Wisdom Engine

Technological developments and the advent of the Internet, and now electronic peer to peer cash have led to new paradigms in international as well as local commercial activity. These developments have reduced the certainty of contractual negotiations leaving a commonly held belief that the law of offer and acceptance does not readily apply to such transactions when conducted online (Rasch, 2006). Some in the Digital currency world go as far as to exclaim, “crypto is law” or even “code is law” and forget [[1]](https://medium.com/@adam_selene/1-5-bitcoin-and-the-connection-to-contracting-9d8e714c7d2a#_ftn1) that the law does not end at the border of an electronic contract [[2]](https://medium.com/@adam_selene/1-5-bitcoin-and-the-connection-to-contracting-9d8e714c7d2a#_ftn2).

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

Bitcoin is money, but it is also a ledger, a commodity and a token. It is all these things and more. The issue is not which one of these we need to define Bitcoin, but, which one defines Bitcoin in a particular use.

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

Bitcoin is a form of currency[[4]](#_ftn4). The statement in itself is heavily contested[[5]](#_ftn5). A key part of the problems surrounding this classification comes from the polymorphic nature of the system. It is not that Bitcoin is currency, a security or a token, it is that the multifariousness of the system allows it to be used as any of these at any time. As commodity monies such as gold could be utilised in exchange or alternative uses including electronics and jewellery have many use cases, we can also apply this to bitcoin[[6]](#_ftn6). The difficulty is not in determining whether bitcoin has value but rather implementing a framework that captures the particular transaction and allows this to be successfully classified.

Bitcoin is a commodity based on the exchange of a tokenised security issued as a payment to the “miners” or nodes in the system for a right to have an “immutable” entry saved to the ledger. The miners or nodes are paid in multiples of the base unit of Bitcoin that is known as a “satoshi”. This unit is a small indivisible value that is worth a small fraction of a cent on today’s markets.

It is interesting how the arguments against commercial mining come down to an outcry against “mining centralisation.” All things in life come from balance. In the commonly used image listed as Fig. 1 below, we see what people like to have as a concept of Bitcoin. Unfortunately, it is also utterly wrong.

Bitcoin is falsely called a distributed or decentralised cryptocurrency because of the ledger. Yet, it presents a misleading understanding and description of Bitcoin. Bitcoin is a peer-to-peer token exchange system that can be used as a form of digital cash. As with all token systems, a token can represent any value and reference any agreed property or item.

In his seminal work, Bowling Alone, Robert Putman has managed to capture many of the difficulties facing society as we change and embrace technology [1]. The author initially released his work as a paper, receiving extensive criticism, but went on to extend it into a well-researched book. The work extends the notion of social capital, a concept formerly utilised by writers including Karl Marx and, in its current form, Lydia Hanifan [2]. Others, including Austrian economists such as von Böhm-Bawerk and Fisher, also worked upon the concept of social cohesion and capital binding society [3]. Yet, it was Putman who brought this obscure academic term into the mainstream. ‘Citizenship is not a spectator sport’, but equally, it does not require exclusively permanent face-to-face interaction; technology has provided alternatives [4].

Bitcoin is under attack, but the arguments are misdirected at the ‘strawman’ of total consumption. Bitcoin is painted as a wasteful system that uses too much electricity. The question of bitcoin’s efficiency can only be answered by addressing its comparative efficiency. By considering the cases of Denmark and bitcoin in a global context of countries, banking institutions, and business enterprises, absolute and relative contrasts focus on the real questions. Only a purely economic approach that considers specialisation and the zero-sum nature of the context can correctly determine the bitcoin costs and benefits.

As an offeror may stipulate the method of acceptance ([Eliason v Henshaw [1819] & Manchester Diocesan Council for Education v Commercial and General Investments [1970]](http://casebrief.me/casebriefs/eliason-v-henshaw/)), it would be wise for parties to agree to the form of acceptance prior to the conclusion of the contractual negotiations. The recipient does not have to accept a form of payment unless in a form that is defined to be legal tender. As Bitcoin is not considered to be legal tender, the parties engaged in exchange need to come to an agreement to accept Bitcoin as consideration.

We have a fundamental flaw within the developer led model of Bitcoin. This problem is the same in many aspects of software development today. We like to argue that we need to change and alter a system with the latest fashion and whims. The Silicon Valley mythology of App development has infiltrated into the idea of sound money changing the primary concept of Bitcoin, that of stable money into the “Shit-Show” of Ethereum. That is Pivot and change and pump and alter.

The truth; users do not need to, and should not have to validate anything. That is the entire point. This concept is itself flawed. In running software, you on your own system cannot be assured of anything. Not the integrity of the software nor the state of the network. Bitcoin is a competitive system, and it was never about decentralisation — it is sound money that is not easy to debase.

Akerlof’s paper was rejected for “triviality” by both the American Economic Review and The Review of Economic Studies, and yet it is seen as something special and drove a movement against markets. The Journal of Political Economy rejected the paper as incorrect and flawed. The argument was that if this paper was correct, then no goods could be traded. The empirical studies have ALL supported this. The hypothesis was flawed. All it was: a hypothesis and a flawed one at that.

Bitcoin is money that is designed for Main St. It was not designed to be the Wall-St casino some want, and it certainly was never designed to be the dark alley between them.

2. Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government “easy money” policy prevents the market’s return to the necessary higher interest rates.

Bitcoin will simplify this. This was the killer app, so to say, in Bitcoin: sound money that does not leave the merchant or user out of pocket. Unlike Visa and MasterCard, it is just like spending cash, and there is nothing to fear when it comes to a transaction over the Internet using Bitcoin. Cards are simple to copy and replay. Bitcoin is not. More, with the ability of a merchant and user to add escrow contracts, a user and the merchant are safe.

If you alter money, you always change the “rules of the game.” You cannot change Bitcoin without subsidising one party and taking from another. Any change is less than a zero-sum game. The party seeking change (may) win, but only and always at the overall expense of the system and the majority of the people using it. This is the key problem with fiat as we have it now. This is what Bitcoin was designed to stop.

The Bitcoin blockchain is a commodity ledger. It is a method to exchange value without the issue of double spending that has plagued all other attempts to create a digital currency. The fallacy is seeing Bitcoin as a road to short-term riches. The long-term road is pathed using commercial transactions.

Bitcoin was never about removing banks and government. It is sound money, a stable supply, and an efficient and audit-able ledger. All of the things that those seeking anonymity and anarchy oppose are at the heart of Bitcoin.

Ledger space in a sound, immutable ledger is a commodity. It has value. The trouble is that many think they can create something new, that Bitcoin is a new form of money. It is not.

Coins remain legal tender without having an economic basis in specie. They hence, as with paper notes, rest on the fiat declaration of a sovereign in the vast majority of existing states (if not indeed all modern states). In the US, UK, and Europe, the respective central bank notes and circulating notes of the respective are decreed to be legal tender “for all debts, public charges, and dues.” At the same time, gold and silver coins are no longer considered legal tender for debts. They do remain as private money, and may be used where agreement is held between the parties, though. We would move that bitcoin, as a commodity money, forms a private money in the nature of other private specie-based monies including coined gold and silver. So, it may be held that bitcoin is not currency. The setting of paper notes as the only category of current money (1) in the narrow sense is more an issue of public policy than of use, and can be seen as a result of a political desire to control the money supply. We may take the law of payment systems to show only a single limitation, the making of state-sanctioned bank notes as the only form of legal tender.

Last week, I discussed how a key could be used in a smart card, whilst privacy was maintained using the firewall’d identity model of Bitcoin. For the coming week, I will show both a method allowing a web server to securely accept payments in bitcoin naively and a method allowing fiat and other tokens to be exchanged whilst maintaining an absolute level of privacy.

It is commonly known that money serves as a store of economic value. Such value is created through the potential use in exchange for other commodities, where money itself is a form of commodity. Money is exchanged for other commodities whose immediate utility in consumption exceeds that of the monetary commodity.

In The Sociology of Money (N. Dodd, Cambridge, 1994, xxii-xxviii), the author demonstrates how when the marketability of a good is directly observable by its potential recipients, the more likely it is to evolve as a medium of exchange. It requires a pseudonymous system — not an anonymous one. The people involved need to gain trust in the system through the ability to validate a chain of their own money. That does not mean, as many say, they need to run a node, but rather that they can validate the source of their funds and ensure that it has been paid in a manner that meets expectations.

I utterly failed to comprehend how many so-called anarchists and socialists would run around calling themselves libertarian or capitalist. Much of what I hear being described is not related to the concept of money in the Austrian economic school at all. Most of it comes from authors such as Simmel and his concept of perfect money (see Simmel, G. (2004) The Philosophy of Money. London: Routledge.). Such socialist-inspired and sociological-based flawed concepts of money seem to have propagated throughout what is the SegWit or CoreCoin (BTC) community.

Under the provisions of FinCEN, any exchange accepting and transmitting virtual currency is a money transmitter [1]. The law is rather explicit and simple to understand. It also facilitates a number of exceptions that mitigate any problems with Bitcoin nodes (that is miners), yet captures Lightning and associated payment systems that are layered on top of Bitcoin.

The problem people have when they look through glasses tainted with greed is that they don’t see the simple facts, but rather paint the scenario with one of their desire. The first thing to remember is that there were no bitcoin sales in January 2009. Bitcoin was a system that cost money to run and create, and yet had no value. When asked about the lost value of the genesis block, the calculation is simple: 50 bitcoin times zero. Remember, anything times zero is zero. There is nothing lost.

HODL is all about having a few people invest in Core coin (BTC) so that some others can get money out. If it was about use, then it would be a spend-and-replace argument, that would place more upward pressure on price, accepting that the 1-MB cap on Core coin precludes such an argument as an option. It would also stop crime-friendly log-destruction systems (such as Lightning).

I believe that economics everywhere up to recent times has been dominated, much more than has been understood, by the doctrines associated with the name of J.-B. Say. It is true that his ‘law of markets’ has been long abandoned by most economists; but they have not extricated themselves from his basic assumptions and particularly from his fallacy that demand is created by supply. Say was implicitly assuming that the economic system was always operating up to its full capacity, so that a new activity was always in substitution for, and never in addition to, some other activity. Nearly all subsequent economic theory has depended on, in the sense that it has required, this same assumption. Yet a theory so based is clearly incompetent to tackle the problems of unemployment and of the trade cycle. [1]

Things started falling apart for me in the middle of 2010. Under my pseudonym, Satoshi Nakamoto, I had started to lose faith in my own project. I had been pushing for commercial applications to be built on top of Bitcoin. I wanted systems involving micropayments. I wanted methods of utilising Bitcoin on websites and automated systems. And yet, the first thing people developed was a heroin store.

Bookkeeping and accounting journals used within double-entry bookkeeping require write once read many (WORM) tables. Any accounting is posted entry is required to be write-only, with the database being set to ensure the read-only nature of posted entries. Accountants have used such a ledger format and posted journal entries using the same method for over 800 years now. Traditionally, accounting records would be maintained using a double-entry ledger written on paper. With a paper record, any alterations would require the creation of a completely new ledger with the new entry and all of the updated values, which was difficult to do in many cases, or an easily detected scenario where someone had intentionally changed values in the ledger, which would then require extensive changes throughout all of the journals.

Money is simply a means of mapping obligations. It is a way of sending obligations through time. With barter, individuals trade goods and services at a point in time. The scenario can be extended using contracts and simple derivatives such as futures agreements. Here, one individual could trade a cow to be delivered on the same day as the agreement is concluded with another party accepting an obligation to deliver 10 sacks of barley six months later.

In the Arnolfini Portrait, we start to see the early innovation and development of linear perspective. Researchers such as Carleton (1982) mathematically analysed the portrait, contending that it exhibited a technique described as “elliptical perspective”. In it, we see some of the early scientific developments in art that led towards linear perspective, while we note that the artist had not yet captured a sole perspective point. A later disciple of van Eyck, Petrus Christus, would take such first experiments in perspective and develop a system that would allow later Renaissance painters to create the linear perspective techniques we recognise today. Independently, the Florentine artist Filippo Brunelleschi started utilising a novel geometric method to capture perspective from around 1413. The growth of commerce and economic exchange led to an interchange of ideas, and techniques likely interacted, creating the Cambrian explosion that we recognise as the art scene of the Late Renaissance. The commingling of methods from the Florentine and Flemish schools may be seen to have occurred in the development of art academies, which started to become common around the time.

Franfurt (2005; originally 1986, in his essay On Bullshit) assembled a modern philosophical concept that presents perhaps one of the most critical advances in philosophy and the twentieth century. Cohen (2013), following his defence of communism and Marxist thought (Cohen 1980), further extends the conception of bullshit. His essay explicates how false logic and misconceptions have been used to baffle people, including himself:

Bitcoin is a financial system, and it is designed to return capitalism to the system that individuals such as Adam Smith promoted. Capitalism is a system that allows the free action of the baker or the candle maker or the software developer seeking to trade fairly, without exploitation. It is such a system that allows for long-term growth—without the exploitation by interest groups, government, greedy individuals, or ‘rent-seekers’.

The journal articles written by Jones (2003) and Cairney (2012) seem very different at face value, but we can see the same point of view in both. Jones analyses specific challenges to rationality that appeared in the 1950s, addressing the nature of homo economicus, and the bounds that exist on human action, using topics such as behavioral choice, cognitive psychology, and organizational theory. Cairney links the subject of complexity theory, a paradigm that has become common in scientific discourse on public policy, demonstrating the inappropriateness of many forms of top-down control. The link between their research is straightforward: if we cannot expect to act with complete rationality, then we cannot assume to be able to centrally plan economies.

The problem that BTC Core, and originally Mr Donald, had was that in my system, a large transaction can be traced and made subject to orders of proceeds of crime. My goals for Bitcoin were not to design a system that suited the anarchist concept of a government-free money. My system was designed to provide micropayments for the web and the Internet generally. It is not 50% of the people running the system making the decision; nodes are commercial entities that are subject to government control, regulation, and law. Here lies the constant point of difference between myself and all those seeking to change Bitcoin from the beginning.

The problem with Ethereum and BTC groups is that they are anticorporate. They call themselves crypto capitalists (Ortiz, 2020). What that really means is that they are anti-capitalist. They are Marxist through and through, and believe in the Marxist dream of individualistic manufacture at the household level. They all have a view of equality that supersedes everything else, and they fail to trust any form of organisation other than themselves. Even then, they only trust themselves when they are the individual leading the group, if they trust themselves at all.

In Finding Bernie Madoff, Stephen Dimmock and William Gerkin (2009) demonstrated that methodologies based on the detailed statistical analysis of financial filings might be utilised in the detection of corporate fraud. The authors note that very little research has been conducted into the detection of fraud that is committed by investment managers. Such lack of concern has been somewhat problematic in the past. As a result, financial frauds have occurred in respect of Enron, WorldCom, and, previously, Bernie Madoff Investment Securities LLC. On Dec 11, 2008, Bernie Madoff and the firm he ran were charged with securities fraud over the creation of an $18-billion Ponzi scheme (SEC).

Like more traditional free-market thinkers, including Adam Smith, Frédéric Bastiat, and Ludwig von Mises, Milton Friedman was a classical liberal.[[2]](#_ftn2) Yet Friedman, who coined the term neoliberalism, would have claimed to be a neoliberal if neoliberalism accurately represented classical liberalism with improved concepts of economic theory. By tracing the history of the term neoliberalism, this article will demonstrate how the notion of classical liberalism has changed from one of freedom to one of centralised government and administrative oversight.[[3]](#_ftn3) In defining liberalism, “[t]he possibility of coordination through voluntary cooperation rests on the elementary—yet frequently denied—proposition that both parties to an economic transaction benefit from it, provided the transaction is bilaterally voluntary and informed.�?[[4]](#_ftn4) That is, exchange occurs without coercion. Such creation of coordination through voluntary exchange is at the heart of what Friedman saw as competitive capitalism.

In writing about the problems with mercantilist systems and the capture of markets, Adam Smith said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.�?[[5]](#_ftn5) Unfortunately, the often misunderstood or overlooked aspect of Smith’s work is that he was not looking to protect large industries but rather interested in how to best benefit the consumer. Unfortunately, the neoliberal capture of free-market economics has undermined classical liberalism by creating a new meaning of liberalism.[[6]](#_ftn6) When Mises wrote about liberalism, he defined the word from its Latin roots—the term liber, meaning freedom.[[7]](#_ftn7) To claim or subvert the term liberalism, neoliberal supporters of international institutionalism and those implementing structuralist ideas[[8]](#_ftn8) have redefined it for their own interests by creating a straw man of liberal supporters of free markets. They posit that classical liberalism promoted systems of “greed is good�? capitalism, which I argue was never the real aim of such theorists promoting free-market economies.[[9]](#_ftn9)

A question that can be posed is why cryptocurrencies have not supplanted more traditional currencies. Yet, exploring such a question also requires an understanding of the nature of Bitcoin and blockchain technology, including, first of all, the question of what Bitcoin is. Bitcoin is neither a cryptocurrency nor a currency system. The definition, though, is widely misunderstood. Bitcoin presents a public ledger that provides a micropayment solution and a foundation to deliver digital cash. Understanding such distinction is a key foundational component of understanding the framework noted by Christensen (2004, p. 4) when it comes to gaining an understanding of “signals of change within an industry.”

Abstract. Sustainability has become a widely used term in business. The term has been linked to the concept of the environment, with many corporate activists seeking to make businesses, rather than government or individuals in NGOs, responsible for setting standards and delivering universal minimums across industries. As a result, corporate social responsibility (CSR) has become a widely deployed buzzword. Yet, the purpose of corporate social responsibility lies in the development of resilient companies. Moreover, the underlying activities undertaken in promoting sustainability within academic research would seem to be at odds with the reality of global sustainability. Crucially, it is well documented that the growth of economic wealth leads to improvements in both social welfare and concern for the environment. Hence, socialist-facing ideas that have been promoted within industries undermine outcomes such as the protection of the environment. This paper demonstrates that many researchers that seem to be aligned with sustainability misapply terms and utilize fully defined definitions in creating research outcomes aligned with biased research designed to deliver a predefined result.

The use of terminology is critical when making an argument (Walton, 1990). A research paper correctly determining a valid and unbiased result necessitates defining the expressions and vocabulary used within the paper. Unfortunately, the production of academic papers concerning sustainability in business has been largely skewed through the misleading use of the terms sustainability and environment. By interviewing business leaders and asking about the environment without defining the terminology used, the results may be collected in a manner that is at odds with the purpose of the study.

Chen et al. (2022) constructed a survey designed to create a model of cryptocurrency adoption. Yet, the design of the questionnaire and the structure of the questions do not align with the research findings, and several other methodological problems in the paper may be shown. This is unfortunate, as the claim that traceability and transparency are two of the prime reasons behind people adopting digital asset systems is undermined through the problems in the paper. In a similar manner, Nguyen Thanh et al. (2023) utilized a collaborative approach in a report prepared for the Ethereum Foundation, under an academic research grant.

It is efficient to use a well-known meme to spread misinformation, and, when something has become accepted as a fact, it tends to take a great deal of effort to challenge that authority. Even people who do not accept a story often accept the meme, leading to logical inconsistencies in their arguments. This is a concern regarding market bubbles because people who verbally attack markets do so on the belief that ‘markets are not perfect’. However, nowhere in the economic literature are markets seriously described as perfect; they are identified as optimally efficient compared to other options.

One could argue that there are strong and weak formulations of Moore’s Law. In its strong form, the prediction is limited to an increase in the number of transistors that exist on a single microchip. In its weak or broader form, the argument is more closely related to an economic costs effect. The former prediction heavily relies on the type of technology being deployed. Silicon- and germanium-based transistor technologies will face severe limits in the coming years, and, therefore, this version of the law can be safely predicted to end.

The merger of Yahoo and Verizon was valued at over US$4.8 billion. This merger was nearly derailed following a series of data breaches that exposed customer information. We have recently seen black-market extortion schemes, hacking the hire and Internet piracy is as rampant as ever. This is not going to stop any time soon. Our entire model is broken. We move security into centralised systems that become more and more tempting to attackers. This is not a cyber flaw, it is a flaw in the economics of the model. Peer models do not make anything inherently secure. What they do is distribute the risk.

Dr. Craig Wright has given me permission to repost and extend one of his blog posts from 2015. Prior to this, I will add a little that I feel is missing. Dr. Wright talks about the changes from a futures contract to an option contract and seems to assume that we will all understand this concept and why this matter is important. Some of us, such as myself, do see this.