The Information Industrial Complex

corbettreport |  So what is the problem with this? As Ike explained:

“Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.”

Here again the warning is of fascism. But instead of the military-industrial fascism that dominated so much of the 20th century, he was describing here a new fascistic paradigm that was but barely visible at the time that he gave his address: a scientific-technological one. Once again, the threat is that the industry that grows up around this government-sponsored activity will, just like the military-industrial complex, begin to take over and shape the actions of that same government. In this case, the warning is not one of bombs and bullets but bits and bytes, not tanks and fighter jets but hard drives and routers. Today we know this new fascism by its innocuous sounding title “Big Data,” but in keeping with the spirit of Eisenhower’s remarks, perhaps it would be more fitting to call it the “information-industrial complex.”

The concept of an information-industrial complex holds equally explanatory power for our current day and age as the military-industrial complex hypothesis held in Eisenhower’s time.

Why is a company like Google going to such lengths to capture, track and database all information on the planet?

The information-industrial complex.

Why were all major telecom providers and internet service providers mandated by federal law to hardwire in back door access to American intelligence agencies for the purpose of spying on all electronic communications?

The information-industrial complex.

Why would government after government around the world target encryption as a key threat to their national security, and why would banker after banker call for bitcoin and other cryptocurrencies to be banned even as they plan to set up their own, central bank-administered digital currencies?

The information-industrial complex.

The effects of this synthesis are more and more felt in our everyday lives. Every single day hundreds of millions of people around the world are interfacing with Microsoft software or Apple hardware or Amazon cloud services running on chips and processors supplied by Intel or other Silicon Valley stalwarts. Google has become so ubiquitous that its very name has become a verb meaning “to search for something on the internet.” The 21st century version of the American dream is encapsulated in the story of Mark Zuckerberg, a typical Harvard whizkid whose atypical rise to the status of multi-billionaire was enabled by a social networking tool by the name of “Facebook” that he developed.

But how many people know the flip side of this coin, the one that demonstrates the pervasive government influence in shaping and directing these companies’ rise to success, and the companies’ efforts to aid the government in collecting data on its own citizens? How many know, for instance, that Google has a publicly acknowledged relationship with the NSA? Or that a federal judge has ruled that the public does not have the right to know the details of that relationship? Or that Google Earth was originally the brainchild of Keyhole Inc., a company that was set up by the CIA’s own venture capital firm, In-Q-Tel, using satellite data harvested from government “Keyhole” class reconnaissance satellites? Or that the former CEO of In-Q-Tel, Gilman Louie, sat on the board of the National Venture Capital Association with Jim Breyer, head of Accel Partners, who provided 12 million dollars of seed money for Facebook? Or that in 1999, a back door for NSA access was discovered in Microsoft’s Windows operating system source code? Or that Apple founder Steve Jobs was granted security clearance by the Department of Defense for still-undisclosed reasons while heading Pixar in 1988, as was the former head of AT&T and numerous others in the tech industry?

The connections between the IT world and the government’s military and intelligence apparatus run deep. In fact, the development of the IT industry is intimately intertwined with the US Air Force, the Department of Defense and its various branches (including, famously, DARPA), and, of course, the CIA. A cursory glance at the history of the rise of companies like Mitre Corporation, Oracle, and other household electronics and software firms should suffice to expose the extent of these relations, and the existence of what we might dub an “information-industrial complex.”

But what does this mean? What are the ramifications of such a relationship?

Yvette's Fifteen Minutes Was Up The Minute She Left Irami...,

philosophyofmetrics |  The cryptocurrency craze is built upon the blockchain technology. Blockchain was created in mystery, with the assumed inventor disappearing into obscurity. Some have made the case that blockchain was in fact created by AI for the purpose of building a de-centralized AI economy. That could be the case, but regardless, the technology is here to stay, and will infiltrate and transform all aspects of human existence and interaction.

The best way I’ve found to understand blockchain is to compare it to the human brain. The brain has synapses which serve the function of allowing neurons to transfer electrical and chemical signals to other neurons. Like the neurons in the human brain, the blockchain technology has nodes which serve the same purpose of transferring information and data. Once the data exists on the blockchain, it can never be destroyed or altered. There will always be an accurate record of all transactions.

This is being likened to an artificial intelligence hive mind which will eventually connect everything in the world, including SMART appliances, SMART watches, SMART cities, and eventually SMART human beings. But I would like to take it a step further and suggest that blockchain technology, and Ethereum specifically, is more comparable to the whole human body and DNA in particular. The complex interactions and transactions which take place within the body and our DNA are being replicated on the blockchain and Ethereum platforms.

This has explosive repercussions on our understanding and acceptance of the de-centralized world which is now emerging in our midst. One of the big esoteric questions we’ve always asked ourselves regarding our individual material, spiritual, and mental fragmentation, was how do we complete a process of de-fragmentation without surrendering to a material centralization which would dominate the totality of our lives?

We can see with blockchain and Ethereum, that a massive de-centralization, or de-fragmentation, of processing and functionality, will allow each individual component to maintain individuality, while the art of de-fragmenting our human inefficiencies can proceed without corrupting into ideological disasters, such as Communism and other externalizations of human weakness.

The recent explosion in the value of Bitcoin is indicative of the growing interest in the blockchain technology. But in some regards Bitcoin is already obsolete. There are some fundamental differences between Bitcoin and Ethereum. Here is a list of just seven which have been complied by Cryptocompare.com:

1. In Ethereum the block time is set to 14 to 15 seconds compared to Bitcoins 10 minutes. This allows for faster transaction times. Ethereum does this by using the Ghost protocol.
2. Ethereum has a slightly different economic model than Bitcoin – Bitcoin block rewards halve every 4 years whilst Ethereum releases the same amount of Ether each year ad infinitum.
3. Ethereum has a different method for costing transactions depending on their computational complexity, bandwidth use and storage needs. Bitcoin transactions compete equally with each other. This is called Gas in Ethereum and is limited per block whilst in Bitcoin, it is limited by the block size.
4. Ethereum has its own Turing complete internal code… a Turing-complete code means that given enough computing power and enough time… anything can be calculated. With Bitcoin, there is not this form of flexibility.
5. Ethereum was crowd funded whilst Bitcoin was released and early miners own most of the coins that will ever be mined. With Ethereum 50% of the coins will be owned by miners in year five.
6. Ethereum discourages centralised pool mining through its Ghost protocol rewarding stale blocks. There is no advantage to being in a pool in terms of block propagation.
7. Ethereum uses a memory hard hashing algorithm called Ethash that mitigates against the use of ASICS and encourages decentralised mining by individuals using their GPU’s.

The information in that list represents the core areas in which our world is transforming. This cannot be stopped. Though Bitcoin may explode even higher, and some nations and institutions may attempt to regulate and slow the onset of the blockchain and Ethereum, the genie is now out of the lamp and nothing can put it back. Blockchain is not just for cryptocurrency and economics. It will build the foundation and framework of everything in the world of tomorrow.

Google "Invests" in Bitcoin

marketslant |  Right now the BitCoin group is running into what we call "floor trader fear". The  voting members are chafing at the idea of scaling their supply by adding servers and/ or server power. This would disrupt their own little empires, not unlike the trading floor fearing Globex back in the day. And so many exchanges held out and protected the floor. And in the end they died. PHLX, AMEX, COMEX, PCOAST, CSCE, all gone or absorbed because they were late to adapt new technology and protect their liquidity pools. If Bitcoin removes power  from its voting members  control by demutualizing and uses those proceeds to increase server power they will likely excel. But Google and Amazon are now playing and they are all about unlimited  server power. Plus they have the eyeballs already. This is no unlike having the "marketmakers" already trading on a screen at Globex. The "liquidity pool" ofbuyers and sellers are already on  Amazon  and Google. Bitcoin does not have that past "early adaptors". Remember Palm?

When, not if, those behemoths are up and running they will immediately have an embedded network of both customers AND service providers  at their disposal in the form of search  eyeballs (google) and buyers (Amazon). They will be set up  to crush the opposition if they choose to create their own currency. Imagine Amazon  offering amazon money for amazon purchases. Now imagine them offering 20% discounts if you use  their money. The choices at this point boggle the mind. Tactical choices thought no longer used will come  into play again. Some examples: Freemium, Coupons, Customer Loyalty, Vertical Client Integration (P.O.S.), Travelers checks and more.

To be fair, Google has invested in Bitcoin as well. What smart trader would not hedge himself. But just like Netflix is Amazon's biggest cloud customer, but will eventually put Netflix out of business (after NetFlix kills Hollywood's distribution network); So will Google/ Amazon/ Apple attempt to obviate the need for any currency but their own. 

Blockchain is  the railroad. Amazon and Google have the oil. Like Rockefeller  before, The railroad will be made "exclusive" to their products.

The Blockchain and Us

blockchain-documentary |  What is the Blockchain?

blockchain, NOUN /ˈblɒktʃeɪn/
A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
From en.oxforddictionaries.com/definition/blockchain

A mysterious white paper (Nakamoto, Satoshi, 2008, “Bitcoin: A Peer-to-Peer Electronic Cash System”) introduced the Bitcoin blockchain, a combination of existing technologies that ensures the integrity of data without a trusted party. It consists of a ledger that can’t be changed and a consensus algorithm—a way for groups to agree. Unlike existing databases in banks and other institutions, a network of users updates and supports the blockchain—a system somewhat similar to Wikipedia, which users around the globe maintain and double-check. The cryptocurrency Bitcoin is the first use case of the blockchain, but much more seems to be possible.

The Next Generation of the Internet

The first 40 years of the Internet brought e-mail, social media, mobile applications, online shopping, Big Data, Open Data, cloud computing, and the Internet of Things. Information technology is at the heart of everything today—good and bad. Despite advances in privacy, security, and inclusion, one thing is still missing from the Internet: Trust. Enter the blockchain.

The Blockchain and Us: The Project

When the Wright brothers invented the airplane in 1903, it was hard to imagine there would be over 500,000 people traveling in the air at any point in time today. In 2008, Satoshi Nakamoto invented Bitcoin and the blockchain. For the first time in history, his invention made it possible to send money around the globe without banks, governments or any other intermediaries. Satoshi is a mystery character, and just like the Wright brothers, he solved an unsolvable problem. The concept of the blockchain isn’t very intuitive. But still, many people believe it is a game changer. Despite its mysterious beginnings, the blockchain might be the airplane of our time.

Economist and filmmaker Manuel Stagars portrays this exciting technology in interviews with software developers, cryptologists, researchers, entrepreneurs, consultants, VCs, authors, politicians, and futurists from the United States, Canada, Switzerland, the UK, and Australia.

How can the blockchain benefit the economies of nations? How will it change society? What does this mean for each of us? The Blockchain and Us is no explainer video of the technology. It gives a view on the topic far from hype, makes it accessible and starts a conversation. For a deep dive, see all full-length interviews from the film here.

blockchain 'smart contracts' to disrupt lawyers

afr |  Among the blockchain cognoscenti, everyone is talking about Ethereum.

A rival blockchain and virtual currency to bitcoin, Ethereum allows for the programming of "smart contracts", or computer code which facilitates or enforces a set of rules. Ethereum was first described by the programmer Vitalik Buterin in late 2013; the first full public version of the platform was released in February.

Commercial lawyers are watching the arrival of Ethereum closely given the potential for smart contracts in the future to disintermediate their highly  lucrative role in drafting and exchanging paper contracts. Smart contracts are currently being used to digitise business rules, but may soon move to codify legal agreements.

The innovation has been made possible because Ethereum provides developers with a more liberal "scripting language" than bitcoin. This is allowing companies to create their own private blockchains and build applications. Already, apps for music distribution, sports betting and a new type of financial auditing are being tested.

Some of the world's largest technology companies, from Microsoft to IBM, are lining up to work with Ethereum, while the R3 CEV banking consortium has also been trialling its technology as it tests blockchain-style applications for the banking industry including trading commercial paper. Banks are interested in blockchain because distributed ledgers can remove intermediaries and speed up transactions, thereby reducing costs. But if banks move business to blockchains in the future, financial services lawyers will need to begin re-drafting into digital form the banking contracts that underpin the capital markets.

The global director of IBM Blockchain Labs, Nitin Gaur, who was in Sydney last week, says he is a "huge fan" of Ethereum, pointing to its "rich ecosystem of developers". He predicts law to be among the industries disrupted by the technology.

googol is not what it seems?

newsweek | In June 2011, Julian Assange received an unusual visitor: the chairman of Google, Eric Schmidt, arrived from America at Ellingham Hall, the country house in Norfolk, England where Assange was living under house arrest. 

For several hours the besieged leader of the world’s most famous insurgent publishing organization and the billionaire head of the world’s largest information empire locked horns. The two men debated the political problems faced by society, and the technological solutions engendered by the global network—from the Arab Spring to Bitcoin. 

They outlined radically opposing perspectives: for Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with U.S. foreign policy objectives and is driven by connecting non-Western countries to Western companies and markets. These differences embodied a tug-of-war over the Internet’s future that has only gathered force subsequently.

In this extract from When Google Met WikiLeaks Assange describes his encounter with Schmidt and how he came to conclude that it was far from an innocent exchange of views.

shilling for the gubmint: do you really believe that gold is actually sitting there?

NYTimes | Keynes would, I think, have been sardonically amused to learn how little has changed in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a “barbarous relic.”) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now we’re burning up resources to create “virtual gold” that consists of nothing but strings of digits. 

I suspect, however, that Adam Smith would have been dismayed. 

Smith is often treated as a conservative patron saint, and he did indeed make the original case for free markets. It’s less often mentioned, however, that he also argued strongly for bank regulation — and that he offered a classic paean to the virtues of paper currency. Money, he understood, was a way to facilitate commerce, not a source of national prosperity — and paper money, he argued, allowed commerce to proceed without tying up much of a nation’s wealth in a “dead stock” of silver and gold. 

So why are we tearing up the highlands of Papua New Guinea to add to our dead stock of gold and, even more bizarrely, running powerful computers 24/7 to add to a dead stock of digits? 

Talk to gold bugs and they’ll tell you that paper money comes from governments, which can’t be trusted not to debase their currencies. The odd thing, however, is that for all the talk of currency debasement, such debasement is getting very hard to find. It’s not just that after years of dire warnings about runaway inflation, inflation in advanced countries is clearly too low, not too high. Even if you take a global perspective, episodes of really high inflation have become rare. Still, hyperinflation hype springs eternal. 

Bitcoin seems to derive its appeal from more or less the same sources, plus the added sense that it’s high-tech and algorithmic, so it must be the wave of the future. 

But don’t let the fancy trappings fool you: What’s really happening is a determined march to the days when money meant stuff you could jingle in your purse. In tropics and tundra alike, we are for some reason digging our way back to the 17th century.

the all-seeing eye only wants to protect you...,

this writing has been on the wall for a while, but I reminded you of this fact two weeks ago...,

Logical outcomes from this?

1. FBI/NSA just shut down the #1 biggest hosting site and #1 most wanted person on Tor

2. Silkroad is next on their list, being the #2 most wanted (#1 was Child Porn, #2 is drugs)

3. Bitcoin and all crypto currenecies set to absolutely CRASH as a result since the feds can not completely control this currency as they please.

I don't always call the Feds agenda transparent, but when i do, I say they can be trying harder. 

Once you grok the fact that the bankster $$ system is the ultimate technology for governance and control, then you can easily understand why they're fitna loosen up their 80 year weed prohibition (cause people will transact for weed in traceable dollars and schmoking is likely to blunt a little bit of the riotous reaction to continuing economic contraction and malaise). Genuine anonymization and well-established virtual currencies are a response to the ever-tightening grip of the "top which lives off the yield of the bottom." Matter fact, they're the only pure genius games in progress at this moment in time - and constitute a genuine and growing threat to unilateral top-down governance and the system of 1% global supremacy. (psychedelics do too, but they'll be easy enough to track and monitor as they'll be an epiphenomenal component of the larger ebb and flow of legalized weed)

NYTimes | State and federal officials are starting broad investigations into shortcomings in the oversight of upstart virtual currencies like bitcoin.

The Senate’s committee on homeland security sent a letter this week to the major financial regulators and law enforcement agencies asking about the “threats and risks related to virtual currency.” These currencies, whose popularity has grown in recent years, are often used in online transactions that are not monitored by traditional financial institutions.

“This is something that is clearly not going away, and it demands a whole government response,” said a person involved in the Senate committee’s investigation, who spoke on the condition of anonymity because the inquiry is continuing.

The Senate letter went out the same day that New York’s top financial regulator, Benjamin M. Lawsky, sent subpoenas to 22 companies that have had some involvement with bitcoin, according to a person briefed on the investigation.

Previously, there have been isolated efforts to crack down on those who took advantage of virtual currencies. But the two investigations made public this week appear to be the most wide-ranging government efforts to exert more coordinated control over what has been a largely faceless and borderless phenomenon.

Bitcoin, the most well-known digital currency, was started by anonymous Japanese computer programmers in 2009 and was intended to serve as an alternative to national currencies. Only a limited number of bitcoins can be created. And an online community has bid up the price of individual bitcoins, which are stored digitally on a decentralized network of computers. On Tuesday, a bitcoin was being sold for about $108 online.

Lawmakers are worried that bitcoin and other alternative forms of money can be used to evade taxes, defraud investors and assist trade in illegal products like drugs and pornography.

half of tor sites compromised, including tormail...,

twitlonger | The founder of Freedom Hosting has been arrested in Ireland and is awaiting extradition to USA.

In a crackdown that FBI claims to be about hunting down pedophiles, half of the onion sites in the TOR network has been compromised, including the e-mail counterpart of TOR deep web, TORmail.

http://www.independent.ie/irish-news/courts/fbi-bids-to-extradite-largest-childporn-dealer-on-planet-29469402.html

This is undoubtedly a big blow to the TOR community, Crypto Anarchists, and more generally, to Internet anonymity. All of this happening during DEFCON.

If you happen to use and account name and or password combinations that you have re used in the TOR deep web, change them NOW.

Eric Eoin Marques who was arrested runs a company called Host Ultra Limited.

http://www.solocheck.ie/Irish-Company/Host-Ultra-Limited-399806
http://www.hostultra.com/

He has an account at WebHosting Talk forums.

http://www.webhostingtalk.com/showthread.php?t=157698

A few days ago there were mass outages of Tor hidden services that predominantly effected Freedom Hosting websites.

http://postimg.org/image/ltj1j1j6v/

"Down for Maintenance
Sorry, This server is currently offline for maintenance. Please try again in a few hours."

If you saw this while browsing Tor you went to an onion hosted by Freedom Hosting. The javascript exploit was injected into your browser if you had javascript enabled. Fist tap Arnach.

Logical outcomes from this?

1. FBI/NSA just shut down the #1 biggest hosting site and #1 most wanted person on Tor

2. Silkroad is next on their list, being the #2 most wanted (#1 was Child Porn, #2 is drugs)

3. Bitcoin and all crypto currenecies set to absolutely CRASH as a result since the feds can not completely control this currency as they please.

I don't always call the Feds agenda transparent, but when i do, I say they can be trying harder.

no wonder these bankster beehotches fear and despise bitcoin...,

outpost-of-freedom | I've been following the concepts of digital cash and encryption since I read the article in the August 1992 issue of Scientific American on "encrypted signatures." While I've only followed the Digitaliberty area for a few weeks, I can already see a number of points that do (and should!) strongly concern the average savvy individual:

1. How can we translate the freedom afforded by the Internet to ordinary life?

2. How can we keep the government from banning encryption, digital cash, and other systems that will improve our freedom?

A few months ago, I had a truly and quite literally "revolutionary" idea, and I jokingly called it "Assassination Politics": I speculated on the question of whether an organization could be set up to legally announce that it would be awarding a cash prize to somebody who correctly "predicted" the death of one of a list of violators of rights, usually either government employees, officeholders, or appointees. It could ask for anonymous contributions from the public, and individuals would be able send those contributions using digital cash.

I also speculated that using modern methods of public-key encryption and anonymous "digital cash," it would be possible to make such awards in such a way so that nobody knows who is getting awarded the money, only that the award is being given. Even the organization itself would have no information that could help the authorities find the person responsible for the prediction, let alone the one who caused the death.

It was not my intention to provide such a "tough nut to crack" by arguing the general case, claiming that a person who hires a hit man is not guilty of murder under libertarian principles. Obviously, the problem with the general case is that the victim may be totally innocent under libertarian principles, which would make the killing a crime, leading to the question of whether the person offering the money was himself guilty.

On the contrary; my speculation assumed that the "victim" is a government employee, presumably one who is not merely taking a paycheck of stolen tax dollars, but also is guilty of extra violations of rights beyond this. (Government agents responsible for the Ruby Ridge incident and Waco come to mind.) In receiving such money and in his various acts, he violates the "Non-aggression Principle" (NAP) and thus, presumably, any acts against him are not the initiation of force under libertarian principles.

The organization set up to manage such a system could, presumably, make up a list of people who had seriously violated the NAP, but who would not see justice in our courts due to the fact that their actions were done at the behest of the government. Associated with each name would be a dollar figure, the total amount of money the organization has received as a contribution, which is the amount they would give for correctly "predicting" the person's death, presumably naming the exact date. "Guessers" would formulate their "guess" into a file, encrypt it with the organization's public key, then transmit it to the organization, possibly using methods as untraceable as putting a floppy disk in an envelope and tossing it into a mailbox, but more likely either a cascade of encrypted anonymous remailers, or possibly public-access Internet locations, such as terminals at a local library, etc.

In order to prevent such a system from becoming simply a random unpaid lottery, in which people can randomly guess a name and date (hoping that lightning would strike, as it occasionally does), it would be necessary to deter such random guessing by requiring the "guessers" to include with their "guess" encrypted and untraceable "digital cash," in an amount sufficiently high to make random guessing impractical.

For example, if the target was, say, 50 years old and had a life expectancy of 30 years, or about 10,000 days, the amount of money required to register a guess must be at least 1/10,000th of the amount of the award. In practice, the amount required should be far higher, perhaps as much as 1/1000 of the amount, since you can assume that anybody making a guess would feel sufficiently confident of that guess to risk 1/1000th of his potential reward.

The digital cash would be placed inside the outer "encryption envelope," and could be decrypted using the organization's public key. The prediction itself (including name and date) would be itself in another encryption envelope inside the first one, but it would be encrypted using a key that is only known to the predictor himself. In this way, the organization could decrypt the outer envelope and find the digital cash, but they would have no idea what is being predicted in the innermost envelope, either the name or the date.

If, later, the "prediction" came true, the predictor would presumably send yet another encrypted "envelope" to the organization, containing the decryption key for the previous "prediction" envelope, plus a public key (despite its name, to be used only once!) to be used for encryption of digital cash used as payment for the award. The organization would apply the decryption key to the prediction envelope, discover that it works, then notice that the prediction included was fulfilled on the date stated. The predictor would be, therefore, entitled to the award. Nevertheless, even then nobody would actually know WHO he is!

It doesn't even know if the predictor had anything to do with the outcome of the prediction. If it received these files in the mail, in physical envelopes, which had no return address, it would have burned the envelopes before it studied their contents. The result is that even the active cooperation of the organization could not possibly help anyone, including the police, to locate the predictor.

Also included within this "prediction-fulfilled" encryption envelope would be unsigned (not-yet-valid) "digital cash," which would then be blindly signed by the organization's bank and subsequently encrypted using the public key included. (The public key could also be publicized, to allow members of the public to securely send their comments and, possibly, further grateful remuneration to the predictor, securely.) The resulting encrypted file could be published openly on the Internet, and it could then be decrypted by only one entity: The person who had made that original, accurate prediction. The result is that the recipient would be absolutely untraceable.

The digital cash is then processed by the recipient by "unbinding" it, a principle which is explained in far greater detail by the article in the August 1992 issue of Scientific American. The resulting digital cash is absolutely untraceable to its source. Fist tap Dale.

currencies of the future..,

lfb | Banking industry insiders are upset with Amex and Wal-Mart, that also is offering prepaid cards, because these prepaid accounts would amount to uninsured deposits, according to Andrew Kahr, who wrote a scathing piece on the issue for American Banker.

Kahr rips into the idea with this analogy:

“To provide even lower ‘discount prices,’ should Wal-Mart rent decaying buildings that don’t satisfy local fire laws and building codes — and offer still better deals to consumers? And why should Walmart have to honor the national minimum wage law, any more than Amex honors state banking statutes? With Bluebird, Amex can already violate both the Bank Holding Company Act and many state banking statues.”

Kahr is implying that regulated fractionalized banking is safe and sound, while prepaid cards provided by huge companies like Amex and Wal-Mart is a shady scheme set up to rip off consumers. The fact is, in the case of IndyMac, panicked customers forced regulators to close the S&L by withdrawing only 7% of the huge S&L’s deposits. It was about the same for WaMu and Wachovia when regulators engineered sales of those banks being run on. Bitcoin supporters, unlike the general public, are well aware of fractionalized banking’s fragility.

Maybe what the banking industry is really afraid of is the Amexes and Wal-Marts of the world creating their own currencies and banking systems. Wal-Mart has tried to get approval to open a bank for years, and bankers have successfully stopped the retail giant for competing with them.

However, prepaid credit cards might be just the first step toward Wal-Mart issuing their own currency — Marts — that might initially be used only for purchases in Wal-Mart stores. But over time, it’s not hard to imagine Marts being traded all over town and easily converted to dollars, pesos, Yuan, or other currencies traded where Wal-Mart has stores. Fist tap Dale.

the eff punks out on bitcoin...,

themonetaryfuture | To stand up and fight to protect lawful online activity from legal threats isn’t for the faint of heart… it takes big ones.

The Electronic Frontier Foundation has a two decade history of taking on cases that set important precedents to protect rights in cyberspace. This is an organisation which has not been afraid to file lawsuits against the CIA, the US Department of Defence, the Department of Justice and other agencies, as well as major corporations like Apple and AT&T.

Recently, however, the EFF seems to be blowing some chilly air of its own and their source of gumption seems to have shrunk a little. They are no strangers to the pernicious effects of ‘self-censorship’; this is the ‘chilling effect’ where discussion, debate and activities are effectively destroyed before they even get started. It is the fear to speak freely or the fear to participate, because of vague legal threats or ill-defined laws. It is the uncertainty about where one’s rights begin and end, and the fear of crossing an invisible line. It is the providers closing or restricting customer accounts; not based on specific legal requests but based on some fuzzy margin even less well defined than the law itself.

Let’s see how the EFF explains its retreat from using one specific technology: Bitcoin, which is not inherently illegal and qualifies more than most as a frontier technology.

EFF and Bitcoin (June 20, 2011)

What then should we make of this statement from the EFF which reveals a primary motivator for avoiding a particular technology is legal uncertainty? At first glance this might make some sense, as ‘understanding the legal issues’ seems like a prudent first step, but you only need to step back into the EFF’s early history to see that their very birth was not just taking place in, but in a way inspired by an era of just this sort of uncertainty regarding electronic frontiers. Take this quote from ‘A Not Terribly Brief History of the EFF’.

"I realized in the course of this interview that I was seeing, in microcosm, the entire law enforcement structure of the United States.

Agent Baxter was hardly alone in his puzzlement about the legal, technical, and metaphorical nature of data crime."

This surely shows that the legal environment was not only uncertain – but positively muddy and misunderstood even by those tasked to investigate and enforce the law.

Arguably, law enforcement lags in their understanding of new technology just as much today. The ‘ambiguous nature of law in Cyberspace’ was almost a defining feature of the landscape, and back then, it didn’t stop the EFF from riding out into it; legal guns at the ready, if not blazing.

The EFF about-face regarding Bitcoin came shortly after a flurry of publicity regarding US Senators Schumer and Manchin raising their concerns about the use of bitcoins for illegal purchases on the silk road tor website. The senators mischaracterised bitcoin as “untraceable”. Senators seek crackdown on “Bitcoin” currency Fist tap Dale.

for computer geeks, financial speculators, and drug dealers...,

Newsweek | What if people could use the Internet to create a new kind of money, one that didn’t involve governments and central banks and could be used anonymously, like cash? That is the idea behind Bitcoin, a virtual currency that has caught the attention of computer geeks, financial speculators, and drug dealers. For the first time, you can buy anything online without giving your credit-card number or bank-account information—leaving no trace at all.

Hundreds of merchants accept Bitcoins for things like books, computers, and professional services. The currency trades on a handful of Bitcoin exchanges, where the price of a Bitcoin fluctuates based on demand. Not long ago a single Bitcoin sold for less than a dollar, but in recent months the price climbed to $8, then to $20, then above $30, before falling back to $18, the current level.

What exactly are you buying? A Bitcoin is basically just a little bit of encrypted code that can be zipped over the Internet and stored in a digital wallet. The concept was proposed by a mysterious hacker named Satoshi Nakamoto (no one knows who he is, and the name is believed to be a pseudonym), who published a white paper describing a way in which computers connected over the Internet could be used to create an unregulated “cryptocurrency.”

New York Sen. Charles Schumer recently called Bitcoin “an online form of money laundering,” after learning about an online warehouse called Silk Road where sellers advertise an astounding array of illegal wares—marijuana, hashish, LSD, ecstasy, cocaine, heroin—and where the only currency accepted is the Bitcoin. (Silk Road is currently shut down, though its anonymous manager claims he intends to start back up soon.)

Right now there are about 6.5 million Bitcoins in circulation. The money supply is controlled by software algorithms and the total supply will max out at 21 million coins. You can crank out Bitcoins on a PC, but it’s an incredibly computer-intensive task, and it will keep getting harder as the number of Bitcoins in existence increases. Some people have pooled together hundreds of machines to “mine” Bitcoins. Most folks, however, just buy them on an exchange.

Some already are hoarding Bitcoins, expecting a Bitcoin bubble will drive the value up to hundreds, maybe even thousands of dollars per coin. The biggest holder, whose identity is not known, is sitting on about 300,000 coins, currently worth about $6 million, says Donald Norman, who runs the London-based Bitcoin Consultancy, which advises companies that want to get in on the action.

Norman says the power of Bitcoins is that they can free people from the tyranny of middlemen: banks; credit-card companies; and money shippers like Western Union, which charge exorbitant fees for performing a rather simple task.

But for a lot of people the appeal lies in the chance to get rich quick by getting in early on the next Internet craze. Still, investing in Bitcoins is extremely risky. You don’t know who’s running the exchanges, and you can’t be sure these guys won’t just take your money and run.

Adding to the risk, authorities might take action. But even if Bitcoin goes away, others like it will spring up. “Now that we have the technology to create decentralized currencies,” Norman says, “they are definitely here to stay.”

bitcoin vs. central bankers

Video - Jon Matonis talks about BitCoin. A method of paying each other which does not rely on your currency being smashed by the devaluations and printing of central banks and politicians.

BitcoinNews | Max interviews guest Jon Matonis who introduces Bitcoin to the RT audience.

“Overall though, I do think the exchangers are the weakest link in the chain”.

“On the government level I think what this is going to actually lead to is a move and a shift away from the model of taxing income and I think you’re going to start to see governments move towards some type of consumption-based tax or headcount-type tax and the reason is because the income levels of individuals are going to become more and more difficult to ascertain”

“I believe digital cash will do to legal tender what BitTorrents did to copyrights”. Fist tap Dale.