. Either way, the whole ecosystem evolves so that with weak coins die, and powerful ones survive. The same is true for exchanges as well; with each major attack or exploit that is carried out, a ton of money is stolen, but then the hole is then almost immediately fixed, or the exchange dies. This one-time ‘security fee’ now raises the bar for all hackers; as the post-mortium analysis of what happened is generally shared with the whole ecosystem of exchanges. The more people try to exploit exchanges or the crypto-currencies themselves, the more flaws are found and fixed, making the system strong and harder to exploit in the future.

The Antifragile Nature of Bitcoin

From http://www.innoguru.nl/

Bitcoin is antifragile, meaning that the more you try to break it, the stronger it becomes. That is why the exchanges with horrible practices like Mt. Gox have died, or at least will be reanimated under much better security. This is not a fluke, but is how distributed networks function; as they are antifragile.

In fact, the only reason that bitcoin has even evolved to where it is today is because of its antifragle properties. No matter what has happened–the demise of the Silk Road, Mt. Gox, and almost 1/2 of major exchanges have failed–bitcoin is still here. Furthermore, bitcoin has not just remained, but security has improved dramatically both on the side of consumers, and exchanges in response to these catastrophes. Even the core protocal is getting more secure as more time and energy is spent developing bitcoin, with features like multisig not even being introduced until 2011. I am sure after the most recent bitstamp heist there will be a post-mortem amongst the major exchanges to ensure a theift like this does not happen again.

This antifragility goes beyond just learning from mistakes, as the whole bitcoin ecosystem works offensively in response to such events. Major exchanges are not sitting around waiting to respond to a heist, they are innovating and developing to make themselves more secure and more difficult to steal bitcoins with each passing day. Coinbase’s vault is a great example of this. When people started to complain that Coinbase could go the way of Gox, Coinbase responded with multisig vault, which means they couldn’t even steal bitcoins stored there if they wanted to! I’m not one for keeping coins with any service, but it’s good to know that such features are available for those who may not want to secure their own coins, or spend the extra bits on something like Trezor.

This kind of development in turn makes it easier for the average consumer or business to have confidence in bitcoin. This paired with already low economic barriers to entry to use bitcoin creates a payment system that is both more secure, and cheaper to use that any other payment system that has ever existed. Anyone with a computer can setup an webpage and sell something to people directly for bitcoin with much more ease, and less expense than any other payment system. This lower barrier to entry is also creates a greater degree of resiliency within the network, as it distributes the risk for the ecosystem among many actors, unlike centralized payment entities.

The price of bitcoin, which has taken a major hit in recent days, also works in an antifragile nature. Having made absurd gains over the last two years (for good reason), the market was overheated, and so a large sell-off started. Although this became a vomit-inducing ride for some noobs to the game, this was actually a good thing! Such an adjustment in price not only shook out speculators and capitalist of all kinds, but it allows for the price per bitcoin to become ‘reasonable’ to people who were looking to invest, but thought bitcoin was overvalued. This drop in price allowed for a whole new wave of folks to invest, which in turn distributed the network even more. As the price rises and falls, we will see this process happen over, and over again.

The Evolution of the Bitcoin Ecosystem

The advent of colored coins, multisig wallets, and properties contracts all seem like they will come to fruition in 2015, and are all going to bring forward a new boom in the bitcoin ecosystem. Again, it will be through a string of thefts, hacks, and exploits which will allow for service providers to improve themselves and allow for the network to get stronger. It is this process of creative destruction that allows for the demise of smaller weaker parts of the network which will allow for more evolved ones to take there place. I am confident that as we move into the coming years that service, security, and creative thefts will only get better, along with the security response to each event as well.

So this one is for the thieves, criminals and neer-do-wellers! Keep doing what you do best, it improves the security of the bitcoin network and ecosystem, and reward those for their unsolicited pen-testing services.

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Next: What is the intrinsic value of Bitcoin?

The Revolution of Bitcoin Banking

One of the dirty secrets of the bitcoin world is that we are still in the 11th century of online exchange. Today bitcoiners are dealing with the classic issue that plagued humanity since at least the 7th century BC when the first piece of coinage were found. Coins, as all physical objects, are subject to physical theft, confiscation, swindling, fraud, and debauchment; but most of all, outright violence to seize it. These issues continue to this day; however there are apparatuses that as groups of people we can use to defend against such issues: Banks.

The Evolution of Banking

The remains of the London Mithraeum

Banks from their earliest origins have functioned quite autonomously of the state. Developing out of the rise of italian merchant class in Italy during the 11th century, banking evolved far beyond the meager protection of precious metals into financialization. I highly recommend reading Nick Szabo’s two essays, “Origins of the Joint-Stock Company” and “The Birth of Insurance” for an in-depth look how this process occurred.

At this time, lending and banking was not a concern of the Sovereign–He had the power of taxation, and war–this was how he would raise funds if need be. However, war economies don’t work if you are on the losing side, and this is where the english crown found itself at the conclusion of the Nine Year’s War. England had been crippeled by france at the Battle of Beachy Head where the Royal Navy was decimated. William the III could not raise the funds at the time, and so he developed something very, very sneaky: The Bank of England. Of intersting note, this bank was built physically on top of a Roman temple of Mithras–how fitting.

As a private corporation, the BOE was given the sole power to issue bank notes in england on behalf of the crown. This allowed for lenders to give cash bullion to the bank, who could then give a loan based upon a promise of repayment from the Crown in the future. The Crown essentially invented war bonds to raise funds for the transformation of england into the naval superpower it would later become. And this was all thanks to the seditious revolution of banking.

Moving from a coinbased economy as the main mode of exchange, to a reserved-based note system, is what allowed for substantial economic development to occur in England in the generations after. This was specifically due to the technological development of new kinds of financialization which were never used before, which gave england a substantial economic advantage over other states.

Slowly and insidiously this version of banking took over the whole world! Using this system states could create money that did not exist yet; one could spend tomorrow’s promise of repayment today! A revolutionary development, but as we see today, when stretched beyond the limits of the markets, it can, and will create havoc.

Transitioning From a Coinbase Economy

Today in the bitcoin world, were are shuffling about our bitgold forged into coins from the process of bitcoin mining. You can read more about the production process of forging bitcoin in my previous post bitcoin as commodity money for a more detailed explanation of this process. While this does have many, many benefits over contemporary banking, fiat money, and governmental interference in economics; it also has substantial problems–mainly incompetence. From the Gox fiasco, to the most recent Bitstamp compromise, it is the golden age of digital highway robbery, with the Black Barts of the digital age having the time of their lives.

Attempting to move from a coinbase economy to a fractional reserve one does have some appeal, but we all know how problematic, and antithetical this is to bitcoin. However, with the developments going on over at Blockstream, I think there is real hope to create something that will straddle the lines between a coinbased economy, and a fiat economy: transparent reserve banking.

Sidechains and Collateralization

Source: https://www.cryptocoinsnews.com/sidechains-bitcoin-2-0-revolution-highlights-reddit-ama/

The team over at Blockstream has assembled a ‘Manhattan Project’ scale of crypto experts to develop sidechains. The sidechain project is one to essentially be able to create a two-way peg between coins deposited, and the creation of new assets. There are two reason I believe this is such a critical development:

1) Using bitcoins deposited via sidechains a new assets can be created which would be more difficult to steal, and would allow some process of restitution in the case of theft, similar to what banks provide today.

2) Bitcoins can be used as collateral for a unique model of debt-financing as follows:

Bob deposits 10 BTC today with Alice Bank via sidechains. This creates a loan that is a fractional value of the bitcoin he deposited.

Today those 10 BTC are worth around $2700, and once deposited with Alice bank, this will make a loan that is leveraged 1:10. Alice Bank will now give Bob a lump sum of $27,000 to be repaid in the future. In order for bob to recover his 10 BTC, he will need to make payment of $275 each month for 100 months. Bob is free to pay back the the loan + the fixed interest early if he chooses to do so. Once the total of $27,500 is fully repaid Bob will ‘unlock’ his bitcoin from the sidechain. Bob now has his 10 BTC back.

What makes this so revolutionary is that it solves the impossible trinity problem that all central banks face. This allows for a natural equalization of the USD value of bitcoin to occur through debt-financing via bitcoin, fixed in dollars. If the value of bitcoin substantially increases beyond the initial $270 that Bob’s bitcoin is financed at over the next 100 months, he will have all the more motive to repay quicker to get his bitcoin back. If bob defaults, Alice Bank will be able to keep the 10 BTC for itself.

By treating bitcoin as property, a sidechain bank could use a fixed amount of bitcoin as collateral just like a how a home is used as the collateral in banking today.

The Next Generation of Bitcoin

If bitcoin is to advance itself beyond the wild west of digital finance, while remaining true to its core tenets we will need sidechains. This will allow for a revolution that will be similar to the scale and scope of the one William the III ushered in when he created the BOE. This will help bitcoiners resolve some of the security issues that have plagued the coin-based bitcoin economy, but more importantly, it will help financialize the bitcoin economy. By using bitcoin as an assest for debt-financing in fiat values, bitcoin banks will be able to create loans for people, while still remaining free from the hands of the state–if they choose to do so.

As dangerous as this is to flirt with debt financing, I believe that sidechains offer a revolutionary way to financialize the bitcoin economy in a way that allows for those in the bitcoin economy to have their cake and eat it too.

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Next: Bitcoin is Political

Principles of Syndicalism

The Principles of Syndicalism offer us an outline for how we can reorganize our communities digitally in the form of digital syndicates. I encourage you to skim through this to gain a deeper understand of how we would reorganize our society once the state is defeated.

Author: Tom Brown | File size: 321 KB

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Written by the well-known activist and propagandist Tom Brown, this text explains clearly the principles according to which syndicalist unions organise, and the new society they aim to create “within the shell of the old”.

This simple introduction to syndicalism, workers control and libertarian communism originally appeared as a series of articles in War Commentary for Anarchism in 1943. Excerpted from Tom Brown’s Syndicalism, Phoenix Press, London, July 1990.
This text from:Anarcho-Syndicalism 101

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Bitcoin, Economic Resistance, and Justice

“After all, the practical reason why, when the power is once in the hands of the people, a majority are permitted, and for a long period continue, to rule, is not because they are most likely to be in the right, nor because this seems fairest to the minority, but because they are physically the strongest. But a government in which the majority rule in all cases cannot be based on justice, even as far as men understand it. Can there not be a government in which majorities do not virtually decide right and wrong, but conscience? — in which majorities decide only those questions to which the rule of expediency is applicable? Must the citizen ever for a moment, or in the least degree, resign his conscience to the legislator? Why has every man a conscience, then? I think that we should be men first, and subjects afterward. It is not desirable to cultivate a respect for the law, so much as for the right. The only obligation which I have a right to assume is to do at any time what I think right. It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience.”

-Henry David Thoreau, Civil Disobedience

I love Thoreau’s unapologetic diatribe against the state, and the banal evil of the hollow men of governments–I cannot recommend more highly to read Civil Disobedience. More than a century and a half ago, Thoreau could plainly see the preposterousness of the idea of a just government. Governments are institutions amongst men, and derive their power and justice from the magnanimity of the men within those institutions. When these institutions of government are taken over by cowards and make their objective to destroy the very constitutional rights from which their power is formed; such organizations can no longer be called legitimate. The whole world knows of the crimes of the American Empire and its axis of capitalist corruption. Now is the time to resist, and fight back before it is too late.

Direct Economic Action

I have always been one to believe that there is no revolutionary action except for direct action. Resistance is something that must be preformed at the exact time and space where injustice is occurring in order for true change to be manifested. This is deeply problematic when we live in a capitalist society that itself is the bases of injustice, exploitation, and alienation. How can one resist an entire social, political, and economic system that is based upon systematic injustice by the state working hand-in-hand with the corporate, oligarchic machinery of late capitalism? The totality, and wholeness of this vast complex of power relations finds their nexus within the legal structure of the state, seems impossible to change or resist.

That is until now.

Nation-States, from the most corrupt failed states, to the superpowers of China, Germany, and the United States; ALL maintain their power and control on their populations only and explicitly through the control of capital–if they cannot control the money, they cannot control the population.

If even 5% of the world’s population refuses to use their governments fiat currency; this would cause for a collapse of their unjust monetary system overnight. The governments, politicians, and capitalists who use our money to fund their wars cannot exist within the digital currency ecosystem. If you want to fight back directly, in a way that will true hurt these monsters; than withdraw your economic support for their corrupt money.

Through this single action–the rejection of using and holding fiat money–can cause for a financial collapse of the old, antiquated, corrupt system of money, while bolstering and legitimizing the new digital economy. This is a capital strike–a refusal to invest or participate in the corrupt economic structure that has left 3.5 billion people with the same amount of wealth as 85 people. I refuse to participate in this evil system, and I refuse to let these fascist use any of my labor, wealth, or exchange to support these conditions.

My revolution is now, and it is permanent–I hope you will join me.

Digital currencies will replace fiat government systems of money–it is simple too effective as a money system. At some point, be it 5, 10, or 30 years down the line, citizens across the globe will take the power of the purse away from government hands, and returning it to the people. By using new, alternative forms of money that the state does not explicitly control, people all over the world can choose to reject their government’s money systems and the endemic and systematic corruption of power enables.

If you truly want to fight back against the state and their oligarchic allies; than the most powerful action you can take is refusal. Refusing to participate in their official economy, using their money institutions, or being a cog in their machines. By refusing to use, or hold fiat currency, one can help start the process of stripping the state, and the banks they are lapdogs to, of their economic power. This single action alone can be what can take down the capitalist empires of exploitation, and return economic power to the hands of the people, where it rightfully belongs.

Student Debt Resistance

I need not to make the argument for the injustice at the price of education, nor the way that people are made into indentured servants of the state for little more than wanting to educate themselves. There is more student debt today that what the entire budget of the United States federal government was in 1965. Private profiteers, and banksters of the most unscrupulous sort, are allowed to leech profits from this debt, participating with the state in direct exploitation of students, and former students, as equitable partners with the state for this right of mass extortion. This is debt bondage in exchange for a certificate of graduation that offers one the false promise of employment upon graduation. You were scammed, and now you must repay them.

On the poverty of student life was an influential piece of writing from 1966 that helped ignite the shortly lived revolutions of May 1968. This work speaks broadly about the hope of youth for a future that was not determined by the exploitation of capitalism and the demand to fight for that future. The underlying point is that being a student is as subservient to the capitalist structure of the world today just as much as any other corporate job. So called ‘education’ within the ridged structure of capitalist universities is not education–it’s ideology. The apparent freedom of university is the iron cage of academia where the erudite elitism of the intelligentsia is a reflection of the same narrow, manufactured dialog of politics. The education systems are not about empowerment or agency, but subservience to the current superstructure of the capitalist world today.

To strike debt; to refuse to pay or service it can and will bring the whole system to a stand still. If a debt strike can be organized for people to default on student debts, or debts of all kinds at the same time, would cause for a total collapse of the monetary and banking systems–international financial contagion would be inescapable. If executed correctly it would take less than one month to see systemic economic crisis. This is the system that has sold out our future, has allowed for the total and complete destruction of the environment and millions of species, all while leaving our posterity broke and impoverished. This can only be defined as unjust and despotic. Resistance must begin somewhere, and I see no better place then here.

To Struggle

We have been taught, ingrained in a pavlovian way, to feel powerless against what seems to be an omnipotent force of the state that is fully against our struggle. It seems easier to simply give up, to not struggle, to find a way to compromise with the system as it is. We pretend that there is not a gross psychological damage that we undertake by living in this capitalist world where everything is for sale, nothing is sacred, and the largest criminals of all go free. We are permitted to have our own little fiefdom of superfluous trinkets and toys, in exchange for our compliance and silence with the machinery of capitalism. We are told by others and ourselves that this is a fair exchange only to find ourselves sobbing inconsolably on top of our piles of trinkets; knowing the price of our estrangement from our innermost self.

Suicide now one of the leading cause of premature death in the united states, and depression is the world’s leading debilitating illness. The estrangement of meaning and purpose from everyday live; ripped away and replaced with the meaningless, soul-sucking existence of bullshit jobs, and vacuous social connections has launched us headlong into the society of the spectacle unhinging itself. The world makes visible the primacy of commodities dominating all that is lived. The world of the commodity is thus shown for what it is, because its movement is identical to the estrangement of men among themselves and in relation to their global product.

It is nothing short of childish to not see the mental toil and exhaustion from living under this despotism. We must valiantly and passionately strike against this way of life that has robbed our lives of dignity, meaning, and purpose for far too long. Inside of each one of us is the drive to zealously seek for something better–the hope of building a better tomorrow is what drives us, and this force alone can change the world. The revolutionary struggle patiently awaits us; whispering to us to rise and taken our proper place in chronos of the liberation of mankind.

To Take Justice

Justice must be taken. It will not be freely given by these governments, or the political institutions that are part of them. That request was made in the streets years ago and it was met with the heavy truncheon of the state’s fascist police armies. Protesting is little more than being a lamb to the slaughter, displaying that political reform is impossible. If we are to have justice, it must be something that we make for ourselves, and refuse to compromise on.

To directly attack capital itself is to strike at the very root and essence of our struggle. Our quest is to fracture the unholy alliance between capitalists and the state through destroying the object that unites them: fiat money. This is a direct plan of attack; an offensive and purposeful mode of resistance that as it gains momentum, it can become the revolutionary force of a general capital strike. If you want justice, than go and take it!

Refuse to accept the conditions which have been impressed upon you! Fight back and struggle against those who keep you under the bootheel of poverty and totalitarianism for their own benefits. Disparage the cowardly fascists who sell your security, freedom, and rights for their own temporary safety. No one will come and tell you fight back against an entire system that seeks to exploit and alienate you from your own being and worth–you must find that inside of yourself and will-to-power the meaning to fight back and resist! The commanders of this economic and political system are cowards and fascists who care nothing for the meaning of justice, liberty, or freedom. They are scare and pathetic little men who allow for their morals and ethics to be commanded by others as thoughtless machines. Allow for the labor and wealth that you command to be a friction against the machine, and part of the great liberation of the digital economy away from the bloody and grimy hands of the state and the capitalist pigs that control them.

—

Next: Financial Insurrection

The Creative Destruction of Bitcoin

A little more than a year ago I covered bitcoin’s creative destruction, and how bitcoin is more efficient money system on several economic levels. We also explored how the near-zero transaction cost of cryptocurrencies creates a monetary system that shall always be more efficient than fiat monetary systems. It is because of this fact that we shall see bitcoin destroy the contemporary models of finance, banking, and monetary systems; while as the same time building something new, better, and more egalitarian in its place. As the bitcoin ecosystem grows, we will see a radical shift of money, finance, and banking away from huge institutions that are embedded within the capitalist structure, to a decentralized, global framework of economic exchange divorced from the state. Schumpeter described this process of creative destruction in chapter 7 of Capitalism, Socialism, and Democracy and how capitalism incessantly transforms the economic landscape:

“In capitalist reality as distinguished from its textbook picture, it is not that kind of competition [oligopolistic competition] which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)—competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.”

Smashing Monopolies with Advanced Technology

The superiority of bitcoin as a money system is something that will be proven in the long-run of decades. What bitcoin has accomplished in 5 years alone is astonishing. As a non-goverment money system, bitcoin is not subject to the same legal system, taxation, inflation, or political pressures that all fiat money systems must experience. Bitcoin explicitly lacks the charlatan features that all fiat money systems–this is a feature, not a bug.

Bitcoin exist outside the framework of sovereignty of the state. Bitcoin cannot derive any legitimacy from laws or enforcement, but only from its own merits as money. In doing this, bitcoin points out how corrupt our current economic and political system is, while creating a totally new form of money that is a radical alternative. Bitcoin points out the corrupt relationship between the state, institutions of money, and how that relationship creates oppression for all people.

Today, the oligopolist and monopolist have won. A small handful of companies control vast swaths of industry with the full cooperation of the state. Government pay huge subsidies to mega-corporations while child homelessness is at an all-time high. Governments use the money they control not to help those in need, but to make illegal wars both domestically and abroad. Politicians are paid off openly and without shame, while the banks readily kick hundred of thousands of people out of their homes and into the streets with the full support of the law. Police openly murder children and are readily acquitted and protected by the legal system.

This is a form of inverted totalitarianism monopolizes the structure of power through omitting any democratic process from the economy system. The monopoly of banking, the monopoly of the law, and the monopoly of the issuance of money have all been forcibly justified through extreme campaigns of fear-mongering around the ‘need for safety’. This has nothing to do with economics, efficiency, or safety–it is about corruption and using the state to create laws that protect incumbent industries and politicians.

Breaking these monopolies is the kind of creative destruction that bitcoin is engages in through applying a superior technology. The restructuring of economic power into a digital realm will not only dramatically redistribute wealth away from the old order, but it will also radically transform the size and breadth of the financial economy by several fold. The financial and banking systems will become much more accessible, the nearly 10 million american adults lacking a bank accounts today, and the 2.5 billion unbanked all over the world can now have a real opportunity at financial access in a way that has never been experience before. Those who build these new systems, and utilize the power of bitcoin to revolutionize the financial and banking industries, will be the champions of this new digital economy.

The Revolution of Accounting

The creative destruction of bitcoin strikes at the very root–the very object of exchange–of the capitalist economic structure: money. It is through the explicit destruction of the current payment systems, legal tenders, and the monopolization of those, that bitcoin will reinvent the entire economic. From destroying these old model of finance, banking, and exchange; the entire infrastructure around economic exchange will be recreated in a better, more effective model. A similar revolution happen around 800 years ago in the north of Italy with ‘discovery’ of double-entry accounting.

This novel approach to accounting allowed for merchants to have a much better understanding of their total assets and liabilities, as opposed to the old version of just keeping a daily diary of what they possessed. The real revolution that came from this accounting system was the way to measure, value, and utilize various assets and liabilities in new ways–equity was birthed into the world. This transformed non-active capital that was previously doing nothing, into doing something. Adam Smith talks at further length about this in The Wealth of Nations:

“It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country. That part of his capital which a dealer is obliged to keep by him unemployed and in ready money, for answering occasional demands, is so much dead stock, which, so long as it remains in this situation, produces nothing, either to him or to his country. The judicious operations of banking enable him to convert this dead stock into active and productive stock; into materials to work upon; into tools to work with; and into provisions and subsistence to work for; into stock which produces something both to himself and to his country.”

-Adam Smith, The Wealth of Nations

Though this seems to be the most boring possible topic to be revolutionary, it certainly was. With the development the merchant banks in Northern Italy, now there was a way in which the ‘dead stocks’ of stationary capital could be commoditized. From the ability to much more accurately understand one’s own finances through double-entry accounting, there became a whole new way to utilize, and understand money. This was the revolution that helped create finance as we know it today, and is what also propelled the advancement of capitalism to its place on the world stage it is today.

The great advancement that came from double-entry accounting was the novel approach of pooling money through banks, and then being able to utilize that capital as an active, and productive investment, rather than a dead stock. This meant that many, many more people could access capital for investments than there ever had been available before. This new market for capital and mode to utilize it, fundamentally restructured the economic fabric of life in a way that would indelibly change the future, and advance it towards one of capitalism. This was the first revolution of accounting, and now 800 years later, we are having the second revolution of accounting and measurements.

Building The New in The Shell of the Old

The creative destruction embedded within capitalism can best be understood as a dual force of creative power. It seeks to destroy and defile old ways in the quest to create something more efficient, more masterful of the task at hand. The only way that we can build a new and better world, is through first through destroying the old ways. It is only once we have cleansed ourselves of the inefficiencies of the past, that we are able to fully manifest and powerfully produce the changes we wish to see in the world.

Luca Pacioli–remembered for writing down how to do double-entry account. No one knows who that other guy is.

The revolution of bitcoin is not just in destroying these old financial industries; but building the new system that will be radically better than anything we could imagine. In this brave new world we are quickly coming into, the financial industry as we know it will be crushed in order to make way for the new system of finance. Bitcoin and other digital currencies simply have too low of a transaction cost when compared to the transaction cost of any fiat money system.

The development of the triple-entry accounting system of the blockchain has at its core the same praxis and creative destruction that double-entry account had: to destroy the old order of exchange, to make way for the new, better, and more effective system that can reach and serve many more people than the old system ever could. What is so revolutionary about this new mode of economic organization is now the arbitrator of measurements within the system of exchange (bitcoin itself) is subject to the same accounting standards as all other actors within the system–the bankers and politicians cannot cheat this system for their own benefit. The bitcoin ecosystem has no way it can just make up new bitcoins, as the state and banks can do with fiat money, or how they can debauch commodity-monies. The real revolution within bitcoin is that makes the banksters, the financiers, and the state subject to the same economic laws that govern everyone else.

Through eliminating the costly, inefficient, slow, burdensome, and corrupt contemporary system of banking, finance, and money itself; there is a whole new economy world to be created. This will exponential increase the productivity of capital, as it no longer has to be subservient to the state, their regulations, or laws that protect their cronies. Bitcoin ensures there is no longer any physical space that must be defended to protect money, so the infrastructure of this new form of capital can extend well beyond the branches of banks, or physical kiosks. Money no longer has any masters–it is free to create the world it sees fit.

What Must Be Done

We have the tools, now we must build the new system. Rome was not built in a day however, and what we are attempting to do is to fundamentally restructure the most prominent aspect of our society and world today: money and wealth. This is an ideological battle of the greatest kind. We are not just trying to address the economic issues at hand, but the mysticism and magic of how money functions. These are huge political, social, and ethical issues that many people today would rather not question or talk about–they would prefer to simply shove their head in the sand and refuse to believe that this is possible.

However the younger, technologically inclined and technology trusting generations will soon come into power against a political and economic system that has willingly and enthusiastically sold them out, disparaging them each step of the way. Spite and the demand for justice is a very powerful thing, and the true revolution is going to come when the youth from all around the globe realize that they can economic and politically organize themselves against the respective systems that have exploit them. The revolution is already in motion; what remains to be seen is how quickly people are going to be willing to seize it for themselves.

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Next: Hayek’s Promise

Bitcoin is a Commodity Money

We have discussed several different ways in which bitcoin creates an intrinsic value for itself. We also have discussed the absolute value that cryptography offers, and how States conjure up fiat money through legal violence via valor impositus, rather than creating money with real bonitas intrinseca value of metals that are coined. Now that we have an understanding of the above concepts, we can discuss how bitcoin is a commodity money, made from rare unique bits of data that create the whole cohesive framework that makes up bitcoin.

Satoshium

For this post I am going to pretend that bitcoins are real coins that are minted from a new metal called Satoshium. This metal is ugly, has few uses, and cannot be physically touched, as it is invisible–overall it is pretty useless. However this new metal is very, very divisible, malleable and it can be transported over any digital communication channel. All Satoshium that will ever comes into existence is created through the coinbase reward that ‘mints’ bitcoin units, which happens during the process of ‘bitcoin mining’.

The reason for the fictionalizing this alloy Satoshium is several fold:

1) To elaborate on the very important distinction between the legal creation of currency out of nothing, and how that is different from the minting of coins which must gain their value from the material the coins are made from. This is the distinction of legal tender under the force of law (valor impositus) and the nominal value states creates out of thin air (the expansion of the money supply), verses natural (bonitas intrinseca) money, which derives its value from no enforcement, or organization of men; but from the intrinsic use-value the object possess in-itself. This is seen most frequently with precious metals, but also with objects of use value like cigarettes.

2) Bitcoins can be used for much more than just money. When bitcoin units are creatively destroyed (proof-of-burn, colored coins, etc) it is similar to the melting down coins to use the metal for something more useful. Contracts, identity, transparent taxation, autonomous agents, etc. can all be created from Satoshium, or the outright destruction of bitcoin units.

3) Bitcoin is really a several dynamic systems working together (payment, identity, proof-of-existence, ownership, PGP system, etc) each with their own purpose. This is in addition to the fact that ‘bitcoins’–what one could think of as the cassacious coin, and I refer to as ‘bitcoin units’–is separate from owning a bitcoin address with no money in it.

Today we shall cover only the first item, and discuss how the bits of data that create the individual bitcoins have their own unique values that are not found within in the laws of men, but the laws of math.

Satoshium Mining

bitcoin monetary base

Let us think of Satoshium similar to gold or silver, with a few notable exceptions. Satoshium is rarer than gold; with only 2,100 trillion units (0.00000001 BTC–the smallest bitcoin unit, ‘a satoshi’) of Satoshium that can ever exist. Today there are about 1,350 trillion units of Satoshium that have been discovered through the ‘Satoshium mining’ process. More and more people are mining everyday with better, and better mining equipment–which is making it harder for current miners to find the mining reward. We will comeback to how bitcoins are ‘minted’ from satoshium using the coinbase reward process later in this post.

Another unique trait about satoshium is that it has a very, very steady inflation rate. For every 10 minutes of satoshium mining that is done on the bitcoin network (combining all of the mining power that everyone is using to find satoshium–be it 9 computers, or 9 billion) there are 5 billion units of satoshium discovered. After the first 4 years of mining, this amount was reduced by 1/2, to 2.5 billion units for the same 10 minute block of total work by the network. This amount will continue to divide in half every 4 years until there are no more units to be divided, which will be somewhere around 2138. Today there is much less satoshium available for mining than there was even just a few years ago–this is similar to the real deflation that metals, like gold, silver, and platinum experience over time, as they also have a finite supply.

Satoshium mining has become very difficult because so much mining energy is competing for these limited number of bitcoin units; the little guy can no longer mine satoshium on their own–it is simply too hard. This would be like trying to mine for gold with only a pick and shovel, while the guy next to you has a gold mining operation–you are not going to win. To resolve this, people discovered that if they ‘pool’ their work, everyone can share in the reward of satoshium mining based upon how much work they are doing for the bitcoin network.

The Minting of Bit-coins

Satoshium is really the coinbase reward, which is the raw material that bitcoins are minted from (fun fact, the only way you can truly destroy a bitcoin is through not claiming the full coinbase reward). In the same manner that gold is just a hunk of metal before it is minted into a coin; so is satoshium is to bitcoin. When someone is rewarded for satoshium mining, those satoshium units are grouped into chunks of 100 million units and ‘minted’ single bitcoin. This is the coinbase reward process. This ‘mints’ satoshium units into bitcoins based upon what the block reward is at that time, and pays that reward of new coins out to a new bitcoin address. This is the ‘minting’ process and how the bitcoin network creates new bitcoins.

Though each bitcoin is created equally, the data that comprises of each individual bitcoin is unique and different. Each bitcoin addresses has unique identifying properties, that differentiate each individual bitcoin to their owners, but to no one else. This is similar to the serial number that is unique to each dollar bill. This means that the history of that particular bitcoin (or subdivisions of that bitcoin) can be tracked, and can only be spent when the 53-digit unique hexadecimal private key authorizes its movement. If properly secured, it is impossible to ‘hack’ a bitcoin address and take the money from that address; as only the private key will be able to move it. This is why there are several bitcoin addresses that have tens of millions of dollars in them, and not a single one has been hacked.

The mining process is also what ensures that there are no ‘double-spend’ attacks. In lay-terms, a double-spend attack is similar to check-kiting, where one spending the balance in checking account twice before the bank can check to make sure the funds are there. We won’t go into details about this right now, but just be aware that the mining process also acts as the gatekeepers to the transference of funds, and offers mathematical assurance that no coins can be stolen, or double-spent.

The Money Supply of Bitcoin

The reason for us fictionalizing the metal Satoshium is to make clear the distinction between fiat currency that are made from nothing, and commodity money which must derive their value from an object’s intrinsic worth–the value is found in the money itself, not vice-versa. A fiat currency is a scrips certificate of exchange issued from a central bank. The scrip itself (such as a $20 bill) is just worthless paper–there is no bonitas intrinseca about it. An infinite number of these scrips can be created, as their values are created and set by the dollar accounting system controlled by the Third Bank of the United States (also known as The Fed–a misleading term that I hate). Each one of these scrips can be redeemed for goods and services for the nominal value printed on it, because it is legal tender–one must accept fiat money in exchange for goods or services. If not, you will face the wrath of the law.

Historically, once could exchange the nominal value of these worthless papers for a precise measure of commodity money, such as gold or silver. However, fiat currency no longer has any sort of value backing them–since 1973 they have been free-floating. Governments are now free to print as much money as the like, which they are happily doing. This is because there has been a low level currency war going on since 2008, and it is starting to intensify. This means that while there still is a finite, natural supply of all physical objects; there now is twice as much money (in the case of the US) that can purchase those same objects.

This is how governments expand the money supply to create inflation. This bleeds the value of the hard-earned savings of common people, in order to further enrich the current ruling class. All people in all nations are now facing these political calamities that will make us all economic casualties.

Velocity of Money

Velocity of USD

When more units of a currency are injected into circulation, this causes for a total number of units within the system to increase. If the velocity of money were normal today, this would mean that the prices of everything would double over night–but it has not. This is because the velocity of money is at historic lows, at less than 1/2 of what it normally is. This is not a mistake, but a response to the QE of the FED.

Let us compare this to how bitcoins are ‘minted’. Bitcoins derive their value from the bonitas intrinseca, the real economic work that has been preformed in the Satoshium mining process, and the use-value that Satoshium has. Each and ever single bitcoin in existence must have came from a coinbase reward–there is no other way to create bitcoins. In order to create the coinbase reward, real computational work that takes real energy–no different from the energy used to dig gold from the ground–must be preformed.

With Satoshium mining, this ‘work’ is done in the form of solving very, very, very complex mathematic problems that secure the network from ever being corrupted. This gives each bitcoin unit equal, market-based value due to the fact that it cost real-time energy to produce bitcoin today. There is no way to modify the number of bitcoin units that can be created (unlike fiat money), as bitcoins can only come from the coinbase reward, and that is hardcoded into bitcoin. This ensures all bitcoiners that no one can ever just change the supply of bitcoin in the way the US can, or any other central bank can for their currency (I’m looking at you Japan and EU).

Bitcoin as a Currency

Money can be held here and proven that it exist

This is a public bitcoin address. If you have the private key for this address you can control the money there.

For us to understand bitcoin as a currency, let us think of bitcoin paper wallet for the moment. This is a piece of paper that has the private key of a bitcoin address printed on it. When one inputs the private key of that address into a bitcoin client, they can access, and transfer the bitcoin found in that addresses. This is a currency bill in the most fundamental sense of the word; as it is not that piece of paper that has any value, but what it represents. What has value is the private key, as that can access the bitcoin–not the paper itself. The paper has only exchange value, not use-value. This is how banking classically existed for centuries with banking bills representing some value of gold until the 1973, when the dollar dropped its peg to gold.

Although bitcoin is called a digital currency, that is a bit of a misnomer. Bitcoin is not a currency but a commodity-money. Bitcoins must come from the coinbase reward process, and that process can only be done through the electrical labor of mining. Thus, like physical coins, a bitcoin can only be created when the correct ‘bits’ are ‘minted’ into bitcoins. Bitcoins cannot just be created willy-nilly–real computational work must be done, and real energy expended to mint bitcoins.

This is why we have differentiated the creation of bitcoin units from that of Satoshium mining. If we are to mint coins, physical or otherwise, we must have something to mint, we cannot make coins from nothing! And this is the very place that commodity monies are different from fiat money–fiat money does not represent anything other than the law, whereas bitcoins ARE something–very special data sets verified by the bitcoin network.

Bitcoin is a Commodity Money

Bitcoin is a commodity money because the cryptography that bitcoin is built on top of. This has created the contract that limits the supply of bitcoin units and protects the bitcoin payment network. It is cryptography that creates the immutable and fungibility of bitcoin units and the imperium of the bitcoin network. This immutability creates a use-value for bitcoin, which also creates its exchange value. Furthermore, the ‘satoshium’ units of bitcoin can be broken down and used for all sort of other various contractual functions. By understanding bitcoin as a commodity money, we can see the true value that bitcoin has is outside of the legal constructs of the state.

The internet now has money that is loyal to no political body, or statist organizations; but to digital ideals alone. This is not just the economic base of a new epoch, but a political one as well. Bitcoin is the economic praxis that will allow for humans to create a new class consciousness. We can use the internet to help us create a new society, and we can use bitcoin as the economic mode to create that new world.

Bitcoin is not about money, and has nothing to do with money. Bitcoin is about political power, sovereignty, and the freedom of economic exchange. This is in direct and antagonistic relations to any and all states. Bitcoin seeks to destroy the old institutions of political power, and replace them with new digitized, decentralized ones.

Once people start to see and reject the corrupt and worthless scrips of the states, there is going to be a great unraveling unlike anything we have seen before. The crisis will collapse the value of all fiat money to becoming nearly worthless, and the value of cryptocurrencies will explode. There will be chaos, and there will be anarchy–but these are the conditions of creative destruction that we must have in order to rebuild something better in place of this corrupt and wicked system called state capitalism.

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Next: Bitcoin and The History of Money

The Legal Politics of Money

Digital currencies are a new form of economic organization that exist entirely outside of the reach of the State. This has far-reaching ramification not just for money and capitalism, but for the ideological super-structure of the world today. Forcing concepts like exchange and economics into a theorem where tangibility is no longer needed causes for an unraveling of the state power structure itself. Institutionalized violence is no longer prerequisite for the monetary and legal system to function.

The ideological structure of capitalism has embedded itself into the state via the legal system. The State then acts as a thug on behalf of capitalist by enforcing laws through means of legalized repression and violence. It is from this proof-of-violence concept that states are able to force people to accept the legitimacy of contracts, the law, and the value of fiat money at the point of a knife. If governments could not the violence of their legal systems to enforce the acceptance of fiat money, or the repayment of debt; the entire international monetary system would collapse overnight.

Sovereignty of Value and Legal Ideology

All contemporary forms of fiat money rely on the physical and legal enforcement of laws, and the monopolization of the payment systems in order to create exchange value. All state money systems operate on maxims of restrictions based in law, enforced with mystical propaganda in one hand, and a clenched fist of enforcement in the other. The propaganda that is used to convince people of the need for the State to control money is far more important than the laws that create that money, or the guns and violence that are used to enforce their value. It is only through the repressive apparatuses of the State, and the cooperation of their capitalist allies that allows for this system of fiat money to continue to hold value.

Legal restrictions create the nominal values of the currency bills from all states. It is the same for the EU’s Euro, the Chinese Yuan, or Malaysian Ringgit–the currencies have nominal, redeemable value for goods and services in those Nation-States (or unions), and not outside them.

The value of these national currencies are created explicitly from the monopolization of the payment systems, and the monopolization of the issuance of legal tender. The monopoly of money itself via legal tender, and the monopolization of the payment system by the banks working with the state, is how national currencies forces themselves into a means of value, unlike commodity-monies like gold, sliver, or bitcoin.

The value of fiat money is unnatural and is only create through legal force. The power to create fiat money exist solely in the legal realm. However, what forces them to have value is the violence in which the laws based around those nominal values function. There is no such law to make commodities into money; they are simply valued. Mises surmises this in the appendix of “The Theory of Money and Credit,”

Ludwig von Mises

“Another acatallactic doctrine seeks to explain the value of money by the command of the state. According to this theory the value of money rests on the authority of the highest civil power, not on the estimation of commerce. The law commands, the subject obeys. This doctrine can in no way be fitted into a theory of exchange; for apparently it would have a meaning only if the state fixed the actual level of the money prices of all economic goods and services as by means of general price regulation. Since this cannot be asserted to be the case, the state theory of money is obliged to limit itself to the thesis that the state command establishes only the Geltung or validity of the money in nominal units, but not the validity of these nominal units in commerce. But this limitation amounts to abandonment of the attempt to explain the problem of money. By stressing the contrast between valor impositus and bonitas intrinseca, the canonists did indeed make it possible for scholastic sophistry to reconcile the Roman-canonist legal system with the facts of economic life. But at the same time they revealed the intrinsic futility of the doctrine of valor impositus; they demonstrated the impossibility of explaining the processes of the market with its assistance.”

This difference between valor impositus and bonitas intrinseca: the nominal value of units imposed by the state–such as the dollar or shekel–and that which holds real intrinsic value; such as the metals, minerals, or other storage of value.

The best example of how these two values act against one another would be a gold coin that has a lower face value than what the coin is worth on the open market–it is not the stamping of the metal that creates value, but the amount of gold that it is comprised of.

Mises spoke further of the historical difference between the nominal value of coins, and their weight as metal:

“Nevertheless, in defiance of all official regulations and prohibitions and fixing of prices and threats of punishment, commercial practice has always insisted that what has to be considered in valuing coins is not their face value but their value as metal. The value of a coin has always been determined, not by the image and superscription it bears nor by the proclamation of the mint and market authorities, but by its metal content. Not every kind of money has been accepted at sight, but only those kinds with a good reputation for weight and fineness. In loan contracts, repayment in specific kinds of money has been stipulated for, and in the case of a change in the coinage, fulfillment in terms of metal required. In spite of all fiscal influences, the opinion gradually gained general acceptance, even among the jurists, that it was the metal value—the bonitas intrinseca as they called it—that was to be considered when repaying money debts.” Part 1, Chapter 3

Today because of the structure of late capitalism, where the state monopolizes the currency, and the banks monopolize the exchange of currency, there is no way to demand repayment in anything other than more fiat. It is from the insidious brilliance of forcing all exchanges into legal structures with no alternative payment forms, that fiat money both creates its own value, and also becomes a legal power.

We can see that money today is not valued because of its bonitas intrinseca, but only its valor impositus. This means that the only way that the state can make its money hold value is through explicit legal means, which are reliant on repressive legal enforcement, and nothing else.

Physical World Against Digital Laws

There is a glaring issue with this mode of money creation when we start to consider for a moment that the world that we live no longer is orchestrated by legal enforcement of the state, but digital communications.

There is no physical footing in this world, no place for the apparatus to establish itself.The repressive violence states use to enforce their laws simply cannot exist here.

If we return to Foucault in Truth and Power he provides us with more hints about the functions of the state and why ‘cutting off the king’s head’ has been impossible until recently:

Moderator: The King’s head still hasn’t been cut off, yet already people are trying to replace it by discipline, that vast system instituted’-in the seventeenth century comprising the functions of surveillance, normalization and control and, a little later, those of punishment, correction, education and so on. One wonders where this system comes from, why it emerges and what its use is. And today there is rather a tendency to attribute a subject to it, a great, molar, totalitarian subject, namely the modern State, constituted in the sixteenth and seventeenth centuries and bringing with it (according to the classical theories) the professional army, the police and the administrative bureaucracy.

Foucault: To pose the problem in terms of the State means to continue posing it in terms of sovereign and sovereignty, that is to say in terms of law. If one describes all these phenomena of power as dependent on the State apparatus, this means grasping them as essentially repressive: the Army as a power of death, police and justice as punitive instances, etc. I don’t want to say that the State isn’t important; what I want to say is that relations of power, and hence the analysis that must be made of them, necessarily extend beyond the limits of the State. In two senses: first of all because the State, for all the omnipotence of its apparatuses, is far from being able to occupy the whole field of actual power relations, and further because the State can only operate on the basis of other, already existing power relations. The State is superstructural in relation to a whole series of power networks, that invest the body, sexuality, the family, kinship, knowledge, technology and so forth. True, these networks stand in a conditioning-conditioned relationship to a kind of ‘meta-power’ which is structured essentially round a certain number of great prohibition functions; but this meta-power with its prohibitions can only take hold and secure its footing where it is rooted in a whole series of multiple and indefinite power relations that supply the necessary basis for the great negative forms of power. That, is just what I was trying to make apparent in my book [“The Order of Things” which was originally titled “Words and Things.”].

To cut off the king’s head we must venture into a realm where a footing for his power cannot be found. A realm where the physical violence, repression, and thus the capacity to physical enforce nationalistic laws cannot exist. The meta-power of the state and their various laws end where they do–in physical territory, in a physical world. There is no need to cut the heads off of false prophets whom we are immune to.

Digital sovereignty departs from the theology of law, and builds a new economic system that operates from a critical bias of math, instead of physical enforcement. These systems are based upon non-physical knowledge alone (knowledge of the private key), which means these systems are built solely around their mathematical soundness. The code upon which these currencies are written is their own sovereign valor impositus. The computer code itself is the legal-mathematical structure that enforces the rules of bitcoin, and other digital currencies–no State or third-party is needed.

Digital Sovereign and The Banishment of Physical Force

Digital currencies are the kernel of power that a new economic and legal superstructure will be built from. Power is no longer something that comes from the sword, but from the pen.

Violence cannot be an explicit tool of enforcement or appropriation in a nearly-anonymous, digital system like bitcoin or other digital currencies. Economic independence outside of the control of the state or the banks is now a real possibility. This severely underminds the power of the State, the banks, and state-capitalism in total. Digital currencies allow for a new frontier of economic freedom and independence, that is not achievable with the current monetary and legal systems. With bitcoin, people are free to choose who they conduct transactions with, without the permission of the state, banks, or the violence they use to enforce their laws.

When we start to critically assess the current money systems of the world, along with the ideological and mythical structures of sovereignty, law, and the state; we find that they quickly break down under scrutiny. We come to understand that the dominion of the ideologies over our lives is not based upon some holy, progressive knowledge that protects us and gives us salvation; rather, it is barbarism wrapped in blanket, upon blanket of lies, obfuscations, and deceptions.

We see that it is not magnanimity or justice that governs the actors of the State; but selfishness, greed, corruption, and cowardice. We come to see the world as Angelus Novus did, and the horrors of what is stacked in front of us and growing with each passing day. To make whole that which has been smashed is possible, but we must wake the dead in our quest for redemption. The gate is strait, and it is our duty to show others the liberation that can come with each passing second.

In the declaration of independence of cyberspace we declared our virtual selves immune to state sovereignty, even as we continue to consent to the subjugation of our bodies. In the mean while we have spread to every corner of the global to ensure that our thoughts cannot be arrested, and so that the crimes of the state and capitalism will be seen by all, for all of history to come.

We now have the means to reappropriate our sovereignty, our economic independence, and ultimately our political organizations and the State itself. This can and will be done to end the era of state-capitalism, and usher in a new era of global digital organization. We are creating a civilization of the Mind in Cyberspace, and using digital currencies to economically unite us is the first step towards this new world.

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Next: Bitcoin as a Commodity Money

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What is Class Consciousness?

False Consciousnesses as Consumers and Citizens

Internet Sociology

The Coming Digital Sovereign

The Internet and The Global Proletariat

To Smash the Chains

To Break a Monetary System

Non-violent, direct economic action

International Money for All

International Direct Economic Action

Revolutionary Syndicalism

A Breif History of Anarcho-Syndicalism

The Digital Federation

The Antifragile Nature of Bitcoin

The Evolution of the Bitcoin Ecosystem

The Evolution of Banking

Transitioning From a Coinbase Economy

Sidechains and Collateralization

The Next Generation of Bitcoin

Direct Economic Action

Student Debt Resistance

To Struggle

To Take Justice

Smashing Monopolies with Advanced Technology

The Revolution of Accounting

Building The New in The Shell of the Old

What Must Be Done

Satoshium

Satoshium Mining

The Minting of Bit-coins

The Money Supply of Bitcoin

Velocity of Money

Bitcoin as a Currency

Bitcoin is a Commodity Money

Sovereignty of Value and Legal Ideology

Physical World Against Digital Laws

Digital Sovereign and The Banishment of Physical Force