Will the Real Bitcoin Billionaire Please Stand Up

A good amount of people have vaguely heard of bitcoins but very few actually know anything about Bitcoin. Bitcoin is a digital currency, a crypto-coin invented or created in 2008-2009 by Satoshi Nakamoto, which is not the real name of the inventor - that is simply his pseudonymous name. Fact is, nobody knows the true name or identity of the person who not only created Bitcoin but what is now looking more like an entire new industry - with new Bitcoin-type digital coins popping up almost on a weekly basis. Has anybody ever heard of a shy, anonymous billionaire in the digital age that created or started the new thing just to go into hiding? I have not, not ever in my entire life. I try to imagine Steve Jobs or Sergey Brin or any other brilliant whiz who had the vision and talent to create something so new and different just to not want to take it to the next level or to simply hide from anyone and everyone without a single sign of life.

As I was saying, digital currencies and all the other spin offs or clones of bitcoin coins which currently exist and are actually traded on live exchanges, just like stocks, exchanges such as Vircurex located in Poland or Mt. Gox or a newer smaller exchange, by the name of Coinbase, which for now only trades Bitcoins but was recently funded by a big venture capitalist firm. Coinbase received a relatively large amount of $5 million from a well-known San Francisco venture capital firm by the name of Union Square. And this young, less than 1 year old exchange company, has also received additional seed money in the amount of $600,000 just about 6 months earlier. This kind of smart money backing something this new, unpredictable and largely unknown by the masses around the world is a very good sign for the future of alternative currencies and those who have the foresight to mine, buy and earn them.

But wait, there’s more, this bitcoin craze is seeing lots of additional attention from those in the know with lots of money, and other exchanges, like Vircurex, Mt. Gox and Coinbase, are popping up all across the world and especially here in America. Coinbase is just one of the latest newcomers to this new, little known about industry. Other newcomers who have also received seed money from investors are other little known about companies such as CoinSetter, OpenCoin and Coinlab. Some of these new companies cropping up are not just exchanges but they also plan to offer other services such as payment processing and ATM machines for Bitcoins, and my guess is, eventually other digital currencies as well.1)

My argument is: Is this not a bit much, an overreaction for what is considered by many to be a fluke and by some people to be nothing more than a scam? Just to be clear, I don't see this as an overreaction, I agree with the very rich and powerful Venture Capitalists that what we're seeing is the birth of a new industry and Bitcoin was just the beginning. But who can fault individuals who are not very informed (yet) about thinking this is only a scam when you have nothing more than what used to be a video game currency all of a sudden pop, no, explode! - and go up in value to as much as $266 per coin in April of this year and now remains very stable, although volatile, at well over $100 and usually selling for over $120 per coin.

A currency which as recently as 2010 was valued at a petty 10,000 Bitcoins for 1 pizza, and now just 1 Bitcoin can buy you 10 pizzas. So really, in essence, this video game coin, Bitcoin, is worth more than the dollar - in real terms. What’s happening here is my question? Have people gone mad, is this really a fluke or is something else going on, something bigger than anyone can see at this point in time and Bitcoin was just the tip of the iceberg with something much bigger lurking beneath, ready to surface at any given moment and change the way everything is done because let’s face it, if you change the very way money is made, paid, processed and spent you will be literally changing many if not all aspects of human life and society. The implications are mind boggling – just look at how the dot com era altered everything and that was just an easier way for us to communicate, find information and purchase goods and services. This Bitcoin fluke or phenomenon, depending if it becomes the real deal and goes mainstream, will alter payments themselves and everything up and down the entire money supply chain.

Here is my first big problem with this. Never in my life have I heard of any newly minted billionaire who not only didn’t use his real name but never came out to show his face or give a single interview. What or who is this new billionaire hiding from? He has to be hiding from something because it is not normal nor is it human nature to not want to take credit for inventing a new industry and something worth so much money. There must be an answer for this odd behavior. And I’m not the only one looking for the owner and inventor of Bitcoin, but other reputable journalists have been searching for him and with no success.

Investigations attempting to find the real identity of Mr. Satoshy Nakamoto have been attempted by big names such as The New Yorker and Fast Company and many others. But they have been unsuccessful, finding only circumstantial evidence, which looked extremely circumstantial in my eyes, but was not conclusive so the question and search continues. What they found was a link between an encryption patent application filed by three men by the names of Neal King, Vladimir Oksman and Charles Bry, on August 15, 2008, and the link was the fact that the bitcoin.org domain name was registered just 72 hours later. Another piece of circumstantial evidence was the wording “computationally impractical to reverse” which was found in both, the patent application and bitcoin’s whitepaper. Naturally, all three inventors vehemently denied being Satoshi Nakamoto.2)

Here is my second part of the problem. Not only do we not know who the true owner is, which is strange and never heard of before, but what we now have is a supposed asset which has broken the laws of physics in the world of Economics and Finance. For a fake asset such as a virtual coin to go up like Bitcoin has is possible, improbable, but possible, but for a worthless virtual coin to go up in value by so much and then find equilibrium at a very high price of $120 and behave like a positive cash-flow earning asset would, well, that is just bizarre. It’s simply not possible. People who invest money invest it because of the potential future cash-flows of any particular asset. You may buy a real coin hoping it will become rare and in the future earn you positive cash-flow, or you may buy a cheap stock hoping in the future its business plan will prove effective and that will earn the company positive future cash-flows, increased earnings and thus lead to a higher stock price making you rich in he process.

But with Bitcoin you get none of that because it’s not a real coin, it’s not rare, as there will be 21 million eventually and right now there are already over 10 million Bitcoins in circulation, so then what is keeping Bitcoin’s price so high? Ok, one might say - hype and supply and demand. Fact is, most people, I’d say 99%, don’t know much about Bitcoin and certainly would not buy it as an investment, especially since it’s already so high. Therefore a huge questions remains, who is consistently buying Bitcoin’s coins to keep their value so high, artificially high I might add? And I say artificially because an asset which is not a business, does not have any current or future business plans and no plans for potential future cash-flows and is not rare, simply, logically and by the laws which govern finance, has a real intrinsic value of ZERO. When things don’t add up – then that’s when I start asking questions in hopes I will find at least a probable answer if not the truth.

One can only imagine and predict what would or could happen but I have to add, it would probably not be all bad. There are market efficiencies to be gained and all businesses would see synergies they could only dream of as payment systems are streamlined and the labor intensive practice of supply and logistics, which physical cash demands, which is a costly burden to banks, retailers and every small business owner, will pretty much disappear. After-all, it’s much cheaper, infinitely so, to transfer $100 Million, or $100 billion, in bits or bytes than it is to stack up pallets full of cash (maximum $68 Million USD per pallet), load them on an 18 wheeler, and if something like that is simply too risky, then to be safe, load many more armored trucks with each truck employing at least 2 if not 3 trained security personnel and then continue paying for the cost of insurance for such a risky business practice, fuel, vehicle maintenance, labor, the risk of having actual people putting their hands on that much money, printing and manufacturing, etc., and you begin to see how just the mere storing, manufacturing and transporting of money can prove to be an enormous, tedious and tiresome cost to all businesses and especially for banks and the government, because the latter two deal with much more physical money than anybody else.

I’m sure they’ve long dreamed of transferring $1 or $1 billion with the simple push of a button and with a prototype like Bitcoin it can now be done. And the cost savings in the supply and logistics portion of money is only the tip of the iceberg. The real benefits will prove to be in the cause and effect of going to a digital currency, the synergies would be incredibly profitable for all businesses but especially for retail (and by extension also marketing), banking and the government.

For banks – they have to know there are at least $1 trillion, and perhaps more than that, which they have no access to. Everybody knows someone who for some reason or other likes to hoard money at home or in a safe location such as in a safety deposit box. Just a quick side-note, most people don’t know but it’s supposedly illegal to put cash in a safety deposit box. Why? I’m not sure, it doesn’t make sense that you can put gold in a safety deposit box but not your cash. My guess is banks don't like not having access to your money so they don't want to encourage you to use the safety of their bank’s vault for your money unless you agree to give it to them so they can pay you 1% interest just to turn around and lend it right back to you for 6%. That’s the only thing that makes sense to me because the other argument, regarding the government needing to know how much money is in the money supply chain at all times, just doesn’t hold water – and that’s because the government doesn’t know what’s under your mattress either but that’s not illegal…well, at least not yet.

As one can see, for banks the benefits of a crypto-currency are enormous – they would have instant access to all the planet’s cash, no more hiding our money from them, no more having to pay for complex marketing schemes to figure out who’s got how much money, who the high value customer is – they’ll have a clear list of which customers to target and they’ll have instant access to all your money as soon as you sign on the dotted line, it’s as if your money was in their vault, or in their computer all along and you were just looking at a number on your computer screen. This brings me to the part which inevitably comes to mind when one talks about a large sum of money, and that is the potential for abuse of such power. What’s to stop powerful banks from overextending their limit and control? I mean, if your money is just a hash rate or a software byte then you never truly know where your money is. Sure if your total net worth is $3,000 you’ll notice if the bank is secretly investing half your money. But what about people out there who have millions or billions?

They may think their money is safe because right there on their iPhone screen they see a huge number and it says it’s sitting in their checking account, not realizing that’s just a number, it doesn’t mean anything and it can be moved around just like it’s nothing because it really is nothing so then, a bank will be very tempted to “borrow” and invest money it really should not touch. And to those who think that’s not possible because there’s going to be rules, regulations, and contracts. All I have to say is, if the mortgage derivatives didn’t prove what we’re dealing with when it comes to banks (and the government for that matter) then nothing will. All capitalism or forms of business can be said to be led by greed, but I would argue that banks are the worst amongst them all – and I only have to look at the constant ever rising unnecessary and, nearly criminal, fees which have become so ruthless, absurd and financially oppressive that one expect at any moment to get hit with a large bill because of fees they weren't aware of. My accounts have been overdrawn numerous times by fees deducted out of my account without my knowledge, fees which did not exist a few months earlier when I signed up for “free” checking with these particularly large banks.

Now if you think the banks are drooling for widespread digital currencies then one can only imagine what perks and benefits are in store for the government, and not just the US government but any government, and the bigger, greedier and more oppressive a government is, the greater the benefits will be for them from the potential of a Bitcoin-like digital money. Some of the biggest problems facing governments today are things such as, rampant illegal drug sales, illegal prostitution, illegal gambling, black markets (other than the previously mentioned illegal activities), tax evasion, tax dodgers (slightly different from tax evaders) and the list goes on - and these are just the major issues which automatically come to mind. I'm certain if a group of just three individuals did a quick brainstorm they would come up with a list three times as long. Let’s take these one by one just to see the potential gains for the government, not just in additional cash flows (due to an immediate increase in the tax base with a simultaneous reduction in costs due to synergies) but also additional and large gains in power and control because if there’s one thing any government wants more than money, it's power and control.

First, let’s combine illegal drug sales (rampant I remind you) with illegal gambling and illegal prostitution, as they are all similar. How can any government use digital money to their advantage to combat and perhaps profit from the above mentioned issues and black markets. Well, it would be to pretty difficult to hide the fact that last year you spent $15,000 on things you can’t account for nor explain and it would be pretty easy for state, local or federal governments to figure out who the drug dealers or prostitutes are by the size, type and frequency of digital cash deposits or withdraws from your NFC iPhone account. Yes, Apple will most likely release an NFC iPhone in the next 2 months and the rest of the major phone manufacturers are already producing them and these NFC phones, for which an entire global retail network has already been set up over the past 5 years by such big names as Visa, MasterCard, Google, Citi, Apple and the list goes on so the hardware, the infrastructure for digital money is prepared and now all they need is digital currencies to complete the puzzle.

Let's imagine if the only gain was a successful war on drugs, if there really is one because I personally have never seen any results and it strikes me as odd that the biggest and most powerful government in the world, the US, cannot stop millions of tons of illegal cocaine and heroine from entering the country. Such a powerful country with so many resources and so much high tech cannot seem to secure our borders on any scale - while third world communist governments with nothing but AK 47s and German Shepherds had no problems keeping any and all drugs out of their countries in the entire and very large Eastern Bloc for nearly 44 years. I lived in one of those Eastern Hardline communist countries and not only did I not see or hear of any drug use, I simply did not know it existed.. At any rate, if the US government wanted to be serious about the war on drugs, a digital currency would make it much easier, so imagine the effect this would have and the success in catching all the “bad guys” - which in turn would have an enormous positive, widespread social impact on the entire United States.

The transparency created by a digital currency would be the biggest deterrent, against all illegal activities, the government has ever had. It would be like posting your monthly spending habits outside your house where all your neighbors and the local police can see you have thousands in odd expenditures with the names of the men and women you paid and the frequency and amounts you paid them, month after month. It would literally make gambling, drug sales and purchases, in any real amounts, and prostitution, practically impossible to do unless you’re going to barter with the pimp and offer him your new iPhone 18 for an hour with his finest. That’s going to be the only real option, back to stone age bartering and even then, it’s going to look odd when you’re going through 30 iPhones per month so that loophole is limited to part time users and one-nighters.

And of course, the biggest benefit the government would get from being able to control and exert their power over these illegal, underground markets is the cash-flows. Without digital currencies all of these illegal activities, worth potentially a trillion dollars, go unchecked and untaxed, but now, with digital money, it would be practically impossible to conduct business without the knowledge of authorities, and so the government would stand to gain a lot of money in additional tax revenues from otherwise previously unknown, untraceable and unquantifiable goods and services markets. Not only would the government control these market but it could then also legislate them, making them legal to some degree, and profit from them and since these are all vice markets, the sin tax would be ridiculously high and the government would get that much more money.

The total black market in the US alone is estimated to be roughly 22% of GDP or over $2 trillion (subtracting some of the already mentioned illegal black markets) which is $2 Trillion in additional potential for our GDP and a large potential increase in revenues which right now the government simply can’t touch and nor do these black markets count towards our GDP which would then add another benefit to our economy and society as well.3) Have you ever had a kid knock on your door and ask to mow your lawn for $5? Well, that was probably me and guess what, I never paid taxes on that money because I was 13 years old and it just never crossed my mind. And you never claimed me on your tax returns so that implicitly made you a tax cheat just like me. Imagine trying to pay your own son for mowing the lawn just $5 or 5 Bitcoins or 5 Devcoins or any other new digital currency sprouting up, but you can't do it the old fashioned way, with a $5 paper bill. Now all of a sudden, with a digital currency, it is a transaction, a sale for a service, which everybody knows about.

Your banker knows about it, the government knows about it and your hacker neighbor who can look in your virtual wallet while you’re watching TV knows about it - which means when tax time comes around you may not be as carefree when it comes to claiming this wage which you paid out. Especially if it’s a wage you pay out on a regular basis which would then stand out as a black market and illegal activity. Just like that, with a stroke of a pen, if digital currencies are made part of our lives one could never get away with even paying your own kid $5 to wash your car. Technically, you would have to claim that on your taxes and so would your 8 year old son. But don’t worry, the government isn’t worried about that $5, but there are many black markets which do add up to $2 trillion. These are activities such as baby sitting, something done by millions of households to save a buck - many hire the girl down the street or you pay your niece to watch your kids twice per week. Well, this regular payment is a considerable amount and if done on a regular basis will surely set off red flags at the new digital IRS office which in turn could invite an IRS audit where they would then show you every penny you spent and you would have no way to hide it because even your neighbor knows about it, let alone the Uncle Sam.

And this brings us to the biggest benefit for the government. No more tax evasion. No more tax dodgers. Many people have the money to pay the government but they have it hidden in overseas accounts, real estate, their cousin's bank account or under their mattress – all places which the government cannot easily search and then even more difficult to prove and to take away form you. But try hiding your wealth when it’s all on a microchip or on your NFC phone. It would be impossible because every transaction, no matter how small, would be tracked and stored. And because it’s all digital - means no matter how hard you try to squeeze those computer bits or bytes in your hand, you’ll simply never be able to physically hold on to your money ever again which means you can never take it out, physically, at least not in any way the government can’t track. And the best part, for the government, is at any time, with a court order of course, should they feel you owe them any money for any reason, and they see some juicy bits of crypto-cash in your digital account they can simply take it without even giving you a call to ask if your rent is paid or your pregnant cat is fed. Just like banks today overdraw your account with new fees you never knew popped up out of nowhere. It would be that simple for any government to control, in absolute terms, everything any individual does with their money and to extract any money they should deem belongs to them.

And I mentioned earlier that the more corrupt a government the more power this will give them. For example, you have X amount in income every month from your hard labor job and you have an X amount of crypto-cash in your bank account, whether you like it to be there or not, and that government just realized they really overspent last fiscal year (again) and well, they don’t have enough cash to pay their new mandatory and self-imposed raises this year so they determine to raise your taxes, effective immediately and actually, since it’s June they’re going to make it effective on January 1st because that’s when this new tax bill was filed so just like that, with a few taps on the keyboard, a predetermined percentage disappears out of your bank account and instantly your next paycheck will now be smaller by a preset percentage as well, and not a single call will be made to your house to find out how your dog is doing, if he has a sufficient supply of separation anxiety pills or if your pregnant cat has health insurance or perhaps, by then, Obamacare for pets.

I wish I were joking - but I remember reading a few years back - an article which stated that one of President's Obama's newly installed Czars (Cass Sunstein) wanted to make it illegal to eat beef (because of global warming/cooling/climate change) and to empower your pet to sue you in an actual court of law, so Obamacare for pets is actually more feasible and rational than your pet suing you in civil court. I mean, how is your puppy going to explain the bruise on his face, his bad breath or a diet he doesn't much care for, to the judge or communicate his displeasure and grievance towards you? It's this type of sheer lack of common sense and sensibility which makes one think bad things can happen when it's these very same irrational people whom are chosen to make and enforce our laws. These ideas of Sunstein's are crazier, irrational and more improbable to ever occur than anything I could possibly theorize in this paper.4)

Now for retailers. I mentioned only the benefit they would get from not having to move around billions in physical cash every year but that’s nothing. The real money is in marketing and that’s where the media comes in. All of the media companies make their killing off selling advertising spots and the more effective that advertising, the more specific and targeted, per household, the more they can charge which is why they’re always trying to get more information about you and your spending habits, so they can better tailor an advertising algorithm which will predict your spending and then they can direct advertise to a target audience with a specifically tailored program which would result in a much higher efficiency rate for both the media companies which sell ad spots and the retailers which directly benefit by being able to target you more directly, would thus gain enormous benefits from a digital currency.

Just imagine a retailer or a marketing company having the ability to look directly into your life through your wallet – to know every little thing about your purchases, down to the late night ice cream binge you had last month. They would be able to tailor such unique and effective marketing plans that both the media companies and retailers would see enormous efficiencies in the dollars they spend on advertising and because of this - a large increase in sales resulting in bigger profits as those previously wasted dollars on old type of advertising can now be better spent on lobbying congress for looser laws which would allow them more access, deeper in to your lives so they would more accurately know when and how often to send you coupons for condoms or laundry detergent.

Don’t get me wrong – so far I make it sound like this is all bad for John, Jane and all societies at large. Well, that’s not the entire picture. If a government really had a war on drugs, such a currency, a digital currency, would do wonders at stomping out the bad guys. If your kids are buying drugs with their school books money, then you too, along with the local cops, would have access to your kids' digital wallet and be able to look for suspicious behavior. Your wallet gets stolen, no worries, they already, today, have highly effective biometric technologies and other complex and effective encryption technologies to keep your digital cash safe. Safer than getting your wallet stolen full of cash and credit cards where there’s nothing stopping a thief from swiping your card or loading it up on Amazon online, which adds another huge benefit - the prevention of billions in fraud and theft losses to both retailers , banks and credit card companies so let’s add that in their column of immense, multi billion dollar benefits.

You would never lose your wallet again, because rarely do you hear people saying they can’t find their phones, and that’s most likely because your phone accepts calls and makes loud ring tones while your wallet just sits there like a fat, lazy, bloated English bulldog - not saying a thing. And I might as well point this out now, but if this were to occur, it wouldn’t be long before the government would want even more control and that would be to make sure your wallet is permanently attached to your hand or skull. And that would then give them another layer of security, for them, in that you can never claim you didn't make that purchase, rather it was your roommate who used your phone and bought 5 kilos of Mexican coke, and no, not the best tasting, made in Mexico, coke on earth which only sells at Costco, but the other made in Mexico coke, the illegal white powder form.

But let’s get back to benefits to individuals and society cause that last one sure wasn’t. Another benefit would be an easy and instant transfer of money, no more waiting 3 days to get your cash. Your cousin is stuck in a Mexican prison (again) and needs quick cash, you can push a few buttons on your phone and in an instant he gets the money. It would be amazing to send your kids college money clear across the country or your relatives living half way around the world in dire need of some cash can then get it in an instant. If there’s anything Americans like is instant gratification and this would be a nice thing to have. I’m sitting here and honestly trying hard to think of additional benefits to individuals and society in general, but I’ m having a difficult time coming up with meaningful and quantifiable reasons, such as the very easy to think of and very easy and enormous benefits which virtually all corporations, the media and the government would get from a switch to digital money. Well, of course, there would also be a reduction in overall crime, especially in the chipped version of digital currencies.

Just imagine, there would never be such a thing as an unsolved murder. Can you imagine the murder rate reduced to near zero where the only ones that take place are by people who don’t care if they go to prison or unplanned crimes such as crimes of passion. And that’s because a chip Much like smartphones today) would be tracked and stored 24/7 and if a murder takes place on the corner of Broadway and 6th then even local cops, without the need for expensive CSI laboratories and highly intuitive Columbo type detectives, could figure out who did it in a matter of hours by pulling up all the chips present on that corner that entire evening. No more missing witnesses who say they weren’t there or didn’t see anything, no more no current suspects.

If there are only 2 computer chips standing on that corner at the time of the murder then it really only requires basic math skills, which most cops presumably have, to know that 2 live people minus 1 dead person equals 1 conviction without a shadow of a doubt, unless of course, the suspect can prove somebody chopped off either his arm or his head (depending where the chip is implanted) and ran off with his limb and killed somebody with it then brought it back and did a miraculous job at stitching it back and sprayed some Windex on it which is why it’s all healed up in under 24 hours and with no scar tissue. That’s just not going to be an argument most juries will believe so then I guess digital currencies and especially in chipped form would be a really bad thing to the earnings of lawyers, especially criminal lawyers. But one could argue that’s another positive checkmark in the column for society.

Clearly - fewer drugs, prostitution, robberies, theft and especially the massive murder rate we have in this country would be a huge benefit to society. Any person or family who has lost a loved one to drugs or violent crimes can attest to this fact. But are these benefits enough? Do they equal the benefits the other side will be getting and most importantly, do these benefits make it worth it for us as a society and as individuals to lose freedoms in such ways that we simply cannot imagine right now as something like this has never been done before by any previous society nor any power tripping dictator so it is really unchartered territory and in my mind that makes it that much more risky and riddled with loopholes for abuse by everyone from banks, marketers (just look at the abuse marketers have done - with just our names and phone numbers, even after laws have been passed), retailers, your hacker neighbor and other things we cannot yet even imagine because it is going to be something completely new and completely very different.

I know what most people are thinking, “ok, maybe NFC will take off, there’s been too many billions going into building the infrastructure for NFC to not take off and most smartphones today are NFC ready, so ok, NFC phones are here but that’s made to secure our dollars and credit card numbers to make our lives more convenient and to reduce fraud and theft, which are great things for society, but I just don’t see this enormous leap forward with something so different and unheard of as going to a full digital currency and getting rid of the dollar or to think they’re going to chip everyone like we’re nothing more than dogs, to be tracked 24/7, well, nobody will go for that, such a bill would never clear the senate floor regardless if any of the 2 major parties have a super majority and don’t need a bipartisan bill passed.”

“Well then, “ I would say, “what great points you made so please allow me this chance at a rebuttal.”

First of all, sure the next step would be a baby step, going to NFC for dollar use and credit cards. No crazy idea or revolution was done in one move, it’s always done in several moves to not let the unknowing public know what’s really coming and also, there’s certain advantages over other nations which one could make an argument for national security. A funny note, a University professor of mine once said, “if the US government ever wants to do something or hide something and they can’t because they don’t have any good reasons or excuses they can always pull out the old,” it’s a matter of national security”, card and that works every-time because any additional questions which are asked by any person or the media which they do not want to answer the government would then simply add the passphrase, “I’m sorry, that’s top secret”.

I wrote an article last week about a historic fact when in 1933 the US government under Roosevelt made owning gold illegal which proved to be step or phase 1 out of 3 phases. After collecting all the gold from Americans and giving them a paper dollar and promising it’s as good as the gold you just gave us (by force) since refusing to give up the gold would have meant prison time since President Roosevelt actually criminalized owning gold and it wasn’t until the late 70’s that owning gold was finally made legal again. This is an important historic fact which most people don’t know about.5)

Step two just about 2 months later was to nullify any and all existing contracts which required a creditor to demand payments per the contract in gold. Now that nobody could get paid in gold and the government owned all the gold while the people owned just paper money, in 1934 the government, with the power of the pen, devalued the gold on their books by 69%, essentially giving their gold a much higher value of $35 up from $20 when people were forced to turn it in.6)

But this inflationary move wasn’t free, it meant the government got nearly 70% richer via the biggest wealth transfer in the world for if they got 70% richer overnight because of the gold they stole (which unlike the paper money they exchanged it for was a real asset) that means the paper they gave in return was now worth 70% less so they essentially stole 70% of all the American wealth just like that, with a quick 3-step program. And nobody batted an eye, nobody said anything - at least nobody with a voice big enough to be heard and I think it was because the plan was so stealth that nobody knew anything until after the fact and at that point you can't do anything about it so what's the point. And I’m in the camp that believes the government is much like a corporation and it will always act in its own best interest and then after that we’d be lucky to be in second place because some huge business partner like China will probably come in second.

It’s obvious and pretty much a guarantee that NFC is here to stay and although nobody uses it today, it will most likely become an overnight success as soon as apple releases an NFC iPhone in the coming months as they tend to popularize everything they make. It would only take one cool app by Apple to make NFC a cool thing to have and use. In fact, I'm now looking forward to the NFC wallet and the biometrics simply because I now hold digital currencies which are unsafe no matter where you try to put them so already, digital currencies have changed something major in my perception of technology which I considered useless or too intrusive for me to ever adopt. And with the biometric technology Apple bought when they bought out Authentec last year, they will have the best security of any phone out there so people will definitely feel safe using the NFC function.7)

“It is obvious NFC is the real deal and it will be in wide use soon but this idea that digital money will lead to getting “chipped” is ridiculous”, one might say. Well, it’s not as ridiculous as one might think given the technology has been around many years and it has been getting better and better and has been in essence in the “testing phase” in various animals across the world such as cattle and people’s dogs and cats. In fact, some reports state that you will not be able to buy or sell cattle unless they have been chipped which (and of course when the cattle chipping program started they promised it would always be voluntary) of course will lead to a much wider acceptance of the practice. 8) Fittingly and ironically, the name of the company who makes this digital chip which will potentially be embedded in people one day is called Digital Angel.

I found Digital Angel about 12 years ago as I was doing stock research in search for a new up and coming tech company. The name caught my attention and as I looked closer I knew this company would someday be huge. I bought the stock for some ridiculous price, around $.25 and sold it just a few months later for at least a 300% gain. But I kept looking it up to see how it was progressing with the intention of getting back in one day. The problem I saw over the last 12 years was the fact that the company kept morphing, constantly spinning itself off in various pieces or merging with other companies and taking on different names and it was so extreme, like nothing I’ve ever seen any company do, that even though I was tracking it I actually lost track of which subsidiary or which spin off was actually selling the actual chip, the “VeriChip”, but I know for a fact because I made a nice profit that about 12 years ago the company used to be called Digital Angel. For a while it was called Applied Digital Solutions, and doing a resent search shows Digital Angel Corp to be a 3 cent stock making apps and video games for tablets and radio receivers, not quite the same company or the same meaning. 9)10)

While it is obvious to me that this is the direction we are all heading into I’m sure some individuals require more evidence. Then consider this, human beings are getting chipped, and have been for some time, and nobody has ever heard about it. In fact, had I not been following Digital Angel I probably would have never heard about it either. In 2004 over 40,000 human beings, prisoners of Ohio State, were slated to be chipped in order to keep them from escaping.11) Again in 2008, the UK started to chip some of their inmates.12)

Who cares about inmates you say? Well, how about your children? Roughly 20,000 school children in the city of Vitoria da Conquista will have microchips embedded in their school T-shirts. The way it works is parents will get a text showing if their children are on time or if they’re late for classes. They’re also selling this idea as a good way to stop kids from skipping classes. The way it works is the RFID chips are placed under the badge of the kids’ school uniform, or on one of the sleeves. The local government has spent nearly $1 Million on this pilot program and if it works well and parents go along with it I’m sure it will spread like a wild fire. After-all, what parents don’t want to feel safer knowing their kids are in school on time and not skipping classes?

What this does in my opinion, is that we the parents, but especially the kids are being programmed, conditioned to be ok with first Biometrics (which are now in wide use all over the world in school cafeterias and in some cases the entire country such as with India where their entire 1.2 Billion population now carry biometric cards….and my guess is we are next) and next will be RFID tagging where it starts on a smaller scale. First it was optional with cattle and other animals and now they’re making it mandatory in markets such as the cattle market. Next it will be for welfare programs such as the one the US government is contemplating where anybody receiving food-stamps will need to use an RFID tag “to cut back on fraud and waste”.13)

If you’re not seeing a trend yet let me give you that should at least get you thinking. The Obamacare plan of 2010, the one that couldn’t get passed and when it did get passed nobody had time to read it. That plan has a clause in it which calls for mandatory micro-chipping of the entire nation of the United States. Allow me to give you the exact details because I cannot believe something like this is possible either. On March 23, 2013 (This is NOW), the microchip in the Affordable Care Act of 2010 will become mandatory. The Obama Health care bill includes, under Class II Paragraph , Section B, “(ii) a class II device that is implantable” – and then on page 1004 it describes what the term “data” means in paragraph 1, section B:

14 (B) In this paragraph, the term ‘data’ refers to
15 information respecting a device described in paragraph (1),
16 including claims data, patient survey data, standardized
17 analytic files that allow for the pooling and analysis of
18 data from disparate data environments, electronic health
19 records, and any other data deemed appropriate by the
20 Secretary

As approved by the FDA, a class II implantable device is an “implantable radio frequency transponder system for patient identification and health information.” 14)

————————————————-VeriChip———————-

I will mention this as a plausible argument against this possible mandatory chipping of the nation via the Omamacare act of 2010, and that is according to a CBS article I read - the author says this notion is ridiculous and there is no truth to it. He states that the devices the most than 1,000 page bill is talking about is their (the government's medical) databases. This author states that the wording in the bill causes this confusion where the term; medical device is referring to the database the government plans to use to store everyone's profile and all medical information. Well, the above information is taken directly from the bill which is available to the public and I can see with my own eyes the term implantable device so read both versions of the argument and believe the one you feel is the truth.

It is clear to me and actually a fact, that the FDA has already approved RFID chips, for use in humans not just cattle, made by Digital Angel, Applied Digital Solutions, VeriChip or whatever the company calls itself now, it’s the same company which I bought in and sold some 12 years ago, and they have used animals and then prisoner inmates to perfect and test the technology and now it appears that they are conditioning everyone to be ok with the idea. This is very much like most people 10 years ago would never have allowed themselves to be fingerprinted just to turn on their phones or laptops, now most will have no problem with it - which is why Apple bought the best mobile biometric company, Authentec, and will most like have biometric security built into their next iPhone. This is so crazy that I'm looking forward to it so I can store my digital coins on a safe device instead of a non-secure server or laptop. And I was as bold as they came a decade ago, I told myself no way I would ever sign up voluntarily for any device where I had to use biometrics so obviously conditioning works and one could argue that the need for higher security, which wasn't needed ten years ago, also plays a big part in that and that would be the truth of the matter but the fact I'm no longer offended is the conditioning part.

So what does all of this craziness and conspiracy theory have to do with digital money? In the back of my mind I couldn’t help but remember some of the research I had done years earlier, not as a conspiracy hobby because I never read conspiracy sites as most are extremists and most hold views which are detached from the realm of reality, although in some cases they get something right, rather because it was my duty to do my due diligence on any stock I was planning to buy. And I remember being so shocked and surprised when I would read such things as prisoners being chipped and not a word in the media about it. “These are human beings,” I remember exclaiming in my own mind, so how could I just forget about such things even a decade later. Therefore, it was a natural event for me to add these up in my mind when I saw Bitcoin literally skyrocket in price and for no real economic reasons and at first I thought nothing of it but after a few weeks too many things didn’t add up, too many questions lacked answers and still do and nobody seems to notice. Which brings up another question but there's already too many so I'll leave out the one about all the experts and PhDs and the media not asking any questions about Bitcoin which don't add up.

For example, why did Bitcoin all of a sudden shoot up? It is by definition a worthless asset with no future cash flows and therefore should not be valued higher than many real assets which do have cash flows. In the real world these flukes exist but they quickly burn out faster than they blew up. Naturally, I was shocked - having researched stocks and studied Economics and Finance, that here is an asset with a perceived and for-now real value of $120 per coin when in reality this supposed (virtual) asset has a ZERO real value and not even a plan for future revenues and cash-flows. That brings about another important question for which there appears to be no answer. If there is a real person behind bitcoin then why hasn't he/she/them used this opportunity, like a stock would, to sell some bitcoins on the open market and then use that money to add value - to create a real business plan which perhaps turns Bitcoin into a real business and makes it a hybrid - half currency half stock type of a company (much like Devcoin is attempting to do with some initial success) but there is not a single sign that there is anything like that in the plans and why would I even bring up plans when there is not even any communication from the supposed CEO and Chairman?

Everything about Bitcoin makes no sense and now at to that the fact that it makes no sense from a Business perspective because even a high school dropout would attempt to raise money at this point in Bitcoin's growth phase to try and add some real value and a business plan. At least in the dot com boom era we had companies with not much real value but they at least had some kind of business plan and a product or service to sell and were getting revenues and had a plan to reach positive cash flow and earnings one day, but with Bitcoin there was and is no such plan, not even any communication from its inventor and owner, the still in hiding and very shy billionaire, Satoshi Nakamoto.

Here was another thing which made no sense, an overnight billionaire, just like many overnight internet and tech billionaires, but in this case and only in this case, the newly minted billionaire not only doesn’t come out to give his real name but he doesn’t even show his face or do a single interview. Top tier news organizations have been looking for this guy and can’t find him. Why? Now I am faced with three unanswerable questions. Why hasn’t bitcoin crashed and burned the way worthless assets always have in the past, why hasn't Bitcoin attempted to raise money given its extremely high valuation to start a real business or add some kind of real value to its current business plan if there is one and finally, why isn’t a legally made billionaire coming out for just one picture or interview?

Some say he is afraid of being made a mark by the banks or the government because he introduced what essentially is a real and very successful currency, and perhaps a competitor for the dollar and for banks and wall street so he doesn’t want to be unfairly targeted and for example audited by the IRS, which, by the way, the IRS has recently admitted to unfairly targeting and auditing conservatives15), or face some sort of backlash by the banks. Ok, both of these arguments are true in nature but I thought about them and this is what I concluded.

First, nobody invents a new currency which in some way influences our economy or the dollar, and Bitcoin - being worth well over $1 Billion and now being accepted in over 1,000 different businesses, has influenced our economy and the dollar and especially so in a symbolic way – a worthless video game coin is now worth more than the dollar itself, without the US government knowing who that person was even before they succeeded. And if somehow Mr. Satoshi Nakamoto was not on the CIA list of “individuals of high interest” and did not previously have a FBI file, he most certainly is and does now. I have personally met top notch computer hackers halfway around the world in third world countries which were hunted, tracked and found by the feds. Nobody gets away from these guys, especially not a guy who left plenty of tracks, as he was not doing anything illegal, and nobody launches their own currency, successfully, which could have potentially dire consequences down the road for the US dollar without our government knowing about it to some degree or at least knowing about that individual.

And the banks, let’s get real, they’re the real power behind everything, and to some degree - including the government. If anybody in the government knows the real identity of this new billionaire you can bet the banks know who he is and besides that, it’s hard to hide transferring or withdrawing $2,000 from the feds or the banks, how is this new Billionaire going to cash in his Bitcoins, transfer and withdraw massive amounts of money while completely bypassing the federal government and the banks. How is he going to avoid not being noticed when he files his taxes and ooops, there's a new billionaire. It’s simply not possible for him to hide. And in addition, the IRS, being part of the US government, would have no problem finding him and targeting him if that was to be their goal and intention. Therefore, the question remains, who or what is Satoshi Nakamoto hiding from?

Well, there’s only one other entity left from which to hide from. If you’re not hiding from the government or from powerful corporations then who are you hiding from? The people, the masses because a lot of questions would then be asked and the answers could bring up many more questions which could eventually lead to some serious problems if somebody indeed has a plan to go to a full digital currency. In order to keep the risk down it’s better to keep the bitcoin inventor anonymous and so the job is done, give birth and rise to a new digital currency and industry and let capitalism take over. And what main factor feeds capitalism? Greed! As Gordon Gecko said in the movie Wallstreet, “Greed is good” - in terms of starting and growing a business, greed is probably one if not the main motivator. If one were to keep the price of a worthless coin at a high value (which is relatively easy to do when there’s only 10 total million coins currently outstanding) then this will lend credibility to this new currency and new market which in turn will bring in many more developers and programmers with their own versions of digital coins.

Basically Bitcoin's out of this world ability to remain so expensive gives the notion to any potential developer and/or investors that this is possible, you can develop an asset with no intrinsic value and grow it into something real and expensive via perception (marketing and awareness) and supply and demand (increase marketing while controlling supply) so basically Bitcoin is a new recipe on how a handful of talented people can become very rich in a very short amount of time. And this, in theory, can be manipulated and invented by simply creating and then artificially inflating a crypto coin like Bitcoin. My prediction is that since Bitcoin 1.0 didn’t get enough Americans excited about and talking about digital currencies that there will certainly be at least a bitcoin 2.0 with lots of media flare and perhaps even an even bigger Bitcoin 3.0 and once that happens then the plan simply becomes self-fulfilling and self-sufficient as developers introduce new types of coins building and improving on the idea of the ones prior to theirs and investors will speculate and invest their money (the way Venture Capitalists are already doing and it's all based on the success of one coin, Bitcoin) and these coins which are limited in supply will rise and rise very far as the law of supply and demand takes over and soon everybody will be talking about the value and riches of digital currencies.

And what you eventually get is the mass population coming to accept, embrace and love the idea and practice of using digital money. And once this acceptance is at a frothy bubble, that’s when the government will step in with their final phase and suggest that perhaps, since people love these digital currencies so much, we too, as a Nation, should embrace the new digital age and save a lot of money by no longer printing money like the peasants of old, but instead simply issue some really popular currency at that time, such as bitcoin is today, in place of the old, worn out and played out dollar.

And if people are so in love, lust or greed for that coin the way only a few are today, then of course the large majority will be blinded by their greed (the tech, dot com and housing bubbles were prime examples of the “irrational exuberance” of human greed)as the offer will I’m sure look like a sweet deal but just like Americans lost nearly 70% of their net worth in one fell swoop in 1933, the same way Americans will most likely lose closer to 90% of their wealth this time around AFTER the swap is done. And the reason I’m suggesting 90% is because all of that new digital currency will have to take into account the trillions the government is currently printing and borrowing so when the government promises you, let's say, 10 bitcoins for every $1 real dollar in your real bank account and you feel crazy rich overnight, I want you to know such things are not possible as real wealth has to be created and the only way the government can pay back so many trillions is to simply do a quick overnight transfer of wealth from everyone, you the citizens, to just one, themselves.

There's two good ways to destroy the savings and wealth of the masses and the first and most common is to hyper-inflate but that would only destroy dollar savings, but it won't affect all assets as real assets such as stocks and real estate keep up with inflation, so the second and better way to do it would be to do a currency swap and using a digital currency makes a lot more sense from every point of view, but especially from the perspective that we live in an era where our governments, across the globe, have become too greedy and selfish and want more and more control for themselves and the corporations and banks to whom they are beholden to. This new form of government if ever created would be a perfect crossbred hybrid between a Marxist and a Fascist. And as I showed earlier, all corporations but especially the banks and the government have the most to gain out of such a deal while society may see some benefits but in the end it will be a big net negative as we will surely lose what’s left of our liberty and personal freedoms.

And if my theory is correct then the government will most likely burry a lot of the trillions it is now printing and borrowing in an asset which will later on carry the optimal benefit, an asset which cannot be destroyed, gold. Once again it’s all about the gold. Because if you’re going to release a digital currency and then take away that much wealth, well, you better have something to back up that digital cash or it will become completely worthless. And this is why I think the government is hoarding gold and I also think gold prices will keep going lower down to $500 at which point the government will then step in with their already printed truckloads of cash and buy up every ounce of gold off the market which has been mass mined (thanks to the high gold prices) for the past decade as no other country is in the position to buy thousands of tons of gold right now, not by the trillions of dollars, the way the US is prepared to do.

“What money?” one may ask. Being Educated to be an economist it strikes me as strange that the government has been pumping literally trillions into our economy for nearly 5 years now and we are not seeing neither much better employment numbers nor an equally massive rise in asset prices or run-away inflation. On the contrary, we’re starting to see deflation. And don’t trust my bachelor’s degree; listen to Harvard and Yale PhD economists who have been saying for years now that we should be seeing hyperinflation while we’re not even seeing a decent amount of inflation. It’s as if the government is not pumping all that money in the economy. Well then, perhaps they’re not. And I agree we are seeing some asset inflation in stocks as the market has been on a 5 year bull run with a faltering economy which makes no sense.

The Dow sits just above 15,000 as I write this which is absurd given the underlying economic conditions but that can be explained by the crowding out of hundreds of billions of dollars by the fed in the bond (long bond) market which is a known fact that the fed is artificially keeping interest rates low at around 3.5% which in turn forces would be bond buyers to go buy something else and one of those major things a would be bond buyer would do is buy stocks. Therefore, when we do get a major correction, which I predict to be around September of 2015, it should be massive, the biggest ever, because it is currently being artificially inflated, once again, by reckless government officials. When the QE’s stop that’s when the music will stop for the stock market and all of these thousands of points it has added in the last 5 years, without real fundamentals, will be erased in a matter of days or weeks and a new true value will be given to the DOW and its siblings.

What should one do right now? For one, as long as the QE’s are running at full speed the stock market will keep going up, there’s simply too much crowding out going on in the bond market for the stock market to go down. But I would not put all my money in stocks as the crash may come early or the fed may lie about when they’re really stopping the QE as to not get a reflex reaction by investors or other foreign governments. But the main thing I would be buying right now if I had speculative money to invest is to buy the few existing digital currencies. Billionaire Venture Capitalists see real value and a future for digital currencies otherwise why would they pump millions into building exchanges, future services and ATM machines. They have more information than any of us so I would say follow the smart money. Among the half dozen or so existing viable digital currencies the one I like most is Devcoin - short for Developers Coin - a coin started with the intent of helping out developers and the only coin which actually reaches out to people and helps them by rewarding them with actual Devcoins for various services - Devcoin will basically hire you and pay you in Devcoins which you can choose to sell on an exchange for real dollars, something quite unreal given that such a thing didn't exist just a few months ago and the impeccable timing - when many Americans still struggle to find employment.

Another reason I like Devcoin is that it is attempting something which I’m shocked Bitcoin isn’t trying, and that is to build an actual business. Devcoin is in essence a hybrid – currency/stock – type of an entity as it employs people who in turn do work and get paid in Devcoins which then in turn earn revenues for Devcoin via venues such as advertising. Should this type of business plan prove successful then you could very well have the very first currency in the world which actually works for you instead of sitting in the vaults of banks making them rich instead of you. For this reason I like Devcoin better than any crypto coin out there and given its ridiculous price of $.0004 per coin, I would say one should at least speculate and risk $1,000, even if it means you’ll lose the whole thing. This is precisely what I have done, I have put my money where my mouth is.

For many Americans, $1,000 is not money which will change anything in their lives. To spread out the risk and raise your odds at landing the next Bitcoin 2.0, and/or 3.0 if I’m correct and it will come, I would suggest also looking at a few other coins which tend to have a good reputation in the digital coin community. By the way, Bitcointalk.org is probably the best and biggest site where one can get information on any digital currency. The additional coins I would recommend to anyone looking at speculating are Namecoin, Ixcoin and Litecoin. There are a few others but these appear to be the top 4 coins right now with some costing more than others. You can go to Vircurex.com to see the latest prices in USD, Euro or any other mixture involving denominations in other coins, such as Bitcoin.

If I am wrong about all of this then what we have is an awesome new industry in its infancy stage, the new digital currency industry, which will prove extremely profitable for those with a vision and an appetite for a bit of risk who choose to buy a few of these alternative currencies now before awareness of these coins is really rises which could only take one major event, Bitcoin 2.0, as I like to call it, to spark a global appetite for alternative currencies, a new-age hunt for gold in a virtual world but very real outcomes and very real dollar profits. But if I’m right then there is much more to this secrecy and to these alternative currencies and in such a case the government and banks want you to fall in love with them and the only way that’s going to happen is if you see everybody getting rich from them and start going nuts for crypto coins just like people so predictably all went crazy for flipping houses and buying gold at ridiculously high prices. The way I see it, you can’t go wrong with speculating in digital currencies.

The rich guys are doing it and they’re usually the first on the scene of a new profitable venture so I don’t think the risk is as high as it might first appear in these digital coins, even though they violate every law of finance ever created. At least Devcoin (Devcoin.org/Devtome.com) is trying to earn profits which, in my book, puts it high above the value of Bitcoin which has no plans to ever earn a single dime and it’s only a matter of time before investors realize that Bitcoin is way overpriced and other coins with just as much or more potential are currently selling on various exchanges at ridiculously low prices, waiting for their day in the sun. For everyone’s sake I hope every prediction I made in this article will prove to be wrong, with the exception of these other digital coins going up in value, much like Bitcoin has. Providing another market, a new digital coin market for American investors to invest in is a good thing in my book so we will see, in due time, what happens in this constantly changing new era we live in.

- Maximilian Wilhelm

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