Freedom Isn't Free... But You Can Buy it for a 0.5 Bitcoin
In the age of digital everything, it should come as no surprise that digital money is a big issue. Around the world, people are fed up with central banks and their fiat currencies and are looking for other ways to conduct financial exchanges. You have probably heard of bitcoins, but do you really know what they are or have you ever thought about what a decentralized currency could mean for liberty?
Bitcoin is a form of digital currency. You can hold bitcoins in your digital bitcoin wallet and transfer them to other peoples' wallets for FREE. Your bitcoin wallet will, by default, reside on your computer or online. Just like any important file on your computer, you want to make sure that you have it in a secure place. Never open an online wallet with a place that you feel may not be trustworthy. Your wallet is your money, don’t be careless with it. The safest place to keep a wallet full of bitcoins is on a computer or USB drive that is not connected to the internet. There are other ways of using multiple encryptions and practices of distribution of bitcoins to multiple wallets, but it can get very detailed and complicated. Check this out for more information.
Bitcoin is not backed by a commodity (such as gold or oil), but acts as a commodity itself with the value of each digital coin being based on scarcity. Bitcoins come into existence through a process known as "mining." Mining is accomplished by running a bitcoin client on your computer. The client crunches through long math problems and every so often a cache of bitcoins is "found." The math problems that are being calculated are actually security checksums on previous transactions. This work in verification of genuine transactions is rewarded, every now and then, with a bitcoin cache. Bitcoin was designed to have a maximum number of 21 million bitcoins in circulation and the rate at which bitcoins are mined is designed to drop off over time with estimates placing the last bitcoin to be mined in 2140.
With the recent popularity spike in bitcoins, great developments have been made in the efficiency of mining bitcoins. New hardware has been developed and is now available for those that have the patience to acquire. This specialized hardware solutions are called ASIC, which is a piece of hardware that was designed, from the ground up, to ONLY mine for bitcoins. It is possible to build a computer with multiple graphics cards that have incredibly fast processors and use the GPUs to mine bitcoins much faster than your standard PC. You can also buy into bitcoin mining operations and receive a smaller payout when your sponsored miner uncovers a bitcoin cache. The popularity of the highest powered graphics cards has made them scarce on the market not for their initial intended use of playing video games or editing videos, but rather for bitcoin entrepreneurs looking to make some extra money.
Up until now, and into the near future, the bitcoin mining process would net some lucky miner 25 bitcoins at a time. It was recently reported that 80% of these "semi easy bitcoins" have already been mined. When the block reward was 50 coins, the coins were thought to be a lot easier to obtain and were referred to as “easy coins.” After the semi easy coins are depleted, the mining cache will fall to 12.5 bitcoins per instance. There are roughly 32 “halving events” to take place… each reducing the bitcoin reward over time.
In the early days of easy mining, some people became rich with bitcoins, but there were very few ways to spend, sell or buy them. The bitcoin model highly favors early adopters as it will always get harder and harder to hit a bitcoin cache. Over the last year, bitcoin prices took off on an aerodynamic price increase. In March of 2012, a bitcoin could be had for around $25-30. In April of 2013, bitcoin crossed the $230 threshold, leading some to compare the new digital currency to the time tested staple of gold. That price was short lived and was quite volatile. After the Winkelvoss Bitcoin Fund announced that they were working with authorities and willing to have their fortune regulated, bitcoin instantly lost over half of its value. Since that initial crash, bitcoin has remained stable and shown demand in the area of $100 each.
The US Department of Alphabet Soup Agency began a crackdown on digital currencies. One high profile attack was on Liberty Reserve in spring of 2013 where the feds confiscated the entire Liberty Reserve business. This led other to believe that bitcoin would be next. However, so far, this has not panned out… partly because the feds have decided to try and con/persuade bitcoin users into accepting more regulation. The feds stated that as long as a digital currency obeyed rules that were in place for banks, they would be in the clear. This gives the impression that bitcoin may be too strong for even Uncle Sam to stop at this point.
You may be asking "Why would it be so hard to actually obtain bitcoins?" The bankster class is on to bitcoin and is doing what it can to stop its success. In 2011, PayPal started seizing
large amounts of money from bitcoin brokers' accounts. Some banks have refused to do wire transfers to purchase bitcoins. Both the government and the banks (what's the difference?) are scared, and they should be.
Since bitcoin was designed as an anonymous, encrypted currency, it is almost impossible to find out who is using them. There are ways to track FRN transfers to bitcoin warehouses and coordinate them with bitcoin transfers into wallets using information from the blockchain, but it is not an exact science. Better anonymity can be obtained by fencing bitcoin acquisitions through multiple wallets so that their trail can be lost.
It is this anonymity that scares the current statist quo. With people trading freely in bitcoins the government is not able to take "their slice" of the income through taxes and the banks are unable to charge transaction fees. This has obviously ruffled some feathers, especially after black market swap meets began springing up in 2011.
One such online black market site is the Silk Road. The Silk Road is an online website where you can buy pretty much any drug imaginable. Silk Road is not accessible by a regular web browser, you must use the TOR network
and have the direct link to the hidden service
. TOR is an anonymizing peer to peer proxying system originally designed for people in oppressive regimes to communicate freely and safely with the outside world. There could be some security problems with TOR
and rumor has it that nefarious government goons have their hands in some of it as it originally came from the Navy
. Since the Silk Road operates as a hidden service, it's about as secure as you can get on the internet. If you would like to check out the Silk Road, you can get a TOR browser here
and use the this link to visit the site: http://silkroadvb5piz3r.onion/ (only works in a TOR browser).
In July of 2011, Gawker posted an article
about the Silk Road which led to a lot of media attention and aggrandizing by congress-critters in DC. Much hooting and hollering ensued. Not only was the Silk Road providing a marketplace for selling drugs, but they were using bitcoins as their sole means of transaction. An anonymous site, using anonymous currency to provide black market services. Bitcoin was definitely on the radar but little was heard until recently.
In April of 2013, the first Silk Road seller was arrested. The South Carolina man had 8 bitcoins seized worth about $815. It is unclear at this time if this was a planned sting or pure carelessness by the accused.
Michael Suede of LibertarianNews.com posted an article on February 16th, 2012 about a recent FinCEN ruling that could possibly be a gateway to government red tape used to start a war on bitcoins.
"FinCEN thinks it has the authority to go after entities such as Mt. Gox that are located in Japan. Mt. Gox, along with all the other related institutions, such as SpendBitcoins.com that exchange Bitcoins for gift cards, or VirWox which exchange Second Life “Linden dollars” for Bitcoins would be subject to criminal sanction by FinCEN even if they have no physical presence in the US at all.
It should be noted that these are dictatorial decrees by FinCEN. No legislation has been passed that says FinCEN should be allowed to go after foreign businesses around the globe. FinCEN decided on its own that it has this authority."
So with a dictatorial decree, FinCEN (the Financial Crimes Enforcement Network) could be making all bitcoin traders into criminals. Good thing the CONstitution is there to protect us and says that all laws have to be passed by congress... oh wait, never mind.
So what can an anonymous currency do for the cause of liberty? By using competing currencies and ignoring the Federal Reserve, people are striking at the root of the problem that is government. Without the monopoly of fiat money imposed by legal tender laws, the government cannot continue to print or issue worthless dollars when there is potentially something out there that holds value and is inflation proof. Of course digital currency is not the only answer and movements are springing up across the country in an effort to avoid the FED with precious metals, local currencies and barter.
People trading in bitcoins can purchase not only contraband, but services and every day goods as well. Services such as spendbitcoins.com provide a gateway to purchase items from all over the world with your new digital currency. Of course, ordering something in the mail is hardly anonymous, but it just proves that bitcoins have real value. Using anonymous currency while not having to pay taxes and being able to keep your transactions away from the prying eyes of Big Brother can be seen as a net positive for privacy.
One of the key principles in agorism is to set up competing institutions to replace those forced on people by the government. Bitcoin may not be the answer, but it is most certainly a grand experiment. As people begin to realize that they do not need the government’s permission to trade freely, the superstition of the state can be chipped away.