Tag Archives: agorism

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Bitcoin and the underground economy

Article by Jon Matonis at Forbes:

Could Bitcoin Become the Currency of System D?

If zeros and ones are outlawed, only outlaws will use zeros and ones.

Cryptography shall always have a place in securing our digital future and most especially in securing our digital value. Advanced public-key encryption for the masses cannot be eliminated nor denied — the genie is out of the bottle and mankind is the better for it. The unintended consequence of regulating or restricting decentralized cryptocurrencies such as bitcoin is that their use as a currency will have been ‘recognized’ officially and that usage will be driven largely underground.

However, underground may not be so bad anymore as Robert Neuwirth points out in his brilliant Foreign Policy article, “The Shadow Superpower”. If aggregated, this $10 trillion global black market is the world’s second largest economy after the United States and it is also the world’s fastest growing economy. The OECD (Organisation for Economic Co-operation and Development) projects that, by the year 2020, fully two-thirds of the world’s workers will inhabit this shadow economy, or “System D.” As Neuwirth elaborates, it refers to the entire untaxed, unlicensed, and unregulated cash-based economy:

System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.

Enter bitcoin. All kind of vibrant economic activity is occurring in this informal economy, which in some regions is between 20-60% of GDP or more, and every economy needs a currency. Essentially, bitcoin is the ‘System D’ of currencies — global, decentralized, and non-state sanctioned. It is still early days but as bitcoin bypasses traditional banking and financial institutions, it is a currency off-the-grid just as System D. To deny the existence of System D is to deny the fact that economic participants find ways to survive even during prolonged times of hardship. According to Neuwirth “it asserts an important truth: what happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization and group solidarity.”

It is inconceivable to think of those in under-developed countries and the developed economies of the eurozone coping without System D activity given the recurring recessions that are exacerbated by the violent central bank-induced business cycles. Despite increasing consumption taxes like VAT (value-added tax), the informal economy can still provide relief through various markets and bazaars. Americans too will need black markets to survive. System D represents the future.

Continue reading…

 

Quote of the day

“Waving the constitution around as a symbol of your liberty is like a dog who has learned to carry his leash in his mouth.” -Butler Shaffer

Advice from Snuffy Smith

Smuggler’s Creed

“Every new law is another business opportunity.”

- The Smuggler

Who Is “We”?

One of the beliefs that most distinguished the fascists, Nazis, and communists of the 20th century was their organic view of society. Proponents of all three ideologies thought of society as an organism – and of each of you, dear readers, as simply a cell in some part of the organism. And just as our cells have no importance outside their ability to serve our whole body, in the aforementioned three ideologies, our whole beings had no importance aside from their ability to serve the whole society. So, of what value was the individual? He was simply a tool for the ends of others, none of whom have importance either because they, also, were tools. And if society was an organism, then it made sense for the head to run things, right? Government was thought to be the head. And, of course, because there were many people within government, the true head was leader of the government – Mussolini, Hitler, and Lenin or Stalin.

Why is all this relevant to an article by “The Wartime Economist?” Because the organic view of society, though hostile to the basic principles of individual rights on which the United States of America were founded (I use “were” on purpose; “states” is plural) has crept into our language and has distorted much thinking on the issues of the day, including war. It is particularly important in discussions of war because people are more likely to fall into the trap of seeing war as a conflict between two organisms rather than what it is, a conflict between two governments that, in most cases, have dragooned their countries’ resources with little or no consent from their citizens. So, for example, most people who discuss U.S. foreign policy, including, distressingly, most libertarians, talk about what “we” did when it was, in fact, not you or I, but specific government officials, who took the actions they’re describing. They say, “We dropped the bomb on Hiroshima,” not “Harry Truman decided to send a small number of people in the military to drop a bomb on Hiroshima.” “The Japanese [or, more commonly, "the Japs"] bombed Pearl Harbor,” rather than “The Japanese government decided to send hundreds of pilots in airplanes to bomb Pearl Harbor.” Etc.

George Orwell wrote a famous essay, “Politics and the English Language,” and a famous novel, 1984, making the point that language really does affect thinking. In 1984, he focused on the fact that, without certain words, certain thoughts could not be expressed – thus the importance of the government’s “memory hole,” down which certain words went. In his “Politics” essay, Orwell also pointed out the other side: using words can affect how we think. And that is my point here. Specifically, if we use the word “we” to refer to what specific governments have done and will do in the future, we are adopting the organic view of society, which most definitely will affect how we think.

I saw this in a conversation my wife and I had recently with a well-traveled man we met while in San Antonio. In response to an innocent question about what his favorite place in the world was, he lit into an attack on George Bush and Bush’s foreign policy. At some points in his rant, he personalized the issue – for example, when he talked about “Bush’s war.” There’s nothing wrong with speaking that way: it is Bush’s war. But then he went on to say that the Sept. 11 attack was “self-inflicted.” It was a predictable result of the U.S. government’s meddling in the affairs of other countries, he said. Now, as it happens, I agree with this last statement. But he then went on to minimize the loss of 3,000 people on Sept. 11: what did the lives of 3,000 people matter when millions have been murdered throughout the world? That I don’t agree with. I thought then, and still think, that the loss was horrific and that the people who did it were among the most evil people in history. But that’s because I see each of the 3,000-plus people as an individual who matters. He doesn’t. Why? Because he has the organic view of society. Go back to his statement that the Sept. 11 attacks were “self-inflicted.” How did the young kid and the 40-something businessman on one of the flights inflict it on themselves? They didn’t. So, what did this man really mean? He meant that the U.S. government had helped to bring on the Sept. 11 attacks. But his organic view of society – society is an organism with government as the head – led him to say that the killings were “self-inflicted.”

The great tragedy of collectivism, the organic view of society, is that it makes people heartless – they become incapable of seeing the real losses and hurts inflicted on innocent people because they stop seeing them as individuals. The example above is one of someone who couldn’t see the hurt that individual innocent Americans suffered in the Sept. 11 attacks. Another example is how hard it is for Americans to see the hurt that the U.S. government inflicts on many foreigners. Two instances come to mind.

While reading a draft of one of my students’ thesis chapters a few years ago, I came across the statement, “Fewer than 150 people were killed in the 1991 Gulf war.” I wrote in the margin that the number killed was likely in excess of 100,000 people, three orders of magnitude higher than the number he mentioned. When we went over his chapter together, he said that when he wrote “people,” he had meant “Americans.” His mistake was an innocent one, but it was an innocent consequence of a selective collectivism: seeing Americans as individuals, but people of other societies – particularly ones living in countries on which the U.S. government had made war – as part of an organism.

My second example is like that of the man who thought Sept. 11 was “self-inflicted.” Kevin S., a Navy officer and former colleague of mine at the Naval Postgraduate School, was burned by fuel from the airplane that flew into the Pentagon on Sept. 11. It looked as if he wouldn’t live, but he did. It was a heroic story that was written up in his local Virginia newspaper. The article talked about his recovery and had me cheering for him and his spirit. But then the article stated that Kevin had contacted some of his buddies in the Air Force and asked them to write on one of the bombs to be dropped on people in Afghanistan, “Kevin sends.” As much as I sympathized with Kevin, I was equally sympathetic toward some of the people whom “Kevin’s” bomb would injure or kill, who were at least as innocent as he was. Unfortunately, Kevin’s collectivist thinking prevented him from distinguishing between those who had hurt him and those who had not.

Collectivism is the ugliest ideology in the world. It has been directly responsible for well over 100 million deaths in the 20th century. Let’s do our part by not participating in it, even – maybe especially – in our language. The only hope we have for a peaceful world is to hold guilty people responsible for their actions and to treat the innocent people in all countries as innocent. Let’s quit talking about governments whose horrific actions we detest as “we.”

Copyright © 2005 by David R. Henderson. Permission automatically granted to use in whole or in part as long as publication, author, and title are attributed.

System D – The Informal Economy

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How to Start Doing Agorism

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The Coming Attack On Bitcoin And How To Survive It

From EconomicsAndLiberty.com:

By Anthony Freeman

(This article is the third in a series on bitcoin. Read parts 1 and 2 here and here.)

With bitcoin gaining mainstream attention the coming attack on its users is inevitable. In this short piece I will explain how it is likely to unfold and how you can survive it.

First, a little background:

In 1996 E-gold was one of the early entrants to the market with a private, global e-currency. They achieved stellar growth and widespread attention – much like bitcoin today. Accolades came from freedom-lovers everywhere. They were the “Great Gold Hope” that would free the people by freeing the money. Privacy-enthusiasts, libertarians, gold-bugs, autarchists, anarchists, voluntaryists, drug-dealers, and even unsavory types flocked to it with praise and adoration.

Of course, the monopolists of the monetary system didn’t take lightly to this threat to their very existence. They came after the independent exchangers and e-gold with their full force and fury – eventually succeeding in convicting the key players for “conspiracy to operate an unlicensed money-transmitting business” and “conspiracy to engage in money laundering”. E-gold was fairly easy to take down because their operations and data-center were centralized and readily accessible.

Many folks who are now currently acting as currency exchangers for bitcoin will be the first to come under attack. Many will get hurt and possibly even imprisoned but, because of its decentralized nature, bitcoin will survive where e-gold did not.

If any of the large exchangers like mtgox.com are operating out of the US then it won’t be long before they are raided and shut down. Individual exchangers will be targeted as well – just to make an example and to scare others out of the community. This will create a giant “wet blanket” on the current enthusiasm for bitcoin and I expect the currency to take a major drop in exchange value when this happens. Not to fear though. Bitcoin will survive due to its decentralized “peer to peer” nature and it will continue to operate as an “alter-cash” resuming its growth albeit at a slower rate during the immediate aftermath.

To protect yourself I recommend the following:

You probably have a little more time before the attacks come (maybe a couple of months?) to acquire bitcoin with cash – and there are profits in speculation to be made until then but, when the raids come, expect a sharp correction before exchange values move on to new highs over a longer period of time. What you do not want to do is be involved as an “exchange service” conducting exchanges in and out of national currencies and you definitely do not want to have your money sitting in the exchanger’s account when they are raided and shut down.

Remember, e-gold was shut down for “conspiracy to operate an unlicensed money transmitting business”. Do not store any money in online accounts like mybitcoin.com in case they get taken down along with the exchangers. Keep all of your bitcoins on your computer with multiple, encrypted back-ups both on the cloud and on an external thumb drive.

The safest way to acquire bitcoin is to let people know that you will accept it as payment for your products and services. Do not ever exchange it for national currencies. The point that people miss here is that national currencies are the very problem that freedom-lovers are trying to get away from. Instead, use bitcoin to trade with merchants and individuals who accept it as payment. Offer it as payment to those who are unaware of it and explain the benefits to them. This will help develop the market and create a solid economy outside of national currencies. After the initial attack, bitcoin will likely be one of the most powerful and revolutionary tools to bring about more freedom and liberty to humankind.

Agorism in action…

From Gawker:

The Underground Website Where You Can Buy Any Drug Imaginable

Adrian Chen — Making small talk with your pot dealer sucks. Buying cocaine can get you shot. What if you could buy and sell drugs online like books or light bulbs? Now you can: Welcome to Silk Road.

About three weeks ago, the U.S. Postal Service delivered an ordinary envelope to Mark’s door. Inside was a tiny plastic bag containing 10 tabs of LSD. “If you had opened it, unless you were looking for it, you wouldn’t have even noticed,” Mark told us in a phone interview.

Mark, a software developer, had ordered the 100 micrograms of acid through a listing on the online marketplace Silk Road. He found a seller with lots of good feedback who seemed to know what they were talking about, added the acid to his digital shopping cart and hit “check out.” He entered his address and paid the seller 50 Bitcoins—untraceable digital currency—worth around $150. Four days later the drugs, sent from Canada, arrived at his house.”It kind of felt like I was in the future,” Mark said.

Silk Road, a digital black market that sits just below most internet users’ purview, does resemble something from a cyberpunk novel. Through a combination of anonymity technology and a sophisticated user-feedback system, Silk Road makes buying and selling illegal drugs as easy as buying used electronics—and seemingly as safe. It’s Amazon—if Amazon sold mind-altering chemicals.

Here is just a small selection of the 340 items available for purchase on Silk Road by anyone, right now: a gram of Afghani hash; 1/8th ounce of “sour 13″ weed; 14 grams of ecstasy; .1 grams tar heroin. A listing for “Avatar” LSD includes a picture of blotter paper with big blue faces from the James Cameron movie on it. The sellers are located all over the world, a large portion from the U.S. and Canada.

But even Silk Road has limits: You won’t find any weapons-grade plutonium, for example. Its terms of service ban the sale of “anything who’s purpose is to harm or defraud, such as stolen credit cards, assassinations, and weapons of mass destruction.”

The Underground Website Where You Can Buy Any Drug ImaginableGetting to Silk Road is tricky. The URL seems made to be forgotten. But don’t point your browser there yet. It’s only accessible through the anonymizing network TOR, which requires a bit of technical skill to configure.

Once you’re there, it’s hard to believe that Silk Road isn’t simply a scam. Such brazenness is usually displayed only by those fake “online pharmacies” that dupe the dumb and flaccid. There’s no sly, Craigslist-style code names here. But while scammers do use the site, most of the listings are legit. Mark’s acid worked as advertised. “It was quite enjoyable, to be honest,” he said. We spoke to one Connecticut engineer who enjoyed sampling some “silver haze” pot purchased off Silk Road. “It was legit,” he said. “It was better than anything I’ve seen.”

Silk Road cuts down on scams with a reputation-based trading system familiar to anyone who’s used Amazon or eBay. The user Bloomingcolor appears to be an especially trusted vendor, specializing in psychedelics. One happy customer wrote on his profile: “Excellent quality. Packing, and communication. Arrived exactly as described.” They gave the transaction five points out of five.

“Our community is amazing,” Silk Road’s anonymous administrator, known on forums as “Silk Road,” told us in an email. “They are generally bright, honest and fair people, very understanding, and willing to cooperate with each other.”

Sellers feel comfortable openly trading hardcore drugs because the real identities of those involved in Silk Road transactions are utterly obscured. If the authorities wanted to ID Silk Road’s users with computer forensics, they’d have nowhere to look. TOR masks a user’s tracks on the site. The site urges sellers to “creatively disguise” their shipments and vacuum seal any drugs that could be detected through smell. As for transactions, Silk Road doesn’t accept credit cards, PayPal , or any other form of payment that can be traced or blocked. The only money good here is Bitcoins.

Bitcoins have been called a “crypto-currency,” the online equivalent of a brown paper bag of cash. Bitcoins are a peer-to-peer currency, not issued by banks or governments, but created and regulated by a network of other bitcoin holders’ computers. (The name “Bitcoin” is derived from the pioneering file-sharing technology Bittorrent.) They are purportedly untraceable and have been championed by cyberpunks, libertarians and anarchists who dream of a distributed digital economy outside the law, one where money flows across borders as free as bits.

To purchase something on Silk Road, you need first to buy some Bitcoins using a service like Mt. Gox Bitcoin Exchange. Then, create an account on Silk Road, deposit some bitcoins, and start buying drugs. One bitcoin is worth about $8.67, though the exchange rate fluctuates wildly every day. Right now you can buy an 1/8th of pot on Silk Road for 7.63 Bitcoins. That’s probably more than you would pay on the street, but most Silk Road users seem happy to pay a premium for convenience.

The Underground Website Where You Can Buy Any Drug ImaginableSince it launched this February, Silk Road has represented the most complete implementation of the Bitcoin vision. Many of its users come from Bitcoin’s utopian geek community and see Silk Road as more than just a place to buy drugs. Silk Road’s administrator cites the anarcho-libertarian philosophy of Agorism. “The state is the primary source of violence, oppression, theft and all forms of coercion,” Silk Road wrote to us. “Stop funding the state with your tax dollars and direct your productive energies into the black market.”

Mark, the LSD buyer, had similar views. “I’m a libertarian anarchist and I believe that anything that’s not violent should not be criminalized,” he said.

But not all Bitcoin enthusiasts embrace Silk Road. Some think the association with drugs will tarnish the young technology, or might draw the attention of federal authorities. “The real story with Silk Road is the quantity of people anxious to escape a centralized currency and trade,” a longtime bitcoin user named Maiya told us in a chat. “Some of us view Bitcoin as a real currency, not drug barter tokens.”

Silk Road and Bitcoins could herald a black market eCommerce revolution. But anonymity cuts both ways. How long until a DEA agent sets up a fake Silk Road account and starts sending SWAT teams instead of LSD to the addresses she gets? As Silk Road inevitably spills out of the bitcoin bubble, its drug-swapping utopians will meet a harsh reality no anonymizing network can blur.

Update: Jeff Garzik, a member of the Bitcoin core development team, says in an email that bitcoin is not as anonymous as the denizens of Silk Road would like to believe. He explains that because all Bitcoin transactions are recorded in a public log, though the identities of all the parties are anonymous, law enforcement could use sophisticated network analysis techniques to parse the transaction flow and track down individual Bitcoin users.

“Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb,” he says.