Finance Without Fingerprints

American Banker aired this encouraging financial privacy video on Friday, February 15, 2013:
 

Physical cash is on its way out and won't be missed, but even in an all-digital future the option of anonymous, untraceable consumer payments must remain, Executive Editor Marc Hochstein argues. Bitcoin and past digital cash schemes show it is technically feasible and that banks can play a role. But regulations and the industry's conservatism augur poorly for payment privacy, and a frank and open debate will be required.

Related Articles:
A Dystopian Vision of Banking from the 'Mad Men' Era
Why Some Payments Should Remain Anonymous 

Will Banks Ever Be Digital Privacy 'Heroes'?

Katherine Mangu-Ward Talks Stateless Currency on Stossel

Reason Managing Editor Katherine Mangu-Ward discusses stateless currency bitcoin on John Stossel's January 3rd, 2013 program. Overall, I think women are better than men at explaining bitcoin.

What is Free Banking?

In this video interview, George Selgin defines free banking as a monetary arrangement where currency is competitively supplied by private commercial banks and, consequently, not monopolized by a central bank.

He sets as examples the Scottish and Canadian’s free banking systems, which flourished in the eighteenth and nineteenth centuries; yet, he clarifies that a completely free banking structure has not existed, since there has always been some form of government involvement. He discusses the possibility and feasibility of implementing such system in the present time, stating, as well, the negative macroeconomic implications that a central banking system has, especially for a developing country such as Guatemala, and suggests that more liberty and less government intervention could be a source of wealth and growth.

Selgin concludes by explaining how transaction costs are managed within this system, in addition to the effectiveness it entails when dealing with crises, such as bank runs or instability, in the current banking organization.

Lucas Rentschler
Universidad Francisco Marroquín
Business School
Guatemala, July 31, 2012

Bitcoin, Gold and Competitive Currencies

You don't want to miss this thought-provoking James Turk interview with economist and trader Félix Moreno de la Cova.

Gold is simply analog bitcoin and, as gold bugs become more aware of that fact, two things will become more apparent. First, that specie-backed digital currencies will always be subject to trust in the custodial issuer, and more importantly, trust that the specie won't be confiscated or seized. Second, a transfer of wealth from national currencies to cryptocurrencies is occurring which will dwarf the transfer of wealth occurring in the precious metals sector. Enjoy.



For further reading:
"Ding, Ding, Ding! James Turk Gets It!", BitcoinMoney, September 20, 2012
"GoldMoney: James Turk in conversation with Félix Moreno de la Cova", Bitcoin Forum, September 14, 2012

Sound Money Project Interviews Dr. Edwin Vieira, Jr.

In this part 2 of the Sound Money Project "Dollar in Crisis" series, Dr. Edwin Vieira, Jr. is interviewed at George Mason University by Rutger van Bergem on April 9, 2012.



Part 1 of "Dollar in Crisis" series with Dr. Thomas Rustici on March 27, 2012 can be seen here.

The Sound Money Project Interview with Dr. Judy Shelton on March 14, 2012 can been seen here.

Alan Szepieniec Presents Bitcoin at Polish Mises Institute

In a step ahead of their U.S. namesake, the Polish Ludwig von Mises Institute hosted Alan Szepieniec to present bitcoin during the 2011 Summer Seminar in Warsaw.



Some of the more recent Mises Institute discussion surrounding the decentralized cryptocurrency bitcoin and its Austrian detractors can be found here and here.

Another notable video presentation was given at DEFCON 19: "Hacking the Global Economy with GPUs or How I Learned to Stop Worrying and Love Bitcoin".

Also, watch Jeffrey Paul presenting Financing The Revolution @ Chaos Communication Camp.

Keiser Report: Jon Matonis on Bitcoin vs. Central Bankers

On May 31, 2011, I was invited by Russia Today's Keiser Report to discuss bitcoin, the decentralized cryptocurrency:




For further reading:
"Rough Trades: Digital Derivatives Hit the Bitcoin Markets as Wall Street Bankers Take Interest", Adrianne Jeffries, August 2, 2011
"Want to Short Bitcoin? Derivatives Trading ‘Coming Soon,’ Say Exchanges", Adrianne Jeffries, July 25, 2011
"New digital money and transaction system may be the wave of the future", Kenneth Schortgen, June 5, 2011
"Bitcoin vs. Central Bankers", Subrealism, June 2, 2011

Senator Schumer vs. Bitcoin

The era of using money as a method of identity tracking may be drawing to a close as much as certain senators detest that thought. In response to the Tor-based Silk Road online drug store and on the topic of individual financial privacy, Sen. Charles Schumer (NY-Democrat) had this to say:



For further reading:
"Bitcoin and Agorism", Libérale et libertaire, June 9, 2011
"The War on Digital Currency", Joel Bowman, June 9, 2011
"Bitcoin, the Darknet Economy, and the Low Over-Head Revolution", Kevin Carson, June 9, 2011
"Bitcoin: With Enemies Like Schumer, Who Needs Friends?", Kevin Carson, June 7, 2011
"The Battle Is On - Silk Road vs Government, and Bitcoin Anonymity", Vitalik Buterin, June 7, 2011
"The Coming Attack On Bitcoin And How To Survive It", Anthony Freeman, June 7, 2011
"Chuck Schumer’s New War on Bitcoin", Libérale et libertaire, June 6, 2011
"Can the War on Drugs Bootstrap Bitcoin?", Eli Dourado, June 4, 2011

Bankers, Amsterdam and Bitcoin

Last week on April 6th, 2011, a group of bankers and payment professionals at the 10th Annual European Payments Consulting Association Conference sat patiently and listened to a presentation on the disruptive bitcoin from Mr. Amir Taaki (or Genjix). Taaki is also the founder of Britcoin, a new bitcoin to Pound Sterling exchange service. The full video is below, but a recent article in DYNDY mentioned the high points:

"Our guy Genjix is a colorful and open minded type, witty and messy, a good mix that entertained the people present despite it being the last presentation of the day; he did a good (unpaid) job presenting some quite impressive information on the growth and usage of Bitcoin, making people present progressively interested (or pissed, but then hard to notice behind the suits) at this crypto-cash system that seems to be there to stay or, one could argue, to multiply in different flavors in the near future."

"Being shown an anonymous digital currency with its own laundering service. Used for selling drugs. Bit-coin, you have cheered me up." --Michael Price

"Ultimately, the positive message that bitcoin also carries is that of more possibilities in engineering currencies, that of a future in which complementary currencies can make economic systems more resilient to the the disruption of capitalist behaviors, while closely relating people to their community values and maybe even revolutionize the way we contribute to the common good – paying taxes for what we really care, rather than not paying them, let me add."

AmirTaaki from itzard on Vimeo.

Central Banking vs. Free Banking and the Gold Standard

Would the world have experienced a financial crisis like the recent one in an environment of free banking? Lawrence H. White, an adjunct scholar at the Cato Institute, speaks at the Cato Institute's 28th Annual Monetary Conference held November 18, 2010.




For further reading:
"The Gold Standard and Monetary Freedom", Dr Richard M. Ebeling, April 1, 2011
"Central Banking is a blight on humanity", Lars Schall, March 22, 2011
"Communist China Embraces the Gold Standard", Daniel Sayani, February 22, 2011
"Currency Wars", Robert P. Murphy, Mises Daily, November 15, 2010
"The Gold Carry Trade", Whiskey and Gunpowder, July 25, 2007

Freedomain Radio Interview with Dr. George Selgin

Professor George Selgin of the University of Georgia explodes the myths of economic stability through central banking, the history of money, and war and death in the 20th century.



For further viewing:
"The Myth of the Free Market: Fractional Banking and Private Currencies", Stefan Molyneux, January 16, 2010

Sealand, HavenCo, and the Rule of Law

Data havens and strong cryptography have long been the bedrock of anonymous and untraceable digital currency transactions and their associated services. James Grimmelmann has published an excellent account of the entire Sealand and HavenCo saga entitled "Sealand, HavenCo, and the Rule of Law".

You can also read James' recent blog entries:
"Sealand and HavenCo Part I: The History of Sealand" (February 14, 2011);
"Sealand and HavenCo Part II: The Rise and Fall of HavenCo" (February 15, 2011).

For further viewing:
"Sealand The Mystery Solved - Part One"
"Sealand The Mystery Solved - Part Two"
"Sealand The Mystery Solved - Part Three"
"Sealand The Mystery Solved - Part Four"
"Sealand"
"Sealand on Bravo Channel 2001"
"Sealand on the UK Evening News Sept 2002"
"Life in Sealand after the Fire"
"Sealand for Sale, an Interview with Prince Michael"

Interview with Doug Casey: The Death of America

Doug Casey was interviewed by Stefan Molyneux for Freedomain Radio on January 18, 2010. With powerful ideas for all lovers of personal and political freedom, Freedomain Radio is the largest and most popular philosophy show on the web, and was a Top 10 Finalist in the 2007, 2008 and 2009 Podcast Awards. Topics range from politics to philosophy to science to economics to relationships to atheism - and how to achieve real freedom in your life today. Passionate, articulate, funny and irreverent, Freedomain Radio shines a bold light on old topics, and invents a few new ones to boot!



Douglas "Doug" Casey is an American-born free market economist, best-selling financial author, and international investor and entrepreneur. He is the founder and chairman of Casey Research, a provider of subscription financial analysis about specific market verticals that he has focused his investing career around, including natural resources/metals/mining, energy, commodities, and technology. Since 1979, he has written, and later co-written, the monthly metals and mining focused investment newsletter, The International Speculator. He also contributes to other newsletters, including The Casey Report, a geopolitically oriented publication. Casey graduated from Georgetown in 1968, as a classmate of Bill Clinton. His 1979 book Crisis Investing (1979) became the largest selling financial book in history, listing at #1 on the New York Times Best Seller list for a total of 12 non-consecutive weeks. Casey is a frequent contributor to various financial websites, as well as to free-market online magazines, such as WorldNetDaily and LewRockwell.com, and the libertarian print publication Liberty, where he espouses his anarcho-capitalist leaning views. He supported Ron Paul's run for president in 2008. In 2009, he gave a speech titled My Misadventures in the Third World, in which he outlined plans to privatize a small country and take it public on the New York Stock Exchange. Casey has lived in twelve countries, and visited 175. His offices are located in the town of Stowe, Vermont.

QE4: A Fictional Account

The first 12 hours of a U.S. Dollar collapse...

Max Keiser's On the Edge with Jim Willie

A most provocative interview was aired on September 17, 2010 from Costa Rica where Jim Willie describes the short squeeze gold raids now being put on the LBMA by some wealthy Arab and Chinese billionaires. They definitely smell blood in the water and they are in a position to demand physical delivery.

Jim Willie is the Editor of Hat Trick Letter and a well-connected private consultant in the areas of financial markets, currencies, and commodities. According to Jim’s source, "This will not end until the Anglo Bankers are Dead and De-nutted."

Provided by Max Keiser:

Sound Money and Free Banking

Lawrence H. White spoke on sound money, free banking, and the rule of law at George Mason University on April 19, 2010. The event was sponsored by the Atlas Economic Research Foundation's Sound Money Project and hosted by the GMU Economics Society.

Lawrence H. White on Sound Money from Atlas Network on Vimeo.

Toward A Private Digital Economy

In April 2004, Wavyhill and Andre Goldman published a landmark achievement in the movement towards anonymous digital cash entitled, "Toward A Private Digital Economy: Trusted Transactions in an Anonymous World". The video presentation from DEF CON 12 can be seen here. It is significant in that it is one of the few written pieces that anticipates the forced closure of digital-issuing mints by the authorities. What is explored is the establishment of a trusted central mint that operates anonymously and therefore can remain operational in the face of direct governmental threats and assaults. From the abstract:

"Currently available financial privacy tools have drawbacks arising from centralized ownership and control, and the limitations of presenting specific services. A better approach would be to construct a fully distributed environment for economic activity which mimics the way cash is used in the physical world but is private, anonymous, trusted, and indestructible. A key to this variety is the element of locale, which we will explain in some detail."

"We will introduce a 'Farmer's Market' model of anonymous commerce and expand it into a detailed functional description. We will explore business models viable in this environment and ways to connect them to the transparent banking world."

"An anonymous economy must resolve issues of trust and reputation to be practical. We show how properties of number can be used to derive an 'algebra of trust' and exploited to reduce risk in anonymous transactions. Once reduced to a number, trust, like any other asset, can be quantified, evaluated, commoditized and even used as a currency. Algorithms that distribute data storage can distribute risk and trust once they are reduced to data. These things may overcome some of the barriers to the wide adoption of a private digital economy."

Building on the Digital Monetary Trust due largely to J. Orlin Grabbe, the authors further anticipate that in order to have a reliable trusted issuing mint that is both anonymous and not geographically locatable, it is necessary to provide a mechanism for distributed trust and auditing provisions that do not compromise the anonymity or location of the issuing entity. This function is accomplished through a series of third-parties known as a guild of bondsmen, escrow agents, and fair witnesses. The bondsmen have access to an auditing process that does not put the assets at risk of seizure while still providing enough assurances to the financial integrity of the currency issuance. From the article:

Bondsman - This is a special case of insurance but one that merits special treatment. An insurer sells safety. A bondsman sells trust, the most precious commodity in the anonymous world. He sells it in the form of a promise to pay for losses incurred by a third party due to the non-performance of his client. The client posts a bond, assets worth some fraction of the amount at risk, depending on the bondsman's perception of that risk. There will be a non-returnable fee for the service. Where does the bondsman get his stock in trade? Some of it comes from his track record. In this business, reputation is literally as good as gold. Risk and trust are two sides of the same coin. He can distribute his risk (and gain trust) by posting secondary bonds with other bondsmen. The promise of 10 people to cover an obligation conveys more trust than the promise of any one person, hence the value of co-signers to a loan, trust is additive. Others have used the term “web of trust”. We introduce a related concept, the “web of bonds”. A guild of bondsmen backing each other generates more trust than the sum of the parts, because trust is associative. A bondsman's profit margin must be relatively large, in proportion to his risk. In section V we show how that proportion can be formally derived.

Escrow Agent - Escrow is another form of trust management, assets deposited with a neutral trusted third party to be delivered under contractually specified conditions. Like Bondsman, it is a service well-suited to the anonymous world because it can be transacted electronically. Like Bondsman, it is another way to rent trust, which may be acquired in the same ways. Escrow Agent doesn't pay as well as bondsman, because there is almost no risk.

Fair Witness - The professional witness sells truth, as a trusted reporter of fact. Unlike Heinlein's Fair Witness, an eidetic memory and hypnotically trained powers of observation are not required. Though a contract can be digitally signed in a non-repudiable way, the recording of it in a trusted neutral place has value. Likewise testimony about associated conditions and events not recorded in any contract (Johnny Carboncabin sent 12 threatening and intimidating messages to Clarke Kent after Clarke's whistle-blowing expose' was published). The Witness may verify Dark Side events, objects, conditions (Wolfie's Toy won today's trifecta, that 1909S VDB penny is in mint condition). There may be conditions on disclosure or limits on scope and audience. The witness may take the role of auditor: “I attest that on this date, 'The Anonymaker' proxy's logs were kept for no more than four hours. I reviewed their code and it was so configured. I probed their server and it was running the code I reviewed”. There is also the role of Notary: “I attest that the same individual signed both of these documents, though I can't disclose the content of the documents or the identity of the individual.”. Another valuable Witness service is putting a time stamp on identities, coins, messages, contracts, and so on. The Fair witnesses fee should be in proportion to the reputation of the Witness, and the amount or issue in contest.

For further reading:
"The Digital Monetary Trust Part 1: Introduction", J. Orlin Grabbe, November 15, 1999
"The Digital Monetary Trust Part 2: The Anonymous Account System", J. Orlin Grabbe, November 22, 1999
"A Brief Guide to Digital Cash Articles on My Webpage", J. Orlin Grabbe, February 28, 1998

Ron Paul Testifies on Behalf of Free Competition in Currency Act

On December 9, 2009, Ron Paul introduced the Free Competition in Currency Act. Watch a January 20, 2010 video of Ron Paul testifying on behalf of his proposed legislation.

HR 4248 would abolish the legal tender laws, allow the establishment of private mints, and repeal capital gains taxes on gold and silver, allowing them to compete effectively as currencies. From Ron Paul:

"Because of legal tender laws that force acceptance of the dollar, the Fed has absolute power over the currency. This absolute power is leading to the absolute corruption of our currency. The money supply has doubled in the last year or so, which is extremely dangerous. The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility."

"I introduced the Free Competition in Currency Act last week to free the people from these governmental threats. HR 4248 would repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain laws related to coinage. The prospect of people turning away from the dollar towards alternate currencies should provide incentive for Congress to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system."

For further reading:
"Real Banking Reform? End the Federal Reserve", Richard M. Ebeling, January 22, 2010
"Judicial Terrorism: The State vs. Robert and Danille Kahre", William Norman Grigg, December 3, 2009
"Prosecuting Robert Kahre for Embarrassing the Federal Reserve", Jacob G. Hornberger, June 3, 2009
"Employer's gold, silver payroll standard may bring hard time", Las Vegas Review-Journal, May 26, 2009

Dr. Ron Paul's Gold Standard

By Steve Forbes
Forbes
Wednesday, January 13, 2010

http://www.forbes.com/2010/01/13/gold-standard-fed-intelligent-investing-ron-paul.html

The Texas congressman says gold as currency would render the Federal Reserve obsolete.

Dr. Ron Paul and Steve Forbes discuss why a gold standard would put an end to the Federal Reserve.

Steve Forbes: What are the qualities of gold that you think make it a better regulator than fallible human beings at the Fed?

Dr. Ron Paul: Well, it isn't so much the qualities that I think about as much as what history has said about gold. And the Austrian School of economics, and von Mises in particular, teaches that money, it comes out of the marketplace. Governments can't create money.

If we were stranded on an island and one of us decided, "Well, we need some money. So we're going to take these pieces of paper and I'll write numbers on them and it'll be money," it would be preposterous. Money comes out with real value. So over the many, many centuries, literally thousands of years, gold and silver has been used. And the founders understood this. They had runaway inflation. They explicitly said, "You can't emit bills of credit." And you want to restrain the authorities. So if you want to restrain government, you restrain the power to create money. And that's what gold does. A lot of people think, "Well, that means you're going to have to carry all that gold around in your pocket." No. There's nothing wrong with gold certificates. And it can be electronic gold. It's just that it restrains the power of individuals, especially secret individuals that have no oversight from Congress to create this money.

You would certainly not need a Federal Reserve if you have a gold standard.

But people don't like it because it will restrain their ability to spend money and do things that they otherwise couldn't do. So it's the natural fact that money has developed over the many century. And even if you had to, you can have something of real value. For it to work, you should always check on who's promising you something beyond the money, that you can take that coin or your paper in and see if they really have the gold in the bank. And this literally came up after the Civil War. See, we were off the gold standard during the Civil War. And the Resumption Act of 1875, they had a three-year period and they said, "We're going to quit printing money." They withdrew some greenbacks and they said, "The gold's going to be available after three years."

And actually it was a non-event. They didn't want to carry the gold around. But they wanted to know, once they knew the gold was in the bank, they went back to using their paper. The government didn't have deficit financing and they weren't running the world.

Watch The Full Interview With Dr. Ron Paul And Steve Forbes.

Debate on Abolishing the Federal Reserve

At the annual FreedomFest gathering in Las Vegas on July 10, 2009, Gene Epstein of Barron’s and Thomas Woods debated Warren Coats and John Fund in "Fed Up with the Fed: Is it Time to Abolish?". At the debate, "Kill the Monster" was the opening statement delivered by Woods.

Thomas Woods also talked about his book Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (2009).